July 10th, 2014

Malicious Prosecution. Bona Fide Termination

Malicious Prosecution Actions: Who won the underlying suit?

Persons who feel that they have been wrongfully prosecuted, either criminally or civilly, may have a claim against their prosecutor for malicious prosecution. There are, however, specific elements that must be alleged in order to establish a claim for malicious prosecution, and a malicious prosecution plaintiff must allege all of them for this cause of action to lie. Those elements are:

(1) A criminal or civil judicial proceeding has been commenced against the plaintiff in the malicious prosecution action;
(2) the proceeding was instigated by the defendant in the malicious prosecution action;
(3) the proceeding has ended in favor of the plaintiff in the malicious prosecution action;
(4) the proceeding was instigated with malice;
(5) without probable cause and
(6) resulted in damage to the plaintiff in the malicious prosecution action.
     Wright v. Yurko, 446 So.2d 1162, 1165 (Fla. 5th DCA 1984).

The focus of this article is on the third element mentioned above and its implications in civil malicious prosecution actions. This element has been phrased as requiring that the underlying litigation, giving rise to the malicious prosecution case, end with a “bona fide termination” in favor of the party who was prosecuted. “This is a fancy phrase which means that the first suit, on which the malicious prosecution suit is based, ended in a manner indicating the original defendant's (and current plaintiff's) innocence of the charges or allegations contained in the first suit, so that a court handling the malicious prosecution suit, can conclude with confidence, that the termination of the first suit was not only favorable to the defendant in that suit, but also that it demonstrated the first suit's lack of merit.” Doss v. Bank of Am., N.A., 857 So.2d 991, 994 (Fla. 5th DCA 2003).

Questions have arisen in Florida law as to which factual scenarios constitute a bona fide termination of the underlying suit. Specifically, courts have focused on whether a voluntary dismissal by the underlying plaintiff and/or a joint stipulation by the parties in the underlying suit are bona fide terminations.

Lawsuits that are dismissed simply for technical or procedural reasons do not meet the bona fide termination requirement. Union Oil of California, Amsco Div. v. Watson, 468 So.2d 349, 353 (Fla. 3d DCA 1985); and Johnson Law Group v. Elimadebt USA, LLC, 2010 WL 2035284, * 6 (S.D. Fla. 2010). However, if the underlying suit was voluntarily dismissed because it was baseless, then a claim for malicious prosecution may lie. Cohen v. Corwin, 980 So.2d 1153, 1156 (Fla.4th DCA2008). In Cohen, the malicious prosecution plaintiff sufficiently alleged that the defendant voluntarily dismissed the underlying lawsuit “because there was not a factual basis to support the same” and because he “did not have probable cause or an evidentiary basis to support the allegations.” Id. See also Union Oil of California, Amsco Div. v. Watson, 468 So.2d 349, 353 (Fla. 3d DCA 1985).

Lawsuits that terminate as a result of a joint stipulation or settlement agreement, generally, are not considered bona fide terminations because there is no clear showing that the underlying suit was meritless. Doss, 857 So.2d at 995. The rationale of the Florida courts seems to be that if a case terminates due to negotiations and/or bargaining by the parties, there is no real winner or loser. Courts have, however, carved out exceptions to the general rule. The Florida Supreme Court held in Alamo Rent-A-Carv.Mancusi, 632 So.2d 1352, 1356 (Fl. 1994), that bargaining or negotiating for the termination of the underlying suit does not always mean that there was no bona fide termination, and that the facts surrounding a termination must be examined to determine this.

Likewise, the Fifth District Court of Appeal held that in determining whether an underlying suit, which ended due to a joint stipulation, resulted in bona fide termination, courts must look at the total circumstances surrounding the termination. Doss, 857 So.2d at 995. In Doss, a bank brought a lawsuit against one of its customers for monies it paid to an unknown person who had presented checks with the customer's forged signature to the bank. At the time suit was filed, the customer had $37.14 in her savings account with the bank, which the bank set off against the monies it claimed it was owed and then closed the account. The customer filed a counterclaim for the $37.14, plus interest, and her attorneys' fees and costs. Shortly after filing suit, the bank's fraud investigation department determined that the customer had no involvement in the check-cashing scheme and the bank offered to settle the case and return the customer's $37.14.

The customer then brought a malicious prosecution suit against the bank. In the malicious prosecution suit, the bank argued that the underlying suit did not end in a bona fide termination because the joint stipulation was “bargained for.” In support of this argument the bank relied on the following facts: 1) its payment of the $37.14 to the customer; 2) the customer waiving her right to interest on the $37.14, which the bank argued showed that the termination was therefore not completely in the customer's favor; and 3) the customer did not pursue her claim for attorney's fees or costs. The court found that the bank's payment of the $37.14 showed, if anything, the customer's innocence in the underlying suit. As to the customer's waiver of interest on the $37.14, the court found the sum to be de minimus. Finally, the court found that the customer's waiver of her right to seek fees and costs was insufficient to show that the termination was not in her favor. The court reasoned that an award of fees under section 57.105, Florida Statutes is difficult to obtain and the costs were an insubstantial amount. Notably, the court explained that “the policy in this state is to encourage settlement of cases expeditiously; especially ones which the parties agree have no merit. If we refused to allow Doss [the customer] to pursue her malicious prosecution case because she did not require that the collection suit be played out in county court to its finality on the merits, including her $37.14 counterclaim, we would be in derogation of this policy.” Id. at 996. Perhaps most instructive, the court stated that “[t]here was no genuine compromise on...[the customer's] part as she gave up nothing of value.”

The rule regarding voluntary dismissals seems to be clearer than that for cases which terminate due to a joint stipulation. Essentially, a malicious prosecution plaintiff whose prior suit was dismissed must show that the underlying suit was dismissed due to a lack of evidence or merit, as opposed to procedural or technical reasons. As to a malicious prosecution plaintiff whose underlying case terminated as a result of a joint stipulation, Florida case law has made it apparent that courts must examine the total circumstances surrounding the termination to make a determination on this issue. Unfortunately, this rule is not all that instructive. Doss does shed some light on this question andcan be interpreted to mean that even in cases where bargaining or negotiations took place to reach a joint stipulation, so long as the defendant in the underlying suit did not give up something of value to reach the agreement, there may still be have been a bona fide termination in his or her favor.