Weststar Mortg. Corp. v. Jackson

• Decision Date: 23 December 2002
• Docket Number: No. 27,270.,27,270.
• Citation: 133 N.M. 114,61 P.3d 823
• Court: New Mexico Supreme Court
• Parties: WESTSTAR MORTGAGE CORPORATION, a New Mexico corporation, Plaintiff-Petitioner/Counter-Defendant, v. Ken JACKSON, Defendant-Respondent/Counter-Plaintiff.

61 P.3d 823

133 N.M. 114

WESTSTAR MORTGAGE CORPORATION, a New Mexico corporation, Plaintiff-Petitioner/Counter-Defendant, v. Ken JACKSON, Defendant-Respondent/Counter-Plaintiff.

No. 27,270.

Supreme Court of New Mexico.

December 23, 2002.

Miller, Stratvert & Torgerson, P.A., Alice Tomlinson Lorenz, James J. Widland, Albuquerque, NM, for Petitioner.

Joseph P. Kennedy, Albuquerque, NM, for Respondent.

OPINION

FRANCHINI, Justice.

{1} Plaintiff Weststar Mortgage Corporation (Weststar) appeals from a jury verdict granting compensatory and punitive damages to Defendant Ken Jackson (Jackson). Weststar, seeking to recover money from Jackson that belonged to Weststar, had filed an action against Jackson for unjust enrichment, fraud, constructive fraud, conversion, and promissory estoppel. In response, Jackson filed a counterclaim alleging malicious abuse of process. The trial court granted partial summary judgment for Weststar on the unjust enrichment claim and ordered Jackson to repay the money in question with interest. However, the trial court did not rule on Weststar's motion for summary judgment on the counterclaim. It was subsequently tried before a jury which awarded Jackson $50,000 in compensatory damages and $150,000 in punitive damages; the trial court declined to award post-judgment interest on the punitive damages. Post-trial, the trial court denied Weststar's motion for judgment as a matter of law, or, in the alternative, a new trial. Weststar appealed the judgment to the Court of Appeals, and Jackson filed a cross appeal challenging the denial of interest. In a divided opinion, the Court of Appeals affirmed the judgment against Weststar and reversed the trial court's denial of post-judgment interest on the punitive damages. Weststar Mortgage Corp. v. Jackson, 2002-NMCA-009, 131 N.M. 493, 39 P.3d 710,cert. granted,131 N.M. 564, 40 P.3d 1008, No. 27,270 (2002). We granted Weststar's petition to this Court to issue a writ of certiorari to the Court of Appeals under NMSA 1978, § 34-5-14(B) (1972). We reverse the Court of Appeals and the judgment in favor of Jackson.

I. FACTUAL AND PROCEDURAL BACKGROUND

{2} Weststar is an escrow company that provides services on escrow accounts, loans, and mortgages by holding real estate contracts, collecting payments, and disbursing proceeds. The corporation also purchases real estate contracts. In April 1998, Weststar purchased a real estate contract from Jackson, for whom they had been providing mortgage services. At that time, Jackson signed a closing statement with Weststar, and he received a copy of the closing statement. There is no dispute that the balance due to Jackson for his equity in the property was $2786.82. But, on May 1, 1998, Norwest Bank mistakenly deposited the entire amount of the sales proceeds into Jackson's account, including $12,927.26 due to Weststar. Jackson testified that when he learned that more than $15,000 had been deposited into his account, he knew that someone had made a mistake. He called Weststar to inquire whether the money transfer had been completed, but did not tell them about the excess funds in his account. On May 14, Jackson removed $12,000 from the account to purchase a certificate of deposit (CD). By July 5, 1998, Weststar was aware of the error, and the employee who had handled the purchase of the real estate contract, Ms. Lynch, contacted Jackson. The first time they spoke, Jackson acted as though he did not understand what she was talking about. During the second call, he acknowledged that he had received the additional funds. Jackson told her about having used $12,000 of the funds to purchase the CD and that he did not have the remaining $972.26. He agreed to repay the $12,000 in August when the CD matured. In the meantime, Weststar, concerned that Jackson had kept the money for two months without notifying them and that his offer to repay the money was not in writing, sent a demand letter to Jackson on August 7 requesting payment of their money within thirty days. The letter also stated that, if necessary, Weststar would pursue legal remedies, including a civil lawsuit, to recover their funds. In response to the letter, Jackson and his wife met with his first attorney who told them that the mistaken transfer of funds to their account was Weststar's loss and their gain. He advised them that the money was theirs to keep and that Jackson could not be arrested for keeping the money.

{3} When Ms. Lynch contacted Jackson in August to arrange for the repayment that they had discussed earlier, he told her that she would now have to speak with his attorney. When Ms. Lynch reported this information to Weststar, a senior vice-president, Mr. Inman, called Jackson's attorney to clarify Jackson's intent. The attorney responded that he and his client considered the mistaken transfer of funds to have been a "golden opportunity" and laughed at the question when Mr. Inman asked about repayment. When Jackson's attorney did respond to Weststar's letter in mid-September, he stated that Jackson no longer had the full amount of $12,927.26, and offered to repay $3000 of the amount due to settle the matter in full. Mr. Inman testified that at this point he believed the money was gone and contacted the Carlsbad police to determine whether a criminal act had been committed. After that conversation, Ms. Lynch met with Detective Sergeant Boutelle of the Carlsbad Police Department on September 23, 1998, and took the documents involved with the contract purchase for his review. She testified that Weststar's purpose in going to the police was to determine whether a crime had been committed and to make a record of the occurrence. The detective explained to her that all he could do was prosecute any criminal wrongdoing and that he was not a collection agent. She stated that she understood and that Weststar's attorneys were preparing to begin civil proceedings for that purpose. Detective Boutelle responded that even if Jackson paid the money back, it would not change his pursuit of the criminal case. During this meeting with Ms. Lynch, the detective called Jackson's attorney to advise him that Weststar had contacted the police about the actions of his client. The detective testified that the attorney had responded that he thought it was a civil matter. The detective disagreed with him and suggested that the attorney should talk to his client about returning the money. The attorney laughed at him. During his investigation, Detective Boutelle contacted Jackson to tell him that the police were investigating Weststar's complaint. The detective also informed Jackson that he thought his attorney had given him bad advice with regard to his keeping Weststar's money. He suggested that, if Jackson felt he was entitled to keep the money, he should return it to Weststar and then file a civil action to recover the funds. A similar suggestion to Jackson's first attorney was also rebuffed.

{4} Detective Boutelle testified that he completed his investigation and gave it to an assistant district attorney for review. Upon determining that probable cause existed, the assistant district attorney issued a criminal complaint. The complaint was taken to a magistrate judge for approval, and an arrest warrant was issued for Jackson. After a preliminary hearing in December 1998 before a presiding magistrate judge, Jackson, who was then represented by his current attorney, was bound over for trial in district court. The assistant district attorney later dismissed the criminal charges when Norwest Bank failed to supply in a timely manner documentation that he would need to prosecute the case.

II. DISCUSSION

{5} In his counterclaim, Jackson alleged that Weststar initiated criminal proceedings against him for an improper purpose and without probable cause. He also claimed that their actions were intentional, willful, and in reckless disregard of his rights. Weststar maintains that the trial court erred when it refused to dismiss the counterclaim for malicious abuse of process, arguing that the evidence presented by Jackson was legally insufficient to sustain the counterclaim. Weststar first raised the issue in a motion for summary judgment. Weststar's argument was continued in motions for a directed verdict after the close of evidence by Jackson and at the close of trial, in a motion for judgment as a matter of law, and in a motion for a new trial. The trial court denied all the motions.

{6} Both parties rely upon DeVaney v. Thriftway Marketing Corp., 1998-NMSC-001, 124 N.M. 512, 953 P.2d 277, to support their respective arguments. In that case, this Court reviewed the purposes and elements of the two torts of abuse of process and malicious prosecution. Id. ¶¶ 13-16. We concluded these torts would no longer be separate causes of actions and restated their elements into a single tort to be known as malicious abuse of process. Id. ¶ 12. The elements of this cause of action were defined as follows:

(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) damages.

Id. ¶ 17. This Court noted that these causes of action involve 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." Id. ¶ 14. In restating the torts as a single cause of action, we observed that they shared a common purpose of protecting "a plaintiff who has been made the subject of legal process improperly, where the action was wrongfully brought by a defendant merely for the purpose of vexing or injuring the plaintiff, and resulting in damage to his or her personal rights." Id. The...