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Smith v. City Bank & Trust Company

Court of Appeals of Louisiana, Third Circuit

May 1, 2019



          Nelson W. Cameron Attorney for Appellant, Daphne Smith

          Adams and Reese, LLP Elizabeth A. Roussel L. Cole Callihan Attorneys for Appellee, City Bank & Trust Company

          Court composed of Sylvia R. Cooks, Billy H. Ezell and Candyce G. Perret, Judges.



         Daphne Smith (Smith) was employed as a tenured senior teller at City Bank & Trust Company (City Bank) in Natchitoches, Louisiana in December of 2013. At that time, she had worked for City Bank for over eleven years without incident. Smith was scheduled to leave for vacation on December 13, 2013. At the close of business on that day City Bank employees performed a routine dual audit in accordance with its policies affecting tellers leaving for vacation. The dual audit of Smith's drawer balanced showing cash and transactions totaling $7, 026.64. On the following Monday, City Bank's balancer audited Smith's tickets and found Smith's drawer was $4, 000.00 out of balance. According to the balancer's report the tickets in this audit indicated Smith's drawer should have a balance of $9, 026.64 but the system showed a cash balance of only $5, 026.64.

         City Bank's balancer informed Smith's University Branch Manager, JoAnna Washington (Washington), of the discrepancies. Washington and the head teller, Mary Quayhagen (Quayhagen), performed a re-count of the cash in Smith's drawer and physically reviewed Smith's tickets attempting to resolve the discrepancies. According to the excerpt of Washington's deposition testimony, she and Quayhagen found a "transaction that reduced the outage from $4, 000 to $2, 000" which she says Smith apparently "failed to account for." Washington and Quayhagen entered that transaction back into the system which left the audit $2, 000 short. City Bank alleges this shortfall is the result of a buy-cash transaction reflected on the computer for which there is no corresponding ticket. City Bank maintains that the absence of this ticket creates an inference that the money is missing and unaccounted for. It further alleges that Smith is seen on video using her computer after the dual audit and that during her time at the computer she deleted a transaction done earlier that day for which there is a verifiable ticket. Smith asserts this was an honest mistake. City Bank implies that this was done as an attempt to balance Smith's drawer. City Bank maintains it is breach of bank protocol for Smith to re-enter the computer system after the audit and it is a breach of bank protocol for Smith to have a transaction for which there is no ticket to establish a verifiable trail of the transaction. City Bank admits there is no evidence that cash is actually missing from the bank but, because it is unaccounted for, it is presumed missing. Additionally, because Smith, as a teller, listed a cash transaction for which no ticket was found to verify the transaction the bank presumed or suspected Smith, through computer fraud, was responsible for the missing money. Based on these notions City Bank informed local authorities that it believed Smith was guilty of theft of $2, 000 by computer fraud just before leaving the bank for vacation.

         City Bank's Chief Operating Officer, Brandon McKee (McKee), contacted the Natchitoches Parish Sheriff's Office (NPSO) informing them, according to Detective Carey R. Etheredge's (Etheredge) deposition testimony, "that he had a teller that has some money that's missing. And that she's gone on vacation. And he was asking us if we could look into that to see, you know, if we felt the same thing they felt and that the money was taken fraudulently." When asked "So he was asking you to confirm what he was telling you?" Etheredge responded "Right. . . . Basically he says they felt like [Smith] stole the money."

         Etheredge and his partner were assigned to investigate the complaint. Within a few days Etheredge agreed that charges should be brought against Smith. He presented an affidavit to a local judge and obtained an arrest warrant. The District Attorney's office was not informed of the investigation and did not participate in the procuring of the arrest warrant. According to Etheredge's deposition testimony this was normal protocol for initiating prosecutions. Following Smith's arrest, the matter was turned over to the District Attorney.

         On the date set for a probable cause hearing the District Attorney dismissed all charges against Smith. Subsequently, Smith filed suit seeking damages for malicious prosecution. City Bank filed a motion for summary judgment asserting it is entitled to summary judgment: "1 Because the NPSO performed an independent investigation, City Bank did not legally cause [Ms. Smith's] prosecution; 2 City Bank did not act with any malice toward [Ms. Smith]; and 3 City Bank had probable cause to believe that [Ms. Smith] was guilty of wrongdoing." Additionally, City Bank asserted in the alternative that Smith lacked evidence of damages. The trial court granted summary judgment in favor of City Bank, dismissing Smith's claims with prejudice. In its ruling from the bench the trial court stated:

In order to sustain a motion for summary judgment the Court is faced with the question of whether or not there is a genuine issue of material fact. I have read all of the exhibits attached to both the motion for summary judgment and the opposition to the motion for summary judgment. They are very well made, they are easy to understand and I find that the City Bank and Trust Company bore no, absolutely no ill will in the investigation and the subsequent filing of criminal charges by the District Attorney towards Daphne Smith. Having read all of the exhibits and having listened to argument this morning I find that the trick word here is the word genuine. I find no genuine issue of material fact.

         Smith appeals the granting of summary judgment dismissing her case.

         Legal Analysis

         Smith asserts three assignments of error:

1) The trial court erred by finding no "ill will" when malicious prosecution does not require such a finding and where presumptions in Plaintiff's favor placed the burden upon City Bank to show it was free of malice and where Plaintiff produced proof of reckless disregard for Plaintiff's rights.
2) The trial court did not rule whether there existed probable cause. In the event this court reviews this issue, the summary judgment presumption and evidence show a reasonable inference existed that there was no probable cause to arrest or prosecute Plaintiff Daphne Smith for theft or computer fraud.
3) The trial court did not rule whether there existed summary judgment evidence of causation. In the event this court reviews this issue, Plaintiff shows that City Bank caused the criminal prosecution of Ms. Daphne Smith. City Bank did not merely report suspicious behavior but asserted Ms. Smith committed a crime before any law enforcement investigation began. Law enforcement investigation relied solely upon information facts provided by City Bank and City withheld exculpatory information.

         We review summary judgments under the de novo standard of review, according no weight to the judgment of the trial court. See Barber v. La. Mun. Risk Mgmt. Agency Grp. Self-Insured Fund, 17-1005 (La.App. 3 Cir. 4/18/18), 244 So.3d 56, and cases cited therein.

The plaintiff ordinarily bears the burden of proof on all the elements of the malicious prosecution action, including proving the absence of probable cause and malice. However, there is a presumption of lack of probable cause which is set forth in Robinson v. Rhodes, 300 So.2d 249, 251 (La.App. 2d Cir.1974), writ refused, 303 So.2d 178 (La.1974). Robinson firmly establishes
". . . the rule that where a committing magistrate, without a trial, has discharged the accused, or the prosecuting officer has dismissed the charge, or where a grand jury has returned a no bill, there is a presumption of want of probable cause with the result that, in a suit for malicious prosecution based on that discharge, the burden of showing that he acted on probable cause and without malice is upon the defendant."
See also Keppard v. AFC Enterprises, Inc., 2000-2474 (La.App. 4th Cir.11/28/01), 802 So.2d 959; Winn v. City of Alexandria, [96-492 (La.App. 3 Cir. 11/20/96), 685 So.2d 281.]

Hope v. City of Shreveport, 37, 759, p. 5 (La.App. 2 Cir. 12/17/03), 862 So.2d 1139, 1143 (emphasis added).

         Because the District Attorney dismissed the charges just before the probable cause hearing, the burden shifted to City Bank to rebut the presumptions of malice and probable cause. The trial court said its ruling was based on its finding that: "City Bank and Trust Company bore no, absolutely no ill will in the investigation and the subsequent filing of criminal charges by the District Attorney towards Daphne Smith." This language indicates the trial judge misunderstood City Bank's burden of proof. It was not Smith's burden to prove ill will on the part of the bank, it was the bank's burden to rebut the presumptions the law created against it as to malice (ill will) and probable cause.

         Critical to overcoming the presumption that City Bank acted without probable cause is a determination of whether Etheredge's investigation was of such a degree as to constitute an intervening cause. We find it was not.

         In Lemoine v. Wolfe, 575 Fed.Appx. 449, 456 (5th Cir. 2014), certified question accepted, 14-1546 (La. 10/31/14), 151 So.3d 611, and certified question answered, 14-1546 (La. 3/17/15), 168 So.3d 362 (alterations in original) (footnotes omitted), the federal court explained:

Under Louisiana law, when a malicious prosecution claim is brought against a civilian-complainant, "[a]n independent investigation by law enforcement of [the complaint] may break the chain of causation between the complaint and the ultimate commencement of a criminal proceeding." Accordingly, citizens who "merely report[ ] their observations to police officers," spurring the police officers to conduct their own investigation, are not usually the legal cause of criminal prosecution. But if the "record shows broad reliance on the facts provided by the [civilian-complainant] and only limited independent inquiry by the police," that is enough to show legal causation.

         According to excerpts of Etheredge's deposition testimony, attached to Smith's opposition to the motion for summary judgment, Etheredge relied almost exclusively on information provided by McKee. The only person he interviewed regarding the matter was Smith. Etheredge did not interview either of the other two persons seen on the video conducting the Friday audit, and he did not interview either of the individuals who conducted the Monday audit and handled Smith's tickets and cash. When he asked McKee if there were any videos showing Smith taking money, he says he was told there were no videos and he was told that the video camera at Smith's window was not working. This, however, was not so. In fact, the camera was working and there was video footage, viewed by McKee, of Smith's transactions on Friday at the drive through. Moreover, McKee testified in his ...

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