N.C. FARM BUREAU INSURANCE V. CULLY'S MOTORCROSS | MALICIOUS PROSECUTION

In N.C. Farm Bureau Insurance v. Cully's Motorcross, from June 13, 2013, the North Carolina Supreme Court clarified one aspect of North Carolina's law pertaining to claims for malicious prosecution. 

In this case, the insured had a fire, which he reported to his insurance company, and filed a claim. The insurer suspected arson, and had several questions about the claim. The insurance investigator conveyed information to local law enforcement, which ultimately charged the insured criminally with a crime (obtaining property by false pretenses, which had to do with the deed of trust on the property). The insured later sued (counter-claimed) the insurance company for malicious prosecution. The Court of Appeals held that this claim was sufficient to go forward, but the Supreme Court reversed.

Of particular import, the Supreme Court adopted the following passage from the Restatement of Torts. "[G]iving 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."

This case will make it more difficult to pursue claims for malicious prosecution in North Carolina. The Court of Appeals had used a standard that would have allowed the claim to proceed if a criminal prosecution would have been unlikely if the Investigator had not contacted law enforcement.

John Kirby has counseled clients in claims for malicious prosecution.