The Lawletter Vol. 38 No. 3
In many states, one of the elements of the tort of malicious prosecution is initiating or procuring the institution of a criminal proceeding. See generally Restatement (Second) of Torts § 653. This element focuses on whether the alleged tortfeasor had probable cause at the time he or she initiated or procured the criminal action against the plaintiff. What if probable cause exists initially, but during the course of the criminal prosecution it becomes clear that there is no probable cause to continue the action? Is there any liability when a party maintains the action thereafter? In a case of first impression, the Hawaii Supreme Court recently addressed this issue.
In Arquette v. State, 290 P.3d 493 (Haw. 2012), the respondents initiated an action in 2004 against the petitioner (Arquette) and others, alleging that Arquette had participated in a scheme to sell long-term deferred annuities to elderly consumers through unfair or deceptive acts. The scheme allegedly involved Arquette and an insurance agent, an attorney (Wong), and others, who were accused of using Wong's name and law practice on mailings that offered information about elder law. Individuals who responded to the mailings were then contacted at their homes, where Arquette and others falsely identified themselves as "paralegals" working for Wong. After personal and confidential financial information was obtained from the persons who were contacted, Arquette and others allegedly marketed annuities to them without providing them with the information necessary for making an informed decision. In 2006, the action against Arquette was dismissed without prejudice.
In 2008, Arquette sued the respondents for malicious prosecution and other causes of action, based on both initiation and maintenance of the 2004 action. The trial court granted summary judgment for the respondents as to the claim for maintaining the 2004 action, and the Hawaii Intermediate Court of Appeals affirmed, ruling that Hawaii does not recognize a tort action for maintaining a prosecution when probable cause to continue no longer exists.
On appeal to the Hawaii Supreme Court, the court noted that such a cause of action has been recognized in Restatement § 674 and in 13 other states.
Explaining the rationale for this cause of action, the court explained:
Although litigation may be warranted in the eyes of the plaintiff at its commencement, if that plaintiff becomes aware that the litigation is no longer justified, then the plaintiff should terminate the litigation. Indeed, "litigation 'has a profound effect upon the quality of one's life that goes beyond the mere entitlement to counsel fees.'" [Young v. Allstate Ins. Co., 119 Haw. 403,] 421, 198 P.3d [666,] 684 [(2008)] (quoting Aranson v. Schroeder, 140 N.H. 359, 671 A.2d 1023, 1028 (1995)).
If a plaintiff fails to terminate litigation when he or she knows it would be appropriate to do so, then the same harms are inflicted on the defendant's quality of life that would have been inflicted if the plaintiff knew that the litigation was unjustified in the first instance. In order to properly guard against the harms associated with protracted litigation, the tort of maintaining malicious prosecution should be recognized.
Id. at 501.
The Arquette court concluded that "the tort of the continuation of a malicious prosecution is not an unwarranted enlargement of the current doctrine but, rather, logically stems from the policies underlying the tort." Id. at 504. The court set forth three elements for the cause of action, all of which must be satisfied to establish liability, as follows:
A workable standard for continuation of malicious prosecution is easily garnered from the elements that must be shown to prove the initiation of a malicious prosecution. Thus, the standard for continuing a malicious prosecution would be (1) that the prior proceedings were terminated in the plaintiff's favor, (2) that the prior proceedings were maintained without probable cause, and (3) that the prior proceedings were maintained with malice.
Id. at 503.
Examining the record, the court concluded that the respondents did have probable cause to bring the original complaint against Arquette. As to whether probable cause existed thereafter, the court found that throughout the proceedings, there had been a reasonable belief in the underlying facts of the case. Moreover, the court found no independent evidence of malice in continuing the prosecution.
Following the decision in Arquette, Hawaii now joins at least 13 other states in recognizing a cause of action in tort for maintaining a prosecution when probable cause to continue no longer exists.