ATTORNEYS FOR APPELLANT
James P. Fenton
Fort Wayne, Indiana
Cathleen M. Shrader
Fort Wayne, Indiana
ATTORNEYS FOR APPELLEES
Mark E. GiaQuinta
Robert W. Eherenman
Fort Wayne, Indiana
SUPREME COURT OF INDIANA
CITY OF NEW HAVEN, )
Appellant (Petitioner Below), )
) Indiana Supreme Court
v. ) Cause No. 90S02-0101-CV-35
PENNY (BRADTMUELLER) ) Indiana Court of Appeals
REICHHART and CHEMICAL ) Cause No. 90A02-9904-CV-247
WASTE MANAGEMENT OF )
INDIANA, L.L.C., )
Appellees (Respondent Below). )
APPEAL FROM THE WELLS CIRCUIT COURT
The Honorable David L. Hanselman, Sr., Judge
Cause No. 90C01-9202-CP-25
ON PETITION FOR TRANSFER
June 7, 2001
Penny Reichhart is an employee of Chemical Waste Management of Indiana (CWMI) and
a resident taxpayer of the City of New Haven. She sued to
challenge New Havens attempt to annex CWMIs facility and New Haven counterclaimed for
malicious prosecution. One element of New Havens malicious prosecution claim is that
Reichharts suit was brought without probable cause. We hold that lack of
probable cause is not satisfied simply because a citizen initiates a taxpayer challenge
financed by her employer, and that Reichhart had probable cause to bring her
Factual and Procedural Background
On November 26, 1991, New Haven passed a municipal ordinance to annex land
on which CWMI operated a hazardous waste disposal facility. Two weeks later,
Penny Reichhart, an employee of CWMI and a resident of New Haven, filed
a Citizen Taxpayer Challenge pursuant to the Indiana Declaratory Judgment Act.
alleged that the annexation ordinance was enacted in violation of Indianas Open Door
law. The trial court immediately issued a temporary restraining order against the
Reichharts lawsuit was financed by her employer, CWMI. In response to the
restraining order, New Haven withdrew the annexation ordinance and filed a counterclaim against
Reichhart and a third party complaint against CWMI, alleging that Reichharts lawsuit, financed
by CWMI, constituted an abuse of process. The trial court denied Reichharts
and CWMIs joint motion for summary judgment on the counterclaim. That order
was certified for interlocutory appeal and the Court of Appeals reversed, holding that
Reichhart and CWMI were entitled to summary judgment on the abuse of process
Reichhart v. City of New Haven, 674 N.E.2d 27, 34 (Ind.
Ct. App. 1996) (Reichhart I).
While the interlocutory appeal was pending in the Court of Appeals, New Haven
amended its counterclaim and third-party complaint to add a count of malicious prosecution.
After the Court of Appeals ruled, Reichhart and CWMI moved to dismiss
the malicious prosecution claim on three grounds. First, they argued that taxpayer
petitions such as Reichharts are absolutely privileged and a governmental entity cannot maintain
an action for malicious prosecution in response to them. Second, they contended
that the Court of Appeals opinion in
Reichhart I constituted the law of
the case and barred New Havens action for malicious prosecution. Third, they
argued that a governmental entity is precluded from seeking an award of punitive
In February 1999, the trial court granted Reichharts and CWMIs motion to dismiss
but did not specify its reasons. New Haven appealed that decision.
The Court of Appeals affirmed the trial court, holding that although the action
was not barred by the law of the case doctrine, the First Amendment
protects a citizens right to petition the government without regard to the citizens
motivation. Because Reichhart, as a taxpayer, was a qualified petitioner with a
legitimate claim against a governmental entity, New Haven was barred from pursuing a
malicious prosecution claim against her and CWMI.
City of New Haven v.
Reichhart, 729 N.E.2d 600, 606-07 (Ind. Ct. App. 2000) (Reichhart II).
We granted transfer in order to clarify Indiana law regarding the nature and
extent of a taxpayers privilege to pursue a challenge against a governmental entity
without risking a malicious prosecution claim.
Standard of Review
It is well settled that a complaint may not be dismissed for failure
to state a claim upon which relief can be granted unless it is
clear on the face of the complaint that the complaining party is not
entitled to relief.
McQueen v. Fayette County Sch. Corp., 711 N.E.2d 62,
65 (Ind. Ct. App. 1999). We view the pleadings in the light
most favorable to the nonmoving party and draw every reasonable inference in favor
of that party. Borgman v. Aikens, 681 N.E.2d 213, 216 (Ind. Ct.
App. 1997). When reviewing a motion to dismiss for failure to state
a claim, this court accepts as true the facts alleged in the complaint.
We will affirm a successful Trial Rule 12(B)(6) motion when a complaint
states a set of facts, which, even if true, would not support the
relief requested in that complaint. We will affirm the trial courts ruling
if it is sustainable on any basis found in the record. Minks
v. Pina, 709 N.E.2d 379, 381 (Ind. Ct. App. 1999).
I. Malicious Prosecution
The Court of Appeals explored two possible justifications for the trial courts judgment
Reichhart II. After concluding that the law of the case doctrine
did not dispose of the issue, the Court of Appeals analyzed Reichharts right
of petition under the First Amendment as a bar to New Havens claim.
Reichhart II, 729 N.E.2d at 605. We believe the first question
presented by this appeal is whether a claim of malicious prosecution is sustainable
on these facts without regard to the potential implications of the First Amendment.
It is the duty of the court not to enter upon the
consideration of a constitutional question where the court can perceive another ground on
which it may properly rest its decision. Bayh v. Sonnenburg, 573 N.E.2d
398, 402 (Ind. 1991) (quoting Applegate v. State ex rel. Bowling, 158 Ind.
119, 124, 63 N.E. 16, 18 (1901)). Whether a citizen who
pursues a taxpayer challenge is vulnerable to a common law malicious prosecution claim
is one of first impression in Indiana. Indeed, that issue has been
before any state or federal court on only a handful of occasions.
City of Long Beach v. Bozek, 661 P.2d 1072 (Cal. 1983); Zeller v.
Consolini, 758 A.2d 376 (Conn. App. Ct. 2000), Cate v. Oldham, 450 So.2d
224, 226 (Fla. 1984). Given the dearth of cases in Indiana and
elsewhere, the common law doctrine of malicious prosecution has not been thoroughly examined
in the context of taxpayer challenges.
The essence of malicious prosecution rests on the notion that the plaintiffin this
case, New Havenhas been improperly subjected to legal process.
Ziobron v. Crawford,
667 N.E.2d 202, 208 (Ind. Ct. App. 1996). There are four elements
of a malicious prosecution claim: (1) the defendant (Reichhart and/or CWMI) instituted or
caused to be instituted an action against the plaintiff (New Haven); (2) the
defendant acted with malice in doing so; (3) the defendant had no probable
cause to institute the action; and (4) the original action was terminated in
the plaintiffs favor. Trotter v. Indiana Waste Sys., 632 N.E.2d 1159, 1164
(Ind. Ct. App. 1994). It is clear that the first and fourth
elements are satisfied in the present case: Reichhart instituted the taxpayer challenge against
New Haven and her claim was dismissed with prejudice by the trial court.
Reichhart I, the Court of Appeals addressed the improper process element of
New Havens abuse of process claim against Reichhart. The Court of Appeals
concluded that Reichharts taxpayer challenge was procedurally and substantively proper and was authorized
by statute and thus legitimate.
Reichhart I, 674 N.E.2d at 32.
Reichhart argues that this finding establishes that she had probable cause to file
the suit and, therefore, that the malicious prosecution claim also falls. But
as the Court of Appeals correctly pointed out in Reichhart II, the probable
cause element of malicious prosecution is not identical to the improper process element
of abuse of process. The test of an improper process is whether
the legal steps were procedurally and substantively proper under the circumstances. Reichhart
I, 674 N.E.2d at 32. In contrast, probable cause exists when a
reasonably intelligent and prudent person would be induced to act as did the
person who is charged with the burden of having probable cause. Maynard
v. 84 Lumber Co., 657 N.E.2d 406, 409 (Ind. Ct. App. 1995).
Given the differences between the definitions of the two elements, the Court of
Appeals concluded that it could not insinuate probable cause into its first ruling.
Reichhart II, 729 N.E.2d at 604.
We agree that the ruling in
Reichhart I was not dispositive of New
Havens malicious prosecution claim. That does not mean, however, that the trial
court could not find, as a matter of law, that Reichhart had probable
cause to file a taxpayer challenge. Reichharts taxpayer challenge alleged that New
Havens proposed annexation has caused or threatens to cause a waste of public
funds and will cause or contribute to serious financial and other burdens to
the city. The Court of Appeals has noted on a number of
occasions that declaratory judgment proceeding brought by city taxpayers are appropriate when the
city common councils actions:
are clearly or patently illegal, or where the council acts without jurisdiction over
the subject matter, or where there is an unmistakable abuse of discretion in
the councils decision to annex, or where wastage of public funds is present
or imminent and is something more than the furnishing of the normal services
and facilities attendant legal annexation.
Prock v. Town of Danville, 655 N.E.2d 553, 557 (Ind. Ct. App. 1995)
(citing Matter of the North I Annexation Area to City of Fort Wayne,
652 N.E.2d 878, 879 (Ind. Ct. App. 1995) and Montagano v. City
of Elkhart 149 Ind. App. 283, 290-92, 271 N.E.2d 475, 480 (1971).
In Count I of her lawsuit, Reichhart alleged that New Havens consideration of
the annexation ordinance violated the Indiana Open Door statute. In response, the
trial court granted a temporary restraining order and New Haven voluntarily withdrew the
ordinance. In a memorandum of law to the trial court, New Haven
seemed to concede that it had violated the statute, and pronounced that [t]he
ordinance will be re-introduced in strict conformity with the terms of the Courts
Order and in compliance with the substantive portions of the Open Door laws.
The Court of Appeals properly concluded that New Havens violation of the
Open Door law in its initial consideration of the annexation ordinance meant that
the city common council lacked jurisdiction to act on the ordinance, and wastage
was certain to occur.
Reichhart II, 729 N.E.2d at 607. We
therefore agree with the Court of Appeals that Reichharts claim was legitimate.
The related but different issue of Reichharts probable cause to initiate her challenge
was not addressed by Reichhart I. However, we conclude that the same
undisputed facts demonstrate that a reasonably intelligent and prudent person in Reichharts place
could believe that New Haven was guilty of the charges laid out in
her taxpayer challenge. This constitutes probable cause for purposes of New Havens
claim of malicious prosecution, and requires its dismissal as a matter of law.
II. Right of Petition
Because we have determined that Reichhart had probable cause to file her lawsuit,
and therefore New Havens malicious prosecution claim was properly dismissed by the trial
court, we need not address whether the First Amendment right to petition the
government precludes a malicious prosecution action based on an attempt to exercise a
statutory right to challenge the validity of a governmental action. Ind.Code §
; United Mine Workers, Dist. 12 v. Illinois Bar Assn, 389 U.S.
217, 222 (1967) ([T]he rights to assemble peaceably and to petition for redress
of grievances are among the most precious of liberties safeguarded by the Bill
We do, however, disagree with New Haven that the Court of Appeals opinion
was as expansive as New Haven claims. Noting that this was a
question of first impression in Indiana, the Court of Appeals turned to United
States Supreme Court cases which considered immunity from
malicious prosecution charges in the
context of the Sherman Anti-Trust Act and the National Labor Relations Act.
In those arenas, the Court of Appeals noted, it is settled that the
First Amendment protects a citizens right of petition regardless of intent. Reichhart
II, 729 N.E.2d at 606. Applying the same principle, the court held
that: where, as here, a qualified petitioner brings a legitimate claim against a
governmental entity in the manner prescribed by law, that entity is prohibited from
pursuing a malicious prosecution claim against the petitioner regardless of her motivation in
bringing the petition. Id.
On appeal, New Haven contends that:
the ruling of the Court of Appeals means that any person may sue
any state, county, or municipal entity, or any public school corporation or state
university in Indiana, with an evil and malicious purpose and without probable cause,
so long as there is standing and there appears to be no abuse
In effect, New Haven argues that Reichhart II nullifies the common law of
malicious prosecution with respect to Indiana governmental entities, collapses the torts of malicious
prosecution and abuse of process and, under the First Amendment, nullifies various state
statutes and court rules.
New Havens view of the Court of Appeals opinion appears to stem from
footnote 10 of the opinion:
We do not agree with Reichharts broad assertion that she had an absolute
privilege to maintain a taxpayer challenge without risking a malicious prosecution claim.
It is more accurate to say that her taxpayer challenge was privileged because
she was a qualified petitioner who brought her claim against the City in
the manner prescribed by law.
Id. at 607. As New Haven points out, this footnote does not
specify that the claim must be legitimate. Yet the opinion takes care
to establish that Reichharts claim was legitimate
and makes it clear that she
was entitled to immunity from the malicious prosecution action because she had both
standing and grounds to bring the taxpayers challenge. Id. New Haven
asserts that the words in the manner prescribed by law mean a mere
procedural hurdle and will therefore open the door for a flood of frivolous,
malevolent taxpayer challenges sheltered from malicious prosecution actions. We do not believe
this accurately captures the holding of the Court of Appeals. Instead, we
think it is clear that the court found a limited immunity from malicious
prosecution actions for qualified citizens who bring legitimate taxpayer challenges against a governmental
entity in compliance with all relevant statutes and court rules. The Court
of Appeals took the view that the motivation of the taxpayer bringing the
challenge is irrelevant as long as the claim is legitimate. We do
not address the constitutional issue other than to observe that the Court of
Appeals opinion is not as expansive as New Haven claims.
The Court of Appeals affirmed the trial court through an interpretation of federal
constitutional law. We reach the same result under common law. It
is well settled that malice alone is not enough to justify a charge
of malicious prosecutionthe claim must also lack probable cause. As explained in
Part I, Reichhart had the requisite probable cause to bring her action against
New Haven. The judgment of the trial court is affirmed.
SHEPARD, C.J., and DICKSON, SULLIVAN, and RUCKER, JJ., concur.
In 1991, the Indiana Declaratory Judgment Act was codified at Indiana Code
section 34-4-10. It has since been moved to Indiana Code section 34-14-1-2.
The statute provides, in part, that a taxpayer may challenge the validity
of any municipal ordinance and obtain a declaration of rights, status, or other
legal relations thereunder.
Footnote: Reichharts lawsuit consisted of two claims: that New Haven violated the Open
Door law and a taxpayer challenge to the ordinance itself. After the
temporary restraining order was granted in response to the first claim and New
Haven voluntarily rescinded its ordinance, Reichhart moved to dismiss her taxpayer challenge without
prejudice but the trial court dismissed it with prejudice.
Footnote: It is undisputed that, by virtue of her status as a taxpaying
property owner in New Haven, Reichhart was entitled to file a taxpayers action
and to initiate proceedings to force compliance with the Open Door Law and
Reichhart II, 729 N.E.2d at 604.
Section 2 of the Uniform Declaratory Judgment Act provides:
Any person interested under a deed, will, written contract, or other writings constituting
a contract, or whose rights, status, or other legal relations are affected by
a statute, municipal ordinance, contract, or franchise, may have determined any question of
construction or validity arising under the instrument, statute, ordinance, contract, or franchise and
obtain a declaration of rights, status, or other legal relations thereunder.
Footnote: Reichharts original complaint alleged that the proposed annexation has caused or threatens
to cause a waste of public funds and that it is clearly and
patently illegal and represents a clear abuse of discretion. The action of
the common council of a city to annex land must be considered a
proper subject of a taxpayer suit if wastage of public funds is evident
or certain to occur as a result of annexation.
Reichhart II, 729
N.E.2d at 607, (quoting Montagano v. City of Elkhart, 149 Ind. App. 283,
290-92, 271 N.E.2d 475, 480 (1971)). The Court of Appeals concluded that
because the New Haven Common Council failed to conform to the Open Door
Law when it enacted the annexation ordinance, it lacked jurisdiction to act on
the ordinance and wastage was certain to occur. Thus, Reichharts claim against
New Haven was legitimate and, regardless of her motivation, she was protected from
a malicious prosecution action. Reichhart II.