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Penwag Property Co. v. Landau

Decided: March 16, 1977.

THE PENWAG PROPERTY CO., INC., A CORPORATION OF THE STATE OF NEW YORK AND THE PENWAG PROPERTY CO., INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFFS-APPELLANTS AND CROSS-RESPONDENTS,
v.
DAVID LANDAU, DEFENDANT-RESPONDENT AND CROSS-APPELLANT



Carton, Kole and Larner. The opinion of the court was delivered by Larner, J.A.D. Kole, J.A.D. (concurring). Carton, P.J.A.D. (dissenting in part).

Larner

[148 NJSuper Page 496] Plaintiff landlord brought this action in the Chancery Division of the Superior Court seeking a judicial declaration that defendant tenant breached a commercial lease by refusing to subordinate to a mortgage and praying for possession and damages. Defendant generally denied the allegations of the complaint and counterclaimed for a declaration that his lease is valid and subsisting; that

he is not required to subordinate to the mortgage as sought by plaintiff, and for damages, costs and counsel fees for "malicious use of process" in prosecuting the litigation against him.

After protracted pretrial proceedings and a lengthy trial the judge rendered a full and exhaustive opinion in which he entered judgment in favor of defendant on the main issues in the litigation, declaring that defendant did not breach the lease, that it was valid and subsisting, and that the mortgage to which plaintiff sought defendant's subordination was in fact subordinate to the lease. In addition, the judge entered judgment in favor of the defendant on the third counterclaim, designated by the judge as "malicious abuse of process." A subsequent trial on damages with respect to that counterclaim resulted in a finding of compensatory damages consisting of counsel fees and costs of defense of the main action in the sum of $19,000 and punitive damages in the amount of $20,000.

Plaintiff appeals from the whole of the judgments entered on the complaint and counterclaim. Defendant cross-appeals from the quantum of damages awarded on his counterclaim.

We find from our review of the record that the judgment entered on the issues of the litigation relating to the lease and the rights of the parties thereunder, and the explicit and detailed findings of the court, are overwhelmingly supported by substantial credible evidence and the applicable law. And in view of the fact that a major factor in the trial judge's determination was his evaluation of the credibility of the actors in the controversy, his conclusion is unassailable on appeal. Rova Farms Resort v. Investors Ins. Co. , 65 N.J. 474, 484 (1974); State v. Johnson , 42 N.J. 146, 162 (1964); Sandler v. Lawn-A-Mat Chem. & Equip. Corp. , 141 N.J. Super. 437, 446-447 (App. Div.), certif. den. 71 N.J. 503 (1976).

From our vantage point the major issue for appellate determination is the propriety of the damage award on defendant's

counterclaim couched in terms of malicious use of process and converted in the trial judge's opinion to an action for malicious abuse of process.

The judge based his affirmative judgment for defendant on the counterclaim on the same factual findings as those leading to the dismissal of plaintiff's complaint. In essence, these findings concluded that plaintiff and its officers contrived to dispose of the lease and tenant by creating a sham mortgage and improperly demanding that the lessee subordinate to that mortgage as part of a preconceived plan to wipe out a burdensome lease through ultimate foreclosure or threat of foreclosure of the mortgage. From these findings the judge proceeded to the conclusion that this fraudulent or improper conduct culminated in perverted use of the lawsuit herein with an ulterior and improper motive, creating a valid basis for a claim of malicious abuse of process.

Our analysis of the record and the judge's factual findings lead to the conclusion that there is no basis for denominating the cause of action as one for malicious abuse of process. The complaint sought a declaratory judgment that defendant breached the lease and a judgment for possession and damages. Regardless of the lack of merit of plaintiff's position, it was entitled to invoke the judicial process to vindicate the same, including a demand for possession of the premises. And even when the litigation is inspired by malicious or other improper motives, that in itself is not sufficient to sustain a complaint for malicious abuse of process. See Earl v. Winne , 34 N.J. Super. 605, 614 (Cty. Ct. 1955). Such a cause of action arises from the employment of legal process in a manner not contemplated by law. "Regular and legitimate use of process, though with a bad intention, is not malicious abuse of process." ADM Corp. v. Speedmaster Packaging Corp. , 384 F. Supp. 1325, 1349 (D.N.J. 1974), mod. on other grounds 525 F.2d 662 (3 Cir. 1975).

In discussing the difference between malicious use of process and malicious abuse of process, the Court of Errors

and Appeals noted in the leading case of Ash v. Cohn , 119 N.J.L. 54 (E. & A. 1937):

An action for malicious abuse of process is distinguished from an action for malicious use of process in that the action for abuse of process lies for the improper, unwarranted and perverted use of process after it has been issued while that for the malicious use of it lies for causing process to issue maliciously and without reasonable or probable cause. Grainger v. Hill , 4 Bing. N.C. 212. Thus it is said, in substance, that the distinction between malicious use and malicious abuse of process is that the malicious use is the employment of process for its ostensible purpose, ...


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