Bernard Scarbor. v. Dillard's Inc

• Decision Date: 11 December 2009
• Docket Number: No. 112A08.,112A08.
• Citation: 693 S.E.2d 640,363 N.C. 715
• Court: North Carolina Supreme Court
• Parties: Bernard SCARBOROUGHv.DILLARD'S, INC., formerly Dillard Department Stores, Inc., a North Carolina Corporation.

363 N.C. 715

693 S.E.2d 640

Bernard SCARBOROUGHv.DILLARD'S, INC., formerly Dillard Department Stores, Inc., a North Carolina Corporation.

No. 112A08.

Supreme Court of North Carolina.

Dec. 11, 2009.

Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, 188 N.C.App. 430, 655 S.E.2d 875 (2008), reversing entry of judgment notwithstanding the verdict in defendant's favor as to punitive damages on 8 January 2007 by Judge Hugh B. Campbell, Jr. in District Court, Mecklenburg County. Heard in the Supreme Court 15 October 2008.

David Q. Burgess for plaintiff-appellee.

Poyner & Spruill LLP, by David W. Long, John W. O'Hale, Raleigh, and Douglas Martin, Charlotte, for defendant-appellant.

PARKER, Chief Justice.

The issue before the Court on this appeal is whether the trial court erred in granting defendant judgment notwithstanding the verdict as to punitive damages. For the reasons stated herein, we conclude that the trial court did not err, and the decision of the Court of Appeals is reversed.

This case arises out of an action for malicious prosecution instituted by plaintiff Bernard Scarborough as the result of his having been indicted, tried, and acquitted of embezzlement from his employer, defendant Dillard's, Inc. At the outset, we note that the sufficiency of the evidence to support the underlying tort of malicious prosecution is not before the Court in that defendant did not cross appeal the trial court's denial of its motion for judgment notwithstanding the verdict (JNOV) as to the jury's determination of liability for malicious prosecution.

The evidence presented at trial tended to show that on 27 October 1997, plaintiff worked in the ladies' shoe department at Dillard's, where he had been employed part-time for approximately two years. Around 8:00 p.m., plaintiff waited on two women for approximately thirty-five to forty minutes, showing them about twenty pairs of shoes. When one of the women decided to purchase two pairs of shoes, plaintiff took the shoes to the register, scanned the shoes, and placed them in a bag. Before plaintiff completed this transaction, the other woman came to the register and asked him about trying on a pair of shoes. Plaintiff voided the first transaction so he could check the price of the shoes for that customer and to prevent his employee number from remaining in the register when he went into the stockroom to look for the shoes. Plaintiff was unable to find shoes in the width the woman needed but agreed to stretch the shoes for her. The two women stated that they would return for the third pair. The women then left Dillard's with two pairs of shoes for which no payment had been made.

The women later returned and asked plaintiff if he could hold the third pair of shoes until the next day. Plaintiff agreed, and the woman who wanted the shoes wrote her name, Betty Jordan, on a piece of paper which plaintiff attached to the shoe box. Plaintiff also wrote his employee number on the piece of paper so he could receive credit for the sale.

After the women left, two other shoe department employees, Lynette Withers and Selma Brown, who had watched the transaction commented to plaintiff that he had had a big sale and asked if they could look at the journal tape to see what the amount was. Plaintiff agreed. Upon looking at the tape Withers and Brown confirmed that the women had taken the first two pairs of shoes without paying for them. Ms. Brown told plaintiff that the sales transaction was missing. Plaintiff then called Steven Gainsboro, the manager on duty that night, to tell him what had happened. Mr. Gainsboro told plaintiff he would discuss the incident the next day with David Hicklin, the shoe department manager.

When plaintiff arrived at Dillard's the next evening, he met with Mr. Hicklin, Kevin McCluskey, the store manager, and Sergeant Cullen Wright, a Dillard's loss prevention employee, who also worked full time as an officer for the Charlotte-Mecklenburg Police Department (CMPD). During the two-hour interview, plaintiff explained that he had made a mistake, took responsibility for the incident, and offered to pay Dillard's for the shoes. Plaintiff also offered to submit to a polygraph exam. Mr. McCluskey accused plaintiff of knowing the two women and threatened to have him prosecuted for embezzlement and ruin his full-time job at First Union National Bank if he did not provide the names of the women. Plaintiff told Mr. McCluskey that he did not know the women and could not provide their names. Sergeant Wright also participated in questioning plaintiff about the incident and took a written statement from him. At the end of the interview, Mr. McCluskey terminated plaintiff for embezzlement.

After plaintiff's termination, Sergeant Ken Schul, another Dillard's security guard who was employed full time as an officer for the CMPD, took statements from four Dillard's employees, Ms. Withers, Ms. Brown, Mr. Gainsboro, and Mr. Hicklin, about plaintiff's failed transaction. On 12 November 1997, Sergeant Schul met with Assistant District Attorney (ADA) Nathaniel Proctor to present a case against plaintiff. Upon review of the information presented, Mr. Proctor authorized the prosecution of plaintiff for embezzlement. Mr. Proctor did not ask for additional information or investigation. Thereafter, Sergeant Schul obtained a warrant for plaintiff's arrest.

Approximately two weeks after his termination from Dillard's, plaintiff was arrested in the atrium of One First Union Center in Charlotte while on his way to his office. Uniformed police officers, one of whom was Sergeant Wright, handcuffed plaintiff and escorted him outside to a police car. Upon his release from jail, plaintiff returned to First Union to find that his employment was suspended without pay because of his arrest for embezzlement and that he would be eligible to return to work only if the charges against him were cleared.

Plaintiff was subsequently indicted by the grand jury for embezzlement. Plaintiff was tried for embezzlement in Superior Court, Mecklenburg County. On 27 May 1998, a jury found plaintiff not guilty.

On 4 April 2001, plaintiff initiated this action for malicious prosecution. Following a trial in January 2005, the jury returned a verdict in plaintiff's favor, awarding him $30,000 in compensatory damages and $77,000 in punitive damages for malicious prosecution. On 24 February 2005, the trial court granted Dillard's motion for JNOV as to punitive damages and entered an order setting aside that award. Plaintiff appealed to the Court of Appeals, which remanded the case because, contrary to N.C.G.S. § 1D-50, the trial court's 24 February 2005 order contained no reasons why the trial court set aside the jury verdict as to punitive damages. Scarborough v. Dillard's, Inc., 179 N.C.App. 127, 130, 632 S.E.2d 800, 803 (2006). Upon remand, the trial court filed an order on 8 January 2007 setting out the basis for its judgment notwithstanding the verdict as to punitive damages. Plaintiff appealed from that order on 9 January 2007.

The Court of Appeals reversed the trial court's entry of judgment notwithstanding the verdict as to punitive damages. The Court of Appeals' majority reviewed the issue under the “more than a scintilla of evidence” standard. Scarborough v. Dillard's Inc., 188 N.C.App. 430, 431, 655 S.E.2d 875, 876 (2008). The dissenting judge would have affirmed the trial court as plaintiff failed to present “clear and convincing evidence” of any statutory aggravating factor required for punitive damages. Id. at 438, 655 S.E.2d at 881 (Hunter, Robert C., J., dissenting).

Defendant appealed to this Court based on the dissenting opinion in the Court of Appeals. Defendant contends that the Court of Appeals applied an incorrect standard of review and that the evidence was insufficient to support a jury's finding of an aggravating factor. We agree.

This Court has stated that “[t]he test for determining the sufficiency of the evidence when ruling on a motion for judgment notwithstanding the verdict is the same as that applied when ruling on a motion for directed verdict.” Northern Nat'l Life Ins. Co. v. Lacy J. Miller Mach. Co., 311 N.C. 62, 69, 316 S.E.2d 256, 261 (1984) (citing Summey v. Cauthen, 283 N.C. 640, 648, 197 S.E.2d 549, 554 (1973)). A motion for judgment notwithstanding the verdict “is essentially a renewal of an earlier motion for directed verdict.” Bryant v. Nationwide Mut. Fire Ins. Co., 313 N.C. 362, 368-69, 329 S.E.2d 333, 337 (1985) (citation omitted). A motion for directed verdict “tests the legal sufficiency of the evidence to take the case to the jury and support a verdict” for the nonmovant. Manganello v. Permastone, Inc., 291 N.C. 666, 670, 231 S.E.2d 678, 680 (1977) (citing inter alia Investment Props. of Asheville, Inc. v. Allen, 281 N.C. 174, 188 S.E.2d 441 (1972)).

“The standard of review of directed verdict is whether the evidence, taken in the light most favorable to the non-moving party, is sufficient as a matter of law to be submitted to the jury.” Davis v. Dennis Lilly Co., 330 N.C. 314, 322, 411 S.E.2d 133, 138 (1991) (citation omitted). A directed verdict and judgment notwithstanding the verdict are therefore “not properly allowed ‘unless it appears, as a matter of law, that a recovery cannot be had by the plaintiff upon any view of the facts which the evidence reasonably tends to establish.’ ” Manganello, 291 N.C. at 670, 231 S.E.2d at 680 (quoting Graham v. North Carolina Butane Gas Co., 231 N.C. 680, 683, 58 S.E.2d 757, 760 (1950)).

We must first determine the application of these principles to an award of punitive damages. Our General Assembly has set parameters for the recovery of punitive damages through the enactment of Chapter 1D of the North Carolina General Statutes. To recover punitive damages a claimant must prove

that the defendant is liable for compensatory damages and that one of the following aggravating factors was

...