An employer that becomes too aggressive in the pursuit of criminal charges may find itself on the receiving end of a lawsuit for malicious prosecution or abuse of process. Recently, a Greensboro employer learned the dangers of pursing criminal charges against a former employee when an employee was engaged in misconduct which may involve criminal violations employers will often consider "pressing charges". This reaction while understandable is one which should be accompanied with a great deal of caution.
The Facts.
Sammy Estridge was employed by House Calls Home Healthcare, a wholly-owned subsidiary of House Calls Healthcare Group, Inc. ("House Calls"), in March 1995 as Assistant Controller. Several months later, Estridge was promoted to Controller. House Calls is a state-wide provider of in-home healthcare services and primarily provides services for Medicaid-eligible patients utilizing part-time nurses. House Calls pays the nurses and then bills Medicaid for reimbursement.
On September 2, 1995, Terry Ward, the owner of House Calls required Estridge to attend a meeting at the office and then remain at the office to complete a project. Later that afternoon, Estridge and his wife discussed his employment with House Calls and Estridge decided to resign. Estridge prepared a letter of resignation citing problems with the accounting system which caused him "multiple ethical dilemmas" and posted several copies of the letter in the office building. Estridge stated his resignation was effective immediately but offered to act as an independent consultant for an additional ten business days. According to Estridge, Mr. Ward paged Estridge the following morning and left a message on his voicemail directing Estridge to return the company's keys. Mr. Ward testified, however, that he also directed Estridge to return any other property of House Calls at once. Estridge testified that he returned Ward's call and stated that he would bring the keys to House Calls on Tuesday morning, while Mr. Ward testified that Plaintiff did not say anything about returning the company property. According to Estridge on the following Tuesday morning he turned his keys over to Christine Stewart. Estridge testified that he told Ms. Stewart that he would bring the pager and cell phone back on Friday when he received his paycheck, or earlier if they were needed. Estridge left a note with the keys requesting that he be informed whether he would be called during the ensuing ten-day period and when he was to bring the equipment back. Ms. Stewart testified that Estridge told her that he would not return the cell phone and pager until he received his final paycheck, and she believed that he was therefore holding the property hostage.
Mr. Ward then instructed Ms. Stewart to go to a magistrate and explain the situation. The magistrate issued a warrant charging that Estridge had committed criminal conversion by retaining possession of the pager and cell phone. That evening, Estridge went to the House Calls office and turned in all the equipment to Lisa Saunders and obtained a receipt from her. He was not aware of the warrant which had been issued at that time and did not learn about the warrant until September 16, 1995, eleven days after it had been issued. When the criminal case came on for trial, Mr. Ward's wife was present and discussed the case with the prosecutor. The Assistant District Attorney, Mary Hedrick, dismissed the case because the property had been returned. Mrs. Ward testified that she did not want the case dismissed and informed Ms. Hedrick of this wish and asked if Mr. Ward could be contacted. Mr. Ward also informed Ms. Hedrick that he wanted the case to be prosecuted, but understood that the decision was Ms. Hedrick's to make.
Estridge filed a lawsuit two weeks after the criminal case was dismissed, seeking damages for unpaid wages, malicious prosecution and abuse of process. After a jury trial the jury entered verdicts against House Calls, Mr. and Mrs. Ward and Christine Stewart for $1,295.93 in unpaid wages and $30,000 for compensatory damages for the criminal prosecution. The jury awarded punitive damages against House Calls in the amount of $1.5 Million Dollars; Mr. Ward in the amount of $1.5 Million Dollars; Mrs. Ward in the amount of One Million Dollars and Ms. Stewart in the amount of One Dollar. House Calls and the Wards argued that the jury's verdict should be overturned, but the trial judge refused. House Calls and the Wards then appealed to the North Carolina Court of Appeals.
The Malicious Prosecution Claim.
In order to establish a malicious prosecution claim, a plaintiff must show (1) the defendant initiated a criminal proceeding; (2) the defendant was acting in malice; (3) there was a lack of probable cause for the initiation of the criminal proceeding; and (4) the criminal proceeding was terminated in favor of the plaintiff. In this case, The Court of Appeals ruled that the jury should not have been allowed by the trial judge to decide whether Ms. Stewart and Mrs. Ward had engaged in malicious prosecution since they had not done anything to initiate the criminal proceeding against Estridge. Ms. Stewart was acting only upon the instructions of her employer when she went to the Magistrate's office. Likewise, Mrs. Ward had no part in the initiation of the action. By contrast, the Court agreed that the trial judge properly allowed the jury to consider whether House Calls and Mr. Ward had maliciously prosecuted Estridge.
Abuse Of Process Claim.
Abuse of process is the misuse of the legal process after it has begun to accomplish an unwarranted purpose. Abuse of process requires both a malicious motive and unproper an act in the use of the legal process. In this case, there was no evidence of any improper use of the legal process after the issuance of the criminal summons. The Court noted that merely because the Wards disagreed with Assistant District Attorney Hedrick's decision to dismiss the case for lack of evidence was not sufficient to prove a wilful improper act outside the regular course of proceedings. Because the elements of abuse of process were not met as to any of the Defendants, the Court of Appeals ruled that the trial judge had erred in failing to dismiss the claim.
New Trial on Damages.
Because the jury had lumped together the damages against all the defendants for both malicious prosecution and abuse of process, the Court found it necessary to order a new trial as to House Calls and Mr. Ward to determine those portions of damages attributable to the malicious prosecution claim.
Bottom Line.
This case is a perfect illustration of a small issue blowing up into a major problem. Employers should always be careful in responding to possible criminal actions by employees. The preferable route is for the employer not to march down to a magistrate and insist that a criminal warrant be issued. Rather, the employer should contact the local law enforcement agency and report to the agency what has occurred. If the law enforcement agency then decides to investigate the matter and issue charges, it will be the police department who has initiated criminal proceeding and not the employer.
Estridge v. House Calls Healthcare Group, Inc. ___ N.C. App. __ (December 29, 1998).