Weststar Mortg. Corp. v. Jackson

Decision Date26 November 2001
Docket NumberNo. 21,179.,21,179.
Citation131 N.M. 493,39 P.3d 710,2002 NMCA 9
PartiesWESTSTAR MORTGAGE CORPORATION, Plaintiff/Counterdefendant-Appellant/Cross-Appellee, v. Ken JACKSON, Defendant/Counterplaintiff-Appellee/Cross-Appellant.
CourtCourt of Appeals of New Mexico

Alice Tomlinson Lorenz, James J. Widland, Miller, Stratvert & Torgerson, P.A., Albuquerque, NM, for Appellant/Cross-Appellee.

Joseph P. Kennedy, Albuquerque, NM, for Appellee/Cross-Appellant.

Certiorari Granted, No. 27,270, January 15, 2002.

OPINION

PICKARD, Judge.

{1} The question before us is whether the use of the criminal process to assist in the collection of money mistakenly deposited into the wrong account gives rise to civil liability under the tort of malicious abuse of process. See DeVaney v. Thriftway Mktg. Corp., 1998-NMSC-001, ¶ 17, 124 N.M. 512, 953 P.2d 277 (defining the elements of malicious abuse of process). In addition, we address whether NMSA 1978, § 56-8-4(A) (1993) requires a trial court to apply post-judgment interest to an award of punitive damages. Under the specific facts of this case, we answer both questions in the affirmative.

{2} Appellant Weststar Mortgage Company (Weststar) appeals from a judgment awarding Appellee Ken Jackson (Jackson) $50,000 in compensatory damages and $150,000 in punitive damages on Jackson's claim for malicious abuse of process. Weststar challenges the jury's verdict on every element of the malicious abuse of process claim and on the award of punitive damages. In particular, Weststar argues that (1) Weststar did not initiate or procure criminal proceedings against Jackson; (2) the trial court erred by failing to find, as a matter of law, that Weststar had probable cause to believe that a criminal claim could be established against Jackson; (3) the claim for malicious abuse of process was precluded by the facts that Jackson was guilty of larceny and the criminal proceedings did not terminate in Jackson's favor; (4) Weststar did not misuse the criminal proceedings; (5) there was no evidence that Weststar had a primary improper motive in seeking the criminal prosecution; (6) the jury instructions were misleading; (7) the jury's award of punitive damages was not supported by substantial evidence; and (8) the trial court erred in denying Weststar's motion for a new trial given that Jackson failed to present evidence sufficient to support the jury's findings. Jackson raises only one issue on cross-appeal, namely whether the trial court erred in failing to award post-judgment interest on Jackson's punitive damages award. We affirm on the appeal, reverse on the cross-appeal, and remand for further proceedings.

FACTS AND PROCEDURAL HISTORY

{3} Weststar is an escrow company that provides escrow, loan, and mortgage servicing. Its services include holding real estate contracts, collecting payments, and disbursing proceeds. Weststar also purchases real estate contracts.

{4} In 1998, Jackson owned a real estate contract encumbered by a mortgage. Weststar held the contract and disbursed payments to Jackson and to the mortgage holder. In April 1998, Weststar and Jackson executed a contract for Jackson to sell his real estate contract to Weststar. Pursuant to this agreement, Weststar arranged to direct-deposit approximately $3,000 in Jackson's account at Norwest Bank. However, Norwest misunderstood Weststar's instructions and mistakenly transferred all of the sale proceeds, including $12,927.26 that should have gone into Weststar's account, into Jackson's account.

{5} Jackson and his wife discovered the error several days later. On his wife's advice, Jackson called Weststar to ask whether the wire transfer had been made correctly. Jackson admits that he did not tell Weststar why he thought there may have been a mistake during this phone call. The Weststar representative, Lori Lynch, told Jackson that the wire transfer had been completed. Jackson then withdrew $12,000 from his account and purchased a certificate of deposit. Jackson testified that he bought the CD because he thought Weststar might eventually want the money returned and he wanted to ensure that he did not spend it.

{6} When Weststar discovered the bank error in July 1998, Lynch called Jackson. During this first telephone call, Jackson denied having any knowledge of the money. However, later that day, Jackson called Lynch and arranged to return the money when the CD matured in August. Lynch testified that she did not demand that Jackson immediately return the money: "At that point he seemed willing to find out what he could do about the CD and return the money to us, so we were allowing him some time to do that."

{7} Shortly after Lynch and Jackson made arrangements for the repayment of the money, Weststar's attorney sent a letter to Jackson, demanding return of the money and threatening legal action should Jackson fail to cooperate. Concerned by the tone of the letter, Jackson and his wife contacted an attorney. The attorney erroneously, if not recklessly, told Jackson that it was his "lucky day" and that he was entitled to keep the money. Based on this advice, Jackson cashed in the CD and deposited the proceeds into another account.

{8} As the CD maturity date approached, Lynch again called Jackson. Jackson told Lynch that he had retained counsel and directed her to communicate with him through his attorney. Lynch reported this conversation to her supervisor, Gary Inman. Inman then called Jackson's attorney. Jackson's attorney told Inman that he viewed the situation as a "golden opportunity" for Jackson and that he would be responding to Weststar's demand letter in due time.

{9} Inman or another supervisor then directed Lynch to make a complaint with the Carlsbad Police Department. Lynch met with Detective Boutelle on September 23, 1998. Boutelle testified that Lynch told him, "We want to avoid going to criminal court, if we can. We are hoping we get cooperation, and can get this resolved where we can just close the whole matter out and go from there." Boutelle explained that he was not a collection agent and asked if Weststar wanted to proceed with the prosecution of Jackson. Lynch responded that she lacked the authority to authorize the prosecution and that her purpose in contacting the police was to document the situation in the event that Weststar was unable to resolve the situation civilly.

{10} Based on Lynch's representations that Weststar wanted to avoid a criminal prosecution if possible, Boutelle called Jackson's attorney to attempt to resolve the situation. Lynch was in the room at the time Boutelle made the call. Boutelle testified that he told the attorney, "I'm asking that you might talk to your client and try to come up with a reasonable solution, so that I can be eliminated from this process and you-all handle it yourselves. Otherwise I will be compelled—I will have to do my job and pursue this further." Jackson's attorney laughed at Boutelle and told Boutelle that he did not believe the matter was a criminal issue.

{11} The following day, Inman called Boutelle and directed the detective to pursue the prosecution of Jackson. During this conversation, Inman told Boutelle that he had received a letter from Jackson's attorney basically stating that Jackson would not be returning the money. In fact, the letter discussed a settlement offer. Nonetheless, Inman told Boutelle that the letter was not the answer he was hoping to get from Jackson and therefore that Weststar wished to proceed with the criminal case.

{12} Jackson did not return the money and was arrested. The district attorney eventually dismissed the prosecution because he was unable to get necessary records from Norwest Bank in order to carry through with the trial before a required deadline.

{13} Shortly after Jackson's arrest, Weststar filed a civil complaint alleging unjust enrichment, fraud, constructive fraud, conversion, and promissory estoppel. Jackson counterclaimed for malicious abuse of process. After Jackson acquired new counsel and repaid the money, Weststar obtained partial summary judgment on its claim of unjust enrichment to memorialize Jackson's repayment of the money.

{14} Weststar filed a motion for summary judgment on Jackson's claim of malicious abuse of process. The trial court did not rule on the motion, and the counterclaim was tried to a jury. The jury found in favor of Jackson and awarded $50,000 in compensatory damages and $150,000 in punitive damages. Weststar then filed a motion for judgment as a matter of law or, in the alternative, for a new trial. The trial court denied the motion.

{15} At the presentment hearing, Jackson asked for pre- and post-judgment interest on both the compensatory and punitive damages awards. The trial court denied Jackson's request and awarded pre- and post-judgment interest on the compensatory damages only. Weststar appeals from the judgment and damages awards, and Jackson cross-appeals from the failure to award post-judgment interest on the punitive damages award.

DISCUSSION
I. Malicious Abuse of Process

{16} The tort of malicious abuse of process represents "an attempt to strike a balance between the interest in protecting litigants' right of access to the courts and the interest in protecting citizens from unfounded or illegitimate applications of the power of the state through the misuse of the courts." DeVaney, 1998-NMSC-001, ¶ 14, 124 N.M. 512, 953 P.2d 277. Because of the importance of the right of access to the courts, the tort is disfavored in the law and must be narrowly construed. Id. ¶ 19.

{17} The elements of malicious abuse of process are:

(1) the initiation of judicial proceedings against the plaintiff by the defendant; (2) an act by the defendant in the use of process other than such as would be proper in the regular prosecution of the claim; (3) a primary motive by the defendant in misusing the process to accomplish an illegitimate end; and (4) dama
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