Fix v. First State Bank of Roscoe

• Decision Date: 30 November 2011
• Docket Number: 25911.,Nos. 25898,s. 25898
• Parties: Rita FIX, Plaintiff and Appellant,andJohn S. Lovald, Plaintiff, v. FIRST STATE BANK OF ROSCOE, a South Dakota Corporation, Roscoe Community Bankshares, Inc., a South Dakota Corporation, Defendants and Appellees,andJames and Pamela Baer and Vaughn Beck, Defendants.
• Court: South Dakota Supreme Court

2011 S.D. 80

807 N.W.2d 612

Rita FIX, Plaintiff and Appellant,andJohn S. Lovald, Plaintiff,

v.FIRST STATE BANK OF ROSCOE, a South Dakota Corporation, Roscoe Community Bankshares, Inc., a South Dakota Corporation, Defendants and Appellees,andJames and Pamela Baer and Vaughn Beck, Defendants.

Nos. 25898

25911.

Supreme Court of South Dakota.

Argued Aug. 23, 2011.Decided Nov. 30, 2011.

Lee Schoenbeck, Watertown, South Dakota, Attorney for plaintiff and appellant.

Roger W. Damgaard, Sander J. Morehead of Woods, Fuller, Shultz & Smith PC, Sioux Falls, South Dakota, Attorneys for defendants and appellees.

MEIERHENRY, Retired Justice.

[¶ 1.] This appeal involves Rita Fix's claim against First State Bank of Roscoe and Roscoe Community Bankshares, Inc. (Bank) for intentional infliction of emotional distress and abuse of process. The trial court dismissed Fix's intentional infliction of emotional distress claim; the abuse of process claim was tried to a jury. Fix claims that the trial court erred in dismissing the intentional infliction of emotional distress claim and erred in instructing the jury at trial. We reverse and remand for a new trial on the abuse of process claim.

FACTS AND BACKGROUND

[¶ 2.] Part of the controversy between Fix and the Bank involves property Fix owned in Faulk County, South Dakota. In 1997, Fix signed a contract for deed selling the property to her son and daughter-in-law, Jeff and Marie Fix, but retained a life estate in the house located on the property. In 1999, Jeff and Marie obtained a loan from the Bank to finance their farming operation. To secure the loan, the Bank required Jeff and Marie to obtain a warranty deed for the property, including Fix's life estate in the house. Although hesitant to relinquish her house, Fix eventually executed a warranty deed to Jeff and Marie after the Bank assured her that she could retain possession of the house. In a letter from the Bank president, the Bank wrote:

In the event that for any reason the bank becomes the owner of the described real estate, you will have full right of possession to the home on the premises as long as you are living.

[¶ 3.] In 2004, Fix filed for bankruptcy in federal court. Fix did not claim a homestead exemption for the house nor list her interest in the house as personal property. Fix retained possession of the house until 2005 when Jeff and Marie's financial problems forced them to convey the house and the property to the Bank in lieu of foreclosure. Later that same year, the Bank sold the property to a third party and then sought to remove Fix from the house.

[¶ 4.] While in federal bankruptcy court, Fix sued the Bank in state court for: (1) right to possession of the house; (2) breach of fiduciary duty; (3) intentional infliction of emotional distress; (4) deceit; and (5) fraudulent misrepresentation. In response, the Bank requested that the bankruptcy court enjoin Fix's state action. The Bank claimed that Fix's cause of actions belonged to the bankruptcy estate not Fix personally. The bankruptcy court agreed with the Bank that all five alleged causes of action could only be brought by Fix's bankruptcy trustee. Eventually, the issue was appealed to federal district court and to the Eighth Circuit Court of Appeals. The Eighth Circuit found that all of Fix's claims belonged to the bankruptcy estate with one exception: Fix's claim for intentional infliction of emotional distress. See Fix v. First State Bank of Roscoe, 559 F.3d 803, 810 (8th Cir.2009).

[¶ 5.] In addition to the bankruptcy and civil proceedings, Jeff, Marie, and Fix were indicted in June 2005 in state court on multiple criminal counts. The criminal counts involved an alleged criminal scheme where Jeff sold grain covered by the Bank's security interest in Fix's name; Fix would then endorse the grain checks, deposit them in her account, and write Jeff a check for the amount. Jeff ultimately pled guilty and the charges against Marie were dismissed. The criminal proceedings against Fix, however, were not dismissed but remained dormant for several months despite her attorney's requests to proceed or dismiss. Eventually in February 2006, Vaughn Beck, the Edmunds County State's Attorney who had brought the charges and who also represented the Bank civilly, contacted Fix's criminal attorney. Beck offered to dismiss the criminal charges against Fix if she would “deed the house back to the bank.” This prompted Fix to amend her state court pleadings to include a claim of abuse of process against both the Bank and State's Attorney Beck and to proceed with her intentional infliction of emotional distress claim against the Bank. Her abuse of process claim alleged that the Bank conspired with Beck to use the criminal proceeding for the illegitimate purpose of removing her from the house.

[¶ 6.] Prior to trial, Beck settled with Fix for $50,000. Additionally, the trial court granted summary judgment against Fix on her intentional infliction of emotional distress claim against the Bank. The abuse of process claim was tried to a jury in February 2010. The jury returned a verdict finding the Bank liable but awarded no damages to Fix.

ISSUES

[¶ 7.] Fix raises several issues on appeal. (1) Fix claims that the trial court's instruction on emotional distress was improper and not a correct statement of the law. The trial court's instruction required Fix to prove “she suffered extreme and disabling emotional distress as a proximate result of the abuse of process.” (Emphasis added.) She claims that she does not need to prove that her emotional distress was “extreme and disabling.” (2) Fix also claims that the trial court erred in dismissing her claim of intentional infliction of emotional distress against the Bank.

[¶ 8.] Additionally, Fix claims error (3) because the Bank was allowed to argue its damages without claiming offset or restitution; (4) because the trial court improperly applied the offset provision of the joint tortfeasor statute; (5) because the alternate juror was selected by lot contrary to statute; and (6) because expenses incurred in a separate federal court proceeding were incorrectly taxed as costs. The Bank also raises three issues by notice of review that we deem waived or without merit.

ANALYSIS

[¶ 9.] 1. Emotional distress damages resulting from an abuse of process claim need not be “extreme and disabling” in order to recover.

[¶ 10.] Under our standard of review for jury instructions:

A trial court has discretion in the wording and arrangement of its jury instructions, and therefore we generally review a trial court's decision to grant or deny a particular instruction under the abuse of discretion standard. However, no court has discretion to give incorrect, misleading, conflicting, or confusing instructions; to do so constitutes reversible error if it is shown not only that the instructions were erroneous, but also that they were prejudicial. Bertelsen v. Allstate Ins. Co., 2011 S.D. 13, ¶ 26, 796 N.W.2d 685, 695 (quoting Wangsness v. Builders Cashway, Inc., 2010 S.D. 14, ¶ 10, 779 N.W.2d 136, 140 (quoting State v. Cottier, 2008 S.D. 79, ¶ 7, 755 N.W.2d 120, 125)).

[¶ 11.] Several of the trial court's jury instructions required the jury to find severe, extreme, and disabling emotional distress in order for Fix to recover damages.¹ We hold that Fix was not required to show that she suffered extreme and disabling emotional distress in order to recover damages for emotional distress caused by the abuse of process.

[¶ 12.] The Bank mistakenly relies on our prior decision in Maryott v. First National Bank of Eden, 2001 S.D. 43, 624 N.W.2d 96, 104. In Maryott, the plaintiff sued First National Bank of Eden under a statutorily adopted Uniform Commercial Code (U.C.C.) provision that makes a bank liable to its customers if it wrongfully dishonored checks. See SDCL 57A–4–402(b). The statute at issue provided damages as follows:

(b) A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. Liability is limited to actual damages proved and may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.

Id. The question was whether emotional damages were included and recoverable as “other consequential damages.” Since the statute did not define “other consequential damages,” this Court looked to other jurisdictions that had interpreted the same 402(b) language and followed those jurisdictions that required proof of intentional or negligent infliction of emotional distress. We held that,

[b]ecause [the statute] does not define the consequential damages that may be recovered and does not clearly indicate an independent right of recovery of emotional damages, we must interpret that section in light of our precedent which requires a plaintiff to prove either intentional or negligent infliction of emotional distress to recover emotional damages.

Maryott, 2001 S.D. 43, ¶ 20, 624 N.W.2d at 103.

[¶ 13.] Maryott is distinguishable from the present tort case and should be read narrowly, mainly because the plaintiff's claim in Maryott was based on a U.C.C. statutory right to recover damages for a dishonored check. It did not involve a tort action. Maryott held that a plaintiff could not recover emotional damages under the statute unless the plaintiff met the requirements of the independent tort of negligent or intentional infliction of emotional distress. Id. ¶ 17. Similarly, the Wyoming Supreme Court and Minnesota Supreme Court both found that “ ‘extra-contractual damages, including those for emotional distress, are not recoverable for breach of contract except in those rare cases where the breach is accompanied by an independent tort.’ ” Long–Russell v. Hampe, 39 P.3d 1015, 1019 (Wyo.2002) (quoting Lickteig v. Alderson, Ondov, Leonard & Sween, P.A., ...