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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: February 26, 2020

Dismissal Based on Excluded Evidence Insufficient Basis for Malicious Prosecution Claim

On February 11, 2020, Justice Borrok of the New York County Commercial Division issued a decision in Wey v. NASDAQ, Inc., 2020 NY Slip Op. 50210(U), holding that a dismissal based on excluded evidence was an insufficient basis for a malicious prosecution claim, explaining:

The elements of a claim for malicious prosecution are (1) the commencement or continuation of a criminal proceeding by the defendant against the plaintiff; (2) the termination of the proceeding in favor of the plaintiff; (3) the absence of probable cause for the criminal proceeding; and (4) actual malice. Significantly, probable cause to believe that a crime has been committed is a complete defense to a cause of action for malicious prosecution. Here, the Plaintiffs fail to adequately allege that the US Attorney lacked probable cause to obtain Mr. Wey’s criminal indictment, putting aside any statements made to law enforcement by the defendants, and cannot establish that the criminal proceeding against Mr. Wey actually terminated in his favor. Critically, the fact that the federal court suppressed the evidence seized pursuant to the search warrant does not, ipso facto, mean Mr. Wey was free of guilt. It solely means that the manner in which the evidence was obtained violated his Fourth Amendment rights and that the evidence obtained had to be suppressed as fruit of the poisonous tree of that illicit search. And, dismissal, under the circumstances, solely means that the government determined that it could not meet its burden of going forward, absent the suppressed evidence, i.e., and not that Mr. Wey was in any way exonerated. For the avoidance of doubt, the government stated as much when it voluntarily dismissed its case: the nolle prosequi entered in the criminal proceeding against Mr. Wey explains that the Government sought charges in this matter based in significant part on materials seized during the searches of Mr. Wey’s home and office and that following the district court’s grant of Mr. Wey’s motion to suppress the Government could no longer rely on that evidence at trial and, therefore, chose not to proceed. As such, the Complaint fails to state a claim for malicious prosecution.

(Internal quotations and citations omitted).

New York courts are tolerant of litigants would advance claims or defenses that ultimately are found to be meritless. However, if a litigant brings claims that are completely without a legal or factual basis in bad faith, they can be subject to sanctions and can be held liable for the tort of malicious prosecution. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding whether you have recourse against someone who has brought baseless claims against you.

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