McAtee v. Morrison & Frampton
512 P.3d 235
Mont.2021Background
- McAtee owned The Mortgage Source (TMS); TMS held a trust indenture later assigned (but unrecorded) to Whitefish Credit Union (WCU). After borrower default, a trustee sale in 2010 resulted in TMS obtaining title.
- WCU refused further financing; McAtee obtained new financing and allegedly pledged collateral to a new lender.
- In March 2011 Morrison & Frampton (M&F) sued McAtee on behalf of WCU for fraud and reported the matter to federal authorities; McAtee was later indicted on federal banking-fraud charges.
- McAtee filed bankruptcy on July 30, 2011 (discharged Nov. 9, 2011); the criminal charges were dismissed Sept. 19, 2012 and the civil fraud suit was dismissed Jan. 29, 2014.
- In 2015 McAtee sued M&F for malicious prosecution, abuse of process, and constructive fraud. M&F moved for summary judgment arguing judicial estoppel (for failure to disclose the claim in bankruptcy), immunity, and statutes of limitations.
- The District Court initially denied estoppel on the malicious-prosecution claim but granted summary judgment on other grounds; after remand (Kucera), the court granted summary judgment based on judicial estoppel and dismissed the malicious-prosecution claim. The Supreme Court affirmed in part, reversed in part, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McAtee is judicially estopped from pursuing malicious-prosecution claim because she did not disclose it in bankruptcy | McAtee: she was not required to list an unaccrued civil malicious-prosecution claim while bankruptcy was open | M&F: failure to disclose the claim in bankruptcy estops McAtee from later pursuing it | Court: Split holding — estoppel applies to claim based on criminal charges (which accrued during bankruptcy) but not to the unaccrued civil-claim theory (which accrued after bankruptcy closed) |
| Whether M&F had probable cause to bring the civil fraud claim (so summary judgment on malicious prosecution was proper) | McAtee: M&F’s investigation was inadequate (e.g., did not interview key witnesses like WCU employee Johnson), so probable cause is disputed | M&F: facts in the WCU loan file provided reasonable grounds to sue (probable cause) | Court: Reversed summary judgment — probable cause is a fact question for a jury given conflicting reasonable inferences |
Key Cases Cited
- Kucera v. City of Billings, 457 P.3d 952 (Mont. 2020) (applies judicial-estoppel principles in bankruptcy nondisclosure context)
- Plouffe v. Mont. Dep’t of Pub. Health & Human Servs., 45 P.3d 10 (Mont. 2002) (lists elements required to establish malicious prosecution)
- Reece v. Pierce Flooring, 634 P.2d 640 (Mont. 1981) (holds lack of probable cause is essential to malicious-prosecution claim)
- Dovey v. BNSF Ry. Co., 195 P.3d 1223 (Mont. 2008) (summary-judgment standard and non-movant burden)