OPINION OF THE COURT
General Refractories Company (GRC) appeals the dismissal with prejudice of its claims of abuse of process and civil conspiracy against the law firm of Gilberg & Kiernan and one of its attorneys, Andrew Butz, Esq. We agree with the District Court that the Complaint failed to state a claim, under Pennsylvania law, for abuse of process, but conclude that it abused its discretion in denying GRC leave to amend the Complaint as to that claim. We further disagree with the District Court that the judicial privilege necessarily would insulate the attorney appellees from liability for abuse of process. Finally, we agree with the District Court that the “intracor-porate conspiracy doctrine” immunized the attorney appellees from liability for civil conspiracy. We therefore will affirm in part and reverse in part, and remand to the District Court for further proceedings.
I. Background
GRC once manufactured heat-resistant material, used in the construction of high temperature facilities, that contained asbestos. Since that time, it has been the target of a number of asbestos-related personal injury suits. Fireman’s Fund Insurance Company (“Fireman’s Fund” or FFIC) is an insurance company that issued an excess insurance policy to GRC for a three-year period covering October 1971 to October 1974, with a one-month extension for November 1974.
The operative facts of this case stem from litigation initiated in April, 1998 by GRC against Fireman’s Fund, in the Court of Common Pleas of Pennsylvania, Philadelphia County (hereinafter referred to as the “State Court Litigation” or, by the District Court, as the “Insurance Coverage Action”), wherein GRC alleged that Fireman’s Fund refused to comply with the three-year excess blanket liability insurance policy. Fireman’s Fund asserted that the policy had a total coverage limit of $5,000,000, while GRC asserted that the policy had three annual coverage limits of $5,000,000 per year. GRC claimed breach of contract, breach of fiduciary duty, and bad faith, and sought a declaratory judgment and monetary relief. Appellees -
The case before us arises from allegedly tortious acts, committed by Fireman’s Fund and the attorney appellees, that were the subject of a motion for sanctions filed by GRC against Fireman’s Fund in the State Court Litigation. In the motion, GRC alleged that Fireman’s Fund, Gilberg & Kiernan, and Butz committed an array of discovery and other litigation abuses. After receiving testimony and argument for four days, the court agreed with GRC that Fireman’s Fund and the attorney ap-pellees’ “conduct ... was intentional, inexcusable, and warrant[ed] severe sanctions.” General Refractories Co., 45 Pa. D. & C. 4th at 164. The Court’s view regarding the defendant’s actions is summarized in the following finding:
The sad history of defendant’s discovery responses in this case reveals a clear pattern of delay, stonewalling, deception, obfuscation and pretense. Defendant intеntionally withheld critical documents, ignored court orders, permitted false testimony at depositions and misrepresented facts to opposing counsel and the court. The defendant, through its employees, its house counsel and its engaged litigation counsel participated in an intentional campaign to hide critical facts and documents. At every stage of discovery, reasonable and relevant requests have been met by incomplete responses, unreasonable objections, unfounded claims of privilege and intentionally incomplete “privilege” logs. “Whenever plaintiff sought court intervention additional documents were “found,” “voluntarily produced” and the privilege log expanded.... Amidst hundreds of such insignificant, nonsensical or unintelligible pages, are material and significant submissions that demonstrate that the defendant engaged in an intentional effort to obstruct legitimate discovery by using the claim of privilege. Defendant has attempted to hide discoverable documents, in an attorney’s file, and have [sic] used an overly broad, clearly untenable, theory of “privilege” to conceal the knowledge, activity and intent which form the very basis of this bad faith lawsuit. The purportedly privileged material demonstrates a strategy antagonistic to their insured including discussion of bad faith, delaying payment, and admissions of fiduciary obligations.
Id.
at 166-67. By order dated April 20, 2000, the Court imposed a number of sanctions, including the revocation of Gilberg & Kiernan and Butz’s
pro hac vice
admission, a fine of $126,897.91 payable to the City of Philadelphia, the payment of GRC’s costs and attorney’s fees in bringing the motion for sanctions, a 120-day extension of discovery, a blanket waiver of Fireman Fund’s right to assert privilege as to a large number of documents, and a directive that Fireman’s Fund supplement and correct its prior responses to GRC’s discovery requests.
Id.
at 171-72. The Court noted that it imposed only the “minimum sanction that accomplishes the goal of correcting discovery abuses, restoring] the case to proper discovery сourse, appropriately punishes recalcitrant behavior and deters future obstreperous conduct by the defendant.”
Id.
at 170. On appeal, the Superior Court of Pennsylvania largely upheld all of the sanctions imposed, except for the blanket waiver of privilege.
General Refractories Co. v. Fireman’s Fund In
While the appeal was pending, GRC brought a separate suit in the Common Pleas Court against Fireman’s Fund, Gil-berg & Kiernan, and Andrew Butz (together referred to as “the defendants”), complaining of the actions of Fireman’s Fund and the attorney appellees during the State Court Litigation and seeking recovery of damages. The defendants removed the case to the District Court for the Eastern District of Pennsylvania.
The Complaint’s allegations largely replicate the Common Pleas Court’s findings in the sanctions proceeding. Nevertheless, because we are asked to analyze the sufficiency of the Complaint, we find it necessary to highlight the exact wording of many of these allegations, specifically that the defеndants engaged in the following conduct: “[a] clear pattern of delay, stonewalling, deception, obfuscation and pretense;” “[i]ntentionally withholding critical documents;” “[i]gnoring court orders;” “testifying falsely at depositions, with litigation counsel fully aware of the false testimony;” “[m]isrepresenting facts to the Court and opposing counsel;” “[plarticipating, through FFIC employees, its house counsel and litigation counsel, in an intentional campaign to hide critical facts and documents;” “[providing incomplete responses, unreasonable objections, unfounded claims of privilege and intentionally incomplete privilege logs in response to reasonable and relevant [requests];” “[u]sing an overly broad, clearly untenable theory of privilege to conceal the knowledge, activity and intent which formed the basis of the Insurance Coverage Action;” “[actively hiding highly probative documents while moving for summary judgment on the issues to which the hidden documents related;” “[u]sing hidden documents during a dеposition of a representative of GRC;” “[l]itigation counsel falsely suggesting he did not previously know of the hidden documents when their existence was finally disclosed;” “[Continuing to locate hundreds of documents that should have been produced or put on privilege logs, each time claiming that they had just been ‘found;’ ” “[engaging in obdurate conduct, including actions demonstrating an attempt to obstruct the discovery process;” “[flailing to timely seek a stay of court orders while an appeal was pending, while at the same time refusing to comply with those orders;” “encouraging witnesses to provide false and misleading testimony;” and “encour-ag[ing] and convincing] FFIC to change [its] position [toward the insurance policy coverage] and to breach FFIC’s contractual duties to GRC.” According to the Complaint, the defendants engaged in this conduct for various reasons, including “to further the interests of FFIC,” “to obtain an unfair litigation advantage,” “to delay FFIC having to pay any money to GRC,” to “drain GRC’s resources and delay the litigation,” “to keep GRC from discovering their agreements and actions,” and “to defeat the claims of GRC at any cost.” The Complaint also alleges that Fireman’s Fund, individually, “used the discovery and litigation processes for purposes of harassment and delay.”
Based on these averments, GRC sought recovery under five distinct causes of action. In count I, GRC alleged that Fireman’s Fund committed insurance bad faith under title 42, section 8371 of the Pennsylvania Consolidated Statutes. In count II, it alleged that Fireman’s Fund breached a fiduciary duty owed to GRC. In count III, it alleged that the defendants violated the Pennsylvania common law’s prohibition against abuse of process. In count IV, it alleged that the attorney appellees tor-tiously interfered with GRC’s contract with Fireman’s Fund. In count V, it al
The defendants filed motions to dismiss all counts against them for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). The District Court granted Gilberg & Kiernan and Butz’s motion in whole and Fireman’s Fund’s motion in part.
See General Refractories Co. v. Fireman’s Fund Ins. Co.,
On appeal, GRC challenges the Court’s decision to dismiss the abuse of process and civil conspiracy claims, as well as its denial of leave to amend, but has chosen not to appeal the dismissal of the tortious interference claim. In dismissing the abuse of process claim, the District Court held that the Complaint failed to state a cause of action for abuse of process and further found that, in any event, judicial privilege would have insulated the defendants from liability for many of their actions, id. at *4, and that granting leave to amend would be futile. In dismissing the civil conspiracy claim, the Court concluded that the “intracorporate conspiracy doctrine” insulated the attorney appellees from liability. Id. at *6. GRC challenges all of these rulings, while the attorney appellees not only contеnd that the District Court’s rulings were proper, but additionally argue that the abuse of process claim could have been dismissed because it failed to contain any allegations that they used “legal process” as required to recover under the tort. 1
II. Abuse of Process
A.
The Supreme Court of Pennsylvania has said that “[t]he gist of an action for abuse of process is the improper use of process after it has been issued, that is, a perversion of it.”
McGee v. Feege,
The District Court recognized these elements of the tort,
General Refractories,
The Complaint alleges that Defendants used abusive discovery tactics and improper motion practice in order to gain a litigation advantage in the Insurance Coverage Action. This allegation is not sufficient to support a claim for abuse of process because the Complaint does not allege that Defendants abused process for an unlawful purpose unconnected to the purpose for which the process was designed, ie., a successful conclusion to the Insurance Coverage Action.
Id. (emphasis added). Thus, the Court found GRC’s Complaint deficient because the “purpose” for any alleged use of process was to “gain a litigation advantage” in - or was “[ ]connected to the successful conclusion of’ - the State Court Litigation. As the attorney appellees put it, the District Court concluded that, in order to state a claim, the process must have been used “primarily for the purpose of coercing a collateral advantage,” that is, unrelated to the underlying litigation. GRC concedes that, if we agree that the test under Pennsylvania law requires a primary purpose of achieving a “collateral advantage,” the District Court properly dismissed the abuse of process clаim.
We, however, do not agree. Neither the Supreme Court of Pennsylvania, nor any other Pennsylvania state court, has so narrowly construed the tort. And, we find no evidence that the Supreme
While it is true that the term “collateral” is sometimes used by Pennsylvania courts when discussing an abuse of process, see,
e.g., Hart,
Abuse of process differs from malicious prosecution in that the gist of the tort is not commencing an action or causing process to issue without justification, but misusing, or misapplying process justified in itself for an end other than that which it was designed to accomplish. The improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself such as the surrender of property or the payment of money by the use of the process as a threat or a club. There is, in other words, a form of extortion, and it is what is done in the course of negotiation, rather than the assurance [sic] of the process itself, which constitutes the tort.
Id.
at 592-93 (citing
Prosser and Keeton on Torts,
§ 131 at 897 (5th ed.1984)).
3
Accordingly, the attorney appellees insist that extortion or a similar purposе
unrelated
to the underlying litigation is
necessary
for an abuse of process claim. But, again, this results in a distortion of the concept and its meaning. The attorney appellees effectively have interpreted the modifier “usually” out of the language. A “collateral advantage” or some type of extortion outside of the underlying litigation is not the only type of abuse of process case; rather, it is the usual case - in other words, “the classic example.”
Al Hamilton Contracting Co. v. Cowder,
For the same reason, we find unpersuasive the attorney appellees’ interpretation
The potential ramifications of the District Court and attorney appellees’ interpretation of the tort buttress our conclusion. Were we to accept their view, we would render the tort largely impotent, inapplicable to those cases where a legal process is pursued in a perverted manner in order to directly harm an adversary. We would be condoning tortious tactics that harm and otherwise disadvantage an adversary simply because those tactics are related to the litigation and improve a party’s chances of succeeding in the litigation. We refuse to do so and doubt that the Supreme Court of Pennsylvania would.
Accord Poduska v. Ward,
In fact, in its most recent opinion discussing abuse of process,
McGee v. Feege,
the Supreme Court of Pennsylvania, al
Having rejected the less expansive view of the tort urged by the attorney appellees and employed by the District Court that would require a purpose unconnected to the litigation, we think the test that courts should use in deciding what circumstances amount to an abuse of process has been clearly enunciated by the Supreme Court of Pennsylvania. Quite simply, a court should ask whether there has been a “perversion” of the process, or, whether a legal process has been used “as a tactical weapon to coerce a desired result that is not the legitimate object of the process.” Id. at 1026.
Responding to that inquiry, we believe that using a legal process primarily to harass and cause direct injury to an adversary similar to what occurred here could constitute a perversion of that process. The following excerpt from the Superior Court’s opinion in Shiner v. Moriarty is illustrative of this concept:
The Shiners did not merely allege that the Moriartys’ and the attorney defendants’ intentions were impure. They alleged that the equity action, the petitions directed toward the confessed judgment, and the sundry motions to stay the execution on the leasehold during the pendency of these actions were undertaken and continued in an effort to harass and to cause them financial and emotional injury. These objectives are illegitimate in the context of any civil proceeding in Pennsylvania.... Pursuing litigation primarily to harass and cause injury to the adverse party is an objective not authorized by the equity action or the efforts to avoid the confessed judgment and constitutes a sufficient perversion of the process employed here to support a common law claim of abuse of process.... [T]he evidence presented was sufficient to permit a jury to determine that the Moriartys and the attorney defendants proceeded for a primary purpose of harassing the Shiners, and not to preserve the leasehold and avoid eviction.
Shiner v. Moriarty,
We pause to add a note of caution. We recognize that causing financial and emotional injury to, as well as weakening the resolve of, opposing parties in the context of ongoing litigation are somewhat nebulous concepts, and when utilizing most litigation procedures an attorney is aware of the possibility that his actions could have one of these results. We do not, here, mean to predict that the Supreme Court of Pennsylvania would allow for liability simply because an attorney acts with these possibilities in mind. Rather, the point of liability is reached when “the utilization of the procedure for the purpose for which it was designed becomes so lacking in justification as to lose its legitimate function as a reasonably justifiable litigation procedure.”
Nienstedt,
Turning to the Complaint at issue, it appears that the thrust of GRC’s allegations comes close to laying out a perversion of process. GRC avers that the “Fireman’s Fund used the discovery and litigation process for purposes of harassment and delay,” that “the abuse of process was without reasonable basis, placed FFIC, Gilberg & Kiernan’s and Mr. Butz’s financial interests above GRC’s interests and was for the unlawful and improper purpose of avoiding and delaying GRC’s right to recover under the Fireman’s Fund Umbrella Policy,” and that “Fireman’s Fund, Gilberg & Kiernan, and Mr. Butz conspired to ... drain GRC’s resources and delay the litigation.”
From these general averments, we view GRC as alleging that the defendants used “discovery and litigation process” for five different purposes: harassment, draining resources, delaying payment to GRC under the insurance policy, delaying litigation, and avoiding payment to GRC under the insurance policy. As evident from our previous discussion, the first four purposes - harassment, draining resources, delaying payment, and delaying litigation - that GRC alleges that the defendants used “discovery and litigation process” to achieve, if severe enough, could constitute perversions of the legal process.
Nevertheless, the allegations are too vague as they are presented in the Complaint. The Complaint does not contain the necessary allegations that legal processes were not employed to achieve their intended purposes. The purposes for which the attorney appellees used the various legal processes are not specifically alleged as a part of the abuse of process claim against the attorney appellees, but only against Fireman’s Fund. The allegations against the attorney appellees are more conclusory and general in nature. While the purposes of draining resources and delaying litigation likely would satisfy the perversion element, GRC does not incorporate such allegations into its abuse of process claim, but only makes such aver-ments under Count V - the “civil conspiracy” claim. While a court must construe a complaint liberally,
see Bald Eagle Area School Dist. v. Keystone Financial, Inc.,
The District did err, however, in refusing to grant leave to amend. The District Court denied leave to amend on the ground that the “factual allegations which Plaintiff proposes to add to the Complaint in support of its abuse of process claim would not be sufficient to state a claim upon which relief may be granted.” However, the Court reached this conclusion while under the misimpression that the abuse must have a purpose unconnected to the litigation.
A party generally should be permitted to amend a complaint where if it did so it could state a claim.
Shane v. Fauver,
In the motion for reconsideration, GRC sought leave to “specifically state that the
Under the guise of negotiation and compromise those few [attorneys] who employ “slash and burn” litigation, delay legitimate discovery requests, pretend to be cooperative, dissuade recourse to discovery court, blame their client for failings and make repeated promises, all the while keeping one eye vigilantly on the clock, awaiting the moment when they can pounce upon unsuspecting prey to claim unjustified protection by the passage of a deadline. Unfortunately, in the matter before the court, Fireman’s Fund Insurance Company through the action of their pro hac vice counsel has adopted this dysfunctional approach. In stark contrast to the vast number of attorneys in our court, a few lawyers have seized upon enforced deadlines as an opportunity to take unfair advantage of the reasonableness and civility of opposing.
General Refractories, 45 Pa. D. & C. 4th at 161-62. The findings of the Court of Common Pleas, as shown by this excerpt and the one reproduced supra, seemingly show a concerted and vicious effort orchestrated by the attorney appellees and Fireman’s Fund to use various legal processes as a club against GRC in the State Court Litigation. We believe that GRC, if granted leave to amend, could properly allege that the attorney appellees used a legal process as a tactical weapon for an improper end not otherwise the legitimate object of that process.
B.
The attorney appellees present an alternative reason as to why the District Court should have dismissed the Complaint. They contend that it did not contain allegations sufficient to satisfy the “use of a legal process” element of an abuse of process claim, and that GRC could not cure this defect. Although it is not entirely clear, the District Court appears to have determined that the Complaint sufficiently alleged a use of legal process.
See General Refractories,
In Pennsylvania, “ ‘[t]he word process as used in the tort of abuse of process has been interpreted broadly, and encompasses the entire range of procedures incident to the litigation process,’ ”
Shiner,
While we agree that some of the alleged uses of legal process, such as failing to comply with court orders, failing to seek a stay, and failing to provide copies of subpoenaed documents, as well as contacting the asbestos litigation counsel, do not
Accordingly, the District Court abused its discretion in denying GRC leave to amend its allegations of an abuse of process.
III. Judicial Privilege
The attorney appellees also contend that, regardless of how we resolve the issues regarding the contours of the abuse of process claim, leave to amend would be futile given that the judicial privilege would insulate them from liability. The District Court agreed with the attorney appellees and held that their “response to discovery and court filings in the Insurance Coverage Action are absolutely privileged and, as such, cannot support a claim for abuse of process.”
General Refractories,
The judicial privilege - often referred to, in Pennsylvania, as “judicial immunity” - extends to “communications which are issued in the regular course of judicial proceedings and which are pertinent and material to the redress or relief sought.”
Post v. Mendel,
[T]he “privilege exists because there is a realm of communication essential to the exploration of legal claims that would be hindered were there not the protection afforded by the privilege.” Without the protection of the privilege for communications necessary to such exploration, access to the courts would be impaired, witnesses would be intimidated and lawyers’ efforts in pursuit of their clients causes would be chilled.
Silver v. Mendel,
GRC mainly argues that the judicial privilege cannot possibly apply to these circumstances because “[i]t is illogical on the one hand to say that discovery abuses and filing frivolous motions can support an abuse of process claim because those actions are incident to the litigation process, and on the other hand to say that those actions are absolutely privileged because they are communications issued in the litigation process.” GRC’s argument has a good deal of logical аppeal. The mere existence of the abuse of process tort is evidence that judicial privilege applies to a much narrower range of activity than the attorney appellees urge. Where judicial process is being perverted, immunity would impede, not further, the interests protected by the judicial privilege.
See Silver,
What is more, the gist of GRC’s Complaint is that the attorney appellees acted in a way that abused process. That is, GRC does not base its cause of action merely on statements, but, rather, chiefly on conduct. While some communications may be privileged - allowing, for instance, immunity from defamation actions - conduct is clearly susceptible to being punishable as abuse.
See Brown v. Del. Valley Transplant Program,
We are therefore convinced that GRC, in its amended complaint, as in its original Complaint, could include averments that the attorney appellees abused process in a manner not protected by the judicial privilege. While the privilege does encompass statements made in court filings and during argument and trial,
see Binder,
We will not, however, examine the allegations of the Complaint as it stands to determine whether the judicial privilege applies, given our determination of the underlying issue. Rather, on remand, the District Court can examine the allegations in the amended complaint re
IY. Civil Conspiracy
GRC also takes issue with the District Court’s dismissal of its allegations that the attorney appellees and Fireman’s Fund conspired to abuse process and violate the insurance bad faith statute. In Pennsylvania, “to state a cause of action for civil conspiracy, the following elements are required: (1) a combination of two or more persons acting with a common purpose to do an unlawful act or to do a lawful act by unlawful means or for an unlawful purpose; (2) an overt act done in pursuance of the common purpose; and (8) actual legal damage.”
Strickland v. Univ. of Scranton,
In
Hefjeman,
we analyzed the application of the intracorporate conspiracy doctrine in the context of attorney-client conspiracies under 42 U.S.C. § 1985(1) & (2).
GRC fails to point to any part of its Complaint containing allegations that the attorney appellees .acted outside of their scope of representation, or allegations from which this even could be inferred. Instead of pointing to where it argued that the attorney аppellees acted for personal reasons, GRC argues that either the mere nature of the conduct of the attorney ap-pellees - which it refers to as “outrageous” - or the attorney appellees’ illegitimate purpose, took their conduct beyond the scope of the attorney-client relationship. In
Heffeman,
however, we rejected a similar argument, stating that “[t]he challenged activity may violate the canons of ethics, but so long as it is within the scope of representation, it does not eliminate the exemption from a conspiracy charge.... ”
V. Conclusion
For the reasons stated above, we will affirm in part and. reverse in part, and remand to the District Court so that it may grant GRC leave to amend its Complaint as to the abuse of process claim.
Notes
. The jurisdiction of the District Court arose under 28 U.S.C. § 1332. We have jurisdiction under 18 U.S.C. § 1291. We review de novo a dismissal with prejudice under Rule 12(b)(6).
Malia v. General Elec. Co.,
Because our jurisdiction is based on the diversity of citizenship of the parties, we must apply state law.
See Orson, Inc. v. Miramax Film Corp.,
. "The significance of [the word primarily’] is that there is no action for abuse of process when the process is used for the purpose for which it is intended, but there is an incidental motive or spite or an ulterior purpose of benefit to the defendant.”
Rosen,
. We note that the excerpt is from a report filed by the Judicial Inquiry and Review Board of the Supreme Court of Pennsylvania, and accepted by the Supreme Court, with four justices recused and one justice dissenting, in a matter involving alleged improprieties of a justice of that court. Ordinarily, then, we would be inclined to view its persuasive value as minimal. But, because the language is lifted nearly verbatim from a definitive treatise, see W. Prosser & W. Keeton, The Law of Torts § 121 at 898 (5th ed.1984), we believe that the Supreme Court of Pennsylvania would find it persuasive. In any event, we do not think the Court would interpret it the way that the attorney appellees insist we should.
. Moreover, it would seem that even if extortion-like purposes were required for an abuse of process, the alleged actions of the attorney appellees might qualify. "Extortion,'’ defined as "obtaining from by coercive means, by threats or intimidation,” Webster's II New Riverside University Dictionary (1988), could encompass some of the purposes alluded to in the allegations made by GRC, such as forcing GRC to abandon its claim because of the attorney appellees' apparent willingness to "harass” аnd cause financial injury to GRC. But we do not reach this issue because there is no support for the notion that the extortion must be wholly unrelated to the underlying litigation.
. Because we will remand this case to the District Court to allow GRC to amend its abuse of process claim, we find it unnecessary to parse each allegation contained in the Complaint to determine which constitutes a "legal process.” Should the occasion arise, the District Court should engage in that analysis in the first instance.
. In addition, on remand, the District Court should take note that an attorney is liable for abuse of process only “when the acts complained of are his own personal acts or acts of others wholly instigated and carried on by him. An attorney cannot be liable for doing nothing more than carrying out the process to its authorized conclusion.”
Hart,