Miessner v. All Dakota Ins. Associates, Inc.

• Decision Date: 06 October 1993
• Docket Number: No. 18231,18231
• Citation: 515 N.W.2d 198
• Parties: Sherman MIESSNER, Plaintiff and Appellant, v. ALL DAKOTA INSURANCE ASSOCIATES, INC., a South Dakota Corporation, Stanley Rudge, individually and as an officer of All Dakota Insurance Associates Inc., and Leanne Weideman, Defendants and Appellees. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 198

515 N.W.2d 198

Sherman MIESSNER, Plaintiff and Appellant, v. ALL DAKOTA INSURANCE ASSOCIATES, INC., a South Dakota Corporation, Stanley Rudge, individually and as an officer of All Dakota Insurance Associates Inc., and Leanne Weideman, Defendants and Appellees.

No. 18231.

Supreme Court of South Dakota.

Considered on Briefs Oct. 6, 1993.

Decided April 13, 1994.

Robert M. Nash, Wilson, Olson, Nash Becker, Smoot, P.C., Rapid City, for plaintiff and appellant.

Wayne F. Gilbert, Johnson Huffman, P.C., Haven L. Stuck, Rapid City, for defendants and appellees.

SABERS, Justice.

Sherman Miessner (Miessner) appeals summary judgment against him on his malicious prosecution claims for (1) forgery, (2) larceny and embezzlement, and (3) Wyoming forgery and theft, and on his claims for defamation and abuse of process. We affirm.

Facts

Miessner and Stanley Rudge (Rudge) were partners in the insurance business since May, 1987. Miessner sold property and casualty insurance and Rudge sold life and health insurance. Miessner and Rudge formed the corporation All Dakota Insurance Associates, Inc. (All Dakota) in January, 1988. Miessner and Rudge acquired an additional insurance agency in Gillette, Wyoming named Frontier Insurance Agencies, Inc. (Frontier) in January, 1988. Leanne Weideman (Weideman) was hired to assist at All Dakota in March, 1988.

In 1989, the South Dakota Division of Insurance brought a proceeding against Miessner, Rudge, and All Dakota based upon a complaint from Titan Indemnity Insurance Company (Titan). Following a hearing on August 8, 1989, at which Miessner did not appear, the South Dakota Director of Insurance revoked Miessner's non-resident insurance agent's license for misappropriating and converting to his own use $68,824.70 belonging to Titan. Miessner did not appeal from the findings of fact and conclusions of law and did not appeal the final Order of Revocation.

The Wyoming Insurance Department commenced administrative proceedings against Frontier and Miessner on October 19, 1989, alleging misappropriation or conversion of trust funds on three occasions and forgery of Rudge's signature on a $20,000 check. On December 13, 1989, Miessner entered into a stipulation with the Wyoming Insurance Department and admitted that he wrote checks on three occasions which withdrew funds from his trust account. Miessner did not contest the allegation that he had, without any authority, forged Rudge's signature on a check for $20,000.00. Based on the terms of the stipulation, Miessner's Wyoming insurance agent's license was suspended for one year and he was fined $1,000.00. The action against him was dismissed.

Rudge consulted attorney Robert Van Norman (Van Norman) in July, 1989, concerning Miessner's acceptance of a motor vehicle from a customer in lieu of payment of an insurance premium. Van Norman advised Rudge to take the matter to law enforcement authorities. As a result, a complaint was filed by the Pennington County State's Attorneys Office against Miessner alleging embezzlement of property received in trust and a second count of larceny.

On December 27, 1990, Magistrate Michael J. O'Connor, after a preliminary hearing, determined that probable cause existed to support the allegations made in the complaint and bound Miessner over for trial. A court trial was held March 25, 1991. At the close of the State's evidence, Miessner moved for a directed verdict of dismissal. His motion was denied. At the close of all the evidence, the trial court ruled that the State failed to prove beyond a reasonable doubt that a crime was committed and acquitted Miessner.

Miessner appeared in the United States District Court for the District of South Dakota, Western Division on January 28, 1992. He pled guilty to the charge that he embezzled and converted to his own use $12,500.00 which belonged to the Oglala Sioux Tribe Public Safety Commission and the Oglala Sioux Tribe Headstart Program.

Miessner filed a complaint against All Dakota, Rudge, and Weideman (Defendants) alleging malicious prosecution, defamation, and abuse of process. Defendants filed a Motion for Summary Judgment. Following a hearing, Defendants' motion was granted. According to the Order for Summary Judgment, there was "no genuine issue as to any material fact, and the efforts by [Miessner] to raise a material fact [were] precluded by prior adjudications and administrative determinations[.]" Miessner appeals.

Our standard of review for a grant or denial of summary judgment is well settled. In Waddell v. Dewey County Bank, we stated:

In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party. The non-moving party, however, must present specific facts showing that a genuine, material issue for trial exists. Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied. If there exists any basis which supports the ruling of the trial court, affirmance of a summary judgment is proper.

Waddell v. Dewey Cnty. Bank, 471 N.W.2d 591, 593 (S.D.1991) (citations omitted).

Lamp v. First Nat'l Bank of Garretson, 496 N.W.2d 581, 583 (S.D.1993); Wilson v. Great N. Ry. Co., 83 S.D. 207, 212, 157 N.W.2d 19, 21 (1968).

1. MALICIOUS PROSECUTION

According to Miessner's complaint: (1) Rudge and Weideman maliciously, recklessly and without probable cause, encouraged the Pennington County Sheriff and State's Attorney to commence a prosecution for forgery of a check with intent to defraud; (2) Rudge falsely, maliciously, and without probable cause, contacted the authorities to commence criminal proceedings against Miessner charging him with the crimes of larceny and embezzlement; and, (3) Rudge and Weideman attempted to cause a prosecution of Miessner in Wyoming for forgery and theft causing Miessner to lose his Wyoming license.

The six elements necessary to sustain an action for malicious prosecution are:

1. the commencement or continuance of an original criminal or civil judicial proceeding;

2. its legal causation by the present defendant against plaintiff, who was defendant in the original proceeding;

3. its bona fide termination in favor of the present plaintiff;

4. the absence of probable cause for such proceeding;

5. the presence of malice; and

6. damages conforming to legal standards resulting to plaintiff.

Weber v. Western Bank, 336 N.W.2d 652, 653 (S.D.1983) (citing Kunz v. Johnson, 74 S.D. 577, 57 N.W.2d 116 (1953)).

Actions for malicious prosecution are not favored by the law because public policy requires that those who have good reason to believe that the law has been violated should be encouraged to bring that information to the attention of the law enforcement authorities, to the end that those guilty of crime may be brought to trial and punished. For that reason limitations have been placed upon such actions, including the requirement that the plaintiff must sustain the burden of proof that the defendant did not have probable cause to initiate the criminal prosecution.

Lampos v. Bazar, Inc., 270 Or. 256, 527 P.2d 376, 380-81 (1974) (citations omitted).

In order to sustain an action for malicious prosecution, all six elements must be met. See Weber, 336 N.W.2d at 653-54. If the plaintiff cannot sustain any one of the six elements, the action fails. Defendants argue that summary judgment was properly granted as to all three matters cited in the complaint because Miessner cannot sustain all six necessary elements.

(1) Forgery

Miessner argues that because the Pennington County forgery allegation was not prosecuted, probable cause was lacking. ¹ Defendants claim that because the authorities dropped the investigation and decided not to prosecute, a judicial proceeding was not commenced.

[A]lthough the plaintiff has the burden of proof to establish that the criminal prosecution was initiated by defendant without probable cause, in considering the sufficiency of the evidence on that issue on a motion for nonsuit or directed verdict, the evidence must be viewed in the light most favorable to the plaintiff in the event of any conflict in the testimony and the plaintiff is entitled to the benefit of all reasonable inferences from the evidence in his favor.

Lampos, 527 P.2d at 381 (citation omitted).

Rudge went to Pennington County law enforcement authorities and filed an affidavit of forgery. He was then interviewed by Detective Edward Hofkamp (Hofkamp) who investigated the allegations and completed a case report. Hofkamp requested that a warrant be issued charging Miessner with forgery. See Keeton, Prosser and Keeton on the Law of Torts Sec. 119, at 871 (issuing a warrant for plaintiff's arrest, although it has never been served, usually sufficient to constitute instituting a criminal proceeding). The warrant request was forwarded to Pennington County State's Attorney Dennis Groff (Groff). The investigation was subsequently dropped when Miessner brought Defendants' books and records to the attention of the State's Attorney. The reason the investigation was dropped is not shown. Apparently, Groff made a decision that the facts did not merit a criminal prosecution. In Miessner's own words, the prosecution was "headed off" before a warrant was issued.

If the defendant merely states what is believed, leaving the decision to prosecute entirely to the uncontrolled discretion of the officer, or if the officer makes an independent investigation, or prosecutes for an offense other than the one charged by the defendant, the latter is not regarded as having instigated the proceeding.

Keeton, Prosser and Keeton on the Law of Torts Sec. 119, at 872-73.

The...