Waste Management of Louisiana, L.L.C. v. Jefferson Parish
Filing
27
ORDER & REASONS denying 20 Motion to Dismiss plaintiff's amended complaint. Signed by Judge Martin L.C. Feldman on 6/3/2013. (caa, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
WASTE MANAGEMENT
OF LOUISIANA, L.L.C.
CIVIL ACTION
v.
NO. 13-226
THE PARISH OF JEFFERSON
THROUGH THE JEFFERSON PARISH COUNCIL
SECTION "F"
ORDER AND REASONS
Before the Court is the defendant's Rule 12(b)(6) motion to
dismiss plaintiff's amended complaint.
For the reasons that
follow, the motion is DENIED.
Background
The malicious prosecution lawsuit before this Court arises
from highly public earlier litigation in which Jefferson Parish
sued Waste Management in an effort to early terminate the parties'
Landfill Contract, so that Jefferson Parish could contract with
another waste disposal services provider, River Birch.
Waste
Management now contends before this Court that Jefferson Parish
pursued the prior lawsuit for years, even though it knew that its
claims
against
Waste
Management
were
factually
and
legally
baseless. Waste Management's charges, and prior litigation history
are necessarily presented here in detail:
Pursuant to their Landfill Contract, Waste Management was to
receive and dispose of waste for Jefferson Parish and also manage
a portion of the Jefferson Parish Sanitary Landfill Site defined as
1
the Expansion Area.
The term of the Landfill Contract, which is
based on the Expansion Area's capacity, has not expired.
In early 2009 Jefferson Parish requested that Waste Management
consent to the early termination of the Landfill Contract.
At
first, Waste Management agreed to terms suggested by the Parish.
Later, however, the Parish demanded still more concessions from
Waste Management.
Jefferson Parish also threatened to sue Waste
Management if it did not agree to early termination on its terms;
specifically, Jefferson Parish threatened to sue Waste Management
and to assert various claims for tens of millions of dollars in
damages.
Jefferson
Parish
added
that
it
could
seek
early
termination of the Landfill Contract under the contract's Annual
Appropriation Dependency Clause, a funding provision.
When Waste Management refused to agree to the additional
concessions demanded by Jefferson Parish, on August 21, 2009
Jefferson Parish filed in state court a petition for declaratory
judgment and for damages against Waste Management.
Jefferson
Parish sought, among other things,1 a declaration as to its right
to early terminate the contract under the Annual Appropriation
Dependency Clause, which provided in part:
The continuation of this Agreement is contingent upon the
appropriation of funds by the Jefferson Parish Council
for the continued operation and maintenance of the
Expansion Area.
If the Council fails to appropriate
1
Jefferson Parish also alleged that Waste Management
breached the Landfill Contract.
2
sufficient monies to provide for the continuation of this
Agreement, the Agreement shall terminate on the last day
of the fiscal year for which funds were appropriated.
Invoking the funding clause, the Parish sought a declaratory
judgment that "in the event the Parish Council decides not to
appropriate funds for the fiscal year 2010 for continuation of the
Landfill Contract, the Landfill Contract shall be deemed terminated
without penalty or expense to the Parish...."
Travelers Casualty and Surety Company of America, which was
sued as Waste Management's surety, removed the early termination
lawsuit to another Section of this Court on September 14, 2009. On
July 22, 2010 Jefferson Parish filed an amended complaint, in which
it
admitted
that
it
had
a
pending
landfill
contract
with
a
competing waste services provider, River Birch, Inc., which, the
Parish said, would result in "substantial savings".
It was for
this stated reason that Jefferson Parish claimed it sought to
terminate the Landfill Contract and instead contract with River
Birch. Jefferson Parish sought a declaration that:
if the Parish Council does not appropriate funds for
fiscal year 2011 for continuation of the Landfill
Contract with Waste Management in order to take advantage
of the substantial annual savings available to the Parish
by contracting with River Birch, Inc. and Highway 90, LLC
to provide disposal services in lieu of continuing to
operate the Parish landfill under contract with Waste
Management, then the Landfill Contract between the Parish
and Waste Management is terminated effective January 1,
2011 without penalty or expense to the Parish except for
tipping fees earned by Waste Management prior to the
termination date.
3
Notwithstanding
the
Parish's
claim
that
it
would
enjoy
substantial savings by contracting with River Birch, the Parish
apparently had no information to support its claim that it would
save any money by contracting with River Birch. In fact, Jefferson
Parish officials were aware that contracting with River Birch might
even be more costly. Jefferson Parish was also aware that a claim
that it would save money by contracting with a competitor for the
same services was not a valid and good faith exercise of the
Landfill Contract's appropriation dependency clause, which is an
emergency provision.2
Nonetheless, Jefferson Parish pursued, in
bad faith, it was claimed, its lawsuit against Waste Management to
prematurely terminate the Landfill Contract.
In fact, it was and remains seriously submitted, the reason
Jefferson Parish sued Waste Management, despite knowing that no
factual or legal basis existed for its claim, was politics:
to
pursue a long-standing agenda by Jefferson Parish's former top
public officials to have the Parish enter into a long-term waste
disposal contract with River Birch, no matter what the cost and
involving now-disgraced public officials.
2
Waste Management's
According to Waste Management, this emergency provision
is triggered only if the Parish fails to appropriate sufficient
funding because of a good faith, legitimate reason such as the
inability to obtain funds due to an emergency situation, not
because it chooses to allocate funding to a different private waste
services provider. Whatever eventuality the funding provision was
supposed to react to, it plainly was pivotal to the prior
termination dispute.
4
sordid story continues.
In late 2008, former Parish President Aaron Broussard, former
Chief
Administrative
Officer
Tim
Whitmer,
and
former
Parish
Attorney, Tom Wilkinson, are said to have devised a plan that they
believed would result in River Birch being awarded a long-term
waste disposal contract with Jefferson Parish.
Against the advice
of the Parish's Environmental Affairs Department, Broussard and
Whitmer revised and broadened an originally narrow bid Request for
Proposals to intentionally solicit a proposal from River Birch that
would divert 100% of Jefferson Parish's waste away from the Parish
Landfill to the River Birch Landfill.
Next, once River Birch
responded with a proposal as anticipated, Broussard, Whitmer, and
Wilkinson hand-picked an Evaluation Committee that would exclude
any member of the Environmental Affairs Department and, instead,
include Wilkinson and another member of the Parish Attorney's
office.
Weeks after receiving the River Birch proposal, the
Evaluation Committee recommended to the Parish Council that it
approve the River Birch proposal due to "significant savings." The
Parish approved the River Birch proposal for contract negotiation
and, in June 2009, entered into a 25-year contract with River
Birch, which required closure of the Jefferson Parish Landfill, a
valuable Parish asset.3
3
The Parish entered into the River Birch contract despite
advice from its Environmental Affairs Department that, at that
time, more information was needed, that no information supported a
5
The River Birch contract contained a provision that rendered
its commencement contingent upon the Parish either (a) obtaining an
agreement from Waste Management to early terminate its contract or
(b) the Parish obtaining a court judgment stating that it may
terminate its contract with Waste Management.
Thus, when Waste
Management did not agree to early termination of its contract with
the Parish, the Parish filed its August 2009 lawsuit against Waste
Management in furtherance of its plan to effectuate its contract
with River Birch.
Soon thereafter, in an attempt to conceal the
relationship between the River Birch contract and the lawsuit
against Waste Management, Whitmer attempted, it was charged, to
manipulate the Parish budget and falsify budgetary information such
that it would appear that there were "insufficient funds" for the
continuation of the Waste Management contract; this would allow the
Parish
to
invoke
the
appropriation
dependency
clause
and,
thereafter, allow the Parish to cancel its contract with Waste
Management effective January 1, 2010.
Things began to unravel.
In January 2010 Broussard and
Whitmer resigned amidst allegations of corruption and impropriety;
Wilkinson resigned in March 2010.
entered to federal criminal charges.
Thereafter, guilty pleas were
Despite this and against the
advice of its own Environmental Affairs Department, Jefferson
conclusion that the Parish would save money, and that the River
Birch contract could create a risk of River Birch obtaining a
monopoly over waste disposal in the area.
6
Parish
continued
its
termination
litigation
against
Waste
Management. Even after it filed its amended complaint in mid-2010,
in which Jefferson Parish disclosed its contractual relationship
with River Birch and that relationship to the Waste Management
litigation, and even after it had approved a budget that included
funding for the 2010 Landfill Contract with Waste Management,
Jefferson Parish continued to press the appropriateness of its use
of the appropriation dependency clause on the basis of funding and
cost savings to terminate Waste Management.
All these very
inflammatory points animated the prior litigation.
In late 2010 Waste Management continued to defend against
Jefferson Parish's lawsuit, including taking depositions of Parish
officials. In bringing to light the lack of basis for the Parish's
claim against it, even the Parish's own Environmental Affairs
Department
acknowledged
that
(1)
the
Parish
never
had
any
information to support the claim that the Parish would save money
by contracting with River Birch, and that (2) the Parish's proposed
use of the appropriation dependency clause to save money would not
constitute a proper use of that clause.
In January 2011 an independent consultant confirmed that the
River Birch contract would in fact cost, not save, the Parish
money.
Specifically, the report stated that the River Birch
contract would cost the Parish between $6 million and $39 million
more than if the Parish continued to dispose of its waste at the
7
Parish Landfill.
Even with this turn of events, Jefferson Parish
continued to press its termination lawsuit for nearly another
year.4
But then, on November 29, 2011, Jefferson Parish filed suit
for declaratory judgment against River Birch in state court, in
which it sought to void the River Birch contract.
The petition
invoked paragraph 36 of the River Birch contract, which made the
commencement of the River Birch contract contingent on Jefferson
Parish obtaining a court judgment stating that it could early
terminate its Landfill Contract with Waste Management under the
appropriation dependency clause.
The sole impetus for Jefferson
Parish seeking to void the River Birch contract was the public
revelation that there would be no cost savings as claimed -- a
central allegation of Jefferson Parish's appropriation dependency
clause claim against Waste Management (in another Section of this
Court).
On December 15, 2011 Jefferson Parish and River Birch
signed a consent judgment in the state court lawsuit, which voided
the River Birch contract.
The only basis for voiding the River
Birch contract was the telling admission by Jefferson Parish that
paragraph 36 of the River Birch contract could never be satisfied
4
Parish President John Young publicly acknowledged the
veracity of the report and in particular the report's conclusion
that contracting with River Birch would cost the Parish money. In
response to the report, Mr. Young also publicly directed the
Parish's attorney to investigate options for cancelling the River
Birch contract.
8
(that
is,
the
Parish
could
not
succeed
in
its
essential
appropriation dependency clause claim against Waste Management for
early termination of the Waste Management Landfill Contract).
Specifically, the state court consent judgment provides:
The Contract among Jefferson Parish, River Birch
Incorporated, and Hwy-90, LLC was signed by the Parish on
June 30, 2009, by River Birch Incorporated on September
15, 2009, and by Highway-90, LLC on September 15, 2009.
The Covenant was signed on September 23, 2009, and was
recorded in the Jefferson Parish Conveyance Book as
Instrument Number 1046573. The Contract is not in effect
because a suspensive condition contained in Paragraph 36
of the Contract has not been met.
The parties
acknowledge that the suspensive condition cannot be met.
Considering the foregoing, the Contract is hereby
declared null, void, and of no effect.
(emphasis added).
At the time Jefferson Parish agreed to the
Consent Judgment, in which it acknowledged that it could not
succeed in its appropriation dependency clause claim against Waste
Management, Waste Management had not in any way agreed to the
dismissal of that claim against it.
Finally, in January 2012, after the Parish made both public
and
judicial
Management
acknowledgments
could
not
that
succeed,
its
Jefferson
claim
Parish
against
asked
Waste
for
a
voluntary dismissal with prejudice of its claims against Waste
Management.
At first, Waste Management opposed the request.
However, on February 6, 2012 Waste Management joined in the request
for voluntary dismissal; by this motion, Jefferson Parish and Waste
Management jointly understood the federal court could dismiss the
Parish termination lawsuit; they acknowledged that the Jefferson
9
Parish/River Birch contract had been declared null and void by the
state court; and the parties agreed that the Parish's request for
declaratory relief was rendered moot by the Parish/River Birch
consent judgment; in fact, the motion for voluntary dismissal
attached a copy of the consent judgment, which contained the
Parish's admission that it could not succeed on its pivotal
appropriation dependency clause claim against Waste Management.
The parties also stipulated that
Waste Management has neither pled nor asserted in any of
its pleadings in this litigation including counterclaims,
a claim of malicious prosecution or bad faith litigation
against the Parish in connection with this litigation,
and the Parish agrees that it shall at no time assert a
defense based on res judicata as to any [such] claim,
which Waste Management may assert in future litigation.5
It was not until February 7, 2012, approximately two and a
half years after Jefferson Parish originally sued Waste Management,
5
Waste Management alleges that its agreement to join the
Parish's request for voluntary dismissal
was not the result of any sort of settlement
or compromise.
To the contrary, Waste
Management only agreed to jointly move for
voluntary dismissal of Jefferson Parish's
appropriation dependency clause claim because
the motion was for dismissal with prejudice
and it contained the acknowledgment by
Jefferson
Parish
that
the
Consent
Judgment...in
which
Jefferson
Parish
acknowledged that it could not succeed in its
appropriation dependency clause claim against
Waste Management...was fatal to Jefferson
Parish's claim.
In fact, Waste Management
expressly reserved its right to bring a
malicious prosecution claim against Jefferson
Parish....
10
that another Section of this Court granted the joint request, and
dismissed Jefferson Parish's case with prejudice.
It is against this bloated and tortuous backdrop that on
February 6, 2013 Waste Management filed the pending lawsuit against
Jefferson Parish, alleging malicious prosecution and seeking to
recover attorney's fees and costs. Waste Management now charges in
this Court that Jefferson Parish maliciously initiated and pursued
its claims against Waste Management for early termination of the
Landfill Contract, all the while knowing that its claim was
factually flawed and baseless in law.
Jefferson Parish at first
requested dismissal of Waste Management's initial complaint on the
ground that it fails to state a claim upon which relief can be
granted.
But on March 27, 2013 the Court denied without prejudice
the motion to dismiss, and permitted Waste Management to file an
amended complaint.
On April 3, 2013 Waste Management filed its
amended complaint, in which it alleges that the dismissal of the
Parish's claim on February 7, 2012 was a dismissal based on and
reflecting the lack of merit of the Parish's claim, and that the
dismissal constituted a bona fide termination of the Parish's
appropriation dependency clause claim against Waste Management; all
in Waste Management's favor.
Jefferson Parish again seeks dismissal of Waste Management's
amended complaint for malicious prosecution on the ground that it
fails to state a claim upon which relief may be granted.
11
I.
Rule 12(b)(6) of the Federal Rules of Civil Procedure allows
a party to move for dismissal of a complaint for failure to state
a claim upon which relief can be granted.
Such a motion is rarely
granted because it is viewed with disfavor.
See Lowrey v. Tex. A
& M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997) (quoting Kaiser
Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d
1045, 1050 (5th Cir. 1982)).
Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a
pleading must contain a "short and plain statement of the claim
showing that the pleader is entitled to relief."
Ashcroft v.
Iqbal, 556 U.S. 662, 678-79 (2009)(citing Fed.R.Civ.P. 8).
"[T]he
pleading standard Rule 8 announces does not require 'detailed
factual allegations,' but it demands more than an unadorned, thedefendant-unlawfully-harmed-me accusation."
Id. at 678 (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
Thus,
in
considering
a
Rule
12(b)(6)
motion,
the
Court
“accepts ‘all well-pleaded facts as true, viewing them in the light
most favorable to the plaintiff.’”
See Martin K. Eby Constr. Co.
v. Dall. Area Rapid Transit, 369 F.3d 464 (5th Cir. 2004) (quoting
Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999)).
But, in
deciding whether dismissal is warranted, the Court will not accept
conclusory allegations in the complaint as true.
at 1050.
Kaiser, 677 F.2d
Indeed, the Court must first identify allegations that
12
are conclusory and, thus, not entitled to the assumption of truth.
Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). A corollary: legal
conclusions “must be supported by factual allegations.”
678.
Assuming
the
veracity
of
the
well-pleaded
Id. at
factual
allegations, the Court must then determine “whether they plausibly
give rise to an entitlement to relief.” Id. at 679.
“‘To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.’” Gonzalez v. Kay, 577 F.3d
600, 603 (5th Cir. 2009)(quoting Iqbal, 556 U.S. at 678)(internal
quotation marks omitted).
“Factual allegations must be enough to
raise a right to relief above the speculative level, on the
assumption that all the allegations in the complaint are true (even
if doubtful in fact).”
Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007) (citations and footnote omitted).
“A claim has facial
plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678 (“The
plausibility standard is not akin to a ‘probability requirement,’
but it asks for more than a sheer possibility that a defendant has
acted
unlawfully.”).
This
is
a
“context-specific
task
that
requires the reviewing court to draw on its judicial experience and
common sense.”
Id. at 679.
“Where a complaint pleads facts that
are merely consistent with a defendant’s liability, it stops short
13
of the line between possibility and plausibility of entitlement to
relief.” Id. at 678 (internal quotations omitted) (citing Twombly,
550 U.S. at 557).
“[A] plaintiff’s obligation to provide the
‘grounds’ of his ‘entitle[ment] to relief’”, thus, “requires more
than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.”
Twombly, 550 U.S. at
555 (alteration in original) (citation omitted).
Finally, “[w]hen reviewing a motion to dismiss, a district
court ‘must consider the complaint in its entirety, as well as
other sources ordinarily examined when ruling on Rule 12(b)(6)
motions to dismiss, in particular, documents incorporated into the
complaint by reference, and matters of which a court may take
judicial notice.”
Funk v. Stryker Corp., 631 F.3d 777, 783 (5th
Cir. 2011)(quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
551 U.S. 308, 322 (2007)).
II.
To state a claim for malicious prosecution under Louisiana
law, a plaintiff must allege facts supporting several essential
elements:
(1)
(2)
(3)
(4)
(5)
(6)
the commencement or continuance of an original
criminal or civil judicial pleading;
its legal causation by the present defendant
against plaintiff who was defendant in the original
proceeding;
its bona fide termination in favor of the present
plaintiff;
the absence of probable cause for such proceeding;
the presence of malice therein; and
damages conforming to legal standards resulting to
14
plaintiff.
Hibernia Nat'l Bank of New Orleans v. Bolleter, 390 So.2d 842 (La.
1980).
Because Louisiana public policy guarantees that people
acting in good faith shall have access to courts to redress wrongs,
malicious prosecution lawsuits are disfavored; indeed, "in order to
sustain them, a clear case must be established, where the forms of
justice have been perverted to the gratification of private malice
and the willful oppression of the innocent."
Johnson v. Pearce,
313 So.2d 812, 816 (La. 1975)(quotation omitted).
Jefferson Parish seeks to dismiss Waste Management's malicious
prosecution lawsuit on the ground that Waste Management has not and
cannot allege the third element -- that there was a bona fide
termination of the prior termination lawsuit in Waste Management's
favor.
The Parish also challenges the sufficiency of the factual
allegations supporting the fifth element -- malice.
A.
"Favorable" Termination?
The parties earnestly dispute the contours of the favorable
termination element.6
Jefferson Parish would have this Court
conclude that, as a matter of law, that its voluntary dismissal of
the underlying suit nullifies any subsequent malicious prosecution
6
There is no dispute that the underlying litigation is
ended and final. The dispute involves whether its termination can
be considered to be "on the merits" and "favorable" to Waste
Management.
15
claim.7
Absent a judicial resolution in favor of the aggrieved
malicious prosecution plaintiff, the Parish insists, the underlying
lawsuit was not terminated on the merits.
Waste Management
counters that it has pled facts that, if proven, satisfy the bona
fide termination element of its malicious prosecution claim; Waste
Management urges that its amended complaint alleges facts that go
beyond merely prevailing in the underlying lawsuit as a result of
some mere procedural or technical defense.
The prior lawsuit need
not end with a trial on the merits, Waste Management submits, as
long as the termination is not merely procedural, but, rather,
"reflects the merits" of the underlying action.
common sense, agrees.
The Court, and
Because the voluntary dismissal directly
focused the merits of the early termination case, in that the
Parish
publicly
appropriations
and
judicially
dependency
acknowledged
clause
claim
that
lacked
its
merit,
central
Waste
Management correctly contends that its amended complaint satisfies
the bona fide "favorable" termination element at the pleading stage
of this lawsuit.
record,
the
Court
At this stage of the litigation, and on this
agrees
that
Waste
Management's
allegations
satisfy the favorable termination requirement.
On one end of the spectrum, a victory after a trial on the
merits in the underlying litigation in favor of the malicious
7
Jefferson Parish also suggests that a request for a
judicial declaration of rights under a contract, as a matter of
law, can never constitute malicious prosecution.
16
prosecution plaintiff is by far the clearest example of a bona fide
termination in favor of the malicious prosecution plaintiff.
At
the other end, it is clear that dismissal of the underlying lawsuit
on only technical or procedural grounds does not implicate the
dispute's merits and, therefore, does not satisfy the "favorable"
component of the bona fide termination requirement.
Of course,
there are other ways in which a lawsuit may be terminated; those
will fall in the middle of this spectrum.
of them:
And this case raises one
voluntary dismissal effected not as a result of a
settlement but, rather, after (the allegations suggest) one party
has candidly conceded that it could not succeed on the central
merits of its claim in the underlying litigation.
Waste Management advances the argument that its case falls
somewhere in that middle, but that a review of the circumstances
establishes that it did, in fact, succeed on the merits of its
claim (or would have, had it prolonged the underlying litigation
and forced a judicial determination of what the Parish had already
conceded – that it could not succeed on its claim).
For its part,
Jefferson Parish would have this Court hold that there is no middle
ground in Louisiana; that malicious prosecution cases fall into one
or the other category and that, as a matter of law, a case that is
voluntarily
termination.
dismissed
can
never
be
considered
a
"favorable"
A review of the scope of the favorable termination
element in the Louisiana case literature reveals no clear bright-
17
line rule to apply in the voluntary dismissal context under the
facts alleged here.
A merely procedural victory, such as when a case is dismissed
on the ground of improper venue,8 prescription,9 or failure to allow
discovery10 is not a bona fide termination in favor of a malicious
prosecution plaintiff. See Deville v. Marcantel, 567 F.3d 156, 173
(5th Cir. 2009)(citation omitted), cert. denied, 130 S.Ct. 243
(2010); see also Savoie v. Rubin, 820 So.2d 486 (La. 2002).
Procedural victories simply do not resolve the merits of the
dispute.
See Savoie, 820 So.2d at 488.
dismissal
is
accomplished
"with
Even if a procedural
prejudice",
the
dismissal
on
technical grounds is not transformed into a conclusion on the
merits so as to satisfy the favorable termination element of a
malicious prosecution claim.
See Deville, 567 F.3d at 173 ("A
procedural dismissal of the [prior lawsuit], even if the dismissal
is with prejudice, does not satisfy [the bona fide termination]
8
Savoie v. Rubin, 820 So.2d 486, 488 (La. 2002)(dismissal
of the underlying suit based upon an exception raising the
objection of improper venue is not a bona fide termination of the
underlying litigation in the plaintiff's favor).
9
Milling, Benson, Woodward, Hillyer, Pierson and Miller,
L.L.P. v. American Marine Holding Co., 729 So.2d 139, 142 (La.App.
4 Cir. 1999)(dismissal of the underlying suit based upon an
exception raising the objection of prescription is not a bona fide
termination of the underlying litigation in the plaintiff's favor).
10
Terro v. Chamblee, 663 So.2d 75, 77-78 (dismissal of the
underlying suit based upon a failure to allow discovery is not a
bona fide termination of the underlying litigation in the
plaintiff's favor).
18
element of [a malicious prosecution] cause of action.").11
Indeed,
the purpose of this requirement, the Louisiana high court has
observed, "is that the underlying litigation should be brought to
a conclusion on the merits before a malicious prosecution suit
based on the underlying litigation is allowed to proceed."
Savoie, 820 So.2d at 488.
See
The question remains: what is a
"conclusion on the merits"?
Because the Louisiana Supreme Court focused on the bona fide
termination element most recently in Savoie, the parties dispute
the
parameters
of
the
element
in
the
context
of
the
Savoie
decision: In Savoie, Dr. Rubin sued his former lawyer, Mr. Savoie,
for legal malpractice in two venues:
he first filed in Orleans
Parish (Rubin I) and one month later filed an identical suit in
Jefferson Parish (Rubin II).
In Rubin I, Mr. Savoie filed an
exception of improper venue, which the court granted and dismissed
the suit with prejudice.
Upon dismissal of Rubin I -- and,
significantly, while Rubin II remained pending in Jefferson Parish
-- Mr. Savoie filed a malicious prosecution and defamation lawsuit
11
In Deville, the Fifth Circuit affirmed the district
court's ruling dismissing, on summary judgment, a malicious
prosecution claim where it was undisputed that the charges in the
underlying lawsuit were dismissed by the parish district attorney's
decision to nolle prosse the charges, "which is a procedural
dismissal of the charges without prejudice--not a bona fide
In reaching this
termination in the defendant's favor."
Id.
conclusion, the Fifth Circuit noted that dismissal of an indictment
pursuant to La.Code Crim. P. 691 and 693 "is not a bar to a
subsequent prosecution...." Id. at 173 n.10.
19
against Dr. Rubin, his attorney and that attorney's law firm in
Orleans Parish (Rubin III). Mr. Savoie alleged that Dr. Rubin made
false allegations in Rubin I and that Dr. Rubin's lawyer and his
firm failed to independently investigate the facts before filing a
malpractice lawsuit.
Dr. Rubin and the other defendants filed
exceptions of prematurity and no cause of action, arguing that
Rubin
II
remained
pending,
making
Mr.
Savoie's
malicious
prosecution suit premature. In opposing the exceptions, Mr. Savoie
argued that the judgment of dismissal "with prejudice" in Rubin I
was a final judgment by operation of La. Code Civ. P. art. 1673.
The
district
court
denied
the
defendants'
exceptions
without
assigning reasons, and the court of appeal denied the writ without
comment.
But the state high court granted the writ, and remanded
the case to the court of appeal for briefing, argument, and full
opinion.
After the appellate court found that the judgment of
dismissal with prejudice in Rubin I is a final judgment, affirming
the district court's judgment, the state high court again granted
certiorari, framing the "sole issue" as:
[W]hether the judgment of the district court in Rubin I
dismissing that suit with prejudice constitutes a final
judgment on the merits of the underlying litigation, such
that the malicious prosecution suit in Rubin III may now
proceed.
Id. at 488. The Louisiana Supreme Court first contrasted the Civil
Code definitions of final judgment (a "judgment that determines the
merits in whole or in part...") and interlocutory judgment (a
20
"judgment that does not determine the merits but only preliminary
matters in the course of the action").
See id.
Even though it is
settled that a judgment sustaining an exception of improper venue
is
an
interlocutory
judgment,
Mr.
Savoie
insisted
that
the
dismissal of Rubin I "with prejudice" had the effect of a final
judgment; he invoked La. Code Civ. P. art. 1673, which provides
that a "judgment of dismissal with prejudice shall have the effect
of a final judgment of absolute dismissal after trial."
But the
Louisiana Supreme Court refused to adopt the literal reading urged
by Mr. Savoie.
Id. at 488 ("we believe that construing an
interlocutory judgment of dismissal based on venue as a final
disposition on the merits would produce an absurd or unintended
result under the facts of this case.").
"The
obvious
purpose
of
the
'bona
fide
termination'
requirement in malicious prosecution cases," the state high court
observed, "is that the underlying litigation should be brought to
a conclusion on the merits before a malicious prosecution suit
based on the underlying litigation is allowed to proceed." Id.
It
was clear on the facts presented that "the merits of the underlying
litigation remain pending in Rubin II."
Id. at 488 n.4.
Thus, the
state high court concluded, "the district court's dismissal of
Rubin I based on an exception of improper venue cannot be equated
to a 'bona fide termination' of the underlying litigation in Mr.
Savoie's favor."
Id.
21
Jefferson Parish seizes on the "conclusion on the merits"
pronouncement in support of its argument that a voluntary dismissal
can not be considered such a conclusion because the court does not
reach
the
presented
merits.
here:
But
whether
Savoie
a
does
voluntary
not
resolve
dismissal
the
can
dispute
ever
be
considered a favorable termination in favor of the prior defendant
(malicious prosecution plaintiff).
There is no case literature in
Louisiana directly on point to settle this debate.
Relatedly, and
paradoxically, whether a voluntary dismissal of underlying criminal
charges may constitute a bona fide termination in favor of the
accused has not been resolved doctrinally in the case literature.12
12
Compare Banken v. Locke, 66 So. 763 (La. 1914)(noting
that "[t]he prosecution of a cause does not always involve a
trial[; here] the prosecution had terminated in a nolle
prosequi...ad plaintiff therefore had the right to institute this
[malicious prosecution] suit"); LeBlanc v. Pynes, 69 So.3d 1273
(La.App. 2 Cir. 2011)(finding that nolle prosequi constituted a
bona fide termination and noting that the law enforcement official
testified that the lack of evidence led to the dismissal of the
criminal prosecution); Hope v. City of Shreveport, 862 So.2d 1139
(La.App. 2 Cir. 2003)(finding bona fide termination in favor of
malicious prosecution plaintiff element satisfied where criminal
proceedings had been dismissed by the district attorney); Amos v.
Brown, 828 So.2d 138 (La.App. 2 Cir. 2002)(noting that "a nol pros
implies a 'bona fide' termination in favor of [the malicious
prosecution plaintiff] where the nol pros had not been obtained as
part of a bargained-for dismissal but, rather, because of
abandonment by the victim); Plessy v. Hayes Motor Co., Inc., 742
So.2d 934 (La.App. 2d Cir. 1999)("[w]e find the dismissal of the
charge...sufficient to establish a bona fide termination of the
criminal proceedings"); Watson v. Church's Fried Chicken, Inc., 527
So.2d 979 (La.App. 4th Cir. 1988)(dismissal of charges constituted
bona fide termination in favor of malicious prosecution plaintiff),
writ denied 532 So.2d 135 (1988) with Deville v. Marcantel, 567
F.3d 156, 173 (5th Cir. 2009)(holding that procedural dismissal, as
of right, of charges against a criminal defendant, which does not
22
A majority of other states, Waste Management points out, have
determined that a voluntary dismissal satisfies the favorable
termination
element
of
a
malicious
prosecution
claim
if
the
circumstances indicate that the suit was dismissed because the
underlying claims were without merit. See, e.g., Frey v. Stoneman,
150 Ariz. 106, 722 P.2d 274, 279 (1986) (holding that a termination
will be deemed favorable based on the circumstances of dismissal);
Siebel v. Mittlesteadt, 41 Cal.4th 735, 62 Cal.Rptr.3d 155, 161
P.3d 527, 531 (2007) (reasoning that the judgment as a whole must
be construed to determine whether a dismissal is a favorable
termination); Cult Awareness Network v. Church of Scientology
Int'l, 177 Ill.2d 267, 226 Ill.Dec. 604, 685 N.E.2d 1347, 1354
(1997); Nelson v. Miller, 227 Kan. 271, 607 P.2d 438, 446 (1980);
Plouffe v. Mont. Dep't of Pub. Health & Human Servs., 2002 MT 64,
¶ 35, 309 Mont. 184, 45 P.3d 10 (“[T]he law in Montana affords a
presumption that voluntary dismissal of an action by the plaintiff
reflects favorably for the defendant unless evidence demonstrates
the converse.”); Neely v. First State Bank, 1998 OK 119, ¶ 10, 975
bar subsequent prosecution, does not satisfy bona fide termination
requirement); Irby v. Harrell, 74 So. 163 (La. 1917)(noting that to
show that a prosecution terminated favorably "there must have been
an acquittal, or else an abandonment of the prosecution equivalent
thereto", but "[a]n abandonment [of the prosecution] brought about
by a compromise[] is not the equivalent of an acquittal.");
Congress Square Limited Partnership v. Polk, No. 10-317, 2011 WL
837144 (E.D. La. Mar. 4, 2011)(finding that favorable termination
element was not satisfied in light of fact that the parties did not
dispute that the underlying charge of criminal trespass was
dismissed by the city attorney prior to trial).
23
P.2d 435, 437 (reviewing the circumstances underlying a dismissal
to determine whether the dismissal was a favorable termination);
Siliski v. Allstate Ins. Co., 174 Vt. 200, 811 A.2d 148, 151–52
(2002); Portland Trailer & Equipment, Inc. v. A-1 Freeman Moving &
Storage, Inc., 182 Or.App. 347, 356, 49 P.3d 803, 808 (“… the
voluntary dismissal of an underlying action before a trial on the
merits is favorable to the defendant if it reflects adversely on
the merits of the underlying action.”); Jaress & Leong v. Burt, 150
F. Supp. 2d 1058, 1064 (D.Haw. 2001) (explaining that the Hawaii
Supreme Court has found that voluntary dismissals with prejudice
satisfy the favorable termination requirement).13
Jefferson Parish contends that the merits of the underlying
lawsuit were never reached.
Waste Management counters that the
voluntary dismissal with prejudice was indeed conclusive of the
merits
of
the
case
because
the
dismissal
was
entered
after
Jefferson Parish conceded that it could not succeed in its attempt
to obtain declaratory relief concerning early termination of the
contract.
That its heavy reliance on the funding provision was
impotent. That concession seems decisive to this Court, the rather
hazy case literature notwithstanding.
13
Some states allow a voluntary dismissal to satisfy that
element no matter what the circumstances. See Barrett Mobile Home
Transp., Inc. v. McGugin, 530 So.2d 730, 735 (Ala.1988) (holding
that a voluntary dismissal without prejudice will suffice as a
favorable termination); Raine v. Drasin, 621 S.W.2d 895, 900
(Ky.1981) (holding that an agreed order of dismissal terminates
prior litigation and constitutes a favorable termination).
24
Given
that
the
case
literature
does
not
speak
to
what
circumstances determine whether to interpret a voluntary dismissal
as a favorable dismissal, the Court must endeavor to apply the
principles that have been developed and make an informed guess as
to how the state high court might decide this issue, being mindful
that this issue is being raised in the context of a motion to
dismiss, not summary judgment.
Louisiana case literature hints
unsatisfactorily that there can be no favorable termination when
the merits have not been reached.
Jefferson Parish insists that
the underlying litigation it pursued against Waste Management was
not
judicially
resolved
after
a
trial
or
dispositive
motion
practice and that, therefore, it was not conclusive of the merits.
This argument pays homage to form over substance and insists that
the Court must ignore the Parish's unqualified concession that it
could not succeed.14
That its dependence on the funding provision
was flawed and defective.
factual
allegations
Waste Management points to detailed
concerning
the
history
of
and
how
the
underlying litigation was resolved and how the resolution, it is
alleged, could not be merely procedural, but was accomplished after
a conclusion on the merits: (1) it was not resolved as a result of
a settlement; (2) Jefferson Parish acknowledged that it could not
14
No rule demands a full-blown trial on the merits. Nor
is there a blanket rule in Louisiana that provides that a voluntary
dismissal of a claim prior to trial can never satisfy the bona fide
termination element.
25
succeed on its claim against Waste Management; and (3) Waste
Management specifically reserved its right to seek relief for
malicious prosecution.
In other words, the allegations posit,
Jefferson Parish abandoned its lawsuit against Waste Management
after conceding that it could not possibly succeed on its claim.
Although not a judicial determination following a trial on the
merits,
the
Court
finds
that
Waste
Management
has
alleged
sufficient facts to plausibly support the favorable termination
element.15
B.
Malice?
Jefferson Parish next contends that the facts as pled by Waste
Management,
if
taken
as
true,
fail
to
support
a
finding
of
malicious intent sufficient to satisfy that element of Waste
Management's malicious prosecution claim.
The Court disagrees.
"Malice can be inferred when the evidence shows that 'the
claimant acted with absence of caution and inquiry that a person
should employ before filing suit'" and "malice exists when there is
'knowledge that is false or a reckless disregard for the truth.'"
15
The Parish's abandonment of its claim under the factual
circumstances alleged by Waste Management plausibly supports a
finding (if all the facts are proven) that the voluntary dismissal
was effected as a result of a conclusion on the merits. It seems
unreasonable at best to demand that Waste Management continue
defending litigation that Jefferson Parish admits has no merit. Of
course the Court makes no determination regarding the ultimate
merit of Waste Management's claim. And it is important to note
that no criminal charges were ever asserted against River Birch or
its principals. In fact, the U.S. Department of Justice publicly
announced the termination of its investigation.
26
Wiley v. Wiley, 800 So.2d 1106 (La.App. 3 Cir. 2001)(citations
omitted).
Indeed, let's remember an earlier caution of the
Louisiana Supreme Court:
[M]alice does not submit readily to defintion.... Any
feeling of hatred, animosity, or ill will toward the
plaintiff, of course, amounts to malice.... But it is
not essential to prove such ill will. Malice is found
when the defendant uses the prosecution for the purpose
of obtaining an unfair advantage, for instance, as a
means to extort money, to collect a debt, to recover
property, to compel performance of a contract, ...or as
an experiment to discover who might have committed the
crime....
Miller v. East Baton Rouge Parish Sheriff's Department, 511 So.2d
446, 453 (La. 1987)(internal quotations and citations omitted).
Waste Management's allegations that the Parish made false
claims in bad faith and attempted to obtain a private advantage
concerning its attempt to invoke the appropriation dependency
clause are sufficient to withstand the Parish's challenge to the
technical sufficiency of its allegations.
Accordingly, IT IS ORDERED: that the defendant's motion to
dismiss the amended complaint is DENIED.
New Orleans, Louisiana, June 3, 2013
______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE
27
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