MIAMI BUSINESS LITIGATION: CLAIMS OF MALICIOUS PROSECUTION

When a business prevails in a lawsuit that was brought unjustly, it might have a cause of action for malicious prosecution. The cause of action for malicious prosecution arises out of the wrongful commencement of a judicial proceeding. “The essence of the tort of malicious prosecution is the misuse of legal machinery for an improper purpose.” Rushing v. Bosse, 652 So. 2d 869 (Fla. 4th DCA 1995). Malicious prosecution could be an option if your business is sued in a baseless lawsuit. The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

To prevail on a claim of malicious prosecution, a plaintiff must prove the following elements:

• an original judicial proceeding against the present plaintiff was commenced or continued’
• the present defendant was the legal cause of the original proceeding;
• the termination of the original proceeding constituted a bona fide termination of that proceeding in favor of the present plaintiff;
• there was an absence of probable cause for the original proceeding;
• there was malice on the part of the present defendant; and
• the plaintiff suffered damages as a result of the original proceeding.

Burns v. GCC Beverages, Inc., 502 So. 2d 1217 (Fla. 1986). For there to be a bona fide termination of the proceeding in favor of plaintiff in the malicious prosecution action, there must be a termination of the proceeding on the merits. See Della-Donna v. Nova Univ., Inc., 512 So. 2d 1051 (Fla. 4th DCA 1987). A termination based on a voluntary dismissal, however, does not constitute a bona fide termination. See Gill v. Kostroff, 82 F. Supp. 2d 1354 (M.D. Fla., Feb. 8, 2000) (construing Florida law). Further, “[t]he determinative factor as to the existence of probable cause as an element of a malicious prosecution action is whether the suit was brought without reasonable prospect of success.” Phelan v. City of Coral Gables, 415 So. 2d 1292 (Fla. 3d DCA 1982). Malice can be can be subjective malice on the part of the tortfeasor, or it can be “legal malice,” which is malice inferred from the circumstances, such as a lack of probable cause. Morgan Intern. Realty, Inc. v. Dade Underwriters Ins. Agency, Inc., 617 So. 2d 455 (Fla. 3d DCA 1993).

An action for malicious prosecution also does not accrue until the termination of the underlying litigation in the favor of the plaintiff in the malicious prosecution action. Olson v. Johnson, 961 So. 2d 356 (Fla. 2d DCA 2007). Thus, a party cannot file a counterclaim for malicious prosecution in the underlying litigation.

An example of a malicious prosecution that occurred in the business context happened in Durkin v. Davis, 814 So. 2d 1246 (Fla. 2d DCA 2002). In Durkin, an accountant was sued by the purchasers of a business claiming that they relied on a faulty financial statement preparing by the account when they purchased the business. The accountant successfully defeated that claim by proving that the financial statement was not prepared until after the purchasers entered into a binding contract to purchase the business. The accountant then filed suit for malicious prosecution against the business purchasers. The trial court dismissed the accountant’s complaint with prejudice, and the accountant appealed. Florida’s Second District Court of Appeals reversed. The court focused on whether the accountant’s complaint had properly pleaded the legal elements of lack of probable cause and malice. The appellate court determined that the accountant’s relevant allegation, stating the purchasers entered into a contract before the accountant prepared the financial affidavit, was sufficient to support a finding of lack of probable cause. The appellate court also held that legal malice could be inferred from the lack of probable cause.

Business owners who feel wronged if their business is unjustly sued may consider their options for repairing their reputation and recuperating some of the damage caused by the unjust lawsuit. In some circumstances, an action for malicious prosecution may be available to them.

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.