Rodenburg Law Firm v. Sira , 931 N.W.2d 687 ( 2019 )

Filed 7/30/19 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2019 ND 205Rodenburg Law Firm, Plaintiff and Appellant
v.
Kathy Sira, aka Kathy Jimenez,
Mikhail Usher, and Usher Law Group, P.C., Defendants and Appellees
No. 20180401
Appeal from the District Court of Cass County, East Central Judicial District,
the Honorable Steven L. Marquart, Judge.
AFFIRMED.
Opinion of the Court by Jensen, Justice.
Stacey J. Hummel (argued), Clifton G. Rodenburg (on brief), and Eeva M.
Wendorf (on brief), Fargo, ND, for plaintiff and appellant.
Mikhail Usher, self-represented and as pro hac vice for Kathy Sira, aka Kathy
Jimenez, and Usher Law Group, P.C., Brooklyn, NY, and William C. Peacock,
Broadchannel, NY, for defendants and appellees; submitted on brief.
Rodenburg Law Firm v. Sira
No. 20180401
Jensen, Justice.
[¶1] The Rodenburg Law Firm appeals from a judgment dismissing its action
against Kathy Sira, Mikhail Usher, and the Usher Law Group, P.C., for malicious
prosecution, abuse of process, and exemplary damages. We conclude the district
court did not clearly err in dismissing Rodenburg’s claims for abuse of process and
malicious prosecution. We affirm the judgment.
I
[¶2] Sira initiated a Fair Debt Collection Practices Act (“FDCPA”) action against
Rodenburg in New Jersey federal court, alleging Rodenburg, a North Dakota law
firm, engaged in harassment and abusive debt collection tactics and violated 15
U.S.C. § 1692 et. seq. Sira’s action was ultimately dismissed by agreement of the
parties. After the dismissal of Sira’s action, Rodenburg sued Sira and her attorney,
Usher and the Usher Law Group, in this action, alleging malicious prosecution.
Rodenburg subsequently amended its complaint to include claims for abuse of process
and exemplary damages.
[¶3] After a bench trial, the district court dismissed Rodenburg’s claims. The court
found Sira lived in New Jersey, her allegations in the federal FDCPA action stated a
claim for relief, and her allegations were based on reasonable trustworthy information
made after a reasonable inquiry under the circumstances. The court found Sira’s
lawsuit was not for an improper purpose and was not an abuse of process. The court
also found her lawsuit was not a malicious prosecution because there was probable
cause for the action and there was no malice.
II
[¶4] Rodenburg argues the district court misapplied the law in determining Sira and
Usher had probable cause to bring the FDCPA action against Rodenburg in New
Jersey federal court. Rodenburg also argues that the court misapplied the law in
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determining Usher and the Usher Law Group satisfied their obligation to make a
reasonable inquiry into the validity of the claims before bringing the FDCPA action.
Rodenburg further argues the court made clearly erroneous findings regarding Sira’s
credibility, the court misapplied the law regarding probable cause and malice for a
malicious prosecution claim, and the court misapplied the law regarding abuse of
process.
III
[¶5] We initially consider Rodenburg’s challenge to the district court’s dismissal
of the abuse of process claim.
[¶6] An “[a]buse of process occurs when a person uses a legal process, whether
criminal or civil, against another primarily to accomplish a purpose for which it is not
designed.” Jordet v. Jordet, 2015 ND 76, ¶ 20, 861 N.W.2d 147. The two essential
elements of an abuse-of-process claim are: (1) an ulterior purpose; and (2) a willful
act in the use of the process not proper in the regular conduct of the proceeding. Id.“In cases involving abuse-of-process claims, our decisions require some overt act akin
to extortion or attempting to obtain a collateral advantage beyond the issuance of the
formal use of process.” Riemers v. Hill, 2016 ND 137, ¶ 22, 881 N.W.2d 624 (citing
Jordet, at ¶ 20; Wachter v. Gratech Co., Ltd., 2000 ND 62, ¶¶ 33-34, 608 N.W.2d
279; Kummer v. City of Fargo, 516 N.W.2d 294, 297-99 (N.D. 1994); Volk v.
Wisconsin Mortg. Assurance Co., 474 N.W.2d 40, 43-44 (N.D. 1991); Stoner v. Nash
Finch, Inc., 446 N.W.2d 747, 751-52 (N.D. 1989)).
[¶7] A district court’s findings on the elements of a claim for an abuse of process
are questions of fact. Riemers, 2016 ND 137, ¶ 24, 881 N.W.2d 624. A question of
fact will not be reversed on appeal unless it is clearly erroneous under N.D.R.Civ.P.
52(a). Schindler v. Wageman, 2019 ND 41, ¶ 8, 923 N.W.2d 507. A finding of fact
is clearly erroneous if it is induced by an erroneous view of the law, if there is no
evidence to support it, or if this Court is left with a definite and firm conviction a
mistake has been made. Id.
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[¶8] The district court made specific factual findings regarding whether Sira’s
FDCPA federal court action in New Jersey was initiated for an ulterior purpose, one
of the essential elements of Rodenburg’s claim for abuse of process. The court found
Rodenburg had previously secured a judgment in collection proceedings against Sira,
collection efforts were initiated and Sira agreed to a payment plan. The court found
Sira subsequently contacted Rodenburg regarding payment of the debt and was
informed Rodenburg had closed its file and instructed Sira to contact the creditor
directly. Rodenburg also obtained Sira’s New Jersey address. Sira contacted the
creditor and was directed to a second law firm, the Eltmann firm, regarding the debt.
At the same time she was in contact with the Eltmann firm regarding the original debt,
Sira began to receive phone calls regarding a second debt from Portfolio Recovery
Associates, LLC. Sira testified she told Usher that Eltmann and Portfolio always
identified themselves in phone calls to her. The court found that while living in New
Jersey, Sira began to receive collection calls from an unidentified source regarding
collection of a “judgment.” According to Sira, the calls were rude and sarcastic, and
the caller refused to give her information about the caller’s identity. Sira contacted
Usher and informed him that Rodenburg had previously secured a judgment against
her when she lived in Montana. Sira also told Usher that Rodenburg had obtained her
address in New Jersey, where she had lived for six months and planned to continue
to reside. Sira communicated to Usher that someone had attempted to withdraw funds
from her bank account and that she could not recall having received a validation
notice as required under the FDCPA. She informed Usher she suspected Rodenburg
made the calls to her because she did not believe anyone else was aware of the
judgment. Usher then sued Rodenburg on behalf of Sira in New Jersey federal court,
alleging violations of the FDCPA.
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[¶9] The district court noted that a representative of Rodenburg, during a
deposition, conceded that had the parties in Sira’s federal action in New Jersey not
agreed to dismissal of the litigation, Rodenburg’s motion to dismiss may not
necessarily have been granted. The court further found the settlement discussions
during the federal court litigation in New Jersey could not be characterized as an
abuse of process.
[¶10] From those facts, the district court found Usher had reasonable trustworthy
information from Sira that led him to believe New Jersey was an appropriate
jurisdiction for resolution of the FDCPA claims, and there was a reasonable chance
of prevailing on the claims. The court found Sira’s New Jersey lawsuit was designed
for the purpose of asserting FDCPA claims, not an ulterior purpose, and dismissed
Rodenburg’s abuse of process claim.
[¶11] We conclude the district court’s finding the New Jersey litigation was not
initiated for an ulterior purpose was not induced by an erroneous view of the law,
there is evidence in the record to support that finding, and we are not left with a
definite and firm conviction a mistake has been made. The court’s finding was not
clearly erroneous, and we affirm the dismissal of Rodenburg’s abuse of process claim.
IV
[¶12] Rodenburg challenges the dismissal of his malicious prosecution claim. This
Court has previously recognized the following elements necessary to support a
malicious prosecution claim:
In order to maintain an action for malicious prosecution one must
establish, at a minimum, the following elements:
1. A criminal proceeding instituted or continued by the defendant
against the plaintiff.
2. Termination of the proceeding in favor of the accused.
3. Absence of probable cause for the proceeding.
4. “Malice,” or a primary purpose other than that of bringing an
offender to justice.
Richmond v. Haney, 480 N.W.2d 751, 755 (N.D. 1992) (citing Prosser and Keeton,
The Law of Torts, 5th ed., p. 871 (1984); Larson v. Baer, 418 N.W.2d 282 (N.D.
1988)).
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[¶13] When considering a claim for malicious prosecution, this Court has previously
recognized malice is a question of fact. Kron v. Bodmer, 63 N.D. 686, 694, 249 N.W.
772, 776 (1933). See Richmond, 480 N.W.2d at 755 n. 4 (stating that establishing
malice as a matter of fact is an essential prerequisite to maintaining a claim for
malicious prosecution). The district court determined, consistent with its
determination on the abuse of process claim, the federal court litigation in New Jersey
was brought for the purpose for which it was designed, not an ulterior purpose, and
the court found there was no malice in bringing the action, a required element of a
malicious prosecution claim. See Kummer, 516 N.W.2d at 298 (stating malice for
malicious prosecution action is essentially synonymous with the element of ulterior
purpose in abuse of process).
[¶14] We conclude the district court’s finding about the absence of malice was not
induced by an erroneous view of the law, there is evidence in the record to support it,
and we are not left with a definite and firm conviction a mistake has been made. The
court’s finding was not clearly erroneous, and we affirm the dismissal of Rodenburg’s
malicious prosecution claim.
V
[¶15] Rodenburg challenges the district court’s application of the law regarding
probable cause to bring the FDCPA claim in New Jersey. Rodenburg’s assertion the
court misapplied the law with regard to determining whether Sira, Usher, and/or the
Usher Law Firm had probable cause relates the third element necessary to support a
claim for malicious prosecution.
[¶16] Probable cause for the institution of an action does not depend on the actual
state of the case, but on the honest and reasonable belief of the party prosecuting it.
Johnson v. Huhner, 76 N.D. 13, 22, 33 N.W.2d 268, 273 (N.D. 1948). Whether there
was probable cause to initiate the federal action in New Jersey is a mixed question of
law and fact. See Richmond, 480 N.W.2d at 756. “ ‘It is well-established an appellate
court need not address questions, the answers to which are unnecessary to the
determination of an appeal.’ ” State v. Garge, 2012 ND 138, ¶ 14, 818 N.W.2d 7185
(quoting Clark v. State, 2001 ND 9, ¶ 9, 621 N.W.2d 576. In order for Rodenburg to
prevail on the malicious prosecution claim, all four of the elements necessary for the
claim must be proven, including the existence of malice, a question of fact. Having
concluded the district court’s determination there was an absence of malice was not
clearly erroneous, it is unnecessary to determine whether the court erred in its
application of the law in considering whether there was probable cause to support the
federal action in New Jersey.
[¶17] Rodenburg challenges the district court’s application of the law in the dismissal
of the malicious prosecution claim. In summary, Rodenburg contends the court’s
misapplication of the law regarding whether the defendants could have reasonably
believed the New Jersey federal court had jurisdiction, and whether there was
probable cause to support the FDCPA claims asserted in that action, led to a clearly
erroneous factual finding regarding the lack of malice. As noted above, we conclude
the district court’s finding of an absence of malice was not induced by an erroneous
view of the law, there is evidence to support it, and we are not left with a definite and
firm conviction a mistake has been made.
VI
[¶18] A claim for exemplary damages is derivative of another cause of action, is not
an independent claim, and “no award of exemplary damages may be made if the
claimant is not entitled to compensatory damages.” N.D.C.C. § 32-03.2-11(4). See
Thimjon Farms P’ship v. First Int’l Bank & Trust, 2013 ND 160, ¶ 34, 837 N.W.2d
327 (stating claim for punitive damages is futile in the absence of a viable substantive
claim); Hilton v. N.D. Educ. Ass’n, 2002 ND 209, ¶ 31, 655 N.W.2d 60 (stating
punitive damages are not allowed in the absence of compensatory damages). The
dismissal of Rodenburg’s claims for abuse of process and malicious prosecution
eliminated Rodenburg’s claim for exemplary damages.
VII
[¶19] The district court’s finding of fact that the federal court action in New Jersey
was not brought for an ulterior purpose was not clearly erroneous, and dismissal of
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Rodenburg’s claim for abuse of process was appropriate. The court’s factual finding
Rodenburg failed to prove malice was not clearly erroneous, and dismissal of the
malicious prosecution claim was appropriate. We affirm the district court judgment.
[¶20] Jon J. Jensen
Daniel J. Crothers
Jerod E. Tufte
Lisa Fair McEvers
Gerald W. VandeWalle, C.J.
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