Gilbert v. Ince

• Decision Date: 02 July 1999
• Docket Number: No. 970392,970392
• Citation: 981 P.2d 841
• Court: Utah Supreme Court
• Parties: 372 Utah Adv. Rep. 47, 1999 UT 65 Cyndi W. GILBERT, Plaintiff and Appellant, v. Paul R. INCE and Callister, Nebeker & McCullough (fka Callister, Duncan & Nebeker), a Utah professional corporation, Defendants and Appellees.

Page 841

981 P.2d 841

372 Utah Adv. Rep. 47, 1999 UT 65

Cyndi W. GILBERT, Plaintiff and Appellant, v. Paul R. INCE and Callister, Nebeker & McCullough (fka

Callister, Duncan & Nebeker), a Utah professional

corporation, Defendants and Appellees.

No. 970392.

Supreme Court of Utah.

July 2, 1999.

Scott M. Lilja, Jonathan Hawkins, Salt Lake City, for plaintiff.

Stephen G. Morgan, Cynthia K.C. Meyer, Jeffrey C. Miner, Salt Lake City, for defendants.

RUSSON, Justice:

¶1 Plaintiff Cyndi W. Gilbert appeals from a verdict in favor of defendants Paul R. Ince and the law firm of Callister, Nebeker & McCullough. Gilbert brought suit against defendants, alleging they had wrongfully used civil proceedings in filing and maintaining a malpractice action against her. The trial court conducted a jury trial and, at the conclusion of Gilbert's case in chief, granted defendants' motion for a directed verdict. We affirm.

BACKGROUND

¶2 Cyndi Gilbert is an attorney, as was Paul R. Ince at the time the relevant events in this case occurred. Ince was a shareholder of the firm Callister, Nebeker & McCullough (formerly known as Callister, Duncan & Nebeker). The events giving rise to this case primarily concern the financial affairs of Dr. Charles E. Gunnoe. Gilbert and Ince acted as Gunnoe's attorney on separate occasions, representing his interests as a claimant in different bankruptcy proceedings. Gilbert began representing Gunnoe in early 1986 with respect to Gunnoe's interest in real property held by an entity known as Mountain View Holdings Ltd. Ince began representing Gunnoe in mid-1990 with respect to Gunnoe's interests in assets held by Brian Head Enterprises, Inc.

¶3 A complicated series of events linked the two bankruptcy proceedings, which resulted in Gunnoe's filing suit against Gilbert for malpractice in September of 1990. The malpractice complaint--prepared and signed by Ince in his capacity as Gunnoe's attorney--consisted of two essential claims: breach of contract and conflict of interest. In substance, the complaint alleged that Gilbert's failure to adequately represent Gunnoe in earlier dealings related to the Mountain View bankruptcy had compromised Gunnoe's position in the Brian Head bankruptcy. The district court granted summary judgment in Gilbert's favor as to the conflict of interest claim. Gunnoe then agreed to dismiss his breach of contract claim in June of 1994.

¶4 In October of that same year, Gilbert filed the instant suit against Ince, alleging that Ince's actions in bringing the malpractice suit on Gunnoe's behalf constituted wrongful use of civil proceedings. Because the events preceding Gilbert's representation of Gunnoe and the events surrounding Gunnoe's subsequent malpractice suit are important to an understanding of the case, we recite them in some detail.

¶5 Prior to retaining Gilbert, Gunnoe had maintained a longstanding and complex financial relationship with Burton K. Nichols and Brian Head Enterprises. Gunnoe held a promissory note for a substantial debt that Brian Head owed him. The note was secured by a trust deed on property known as the Woodbridge Subdivision. Nichols and Brian Head held a similar security interest in the aforementioned Mountain View property. In 1985, Nichols offered to assign Brian Head's Mountain View interest to Gunnoe if Gunnoe would execute a release of his interest in the Woodbridge property. Because of Gunnoe's longstanding relationship with Nichols, Gunnoe agreed to the exchange.

¶6 Apparently both the Mountain View and the Woodbridge properties constituted adequate collateral for the original debt. However, Mountain View Holdings, Ltd., was in the midst of chapter 11 bankruptcy proceedings, and the Mountain View property was encumbered by a tax lien in the amount of $75,000. Brian Head agreed to make the tax payments so that Gunnoe would not become liable for them in the event he foreclosed on the collateral. To guarantee payment of the taxes, Nichols represented that Brian Head would grant Gunnoe a further security interest in ski equipment possessed by Brian ¶7 The bankruptcy court was notified that Gunnoe was to be substituted as a claimant in the Mountain View proceedings. Nichols recommended that Gunnoe retain Cyndi Gilbert (then Cyndi Woodbury ¹) to represent Gunnoe's interest in the Mountain View bankruptcy. Gunnoe was aware that Gilbert had previously represented Nichols and Brian Head in a number of other matters.

Head. Although Gunnoe and Nichols arrived at a verbal understanding of their agreement, they did not immediately complete the documents necessary to effect the transfer of the property interests, nor did they draft a security agreement covering the ski equipment.

¶8 While Gilbert was representing Gunnoe in the Mountain View bankruptcy, Brian Head sent her a UCC-1 financing statement covering its ski equipment and a request for reconveyance of Gunnoe's rights in the Woodbridge property. Because Gilbert had not been privy to the original negotiations between Gunnoe and Nichols, she wrote to Gunnoe, stating, "It is my opinion that we need to draft an agreement between you and [Brian Head] covering the 'technical' points of this new arrangement." She requested that Gunnoe send her information detailing his understanding of the agreement and also sent a similar request to Brian Head. She received some information from Gunnoe but no information from Brian Head. Gilbert asserts that she contacted the Secretary of State ² and was told that there were no prior liens on Brian Head's ski equipment. However, she did not request or obtain any written documentation. Gilbert forwarded the Woodbridge reconveyance to Brian Head after Gunnoe signed it and filed the UCC-1 financing statement but otherwise took no further action to document or investigate the nature of the agreement between Gunnoe and Nichols.

¶9 In 1990, Brian Head filed for bankruptcy and Gunnoe retained Ince to represent his interests. The Brian Head trustee filed an objection to Gunnoe's claimed $75,000 security interest in the ski equipment. Among other grounds for the objection, the trustee revealed that an entity known as SISCorp held a prior perfected security interest that completely encumbered the ski equipment.

¶10 Ince contacted Gilbert and informed her that he was considering a malpractice action for her failure to assure that Gunnoe had a perfected security interest in the ski equipment. However, Ince also stated that there was a pending stipulation before the bankruptcy court that could potentially satisfy Gunnoe's claims and, if the stipulation was approved, he believed a malpractice action would be of no benefit to his client. He told her that he needed to decide within a few days whether to file suit against her because the statute of limitations was about to expire. He requested that Gilbert waive the statute of limitations until after the bankruptcy court had dealt with the proposed stipulation. Gilbert refused to waive the statute of limitations, and Ince filed the action for malpractice three days later, on September 28, 1990.

¶11 The malpractice suit consisted of two essential claims: (1) failure to perform contractual duties, and (2) breach of fiduciary duty due to conflict of interest. ³ The first claim related to Gilbert's alleged failure to ¶12 In January 1991, the bankruptcy court approved a stipulation whereby Gunnoe received an undisputed but unsecured claim in the amount of $100,000. ⁴ Shortly thereafter, in February of 1991, the district court dismissed the malpractice suit against Gilbert because Ince had failed to serve her with a summons and a copy of the complaint within 120 days. In March of 1991, Ince filed an ex parte motion for relief from the dismissal. The court granted the motion. Ince then served Gilbert in April of 1991, and the malpractice suit proceeded. Thereafter, Gilbert moved for summary judgment, which the district court granted on the conflict of interest claim. ⁵ Gunnoe subsequently obtained new counsel and agreed to a dismissal with prejudice of the remainder of the suit.

"detect or disclose" SISCorp's senior perfected security interest in the ski equipment and her alleged failure to assure that Gunnoe's own interest in the same equipment was established or preserved. The second claim asserted that Gilbert had acted to protect Nichols' and Brian Head's interests in violation of her duty of loyalty to Gunnoe.

¶13 Within a few months of the dismissal of the malpractice suit, Gilbert instituted the present action against Ince and the law firm of Callister, Nebeker & McCullough for wrongful use of civil proceedings. The district court conducted a jury trial that spanned several days. At the conclusion of Gilbert's case in chief, Ince and his law firm moved for a directed verdict. The court ruled on the motion as follows:

Defendants' motion for directed verdict on the issue of probable cause is granted and Plaintiff's complaint is hereby dismissed with prejudice and on the merits for failure of plaintiff to prove that defendants lacked probable cause in filing the underlying malpractice complaint on behalf of Dr. Gunnoe against Ms. Gilbert.

Gilbert appeals from this judgment.

DISCUSSION

¶14 A directed verdict at the close of a plaintiff's case in chief assumes that the plaintiff has not met his or her burden of proof. Thus, "in reviewing a grant of a directed verdict, we view all facts and the inferences drawn therefrom in the light most favorable to the nonmoving party." Nay v. General Motors Corp., 850 P.2d 1260, 1261 (Utah 1993). "We reverse a directed verdict when the evidence [so viewed] is sufficient to permit a reasonable jury to find for the nonmovant." Id. at 1263.

¶15 This court has only infrequently treated the tort of wrongful use of civil proceedings, and only once have we discussed the action under that particular label. See Baird v. Intermountain Sch. Federal Credit Union, 555 P.2d 877, 878 (Utah 1976) (...