Jones v. Gwynne, 531A83

• Decision Date: 04 December 1984
• Docket Number: No. 531A83,531A83
• Citation: 312 N.C. 393,323 S.E.2d 9
• Parties: Ray Livingston JONES v. Matt GWYNNE, Christal Newton, Ramona Galarza and McDonald's Corporation.
• Court: North Carolina Supreme Court

Page 9

323 S.E.2d 9

312 N.C. 393

Ray Livingston JONES v. Matt GWYNNE, Christal Newton, Ramona Galarza and McDonald's Corporation.

No. 531A83.

Supreme Court of North Carolina.

Dec. 4, 1984.

Teague, Campbell, Conely & Dennis by C. Woodrow Teague and Dayle A. Flammia, Raleigh, and Smith, Dickey & Parish by W. Ritchie Smith, Jr., Fayetteville, for plaintiff-appellee and cross-appellant.

Hunton & Williams by Odes L. Stroupe, Jr., and David Dreifus, Raleigh, for defendants-appellants and cross-appellees.

FRYE, Justice.

On defendants' appeal, the issue is whether the Court of Appeals correctly found no error when the trial court instructed the jury in a malicious prosecution action that subsequent indictments by a grand jury could not be considered as evidence of probable cause. On plaintiff's cross-appeal, we review that portion of the Court of Appeals' decision which holds that the plaintiff's evidence was insufficient to sustain a jury award of punitive damages. On defendants' appeal, we affirm. On plaintiff's cross-appeal we reverse the decision of the Court of Appeals and reinstate the judgment of the trial court.

I.

This is a civil action for malicious prosecution. By complaint filed 29 June 1979, the plaintiff, Ray Livingston Jones, alleged that on and prior to 18 May 1979, he was employed by McDonald's Corporation as manager of its business located at 3002 Raeford Road, Fayetteville, North Carolina; that the individual defendants, Christal Newton and Ramona Galarza (cashiers at the Raeford Road store), and Matt Gwynne, regional security officer, were on that date acting as the employees, servants and agents of the corporate defendant, McDonald's Corporation; that on or about 18 May 1979, the individual defendants wilfully, wrongfully, maliciously and without just and probable cause instituted, or caused to be instituted, two criminal actions against plaintiff, charging the plaintiff with embezzling from McDonald's Corporation the sum of $1.50 on or about 15 May 1979 and an "indeterminate amount" at some time prior to and after 13 April 1979; that such charges were false and untrue and known at the time by the defendants to be false and untrue; that said criminal charges were terminated in favor of the plaintiff on 26 June 1979, when the said charges were voluntarily dismissed by the district attorney; that the defendants acted without justification or probable cause and acted with actual malice towards the plaintiff, entitling the plaintiff to both compensatory and punitive damages; that by reason of the acts and conduct of the defendants, plaintiff was arrested and taken into custody, lost his job, opportunity of advancement and former good standing with McDonald's Corporation, was humiliated and caused great grief, embarrassment, etc.; compensatory damages of $200,000 and punitive damages of $100,000 were sought against all defendants, jointly and severally.

On 13 August 1979, while the present action was pending, the Cumberland County Grand Jury returned three true bills of indictment against Mr. Jones for embezzlement from the McDonald's restaurant. ¹

On 20 August 1979, defendants filed an answer in this malicious prosecution action, admitting residence of the parties and that the individual defendants were, on or about 18 May 1979, acting as the employees, servants and agents of McDonald's Corporation. The remaining allegations of the complaint were denied.

Plaintiff was tried on the criminal charges in February 1980. After hearing the State's evidence on the indictment for embezzling $1.51 from McDonald's, which was considered by the assistant district attorney to be his strongest case, the trial judge dismissed the case. Thereafter, the assistant district attorney took voluntary dismissals on the remaining charges.

The present malicious prosecution action was tried in January 1982. The trial court allowed Defendants Newton and Galarza's motions for a directed verdict at the end of the plaintiff's evidence but denied Defendants Gwynne and McDonald's Corporation's motions for a directed verdict.

The jury returned a verdict finding that defendants Matt Gwynne and McDonald's Corporation had "maliciously prosecute[d] criminal charges of embezzlement, issued on May 18 1979, against the Plaintiff, Ray Jones." The jury awarded plaintiff $200,000 for compensatory damages and $100,000 for punitive damages.

On appeal, a sharply divided panel of the Court of Appeals (one judge writing for the majority, one judge concurring in the result and one judge dissenting) found no error in the trial proceedings leading to the jury award of compensatory damages. However, the court unanimously voted to vacate the award of punitive damages because there was insufficient evidence adduced at trial to support such an award.

Other facts necessary for a determination of the issues raised on appeal will be incorporated in this opinion.

II.

"An action in tort for malicious prosecution is based upon a defendant's malice in causing process to issue." Middleton v. Myers, 299 N.C. 42, 44, 261 S.E.2d 108, 109 (1980). A plaintiff must prove four essential elements to establish a malicious prosecution claim against an accuser. He must prove " that defendant initiated the earlier proceeding, that he did so maliciously and without probable cause, and that the earlier proceeding terminated in plaintiff's favor." Stanback v. Stanback, 297 N.C. 181, 202, 254 S.E.2d 611 (1979).

In the instant case, defendants' appeal to this Court relates to an alleged error in the trial court's instruction to the jury on the question of probable cause. That instruction is as follows:

The question presented here is not one of the guilt or innocence of Ray Jones. Rather, it is the question of probable cause. Now, probable cause does not depend upon the guilt or innocence of the person accused but upon whether the Defendants had reasonable grounds for the suspicion supported by circumstances sufficiently strong in themselves to warrant cautious man to believe that the accused is guilty of the offense. And I am referring to the events with which he is ultimately charged on the eighteenth day of May 1979. And in this case I refer specifically to the two felony embezzlement warrants issued by a magistrate on the eighteenth day of May 1979. This case is based upon those two warrants and not upon any bills of indictment which may have subsequently been returned by the Grand Jury.... And I instruct you that you may not consider the evidence of the return by the Grand Jury of the bills of indictment as true bills on this question because it occurred after the filing of this action. However, you may consider the finding of the bills of indictment and Ray Jones' acquittal there on the question of whether or not the proceedings commenced by the issuance of the warrants has actually terminated in favor of the Plaintiff.

The defendants argue in this Court, as they did in the Court of Appeals, that the above instruction is erroneous as a matter of law. Stated more specifically, the defendants contend that "the jury was erroneously instructed that it could not consider the grand jury indictments as evidence of probable cause."

In concluding that the trial court had not erred in giving the challenged instruction, Judge Hedrick, author of the majority opinion of the Court of Appeals, reasoned as follows:

While the general rules governing the admissibility of grand jury indictments in malicious prosecution cases are clear, it is true, as defendants concede in their memorandum of additional authority, that '[t]he factual situation in this case has never been ruled upon by a North Carolina appellate court.' In this case, the indictments defendants sought to introduce were issued after the present action for malicious prosecution was commenced. Plaintiff in the present case based his complaint not on the indictments, but rather on the arrest warrants issued months before. When the district attorney took a voluntary dismissal on the warrants, the criminal proceedings against Jones terminated for the purpose of this action, and the tort was complete. Taylor v. Hodge, 229 N.C. 558, 50 S.E.2d 307 (1948); Perry v. Hurdle, 229 N.C. 216, 49 S.E.2d 400 (1948). See also W. Prosser, Handbook of the Law of Torts Sec. 119, at 839 (4th ed. 1971). While we could avoid deciding the question by agreeing with plaintiff that the challenged instruction, if error, was not prejudicial, we choose to be more definitive and declare that the better rule in such a case bars consideration of later indictments on the issue of probable cause. We note that the inquiry into probable cause seeks to establish whether there existed 'such facts and circumstances, known to [the defendant] at the time, as would induce a reasonable man to commence a prosecution.' Pitts v. Pizza, Inc., 296 N.C. 81, 87, 249 S.E.2d 375, 379 (1978) (citation omitted). We do not believe that a grand jury determination of the existence of probable cause, issued after the alleged tort is complete and the complaint filed, is relevant to this inquiry. We thus hold that the trial judge did not err in giving the challenged instructions.

Jones v. Gwynne, 64 N.C.App. 51, 56, 306 S.E.2d 574, 577 (1983). Judge Hill concurred in the result, stating that he believed that the trial judge erred by instructing the jury "not to consider the return of true bills of indictment as evidence of probable cause." However, he thought the instruction was "harmless under the facts of the case." Gwynne, 64 N.C.App. at 60, 306 S.E.2d at 579-80 (Hill, J., concurring). Judge Webb, in a dissenting opinion, stated that he believed that the trial court had erred in instructing the jury not to consider the grand jury's return of true bills of indictment as evidence of probable cause. Gwynne, 64 N.C.App. at 60-61, 306 S.E.2d at 580 (Webb, J., dissenting).

The defendants contend that the Court of Appeals' holding, that the challenged jury...