Wyles v. Sussman

• Court: Court of Appeals for the Tenth Circuit
• Decided: June 23, 2025
• Docket: 24-1226
• Status: Unpublished

Opinion

Appellate Case: 24-1226 Document: 46-1 Date Filed: 06/23/2025 FILED Page: 1 United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS June 23, 2025 FOR THE TENTH CIRCUIT Christopher M. Wolpert _________________________________ Clerk of Court TERRENCE M. WYLES,

Plaintiff - Appellant,

v. No. 24-1226 (D.C. No. 1:17-CV-01868-RBJ) ALLEN ZACHARY SUSSMAN; LOEB & (D. Colo.) LOEB LLP,

Defendants - Appellees,

and

ALUMINAID INTERNATIONAL, A.G.; WEST HILLS RESEARCH & DEVELOPMENT, INC., f/k/a Aluminaid, Inc.; CARL J. FREER; JAMES JOHN HUNT; ADAM FREER, f/k/a Adam Agerstam; JULIA FREER-AGERSTAM, f/k/a Julia Agerstam; DAVID ANDREW WARNOCK; ALEX ARENDT,

Defendants. _________________________________

ORDER AND JUDGMENT * _________________________________

Before HARTZ, BALDOCK, and MORITZ, Circuit Judges. **

* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. ** After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. Appellate Case: 24-1226 Document: 46-1 Date Filed: 06/23/2025 Page: 2

_________________________________

I. INTRODUCTION

Plaintiff Terrence M. Wyles appeals the district court’s grant of summary

judgment in favor of Defendants Allen Zachary Sussman and Loeb & Loeb, LLP on

his claim of malicious prosecution. Exercising jurisdiction under 28 U.S.C. § 1291,

we affirm.

II. BACKGROUND

Wyles is a Colorado attorney who briefly worked as in-house counsel for

Aluminaid, Inc., which terminated him in April 2013. In July 2013 the company,

under the new name of West Hills Research and Development, Inc., sued Wyles in

California state court. The complaint asserted 12 causes of action, including claims

for breach of fiduciary duty, misappropriation of trade secrets, and intentional and

negligent interference with economic advantage. Loeb & Loeb represented West

Hills in the lawsuit, and Sussman was a partner at the firm.

In September 2016 the California court learned that West Hills’ corporate

status had been suspended. It issued an order to show cause why the case should not

be dismissed “if the status issue is not taken care of.” Aplt. App., Vol. I at 145. Then,

“[b]ased on the representation of counsel that [West Hills’ corporate status] is still

suspended,” the court in October dismissed the case without prejudice “for [West

Hills’] failure to be able to proceed as a corporate entity.” Id. at 150.

In August 2017 Wyles filed the present action in the United States District

Court for the District of Colorado, raising multiple claims against multiple

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defendants. Among the claims was a claim against Defendants for malicious

prosecution arising out of their involvement in the California lawsuit. Defendants

successfully moved for summary judgment on that claim. The court ruled that Wyles

could not establish one of the elements of malicious prosecution—that the California

lawsuit “was terminated in [his] favor.” Id., Vol. IV at 485. Judgment has been

entered on all claims against all defendants.

This appeal concerns only the court’s summary judgment on the malicious-

prosecution claim.

III. DISCUSSION

A. Standard of Review

“We review the district court’s grant of summary judgment de novo, applying

the same legal standard that the district court is to apply.” N.H. Ins. Co. v. TSG Ski &

Golf, LLC, 128 F.4th 1337, 1344 (10th Cir. 2025). Summary judgment is appropriate

if “there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a).

When, as in this case, a federal court is exercising diversity jurisdiction, it

must apply “state law to the substantive issues of the appeal[] and determine which

state’s law applies by using the forum state’s choice-of-law rule.” Gorsuch, Ltd. v.

Wells Fargo Nat. Bank Ass’n, 771 F.3d 1230, 1236 n.7 (10th Cir. 2014). The parties

disagree over whether Colorado or California law applies to this action. But because

the parties agree that there is no outcome-determinative conflict between Colorado

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and California law as to the malicious-prosecution claim, we need not resolve the

choice-of-law issue. See Dummar v. Lummis, 543 F.3d 614, 619 (10th Cir. 2008).

B. Malicious Prosecution

The parties do not dispute that in both Colorado and California, a claim for

malicious prosecution requires the plaintiff to establish that the previous action,

which was allegedly prosecuted maliciously (here the suit against Wyles by West

Hills), ended in his favor. See Hewitt v. Rice, 154 P.3d 408, 411 (Colo. 2007)

(“Generally, to prevail on a claim for malicious prosecution, the following elements

must be satisfied: (1) the defendant contributed to bringing a prior action against the

plaintiff; (2) the prior action ended in favor of the plaintiff; (3) no probable cause; (4)

malice; and (5) damages.” (emphasis added)); Parrish v. Latham & Watkins, 400

P.3d 1, 7 (Cal. 2017) (“The common law tort of malicious prosecution . . . consists of

three elements. The underlying action must have been: (i) initiated or maintained by,

or at the direction of, the defendant, and pursued to a legal termination in favor of

the malicious prosecution plaintiff; (ii) initiated or maintained without probable

cause; and (iii) initiated or maintained with malice.” (emphasis added and citations

and internal quotation marks omitted)). In particular, the termination must be based

on the merits of the previous action in a manner indicating the nonliability of the

malicious-prosecution plaintiff. See Hewitt, 154 P.3d at 410 (“Favorable termination

is a question of law requiring an action to be resolved on the merits in favor of the

party claiming malicious prosecution.” (emphasis added)); Hewitt, 119 P.3d 541, 544

(Colo. App. 2004), aff’d, 154 P.3d. 408 (“To show a termination in one’s favor, a

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plaintiff must prove that the court passed on the merits of the charge or claim against

him in such circumstances as to show one’s innocence or non-liability, or show that

the proceedings were terminated or abandoned at the instance of the defendant in

circumstances that fairly imply the plaintiff’s innocence.” (internal quotation marks

omitted)); Siebel v. Mittlesteadt, 161 P.3d 527, 531 (Cal. 2007) (to establish

favorable termination “the termination must reflect the merits of the action and

plaintiff’s innocence of the misconduct alleged in the lawsuit” (emphasis added and

internal quotation marks omitted)).

Wyles argues that the district court erred in determining that he could not

satisfy the favorable-termination element of malicious prosecution. He contends 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.”

Aplt. Br. at 8. We disagree. That is not the standard for favorable termination.

Here, the California court dismissed West Hills’ action against Wyles without

prejudice because the company’s corporate status was suspended, and it therefore

lacked the legal capacity to sue. See Casiopea Bovet, LLC v. Chiang, 12 Cal. App.

5th 656, 662 (Cal. Ct. App. 2017) (“A corporation that has had its powers suspended

lacks the legal capacity to prosecute or defend a civil action during its suspension.”

(internal quotation marks omitted)). The court’s order stated: “Based on the

representation of counsel that [West Hills] is still suspended, this case is

DISMISSED for [West Hills’] failure to be able to proceed as a corporate entity.”

Aplt. App., Vol. I at 150. The notice of ruling stated that “[t]he court dismissed the

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entire action without prejudice.” Id. at 152. In no way did this ruling reflect on the

merits of West Hills’ legal claims against Wyles. Indeed, the suit could be revived if

West Hills regained corporate status.

Although Wyles maintains that Colorado law applies, he argues in the

alternative that “[i]n some circumstances, if there is a termination other than on the

merits, California creates a jury issue as to whether the termination was favorable.”

Aplt. Br. at 8. For support, he cites Fuentes v. Berry, 38 Cal. App. 4th 1800, 1808

(Cal. Ct. App. 1995). But that case stands only for the proposition that if there is a

conflict “as to the circumstances explaining a failure to prosecute an action further,

the determination of the reasons underlying the dismissal is a question of fact.” Id. at

1808. Here, however, there is no question about the circumstances or reasons

underlying the termination of the California lawsuit. The court unequivocally

dismissed the action because West Hills’ corporate status was suspended, not because

the company’s claims against Wyles were without merit.

We agree with the district court’s ruling that Wyles cannot establish a

necessary element of malicious prosecution.

IV. CONCLUSION

We AFFIRM the judgment below.

Entered for the Court

Harris L Hartz Circuit Judge