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Brunson v. Affinity Federal Credit Union

May 5, 2009

HOWARD D. BRUNSON, PLAINTIFF-RESPONDENT,
v.
AFFINITY FEDERAL CREDIT UNION, A CORPORATION, DOING BUSINESS IN THE STATE OF NEW JERSEY AND JIM WILCOX, INDIVIDUALLY AND AS AGENT/EMPLOYEE OF AFFINITY FEDERAL CREDIT UNION, DEFENDANTS-APPELLANTS.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 402 N.J. Super. 430 (2008).

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

The issues before the Court are whether: 1) there exists a viable claim for malicious prosecution; 2) there is a cause of action for negligent investigation; and 3) Howard Brunson's failure to appear for trial constitutes sufficient cause to dismiss his complaint.

On October 7, 2002, a person purporting to be Howard D. Brunson applied to open a savings account at the Paramus branch of Affinity Federal Credit Union (Affinity). As proof of his identity, he presented to the teller a New Jersey State Motor Vehicle Services identification card bearing a unique identification number akin to a driver's license number, clearly marked "For Identification Only," that bore his photograph, identified him as "Howard D. Brunson of 456 11th Avenue, Patterson, New Jersey, 07504," with a date of birth of August 31, 1967, and described him as a five-foot-six-inch tall male with brown eyes.

On October 8, 2002, that same person returned to Affinity's Paramus branch and deposited into the same account what appeared to be a payroll check, in the amount of $1,522.91, made payable to "Howard D. Brunson" at the address listed on the account. Consistent with Affinity's policy to give immediate credit for payroll checks issued by certain employers, the person was allowed to withdraw immediately the entire deposit in cash. This person, over a three-day period, deposited six seemingly valid payroll checks and immediately withdrew the amount in cash at several other Affinity branches for a total of $9,506.82. Eventually, the bank learned that the checks were counterfeit and had been drawn on a fictitious account.

Affinity asked its employee, defendant Jim Wilcox, a certified fraud examiner of twenty-five years, to conduct an investigation. Wilcox's investigation yielded a report, which he presented the Paramus police Department. The police informed Wilcox that Dwayne Brunson of Bronx, New York was known to use the same name and social security number as that used to open the account at Affinity. The investigation led to the issuance of two criminal complaints against "Howard D. Brunson, LKA 456 11th Avenue, Paterson, NJ." On March 26, 2003, the matter was presented to a Bergen County grand jury and Wilcox was the sole witness. The grand jury returned a three-count indictment charging "Dwayne Brunson, a/k/a Howard Brunson" with third-degree issuing a bad check, third-degree forgery, and third-degree theft by deception. Because the person indicted failed to appear at the arraignment, a bench warrant authorizing the arrest of "Dwayne Brunson, a/k/a Howard Brunson" was issued on May 19, 2003.

On June 15, 2003, plaintiff Howard Dwayne Brunson was visiting his father in Virginia and was a passenger in a car that was stopped for a motor vehicle infraction. He was arrested after police conducted a computer search and discovered the outstanding New Jersey bench warrant. Brunson waived extradition and was transported to Bergen County. Brunson retained an attorney who asserted that the wrong man had been arrested. When it was determined that Brunson did not match the physical description nor the surveillance still photographs of the thief, the trial court concluded that the wrong person had been arrested and ordered Brunson's release from jail. In total, he had been incarcerated for thirteen days on the bench warrant.

On June 27, 2005, Brunson filed a four-count complaint against Affinity, Wilcox, and fictitious defendants. He claimed that all defendants were liable to him for malicious prosecution, that Wilcox was liable for negligence, that Affinity was liable for the negligent hiring of Wilcox, and that the individual fictitious defendant was liable for negligence. Affinity and Wilcox eventually moved for summary judgment and to dismiss the complaint because Brunson had failed to appear for a deposition or in response to a notice in lieu of subpoena. The trial court granted both motions, finding that the misidentification was a tragic mistake but that there was no willful or reckless presentation of evidence in order to falsely indict Brunson. Although aware that Brunson was incarcerated in Oklahoma, the trial court dismissed the complaint based on its finding that the failure to produce him for trial was an appropriate ground for dismissal.

The Appellate Division reversed and remanded, concluding that Wilcox, as a trained, certified fraud investigator, put the proceedings into motion when the circumstances would not warrant an ordinary prudent individual to conclude that an offense had been committed by plaintiff and that filing the criminal complaints without undertaking a reasonable investigation amounted to negligence. The Appellate Division found that Affinity and Wilcox had a duty of care to Brunson, requiring a reasonable investigation before initiating criminal proceedings against a person whose stolen identity was used to open an account. The Appellate Division also concluded that the trial court erred in concluding that Brunson had to be present for trial.

The Supreme Court granted certification.

HELD: Because Brunson's arrest and detention were based on probable cause, his claim for malicious prosecution was properly dismissed by the trial court. In the circumstances presented, New Jersey does not recognize a cause of action for negligent investigation as a surrogate for a malicious prosecution claim. When confronted with a plaintiff who fails to appear as a witness, trial courts must first explore less drastic remedies before invoking the ultimate sanction of dismissal.

1. The elements a plaintiff must prove if making a claim for malicious prosecution are: 1) that the criminal action was instituted by the defendant against the plaintiff; 2) that it was actuated by malice; 3) that there was an absence of probable cause for the proceeding; and 4) that it was terminated favorably to the plaintiff. The crux of this case rests on whether the filing of the criminal complaint against Brunson was actuated by malice and whether there was an absence of probable cause. Brunson produced no extrinsic evidence of malice. Because the Court is obliged to give deference to the factual conclusion reached by the trial court, the Court must reject Brunson's claim that a mere comparison of photographs would have avoided the arrest and detention and thus demonstrated a want of probable cause sufficient to also demonstrate malice. (Pp. 13-20)

2. Returning to the point in time when Affinity and Wilcox presented their investigative findings to the Paramus Police Department and applying the probable cause standard to the facts adduced leads to the conclusion that the facts presented to law enforcement authorities by Wilcox on Affinity's behalf amply demonstrated the presence of probable cause. There is nothing in the facts that suggest the type of abuse of judicial processes the tort of malicious prosecution is designed to thwart. Rather, defendants' actions, although ultimately erroneously directed at Brunson, were based on probable cause. As such, the trial court correctly determined that Brunson's malicious prosecution claim should fail. (Pp. 20-24)

3. The Appellate Division relied on Patrick v. Union State Bank, an out-of-state case, to hold that Affinity and Wilcox could be held liable for initiating the criminal complaints against Brunson based on negligent investigation. Patrick stands for the proposition that, in an identity theft case, a bank will be deemed to have a relationship with the identity theft victim, even though that relationship is based on fraud. This expansive holding has met with near universal disapproval. The Court is reluctant to adopt Patrick's holding and impose a duty of care on banks in respect of a total stranger. Thus, the Appellate Division erred when it imported a claim based on an alleged negligence that otherwise cannot meet the requirements for a malicious prosecution action. In effect the Appellate Division created a "negligence back door" that avoids the intentionally difficult requirements for a malicious prosecution claim. The Court rejects the panel's creation of a new cause of action for negligent investigation as a surrogate for a traditional malicious prosecution claim. (Pp. 24-29)

4. It is beyond dispute that in order to support the overwhelming majority of Brunson's damages claims, he must testify before the fact finder. There are reasoned, intermediate steps between the outright dismissal of the complaint and allowing Brunson's claims to go forward in his absence that should have been explored. The Rules of Court provide for reasonable alternatives that should be explored when a party is unable or unwilling to participate in those steps integral to a fair trial. (Pp. 30-35)

The judgment of the Appellate Division reversing the trial court's entry of summary judgment in favor of Affinity and Wilcox is REVERSED; the judgment of the Appellate Division remanding the case to determine whether Affinity and Wilcox are liable to Brunson in negligence is REVERSED; the judgment of the Appellate Division determining that Brunson need not appear physically as a witness at trial in order for the trial to proceed is VACATED; and the judgment of the trial court dismissing the complaint is REINSTATED.

CHIEF JUSTICE RABNER and JUSTICES LONG, LaVECCHIA, ALBIN, WALLACE and HOENS join in JUSTICE RIVERA-SOTO'S opinion.

The opinion of the court was delivered by: Justice Rivera-soto

Argued March 10, 2009

An apparent case of identity theft blossomed into criminal charges, an indictment, an arrest, and the thirteen-day incarceration of the wrong person. Those events triggered the malicious prosecution action now on appeal, which raises three discrete questions. First, does a claim of malicious prosecution lie in the circumstances presented? Second, is there a cause of action for negligent investigation? And, third, does the plaintiff's failure to appear for trial, after a notice in lieu of a subpoena commanding his presence has been properly issued and served, constitute sufficient cause to dismiss his complaint?

We conclude that, because the plaintiff's arrest and detention were based on probable cause, his claim for malicious prosecution properly was dismissed by the trial court. We also conclude that, in the circumstances presented, New Jersey does not recognize a cause of action for negligent investigation as a surrogate for a malicious prosecution claim. Finally, we hold that, when confronted with a plaintiff who fails to appear as a witness, trial courts first must explore less drastic remedies before invoking the ultimate sanction of dismissal.

I.

On October 7, 2002, a person purporting to be Howard D. Brunson applied to open a savings account at the Paramus branch of defendant Affinity Federal Credit Union (Affinity). As proof of his identity, he presented to the teller a New Jersey State Motor Vehicle Services identification card bearing a unique identification number akin to a driver's license number, clearly marked "For Identification Only," that bore his photograph, identified him as "Howard D. Brunson of 456 11th Avenue, Patterson,*fn1 New Jersey 07504," with a date of birth of August 31, 1967, and described him as a male with brown eyes who was five feet six inches tall. As part of the account opening process, he also provided a Social Security number to the teller. Once the account was opened, he deposited twenty-five dollars and left.

The next day, October 8, 2002, that person returned to Affinity's Paramus branch and deposited into the same account what appeared to be a payroll check, in the amount of $1,522.91, made payable to "Howard D. Brunson" at the address listed on the account. Consistent with Affinity's policy to give immediate credit for payroll checks issued by certain employers,*fn2 he was allowed to withdraw immediately the entire deposit in cash. Later that same day, he went to the Morristown branch of Affinity, deposited another payroll check purportedly issued by the same employer in the amount of $1,598.24 and, again, immediately withdrew that sum in cash. Thus, on October 8, 2002, he deposited two different payroll checks from the same alleged employer at two different branches of Affinity, and withdrew an aggregate of $3,121.15.

The following day, October 9, 2002, the same person went to Affinity's Dover branch and repeated what he twice had done the day before: he deposited what purported to be a payroll check from the same identified employer, in the amount of $1,436.95, and again immediately withdrew that amount in full and in cash. An hour later, he went to Affinity's Denville branch and again reprised his steps: he deposited what purported to be a payroll check from what appeared to be the same employer, in the amount of $1,675.24, only to withdraw immediately that amount in cash. Thirty minutes later, he repeated those actions at the Cedar Knolls branch of Affinity, only this time the amount of the claimed payroll check deposited and immediately withdrawn was identical to the second transaction that day: $1,675.24. In sum, on October 9, 2002, he deposited three different payroll checks from the same alleged employer at three different branches of Affinity, withdrawing an aggregate of $4,787.43. Finally, on October 10, 2002, he retraced his steps once more, this time at Affinity's Warren branch, where he deposited an alleged payroll check and immediately withdrew the sum of $1,598.24.

In the aggregate, then, over a three day period, he deposited and immediately withdrew six separate, seemingly valid payroll checks totaling $9,506.82. Once those purported payroll checks were processed through the central banking system, they were returned unpaid to Affinity, marked "Unable to Locate Account." Further inquiry made of the employer listed on the checks and the bank on which those checks purportedly were issued determined that the checks were counterfeit and had been drawn on a fictitious account.

Confronted with this loss, Affinity instructed its employee, defendant Jim Wilcox, a certified fraud examiner, to conduct an investigation. Wilcox collected the above information, prepared a written report, and presented it to the Paramus Police Department, the municipality where the account was opened. Wilcox was informed by the police that a Dwayne Brunson of Bronx, New York, was known to use the same name --Howard D. Brunson -- and Social Security number used in opening the Affinity account to defraud a number of other financial institutions. In a written report, Wilcox noted that "[p]hoto line-ups will be required in all other counties*fn3 [ and that the] Denville Detective Bureau is in the process of getting a photo from New York to use in a line-up for [Affinity's] personnel." In January 2003, that investigation resulted in the issuance of two criminal complaints against "Howard D. Brunson, LKA*fn4 456 11th Avenue, Paterson, NJ."

On March 26, 2003, the matter was presented to the Bergen County grand jury. Wilcox was the sole witness called. In response to questions from the assistant prosecutor, he testified that, in respect of "the matter of Dwayne Brunson, also known as Howard Brunson[,]" he was "familiar with [the] investigation[.]" He explained that he was employed by Affinity and that he had been investigating bank fraud for twenty-five years. After explaining the ...


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