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City of New Haven v. Reichhart6/7/2001
ON PETITION FOR TRANSFER
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 Haven's attempt to annex CWMI's facility and New Haven counterclaimed for malicious prosecution. One element of New Haven's malicious prosecution claim is that Reichhart's 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 suit.
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. Reichhart alleged that the annexation ordinance was enacted in violation of Indiana's Open Door law. The trial court immediately issued a temporary restraining order against the annexation.
Reichhart's 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 Reichhart's lawsuit, financed by CWMI, constituted an abuse of process. The trial court denied Reichhart's and CWMI's 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 claim. 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 Reichhart's 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 Haven's action for malicious prosecution. Third, they argued that a governmental entity is precluded from seeking an award of punitive damages.
In February 1999, the trial court granted Reichhart's and CWMI's 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 citizen's right to petition the government without regard to the citizen's 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 taxpayer's 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 enti
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