Downtown Lawyer

Brooks v. First State Bank, N.A., No. CA 09-767.

In December 2005, Ressie Lee Brooks was notified by a bogus company that she had won a $50,000 sweepstakes. She was told that a check representing partial payment of $2,270 would be sent to her and that she should cash the check and return the funds for payment of fees and taxes due on her prize money. Once Brooks received the $2,270 check drawn on an out-of-state bank, she deposited the same into her savings account at First State Bank on December 20, 2005. The bank informed her that the funds would not be available for withdrawal for five business days. On December 28, 2005, Brooks returned to the bank, withdrew the funds, and wired them to the bogus company.

On January 1, 2006, the bank received the returned check, which was counterfeit. On January 3, 2006, the bank informed Brooks that the check was counterfeit and sought to recover the funds from her. Detective Brian Williams of the Conway Police Department was present during the meeting and also insisted that Brooks owed the money to the bank. When Brooks refused to repay the money by January 30, 2006, the bank reported the same to Williams. He consulted with the prosecuting attorney, an arrest warrant was issued, and Brooks was arrested for theft. After spending the night in jail, Brooks bonded out. On September 7, 2006, the charges were nol prossed, and Brooks was ordered to pay $41 in restitution to the bank.

Brooks then filed a civil lawsuit against the bank, alleging malicious prosecution and abuse of process. She argued that the bank controlled the criminal prosecution and used it to coerce her to pay for the bank’s error of presentation and payment of the check. The bank denied her allegations and asserted it had immunity from suit under a safe-harbor provision of federal law regarding the reporting responsibilities of financial institutions. The bank then filed a motion for summary judgment, arguing that the prosecutor acted independently and that the bank was immune because of its duty to report suspicious financial activity. The trial court agreed that the evidence indicated only a routine investigation and dismissed the case.

On appeal, the Arkansas Court of Appeals noted that a claim for malicious prosecution requires proof of (1) a proceeding instituted or continued by the defendant against the plaintiff, (2) termination of the proceeding in favor of the plaintiff, (3) absence of probable cause for the proceeding, (4) malice on the part of the defendant, and (5) damages. The court then stated that a defense to malicious prosecution is making a full, fair, and truthful disclosure of all facts known to competent counsel (or the prosecuting attorney) and acting upon advice received from the attorney. Here, the bank informed the prosecuting attorney about the facts of this case, and the prosecutor brought charges against Brooks for theft. Accordingly, summary judgment was proper.