Titan America, LLC v. Riverton Investment Corp.

PRESENT: All the Justices

TITAN AMERICA, LLC, ET AL.

v. Record No. 012554 OPINION BY JUSTICE ELIZABETH B. LACY
September 13, 2002
RIVERTON INVESTMENT
CORPORATION, ET AL.

FROM THE CIRCUIT COURT OF FREDERICK COUNTY
John E. Wetsel, Jr., Judge

In 1998 the appellant, Titan America, LLC, the successor to

Carolinas Cement Company, G.P., t/a Roanoke Cement Company,

(Titan) * sought to acquire land in Warren County to use as a

warehousing and distribution site for its cement business. The

appellees, Riverton Investment Corporation, Capitol Cement

Corporation, and Riverton Corporation (collectively "Riverton"),

a competing cement company and its affiliates, opposed Titan's

plans by appearing before the local governing bodies including

the board of zoning appeals and planning commission, initiating

litigation in circuit court, and funding litigation undertaken

by various Warren County residents.

While Titan ultimately secured the necessary land and

permits to complete its project, Titan filed a motion for

judgment against Riverton in October 1999 asserting, inter alia,

claims of tortious interference with existing and potential

*
The other appellants, Titan Atlantic Cement Industrial and
Commercial Company, S.A., Inc. and Tarmac Cement, Inc. were
general partners of the Carolinas Cement Company, G.P. and
remain members of Titan America, LLC.
economic relationships, conspiracy, and defamation based on the

litigation filed or funded by Riverton. Following consideration

of Riverton's demurrers, motion for partial summary judgment,

and motions for stay of discovery relating to Titan's original

and amended motions for judgment, the trial court ultimately

entered judgment in favor of Riverton, holding that under the

Noerr-Pennington doctrine none of the complained of litigation

was objectively baseless, that discovery was not required, and

that the alleged defamatory statements were made in the course

of litigation and therefore were absolutely privileged. For the

reasons that follow, we will affirm the judgment of the trial

court.

FACTS

A. Underlying Proceedings

Titan originally sought to build its Warren County

distribution facility on a site that it leased from Potomac

Edison Company d/b/a Allegheny Power (Potomac Edison), but later

purchased a site for the facility from the Economic Development

Authority of Warren County and the town of Front Royal (EDA).

The underlying litigation that forms the basis of Titan's motion

for judgment in this case involved both sites. Riverton

recruited the individual litigants involved in this litigation,

Ramona Bowden, Carol and Benjamin Weddle, and Tommy R. and Joyce

S. Fritts, and provided legal representation for them. Although

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Titan filed this action in Frederick County, on the recusal of

the circuit court judge of Frederick County, the matter was

heard by Judge John E. Wetsel, Jr. Judge Wetsel also heard all

of the underlying proceedings at issue in this case. We recite

the facts in relation to each of the proposed development sites.

1. Potomac Edison Site

In February 1999, Titan applied for a by-right use permit

for its distribution facility on a site it leased from Potomac

Edison. The deputy zoning administrator approved the by-right

permit in March 1999. The following month Bowden and the

Weddles appealed the administrator's decision to the Warren

County Board of Zoning Appeals (BZA), asserting that the

facility did not qualify as a by-right use and that the access

road to the site could not be used for industrial purposes

because it traversed agricultural land. After two public

hearings, the BZA reversed the decision of the zoning

administrator and also held that the existing road could be used

for industrial purposes, but that Titan could not construct a

new road through the agricultural area to service the industrial

portion of the property.

Titan appealed the BZA's decision to deny the by-right

permit to the circuit court. Bowden and the Weddles intervened

in Titan's suit and also filed a separate appeal of the BZA's

decision on the access road issue. In August 1999, the circuit

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court entered an order reversing the decision of the BZA,

holding that Titan was entitled to the by-right permit and that

the BZA erred in determining that Titan had a grandfathered

right to use the access road for industrial purposes.

While the BZA was considering the access road issue on

remand from the circuit court, Titan and Potomac Edison filed an

application for a variance to allow industrial use of the access

road. The BZA denied the variance and made a finding strictly

limiting Titan's grandfathered non-conforming use of the access

road. Titan and Potomac Edison appealed those decisions to the

circuit court, which upheld the BZA's determinations.

Titan filed a petition for appeal with this Court regarding

the use of the access road, which was refused. This Court

awarded Bowden and the Weddles an appeal on the by-right permit

issue, but dismissed the appeal as moot in June 2000 because

Titan terminated the Potomac Edison lease and abandoned its

plans to develop that site.

2. EDA Site

In the spring and summer of 1999, Titan began to consider

other sites for its facility, including a site owned by EDA at

the Kelley Industrial Park in Warren County. EDA voted to

approve the sale to Titan on September 3, 1999. On September

13, Riverton filed a petition for mandamus against the EDA,

alleging that the EDA violated Code § 2.1-343 of the Virginia

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Freedom of Information Act by not giving proper notice of its

intention to vote on the sale of the land. Riverton also sought

a declaratory judgment and injunction against the sale of the

site to Titan asserting that the sale was contrary to the

criteria established by statute and EDA rules for such a sale.

EDA settled this action by agreeing to comply with the

provisions of the Virginia Freedom of Information Act and to

vote again on the sale of the land on October 15.

On September 27, 1999, EDA informed Riverton that it had

rescheduled the vote for October 7 and Riverton filed another

action against EDA to enforce the settlement agreement reached

in the prior mandamus proceeding. The circuit court entered a

decree enjoining EDA from voting on the sale of the land to

Titan before October 15.

EDA set November 12 as the date for the vote on the sale of

the land. Riverton and the Fritts filed a complaint seeking a

declaratory judgment and an injunction preventing EDA from

selling the site to Titan. They asserted, as they had in the

prior action, that sale of the land to Titan did not meet the

criteria established by statute and EDA rules for such a sale.

Following a hearing on the request for a temporary injunction,

the circuit court entered an order denying Riverton's and the

Fritts' request for a temporary injunction. Applying a liberal

interpretation of the Industrial Development and Revenue Bond

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Act, Code §§ 15.2-4900 through -4920, the circuit court

concluded that a facility, new to a community, qualified under

the Act as a new industry in the Commonwealth, that EDA's

variance from its own guidelines did not make the sale arbitrary

and capricious because such guidelines can be altered by EDA at

any time, and that the sale did not constitute special

legislation merely because it benefited Titan. Finally, in

denying the temporary injunction, the trial court stated that

"[w]ithout proof of damage particular to [Riverton and the

Fritts] of an irreparable character, the plaintiffs' standing to

maintain this action is called into question." EDA voted to

sign the contract of sale to Titan on November 12, 1999, and the

sale was completed the same day.

On October 8, 1999, prior to the completion of the sale of

the EDA site to Titan, the zoning administrator approved Titan's

application for a by-right permit for its facility to be built

on the EDA property. The Planning Commission approved the by-

right use of the property on October 13. Riverton and the

Fritts appealed the zoning administrator's and the Planning

Commission's decisions to the BZA. On December 1, 1999, the BZA

concluded that it lacked jurisdiction to review the Planning

Commission's by-right determination, but deferred its ruling on

the issue whether the zoning administrator properly approved the

by-right application.

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 On December 8, 1999, Titan brought an action against the

BZA, Riverton, and the Fritts asking the court to direct the BZA

to terminate the stay and dismiss the appeal of the zoning

administrator's and Planning Commission's decisions and to

enjoin Riverton and the Fritts from further litigating the by-

right issue regarding the EDA site, asserting that that issue

was resolved in the earlier case regarding the Potomac Edison

site. The circuit court denied Titan's requests, finding that

the current proceedings involved a different site and different

parties.

A month later, the BZA concluded that Riverton and the

Fritts did not have standing to appeal the zoning

administrator's decision to the BZA. Riverton and the Fritts

appealed this decision. The circuit court remanded the issue of

standing to the BZA, but rejected the contention raised by

Riverton and the Fritts that Titan did not have the right to

seek the by-right permit.

On remand, the BZA determined that the Fritts had standing

to appeal the administrative decisions to the BZA, but that

Riverton did not. The BZA also concluded that the proposed

facility was a by-right use of the EDA site and consistent with

the zoning ordinance. Titan appealed the BZA's determination

regarding the Fritts' standing and the Fritts appealed the BZA's

conclusion regarding the use of the site for Titan's facility.

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On May 31, 2000, the circuit court affirmed the decision of the

BZA. The Fritts appealed the circuit court order to this Court.

An appeal was awarded and the decision of the circuit court was

affirmed by an opinion issued September 14, 2001. Fritts v.

Carolinas Cement Co., 262 Va. 401, 551 S.E.2d 336 (2001).

B. This Litigation

Titan filed this suit on October 28, 1999 alleging tortious

interference with contract and business expectancy, statutory

and common law conspiracy and defamation based on the litigation

pursued and financed by Riverton. Titan also filed requests for

admissions, interrogatories and requests for documents.

Riverton filed a demurrer and a motion for a protective order,

asserting that the claim was barred by the Noerr-Pennington

doctrine. Although Riverton's first demurrer was overruled by

the trial court, the trial court granted Riverton's motion for

summary judgment in part, finding that the underlying

proceedings were brought with probable cause, but deferred

ruling on Titan's arguments that such proceedings were

nevertheless sham proceedings because Riverton orchestrated the

litigation through the use of straw persons. The trial court

granted Riverton's motions to prohibit discovery concerning its

motivation for pursuing the litigation and granted a stay on

further discovery pending its ruling on the straw persons issue.

After further briefing by the parties, the trial court entered

8
an order on June 6, 2000, holding that Riverton's use of straw

persons was not a fraud upon the tribunal and did not constitute

sham litigation depriving Riverton of the protection of the

Noerr-Pennington doctrine.

Titan filed an amended motion for judgment and second

amended motion for judgment, adding claims of abuse of process

and fraud. Riverton's demurrers to both pleadings were

sustained in part and denied in part and the trial court

dismissed with prejudice all claims to which Riverton's

demurrers were sustained. The trial court entered an order

granting Titan's motion to non-suit all remaining claims. We

awarded Titan an appeal.

On appeal, Titan asserts that the Noerr-Pennington doctrine

should not be applied to the causes of action pled in this case,

that even if the doctrine is applied, the trial court applied

the wrong test, that Titan's allegations of sham activity by

Riverton were sufficient to withstand a demurrer, that the trial

court should not have considered whether Riverton was entitled

to the protection of the Noerr-Pennington doctrine without

discovery and further development of the evidence, and that the

trial court erred in holding that defamatory statements made by

Riverton were entitled to an absolute privilege. We will

address these issues in order.

DISCUSSION

9
 A. The Noerr-Pennington Doctrine

1. Application to state law conspiracy and business tort
claims

The Noerr-Pennington doctrine was initially developed in

the United States Supreme Court cases of Eastern Railroad

Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127

(1961), and United Mine Workers of America v. Pennington, 381

U.S. 657 (1965). In those cases, the Supreme Court held that

actions taken to influence legislative or executive action

cannot be the basis for a violation of the Sherman Antitrust Act

unless such activities were "a mere sham" designed to disguise

actions directed towards interfering with the business

relationships of a competitor. Noerr, 365 U.S. at 144. This

doctrine is based on the federal constitutional rights to free

speech and to petition the government. In subsequent cases, the

doctrine has been expanded to apply to actions taken in

adjudicatory proceedings before administrative agencies and

courts. California Motor Transp. Co. v. Trucking Unlimited, 404

U.S. 508, 510-11 (1972).

Titan argues that the Noerr-Pennington doctrine should not

be extended to state law claims of the type raised in this case

because the doctrine was developed in the context of the federal

antitrust laws and because Virginia law affords a defendant

10
sufficient defenses "without the need to inject an additional

defense based on the Noerr-Pennington doctrine."

The Noerr-Pennington doctrine arises from rights afforded

by the First Amendment to the United States Constitution and

does not limit protection of those rights to causes of action

involving antitrust matters. See, e.g., Pacific Gas & Elec. Co.

v. Bear Stearns & Co., 791 P.2d 587, 594 (Cal. 1990); Protect

Our Mountain Env't v. County of Jefferson, 677 P.2d 1361, 1365-

66 (Colo. 1984); Harrah's Vicksburg Corp. v. Pennebaker, 812 So.

2d 163, 171 (Miss. 2001). We have previously acknowledged that

the Noerr-Pennington doctrine is concerned with efforts to

affect the decisions of legislative, judicial, and executive

bodies in the field of public policy matters. Lockheed Info.

Mgmt. Sys. Co., Inc. v. Maximus, Inc., 259 Va. 92, 104, 524

S.E.2d 420, 426-27 (2000) (citing F. Buddie Contracting, Inc. v.

Seawright, 595 F. Supp. 422 (N.D. Ohio 1984)). While we have

rejected the application of the doctrine when the government is

acting in its proprietary capacity under the "commercial

activity exception," the rationale underlying that exclusion

does not exist in this case. Id., 524 S.E.2d at 427. This case

involves actions seeking to enforce or challenge governmental

decisions through the use of the courts and, thus, falls

squarely within the constitutional protections recognized by the

Noerr-Pennington doctrine. We conclude that the protection of

11
First Amendment rights provided by application of the Noerr-

Pennington doctrine should be available to a defendant in causes

of action for tortious interference with business expectancy and

conspiracy, and that the trial court did not err in applying the

Noerr-Pennington doctrine in this case.

2. Appropriate test for determination of sham litigation

Titan asserts that, even if the Noerr-Pennington doctrine

is applicable in this case, the trial court applied the wrong

test in considering whether the litigation at issue was sham

litigation. The trial court utilized the two-part test set out

in Professional Real Estate Investors, Inc. v. Columbia Pictures

Industries, Inc., 508 U.S. 49, 60 (1993) (PRE). Under that

test, a court first determines whether the challenged litigation

was objectively baseless. Id. A case is objectively baseless

if the proponent of the litigation lacked probable cause to

institute the unsuccessful lawsuit. Id. Probable cause in this

context means a " 'reasonable belief that there is a chance that

[a] claim may be held valid upon adjudication.' " Id. at 62-63

(quoting Hubbard v. Beatty & Hyde, Inc., 178 N.E.2d 485, 488

(Mass. 1961)). If such litigation is objectively baseless, the

court then makes a subjective inquiry into whether the

litigation was filed with an anti-competitive purpose. Id. at

60. If the litigation was not objectively baseless, the second

inquiry is not necessary. Id. In this case, the trial court

12
concluded that none of the underlying actions was objectively

baseless and, accordingly, did not consider whether the actions

were subjectively pursued for anti-competitive purposes.

Titan argues that the PRE analysis should not be applied in

this case because PRE involved a single underlying action, not a

series of proceedings as in this case. Rather, Titan asserts

that the trial court should have applied the test suggested by

language in California Motor Transport, a case involving

multiple underlying actions. 404 U.S. at 515. Titan argues,

based on California Motor Transport, that courts must apply a

subjective test when multiple filings are alleged to have been

"pursued to harass, delay and coerce a competitor." Titan

describes that test as looking at "the totality of the filings

and determin[ing] whether they were truly undertaken out of a

genuine interest in redressing grievances, or whether they were

merely a part of a pattern or practice of successive filings

undertaken for the purpose of harassing and injuring a

competitor." Whether there was probable cause to file an action

is irrelevant in this test, according to Titan. Therefore,

Titan argues that the trial court in this case should not have

looked to whether the litigation undertaken directly or

indirectly by Riverton was objectively baseless but rather

should have considered whether the litigation was pursued for

the purpose of harassing and injuring its competitor.

13
 We disagree with Titan and its interpretation of California

Motor Transport. The United States Supreme Court in PRE

considered California Motor Transport and other cases decided

since Noerr and concluded that "the sham exception contains an

indispensable objective component" and a subjective

"anticompetitive intent or purpose alone cannot transform

otherwise legitimate activity into a sham." PRE, 508 U.S. at

58–59. The language in California Motor Transport upon which

Titan relies for the test it advocates is the statement that "a

pattern of baseless, repetitive claims may emerge which leads

the factfinder to conclude that the administrative and judicial

processes have been abused." California Motor Transport, 404

U.S. at 513. This statement specifically identifies baseless

litigation as forming the pattern of harassment, a requirement

consistent with the test established in PRE.

Considering the holdings in both PRE and California Motor

Transport, we find no support for the imposition of a single,

subjective test based on a finding of anti-competitive purpose

simply because a series of actions rather than a single action

is the focus of the alleged anti-competitive activity. We

conclude that, when considering an allegation that the sham

exception to the Noerr-Pennington doctrine applies, a court must

consider first whether any or all of the complained of actions

were objectively baseless, and those which are not may not be

14
considered in determining whether the sham exception is

applicable. Therefore, the trial court in this case did not err

in applying the two-part test as described in PRE.

3. Standing to claim the protection of the Noerr-
Pennington doctrine.

Titan argues that Riverton was not entitled to the

protection of the Noerr-Pennington doctrine because such

protection is available only to those persons or entities that

are parties to the underlying litigation. Relying on In re

Burlington Northern, Inc., 822 F.2d 518 (5th Cir. 1987), cert.

denied sub nom. Union Pacific Railroad v. Energy Transportation

Systems, Inc., 484 U.S. 1007 (1988), Titan asserts that a person

without standing to bring a suit cannot "manufacture standing"

by "orchestrating litigation" for the purpose of interfering

with a competitor. Titan argues that Riverton's lack of

standing in the underlying litigation denies Riverton the

protection of the Noerr-Pennington doctrine for its actions in

supporting, soliciting, and financing others in the prosecution

of that litigation.

The trial court considered these same arguments in

connection with its ruling on Riverton's demurrer and motion for

partial summary judgment on Titan's original motion for

judgment. The trial court rejected Titan's arguments, adopting

the rationale of the federal district court in Baltimore Scrap

15
Corp. v. The David J. Joseph Co., 81 F. Supp. 2d 602 (D. Md.

2000). In that case, the district court held that the Noerr-

Pennington doctrine applied even if a company secretly and for

anti-competitive purposes, sponsored a lawsuit against a

competitor, "so long as the lawsuit is neither a sham, meaning

that it is not objectively baseless, nor fraudulent." Id. at

603. The United States Court of Appeals for the Fourth Circuit

subsequently affirmed the federal district court's holding that

the defendants' participation in the underlying action was not

determinative in the sham litigation analysis and that

"[f]unding of litigation by a non-party can be petitioning to

the same extent" as actually filing the lawsuit. Baltimore

Scrap Corp. v. The David J. Joseph Co., 237 F.3d 394, 401 (4th

Cir.), cert. denied, 533 U.S. 916 (2001). In reaching its

holding, the Fourth Circuit observed that

nonparties often provide aid to litigants, whether
through financial backing, legal assistance, amicus
briefs, or moral support. . . . The realities often
are that litigation cannot be entirely financed out of
the pocket of the party bringing suit. . . . To hold
that only parties who have standing in their own right
receive the protection of Noerr-Pennington immunity is
to artificially restrict that doctrine by penalizing
even the lawful support of objectively meritorious
actions.

Id. at 401.

We consider this rationale the more persuasive and proper

application of the Noerr-Pennington doctrine. Accordingly, we

16
conclude that the trial court did not err in holding that

Riverton's support for and financing of the litigation brought

by others did not exclude Riverton from the protection afforded

by the Noerr-Pennington doctrine.

B. Demurrer

Next Titan asserts that the trial court should not have

decided this matter on demurrer. Applying the principle that a

pleading that sufficiently states a cause of action survives a

demurrer, Titan argues that each of its pleadings sufficiently

recited facts which if proved at trial would have invoked the

sham exception to the Noerr-Pennington doctrine, and therefore

the trial court should have denied Riverton's demurrers. We

disagree with Titan.

When the Noerr-Pennington doctrine and accompanying sham

exception were invoked in Titan's pleadings and challenged by

Riverton's demurrers, the trial court was required to consider

the facts alleged in the pleadings as true and to draw all

reasonable inferences from those facts in favor of Titan.

However, the trial court was not required to accept Titan's

conclusions of law and, thus, the trial court was not bound by

Titan's allegations in its pleadings that the litigation in

question was baseless. Yuzefovsky v. St. John's Wood

Apartments, 261 Va. 97, 102, 540 S.E.2d 134, 137 (2001). To

rule on the demurrer, the trial court was required to apply the

17
two-part PRE test and the initial focus of the court's inquiry

was whether the underlying litigation was objectively baseless.

To make this determination, the trial court took judicial

notice of the records of the underlying actions, a procedure

long recognized as appropriate by our jurisprudence.

[W]here the plaintiff refers to another proceeding or
judgment, and specifically bases his right of action,
in whole or in part, on something which appears in the
record of the prior case, the court, in passing on a
demurrer to the complaint, will take judicial notice
of the matters appearing in the former case.

Fleming v. Anderson, 187 Va. 788, 794-95, 48 S.E.2d 269, 272

(1948); see also Martone v. Martone, 257 Va. 199, 208, 509

S.E.2d 302, 307 (1999). The issue before the trial court was

the objective legal merit of each of the underlying proceedings.

Following a review of each proceeding, the trial court, which

conducted those underlying proceedings, concluded that Riverton

had probable cause to pursue each of the proceedings and,

therefore, those cases were not objectively baseless. Having

made this determination, the trial court did not have to reach

the second part of the PRE test by considering Titan's

allegations of sham activity when ruling on Riverton's demurrer.

C. Discovery Limitation

Titan also complains that, in light of its allegations of

fraud and misrepresentation, the trial court erred in limiting

discovery and making a probable cause determination without

18
further development of the evidence. Titan asserts that making

the probable cause determination solely on the basis of the

record of the underlying proceedings as a matter of law is

proper only if "there is no dispute over the predicate facts of

the underlying legal proceeding." PRE, 508 U.S. at 64-65.

Here, Titan alleges disputed facts in the underlying litigation

regarding "secret conspiracies," the use of straw persons,

Riverton's "surreptitious orchestration and involvement" in the

underlying litigation, and that named litigants were not members

of a "citizens group." These matters involve Riverton's

motivation for participating in the proceedings and the manner

in which the litigation proceeded and do not address the

predicate facts of the underlying legal proceedings.

Clearly, the parties had divergent views on the legal

implications of the facts in the underlying litigation, such as:

whether Titan's proposed facility was a warehouse or

distribution center entitled to a by-right permit; could the

access road to the facility be used for industrial purposes;

were the notice provisions of the Freedom of Information Act

violated; and did EDA comply with existing law and internal

rules in selling its property to Titan? These disputes,

however, are not disputed facts in the underlying litigation

that would prevent a court from determining whether the

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underlying litigation was "objectively baseless" as a matter of

law.

Finally, Titan urges that the trial court erred in making

its probable cause rulings "in a vacuum" without further

discovery on Titan's allegations that Riverton engaged in

"concealments and misrepresentations, the full extent of which

could not be known without ordinary discovery." We agree with

Titan that the protection of the Noerr-Pennington doctrine

should not be based on a judgment obtained by fraud and that

intentional misrepresentations made to a court may deprive a

proceeding of its legitimacy. But such alleged

misrepresentations must be material to the underlying

proceedings. To make this determination, the court examines the

record of the underlying proceedings, the outcome of those

cases, the nature of the alleged fraud or misrepresentation, and

whether those allegations would have had an impact on the

outcome of the underlying litigation. See Bath Petroleum

Storage, Inc. v. Market Hub Partners, L.P., 129 F. Supp. 2d 578,

593 (W.D. N.Y.), aff'd, 229 F.3d 1135 (2nd Cir. 2000), cert.

denied, 532 U.S. 1037 (2001). If this analysis shows that the

alleged misrepresentations did not have a significant impact on

the underlying litigation, further discovery is not necessary:

To allow [ ] claims based solely on broad and
indistinct allegations of misrepresentation and "sham
litigation" to reach discovery, regardless of the role

20
 the claimed misrepresentations played, or could have
played, in the prior proceeding would predicate the
viability of [a] complaint on a petitioner's
subjective intent, and not the objective merit of its
petition, and thus directly contravene the Supreme
Court's holding in PRE.

Id. at 594 (citations and quotations omitted).

In this case, Titan's allegations of fraud and

misrepresentations, as we have already noted, concerned

Riverton's motivation in pursuing or supporting the underlying

actions. Allegations that Riverton solicited and financed

litigation by others, even if its involvement was kept from the

court, is not the type of fraud on the court that would bring

into question the legitimacy of the proceeding, Baltimore Scrap,

237 F.3d at 401-02, especially when the court has determined

that the litigation was brought with probable cause and was not

objectively baseless.

The trial court carefully reviewed each of the underlying

actions, including Riverton's suit based on an alleged violation

of the Freedom of Information Act and the continuation of the

appeal before this Court regarding the Potomac Edison site. In

each instance the trial court concluded that none of the suits

was objectively baseless. As stated by the trial court "[w]hile

Riverton may have gotten perilously close to the line, it did

not cross it." In light of this record, we conclude that the

trial court did not err in considering whether there was

21
probable cause to pursue the underlying litigation based on the

records of those proceedings without allowing further discovery.

Titan has challenged the use of the Noerr-Pennington

doctrine in this case and the manner and circumstances under

which it was applied. Titan has not challenged the trial

court's probable cause determinations based on the record of any

of the underlying proceedings. Accordingly, the trial court's

conclusion that Riverton had probable cause to pursue that

litigation is not before us for review.

D. Defamation

In its September 13, 1999 bill of complaint seeking a writ

of mandamus, a declaratory judgment, and an injunction against

the sale of the EDA site to Titan, Riverton alleged that "the

Commission of the European Communities and the Restrictive

Practices Court in London have found that Titan and a Tarmac

subsidiary, respectively, have violated European antitrust laws

by engaging in collusive, anti-competitive activities in the

cement industry, including market sharing and price fixing."

Titan asserts that this statement was per se defamatory. The

trial court sustained Riverton's demurrer to Titan's defamation

count, concluding that the statement was entitled to an absolute

privilege because it was made in the course of litigation.

Titan assigns error to this holding.

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 A statement made in the course of a judicial proceeding is

absolutely privileged if it is material and relevant to the

proceeding. Donohoe Constr. Co. v. Mount Vernon Associates, 235

Va. 531, 537, 369 S.E.2d 857, 860 (1988). Such statements are

privileged because of the safeguards in those proceedings,

including rules of evidence and penalties for perjury.

Lockheed, 259 Va. at 101, 524 S.E.2d at 424-25. Titan argues

that the statement at issue here had no bearing on the issue in

the litigation which was a suit "to compel [EDA] to comply with

the Freedom of Information Act." The matter was settled by

agreement on the pleadings with no evidence taken. Under these

circumstances, Titan concludes that the allegedly defamatory

statement was not entitled to absolute privilege.

Titan's argument overlooks the second part of Riverton's

mandamus proceeding in which Riverton sought a declaratory

judgment and injunction precluding the sale of the land by EDA

to Titan. In that count, Riverton alleged that, by statute, EDA

was required to consider the public interest in determining

whether it would sell the site to Titan. Whether the sale would

be in the public interest if the site were to be used to

facilitate unfair competition was an issue before EDA and the

circuit court and, therefore, statements regarding Titan's past

actions were relevant. Finally, settlement of the litigation

before consideration of all the counts does not deprive

23
statements relevant to the untested allegations of the

protection of absolute privilege. Furthermore, the trial court

judge in this case conducted all the underlying proceedings

including the mandamus action. He was aware of all the

arguments made and their relevance to the causes of actions

before him.

Based on this record, we cannot say that the trial court

was in error as a matter of law in determining that the

allegedly defamatory statement was relevant to the proceedings.

For the reasons stated above, we hold that the trial court

did not err by applying the Noerr-Pennington doctrine to the

state tort claims at issue here; that the trial court properly

applied the two-step analysis from PRE when determining that

Riverton's actions did not fall within the sham exception to the

Noerr-Pennington doctrine; that the trial court did not err by

deciding that Riverton had standing to claim the Noerr-

Pennington doctrine as a defense; that the trial court properly

made the determination regarding whether Riverton had probable

cause to bring the underlying proceedings based on the record of

those proceedings without allowing or considering additional

discovery or evidence; and that the trial court did not err in

sustaining Riverton's demurrer to Titan's defamation count.

Accordingly, we will affirm the judgment of the trial

court.

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 Affirmed.

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