                         NOT RECOMMENDED FOR PUBLICATION
                                 File Name: 14a0900n.06


                            UNITED STATES COURT OF APPEALS
                                 FOR THE SIXTH CIRCUIT

                                                No. 14-5155                                     FILED
                                                                                         Dec 05, 2014
JOHN OHNEMUS,                                         )                              DEBORAH S. HUNT, Clerk
                                                      )
       Plaintiff-Appellant,                           )
                                                      )
v.                                                    )     ON APPEAL FROM THE UNITED
                                                      )     STATES DISTRICT COURT FOR THE
TRAVIS THOMPSON,                                      )     EASTERN DISTRICT OF KENTUCKY
                                                      )
       Defendant-Appellee.                                     )



Before: MOORE and COOK, Circuit Judges; and STEEH, Senior District Judge.*

       GEORGE CARAM STEEH, Senior District Judge. In this malicious prosecution and

defamation per se case, plaintiff-appellant John Ohnemus appeals the district court’s grant of

defendant Deputy Sheriff Travis Thompson’s motion to dismiss. For the reasons set forth below,

we AFFIRM the district court’s order of dismissal.

                     I. FACTUAL AND PROCEDURAL BACKGROUND

       Because we are reviewing a dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6),

the facts set forth below are those alleged in the complaint. Ohnemus served as president of AirFoil

Aerial Systems, Inc. (“AirFoil”), a corporation for which he was also a shareholder. AirFoil designs

and manufactures remote-controlled gas and electric powered helicopters (also known as “drones”)

for law enforcement agencies. Some of the drones are equipped with cameras, including those with


             *
                The Honorable George Caram Steeh, Senior United States District Judge for the Eastern
     District of Michigan, sitting by designation.
thermal imaging units. In late December, 2010, Deputy Thompson contacted Ohnemus about

purchasing a drone and thermal camera for the Pulaski County Sheriff’s Department (“Department”)

before the year’s end. Ohnemus sent Deputy Thompson specifications for the drone and a thermal

camera known as a Forward Looking Infrared (“FLIR”) camera which uses infrared radiation to

create a video picture that allows pilots and drivers to steer their vehicles at night and in fog, and

to identify warm objects, which allow users to find fugitives and missing persons. The Department

ultimately purchased a remote controlled helicopter with a thermal imaging camera for $22,980.

At the time of the sale, Ohnemus advised Deputy Thompson that other orders were ahead of his, and

that there would be some delay in delivery of the products.

       At some point prior to June, 2011, AirFoil delivered the drone to the Department without the

camera. AirFoil ordered the FLIR camera from a third-party vendor, but the vendor would not

deliver the camera until certain financing arrangements were made. While AirFoil was arranging

for payment of the FLIR camera, the Department informed Ohnemus that it would not accept the

camera for which it had already paid. Ohnemus spoke to Deputy Thompson in July, August, and

September, 2011, and offered to substitute replacement products in lieu of the FLIR camera.

Ohnemus also told Deputy Thompson that the Department could retain the drone that had already

been delivered. It is unclear from the face of the complaint what response, if any, Deputy Thompson

or the Department made to these overtures.

       Ohnemus was contacted by a United States Marshal on February 2, 2012, and upon meeting

him the next day, was arrested on a felony warrant for theft. The warrant was issued by the Pulaski

County District Court based upon a criminal complaint sworn to by Deputy Thompson. Ohnemus

was immediately jailed and released after posting a cash bond of $30,000. The criminal complaint


                                                  2
charged Ohnemus with “Theft by failure to make required disposition of property.” That crime is

defined as follows:

       (1) A person is guilty of theft by failure to make required disposition of property
       received when:

       (a) He obtains property upon agreement or subject to a known legal obligation to
       make specified payment or other disposition whether from such property or its
       proceeds or from his own property to be reserved in equivalent amount; and

       (b) He intentionally deals with the property as his own and fails to make the
       required payment or disposition.

Ky. Rev. Stat. Ann. § 514.070. On April 27, 2012, the criminal charge was dismissed pursuant to

a motion by the district attorney. The Pulaski District Court entered an order on April 30, 2012,

stating that the charge was dismissed “with prejudice upon the defendant paying restitution to the

Pulaski County Sheriff in the amount of $22,980.” On April 26, 2013, Ohnemus brought this action

against Deputy Thompson for malicious prosecution and defamation per se.

                                  II. STANDARD OF REVIEW

       We review de novo the district court's dismissal of a claim pursuant to Rule 12(b)(6). Bright

v. Gallia Cnty., 753 F.3d 639, 652 (6th Cir. 2014). In such a review, we must accept non-conclusory

allegations of fact in the complaint as true and determine if the plaintiff has stated a claim that is

plausible on its face. Id. (citing Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009)). “‘Conclusory

allegations or legal conclusions masquerading as factual allegations will not suffice.’” Id. (quoting

Eidson v. Tenn. Dep't of Children's Servs., 510 F.3d 631, 634 (6th Cir. 2007)). Because federal

jurisdiction here is based on diversity, Kentucky substantive law applies to Ohnemus’ common law

claims of malicious prosecution and defamation per se. Conlin v. Mortgage Elec. Reg. Sys., Inc.,

714 F.3d 355, 358 (6th Cir. 2013) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). The


                                                  3
court reviews a district court’s application of state law de novo. Lukas v. McPeak, 730 F.3d 635,

637-38 (6th Cir. 2013). The court first looks to authority from the Kentucky Supreme Court, and

absent such precedent, should look to decisions of the state appellate courts. Id. at 637-38.

                                          III. ANALYSIS

A.     Malicious Prosecution

       Under Kentucky law, a malicious prosecution claim requires that six elements be met:

“‘(1) the institution or continuation of original judicial proceedings, either civil or criminal, or of

administrative or disciplinary proceedings, (2) by, or at the instance, of the [defendant], (3) the

termination of such proceedings in [the plaintiff’s] favor, (4) malice in the institution of such

proceeding, (5) want or lack of probable cause for the proceeding, and (6) the suffering of damage

as a result of the proceeding.’” Garcia v. Whitaker, 400 S.W.3d 270, 274 (Ky. 2013) (quoting Raine

v. Drasin, 621 S.W.2d 895, 899 (Ky. 1981)). The tort of malicious prosecution is traditionally

disfavored, and litigants seeking to prevail on such claims must strictly comply with the elements

of that tort. Raine, 621 S.W.2d at 899. The district court dismissed the malicious prosecution claim

for Ohnemus’ failure to allege sufficient facts to support the third element: that the criminal

proceedings terminated in his favor. Specifically, the district court ruled that termination was not

favorable to Ohnemus because the parties reached a compromise by which Ohnemus paid $22,980 in

restitution in exchange for the dismissal of the criminal charges.

       “[T]he determination of whether a termination is sufficiently favorable ultimately rests with

the trial court as a matter of law, absent a factual dispute relative to the circumstances of the

dismissal.” Davidson v. Castner-Knott Dry Goods Co., Inc., 202 S.W.3d 597, 606 (Ky. Ct. App.

2006). In determining that the criminal proceedings did not terminate in Ohnemus’ favor, the


                                                  4
district court relied on Broaddus v. Campbell, 911 S.W.2d 281 (Ky. Ct. App. 1995). In that case,

the Kentucky Court of Appeals dismissed plaintiff’s malicious prosecution claim because the

criminal case was dismissed once he admitted to probable cause for the indictment. Id. at 284. The

court concluded that the criminal case did not terminate in plaintiff’s favor because “he gave up

something to secure the dismissal of the charges” and the dismissal did not indicate that he was

actually innocent. Id. The court held that “one may not elect to settle a criminal action, stipulate

probable cause and maintain that the action was favorable to him on the merits.” Id. at 285.

          The termination must go to the merits of the accused’s professed innocence for the

dismissal to be “favorable” to him. See Alcorn v. Gordon, 762 S.W.2d 809, 812 (Ky. Ct. App.

1988) (dismissal on grounds of statute of limitations defense not a termination in favor of the

plaintiff because it did not address the merits of the claim). Only where dismissal indicates that

the accused may be innocent of the charges, have Kentucky courts found that the termination of

the proceedings were favorable to the party bringing a malicious prosecution claim. See

Davidson, 202 S.W.3d at 605-06 (finding an issue of fact over whether termination of

proceedings was favorable to the accused where criminal charges were dropped after evidence of

actual innocence presented); Raine, 621 S.W.2d at 899-900 (dismissal of malpractice action

which did not include any settlement agreement was termination in favor of accused doctors).

Unlike Davidson and Raine, the dismissal of the criminal complaint here does not suggest that

Ohnemus is innocent of the charges, but rather that he paid the amount he was alleged to have

stolen.

          In order for a termination of proceedings to be favorable to the accused, the dismissal must

be one-sided and not the result of any settlement or compromise. See Feinberg v. Townsend,


                                                   5
107 S.W.3d 910, 912 (Ky. Ct. App. 2003) (legal malpractice lawsuit did not terminate in plaintiff-

lawyer’s favor where the case was resolved by mutual agreement leading to a settlement and not by

a one-sided dismissal). Numerous courts have determined that the payment of restitution constitutes

a compromise which bars a finding that the criminal proceedings terminated in favor of the accused.

See Brabham v. O’Reilly Auto., Inc., 438 F. Supp. 2d 680, 683 (N.D. Miss. 2006) (collecting cases),

aff’d 274 F. App’x 373 (5th Cir. 2008). So too in this case, the dismissal was not the unilateral

decision of the prosecutor to drop charges, but was the result of a mutual agreement by which

Ohnemus paid $22,980, representing the full amount paid for the camera which was never delivered,

in exchange for the dismissal.

       The Restatement regarding malicious prosecution claims is instructive. The Restatement

(Second) of Torts § 660(a) (1977) provides:

       A termination of criminal proceedings in favor of the accused other than by
       acquittal is not a sufficient termination to meet the requirements of a cause of
       action for malicious prosecution if

               (a) the charge is withdrawn or the prosecution abandoned pursuant
               to an agreement of compromise with the accused.

Id. Section 660(c) explains the rationale for the rule:

       Although the accused by his acceptance of a compromise does not admit his guilt,
       the fact of compromise indicates that the question of his guilt or innocence is left
       open. Having bought peace the accused may not thereafter assert that the
       proceedings have terminated in his favor.

Restatement (Second) of Torts § 660(a) cmt. c. (1977).           This case presents the situation

contemplated by the Restatement as Ohnemus “bought peace” by paying the sum alleged to have

been stolen in exchange for the dismissal of criminal charges.




                                                 6
       Ohnemus argues that Town of Newton v. Rumery, 480 U.S. 386 (1987) and Coughlen v.

Coots, 5 F.3d 970 (6th Cir. 1993) require the district court to scrutinize the underlying facts of the

dismissal to decide the question of whether the termination could be found to be “favorable” to him.

In Rumery, the Court held that release-dismissal agreements, by which an accused agrees not to

bring a § 1983 suit in exchange for the dismissal of criminal charges, are not per se invalid, but must

be evaluated to determine whether they were voluntary and thus enforceable, on a case-by-case

basis. 480 U.S. at 397-98. In Coughlen, the Sixth Circuit, interpreting Rumery, held that release-

dismissal agreements are not presumptively valid, and established three factors which a § 1983

defendant must prove in order to render such an agreement enforceable: “(1) the agreement was

voluntary, (2) there was no evidence of prosecutorial misconduct, and (3) enforcement of the

agreement will not adversely affect relevant public interests.” 5 F.3d at 974. Under the reasoning

of these cases, Ohnemus argues that this court must delve into the facts and circumstances

surrounding the dismissal of the criminal charges here, and cannot dismiss based solely on the fact

that he paid restitution. Rumery and Coughlen are distinguishable, however, as those cases involved

release-dismissal agreements in the § 1983 context where constitutional claims are at stake, and

where criminal charges are dropped based solely on an accused’s agreement not to sue. By contrast,

the instant dispute involves state law tort claims, including a claim for malicious prosecution, a

cause of action which has historically been disfavored in the law. Raine, 621 S.W.2d at 899. In

addition, Ohnemus agreed to pay substantial restitution, not merely to forego his right to file a civil

complaint.

       Even if the court considered facts surrounding the dismissal order, Ohnemus was not in jail

at the time he decided to pay restitution, was represented by counsel, was a sophisticated


                                                  7
businessman, and had nearly three months to consider whether to pay restitution between the time

of his arrest and the time of the dismissal of the criminal case. Under these circumstances,

Ohnemus’ payment of restitution in exchange for the dismissal of criminal charges constitutes a

compromise on the merits which does not qualify as a termination in his favor.

       Moreover, in determining whether a dismissal is a termination in favor of the accused, the

court is not to consider whether the plaintiff is actually innocent of the charges, but rather, whether

the dismissal of the proceedings established his innocence.           Specifically, the Restatement

commentary provides:

       c. Proof of innocence not enough. It is a necessary element of a cause of action
       under the rule stated in § 653 that the criminal proceedings shall have terminated in
       favor of the accused. Therefore, proof of the fact that he was innocent of the crime
       charged against him will not support an action under that Section unless his
       innocence has been established by the termination of the proceedings in his favor.

Restatement (Second) of Torts § 658 cmt. c (1977). The payment of restitution is inconsistent with

innocence, and thus, the dismissal here does not constitute a termination in favor of Ohnemus.

       The Supreme Court has explained that the requirement that the prior criminal proceeding

terminate in favor of the accused serves the important policy goal of preventing parallel litigation

over issues of probable cause and guilt and avoids the creation of conflicting resolutions arising out

of the same or identical transactions. Heck v. Humphrey, 512 U.S. 477, 484 (1994). Courts have

“reasoned that only terminations that indicate that the accused is innocent ought to be considered

favorable.” Uboh v. Reno, 141 F.3d 1000, 1004 (11th Cir. 1998) (internal quotation marks and

citations omitted). In this case, barring Ohnemus’ malicious prosecution claim serves the public

policy reasons behind the “favorable termination” requirement, as it avoids the risk of inconsistent

outcomes arising out of the same transactions.


                                                  8
       Finally, Ohnemus argues that the court should have converted the motion to one for summary

judgment, and should have deferred ruling on the motion until he completed discovery, and had the

opportunity to present evidence regarding the circumstances of the payment. Deputy Thompson

responds that the order of dismissal in this case sets forth Ohnemus’ payment of restitution in the

amount of $22,980, that this is the “final disposition” of the criminal proceedings, and no discovery

is warranted to prove his innocence when he has paid restitution in exchange for the dismissal of the

criminal proceedings. The district court properly considered the dismissal order which was not a

matter outside the pleadings, but a public record central to his claims. Bassett v. NCAA, 528 F.3d

426, 430 (6th Cir. 2008).1 Because the law is clear that a prosecution which ends in a compromise

with the accused bars a subsequent malicious prosecution action, the district court did not err in

refusing to convert Deputy Thompson’s motion to dismiss under Rule 12(b)(6) into a motion for

summary judgment. Where the final order of dismissal set forth the payment of restitution as its

basis, no discovery would have altered the conclusion that the proceedings did not terminate in favor

of Ohnemus. Accordingly, the district court did not err in deciding the motion under the standards

of Rule 12(b)(6) and denying Ohnemus’ request to allow discovery and to convert the motion into

one for summary judgment.

B.     Defamation Per Se

       The district court properly dismissed Ohnemus’ defamation per se claim on the grounds that

Deputy Thompson’s statements in court filings are entitled to absolute privilege. Ohnemus’

defamation claim was based on the publication of the sworn criminal complaint filed in the public


             1
               The dissent argues that our reliance on the court order dismissing the criminal case is
     improper because it “would provide a distorted view of the events at issue.” However, the parties
     unequivocally agree that Ohnemus paid restitution of $22,980 in exchange for dismissal of the
     prosecution, as reflected in the court’s order.

                                                       9
records of the Pulaski District Court, and on the republication of those judicial records by the news

media. Under Kentucky law, as in practically all jurisdictions, “‘statements in pleadings filed in

judicial proceedings are absolutely privileged when material, pertinent, and relevant to the subject

under inquiry.’” Heavrin v. Nelson, 384 F.3d 199, 202 (6th Cir. 2004) (quoting Schmitt v. Mann,

163 S.W.2d 281, 283 (Ky. 1942)). Contrary to Ohnemus’ argument, the statements need not be

made in the courtroom for the privilege to apply. Schmitt, 163 S.W.2d at 283. In addition, the

doctrine applies whether it is alleged that Deputy Thompson knew the charges were false and even

if brought in bad faith or with actual malice. Id. Moreover, under Kentucky law, statements

protected by absolute privilege do not lose their privilege merely because they are republished by

a newspaper. Greenfield v. Courier-Journal & Louisville Times Co., 283 S.W.2d 839, 842 (Ky.

1955).

         Under the pleading requirements of Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007),

“[f]actual allegations must be enough to raise a right to relief above the speculative level.” “[N]aked

assertion[s] devoid of further factual enhancement” are insufficient to “state a claim to relief that

is plausible on its face.” Iqbal, 556 U.S. at 678 (internal quotation marks and citations omitted).

The complaint here fails to state a plausible claim for defamation per se. Ohnemus fails to assert

any specific facts demonstrating that Deputy Thompson personally made any false statements to the

news media outside those set forth in the public records of the District Court of Pulaski County

which are entitled to absolute privilege. In fact, reading paragraphs 37 and 38 of the complaint

together strongly implies the opposite: that his statements in public records were later published by

the news media. Contrary to the speculative reading of the complaint by the dissent, if Ohnemus




                                                  10
is claiming that Deputy Thompson made any untrue statements outside of the public records, he

simply had to say so in the complaint.

       Deputy Thompson also argues that the defamation claim is time-barred, an issue not reached

by the district court. Because it is clear that the doctrine of absolute privilege insulates Deputy

Thompson from liability on the defamation claim, we need not address the statute of limitations

defense.

                                         IV. CONCLUSION

       For the reasons discussed above, we AFFIRM the district court’s order of dismissal.




                                                11
       KAREN NELSON MOORE, Circuit Judge, dissenting. Like the district court, the

majority improperly relies on materials outside of the pleadings and misapplies the standard for

dismissal under Federal Rule of Civil Procedure 12(b)(6). As a result, I dissent.

       In affirming dismissal of Ohnemus’s malicious prosecution claim, the majority begins by

impermissibly relying on a document outside of the pleadings—the court order dismissing

Ohnemus’s criminal case pending payment of restitution. Although the order is a public record, we

generally do not consider such evidence on a motion to dismiss “[w]here the evidence captures only

part of the incident and would provide a distorted view of the events at issue.” Jones v. City of

Cincinnati, 521 F.3d 555, 562 (6th Cir. 2008); see, e.g., Mediacom Se. LLC v. BellSouth Telecomm.,

Inc., 672 F.3d 396, 400 (6th Cir. 2012); Passa v. City of Columbus, 123 F. App’x 694, 697 (6th Cir.

2005). Such is the case here—Ohnemus argued that the reference to “restitution” in the order was

“misnamed” and “the agreement was obtained by unfair means.” R. 10 (Resp. Mot. to Dismiss at

10S11) (Page ID #105S06). The majority then compounds the problem by failing to apply Town of

Newton v. Rumery, 480 U.S. 386 (1987), and Coughlen v. Coots, 5 F.3d 970 (6th Cir. 1993), which

instruct courts to scrutinize agreements to dismiss criminal charges in exchange for a criminal

defendant’s promise not to pursue a civil action. Even accepting the dismissal order, Ohnemus’s

criminal charges were dismissed with prejudice—rendering him not guilty of those charges—upon

his payment of $22,980 to the Pulaski County Sheriff, Thompson’s employer and party to a civil

contract gone bad worth $22,980. See Rumery, 480 U.S. at 401 (“No court would knowingly permit

a prosecutor to agree to accept a defendant’s plea to a lesser charge in exchange for the defendant’s

cash payment to the police officers who arrested him”) (O’Connor, J., concurring). Given this, and

the “disturbing abuse of power” alleged in the complaint, R. 12 (D. Ct. Order at 7) (Page ID #129),


                                                 12
a Rumery/Coughlen analysis was warranted, and Ohnemus should be given the opportunity to

present evidence demonstrating that any agreement was obtained through unfair means. See

Coughlen, 5 F.3d at 974 (“[A]greements should be scrutinized closely in cases where substantial

evidence supports an allegation of police misconduct, in view of the potential for abuse of release-

dismissal agreements by law enforcement officials.”).

       The majority also mistakenly affirms dismissal of Ohnemus’s defamation claim. Like the

district court, the majority accepts that Ohnemus’s allegation that Thompson published false

statements to “third persons, both in the public records of the District Court of Pulaski County, as

well as republication in the news media,” R. 1 (Complaint at 7) (Page ID #7), means only that

Thompson published the false statements in court filings and the news media republished those

statements by reporting on the court filings. It then affirms dismissal because “Ohnemus fails to

assert any specific facts” supporting any other reading. But the majority’s reading turns on its own

definition of “republished” (simply, that the news media reported on the judicial proceedings), rather

than viewing the complaint “in the light most favorable” to Ohnemus and drawing all reasonable

inferences in his favor as we must. Rondigo, L.L.C. v. Twp. of Richmond, 641 F.3d 673, 680 (6th

Cir. 2011). Indeed, “republication,” a term of art, occurs “where the defendant edits and retransmits

the defamatory material, or distributes the defamatory material for a second time with the goal of

reaching a new audience.” Salyer v. S. Poverty Law Ctr., Inc., 701 F. Supp. 2d 912, 916 (W.D. Ky.

2009) (emphasis added) (citing as examples “publishing a second edition [of] a book or periodical,

editing and republishing defamatory material, or placing it in a new form”) (internal quotation marks

omitted); In re Philadelphia Newspapers, LLC, 690 F.3d 161, 174 (3d Cir. 2012), cert. dismissed,

133 S. Ct. 1001 (2013) (“Republishing material” means “editing and reissuing material, or placing


                                                 13
it in a new form that includes the allegedly defamatory material”). So Ohnemus has plausibly

alleged that Thompson himself republished new false statements to the news media “with the goal

of reaching a new audience.” Salyer, 701 F. Supp. 2d at 916; see also Keys v. Humana, Inc., 684

F.3d 605, 608 (6th Cir. 2012) (“Specific facts are not necessary; the statement need only give the

defendant fair notice of what the . . . claim is and the grounds upon which it rests.”) (quoting

Erickson v. Pardus, 551 U.S. 89, 93 (2007)). In any event, the majority’s basis for dismissal is

essentially its own creation—Thompson did not develop this argument on appeal, and the district

court did not rely on this as a basis for dismissing the defamation claim. R. 12 (D. Ct. Order at 5S7)

(Page ID #127S29). So, at the very least, we should remand to allow Ohnemus to attempt to plead

additional facts to support his defamation claim.

       Based on the above, I respectfully dissent from the majority opinion approving the dismissal

of the complaint under Rule 12(b)(6), and would REVERSE the judgment of the district court and

REMAND for further proceedings.




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