Hilfirty v. Shipman ( 1996 )

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
7-31-1996
Hilfirty v. Shipman
Precedential or Non-Precedential:
Docket 95-7206
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 95-7206
JOHN A. HILFIRTY; MARTHA L. MILLER
v.
DAVID C. SHIPMAN; KENNETH R. SCHRINER; BRETT O. FEESE;
STEPHEN C. SCHOPFER; BETTY A. NOLL
Martha Miller,
Appellant
Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Civil No. 4:CV-93-1497)
Argued January 25, 1996
Before: COWEN and SAROKIN, Circuit Judges
and POLLAK, District Judge
(Filed July 31, 1995)
Donald A. Bailey (argued)
Suite #9
845 Sir Thomas Court
Olde English Gap
Harrisburg, PA 17170
Attorney for Appellant
Gary L. Weber (argued)
Mitchell, Mitchell, Gray
& Gallagher
10 West Third Street
Williamsport, PA 17701
Attorney for Appellee Schriner
William A. Hebe (argued)
Spencer, Gleason & Hebe
17 Central Avenue
P.O. Box 507
Wellsboro, PA 16901
Attorney for Appellee Feese
J. David Smith
McCormick, Reeder, Nichols,
Bahl, Knecht & Person
835 West Fourth Street
P.O. Box 577
Williamsport, PA 17703
Robin A. Read (argued)
McNerney, Page, Vanderlin
& Hall
433 Market Street
P.O. Box 7
Williamsport, PA 17703
Attorneys for Appellee
Schopfer
OPINION OF THE COURT
SAROKIN, Circuit Judge.
Plaintiff Martha A. Miller filed a 42 U.S.C. 1983 action
for malicious prosecution against numerous defendants after a
motion by the state to nolle prosequi her criminal charges was
granted. The motion to nolle prosequi her charges resulted from
a compromise between the District Attorney's Office and her
common law husband, John Hilfirty, who was arrested with her.
Pursuant to this compromise, Hilfirty agreed to enter an
Accelerated Rehabilitative Disposition ("ARD") program in
exchange for dismissal of the charges against him and for the
motion to nolle prosequi the charges against Miller.
The district court reviewing Miller's malicious prosecution
claim granted summary judgment in favor of defendants on the
ground that Miller failed to make out a prima facie case of
malicious prosecution because she was unable to meet the
threshold requirement of demonstrating that the criminal charges
against her were terminated favorably.
We conclude that a grant of nolle prosequi is insufficient
to support a claim of malicious prosecution only in circumstances
where the accused herself enters into a compromise with the
prosecution in which she surrenders something of value to obtain
the dismissal or where the accused formally accepts the grant of
nolle prosequi in exchange for her knowing, voluntary release of
any future claims for malicious prosecution. Because we find
that Miller neither compromised with the prosecution to obtain
her grant of nolle prosequi nor formally accepted the nolle
prosequi in exchange for a release of future civil claims, we
conclude that the underlying proceeding terminated in her favor
for purposes of sustaining a malicious prosecution claim, and
accordingly, we reverse as to the dismissal of the malicious
prosecution claim.
I.
John Hilfirty was terminated from his position as a general
manager of a recycling center operated by the Lycoming Valley
Association for the Deaf (LVAD) on May 7, 1991. His termination
followed the deterioration of his relationship with the Chairman
of the LVAD Board, Betty Noll, due to a dispute regarding the
alleged misuse of some of LVAD's funds. According to the
complaint filed by Hilfirty and Miller before the district court,
Noll was involved in the mishandling of funds, and she had become
frustrated with Hilfirty's refusal to participate in her scheme.
Hilfirty fought against his termination and applied for
unemployment compensation, which LVAD contested. Hilfirty
alleged that during the course of his unemployment compensation
hearing a series of events transpired which led some of the LVAD
Board members to participate in a conspiracy with county law
enforcement authorities to have criminal charges filed against
Hilfirty and Miller, his common law wife, in order to try to ruin
Hilfirty's reputation. In particular, Hilfirty claimed that
several LVAD Board members supplied false information to the
prosecutor's office that Hilfirty had secretly recorded LVAD
Board meetings and telephone conversations with LVAD Board
members in violation of Pennsylvania's wire-tapping statute. As a
result of this information, a search warrant was issued for the
premises of the house shared by Hilfirty and Miller. The search
warrant identified the items to be searched for and seized to be
"[e]lectronical [sic], mechanical, or other device as defined in
Pa. Crimes Code 5702 Tape Recordings (Audio or Visual) and
transcripts, notes pertaining to illegal intercepts." Appellee
Appendix at 13.
In the course of the ensuing search, several items were
seized from the house, including cassette tapes, recorders, a
small amount of illegal drugs and drug paraphernalia including
pipes, bongs, and rolling paper. As a result of this seizure,
the District Attorney's Office filed criminal complaints against
both Hilfirty and Miller, who were arrested as a result.
Hilfirty was charged with five counts of violating the
Pennsylvania wire-tapping statute, one count of possession of an
electronic device capable of illicitly intercepting verbal
communications, one count of criminal conspiracy, one count of
possession of a controlled substance, and one count of possession
of drug paraphernalia. Miller was charged with one count of
criminal conspiracy to intercept oral communications, one count
of violation of the Pennsylvania wire-tapping statute, one count
of possession of drug paraphernalia, and one count of possession
of a controlled substance.
Hilfirty and Miller were released on their own recognizance,
and their cases were consolidated for trial. In the course of
preparing for trial, Hilfirty and Miller filed a motion to
suppress the evidence seized during the search on the ground that
probable cause for issuing the warrant was lacking. Their motion
was denied.
In June of 1992, the District Attorney's Office approached
Hilfirty's counsel, suggesting that Hilfirty's case be disposed
of through the ARD program, whereby the charges against Hilfirty
would be dismissed if he agreed to certain terms, including
probation for one year, payment of the costs of the prosecution,
payment of a $250 administrative fee, payment of the costs of
supervision, performance of 32 hours of community service, and
the withdrawal of private criminal complaints he had filed
against defendants Noll and Shipman. After some negotiations,
Hilfirty agreed to enter the ARD program on the condition that
the District Attorney's Office would file a motion to nolle
prosequi the charges against Miller. Accordingly, Hilfirty
signed, and the court approved, a document through which he
entered the ARD program. On the same day, the Court of Common
Pleas of Lycoming County also separately issued an order granting
the Commonwealth's Motion to Nolle Prosequi the charges against
Miller. Miller did not sign any documents accepting the grant of
nolle prosequi.
According to two affidavits by attorneys from the District
Attorney's Office which were presented by defendants to the
district court in the instant civil action, counsel for both
Hilfirty and Miller were present at these negotiations. Miller
presented no evidence to the contrary before the district court,
although she asserts on appeal that she neither initiated these
negotiations nor participated in any of these discussions
herself. Rather, she avers that during these discussions
Hilfirty's counsel alone agreed that Hilfirty would be willing to
enter the ARD program if a motion to nolle prosequi Miller's
charges were granted.
Following the disposition of their criminal case,
Hilfirty and Miller filed a civil complaint in federal district
court against the following individuals: LVAD Board member David
C. Shipman; former LVAD Board member Betty Noll; Lycoming County
Detective Kenneth R. Schriner; Lycoming County District Attorney
Brett O. Feese; and Stephen C. Schopfer of the Lycoming County
Solid Waste Department. Plaintiffs' complaint contained five
counts alleging, inter alia, a section 1983 claim based on
alleged violations under the First, Fourth, Fifth and Fourteenth
Amendments of their right to be free from malicious prosecution,
their right to be free from unlawful searches and seizures, their
right to their lawful interest in their property and their right
not to be falsely arrested without due process of law. Their
complaint further alleged claims under section 1983 for
conspiracy to deprive plaintiffs of their constitutional rights,
as well as claims under section 1986 for failure to prevent a
conspiracy and pendent state claims for malicious prosecution and
deprivation of life, liberty and property under the Constitution
of the Commonwealth of Pennsylvania.
The five individual defendants in this action responded by
filing motions to dismiss. Defendants Shipman and Noll framed
their motions to dismiss alternatively as motions for summary
judgment. The district court treated all five motions as motions
for summary judgment because it accepted and considered material
outside of the pleadings, specifically affidavits, in disposing
of the motions. It granted summary judgment to defendants on all
federal claims and Miller's state malicious prosecution claim
and dismissed the other pendent state claims without prejudice.
With the exception of plaintiffs' section 1983 claim of
malicious prosecution, the district court found that all of
plaintiffs' federal claims were time-barred because the statute
of limitations had run. With regard to the malicious prosecution
claim, the district court found that neither Hilfirty nor Miller
was able to meet the threshold requirement of demonstrating that
the underlying proceeding terminated in his/her favor. Hilfirty
v. Shipman, No. 93-1497, slip op. at 16 (M.D. Pa. June 3, 1994)
(hereinafter "Dist. Ct. Op.").
The only appellant in this matter is Martha Miller, who
appeals to this court only from that portion of the district
court's judgment regarding her claim for malicious prosecution.
The only appellees here are Schriner, Feese and Schopfer.
II.
The district court had jurisdiction over this matter
pursuant to 28 U.S.C. 1331 and 1343(3) & (4) and 42 U.S.C.
1983. This court exercises jurisdiction over this appeal of a
final order of the district court pursuant to 28 U.S.C. 1291.
Our review of the district court's order for summary
judgment is plenary, and we thus apply the same standards that
were applicable in the district court. J.F. Feeser, Inc. v.
Serv-A-Portion, Inc., 909 F.2d 1524, 1530 (3d Cir. 1990), cert.denied, 499
U.S. 921 (1991). Summary judgment is appropriately
granted when "there is no genuine issue as to any material fact
and the moving party is entitled to a judgment as a matter of
law." Fed. R. Civ. P. 56(c). If, however, "the evidence is such
that a reasonable jury could return a verdict for the nonmoving
party," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986), summary judgment shall not be granted. Miller, as the
nonmoving party, is entitled to have all reasonable inferences
drawn in her favor. See J.F. Feeser, 909 F.2d at 1531.
III.
The district court issued summary judgment in favor of
defendants on the malicious prosecution claim because it
determined that Miller was unable to meet the threshold
requirement of demonstrating that the criminal action "terminated
in a manner 'consistent with innocence, such as acquittal or
reversal of conviction.'" Dist. Ct. Op. at 16 (quoting Junod v.
Bader, 458 A.2d 251, 253 (Pa. Super. Ct. 1983) (citing Anolik v.
Marcovsky, 186 A. 418 (Pa. Super. Ct. 1936))). Specifically, the
district court concluded that the "nol prossing of charges as
part of a plea bargain agreement [does not] equat[e] to the
termination of the underlying proceedings in plaintiffs' favor."
Dist. Ct. Op. at 19. We are required to determine whether the
district court was correct in its assessment that there was no
genuine issue of material fact regarding whether the underlying
proceedings terminated in Miller's favor.
A.
As an initial matter, we will assess whether the district
court appropriately converted the 12(b)(6) motions filed by
defendants into motions for summary judgment. The district court
explained that in reviewing the motions to dismiss, it accepted
and considered four affidavits presented by defendants and the
affidavit of Hilfirty, attached to plaintiffs' Memorandum of Law
and Facts, and that accordingly, it considered all motions as
motions for summary judgment. Dist. Ct. Op. at 7 n.19. Federal
Rule of Civil Procedure 12(b) provides that if, on a motion to
dismiss under Rule 12(b)(6),
matters outside the pleading are presented to and not
excluded by the court, the motion shall be treated as
one for summary judgment and disposed of as provided in
Rule 56, and all parties shall be given reasonable
opportunity to present all material made pertinent to
such a motion by Rule 56.
Fed. R. Civ. P. 12(b). Given that the district court accepted
and considered documents outside of the pleadings in the course
of disposing of defendants' motion, its treatment of these
motions as motions for summary judgment was appropriate under the
plain terms of the rule. See 5A Charles Alan Wright & Arthur
Miller, Federal Practice and Procedure 1366 at 493 (West 1990)
(noting that "[o]nce the court decides to accept matters outside
the pleading, it must convert the motion to dismiss into one for
summary judgment").
Miller argues in her brief before this Court, however, that
the "lower court's decision was pre-mature" [sic] and claims that
"[d]iscovery should have been allowed." Appellant's Brief at 11.
Specifically, Miller contends that, had she had the opportunity
to present the district court with more material regarding the
circumstances under which the compromise was reached between the
prosecution and Hilfirty, it would have been evident to the
district court that she did not participate in the compromise and
that, therefore, the court's grant of nolle prosequi should be
considered to be a termination of the proceedings in her favor.
While she does not clearly define her argument as such, we
interpret her claim to be that the district court erred in
failing to provide notice that it was treating the motions to
dismiss as motions for summary judgment and erred in failing to
provide her an opportunity to submit material in support of her
position. It is, indeed, well-established that prior to
converting a motion to dismiss into a motion for summary
judgment, the district court must provide adequate notice to the
parties. Rose v. Bartle, 871 F.2d 331, 342 (3d Cir. 1989) ("We
have held that it is reversible error for a district court to
convert a motion under Rule 12(b)(6) . . . into a motion for
summary judgment unless the court provides notice of its
intention to convert and allows an opportunity to submit
materials admissible.") (and cases cited therein); 5A Wright &
Miller, supra, 1366 at 501 ("It is important that the court
give the parties notice of the changed status of the motion and a
'reasonable opportunity to present all material made pertinent to
such a motion by Rule 56.'"). Certainly, the nonmoving party
must have adequate notice and time to present to the district
court material relevant to her claim in order to demonstrate that
there is a genuine issue of material fact that renders summary
disposition of the case inappropriate.
We find in the instant matter that Miller had adequate
notice that the court would convert defendants' motions to
dismiss into summary judgment motions, as well as adequate
opportunity to respond. The primary reason for our conclusion is
that two of the five motions to dismiss were framed in the
alternative as motions for summary judgment. See Dist. Ct. Op. at
6. This court has previously held that "[w]here a party has
filed a motion for summary judgment, the opposing party is under
an obligation to respond to that motion in a timely fashion and
to place before the court all materials it wishes to have
considered when the court rules on the motion." Cowgill v.
Raymark Industries, Inc., 780 F.2d 324, 329 (3d Cir. 1985). That
the two motions were framed only in the alternative as motions
for summary judgment does not alter our conclusion. Miller was
on notice that the court was considering two motions for summary
judgment, and she had the opportunity to respond over a period of
nearly eight months, between the filing of the defendants'
motions to dismiss in late October 1993 and the district court's
final judgment in June of 1994. Furthermore, neither Miller nor
Hilfirty ever objected to defendants' submission of affidavits
with their motions, nor did either Miller or Hilfirty make a
motion for discovery before the court. Rather, Hilfirty
submitted his own affidavit with their brief before the court.
Thus, it was appropriate for the district court to treat the
motions as ones for summary judgment.
B.
We will now assess the district court's conclusion that
Miller failed to meet the threshold requirement for a claim for
malicious prosecution.
In order to state a prima facie case for a section 1983
claim of malicious prosecution, the plaintiff must establish the
elements of the common law tort as it has developed over time.
See Lee v. Mihalich, 847 F.2d 66, 70 (3d Cir. 1988); see alsoMcArdle v.
Tronetti, 961 F.2d 1083, 1088 (3d Cir. 1992);
Singleton v. City of New York, 632 F.2d 185, 195 (2d Cir. 1980)
(collecting cases), cert. denied, 450 U.S. 920 (1981). In
Pennsylvania, like most jurisdictions, a party bringing a
malicious prosecution claim must demonstrate that (1) the
defendants initiated a criminal proceeding; (2) the criminal
proceeding ended in the plaintiff's favor; (3) the proceeding was
initiated without probable cause; and (4) the defendants acted
maliciously or for a purpose other than bringing the plaintiff to
justice. Haefner v. Burkey, 626 A.2d 519, 521 (Pa. 1993); seealso Lee, 847
F.2d at 69-70.
The resolution of this case rests on an assessment of
whether Miller is able to meet the second requirement, i.e.
demonstrate that the criminal proceedings below ended in her
favor. According to the Restatement (Second) of Torts 659
(1976), which has been relied upon by the Pennsylvania Supreme
Court, criminal proceedings are terminated in favor of the
accused by
(a) a discharge by a magistrate at a preliminary
hearing, or
(b) the refusal of a grand jury to indict, or
(c) the formal abandonment of the proceedings by the
public prosecutor, or
(d) the quashing of an indictment or information, or
(e) an acquittal, or
(f) a final order in favor of the accused by a trial or
appellate court.
Id., quoted in Haefner, 626 A.2d at 521.
Miller's basic argument is that the prosecution's decision
to move for nolle prosequi of her charges amounts to a "formal
abandonment of the proceedings by the public prosecutor," and
thus the district court should have found that the criminal
proceedings had terminated in her favor. In particular, Miller
refers us to the Pennsylvania Supreme Court's decision in
Haefner, where the court determined that the plaintiff had met
the threshold requirement for a malicious prosecution claim after
the prosecution "nolle prossed the remaining charges because of
insufficient evidence." Haefner, 626 A.2d at 521. The court
there noted, "'if the defendant is discharged after abandonment
of the charges by the prosecutor, this is sufficient to satisfy
the requisite element of prior favorable termination of the
criminal action.'" Id. (quoting Woodyatt v. Bank of Old York
Road, 182 A.2d 500, 501 (Pa. 1962)).
While Haefner clearly indicates that a grant of nolle
prosequi can be sufficient to satisfy the favorable termination
requirement for malicious prosecution, not all cases where the
prosecutor abandons criminal charges are considered to have
terminated favorably. Indeed, the Pennsylvania Supreme Court has
previously held that a prosecutor's decision to withdraw criminal
charges pursuant to a compromise with the accused is not
considered to be a termination sufficiently favorable to support
a malicious prosecution claim. See Alianell v. Hoffman, 176 A.2d
207 (Pa. 1935). Haefner, which did not involve a compromise
agreement, did not disturb this holding.
It is indeed well-established at common law that
[a] termination of criminal proceedings in favor of the
accused other than by acquittal is not a sufficient
termination to meet the requirements of a cause of
action for malicious prosecution if
(a) the charge is withdrawn or the prosecution
abandoned pursuant to an agreement of compromise with
the accused . . . .
Restatement (Second) of Torts 660. While the Pennsylvania
Supreme Court has never adopted this section of the Restatement,
the Pennsylvania Superior Court has. See Junod v. Bader, 458
A.2d 251, 253-54 (Pa. Super. Ct. 1983) (finding that an ARD
termination as a result of a compromise is not sufficient for
meeting the threshold test for malicious prosecution and citing
to section 660 of the Restatement). Section 660(a) of the
Restatement has also been adopted by a multitude of other state
courts, see, e.g., Broaddus v. Campbell, 911 S.W. 2d 281, 284
(Ky. Ct. App. 1995); Piper v. Scher, 533 A.2d 974, 976 (N.J.
Super. Ct. App. Div. 1987); Joiner v. Benton Community Bank, 411
N.E.2d 229, 232 (Ill. 1980); Robinson v. Fimbel Door Company,
306 A.2d 768, 770 (N.H. 1973), and at least two federal courts of
appeals have accepted the general premise that dismissals
resulting from a compromise with the prosecution are not
"favorable terminations." See Taylor v. Gregg, 36 F.3d 453, 456
(5th Cir. 1994) (holding that dismissal of charges pursuant to a
pre-trial diversion agreement with prosecutors is not termination
of proceedings in favor of the accused to the extent that it will
support a malicious prosecution claim); Singleton, 632 F.2d at
194 (same).
The basic premise for this rule is that, unlike a situation
where the prosecution seeks a grant of nolle prosequi "because of
insufficient evidence," Haefner, 626 A.2d at 521, dismissal of
charges as a result of a compromise is not an indication that the
accused is actually innocent of the crimes charged. SeeRestatement
(Second) of Torts 660 cmt. c ("[T]he fact of a
compromise indicates that the question of [the accused's] guilt
or innocence is left open."); Davis v. Chubb/Pacific Indem.
Group, 493 F. Supp. 89, 92 (E.D. Pa. 1980) (noting that entry
into an ARD program is a compromise that leaves the question of
guilt or innocence open). Both the Restatement and case law
suggest that only terminations that indicate that the accused is
innocent ought to be considered favorable. See Restatement
(Second) of Torts 660 cmt. a ("Proceedings are 'terminated in
favor of the accused' . . . only when their final disposition is
such as to indicate the innocence of the accused."); Taylor, 36
F.3d at 456 (noting that "proceedings are terminated in favor of
the accused only when their final disposition indicates that the
accused is not guilty") (citing Singleton, 632 F.2d at 193);
Jaffe v. Stone, 114 P.2d 335, 338 (Cal. 1941) (holding that
"[t]he theory underlying the requirement of favorable termination
is that it tends to indicate the innocence of the accused").
The district court relied upon this principle that the
withdrawal of charges pursuant to a compromise is not a favorable
termination in concluding that Miller was barred from filing a
malicious prosecution claim. The court considered the grant of
nolle prosequi of Miller's charges to be the result of a
compromise and thus concluded that the termination of the
underlying proceedings was not sufficiently favorable to sustain
Miller's malicious prosecution claim:
The Commonwealth's willingness to nol pros the charges
filed against [Miller] were conditioned on Hilfirty's
entry into the ARD program. According to the
uncontradicted affidavits of prosecuting attorney
Ciampoli and First Assistant District Attorney Kenneth
A. Osokow, had Hilfirty not agreed to enter the ARD
program, the charges against Miller would not have been
dropped. The quid pro quo demanded and received by the
Commonwealth deprives the nol pros of its effect and
indicates that the nol prossing of the charges against
Miller does not equate to, and cannot be considered as,
a termination in her favor sufficient to support an
action for malicious prosecution.
Dist. Ct. Op. at 18-19.
However, that Miller was a beneficiary of Hilfirty's
compromise agreement with the prosecution does not require a
finding that she, herself, entered into a compromise. The
Restatement specifically contemplates that a termination is not
sufficiently favorable to support a claim for malicious
prosecution if "the charge is withdrawn . . . pursuant to an
agreement of compromise with the accused." Restatement (Second)
of Torts, 660 (emphasis added). An accused has entered into a
compromise with the prosecution only if she herself offers
something in return for the dismissal of her charges -- the
equivalent of "consideration" in a contract arrangement. This
"consideration" could be, for example, entry into an ARD program
such as that entered into by Hilfirty, or an agreement to pay
restitution or return property to the victim. This
interpretation is consistent with the common understanding of a
compromise, where both parties give something up in order to
accommodate the agreement, as well as with case law in which
compromises have been found to bar malicious prosecution claims.
See, e.g., Alianell, 176 A.2d at 207 (finding malicious
prosecution claim barred where the prosecution "agreed to
withdraw the charges in consideration of a payment of $20 and the
return of the goods in question"); Junod, 458 A.2d at 252-53(finding malicious prosecution claim barred because accused
agreed to enter into ARD program and comply with its terms in
exchange for dismissal of charges); Taylor, 36 F.3d at 455-56(finding malicious prosecution claim barred because accused
entered into pre-trial diversion agreement, thereby agreeing to
enter into program of supervision); Singleton, 632 F.2d at 188,
194 (finding malicious prosecution claim barred because accused
consented to an adjournment in contemplation of dismissal,
thereby agreeing to enter into a program "not unlike probation"
where he is subject to the observation of the prosecution);
Broaddus, 911 S.W.2d at 284 (finding malicious prosecution claim
barred because "[t]he dismissal was not the unilateral act of the
prosecutor; [the accused] gave up something to secure the
dismissal of the charges"); but see Tucker v. Duncan, 499 F.2d
963, 964 (4th Cir. 1974) (finding malicious prosecution claim
barred simply because prosecution agreed to a nolle prosequi of
accused's charges "after his attorney spoke with the prosecutor
in a back room").
In the instant case, the compromise that occurred was not
between Miller and the prosecution, but rather between Miller's
co-defendant, Hilfirty, and the prosecution. While Hilfirty
offered the "quid pro quo" or "consideration" of entry into the
ARD program in exchange for the prosecution not bringing him to
trial and agreeing to move for nolle prosequi of Miller's
charges, Miller herself offered no "consideration" or "quid pro
quo" in exchange for the grant of nolle prosequi. Thus, we do
not find that she herself entered into any compromise with the
prosecution indicating that the charges against her terminated
favorably.
The district court, however, appears to have concluded that
the nolle prosequi of Miller's charges was not a favorable
termination because Miller was bound by Hilfirty's compromise.
The district court treated Hilfirty's "quid pro quo" as though it
were from Miller as well in finding that "[t]he quid pro quo
demanded and received by the Commonwealth deprives the nol pros
of its effect and indicates that the nol prossing of the charges
against Miller does not equate to . . . a termination in her
favor . . . ." Dist. Ct. Op. at 19.
We thus are left to determine whether a compromise entered
into by one party can bind that party's co-defendant such that
the co-defendant is deprived of her ability to file a malicious
prosecution claim. This question has been answered affirmatively
by one Pennsylvania Superior Court case, Georgiana v. United Mine
Workers of America, International Union, 572 A.2d 232, 235 (Pa.
Super. 1990). Although the district court decision did not cite
to Georgiana, we will discuss the case in some detail because of
its similarities to the instant matter.
In Georgiana a woman and her husband were sued for fraud by
the United Mine Workers. Eventually, the woman entered into a
settlement agreement pursuant to which the complaint against her
and her husband was dropped. Id. at 233. The husband later
filed a claim for malicious use of civil process against the
United Mine Workers, but the trial court granted a demurrer on
the ground that the settlement agreement was effective against
both him and his wife and the underlying proceedings thus had not
terminated in the husband's favor. Id. On appeal, the
Pennsylvania Superior Court reversed: "We cannot agree that the
unilateral action of one party in negotiating a settlement
necessarily binds another party who did not participate in that
settlement, simply because the parties are named defendants in
the same suit." Id. at 235 (emphasis added). However, the court
did allow that "the fact-finder could determine that, even though
appellant himself did not negotiate the settlement, his wife
acted on his behalf in order to prevent an inquiry into her
husband's conduct." Id. In support of its conclusion, the court
cited to Comment b of 660(a) in the Restatement (Second) of
Torts, which reads as follows:
There are two factors common to [indecisive
terminations not considered favorable for purposes of
malicious prosecution]: First, the charge is withdrawn
for a cause not incompatible with the guilt of the
accused or the possibility of obtaining his conviction;
second, the withdrawal is at the request or with the
consent of the accused or is due to something done by
him or on his behalf for the purpose of preventing a
full and fair inquiry into his guilt or innocence.
Id. (emphasis added). The court thus remanded the matter so that
a fact-finder could determine whether the wife's settlement of
the action should bind her husband, based upon "the particular
circumstances surrounding [the] settlement, and not upon the
status of the parties." Id.
While our research has revealed no other case from
Pennsylvania or any other jurisdiction in which a court has
concluded that there may be circumstances in which one party's
settlement agreement may bind another, we nonetheless predict
that the Pennsylvania Supreme Court would adopt Georgiana's
fundamental holding. See Kiewet Eastern Co., Inc. v. L & R
Const. Co., Inc., 44 F.3d 1194, 1201 n.16 (3d Cir. 1995)
(explaining that, when the Pennsylvania Supreme Court has not
spoken on an issue, we look to the decisions of the intermediate
Pennsylvania courts). We find no indication in any other
Pennsylvania case law that Georgiana would not be followed. SeeWisniewski
v. Johns-Manville Corp., 759 F.2d 271, 273-74 (3d Cir.
1985) ("Although lower state court decisions are not controlling
on an issue on which the highest court of the state has spoken,
federal courts must attribute significant weight to these
decisions in the absence of any indication that the highest state
court would rule otherwise.").
Having determined that we will follow Georgiana's basic
holding, we still are left to enumerate the specific findings
that a trial court is required to make in order to conclude that
one party is bound by the settlement agreement of her co-
defendant such that she is barred from bringing a malicious
prosecution claim. Georgiana makes clear only that this
determination is to be based upon "the particular circumstances
surrounding [the] settlement, and not upon the status of the
parties." Georgiana, 572 A.2d at 235. It provides us with no
other guidance, however, and we are left to rely upon policy
considerations in making this determination.
As a threshold matter, we can envision no scenario in which
it would be appropriate for a co-defendant to enter into a
settlement agreement on behalf of another party without that
party's consent. The contents of a settlement agreement may have
profound effects upon an individual's life. Accordingly, we find
that a court may determine under Georgiana that a party is bound
by her co-defendant's settlement agreement only if it finds that
the party has knowingly authorized her co-defendant to serve as
her agent in entering the agreement.
We further think that policy considerations suggest that a
court may conclude that a party is bound by her co-defendant's
settlement agreement only if it finds that she fully understands
the consequences of her consent. A court certainly would not
accept a plea bargain from a criminal defendant absent a
statement from that defendant that he fully understands the terms
of the agreement and the consequences of entering the plea.
While we recognize that the repercussions of allowing a criminal
defendant to enter a guilty plea, perhaps accepting jail time
without fully understanding the consequences of his actions, are
undoubtedly greater than those of allowing an accused to
relinquish her right to file a malicious prosecution claim, it is
nonetheless our view that a maliciously prosecuted individual's
right to file a civil action is of significant importance; we are
thus loath to allow for a situation where such a right is
unknowingly relinquished.
It is, indeed, easy to envision a scenario where such could
occur. For example, a wife might agree to allow her husband to
represent both of them in negotiations with the prosecution,
knowing that she is completely innocent of all alleged charges
and fully expecting that her husband will be able to obtain a
dismissal of all charges against her. Assuming her husband
succeeds in accomplishing this in the course of negotiating his
own compromise, she would most likely presume that she had been
exonerated of all wrongdoing and would expect that she would be
able to pursue a malicious prosecution claim. She would have
given up nothing in exchange for the dismissal; no consideration
would have been offered that would leave her innocence in doubt
and she would have every reason to believe that her proceedings
had terminated favorably. Yet, if Georgiana were interpreted to
allow the husband's compromise to bind his wife without requiring
any inquiry into her understanding of the consequences of the
agreement, she would be unable to vindicate her right to be free
from malicious prosecution.
Such an outcome is highly undesirable and can be avoided.
We thus conclude that, when a co-defendant acting as an
authorized agent of another party, say his wife, enters into a
compromise that provides for the dismissal of charges against
her, she cannot be barred from filing a malicious prosecution
claim if she herself offered no consideration in exchange for the
dismissal, unless it is clear that she was fully aware that such
waiver would be the consequence of allowing her husband to enter
into the compromise on her behalf.
These two determinations -- whether a party (1) consented to
allow her co-defendant to enter an agreement on her behalf, and
(2) whether she was fully aware that by allowing her co-defendant
to enter the agreement she would be barred from filing a
malicious prosecution claim -- are fact questions. We believe,
however, that policy considerations suggest that a jury not be
left to make this all-important state-of-mind determination by
merely piecing together snippets of evidence regarding the nature
of the settlement agreement. As noted above, we believe that the
right to file a malicious prosecution claim is a deeply important
one. Persons who are unjustly prosecuted may suffer emotional
pain, permanent damage to their reputation and real financial
costs. Furthermore, it is in the public interest to ensure that
persons against whom prosecutions are maliciously filed are
provided an opportunity to recover civil damages; such actions
protect those persons wrongly prosecuted and deter malicious
prosecutions, thereby lending legitimacy to the institution of
criminal prosecution.
In order to ensure that no person who may have been subject
to malicious prosecution inadvertently or unintentionally waives
the right to pursue such claim, we conclude that, in instances
where a party authorizes her co-defendant to enter into a
compromise agreement providing for the dismissal of her criminal
charges and she offers no consideration in exchange for such
dismissal, she will not have been found to have relinquished her
right to file a malicious prosecution claim unless it is plain
from the record of a hearing in open court or a written release-
dismissal agreement that such relinquishment was knowing,
intentional and voluntary.
While we recognize that this requirement is not specifically
suggested by the language of Georgiana, we think that it is a
highly sensible requirement and an outgrowth of that opinion.
First, and most importantly, it ensures that individuals
consciously consider their options and understand the
consequences of their actions before waiving their civil rights.
Second, it provides for a bright-line rule, avoiding the need for
extensive fact-finding on the part of a jury; either a defendant
has agreed to relinquish her rights or she has not. Third, it
ensures a meeting of the minds between the prosecution and an
accused. If, for example, the prosecution affirmatively seeks to
require an accused to relinquish her right to file a civil claim
when dismissing the charges against her, such an intention will
be plain from the face of the court record or the release-
dismissal agreement. Finally, such a requirement imposes no cost
or undue burden on the prosecution. Rather, it precludes the
need for lengthy inquiries into state of mind or the significance
of a dismissal of charges. Indeed, it may well be that such a
requirement will limit the number of malicious prosecution cases.
We take care to note that any such in-court waiver or
release-dismissal agreement will be valid only if it is
voluntary; there is no evidence of prosecutorial misconduct; and
the agreement is not offensive to the relevant public interest.
See Cain v. Darby Borough, 7 F.3d 377, 380 (3d Cir. 1993) (in
banc) (citing Town of Newton v. Rumery, 480 U.S. 386, 398
(1987)). This three-pronged test will ensure that prosecutors do
not deliberately seek to avoid liability for themselves or others
who wrongfully initiated such proceedings by forcing individuals
into a waiver or signing of these agreements. In addition, the
test prevents prosecutors from adopting a blanket policy of
routinely obtaining in-court waivers or release-dismissal
agreements every time they agree to dismiss the charges against
one defendant in the course of agreeing to a compromise with a
co-defendant; instead, they must make their determinations about
whether to seek a waiver or release-dismissal agreement on a
case-by-case basis. See id. at 382.
In light of the above analysis, we find that the district
court erred in concluding that Miller could be bound by a
compromise entered into by her husband such that she was
precluded from filing a malicious prosecution claim. Even if
defendants' representation that Miller herself sought or accepted
the grant of nolle prosequi were true -- facts which are not
necessarily indicated by the record -- there is no indication in
the form of a release-dismissal agreement with the prosecution or
a record of a hearing in open court indicating that she knew that
her acceptance of the grant of nolle prosequi, for which she
offered no consideration, would deprive her of her ability to
file a malicious prosecution claim. In the absence of a release-
dismissal agreement or a waiver reflected in a court record
coupled with our earlier conclusion that the grant of nolle
prosequi was not the result of a compromise between Miller
herself and the prosecution, we conclude that this case is
governed by Haefner, 626 A.2d at 521, and that the grant of nolle
prosequi is "sufficient to satisfy the requisite element of prior
favorable termination of the criminal action." Id. (citation
omitted). Accordingly, Miller may pursue her claim for malicious
prosecution.
IV.
For the foregoing reasons, we reverse the district court's
grant of summary judgment regarding Miller's ability to
demonstrate the favorable termination of her underlying criminal
proceedings, and we remand this matter to the district court for
further proceedings consistent with this opinion.
Hilfirty v. Shipman, No. 95-7206
POLLAK, District Judge, concurring:
In Georgiana v. UMW, 572 A.2d 232 (Pa. Super. 1990), the
Pennsylvania Superior Court rejected the proposition "that the
unilateral action of one party in negotiating a settlement
necessarily binds another party who did not participate in that
settlement. . . ." Id. at 235. Today, this court, in an
opinion which I join, holds "that, in instances where a party
authorizes her co-defendant to enter into a compromise agreement
providing for the dismissal of her criminal charges and she
offers no consideration in exchange for such dismissal, she will
not have been found to have relinquished her right to file a
malicious prosecution claim unless it is plain from the record of
a hearing in open court or a written release-dismissal agreement
that such relinquishment was knowing, intentional and voluntary."
Typescript, supra, p. 26. This holding -- which comports with
the test generally applicable to waivers of civil rights claims,
see W. B. Matula, 67 F.3d 484, 497 (3d Cir. 1995), Cain v. Darby
Borough, 7 F.3d 377, 380 (3d Cir. 1993) (in banc) -- is
characterized as an "outgrowth" of Georgiana. Typescript, supra,
p. 26.
While I accept this court's hospitable reading of Georgiana,
and agree that the Pennsylvania Supreme Court, when it has
occasion to address the issue, is likely to adopt Georgiana's
"fundamental holding," Typescript, supra p. 22, I add these
concurring words to make the point that, in the case at bar, even
under a narrower reading of Georgiana, a grant of summary
judgment against Miller was not warranted.
The narrower reading of Georgiana would place particular
weight on the Superior Court's statement "that the question
whether one defendant's settlement of an action should bind
another defendant must depend on the particular circumstances
surrounding that settlement . . . ." 572 A.2d at 235. That
statement follows the Georgiana court's discussion of section 660
of the Restatement (Second) of Torts, the section which is
Georgiana's analytic bedrock. That section, captioned
"Indecisive Termination of Proceedings," provides as follows:
A termination of criminal proceedings in favor of the
accused other than by acquittal is not a sufficient
termination to meet the requirements of a cause of
action for malicious prosecution if
(a) the charge is withdrawn or the prosecution
abandoned pursuant to an agreement of compromise with
the accused; or
(b) the charge is withdrawn or the prosecution
abandoned because of misconduct on the part of the
accused or in his behalf for the purpose of preventing
proper trial; or
(c) the charge is withdrawn or the proceeding
abandoned out of mercy requested or accepted by the
accused; or
(d) new proceedings for the same offense have been
properly instituted and have not been terminated in
favor of the accused.
Restatement (Second) of Torts 660 (1977).
Plainly, the "termination of criminal proceedings in favor
of" Miller is not covered by clause (b): i.e., there is no hint
that the charges against Miller were withdrawn "because of
misconduct . . . for the purpose of preventing proper trial."
Nor is there any suggestion that either clause (c), relating to
"abandon[ment] out of mercy," or clause (d), relating to the
institution of new proceedings, had application to Miller.
The only aspect of section 660 that might be inquired into
is clause (a), relating to withdrawal of charges "pursuant to an
agreement of compromise with the accused." On the record made
below, evidence that Miller entered into an "agreement of
compromise" is extremely tenuous. To be sure, it has been
averred that Miller's attorney was present at discussions with
the assistant district attorney and with Hilfirty's attorney.
The assistant district attorney characterized the result of these
discussions as a "joint agreement," under which "the Commonwealth
agreed to recommend the ARD program for Mr. Hilfirty and to nolle
pros the charges against Ms. Miller." Ciampoli Affidavit, 6,
Appellees' Appendix at 2. But there is no suggestion that
Miller, via her attorney or otherwise, took any sort of active
role in these discussions. To the contrary, it would appear that
it was Hilfirty's attorney who, on his client's behalf, entered
into a bargain with the Commonwealth Ä namely, that Hilfirty
would enter the ARD program and the Commonwealth would drop the
charges against Miller. Moreover, according to the assistant
district attorney, "the Commonwealth would not have agreed to
dismiss the charges against Miller if Hilfirty had not agreed to
the ARD program." Id. In other words, it appears that the
Commonwealth included Miller in the "joint agreement" as an
inducement to Hilfirty to accept ARD.
One who acquiesces in an arrangement under which she
surrenders nothing does not thereby accept a "compromise," at
least not in the sense in which the Restatement means that word.
Comment c to section 660 of the Restatement provides an
illuminating explanation of the rationale for section 660(a)'s
rule that a prosecution that terminates with an agreement of
compromise does not terminate favorably. It states: "Although
the accused by his acceptance of a compromise does not admit his
guilt, the fact of compromise indicates that the question of his
guilt or innocence is left open. Having bought peace the accused
may not thereafter assert that the proceedings have terminated in
his favor." Restatement (Second) of Torts 660 cmt. c (1977).
In this case, the most that can be said is that Miller acquiesced
in a compromise structured by the Commonwealth and Hilfirty.
Since there is no evidence that Miller made any affirmative
effort whatsoever to seek out a compromise, she can hardly be
thought to have "bought peace." In short, the circumstances of
the dismissal of the case against Miller in no way call into
question the favorable nature of the termination of Miller's
prosecution.
Thus, even if the Pennsylvania Supreme Court were to build
on Georgiana more narrowly than we do -- even if, for example,
the Pennsylvania Supreme Court were to conclude that a dismissal
of criminal charges which was negotiated by a co-defendant might
in certain "particular circumstances" bar a suit for malicious
prosecution notwithstanding that the would-be plaintiff had not
executed a written release-dismissal agreement or stated in open
court her intention to relinquish her potential claim -- the
particular "particular circumstances" presented on this appeal
are not of a sort that could properly operate to bar Miller's
suit.
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