Plaintiff sued Defendant for malicious prosecution. Defendant filed a motion to dismiss, arguing the suit should be dismissed under applicable Washington law.
In a malicious prosecution claim, the injury for purposes of lex loci delicti occurs in the state where the malicious lawsuit was terminated in favor of the complaining party.
Sterne Agee (Plaintiff), a Delaware corporation with headquarters in Alabama, sued U.S. National Bank Association (Defendant) for malicious prosecution in Alabama. This lawsuit was brought after Defendant sued Plaintiff and others in Washington for violations of the Washington State Securities Act. Judgment was entered in favor of Plaintiff in the previous suit. In the present suit, Defendant filed a motion to dismiss, arguing that under lex loci delicti Washington law applied and Plaintiff had not stated a sufficient claim for relief under the Washington standard. Plaintiff argued against this motion, stating that under lex loci delicti Alabama law applied because financial harm was felt by the Plaintiff’s headquarters in Alabama.
In a malicious prosecution case, does the injury occur in the state where the malicious prosecution was terminated in favor of the complaining party?
Yes, the law of the state where the malicious position was terminated in favor of the complaining party should be applied.
The Court first acknowledged that Alabama’s choice of law doctrine followed lex loci delicti. Under this doctrine, the Court determined that the injury occurred in Washington where the allegedly malicious lawsuit was terminated in favor of the Plaintiff and thus Washington law must be applied to the case. Analogizing cases involving bad-faith failure to defend tort claims, the Court rejected the Plaintiff’s argument that the injury should be defined by the financial harm felt in Alabama, because expending financial resources are inevitable in a lawsuit, whereas termination of the lawsuit in favor of the Plaintiff was what gave rise to the claim of maliciousness.