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The Role of Civil Conspiracy in United States Business Litigation

By John DiGiacomo

Legally, a “conspiracy” is some sort of agreement — express or implied — reached between two or more persons or entities to commit a crime or a wrongful act. Conspiracies are punished under both criminal and civil law. In criminal law, the agreement is the gist of the claim and intent that a crime be committed is enough. That is, under criminal law, there need not be any follow through; generally “intent to commit” is punishable.

By contrast, agreement is not sufficient for proof of civil conspiracy. Wrongful actions must be taken and harm must be inflicted upon some third party. In Michigan, for example, the essential elements of a civil conspiracy are:

  • At least one concerted action
  • By a combination of two or more persons or entities
  • To accomplish an unlawful purpose or a lawful purpose by unlawful means and
  • Injury or damages resulting from wrongful act

As noted, “talk” is not enough; there must be some action. See Fenestra Inc. v. Gulf Amer. Land Corp., 141 NW 2d 36 (Mich. Supreme Court 1966).

Civil conspiracy claims are important litigation tools in business disputes, although there are important limitations. Generally, civil conspiracy claims are not “stand alone” claims. That is, generally, it is not possible to file a business lawsuit alleging only a civil conspiracy. Some other legal claim of wrongful action — a tort claim — must be filed and, then, a civil conspiracy count can be added to the lawsuit. In this manner, civil conspiracy claims can multiply causes of action. This can help maximize the potential recovery of money damages.

Similarly, in business litigation, adding a civil conspiracy claim can multiply the number of defendants. As discussed above, civil conspiracy requires at least two persons/entities to engage in concerted action. Thus, at least two persons/entities can be sued. Adding defendants to a lawsuit is useful since multiple defendants can help maximize the recovery of money damages since separate and distinct judgments can be imposed against each defendant and additional insurance policies may be triggered. However, there is an important legal limitation here. Legally, principles and agents cannot conspire with themselves. This means that there can be no conspiracy between a corporation and its CEO, an employer and its employee or a client and the client’s attorney. See Tropf v. Holzman & Holzman, Case No. 257019 (Mich. Court. Appeals 2006).

Filing and winning claims of civil conspiracy can also help satisfaction of any resulting judgment. Generally, each member of the conspiracy is jointly and severally liable. This means that each co-conspirators is wholly liable for the entire judgment regardless of whether other co-conspirators have available assets to pay the judgment. In this manner, filing claims of civil conspiracy allows a successful plaintiff to reach a “deep pocket” and to avoid the disappointment of vindicating a wrong but facing a judgment-proof defendant. For more information or if you need proven business litigation services, contact the business lawyers at Revision Legal at 231-714-0100

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