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United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
December 29, 2004
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 04-40458
MARION DUZICH; SEAFOOD MARKETING, INC.; GULFWAY SEAFOODS, INC.;
GALVESTON HARBOUR PROPERTIES, INC.; ISLAND TIME PROPERTY CO.;
ISLAND SPICE & TEA CO.; SOUTHEAST PACKING CO.; FISH TALES, INC.;
THE SPOT IN THE VILLAGE; and WATERMAN INTERNATIONAL, INC.,
Plaintiffs-Appellants,
versus
ADVANTAGE FINANCE CORP.; Et Al,
Defendants,
THE CIT GROUP/COMMERCIAL SERVICES, INC.,
Defendant-Appellee.
Appeal from the United States District Court
For the Southern District of Texas
Before GARZA, DeMOSS, and STEWART, Circuit Judges.
PER CURIAM:
Plaintiffs-Appellants Marion Duzich, et al. (together,
"Duzich") appeal the district court's grant of the Rule 12(b)(6)
motion to dismiss filed by Defendants-Appellees Advantage Financial
Group, et al. (together, "CIT"). Duzich also appeals the district
court's denial of Duzich's motion for leave to file a second
amended complaint. We AFFIRM.

BACKGROUND
In September 2000 CIT filed the underlying prosecution against
Duzich in bankruptcy court in the Southern District of Texas, on
behalf of Liberty Seafood, Inc. ("Liberty"). The allegations
concerned criminal conduct and fraud in the seafood business. The
bankruptcy court granted CIT a temporary restraining order and
preliminary injunction and appointed a trustee for Liberty (the
"Trustee"). For reasons not in the record, the Trustee voluntarily
dismissed the bankruptcy adversary proceeding.
In June 2003 Duzich filed this case based on diversity in
district court in the Southern District of Texas. Duzich alleged
that the underlying bankruptcy litigation constituted a malicious
prosecution and that CIT engaged in civil conspiracy. CIT filed a
motion to dismiss under Rule 12(b)(6). Duzich responded and CIT
replied. The district court granted CIT's motion to dismiss for
failure to state a claim and entered final judgment dismissing all
Duzich's claims with prejudice. In doing so, the district court
found that Duzich had not sufficiently pleaded a requisite element
for a malicious prosecution claim that the underlying litigation
had terminated in Duzich's favor. In addition, the court found
that Duzich had not satisfied a requisite element for civil
conspiracy an unlawful, overt act because Duzich had not shown
that CIT's initiation of the bankruptcy action was an unlawful act.
The court also denied Duzich's motions for leave to file a second
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amended complaint and for reconsideration. Duzich timely appealed.
DISCUSSION
Whether the district court erred in dismissing Duzich's malicious
prosecution claim.
We review a Rule 12(b)(6) dismissal de novo. Priester v.
Lowndes County, 354 F.3d 414, 418 (5th Cir. 2004). Texas law
governs this diversity case. To establish a claim for malicious
prosecution, a plaintiff must show: (1) the institution or
continuation of civil proceedings against the plaintiff; (2)
initiated by the defendant; (3) with malice in the commencement of
the proceedings; (4) which proceedings lacked probable cause; (5)
were terminated in the plaintiff's favor; and (6) resulted in
special damages. Tex. Beef Cattle Co. v. Green, 921 S.W.2d 203,
207 (Tex. 1996).
The only element at issue here is whether Duzich has
sufficiently shown that the underlying bankruptcy proceeding
terminated in their favor to survive dismissal. Although Duzich
concedes that nothing in the record explains the reasoning for the
Trustee's termination of the proceeding, Duzich nonetheless
maintains that the voluntary dismissal of an action connotes a
favorable termination for the opposing party. Duzich argues that
the Texas Supreme Court has adopted the Restatement (Second) of
Torts § 674, cmt. j,1 for the proposition that the voluntary
1Comment j of § 674 of the Restatement (Second) of Torts
provides:
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dismissal of civil proceedings should be construed as a favorable
decision. See Texas Beef at 208. CIT relies on KT Bolt
Manufacturing Co. v. Texas Electric Cooperatives, Inc., 837 S.W.2d
273 (Tex. App.Beaumont 1992, writ denied), and argues that Texas
law is clear that a voluntary dismissal is not a favorable
termination for the plaintiff. CIT also contends the Texas Supreme
Court did not wholly adopt the Restatement comment relied on by
Duzich in the context of a voluntary dismissal of a civil action.
In KT Bolt, a Texas appeals court explained that the dismissal
Termination in favor of the person against whom civil
proceedings are brought. Civil proceedings may be terminated
in favor of the person against whom they are brought under the
rule stated in Clause (b), by (1) the favorable adjudication
of the claim by a competent tribunal, or (2) the withdrawal of
the proceedings by the person bringing them, or (3) the
dismissal of the proceedings because of his failure to
prosecute them. A favorable adjudication may be by a judgment
rendered by a court after trial, or upon demurrer or its
equivalent. In either case the adjudication is a sufficient
termination of the proceedings, unless an appeal is taken. If
an appeal is taken, the proceedings are not terminated until
the final disposition of the appeal and of any further
proceedings that it may entail.
Whether a withdrawal or an abandonment constitutes a final
termination of the case in favor of the person against whom
the proceedings are brought and whether the withdrawal is
evidence of a lack of probable cause for their initiation,
depends upon the circumstances under which the proceedings are
withdrawn. In determining the effect of withdrawal the same
considerations are decisive as when criminal charges are
withdrawn; and therefore §§ 660-661 and 665, and the Comments
under those Sections are pertinent to this Section. As to the
right of restitution of money paid to compromise a claim
brought without probable cause and in bad faith, see
Restatement of Restitution, § 71.
RESTATEMENT (SECOND) OF TORTS § 674, cmt. j (1977).
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of an action pursuant to a voluntary nonsuit was in no way an
adjudication of the merits of the particular case. 837 S.W.2d at
275. There, the court held that because the voluntary nonsuit of
the initial action brought by the now-defendant did not indicate a
termination of the proceedings in the now-plaintiff's favor, the
trial court properly determined that an essential element for
malicious prosecution was missing. Id.
Here, we agree with the district court. The record in this
case provides nothing from which to infer that the voluntary
dismissal of the bankruptcy proceeding by the Trustee was a
favorable termination for Duzich on the merits. Moreover, although
the Texas Supreme Court noted that its rule in Texas Beef was in
accord with cmt. j. of § 674 of the Restatement, the rule at issue
did not concern whether to interpret a voluntary dismissal as a
favorable termination. Instead, the court held that there could be
no favorable termination for a malicious prosecution plaintiff
while the underlying proceeding was still on appeal. 921 S.W.2d at
208 (quoting RESTATEMENT (SECOND) OF TORTS § 674, cmt. j (1977) ("If an
appeal is taken, the proceedings are not terminated until the final
disposition of the appeal and of any further proceedings that it
may entail.")). KT Bolt's holding remains undisturbed.2
2We note that a Texas appeals court implied in dicta that because
of the Texas Supreme Court's adoption of cmt. j of § 674 of the
Restatement in Texas Beef, KT Bolt cannot "stand[] for an iron-clad
rule that a favorable termination may never, as a matter of law,
arise from a voluntary non-suit taken by the plaintiff in the
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Therefore, we find the district court properly applied Texas law as
set forth in KT Bolt in this case.
Whether the district court erred in dismissing Duzich's civil
conspiracy claim.
We continue our de novo review. See Priester, 354 F.3d at
418. To establish a claim for civil conspiracy in Texas, a
plaintiff must show: (1) two or more persons; (2) an objective to
be accomplished; (3) a meeting of the minds on the objective; (4)
one or more unlawful, overt acts; and (5) proximate damages. Apani
Southwest, Inc. v. Coca-Cola Enters., Inc., 300 F.3d 620, 635 (5th
Cir. 2002) (citing Massey v. Armco Steel Co., 652 S.W.2d 932, 934
(Tex. 1983)).
Duzich argues that they satisfied the requisite elements to
support a civil conspiracy claim. CIT agrees with the district
court, which found that because Duzich did not satisfy the elements
for malicious prosecution, Duzich did not meet the predicate
element of an unlawful, overt act for civil conspiracy.
We agree with CIT and the district court. See generally Kerr
v. Lyford, 171 F.3d 330, 340 (5th Cir. 1999), abrogated on other
underlying civil suit upon which a claim for malicious prosecution
is founded." McCall v. Tana Oil & Gas Corp., 82 S.W.3d 337, 350
(Tex. App.-Austin 2001), rev'd in part on other grounds, 104
S.W.3d 80 (Tex. 2003). However, again, whether to interpret a
voluntary nonsuit as a favorable dismissal was not the particular
issue in that case. See id. at 350-51 (affirming take-nothing
judgment against plaintiffs because they had not proven the special
damages element of malicious prosecution).
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grounds, Castellano v. Fragozo, 352 F.3d 939 (5th Cir. 2003) (en
banc) (noting how plaintiffs' civil conspiracy claim was contingent
on the success of their malicious prosecution claim).
Whether the district court abused its discretion in denying Duzich
leave to amend a second time.
Finally, we address Duzich's argument that the district court
abused its discretion in denying them leave to amend their
complaint a second time. The district court denied Duzich's Rule
15(a) motion using the same reasoning as in its granting of CIT's
Rule 12(b)(6) motion. We agree with the district court that any
amendment to Duzich's complaint would have been futile to cure its
defects. See, e.g., United States ex rel. Adrian v. Regents of
Univ. of Cal., 363 F.3d 398, 403 (5th Cir. 2004) (listing futility
of amendment as justification for denial of leave to amend)
(citation omitted). Therefore, we find the district court did not
abuse its discretion.
CONCLUSION
For the above reasons, we AFFIRM the district court's final
judgment.
AFFIRMED.
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