Robb v. Chagrin Lagoons Yacht Club, Inc. - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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Robb et al., Appellees, v Chagrin Lagoons Yacht Club, Inc., et al. Appellants.
[Cite as Robb v. Chagrin Lagoons Yacht Club, Inc. (1996), Ohio St.3d.]
Torts -- Malicious prosecution -- Elements stated, including seizure of
person or property.
In order to state a cause of action for malicious civil prosecution in Ohio, four
essential elements must be alleged by the plaintiff: (1) malicious
institution of prior proceedings against the plaintiff by defendant, (2)
lack of probable cause for the filing of the prior lawsuit, (3) termination
of the prior proceedings in plaintiff's favor, and (4) seizure of plaintiff's
person or property during the course of the prior proceedings. (Crawford
v. Euclid Natl. Bank [1985], 19 Ohio St.3d 135, 19 OBR 341, 483
N.E.2d 1168, followed; Trussell v. General Motors Corp. [1990], 53
Ohio St.3d 142, 559 N.E.2d 732, distinguished.)

(No. 94-2141-- Submitted December 13, 1995-- Decided March 6,
1996.)
Appeal from the Court of Appeals for Lake County, No. 92-L-064.

The facts of this case are more intricate than the libretto of "The H.M.S.
Pinafore" and as full of intrigue and betrayal as "Mutiny on the Bounty."
Appellant Chagrin Lagoons Yacht Club, Inc. ("club") is a nonprofit
corporation located in Eastlake, Ohio. The club's present constitution was
adopted in April 1984. Section 1, Article 2 of the club constitution sets forth
the five different classes of membership in the club. Class B members have the
right to vote on various club matters, including the election of officers and
trustees. Class B members also have the right to be a candidate for any of the
seven offices in the club hierarchy and to serve as a trustee. The office of
Commodore is the club's highest ranking office. The board of trustees consists
of fourteen members, including the seven present officeholders, the immediate
past Commodore, and six other elected members.

In order to qualify as a Class B member, an individual must be the bona
fide owner or co-owner of a boat that is docked on the club premises. If a
Class B owner ceases to own a boat and does not purchase another before the

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end of the next calendar year, he sinks to Class C membership. A Class C
member has none of the office-holding or voting rights of a Class B member.

Prior to September 1991, appellants Jack Reese and Harry Faint, as well
as appellees Frank Robb, Charles Patterson, James Graham (now deceased),
Donald Miller and Robert Stickle, were all Class B members of the club.
According to the parties, in 1988, Faint had been Commodore; in 1989, it
seems Patterson held the office. In December 1989, a dispute arose as to
whether Faint was qualified to be elected Commodore again, because there was
some concern as to whether Faint qualified for Class B membership. A
grievance was held on the matter, with the board deciding that Faint was
qualified to serve. However, all was not shipshape.

Patterson filed an action in the trial court against the club and Faint,
seeking removal of Faint from the office of Commodore. The court dismissed
the action as to both defendants. On February 26, 1990, Patterson, this time
joined by Robb, Miller, Graham and Sherrill Flood, filed another action against
Faint and the club, making the same basic allegations as before. On May 17,

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1991, the trial court dismissed that case on the grounds of res judicata. The
Lake County Court of Appeals affirmed. (Robb v. Faint [Dec. 31, 1992], Lake
App. No. 91-L-078, unreported.)

Just prior to the filing of the second action, Reese filed a grievance with
the club's grievance committee against each of the appellees herein, alleging
that they had distributed to the membership confidential material concerning
Faint. After the second lawsuit was filed, the grievances were amended on
October 1, 1990, to include a charge of conduct unbecoming a member. When
the grievance committee was unable to amicably resolve the dispute, the
committee referred the matter to the trustees.

On January 21, 1991, the trustees met and recommended that the six
individuals named in the grievance (the five appellees plus Sherrill Flood) be
suspended from participation in membership meetings for three years and from
holding any club office, participating on club committees, or representing the
club in any way for five years. Pursuant to the constitution, a special

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membership meeting was called for February 11, 1991, to act on the trustees'
recommendation.

Before that meeting could be held, the appellees brought a third action in
the trial court in February 1991. The club and Reese were named as
defendants. In their complaint, appellees essentially alleged that the board had
not complied with the club's constitution in recommending their suspensions
from club activities. Appellees also asserted that the charges in the grievances
did not state proper grounds for discipline against them. On August 26, 1991,
the trial court granted appellants' motion to dismiss. The court held that the
grievances did state proper grounds for disciplinary action by the board. The
court further held that that the procedure followed by the board had been in
compliance with the club's constitution. Finally, the court concluded that since
the board's exercise of power had been fair and reasonable, it would not take
jurisdiction over the matter until a final disposition had been made.

Buoyed by the trial court's dismissal, the board held a special meeting on
the following day. Following a discussion of the situation, the board voted to

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rescind its prior recommendation, and decided instead to recommend that
appellees be expelled from the club. A special meeting of voting members was
set for September 5, 1991, and notice of that meeting was sent to each appellee.
In the notice, each appellee was advised that a final determination on the
grievances would be made at the meeting. None of appellees attended the
meeting, but they did send a letter to each voting member requesting that they
dismiss the grievances. However, the board's recommendation to expel each
appellee was adopted by the voting members. The members decided not to
expel Sherill Flood, whom the board also recommended be expelled.

Appellees were not ready to give up the ship. They continued this now-
titanic struggle with another wave of litigation. In March 1992, appellees
initiated the present action against appellants. In this, their fourth complaint,
appellees alleged that they had been denied the opportunity for a full hearing
on the grievances. They further alleged that the board had failed to follow the
required procedure when it changed its recommendation from suspension to
expulsion. Appellees sought as relief reinstatement as Class B members and

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monetary damages for emotional anguish and loss of equity in the value of the
club's assets.
Appellants
answered
appellees' complaint and asserted three
counterclaims against them. Appellants' claims were based upon allegations of
malicious prosecution, abuse of process, and breach of contract.

Both sets of parties filed motions for summary judgment. The trial court,
in separate orders, granted summary judgment to appellants on the claims of
appellees, and granted appellees summary judgment on all of appellants'
counterclaims.

Appellees appealed and appellants cross-appealed to the Lake County
Court of Appeals. The appellate court found in favor of appellees, determining
that the trial court had erred in granting summary judgment against them. The
court found that appellants had failed to follow the procedure set forth in the
club's constitution, and that appellees had been denied the opportunity to
present a defense. Therefore, the court reasoned, the trial court had improperly
awarded summary judgment.

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The appellate court affirmed the trial court's summary judgment against
appellants. The court found that appellants' malicious prosecution claim failed
due to the lack of any seizure of appellant's property, their abuse of process
claim failed due to the lack of demonstrating appellees' ulterior motive, and
their contract claim failed because Ohio does not recognize an action for
damages arising from the failure of a member of a nonprofit organization to
abide by the decisions of the corporate officers.

The cause is now before this court upon the allowance of a discretionary
appeal.
________

McCarthy, Lebit, Crystal & Haiman Co., L.P.A., Jeffrey A Huth and
Mark B. Cohn; Smith, Marshall & Weaver and Stephen C. Merriam, for
appellants.

Albert L. Purola, for appellees (Letitia Graham, substitute party)
__________

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Pfeifer, J. We reverse the appellate court on its ruling regarding whether
appellees were properly expelled from the club and on its ruling regarding
appellants' abuse of process claim. We affirm the appellate court's decisions
on appellants' malicious prosecution and contract actions.
I
Expulsion

This is a case about a yacht club expelling some of its members. This is
not the case of someone being denied his rights under the Constitution of the
United States. We thus adopt a more relaxed standard as to whether appellees'
due process rights were violated. We find that the appellants substantially
complied with the club's constitution and that appellants should have been
awarded summary judgment.

Section 4, Article 2 of the club's constitution states that when the club's
grievance committee is unable to amicably resolve a grievance, and it
determines that discipline will be needed to resolve the problem, notice of the

9

charges must be given to the affected member by certified mail. No sooner
than ten days after that notice "a formal closed hearing on the matter shall be
conducted by the Board of Trustees." After the hearing, the board makes a
recommendation which is voted upon by the voting members at a meeting. The
club constitution does not stipulate how much time must pass between the
trustees' recommendation and the meeting of the voting members, nor does it
state whether persons to be disciplined may be heard at the meeting of the
voting members.

Pursuant to Section 5, Article 2 of the club constitution, the voting
membership makes the final determination of whether to mete out discipline.
The fact that the trustee's hearing was closed to appellees does not mean that
they were denied an important right. The behavior for which the board
recommended discipline was not subject to dispute: appellees could not deny
that they had filed complaints against the club in the trial court.

More importantly, the most significant opportunity to be heard was at the
meeting of the voting membership. It was the voting membership who had the
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ultimate decision on appellees' fate. The trustees gave appellees at least seven
days' notice of the meeting. Appellees took advantage of that time and
communicated with the voting members through a letter. Appellees were not
denied an opportunity to be heard at the members' meeting-- appellees simply
chose not to attend. A discussion preceded the expulsion vote regarding each
appellee. The members' meeting was not a mere rubber stamp of the trustees'
recommendation. In fact, the board's recommendation regarding Flood was
rejected by the members.

Thus, the appellees had reasonable notice of the meeting at which the
expulsion vote would be taken. They were able to communicate with the
persons who would decide their fate. Appellees were not denied an
opportunity to attend the meeting or to be heard at the meeting. In short, they
knew the charges leveled against them and had a meaningful opportunity to do
something about them.

To substantially comply with the club's constitution, appellants had to
provide appellees notice and an opportunity to be heard. Appellants did so in a
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fair and reasonable manner. Accordingly, we reverse the appellate court and
find that the trial court properly granted summary judgment in favor of
appellants on the expulsion issue.

II
Malicious Prosecution

In Crawford v. Euclid Natl. Bank (1985), 19 Ohio St.3d 135, 19 OBR
341, 483 N.E.2d 1168, this court held that a plaintiff must satisfy four elements
to establish a claim of malicious civil prosecution:

"[I]n order to state a cause of action for malicious prosecution in Ohio,
four essential elements must be alleged by the plaintiff:(1) malicious institution
of prior proceedings against the plaintiff by defendant, * * * (2) lack of
probable cause for the filing of the prior lawsuit, * * * (3) termination of the
prior proceedings in plaintiff's favor, * * * and (4) seizure of plaintiff's person
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or property during the course of the prior proceedings * * * ." Crawford, 19
Ohio St.3d at 139, 19 OBR at 344, 483 N.E.2d at 1171.

In a later case, Trussell v. General Motors Corp. (1990), 53 Ohio St.3d
142, 559 N.E.2d 732, this court eliminated the element of arrest or seizure from
the claim of malicious criminal prosecution. In Trussell, this court noted that a
majority of states had eliminated the element of arrest or seizure from both
criminal and civil malicious prosecution. However, this court did not overrule
Crawford, but instead pointed out the key differences in the two types of
malicious prosecution claims. The court noted that a special stigma arises in
criminal cases:

"The tort of malicious criminal prosecution compensates the plaintiff for
the damage done to dignity and reputation caused by false accusation of a
crime. * * * The damage occurs whether the plaintiff is arrested or * * * haled
into court on a summons. Unlike the victim of malicious civil prosecution, the
victim of false criminal charges does not have the remedies provided by Civ.R.
11." Id. at 145-146, 559 N.E.2d at 736.
13

The
Trussell court noted that the seizure requirement was first instituted
by this court in a malicious civil prosecution case in Cincinnati Daily Tribune
v. Bruck (1900), 61 Ohio St. 489, 56 N.E. 198. The line of cases developing
malicious criminal prosecution, culminating in Rogers v. Barbera (1960), 170
Ohio St. 241, 10 O.O.2d 248, 164 N.E.2d 162, did not include the seizure
requirement. The distinction between civil and criminal cases had become
blurred in dicta in Kelly v. Whiting (1985), 17 Ohio St.3d 91, 17 OBR 213, 477
N.E.2d 1123, but the Trussell court clarified the distinction between the two in
the case law and in fact.

We believe that the interests of justice and judicial economy are best
served by continuing to require the element of seizure of property in malicious
civil prosecution cases. The damages from being sued civilly are of a different
character than from being arrested or haled into court on a criminal charge. A
person's freedom is not at stake in a civil trial. Civ.R. 12 allows for the quick
disposal of meritless claims, and Civ.R. 11 presents the best avenue to deal
early, quickly, and effectively with bogus lawsuits. Also, R.C. 2323.51(B)(1)
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allows for the award of attorney fees to victims of frivolous conduct in a civil
case.

We echo this court's concern in Crawford that removing the seizure
requirement from malicious civil prosecution claims would result in an
explosion of claims for malicious prosecution. There are opportunities already
built into the civil system to deal with a meritless lawsuit within that same
lawsuit, rather than instituting another suit. Every successful summary
judgment defendant should not be tempted to file a malicious prosecution
claim.

We therefore retain in malicious civil prosecution cases the long-held
and well-reasoned requirement of seizure of property, and leave to our Rules of
Civil Procedure, or the General Assembly, the method with which to deal with
meritless civil claims. A cause of action for malicious civil prosecution will lie
only in cases where there is a prejudgment seizure of property, i.e., where there
essentially has been a judgment against, and a concomitant injury suffered by, a
15

defendant before he has had a chance to defend himself. We therefore decline
to overrule this court's decision in Crawford.

Thus, in order to properly assert a claim of malicious civil prosecution,
appellants were required to satisfy the seizure element. Since appellants
presented no evidence of seizure, we affirm the judgment of the appellate court
on this issue.
III
Abuse of Process

In order to establish a claim of abuse of process, a plaintiff must satisfy
three elements: "(1) that a legal proceeding has been set in motion in proper
form and with probable cause;(2) that the proceeding has been perverted to
attempt to accomplish an ulterior purpose for which it was not designed; and
(3) that direct damage has resulted from the wrongful use of process."
Yaklevich v. Kemp, Schaffer & Rowe Co., L.P.A (1994), 68 Ohio St.3d 294,
298, 626 N.E.2d 115, 118.
16

Appellants argue that appellees' barrage of lawsuits constituted an abuse
of process, and specifically that the third and fourth actions were initiated to
stop the voting members from acting on the board's disciplinary
recommendations. The appellate court found that appellants could not prove
their case as to the element of appellees' ulterior motive. We disagree, and
believe a genuine issue of material fact exists as to whether appellees had an
ulterior motive for filing their lawsuits.

"`[A]buse of process' differs from `malicious prosecution' in that the
former connotes the use of process properly initiated for improper purposes,
while the latter relates to the malicious initiation of a lawsuit which one has no
reasonable chance of winning." Clermont Environmental Reclamation Co. v.
Hancock (1984), 16 Ohio App.3d 9, 11, 16 OBR 9, 12, 474 N.E.2d 357, 362.
In an abuse of process case, "[t]he improper purpose usually takes the form of
coercion to obtain a collateral advantage, not properly involved in the
proceeding itself, such as the surrender of property or the payment of money,
by the use of the process as a threat or a club." Prosser & Keeton on Torts, (5
17

Ed. 1984), 898, Section 121. Simply, abuse of process occurs where someone
attempts to achieve through use of the court that which the court is itself
powerless to order.

We believe that reasonable minds could conclude that appellees
instituted at least one of their suits with the intention to use it as a club to
coerce the membership to vote in their favor. Clearly, the trial court had no
authority to order club members how to vote. In opposition to appellees'
motion for summary judgment on the issue, appellants presented evidence
which could be construed as proof of an ulterior motive. In their September 3,
1991 letter to the members, appellees stated, in part:

"Without the Grievances, there would not have been a law suit * * * .
Remember, no grievances, the case is dead and you members stop paying * * *.
VOTE TO DROP THE GRIEVANCES." (Emphasis sic.)
18

Appellee Graham also stated in a deposition that "the reasoning behind
our litigation was, to keep the membership from, in fact, rejecting our
membership."

There are sufficient facts in their favor for appellants to successfully
prosecute a claim for abuse of process. Accordingly, we overrule the court of
appeals on this issue.
IV
Contract Action

Finally, appellants appeal the holding of the appellate court that a
nonprofit corporation cannot maintain an action for damages incurred as a
result of a member's failure to abide by the rules and regulations of the
corporation. The appellants' remedy lies within the contract between the club
and its members. The club exercised its right of expulsion thereunder. We
decline to recognize any action for damages for appellees' alleged breach, and
therefore affirm the appellate court on this issue.
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Judgment affirmed in part,
reversed in part, and cause remanded.

MOYER, C.J., WRIGHT and COOK, JJ., concur.

RESNICK, J., concurs in part and dissents in part.

DOUGLAS and F.E. SWEENEY, JJ., dissent.
Alice Robie Resnick, J., concurring in part and dissenting in part. I
agree in substance with the majority's statement that "[t]o substantially
comply with the club's constitution, appellants had to provide appellees
notice and an opportunity to be heard." However, as the court of appeals
correctly points out, "Article 2, Section 4 of the club's constitution states
that if the grievance committee cannot resolve the dispute raised in a
grievance, notice of the charges must be forwarded to the member by
certified mail. Section 4 then expressly states that a formal closed `hearing'
must be conducted by the board of trustees, which must afterwards make a
recommendation as to whether disciplinary action is warranted.
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"As appellants [Frank Robb et al.] aptly note, the trial court's entire
analysis as to whether they had received due process was predicated upon
the determination that the special meeting of the voting members constituted
a `hearing.' However, the plain wording of the club's constitution indicates
that the `hearing' on a grievance is to be held before the board, not the
voting members."

Clearly, pursuant to this constitution, the grievant must be afforded the
opportunity to be heard and to present a defense at the board meeting.
Appellees were not afforded this opportunity. While I strongly believe that
resolution of disagreements within a private club should be resolved within
that club, the club does not have carte blanché to proceed however it pleases.
Due process must still be provided a member. The process that is due a
grievant member in such circumstances is that which is set forth in the club's
regulations, constitution and by-laws.

The majority mistakenly determines that the club "substantially"
complied with the club's constitution when in actuality there was not even a
21

semblance of compliance. I agree with the court of appeals that the "board
of trustees acted beyond their power" by not holding a proper hearing. Due
to their failure to comply with Section 4, Article 2 of the club constitution
regarding notice and hearing, appellants should not be entitled to judgment
as a matter of law. I would affirm the judgment of the court of appeals in its
entirety.

DOUGLAS, J., dissenting. I must respectfully dissent. Once again, a
majority of this court misses the opportunity to bring the law of Ohio into at
least the twentieth century. By continuing the archaic requirement, in cases of
malicious civil prosecution in Ohio, that a plaintiff must show that his or her
person or property was seized during the underlying proceedings, the majority
grants absolute immunity from suit to a litigant who has initiated a prior law
suit with actual malice and without any probable cause. Seldom, if ever, will a
party's person or property be seized in a civil suit.

Unfortunately, spurious suits against "deep-pocket" or "target"
defendants have become a significant problem. By today's majority decision,
22

target defendants such as judges, doctors, newspapers and public officials are
left without a remedy even though the suits brought against them have no basis
in law or fact. Simply put, this is unfair and wrong.

It is further interesting to note that the majority does not even cite, never
mind discuss, Border City S. & L. Assn. v. Moan (1984), 15 Ohio St.3d 65, 15
OBR 159, 472 N.E.2d 350. Therein, seizure of a person or property was not a
requirement that had to be met before a suit such as the one now before us
would lie. With regard to this entire question, I respectfully refer any
interested reader to the dissenting opinions of then Chief Justice Celebrezze
and myself in Crawford v. Euclid Natl. Bank (1985), 19 Ohio St.3d 135, 19
OBR 341, 483 N.E.2d 1168.
I
dissent.
F.E. SWEENEY, J., concurs in the foregoing dissening opinion.

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