A bank can be sued for failing to conduct a reasonable investigation before initiating a criminal complaint against an identity theft victim.  In an unpublished opinion out of New Jersey, the appellate court reversed an order granting summary judgment to the bank, and held that the main issue – whether the bank had acted with malice in calling the cops on the victim, was a matter for the jury to decide.  The bank had opened an account with a $25 deposit from a man who had a State identification card that misspelled the name of the city, described a person who was nine inches taller than the victim, and did not identify his actual employer.  A fraud investigator did a minimal investigation, and then filed a complaint on behalf of the bank against the victim.  The real bad guy ran up $9,000 worth of bad checks, all against the victim’s credit, largely because he had the victim’s social security number and the fake identification.  Victim spent 13 days in jail, and when a real investigation proved he had not opened the account or written the checks, the case was dismissed.  Victim then sued the bank which had reported that he had created the false account and written $9000 worth of checks.  The trial court dismissed the case, ruling that there was not proof the bank acted with malice.  Malice in this context is not "bad will" but rather the doing of an intentional act.  Here’s what the court said:

The kind of malice I speak of means the intentional doing of a wrongful or unlawful act without just cause or excuse. Such malice is an intentional act which an ordinarily cautious man would realize that under ordinary circumstances damage would result to one’s person or property, and which does in fact damage another’s person or property. The element of malice may be inferred from a lack of
reasonable or probable cause.


Back to the drawing board for the bank which should simply pay this guy for his grief.  They did virtually no investigation, and as a result, he spent 13 days in county jails trying to "prove" that he was not the person who stole from the bank.  I love the fact that the "expert fraud investigator" hired by the bank did such a poor job – but proceeded in the face of real evidence some other person was responsible.  And there is that other message here for all of us – protect that social security number!

This case is similar to one I handled this past year in Utah.  There, a district judge dismissed a case before the jury could decide whether a prominent Salt Lake law firm had acted with malice when it falsely reported to an insurance company (and its client) that my client (a partner in the firm) had over-billed for his work.  That allegation was false and unfounded, but it had the effect of destroying the client’s ability to work as an insurance defense lawyer.  His twenty-five year career doing insurance defense work was destroyed by the falsehood.  Their proof – he had not signed into his computer during times that he billed the insurance carrier.  You know, like when he was in court!  The malice we had to prove – and I believe we proved it – is the same as here.  Not evil or bad will (though I think we also proved that), but an intentional act done without ordinary caution.  Been in a similar situation?  Call us or fill out the contact form.  Maybe we can help.  We haven’t given up in Utah, case is on appeal and we expect to win.  Another lesson learned – never give up.