Bank of Lyons v. Schultz

Alvin Schultz, husband of Mary Schultz (Mary) (plaintiff), died. Alvin’s life-insurance policies listed Mary as the beneficiary. At the time of Alvin’s death, the Bank of Lyons (the bank) (defendant) believed that Alvin and Mary owed money to the bank. The bank filed multiple actions against Mary to collect the debt. In addition, and in parallel, to suing Mary, the bank asked the trial court to issue injunctions preventing Mary from receiving the money from the life-insurance policies. Ultimately, those injunctions were dissolved and at least one was found to have been wrongfully issued. After the injunctions were dissolved, Mary still had to defend against the underlying claims brought by the bank. Mary prevailed in those suits as well. The bank’s actions delayed Mary receiving the life-insurance money by nine years. The lack of access to the life-insurance money caused Mary to fall behind on mortgage payments, and she lost her house to foreclosure. Mary sued the bank for malicious prosecution. The trial court dismissed her case on the grounds that her claim was barred by res judicata and that Mary did not suffer the special injury necessary for a malicious-prosecution claim. Mary appealed. The appellate court found in favor of Mary, reversing the trial court. The Bank of Lyons appealed to the state supreme court.