New York Law Review

Tag: provisional remedy

  • Engel v. CBS, Inc., 93 N.Y.2d 195 (1999): Establishing ‘Special Injury’ for Malicious Prosecution

    Engel v. CBS, Inc., 93 N.Y.2d 195 (1999)

    In New York, a malicious prosecution claim requires a showing of ‘special injury,’ meaning the defendant suffered a concrete harm considerably more burdensome than the typical demands of defending a lawsuit, akin to the effect of a provisional remedy.

    Summary

    Attorney Donald Engel sued CBS for malicious prosecution after CBS sued him in a prior action to allegedly interfere with his representation of his client, Donald Thomas Scholz. The Second Circuit certified a question to the New York Court of Appeals regarding the ‘special injury’ element of a malicious prosecution claim under New York law. The Court of Appeals held that New York law requires a showing of special injury, but it is not limited to situations where a provisional remedy was imposed. However, the Court found that Engel’s allegations, as presented in the certified question, did not demonstrate a sufficient undermining of his representation to constitute special injury.

    Facts

    CBS sued the rock group Boston and its leader, Donald Thomas Scholz, for breach of contract. Scholz hired Engel to represent them. Engel successfully negotiated a contract with MCA Records on Scholz’s behalf. CBS then sued MCA, Scholz, Engel, and others, alleging breach of contract and copyright infringement based on the MCA deal. Engel claimed CBS sued him, in part, to dissuade him from representing Scholz. Engel alleged that this created conflicts of interest, made effective service to Scholz more onerous, increased the burden of discovery requests, and caused him to absorb these costs. He also claimed to have lost at least one potential client and suffered emotional and financial harm due to damage to his reputation.

    Procedural History

    The District Court granted Engel’s motion for summary judgment in the CBS action, dismissing him as a defendant. Engel then commenced a malicious prosecution action in the Central District of California. The California Federal court granted CBS’s motion for summary judgment, which was reversed by the Ninth Circuit Court of Appeals, holding that New York law applied. The case was transferred to the Southern District of New York, which granted CBS’s motion for summary judgment. The Second Circuit Court of Appeals then certified a question to the New York Court of Appeals regarding the special injury requirement under New York law.

    Issue(s)

    Whether an attorney, sued by his client’s adversary for the purpose of interfering with the attorney’s zealous representation of his client, and whose representation is actually undermined by the suit, may satisfy the required element of special injury in an action for malicious prosecution of a civil lawsuit under New York law where no provisional remedy is had against him.

    Holding

    No, because under the specific facts presented in the certified question, Engel did not demonstrate the requisite added grievance, or a sufficient undermining of his representation, to constitute special injury.

    Court’s Reasoning

    The Court acknowledged the argument against the special injury requirement, noting its English origins and the American rule on attorney’s fees. However, the Court emphasized that New York law has consistently required special injury in malicious prosecution claims, citing Williams v. Williams and other cases. The Court stated that the special injury requirement ensures open access to the courts and prevents endless litigation. While special injury typically involves interference with person or property, such as through a provisional remedy (arrest, attachment, or injunction), the Court clarified that special injury is not confined to the imposition of a provisional remedy. The court found that a verifiable burden substantially equivalent to the provisional remedy effect can amount to special injury. It must be a concrete harm considerably more cumbersome than the physical, psychological, or financial demands of defending a lawsuit.

    Regarding Engel’s situation, the Court found that the allegations of injury presented in the certified question fell short of the special injury standard. The Court stated, “The question itself begs us to assume that an attorney-client relationship was ‘actually undermined,’ but on the facts given to us, we cannot so conclude.” The Court noted that Engel complained about the burdens imposed by the conflict of interest but that avoiding conflicts and dealing with actual conflicts are part of the lawyer’s profession. The court explained that although his burden was slightly increased, it did not form the critical mass necessary to be cognizable as special injury. The Court also noted that the claims of lost business were too general and not sufficient to establish special injury. The court emphasized the need to balance concerns of open access to courts with preventing the courts from being used for oppression and harassment, echoing the sentiment in Burt v. Smith. Although the court found CBS’s actions reprehensible, the consequences never materialized to the degree necessary to constitute special injury. The Court stated that a malicious civil prosecution is one that is begun in malice, without probable cause, and which, after imposing a grievance akin to the effect of a provisional remedy, finally ends in failure: “see, Burt v Smith, supra, 181 NY, at 5“. The Court explicitly declined to create a special rule for attorneys.

  • Goff v. Goff, 41 N.Y.2d 476 (1977): Standard for Vacating an Attachment Order

    Goff v. Goff, 41 N.Y.2d 476 (1977)

    A court should not vacate an attachment order unless the plaintiff’s claim is clearly baseless; the standard is not whether the plaintiff has definitively proven their case at the attachment stage.

    Summary

    This case concerns a dispute over a supplemental attachment in a case involving running accounts between plaintiff and defendant, and defendant and overseas licensees. The lower courts vacated the attachment, essentially granting summary judgment before discovery. The Court of Appeals affirmed, finding no abuse of discretion. Chief Judge Breitel, in dissent, argued that the reference was only to determine if the attachment was excessive, not to try the case on its merits, and that the plaintiff should not have to fully establish the case at the attachment stage. The dissent emphasized that the referee improperly granted summary judgment when disputed facts existed and pretrial discovery was lacking.

    Facts

    The underlying action involved disputes over running accounts between the plaintiff and the defendant, and between the defendant and its overseas licensees. The specifics of what was owed and what was received were sharply disputed. The plaintiff obtained a supplemental attachment, which the defendant challenged as excessive.

    Procedural History

    Special Term initially determined that trust funds were involved, pursuant to the agreements between the parties. A Special Referee was appointed to determine if the supplemental attachment was excessive. The referee recommended vacating the attachment, which Special Term confirmed. The Appellate Division affirmed. The Court of Appeals affirmed the order vacating the attachment. Chief Judge Breitel dissented, arguing the lower courts erred in treating the attachment hearing as a full trial on the merits.

    Issue(s)

    Whether the lower courts erred in vacating the supplemental attachment by applying an incorrect standard of review, effectively requiring the plaintiff to prove their case on the merits at the attachment stage, rather than determining if the claim was baseless and the attachment excessive.

    Holding

    No, because the Court of Appeals affirmed the order of the lower court, effectively finding that the lower courts did not abuse their discretion in vacating the attachment. The majority did not issue a full opinion, but the dissent highlighted that the referee and lower courts improperly treated the attachment hearing as a summary judgment proceeding.

    Court’s Reasoning

    The majority opinion is a brief memorandum affirming the lower court’s decision. The dissent, however, provides insight into the legal reasoning. Chief Judge Breitel argued that the reference to the Special Referee was solely to determine whether the supplemental attachment was excessive, not to determine the merits of the underlying claims. He emphasized the preliminary nature of the determination under CPLR 6223, noting the lack of discovery and the complexity of the running accounts. The dissent criticized the referee for granting the equivalent of summary judgment in a case with disputed issues of fact and no pretrial discovery. Breitel stated, “An attachment will be of limited use as a provisional remedy if an attaching creditor must, on motion to vacate the attachment, summarily establish his case as if it had been fully tried and determined. That trial and determination was not the referee’s function. He was only to determine whether the supplementary attachment was excessive because the support for it was baseless and plaintiff’s claim must inevitably have failed.” The dissent contended that the correct standard is not whether the plaintiff has definitively proven their case, but whether the claim is “baseless.”