Bextel v. Bryner
| Decision Date | 04 December 2020 |
| Docket Number | No. 19-8080,19-8080 |
| Parties | JONATHAN BEXTEL, Plaintiff - Appellant, v. M. CANDICE BRYNER; LAW OFFICES OF M. CANDICE BRYNER, a California professional corporation; CHARLES RICHARDS, Defendants - Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
(D. Wyo.)
ORDER AND JUDGMENT*Before TYMKOVICH, Chief Judge, MURPHY and PHILLIPS, Circuit Judges.
Wyoming law requires a plaintiff suing for malicious prosecution to show that the underlying (and allegedly malicious) lawsuit terminated in his or her favor. The lawsuit underlying this malicious-prosecution case occurred in California, when Charles Richards sued Jonathan Bextel. The California court found that it lacked personal jurisdiction over Bextel, and Richards dismissed him from the lawsuitwithout prejudice. Citing the California lawsuit, Bextel sued Richards1 in Wyoming for malicious prosecution. The district court dismissed the case, concluding that Bextel could not make out a malicious-prosecution claim because the California lawsuit did not terminate in his favor. We agree with the district court, so we affirm.
Bextel worked for, and eventually acquired, a Wyoming company that organizes limited liability companies, maintains an inventory of those companies, and provides them to "customers who want to have a Wyoming LLC." Aplt. App. at 18. In line with this practice, Bextel organized Mountain Meadow Partners, LLC. A man named Darrell Shortes eventually bought "the right to the name 'Mountain Meadow Partners, LLC,' and the official filings with the Wyoming Secretary of State for that entity," id. at 20, and Bextel's company resigned as the agent for Mountain Meadow Partners.
More than two years later, Bextel learned about a judgment against him from California. It turned out that, in a California court, Richards had sued Bextel, Shortes, Mountain Meadow Partners, and several others for fraud (among other things) based on a failed business deal between Richards and a person claiming to beShortes, operating through Mountain Meadow Partners. Richards's fraud claim alleged that the person claiming to be Shortes was in fact Bextel or someone else. Richards also alleged that Bextel is a principal of Mountain Meadow Partners. The California court eventually entered a default judgment against Bextel, and Richards went to a Wyoming court and obtained a writ of execution on the default judgment.
Once Bextel found out about the default judgment from California, he successfully moved to vacate it. The California court agreed that it lacked personal jurisdiction over him. Evaluating personal jurisdiction, the California court opined that Richards "offered mostly speculation" to support his claim that Bextel misrepresented himself as Shortes and that Richards offered no support for his claim that Bextel could not have been only an organizer and registered agent for Mountain Meadow Partners. Id. at 88. After the California court's jurisdictional ruling, Bextel demanded that Richards dismiss him from the California lawsuit with prejudice. Richards refused, ultimately dismissing Bextel without prejudice.
Bextel then sued Richards for malicious prosecution in a Wyoming state court. Richards invoked diversity jurisdiction and removed the case to federal court. Then he moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that Bextel failed to state a claim because he did not allege facts showing, as he must, that the California lawsuit terminated in his favor. The district court agreed and dismissed the case.
We review a Rule 12(b)(6) dismissal de novo. Smallen v. W. Union Co., 950 F.3d 1297, 1305 (10th Cir. 2020). To survive a motion to dismiss, "a complaint must plead facts sufficient 'to state a claim to relief that is plausible on its face.'" Slater v. A.G. Edwards & Sons, Inc., 719 F.3d 1190, 1196 (10th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
In diversity cases, federal courts apply state law with the goal "of obtaining the result that would be reached in state court." Butt v. Bank of Am., N.A., 477 F.3d 1171, 1179 (10th Cir. 2007). We apply the choice-of-law rules of the forum state, in this case, Wyoming. See Pepsi-Cola Bottling Co. of Pittsburg, Inc. v. PepsiCo, Inc., 431 F.3d 1241, 1255 (10th Cir. 2005). The parties agree that Wyoming law governs Bextel's malicious-prosecution claim.
To ascertain and apply state law, we start with the most recent decisions from the state's highest court. Coll v. First Am. Title Ins. Co., 642 F.3d 876, 886 (10th Cir. 2011). If no controlling state opinion exists, we must try to predict what the state's highest court would do. Id. Such a prediction "should consider state court decisions, decisions of other states, federal decisions, and the general weight and trend of authority." Armijo v. Ex Cam, Inc., 843 F.2d 406, 407 (10th Cir. 1988).
At least for now, this case turns on one element of a malicious-prosecution claim under Wyoming law: the allegedly malicious prosecution must have terminated in favor of the party now suing, see Consumers Filling Station Co. v. Durante, 333 P.2d 691, 694 (Wyo. 1958). The allegedly malicious prosecution in this case—the California lawsuit—ended with a voluntary dismissal without prejudice after the court ruled that it lacked jurisdiction over Bextel. Would the Supreme Court of Wyoming view that disposition as a termination in Bextel's favor? Bextel thinks so, highlighting an opinion from more than a century ago, McIntosh v. Wales, 134 P. 274 (Wyo. 1913).
The defendants in McIntosh accused the plaintiff of stealing unbranded calves. Id. at 275. But "after inquiry and investigation," the prosecutor "refused to prosecute," and the charge "was without the consent of the" defendants dismissed. Id. The plaintiff then successfully sued the defendants for malicious prosecution. Id. The defendants argued on appeal "that the dismissal of the criminal proceeding by the justice of the peace at the request of the prosecuting attorney without submitting any evidence was not a termination of that proceeding in [the] plaintiff's favor." Id. at 276. The Supreme Court of Wyoming disagreed, noting that the dismissal "put an end to any further proceedings" on the criminal complaint and that the proceedings "could not be revived," while recognizing that the "dismissal would be no bar to a prosecution for the same offense charged in a new and different complaint." Id. at 277.
We agree with Bextel that McIntosh shows that a voluntary dismissal without prejudice can amount to favorable termination for purposes of malicious prosecution. Given that the prosecutor refused to go forward and that the dismissal would not bar a future prosecution for the same offense, it is fair to say that the underlying criminal case in McIntosh ended with a voluntary dismissal without prejudice.
Richards would distinguish McIntosh in two ways. First, he highlights that the underlying case in McIntosh was criminal whereas here it was civil. We do not see why that difference should matter, however, because "the same elements must be present to authorize the maintenance of an action for maliciously instituting a civil suit as for maliciously prosecuting a criminal proceeding," Consumers Filling Station, 333 P.2d at 694. Second, Richards tells us that the prosecutor dismissed the underlying case in McIntosh because he "lacked credible evidence." Aplee. Br. at 14. True, the prosecutor in McIntosh refused to go forward "after inquiry and investigation." 134 P. at 275. But although it might be reasonable to infer that the investigation revealed holes in the evidence (or even affirmatively showed the plaintiff's innocence), the McIntosh opinion does not make clear the results of the investigation or the reason for the prosecutor's decision to drop the charge. So McIntosh does not expressly limit itself to cases in which the initial prosecution ends in a dismissal based on a lack of credible evidence.
But neither does McIntosh expressly say that a voluntary dismissal without prejudice necessarily amounts to a favorable termination supporting a later malicious-prosecution claim. After all, voluntary dismissals without prejudice can occur for many reasons, ranging from a lack of evidence to a decision to refile in a different forum. The underlying criminal case in McIntosh is but one example of a case that can fairly be described as ending with a voluntary dismissal without prejudice. Whatever we might say about McIntosh, it does not delineate what types of voluntary dismissals amount to a favorable termination. And so it leaves usuncertain about the circumstances under which the Supreme Court of Wyoming would conclude that a voluntary dismissal without prejudice qualifies as a favorable termination. The parties have not identified other Wyoming authority resolving that question, and we have not found any. So we look elsewhere.
The Restatement provides guidance because the Supreme Court of Wyoming has relied on it "on numerous occasions to develop [its] common law." Howard v. Aspen Way Enters., Inc., 406 P.3d 1271, 1278 (Wyo. 2017). The Restatement tells us that civil proceedings can terminate in favor of the person against whom they are brought by "the withdrawal of the proceedings by the person bringing them." Restatement (Second) of Torts § 674 cmt. j (1977). But whether such a withdrawal constitutes a termination in favor of the person against whom the proceedings are brought "depends upon the circumstances under which the proceedings are withdrawn." Id. "In determining the effect of withdrawal the same considerations are decisive as when criminal charges are withdrawn . . . ." Id. And when a criminal case is dismissed, "abandonment of the proceedings because the accuser believes that the accused is innocent or that a conviction has, in the natural course of events, become impossible or improbable, is a sufficient termination in favor the...
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