THOMSON McKINNON SECURITIES v. LIGHT

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Docket Number

Nos. 86-3091, 87-1024.

Attorney(S)

Stein, Rosenberg Winikoff and Jack Stein, Ft. Lauderdale, for appellant/appellee Thomson McKinnon Securities. Greenfield DuVal and Leo Greenfield, for appellees/appellants Bionic Instruments, Inc., Michael Light and Michael Dermer.

Judges

PER CURIAM.

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Smart Summary

Factual and Procedural Background

Thomson McKinnon Securities, Inc. (Thomson) and Bionic Instruments of Delaware, Inc. (BID), along with Michael Light and Michael Dermer, were involved in litigation following a dispute over a margin account opened by BID with Thomson. BID transferred its securities to a wholly owned subsidiary, Bionic Financial Corporation (Bionic). After a decline in the value of Bionic's stock portfolio, Thomson requested additional collateral. Michael Light and Michael Dermer issued two $20,000 checks to Thomson, both of which were returned for insufficient funds. Thomson liquidated the Bionic account, incurring a net loss. Thomson initiated criminal prosecution against Light for issuing worthless checks, but the criminal charges were dismissed for reasons not in the record. Subsequently, Thomson filed a civil complaint alleging damages from the worthless checks. The defendants counterclaimed for abuse of process, breach of contract, and malicious prosecution. At trial, Light and Dermer admitted issuing the checks without sufficient funds but claimed Thomson agreed to hold the checks until funds were available. The trial court ruled in favor of Thomson on its claims and awarded damages, but also awarded Light damages on the counterclaims for abuse of process and malicious prosecution. Thomson appealed these counterclaim awards.

Legal Issues Presented

Whether the trial court erred in awarding damages to Michael Light for malicious prosecution when Thomson had probable cause to initiate the criminal proceeding.
Whether the trial court erred in awarding damages for abuse of process to Michael Light in the absence of evidence supporting the necessary elements of the claim.
Whether corporate officers Michael Light and Michael Dermer could be held personally liable for issuing worthless checks on behalf of the corporation.

Arguments of the Parties

Appellant Thomson McKinnon Securities

The finding in favor of Light on malicious prosecution and abuse of process is inconsistent with the judgment finding fraudulent uttering of a worthless check.
Thomson had probable cause to initiate the criminal prosecution based on Light's admission and the evidence presented.
Court should reverse the judgment awarding damages for malicious prosecution and abuse of process.

Appellees Michael Light, Michael Dermer, and Bionic Instruments

Light and Dermer admitted issuing the checks without sufficient funds but argued they informed Thomson of the insufficiency and Thomson agreed to hold the checks.
They contended that a judgment could not be entered against them personally as corporate officers.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Burns v. GCC Beverages, Inc., 502 So.2d 1217 (Fla. 1986)	Absence of probable cause is essential element in malicious prosecution.	Supported the court's conclusion that probable cause existed to initiate prosecution.
K-Mart Corp. v. Sellars, 387 So.2d 552 (Fla. 1st DCA 1980)	Definition and requirement of probable cause in malicious prosecution.	Reinforced the standard for probable cause applied by the court.
Hunter v. First Baptist Church, Inc., 294 So.2d 355 (Fla. 4th DCA 1974)	Probable cause as an essential element in malicious prosecution claims.	Used to affirm the necessity of probable cause in the case.
Goldstein v. Sabella, 88 So.2d 910 (Fla. 1956)	Definition of probable cause as reasonable grounds supported by circumstances.	Applied to determine that probable cause existed based on evidence.
Phelan v. City of Coral Gables, 415 So.2d 1292 (Fla. 3d DCA 1982)	Dismissal of criminal charges does not alone establish absence of probable cause.	Supported rejection of Light's argument that dismissal proved lack of probable cause.
Weissman v. K-Mart Corp., 396 So.2d 1164 (Fla. 3d DCA 1981)	Dismissal of charges insufficient to prove absence of probable cause.	Confirmed that dismissal is not dispositive on probable cause issue.
Della-Donna v. Nova Univ., Inc., 512 So.2d 1051 (Fla. 4th DCA 1987)	Elements required to establish abuse of process claim.	Used to analyze and reject Light's abuse of process claim for lack of evidence.
Bothmann v. Harrington, 458 So.2d 1163 (Fla. 3d DCA 1984)	No abuse of process when process is used to accomplish intended result despite incidental ulterior motive.	Applied to conclude no abuse of process occurred.
Tourismart of Am., Inc. v. Gonzalez, 498 So.2d 469 (Fla. 3d DCA 1986)	Corporate officers liable for fraudulent acts against corporation's creditors.	Supported holding Light and Dermer personally liable despite corporate status.
Mannish v. Lacayo, 496 So.2d 242 (Fla. 3d DCA 1986)	Corporate agents not immune from liability for tortious misrepresentations.	Reinforced personal liability of officers for torts committed in corporate capacity.

Court's Reasoning and Analysis

The court analyzed the inconsistency between the trial court's findings in favor of Thomson on the fraudulent issuance of worthless checks and the award of damages to Light for malicious prosecution and abuse of process. It emphasized that under Florida law, absence of probable cause is a necessary element for malicious prosecution claims. The evidence showed Light knowingly issued checks without sufficient funds and made false assurances to Thomson. The criminal charges' dismissal did not establish lack of probable cause because dismissal alone is not dispositive, and the civil ruling supported the existence of probable cause.

Regarding abuse of process, the court highlighted the three required elements: improper use of process, ulterior motive, and resulting injury. Light failed to provide evidence supporting any of these elements. The court noted that Thomson's use of criminal process was proper to address the issuance of worthless checks and that incidental motives do not constitute abuse of process.

Finally, the court addressed the liability of corporate officers, reaffirming the principle that officers are personally liable for fraud against corporate creditors and found no basis to exempt Light and Dermer from such liability.

Holding and Implications

The court REVERSED the part of the judgment awarding damages to Michael Light on the counterclaims for malicious prosecution and abuse of process, concluding these awards were erroneous. The remainder of the judgment, including the award of damages to Thomson on its claims, was affirmed.

The direct effect is that Light and Dermer cannot recover damages for malicious prosecution or abuse of process based on the facts of this case. The decision reinforces the requirement of probable cause in malicious prosecution actions and the necessity of evidentiary support for abuse of process claims. It also confirms that corporate officers may be personally liable for fraudulent acts against creditors. No new legal precedent was established beyond affirming existing Florida law.

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THOMSON McKINNON SECURITIES, INC., APPELLANT, v. MICHAEL LIGHT, APPELLEE. BIONIC INSTRUMENTS OF DELAWARE, INC., A FLORIDA CORPORATION, MICHAEL DERMER AND MICHAEL LIGHT, APPELLANT,

PER CURIAM.

Thomson McKinnon Securities, Inc. (Thomson) appeals from part of a final judgment which awards Michael Light damages for abuse of process and malicious prosecution. Michael Light, Michael Dermer and Bionic Instruments of Delaware, Inc. (BID) cross-appeal that part of the final judgment which awards damages to Thomson.

Light and Dermer own a controlling interest in BID, a corporation which opened a margin account with Thomson, a securities broker. The brokerage agreement gave Thomson the right to require additional collateral and the right to sell any securities when necessary to protect the BID account. Subsequently, BID formed a wholly owned subsidiary, Bionic Financial Corporation (Bionic), and transferred all securities into the new corporation.

On February 27, 1981, Paul Bach, Thomson's account executive, contacted Michael Light, the president of Bionic, and requested additional collateral because of a decline in the value of Bionic's stock portfolio. Light issued a $20,000 check to Thomson on March 5. Ten days later, the check was returned due to insufficient funds. The next day, Michael Dermer, Bionic's vice-president, issued a second $20,000 check to Thomson. The second check was also returned for lack of funds.

On March 19 Thomson liquidated the Bionic account. During the twenty-day period beginning from the date of the margin call until the date of liquidation, the market declined, resulting in a $39,087.18 net loss to Thomson.

Thomson initiated a prosecution by the state attorney for the returned checks by giving a sworn statement. The state filed an information charging Light with uttering a worthless check. Later, however, the criminal charges were dismissed. Thomson filed a civil complaint against Light, Dermer, Bionic, and BID seeking damages allegedly incurred as a result of the fraudulently uttered worthless checks. The defendants answered and filed a counterclaim alleging abuse of process, breach of contract, and malicious prosecution.

The reason for dismissal is not part of the record.

At the ensuing trial, Light and Dermer admitted that they issued the checks knowing that they were not covered by funds in the bank account. The defendants maintained, however, that they had informed Thomson that the funds in the bank were insufficient to cover the checks and that Thomson had agreed to accept and hold the checks until sufficient funds were obtained. Paul Bach, the account executive for Thomson, disputed the defense and testified that Light and Dermer continually represented to him that the checks were good.

The trial court ruled in Thomson's favor on all four counts of its complaint and awarded damages. Nevertheless, the court granted judgment for Light on the counterclaims for abuse of process and malicious prosecution, awarding Light $50,000 in damages on each count.

Thomson contends that the finding in favor of Light on the malicious prosecution and abuse of process counts is inconsistent with the finding in Thomson's favor on the claim for fraudulent uttering of a worthless check. We agree and reverse the judgment and damage award for Light on the counterclaim for malicious prosecution and abuse of process.

It is settled law in Florida that an absence of probable cause for the commencement or continuance of an original criminal or civil judicial proceeding is an essential element in an action for malicious prosecution. Burns v. GCC Beverages, Inc., 502 So.2d 1217 (Fla. 1986); K-Mart Corp. v. Sellars, 387 So.2d 552 (Fla. 1st DCA 1980); Hunter v. First Baptist Church, Inc., 294 So.2d 355 (Fla. 4th DCA 1974). The Florida supreme court has defined probable cause with regard to a malicious prosecution action as "[a] reasonable ground of suspicion, supported by circumstances sufficiently strong in themselves to warrant a cautious man in the belief that the person accused is guilty of the offense with which he is charged." Goldstein v. Sabella, 88 So.2d 910, 911 (Fla. 1956).

Here, the evidence demonstrated, and the trial court found, that Light persuaded Thomson to keep the account open with false assurances to Paul Bach that the $20,000 check was good. At trial Light admitted that he issued the check knowing that the account held insufficient funds. After the presentation of all the evidence, the trial judge ruled in Thomson's favor on Count III which alleged that Light issued the check for the purpose of deceiving and defrauding Thomson. Therefore, we must reject Light's contention that the action of the circuit court in dismissing the criminal charges against Light constitutes proof of the absence of probable cause.

First, a dismissal of criminal charges does not alone establish an absence of probable cause. Phelan v. City of Coral Gables, 415 So.2d 1292 (Fla. 3d DCA 1982); Weissman v. K-Mart Corp., 396 So.2d 1164 (Fla. 3d DCA 1981). Second, the ruling adverse to Light in the civil case — finding that he fraudulently uttered a worthless check — is consistent with the existence of probable cause. Because Light failed to carry his burden of proof to show that the criminal proceeding was initiated or continued by Thomson without probable cause, the trial court erred in entering a judgment against Thomson on Light's counterclaim for malicious prosecution.

For a discussion on the considerable burden placed on the plaintiff in a malicious prosecution action, see W. Prosser Laws of Torts § 119 (4th ed. 1971).
Because we find that Light failed to prove an absence of probable cause, we need not reach Thomson's claim of statutory immunity pursuant to section 832.07, Florida Statutes (1985).

The finding in favor of Light on the count for abuse of process was also error because the finding is without evidentiary support. A cause of action for abuse of process requires proof that: (1) the defendant made an illegal, improper, or perverted use of process; (2) the defendant had an ulterior motive or purpose in exercising the illegal, improper or perverted process; and (3) the plaintiff was injured as a result of defendant's action. Della-Donna v. Nova Univ., Inc., 512 So.2d 1051 (Fla. 4th DCA 1987). Light presented no evidence on any of the three elements necessary to establish a misuse of process. To the contrary, the evidence adduced at the civil trial demonstrated that Thomson made proper use of the criminal process to "remedy the evil of giving [worthless] checks. . . ." § 832.05, Fla. Stat. (1985). There is no abuse of process when the process is used to accomplish the result for which it was created, regardless of an incidental or concurrent motive of spite or ulterior motive. See Bothmann v. Harrington, 458 So.2d 1163 (Fla. 3d DCA 1984). A judgment for Light on the counterclaim for abuse of process was erroneous as a matter of law.

Light and Dermer contend that a judgment could not be entered against them personally because they issued the checks as corporate officers of Bionic. The general and controlling principle of law is that corporate officers are liable for acts of fraud perpetrated on the corporation's creditors. Tourismart of Am., Inc. v. Gonzalez, 498 So.2d 469 (Fla. 3d DCA 1986) (agent for corporation not shielded from liability for issuance of checks with knowledge that there were insufficient funds to cover them); Mannish v. Lacayo, 496 So.2d 242 (Fla. 3d DCA 1986) (corporate agents are not immune from liability for their tortious misrepresentations merely because they were acting as agents for the corporation); see generally H. Henn J. Alexander, Laws of Corporations § 230 (1983). No facts are presented for applying an exception to the rule.

The part of the judgment finding for Light on the counterclaim counts for abuse of process and malicious prosecution is reversed; the judgment is otherwise affirmed.