Digby v. Texas Bank

• Citation: 943 S.W.2d 914
• Decision Date: 06 March 1997
• Docket Number: No. 08-96-00234-CV,08-96-00234-CV
• Parties: Terry "Bo" DIGBY, Appellant, v. TEXAS BANK, et al., Appellee.
• Court: Court of Appeals of Texas

Page 914

943 S.W.2d 914

Terry "Bo" DIGBY, Appellant, v. TEXAS BANK, et al., Appellee.

No. 08-96-00234-CV.

Court of Appeals of Texas El Paso.

March 6, 1997.

Rehearing Overruled April 23, 1997.

Eric C. Bohnet, Midland, Robert E. White, Childs, Bishop & White Law Offices, Odessa, for Appellant.

Jack Q. Tidwell, McMahan, Tidwell, Hansen, & Atkins, P.C., Odessa, Layton Zant Woodul, Cecil Kuhne, Crenshaw, Dupree & Milam, Lubbock, for Appellee.

Before BARAJAS, C.J., and LARSEN and McCLURE, JJ.

OPINION

McCLURE, Justice.

This is an appeal from a summary judgment granted against Terry "Bo" Digby, plaintiff below and Appellant herein, on his claim of malicious prosecution against Texas Bank and the officers and directors of the Bank, co-defendants below and collectively the Appellee herein. We reverse.

SUMMARY OF THE EVIDENCE

By a security agreement dated October 11, 1989, Digby and his wife obtained a loan for $100,000 from Texas Bank. As part of the collateral for the loan memorialized in the October 11 security agreement, the Digbys assigned a total of five life insurance policies, three of which were Principal Mutual Life Insurance Company (formerly Bankers Life) policies. Three separate assignments were executed. The Digbys renewed the note on December 22, 1989. They conducted the October 11 and December 22 transactions with Thelma Stone, who from 1989 to 1994 was Executive Vice President, and subsequently became President of the Bank. In her affidavit supporting the motion for summary judgment, Stone attested to a personal acquaintance with the Digbys.

There appears in the record a letter dated October 11, 1989 from Stone to Principal Mutual, purporting to forward copies of the assignments. However, Principal Mutual informed the Bank in 1992 that the company received neither the letter nor copies of the assignments.

In sworn affidavits accompanying the summary judgment response, Digby and his wife alleged that after securing the loan, they received permission from Stone to borrow from the policies in order to meet the quarterly note payments, despite the fact that these policies had already been assigned as collateral on the same note. Specifically, the Digbys claimed that they first obtained permission from Stone in her office at the Bank, and thereafter received permission from Stone by telephone each time the Digbys needed to borrow from the policies to make their loan payments. The Digbys deny that they ever completely depleted these policies. Stone's summary judgment affidavit is silent concerning any such agreement with the Digbys.

At some point before the end of 1991, the Digbys defaulted on the loan. The Bank filed suit on the note in district court in Ector County, and on July 7, 1992, the Digbys signed an agreed judgment in favor of the Bank. In addition to filing suit to collect on the note, the Bank filed with the FDIC a Report of Apparent Crime, dated May 18, 1992. This report alleged that the Digbys were possible violators of two federal bank fraud statutes ¹ and that the Digbys had borrowed against the policies without the Bank's permission. Additionally, the report contained the Bank's unequivocal statement that it first discovered the Digbys' actions with respect to the three life insurance policies when the loan became due. Specifically, the report noted that Stone had discovered the Digbys' unauthorized action; that she had reported it immediately after discovering it; that she was a witness concerning the suspected violation; and that she was one of two representatives of the Bank whom the FDIC could contact for any further information.

The Bank cooperated with the United States Attorney for the Western District of Texas in the formulation of an indictment under 18 U.S.C. § 1344, Criminal Cause Number M093CR085. A federal grand jury indicted Terry L. "Bo" Digby on December 15, 1993. He was acquitted following a jury trial in which Stone testified for the prosecution.

In a single point of error, Digby alleges that the trial court erred in holding that no genuine issue of material fact existed with respect to Digby's claims and in concluding that the Bank was entitled to summary judgment as a matter of law. Before evaluating Digby's contention, we must first review basic legal principles governing claims for malicious prosecution and appellate review of summary judgments.

MALICIOUS PROSECUTION CLAIMS

As we recently discussed in ITT Consumer Financial Corporation d/b/a ITT Financial Services v. Daniel Tovar, 932 S.W.2d 147 (Tex.App.--El Paso 1996, writ requested), Texas law discourages actions for malicious prosecution. Parker v. Dallas Hunting and Fishing Club, 463 S.W.2d 496, 499 (Tex.Civ.App.--Dallas 1971, no writ); Montgomery Ward & Co., Inc. v. Kirkland, 225 S.W.2d 906, 909 (Tex.Civ.App.--San Antonio 1949, writ ref'd n.r.e.). Malicious prosecution has been described as inherently tending to stultify the reporting of crimes, an undesirable consequence for public policy. Brookshire Grocery Co. v. Richey, 899 S.W.2d 331, 334 (Tex.App.--Tyler 1995, writ granted). Where a business or organization--such as the Bank in the present case--discovers what it believes to be criminal behavior during an internal investigation, public policy requires that there be wide latitude in reporting facts to prosecuting authorities in order that the exposure of crime not be discouraged. Thomas v. Cisneros, 596 S.W.2d 313, 317 (Tex.Civ.App.--Austin 1980, writ ref'd n.r.e.); Compton v. Calabria, 811 S.W.2d 945, 949-50 (Tex.App.--Dallas 1991, no writ). As a result, the tort of malicious prosecution "has been hedged about by limitations more stringent than those in the case of almost any other act causing damage to another and the courts have allowed recovery only when the requirements limiting it have been fully complied with." Reed v. Lindley, 240 S.W. 348, 351 (Tex.Civ.App.--Fort Worth 1922, no writ). Malicious prosecution addresses the public policy concern that exists in tension with the encouragement of citizens to report possible crimes: protecting innocent citizens from wrongful prosecution. The Texas Supreme Court recently articulated the balance between these two policy considerations in Browning-Ferris Industries, Inc. v. Lieck, 881 S.W.2d 288 (Tex.1994).

What is distinctive about malicious prosecution is that there is little room for error in applying the law. Even a small departure from the exact prerequisites for liability may threaten the delicate balance between protecting against wrongful prosecution and encouraging reporting of criminal conduct.

Id. at 291.

Texas courts have formulated the elements of malicious prosecution in different ways, but these differences are of little consequence in practical effect. We have followed those decisions that define malicious prosecution as comprised of five elements. A plaintiff in a malicious prosecution case has the burden of proving: (1) the commencement of a criminal prosecution; (2) with malice; (3) without probable cause; (4) resulting in an acquittal; and (5) damaging the plaintiff. ITT Consumer Financial Corporation, 932 S.W.2d at 160, citing Coniglio v. Snyder, 756 S.W.2d 743, 744 (Tex.App.--Corpus Christi 1988, writ denied) and Dominguez v. Kelly, 786 S.W.2d 749, 751 (Tex.App.--El Paso 1990, writ denied). See also James v. Brown, 637 S.W.2d 914, 918 (Tex.1982). To encourage reporting of crimes, and to ensure that citizens who do so in good faith will not suffer for their actions, plaintiffs must present clear, positive, and satisfactory proof in order to succeed. Brookshire Grocery Co., 899 S.W.2d at 331; Parker, 463 S.W.2d at 499; American Motors Finance Co. v. Cleckler, 28 S.W.2d 274 (Tex.Civ.App.--Eastland 1930, no writ). The failure of a plaintiff to prove any one of the above elements is fatal to his case. Coniglio v. Snyder, 756 S.W.2d 743, 744 (Tex.App.--Corpus Christi 1988, writ denied).

STANDARD OF REVIEW

Summary judgment is proper if the summary judgment record shows that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. See TEX.R.CIV.P. 166a(c). The purpose of summary judgment is the elimination of patently unmeritorious claims or untenable defenses; it is not intended to deprive litigants of their right to a full hearing on the merits of any real issue of fact. Gulbenkian v. Penn, 151 Tex. 412, 416, 252 S.W.2d 929, 931 (1952). Notwithstanding public policy considerations favoring those who report alleged crimes, a defendant in a malicious prosecution case who moves for summary judgment assumes the burden of showing as a matter of law that the plaintiff has no cause of action against it. Unlike other final judgments reviewed on appeal, we do not review the evidence in cases appealed from summary judgment in the light most favorable to the judgment of the trial court. Continental Savings Association v. Collins, 814 S.W.2d 829, 831-32 (Tex.App.--Houston [14th Dist.] 1991, no writ). As explained in Nixon v. Mr. Property Management Company, Inc., 690 S.W.2d 546, 548-49 (Tex.1985), the movant for summary judgment has the burden of showing there is no genuine issue of material fact and that it is entitled to summary judgment as a matter of law. In deciding whether there is a disputed material fact issue precluding summary judgment, all admissible evidence favorable to the non-movant will be taken as true, every reasonable inference must be indulged in favor of the non-movant, and all doubts resolved in the non-movant's favor.

In order to show as a matter of law that the plaintiff has no cause of action, it is not necessary that the defendant disprove all elements of the plaintiff's claim. If a defendant can disprove any one of the essential elements of the plaintiff's cause of action, then the court should render summary judgment for the defendant. Compton, 811 S.W.2d at 949; Citizens First Nat'l Bank of Tyler v. Cinco Exploration Co., 540 S.W.2d 292, 294 (Tex...