North Carolina Farm Bureau Mutual Insurance v. Cully's Motorcross Park, Inc.

IN THE SUPREME COURT OF NORTH CAROLINA
No. 243PA12
FILED 13 JUNE 2013
THE NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY
v.
CULLY’S MOTORCROSS PARK, INC., and LAURIE VOLPE
On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous
decision of the Court of Appeals, ___ N.C. App. ___, 725 S.E.2d 638 (2012), affirming
a judgment and two orders, all entered on 7 February 2011 by Judge Wayland J.
Sermons, Jr. in Superior Court, Wilson County. Heard in the Supreme Court on 16
April 2013.
Harris, Creech, Ward and Blackerby, P.A., by Jay C. Salsman, C. David
Creech, and Luke A. Dalton, for plaintiff-appellant.
Hemmings & Stevens, PLLC, by Aaron C. Hemmings, for defendant-appellees.
Schulz Stephenson Law, by Bradley N. Schulz; and Wait Law, P.L.L.C., by
John L. Wait, for North Carolina Advocates for Justice, amicus curiae.
Young Moore and Henderson P.A., by Glenn C. Raynor, for North Carolina
Association of Defense Attorneys, amicus curiae.
Baucom, Claytor, Benton, Morgan & Wood, P.A., by James F. Wood, III, for
North Carolina Insurance Crime Information Exchange, amicus curiae.
Bailey & Thomas, P.A., by Roger W. Marion, Jr. and David W. Bailey, Jr., for
Property Casualty Insurers Association of America, amicus curiae.
EDMUNDS, Justice.
N.C. FARM BUREAU V. CULLY’S MOTORCROSS
Opinion of the Court
In the aftermath of a house fire on property belonging to defendant Cully’s
Motorcross Park, Inc. (Cully’s), an investigator for plaintiff North Carolina Farm
Bureau Mutual Insurance Company (Farm Bureau) found strong evidence of arson
and reported his suspicions to a Wilson Police Department sergeant. These findings
included allegations that defendant Laurie Volpe (Volpe), Cully’s president and sole
stockholder, had failed to report to Farm Bureau that there was a deed of trust on
the property when she insured it, when she filed a claim of loss after the fire, or
when she later sold the burned property to a purchaser who did not know it was
still encumbered. Volpe thereafter was arrested and charged with obtaining
property by false pretenses based upon her sale of the encumbered property. This
appeal involves Volpe’s claim that the insurance investigator’s report to a law
enforcement officer constituted the initiation of a malicious prosecution. Because
we conclude that the investigator did not initiate a criminal prosecution, we reverse
the holding of the Court of Appeals that affirmed the trial court’s finding to the
contrary.
In the late evening of 5 September or early morning of 6 September 2008, a
fire was set in the house at 314 Hill Street in Wilson, North Carolina. Responding
Wilson Fire Department firefighters found a candle on the floor of the downstairs
dining room and observed a distinctive pour pattern on some walls of the house.
They followed the burn trail and pour pattern to a small room at the top of the
stairs on the second floor of the house. Inside the room was a tipped red gas can
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labeled “Race Fuel.” A pour pattern on the walls of the house led directly to the gas
can.
The damaged property was owned by defendant Cully’s. Defendant Volpe
was the president and only shareholder of Cully’s, and Volpe’s husband, Louis R.
Volpe, Jr. (Mr. Volpe), was the corporate secretary. Cully’s originally was
incorporated in Florida, where the Volpes operated a dirt bike racing track, using
red gas cans labeled “Race Fuel” in the business. When the Volpes moved to North
Carolina, they reincorporated, keeping the name Cully’s Motorcross Park, but
operating as a business renovating and reselling homes. They brought their red gas
cans from Florida, and Mr. Volpe kept them to fuel equipment that he used for
landscaping and lawn maintenance at the properties that Cully’s owned and
renovated.
Volpe, through Cully’s, purchased the property at 314 Hill Street from James
and Diane Skinner on 19 December 2007, paying in cash $25,000 of the $31,500
purchase price. The remaining $6,500 was to be paid via a balloon payment
recorded in a deed of trust that required full payment to the Skinners no later than
one year from the date of purchase or upon the sale of the home, whichever came
first. Before signing the deed of trust, Volpe submitted an application to Farm
Bureau to have the property added to her fire insurance policy. The application,
which named the insured as “Laurie Volpe – Cullys [sic] Motorcross Park LLC” and
was signed “Laurie A. Volpe,” did not reveal the existence of a deed of trust on the
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property, and the box on the form that asked, “Does any other person or entity have
an ownership interest in the property?” was checked “No.” The property was added
and the policy was issued by Farm Bureau with a policy limit of $60,000.
After the fire, on 17 September 2008, Volpe filed a Sworn Statement in Proof
of Loss form with Farm Bureau on behalf of Cully’s. In response, Farm Bureau
initiated an investigation. In the days following the fire, the Farm Bureau Special
Investigator Randall Loftin (Investigator Loftin) and other Farm Bureau
investigators toured the fire scene. Investigator Loftin testified that he observed
medium to heavy fire damage, extensive smoke damage, a pour pattern, and the
candle that was still on the floor in the downstairs dining room. The circumstances
of the fire led Farm Bureau to suspect arson, and Investigator Loftin quickly
focused on Mr. Volpe.
Investigator Loftin interviewed both Volpes several times in the months
following the fire, collecting financial information from them pertaining both to
themselves and to Cully’s, along with such materials as notes or deeds of trust and
prior insurance claims. Volpe submitted to an examination under oath in January
2009, maintaining that she was cooperating fully with Farm Bureau and providing
all the documents she understood had been requested and that she had in her
possession. Mr. Volpe, on the other hand, refused to submit to an examination
under oath, and Investigator Loftin was unable to obtain a sworn statement from
him prior to Mr. Volpe’s death in September 2010. Although Mr. Volpe was named
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in the litigation described below, he was dismissed as a party after he died.
As Investigator Loftin continued his investigation, on 6 November 2008,
Cully’s sold the property by means of a quitclaim deed signed by Volpe to José
Giron, who knew of the fire damage. When deposed before trial, Volpe claimed she
had made Mr. Giron aware of the balloon payment that she still owed on the
original purchase, adding that she had told Mr. Giron she would pay off that balloon
payment. However, James Skinner testified at trial that he had to work out a
repayment plan with Mr. Giron because the Volpes never paid the $6,500.
Another point of contention at trial was whether Volpe had disclosed the deed
of trust on 314 Hill Street during Farm Bureau’s investigation. As noted above,
Volpe failed to indicate on the insurance application form she signed and filed with
Farm Bureau that the property was the subject of a mortgage, even though the form
contained an explicit inquiry seeking such information. Volpe testified, and the
trial court found as fact, that she had responded as she did because she did not
consider a purchase money deed of trust that was due in one year and did not
require monthly payments to be a mortgage. Although the trial court further found
that Volpe disclosed in the proof of loss form she filed after the fire that Cully’s
owed $6,500 on the property, we note that where the form asks for “all owners (and
names of spouses) of the insured property, and all persons or companies which have
any lien or encumbrances against the insured property, such as mortgagees, deeds
of trust, judgments, etc.,” Volpe wrote in only “Cully’s Motorcross Park, Inc.” while
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nowhere listing either the amount of $6,500 or the names of creditors James and
Diane Skinner.
While Investigator Loftin worked, the Wilson Police Department opened a
parallel investigation into the fire, which police and firefighters had classified as
“suspicious.” Police Sergeant J.C. Lucas (Sergeant Lucas) was the assigned
investigator. He interviewed the Volpes and neighbors around 314 Hill Street. On
24 September 2008, he met Investigator Loftin and the Volpes at the house. Shortly
after that meeting, however, Sergeant Lucas fell ill and did not return from sick
leave until April 2009. As a result, the investigation was conducted primarily by
Investigator Loftin on behalf of Farm Bureau.
After completing his investigation, Investigator Loftin submitted his report
and recommendations to his superiors. Farm Bureau ultimately denied the claim
on 23 February 2009, citing among other factors Mr. Volpe’s failure to provide a
sworn statement, Volpe’s failure to disclose the deed of trust in favor of the
Skinners, and Farm Bureau’s suspicion that the fire had been intentionally set by
one of the Volpes. The next day, Farm Bureau filed a complaint for declaratory
judgment, seeking a judicial declaration that it had no obligation under the
insurance policy to named defendants Cully’s, Volpe, and Mr. Volpe. The complaint
alleged that Farm Bureau acted reasonably and in good faith in investigating the
fire and set out several reasons Farm Bureau was legally entitled to a declaratory
judgment in its favor. These allegations included that Mr. Volpe, an officer and
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employee of Cully’s, failed to submit to an examination under oath as required by
the policy; that defendants failed to cooperate in the investigation by providing
requested documents and records; and that defendants made material
misrepresentations and attempted to conceal material facts, both by failing to
provide the deed of trust on the property and by failing to produce the quitclaim
deed that transferred the property after the fire. In addition, Farm Bureau alleged
that evidence indicated that the Volpes had the opportunity and motive to set the
fire, an act that, if established in court, also would relieve Farm Bureau of its duty
to provide coverage.
On 23 March 2009, defendants filed a combined answer and counterclaim,
denying Farm Bureau’s right to decline coverage and asserting that Farm Bureau
had breached the insurance contract, violated the Unfair Claims Settlement
Practices provision of the North Carolina Insurance Law, committed unfair and
deceptive acts or practices in or affecting commerce in violation of N.C.G.S. § 75-1.1,
and acted in bad faith. Defendants sought treble damages, punitive damages, and
attorney’s fees.
On 16 April 2009, Investigator Loftin again met with Sergeant Lucas at
Investigator Loftin’s request. Investigator Loftin informed Sergeant Lucas, who by
then had returned to duty from sick leave, of the results of his investigation, told
Sergeant Lucas that the Volpes’ insurance claim had been denied, and added that
the property had been sold to Mr. Giron even though Volpe had not paid off the
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balloon payment owed and secured by a deed of trust on the property. Using the
documentation provided by Investigator Loftin, Sergeant Lucas opened a separate
investigation of fraud against Volpe. After meeting with Mr. Giron and Mr.
Skinner, Sergeant Lucas concluded that Volpe had committed a crime by selling to
Mr. Giron property that Volpe did not own.
Sergeant Lucas consulted with a real estate attorney and an assistant
district attorney to discuss his findings, then presented the case to a Wilson County
magistrate on 4 May 2009. The magistrate found probable cause and issued a
warrant to arrest Volpe for the offense of obtaining property by false pretenses. The
next day, Sergeant Lucas asked Volpe to come to the police station and give a
statement. After interviewing her and asking her to write out a statement
regarding the sale of 314 Hill Street to Mr. Giron, Sergeant Lucas had Volpe
arrested pursuant to the warrant. However, on 19 May 2009, the district attorney
dismissed the charge against Volpe. On 22 June 2009, Volpe and Cully’s filed an
amended answer and counterclaim, adding a claim that Farm Bureau had
instituted a malicious prosecution against Volpe.
A bench trial on all claims and counterclaims was held in December 2010.
After considering the evidence, arguments of counsel, and additional posttrial
motions by the parties, the trial court found that Farm Bureau had neither
breached the insurance contract nor engaged in unfair and deceptive practices by
“refusing to pay the fire claim without conducting a reasonable investigation based
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upon all available information.” The trial court also found that “[Mr.] Volpe, Jr.
acting on behalf of Cully’s Motorcross Inc., caused, conspired to cause, or allowed to
be caused the fire at 314 Hill Street.” However, the trial court found that Volpe was
not involved in the fire, that Volpe’s actions as described to Sergeant Lucas by
Investigator Loftin did “not amount to a crime,” that Farm Bureau caused a
criminal proceeding to be instituted against Volpe, and that Farm Bureau was
liable to Volpe for malicious prosecution.
The trial court further found as fact that Volpe had made a statement
pertaining to the debt on 314 Hill Street to a representative of Farm Bureau as
early as 8 September 2008, that Farm Bureau knew of Volpe’s debt to Mr. Skinner
on the property as of that date, and that Farm Bureau did not provide this
information to Sergeant Lucas until after Volpe filed her counterclaim. The trial
court concluded as a matter of law that Farm Bureau withheld this information
from the Wilson Police until after Volpe filed her counterclaim for the purpose of
achieving leverage in the instant action, thereby committing an unfair and
deceptive practice. The trial court awarded Volpe attorney’s fees, damages in the
amount of $26,075 for malicious prosecution, and damages in the amount of $10,000
(trebled to $30,000) for “the unfair and deceptive trade practice of malicious
prosecution.”
The Court of Appeals affirmed the trial court’s decision. N.C. Farm Bureau
Mut. Ins. Co. v. Cully’s Motorcross Park, Inc., ___ N.C. App. ___, ___, 725 S.E.2d
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638, 651 (2012). In reviewing Farm Bureau’s argument that it did not initiate the
criminal action against Volpe, but instead merely provided information to the
police, the Court of Appeals focused on its finding that almost all the information
used by Sergeant Lucas in making his decision to prosecute Volpe had been
supplied by Farm Bureau’s Investigator Loftin. Id. at ___, 725 S.E.2d at 643-44.
Because it agreed with the trial court that a criminal prosecution would have been
unlikely if Investigator Loftin had not contacted Sergeant Lucas, the Court of
Appeals concluded that the trial court did not err by determining that Farm Bureau
initiated criminal proceedings. Id. at ___, 725 S.E.2d at 644. The Court of Appeals
then considered Farm Bureau’s other issues and affirmed the trial court. Id. at ___,
725 S.E.2d at 651. We allowed Farm Bureau’s petition for discretionary review.
We begin by observing that all of Volpe’s surviving claims are based upon a
contention that Farm Bureau maliciously instigated a criminal prosecution against
her and that the malicious prosecution was an unfair and deceptive practice, which
the trial court found was instituted for the purpose of gaining leverage in the
current action. Thus, if Investigator Loftin’s report to Sergeant Lucas was proper,
Farm Bureau neither instituted a malicious prosecution nor committed an unfair
and deceptive practice, and Volpe’s claims fail. Accordingly, we consider the
propriety of Investigator Loftin’s actions.
No party has challenged the trial court’s findings of fact. When a trial court
sits without a jury, findings of fact are conclusive on appeal “if supported by any
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substantial evidence,” Carolina Milk Producers Ass’n Coop., Inc. v. Melville Dairy,
Inc., 255 N.C. 1, 22, 120 S.E.2d 548, 563 (1961), while conclusions of law are
reviewed de novo, Davison v. Duke Univ., 282 N.C. 676, 712, 194 S.E.2d 761, 783
(1973). Here, while the trial court found as fact that Investigator Loftin initiated
the prosecution of Volpe, we determine that this matter is instead a mixed question
of fact and law. State v. Sparks, 362 N.C. 181, 185-86, 657 S.E.2d 655, 658 (2008)
(conducting de novo review of a conclusion of law that the trial court mislabeled as a
finding of fact); see also In re Foreclosure of Gilbert, 211 N.C. App. 483, 487-88, 711
S.E.2d 165, 169 (2011) (citations omitted) (observing that when the trial court has
mislabeled findings of fact and conclusions of law, the reviewing court may
reclassify them as necessary before applying the appropriate standard of review).
The actions of Investigator Loftin and Sergeant Lucas are facts, but the trial court’s
determination that these actions constituted initiation of a criminal action is a
conclusion of law we review de novo.
To prove that Farm Bureau is guilty of malicious prosecution, Volpe must
establish that: “(1) [Farm Bureau] initiated the earlier proceeding; (2) malice on the
part of [Farm Bureau] in doing so; (3) lack of probable cause for the initiation of the
earlier proceeding; and (4) termination of the earlier proceeding in favor of [Volpe].”
Best v. Duke Univ., 337 N.C. 742, 749, 448 S.E.2d 506, 510 (1994) (citing Jones v.
Gwynne, 312 N.C. 393, 397, 323 S.E.2d 9, 11 (1984)). The dispositive issue in this
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case is whether the trial court erred when it found as a matter of law that Farm
Bureau, through its agent Investigator Loftin, initiated the prosecution of Volpe.
The Court of Appeals cited one of its own cases for the proposition that
“ ‘[e]xcept for the efforts of [Farm Bureau], it is unlikely there would have been a
criminal prosecution of [Volpe].’ ” Cully’s Motorcross, ___ N.C. App. at ___, 725
S.E.2d at 644 (quoting Williams v. Kuppenheimer Mfg. Co., 105 N.C. App. 198, 201,
412 S.E.2d 897, 900 (1992)). The court below noted that Investigator Loftin had
provided to Sergeant Lucas almost all the information Sergeant Lucas knew about
the case, that Sergeant Lucas had learned about the sale of the property at 314 Hill
Street and the quitclaim deed to Mr. Giron only as a result of the information
Investigator Loftin had gathered, and that Sergeant Lucas had relied almost
exclusively on the information provided by Investigator Loftin when Sergeant Lucas
decided to interview Mr. Giron and Volpe. Id. at ___, 725 S.E.2d at 644. Based on
this chain of events, the Court of Appeals concluded that, but for Investigator
Loftin’s provision of information to Sergeant Lucas, Volpe probably would not have
been charged. Id. at ___, 725 S.E.2d at 644. Accordingly, the Court of Appeals
affirmed the trial court’s finding that Volpe’s prosecution effectively had been
initiated by Farm Bureau through its agent, Investigator Loftin. Id. at ___, 725
S.E.2d at 644.
We believe that the Court of Appeals’ interpretation of the element of
initiation in a malicious prosecution case does not account adequately for the roles
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played by police and prosecutorial discretion. Instead, a more comprehensive
analysis is that advocated by Farm Bureau and found in the Restatement (Second)
of Torts. Section 653 of the Restatement sets out the requirements for a cause of
action for malicious prosecution, and most relevant to this case, states in Comment
(g):
Influencing a public prosecutor. A private person
who gives to a public official information of another’s
supposed criminal misconduct, of which the official is
ignorant, obviously causes the institution of such
subsequent proceedings as the official may begin on his
own initiative, but giving the information or even making
an accusation of criminal misconduct does not constitute a
procurement of the proceedings initiated by the officer if it
is left entirely to his discretion to initiate the proceedings
or not. When a private person gives to a prosecuting
officer information that he believes to be true, and the
officer in the exercise of his uncontrolled discretion
initiates criminal proceedings based upon that
information, the informer is not liable under the rule
stated in this Section even though the information proves
to be false and his belief was one that a reasonable man
would not entertain. The exercise of the officer’s
discretion makes the initiation of the prosecution his own
and protects from liability the person whose information
or accusation has led the officer to initiate the
proceedings.
Restatement (Second) of Torts § 653 (cmt. g) (1977).
This formulation balances and protects important public interests. It allows
citizens to make reports in good faith to police and prosecutors without fear of
retaliation if the information proves to be incomplete or inaccurate. If the
information is false, this formulation only protects a reporting party who believes it
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to be true, thus preserving the element of malice both to deter those who would
subvert to their own ends the power held by police and prosecutors and to protect
citizens from “one [who] resorts to the process of the law without probable cause,
willfully and maliciously, for the purpose of injuring his neighbor.” Chatham
Estates v. Am. Nat’l Bank, 171 N.C. 648, 651, 171 N.C. 579, 582, 88 S.E. 783, 785
(1916). This sensible approach encourages independent investigation by those in
law enforcement who receive the information. Unlike the “but for” test employed by
the trial court and the Court of Appeals, the Restatement recognizes that police and
prosecutors have discretionary authority that can insulate from liability those who
provide erroneous or mistaken information. Accordingly, we recognize and apply
here the principles set out in Comment (g). See Stanback v. Stanback, 297 N.C.
181, 204, 254 S.E.2d 611, 626 (1979) (citing the Restatement of Torts for the
proposition that to establish that the former proceeding terminated favorably, a
plaintiff in a malicious prosecution action need assert only that the prior case was
dismissed), disapproved of for other reasons by Dickens v. Puryear, 302 N.C. 437,
447-48, 276 S.E.2d 325, 331-33 (1981).
When this Court implements a new analysis to be used in future cases, we
may remand the case to the lower courts to apply that analysis. See, e.g., Whitacre
P’ship v. Biosignia, Inc., 358 N.C. 1, 39, 591 S.E.2d 870, 895 (2004) (noting that
because “the trial court did not have the benefit of the precise formulation of the
doctrine we articulate in this opinion,” the case should be remanded “for further
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proceedings consistent with this opinion”). Remand is particularly appropriate
when additional findings of fact are necessary. Id. (remanding the case to the trial
court because the “inquiry required here is a fact-intensive one”). However, when
the new analysis relies upon conclusions of law rather than findings of fact, and
when the findings of fact made by the trial court are unchallenged, this Court may
elect to conduct the analysis rather than to remand the case.
In its judgment, the trial court’s finding of fact 61 states that Investigator
Loftin withheld from Sergeant Lucas information about the debt on the property
until after Volpe’s amended counterclaim had been filed, thereby causing the
criminal action to be instituted. However, in light of our recognition of the test
enunciated above, whether the recited facts constitute initiation of a criminal action
is a conclusion of law that we review de novo. In addition, the “but for” test used in
finding of fact 62, which states that Sergeant Lucas would “never” have pursued a
criminal prosecution if Investigator Loftin had not reported his findings, is no
longer appropriate.
Accordingly, we must determine whether, once Sergeant Lucas received
information from Investigator Loftin about Volpe, Sergeant Lucas exercised his own
discretion in deciding to seek criminal charges against Volpe. Our review of
uncontested evidence presented at trial indicates that Investigator Loftin testified
that the offense he believed Volpe had committed was insurance fraud, that he
never asked Sergeant Lucas to arrest Volpe or initiate a prosecution against her,
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and that he never made any suggestions as to what Sergeant Lucas should do with
Investigator Loftin’s information. Sergeant Lucas testified that the decision to
pursue a charge of false pretenses was “my decision, my decision only.” He also
stated that, “no one tells me, even my chief on down when I should -- when I should
make a charge or not.” In addition, Sergeant Lucas testified that he interviewed
Mr. Skinner and Mr. Giron during his investigation and that he consulted with an
assistant district attorney and a real estate attorney after receiving information
from Investigator Loftin and before taking the matter to a magistrate in pursuit of a
warrant. All this testimony leaves no doubt that while Sergeant Lucas considered
and used the information provided by Investigator Loftin, he independently
exercised his discretion to make the prosecution his own. Consequently, Farm
Bureau did not institute a malicious prosecution and its actions did not constitute
an unfair and deceptive practice.
Because the remaining issues on appeal stem from the trial court’s
determination that Farm Bureau initiated a malicious prosecution, those issues are
now moot. Those issues are dismissed, and the Court of Appeals’ decision as to
those matters is vacated. This case is remanded to the Court of Appeals for further
remand to the trial court with instructions to vacate the two orders entered on 7
February 2011 and amend the judgment entered the same day in a manner
consistent with this opinion.
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REVERSED IN PART, VACATED IN PART, AND REMANDED.
Justice BEASLEY, concurring in part and dissenting in part.
I concur with the majority that Comment (g) in the Restatement (Second) of
Torts § 653 (1977) is the proper standard to define whether a party “initiated” the
earlier proceeding in a malicious prosecution claim. I would, however, remand the
case to the trial court to make findings of fact and conclusions of law applying the
standard announced today, as is appropriate for a trial court rather than an
appellate court, and therefore I dissent in part. See Whitacre P’ship v. Biosignia,
Inc., 358 N.C. 1, 38, 591 S.E.2d 870, 894 (2004) (“This disposition [of remand]
reflects trial courts’ ‘institutional advantages’ over appellate courts in the
‘application of facts to fact-dependent legal standards.’ ” (quoting Augur v. Augur,
356 N.C. 582, 586, 573 S.E.2d 125, 129 (2002)).
North Carolina law requires a plaintiff to prove four elements to prevail on a
malicious prosecution claim: “(1) defendant initiated the earlier proceeding; (2)
malice on the part of defendant in doing so; (3) lack of probable cause for the
initiation of the earlier proceeding; and (4) termination of the earlier proceeding in
favor of the plaintiff.” Best v. Duke Univ., 337 N.C. 742, 749, 448 S.E.2d 506, 510
(1994) (citation omitted). This case provides clarity regarding the first element. Id.A private person who gives to a public official information
of another’s supposed criminal misconduct, of which the
official is ignorant, obviously causes the institution of
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BEASLEY, J., dissenting
such subsequent proceedings as the official may begin on
his own initiative, but giving the information or even
making an accusation of criminal misconduct does not
constitute a procurement of the proceedings initiated by
the officer if it is left entirely to his discretion to initiate
the proceedings or not. When a private person gives to a
prosecuting officer information that he believes to be true,
and the officer in the exercise of his uncontrolled
discretion initiates criminal proceedings based upon that
information, the informer is not liable under the rule
stated in this Section even though the information proves
to be false and his belief was one that a reasonable man
would not entertain. The exercise of the officer’s
discretion makes the initiation of the prosecution his own
and protects from liability the person whose information
or accusation has led the officer to initiate the
proceedings.
Restatement (Second) of Torts § 653 cmt. g (1977).
Whether plaintiff initiated the earlier proceeding is a conclusion of law, but
this conclusion of law, like any other conclusion of law, is dependent upon factual
support. See, e.g., Scarborough v. Dillard’s, Inc., 363 N.C. 715, 722, 693 S.E.2d 640,
644 (2009), cert. denied, __ U.S. __, 131 S. Ct. 2456 (2011). When a party has failed
to challenge the findings of fact, the findings are binding on the appellate court. Id.(citations omitted). The trial court’s conclusions of law are reviewed de novo. Id.(citations omitted).
Here, plaintiff did not challenge the trial court’s findings of fact as findings of
fact; rather, plaintiff challenged what the trial court labeled “findings of fact,” but
argued such “findings” were actually conclusions of law. In essence, plaintiff
challenged the trial court’s conclusions of law and allowed the court’s findings of
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BEASLEY, J., dissenting
fact to go unchallenged. Thus, the trial court’s correctly labeled findings of fact are
binding on this Court, though conclusions of law are reviewed de novo.
The majority’s opinion, written under the guise of de novo review, necessarily
requires findings of fact that the trial court did not make—findings whether
Sergeant Lucas exercised “uncontrolled discretion” in charging defendant Volpe
with obtaining property by false pretenses. Restatement (Second) of Torts § 653
cmt. g. Sergeant Lucas’s exercise of discretion is evidenced by actions that, by the
majority’s own definition, are appropriately considered findings of fact. I cannot
fault the trial court for not making findings of fact regarding whether Sergeant
Lucas exercised independent discretion because we had not yet established that
Comment (g) is the appropriate standard by which to determine whether plaintiff
“initiated the earlier proceeding.” The need for further fact-finding distinguishes
the instant case from IMT, Inc. v. City of Lumberton, __ N.C. __, 738 S.E.2d 156(2013), “in which the material facts necessary to determine the legal question [were]
uncontested.” Id. at __, 738 S.E.2d at 160. The trial court, if provided the
opportunity to make the appropriate findings of fact, might agree that there is “no
doubt” that Sergeant Lucas exercised independent discretion in charging defendant
Volpe based on the evidence presented, but we are not a fact-finding court. We lack
material findings of fact necessary to answer the legal question in this case, and
this Court should not engage in the fact-finding process. Godfrey v. Zoning Bd. of
Adjust. of Union Cnty., 317 N.C. 51, 63, 344 S.E.2d 272, 279 (1986) (“Fact[-]finding
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N.C. FARM BUREAU MUT. INS. CO. V. CULLY’S MOTORCROSS PARK, INC.
BEASLEY, J., dissenting
is not a function of our appellate courts.”). Therefore, remand is the only
appropriate disposition.
For the reasons stated above, I respectfully concur with the majority’s
recognition of the Restatement to define when a party “initiated the earlier
proceeding” and dissent from the majority’s mandate to reverse rather than to
remand for appropriate findings of fact and conclusions of law under the standard
recognized today.
Justice HUDSON joins in this opinion concurring in part and dissenting in
part.
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