Loeb & Loeb Will Not Face Sanctions for Malicious Prosecution

The Tenth Circuit affirmed the United States District Court for the District of Colorado’s dismissal of a malicious prosecution claim lodged by Terrence M. Wyles, former General Counsel of West Hills Research & Development, Inc., against his former employer’s legal counsel, Loeb & Loeb LLP. In its June 23 ruling, the panel agreed that Wyles could not prove a required element of his malicious prosecution claim.

Wyles alleged that an earlier lawsuit against him brought by West Hills, stemming from the acrimonious end of his employment with the medical device company, constituted malicious prosecution. In July 2013, West Hills, represented by Loeb & Loeb, asserted twelve causes of action against its former General Counsel, including claims for breach of fiduciary duty, misappropriation of trade secrets, and intentional and negligent interference with economic advantage. A California state court ultimately dismissed the case without prejudice in 2016 after West Hills’ corporate status was suspended.

The following year, Wyles responded with a malicious prosecution suit, naming Loeb & Loeb, and the firm’s partner, Allen Zachary Sussman, as defendants. The district court dismissed Wyles’ claim, and the Tenth Circuit affirmed this holding on June 23.

The panel’s rejection of Wyles’ suit hinged on one element of his malicious prosecution claim: whether West Hills’ prior suit against him was terminated in his favor. Wyles argued that “there is no question” that the California lawsuit was terminated in his favor, “as he was no longer subject to the liability which Defendants sought to impose on him.”

The Tenth Circuit was unpersuaded, relying on both California and Colorado precedent holding that a favorable termination is one which reaches the merits of the claim as to show the plaintiff’s innocence or lack of liability. The panel explained that the California court “unequivocally dismissed the action because West Hills’ corporate status was suspended, not because the company’s claims against Wyles were without merit.” Moreover, the California court had expressly contemplated that West Hills could re-file its claims against Wyles if it regained the legal capacity to sue.