Bergstrom v. Noah, 79,453

• Citation: 974 P.2d 520,266 Kan. 829
• Decision Date: 05 March 1999
• Docket Number: No. 79,453,79,453
• Parties: Marvin BERGSTROM; Marilyn Bergstrom; Ben Dreesen; Karen Dreesen; and Farmers Livestock Commission Co., Inc., a Kansas Corporation, Appellants, v. Don W. NOAH; Noah & Harrison, P.A.; and Lyle J. Koenig, Appellees, Roger McCartney, d/b/a/ Stockman's Livestock Exchange; and Charlene McCartney, Defendants.
• Court: United States State Supreme Court of Kansas

Page 520

974 P.2d 520

266 Kan. 829

Marvin BERGSTROM; Marilyn Bergstrom; Ben Dreesen; Karen

Dreesen; and Farmers Livestock Commission Co., Inc., a Kansas Corporation, Appellants, v. Don W. NOAH; Noah & Harrison, P.A.; and Lyle J. Koenig, Appellees, Roger McCartney, d/b/a/ Stockman's Livestock Exchange; and Charlene McCartney, Defendants.

No. 79,453.

Supreme Court of Kansas.

March 5, 1999.

Syllabus by the Court

1. The general principles of law to be followed in determining liability in the malicious prosecution of a civil action are stated and applied.

2. Probable cause for instituting a civil proceeding exists when there is a reasonable ground for suspicion supported by circumstances sufficiently strong in themselves to warrant a cautious or prudent person in the belief that the party committed the act of which that person is complaining.

3. Special rules as set forth in the Restatement (Second) of Torts § 674, Comment d (1997) apply in Kansas where the question is whether an attorney had probable cause to file a civil proceeding.

4. A person initiating civil proceedings against another cannot have a reasonable belief in the existence of the facts on which the proceedings are based if he or she knows that the alleged facts are not true and his or her claim is based on false testimony. However, if the existence of the facts are not certain but the initiator believes that their existence can be established to the satisfaction of court and jury, there may be probable cause to initiate a civil proceeding.

5. The initiator of private civil proceedings need not have the same degree of certainty as to the relevant facts that is required of a private prosecutor of criminal proceedings. Many civil proceedings, to be effective, must be begun before all of the relevant facts can be ascertained to a reasonable degree of certainty. To put the initiator of civil proceedings to a greater risk of liability would put an undesirable burden upon those whose rights cannot be otherwise effectively enforced.

6. Where the legal validity of a civil claim is uncertain, the initiator of the civil proceeding may believe that his or her claim is meritorious, but he or she can have no more than an opinion that the chances are good that the court might decide to uphold it. The question is not whether the initiator is correct in believing that the court would sustain the claim, but whether his or her opinion that there was a sound chance that the claim might be sustained was a reasonable one.

John Terry Moore, of Hinkle, Eberhart & Elkouri, L.L.C., of Wichita, argued the cause and was on the brief for appellants.

Justice B. King, of Fisher, Patterson, Sayler & Smith, L.L.P., argued the cause and was on the brief for appellees Don W. Noah and Noah & Harrison, P.A.

No appearance by appellee Lyle J. Koenig.

DAVIS, J.:

This is a malicious prosecution action growing out of a Kansas antitrust lawsuit filed by Roger McCartney, d/b/a Stockman's Livestock Exchange, and Charlene McCartney (hereinafter referred to collectively as the McCartneys) against Farmers Livestock Commission Co., Inc., Marvin Bergstrom, Marilyn Bergstrom, Ben Dreesen, and Karen Dreesen (hereinafter referred to collectively as the FLCC parties) in the District Court of Republic County, Kansas. The underlying antitrust action terminated in favor of the FLCC parties by summary judgment, which judgment was affirmed in an unpublished opinion of the Kansas Court of Appeals, McCartney v. Farmers Livestock Comm'n, No. 70,778, 1994 WL 590317, filed October 28, 1994. This court denied the McCartneys' petition for review.

The FLCC parties then filed a malicious prosecution action against the McCartneys. Summary judgment was entered by the trial court in favor of the McCartneys on the basis that probable cause existed for the filing of the antitrust action by the McCartneys. The issue we will resolve is whether on undisputed facts the trial court was correct in its determination that probable cause existed for the filing of the underlying antitrust action.

Dr. McCartney, one of the plaintiffs in the underlying action, is the owner of the sale barn in Belleville, Kansas. He purchased the sale barn in 1985. Don W. Noah and his law firm, Noah & Harrison, P.A., were retained by Dr. McCartney in connection with the underlying antitrust action.

Marvin and Marilyn Bergstrom and Ben and Karen Dreesen are the owners of the Farmers Livestock sale barn in Washington, Kansas. They acquired the sale barn in a bankruptcy sale in 1984. Since that time they have operated the sale barn.

After 1985, the number of livestock being sold through the McCartneys' sale barn decreased. The McCartneys became concerned that they were losing business to the FLCC parties' sale barn and suspected that the FLCC parties were providing free and below-cost trucking for sellers to get their cattle to the barn. While providing free or below-cost trucking to sellers is not illegal, providing free or below-cost trucking on a discriminatory basis is a violation of the Packers and Stockyards Act of 1921, 7 U.S.C. § 181 et seq. (1994). The McCartneys knew that in 1985 the Packers and Stockyards Administration had issued a warning letter advising the FLCC and its owners to cease and desist from awarding discriminatory free or below-cost trucking.

In 1986, the McCartneys had made arrangements with a consignor, Eric Anderson, to purchase his cattle through his sale barn, Stockman's Livestock Exchange. The McCartneys became concerned when Anderson advised that the FLCC parties had contacted him and that he would be selling his cattle through the FLCC parties' sale barn.

The McCartneys discussed their concerns with other sale barn operators in the area and those operators supported the McCartneys' concerns that the FLCC parties were offering free or below-cost trucking in order to entice customers. Steve Werner, the owner of a sale barn in Fairbury, Nebraska, and a client of Lyle Koenig, a Nebraska attorney, had obtained information through one of his field men that the FLCC parties were offering free trucking and kickbacks through a trucking company owned and operated by Adolph Charbonneau, C & C Trucking. Werner gave this information to Koenig, who then related it to the McCartneys' attorney, Don W. Noah.

In 1988, the Packers and Stockyards Administration conducted an investigation of the FLCC parties' operation at the request of the McCartneys. However, no evidence of further violations was found. The head of the Packers and Stockyards Administration office in Lenexa, Kansas, later told the McCartneys that in his opinion, the investigation had been "poorly done." The McCartneys complained to the Packers and Stockyards Administration in November 1990, and in 1991 the McCartneys sent letters to U.S. Senator Bob Dole complaining that the Packers and Stockyards Administration had not done enough.

In August 1991, the McCartneys sent another letter to Senator Dole regarding the need for a more thorough investigation. This letter was copied to then U.S. Senator Nancy Landon Kassebaum, U.S. Representative Pat Roberts, Kansas Senator Janis Lee, Kansas Representative Bill Bryant, the editor of the Belleville Telescope, the Kansas Livestock Commissioner, and CBS's Sixty Minutes.

At the urging of the McCartneys, the Packers and Stockyards Administration instituted another investigation in 1991 of the FLCC parties' operations. The McCartneys submitted a list to the Packers and Stockyards Administration's investigators, naming 40 farmers, 3 commercial truckers, and 4 farm truckers whom the McCartneys believed had had their trucking costs paid or had received part of their commission back, or both, from the FLCC parties. The investigators randomly interviewed six farmers and discovered one farmer, Dean Anderson, who admitted to having had some of his trucking costs paid by the FLCC parties. The investigation also found another farmer, Francis Baxa, normally had had trucking costs deducted from his sale proceeds by the FLCC parties, but on at least one occasion, no trucking costs had been deducted.

As a result of the 1991 investigation, the Packers and Stockyards Administration issued another warning letter to the FLCC parties:

"During an investigation of Farmers' business operations, the following violation of the Packers and Stockyards Act was discovered.

"The investigation disclosed that Farmers, for the purpose of inducing certain owners to consign their livestock to the market, provided free transportation of livestock. The Packers and Stockyards Administration considers this an unfair and unjustly discriminatory practice under sections 307 and 312(a) of the Act.

"Enclosed is a copy of the Packers and Stockyards Act. The relevant sections can be found on pages 14 and 18. We trust you will take immediate steps to bring your operation into compliance. If you have any questions, please contact this office."

In October 1991, Noah was retained by the McCartneys to assist them in obtaining access to the books and records of the FLCC parties' business in order to uncover what he believed to be a pattern of illegal activity and to bring this activity to an end. The McCartneys told Noah that they noticed the FLCC parties' sale barn drawing consignors from various locations that were much closer to other sale barns and that many people were telling him it was no secret that the FLCC parties were offering illegal inducements to consignors. The McCartneys also told Noah that they had heard that the free trucking and illegal inducements were buried so deep in the books of the FLCC parties that the Packers and Stockyards Administration would never discover the illegal inducements.

Noah obtained the records from the original Packers and Stockyards Administration investigations and was aware of the cease and desist letters sent to the FLCC parties. He was also aware that the FLCC parties had admitted to offering illegal...