Court Opinion

ID: 2677921
Source: CourtListenerOpinion
Date Created: 2014-06-10 23:48:47.068951+00
Date Added: 2024-06-11T11:57:44.116374
License: Public Domain

IN THE SUPREME COURT OF NORTH CAROLINA

                                   No. 243PA12

                               FILED 13 JUNE 2013

THE NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY

              v.
CULLY’S MOTORCROSS PARK, INC., and LAURIE VOLPE

      On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous

decision of the Court of Appeals, ___ N.C. App. ___, 725 S.E.2d 638 (2012), affirming

a judgment and two orders, all entered on 7 February 2011 by Judge Wayland J.

Sermons, Jr. in Superior Court, Wilson County. Heard in the Supreme Court on 16

April 2013.

      Harris, Creech, Ward and Blackerby, P.A., by Jay C. Salsman, C. David
      Creech, and Luke A. Dalton, for plaintiff-appellant.

      Hemmings & Stevens, PLLC, by Aaron C. Hemmings, for defendant-appellees.

      Schulz Stephenson Law, by Bradley N. Schulz; and Wait Law, P.L.L.C., by
      John L. Wait, for North Carolina Advocates for Justice, amicus curiae.

      Young Moore and Henderson P.A., by Glenn C. Raynor, for North Carolina
      Association of Defense Attorneys, amicus curiae.

      Baucom, Claytor, Benton, Morgan & Wood, P.A., by James F. Wood, III, for
      North Carolina Insurance Crime Information Exchange, amicus curiae.

      Bailey & Thomas, P.A., by Roger W. Marion, Jr. and David W. Bailey, Jr., for
      Property Casualty Insurers Association of America, amicus curiae.

      EDMUNDS, Justice.
                    N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                 Opinion of the Court

      In the aftermath of a house fire on property belonging to defendant Cully’s

Motorcross Park, Inc. (Cully’s), an investigator for plaintiff North Carolina Farm

Bureau Mutual Insurance Company (Farm Bureau) found strong evidence of arson

and reported his suspicions to a Wilson Police Department sergeant. These findings

included allegations that defendant Laurie Volpe (Volpe), Cully’s president and sole

stockholder, had failed to report to Farm Bureau that there was a deed of trust on

the property when she insured it, when she filed a claim of loss after the fire, or

when she later sold the burned property to a purchaser who did not know it was

still encumbered.    Volpe thereafter was arrested and charged with obtaining

property by false pretenses based upon her sale of the encumbered property. This

appeal involves Volpe’s claim that the insurance investigator’s report to a law

enforcement officer constituted the initiation of a malicious prosecution. Because

we conclude that the investigator did not initiate a criminal prosecution, we reverse

the holding of the Court of Appeals that affirmed the trial court’s finding to the

contrary.

      In the late evening of 5 September or early morning of 6 September 2008, a

fire was set in the house at 314 Hill Street in Wilson, North Carolina. Responding

Wilson Fire Department firefighters found a candle on the floor of the downstairs

dining room and observed a distinctive pour pattern on some walls of the house.

They followed the burn trail and pour pattern to a small room at the top of the

stairs on the second floor of the house. Inside the room was a tipped red gas can

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                    N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                 Opinion of the Court

labeled “Race Fuel.” A pour pattern on the walls of the house led directly to the gas

can.

       The damaged property was owned by defendant Cully’s. Defendant Volpe

was the president and only shareholder of Cully’s, and Volpe’s husband, Louis R.

Volpe, Jr. (Mr. Volpe), was the corporate secretary.         Cully’s originally was

incorporated in Florida, where the Volpes operated a dirt bike racing track, using

red gas cans labeled “Race Fuel” in the business. When the Volpes moved to North

Carolina, they reincorporated, keeping the name Cully’s Motorcross Park, but

operating as a business renovating and reselling homes. They brought their red gas

cans from Florida, and Mr. Volpe kept them to fuel equipment that he used for

landscaping and lawn maintenance at the properties that Cully’s owned and

renovated.

       Volpe, through Cully’s, purchased the property at 314 Hill Street from James

and Diane Skinner on 19 December 2007, paying in cash $25,000 of the $31,500

purchase price.   The remaining $6,500 was to be paid via a balloon payment

recorded in a deed of trust that required full payment to the Skinners no later than

one year from the date of purchase or upon the sale of the home, whichever came

first. Before signing the deed of trust, Volpe submitted an application to Farm

Bureau to have the property added to her fire insurance policy. The application,

which named the insured as “Laurie Volpe – Cullys [sic] Motorcross Park LLC” and

was signed “Laurie A. Volpe,” did not reveal the existence of a deed of trust on the

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                                 Opinion of the Court

property, and the box on the form that asked, “Does any other person or entity have

an ownership interest in the property?” was checked “No.” The property was added

and the policy was issued by Farm Bureau with a policy limit of $60,000.

      After the fire, on 17 September 2008, Volpe filed a Sworn Statement in Proof

of Loss form with Farm Bureau on behalf of Cully’s. In response, Farm Bureau

initiated an investigation. In the days following the fire, the Farm Bureau Special

Investigator Randall Loftin (Investigator Loftin) and other Farm Bureau

investigators toured the fire scene. Investigator Loftin testified that he observed

medium to heavy fire damage, extensive smoke damage, a pour pattern, and the

candle that was still on the floor in the downstairs dining room. The circumstances

of the fire led Farm Bureau to suspect arson, and Investigator Loftin quickly

focused on Mr. Volpe.

      Investigator Loftin interviewed both Volpes several times in the months

following the fire, collecting financial information from them pertaining both to

themselves and to Cully’s, along with such materials as notes or deeds of trust and

prior insurance claims. Volpe submitted to an examination under oath in January

2009, maintaining that she was cooperating fully with Farm Bureau and providing

all the documents she understood had been requested and that she had in her

possession. Mr. Volpe, on the other hand, refused to submit to an examination

under oath, and Investigator Loftin was unable to obtain a sworn statement from

him prior to Mr. Volpe’s death in September 2010. Although Mr. Volpe was named

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                     N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                  Opinion of the Court

in the litigation described below, he was dismissed as a party after he died.

      As Investigator Loftin continued his investigation, on 6 November 2008,

Cully’s sold the property by means of a quitclaim deed signed by Volpe to José

Giron, who knew of the fire damage. When deposed before trial, Volpe claimed she

had made Mr. Giron aware of the balloon payment that she still owed on the

original purchase, adding that she had told Mr. Giron she would pay off that balloon

payment. However, James Skinner testified at trial that he had to work out a

repayment plan with Mr. Giron because the Volpes never paid the $6,500.

      Another point of contention at trial was whether Volpe had disclosed the deed

of trust on 314 Hill Street during Farm Bureau’s investigation. As noted above,

Volpe failed to indicate on the insurance application form she signed and filed with

Farm Bureau that the property was the subject of a mortgage, even though the form

contained an explicit inquiry seeking such information. Volpe testified, and the

trial court found as fact, that she had responded as she did because she did not

consider a purchase money deed of trust that was due in one year and did not

require monthly payments to be a mortgage. Although the trial court further found

that Volpe disclosed in the proof of loss form she filed after the fire that Cully’s

owed $6,500 on the property, we note that where the form asks for “all owners (and

names of spouses) of the insured property, and all persons or companies which have

any lien or encumbrances against the insured property, such as mortgagees, deeds

of trust, judgments, etc.,” Volpe wrote in only “Cully’s Motorcross Park, Inc.” while

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                     N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                 Opinion of the Court

nowhere listing either the amount of $6,500 or the names of creditors James and

Diane Skinner.

      While Investigator Loftin worked, the Wilson Police Department opened a

parallel investigation into the fire, which police and firefighters had classified as

“suspicious.”    Police Sergeant J.C. Lucas (Sergeant Lucas) was the assigned

investigator. He interviewed the Volpes and neighbors around 314 Hill Street. On

24 September 2008, he met Investigator Loftin and the Volpes at the house. Shortly

after that meeting, however, Sergeant Lucas fell ill and did not return from sick

leave until April 2009. As a result, the investigation was conducted primarily by

Investigator Loftin on behalf of Farm Bureau.

      After completing his investigation, Investigator Loftin submitted his report

and recommendations to his superiors. Farm Bureau ultimately denied the claim

on 23 February 2009, citing among other factors Mr. Volpe’s failure to provide a

sworn statement, Volpe’s failure to disclose the deed of trust in favor of the

Skinners, and Farm Bureau’s suspicion that the fire had been intentionally set by

one of the Volpes. The next day, Farm Bureau filed a complaint for declaratory

judgment, seeking a judicial declaration that it had no obligation under the

insurance policy to named defendants Cully’s, Volpe, and Mr. Volpe. The complaint

alleged that Farm Bureau acted reasonably and in good faith in investigating the

fire and set out several reasons Farm Bureau was legally entitled to a declaratory

judgment in its favor. These allegations included that Mr. Volpe, an officer and

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                       N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                   Opinion of the Court

employee of Cully’s, failed to submit to an examination under oath as required by

the policy; that defendants failed to cooperate in the investigation by providing

requested   documents      and   records;    and   that   defendants   made   material

misrepresentations and attempted to conceal material facts, both by failing to

provide the deed of trust on the property and by failing to produce the quitclaim

deed that transferred the property after the fire. In addition, Farm Bureau alleged

that evidence indicated that the Volpes had the opportunity and motive to set the

fire, an act that, if established in court, also would relieve Farm Bureau of its duty

to provide coverage.

      On 23 March 2009, defendants filed a combined answer and counterclaim,

denying Farm Bureau’s right to decline coverage and asserting that Farm Bureau

had breached the insurance contract, violated the Unfair Claims Settlement

Practices provision of the North Carolina Insurance Law, committed unfair and

deceptive acts or practices in or affecting commerce in violation of N.C.G.S. § 75-1.1,

and acted in bad faith. Defendants sought treble damages, punitive damages, and

attorney’s fees.

      On 16 April 2009, Investigator Loftin again met with Sergeant Lucas at

Investigator Loftin’s request. Investigator Loftin informed Sergeant Lucas, who by

then had returned to duty from sick leave, of the results of his investigation, told

Sergeant Lucas that the Volpes’ insurance claim had been denied, and added that

the property had been sold to Mr. Giron even though Volpe had not paid off the

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                    N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                 Opinion of the Court

balloon payment owed and secured by a deed of trust on the property. Using the

documentation provided by Investigator Loftin, Sergeant Lucas opened a separate

investigation of fraud against Volpe.     After meeting with Mr. Giron and Mr.

Skinner, Sergeant Lucas concluded that Volpe had committed a crime by selling to

Mr. Giron property that Volpe did not own.

      Sergeant Lucas consulted with a real estate attorney and an assistant

district attorney to discuss his findings, then presented the case to a Wilson County

magistrate on 4 May 2009.      The magistrate found probable cause and issued a

warrant to arrest Volpe for the offense of obtaining property by false pretenses. The

next day, Sergeant Lucas asked Volpe to come to the police station and give a

statement.   After interviewing her and asking her to write out a statement

regarding the sale of 314 Hill Street to Mr. Giron, Sergeant Lucas had Volpe

arrested pursuant to the warrant. However, on 19 May 2009, the district attorney

dismissed the charge against Volpe. On 22 June 2009, Volpe and Cully’s filed an

amended answer and counterclaim, adding a claim that Farm Bureau had

instituted a malicious prosecution against Volpe.

      A bench trial on all claims and counterclaims was held in December 2010.

After considering the evidence, arguments of counsel, and additional posttrial

motions by the parties, the trial court found that Farm Bureau had neither

breached the insurance contract nor engaged in unfair and deceptive practices by

“refusing to pay the fire claim without conducting a reasonable investigation based

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                     N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                  Opinion of the Court

upon all available information.” The trial court also found that “[Mr.] Volpe, Jr.

acting on behalf of Cully’s Motorcross Inc., caused, conspired to cause, or allowed to

be caused the fire at 314 Hill Street.” However, the trial court found that Volpe was

not involved in the fire, that Volpe’s actions as described to Sergeant Lucas by

Investigator Loftin did “not amount to a crime,” that Farm Bureau caused a

criminal proceeding to be instituted against Volpe, and that Farm Bureau was

liable to Volpe for malicious prosecution.

      The trial court further found as fact that Volpe had made a statement

pertaining to the debt on 314 Hill Street to a representative of Farm Bureau as

early as 8 September 2008, that Farm Bureau knew of Volpe’s debt to Mr. Skinner

on the property as of that date, and that Farm Bureau did not provide this

information to Sergeant Lucas until after Volpe filed her counterclaim. The trial

court concluded as a matter of law that Farm Bureau withheld this information

from the Wilson Police until after Volpe filed her counterclaim for the purpose of

achieving leverage in the instant action, thereby committing an unfair and

deceptive practice. The trial court awarded Volpe attorney’s fees, damages in the

amount of $26,075 for malicious prosecution, and damages in the amount of $10,000

(trebled to $30,000) for “the unfair and deceptive trade practice of malicious

prosecution.”

      The Court of Appeals affirmed the trial court’s decision. N.C. Farm Bureau

Mut. Ins. Co. v. Cully’s Motorcross Park, Inc., ___ N.C. App. ___, ___, 725 S.E.2d

                                             -9-
                     N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                   Opinion of the Court

638, 651 (2012). In reviewing Farm Bureau’s argument that it did not initiate the

criminal action against Volpe, but instead merely provided information to the

police, the Court of Appeals focused on its finding that almost all the information

used by Sergeant Lucas in making his decision to prosecute Volpe had been

supplied by Farm Bureau’s Investigator Loftin. Id. at ___, 725 S.E.2d at 643-44.

Because it agreed with the trial court that a criminal prosecution would have been

unlikely if Investigator Loftin had not contacted Sergeant Lucas, the Court of

Appeals concluded that the trial court did not err by determining that Farm Bureau

initiated criminal proceedings. Id. at ___, 725 S.E.2d at 644. The Court of Appeals

then considered Farm Bureau’s other issues and affirmed the trial court. Id. at ___,

725 S.E.2d at 651. We allowed Farm Bureau’s petition for discretionary review.

      We begin by observing that all of Volpe’s surviving claims are based upon a

contention that Farm Bureau maliciously instigated a criminal prosecution against

her and that the malicious prosecution was an unfair and deceptive practice, which

the trial court found was instituted for the purpose of gaining leverage in the

current action. Thus, if Investigator Loftin’s report to Sergeant Lucas was proper,

Farm Bureau neither instituted a malicious prosecution nor committed an unfair

and deceptive practice, and Volpe’s claims fail.          Accordingly, we consider the

propriety of Investigator Loftin’s actions.

      No party has challenged the trial court’s findings of fact. When a trial court

sits without a jury, findings of fact are conclusive on appeal “if supported by any

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                     N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                  Opinion of the Court

substantial evidence,” Carolina Milk Producers Ass’n Coop., Inc. v. Melville Dairy,

Inc., 255 N.C. 1, 22, 120 S.E.2d 548, 563 (1961), while conclusions of law are

reviewed de novo, Davison v. Duke Univ., 282 N.C. 676, 712, 194 S.E.2d 761, 783

(1973). Here, while the trial court found as fact that Investigator Loftin initiated

the prosecution of Volpe, we determine that this matter is instead a mixed question

of fact and law. State v. Sparks, 362 N.C. 181, 185-86, 657 S.E.2d 655, 658 (2008)

(conducting de novo review of a conclusion of law that the trial court mislabeled as a

finding of fact); see also In re Foreclosure of Gilbert, 211 N.C. App. 483, 487-88, 711

S.E.2d 165, 169 (2011) (citations omitted) (observing that when the trial court has

mislabeled findings of fact and conclusions of law, the reviewing court may

reclassify them as necessary before applying the appropriate standard of review).

The actions of Investigator Loftin and Sergeant Lucas are facts, but the trial court’s

determination that these actions constituted initiation of a criminal action is a

conclusion of law we review de novo.

      To prove that Farm Bureau is guilty of malicious prosecution, Volpe must

establish that: “(1) [Farm Bureau] initiated the earlier proceeding; (2) malice on the

part of [Farm Bureau] in doing so; (3) lack of probable cause for the initiation of the

earlier proceeding; and (4) termination of the earlier proceeding in favor of [Volpe].”

Best v. Duke Univ., 337 N.C. 742, 749, 448 S.E.2d 506, 510 (1994) (citing Jones v.

Gwynne, 312 N.C. 393, 397, 323 S.E.2d 9, 11 (1984)). The dispositive issue in this

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                    N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                  Opinion of the Court

case is whether the trial court erred when it found as a matter of law that Farm

Bureau, through its agent Investigator Loftin, initiated the prosecution of Volpe.

      The Court of Appeals cited one of its own cases for the proposition that

“ ‘[e]xcept for the efforts of [Farm Bureau], it is unlikely there would have been a

criminal prosecution of [Volpe].’ ” Cully’s Motorcross, ___ N.C. App. at ___, 725

S.E.2d at 644 (quoting Williams v. Kuppenheimer Mfg. Co., 105 N.C. App. 198, 201,

412 S.E.2d 897, 900 (1992)). The court below noted that Investigator Loftin had

provided to Sergeant Lucas almost all the information Sergeant Lucas knew about

the case, that Sergeant Lucas had learned about the sale of the property at 314 Hill

Street and the quitclaim deed to Mr. Giron only as a result of the information

Investigator Loftin had gathered, and that Sergeant Lucas had relied almost

exclusively on the information provided by Investigator Loftin when Sergeant Lucas

decided to interview Mr. Giron and Volpe. Id. at ___, 725 S.E.2d at 644. Based on

this chain of events, the Court of Appeals concluded that, but for Investigator

Loftin’s provision of information to Sergeant Lucas, Volpe probably would not have

been charged. Id. at ___, 725 S.E.2d at 644. Accordingly, the Court of Appeals

affirmed the trial court’s finding that Volpe’s prosecution effectively had been

initiated by Farm Bureau through its agent, Investigator Loftin. Id. at ___, 725

S.E.2d at 644.

      We believe that the Court of Appeals’ interpretation of the element of

initiation in a malicious prosecution case does not account adequately for the roles

                                         -12-
                    N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                  Opinion of the Court

played by police and prosecutorial discretion.           Instead, a more comprehensive

analysis is that advocated by Farm Bureau and found in the Restatement (Second)

of Torts. Section 653 of the Restatement sets out the requirements for a cause of

action for malicious prosecution, and most relevant to this case, states in Comment

(g):

                     Influencing a public prosecutor. A private person
             who gives to a public official information of another’s
             supposed criminal misconduct, of which the official is
             ignorant, obviously causes the institution of such
             subsequent proceedings as the official may begin on his
             own initiative, but giving 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.         The exercise of the officer’s
             discretion makes the initiation of the prosecution his own
             and protects from liability the person whose information
             or accusation has led the officer to initiate the
             proceedings.

Restatement (Second) of Torts § 653 (cmt. g) (1977).

       This formulation balances and protects important public interests. It allows

citizens to make reports in good faith to police and prosecutors without fear of

retaliation if the information proves to be incomplete or inaccurate.           If the

information is false, this formulation only protects a reporting party who believes it

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                    N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                 Opinion of the Court

to be true, thus preserving the element of malice both to deter those who would

subvert to their own ends the power held by police and prosecutors and to protect

citizens from “one [who] resorts to the process of the law without probable cause,

willfully and maliciously, for the purpose of injuring his neighbor.”     Chatham

Estates v. Am. Nat’l Bank, 171 N.C. 648, 651, 171 N.C. 579, 582, 88 S.E. 783, 785

(1916). This sensible approach encourages independent investigation by those in

law enforcement who receive the information. Unlike the “but for” test employed by

the trial court and the Court of Appeals, the Restatement recognizes that police and

prosecutors have discretionary authority that can insulate from liability those who

provide erroneous or mistaken information. Accordingly, we recognize and apply

here the principles set out in Comment (g). See Stanback v. Stanback, 297 N.C.

181, 204, 254 S.E.2d 611, 626 (1979) (citing the Restatement of Torts for the

proposition that to establish that the former proceeding terminated favorably, a

plaintiff in a malicious prosecution action need assert only that the prior case was

dismissed), disapproved of for other reasons by Dickens v. Puryear, 302 N.C. 437,

447-48, 276 S.E.2d 325, 331-33 (1981).

      When this Court implements a new analysis to be used in future cases, we

may remand the case to the lower courts to apply that analysis. See, e.g., Whitacre

P’ship v. Biosignia, Inc., 358 N.C. 1, 39, 591 S.E.2d 870, 895 (2004) (noting that

because “the trial court did not have the benefit of the precise formulation of the

doctrine we articulate in this opinion,” the case should be remanded “for further

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                      N.C. FARM BUREAU V. CULLY’S MOTORCROSS

                                  Opinion of the Court

proceedings consistent with this opinion”).      Remand is particularly appropriate

when additional findings of fact are necessary. Id. (remanding the case to the trial

court because the “inquiry required here is a fact-intensive one”). However, when

the new analysis relies upon conclusions of law rather than findings of fact, and

when the findings of fact made by the trial court are unchallenged, this Court may

elect to conduct the analysis rather than to remand the case.

      In its judgment, the trial court’s finding of fact 61 states that Investigator

Loftin withheld from Sergeant Lucas information about the debt on the property

until after Volpe’s amended counterclaim had been filed, thereby causing the

criminal action to be instituted. However, in light of our recognition of the test

enunciated above, whether the recited facts constitute initiation of a criminal action

is a conclusion of law that we review de novo. In addition, the “but for” test used in

finding of fact 62, which states that Sergeant Lucas would “never” have pursued a

criminal prosecution if Investigator Loftin had not reported his findings, is no

longer appropriate.

      Accordingly, we must determine whether, once Sergeant Lucas received

information from Investigator Loftin about Volpe, Sergeant Lucas exercised his own

discretion in deciding to seek criminal charges against Volpe.        Our review of

uncontested evidence presented at trial indicates that Investigator Loftin testified

that the offense he believed Volpe had committed was insurance fraud, that he

never asked Sergeant Lucas to arrest Volpe or initiate a prosecution against her,

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                                    Opinion of the Court

and that he never made any suggestions as to what Sergeant Lucas should do with

Investigator Loftin’s information.     Sergeant Lucas testified that the decision to

pursue a charge of false pretenses was “my decision, my decision only.” He also

stated that, “no one tells me, even my chief on down when I should -- when I should

make a charge or not.” In addition, Sergeant Lucas testified that he interviewed

Mr. Skinner and Mr. Giron during his investigation and that he consulted with an

assistant district attorney and a real estate attorney after receiving information

from Investigator Loftin and before taking the matter to a magistrate in pursuit of a

warrant. All this testimony leaves no doubt that while Sergeant Lucas considered

and used the information provided by Investigator Loftin, he independently

exercised his discretion to make the prosecution his own.       Consequently, Farm

Bureau did not institute a malicious prosecution and its actions did not constitute

an unfair and deceptive practice.

      Because the remaining issues on appeal stem from the trial court’s

determination that Farm Bureau initiated a malicious prosecution, those issues are

now moot. Those issues are dismissed, and the Court of Appeals’ decision as to

those matters is vacated. This case is remanded to the Court of Appeals for further

remand to the trial court with instructions to vacate the two orders entered on 7

February 2011 and amend the judgment entered the same day in a manner

consistent with this opinion.

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                                  Opinion of the Court

      REVERSED IN PART, VACATED IN PART, AND REMANDED.

      Justice BEASLEY, concurring in part and dissenting in part.

      I concur with the majority that Comment (g) in the Restatement (Second) of

Torts § 653 (1977) is the proper standard to define whether a party “initiated” the

earlier proceeding in a malicious prosecution claim. I would, however, remand the

case to the trial court to make findings of fact and conclusions of law applying the

standard announced today, as is appropriate for a trial court rather than an

appellate court, and therefore I dissent in part. See Whitacre P’ship v. Biosignia,

Inc., 358 N.C. 1, 38, 591 S.E.2d 870, 894 (2004) (“This disposition [of remand]

reflects trial courts’ ‘institutional advantages’ over appellate courts in the

‘application of facts to fact-dependent legal standards.’ ” (quoting Augur v. Augur,

356 N.C. 582, 586, 573 S.E.2d 125, 129 (2002)).

      North Carolina law requires a plaintiff to prove four elements to prevail on a

malicious prosecution claim: “(1) defendant initiated the earlier proceeding; (2)

malice on the part of defendant in doing so; (3) lack of probable cause for the

initiation of the earlier proceeding; and (4) termination of the earlier proceeding in

favor of the plaintiff.” Best v. Duke Univ., 337 N.C. 742, 749, 448 S.E.2d 506, 510

(1994) (citation omitted). This case provides clarity regarding the first element. Id.

             A private person who gives to a public official information
             of another’s supposed criminal misconduct, of which the
             official is ignorant, obviously causes the institution of

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        N.C. FARM BUREAU MUT. INS. CO. V. CULLY’S MOTORCROSS PARK, INC.

                                 BEASLEY, J., dissenting

             such subsequent proceedings as the official may begin on
             his own initiative, but giving 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.          The exercise of the officer’s
             discretion makes the initiation of the prosecution his own
             and protects from liability the person whose information
             or accusation has led the officer to initiate the
             proceedings.

Restatement (Second) of Torts § 653 cmt. g (1977).

      Whether plaintiff initiated the earlier proceeding is a conclusion of law, but

this conclusion of law, like any other conclusion of law, is dependent upon factual

support. See, e.g., Scarborough v. Dillard’s, Inc., 363 N.C. 715, 722, 693 S.E.2d 640,

644 (2009), cert. denied, __ U.S. __, 131 S. Ct. 2456 (2011). When a party has failed

to challenge the findings of fact, the findings are binding on the appellate court. Id.

(citations omitted). The trial court’s conclusions of law are reviewed de novo. Id.

(citations omitted).

      Here, plaintiff did not challenge the trial court’s findings of fact as findings of

fact; rather, plaintiff challenged what the trial court labeled “findings of fact,” but

argued such “findings” were actually conclusions of law.            In essence, plaintiff

challenged the trial court’s conclusions of law and allowed the court’s findings of

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        N.C. FARM BUREAU MUT. INS. CO. V. CULLY’S MOTORCROSS PARK, INC.

                                BEASLEY, J., dissenting

fact to go unchallenged. Thus, the trial court’s correctly labeled findings of fact are

binding on this Court, though conclusions of law are reviewed de novo.

      The majority’s opinion, written under the guise of de novo review, necessarily

requires findings of fact that the trial court did not make—findings whether

Sergeant Lucas exercised “uncontrolled discretion” in charging defendant Volpe

with obtaining property by false pretenses. Restatement (Second) of Torts § 653

cmt. g. Sergeant Lucas’s exercise of discretion is evidenced by actions that, by the

majority’s own definition, are appropriately considered findings of fact. I cannot

fault the trial court for not making findings of fact regarding whether Sergeant

Lucas exercised independent discretion because we had not yet established that

Comment (g) is the appropriate standard by which to determine whether plaintiff

“initiated the earlier proceeding.” The need for further fact-finding distinguishes

the instant case from IMT, Inc. v. City of Lumberton, __ N.C. __, 738 S.E.2d 156

(2013), “in which the material facts necessary to determine the legal question [were]

uncontested.”   Id. at __, 738 S.E.2d at 160.       The trial court, if provided the

opportunity to make the appropriate findings of fact, might agree that there is “no

doubt” that Sergeant Lucas exercised independent discretion in charging defendant

Volpe based on the evidence presented, but we are not a fact-finding court. We lack

material findings of fact necessary to answer the legal question in this case, and

this Court should not engage in the fact-finding process. Godfrey v. Zoning Bd. of

Adjust. of Union Cnty., 317 N.C. 51, 63, 344 S.E.2d 272, 279 (1986) (“Fact[-]finding

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         N.C. FARM BUREAU MUT. INS. CO. V. CULLY’S MOTORCROSS PARK, INC.

                               BEASLEY, J., dissenting

is not a function of our appellate courts.”).       Therefore, remand is the only

appropriate disposition.

        For the reasons stated above, I respectfully concur with the majority’s

recognition of the Restatement to define when a party “initiated the earlier

proceeding” and dissent from the majority’s mandate to reverse rather than to

remand for appropriate findings of fact and conclusions of law under the standard

recognized today.

        Justice HUDSON joins in this opinion concurring in part and dissenting in

part.

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