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The plaintiff brought this malicious prosecution action seeking to recover damages flowing from a civil action previously brought by the defendant against the plaintiff. The defendant moves to dismiss this present claim arguing the claim is either barred by res judicata or by a-three year statute of limitations.

The plaintiff files this malicious prosecution action seeking damages he claims were caused as a result of the defendant's previous filing of two law suits against him and the Terry C. and Terry M. Bennett Charitable Remainder Unitrust (the trust) in Rockingham County. Specifically, the plaintiff claims that the defendant filed the lawsuits without probable cause and with the primary purpose of interfering with the plaintiff's lawful business activities. The defendant denies the allegations and argues, among other things, that the doctrines of res judicata and collateral estoppel preclude the plaintiff from recovering damages in the present case. For the reasons stated in this order, the court finds for the plaintiff in the amount of $434,000.

The instant action arises out of defendants' refusal to provide coverage under two general liability insurance policies for costs incurred by the plaintiff, Mill Steel Supply Corp. ("Mill Steel"), in the settlement of counterclaims in an underlying suit. In January of 1998, Mill Steel terminated several employees and filed suit against them. Subsequent to the termination but prior to bringing the underlying suit, Mill Steel wrote a letter in which it allegedly defamed its former employees. The various defendants in the underlying action filed countersuits alleging wrongful termination, interference with advantageous business and employment relations, breach of contract, defamation by libel, and malicious prosecution. One defendant sought compensation under a theory of quantum meruit. Travelers did not provide Mill Steel a defense to the counterclaims, nor did it reimburse Mill Steel's costs in defending against the counterclaims. Defendant Acadia Insurance Company also denied coverage. As a result, Mill Steel filed the instant action.