Diane Kundinger v. Samuel P. Stair

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
June 20, 2023
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.
Appeal No. 2022AP402 Cir. Ct. No. 2020CV6138
STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT I
DIANE KUNDINGER,
PLAINTIFF-APPELLANT,
V.
SAMUEL P. STAIR,
DEFENDANT-RESPONDENT.
APPEAL from an order of the circuit court for Milwaukee County:
PEDRO COLON, Judge. Reversed and cause remanded for further proceedings.
Before Brash, C.J., Dugan and White, JJ.
Per curiam opinions may not be cited in any court of this state as precedent
or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
No. 2022AP402
¶1 PER CURIAM. Diane Kundinger appeals from the circuit court
order granting judgment in favor of Samuel Stair in her civil action alleging
malicious prosecution. Kundinger argues that the circuit court erred when it
granted summary judgment because genuine issues of material fact exist. We
agree that there are material facts related to Kundinger’s claim that must be
determined and that Stair is not entitled to judgment as a matter of law.
Accordingly, we reverse and remand for further proceedings.
BACKGROUND
¶2 In October 2020, Kundinger filed a civil action against Stair alleging
one count of the intentional tort of malicious prosecution. We recite from the
allegations in the complaint. Stair employed Kundinger from February 2013
through October 2015 at his various business operations, including S2 Real Estate
and S2 Technologies (collectively, S2). Kundinger’s duties included office
management, operations, day-to-day financial transactions, and purchasing. It is
undisputed that Kundinger redeemed certain Menards rebates for personal
purchases in addition to her purchasing at Menards for S2.
¶3 The complaint alleged that after Kundinger left S2’s employment,
she noticed that her final paycheck was “missing significant compensation.”
When Kundinger could not get a resolution with Stair, she sought assistance from
the Wisconsin Department of Workforce Development (DWD) to recover her
missing wages. A decision in Kundinger’s favor was issued by DWD in October
2016.
¶4 The complaint further alleged that in December 2015, Stair
contacted the Wauwatosa Police Department and alleged that he had become
aware of potential embezzlement in his companies, and suspected Kundinger.
2
No. 2022AP402
Stair alleged that Kundinger committed embezzlement by using promotional
rebates from his businesses’ purchases at Menards for her personal use without his
authorization, alleging that he was unaware that the rebate program existed.
¶5 In October 2017, the Milwaukee County District Attorney’s Office
(DA) filed a criminal complaint against Kundinger. In March 2018, Kundinger
was arrested and released on bond. On November 13, 2018, the DA moved to
dismiss without prejudice all charges against Kundinger, and the case was
dismissed on the same date. The record does not reflect why the case was
dismissed.
¶6 Stair moved for summary judgment on Kundinger’s complaint in
September 2021, arguing that her claim failed as a matter of law because the
criminal complaint was not initiated with malice by Stair and was never
adjudicated on the merits. In support of his motion, Stair submitted an affidavit
from a Wauwatosa Police Department detective who investigated Stair’s
complaint from January through June 2016, after Stair’s police report in December
2015. The detective determined that Kundinger, without Stair’s authorization,
redeemed Menards rebates earned by S2 for her personal use. As part of his
investigation, the detective (1) performed a criminal background check on
Kundinger; (2) discussed the Menards rebate program with an employee;
(3) obtained and reviewed surveillance videos of Kundinger’s purchases at
Menards; and (4) met with Stair on two occasions to review the surveillance
3
No. 2022AP402
videos and to clarify whether there were any valid business reasons for
Kundinger’s purchases.1
¶7 In her opposition to the summary judgment motion, Kundinger
submitted copies of text messages she purported were from Stair in which he
represented to her that he had dispositive control over whether she would continue
to be prosecuted. The first message stated:
…you were a good office manager but no one will hire you
if you have employee theft or embezzlement on your record
even if u don’t get jail time.. you cannot be this stupid.
Call me.. work out a payment plan.. heck put it on another
cc or I have to email back the office to press charges. [sic]
A second message dated May 9, 2016, stated, “Okay you win I called Department
of Workforce Development say it was your error cancel the whole thing and I’ll
drop all the felony charges.” [sic]
¶8 The circuit court held a hearing on the summary judgment motion on
January 27, 2022, with a written decision filed on February 2, 2022. The court
concluded that the Wauwatosa Police Department detective conducted an
independent investigation that broke the chain of causation between the initial
police report by Stair and the ultimate commencement of the criminal proceeding
against Kundinger. The court granted judgment in Stair’s favor.
¶9 Kundinger appeals.
1
While the detective’s report and affidavit were submitted to the circuit court, the record
before us does not contain the criminal complaint.
4
No. 2022AP402
DISCUSSION
¶10 Kundinger argues that the circuit court erred when it granted
summary judgment in Stair’s favor. Whether the circuit court properly granted
summary judgment to Stair is a question of law that we review independently,
applying the same two-step methodology used by the circuit court. Tatera v.
FMC Corp., 2010 WI 90, ¶15, 328 Wis. 2d 320, 786 N.W.2d 810. First, the court
“examine[s] the pleadings to determine whether a claim for relief has been stated.”
Green Spring Farms v. Kersten, 136 Wis. 2d 304, 314-15, 401 N.W.2d 816(1987). Second, “[i]f a claim for relief has been stated, the inquiry then shifts to
whether any factual issues exist.” Id.¶11 If there are “no genuine issues as to any material fact” brought forth
in the pleadings and supporting papers, and the moving party is entitled to
judgment as a matter of law, then the circuit court shall render summary judgment.
WIS. STAT. § 802.08(2) (2021-22).2 However, “if there are any material facts in
dispute or competing reasonable inferences the party resisting the motion is
entitled to a trial.” Lecus v. American Mut. Ins. Co. of Bos., 81 Wis. 2d 183, 190,
260 N.W.2d 241 (1977). “All reasonable inferences drawn from the underlying
facts contained in these [supporting] documents that are in the record must be
viewed in the light most favorable to the non-moving party.” Johnson v. Rogers
Mem’l Hosp., Inc., 2005 WI 114, ¶30, 283 Wis. 2d 384, 700 N.W.2d 27.
¶12 Kundinger asserts that her complaint sufficiently alleged the six
elements of a malicious prosecution civil action. Stair contends that Kundinger’s
2
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.
5
No. 2022AP402
allegations could not support the second element of a malicious prosecution claim;
therefore, her claim fails as matter of law. Kundinger argues that Stair
misinterprets that element. We begin with the six elements required to be shown
to succeed on a claim of the intentional tort of malicious prosecution:
1. There must have been a prior institution or continuation
of judicial proceedings against the plaintiff;
2. Such former proceedings must have been by, or at the
instance of the defendant;
3. The former proceedings must have terminated in favor
of the plaintiff;
4. There must have been malice in instituting the former
proceedings;
5. There must have been want of probable cause for the
institution of the former proceedings; and
6. There must have been injury or damage resulting to the
plaintiff from the former proceedings.
Monroe v. Chase, 2021 WI 66, ¶11, 397 Wis. 2d 805, 961 N.W.2d 50 (quoting
Elmer v. Chicago & N.W. Ry. Co., 257 Wis. 228, 231, 43 N.W.2d 244 (1950)).
¶13 The first step in the summary judgment analysis is whether
Kundinger sufficiently alleged facts to support a claim upon which relief may be
granted. “All six elements must be present in order to state a valid claim for
malicious prosecution, and the absence of any one element is fatal to the claim.”
Strid v. Converse, 111 Wis. 2d 418, 424, 331 N.W.2d 350 (1983). There is no
dispute that the first element is satisfied by the criminal complaint against
Kundinger for the charge of embezzlement of Stair’s companies. Stair does not
dispute the circuit court’s analysis that elements four, five, and six were
sufficiently pled to state a claim, but argues that material facts were at issue
6
No. 2022AP402
precluding summary judgment. Stair’s primary argument is that element two fails
as a matter of law; however, he asks us to also consider that element three fails.3
¶14 Element two requires that the “former proceedings must have been
by, or at the instance of the defendant.” Monroe, 397 Wis. 2d 805, ¶11. In other
words, Stair had to have initiated the criminal case against Kundinger to satisfy
element two. Malicious prosecution claims are limited “to those instances in
which the defendant, as a private citizen, has taken affirmative, decisive steps to
subject another person to the rigors of a lawsuit, without knowing that his claim is
well grounded[.]” Pollock v. Vilter Mfg. Corp., 23 Wis. 2d 29, 36, 126 N.W.2d
602 (1964). The defendant must also be “motivated, not by a desire to vindicate
his legitimate legal interests or the interests of the community, but rather by a
desire to injure the reputation, or economic interests of the plaintiff.” Id. at 36-37.
¶15 Both parties rely on Pollock to support their reasoning with regard to
element two. Therefore, we begin by considering the facts and law of that case,
which arises out of an independent auditor of Vilter Manufacturing Corporation
raising concerns about “certain irregularities” in Vilter’s accounts. Id. at 31. The
auditor raised concerns about a business entity, which acted between Vilter and
one of its freight handlers, and Pollock, a vice president at Vilter. Id. It was
revealed that Pollock operated the business entity—unbeknownst to Vilter. Id. at
32. After a detailed audit that showed questionable transactions in upwards of
$250,000, Vilter’s counsel raised a concern that Pollock was violating the National
Stolen Property Act, a federal crime. Id. at 34. Vilter contacted the U.S.
3
Kundinger argues that Stair has not cross-appealed the judgment and cannot challenge
the court’s decision on appeal with regard to element three. We address this concern below.
7
No. 2022AP402
Attorney’s office, and an FBI agent then “conducted an independent investigation
of Pollock’s activities in his dual role as a Vilter vice-president” and as his own
business entity. Id. at 34-35. The FBI agent concluded there was probable cause
to believe that Pollock violated federal law, which led to Pollock’s arrest, and
eventually, an indictment by a federal grand jury. Id. However, the jury returned
a not guilty verdict in the trial of the charges against Pollock. Id.¶16 Shortly after his acquittal, Pollock filed a malicious prosecution
action against Vilter. Id. at 35. After Vilter was granted summary judgment on
the claim, Pollock appealed. Id. Our supreme court affirmed the dismissal of the
action because the FBI agent conducted an independent investigation and “did not
base his decision to sign the complaint solely upon the information provided by
Vilter.” Id. at 40, 44. It concluded that “[u]nder these circumstances Vilter’s
conduct did not, as a matter of law, initiate the criminal prosecution of Pollock.”
Id. at 40.
¶17 The instant case centers on the same element that was in dispute in
Pollock. Stair argues that the Wauwatosa detective’s investigation was conducted
independently after Stair filed his police report, and therefore, Stair could not have
initiated the criminal prosecution of Kundinger. Kundinger counters this position
by arguing that the criminal prosecution was predicated and could only continue
upon Stair’s accusation that Kundinger was not authorized to use the Menards
rebates.
¶18 On this issue, we conclude that Kundinger’s position is correct under
the “[u]nder these circumstances” analysis in Pollock. Id. at 40. We conclude
that Stair’s actions initiated and continued the criminal prosecution of Kundinger.
Although Stair points to the lengthy investigation of Kundinger by Wauwatosa
8
No. 2022AP402
police and the detective’s contact with personnel at Menards, that investigation
remained dependent on Stair’s accusation that Kundinger was using the Menards
rebates without his knowledge or authorization. Without Stair’s accusation, the
detective’s investigation showed only that Kundinger used the rebates—an action
that is not a crime on its own. Kundinger asserts she was authorized by Stair to
use the rebates. A crime only arises if she used S2’s Menards rebates without
authorization or consent. Moreover, the detective’s investigation does not present
an independent corroboration of Stair’s claim. In contrast, in Pollock, the FBI
agent investigated a violation of federal law that began with Vilter’s report, but the
violation was not entirely predicated on Vilter’s accusation.
¶19 Stair argues that the police and the DA’s office found probable cause
and pursued charges against Kundinger; therefore, the chain of causation from his
report to Kundinger’s prosecution was broken. We reject this argument. Again,
turning to Pollock,
In the state system, an officer may simply allege his
conclusion of probable cause based upon information and
belief. Therefore, if an officer accepted groundless
allegations made by a private party and signed a complaint
supporting the warrant alleging information and belief as
the basis of his conclusion, and if the magistrate, accepting
the sufficiency of the allegations, issued a warrant, the
plaintiff would be damaged as a result of defendant’s initial
false or inaccurate statements. That an officer signed the
original complaint does not alter defendant’s liability under
these circumstances.
Id. at 40. As always, during summary judgment, we view Kundinger’s allegations
in the light most favorable to her, as the non-moving party. See Johnson, 283
Wis. 2d 384, ¶30. Kundinger alleged that Stair falsely told the police that she was
unauthorized to use the Menards rebates; therefore, the detective’s and the DA’s
findings of probable cause could be based on “groundless allegations made by a
9
No. 2022AP402
private party” and Stair’s liability could support Kundinger’s damages caused by
Stair’s “false or inaccurate statements.” See Pollock, 23 Wis. 2d at 40.
¶20 Further, our supreme court has explained that in a malicious
prosecution claim, probable cause is defined as “that quantum of evidence which
would lead a reasonable layman in the same circumstances to honestly suspect that
another person had committed a crime.” Id. at 41-42. The record of Stair’s
communication with Kundinger, submitted as two texts, shows that Stair believed
or represented to Kundinger that he had the power to stop the criminal
prosecution. This raises an issue of material fact about whether Stair could claim
an honest suspicion about Kundinger’s conduct.
¶21 Ultimately, genuine issues of material fact with regard to element
two preclude summary judgment. Kundinger claims Stair consented to her use of
the rebates and accuses him of making false statements to the Wauwatosa police
that he did not authorize her use. Stair claims he did not consent or authorize her
use. The “court does not resolve issues of fact on summary judgment, but rather
decides whether genuine issues of material fact exist” to be tried. Voysey v.
Labisky, 10 Wis. 2d 274, 280, 103 N.W.2d 9 (1960) (“Summary judgment
procedure is not to be a trial on affidavits and adverse examinations.”).
¶22 Turning to element three, the substance of Stair’s argument on
appeal is that because the circuit court concluded the record was “devoid” of why
the case against Kundinger was dismissed, she could not successfully support
element three of her allegations. Kundinger asserts that Stair did not cross-appeal
the circuit court’s decision, and thus, improperly asks the court to review the
circuit court’s findings and conclusions related to element three. As the
respondent to this appeal, Stair “may raise an issue in his briefs without filing a
10
No. 2022AP402
cross-appeal ‘when all that is sought is the raising of an error which, if corrected,
would sustain the judgment[.]’” Auric v. Continental Cas. Co., 111 Wis. 2d 507,
516, 331 N.W.2d 325 (1983) (quoting State v. Alles, 106 Wis. 2d 368, 391, 316
N.W.2d 378 (1982)). Therefore, because Stair asserts that element three also
supports judgment in his favor, his argument is allowed because the judgment
“will not be overturned where the record reveals that the trial court’s decision was
right, although for the wrong reason.” Alles, 106 Wis. 2d at 391.4 Accordingly,
we will address the merits of his argument, although we ultimately reject his
position.
¶23 First, Stair argues that because of the circuit court’s pronouncement
that there was a “devoid” record with regard to reasoning behind the dismissal
means that Kundinger cannot support her claim on element three. However, we
are not convinced that Stair’s position matches the circuit court’s meaning. The
circuit court concluded it would be premature to determine whether Kundinger
was meritorious in the prior proceeding because there was a lack of information in
the record.5 Viewing the facts in the light most favorable to Kundinger as the non-
moving party during summary judgment, we consider her allegation in the
complaint that it took “until November 2018 to prove her innocence to the
prosecutor’s satisfaction” sufficient to state a claim. While there are genuine
issues of material facts stemming from the limited information in the record,
4
Consistent with this concept, an appellate court “has the power, once an appealable
order is within its jurisdiction, to examine all rulings to determine whether they are erroneous
and, if corrected, whether they would sustain the judgment or order which was in fact entered.”
State v. Alles, 106 Wis. 2d 368, 391, 316 N.W.2d 378 (1982).
5
Moreover, the circuit court decided that element two was dispositive, and it only
addressed the remaining disputed issues out of completeness.
11
No. 2022AP402
nonetheless, her allegation is sufficient to state a claim for element three and those
disputed facts preclude summary judgment.
¶24 Second, Stair fails to address Monroe, where our supreme court held
that “a withdrawal of a prior proceeding may satisfy the favorable-termination
element of a malicious-prosecution action,” depending on the facts and
circumstances of the case. Monroe, 397 Wis. 2d 805, ¶¶22, 26. The circuit court
commented in its decision that all of Stair’s legal authority upon which he relied
predates the Monroe decision in 2021. We conclude that whether the State’s
dismissal, without prejudice, of the charge against Kundinger “constitutes a
favorable termination” that “remains a question for a fact-finder.” See id., ¶26.
CONCLUSION
¶25 For the reasons stated above, we conclude that Stair is not entitled to
judgment as a matter of law because the police investigation into Kundinger’s use
of the rebates relied upon Stair’s continued and ongoing assertion that she did not
have consent or authorization to use those rebates. Therefore, she has stated facts
to support element two of her malicious prosecution claim. Further, while
Kundinger sufficiently alleged facts to support element three, there are material
facts in dispute over whether the dismissal was in her favor. Ultimately, genuine
issues of material fact exist throughout this case, and preclude summary judgment
in favor of Stair. Therefore, we reverse the judgment and remand for further
proceedings consistent with this decision.
By the Court.—Reversed and cause remanded for further
proceedings.
12
No. 2022AP402
This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.
13