Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_06-cv-00302/USCOURTS-almd-2_06-cv-00302-0/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1391 Personal Injury

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Under the dismissal standard, the court must accept all facts that are pled as true. 

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IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA 

NORTHERN DIVISION

RUTH ELIZABETH STONE, )

)

Plaintiff, )

)

v. ) CASE NO. 2:06-cv-302-WKW

)

KMART CORPORATION, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

This case is before the court on Defendant Kmart Corporation’s (“Kmart” and sometimes referred

to as the “Defendant”) Motion to Dismiss (Doc. # 1) under Rule 12(b)(6) of the Federal Rules of Civil

Procedure. For the reasons that follow, Defendant’s Motion to Dismiss is due to be GRANTED. 

I. FACTS AND PROCEDURAL HISTORY1

Ruth Elizabeth Stone (“Stone” and sometimes referred to as the “Plaintiff”) was arrested and

charged with theft of property from Kmart on April 1, 2002. On February 23, 2004, the charge against

Plaintiff was nolle prosequi, and she subsequently filed this action in state court exactly two years later,

on February 23, 2006, claiming the proceedings instituted by Kmart were done maliciously and without

probable cause. Kmart timely removed the case to this court on April 5, 2006, and filed the instant Motion

to Dismiss on April 6, 2006.

On June 22, 2002, Kmart filed a voluntary petition under Chapter 11 of the United States

Bankruptcy Code in the United States BankruptcyCourtfor the Northern District of Illinois. Kmart’s First

Amended Joint Plan of Reorganization (“Reorganization Plan”) became effective on May 6, 2003.

Pursuant to the terms of the Reorganization Plan, personal injury claims against Kmart arising between

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January 22, 2002, and May 6, 2003, were to be filed on or before June 20, 2003 (the “Bar Date”). All

personal injury claims not filed before the Bar Date were lost, with the Reorganization Plan operating as

an injunction against the commencement of litigation on any such claims.

Kmart’s Motion to Dismiss claims the full benefit of the Bar Date to preclude Plaintiff’s malicious

prosecution action. Kmart claims the cause of action “arose” during the claim period because the arrest

occurred during that period. Plaintiff responds that her cause of action for malicious prosecution did not

accrue until all the elements were in place, which was February 23, 2004, when the charges were nolle

prosequi. She further alleges she is pursuing third party insurance benefits. However, Kmart appears to

be self-insured. (Rock Aff. ¶ 3.) 

II. STANDARD FOR DISMISSAL

“Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant may move to

dismiss a complaint on the ground that the plaintiff has failed to state a claim upon which relief may be

granted.” Gorman v. Roberts, 909 F. Supp. 1493, 1497 (M.D. Ala. 1995). “[A] complaint should not be

dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of

facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46

(1957); see also Jackam v. Hospital Corp. of America Mideast, Ltd., 800 F.2d 1577 (11th Cir. 1986)).

The Court must accept all factual allegations as true and view them in a light most favorable to the

plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). The threshold is “exceedingly low” for a

complaint to survive a motion to dismiss for failure to state a claim. Ancata v. Prison Health Servs., Inc.,

769 F.2d 700, 703 (11th Cir. 1985).

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III. DISCUSSION

Kmart argues that Stone’s claims must be dismissed because the Reorganization Plan bars Stone’s

malicious prosecution action. Under Alabama law, the necessary elements for a malicious prosecution

action are: “(1) institution or continuation of an original judicial proceeding, either civil or criminal; (2)

by or at the instance of the defendant; (3) termination of such proceeding in plaintiff’s favor; (4) malice

in instituting the proceeding; (5) want of probable cause for the proceeding; and (6) injury or damage as

the result of the prosecution’s complaint.” Kroger Co. v. Puckett, 351 So. 2d 582, 585 (Ala. Civ. App.

1977). Alabama jurisprudence has consistently held that “[m]alicious prosecution actions are disfavored

in the law for the very reason that ‘anyone who has reasonable cause to believe that there is reasonable

cause for legal redress and protection has a lawful right to seek such redress without risk of being sued and

having to respond in damages for seeking successfully to enforce his rights.’” Shoney’s Inc. v. Barnett, 773

So. 2d 1015, 1023 (Ala. Civ. App. 1999) (quoting Alabama Power Co. v. Neighbors, 402 So. 2d 958, 962

(Ala. 1981)). 

The issue is not whether Plaintiff’s claim fulfills the elements of a malicious prosecution action,

but the specific point of accrual for Stone’s claim. Kmart contends that the action accrued at the moment

of the theft, while Stone contends that the action accrued at the moment the charges were nol-prosed. The

court agrees with Stone that her malicious prosecution action accrued at the time that the proceeding

terminated in her favor - - more specifically, when the charges were nol-prosed by the prosecutor. The

basic elements to a malicious prosecution action require that the proceeding terminate in the plaintiff’s

favor before she can even put ink to a complaint. See Barrett Mobile Home Transport, Inc. v. McGugin,

530 So. 2d 730 (Ala. 1988) (holding that amalicious prosecution action does not accrue until the the action

terminates in favor of the plaintiff). Without the aforementioned necessary element of the claim, Plaintiff

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is without a cause of action. Plaintiff’s malicious prosecution action, if filed at the time of theft, would

have been premature. On February 23, 2004, the time that the charges were nol-prosed, Plaintiff’s cause

of action accrued for state law purposes.

Kmart, however, argues that even if Alabama law considers the accrual date of a malicious

prosecution action to be the time that the case terminated in favor of the Plaintiff, the definition of a claim

under the Bankruptcy Code is broad and should include Plaintiff’s cause of action. Defendant avers that

Plaintiff should have filed her malicious prosecution claim with the Trustee of the bankruptcy estate before

the Bar Date for all claims against Kmart. Further, Kmart says that because Plaintiff did not file the action

at that time, she is foreclosed from filing her claim at all against Kmart. Kmart argues that the definition

of claim entails even claims that have yet to accrue, including Plaintiff’s malicious prosecution claim. 

The court agrees with Defendant’s analysis based upon Eleventh Circuit precedent. The definition

of the term claim as used in the Bankruptcy Code is:

(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated,

fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or

unsecured; or 

(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to

payment, whether or not such right to an equitable remedy is reduced to judgment, fixed,

contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. 

11 U.S.C. § 101(5). Because the purpose behind bankruptcy law is to provide the debtor with a “fresh

start,” “[t]he legislative history of the [Bankruptcy] Code suggests that Congress intended to define the

term claim very broadly under § 101(5), so that ‘all legal obligations of the debtor, no matter how remote

or contingent, will be able to be dealt with in the bankruptcy case.’” Epstein v. Off. Com. of Unsecured

Creditors of theEst. of Piper Aircraft, 58 F.3d 1573, 1576 (11th Cir. 1995) (quoting H.R. Rep. No. 95-595,

(1978)) (emphasis added). Further, as an extension of itsinterpretation of legislative history, the Eleventh

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Circuit has rejected the “accrued state law claim test” of other circuits, a test which “states that there is no

claim for bankruptcy purposes until a claim has accrued under state law.” Piper, 58 F.3d at 1576 n.2. 

The accrual time for Plaintiff’s malicious prosecution claim under Alabama law does not control

this action. The relevant inquiry is whether a claim has accrued under bankruptcy law based upon the

statutory definition of a claim. The court finds that Plaintiff’s claim accrued for purposes of bankruptcy

law prior to the Bar Date. Applying the broad definition of claim to the facts of this case, Plaintiff, at the

time of her arrest, had an arguably remote claim for malicious prosecution against Kmart. The scope of

the term claim, as determined through the legislative history of the Bankruptcy Code, is more than broad

enough to accommodate a malicious prosecution action, although the action has not accrued for purposes

of state law. See also In re M.A.S. Realty Corp., 138 B.R. 234, 237-38 (“[A] non-debtor party to an

executory contract does not need to wait until the contract is rejected or otherwise breached in order to

have a claim within the broad meaning of the Code.”). The claim is contingent upon termination of the

criminal case in favor of Plaintiff, which at least arguably would happen at some point during her criminal

investigation or trial. That makes the claim at least “contingent” or “unmatured” in the context of the

Code. Although, at first blush, the result seems unfair to Plaintiff, her claim is inextricably intertwined

with the pre-bankruptcy state of Kmart, and therefore, if allowed, would render the “fresh start” mandate

of Congress meaningless. 

Plaintiff contends that she can still maintain an action against Defendant’s insurance company for

her claim. However, Sally E. Rock, a claims manager for Kmart, submitted an affidavit stating that Kmart

is a self-insured entity. (Rock Aff. ¶ 3.) Because Kmart is self-insured, any judgment against it would be

paid solely by Kmart, rather than by a third party insurance company. For this reason, Plaintiff’s original

theory that the insurance company, rather than Kmart, would pay for a judgment is misplaced. 

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IV. CONCLUSION

For the reasons set forth above, it is hereby ORDERED that 

1. Defendant’s Motion to Dismiss (Doc. # 1) is GRANTED; 

2. This action is due to be DISMISSED; and

3. An appropriate judgment will be entered.

DONE this 30th day of March, 2007.

 /s/ W. Keith Watkins 

UNITED STATES DISTRICT JUDGE 

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