Lawyer’s defamation suit against former client founders on absolute privilege

In Sexter & Warmflash, P.C. v Margrabe, 2007 NY Slip Op 00065, a woman hired lawyers to represent her and her brother in a dispute with a cousin. The lawyers charged a reduced fee but could charge a 50% premium upon resolution of the dispute. The dispute was settled, but the woman thought the lawyers were progressing too fast towards final resolution (and their premium payment) at the expense of her interests. She fired them and copied her brother in on her none-too-complimentary letter of dismissal, which she also sent to two other lawyers she had retained for second opinions. Essentially, she alleged a concurrent conflict between duty and interest, as well as incompetence. The lawyers sued her in defamation for at least US$1 million, and then represented themselves, a step which raises real questions in my mind about their strategic competence, one of the things criticised in the controversial letter. The case was summarily dismissed. The New York Supreme Court Appellate Division‘s statement of the law of absolute privilege is reproduced:

‘An absolute privilege affords a speaker or writer immunity from liability for an otherwise defamatory statement to which the privilege applies, regardless of the motive with which the statement was made (see Park Knoll Assoc. v Schmidt, 59 NY2d 205, 208-209 [1983]; Toker v Pollak, 44 NY2d 211, 219 [1978]; see also Prosser & Keaton, Torts § 114, at 816 [5th ed] [absolute privilege applies “without regard to (the defendant’s) purpose or motive, or the reasonableness of his conduct”]; 2 Dobbs, Torts § 412, at 1153 [2001] [absolute privilege “is not defeated by the defendant’s malice”]). Thus, the protection of an absolute privilege, unlike a qualified privilege, “is not conditioned upon the honest and reasonable belief that the defamatory matter is true or upon the absence of ill will on the part of the actor” (3 Restatement [Second] of Torts, at 243). Absolute privilege has been recognized in “a very few situations where there is an obvious policy in favor of permitting complete freedom of expression, without any inquiry as to the defendant’s motives” (Prosser & Keaton, supra, at 816).

Judicial proceedings are among the settings in which an absolute privilege is recognized. The rule is that “a statement made in the course of legal proceedings is absolutely privileged if it is at all pertinent to the litigation” (Lacher v Engel, 33 AD3d 10, 13 [2006], citing Youmans v Smith, 153 NY 214, 219 [1897]; see also Mosesson v Jacob D. Fuchsberg Law Firm, 257 AD2d 381, 382 [1999], lv denied 93 NY2d 808 [1999]; 43A NY Jur 2d, Defamation and Privacy § 154; Kreindler, Rodriguez, Beekman & Cook, New York Law of Torts § 1:50, at 53 [14 West’s NY Prac Series 1997]). The privilege extends to judge, jurors, counsel, witnesses, and, as relevant here, the parties to the proceeding (see Park Knoll Assoc., 59 NY2d at 209)^[FN4]. The principle [*8]underlying the absolute privilege for judicial proceedings is that “the proper administration of justice depends upon freedom of conduct on the part of counsel and parties to the litigation,” which freedom ” tends to promote an intelligent administration of justice'” (People ex rel. Bensky v Warden of City Prison, 258 NY 55, 59-60 [1932], quoting Marsh v Ellsworth, 50 NY 309, 312 [1872]). As a matter of public policy, the possible harm to individuals barred from recovering for defamatory statements made in connection with judicial proceedings is deemed to be “far outweighed by the need . . . to encourage parties to litigation, as well as counsel and witnesses, to speak freely in the course of judicial proceedings” (Martirano v Frost, 25 NY2d 505, 508 [1969]).

In view of the public policy to permit persons involved in a judicial proceeding to write and speak about it freely among themselves, pertinent statements made in the course of such proceedings are afforded the protection of privilege, ” irrespective of the motive’ with which [the statements] are made” (Wiener v Weintraub, 22 NY2d 330, 331 [1968], quoting Marsh, 50 NY at 311-312; see also Mosesson, 257 AD2d at 383; Ticketmaster Corp. v Lidsky, 245 AD2d 142 [1997]; Allan & Allan Arts v Rosenblum, 201 AD2d 136, 138 [1994], lv denied 85 NY2d 921 [1995], cert denied 516 US 914 [1995]; 2 PJI3d 3:31, supra, at 349; Kreindler, Rodriguez, Beekman & Cook, supra, at 53]). Stated otherwise, the judicial proceedings privilege is extended to pertinent statements made in the course of litigation “no matter how great the personal malice of the writer” (Pecue v West, 233 NY 316, 319 [1922]).

While it is true that the judicial proceedings privilege may be “abused,” and, in that event, “protection is withdrawn” (Youmans, 153 NY at 220), the authorities make clear that the sole criterion of whether such abuse has occurred is the pertinence of the statement in question to the proceedings ^[FN5]. “It is only when the language used goes beyond the bounds of reason and is so clearly impertinent and needlessly defamatory as not to admit of discussion that the privilege is lost” (Bensky, 258 NY at 59). Thus, in the case of a defamatory statement that was obviously [*9]impertinent to the judicial proceeding in which it was made, the privilege is withdrawn because the malice of the speaker or writer is inferred from the statement’s impertinence. However, an offending statement pertinent to the proceeding in which it was made is absolutely privileged, regardless of any malice, bad faith, recklessness or lack of due care with which it was spoken or written, and regardless of its truth or falsity (see Andrews v Gardiner, 224 NY 440, 446 [1918] [the “statements may have been false, but they were not impertinent”]; Grasso v Mathew, 164 AD2d 476, 480 [1991], lv dismissed 77 NY2d 940 [1991], lv denied 78 NY2d 855 [1991] [“whether true or not, the challenged statement . . . (was) absolutely privileged, as a matter of law”]).

Whether a statement is “at all pertinent to the litigation” (Mosesson, 257 AD2d at 382) is determined by an “extremely liberal” test (Black v Green Harbour Homeowners’ Assn., Inc., 19 AD3d 962, 963 [2005]). A statement made in the course of judicial proceedings is privileged “if, by any view or under any circumstances, it may be considered pertinent to the litigation” (Martirano, 25 NY2d at 507; see also Lacher, 33 AD3d at 14). Thus, “the narrow and technical rules normally applied to determine the admissibility of evidence” (Martirano, 25 NY2d at 508) are not used to determine a statement’s pertinence for purposes of the privilege analysis. To be actionable, a statement made in the course of judicial proceedings “must be so outrageously out of context as to permit one to conclude, from the mere fact that the statement was uttered, that it was motivated by no other desire than to defame” (id.; see also Cavallaro v Pozzi, 28 AD3d 1075, 1077 [2006]; Grasso, 164 AD2d at 479). Stated otherwise, “the possibly pertinent [for purposes of the judicial proceedings privilege] need be neither relevant nor material to the threshold degree required in other areas of the law,” and “the barest rationality, divorced from any palpable or pragmatic degree of probability, suffices” to establish the offending statement’s pertinence to the litigation (Seltzer v Fields, 20 AD2d 60, 62 [1963], affd 14 NY2d 624 [1964]; see also Mosesson, 257 AD2d at 382; Grasso, 164 AD2d at 479; 43A NY Jur 2d, Defamation and Privacy § 154).

The pertinence of a statement made in the course of judicial proceedings is a question of law for the court (Bensky, 258 NY at 60; Mosesson, 257 AD2d at 382; Grasso, 164 AD2d at 479). In answering that question, any doubts are to be resolved in favor of pertinence (Mosesson, 257 AD2d at 382, citing Seltzer, 20 AD2d at 63; see also Baratta v Hubbard, 136 AD2d 467, 469 [1988]). Pertinence is properly determinable on a motion to dismiss addressed to the pleadings and documentary evidence alone (see e.g. Arts4All, Ltd. v Hancock, 5 AD3d 106 [2004]; Carniol v Carniol, 288 AD2d 421, 422 [2001]; Impallomeni v Meiselman, Farber, Packman & Eberz, 272 AD2d 579 [2000], lv denied 95 NY2d 764 [2000]; Ticketmaster Corp. v Lidsky, 245 AD2d 142, supra; Lieberman v Hoffman, 239 AD2d 273 [1997]; Feldman v Bernham, 6 AD2d 498, 500 [1958], affd 7 NY2d 772 [1959]).

The absolute privilege is not limited to statements made on the record during oral testimony or argument, or set forth in formal litigation documents, such as pleadings, affidavits, and briefs. In the interest of “encourag[ing] parties to litigation to communicate freely in the course of judicial proceedings” (Grasso, 164 AD2d at 480), the privilege is extended to all pertinent communications among the parties, counsel, witnesses, and the court. Whether a [*10]statement was made in or out of court, was on or off the record, or was made orally or in writing, the rule is the same – the statement, if pertinent to the litigation, is absolutely privileged (see Martirano v Frost, 25 NY2d 505, supra [party’s unsworn statement in open court]; Youmans v Smith, 153 NY 214, supra [letter from attorney to witness subpoenaed for trial]; Arts4All, Ltd. v Hancock, 5 AD3d at 108 [letter from witness to judge]; Impallomeni v Meiselman, Farber, Packman & Eberz, 272 AD2d at 580 [letter from attorney to judge]; Lemberg v Blair Communications, 258 AD2d 291, 292-293 [1999] [out-of-court verbal exchange between attorneys]; Papa v Regan, 256 AD2d 452, 453 [1998] [communications among parties to a matrimonial action and their respective counsel]; Jones Lang Wootton USA v LeBoeuf, Lamb, Greene & MacRae, 243 AD2d 168, 182-183 [1998], lv dismissed 92 NY2d 962 [1998] [statement at settlement conference]; Caplan v Winslett, 218 AD2d 148, 152-153 [1996] [out-of-court verbal exchange between attorneys]; Klein v McGauley, 29 AD2d 418, 419 [1968] [off-the-record statement by attorney to adverse party in court clerk’s office, in presence of others]; see also O’Brien v Alexander, 898 F Supp 162, 170, 171 [SD NY 1995], mod on other grounds 101 F3d 1479 [2d Cir 1996] [statements by party’s representatives to potential trial witnesses; applying New York law]).

As the foregoing authorities would lead one to expect, New York courts have consistently held that a communication of the kind at issue here – a letter among parties and counsel on the subject of pending or prospective litigation – enjoys the protection of the absolute privilege for judicial proceedings. For example, the Third Department recently held that the absolute privilege applied to statements in a letter from the board of directors of a homeowners’ association to the association’s members reporting on the status of litigation to which the association was a party (see Black, 19 AD3d at 963). Similarly, in Vodopia v Ziff-Davis Publ. Co. (243 AD2d 368 [1997]), this Court affirmed the dismissal of an attorney’s defamation claim that was based on “a letter written by opposing counsel and sent to [the attorney] and directly to [the attorney’s] client during the course of negotiations to settle a copyright lawsuit threatened by [the attorney’s] client” (id.). We held that the allegedly defamatory statements in the letter were absolutely privileged because the letter was written “in an attempt to settle the claim by [the attorney’s] client, and its contents . . . were relevant and pertinent to that claim” (id.; see also Lieberman v Hoffman, 239 AD2d 273, supra [statements in letter from attorneys to their client’s opponent, concerning client’s claims against opponent on which suit was contemplated, were absolutely privileged]). The absolute privilege has also been held to apply to statements in a letter concerning ongoing matrimonial litigation from one divorcing spouse to the other and to the writer’s own attorney (see Grasso, 164 AD2d at 478, 479); and to statements in a letter from an officer of a bankrupt corporation to the corporation’s directors, the members of its creditors’ committees, and other parties interested in the corporation’s bankruptcy case (see Friedman v Alexander, 79 AD2d 627, [*11]628 [1980]).^[FN6]‘