Crawford v. Ryan et al

Filing 19

ORDER denying 8 motion for summary judgment. Signed on 5/28/13 by Magistrate Judge Robert E. Larsen. (Wilson, Carol)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
ST. JOSEPH DIVISION
STEVEN C. CRAWFORD,

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Plaintiff,
v.
RICHARD A. RYAN and
LORETA J. RYAN,
Defendants.

Case No. 12-6068-CV-SJ-REL

ORDER
Before the court is defendants’ motion to dismiss
plaintiff’s complaint.

On May 3, 2013, I entered an order giving

the parties until May 7, 2013, to file notice that additional
briefing or evidence was needed since the motion was being
converted to a motion for summary judgment.

No notice having

been filed by either party, the issue is ready to rule.
I.

BACKGROUND
On August 17, 1995, defendants1 sold the property at issue

in the underlying action.

On August 16, 2000, defendants filed a

lawsuit in state court against plaintiff, nine other individuals,
and six companies alleging a conspiracy to defraud defendants in
connection with the sale of the property.

Defendants sought to

recover from plaintiff special damages of $500,000 and punitive
damages of $1,000,000.

On March 21, 2006, summary judgment was

entered in favor of plaintiff.

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In April 2009, defendants went to

In the underlying state suit, Crawford was a defendant and
the Ryans were the plaintiffs. However, Crawford will be
referred to as the plaintiff throughout this order since he is
the plaintiff in this federal suit, and the Ryans are referred to
as defendants since they are the defendants in this federal suit.

trial against the one company left in the suit and won a judgment
against that company in the amount of $2,440,953 plus interest.
On April 2, 2010, the trial court entered final judgment which
included the $2,440,953 plus interest and judgment in favor of
plaintiff on all counts.
The trial court’s grant of summary judgment was appealed by
both parties.

On August 23, 2011, the Missouri Court of Appeals

affirmed the trial court’s grant of summary judgment and found
defendants’ cross appeal moot.

Defendants were paid $2,726,000

on January 9, 2012, pursuant to the jury verdict.
On January 30, 2012, plaintiff filed the instant complaint
alleging that defendants had no reasonable ground and no just
cause or excuse to file the suit in state court against
plaintiff.

Plaintiff alleges that he incurred damages in the

form of attorney’s fees and expenses in the amount of $123,421.43
defending the state lawsuit.

Plaintiff now seeks that amount in

damages based on that malicious prosecution.
Defendants filed a motion to dismiss this federal case.

In

support, defendants allege that plaintiff paid the defendants
$20,000 to settle the “canceled deeds and quiet title” claim in
the underlying lawsuit which constitutes a successful claim; and
because plaintiff must show that the entire proceeding in the
underlying lawsuit lacked probable cause, his claim fails.
Defendants, in their motion to dismiss, allege that:
Apparently concerned about a potential appeal and the
absence of finality, several months after the summary
judgment ruling [plaintiff] contacted the [defendants’]

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counsel for the purpose of reaching a settlement on the
previously dismissed Count IV claim to quiet title. On
November 27, 2006, the parties executed a Partial Settlement
Agreement and Special Mutual Releases providing that in
return for payment of $20,000 by [plaintiff], the
[defendants] agreed to release [plaintiff] from any claims
or causes of action relating to Count IV, and further agreed
that they would not appeal the summary judgment ruling on
Count IV.
Plaintiff opposes the motion to dismiss, first arguing that
because defendants included exhibits with their motion to dismiss
it should be converted to a motion for summary judgment, and
second arguing that:
[T]here is nothing in the Circuit Court’s record or in the
terms of the Settlement Agreement that provides that Count
IV had probable cause or merit, nor did the execution of the
Settlement Agreement somehow imbue Count IV with any indicia
of probable caused or merit. . . . Quite often, a defendant
will make a financial decision to settle a frivolous lawsuit
for a nominal amount rather than continue to pay litigation
costs, which can be expensive. Such a decision, however,
does not mean that the lawsuit had merit. . . .
Attached to plaintiff’s response to the motion to dismiss is
an affidavit, the state court motion to dismiss, and other
documents in which plaintiff states that defendants sold the
subject property in August 1995 to Burnham and Hurt (not parties
to this federal suit) for $960,000.

The property was purchased

with $700,000 which was financed through Provident Bank and the
remaining $260,000 was financed by the defendants who then held a
second deed of trust expressly subordinated to the first deed of
trust held by Provident Bank.

During 1996, the Burnhams

defaulted on their loan with Provident Bank who then foreclosed
on the property.

Defendants had notice of the foreclosure sale

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and attended the sale, but they did not bid on the property.
Provident Bank purchased the property at the foreclosure sale for
the amount of the first mortgage debt, and as a result
defendants’ second deed of trust was eliminated.

Provident Bank

then sold the property to Wayne and Connie Lemon (not parties to
this federal suit) in 1996.

On January 14, 1997, plaintiff

purchased the subject property from Wayne and Connie Lemon for
$700,000, all of which was financed.
On August 16, 2000, defendants filed a lawsuit in state
court and claimed an “equitable Vendors Lien” based on allegedly
fraudulent misrepresentations.

In Count IV of that state court

lawsuit, defendants sought to rescind all transactions involving
the sale of the property and to cancel all deeds in connection
therewith.

Although they sought to quiet title in their names

and filed a Notice of Lis Pendens on the property, it is alleged
that they never offered or tendered back the $700,000 they
received for the property.

On December 16, 2004, the state court

granted a motion to dismiss Count IV (quiet title) and ordered
defendants to release their Notice of Lis Pendens.

On March 21,

2006, the state trial court granted summary judgment in favor of
plaintiff on the other counts in which he was named.
In the meantime, on September 4, 2002, plaintiff had sold
the property to the City of Kansas City.

Because of the Notice

of Lis Pendens, plaintiff was unable to procure a title insurance
policy on the property without first delivering a letter of

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credit in the amount of $700,000.

In order to get that letter of

credit, plaintiff was required by the bank to deliver into escrow
personal assets having a value in excess of $1,000,000.

The

deposit of those assets into escrow “was solely the result of the
[defendants] filing Count IV of the Ryan Suit and their Notice of
Lis Pendens.”

After the Notice of Lis Pendens was withdrawn,

plaintiff was informed by the bank that it would not release the
letter of credit until the entire state lawsuit was concluded or
a release was obtained from the defendants for Count IV, the
quiet title count.

As a result, plaintiff alleges that he

offered to pay a nominal sum of money to the defendants in return
for a release of Count IV.

Plaintiff alleges that defendants

demanded a payment of $20,000 for the release -- the release
required by the bank to return plaintiff’s $1,000,000 escrow
assets.
Plaintiff’s affidavit states:
I reluctantly decided to go forward with the partial
settlement agreement with the [defendants], even though
Count IV of the Ryan Suit against me had been dismissed by
the Trial Court as being without merit, because I badly
needed the Escrow Assets in order to continue doing
business. I was in a position of disadvantage and
[defendant’s attorney] and the [defendants] took full
advantage of my predicament to exploit it for their benefit.
Plaintiff argues that the order of the state trial court
dismissing the quiet title count for failure to state a claim
upon which relief could be granted was never withdrawn, vacated
or amended.

Plaintiff further points out that:

On April 2, 2010, the Trial Court entered final judgment in
the Ryan Suit. That final judgment included a damage award

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in favor of the [defendants] and against Block & Company,
Inc. in the amount of $2,440,953, plus interest. It also
included complete judicial relief in my favor, and
terminated all claims asserted by the [defendants] against
me. That final judgment included disposition of all three
Counts of the Ryan Suit in my favor.
In their reply, defendants argue that plaintiff is unable to
demonstrate one of the necessary elements of malicious
prosecution -- lack of probable cause.

Defendants point out that

although plaintiff concludes that the state trial court’s
dismissal of Count IV means there was no probable cause to
support it, the order is actually a one-paragraph order and lists
no reasons at all for the granting of the motion to dismiss.
Defendants argue that the motion to dismiss that was granted by
the state court put forth only one reason in support of
dismissal, and that was that the pleading did not include a
necessary allegation that there was a tender back of all
consideration -- not that the count lacked probable cause.
Defendants also argue that the allegation of financial duress
does not prove lack of probable cause.
Plaintiff made a rational calculation about how to serve his
own business interests, and paid the [defendants] $20,000 to
further his objectives with regard to title issues relating
to the property. There is no evidence that anyone kept
plaintiff from exercising his free will, and so his
complaints of duress and exploitation by others ring hollow.
Finally, defendants argue that plaintiff confuses a lack of
probable cause with a lack of merit.
II.

SUMMARY JUDGMENT
Rule 56(c), Federal Rules of Civil Procedure, permits

summary judgment “if the pleadings, depositions, answers to

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interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment
as a matter of law.”
The key to determining whether summary judgment is proper is
ascertaining whether there exists a genuine issue of material
fact.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

A genuine issue of material fact exists if:

(1) there is a

dispute of fact; (2) the disputed fact is material to the outcome
of the case; and (3) the dispute is genuine, that is, a
reasonable jury could return a verdict for either party.
American Academy of Family Physicians v. United States, 75
A.F.T.R.2d 95-1709 (W.D. Mo. 1995), aff’d 91 F.3d 1155 (8th Cir.
1996).

The party moving for summary judgment has the burden of

proving that these requirements for summary judgment have been
met.

Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).
In a summary judgment analysis, a court must first consider

whether there are any issues of fact.

If the only issues are

issues of law, then summary judgment is appropriate.

Disesa v.

St. Louis Community College, 79 F.3d 92, 94 (8th Cir. 1996).

If

issues of fact are raised, a court must consider whether these
issues are material to the outcome of the case.

Materiality is

identified by the substantive law that is to be applied.
Anderson v. Liberty Lobby, Inc., 477 U.S. at 248.

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Factual

disputes that are collateral to the substantive law will not
preclude summary judgment.

Id.

In addition to the requirement that a dispute of fact be
material, the dispute must also be genuine.

A dispute of fact is

considered genuine if the non-moving party has produced
sufficient evidence such that a reasonable jury could return a
verdict for that party.

Id. at 249.

When considering a motion

for summary judgment, the evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in its
favor.

Id. at 255.

If the evidence submitted by the non-moving

party is merely colorable or is not significantly probative, then
summary judgment may be granted.

Id. at 249-250.

Where the party moving for summary judgment does not bear
the burden of proof at trial, that party must show “that there is
an absence of evidence to support the non-moving party’s case.”
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).

This burden

is met when the moving party identifies portions of the record
demonstrating an absence of a genuine issue of material fact.
Id. at 323.

If the moving party meets the requirement, the

burden shifts to the non-moving party who must set forth specific
facts showing that there is a genuine issue for trial.
v. Liberty Lobby, Inc., 474 U.S. at 248.

Anderson

The trial judge then

determines whether a trial is needed -- “whether, in other words,
there are any genuine factual issues that properly can be
resolved only by a finder of fact because they may reasonably be
resolved in favor of either party.”

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Id. at 250.

Under Missouri law, plaintiff must establish the following
elements of a malicious prosecution claim:
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commencement of a prosecution against the plaintiff by the
defendant

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the suit was terminated in favor of the plaintiff

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there is a want of probable cause

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defendant’s conduct was actuated by malice

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plaintiff was damaged

Duvall v. Lawrence, 86 S.W.3d 74, 84 (Mo. Ct. App. 2002).
Because malicious prosecution suits countervail the public
policy that the law should encourage citizens to aid in the
uncovering of wrongdoing, the courts require strict and clear
proof of each element.

Sanders v. Daniel Intern. Corp., 682

S.W.2d 803, 806 (Mo. 1984); Holley v. Caulfield, 49 S.W.3d 747,
750 (Mo. Ct. App. 2001).
At issue in this motion is the element requiring “want of
probable cause.”

Probable cause for initiating a civil action

consists of “a belief in the facts alleged, based on sufficient
circumstances to reasonably induce such belief by a person of
ordinary prudence in the same situation, plus a reasonable belief
by such person that under such facts that claim may be valid
under the applicable law.”
S.W.2d 628, 633 (1977).

Haswell v. Liberty Mut. Ins. Co., 557

Proving lack of probable cause involves

proving a negative, thus, the slightest proof is all that is
required to make a prima facie case.

Id.

Where there is no

dispute about the facts of a claim of malicious prosecution,

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probable cause is a question of law for the court to determine.
Hernon v. Revere Copper & Brass, Inc., 494 F.2d 705, 707 (8th
Cir. 1974); Kelley v. Kelly Residential Group, Inc., 945 S.W.2d
544, 549 (Mo. Ct. App. 1997).

However, “[i]f any material part

of the evidence showing existence or want of probable cause is in
conflict, a fact issue exists that is sufficient to make a
submissible case.”

Ehrhardt v. Herschend, 294 S.W.3d 58, 59 (Mo.

Ct. App. 2009).
Dismissal of a defendant’s action against the plaintiff is
not alone sufficient to conclude a lack of probable cause.
Haswell v. Liberty Mut. Ins. Co., 557 S.W.2d at 633 (citing Jones
v. Phillips Petroleum Co., 186 S.W.2d 868, 875 (Mo. Ct. App.
1945)).

However, a settlement agreement is not sufficient to

conclude existence of probable cause.
In this case plaintiff argues that he entered into the
settlement agreement under financial duress which was caused by
defendants’ lawsuit and defendants’ demand that they be paid
$20,000 to sign a release, even though they had already lost in
state court on the relevant claim.

Defendants argue that

plaintiff made a business decision that benefitted him at the
time and that the settlement agreement is evidence of probable
cause despite the state court decisions.
I find that the underlying facts are in dispute and
therefore whether probable cause existed for the state court suit
cannot be determined at this time.

As a result, defendants’

motion for summary judgment will be denied.

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III. CONCLUSION
Because there remains a factual dispute which precludes the
determination of probable cause for the underlying state lawsuit,
it is
ORDERED that defendants’ motion to dismiss, converted to a
motion for summary judgment, is denied.

ROBERT E. LARSEN
United States Magistrate Judge
Kansas City, Missouri
May 28, 2013

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