Schlueter v. Southern Energy Homes, Inc. ( 2007 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 07a0746n.06
Filed: October 18, 2007
No. 07-5323
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
JOHN F. SCHLUETER, )
) ON APPEAL FROM THE
Plaintiff-Appellant, ) UNITED STATES DISTRICT
) COURT FOR THE MIDDLE
v. ) DISTRICT OF TENNESSEE
)
SOUTHERN ENERGY HOMES, INC., ) OPINION
)
Defendant-Appellee. )
BEFORE: COLE and GRIFFIN, Circuit Judges; and WATSON, District Judge.*
MICHAEL H. WATSON, District Judge. Plaintiff-Appellant John F. Schlueter brought
a diversity action asserting state law claims of malicious prosecution and continued malicious
prosecution. The district court granted summary judgment in favor of Defendant-Appellee Southern
Energy Homes Inc. (“Southern”), holding that Schlueter was unable to establish lack of probable
cause as a matter of law. For the following reasons, we AFFIRM the district court’s judgment.
I.
Schlueter worked for Southern Energy Homes Retail Corporation, a subsidiary of Southern,
until his termination in 2000. On April 6, 2000, the state grand jury indicted Schlueter for theft in
excess of $60,000 from Southern in violation of Tenn. Code. Ann. § 39-14-103. Schlueter’s counsel
*
The Honorable Michael H. W atson, United States District Judge for the Southern District of Ohio, sitting by
designation.
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filed a pretrial motion to compel production or allow inspection of records. The state trial court
denied the motion as too broad, but indicated that it would reconsider the request if Schlueter’s
counsel defined the documents being sought more narrowly. Schlueter’s counsel, however, did not
make any further attempts to obtain documents. The matter proceeded to trial on October 16, 2001,
and the jury convicted Schlueter of theft over $60,000. Some months later, on February 10, 2003,
the state trial court sentenced Schlueter to ten years in prison.
Schlueter filed a motion for new trial on March 11, 2003, arguing, inter alia, the weight of
the evidence did not support a verdict of guilty of theft over $60,000, and counsel was ineffective
because he failed to narrowly tailor the motion to compel, which resulted in the failure to obtain
discoverable material. The state trial court granted Schlueter’s motion for new trial on November
17, 2003, based solely upon ineffective assistance of counsel. The court noted that at trial Schlueter
admitted sending fraudulent or inflated invoices, and, hence, his “own testimony convicted him.”
(JA 7.) Furthermore, the court stated, “while Defendant’s guilt was proven by the State beyond a
reasonable doubt, the Court is not convinced that, had all the documentation been presented to the
jury, that it would have found the Defendant guilty of theft over $60,000 beyond a reasonable
doubt.” (JA 9.)
The matter was never set for a new trial. On May 26, 2005, Schlueter moved to dismiss the
criminal case for violation of his right to a speedy trial. On June 12, 2006, the trial court dismissed
the criminal action in its entirety without explanation.
On October 24, 2006, Schlueter filed a complaint in the district court against Southern,
asserting malicious prosecution and continued malicious prosecution. On December 13, 2006,
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Southern filed a Fed. R. Civ. P. 12(b)(6) motion to dismiss. Schlueter filed a memorandum in
opposition, to which he attached an affidavit. As it should, the district court converted the Rule
12(b)(6) motion to a motion for summary judgment, and gave both parties notice and an opportunity
to submit additional material. The district court granted Southern’s motion for summary judgment
on February 21, 2007, holding Schlueter was unable to establish lack of probable cause as a matter
of law. The district court observed:
The fact that the criminal case was ultimately dismissed is in no way an indication
that probable cause did not exist at the outset. The Motion to Dismiss that resulted
in the ultimate dismissal was based exclusively upon a denial of the right to speedy
trial. The Order granting that motion without any explanation whatsoever can only
be interpreted as granting a dismissal on the grounds set out in the motion. The
plaintiff’s criminal counsel may not, through the hearsay statements in her Affidavit
“fill in the blanks” to furnish a rationale for the court’s dismissal that does not appear
in the court’s Order. Courts speak through their orders.
(JA 16)(docket references omitted.) Schlueter filed his notice of appeal on March 16, 2007.
II.
Appellate courts review a district court’s grant of summary judgment de novo. Tucker v.
Union of Needletrades, Industrial and Textile Employees, 407 F.3d 784, 787 (6th Cir. 2005).
Summary judgment may be granted when there exists no genuine issue of material fact, and the
moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).
III.
A.
To succeed in an action for malicious prosecution, a plaintiff must show: (1) a prior lawsuit
or judicial proceeding was brought against the plaintiff without probable cause; (2) the prior lawsuit
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or judicial proceeding was brought against the plaintiff with malice; and (3) the prior lawsuit or
judicial proceeding was finally terminated in the plaintiff’s favor. Parrish v. Marquis, 172 S.W.3d
526, 530 (Tenn. 2005); Christian v. Lapidus, 833 S.W.2d 71, 73 (Tenn. 1992).
In an action for malicious prosecution, the plaintiff bears a “heavy burden of proof” to show
lack of probable cause. Kauffman v. A.H. Robins Co., 448 S.W.2d 400, 404 (Tenn. 1969). Absent
fraud, a judgment in the original case in favor of the prosecution conclusively establishes probable
cause. Christian, 833 S.W.2d at 74. A criminal conviction, even if later reversed, constitutes
conclusive evidence of probable cause unless the conviction was obtained by fraud, perjury, or other
corrupt means. Dunn v. State of Tennessee, No. 84-5382, 1986 WL 17155, at * 3 (6th Cir. June 23,
1986); Restatement (Second) of Torts § 667(1) (1977); see also Haynie v. State of Tennessee, No.
M2001-01522-CCA-R3-PC, 2002 WL 464822, at * 6 (Tenn. Ct. App. Sept. 16, 2002)(conviction
in underlying criminal proceeding is complete bar to malicious prosecution claim).
Schlueter contends that his complaint, along with the affidavit of his former attorney, Cynthia
M. Fort, give rise to a jury issue as to probable cause. In her brief affidavit, Fort avers the documents
Schlueter’s former trial counsel failed to obtain could have exonerated Schlueter. The documents
Fort refers to are not part of the record before this Court, nor does it appear that Schlueter submitted
them in opposing summary judgment before the district court.
The text of Fed. R. Civ. P. 56 provides a party may not rest on its pleadings in opposing a
summary judgment motion. Fed R. Civ. P. 56(e). Schlueter’s reference to his complaint is therefore
unavailing.
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The district court rejected Fort’s affidavit because it constituted hearsay, and because it
purported to furnish the state trial court’s rationale for dismissing the criminal action. On appeal,
Schlueter does not challenge the district court’s ruling that Fort’s affidavit contained inadmissible
hearsay. Aside from that, Fort’s assertion that the subject documents might have “possibly
exonerated Schlueter” is both equivocal and conclusory, and does not give rise to a genuine issue
of material fact on the issue of probable cause. See Revis v. Meldrum, 489 F.3d 273, 288 (6th Cir.
2007); Williams v. Ford Motor Co., 187 F.3d 533, 544 (6th Cir. 1999). In similar fashion, Schlueter
suggests in his brief that his conviction was obtained by fraud. The record is, however, devoid of
any admissible evidence that Southern fraudulently withheld documents. Rather, the documents
were not obtained by Schlueter due to the ineffective assistance of his counsel.
The jury convicted Schlueter of theft in violation of Tenn. Code Ann. 39-14-103 (2003).
That statute provides: “A person commits theft of property if, with intent to deprive the owner of
property, the person knowingly obtains or exercises control over the property without the owner's
effective consent.” Nothing in the language of the statute suggests the value of the property stolen
is an essential element of the offense of theft.
Schlueter’s conviction constitutes conclusive evidence of probable cause for the offense of
theft. See Dunn, at * 3. Although the fact of conviction itself establishes probable cause, as noted
above, the state trial judge observed separately that the evidence supported the jury’s verdict, and
that Schlueter’s “own testimony convicted him” (JA 8.) Although the trial court found the additional
documents cast doubt on the amount of money stolen, the court nonetheless found the weight of the
evidence confirmed the jury’s conviction of Schlueter for the offense of theft.
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For the above reasons, Schlueter cannot satisfy the heavy burden of establishing the lack of
probable cause. It follows the district court did not err in granting summary judgment in favor of
Southern.
B.
Southern argues that even if the district court erred in holding that Schlueter was unable to
demonstrate a lack of probable cause, this Court should nevertheless affirm the district court’s
judgment because Schlueter is also unable to demonstrate favorable termination. For purposes of
establishing malicious prosecution, the termination of the criminal proceeding must have been both
“final and favorable.” Christian, 833 S.W.2d at 73. A favorable termination must reflect on the
merits of the case. Parish, 172 S.W.3d at 531; Foshee v. Southern Finance & Thrift Corp., 967
S.W.2d 817, 820 (Tenn. Ct. App. 1997). A court must examine the circumstances of the underlying
proceeding to determine whether a specific result was a favorable termination. Parish, 172 S.W.3d
at 531. “‘[I]f the circumstances surrounding dismissal are ambiguous on this point, the determination
should be left for trial.’” Id. (quoting Siliski v. Allstate Ins. Co., 811 A.2d 148, 152 (Vt. 2002)).
Schlueter contends the dismissal of the criminal charge against him was a favorable
termination on the merits. Schlueter ostensibly supports this assertion with the affidavit of his
former attorney. As noted above, Fort’s affidavit is conclusory and therefore insufficient to create
a genuine issue of material fact. See Revis,489 F.3d at 288; Williams, 187 F.3d at 544. Furthermore,
as the district court observed, allowing Schlueter to explain the state trial court’s dismissal in this
manner would run afoul of the principle that courts speak through their orders. See In re Adoption
of Female Child E.N.R, 42 S.W.3d 26, 31 (Tenn. 2001).
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The circumstances underlying the dismissal of the criminal charge against Schlueter are as
follows: Schlueter was convicted in October 2001, and was sentenced on February 10, 2003. (JA
5.) Schlueter filed a motion for new trial on March 11, 2003, which the state trial court granted on
November 17, 2003. Id. In the order granting a new trial, the state trial court concluded the jury’s
finding of guilt was supported by the evidence, which included Schlueter’s own admissions. (JA 8).
No further action was taken in the criminal proceeding until May 26, 2005, when Schlueter moved
to dismiss the case on the ground that his right to a speedy trial had been violated. The state trial
court dismissed the criminal action more than a year later, on June 12, 2006. None of these
circumstances surrounding the dismissal of the state criminal action against Schlueter support an
inference that the dismissal was a favorable termination. Rather, given the state trial court’s finding
that the jury’s guilty verdict was supported by the evidence, and the last event before the dismissal
was the filing of a motion to dismiss on speedy trial grounds, the surrounding circumstances
unambiguously indicate the dismissal was not a favorable termination on the merits. For this
additional reason, the district court did not err in granting summary judgment in favor of Southern.
C.
Schlueter also purports to assert a separate claim of “continued malicious prosecution.” The
claim is based upon Southern’s alleged continued efforts to prosecute Schlueter after it had
knowledge of facts rebutting probable cause. The district court did not address Schlueter’s continued
malicious prosecution claim.
“‘A private person who takes an active part in continuing or procuring the continuation of
criminal proceedings initiated by himself or by another is subject to the same liability for malicious
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prosecution as if he had then initiated the proceedings.’” Pera v. The Kroger Co., 674 S.W.2d 715,
722 (Tenn. 1984)(quoting Restatement (Second) of Torts § 655 (1977)). Liability is not imposed
unless the private person has some control over the case after prosecution has begun. Id. at 722-23.
“Active participation required. In order that there may be liability under the rule
stated in this Section, the defendant must take an active part in their prosecution after
learning that there is no probable cause for believing the accused guilty. It is not
enough that he appears as a witness against the accused either under subpoena or
voluntarily, and thereby aids in the prosecution of the charges which he knows to be
groundless. His share in continuing the prosecution must be active, as by insisting
upon or urging further prosecution. The fact that he initiated the proceedings does not
make him liable under the rule stated in this Section merely because he intentionally
refrains from informing a public prosecutor, into whose control the prosecution has
passed, of subsequently discovered facts that clearly indicate the innocence of the
accused, even though they have the effect of convincing him that this is the fact.”
Id. at 723 (quoting Restatement (Second) of Torts § 655 cmt. c (1977)).
Schlueter has not attempted to show that Southern had any control over the criminal
prosecution, or that it actively insisted upon or urged further prosecution. In addition, in opposing
summary judgment, Schlueter did not offer any admissible evidence that facts negating probable
cause for theft existed at any time. Moreover, for reasons discussed above, Schlueter cannot
demonstrate the favorable termination of a continued malicious prosecution. For these reasons, we
conclude the district court did not err in dismissing Schlueter’s action in its entirety on summary
judgment, including Schlueter’s continued malicious prosecution claim.
IV.
Based on the above, we AFFIRM the district court’s judgment.
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