Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-93-02316/USCOURTS-ca10-93-02316-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 

---

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

DEE GLASGOW and DELIGHT GLASGOW, 

Plaintiffs-Appellants, 

FILED - Ulllted State~ Court of Appeall Tath Clrruft 

JAN 1 8 1995 

PATRICK FISHER 

Clerk 

v. No. 93-2316 

EAGLE PACIFIC INSURANCE COMPANY, 

Defendant-Appellee. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW MEXICO 

(D.C. No. CIV-92-178-M) 

Robert L. Hackett (Stephen L. Dunne and James E. Uschold on the 

briefs) of Hackett & Dunne, New Orleans, Louisiana, for 

Plaintiffs-Appellants. 

Alice Tomlinson Lorenz (Stephan M. Vidmar with her on the brief) 

of Miller, Stratvert, Torgerson & Schlenker, P.A., Albuquerque, 

New Mexico, for Defendant-Appellee. 

Before TACHA, McKAY and BALDOCK, Circuit Judges. 

McKAY, Circuit Judge. 

Appellate Case: 93-2316 Document: 01019290249 Date Filed: 01/18/1995 Page: 1 
This appeal is the final volley in a protracted battle 

between Dee and Delight Glasgow and Eagle Pacific, the former 

insurance company of Mr. Glasgow. Mr. Glasgow had bought from 

Eagle Pacific a workers' disability policy that provided benefits 

similar to those available under statutory workers' compensation. 

After Mr. Glasgow was tortiously injured by a third party, Mr. 

Glasgow and Eagle Pacific parted ways over a disagreement about 

rights of subrogation and reimbursement. Mr. Glasgow believed 

that Eagle Pacific had fraudulently obtained from him a release of 

his claims against Eagle Pacific. Eagle Pacific, in turn, feared 

that Mr. Glasgow was scheming to collect a double recovery. Eagle 

Pacific first sought to have its rights determined by the United 

States District Court for the District of Louisiana as part of the 

overall tort action. After this action settled (in favor of Mr. 

Glasgow) and the federal court determined that it no longer had 

jurisdiction over the case, Eagle Pacific then brought an action 

against Mr. Glasgow in state court in Cibola County, New Mexico. 

While Eagle Pacific pursued its remedies in court (both federal 

and state), Mr. Glasgow was enjoined from using the proceeds of 

the settlement. Eagle Pacific eventually lost its state action, 

and the settlement funds were released. The Glasgows then sued 

Eagle Pacific. 

The Glasgows brought, on behalf of Mr. Glasgow, seven causes 

of action against Eagle Pacific: fraud and bad faith dealing; 

violation of the New Mexico Unfair Insurance Practices Act 

(NMUIPA) ; violation of the New Mexico Unfair Practices Act 

-2-

Appellate Case: 93-2316 Document: 01019290249 Date Filed: 01/18/1995 Page: 2 
(NMUPA); wrongful seizure and abuse of process in the Louisiana 

federal court action; wrongful seizure and abuse of process in the 

Cibola County action; prima facie tort; and intentional infliction 

of emotional distress. These claims were predicted upon the 

fradulently obtained release or the two court actions brought by 

Eagle Pacific to determine the legal effect of that release. The 

district court ruled that six of these causes of action (all but 

the prima facie tort claim) were compulsory counterclaims that 

should have been raised in the Cibola County state action and were 

consequently barred. The Glasgows appeal this ruling. 

We find neither factual nor legal reason to disagree with the 

district court's reasoning and therefore affirm. The New Mexico 

rule governing compulsory counterclaims, which is virtually 

indistinguishable from the federal rule, incorporates a "logical 

relationship" test. See Slide-a-Ride v. Citizens Bank, 733 P.2d 

1316, 1318-19 (N.M. 1987). "A logical relationship will be found 

if both the claim and the counterclaim have a common origin and 

common subject matter." Id. at 1319. Irrespective of other 

possible bases upon which Eagle Pacific could have grounded the 

claims raised in the Cibola County action, the release executed by 

Mr. Glasgow was at the center of that action. The release, in 

turn, is central to all of the claims now made by the Glasgows. 

The body of evidence that would decide the Glasgows' current 

claims is precisely that which would have determined the merits of 

Eagle Pacific's action in state court. We therefore conclude, as 

did the district court, that the barred claims should have been 

-3-

Appellate Case: 93-2316 Document: 01019290249 Date Filed: 01/18/1995 Page: 3 
raised as counterclaims in the earlier action. Compare Heffern v. 

First Interstate Bank, 660 P.2d 621, 624 (N.M. App. 1983) 

("Allegations of creditor misconduct have been held to be compulsory counterclaims in foreclosure suits."). 

Although the complaint did not explicitly plead a cause of 

action for malicious prosecution, the Glasgows now ask, in so many 

words, that the pleadings be amended to conform to the evidence of 

malicious prosecution alleged in the complaint. We assume without 

deciding that, fairly construed, the complaint does allege malicious prosecution.1 We also agree with the Glasgows that a 

counterclaim from malicious prosecution arising from the Cibola 

County action could not have been made in that action because a 

claim for malicious prosecution, unlike a claim of abuse of 

process, requires the unsuccessful termination of the culpable 

prosecution. Nonetheless, we agree with the district court that 

the Glasgows' malicious prosecution claim fails as a matter of 

law. In the Cibola County action, the state court judge, after a 

hearing at which evidence was presented and legal arguments 

offered, found good cause to grant the injunction seizing the 

funds in controversy; a later motion by the Glasgows to vacate the 

injunction--a motion supported by briefs and legal argument--was 

also denied on the ground that the injunction was supported by 

cause. These earlier judicial rulings are tantamount to a finding 

of good cause that precludes an action for malicious prosecution. 

1 We note, moreover, that there is no question but that Eagle 

Pacific was on notice of the malicious prosecution claim. 

-4-

Appellate Case: 93-2316 Document: 01019290249 Date Filed: 01/18/1995 Page: 4 
Bokurn v. Elkins, 355 P.2d 137, 141 (N.M. 1960) ("It has been held 

that where the injunction is issued after the court is fully 

informed by proof taken and arguments presented on both sides, 

that the granting of the injunction under those circumstances is 

conclusive of probable cause."). 

The final cause of action asserted by Mr. Glasgow alleged 

prima facie tort. Prima facie tort had not yet been recognized in 

New Mexico at the time of the Cibola County action, and thus the 

Glasgows could not have based a counterclaim upon prima facie 

tort. The district court found, however, that the recognition of 

prima facie tort in New Mexico was not retroactive and, therefore, 

that the Glasgows could not bring an action for prima facie tort. 

The New Mexico Supreme Court, in Beavers v. Johnson Controls World 

Services, Inc., 881 P.2d 1376 (N.M. 1994), has since held that the 

recognition of prima facie tort should be given retroactive 

effect. 

We nonetheless find that the cause of action for prima facie 

tort fails as a matter of law. In recognizing prima facie tort, 

the New Mexico Supreme Court cautioned that "prima facie tort 

should not be used to evade stringent requirements of other 

established doctrines of law," Schmitz v. Smentowski, 785 P.2d 

726, 738 (N.M. 1990). "[I]f at the close of the evidence, 

plaintiff's proof is susceptible to submission under one of the 

accepted categories of tort, the action should be submitted to the 

jury on that cause and not under prima facie tort." Id. at 736. 

-5-

Appellate Case: 93-2316 Document: 01019290249 Date Filed: 01/18/1995 Page: 5 
In this case, all of the wrongs averred by the Glasgows fall 

easily into some other cause of action, be it fraud, abuse of 

process, malicious prosecution, intentional infliction of ernetional harm, or violation of various insurance and unfair trade 

regulations. Mr. Glasgow's inability to raise those claims here 

results not from some failure of proof, compare id. at 738-39 

(allowing plaintiff to bring prima facie tort because elements of 

fraud or conversion were lacking), but from his own failure 

properly to bring those claims as counterclaims. To allow Mr. 

Glasgow to use prima facie tort as a convenient means "to evade 

[the] stringent requirements" of the compulsory counterclaim rule 

would obviate the rule. We therefore hold that Mr. Glasgow's 

prima facie tort claims are barred as well. See id. at 733-39.2 

Turning now to the causes of action put forth on behalf of 

Mrs. Glasgow, the Glasgows appeal summary judgment entered against 

them on the following causes of action: fraud and bad faith 

dealing; violation of the NMUIPA; violation of the NMUPA; wrongful 

2 We have held that Mr. Glasgow's claim for malicious 

prosecution fails as a matter of law. In so doing we have assumed 

that a claim for malicious prosecution can fairly be read into the 

complaint. If, however, a malicious prosecution claim were not 

read into the complaint, it is at least arguable that the 

allegations of prima facie tort could, in essence, substitute for 

the unpled malicious prosecution claim. In any event, the prima 

facie tort claim, like the malicious prosecution claim, cannot 

survive summary judgment. The state court's finding of cause to 

continue the injunction constitutes at least a prima facie, if not 

a conclusive, showing that the Cibola County action was justified. 

See Bokum, 355 P.2d at 141. The burden then shifted to the 

Glasgows to rebut this prima facie showing by raising "'reasonable 

doubt as to whether a genuine issue for trial exist[ed] .'" Fleet 

Mortgage Corp. v. Schuster, 811 P.2d 81, 83 (N.M. 1991) (quoting 

Koenig v. Perez, 726 P.2d 341, 343 (N.M. 1986)). This the 

Glasgows have failed to do. 

-6-

Appellate Case: 93-2316 Document: 01019290249 Date Filed: 01/18/1995 Page: 6 
seizure and abuse of process in the Cibola County action; prima 

facie tort; and intentional infliction of emotional distress. We 

note that her claim for malicious prosecution fails for the reasons applicable to Mr. Glasgow. Her allegations of prima facie 

tort likewise fail for the reasons given above. 

The district court ruled that Mrs. Glasgow could not bring 

actions under the NMUIPA or the NMUPA or for fraud and bad faith 

because she was neither a party to the release nor to the insurance policy. We agree. The insurance policy that lies at the 

heart of this imbroglio was a voluntary disability policy intended 

to provide Mr. Glasgow with coverage equivalent to that of 

workers' compensation. Whatever rights Mrs. Glasgow held under 

this policy were incidental only and do not give rise to a claim 

under the NMUIPA. See Schuster, 811 P.2d at 82-83. The impact of 

the release upon her was similarly incidental. We note also that 

the release was negotiated solely with Mr. Glasgow; Eagle Pacific 

is consequently liable to him alone. We therefore affirm summary 

judgment entered against Mrs. Glasgow on counts one through 

three.3 

3 On appeal, the Glasgows contend that the district court 

misconstrued their complaint and failed to rule upon Mrs. 

Glasgow's claim that the two seizures of funds--some portion of 

which was allegedly the property of Mrs. Glasgow--themselves gave 

rise to a claim under the NMUPA. We note that the complaint 

refers only to claims arising from the manner in which Eagle 

Pacific obtained the release from Mr. Glasgow. The record, 

furthermore, contains no evidence that the Glasgows argued before 

the district court that the seizures gave rise to NMUPA claim; in 

fact, the converse is true. The Glasgows themselves, in their 

Memorandum in Opposition to Defendant's Motion to Dismiss or 

Motion for Summary Judgment, limit the discussion of the NMUPA and 

NMUIPA claims to "Eagle Pacific's obtainment of the full and final 

-7-

Appellate Case: 93-2316 Document: 01019290249 Date Filed: 01/18/1995 Page: 7 
Lastly, Mrs. Glasgow contends that the district court 

improperly concluded that the alleged conduct of Eagle Pacific 

failed as a matter of law to give rise to a claim for intentional 

infliction of emotional harm. We reject this contention. To 

state a claim for intentional infliction of emotional harm, a 

plaintiff must allege behavior that is so outrageous as to go 

beyond the bounds of human decency. See Newberry v. Allied 

Stores. Inc., 773 P.2d 1231 (N.M. 1989). Giving Mrs. Glasgow the 

benefit of every doubt, the actions of Eagle Pacific cannot support her case. 

We AFFIRM the decision of the district court granting summary 

judgment for Eagle Pacific. 

release." Aplt.'s Supp. App. at 40. More significantly, the 

Glasgows' argument that the NMUPA and NMUIPA claims were not 

compulsory counterclaims turns on the fact that those claims were 

based on the release and not on the seizure. See id. at 41-45. 

The Federal Rules of Civil Procedure command us to construe 

pleadings so as to promote justice, but there is simply a limit to 

the extent to which pleadings may be reinterpreted upon appeal to 

resurrect an otherwise defeated ground for relief. In this 

instance, the complaint does not allege the seizures as bases for 

NMUPA and NMUIPA; the argument was apparently not made before the 

district court; and we will therefore not allow the Glasgows to 

make, for the first time, such claims on appeal. 

-8-

Appellate Case: 93-2316 Document: 01019290249 Date Filed: 01/18/1995 Page: 8