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RANNELS v. S. E. NICHOLS

March 22, 1978

CAROL A. RANNELS and LYNN L. RANNELS
v.
S. E. NICHOLS, INC.



The opinion of the court was delivered by: TROUTMAN

 TROUTMAN, J.

 Plaintiff Carol Rannels, is a citizen of Pennsylvania bringing this diversity action against defendant S. E. Nichols, Inc., a corporation incorporated under the laws of the State of New York with its principal place of business in New York, alleging that defendant is liable for the torts of malicious prosecution and defamation. Although not clearly stated, jurisdiction is apparently invoked under 28 U.S.C. ยง 1332 by reason of the diversity of citizenship.

 Plaintiff alleges that on June 25, 1977, she purchased a pair of ladies' jeans at defendant's store in Ephrata, Pennsylvania, for $8.00, in payment of which plaintiff issued a personal check. Upon returning home she tried on the jeans and found the zipper to be defective. On June 27, she returned to the store with the jeans and demanded either a refund or an exchange for another pair of jeans. Defendant refused to do either. As a result, plaintiff placed a stop-payment order on the check and paid $2.00 to have the defective zipper replaced. On July 1 she offered defendant $6.00 in payment of the jeans. The offer was refused and in a letter dated July 13, 1977, defendant demanded $13.98 in payment, $8.00 for the purchase price of the jeans, $5.00 for a "handling charge", and 98 cents for postage. On August 4, defendant filed a criminal complaint alleging that plaintiff had issued a bad check in violation of the Pennsylvania Crimes Code, despite knowledge by Douglas Stauffer, assistant manager of the aforesaid store, that the check was not issued in violation of the Code and was in fact dishonored because a stop-payment order had been placed on the check because of a dispute over the quality of the merchandise. On August 17, plaintiff received notice of the criminal complaint and immediately went to the District Judge and entered a plea of not guilty. On August 18, plaintiff went to the store and showed the complaint to manager Robert Boyd, asking why it had been sent. Boyd is alleged to have said, "Why, because you attempted fraud in my store". Boyd said he would not withdraw the complaint because defendant would have to pay court costs, then said, "Mrs. Rannels, we have to set an example of you so others don't try to stop payment on goods. Our attorneys will be there and I will be there to make sure you are found guilty and pay the store and the fine and the costs". Plaintiff alleges that these things were said in the presence of plaintiff's son, a number of customers, and a man being interviewed for a job. During this meeting plaintiff offered $8.00 in payment of the goods, but this offer was refused.

 In addition to the above encounter, plaintiff alleges that on August 17 she sent a letter to Manfred Brecker, defendant's president, protesting the actions thus taken, including alleged harassment by telephone. Brecker responded in a letter dated August 22 which allegedly further slandered plaintiff by contending that she had in fact violated the law and condoning the actions previously taken. Plaintiff was ultimately found not guilty of the criminal charge. She eventually paid $6.00 in settlement of the claim outstanding against her. She alleges malicious prosecution because of the criminal complaint and defamation resulting from the Boyd statements and the Brecker letter. She alleges humiliation, harm to her reputation, and great emotional pain. Her husband alleges emotional pain, humiliation and embarrassment, and contends that the emotional stress has harmed their marital relationship. Plaintiff demands $2,800,000.00 plus interest and costs.

 Defendant moves to dismiss on two grounds. First it contends that there is no substantive ground for either malicious prosecution or defamation because defendant's actions do not give rise to recovery in tort; thus, the complaint does not state a claim upon which relief can be granted. Defendant also moves to dismiss for lack of subject matter jurisdiction because the amount in controversy is less than $10,000.00.

 Regarding the substantive claims, we note that an action for malicious prosecution carries with it two indispensable elements. First, there must be a lack of probable cause for the prosecution. See Psinakis v. Psinakis, 221 F.2d 418 (3d Cir. 1955), citing Publix Drug Co. v. Breyer Ice Cream Co., 347 Pa. 346 at 349, 32 A. 2d 413 (1943) :

 
"In an action for malicious arrest of the person, the defendant is excused when any one of the following conditions is fulfilled: 'either (a) the plaintiff was in fact guilty of the wrong as charged (just cause); or (b) the defendant (in the civil case) believed and had probable cause to believe the defendant (in the criminal case) guilty (just cause); or (c) the defendant resorted to legal process for the purpose of securing justice upon the plaintiff, and not primarily to gratify personal malice or spite': Altman v. Standard Refrig. Co., 315 Pa. 465, 478, 173 A. 411. * * *".

 In considering the motion we shall assume that well-pleaded factual allegations contained in the complaint are true. In so doing we note the following allegations:

 
"9. Douglas Stauffer filed the aforesaid complaint knowing that plaintiff, Carol A. Rannels, had not issued a check in violation of the aforesaid Crimes Code. Furthermore, Douglas C. Stauffer did know that the true reason the said check was not honored was because a stop order (sic) had been placed on the check due to a dispute over defective merchandise.
 
* * *
 
"15. During all these negotiations Robert Boyd, Manfred Brecker and Douglas Stauffer each knew that Mrs. Rannels had not committed any criminal act and had not attempted to defraud S. E. Nichols (sic) or anyone else."

 These statements are not tantamount to factual allegations of a lack of probable cause. Accepting the truth of the allegations that the named individuals knew that plaintiff had placed a "stop order" on the check by reason of a dispute over the quality of the goods, the assertions that said individuals knew that there had been no violation of the Crimes Code are not factual allegations, but legal conclusions. Plaintiff has provided no authority for the proposition that stopping payment on a check issued in payment of goods is not fraud, as a matter of law. Absent such authority we cannot assume the ...


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