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After a contractor prevailed at trial in a counterclaim against a homeowner that sued for breach of contract and defective workmanship, the contractor filed suit against the homeowner and the attorney that had filed suit on behalf of the homeowner, arguing that the homeowner’s suit constituted malicious prosecution.   A motion by the contractor for summary judgment in the underlying case was considered and rejected by the trial court before the case went forward to a trial on the merits.   At the trial on the construction defect claim, the verdict awarded nominal damages to the contractor on its counterclaim for breach of contract, and also awarded a small portion of its attorney’s fees.   Flush from that victory, the contractor filed this malicious prosecution claim against the homeowner and their attorney, asking for $1 million in damages plus the entirety of the legal fees it claimed in its original suit.

On the malicious prosecution suit, the court granted motions by the homeowner and their attorneys to dismiss the contractor’s case, and awarded them attorneys fees.  In doing so, the Motion’s judge stated that he did not think the contractor presented admissible evidence to prove the underlying construction defect case was not at least tenable when the homeowner filed it.   He concluded that “there was conflicting evidence … that supported the relief ultimately sought in the underlying case, even though they [homeowner] did ultimately lose.”  He also stated:  “I don’t think there is evidence that they undertook their conduct knowing that there was no merit to the underlying case.”   This was affirmed on appeal, with the court holding that the contractor failed to plead and prove that the homeowner’s suit had been filed without probable cause and with malice.   A finding of probable cause by the court ends any question of whether the underlying suit constituted malicious prosecution since there can be no malice so long as probable cause existed for the homeowner to believe it had a legal basis for its suit against the contractor.  In this regard, the appellate point to the fact that the homeowner’s summary judgment motion in the underlying case had been denied and the matter had been permitted to go to trail.    The court stated:  “Ordinarily, this denial of a defendant’s summary judgment motion in the underlying case establishes conclusively that there was probable cause to bring the suit,  thus barring a later malicious prosecution action.”  Lutge v. McKague & Tong, 2011 WL 1004870 (Cal. App. 1 Dist, 2011).

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 13, No.9 (Dec 2011).

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