Present: All the Justices
JAMES M. MANSFIELD
OPINION BY
v. Record No. 111314 JUSTICE S. BERNARD GOODWYN
June 7, 2012
LYNNE BERNABEI, ET AL.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
R. Terrence Ney, Judge
In this appeal, we consider whether the circuit court
erred in ruling that the doctrine of absolute judicial
privilege may apply to communications made before the filing of
an action.
Material Facts and Proceedings
Michael A. Ford served as the building manager at Horizon
House, a residential condominium in Arlington, Virginia. After
his termination from that employment, Ford filed a complaint
with the Equal Employment Opportunity Commission (EEOC) against
the three corporate employers vested with the authority to fire
him, Horizon House Condominium Unit Homeowners Association,
Zalco Realty, Inc., and MDV Maintenance, Inc. The EEOC issued
a probable cause determination that two of these employers
discriminated against Ford on the basis of his race in
violation of federal law.
James M. Mansfield served as counsel to Horizon House. He
was involved in the process of hiring Ford and allegedly, among
other actions that interfered with Ford’s employment, wrote a
letter containing defamatory statements about Ford to the
Horizon House board.
Ford, acting by and through Bernabei & Wachtel, PLLC, sent
a demand letter and a draft complaint marked “Draft – For
Settlement Purposes Only” to numerous individuals and entities.
Mansfield was one of the defendants named in the draft
complaint. The demand letter concluded: “Please contact me
with a response to this settlement proposal by the close of
business on December 17, 2008. If we do not receive a response
from you by that time, Mr. Ford will have no choice but to
initiate formal legal action.”
Approximately one week later, Ford filed a complaint,
substantially similar to the draft complaint, in the United
States District Court for the Eastern District of Virginia
against several defendants, including Mansfield. 1
Mansfield subsequently filed a complaint in the Circuit
Court of Fairfax County against Lynne Bernabei, Emily Brittain
Read, Bernabei & Wachtel, PLLC, and Ford (collectively “the
1
All defendants in the federal action except Mansfield
were dismissed from the case by agreed order. Ford v. Zalco
Realty, Inc., 708 F. Supp.2d 558, 560 (E.D. Va. 2010). The
district court granted summary judgment for Mansfield, but it
declined to award attorneys’ and expert witnesses’ fees because
Ford “acted in good faith in filing suit” and “the case was not
frivolous, unreasonable, or without foundation.” Id. at 560,
563.
2
defendants”) alleging that he was defamed by statements made
about him in the draft complaint.
The defendants filed demurrers, claiming the allegations
made in the draft complaint, sent before the lawsuit was filed,
were nevertheless privileged. Mansfield claimed there was no
privilege because there was no pending judicial proceeding when
the draft complaint was communicated.
The circuit court sustained the demurrers. It ruled that
absolute or judicial privilege applied to the communications in
the draft complaint that were published only to interested
parties in good faith for the purpose of attempting to settle
the underlying dispute preliminary to a proposed judicial
proceeding. Mansfield timely filed a notice of appeal and we
granted an appeal on the following assignments of error:
1. The trial court erred by ignoring the
mandates of Penick and its progeny, establishing the
concrete element that a communication must be part of
a judicial proceeding to be considered absolutely
privileged.
2. The trial court erred by failing [sic] by
ignoring the important Penick public policy
ramifications. 2
2
We do not address whether the circuit court properly
applied absolute privilege to the facts of this case, because
the assignments of error only pertain to whether the doctrine
may apply to statements communicated before litigation is
initiated.
3
Analysis
Mansfield argues that the circuit court erred in
sustaining the demurrers because this Court established a
concrete limit on absolute privilege in Penick v. Ratcliffe,
149 Va. 618, 140 S.E. 664 (1927), and its progeny. Mansfield
asserts that if a communication is not part of a judicial
proceeding or process and relevant to that judicial proceeding
or process, the communication is not protected by absolute
judicial privilege. He claims that this Court has declined to
extend the privilege beyond a judicial environment, and that a
draft complaint sent prior to the actual filing of an action
fails to satisfy the prerequisites necessary for the privilege
to be applicable.
The defendants respond that absolute privilege should
attach to communications if they are relevant and pertinent to
the subject matter of litigation that is in good faith and
under serious contemplation. They argue that Penick does not
address the instant circumstance and this Court has never
expressly found absolute privilege inapplicable to pre-filing
circulation of a draft complaint. The defendants urge
application of the Restatement (Second) of Torts, which they
claim provides immunity for certain communications before
filing as well as safeguards against abuse of such
communications. We agree.
4
This Court applies well-settled principles in reviewing
the circuit court’s decision to sustain the demurrers:
“The purpose of a demurrer is to determine whether a
motion for judgment states a cause of action upon
which the requested relief may be granted. A
demurrer tests the legal sufficiency of facts alleged
in pleadings, not the strength of proof.
Accordingly, we accept as true all properly pled
facts and all inferences fairly drawn from those
facts. Because the decision whether to grant a
demurrer involves issues of law, we review the
circuit court's judgment de novo.”
Dunn, McCormack & MacPherson v. Connolly, 281 Va. 553, 557, 708
S.E.2d 867, 869 (2011) (quoting Abi-Najm v. Concord Condo.,
LLC, 280 Va. 350, 356-57, 699 S.E.2d 483, 486-87 (2010)). In
ruling on the demurrers, this Court considers not only the
pleadings, but also the documents attached thereto. E.g.,
Caudill v. County of Dinwiddie, 259 Va. 785, 788, 529 S.E.2d
313, 314 (2000).
Only a partial version of Ford’s settlement draft
complaint, omitting reference to the EEOC action, was attached
to Mansfield’s defamation complaint; Ford’s federal complaint
was not attached thereto. However, Mansfield stipulated to the
circuit court’s consideration of the federal complaint and the
demand letter in ruling upon the demurrers. “A court in ruling
upon a demurrer may consider documents not mentioned in the
challenged pleading when the parties so stipulate.” Flippo v.
F & L Land Co., 241 Va. 15, 17, 400 S.E.2d 156, 156 (1991).
5
In Penick, this Court applied the doctrine of absolute
privilege to a petition, filed by voters, alleging bribery and
other illegal acts by a judge of elections. 149 Va. at 621-27,
637-38, 140 S.E. at 665-67, 670. The petition was dismissed
and the judge of elections filed a libel action against the
voters on the basis of the petition’s contents. Id. at 622-26,
140 S.E. at 665-67. On appeal from a verdict in favor of the
judge, this Court reversed, holding that absolute privilege
barred the libel action. Id. at 637-38, 140 S.E. at 670. The
election contest was a judicial proceeding and the allegations
of the petition were material, relevant and pertinent to the
relief sought; therefore, the allegations were privileged. Id.
at 635, 140 S.E. at 669. In so holding, this Court noted that
the public interest and the ends of justice are best served in
allowing counsel to freely advocate for their clients. Id. at
632, 140 S.E. at 668.
In the Commonwealth, “[i]t is well settled that ‘words
spoken or written in a judicial proceeding that are relevant
and pertinent to the matter under inquiry are absolutely
privileged’” against actions on the basis of defamation.
Donohoe Constr. Co. v. Mt. Vernon Assocs., 235 Va. 531, 537,
369 S.E.2d 857, 860 (1988) (quoting Darnell v. Davis, 190 Va.
701, 707, 58 S.E.2d 68, 70 (1950)); see also Penick, 149 Va. at
6
627, 140 S.E. at 667. 3 For absolute judicial privilege to
attach, the communications at issue must be “material, relevant
or pertinent” to the issues of the judicial proceeding. See,
e.g., Penick, 149 Va. at 635, 140 S.E. at 669.
This Court articulated the broad rule of absolute
privilege in Penick but has not limited its application to
trials, reasoning that the privilege “includ[es] within its
scope all proceedings of a judicial nature . . . .” Id. at
628, 140 S.E. at 667 (citation and internal quotation marks
omitted). In Donohoe Construction, this Court accordingly
concluded that the filing of a mechanic’s lien was a judicial
proceeding to which absolute privilege applied. 235 Va. at
538-39, 369 S.E.2d at 861 (noting that perfection and
enforcement of a lien are “inseparable”). Absolute judicial
privilege clearly extends outside the courtroom. See, e.g.,
Watt v. McKelvie, 219 Va. 645, 651, 248 S.E.2d 826, 829 (1978)
(protecting third party statements republished by another
during a deposition). However, this Court has not yet
3
The privilege is based in part upon the existence of the
safeguards offered by the judicial process. Elder v. Holland,
208 Va. 15, 21, 155 S.E.2d 369, 374 (1967) (“ ‘[I]n strictly
judicial proceedings the potential harm . . . is somewhat
mitigated by the formal requirements such as notice and
hearing, the comprehensive control exercised by the trial judge
whose action is reviewable on appeal, and the availability of
retarding influences such as false swearing and perjury
prosecutions.’ ” (quoting Rainier’s Dairies v. Raritan Valley
Farms, Inc., 117 A.2d 889, 894 (N.J. 1955)).
7
addressed the precise issue in this case, when a complaint
containing allegedly defamatory statements is drafted and
circulated before the filing of an action.
We have considered application of absolute judicial
privilege to communications tangentially related to potential
litigation. In Lindeman v. Lesnick, 268 Va. 532, 535, 604
S.E.2d 55, 57 (2004), this Court addressed defamatory
statements made by a physician to a patient, Lindeman, about
another doctor, Lesnick, in regard to treatment Lindeman
received pursuant to a workers’ compensation award. Lindeman
shared the written statements with his attorney, who
inadvertently forwarded them to counsel for the insurance
company of Lindeman’s employer, who distributed them to the
employer. Id. The employer provided the statements to
Lesnick, who thereafter filed a defamation action. Id.
The Court noted that an ongoing award for workers’
compensation medical benefits did not constitute a pending
proceeding and that no claim was pending before the Workers’
Compensation Commission. Id. at 538, 604 S.E.2d at 58-59.
While stating that “we have extended the application of the
absolute privilege well beyond the actual courtroom,” this
Court declined to extend the privilege to “mere potential
litigation” to avoid “permit[ting] defamatory communications to
be made with impunity merely upon an assertion that litigation
8
might be subsequently initiated.” Id. at 537-38, 604 S.E.2d at
58.
Numerous factors distinguish the current case from
Lindeman. The communication at issue in Lindeman was published
through apparent inadvertence and the claim Lindeman sought to
bring was with respect to his workers’ compensation benefits;
it did not contemplate Lesnick as a party. Id. at 534-36, 604
S.E.2d at 56-57. The statements regarding Lesnick were not a
part of attempted settlement negotiations, as was the draft
complaint in the present case, and there was no indication that
the allegedly defamatory statements were eventually alleged and
relevant in a judicial proceeding. See id.
The defendants argue that the circuit court properly
recognized the value in unrestricted settlement negotiations
and the Commonwealth’s long-expressed public policy preference
of encouraging settlement, which supports application of
absolute privilege in this case. Mansfield responds that
Penick and our later decisions considered the value in
encouraging settlement, but recognized the greater importance
of preventing abuse in the litigation process.
The Restatement (Second) of Torts § 586 provides:
An attorney at law is absolutely privileged to
publish defamatory matter concerning another in
communications preliminary to a proposed judicial
proceeding, or in the institution of, or during the
course and as a part of, a judicial proceeding in
9
which he participates as counsel, if it has some
relation to the proceeding.
Restatement § 587 likewise states:
A party to a private litigation or a private
prosecutor or defendant in a criminal prosecution is
absolutely privileged to publish defamatory matter
concerning another in communications preliminary to a
proposed judicial proceeding, or in the institution
of or during the course and as a part of, a judicial
proceeding in which he participates, if the matter
has some relation to the proceeding.
The comments to these sections are furthermore
instructive, emphasizing the limitation of the protections
afforded to pre-litigation communications:
As to communications preliminary to a proposed
judicial proceeding the rule stated in this Section
applies only when the communication has some relation
to a proceeding that is contemplated in good faith
and under serious consideration. The bare
possibility that the proceeding might be instituted
is not to be used as a cloak to provide immunity for
defamation when the possibility is not seriously
considered.
Restatement (Second) of Torts §§ 586 cmt. e., 587 cmt. e.
Numerous jurisdictions apply an approach in accord with
the Restatement, holding that absolute privilege may bar
defamation claims on the basis of pre-filing, litigation-
related communications. See, e.g., Rogers v. Luttrell, 144
S.W.3d 841, 843-44 (Ky. Ct. App. 2004) (quoting General Elec.
Co. v. Sargent & Lundy, 916 F.2d 1119, 1127 (6th Cir. 1990));
Rickenbacker v. Coffey, 405 S.E.2d 585, 587-88 (N.C. Ct. App.
1991); Crowell v. Herring, 392 S.E.2d 464, 467 (S.C. Ct. App.
10
1990); Collins v. Red Roof Inns, Inc., 566 S.E.2d 595, 600-01
(W. Va. 2002). The Fourth Circuit likewise applied absolute
privilege in a case involving a pre-filing letter, finding it
“probable that Virginia would follow the lead of the
Restatement [(First)] of Torts, § 587 (1938).” 4 West v.
Marjorie’s Gifts, Inc., 529 F.2d 518, 518 (4th Cir. 1975)
(unpublished).
The importance of encouraging compromise and settlement is
unquestioned in our jurisprudence. See, e.g., Snyder-Falkinham
v. Stockburger, 249 Va. 376, 381, 457 S.E.2d 36, 39 (1995)
(“ ‘The law favors compromise and settlement of disputed
claims.’ ” (quoting Bangor-Punta Operations, Inc. v. Atlantic
Leasing, Ltd., 215 Va. 180, 183, 207 S.E.2d 858, 860 (1974)));
Eggleston v. Crump, 150 Va. 414, 418-19, 143 S.E. 688, 689
(1928) (citing Chesapeake & Ohio Ry. Co. v. Mosby, 93 Va. 93,
100, 24 S.E. 916, 918 (1896); Zane’s Devisees v. Zane, 20 Va.
(6 Munf.) 406, 412 (1819)). It is elementary that the
settlement of claims is facilitated through free and open
communication regarding the issues between parties and their
attorneys, as well as between opposing counsel. See, e.g.,
Donohoe Constr., 235 Va. at 537, 369 S.E.2d at 860 (“ ‘[T]he
public interest is best served when individuals who participate
4
This section of the Restatement (First) is substantially
similar to § 587 of the Restatement (Second), quoted above.
11
in law suits are allowed to conduct the proceeding with freedom
to speak fully on the issues relating to the controversy.’ ”
(quoting Watt, 219 Va. at 651, 248 S.E.2d at 829); see also
Messina v. Fontana, 260 F. Supp.2d 173, 179 (D. D.C. 2003)
(“Private and amicable resolution of disputes is to be
encouraged, not discouraged, as would happen if every lawyer's
letter could provoke a defamation suit.”).
The Restatement approach facilitates the legitimate
investigation and settlement of claims. The countervailing
legitimate concern we expressed in Lindeman, that extension of
absolute privilege to pre-filing communications may prompt
defamatory statements without meaningful restraint, 5 is
addressed by the Restatement requirements that the proposed
judicial proceeding must be “contemplated in good faith and
under serious consideration,” and the communication must relate
to that anticipated proceeding. The concern may be further
alleviated by limiting the absolute privilege to disclosures
made to persons with an interest in the proposed proceeding.
Thus, regarding the applicability of absolute privilege to
communications preliminary to a proposed judicial proceeding,
this Court adopts the rule expressed in the Restatement
(Second) of Torts §§ 586, 587 as well as the additional
requirement that the disclosure be made only to interested
12
persons. See, e.g., Gardner v. Senior Living Sys., Inc., 731
N.E.2d 350, 357 (Ill. App. Ct. 2000); Harris, 355 S.E.2d at
843.
For absolute privilege to attach, the communication must
be “material, relevant or pertinent” to the judicial process.
See, e.g., Penick, 149 Va. at 635, 140 S.E. at 669. Applying
this requirement to communications preliminary to proposed
judicial proceedings requires a reviewing court to examine
whether: (1) the statement was made preliminary to a proposed
proceeding; (2) the statement was related to a proceeding
contemplated in good faith and under serious consideration, and
(3) the communication was disclosed to interested persons.
In this case, Ford’s draft complaint containing the
allegedly defamatory statements about Mansfield was marked “For
Settlement Purposes Only.” The demand letter accompanying the
draft complaint stated that if a response was not received,
Ford would “initiate a formal legal action” against the
potential defendants to whom the letter and complaint were
addressed. Ford did, in fact, file a substantially similar
complaint in the United States District Court for the Eastern
District of Virginia approximately one week after sending the
draft complaint and demand letter. Thus, we hold that the
circuit court did not err in finding that absolute privilege
5
268 Va. at 538, 604 S.E.2d at 58.
13
attached to the draft complaint. Accordingly, for the reasons
stated, we will affirm the judgment of the circuit court.
Affirmed.
14