Union Nat. Bank of Little Rock v. Kutait

• Decision Date: 08 February 1993
• Docket Number: No. 92-246,92-246
• Citation: Union Nat. Bank of Little Rock v. Kutait, 312 Ark. 14, 846 S.W.2d 652 (Ark. 1993)
• Parties: UNION NATIONAL BANK OF LITTLE ROCK, Appellant, v. Kemal KUTAIT, Appellee.
• Court: Arkansas Supreme Court

Page 652

846 S.W.2d 652

312 Ark. 14

UNION NATIONAL BANK OF LITTLE ROCK, Appellant, v. Kemal KUTAIT, Appellee.

No. 92-246.

Supreme Court of Arkansas.

Feb. 8, 1993.

Thomas Ray, Little Rock, for appellant.

Robert M. Cearley, Jr., Steven A. Owings, Little Rock, for appellee.

NEWBERN, Justice.

This is an abuse of process case. It was brought by the appellee, Dr. Kemal Kutait, against the appellant, Union National Bank of Little Rock (the Bank). Dr. Kutait alleged the Bank was liable for malicious prosecution as well as abuse of process due to its unjustified action against him for $5 million alleging improprieties and dishonesty in a business relationship. The Trial Court directed a verdict on the malicious prosecution aspect of the claim, finding that the Bank's action against Dr. Kutait was, although unsuccessful, commenced with probable cause. The abuse of process claim was tried, and a jury found in favor of Dr. Kutait. The Bank contends the evidence does not support an abuse of process judgment as there was no "process" issued subsequent to the complaint it filed against Dr. Kutait. We agree with the Bank's argument, and thus we must reverse and dismiss the case.

The Bank's suit against Dr. Kutait was filed August 7, 1987, asserting (1) breach of a contract of guaranty on a loan to Leird Church Furniture Manufacturing Co. (Leird); (2) fraud; (3) intentional tortious interference with a guaranty contract between the Bank and the Economic Development Administration (EDA); (4) intentional interference with loan agreements between the Bank and Leird; and (5) breach of Dr. Kutait's duty as a director of Leird.

In 1981 the Bank loaned money to Dr. Kutait's brother, Ed Kutait, to start Leird, a furniture manufacturing business. Dr. Kutait guaranteed a portion of the loan and served on Leird's board of directors. Conflicts arose between the Bank and Ed Kutait. Leird filed for bankruptcy in 1984. At that time Ed Kutait and others were suing the Bank in a federal court for $15 million in damages upon various allegations, including fraud, arising out of their business relationship.

During the federal litigation the Bank deposed Dr. Kutait and learned that he was supporting his brother financially. The 1987 suit was filed shortly after the deposition. The Bank's claims against Dr. Kutait were all arguably time barred or lacking in a factual basis. Dr. Kutait contended the claims accusing him of dishonesty and deceit caused distress which was exacerbated by the $5 million in damages sought in the suit. His counsel sought to have the case dismissed for lack of a sound legal basis. During the process of negotiations counsel for the Bank allegedly suggested it would dismiss the suit if Dr. Kutait would influence his brother to drop his federal court claim against the Bank.

Dr. Kutait refused to attempt to influence his brother. On August 25, 1988, shortly before trial the Bank dropped its claim against Dr. Kutait by taking a voluntary nonsuit. The Bank could have refiled its claim against Dr. Kutait within one year, but it did not do so. Dr. Kutait filed this malicious prosecution and abuse of process action two months after the federal court jury returned a verdict for Ed Kutait against the Bank in excess of $5 million. He sought compensatory and punitive damages arguing that the institution of the 1987 lawsuit was without probable cause.

At the trial, testimony was presented supporting the allegation that the Bank's counsel said the suit against Dr. Kutait would be dropped if he used his influence to get his brother to drop his federal court claim.

The Bank raises several arguments. We need only address the first of them, i.e., that the Court erred in refusing to grant its motion for a directed verdict on the abuse of process claim.

Abuse of process

The nature of abuse of process was considered in Smith & McAdams Inc. v. Nelson, 255 Ark. 641, 501 S.W.2d 769 (1973). We quoted with approval from W. Prosser, Law of Torts § 121 (4th Ed.1971), three requirements to sustain an abuse of process action. There must be:

(1) a legal procedure set in motion in proper form, even with probable cause, and even with ultimate success, but, (2) perverted to accomplish an ulterior purpose for which it was not designed, and (3) a wilful act in the use of process not proper in the regular conduct of the proceeding.

In that case and others we have determined that abuse of process is somewhat in the nature of extortion or coercion. The key is improper use of process after issuance, even when issuance has been properly obtained. In the Smith & McAdams, Inc., case we stated, "The test of process abuse is not whether the process was originally issued with malice and without probable cause. The remedy in that situation would be an action for malicious prosecution which was asserted in the case at bar." In Cordes v. Outdoor Living Ctr., Inc., 301 Ark. 26, 781 S.W.2d...