Privileges and the Torts of Defamation, Interference and Malicious Prosecution

Posted by: on Mon, Nov 03, 2014

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           Privileges with respect to the Torts of Slander and Defamation

 

Nevada recognizes a long-standing common law rule that communications uttered or published in the course of judicial proceedings are absolutely privileged so long as they are in some way
pertinent to the subject of controversy.  [Citations omitted.]  The absolute
privilege precludes liability even where the defamatory statements are
published with knowledge of their falsity and personal ill will toward the
plaintiff.  [Citations omitted.]  Circus-Circus Hotels, Inc. V. Witherspoon,
99 Nev. 56, 657 P.2d 101, 104 (1983).  The policy underlying the privilege is
that in certain situations the public interest in having people speak freely
outweighs the risk that individuals will occasionally abuse the privilege by
making false and malicious statements.
[Citations omitted.]

On the basis of this policy, the absolute privilege attached to judicial proceedings has
been extended to quasi-judicial proceedings before execute officers, boards,
and commissions, including proceedings in which the administrative body is
considering an employee’s claim for unemployment compensation.  Id.

Nevada also recognizes that certain communications relating to law enforcement and
litigation enjoy an absolute privilege such that they may not be utilized as
support for slander, libel, defamation, or similar claims against the party who
made the statement.  For example, the Nevada Supreme Court in Fink v. Oshins, 49 P.3d 640, 118 Nev. 428 (Nev. 2002), explained that an absolute privilege applies not only to communications made during the actual judicial proceedings, but also to communications
preliminary to a proposed judicial proceeding.  Id. at 644.  The court
noted that if, at the time a defamatory communication is made, a legal
proceeding is contemplated in good faith and under serious consideration, the
communication will be absolutely privileged and within these limits the court
should apply the absolute privilege liberally, resolving any doubt in favor of
its relevancy or pertinency.  Id. at
644.

The court reiterated that the absolute privilege precludes liability even where the defamatory statements are published with knowledge of the falsity and persona ill will toward the plaintiff.  Id. at 643.

The Nevada Supreme Court in Hampe v. Foote, 47 P.2d 438, 118 Nev. 405 (Nev.
2002) also held that the absolute privilege was applicable to a letter of
complaint written to the Nevada Gaming Commission, thus barring any civil
action by the licensee for libel or defamation, malicious prosecution and
intentional infliction of emotion distress arising from the communication even
though the licensee alleged that the letter was made with malice and contained
fraudulent accusations.

In the case of Clark County School District v. Virtual Education Software,
Inc.,
125 Nev. 374, 213 P.3d 496 (Nev. 2009), the Nevada Supreme Court
extended the absolute privilege to communications made by non-lawyers where
civil or criminal judicial proceedings have commenced or are under serious
consideration.  The court explained the rationale for its decision as follows:

“The purpose of the absolute privilege is to afford all persons
freedom to access the courts and freedom from liability for defamation where
civil or criminal proceedings are seriously considered
.  Restatement (Second) of Torts 587 comment a and e (1977).  Therefore, the absolute privilege affords
parties the same protection from liability as those protections afforded to an
attorney for defamatory statements made during, or in anticipation of, judicial
proceedings.  Restatement (Second) of Torts 587, comment (1977).”  Id.
at 502. (Emphasis added).

Because this was a matter of first impression in Nevada, the court went on to explain
as follows:

“Consequently we extend the protections of the absolute
privilege to instances where a non-lawyer asserts an alleged defamatory
communication in response to threatened litigation or during a judicial
proceeding.  Thus, just as we announced in Fink, for the privilege to apply (1) a judicial proceeding must be contemplated in good faith and under serious consideration, and (2) the
communication must be related to the litigation.” Id. at 503, citing
Fink v. Oshins, 49 P.3d 640 (Nev. 2002).

The court noted that because the scope of the absolute privilege is broad, a court determining whether a privilege applies is to resolve any doubt in favor of a broad application.
Id. at 502, citing Fink, 118 Nev. at 433-34, 49 P.3d at 644.  The court then extended this absolute privilege to statements made prior to threatened and pending litigation.  On that basis, the Court reversed a lower court’s judgment arising out of a letter and three email communications to individual teachers, holding that these communications
were absolutely privileged.

In the case at bar, where R had just filed a Nevada civil suit for the monies due and owing on a Promissory Note, an absolute privilege was clearly afforded and applicable to
all of the communications which form the basis of the counterclaim such as
communications made to third parties related to the suit, such as asset checks
for potential funds that could be available to satisfy any judgment.

Nevada also recognizes the conditional common interest privilege which exists when allegedly a defamatory statement is made in good faith on any subject matter in which the person communicating has an interest or in reference to which he has a right or a duty, if it is made to a person with a corresponding interest or duty.  Leuben v. Kunin, 17 P.3d 422, 117 Nev. 107 (Nev. 2001).  The Court has noted that whether the common interest privilege applies in defamation actions is a question of law for the
court to determine.  Id. at 425.  If the action is privileged under the common
interest privilege, such as where both of the parties discussing the matter
have an interest in it, then there is no cause of action for defamation.  Leuben v. Kunin, at 428.

For purposes of determining whether defamation has been established under Nevada law, a publication is privileged where a defamatory statement is made in good faith on any subject matter in which the person communicating has an interest or in reference to which he has a right or a duty if it is made to a person with a corresponding interest or duty.
Id. at 428.

Here,  R Group as a re-insurer of Driverz Edge administration and as a consultant to the insurance company Assurant, had a duty and an obligation and a common interest to determine if Driverz Edge and its president Robert William Roback were involved in theft of insurance premiums for automobile warranty insurance coverage.  The only way to confirm the answer to this question before turning the matter over to the police was to speak with several
customers and dealers to confirm whether the theft was in fact occurring.  When confronted by the police and the detectives with the information obtained through this process, Roback quickly admitted to the theft of some $775,000.

Counterdefendant also had the right to conduct an asset check regarding their pending civil suit. As a matter of law, summary judgment is appropriate here inasmuch as the communications were not only protected by the absolute privilege, and subject to the common
interest privilege, but the allegations were all true as admitted by Defendant
Roback upon his arrest.  Here there is not one but two related judicial proceedings generating the absolute privilege shield, the Nevada civil case and the Henderson Justice Court criminal
proceedings.

 

2.         Interference with Contractual Relations.

With respect to the Second Cause of Action for Interference with Contractual
Relationships, Paragraph 22 of the Counterclaim alleges that:

Before and after filing the instant lawsuit COUNTERDEFENDANTS, through RON ,
contacted several of the third party clients with an intention to disrupt the
contractual relationship and have the third party hold or divert funs to
COUNTERDEFENDANTS.

In the case of J. J. Industries LLC v. Bennett, 119 Nev. 269, 721 P.3d 1264 (Nev. 2003), the
Nevada Supreme Court outlined the elements of a clam for interference with contractual
relations as follows:

In an action for intentional interference with contractual relations, a plaintiff must establish :

 

1.         A valid and existing contract;

2.         The defendant”s knowledge of the contract;

3.         Intentional acts intended or designed to disrupt the contractual relationship;

4.         Actual disruption of the contract; and

5.         Resulting damage.

The court noted that the Restatement (Second)) of Torts 766, at i
(1979) provides that the defendant must have knowledge of the contract with
which he is interfering and of the fact that he is interfering with the
performance of the contract.  The court went on to note that because interference with contractual relations is an intentional tort, the plaintiff must demonstrate that the
defendant knew of the existing contract or at the very least, established facts
from which the existence of the contract could be inferred.

The court noted that at the
heart of an intentional interference claim is whether the plaintiff has proved
intentional acts by the defendant intended or designed to disrupt plaintiff’s contractual relations.  The United States District Court of Nevada,
interpreting Nevada law, explained that the plaintiff must establish that the
defendant had a motive to induce breach of the contract with the third party as
follows:

The fact of a general intent to interfere under a definition that includes imputed knowledge of consequences, does not alone suffice to impose liability. Inquiry into the motive or purpose
of the actor is necessary.  The inducement of a breach therefore does not always vest third or incidental persons with a tort action against the one who interfered.
Where the actor’sconduct is not criminal or fraudulent and absent some other aggravating
circumstances, it is necessary to identify those whom the actor had a specific
motive or purpose to injure by his interference and to limit liability
accordingly.  See, National Life to Life PA Comm., 741 F.Supp. 807, at 814 (D.Nev 1990), quoting from Devoto v. Pacific Fidelity Life Ins. Co., 618 F.2d 1340, 1347 (9th Cir.
1980).

The Nevada Supreme Court went on to explain that mere knowledge of the contract is
insufficient to establish intent or design to disrupt.  Rather, the plaintiff
must demonstrate that the defendant intended the other party to breach the
contract with the plaintiff.  J. J. Industries v. Bennett, at 276.

Applying the foregoing principles of law to the facts in the instant case, it is readily
apparent as a matter of law that there was no intent to disrupt the contract, and
all communications were privileged.  Indeed, there was actually no disruption of the contract that is still in place.  Rather, the only purpose of
the inquiry was to determine whether there adequate funds were available to
help satisfy any eventual judgment obtained by R against Driverz Edge in
the case already filed in Nevada.  The conversation with general counsel for Dealers A Company (ADCA)  indicated that there would be some monies
available if a judgment was obtained in the Nevada proceedings..

While there is no Nevada law expressly applying absolute privilege to tortious interference
with existing contracts, there is clearly precedent for applying absolute
privilege to torts beyond defamation when those torts arise from the same
conduct as the defamation claim.

In Walker v. D=Alesandro, the Court of Appeals of Maryland stated that privilege was not limited to immunity from liability for defamation.
212 Md. 163, 169 (1957). The Court of Appeals reiterated this position
in Carr v. Watkins, when it examined whether privilege could act as a
shield for torts such as invasion of privacy and malicious interference with
contract rights.  227 Md. 578, 582
(1961).  Carr concluded that Aif there was immunity from liability
for defamation, there was immunity from liability for the other alleged torts
claimed by the [plaintiff] to have been committed.  Id. at 583.

The U.S. Supreme Court also recognizes that privilege is not confined to defamation
torts when the same behavior is the subject of other torts.  In Barr v. Matteo, the Supreme Court discussed the law of privilege as an absolute defense for federal officers in
civil suits for defamation and kindred torts.  360 U.S. 564, 569 (1959).  Moreover, in Hustler Magazine, Inc. v. Falwell, the Supreme Court held that the First Amendment privilege applies
equally to libel and intentional infliction of emotional distress.  485 U.S. 46, 56 (1988).  The Court’s rationale for applying the First Amendment privilege equally to libel and
intentional infliction of emotional distress suggests that absolute privilege
would apply equally to those claims as well.
See, Mixter v. Farmer, 81 A.3d 631 (App Md. 2013).  The Supreme Court recognized that in order to protect the important freedoms of the First Amendment, it was necessary to
expand the privilege beyond libel to intentional infliction of emotional
distress.  Hustler Magazine, Inc. v. Falwell, 485 U.S. 46, 56 (1988).
Similarly, in order to protect the free access to the courts, it is necessary to expand the absolute judicial privilege beyond defamation to other torts.

Other courts also have used privilege to protect defendants from claims other than
defamation that originated from the same acts.  See, Sullivan v. Birmingham, 416 N.E.2d 528, 533 (Mass. App. Ct. 1981) (holding that absolute privilege was a complete defense to
intentional infliction of emotional distress, see also Rainier’s Dairies v. Raritan Val. Farms,
117 A.2d 889, 895 (N.J. 1955) (holding that absolute privilege was a complete
defense to interference with business claims.)
See, also Pelagatti v. Cohen, 536 A.2d 1337 (Penn. 1987)
(the contractual interference counts dismissed due to absolute privilege
afforded to judicial communications.  Id. at pg 1344).

A broad reading of absolute privilege makes sense from a policy perspective.  The Sullivan v. Birmingham court noted that the policy behind the privilege Awould
be severely undercut if the absolute privilege were to be regarded as less than
a bar to all actions arising out of the conduct of parties and/or witnesses in connection with a judicial proceeding.
416 N.E.2d at 534 (quoting Devlin v. Greiner, 371 A.2d 380, 38 (N.J.
Super Ct. Law Div. 1977)).  The court in Thornton
v. Rhoden
agreed that the policy reasons behind the absolute privilege
would be defeated if claims beyond defamation were not protected.  245 Cal. App.,2d 80, 99 (Cal. Dist. Ct. App. 1966).  Thornton stated, A[i]f it is desirable to create an
absolute privilege in defamation … we should not remove one concern and
saddle him with another for doing precisely the same thing. Id.

One court explained the policy of expanding the absolute privilege to a variety of
related torts:  It is obvious that except
for the post-filing publicity everything done by Rhoden or caused to be
done by him was an integral part of the deposition proceedings he had imitated
by notice.  We have held these facts to
be absolutely privileged in a defamation  action.  The salutary purpose of the privilege
should not be frustrated by putting a new label on the complaint If it is
desirable t6o crate an absolute privilege in defamation, not
because we desire to protect the shady practitioner, but because we do not want
the honest one to have to be concerned with libel or slander actions while
acting for his client, we should not remove one concern and saddle him with
another for doing precisely the same thing. . . .  If an action for liable or slander cannot be
maintained, now can such an action as I have mentioned be maintained, it being
in truth an action for defamation in an altered form?  Every objection and every reason which can be urged against an action for libel or slander will equally apply against the
suggested form of action.  (Thornton at
pp.. 601-602)).

3.         Malicious Prosecution.

The most important difference for the court to note between malicious prosecution and
abuse of process is that the former requires a previous criminal proceeding,
which (obviously) has been terminated (in favor of the party charged).  To establish malicious prosecution, a plaintiff must establish the following in Nevada law:  (1) want of probable cause to initiate the prior criminal proceeding; (2) malice; (3) termination of the prior criminal
proceeding
; and (4) damages.  See LaMantia v. Redisi 38 P.3d 877 (Nev. 2002).  (Emphasis added).

The third element is critical, which requires that the criminal proceeding has been
terminated prior to the commencement of any civil claim alleging malicious
prosecution.  This requirement avoids the possibility of a plaintiff being awarded money damages for malicious prosecution of a pending criminal matter, but then later being convicted for the same exact crime.  To avoid such an
absurd possibility, the Nevada Supreme Court recognized the requirement that
there must be some type of a termination of the underlying criminal proceedings
before a malicious prosecution claim will stand.  In this case, as shown on the attached docket
sheet from the Henderson Justice Court (Exhibit AJ@
hereto), the bail was posted by Roback and set on January 16, 2014 for the
following charges: (1) theft in the amount in excess of $3,500.00; (2) theft in
an amount in excess of $3,500.00; and (3) theft of an amount in excess of $3,500.00.  No dismissal the charges has occurred.  The District Attorney has not yet filed a
criminal complaint since its investigators are still conducting an audit.  Hence, there has been no termination of the
underlying criminal proceedings.

In discussing the favorable termination element of a
malicious prosecution cause of action, a leading treatise states that Athe termination must not only be favorable to the defendant in the underlying proceeding but must also reflect
the merits and not merely a procedural victory.
W. Page Keeton et al.
, Prosser and Keeton on The Law of Torts, ‘ 119 (5th ed. 1984).  The rationale for requiring a plaintiff in a malicious prosecution action to establish that the favorable termination and the underlying proceeding was not simply based on mere technical or procedural grounds is that tends to indicate the innocence of the accused and coupled with
the other elements of lack of probably cause and malice establishes the tort of
malicious prosecution.

It is not essential to maintain an action for malicious prosecution that the prior
proceeding was favorably terminated following a full trial on the merits.  However, the termination must reflect on the
merits of the underlying criminal action.
See, Annotation, Nature of Termination of Civil Action Required
to Satisfy Element of Favorable Termination to Support Action for Malicious
Prosecution, 30 A.L.R. 4th 572 (1984 & Supp.2005).  In determining whether a specific result was a favorable termination, the court must examine the circumstances of the
underlying proceeding.  See Restatement (Second) of Torts
674
, cmt. j (1977).

Here, the counter-claimant has failed to establish the favorable termination element of
his malicious prosecution claim.  The
underlying criminal action is still pending in the Clark County court system,
is still being investigated, audits are still being conducted, and the District
Attorney’s Office has not yet filed a criminal complaint.
It appears likely that the District Attorney’s
Office will prosecute this matter in as much as the declaration of arrest
attached hereto as Exhibit K indicates that when Detective
Brent Wagner along with Detective J. Dixon and Nevada Insurance Commission
Investigator Nixon Medina contacted the suspect, Robert Roback, at his place of
business, Roback agreed to discuss the matter and invited the investigator and
detectives into his office, at which time he admitted the allegations.  Id. page 3.

The details of the probable cause report explain the confession made by Roback as follows:

 

When asked to explain what had happened to the money,
Roback confessed that he had used the money to pay for his company=s overhead, including payroll for his employees. He claimed his company had become financially strapped and that he
had explained this to A Solutions owner Ron .  I asked him if Mr.  In the had given him permission to take this $772,749.77 for his own purpose.  He stated that he had not, however claimed that Mr.  had not said anything to him about the money not being sent.  I then advised Roback that I knew
that he had been contacted numerous times about the money, at which time he
claimed that he, Roback, was entitled to over a million dollars, which would go
to the R and A Company once all the vehicle service contracts
reached their full terms, and was going to pay back the $772,749.77 then.  It should be noted that Woodruff had advised
me earlier that Roback would probably claim this, however Roback never was and
never would be entitle to this money.  I
confronted Roback with this, at which time he admitted that he misappropriated
the money, then added, it’s not like I just took the money and
ran off with it.

 

For three separate months Robert Roback misappropriated money (in excess of $650,000)
which belonged to the R Group LLC and A Solutions.  Consequently, Roback was taken into custody and transported to the Henderson Detention Center for booking for felony violations of NRS 205.0832.  Consequently the third claim for relief alleging malicious prosecution must be summarily
dismissed as a matter of law.

D.        CONCLUSION.

For the reasons set forth above, the counterclaim filed in this matter should be
dismissed with prejudice.

DATED this
_____day of August, 2014.

 

ALBRIGHT,
STODDARD, WARNICK & ALBRIGHT

 

 

 

____________________________________________

G. MARK
ALBRIGHT, ESQ.

Nevada Bar
No. 001394

D. CHRIS
ALBRIGHT, ESQ.

Nevada Bar
No. 004904

801 South
Rancho Drive, Suite D-4

Las Vegas,
Nevada 89106

(702)
384-7111

Attorneys
for Plaintiff/Counterdefendants

 

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah.  Our firm’s practice includes a strong emphasis on construction law, contracts and litigation in the jurisdictions where we are licensed.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services.  Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation.  Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

 

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on personal injury accidents. Call us at 702-384-7111.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.