California Supreme Court allows malicious prosecution action to proceed, holding that a post-judgment settlement constituted a favorable termination of the underlying case
July 16, 2007
Siebel v. Mittlesteadt (2007) 41 Cal.4th 735 (California Supreme Court). An employee of Siebel Systems sued the head of the company, GMSR's client Tom Siebel, for sexual discrimination and wrongful termination. Through motions and a jury trial, he prevailed on every claim. While the plaintiff's appeal from the resulting judgment was pending, Siebel agreed to settle with her. Under the settlement agreement, the plaintiff paid the entirety of the cost judgment Siebel had recovered and dismissed her appeal, and she and Siebel exchanged mutual releases. However, the release did not extend to the plaintiff's lawyers; Siebel expressly reserved his right to sue them for malicious prosecution. This appeal arose from Siebel's malicious prosecution action against the lawyers. It raised a novel question concerning one of the requirements of a malicious prosecution suit: The malicious prosecution plaintiff must have obtained a "favorable termination" of the underlying case. In most cases, a settlement of the underlying case before judgment precludes a finding of favorable termination. However, there is virtually no law on whether or how that rule applies when the malicious prosecution plaintiff actually won the underlying case before settling. The Supreme Court addressed that question here, holding that "a post-judgment settlement constitutes a favorable termination when the malicious prosecution plaintiff received a favorable judgment in the underlying action, and settled without giving up any portion of the judgment in his favor."
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