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. e du/thir dc ir c uit_1996/137UNITED STATES COURT O F APPEALS

FOR THE THIRD CIRCUIT

No. 95-7206

JOHN A. HILFIRTY; MARTHA L. MILLER

v.

DAVID C. SHIPMAN; KENNETH R. SCHRINER; BRETT O. FEESE; STEPHEN C. SCHOPFER; BETTY A. NOLL

Martha Mill er,

Appell ant

Appeal from the United States District C ourt for the Middle District of Pennsylvani a (D.C. Civil No. 4:CV-93-1497)

Argued January 25, 1996

Before: COWEN and SAROKIN, Circuit Jud ges and POLLAK, District Judge (Filed July 31, 1995)

Donald A. Bailey (argued) Suite #9

845 Sir Thomas C ourt Olde English Gap Harrisburg, PA 17170

Attorney for App ellant

Gary L. Weber (a rgued) Mitchell, Mitche ll, Gray & Gallagher

10 West Third St reet Williamsport, PA 17701

Attorney for App ellee Schriner

William A. Hebe (argued)Spencer, Gleason & Hebe

17 Central Avenu e P.O. Box 507 Wellsboro, PA 16901

Attorney for App ellee Feese

J. David Smith McCormick, Reede r, Nichols, Bahl, Knech t & Person

835 West Fourth Street

P.O. Box 577 Williamsport, PA 17703

Robin A. Read (a rgued) McNerney, Page, Vanderlin

& Hall

433 Market Stree t

P.O. Box 7 Williamsport, PA 17703

Attorneys for Ap pellee Schopfer

OPINION OF THE COURT

SAROKIN, Circuit Judge.

Plaintiff Martha A. Miller filed a 42 U.S.C.  1983 action for malicious prosecution against numerous defendan ts after a motion by the state to nolle prosequi her criminal charges was granted. The motion to nolle prosequi her charges resulted from a compromise between the District Attorney's Office and her common law husband, John Hilfirty, who was arrested with her. Pursuant to this compromise, Hilfirty agreed to ent er an Accelerated Rehabilitative Disposition ("ARD") prog ram in exchange for dismissal of the charges against him a nd for the motion to nolle prosequi the charges against Miller

. The district court reviewing Miller's maliciou s prosecution claim granted summary judgment in favor of defendan ts on the ground that Miller failed to make out a prima facie case of malicious prosecution because she was unable to mee t the threshold requirement of demonstrating that the cri minal charges against her were terminated favorably. We conclude that a grant of nolle prosequi is insufficient to support a claim of malicious prosecution only in circumstances where the accused herself enters into a compromise with the prosecution in which she surrenders something of va lue to obtainthe dismissal or where the accused formally accepts the grant of

nolle prosequi in exchange for her knowing, volunta ry release of any future claims for malicious prosecution. Becau se we find that Miller neither compromised with the prosecutio n to obtain her grant of nolle prosequi nor formally accepted t he nolle prosequi in exchange for a release of future civil claims, we conclude that the underlying proceeding terminated in her favor for purposes of sustaining a malicious prosecution claim, and accordingly, we reverse as to the dismissal of the malicious prosecution claim.

I. John Hilfirty was terminated from his position as a general manager of a recycling center operated by the Lycom ing Valley Association for the Deaf (LVAD) on May 7, 1991. Hi s termination followed the deterioration of his relationship with the Chairman of the LVAD Board, Betty Noll, due to a dispute reg arding the alleged misuse of some of LVAD's funds. According to the complaint filed by Hilfirty and Miller before the d istrict court, Noll was involved in the mishandling of funds, and she had become frustrated with Hilfirty's refusal to participate i n her scheme. Hilfirty fought against his termination and ap plied for unemployment compensation, which LVAD contested. H ilfirty alleged that during the course of his unemployment compensation hearing a series of events transpired which led som e of the LVAD Board members to participate in a conspiracy with c ounty law enforcement authorities to have criminal charges fi led against Hilfirty and Miller, his common law wife, in order to try to ruin Hilfirty's reputation. In particular, Hilfirty cla imed that several LVAD Board members supplied false informati on to the prosecutor's office that Hilfirty had secretly reco rded LVAD Board meetings and telephone conversations with LVA D Board members in violation of Pennsylvania's wire-tapping statute. As a result of this information, a search warrant was is sued for the premises of the house shared by Hilfirty and Miller . The search

warrant identified the items to be searched for and seized to be "[e]lectronical [sic], mechanical, or other device as defined in

Pa. Crimes Code  5702 Tape Recordings (Audio or Visual) and transcripts, notes pertaining to illegal intercepts ." Appellee Appendix at 13. In the course of the ensuing search, several i tems were seized from the house, including cassette tapes, re corders, a small amount of illegal drugs and drug paraphernali a including pipes, bongs, and rolling paper. As a result of th is seizure, the District Attorney's Office filed criminal compl aints against both Hilfirty and Miller, who were arrested as a re sult. Hilfirty was charged with five counts of violating the Pennsylvania wire-tapping statute, one count of pos session of an electronic device capable of illicitly intercepting verbal communications, one count of criminal conspiracy, o ne count of possession of a controlled substance, and one count of possession of drug paraphernalia. Miller was charged with one count of criminal conspiracy to intercept oral communication s, one count of violation of the Pennsylvania wire-tapping statu te, one countof possession of drug paraphernalia, and one count of possession

of a controlled substance. Hilfirty and Miller were released on their own recognizance,

and their cases were consolidated for trial. In th e course of preparing for trial, Hilfirty and Miller filed a mo tion to suppress the evidence seized during the search on t he ground that probable cause for issuing the warrant was lacking. Their motion

was denied. In June of 1992, the District Attorney's Offic e approached Hilfirty's counsel, suggesting that Hilfirty's case be disposed of through the ARD program, whereby the charges aga inst Hilfirty would be dismissed if he agreed to certain terms, i ncluding probation for one year, payment of the costs of the prosecution, payment of a $250 administrative fee, payment of th e costs of supervision, performance of 32 hours of community s ervice, and the withdrawal of private criminal complaints he ha d filed against defendants Noll and Shipman. After some ne gotiations, Hilfirty agreed to enter the ARD program on the con dition that the District Attorney's Office would file a motion to nolle prosequi the charges against Miller. Accordingly, Hilfirty signed, and the court approved, a document through which he entered the ARD program. On the same day, the Cour t of Common Pleas of Lycoming County also separately issued an order granting the Commonwealth's Motion to Nolle Prosequi the cha rges against Miller. Miller did not sign any documents acceptin g the grant of nolle prosequi. According to two affidavits by attorneys from the District Attorney's Office which were presented by defendant s to the district court in the instant civil action, counsel for both Hilfirty and Miller were present at these negotiati ons. Miller presented no evidence to the contrary before the di strict court, although she asserts on appeal that she neither ini tiated these negotiations nor participated in any of these discu ssions herself. Rather, she avers that during these discu ssions Hilfirty's counsel alone agreed that Hilfirty would be willing to enter the ARD program if a motion to nolle prosequi Miller's charges were granted. Following the disposition of their crimin al case, Hilfirty and Miller filed a civil complaint in fede ral district court against the following individuals: LVAD Boar d member David C. Shipman; former LVAD Board member Betty Noll; Ly coming County Detective Kenneth R. Schriner; Lycoming County Dist rict Attorney Brett O. Feese; and Stephen C. Schopfer of the Lyco ming County Solid Waste Department. Plaintiffs' complaint cont ained five counts alleging, inter alia, a section 1983 claim b ased on alleged violations under the First, Fourth, Fifth a nd Fourteenth Amendments of their right to be free from malicious prosecution, their right to be free from unlawful searches and s eizures, their right to their lawful interest in their property an d their right not to be falsely arrested without due process of l aw. Their complaint further alleged claims under section 1983 for conspiracy to deprive plaintiffs of their constitut ional rights,

as well as claims under section 1986 for failure to prevent a conspiracy and pendent state claims for malicious p rosecution anddeprivation of life, liberty and property under the Constitution

of the Commonwealth of Pennsylvania.

The five individual defendants in this action responded by filing motions to dismiss. Defendants Shipman and Noll framed their motions to dismiss alternatively as motions f or summary judgment. The district court treated all five moti ons as motions for summary judgment because it accepted and consid ered material outside of the pleadings, specifically affidavits, in disposing of the motions. It granted summary judgment to def endants on all federal claims and Miller's state malicious prosecu tion claim and dismissed the other pendent state claims withou t prejudice. With the exception of plaintiffs' section 1983 claim of malicious prosecution, the district court found tha t all of plaintiffs' federal claims were time-barred because the statute of limitations had run. With regard to the malicio us prosecution claim, the district court found that neither Hilfir ty nor Miller was able to meet the threshold requirement of demon strating that the underlying proceeding terminated in his/her fav or. Hilfirty v. Shipman, No. 93-1497, slip op. at 16 (M.D. Pa. J une 3, 1994) (hereinafter "Dist. Ct. Op."). The only appellant in this matter is Martha Mi ller, who appeals to this court only from that portion of the district court's judgment regarding her claim for malicious prosecution. The only appellees here are Schriner, Feese and Sch opfer.

II. The district court had jurisdiction over this matter pursuant to 28 U.S.C.  1331 and 1343(3) & (4) and 42 U.S.C.  1983. This court exercises jurisdiction over this appeal of a final order of the district court pursuant to 28 U. S.C.  1291.

Our review of the district court's order for s ummary judgment is plenary, and we thus apply the same sta ndards that were applicable in the district court. J.F. Feeser , Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1530 (3d Cir. 1990), cert.denied, 499 U.S. 921 (1991). Summary judgment is appropriately granted when "there is no genuine issue as to any m aterial fact and the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). If, however, "the ev idence is such that a reasonable jury could return a verdict for t he nonmoving party," Anderson v. Liberty Lobby, Inc., 477 U.S. 2 42, 248 (1986), summary judgment shall not be granted. Mil ler, as the nonmoving party, is entitled to have all reasonable inferences drawn in her favor. See J.F. Feeser, 909 F.2d at 1 531.

III. The district court issued summary judgment in favor of defendants on the malicious prosecution claim becau se it

determined that Miller was unable to meet the thres hold requirement of demonstrating that the criminal acti on "terminated in a manner 'consistent with innocence, such as acq uittal or reversal of conviction.'" Dist. Ct. Op. at 16 (quot ing Junod v. Bader, 458 A.2d 251, 253 (Pa. Super. Ct. 1983) (cit ing Anolik v. Marcovsky, 186 A. 418 (Pa. Super. Ct. 1936))). Spe cifically, the district court concluded that the "nol prossing of charges aspart of a plea bargain agreement [does not] equat[e ] to the

termination of the underlying proceedings in plaint iffs' favor." Dist. Ct. Op. at 19. We are required to determine whether the

district court was correct in its assessment that t here was no genuine issue of material fact regarding whether th e underlying proceedings terminated in Miller's favor.

A. As an initial matter, we will assess whether t he district court appropriately converted the 12(b)(6) motions filed by defendants into motions for summary judgment. The district court explained that in reviewing the motions to dismiss, it accepted and considered four affidavits presented by defenda nts and the affidavit of Hilfirty, attached to plaintiffs' Memo randum of Law and Facts, and that accordingly, it considered all motions as motions for summary judgment. Dist. Ct. Op. at 7 n .19. Federal Rule of Civil Procedure 12(b) provides that if, on a motion to dismiss under Rule 12(b)(6),

matters outside the pleading are presented to and not excluded by the court, the motion shall be tre ated as one for summary judgment and disposed of as pr ovided in Rule 56, and all parties shall be given reason able opportunity to present all material made perti nent to such a motion by Rule 56. Fed. R. Civ. P. 12(b). Given that the district cou rt accepted and considered documents outside of the pleadings i n the course of disposing of defendants' motion, its treatment o f these motions as motions for summary judgment was appropr iate under the plain terms of the rule. See 5A Charles Alan Wrigh t & Arthur Miller, Federal Practice and Procedure  1366 at 493 (West 1990) (noting that "[o]nce the court decides to accept ma tters outside the pleading, it must convert the motion to dismiss into one for summary judgment"). Miller argues in her brief before this Court, however, that the "lower court's decision was pre-mature" [sic] a nd claims that "[d]iscovery should have been allowed." Appellant' s Brief at 11. Specifically, Miller contends that, had she had the opportunity to present the district court with more material re garding the circumstances under which the compromise was reache d between the prosecution and Hilfirty, it would have been eviden t to the district court that she did not participate in the compromise and that, therefore, the court's grant of nolle prosequ i should be considered to be a termination of the proceedings i n her favor. While she does not clearly define her argument as such, we interpret her claim to be that the district court e rred in failing to provide notice that it was treating the motions to dismiss as motions for summary judgment and erred i n failing to provide her an opportunity to submit material in su pport of her position. It is, indeed, well-established that pri or to converting a motion to dismiss into a motion for su mmary judgment, the district court must provide adequate notice to the parties. Rose v. Bartle, 871 F.2d 331, 342 (3d Cir . 1989) ("We

have held that it is reversible error for a distric t court to convert a motion under Rule 12(b)(6) . . . into a m otion forsummary judgment unless the court provides notice o f its

intention to convert and allows an opportunity to s ubmit materials admissible.") (and cases cited therein); 5A Wright & Miller, supra,  1366 at 501 ("It is important that the court give the parties notice of the changed status of th e motion and a 'reasonable opportunity to present all material mad e pertinent to such a motion by Rule 56.'"). Certainly, the nonmo ving party must have adequate notice and time to present to th e district

court material relevant to her claim in order to de monstrate that there is a genuine issue of material fact that rend ers summary disposition of the case inappropriate.

We find in the instant matter that Miller had adequate

notice that the court would convert defendants' mot ions to dismiss into summary judgment motions, as well as a dequate opportunity to respond. The primary reason for our conclusion is

that two of the five motions to dismiss were framed in the alternative as motions for summary judgment. See Di st. Ct. Op. at 6. This court has previously held that "[w]here a party has filed a motion for summary judgment, the opposing p arty is under an obligation to respond to that motion in a timely fashion and to place before the court all materials it wishes t o have

considered when the court rules on the motion." Co wgill v. Raymark Industries, Inc., 780 F.2d 324, 329 (3d Cir . 1985). That the two motions were framed only in the alternative as motions for summary judgment does not alter our conclusion. Miller was on notice that the court was considering two motion s for summary judgment, and she had the opportunity to respond ov er a period of nearly eight months, between the filing of the defe ndants'

motions to dismiss in late October 1993 and the dis trict court's final judgment in June of 1994. Furthermore, neit her Miller nor Hilfirty ever objected to defendants' submission of affidavits with their motions, nor did either Miller or Hilfir ty make a motion for discovery before the court. Rather, Hil firty

submitted his own affidavit with their brief before the court. Thus, it was appropriate for the district court to treat the motions as ones for summary judgment.

B.

We will now assess the district court's conclu sion that Miller failed to meet the threshold requirement for a claim for malicious prosecution. In order to state a prima facie case for a sec tion 1983 claim of malicious prosecution, the plaintiff must establish the elements of the common law tort as it has developed over time. See Lee v. Mihalich, 847 F.2d 66, 70 (3d Cir. 1988) ; see alsoMcArdle v. Tronetti, 961 F.2d 1083, 1088 (3d Cir. 1992); Singleton v. City of New York, 632 F.2d 185, 195 (2 d Cir. 1980) (collecting cases), cert. denied, 450 U.S. 920 (198 1). In Pennsylvania, like most jurisdictions, a party brin ging a malicious prosecution claim must demonstrate that ( 1) the defendants initiated a criminal proceeding; (2) the criminal proceeding ended in the plaintiff's favor; (3) the proceeding was initiated without probable cause; and (4) the defen dants acted maliciously or for a purpose other than bringing th e plaintiff tojustice. Haefner v. Burkey, 626 A.2d 519, 521 (Pa. 1993); seealso Lee, 847

F.2d at 69-70.

The resolution of this case rests on an asse ssment of whether Miller is able to meet the second requireme nt, i.e. demonstrate that the criminal proceedings below end ed in her favor. According to the Restatement (Second) of To rts  659 (1976), which has been relied upon by the Pennsylva nia Supreme Court, criminal proceedings are terminated in favor of the accused by (a) a discharge by a magistrate at a prelimina ry hearing, or (b) the refusal of a grand jury to indict, or (c) the formal abandonment of the proceedings by the public prosecutor, or (d) the quashing of an indictment or informati on, or (e) an acquittal, or (f) a final order in favor of the accused by a trial or appellate court. Id., quoted in Haefner, 626 A.2d at 521. Miller's basic argument is that the prosecutio n's decision to move for nolle prosequi of her charges amounts t o a "formal abandonment of the proceedings by the public prosec utor," and

thus the district court should have found that the criminal proceedings had terminated in her favor. In partic ular, Miller refers us to the Pennsylvania Supreme Court's decis ion in Haefner, where the court determined that the plaint iff had met the threshold requirement for a malicious prosecuti on claim after the prosecution "nolle prossed the remaining charge s because of insufficient evidence." Haefner, 626 A.2d at 521. The court there noted, "'if the defendant is discharged after abandonment of the charges by the prosecutor, this is sufficien t to satisfy the requisite element of prior favorable terminatio n of the criminal action.'" Id. (quoting Woodyatt v. Bank o f Old York Road, 182 A.2d 500, 501 (Pa. 1962)). While Haefner clearly indicates that a grant o f nolle prosequi can be sufficient to satisfy the favorable termination requirement for malicious prosecution, not all case s where the prosecutor abandons criminal charges are considered to have terminated favorably. Indeed, the Pennsylvania Sup reme Court has previously held that a prosecutor's decision to wit hdraw criminal charges pursuant to a compromise with the accused i s not considered to be a termination sufficiently favorab le to support a malicious prosecution claim. See Alianell v. Hof fman, 176 A.2d 207 (Pa. 1935). Haefner, which did not involve a c ompromise agreement, did not disturb this holding.

It is indeed well-established at common law th at [a] termination of criminal proceedings in fav or of the accused other than by acquittal is not a suffi cient termination to meet the requirements of a caus e of action for malicious prosecution if

(a) the charge is withdrawn or the prosecution abandoned pursuant to an agreement of compromi se with

the accused . . . .Restatement (Second) of Torts  660. While the Pennsylvania

Supreme Court has never adopted this section of the Restatement, the Pennsylvania Superior Court has. See Junod v. Bader, 458 A.2d 251, 253-54 (Pa. Super. Ct. 1983) (finding tha t an ARD termination as a result of a compromise is not suff icient for meeting the threshold test for malicious prosecutio n and citing to section 660 of the Restatement). Section 660(a) of the Restatement has also been adopted by a multitude of other state courts, see, e.g., Broaddus v. Campbell, 911 S.W. 2 d 281, 284 (Ky. Ct. App. 1995); Piper v. Scher, 533 A.2d 974, 976 (N.J. Super. Ct. App. Div. 1987); Joiner v. Benton Commun ity Bank, 411 N.E.2d 229, 232 (Ill. 1980); Robinson v. Fimbel Do or Company, 306 A.2d 768, 770 (N.H. 1973), and at least two fed eral courts of appeals have accepted the general premise that dism issals resulting from a compromise with the prosecution ar e not "favorable terminations." See Taylor v. Gregg, 36 F .3d 453, 456 (5th Cir. 1994) (holding that dismissal of charges pursuant to a pre-trial diversion agreement with prosecutors is n ot termination of proceedings in favor of the accused to the exten t that it will support a malicious prosecution claim); Singleton, 632 F.2d at 194 (same). The basic premise for this rule is that, unlik e a situation where the prosecution seeks a grant of nolle proseq ui "because of insufficient evidence," Haefner, 626 A.2d at 521, d ismissal of charges as a result of a compromise is not an indic ation that the accused is actually innocent of the crimes charged. SeeRestatement (Second) of Torts  660 cmt. c ("[T]he fact of a compromise indicates that the question of [the accu sed's] guilt or innocence is left open."); Davis v. Chubb/Pacifi c Indem. Group, 493 F. Supp. 89, 92 (E.D. Pa. 1980) (noting that entry into an ARD program is a compromise that leaves the question of guilt or innocence open). Both the Restatement and case law suggest that only terminations that indicate that t he accused is innocent ought to be considered favorable. See Res tatement (Second) of Torts  660 cmt. a ("Proceedings are 'terminated in favor of the accused' . . . only when their final d isposition is such as to indicate the innocence of the accused.") ; Taylor, 36 F.3d at 456 (noting that "proceedings are terminate d in favor of the accused only when their final disposition indic ates that the accused is not guilty") (citing Singleton, 632 F.2d at 193); Jaffe v. Stone, 114 P.2d 335, 338 (Cal. 1941) (hold ing that "[t]he theory underlying the requirement of favorab le termination

is that it tends to indicate the innocence of the a ccused"). The district court relied upon this principle that the withdrawal of charges pursuant to a compromise is n ot a favorable termination in concluding that Miller was barred fr om filing a malicious prosecution claim. The court considered the grant of nolle prosequi of Miller's charges to be the result of a compromise and thus concluded that the termination of the underlying proceedings was not sufficiently favorab le to sustain Miller's malicious prosecution claim: The Commonwealth's willingness to nol pros the charges filed against [Miller] were conditioned on Hil firty'sentry into the ARD program. According to the

uncontradicted affidavits of prosecuting attor ney Ciampoli and First Assistant District Attorney Kenneth A. Osokow, had Hilfirty not agreed to enter th e ARD program, the charges against Miller would not have been dropped. The quid pro quo demanded and receiv ed by the Commonwealth deprives the nol pros of its effe ct and indicates that the nol prossing of the charges against Miller does not equate to, and cannot be consi dered as, a termination in her favor sufficient to suppo rt an action for malicious prosecution. Dist. Ct. Op. at 18-19. However, that Miller was a beneficiary of Hilf irty's compromise agreement with the prosecution does not require a finding that she, herself, entered into a compromis e. The Restatement specifically contemplates that a termin ation is not sufficiently favorable to support a claim for malic ious prosecution if "the charge is withdrawn . . . pursu ant to an agreement of compromise with the accused." Restate ment (Second) of Torts,  660 (emphasis added). An accused has entered into a compromise with the prosecution only if she herself offers something in return for the dismissal of her charge s -- the equivalent of "consideration" in a contract arrange ment. This "consideration" could be, for example, entry into a n ARD program such as that entered into by Hilfirty, or an agreem ent to pay restitution or return property to the victim. This interpretation is consistent with the common unders tanding of a compromise, where both parties give something up in order to accommodate the agreement, as well as with case law in which compromises have been found to bar malicious prosec ution claims. See, e.g., Alianell, 176 A.2d at 207 (finding malic ious prosecution claim barred where the prosecution "agr eed to withdraw the charges in consideration of a payment of $20 and the return of the goods in question"); Junod, 458 A.2d at 252-53 (finding malicious prosecution claim barred because accused agreed to enter into ARD program and comply with it s terms in exchange for dismissal of charges); Taylor, 36 F.3 d at 455-56 (finding malicious prosecution claim barred because accused entered into pre-trial diversion agreement, thereby agreeing to enter into program of supervision); Singleton, 632 F.2d at 188, 194 (finding malicious prosecution claim barred bec ause accused consented to an adjournment in contemplation of dis missal, thereby agreeing to enter into a program "not unlik e probation" where he is subject to the observation of the prose cution); Broaddus, 911 S.W.2d at 284 (finding malicious pros ecution claim barred because "[t]he dismissal was not the unilate ral act of the prosecutor; [the accused] gave up something to secu re the dismissal of the charges"); but see Tucker v. Dunca n, 499 F.2d 963, 964 (4th Cir. 1974) (finding malicious prosecu tion claim barred simply because prosecution agreed to a nolle prosequi of accused's charges "after his attorney spoke with th e prosecutor in a back room"). In the instant case, the compromise that occur red was not between Miller and the prosecution, but rather betw een Miller'sco-defendant, Hilfirty, and the prosecution. While Hilfirty

offered the "quid pro quo" or "consideration" of en try into the ARD program in exchange for the prosecution not bri nging him to trial and agreeing to move for nolle prosequi of Mi ller's charges, Miller herself offered no "consideration" or "quid pro quo" in exchange for the grant of nolle prosequi. Thus, we do not find that she herself entered into any compromi se with the prosecution indicating that the charges against her terminated favorably. The district court, however, appears to have c oncluded that the nolle prosequi of Miller's charges was not a fa vorable termination because Miller was bound by Hilfirty's compromise. The district court treated Hilfirty's "quid pro quo " as though it were from Miller as well in finding that "[t]he qui d pro quo demanded and received by the Commonwealth deprives the nol pros of its effect and indicates that the nol prossing o f the charges against Miller does not equate to . . . a terminati on in her favor . . . ." Dist. Ct. Op. at 19. We thus are left to determine whether a compro mise entered into by one party can bind that party's co-defendan t such that the co-defendant is deprived of her ability to file a malicious prosecution claim. This question has been answered affirmatively by one Pennsylvania Superior Court case, Georgiana v. United Mine Workers of America, International Union, 572 A.2d 2 32, 235 (Pa. Super. 1990). Although the district court decision did not cite to Georgiana, we will discuss the case in some deta il because of

its similarities to the instant matter. In Georgiana a woman and her husband were sued for fraud by the United Mine Workers. Eventually, the woman ent ered into a settlement agreement pursuant to which the complain t against her and her husband was dropped. Id. at 233. The husb and later filed a claim for malicious use of civil process ag ainst the United Mine Workers, but the trial court granted a demurrer on the ground that the settlement agreement was effect ive against both him and his wife and the underlying proceeding s thus had not terminated in the husband's favor. Id. On appeal, the Pennsylvania Superior Court reversed: "We cannot a gree that the unilateral action of one party in negotiating a set tlement necessarily binds another party who did not partici pate in that settlement, simply because the parties are named de fendants in the same suit." Id. at 235 (emphasis added). Howe ver, the court

did allow that "the fact-finder could determine tha t, even though appellant himself did not negotiate the settlement, his wife acted on his behalf in order to prevent an inquiry into her husband's conduct." Id. In support of its conclus ion, the court

cited to Comment b of  660(a) in the Restatement (Second) of Torts, which reads as follows: There are two factors common to [indecisive terminations not considered favorable for purp oses of malicious prosecution]: First, the charge is withdrawn for a cause not incompatible with the guilt of the accused or the possibility of obtaining his co nviction; second, the withdrawal is at the request or wi th the consent of the accused or is due to something done byhim or on his behalf for the purpose of preven ting a

full and fair inquiry into his guilt or innoce nce. Id. (emphasis added). The court thus remanded the matter so that

a fact-finder could determine whether the wife's se ttlement of the action should bind her husband, based upon "the particular circumstances surrounding [the] settlement, and not upon the status of the parties." Id.

While our research has revealed no other case from Pennsylvania or any other jurisdiction in which a c ourt has concluded that there may be circumstances in which one party's settlement agreement may bind another, we nonethele ss predict that the Pennsylvania Supreme Court would adopt Geo rgiana's fundamental holding. See Kiewet Eastern Co., Inc. v. L & R Const. Co., Inc., 44 F.3d 1194, 1201 n.16 (3d Cir. 1995) (explaining that, when the Pennsylvania Supreme Cou rt has not spoken on an issue, we look to the decisions of the intermediate Pennsylvania courts). We find no indication in any other Pennsylvania case law that Georgiana would not be f ollowed. SeeWisniewski v. Johns-Manville Corp., 759 F.2d 271, 273-74 (3d C ir. 1985) ("Although lower state court decisions are no t controlling on an issue on which the highest court of the state has spoken, federal courts must attribute significant weight to these decisions in the absence of any indication that the highest state court would rule otherwise."). Having determined that we will follow Georgian a's basic holding, we still are left to enumerate the specifi c findings that a trial court is required to make in order to conclude that one party is bound by the settlement agreement of h er codefendant such that she is barred from bringing a m alicious prosecution claim. Georgiana makes clear only that this determination is to be based upon "the particular c ircumstances surrounding [the] settlement, and not upon the stat us of the parties." Georgiana, 572 A.2d at 235. It provides us with no other guidance, however, and we are left to rely up on policy considerations in making this determination. As a threshold matter, we can envision no scen ario in which it would be appropriate for a co-defendant to enter into a settlement agreement on behalf of another party wit hout that party's consent. The contents of a settlement agre ement may have profound effects upon an individual's life. Accord ingly, we find that a court may determine under Georgiana that a p arty is bound by her co-defendant's settlement agreement only if it finds that the party has knowingly authorized her co-defendant to serve as her agent in entering the agreement. We further think that policy considerations su ggest that a court may conclude that a party is bound by her co- defendant's settlement agreement only if it finds that she full y understands the consequences of her consent. A court certainly would not accept a plea bargain from a criminal defendant abs ent a statement from that defendant that he fully underst ands the terms of the agreement and the consequences of entering t he plea. While we recognize that the repercussions of allowi ng a criminal defendant to enter a guilty plea, perhaps accepting jail time without fully understanding the consequences of his actions, areundoubtedly greater than those of allowing an accus ed to

relinquish her right to file a malicious prosecutio n claim, it is nonetheless our view that a maliciously prosecuted individual's right to file a civil action is of significant impo rtance; we are

thus loath to allow for a situation where such a ri ght is unknowingly relinquished. It is, indeed, easy to envision a scenario whe re such could occur. For example, a wife might agree to allow he r husband to represent both of them in negotiations with the pro secution, knowing that she is completely innocent of all alle ged charges and fully expecting that her husband will be able t o obtain a dismissal of all charges against her. Assuming her husband succeeds in accomplishing this in the course of neg otiating his own compromise, she would most likely presume that she had been exonerated of all wrongdoing and would expect that she would be able to pursue a malicious prosecution claim. She would have given up nothing in exchange for the dismissal; no consideration

would have been offered that would leave her innoce nce in doubt and she would have every reason to believe that her proceedings had terminated favorably. Yet, if Georgiana were i nterpreted to allow the husband's compromise to bind his wife wit hout requiring any inquiry into her understanding of the consequen ces of the agreement, she would be unable to vindicate her rig ht to be free from malicious prosecution. Such an outcome is highly undesirable and can be avoided. We thus conclude that, when a co-defendant acting a s an authorized agent of another party, say his wife, en ters into a compromise that provides for the dismissal of charg es against her, she cannot be barred from filing a malicious p rosecution

claim if she herself offered no consideration in ex change for the dismissal, unless it is clear that she was fully aw are that such waiver would be the consequence of allowing her hus band to enter into the compromise on her behalf. These two determinations -- whether a party (1 ) consented to allow her co-defendant to enter an agreement on her behalf, and (2) whether she was fully aware that by allowing he r co-defendant to enter the agreement she would be barred from fil ing a malicious prosecution claim -- are fact questions. We believe, however, that policy considerations suggest that a jury not be left to make this all-important state-of-mind deter mination by merely piecing together snippets of evidence regard ing the nature of the settlement agreement. As noted above, we be lieve that the right to file a malicious prosecution claim is a de eply important one. Persons who are unjustly prosecuted may suffe r emotional pain, permanent damage to their reputation and real financial costs. Furthermore, it is in the public interest t o ensure that persons against whom prosecutions are maliciously f iled are provided an opportunity to recover civil damages; s uch actions protect those persons wrongly prosecuted and deter malicious prosecutions, thereby lending legitimacy to the ins titution of criminal prosecution. In order to ensure that no person who may have been subject to malicious prosecution inadvertently or unintenti onally waives the right to pursue such claim, we conclude that, i n instanceswhere a party authorizes her co-defendant to enter into a

compromise agreement providing for the dismissal of her criminal charges and she offers no consideration in exchange for such dismissal, she will not have been found to have rel inquished her right to file a malicious prosecution claim unless it is plain from the record of a hearing in open court or a wri tten releasedismissal agreement that such relinquishment was kn owing, intentional and voluntary. While we recognize that this requirement is no t specifically suggested by the language of Georgiana, we think th at it is a highly sensible requirement and an outgrowth of tha t opinion. First, and most importantly, it ensures that indivi duals consciously consider their options and understand t he consequences of their actions before waiving their civil rights. Second, it provides for a bright-line rule, avoidin g the need for extensive fact-finding on the part of a jury; eithe r a defendant has agreed to relinquish her rights or she has not. Third, it ensures a meeting of the minds between the prosecut ion and an accused. If, for example, the prosecution affirmat ively seeks to require an accused to relinquish her right to file a civil claim when dismissing the charges against her, such an in tention will be plain from the face of the court record or the r eleasedismissal agreement. Finally, such a requirement i mposes no cost or undue burden on the prosecution. Rather, it pre cludes the need for lengthy inquiries into state of mind or th e significance of a dismissal of charges. Indeed, it may well be that such a requirement will limit the number of malicious pros ecution cases. We take care to note that any such in-court wa iver or release-dismissal agreement will be valid only if i t is voluntary; there is no evidence of prosecutorial mi sconduct; and the agreement is not offensive to the relevant publ ic interest. See Cain v. Darby Borough, 7 F.3d 377, 380 (3d Cir. 1993) (in banc) (citing Town of Newton v. Rumery, 480 U.S. 38 6, 398 (1987)). This three-pronged test will ensure that prosecutors do not deliberately seek to avoid liability for themse lves or others who wrongfully initiated such proceedings by forcin g individuals into a waiver or signing of these agreements. In a ddition, the test prevents prosecutors from adopting a blanket p olicy of routinely obtaining in-court waivers or release-dis missal agreements every time they agree to dismiss the cha rges against one defendant in the course of agreeing to a compro mise with a co-defendant; instead, they must make their determi nations about whether to seek a waiver or release-dismissal agree ment on a case-by-case basis. See id. at 382. In light of the above analysis, we find that t he district court erred in concluding that Miller could be boun d by a compromise entered into by her husband such that sh e was precluded from filing a malicious prosecution claim . Even if defendants' representation that Miller herself soug ht or accepted the grant of nolle prosequi were true -- facts whic h are not necessarily indicated by the record -- there is no indication in the form of a release-dismissal agreement with the prosecution or a record of a hearing in open court indicating that she knew that her acceptance of the grant of nolle prosequi, for which sheoffered no consideration, would deprive her of her ability to

file a malicious prosecution claim. In the absence of a releasedismissal agreement or a waiver reflected in a cour t record coupled with our earlier conclusion that the grant of nolle prosequi was not the result of a compromise between Miller herself and the prosecution, we conclude that this case is governed by Haefner, 626 A.2d at 521, and that the grant of nolle prosequi is "sufficient to satisfy the requisite el ement of prior

favorable termination of the criminal action." Id. (citation omitted). Accordingly, Miller may pursue her claim for malicious prosecution.

IV. For the foregoing reasons, we reverse the dist rict court's grant of summary judgment regarding Miller's abilit y to

demonstrate the favorable termination of her underl ying criminal proceedings, and we remand this matter to the distr ict court for further proceedings consistent with this opinion.

Hilfirty v. Shipman, No. 95-7206

POLLAK, District Judge, concurring:

In Georgiana v. UMW, 572 A.2d 232 (Pa. Super. 1990), the Pennsylvania Superior Court rejected the propositio n "that the unilateral action of one party in negotiating a set tlement necessarily binds another party who did not partici pate in that settlement. . . ." Id. at 235. Today, this court , in an opinion which I join, holds "that, in instances whe re a party authorizes her co-defendant to enter into a comprom ise agreement providing for the dismissal of her criminal charges and she offers no consideration in exchange for such dismis sal, she will not have been found to have relinquished her right to file a malicious prosecution claim unless it is plain from the record of a hearing in open court or a written release-dismis sal agreement that such relinquishment was knowing, intentional a nd voluntary." Typescript, supra, p. 26. This holding -- which co mports with the test generally applicable to waivers of civil r ights claims, see W. B. Matula, 67 F.3d 484, 497 (3d Cir. 1995), Cain v. Darby Borough, 7 F.3d 377, 380 (3d Cir. 1993) (in banc) - - is characterized as an "outgrowth" of Georgiana. Type script, supra, p. 26. While I accept this court's hospitable reading of Georgiana, and agree that the Pennsylvania Supreme Court, when it has occasion to address the issue, is likely to adopt G eorgiana's "fundamental holding," Typescript, supra p. 22, I a dd these concurring words to make the point that, in the cas e at bar, even under a narrower reading of Georgiana, a grant of s ummary judgment against Miller was not warranted. The narrower reading of Georgiana would place particular weight on the Superior Court's statement "that the question

whether one defendant's settlement of an action sho uld bindanother defendant must depend on the particular cir cumstances

surrounding that settlement . . . ." 572 A.2d at 2 35. That statement follows the Georgiana court's discussion of section 660 of the Restatement (Second) of Torts, the section w hich is Georgiana's analytic bedrock. That section, captio ned "Indecisive Termination of Proceedings," provides a s follows: A termination of criminal proceedings in favor of the accused other than by acquittal is not a suffi cient termination to meet the requirements of a caus e of action for malicious prosecution if

(a) the charge is withdrawn or the prosecut ion abandoned pursuant to an agreement of compromi se with the accused; or

(b) the charge is withdrawn or the prosecut ion abandoned because of misconduct on the part of the accused or in his behalf for the purpose of pr eventing proper trial; or

(c) the charge is withdrawn or the proceedi ng abandoned out of mercy requested or accepted b y the accused; or

(d) new proceedings for the same offense ha ve been properly instituted and have not been terminat ed in

favor of the accused.

Restatement (Second) of Torts  660 (1977). Plainly, the "termination of criminal proceedi ngs in favor of" Miller is not covered by clause (b): i.e., ther e is no hint that the charges against Miller were withdrawn "bec ause of misconduct . . . for the purpose of preventing prop er trial." Nor is there any suggestion that either clause (c), relating to "abandon[ment] out of mercy," or clause (d), relati ng to the institution of new proceedings, had application to Miller. The only aspect of section 660 that might be i nquired into is clause (a), relating to withdrawal of charges "p ursuant to an agreement of compromise with the accused." On the record made below, evidence that Miller entered into an "agreem ent of compromise" is extremely tenuous. To be sure, it h as been averred that Miller's attorney was present at discu ssions with the assistant district attorney and with Hilfirty's attorney. The assistant district attorney characterized the r esult of these discussions as a "joint agreement," under which "th e Commonwealth agreed to recommend the ARD program for Mr. Hilfirt y and to nolle pros the charges against Ms. Miller." Ciampoli Aff idavit,  6, Appellees' Appendix at 2. But there is no suggesti on that Miller, via her attorney or otherwise, took any sor t of active role in these discussions. To the contrary, it wou ld appear that it was Hilfirty's attorney who, on his client's beh alf, entered into a bargain with the Commonwealth Ä namely, that Hilfirty would enter the ARD program and the Commonwealth wo uld drop the charges against Miller. Moreover, according to the assistantdistrict attorney, "the Commonwealth would not have agreed to

dismiss the charges against Miller if Hilfirty had not agreed to the ARD program." Id. In other words, it appears that the Commonwealth included Miller in the "joint agreemen t" as an inducement to Hilfirty to accept ARD. One who acquiesces in an arrangement under whi ch she surrenders nothing does not thereby accept a "compr omise," at

least not in the sense in which the Restatement mea ns that word. Comment c to section 660 of the Restatement provide s an illuminating explanation of the rationale for secti on 660(a)'s rule that a prosecution that terminates with an agr eement of compromise does not terminate favorably. It states : "Although the accused by his acceptance of a compromise does not admit his guilt, the fact of compromise indicates that the qu estion of his guilt or innocence is left open. Having bought pea ce the accused may not thereafter assert that the proceedings have terminated in his favor." Restatement (Second) of Torts  660 cmt. c (1977). In this case, the most that can be said is that Mil ler acquiesced in a compromise structured by the Commonwealth and Hilfirty. Since there is no evidence that Miller made any aff irmative effort whatsoever to seek out a compromise, she can hardly be thought to have "bought peace." In short, the circ umstances of the dismissal of the case against Miller in no way call into question the favorable nature of the termination of Miller's prosecution. Thus, even if the Pennsylvania Supreme Court w ere to build on Georgiana more narrowly than we do -- even if, f or example, the Pennsylvania Supreme Court were to conclude tha t a dismissal of criminal charges which was negotiated by a co-de fendant might in certain "particular circumstances" bar a suit fo r malicious prosecution notwithstanding that the would-be plain tiff had not executed a written release-dismissal agreement or s tated in open court her intention to relinquish her potential cla im -- the particular "particular circumstances" presented on this appeal are not of a sort that could properly operate to ba r Miller's

suit.

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