Michelle Kirchner v. Patricia Jernell, Turpen Realty

• Court: Court of Appeals of Minnesota
• Decided: November 10, 2014
• Docket: A14-221
• Status: Unpublished

Opinion

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2012).

STATE OF MINNESOTA IN COURT OF APPEALS A14-0221

Michelle Kirchner, et al., Respondents,

vs.

Patricia Jernell, et al., Appellants,

Turpen Realty, Defendant.

Filed November 10, 2014 Affirmed Hudson, Judge

Anoka County District Court File No. 02-CV-10-4550

Scott A. Johnson, Todd M. Johnson, Hellmuth & Johnson, PLLC, Edina, Minnesota (for respondents)

Anthony C. Palumbo, Anoka County Attorney, Robert D. Goodell, Assistant County Attorney, Anoka, Minnesota (for appellants)

Considered and decided by Kirk, Presiding Judge; Hudson, Judge; and

Stoneburner, Judge.

 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10. UNPUBLISHED OPINION

HUDSON, Judge

Appellants challenge the district court’s denial of their motion for summary

judgment in this malicious-prosecution action, arguing that: (1) they are immune from

suit under the official immunity doctrine; (2) they did not initiate criminal prosecution of

respondents; and (3) there was probable cause for the charges prosecuted. Because we

conclude that the district court correctly determined that genuine issues of material fact

preclude summary judgment on the immunity issue, we affirm.

FACTS

In February 2006, respondent Michelle Kirchner filed an application for public

assistance on behalf of herself and her four children.1 At the time of her application,

respondent worked as an independent contractor for Re/Max Associates Plus and

Mortgages West. Income earned from these positions was paid to Creative Loan

Consulting, Inc. (CLC), a private subchapter S corporation respondent formed in 2003.

Respondent withdrew and recognized income from CLC at year’s end for tax purposes.

An Anoka County Human Services caseworker assisted respondent with her

application. Respondent described her family, assets, and income to the caseworker. She

informed the caseworker that she would not know her income until year’s end, that she

had no knowledge of Minnesota public-assistance programs, and that she was unaware if

she was eligible for assistance. The caseworker determined that respondent qualified for

1 “Respondent” refers to Michelle Kirchner. “Respondents” refers to Michelle Kirchner and Jeffrey Kirchner.

2 MinnesotaCare and her children qualified for Medical Assistance. Respondent renewed

her application in April 2006.

A few months later, respondent’s file was transferred to appellant Cassandra Volk,

a human services caseworker supervised by appellant Patricia Jernell. Respondent and

Jernell knew each other. Jernell also worked as a realtor and previously represented the

buyer of property for which respondent had served as the listing agent. During the sale

period, respondent twice reprimanded Jernell for permitting pre-sale access to the

property and threatened to file ethics complaints against her when Jernell’s employer

demanded additional commission for Jernell’s role in the sale.

Shortly after respondent’s file was transferred, respondent completed and signed a

Minnesota Health Care Programs Renewal Form (renewal form). The renewal form

listed respondent’s assets, indicated she was self-employed, and reported her 2006 self-

employment income to be $0. It is unclear who placed the $0 figure on the renewal form;

respondent claims she left the line blank and that the figure was added after she

completed the renewal form. Respondent also authorized human services to contact any

third party necessary to verify information on the renewal form.

Volk stated at a deposition that she received the renewal form after she conducted

a phone screening with respondent. Volk maintained that she became suspicious because

the renewal form indicated that respondent’s family survived with no income. Volk

expressed her concerns to a program coordinator, who directed her to approve the

application, refer it for an internal fraud investigation, and discuss the matter with Jernell.

Volk indicated that she informed Jernell of the fraud referral, and she admitted that

3 Jernell became upset upon learning respondent’s identity. Volk also stated that Jernell

agreed that a fraud referral was appropriate, but maintained that Jernell’s approval was

not required to file the referral.

Respondent, however, alleges that she filled out the renewal form during a

consultation with Volk. She maintains that she explained to Volk that she would not

calculate her 2006 income until year’s end, that she borrowed money from friends and

family, and that she relied on caseworkers’ advice to provide the information necessary to

complete the renewal form. She asserts that she never intended to claim $0 in 2006.

Instead, respondent alleges Volk “induced” her to claim $0 income and colluded with

Jernell to “manipulate[]” the renewal form to instigate a fraud investigation against her.

She asserts that the referral for a fraud investigation was “misleading, factually

inaccurate, and omitted critical information.”

The record reflects that six Regional Multiple Listing Services (RMLS) printouts,

each describing the value of property sold by respondent in the previous year, were

attached to the fraud referral. These printouts were acquired by Jernell, who used her

realtor’s password to access RMLS password-protected records for the purpose of

investigating respondent’s real-estate sales. Notations in the referral record indicate that

these printouts demonstrate that respondent failed to report real estate commissions as

income on the renewal form.

The internal fraud referral was assigned to an Anoka County deputy for

investigation and was later submitted to the Anoka County Attorney for additional

investigation. The county attorney’s investigation culminated in the arrests of

4 respondents; respondent was ultimately charged with one count of wrongfully obtaining

assistance. The state later dismissed the criminal complaint without prejudice.

In June 2010, respondents brought suit against appellants, alleging various claims,

most of which were disposed of before trial. In November 2013, appellants moved for

summary judgment on the remaining claim of malicious prosecution. The district court

determined that genuine issues of material fact preclude summary judgment and denied

appellants’ motion. This appeal follows.

DECISION

An order denying summary judgment is immediately appealable under the

collateral-order doctrine when the motion is based on a claim of official immunity.

Gleason v. Metro. Council Transit Operations, 582 N.W.2d 216, 218 (Minn. 1998). A

court reviewing the denial of summary judgment determines de novo whether genuine

issues of material fact exist and whether the district court erred in its application of the

law. Mumm v. Mornson, 708 N.W.2d 475, 481 (Minn. 2006). A genuine issue of fact

exists when the evidence permits “reasonable persons to draw different conclusions.”

Frieler v. Carlson Mktg. Grp., Inc., 751 N.W.2d 558, 564 (Minn. 2008) (quotation

omitted). The evidence is viewed in the light most favorable to the nonmoving parties

and all reasonable inferences are drawn in their favor. Id.

Appellants argue that the district court erred by concluding that genuine issues of

material fact preclude summary judgment, alleging that, as a matter of law, common-law

official immunity protects their conduct related to respondent’s renewal form. The

doctrine of common-law official immunity prevents public officials charged by law with

5 duties which call for the exercise of “judgment or discretion from being held personally

liable to an individual for damages.” Schroeder v. St. Louis Cnty., 708 N.W.2d 497, 505

(Minn. 2006) (quotation omitted). The purpose of the doctrine is to enable public

officials “to perform their duties effectively, without fear of personal liability that might

inhibit the exercise of their independent judgment.” Mumm, 708 N.W.2d at 490. The

application of immunity is a question of law reviewed de novo, Gleason, 582 N.W.2d at

219, and “[t]he party asserting immunity has the burden of showing particular facts

demonstrating an entitlement to immunity.” Meier v. City of Columbia Heights, 686

N.W.2d 858, 863 (Minn. App. 2004), review denied (Minn. Dec. 14, 2004).

“Before we analyze the application of official immunity, we must first identify the

precise governmental conduct at issue.” Mumm, 708 N.W.2d at 490. Common-law

official immunity does not protect officials from liability related to the exercise of

ministerial duties, but extends to officials charged with the execution of discretionary

functions. Anderson v. Anoka Hennepin Indep. Sch. Dist. 11, 678 N.W.2d 651, 655

(Minn. 2004). Conduct is discretionary if it requires “individual professional judgment

that necessarily reflects the professional goal and factors of a situation.” Mumm, 708

N.W.2d at 490–91 (quotation omitted). Here, the parties identify two official acts at

issue: (1) Jernell’s use of her realtor’s password to access RMLS records and (2) Volk’s

decision to refer respondent’s case for fraud investigation. It is undisputed that this

conduct is discretionary. Therefore, appellants are entitled to official immunity unless

they acted maliciously or willfully. Rico v. State, 472 N.W.2d 100, 107 (Minn. 1991).

6 Malice has been defined as “the intentional doing of a wrongful act without legal

justification or excuse, or . . . the willful violation of a known right.” Id. (quotation

omitted). In the context of official immunity, an official acts with malice by intentionally

committing an act that he or she has reason to believe is legally prohibited. Id.

Generally, the existence of malice is a question of fact decided by the jury. Kelly v. City

of Minneapolis, 598 N.W.2d 657, 664 n.5 (Minn. 1999). But when there is no genuine

issue of material fact, malice may be decided as a matter of law by the court. See

Vassallo ex rel. Brown v. Majeski, 842 N.W.2d 456, 465 (Minn. 2014) (deciding

existence of malice as matter of law because undisputed facts established defendant did

not maliciously violate a known right of plaintiff).

Here, the district court determined that genuine issues of material fact exist with

regard to both official acts. Regarding the RMLS records, the district court determined

that disputed facts remain about “the events that led to the entry of a zero dollar figure on

[respondent’s] application,” and whether Jernell acted “in the service of her alleged

personal animus against the [respondent].” The district court determined that “the same

reasons” also prevented it from determining whether the fraud referral was legally

reasonable, specifically noting that disputed facts remain regarding, “who actually

entered zero dollars as self-employment income on the form” and whether “[respondent]

verbally communicated that she earned zero income in 2006 to Volk.” The district court

concluded that resolution of these facts is necessary to determine whether Jernell and

Volk colluded to persuade respondent to fill out the renewal form “in a manner that

7 would lead to adverse consequences. . . .” The district court determined that appellants

possess no legal justification for their actions if these facts were proven.

Appellants argue, however, that the district court erred by concluding that Jernell’s

alleged animus toward respondent presents an issue of material fact that precludes

summary judgment. We agree. The malice exception “contemplates an objective inquiry

into the legal reasonableness of an official’s actions.” State by Beaulieu v. City of

Mounds View, 518 N.W.2d 567, 571 (Minn. 1994). The fact that an official’s act is

motivated by a desire to cause “mischief” with another is insufficient to establish malice.

Carnes v. St. Paul Union Stockyards Co., 164 Minn. 457, 462, 205 N.W. 630, 631

(1925); see also Gleason v. Metro. Council Transit Operations, 563 N.W.2d 309, 317–18

(Minn. App. 1997) (“Malice in the context of immunity connotes a concept unrelated to

‘ill will’ or ‘improper motive.’”), aff’d in part, 582 N.W.2d 216 (Minn. 1998). The

malice exception applies only if a “clearly established law or regulation” prohibits the

official’s conduct. Rico, 472 N.W.2d at 107. Thus, the fact that Jernell may have acted

with animosity toward respondent is not relevant to the determination of whether her

conduct is legally reasonable.

But the remaining factual questions identified by the district court, which relate to

the events surrounding respondent’s listing $0 income, are relevant to the determination

of whether Jernell or Volk’s conduct was legally reasonable. Here, the appropriate

inquiry is whether these questions, resolved in a light most favorable to respondents,

would demonstrate conduct prohibited by a well-established law or regulation. In this

context, the facts could demonstrate that appellants created a fraud referral based on

8 information they knew to be false, accessed password-protected records to make their

claims that the information was false appear credible, and communicated the false

information to a law enforcement officer for further investigation. Viewed objectively, if

proved, these actions are not legally reasonable; they are akin to providing a false report

to law enforcement, see Minn. Stat. § 609.505, subd. 1 (2006), or making a false

statement that has the effect of harming another’s reputation, which is conduct prohibited

by the common-law tort of defamation. See Richie v. Paramount Pictures Corp., 544

N.W.2d 21, 25 (Minn. 1996) (listing elements of defamation claim). We therefore

conclude the district court properly determined that resolution of these predicate factual

disputes precluded summary judgment.

In addition, malice may be established by conduct that is willfully committed in

violation of another’s known rights. Rico, 472 N.W.2d at 107. Appellants contend that

Jernell’s accessing of the RMLS listings did not violate respondents’ rights because

respondent had no recognized right to the privacy of the information in the RMLS

listings. We reject appellants’ narrow interpretation. Generally, public officials are not

immune from suit in intentional tort actions because the “willful and intentional nature”

of their acts establishes malice. LeBaron v. Minnesota Bd. of Pub. Defense, 499 N.W.2d

39, 41 (Minn. App. 1993), review denied (Minn. June 9, 1993); but cf. Kelly, 598 N.W.2d

at 663 (upholding jury’s finding that defendants committed intentional tort of intentional

infliction of emotional distress, but did so without malice, because the jury could have

concluded the conduct was reckless or justified by the circumstances). Malicious

9 prosecution2 is an intentional tort, and we have stated, in a different context, that

malicious prosecution results in a “direct invasion” of another’s rights. See Manteuffel v.

City of North St. Paul, 570 N.W.2d 807, 810 (Minn. App. 1997) (citing malicious

prosecution as example of intentional tort in data-practices-act claim); Bohdan v. Alltool

Mfg., Co., 411 N.W.2d 902, 907 (Minn. App. 1987) (noting that plaintiffs may recover

damages for mental anguish and suffering in a malicious prosecution action because

plaintiffs have suffered a “direct invasion” of their rights). Here, the disputed facts

identified by the district court are also relevant to the elements of respondents’ malicious

prosecution claim, which, in turn, may establish whether appellants’ conduct violated

respondents’ known rights. We conclude for this reason as well that the district court did

not err in denying appellants’ motion for summary judgment.

Finally, appellants assert that summary judgment was warranted because

undisputed facts in the record gave them ample reason to suspect that respondent

misrepresented her income and thus they were “legally justified” in pursuing the fraud

investigation. We disagree. In support of their argument, appellants rely on evidence

documenting multiple instances in which it appears that respondent asserted that she

earned no income. But this evidence does not establish that respondent knew that her

claims were false or that appellants believed that respondent intended to claim no income

2 To state a claim for malicious prosecution, respondents must demonstrate: (1) the criminal action was brought without probable cause or reasonable belief that the plaintiff would ultimately prevail on the merits; (2) the action was instituted and prosecuted with malicious intent; and (3) the action terminated in favor of the party asserting the claim. Dunham v. Roer, 708 N.W.2d 552, 569 (Minn. App. 2006), review denied (Minn. Mar. 28, 2006).

10 on the renewal form. Respondent has consistently maintained that appellants knew that

she relied on caseworkers’ assessments of her employment and income to complete her

application for public assistance. She asserts that appellants understood that respondent

never intended to claim $0 income, but that they manipulated her renewal form to make it

appear that she misrepresented her income. The undisputed facts appellants rely on do

not support summary judgment unless additional factual inferences are drawn in

appellants’ favor. But all factual inferences are to be drawn in respondent’s favor as the

nonmoving party. Frieler, 751 N.W.2d at 564. Therefore the district court did not err in

denying appellants’ motion for summary judgment.

Appellants also allege that they did not initiate criminal prosecution of

respondents, that there was probable cause for the charges prosecuted, and that the

district court erred by concluding that genuine issues of material fact preclude summary

judgment on these issues. But the scope of review on this interlocutory appeal is limited

to the issue of immunity. Pigs R Us, LLC v. Compton Twp., 770 N.W.2d 212, 217

(Minn. App. 2009). We therefore decline to address these additional issues.

Affirmed.