Portfolio Recovery Associates, LLC (PRA) sued Sharon Kinner in Pennsylvania state court for delinquency on a credit card account. Kinner filed preliminary objections to the complaint, which the court sustained. PRA filed an amended complaint, but Kinner filed further objections that were also sustained. Instead of filing a second amended complaint, PRA filed a praecipe to discontinue the action without prejudice. Kinner then sued PRA in state court, alleging that PRA had sued her for improper purposes, lacked probable cause, and violated Pennsylvania's Dragonetti Act. PRA removed the case to federal court, where the District Court granted summary judgment to PRA. Kinner appealed, arguing that the dismissal of the state court action constituted a favorable termination under the Dragonetti Act.
The Third Circuit applied Pennsylvania law to determine whether the state court action terminated in Kinner's favor. Under the Dragonetti Act, a claim must terminate in the plaintiff's favor to support a malicious prosecution action. The court noted that PRA withdrew its complaint without prejudice early in the proceedings after Kinner's preliminary objections were sustained and the deadline for filing a second amended complaint had passed. The court distinguished this from cases where claims are withdrawn on the day of trial, which might constitute favorable termination. The court reasoned that PRA's withdrawal was not 'tantamount to the unbidden abandonment of a claim brought in bad faith.' Because the withdrawal was not an abandonment in bad faith, the statutory requirement for a favorable termination was not met, and Kinner's Dragonetti Act claim failed.
The decision clarifies that a defendant's voluntary withdrawal of a complaint without prejudice, particularly after preliminary objections are sustained, does not automatically satisfy the favorable termination element required for a Dragonetti Act claim. This limits the ability of defendants to use Dragonetti Act claims as a remedy when a plaintiff voluntarily dismisses a case without prejudice rather than facing a judgment on the merits. The case was affirmed, leaving the summary judgment for PRA in place.
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