One Thousand Fleet Ltd. Partnership v. Guerriero

³² RAKER, Judge. This appeal involves the torts of malicious use of process and abuse of process. We must decide whether Appellant One Thousand Fleet Limited Partnership may maintain suit for malicious use of process and abuse of process against Appellees John Guerriero, Richard Ingrao, and the Little Italy Community Organization based on lawsuits filed by Ingrao and the Little Italy Community Organization challenging the zoning modification and issuance of building permits for a real estate development project undertaken by Appellant in Baltimore’s Little Italy neighborhood. The Circuit Court for Baltimore City dismissed Appellant’s two-count complaint against Appellees.

We shall affirm. The Parties Appellant One Thousand Fleet Limited Partnership (“Fleet”) is a Maryland limited partnership engaged in real estate development in Baltimore City. Appellee John Guerriero is a property owner in Baltimore’s Little Italy neighborhood. Appellee Richard Ingrao is also a property owner in Little Italy and, at the time of most of the events in question here, was president of the Little Italy Community Organization (“Community Organization”).

The Community Organization, also an appellee, is a non-profit corporation formed to further the interests of the residents and businesses of the Little Italy neighborhood. The Project In the summer of 1992, Fleet began negotiations to purchase an abandoned furniture warehouse, the Bagby Furniture building, located at 509-521 South Exeter Street in Baltimore City. Fleet intended to convert the building to an apartment building containing fifty-seven apartments. The Community Organization initially supported the project.

In a letter dated March 15, 1993, Ingrao, on behalf of the Commu ³³ nity Organization, wrote a letter to Fleet’s predecessor 1 informing Fleet that “[t]he community overwhelmingly approved the conversion of the building into 56 apartment units.” 2 The letter contained certain Community Organization demands concerning parking, the height of the building, the management of the property, and the zoning modifications that Fleet would be required to obtain. On April 1, 1993, Fleet reached an agreement of sale with the owners of the Bagby Furniture building to purchase the building for one' million dollars. In order to develop the property as an apartment building, it was necessary to obtain a rezoning of the property from heavy industrial to a residential classification. The Mayor and City Council of Baltimore approved the zoning change on July 2, 1993.

Fleet also applied for conditional use authority from the Board of Municipal and Zoning Appeals (“the Board”) of the City of Baltimore. Conditional use authority from the Board was necessary in order to use the building as apartments. The Board approved the conditional use authority on November 30, 1993. After it cleared the zoning hurdles, Fleet sought and received financial commitments for the project from various federal, state, and local entities.

As a condition of state and ³⁴ local funding, Fleet was required to reserve ten apartment units in the planned residential facility for persons of moderate income. Fleet alleges that at this point the Community Organization’s support for the project evaporated. According to Fleet, the public financing was discussed at several public meetings and opposition to the project became intense. Fleet alleges in its complaint that racism motivated the opposition and that at one of the meetings, Guerriero stated that he opposed the project because “it would attract residents of African-American descent” to the neighborhood; Guerriero suggested that a lawsuit should be filed to prevent further development of the project.

Fleet further alleges that at this meeting, Guerriero also offered to fund a lawsuit to stop the project, although he did not wish to have his name associated with the lawsuit. On April 5, 1995, counsel for Guerriero sent a letter to Glenn Charlow of the Manekin Corporation, the Bagby Furniture Company’s realtor. In the letter, Guerriero offered to purchase the property for $300,000 cash. The record does not reflect whether Mr. Charlow responded, but Guerriero’s offer apparently was not accepted as Fleet ultimately succeeded in purchasing the building for the agreed upon one million dollars.

The Underlying Law Suits The Community Organization and Ingrao filed four lawsuits against the Board and the Mayor and City Council of Baltimore. 3 The lawsuits challenged the Board’s extension of the conditional use authority, the City’s issuance of the building permit, and the City’s rezoning of the Bagby Furniture build ³⁵ ing. Fleet was not named as . a defendant in any of the four lawsuits filed by Gerald R. Walsh, counsel for the Community Organization and Ingrao. Fleet sought to intervene in these four actions and to consolidate the cases. The circuit court (Rombro, J.) granted Fleet’s motion to intervene and ordered the cases consolidated.

The court also agreed to shorten the time to file pleadings and motions, finding that the lawsuits could jeopardize Fleet’s financing if allowed to run their normal course. On June 8, 1995, the circuit court dismissed all four lawsuits, concluding that the Community Organization and Ingrao lacked standing to assert the claims contained in the four actions. The Community Organization and Ingrao appealed to the Court of Special Appeals. Ultimately, on December 5, 1995, the appeals were dismissed by the Court of Special Appeals for lack of prosecution.

The Present Lawsuit On April 24, 1995, Fleet filed a one-count complaint against Guerriero, Ingrao, and the Community Organization alleging abuse of process. On June 26, 1995, Fleet filed an amended complaint, adding a count of malicious use of process. The complaint alleged that the Community Organization and Ingrao, at the direction of Guerriero and with his financial backing, filed suits in order to prevent Fleet from completing its project and that the lawsuits were misused to facilitate Guerriero’s purchase of the property at a reduced price. The Community Organization and Ingrao filed a two-count counterclaim.

In the first count, the Community Organization and Ingrao challenged the Board’s issuance of a building permit because they contended that the conditional use permit, on which the building permit was premised, was invalid. The second count alleged defamation based on a letter Fleet sent to Administrative Judge Joseph H.H. Kaplan dated May 10,1995, that allegedly accused Appellees of racism. All parties moved to dismiss. The circuit court (Steinberg, J.) granted the motions of Guerriero, the Community Organi ³⁶ zation and Ingrao “for the reasons set forth in that motion, which this Court hereby adopts, and the additional fact that the underlying litigation which serves as the predicate for the malicious use of process cause of action is currently on appeal before the Court of Special Appeals of Maryland.” Judge Steinberg entered final judgment in favor of Guerriero, the Community Organization, and Ingrao.

See Maryland Rule 2-602. Fleet appealed to the Court of Special Appeals. This Court granted certiorari before consideration by that court. I. Despite the similarity in language, “[a]buse of process, malicious use of process, and malicious prosecution are essentially different and independent torts.” R. Gilbert & P. Gilbert, Maryland Tort Law Handbook § 5.3, at 54 (1992).

In Maryland, the term “malicious use of process” means malicious prosecution of a civil claim. “Malicious prosecution” in Maryland applies to criminal charges, but otherwise shares the same elements as malicious use of process. S. Speiser, et al., The American Law of Torts § 28:20, at 114 (1991, 1996 Supp.). “Abuse of process,” on the other hand, is a distinct tort. Abuse of process in Maryland can apply to either civil or criminal charges. With these basic concepts in mind, we turn to the elements of malicious use of process and abuse of process under Maryland law.

A. Malicious Use of Process This Court in Walker v. American Security Co., 237 Md. 80, 87 , 205 A.2d 302, 307 (1964), described the tort of malicious use of process: [Ajctions for malicious prosecution and malicious use of process are concerned with maliciously causing criminal or civil process to issue for its ostensible purpose, but without probable cause— Actions for malicious prosecution and malicious use of process have the same essential elements and are often referred to as being essentially synonymous, ³⁷ with most of the cases referring to malicious prosecution as arising out of a criminal proceeding and malicious use of process as arising out of a civil proceeding. This Court has long recognized that “[s]uits for malicious prosecution are viewed with disfavor in law and are to be carefully guarded against.” North Pt. Constr. Co. v. Sagner, 185 Md. 200, 206, 44 A.2d 441, 444 (1945).

Public policy requires that citizens be free to resort to the courts to resolve grievances without fear that their opponent will retaliate with a malicious use of process lawsuit against them. See Owens v. Graetzel, 149 Md. 689, 694-95 , 132 A. 265, 267 (1926). The cause of action for malicious use of process has five elements and all must co-exist to maintain the action. Keys v. Chrysler Credit Corp., 303 Md. 397, 407 , 494 A.2d 200, 205 (1985).

First, a prior civil proceeding must have been instituted by the defendant. Second, the proceeding must have been instituted without probable cause. Sagner, 185 Md. at 208 , 44 A.2d at 445 . Probable cause for purposes of malicious use of process means “a reasonable ground for belief in the existence of such state of facts as would warrant institution of the suit or proceeding complained of.” Id. at 208-09 , 44 A.2d at 445 .

Third, the prior civil proceeding must have been instituted by the defendant with malice. Malice in the context of malicious use of process means that the party instituting proceedings was actuated by an improper motive. Keys, 303 Md. at 408 n. 7, 494 A.2d at 205 n. 7. As a matter of proof, malice may be inferred from a lack of probable cause.

See Montgomery Ward v. Wilson, 339 Md. 701, 717 , 664 A.2d 916, 924 (1995). Fourth, the proceedings must have terminated in favor of the plaintiff. See Berman v. Karvounis, 308 Md. 259, 266 , 518 A.2d 726, 729 (1987). Finally, the plaintiff must establish that damages were inflicted upon the plaintiff by arrest or imprisonment, by seizure of property, or other special injury which would not necessarily result in all suits prosecuted to recover for a like cause of action.

Keys, 303 Md. at 407 , 494 A.2d at 205 ; Owens, 149 Md. at 695 , 132 A. at 267 . ³⁸ B. Abuse of Process In his treatise, Professor Keeton notes that an action for malicious use of process does not provide a remedy for those cases “in which legal procedure has been set in motion in proper form, with probable cause, and even with ultimate success, but nevertheless has been perverted to accomplish an ulterior purpose for which it was not designed. In such cases a tort action has been developed for what is called abuse of process.” W. Keeton, Prosser & Keeton on the Law of Torts § 121, at 897 (5th ed.1984). In Krashes v. White, 275 Md. 549, 555 , 341 A.2d 798, 802 (1975), Judge Eldridge, writing for the Court, described the tort of abuse of process: The tort of abuse of process occurs when a party has wilfully misused criminal or civil process after it has issued in order to obtain a result not contemplated by law. (citations omitted.) To sustain a cause of action for abuse of process, the plaintiff must prove: first, that the defendant wilfully used process after it has issued in a manner not contemplated by law, Keys, 303 Md. at 411 , 494 A.2d at 207 ; second, that the defendant acted to satisfy an ulterior motive; and third, that damages resulted from the defendant’s perverted use of process, Berman, 308 Md. at 262 , 518 A.2d at 727 .

A bad motive alone is not sufficient to establish an abuse of process. “Some definite act or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process is required----” Keeton, supra, § 121, at 898; see also Berman, 308 Md. at 265 , 518 A.2d at 729 ; Bartlett v. Christhilf, 69 Md. 219, 230-31 , 14 A. 518, 522 (1888); Wells v. Orthwein, 670 S.W.2d 529, 533 (Mo.Ct.App.1984) (“[N]o liability is incurred where the defendant has done nothing more than pursue the lawsuit to its authorized conclusion regardless of how evil his motive may be.”). In summary, the two torts at issue in this case are separate and distinct. This Court, in Walker v. American Security Co., 237 Md. 80, 87 , 205 A.2d 302, 306-07 (1964), outlined the differences between the two as follows: ³⁹ A tort action for abuse of process, on the one hand, and the tort actions for malicious prosecution and malicious use of process, on the other hand, are essentially different and independent actions. An action for abuse of process differs from actions for malicious prosecution and malicious use of process in that abuse of process is concerned with the improper use of criminal or civil process in a manner not contemplated by law after it has been issued, without the necessity of showing lack of probable cause or termination of the proceeding in favor of the plaintiff, while actions for malicious prosecution and malicious use of process are concerned with maliciously causing criminal or civil process to issue for its ostensible purpose, but without probable cause, (emphasis in original).

See also Bidna v. Rosen, 19 Cal.App.4th 27 , 23 Cal.Rptr.2d 251, 259 (1993), rev. denied, No. G012357, 1993 Cal. LEXIS 6936 (Cal. Dec. 30, 1993) (describing malicious use of process as concerning a meritless lawsuit and abuse of process as concerning “misuse of the tools the law affords litigants once they are in a lawsuit” (emphasis in original)). The case of Keys v. Chrysler Credit Corporation, 303 Md. 397 , 494 A.2d 200 (1985), illustrates the differences between malicious use of process and abuse of process.

In Keys , Anna Keys’s wages were attached by a writ of garnishment issued to enforce a judgment that Keys had fully satisfied more than four years earlier. Id. at 400 , 494 A.2d at 201 . After Keys’s attorney brought the matter to the attention of Chrysler Credit Corporation, Chrysler Credit checked its records and found that Keys had indeed satisfied the judgment four years earlier. Chrysler Credit reimbursed her wages.

Keys sued Chrysler Credit for, inter alia, malicious use of process and abuse of process. Id. at 402 , 494 A.2d at 202 . Judge McAuliffe, writing for the Court, concluded that the trial court improperly dismissed Keys’s malicious use of process claim because a prior civil proceeding had been instituted by Chrysler Credit against Keys, that the proceeding was instituted without probable cause inasmuch as Chrysler admitted that Keys had fully paid the judgment, that malice may be inferred ⁴⁰ from a want of probable cause, that the proceeding was terminated in Keys’s favor, and that Keys suffered a seizure of her property, ie., the garnished wages. Id. at 408-10 , 494 A.2d at 205-07 .

The Court held, however, that Keys could not maintain an action for abuse of process because there was no evidence of any improper use or perversion of the process after it issued. The Court noted that Keys’s “proper complaint in this case is with the issuance of the process, ... and she has no proper proof of an abuse of process.” Id. at 412 , 494 A.2d at 207 (emphasis added). Thus, an action for abuse of process could not survive. With the elements of the two torts in mind, we turn now to examine whether Fleet alleged facts sufficient to support causes of action for malicious use of process and abuse of process.

II

Fleet appeals the judgment of dismissal, with prejudice, of its two-count complaint against Guerriero, the Community Organization, and Ingrao. Accordingly, this Court must “assume the truth of all relevant and material facts well pleaded and all inferences which can be reasonably drawn from those facts.” Stone v. Chicago Title Ins. Co., 330 Md. 329, 333 , 624 A.2d 496, 498 (1993). In considering the allegations, however, we consider allegations of fact and inferences deducible from them; we do not consider merely conclusory charges.

Berman v. Karvounis, 308 Md. 259, 265 , 518 A.2d 726, 728-29 (1987). A. Malicious Use of Process Fleet alleges that the Community Organization, Ingrao, and Guerriero committed the tort of malicious use of process on the grounds that the four lawsuits challenging the zoning of the disputed property were instituted without probable cause and with malice, in that the lawsuits were intended to interfere with Fleet’s ability to finance the purchase and to facili ⁴¹ tate Guerriero’s purchase of the property at a reduced price. Fleet further alleges that the dismissal of all four zoning lawsuits by Judge Rombro constituted termination in its favor. Finally, Fleet claims damages based on the inability to obtain financing, delays, and loss of rental income.

The Community Organization, Guerriero, and Ingrao contend that Fleet lacks standing because the Community Organization and Ingrao did not name Fleet as a party in any of the