author: KANE, District Judge.

text:
    MILLERS’ MUTUAL INSURANCE ASSOCIATION OF ILLINOIS, An Illinois Mutual Insurance Association, Plaintiff, v. IOWA NATIONAL MUTUAL INSURANCE COMPANY, an Iowa Corporation, Defendant.
    Civ. A. No. 84-K-2393.
    United States District Court, D. Colorado.
    Sept. 18, 1985.
    Gary L. Palumbo, Bayer, Carey & McGee, Denver, Colo., for plaintiff.
    Michael W. Anderson, & John M. Palmeri, White & Steele, Denver, Colo., for defendant.
   MEMORANDUM OPINION AND ORDER

KANE, District Judge.

Plaintiff Millers’ Mutual Insurance Association filed suit seeking a declaratory judgment that defendant Iowa National Insurance Company is required to contribute on a pro-rata basis to the defense costs of suits involving the parties’ mutual insured. Millers’ also seeks money damages for the defendant’s past failure to contribute to such costs.

This court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 as the parties are completely diverse and the amount in controversy exceeds $10,000.00. This matter is before me now on Iowa’s motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), failure to state a claim upon which relief can be granted. Further, the parties have briefed the ultimate issue in the case; namely, whether Iowa must share with Millers’ in the cost of defending Farmers.

A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). For the reasons set forth below, Iowa has failed to meet this difficult burden. Accordingly, its motion to dismiss for failure to state a claim is denied.

BACKGROUND

On July 15, 1982 the Lawn Lake Dam in Larimer County, Colorado ruptured sending torrents of water to flood the town of Estes Park. Farmers Irrigating Ditch and Reservoir Company owned the reservoir where the embankment collapsed, and has since been beseiged by a multitude of lawsuits claiming personal and property damage.

At the time of the flood, Millers’ was Farmers primary insurer. Millers’ policy provided coverage to $100,000.00 for property damage per occurrence and $300,-000.00 for personal injury damage per occurrence. In addition to indemnification, Millers’ policy created certain defense obligations:

the insurer shall defend any suit against the insured seeking damages on account of such bodily injury or property damage ... but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company’s liability has been exhausted by payment of judgments or settlements.

At the time of the flood, Iowa was an excess insurer of Farmers’. The Iowa policy obligated Iowa to indemnify Farmers to the extent its liability caused by an occurrence was in excess of the liability of an underlying primary insurer, ($400,000.00), up to a limit of $1,000,000.00. In addition to indemnification liability the Iowa insurance contract states that

When underlying insurance does apply to an occurrence: ... In the event that the limits of liability of the underlying insurance ... are exhausted by occurrence, the company shall be obligated to assume charge of the settlement or defense of any claim or proceeding against the insured resulting from the same occurrence ...

In anticipation of judgments in excess of both Millers’ primary and Iowa’s excess limits, Farmers, Millers’ and Iowa filed an interpleader action in the U.S. District Court for the District of Colorado. Millers', et al., v. John Grace, et al., No. 82-JM-1517 (D.Colo. March 28, 1985, amended April 10, 1985). Millers’ and Iowa deposited money in the court registry commensurate with their policy limits. Judge Moore discharged Millers’ and Iowa from any further liability “arising as a matter of contract from policies of insurance between the plaintiff companies and the Farmers Irrigating Ditch and Reservoir Company.” Slip opinion at 4.

In an amended order, Judge Moore added that, notwithstanding the court’s acceptance of the insurers’ interpleaded funds, “This discharge is not a judicial resolution by this court of any of the issues of the relationship or duties between the plaintiff insurance companies and their insureds”. Amended Order, April 10, 1984.

Subsequently, Millers’ filed a declaratory judgment action against Farmers. Millers’ Mutual Insurance Company v. Farmers Irrigating Ditch and Reservoir Company, No. 82-Z-2196 (D.Colo. November 19, 1984). Millers’ argued that the deposit of its policy limits in the previous interpleader action constituted an exhaustion by “payment of judgments or settlements” of its policy limits so as to relieve Millers’ of its obligation to defend.

Ruling from the bench, Judge Weinshienk held that the “deposit of funds in the interpleader action does not terminate the obligations under the insurance policy to defend.” Reporter’s Transcript at p. 5-6. Thus, Millers’ is continuing to defend Farmers against claims arising from the flood.

Millers’ then brought this present action seeking a declaratory judgment that Iowa has an obligation to share on a pro rata basis the costs of defense and settlements already incurred and to be incurred in the future. Alternatively, Millers’ argues that Iowa became solely responsible for all defense costs once it became clear to Iowa that Millers’ policy was “exhausted”.

Iowa seeks dismissal of all of Millers’ claims on two bases. First, Iowa argues that Judge Weinshienk’s order that Millers’ duty to defend continues operates collaterally to estop Millers’ from litigating whether Iowa is also bound to defend. Second, Iowa argues that absent a contractual agreement between the parties, Iowa has no duty to share in defense costs with Millers’.

I. THE COLLATERAL ESTOPPEL ISSUE

There are four requirements to be satisfied for collateral estoppel to apply:

First, was the issue decided in the prior adjudication identical with the one presented in the action in question? Second, was there a final judgment on the merits? Third, was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication? And, fourth, did the party against whom the plea is asserted have a full and fair opportunity to litigate the issue in the prior adjudication?

Rodriguez v. Bar-S Food Co., 567 F.Supp. 1241 at 1244 (D.Colo.1983), citing Pomeroy v. Waitkus, 183 Colo. 344 at 350-351, 517 P.2d 396 at 399 (1973).

Applying these criteria to Judge Weinshienk’s decision in Millers’ v. Farmers, supra, it is clear that collateral estoppel does not apply. The issue decided in that adjudication is not identical with the one in this ease. “The issue in this case”, Judge Weinshienk noted, Reporter’s transcript p. 2, “is whether the deposit of the funds in the federal interpleader action terminate the plaintiffs obligations under the insurance policy.” The duties and obligations of Iowa as an excess insurer were never addressed. Specifically, Judge Weinshienk construed the phrase “exhaustion by payment of judgment or settlement” in Millers’ policy — such being the occurrence relieving Millers’ of its defense obligations. In applying pro-insured canons of construction and public policy, Judge Weinshienk narrowly construed the policy to require Millers’ to defend and noted that

case law and Colorado policy is [sic] very clear that if there is some ambiguity in insurance policy language, it must be construed against the company; and here, there appears to be an argument that “settlements” means “interpleader”. It (the policy) does not say interpleader. To stretch that language, I think, is not construing the language against the company ...

Reporter’s transcript p. 4. (Parenthetical phrase added.)

The condition precedent to Iowa’s duty to defend is not “exhaustion by the payment of judgment or settlements”, but rather, merely, “exhaustion by occurrence.” The issue in the prior case, whether “exhaustion by the payment of judgment or settlements” has occurred, is not identical with the threshold issue before me today, whether mere “exhaustion by occurrence” has happened.

Iowa’s collateral estoppel contention is rejected not only because the policy language at issue in Millers’ v. Farmers is different than that before me here, but for reasons of public policy. Judge Weinshienk’s restrictive construction of the policy’s “exhaustion by the payment of judgments or settlements” language was ordered in light of a “very strong state policy that an insured has a legitimate expectation of a defense in a case”. Reporter’s transcript p. 4-5.

A pro-insured construction should neither directly nor indirectly through collateral estoppel be invoked in the instant ease brought to determine the rights and liabilities between two insurers. Millers’ does not deny its liability to defend Farmers; Farmers’ expectation of a defense is fully protected as a result of the Millers’ v. Farmers ruling. Iowa is not within the ambit of the canon of construction and public policy which it seeks to invoke.

II. THE OCCURRENCE OF THE CONDITION PRECEDENT OF IOWA’S DUTY TO DEFEND

The condition precedent to Iowa’s duty to defend has occurred. Millers’ policy limits have been “exhausted by occurrence”. Words used in a document are to be given their plain meaning. Buckley Bros. Motors, Inc. v. Gran Prix Imports, Inc., 633 P.2d 1081 (Colo.1981). The plain meaning of “exhaustion” in the Iowa insurance contract includes exhaustion by way of interpleader. I reach this conclusion with due consideration of the parties briefs and with an eye toward the avoidance of unnecessary litigation.

Thus far, I have addressed whether Millers’ v. Farmers operates collaterally to estop Millers’ from asserting that Iowa has a duty to defend the parties’ mutual insured. I have ruled that Millers’ is not so estopped. Next, I held that the condition precedent of Iowa’s duty to defend has occurred. Now, I address the rights and obligations between the two insurer’s, both obligated to defend. In so doing I not only deny Iowa’s motion to dismiss but also rule upon the germinative issue in this case, i.e. Iowa’s duty to contribute to defense costs.

III. IOWA’S DUTY TO CONTRIBUTE TO DEFENSE COSTS

Generally speaking, there is a split of authority as to whether an excess insurer is obligated to contribute to the cost of defending an insured where the defense is provided by a primary insurer and a recovery is obtained which is in excess of the limits of the primary insurance policy. See, generally, Annotation. Performance by one insurer of its duty to defend as excusing failure of other insurers equally obligated to defend. 90 A.L.R.3d 1199 (1979). On the one hand it has been held that

The duty to defend is personal to each insurer. The obligation is several and the carrier is not entitled to divide the duty nor require contribution from another absent a specific contractual right.

United States Fidelity and Guaranty Company v. Tri-State Insurance Company, 285 F.2d 579 at 582, (C.A.10 1960) — applying Oklahoma law. Numerous other courts, however, have held that where

the claim is over the policy limits of the primary policy and only one insurer undertakes the defense, the primary insurer and the excess insurer will each be liable for a pro-rata share of the costs of defense in proportion to the amount of the claim each is required to pay.

American Fidelity Insurance Co. v. Employers Mutual Casualty Company, 593 P.2d 14 at 23, 3 Kan.App. 245 at 255 (1979).

Due to the factual peculiarities of this case, none of the precedents cited by the parties nor which my research has uncovered is dispositive. The following factual circumstances distinguish the present case: 1) Both insurers interpleading their policy limits, (Millers’ et al., v. Grace et al., No. 82-JM-1517); 2) A prior ruling that the primary insurer’s duty to defend continues notwithstanding the interpleading of its policy limits, (Millers’ v. Farmers, No. 82-Z-2196); and, 3) my finding, supra, that while the primary policy has not been “exhausted by the payment of judgments or settlements” so as to terminate the primary’s defense obligations, it has been exhausted for the purposes of triggering the excess insurer’s duty to defend.

Iowa places great reliance upon a California Supreme Court opinion, Signal Companies v. Harbor Insurance Co., 27 Cal.App.3d 359, 165 Cal.Rptr. 799, 612 P.2d 889 (1980). This reliance is misplaced. In Signal the primary insurer was denied a right to contribution for defense costs from the excess insurer. The Signal court concluded that “the expenses were incurred almost entirely prior both to settlement of the litigation and exhaustion of Pacific’s (the primary insurer) policy coverage”. 27 Cal.App.3d at 369,165 Cal.Rptr. at 805, 612 P.2d at 895, (emphasis and parenthetical phrase added). “In such a situation”, the court added, “there is no reasonable basis for assuming that the reasonable expectations of either the insured or the primary carrier were that the excess carrier would participate in defense costs beyond the express terms of the policy”. 27 Cal.App.3d at 369, 165 Cal.Rptr. at 805, 612 P.2d at 895.

Signal is factually inapposite because the defense costs presently at issue were, and still are being incurred, subsequent to the exhaustion of the primary policy limits. Such being the case, Farmers’ and Millers’ reasonable expectation is that Iowa will participate in the defense; The express condition precedent to Iowa’s duty to defend, “exhaustion by occurrence” of Millers’ policy limits, has occurred.

While Signal is of little precedential value, it does articulate the rationale behind my denial of Iowa’s motion to dismiss:

We expressly decline to formulate a definitive rule applicable in every case in light of varying equitable considerations which may arise, and which effect the insured and the primary and excess carriers, and which depend upon the particular policies of insurance, the nature of the claim made, and the relation of the insured to the insurers ... (citations omitted) ... Moreover, we affirm the wisdom expressed in American Automobile Insurance Company v. Seaboard Surety Co. (1957) 155 Cal.App.2d 192, 195-196, 318 P.2d 84, 86: “the reciprocal rights and duties of several insurers who have covered the same event do not arise out of contract, for their agreements are not with each other ... their respective obligations flow from equitable principle designed to accomplish ultimate justice in the bearing of a specific burden.

27 Cal.App.3d at 369, 165 Cal.Rptr. at 805, 612 P.2d at 895.

Millers’ claims a right to contribution from Iowa under the theory of equitable subrogation, defined by the 10th Circuit as a doctrine “grounded in equity and (which) arises by operation of law, (and) which gives to a third person who has been compelled to pay a remedy against one who, in justice, ought to pay.” Insurance Company of North America v. The Medical Protective Company, 768 F.2d 315, 320 (10th Cir.1985). See also Behlen Manufacturing Company v. First National Bank of Englewood, 472 P.2d 703, 28 Colo.App. 300 (1970). In the present case Millers’ is equitably subrogated to the rights of Farmers to whom Iowa is contractually obligated to defend.

In Continental Casualty Co. v. Zurich Insurance Co., 57 Cal.2d 27, 17 Cal.Rptr. 12, 366 P.2d 455 (1961), the court ordered that the costs of defense be shared by all the obligated insurers in proportion to their respective indemnification losses and noted that:

Under general principles of equitable subrogation ... it is our view that all obligated carriers who have refused to defend should be required to share in the costs of the insured’s defense ... A contrary result would simply provide a premium or offer a possible windfall for the insurer who refuses to defend, and thus ... enjoys a chance that the costs of defense will be provided by some other insurer at no expense to the company which declines to carry out its contractual commitments.

57 Cal.2d at 37, 17 Cal.Rptr. at 18, 366 P.2d at 461.

It is likely that the cost of defending Farmers against all claims brought against it in connection with the rupture of Lawn Lake Dam could run into the hundreds of thousands of dollars. Where both Millers’ and Iowa are contractually committed to defend, and the premiums collected from the insured reflect the risk that the insurers will be so obligated, equity will not permit Iowa the windfall of having their defense obligations discharged by Millers’.

Iowa cites a number of cases wherein an excess insurer who defended against a claim seeking damages in an amount below its liability was denied contribution from the derelict primary insurer. Not only are such cases factually inapposite, but a mechanical application of their “no contribution” rule would work palpable injustice in the case at bar.

In Continental Casualty Co. v. Fireman’s Fund Insurance Co., 403 F.2d 291, (C.A.10 1968), the 10th Circuit Court of Appeals upheld our Judge Arraj’s denial of an excess insurer’s claim for contribution for defense costs from the primary insurer. The rationale of the court’s decision was that by defending the claim against the insured the excess insurer conferred a benefit upon itself by precluding its own excess indemnification liability. In the present case, however, since Millers’ indemnification liability is exhausted, its continued defense is of no benefit to itself. Further, the district judge noted that “there certainly has been no showing that it (the defending excess insurer) incurred any greater costs in defending than it would have had the ... (primary insurer) ... assisted in the defense”. 403 F.2d at 323 (parenthetical phrase added). On the contrary, in the present case Millers’ will incur substantially greater defense costs if Iowa is not ordered to share. The equities compelling me to require contribution from Iowa in this case were absent in Continental Casualty, supra. Canal Insurance Co. v. Occidental Fire and Casualty Co. of North Carolina, 462 F.Supp. 512 (E.D.Okla.1978), cited by Iowa and with facts similar to Continental Casualty, supra, is likewise inapplicable.

Iowa cites United States Fidelity and Guaranty Co. v. Tri-State Insurance Company, 285 F.2d 579 (C.A.10 1960), as being dispositive of the issue before me and requiring that its motion to dismiss be granted. U.S.F. & G., however, is factually distinct. First, U.S.F. & G. was an excess insurer which incurred defense costs and sought contribution from the non-defending primary insurer; the opposite situation is now before me. Second, in denying U.S.F. & G. contribution from Tri-State the court noted that “no contractual relationship existed between Tri-State and U.S.F. & G. and the latter does not claim by subrogation”. 285 F.2d at 582. In its response to Iowa’s motion to dismiss, Millers’ specifically premises its right to have Iowa share in the defense costs upon the doctrine of equitable subrogation and not “contribution” per se. The pleading infirmity which precluded the sharing of costs in U.S.F. & G. is absent in the present case. Further, U.S.F. & G. fairly implies that had subrogation rather than contribution been pleaded, relief would have been awarded.

In Brayman v. Northwestern Mutual Insurance Co., 381 F.Supp. 362 (D.Colo.1974), cited by Iowa in support of its position, a defending co-insurer was denied contribution from another co-insurer; a decision following U.S.F. & G., supra. In Brayman, the ultimate judgment of the claim defended against was within the defending co-insurer’s policy limits. Bray-man, therefore, is irrelevant to the present suit as Millers’ is defending suits whose judgments most certainly will be far in excess of its policy limits. As noted with reference to Continental Casualty, supra, the equities compelling me to deny Iowa’s 12(b)(6) motion were not present in Bray-man.

Finally, Iowa cites Insurance Company of North America v. The Medical Protec tive Company, supra, wherein a primary insurer was denied contribution from the excess insurer for costs incurred in defense of a claim resulting in judgment in excess of the primary policy limits. A close reading of INA, however, supports my denial of Iowa’s motion to dismiss. The 10th Circuit recognized the doctrine of equitable subrogation but declined to invoke it in light of the unclean hands of the primary insurer:

The court in Signal went on to state that it “decline(d) to formulate a definitive rule applicable in every case in light of varying equitable considerations which may arise ...” Indeed, under all the circumstances of this case, we do not believe that Medical Protective is in any position to invoke equity in order to obtain contribution to Dr. Torbey’s defense costs.

768 F.2d at p. 323. The primary insurer was specifically found to have “acted in bad faith in failing to settle within its policy limits”. At p. 321. In the present case, the equities are clearly in Millers’ favor. IT IS THEREFORE ORDERED THAT;

Defendant’s motion to dismiss is denied. Further, because the parties have presented the issue in their briefs, IT IS ORDERED that the parties will each be liable for a share of the costs of defending Farmers in proportion to the amounts which they have deposited into the court registry pursuant to Millers’ v. Farmers, supra. In that action Millers’ interpleaded $400,-000.00 and Iowa interpleaded $600,000.00. Accordingly, Iowa is liable for 60% of all defense costs and Millers’ for 40%.


source: Caselaw Access Project

author: BARBOUR, District Judge.

license: Public Domain

text:
    K, An Attorney and B, An Attorney, Plaintiffs, v. The COMPLAINTS COMMITTEE OF the MISSISSIPPI STATE BAR, et al., Defendants.
    Civ. A. No. J84-0868(B).
    United States District Court, S.D. Mississippi, Jackson Division.
    Sept. 19, 1985.

      Shirley Payne, Charles R. Bliss, ACLU of MS, Jackson, Miss., for plaintiffs.
    Stephen Kirchmayr, Asst. Atty. Gen., Jackson, Miss., for defendants.
   MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This matter is before the Court on the following motions: Plaintiffs Motion for Certification of Plaintiff Class, Defendants’ Motion for Summary Judgment or, in the Alternative, Motion to Dismiss, and Plaintiff/Intervenor’s Motion to Intervene as Plaintiff.

PARTIES

The Plaintiff in this action is a member in good standing of the Mississippi State Bar who practices law in the State of Mississippi. Upon motion of the Plaintiff, this Court issued a protective order on November 30, 1984, granting Plaintiff the right to prosecute this action under a fictitious name. Plaintiff/Intervenor, Attorney B, is also a member in good standing of the Mississippi State Bar who practices law in the State of Mississippi. Plaintiff/Intervenor is also proceeding anonymously in this action and has filed a motion for a protective order to maintain such anonymity.

The Defendants are the individual members of the Complaints Committee of the Mississippi State Bar, the Complaints Counsel of the Mississippi State Bar and the individual members of the Mississippi Supreme Court. The members of the Complaints Committee and the Court are sued only in their official capacities.

FACTS

On June 29, 1984, a complaint was filed with Defendant Committee on Complaints of the Mississippi State Bar (Committee) against Plaintiff. The complaint was filed by one of the Plaintiff’s former clients and alleged, among other things, that Plaintiff wanted sex in return for his legal services and that he misrepresented the complainant in a divorce action. Plaintiff was immediately served with a copy of the complaint and was notified of his right to submit an informal response. Plaintiff was also informed that his response would be considered prior to determining whether or not an investigatory hearing would be conducted. Plaintiff’s response to the complaint was received by the Defendant Complaint Counsel on July 19, 1984. Following a review of the complaint and the Plaintiff’s response thereto, the Committee authorized its Complaint Counsel to conduct an investigation and hearing with regard to the allegations of the complaint. Plaintiff received a copy of the September 18, 1984, letter authorizing the investigation and hearing and was notified at that time of his right to offer witnesses and documentary evidence and to cross-examine and subpoena witnesses at the hearing.

The hearing was originally scheduled for October 17, 1984, but Plaintiff requested a continuance and the hearing was postponed until November 19, 1984. Plaintiff also filed a motion for a more specific statement as to the allegations which would be considered at the hearing and sought to have the hearing limited to specified allegations. A variety of other objections to the procedural and substantive aspects of the hearing were raised by the Plaintiff by way of motion and letters to Complaint Counsel and the hearing was again continued at Plaintiffs request until December 3, 1984.

On November 28, 1984, Complaint Counsel offered to hold the hearing in abeyance pending Plaintiffs presentation of his objections at the Committee’s meeting on December 14, 1984. This offer was apparently declined and Plaintiff filed suit in this Court on November 29, 1984, seeking declaratory and injunctive relief pursuant to 42 U.S.C. § 1983 for alleged violation of his rights under the First, Fourth, Fifth, Ninth and Fourteenth Amendments. A Motion for Certification of Plaintiff Class pursuant to Rule 23(b)(2) of the Federal Rules of Civil Procedure and for a Temporary Restraining Order was filed on the same date. In the Motion for a Temporary Restraining Order, Plaintiff requested that this Court enjoin the investigatory hearing. An Order denying the Temporary Restraining Order was entered on December 3, 1984.

The hearing was thereafter held as scheduled. On January 21, 1985, Plaintiff was informed by letter that the Committee had found no conduct on his part which would warrant disciplinary action and that the complaint was therefore dismissed. The letter informing Plaintiff of the dismissal contained a statement to the effect that the investigation had been instituted because of information provided by Plaintiff in his informal response to the complaint. The author of the letter noted that the conduct described by Plaintiff in his response “could constitute conduct not in the best interest of the tradition and values of the legal profession.”

Subsequent to the dismissal of the complaint by the Committee, Plaintiff was granted an enlargement of time in which to pursue class certification by Order of this Court on March 3, 1985. Defendants filed a Motion for Summary Judgment or, in the alternative, Motion to Dismiss on March 26, 1985. A Motion to Intervene as Plaintiff was filed on April 8, 1985, and Plaintiffs’ Amended Motion for Certification of Plaintiff Class was filed on April 11, 1985. Since issues relating to standing and abstention are raised in relation to each of the Motions, these issues will be addressed first and will then be examined in the particular context of the Motions now pending before this Court.

In relation to these issues, it should be noted that the Plaintiff seeks broad injunctive and declaratory relief against the Defendants. The relief sought includes an injunction limiting and defining the Defendants’ authority to conduct investigatory hearings as well as various declarations as to the constitutionality of the procedures and state statutes relating to such hearings.

STANDING

As shown in the above recitation of the facts underlying Plaintiff’s claims, Plaintiff was absolved of any charges of professional misconduct two months after filing the Complaint which is now before the Court. There are at this time no bar disciplinary actions pending against Plaintiff. Affidavit of Andrew J. Kilpatrick, Jr., attached to Defendant’s Motion, ¶ 11. Additionally, no damages are sought against any Defendants in this action.

As stated in O’Shea v. Littleton, 414 U.S. 488, 493, 94 S.Ct. 669, 675, 38 L.Ed.2d 674 (1974), “[plaintiffs in the federal courts must allege some threatened or actual injury resulting from the putatively illegal action before a federal court may assume jurisdiction.” (citations omitted). Because the bar proceedings involving Plaintiff were terminated on January 21, 1985, without any disciplinary action against Plaintiff, Defendants contend that there is at this time no threatened or actual injury sufficient to confer standing upon the Plaintiff to pursue this action in federal court. While Plaintiff’s standing at the outset of this action has not been challenged, the mootness doctrine relied upon by the Defendants in support of their Motion has been described as “a time dimension of standing, requiring that the interest originally sufficient to confer standing persists throughout the suit.” 13A Wright & Miller, Federal Practice and Procedure, § 3533.1 (2d Ed.1984). More simply stated, the mootness doctrine requires the existence of an actual case or controversy in the constitutional sense at all stages of litigation. See United States Parole Commission v. Geraghty, 445 U.S. 388, 411, 100 S.Ct. 1202, 1216, 63 L.Ed.2d 479 (1980). The controversy between the parties in the instant case, and thus the threat of injury to the Plaintiff, terminated when the complaint filed with the Mississippi State Bar against Plaintiff was dismissed. This Court therefore has no jurisdiction to decide the constitutionality of the procedures and statutes challenged by Plaintiff. See Golden v. Zwickler, 394 U.S. 103, 109-10, 89 S.Ct. 956, 960, 22 L.Ed.2d 113 (1969).

Plaintiff attempts to avoid application of the mootness doctrine by alleging a live interest in certain of the challenged state laws and a chilling effect from remaining under the investigatory power of the Defendants. . While Plaintiff may well have a live interest in the challenged laws governing confidentiality of state bar proceedings and the right to file libel, slander or malicious prosecution actions against the party who filed the complaint against him, this interest is insufficient to constitute an actual case or controversy. Plaintiff has not shown that the Defendants refused to waive the confidentiality of the bar proceedings nor has he shown that he attempted to file any action against the complaining party. See Boyle v. Landry, 401 U.S. 77, 91 S.Ct. 758, 27 L.Ed.2d 696 (1971) (standing to challenge state statutes denied where there was no showing of threatened or actual prosecution under challenged statute). Any injury or threat of injury from the challenged state laws is thus merely conjectual or hypothetical. See O’Shea, supra, 414 U.S. 488, at 494, 94 S.Ct. 669 at 675. The “chilling effect” which Plaintiff alleges from remaining under the “sweeping investigatory powers” of the Defendants is also insufficient to breathe life into this claim, since there is no showing that Plaintiff is or will be the subject of another bar investigation. See Laird v. Tatum, 408 U.S. 1, 11-14, 92 S.Ct. 2318, 2324-26, 33 L.Ed.2d 154 (1972).

Plaintiff further alleges that certain statements in the Committee’s January 21, 1985, letter are sufficient to give rise to “collateral consequences” and thus to give Plaintiff a continuing live interest in this lawsuit. It has been clearly established, though, that no facts or material relating to the bar complaint filed against Plaintiff, including the January 21, 1985, letter can be disclosed or used in any subsequent bar disciplinary proceedings against him. Since there can be no injury flowing to Plaintiff from the mere existence of this letter in the confidential files of the Mississippi State Bar, the collateral consequences exception to mootness is not applicable.

Plaintiffs efforts to avoid mootness by categorizing the Defendants’ actions as “capable of repetition, yet evading review” must also fail. As noted in De-Funis v. Odegaard, 416 U.S. 312, 319, 94 S.Ct. 1704, 1707, 40 L.Ed.2d 164 (1974), the “capable of repetition” exception is applied only in exceptional situations. In order to show that a controversy is “capable of repetition,” the individual plaintiff must show that there is a “reasonable expectation” or “demonstrated probability” that the same controversy will recur involving him. See Murphy v. Hunt, 455 U.S. 478, 482, 102 S.Ct. 1181, 1183, 71 L.Ed.2d 353 (1982). In this case, the facts show that any recurrence is far from probable. There are approximately 5,126 individual lawyers who are licensed to practice law in Mississippi and who are subject to the disciplinary jurisdiction of the Mississippi Supreme Court. In order for any of these individuals to be subject to the procedures challenged by Plaintiff, a written complaint must be filed with the Mississippi State Bar. See Rule 4, Rules of Discipline for the Mississippi State Bar. During the 1983-84 fiscal year, 285 complaints were processed by the Bar. Of this number, 158 or 55% were dismissed without an investigatory hearing. Based upon the facts before this Court, it cannot be said that there is demonstrable probability that one of the estimated 127 complaints which would be the subject of an investigatory hearing will involve Plaintiff.

Even if a demonstrable probability of recurrence could be shown, Plaintiff would have to show a likelihood that the recurrence would evade review. In the instant case, Defendants have demonstrated that ample provisions for review are provided when any disciplinary action, including issuance of an informal admonition, is taken. Rule 7 of the Rules of Discipline for the Mississippi State Bar allows an attorney who receives a letter of admonition to request in writing that formal disciplinary proceedings be initiated to adjudicate the propriety of the conduct upon which the admonition is based. Where a timely request is made, the letter is vacated and formal proceedings are initiated. Upon final disposition of the bar proceedings, the accused attorney may, as a matter of right, appeal any final disposition to the Mississippi Supreme Court. See Rule 9(a), Rules of Discipline of the Mississippi State Bar. On appeal, the Mississippi Supreme Court considers bar disciplinary matters de novo. See Levi v. Mississippi State Bar, 436 So.2d 781, 782 (Miss.1983). Thus, upon the recurrence of the actions alleged herein, the Plaintiff would have an ample opportunity to seek review of any disciplinary action taken by the Committee. The Mississippi Supreme Court has shown that it will fully consider any constitutional claims which are raised in an action seeking review of disciplinary proceedings. See, e.g., Netterville v. Mississippi State Bar, 397 So.2d 878 (Miss.1981) (due process challenge to disciplinary proceedings). The fact that the Plaintiff in the instant case chose to forego the specified procedures for review following final disposition of the complaint by the Committee in no way establishes that the proceedings are in fact “incapable of review.” See Matter of Kulp Foundry, Inc., 691 F.2d 1125, 1130 (3d Cir.1982) (exception to mootness doctrine inapplicable where mootness pending appeal could have been avoided by prompt and diligent action). This Court therefore finds that the Plaintiff’s personal claims are moot.

Because this action was brought as a class action, the Court’s inquiry does not end with an examination of the named Plaintiff’s standing to pursue his individual claim. Whether the mootness of the named Plaintiff’s personal claims requires the dismissal of the suit brought as class action depends largely on the timing of the class certification decision. See Zeidman v. J. Ray McDermott & Co., Inc., 651 F.2d 1030, 1046 (5th Cir.1981). When the personal claims of the named plaintiff are moot and no class has been certified, the general rule is that the action will be dismissed for mootness. Id. at 1045. Plaintiff argues that a substantial risk of mootness on the part of the named Plaintiff in the instant case is sufficient to justify class certification, citing Johnson v. City of Opelousas, 658 F.2d 1065 (5th Cir.1981). This argument overlooks the fact that the claims of the named Plaintiff in the instant case are not merely at risk of becoming moot, but are in fact moot and have been moot since final disposition of the disciplinary action on January 21, 1985.

In addition to the mootness exceptions advanced as to the personal claims of the named Plaintiff, Plaintiff urges that mootness in the class action context may be avoided by application of the “relation back” doctrine. This theory, when applicable, allows the court a reasonable opportunity to rule on a pending motion for class certification despite the intervening mootness of the named plaintiffs individual claim. See Zeidman, 651 F.2d 1030, supra at 1047. This theory has been applied in conjunction with the “capable of repetition, yet evading review” doctrine or where the plaintiffs claims have been rendered moot by purposeful action on the part of the Defendant. Id. As noted above, this Court does not view Plaintiffs claims as “capable of repetition, yet evading review,” and there has been no contention that Defendants purposefully acted to moot Plaintiffs claims.

Even without the intervening mootness of the named Plaintiffs claims, this Court finds that Plaintiff has failed to meet the burden of establishing all of the elements necessary for class certification. Plaintiffs claims relate to the substantive and procedural aspects of the Bar’s handling of the complaint which was filed against him by a former client. Due to the fact that the scope of any bar investigation will necessarily depend upon the particulars of the complaint being investigated, Plaintiff’s claims cannot be said to be typical of the class which he seeks to represent. See General Telephone Company of the Southwest v. Falcon, 457 U.S. 147, 156, 102 S.Ct. 2364, 2369, 72 L.Ed.2d 740 (1982) (noting that a class representative must possess the same injury as class members); Vuyanich v. Republic National Bank of Dallas, 723 F.2d 1195, 1199 (5th Cir.1984) (holding that class representative must possess the same interest and suffer the same injury as the class members) cert. denied — U.S. -, 105 S.Ct. 567, 83 L.Ed.2d 507. The procedures followed in the investigation of the complaint against Plaintiff could also be atypical, in that Plaintiff was granted two continuances of the investigatory hearing. In addition, the procedures followed by the Bar in relation to a given complaint necessarily vary with the findings which result from the investigatory stage of the procedures. Thus, the class which Plaintiff seeks to represent could include attorneys who are subject to prosecution of a formal complaint while Plaintiff was subject only to the procedures utilized in relation to informal complaints. The Court therefore finds that Plaintiff has failed to satisfy his burden of showing that his claims are typical of the proposed class.

ABSTENTION

As an alternative ground for dismissal, Defendants urge that this Court should decline jurisdiction based upon the principles of abstention as stated and applied in Middlesex Ethics Commission v. Garden State Bar Association, 457 U.S. 423, 102 S.Ct. 2515, 73 L.Ed.2d 116 (1982) and Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). While abstention would appear to be inapplicable to the extent that there are currently no pending state proceedings against the named Plaintiff, the Court finds that abstention would be appropriate as to any claims which are subject to pending proceedings before the various disciplinary agencies of the Mississippi State Bar. As previously stated in this opinion, it has been established that there is an adequate opportunity for attorneys who are disciplined by such agencies to raise any constitutional claims in the state proceedings. Since there is an adequate state forum for all relevant issues, the substantial state interest in bar disciplinary proceedings argues heavily against intervention by the federal courts in on-going disciplinary proceedings. Such intervention would run afoul of the principles of comity and federalism which form the basis for abstention.

INTERVENTION

A Motion to Intervene as Plaintiff in this action was filed by Attorney B after the Defendants had filed their Motion for Summary Judgment. Plaintiff/Intervenor has attempted to intervene based upon the fact that a complaint was filed against her with the Mississippi State Bar in January, 1985. The only action which appears to have been taken by any of the Defendants in regard to this complaint was the mailing of a letter and a copy of the complaint to Plaintiff/Intervenor. To the extent that any actions pertaining to this complaint are currently pending before an agency of the State Bar, this Court would decline jurisdiction based upon the principles of abstention discussed above.

Alternatively, this Court finds that the Motion for Intervention should be denied as untimely since it was filed long after the original Plaintiff’s claim became moot. See Black v. Central Motor Lines, Inc., 500 F.2d 407, 408 (4th Cir.1974).

For reasons set out hereinabove in this Opinion, Defendants’ Motion to Dismiss is hereby granted, and Plaintiff’s Motion for Class Certification is denied. Plaintiff/Intervenor’s Motion to Intervene is also denied.

      . The informal response which was filed by Plaintiff with the Mississippi State Bar contained the following statement:
      The allegations concerning my sexual advances to her [the complainant] during the period of time she worked for me have an element of truth, except that the words and actions have been twisted to suit [her] purposes. I have on occasion asked everyone who ever worked for me, plus a goodly number of the legal secretaries and assistant clerks and a few clients, to go away with me for a weekend, to go on vacation with me, to spend the night with me and made various other "sexual” comments. I have patted quite a few [fjannies and tickled or poked quite a few ribs. I may have done any or all of the above to [the complainant]____

      . Plaintiff contends that the letter notifying him of the dismissal of the complaint constituted an informal admonition. The Defendants have countered this allegation with an affidavit attached to their Motion for Summary Judgment stating that the letter was not an informal admonition. The affidavit further states that the letter is deemed expunged and not considered as a charge touching upon the Plaintiff/attorney's conduct. See Affidavit of Andrew J. Kilpatrick, Jr. attached to Defendant’s Motion for Summary Judgment at par. 10. While this Court finds that there is no genuine issue to the fact that an informal admonition was not issued, that finding is not essential to the resolution of the matters now before the Court. If an informal admonition had been issued by the Committee, Plaintiff could have exercised his rights under Rule 7(b)(iv) of Rules of Discipline for the Mississippi State Bar. The provisions of this Rule specify the procedures by which a letter of admonition may be vacated and formal proceedings instituted. The principles of abstention which would thus be brought into play are discussed in a subsequent section of this Opinion.

      . The proposed class is defined to include "all resident or nonresident attorneys who have in the past, do now, or will in the future practice law or render legal assistance in the State of Mississippi who have been, are now, or will in the future be subject to the disciplinary jurisdiction of the Mississippi Supreme Court.


author: WANGELIN, District Judge.

text:
    William Q. GLASS, Plaintiff, v. ALLIS-CHALMERS CORPORATION, Defendant.
    No. S84-52C (D).
    United States District Court, E.D. Missouri, Southeastern Division.
    Sept. 19, 1985.

      Kenneth L. Dement, Jr., Dement, Barkett & Dement, Sikeston, Mo., for plaintiff.
    John L. Oliver, Jr., Oliver, Oliver, Waltz & Cook, Cape Girardeau, Mo., for defendant.
   MEMORANDUM

WANGELIN, District Judge.

This matter is before the Court on defendant’s motion for summary judgment pursuant to Rule 56 Fed.R.Civ.P. Both parties have submitted memoranda and affidavits asserting their positions with respect to defendant’s motion.

FACTUAL BACKGROUND

Plaintiff brought this action alleging physical injuries which were the result of plaintiff falling from his combine while attempting to put out a fire of unknown origin. Plaintiff contends that (1) combines of this make and model have a propensity to catch fire; (2) the safety stripping which was on the deck of the combine when defendant manufactured the combine was likely to wear away or lose its adhesion; and (3) there were no warnings on or about the combine to give notice to the consumer of the defects articulated in (1) and (2) above.

Defendant manufactured the combine which plaintiff alleges is defective. Defendant asserts that the combine was not in the same condition at the time of plaintiff’s injury, as when it was placed in the stream of commerce. Defendant further contends that the combine was not defective when it was placed in the stream of commerce.

Missouri has adopted the Restatement of Torts 2d, § 402A. Weatherford v. H.K. Porter, Inc., 560 S.W.2d 31 (Mo.App.1977). In Weatherford the Court concluded that in order to make a submissible case, plaintiff must prove both a defect and that the product is expected to and does reach the user or consumer without substantial change in the condition in which it is sold. Weatherford, supra at 35. The language of M.A.F. Instruction No. 25.04 makes it necessary that plaintiff prove that the defect existed at the time the product left the hand of defendant.

Plaintiff has claimed two defects: (1) the lack of safety non-skid stripping on the deck of the combine; and (2) the propensity of this make and model to catch fire. Thus, according to the long standing principles of law cited above, plaintiff must establish that the lack of non-skid stripping was a defect at the time plaintiff placed their combine in the stream of commerce. Defendant, however, has produced affidavits that when defendant sold the combine to the local dealer, four strips of non-skid stripping called “safety walk” were in place on the deck of the combine. The uncontroverted evidence clearly indicates that the defect complained of was not present at the time defendant placed the combine in the stream of commerce.

Plaintiff next contends that the defect was not that the “safety walk” was missing but rather that the “safety walk” was likely to “wear away, or lose its adhesion.” This contention is simply not a sound legal theory for recovery.

Comment G to the Restatement of Torts 2d § 402A states:

The seller is not liable when he delivers the product in a safe condition, and subsequent mishandling or other cause make it harmful by the time it is consumed.

It is clear that as time goes by and a product is used, it or its parts may simply wear out. To hold a manufacturer or seller liable for unavoidable accidents or ordinary wear and tear would be to place the manufacturer or seller in the place of an insurer. This concept has been rejected as the law of Missouri in the Armco Steel cases.

In St. Louis-San Francisco R.R. Co. v. Armco Steel, a train derailment occurred because a wheel did not function properly. The Court specifically noted, “railroad wheels do not last forever.” St. Louis-San Francisco R.R. Co. v. Armco Steel, 359 F.Supp. 760 (1973), Aff'd. 490 F.2d 367, 370 (8th Cir.1974). In doing so, the Court reaffirmed the concept that a manufacturer is not responsible just because his product is involved in an accident.

Plaintiff’s position is weakened further by the fact that he purchased the combine used. It had been used for four years prior to. plaintiff’s taking possession. Plaintiff further provides no evidence as to what happened to the “safety walk”. It may have worn out, in which case Missouri law provides no remedy. The “safety walk” may have been removed by a previous owner, in which case defendant certainly is insulated from liability.

Plaintiff’s second contention is that combines such as these have a propensity to catch on fire. Plaintiff’s support for this contention rests in the affidavit of Mr. Cohen who is a combine repairman. Mr. Cohen states that he has worked on combines of this sort and that some of them have caught fire for a variety of reasons. Plaintiff’s assertion and supporting affidavit are not enough to impart liability on defendant. Plaintiff has not alleged any defect, only a conclusion that because of a defect these types of combines catch fire.

It is true that the existance of a defect may be inferred from circumstantial evidence with or without the aid of expert opinion evidence. Winters v. Sears, Roebuck and Co., 554 S.W.2d 565 (Mo.App.1977). However, when plaintiff relies upon such proof, he does have the burden of establishing circumstances from which the facts necessary to prove his claim may be inferred, without resort to conjective and speculation, and the circumstances proved must point reasonably to the desired conclusion. Further, the facts inferred must tend to exclude any other reasonable conclusion. Hale v. Advance Abrasives Co., 520 S.W.2d 656, 658 (Mo.App.1975).

This case differs from Williams v. Ford Motor Co., 411 S.W.2d 443 (Mo.App.1966). In Williams the Court found that if a new automobile is properly operated but does not turn in the direction it is steered, then the automobile is not properly manufactured. (Emphasis added). Id. at 448. See also Jacobson v. Broadway Motors, Inc., 430 S.W.2d 602 (Mo.App.1968) (jury could infer that a fire which started under the hood of a three-month-old car while the car was stopped in a parking lot was caused by a defect in material or workmanship).

In contrast to Williams and Jacobson, plaintiffs combine was four years old at the time plaintiff purchased it. No evidence has been provided as to its maintenance or service record. Thus, plaintiffs evidence does not rule out the most reasonable explanation for the fire, namely that during four years of use either the combine was not properly maintained or again that certain parts simply wore out.

Once the plaintiff in a case of strict liability produces evidence that neither he nor any third-party has made alteration to the product which would create a defect that could be the proximate cause of the damages incurred, he has made a submissable case as to the issue of a defect at the time of. sale or delivery of the product. Winters v. Sears, supra at 573. Here plaintiff has produced no such evidence with respect to either the non-skid strips or the propensity of combines to catch fire.

Since it has not been established that the combine was defective when defendant placed it in the stream of commerce, plaintiffs third contention that warnings should have been given is without merit.

The Eighth Circuit Court has determined that summary judgment is appropriately approached simultaneously from two different directions, either of which provides a proper basis for the granting of summary judgment. First, the burden is upon defendant to show there is no genuine basis as to any material fact. However, when the defendant comes forward with affidavits, as in this case, the plaintiff then has the burden to demonstrate specific facts showing there is a genuine issue for trial. Lyons v. Board of Education, 523 F.2d 340 (8th Cir.1975). The second approach is to examine whether, under the circumstances, a directed verdict, under the same evidentiary facts, would be required. Hurd v. Sheffield Steel Corp., 181 F.2d 269 (8th Cir.1950).

Plaintiff here has not produced specific facts showing a genuine issue for trial, and, based upon evidence produced by plaintiff, defendant as matter of law would be entitled to a directed verdict because plaintiff has not presented a submissible case as to the existence of any defect in the combine when defendant placed it in the stream of commerce.

Accordingly, appropriate Orders and Judgment will be entered in accordance with this Memorandum.


author: GLEN M. WILLIAMS, District Judge.

text:
    Della H. WARREN, Plaintiff, v. BANK OF MARION, et al, Defendants.
    Civ. A. No. 84-0348-A.
    United States District Court, W.D. Virginia, Abingdon Division.
    Sept. 20, 1985.

      Mary Lynn Tate, Abingdon, Va., Lome Campbell, Independence, Va., for plaintiff.

      Stephen M. Hodges, Abingdon, Va., C. Adrian White, Bristol, Va., Joseph Tate, Marion, Va., for defendants.
   MEMORANDUM OPINION AND ORDER

GLEN M. WILLIAMS, District Judge.

Plaintiff instituted this action seeking damages for slander, slander of title, emotional distress and violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692. The action is now before the court on defendants’ motions for summary judgment pursuant to Fed.R.Civ.P. 56. Jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332.

I.

The controversy at bar arises over a suit filed in the Circuit Court of Smyth County, Virginia on December 19, 1978, and a notice of lis pendens filed among the land records in the Smyth County Clerk’s Office on December 20, 1978. These were filed by the defendants Bank of Marion (the Bank) and Grissom Motor Parts, Inc. (Grissom Motor), both Virginia corporations, against the plaintiff, Della H. Warren, a resident of Tennessee, and against land recorded in her name, respectively. As set forth in the bill of complaint, defendants alleged, inter alia, that plaintiff’s son, James Warren, was owing on two notes payable to the Bank and an account to Grissom Motor; that subsequent to execution of the first note he conveyed certain parcels of real estate located in Smyth County to plaintiff; that he had fled the Commonwealth of Virginia without making payment on these debts; and that he had taken with him the collateral, an automobile, that he had given with one of the notes. As part of their relief, defendants sought to have the conveyances from James Warren to plaintiff set aside pursuant to Virginia statutes governing conveyances made in an attempt to defraud creditors. In the memorandum of lis pendens, the defendants gave notice that the suit in the Smyth County Circuit Court was pending, stating that the object of the action was “to set aside as fraudulent and void certain deeds made by James R. Warren to Della H. Warren ... and to subject the property therein mentioned to the payment of the plaintiffs’ claim.” The memorandum went on to describe the property James Warren conveyed to plaintiff.

On September 22, 1983, the Smyth County Circuit Court ordered the Bank and Grissom Motor’s suit against plaintiff dismissed upon a finding that they had failed to prove that plaintiff had attempted to defraud them. Subsequently, the defendants prepared a release of lis pendens, which was filed on October 5,1983 with the Smyth County Clerk’s Office.

Plaintiff filed the present action on September 21, 1984. In count one of her complaint, she essentially alleges that as a result of the bill of complaint and memorandum of lis pendens filed by the defendants against her and her property she is entitled to damages for slander and slander of title. Plaintiff also alleges in count one that she is entitled to damages for emotional distress that she suffered as a result of defendants’ conduct. In count two, she alleges that defendants’ efforts at collecting the debts owed them by her son constitutes violations of 15 U.S.C. § 1692 of the Fair Debt Collection Practices Act, which also entitles her to damages.

II.

The court must now consider defendants’ motions for summary judgment in which it is argued: first, that all of plaintiff's claims in both counts are barred by the applicable Virginia statutes of limitations; second, that the documented statements giving rise to the defamation claim (which defendants assume to include the claim for slander of title) is nevertheless absolutely privileged; and third, that count two does not state a claim upon which relief may be granted because neither defendant is a “debt collector” within the scope or meaning of the Fair Collection Practices Act.

A.

In diversity actions this court must first look to the law of Virginia to determine both the appropriate statute of limitations and the time at which a claim accrues under the applicable statute. Brown v. American Broadcasting Co., 704 F.2d 1296 (4th Cir.1983) (citing Ragan v. Merchants Transfer and Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949)). In its brief in support of the summary judgment motion, defendant Bank correctly states that in Virginia an action for defamation is subject to the one-year statute of limitations set forth in Virginia Code § 8.01-248 (1984). Watt v. McKelvie, 219 Va. 645, 248 S.E.2d 826 (1978); Weaver v. Beneficial Finance Co., 199 Va. 196, 98 S.E.2d 687 (1957). Based on this premise, defendant concludes that plaintiff’s claim of defamation is time-barred because the present action was instituted approximately five and one-half years after the December, 1978 filing of the bill of complaint and memorandum of lis pendens, which have been identified as the sole source of slanderous statements upon which plaintiff bases the claim. Defendant, in reaching this conclusion, makes two incorrect assumptions. First, defendant assumes that an action for slander of title falls within the general common law rules governing a tort of defamation. Second, defendant assumes that plaintiff’s cause of action for what is, in fact, an action based on an alleged personal defamation, necessarily accrued upon publication of the alleged defamatory statements, e.g. upon the December, 1978 filings.

Though the tort of slander of title has been analogized to one of defamation, it is a separate and distinct common law cause of action. Dean Prosser has explained its historical development as follows:

The earliest cases, which arose shortly before 1600, involved oral aspersions cast upon the plaintiff’s ownership of land, by which he was prevented from leasing or selling it; and from this tort acquired the name of ‘slander of title.’ From the beginning, however, the action seems to have been recognized as only loosely allied to defamation, and to be rather an action on the case for the special damage resulting from the defendant’s interference. In the nineteenth century it was enlarged by slow degrees, first to include written aspersions and the title to property other than land, and then to cover disparagement of the quality of the property, rather than its title.

W. Prosser, Handbook of the Law of Torts § 128 (4th ed.1971). Thus, the nature of a slander of title action is an aspersion upon one’s property, rather than one’s person. As to the law governing the various elements of this cause of action, including the appropriate statute of limitations and the time at which the action accrues under the applicable statute, the court must look for guidance to sources outside the Commonwealth since it has found no decisions by the Virginia Supreme Court dealing with a slander of title action.

It is generally recognized that in bringing an action for slander of title the plaintiff must prove that the defendant maliciously published false words, which disparaged plaintiff’s property causing plaintiff to suffer special damages. Cf. General Products Company v. Meredith Corp., 526 F.Supp. 546 (E.D.Va.1981) (dealing with related action for product disparagement); see generally 50 Am.Jur.2d, Libel and Slander, §§ 539-558 (1970); Restatement (Second) of Torts § 624 (1977). The alleged malicious filing of a lis pendens, which would cast a cloud over the subject property, should thus be recognized as constituting the basis for such an action, subject to any privilege to which the defendant might be entitled. For a discussion of specific and related cases, see Annot., 39 A.L.R.2d 840 (1955). For a more recent case affirming the principle that the act of maliciously recording a document that disparages another’s title to real estate is actionable as slander of title, see Whildin v. Kovacs, 82 Ill.App.3d 1015, 38 Ill.Dec. 463, 403 N.E.2d 694 (1980).

Accordingly, plaintiff has set forth a prima facie case of slander of title by her allegations that defendants had made false statements regarding her property in filing the memorandum of lis pendens; that defendants made claims against her property “knowing that they could not legally do so” and that as a result of defendants’ slandering of her title she sustained damages through a lost sale of the subject property.

Turning, then, to the statute of limitations issue, the court has found a split of authority among those courts that have addressed the question as to which statute of limitations applies to a slander of title action in the absence of an expressly applicable statute. Under one line of authority, courts have held that the action is governed by the statute of limitations applicable to ordinary actions for defamation; whereas courts in other jurisdictions have held that the action is subject to the generally longer limitations period application to actions for trespass or injury to property. Compare Lehigh Chemical Company v. Celanese Corp. of America, 278 F.Supp. 894 (D.Md.1968) (applying Maryland’s one-year limitations period for a defamation action in a diversity action for disparagement of property) with Selby v. Taylor, 57 N.C.App. 119, 290 S.E.2d 767 (1982) (applying North Carolina’s three-year limitations period for trespass upon real property in an action for slander of title). The court, however, does not have to reach a decision in the present case on whether Virginia’s one-year statute of limitations for defamation actions or its five-year statute of limitations for injury to property actions should govern an action for slander of title. Given the court’s position on when the statute of limitations begins to run for a slander of title action as the one at bar, plaintiff’s action is not time-barred even under the shorter limitations period.

Though there is authority providing otherwise, the court is persuaded by the decisions of those courts that have held that the statute of limitations applicable to an action for slander of title does not begin to accrue as long as the defendant maintains the claim against the plaintiff’s property. See 53 C.J.S. Libel and Slander § 278 (1948). In Chesebro v. Powers, 78 Mich. 472, 44 N.W. 290 (1889), for example, the court, without deciding whether the shorter limitations period for defamation actions applied to the slander of title action at bar, held as follows:

Though the deed containing the defamatory words was executed more than two years before commencement of the action, as defendants continued their claim to the premises up to within a few months thereof, plaintiff’s action is not barred, even if How.St.Mich. § 8714, which provides that ‘all actions for ... slanderous words and for libels shall be commenced within two years after the action shall accrue,’ is applicable.

This rule was later followed in New England Oil & Pipe Line Company v. Rogers, 154 Okla. 285, 7 P.2d 638 (1931) (citing Chesebro), a case involving a slander of title action based upon a notice of claim to an oil and gas lease that the defendants recorded with the county clerk against the plaintiff’s property. The notice was recorded in April, 1923. Plaintiff’s action was not commenced until February, 1925. Defendants contended that the action was barred by the state’s one-year statute of limitations. The court decided in plaintiff’s favor, however, but without ruling on the applicable limitations period. As the court reasoned,

We deem it unnecessary to discuss this question. The record shows clearly that the affidavit or notice complained of remained on record, and the defendant continued to assert its rights and claims to the land until about December 17, 1924, when it agreed to a judgment canceling its lease.

Id. at 642. “The rule as to the running of the statute of limitation in cases involving slander of title,” the court went on to state, is that “ ‘where the slander complained of consists of a continued claim of rights in plaintiffs property by defendant, the statute of limitations does not commence to run until defendant ceases to set up his adverse claims.’ ” Id. And in Green v. Chamberlain, 60 So.2d 120, 124 (La.Ct.App.1952), involving a slander of title action over facts similar to those in Rogers, the court held:

[W]e are of the opinion that the slander was not committed by the mere recordation of the lease but is being committed by the continued existence of the lease on record together with the acceptance of rentals by the lessor. We do.not mean by this to voice our opinion as to whether a prescriptive period of more than one year may be applicable to suits of this nature; we are merely of the opinion that in the case of a continued slander, as here, that suit is timely brought if instituted within one year from the time of the existence (as opposed to the initiation) of the slander.

Thus, the fact that plaintiff instituted the present action approximately five and one-half years after the filing of defendants’ memorandum of lis pendens is not dispositive of her claim for slander of title. Under the rule here adopted, this cause of action did not fully accrue and the limitations period did not begin to run until the defendants released their claim against her property. Since plaintiff filed her action within one year of this release, she is not barred by application of Virginia’s statute of limitations for defamation actions, much less its limitations period for injury to property. To hold otherwise would anomalously cut off plaintiff’s opportunity to pursue her rights against the defendants prior to the time that defendants had exhausted their remedial efforts against her, which are the very efforts giving rise to plaintiff’s present action. Moreover, the court’s holding in this matter is supported by analogous decisions by state and federal courts applying Virginia statutes of limitations in which it has been held that in the event of a continuing tort the statute of limitations does not commence running until such tortious conduct has ceased. See, e.g., Fenton v. Danaceau, 220 Va. 1, 255 S.E.2d 349 (1979) (statute of limitations in medical malpractice suit began to run only after the termination of what was allegedly to have been a continuous and substantially uninterrupted course of treatment); Williams v. Norfolk and Western Railway Co., 530 F.2d 539 (4th Cir.1975) (Virginia statute of limitations not a bar to railroad employee’s civil rights actions since they related to alleged employment practices which constituted continuous discrimination); Poe v. Lynchburg Training School and Hospital, 518 F.Supp. 789 (W.D.Va.1981) (Williams followed in civil rights suit).

The court now turns to what is, in fact, plaintiff’s cause of action for an alleged personal defamation. Plaintiff claims to have been defamed in both the bill of complaint and memorandum of lis pendens. For reasons discussed in Part II.B. of this opinion, plaintiff cannot rely on statements contained in the bill of complaint as a basis for this claim. She may rely on statements contained in the memorandum of lis pendens, however, as a basis for such an allegation. Courts addressing the issue have generally held that a slander of property or title action may also give rise to an action for personal defamation where the statements regarding the property also contain imputations on the plaintiff’s character or reputation. See 50 Am. Jur. 20 Libel and Slander § 540 (1970). The court in Lehigh Chemical Company, 278 F.Supp. at 896, for example, after reviewing a number of both American and English defamation and disparagement of property cases, concluded that if the alleged defamatory statement either directly or by implication “ascribes dishonesty, fraud, lack of integrity, or reprehensible conduct to the owner ... or seller of the property it [also] constitutes personal defamation.” That both a defamation and disparagement of property action may arise from the same statement was recently recognized in General Products Company, 526 F.Supp. at 553, a diversity action of first impression involving an action for personal defamation and for disparagement of goods in which the court was to apply Virginia law. Though there was no Virginia law dealing with property disparagement to guide the court then, just as now, there has continued to be Virginia law recognizing common law actions for defamation. Fleming v. Moore, 221 Va. 884, 275 S.E.2d 632 (1981). Plaintiff, therefore, in her allegations that she was defamed by defendants’ accusations of fraud contained in the memorandum of lis pendens has set forth a cognizable claim of personal defamation.

As stated previously, however, defendants argue that plaintiff’s claim is time-barred under Virginia’s applicable one-year statute of limitations because the source of the alleged defamatory statement was published approximately five and one-half years prior to institution of the present action. In addressing the statutory limitation issue as to plaintiff’s second claim the court is again without Virginia law on point. Although the Supreme Court of Virginia has dealt with the issue of publication and republication of defamatory matter as this relates to the running of the statute of limitations, Weaver v. Beneficial Finance Co., 199 Va. 196, 98 S.E.2d 687 (1957), it has not confronted the issue in the present context in which plaintiff’s defamation claim could not be adjudicated before the parties to this action had settled their rights in prior litigation. The Fifth Circuit, however, squarely addressed the issue in this context long ago in Masterson v. Brown, 72 Fed. 136 (5th Cir.1896), which involved an action for libel and for malicious prosecution in a civil suit. The libel action was based on publications not absolutely privileged that were made in the course of litigation giving rise to the claim of malicious prosecution. Though more than a year had passed since the alleged defamatory statements had been published, the subsequent action was filed less than one year from the conclusion of the prior litigation. On defendant’s motion to dismiss plaintiff’s defamation action as untimely, the court held that plaintiff was not time-barred under the applicable one-year limitations period based on the conclusion that

every reason which has been advanced or which we can perceive for holding that a cause of action for malicious prosecution does not exist until the malicious prosecution is terminated in favor of the defendant, applies with equal force to a suit by the defendant for libel founded on [nonprivileged] publications made in the course of the judicial proceeding in the first suit.

Id. at 142. As the court aptly pointed out in arriving at this conclusion, neither action could be brought if the plaintiff prevailed in the initial proceeding; only when the plaintiff received an unfavorable verdict could defendant proceed in a subsequent action and attempt to prove that plaintiff’s allegations were baseless and maliciously motivated. Id. at 139-141. This rationale was more recently applied in Giordano v. Tullier, 139 So.2d 15 (La.Ct.App.1962), a case involving circumstances nearly identical to those in Masterson. There, the Louisiana Court of Appeals followed a number of Louisiana Supreme Court decisions in holding that the limitations period did not begin to run on plaintiff’s libel claim until final judgment on appeal had been entered in the prior suit, which was the basis of plaintiff’s claim in the subsequent action.

The principle derived from these cases is applicable in the present case. In proceeding on a theory of defamation, plaintiff’s threshold burden will be to prove that defendants’ alleged defamatory statements were falsely made. Had defendants prevailed in their action in state court plaintiff would be estopped from pursuing such a claim since defendants’ assertions would have been adjudged as valid. Thus, it was only after the court ruled in plaintiff’s favor (as defendant) that her action for defamation fully accrued. Since she instituted the present suit within one year from the date of the state court’s final order her defamation action is timely.

The court now moves to plaintiff’s third cause of action based on allegations of infliction of emotional distress. Plaintiff alleges in paragraph VI of count one of the complaint that subsequent to institution of the state action “defendants and their agents and employees intentionally, maliciously and regularly harassed the plaintiff,” which constituted “outrageous conduct” and caused her “extreme emotional distress.” Plaintiff concedes in her answer to interrogatories, however, that the alleged acts of harassment were by a Bank employee only, and last occurred in 1979. Furthermore, despite the construction that plaintiff argues to be given to count one, plaintiff fails to allege any other basis for her claim of emotional distress. Thus, as defendants argue, this claim is barred by the Virginia two-year statute of limitations governing actions for personal injury. See Moore v. Allied Chemical Corp., 480 F.Supp. 364 (E.D.Va.1979).

As to count two of plaintiffs complaint, the court does not have to rule on the timeliness of plaintiffs claim based on alleged violations of the Fair Debt Collection Practices Act. Plaintiff concedes in her brief in opposition to summary judgment that neither defendant is a “debt collector” within the scope or meaning of the Act. Count two thus fails to state a claim upon which relief may be granted.

B.

The remaining issue before the court is whether plaintiffs defamation and slander of title claims are nevertheless barred based on defendants’ argument that the source of the statements allegedly giving rise to these claims is absolutely privileged. ■ It is well established that state law governs when the privilege defense is raised in a private individual defamation action, Mills v. Kingsport Times-News, 475 F.Supp. 1005 (W.D.Va.1979); furthermore, though no court in Virginia has addressed the issue, it is generally accepted that the same law of privileges applies to actions for slander of title. See 50 Am.Jur.2d Libel and Slander § 547 (1970). The law of privileges in this context is based on public policy protecting communications made in certain circumstances that might otherwise be actionable. The privilege is one of two kinds, qualified or absolute, depending upon the circumstances in which it is raised. Judicial proceedings have been recognized in Virginia as constituting one of the principal occasions where communications are absolutely privileged. See Elder v. Holland, 208 Va. 15, 155 S.E.2d 369 (1967). In other circumstances only a qualified privilege is deemed appropriate, whereby the plaintiff can avoid the privilege defense if it is proved that the defendant’s communications were published, with actual malice. See Preston v. Land, 220 Va. 118, 255 S.E.2d 509 (1979).

As to the communications on which plaintiff bases her defamation and slander of title claims, plaintiff concedes that the bill of complaint filed in state court is squarely within the absolute privilege granted under Virginia law for communications made in the course of judicial proceedings. The real issue is whether the statements contained within the memorandum of lis pen-dens constitute communications protected by an absolute privilege, a qualified privilege, or no privilege at all. The Virginia Supreme Court has not ruled on the status of a notice of lis pendens in this context, but has addressed the status of debt collection related communications in an action for defamation, holding the communications made by a creditor who has an interest in the subject matter to be qualifiedly privileged. Rosenberg & Sons v. Craft, 182 Va. 512, 29 S.E.2d 375, 381 (1944). Also, in Federal Land Bank of Baltimore v. Birchfield, 173 Va. 200, 3 S.E.2d 405 (1939), involving an action for defamation, the court held the communications that were published by the defendant bank in order to protect its interest in a new loan servicing plan to be a qualifiedly privileged occasion. It is the court’s opinion that the statements contained within the memorandum of lis pendens should be equally treated.

Defendants, on the other hand, argue that the subject-memorandum is absolutely privileged as part of a judicial proceeding, citing as authority Stewart v. Fahey, 14 Ariz.App. 149, 481 P.2d 519 (1971). Stewart is one of several state court decisions across the country that have relied on Albertson v. Raboff, 46 Cal.2d 375, 295 P.2d 405 (1956), in which the court rejected an earlier California Supreme Court decision that held a notice of lis pendens only qualifiedly privileged in an action for slander of title. In holding such a publication absolutely privileged, the Albertson court relied on the fact that the publication was permitted by law and considered it necessary in order to “achieve the objects of the litigation,” even though a court was not involved in its making. Id. at 409.

It is this court’s position, however, that when all the interests involved are taken into consideration the filing of a notice of lis pendens is more appropriately characterized as a qualifiedly privileged occasion. As a preliminary matter, such a notice can easily be viewed as an extrajudicial publication involving merely a private act, and not involving any function of the court, thus falling outside the scope of protection given to communications made in the course of judicial proceedings. Nevertheless, the filing of a notice of lis pendens gives a creditor an opportunity to protect whatever interest he believes he may have in certain real estate during litigation by preventing the property from being taken by a bona fide purchaser for value. See Va.Code § 8.01-268 (1984). The one holding title to the property, on the other hand, deserves the protection of a legal disincentive against an ill willed creditor who, without justification, wishes to apply undue pressure by tieing up the record owner’s property with a notice of lis pendens for what could be a period of years. In holding a notice of lis pendens subject to a qualified privilege, the court is not placing any restraints on a creditor who in good faith wants to protect his potential legal interests, while at the same time allowing a landowner an opportunity to prove that she has been defamed and her property disparaged by the unfounded and malicious publication of another. Furthermore, this position comports with the Virginia Supreme Court’s treatment of the privilege defense in the Craft and Birch-field cases cited above where publications made to protect a personal or business interest was at issue.

For the reasons stated above, defendant’s motions for summary judgment are denied as to count one of plaintiff’s complaint, with the exception of defendants’ motion as to plaintiff’s claim of emotional distress, which is hereby granted. Defendants’ motion for summary judgment as to count two of plaintiff’s complaint is also granted.

      . Liberally construed under the standard for notice pleading, the complaint sets forth a claim of personal defamation as well as one for slander of title, though plaintiff failed to set out the defamation claim in a separately numbered paragraph.