Tuesday, May 19, 2015

FYI: Cal App Ct Holds Malicious Prosecution Claim Against Bank and Its Branch Employee Barred By Probable Cause Determination in Related Criminal Proceedings

The Court of Appeal of the State of California, Second Appellate District, recently affirmed the trial court’s ruling in favor a bank and its employee as to a plaintiff’s malicious prosecution claim.

In so ruling, The Appellate Court held that the doctrine of the law of the case does not bar application of the doctrine of collateral estoppel to plaintiff’s malicious prosecution claim, and that a magistrate’s determination in the plaintiff’s criminal proceeding on the issue of probable cause defeats the malicious prosecution claim as a matter of law.

A copy of the opinion is available 
at: http://www.courts.ca.gov/opinions/documents/B258021.PDF

The plaintiff sued a bank and its branch manager for malicious prosecution. The dispute arose when the plaintiff went to a local bank branch to cash two insurance checks. The bank’s branch manager refused to do so because she could not verify the signature on the larger check, at which point the plaintiff became irate.

The parties’ accounts of what happened thereafter were diametrically opposed, with the plaintiff claiming he got upset, but did not threaten anyone, and the bank’s employees claiming the plaintiff threatened to blow the bank up. The police were called and plaintiff was arrested and charged with making a criminal threat. The plaintiff was acquitted after a jury trial in the criminal proceedings.

The trial court in this civil case entered judgment in the defendants’ favor after they filed a motion to strike plaintiff’s case under California’s Code of Civil Procedure section 426.16j (the “anti-SLAPP motion”).

The plaintiff appealed and the Second Appellate District reversed the judgment in defendant’s favor, holding that when there is conflicting evidence on the issue of probable cause, the finder of fact must decide whether sufficient facts exist to raise or reject an inference of probably cause.

On remand, the defendants moved for summary judgment, arguing that the plaintiff was collaterally estopped from re-litigating the issue of probable cause, the lack of which is an essential element in a malicious prosecution claim. This was because the magistrate in plaintiff’s criminal case found that probable cause existed at the preliminary hearing based on the branch manager’s testimony that plaintiff had threatened to blow-up the bank, and the trial judge’s denial of plaintiff’s motion for acquittal based on insufficient evidence. The trial court granted the defendants’ motion for summary judgment, reasoning that the finding of probable cause in the criminal case precluded plaintiff from re-litigating the issue in the civil case.

The plaintiff appealed, arguing that the appellate court decided the issue of probable cause in the first appeal and the doctrine of the law of the case precluded defendants from re-litigating that issue. The plaintiff also argued that collateral estoppel did not apply because the magistrate’s probable cause finding was based on lies procured by fraud.

Rejecting the plaintiff’s arguments, the Appellate Court reasoned that under California Supreme Court precedent, in order to state a cause of action for malicious prosecution of either a criminal or civil proceeding must show that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in the plaintiff’s favor; (2) was brought without probable cause; and (3) was initiated maliciously. The question of probable cause revolves around whether it was objectively reasonable for the defendant to suspect that the plaintiff had committed a crime.

The Appellate Court next discussed the law of the case doctrine, which applies “when, in deciding an appeal, an appellate court states in its opinion a principle or rule of law necessary to the decision, [which then] becomes the law of the case and must be adhered to throughout its subsequent progress, both in the lower court and upon subsequent appeal.” However, the law of the case doctrine does not apply to issues of which were not raised and determined in the prior appeal.

The Appellate Court affirmed the summary judgment in defendants’ favor because the issue of collateral estoppel was not raised in the first appeal and the doctrine of the law of the case does not preclude applying the doctrine of collateral estoppel. Applying the doctrine of collateral estoppel to the case at bar, the Court concluded that the magistrate’s probable cause finding in the plaintiff’s criminal case defeated plaintiff’s malicious prosecution claim as a matter of law.

Eric Tsai
Maurice Wutscher LLP
71 Stevenson Street, Suite 400
San Francisco, CA 94105
Direct: (415) 529-7654
Fax: (866) 581-9302
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Email: etsai@MauriceWutscher.com

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