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06/05/89 Robert C. King, v. Paul Levin

June 5, 1989





540 N.E.2d 492, 184 Ill. App. 3d 557, 132 Ill. Dec. 752 1989.IL.841

Appeal from the Circuit Court of Cook County; the Hon. Allen A. Freeman, Judge, presiding.


JUSTICE BUCKLEY delivered the opinion of the court. CAMPBELL and QUINLAN, JJ., concur.


Robert King (plaintiff), who is engaged in the business of subsidized real estate development, learned of a Housing and Urban Development funding opportunity for low and moderate income housing developments. In pursuit of this opportunity, plaintiff executed an option to purchase two buildings containing 54 units located at 2630-44 North Spaulding and 2219-23 North Kedzie Boulevard in Chicago (hereinafter the Lorington). In September 1983, HUD awarded plaintiff the subsidies for the development, and plaintiff thereafter submitted loan applications for the project to the Illinois Housing Development Authority and the Chicago Metropolitan Housing Development Corporation. In May 1984, IHDA included the Lorington in an upcoming bond sale, through which it would finance the development. On May 21, 1984, four days before the scheduled bond sale, Paul Levin (defendant), a resident of the neighborhood, telephoned IHDA and threatened to institute litigation to stop the project. IHDA subsequently decided to exclude the Lorington from the bond sale.

Plaintiff then filed an action in the circuit court against defendant for tortious interference with prospective economic advantage, alleging that as a result of defendant's malicious threat of baseless litigation to IHDA, he incurred damages from the loss of IHDA's financing. After five days of trial before a jury, the trial Judge granted defendant's motion for a directed verdict at the close of plaintiff's case in chief because plaintiff failed to establish that defendant's actions were not privileged under the first amendment right to petition government for redress of grievances, as defendant had alleged in his affirmative defense.

Plaintiff appeals from the trial court's order, contending that the trial court, in directing the verdict against him on first amendment grounds, committed several reversible procedural errors, as well as erroneously concluding plaintiff had not met his burden on the merits. Plaintiff also raises as error the trial court's exclusion of evidence on the issue of damages. We affirm on the ground that plaintiff did not meet his burden of proving the absence of a first amendment privilege.

The first amendment right to petition government for redress of grievances has been invoked as a qualified privilege in the Federal courts and in Illinois to protect persons engaged in activities designed to influence government action from civil liability. Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc. (1961), 365 U.S. 127, 5 L. Ed. 2d 464, 81 S. Ct. 523, established the "Noerr-Pennington doctrine," in invoking this first amendment right to protect efforts to lobby or influence public officials from antitrust liability. The Supreme Court qualified the privilege, however, by excluding from protection lobbying activities constituting a "mere sham" -- "nothing more than an attempt to interfere directly with the business relationships of a competitor." Eastern R.R., 365 U.S. at 144, 5 L. Ed. 2d at 475, 81 S. Ct. at 533.

The Supreme Court further expanded the doctrine to protect efforts to seek redress through the judicial process in California Motor Transport Co. v. Trucking Unlimited (1972), 404 U.S. 508, 30 L. Ed. 2d 642, 92 S. Ct. 609. The Court recognized there that the right to petition includes the institution of administrative and adjudicatory proceedings. It also applied Eastern R.R.'s "sham" lobbying activities exception to "sham litigation," situations involving a pattern of baseless, repetitive claims. Thereafter, a number of lower Federal courts held in antitrust actions that a single lawsuit or claim may constitute "sham litigation." See, e.g., MCI Communications Corp. v. American Telephone & Telegraph Co. (7th Cir. 1983), 708 F.2d 1081; Clipper Express v. Rocky Mountain Motor Tariff Bureau, Inc. (9th Cir. 1982), 690 F.2d 1240.

Federal and State courts did not limit application of the Noerr-Pennington doctrine and its "sham litigation" exception to antitrust actions, but adopted the doctrine for civil claims outside the antitrust area. See, e.g., Protect Our Mountain Environment, Inc. v. District Court (Colo. 1984), 677 P.2d 1361; Sierra Club v. Butz (N.D. Cal. 1972), 349 F. Supp. 934; Landmarks Holding Corp. v. Bermant (2d Cir. 1981), 664 F.2d 891.

The Illinois Supreme Court invoked the first amendment right to petition government for redress of grievances in a tortious interference with contract action, but applied a different "exception" than that which the Federal courts have adopted. In Arlington Heights National Bank v. Arlington Heights Federal Savings & Loan Association (1967), 37 Ill. 2d 546, 229 N.E.2d 514, the court addressed the extent to which acts petitioning a legislative body were privileged under the petitioning clause. It found that the right to petition is not absolute and that wrongful conduct by a person who has "actual malice" is outside the ambit of the privilege. Arlington Heights, 37 Ill. 2d at 551, 229 N.E.2d at 518.

With this constitutional foundation, we address plaintiff's claims, beginning with his procedural contentions. Plaintiff initially contends that the trial court improperly shifted defendant's burden of proving his affirmative defense of a qualified privilege to plaintiff by prematurely granting a directed verdict. He argues that by directing the verdict at the close of plaintiff's case in chief, the court improperly required plaintiff to prove "actual malice" or "sham" as an element of his case in chief once the petition privilege became an issue. Notwithstanding our concurrence with defendant's argument that plaintiff has waived this issue by failing to raise it at trial or in post-trial motions and by his arguments before the trial court, we believe plaintiff's contention is without merit.

Aside from citing cases which set forth general principles as to the order of proof relating to affirmative defenses (Capitol Plumbing & Heating Supply, Inc. v. Van's Plumbing & Heating (1978), 58 Ill. App. 3d 173, 373 N.E.2d 1089; Harwood v. Attella (1963), 44 Ill. App. 2d 280, 194 N.E.2d 520 (abstract of opinion)), plaintiff relies solely on a Federal district court case analyzing Illinois law to support his position that the plaintiff does not have the burden of proving this qualified privilege as an element of his cause of action. In Haupt v. International Harvester Co. (N.D. Ill. 1984), 582 F. Supp. 545, 550, the court stated that ...

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