Opinion ID: 1138780
Heading Depth: 2
Heading Rank: 4

Heading: the prima facie tort.

Text: This court is faced today with two questions: Should a cause of action in prima facie tort be recognized in New Mexico, and, if so, did the Mocks prove that the Bank committed a prima facie tort?
The Bank contends that we should refuse this opportunity to recognize prima facie tort. It claims that the two jurisdictions that have recognized prima facie tort as a specific tort cause of action, New York and Missouri, have found prima facie tort to be arcane and unworkable, spawning much litigation without appreciable benefit to plaintiffs. We disagree, and hold today that prima facie tort is recognized in New Mexico. As will be shown, it accords with our recent tort jurisprudence, and, if properly used, provides a remedy for plaintiffs who have been harmed by a defendant's intentional and malicious acts that fall outside of the rigid traditional intentional tort categories. Prima facie tort is not a recent innovation; its development has been discussed in various law reviews and decisions spanning practically a century. See Beardsley v. Kilmer, 236 N.Y. 80, 140 N.E. 203 (1923); Holmes, Privilege, Malice, and Intent, 8 Harv.L.Rev. 1 (1894); Brown, The Rise and Threatened Demise of the Prima Facie Tort Principle, 54 Nw.U.L.Rev. 563 (1959) (hereinafter Brown); Forkosch, An Analysis of the Prima Facie Tort Cause of Action, 42 Cornell L.Q. 465 (1957). The theory underlying prima facie tort is that a party that intends to cause injury to another should be liable for that injury, if the conduct is generally culpable and not justifiable under the circumstances. Restatement (Second) of Torts § 870 (1977). With variations in the several jurisdictions that have adopted the tort, its elements are generally recognized to be: 1. An intentional, lawful act by defendant; 2. An intent to injure the plaintiff; 3. Injury to plaintiff, and 4. The absence of justification or insufficient justification for the defendant's acts. Porter v. Crawford & Co., 611 S.W.2d 265, 268 (Mo. Ct. App. 1980); see ATI, Inc. v. Ruder & Finn, Inc., 42 N.Y.2d 454, 458, 368 N.E.2d 1230, 1232, 398 N.Y.S.2d 864, 866 (1977). Although the concept that unjustified intentionally caused harm should be the basis for liability has been utilized without denominating the theory as prima facie tort throughout recent jurisprudence, see, e.g., Diaz v. Kay-Dix Ranch, 9 Cal. App.3d 588, 592 n. 3, 88 Cal. Rptr. 443, 445 n. 3 (1970); Moran v. Dunphy, 177 Mass. 485, 59 N.E. 125 (1901); Tuttle v. Buck, 107 Minn. 145, 119 N.W. 946 (1909); Mangum Electric Co. v. Border, 101 Okla. 64, 222 P. 1002 (1923), New York was the first state to adopt prima facie tort as a specific cause of action. See Advance Music Corp. v. American Tobacco Co., 296 N.Y. 79, 70 N.E.2d 401 (1946); Brown, 54 Nw.U.L.Rev. at 566. The cause of action as it developed in New York, became stylized, as courts added requirements; for example, that special damages be proven, that the complaint not plead any other tortious conduct, that the activity complained of be otherwise lawful and not fit into any other established tort category, and that the activity complained of be motivated by a solely malicious intent. Note, Prima Facie Tort, 11 Cumb.L.Rev. 113, 116-18 (1980). In recent years, New York has retreated somewhat from these requirements, allowing alternative pleadings and expanding the definition of prima facie tort. Board of Educ. v. Farmingdale Classroom Teachers Ass'n, Local 1889, 38 N.Y.2d 397, 406, 343 N.E.2d 278, 284-85, 380 N.Y.S.2d 635, 644-45 (1975). Restatement (Second) of Torts § 870 (1977) has adopted a much more general theory of prima facie tort, providing that: One who intentionally causes injury to another is subject to liability to the other for that injury, if his conduct is generally culpable and not justifiable under the circumstances. This liability may be imposed although the actor's conduct does not come within a traditional category of tort liability. The Restatement approach embodies a balancing process, because not every intentionally caused harm ... deserves a remedy in tort. Id. comment e. Thus, the activity complained of is balanced against its justification and the severity of the injury, weighing: (1) the injury; (2) the culpable character of the conduct; and (3) whether the conduct is unjustifiable under the circumstances. Id. The dual nature of the determination is manifested by the requirement that the conduct be both culpable  wrongful or improper in generaland unjustifiableunder the circumstances no privilege should apply. Id. The Restatement further breaks down the analytical process into four considerations that should be considered in balancing the above factors: (1) the nature and seriousness of the harm to the injured party, (2) the nature and significance of the interests promoted by the actor's conduct, (3) the character of the means used by the actor and (4) the actor's motive. Id. It is apparent from a discussion of the Restatement view that, although it considers the same factors as do the New York courts, it does so in a more flexible way, by balancing the factors rather than by creating stylized requirements. Instructive to this court in our consideration of prima facie tort is the Missouri experience. In Porter v. Crawford & Co., 611 S.W.2d 265 (Mo. Ct. App. 1980), the court addressed the issue we consider today: whether to allow recovery in tort for a lawful act performed maliciously and with the intent to injure the plaintiff. Id. at 266. Porter involved an automobile accident, where the defendant-insurance agent settled the plaintiff's claim and delivered a check to plaintiff in release of claims. Plaintiff deposited the draft and wrote checks against it, while, without plaintiff's knowledge, the defendant cancelled the draft. Plaintiff incurred injuries as a consequence, and brought suit alleging that, by acting with careless and reckless disregard for plaintiff's rights and without just cause, the defendant had maliciously acted with intent to injure plaintiff. Id. at 267. The Missouri court examined the New York experience and the Restatement view, and fashioned a prima facie tort doctrine that combined the fundamental policy view of the Restatement with the analytically consistent aspects of the New York experience. We feel that their approach was analytically sound, and we adopt it, with refinements as discussed below. To constitute a prima facie tort, the tort-feasor must act maliciously, with the intent to cause injury, and without justification or with insufficient justification. One early development in New York was that the defendant was required to have acted with disinterested malevolencethe intent to harm being the sole motivation for the action. This was a means to determine if otherwise lawful conduct was done without any beneficial end but solely to injure the plaintiff. See Porter, 611 S.W.2d at 269. We reject this approach in favor of the balancing approach sanctioned by the Restatement. A sole intent to injure is, by definition, unjustifiablea purpose other than to injure the plaintiff is a justification for the act. Id. Thus, if a defendant offers a purpose other than the motivation to harm the plaintiff as justification for his actions, that justification must be balanced to determine if it outweighs the bad motive of the defendant in attempting to cause injury. See id.; Restatement (Second) of Torts § 870 comment c (1977); but see Rodgers v. Grow-Kiewit Corp.-Mk., 535 F. Supp. 814, 816 (S.D.N.Y.), aff'd 714 F.2d 116 (2d Cir.1982) ([M]otives of profit, economic self-interest or business advantage are by their terms not malicious, and their presence, even if mixed with malice or personal animus, bars recovery under prima facie tort.) We believe that to allow a defendant to escape liability solely because he can demonstrate some economic benefit to himself from the complained of act would defeat the policy behind our recognition of prima facie tortto allow a plaintiff to recover for intentionally committed acts that, although otherwise lawful, are committed with the intent to injure. Thus, we hold that the act must be committed with the intent to injure plaintiff, or, in other words, without justification, but it need not be shown that the act was solely intended to injure plaintiff. Porter, 611 S.W.2d at 269; Restatement (Second) of Torts § 870 (1977); see Speer v. Cimosz, 97 N.M. 602, 606, 642 P.2d 205, 209 (Ct.App.), cert. denied, 98 N.M. 50, 644 P.2d 1039 (1982); Bynum v. Bynum, 87 N.M. 195, 197-98, 531 P.2d 618, 620-21 (Ct.App.), cert. denied, 87 N.M. 179, 531 P.2d 602 (1975). We also accept the view held by New York and Missouri that prima facie tort may be pleaded in the alternative; however, if 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. Bandag of Springfield, Inc. v. Bandag, Inc., 662 S.W.2d 546, 552-53 (Mo. Ct. App. 1982); Farmingdale Classroom Teachers Ass'n, 38 N.Y.2d at 406, 343 N.E.2d at 284-85, 380 N.Y.S.2d at 644-45. Thus, double recovery may not be maintained, and the theory underlying prima facie tortto provide remedy for intentionally committed acts that do not fit within the contours of accepted tortsmay be furthered, while remaining consistent with modern pleading practice. Id.
Contemporary scholarship recognizes that there exists a residue of tort liability, which has escaped categorization in the forms of tort action, that is available for development into recognized torts as the need arises. Brown, 54 Nw.U.L.Rev. at 573; Porter, 611 S.W.2d at 268. In recognizing the tort of prima facie tort, this court is acting well within the tradition of the development of tort law in this jurisdiction. New Mexico has recognized that tort law is not staticit must expand to recognize changing circumstances that our evolving society brings to our attention. Thus, in other areas, we have recognized that intentional, malicious conduct that injures another, even though it may not have been recognized by the heretofore accepted areas of intentional tort, can serve as a basis for tort liability. We have also been very willing to adopt the view of the Restatement of Torts to assist our development of new tort areas. Accordingly, New Mexico has recognized as tortious inducing a breach of contract, adopting the view promulgated in Restatement of Torts § 766 (1939). Wolf v. Perry, 65 N.M. 457, 461, 339 P.2d 679, 681 (1959) (requiring that one who, without justification or privilege to do so, induces a third person not to perform a contract with another, is liable to the other for the harm caused thereby); see also Williams v. Ashcraft, 72 N.M. 120, 381 P.2d 55 (1963) (recognizing the tort of wrongful interference with another's business relations). We have adopted the cause of action of intentional interference with prospective contractual relations, relying on the tort as articulated in Restatement (Second) of Torts § 766(B) (1977). M & M Rental Tools, Inc. v. Milchem, Inc., 94 N.M. 449, 452-54, 612 P.2d 241, 244-46 (Ct.App. 1980) (one who, with bad motive, intentionally interferes with another's prospective contractual relations, is subject to liability); Anderson v. Dairyland Ins. Co., 97 N.M. 155, 158-59, 637 P.2d 837, 840-41 (1981). These torts reflect the underlying theory of prima facie tort as applied to contractual relationsthe underlying malicious motive of a defendant's actions, done without justification, makes an otherwise lawful act, competition, tortious. New Mexico has also recognized the tort of intentional infliction of emotional distress, relying on Restatement (Second) of Torts § 46 (1965), Mantz v. Follingstad, 84 N.M. 473, 479-80, 505 P.2d 68, 74-75 (Ct. App. 1972); Ramirez v. Armstrong, 100 N.M. 538, 673 P.2d 822 (1983), and we have recognized that the intentional and wrongful deprivation of the right to vote or hold public office creates tort liability. Valdez v. Gonzales, 50 N.M. 281, 176 P.2d 173 (1946). In light of this prior jurisprudence, it becomes evident that we have traditionally afforded relief for wrongs intentionally and maliciously committed, giving credence to the maxim of prima facie tort theory: prima facie, the intentional infliction of temporal damage is a cause of action, which, as a matter of substantive law,    requires a justification if the defendant is to escape. Aikens v. Wisconsin, 195 U.S. 194, 204, 25 S.Ct. 3, 5, 49 L.Ed. 154 (1904).
All that remains is for us to determine whether the Bank committed a prima facie tort against the Mocks. It is uncontradicted that the Bank was acting in an otherwise lawful manner. It took possession of a note as collateral on a loan, and when Smentowski defaulted on the loan, it moved to protect its interest and notified the payor to send its payment directly to the Bank. It is also uncontradicted that the Mocks were injured by the Bank's actions. The mortgage on their ranch was not paid in a timely manner because the proceeds of the note were not turned over to Edmondson, precipitating a foreclosure action. To prevent the loss of the ranch, the Mocks were forced to borrow on their line of credit that they otherwise would have used to purchase cattle, and they thereby lost profit and were forced to under-utilize their land. The second element of prima facie tort raises more substantial problems. The tort requires that the defendant not only intend the act, but that he also intend the harm. The Bank contends that the Mocks have not demonstrated that the Bank was motivated solely by a malicious intention to harm the Mocks; that the Bank, because it was motivated at least in part by economic self-interest, cannot be liable. As discussed above, we have rejected the requirement that the action be solely motivated by the intent to harm, as accepted by New York, in favor of the Restatement's balancing approach, whereby motives such as economic self-interest are weighed as an issue of justification. The Bank contends that, nevertheless, our precedent dictates that we should adopt a standard of sole motivation to harm, citing M & M Rental Tools, 94 N.M. 449, 612 P.2d 241 (Ct.App. 1980). However, M & M dealt with interference with prospective contract; the rights involved with prospective contract are speculative, and more concrete rights are entitled to a greater degree of protection. Dairyland Ins. Co., 97 N.M. at 158-59, 637 P.2d at 840-41. The rights implicated by a prima facie tort are not prospectivereal, concrete damages must be proven, and we see no reason to adopt a higher standard of intent. The Bank further contends that even Missouri requires that disinterested malevolence be shown, citing us to Kiphart v. Community Fed. Sav. & Loan Ass'n, 729 S.W.2d 510 (Mo. Ct. App. 1987), and Centerre Bank of Kansas City v. Distributors, Inc., 705 S.W.2d 42 (Mo. Ct. App. 1985). Missouri does require that specific intent to injure be shown; merely showing the intent to do the act is insufficient. See Kiphart, 729 S.W.2d at 516. However, it does not require that the intent be solely to injure, and it requires that the intent be balanced to determine if the activity was beyond the bounds of what society should tolerate. Porter, 611 S.W.2d at 270. In Kiphart, the court found no specific intent to harm. The activity complained of was an interrogation to determine whether the plaintiff, a teller, was responsible for a cash shortfall. The court determined that, under the circumstances, the Bank was justified, and that it did not go so beyond the bounds of what it was entitled to do in protecting its economic interest to show a specific intent to harm. 729 S.W.2d at 517. Centerre is interesting because the bank's actions there demonstrate why the Colorado National Bank stepped beyond the bounds of justifiable activity. In Centerre, the bank extended loans to a corporation. Upon the corporation's subsequent sale, the bank called its demand note, because it no longer considered the loan good. The bank eventually sued to collect, and the defendant corporation and personal guarantors counterclaimed, alleging inter alia, prima facie tort. The counterclaimants demonstrated that the bank knew that by calling its note it would put the corporation out of business, and presented evidence of personal animus toward the corporation's new owners. The court expressed doubt regarding the evidence of intent to injure, but resorted to the balancing test and determined that the bank was justified in calling the loan because it was acting to protect its valid business interest. 705 S.W.2d at 54; see also Bank of Boston Int'l v. Arguello Tefel, 644 F. Supp. 1423 (E.D.N.Y. 1986). The facts of Centerre demonstrate how the case at bar is easily distinguishable, and points out the crucial issue for us to decide in determining whether the requisite intent is present. The Colorado National Bank was not acting pursuant to a valid business interest. It did not make a valid business decision to call the note, and cannot now hide behind its claim that it was merely protecting its loan as a business justification. The standard for prima facie tort is whether there is an absence of justification or insufficient justification for the defendant's act. Kiphart, 729 S.W.2d at 516. In this case, the Bank's acts are not sufficiently justifiableit knew Smentowski had no interest in the note and had accented it initially not as collateral but to satisfy the bank examiners. The Bank does not contend that it did not intend the act, but maintains that it did not intend the harm and that its motive was justified and not malicious. The real issue for this court is whether the Bank's intentional act, without sufficient justification and with the certain knowledge that by moving against the note in which it had no interest it would injure an innocent party, rises to the level of intending the harm. The Mocks contend that a prima facie tort requires nothing more than a showing that the act complained of was wrongful, intentional, and without justification, and that the injury was a natural and foreseeable consequence of the act. In other words, they argue that it is not necessary that the Bank possessed ill will or a malicious motive, i.e. that it intended to harm them, as long as it intended the act that caused the harm. Thus, they claim that because the Bank intended to move against the note, because this act was wrongful and unjustified under the circumstances, and because it caused the Mocks financial injury, the Bank is liable for prima facie tort. We disagree with this analysis. To allow such a lax standard would be to invite every victim of an intentional act to bring an action in prima facie tort and would subvert the purpose of prima facie tort by eliminating the element requiring that a defendant intended injury to the plaintiff. Nevertheless, we do agree that the Bank's actions did rise to the level of intending to commit the harm. Thus, we hold that, when a defendant, such as the Bank, has intentionally acted with the certainty that injury will necessarily result, the intent to injure has sufficiently been proved to allow a court to resort to the Restatement's balancing approach to determine whether the tort has been committed. This approach differs from that adopted to New York, yet we believe that the balancing approach allows this lessened degree of proof of intent to be considered. See Brown, 54 Nw.U.L.Rev. at 569-70; Morrison v. National Broadcasting Co., 24 A.D.2d 284, 266 N.Y.S.2d 406 (1965) (finding liability for intentional, foreseeable infliction of harm in tort, although not in the narrow confines of the prima facie tort doctrine as it had by then evolved in New York), rev'd on other grounds, 19 N.Y.2d 453, 227 N.E.2d 572, 280 N.Y.S.2d 641 (1967); Smith v. Fidelity Mut. Life Ins. Co., 444 F. Supp. 594, 598 n. 6 (S.D.N.Y. 1978); but see Donahue v. Pendleton Woolen Mills, Inc., 633 F. Supp. 1423 (S.D.N.Y. 1986) (where plaintiff alleged defendant acted in reckless disregard of plaintiff's rights and not that defendant intended to injure plaintiff, no cause of action in prima facie tort). Nevertheless, the Bank argues that the Mocks had alternative theories for tort relief available, specifically in fraud and conversion, and thus they should not have been allowed to proceed on the theory of prima facie tort. We agree that prima facie tort should not be used to evade stringent requirements of other established doctrines of law. See, e.g., Lundberg v. Prudential Ins. Co. of America, 661 S.W.2d 667, 671 (Mo. Ct. App. 1983) (prima facie tort cannot be used to avoid employment at will doctrine); Restatement (Second) of Torts § 870 comment j (1977) (In determining whether a new tort can appropriately eliminate a restrictive feature of a traditional tort it is important to give careful consideration to the nature of the restriction.). However, it is apparent that the Mocks possessed claims in neither fraud nor conversion. A fundamental element of fraud is a misrepresentation of fact, made with the intent to deceive a third party and to induce his reliance. Cargill v. Sherrod, 96 N.M. 431, 631 P.2d 726 (1981). On the facts presented, it is apparent that the Bank did not misrepresent facts to the Mocks to induce their reliance, and a cause of action in fraud would not lie. A cause of action in conversion requires proof of wrongful possession of property inconsistent with the owner's rights. Molybdenum Corp. v. Brazos Eng'g Co., 81 N.M. 708, 710, 472 P.2d 971, 973 (1970). The present facts indicate that the Bank lawfully came into possession of the note; it was their subsequent activity that was tortious. Thus, the Mocks could not have proceeded with either theory. The Bank also contends that the Mocks pursued the prima facie tort theory rather than that of the fraud to evade the stringent clear and convincing standard of proof required to prove fraud. As already discussed, the Mocks had no basis to pursue the fraud theory. In addition, the court properly instructed the jury that the standard of proof for prima facie tort was by a preponderance of the evidence. Thus, it is apparent that the Mocks did present the elements of a prima facie tort, and it is therefore necessary to resort to the balancing test to determine whether the Bank's acts could reasonably have been found by the jury to be tortious. The factors we consider are: (1) the nature and seriousness of the harm to the injured party; (2) the interests promoted by the actor's conduct; (3) the character of the means employed by the actor, and (4) the actor's motives. Restatement (Second) of Torts § 870 comments f, g, h & i (1977); Lundberg, 661 S.W.2d at 671. In considering the first factor, physical, concrete harm is weighed more heavily than emotional or prospective economic harm. With reference to the second, the court must consider established privileges or rights. In balancing the third consideration, conduct offensive to society's concepts of fairness and morality favors liability, and in determining the last, the degree of malice is significant. Id. Here, the Mocks received palpable economic injury. As a result of the Bank's actions, they were forced to pay off the mortgage in toto, borrowing funds from their line of credit, and thereby suffering injury to their ranching business. With regard to the second factor, although under other circumstances the Bank would be privileged to protect its loan and move against the collateral, the Bank's knowledge that it had no interest in the note negates its right to move against it. Thus, the character of the means used favors the Mocks. In considering the third factor, again, although under different circumstances the Bank would have rightfully acted as it did, the evidence indicates that the Bank was concerned solely with its own economic well-being, without privilege, to the exclusion of any harm its actions would cause to innocent parties that would result. Its knowledge of the underlying factors makes its means offensive and unfair and denotes that the Bank was acting under the color of economic privilege to harm innocent peoplemeans that were both offensive and unfair. Finally, the Bank's motive, although not actually to injure the Mocks, was with such utter disregard for the Mocks' interests as to rise to the level of specific intent to injure. The Bank's argument that it acted solely for its own economic benefit does not negate its culpability under these circumstances. It was proper for the court below to balance these factors, and, as we have demonstrated, the jury's decision was reasonable. We therefore AFFIRM. IT IS SO ORDERED. SOSA, C.J., and WILSON, J., concur.