Dismissal based on statute of limitations not a favorable termination for later malicious prosecution claim.

When summary judgment in a previous suit was based on the statute of limitations, a malicious prosecution action cannot be based on that previous suit.

In Horizon Trades, Inc. v. Givens, No. M2019-01876-COA-R3-CV (Tenn. Ct. App. Aug. 20, 2020), defendant was the attorney for Shermane Stuart in a previous action wherein Ms. Stuart filed a claim for breach of contract against Horizon Trades. Horizon Trades filed a motion for summary judgment in that action, and it asserted multiple grounds in its motion. The trial court ruled that although plaintiff had purported to file a breach of contract claim, the claim was actually for “conversion and/or damages to her personal property,” and that the three-year statute of limitations actually applied. The trial court accordingly granted Horizon Trades summary judgment based on the previous suit being untimely. In its ruling, the trial court specifically found that there was “no viable breach of contract claim,” but it did state in its order that even if there were a contract claim, the Statute of Frauds would have barred such a claim based on the value of the property at issue.

After summary judgment, Horizon Trades filed this malicious prosecution claim against Ms. Stuart and her attorney, who was the defendant at issue in this appeal. Defendant attorney filed a motion to dismiss, arguing that “dismissal based on the expiration of a statute of limitations was not a favorable termination for purposes of a malicious prosecution claim.” The trial court agreed, dismissing the case, and the Court of Appeals affirmed.

A plaintiff asserting malicious prosecution “must show that (1) a prior suit or judicial proceeding was brought against plaintiff without probable cause, (2) defendant brought such action with malice, and (3) the prior action was finally terminated in favor of plaintiff.” (internal citation omitted). The termination of the prior suit “must address the merits of the suit rather than terminating the suit on procedural or technical grounds,” and “a dismissal of a prior action based on a successful statute of limitations defense is not a termination on the merits.” (internal citations omitted).

Here, Horizon Trades argued that the trial court dismissed the prior suit “on both procedural and substantive grounds and that there were specific findings that went beyond the statute of limitations.” The Court of Appeals rejected this argument, noting that the trial court specifically ruled that it was dismissing the previous case based on the statute of limitations. The Court noted that the trial court “stated that Ms. Stuart did not have a legitimate claim for breach of conflict,” and it ruled that the trial court’s decision to include an alternate finding that the Statute of Frauds would have applied had this been a contract claim did not change the fact that the case was dismissed based on untimeliness. Dismissal was accordingly affirmed.

Malicious prosecution claims require specific showings regarding the prior action on which they are based. As this case shows, a dismissal based solely on the statute of limitations will not support a later malicious prosecution action.

Note:  this case was decided by the Court of Appeals two weeks after oral argument.


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