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Rannels v. S. E. Nichols Inc.

decided: January 18, 1979.



Before Aldisert and Adams, Circuit Judges, and Latchum, District Judge.*fn*

Author: Aldisert


In 1957 the Supreme Court instructed that "the Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon which he bases his claim."*fn1 The district court here dismissed a diversity action on the grounds that the complaint did not contain proper "factual allegations" to set forth a claim upon which relief could be granted under the applicable Pennsylvania law of malicious prosecution and defamation. We must decide whether the complaint as drafted met the minimum requirements of Rule 8(a), Federal Rules of Civil Procedure*fn2 so as to withstand a motion for dismissal under Rule 12(b)(6).*fn3 Because we hold that it did, we reverse.


The facts that underlie this lawsuit are traceable to a dispute over $2.00 between a customer and the management of a retail store. This quarrel has now commanded the attention of a Pennsylvania district justice, a United States district court, and the United States Court of Appeals for the Third Circuit, and is the basis of a claim for $2,800,000 in damages. Mrs. Rannels, an unemployed school teacher, seeks to make a "federal case" as is her right under existing statutes out of the circumstances that befell her after she purchased a pair of blue jeans for eight dollars at the Nichols Store in Ephrata, Pennsylvania. The following facts are alleged in the complaint filed in the district court.

A day after she purchased the jeans, Mrs. Rannels discovered that the zipper was defective, whereupon she returned to the store and requested a replacement or a refund of the purchase price which she had paid with a personal check. The store refused to oblige. Mrs. Rannels then did two things: she stopped payment on the check and had the jeans repaired at an expense of two dollars. She alleges that she then offered to pay six dollars for the jeans the purchase price less the cost of repair. The store again refused. Instead it made a demand for $13.98, representing the original cost plus handling and postage. When Mrs. Rannels did not honor this demand, the store's assistant manager, Douglas A. Stauffer, filed a criminal complaint against her, charging violation of the Pennsylvania bad check statute, 18 Pa.C.S.A. ยง 4105.*fn4 After the criminal complaint was filed, Mrs. Rannels returned to the store and offered to pay eight dollars; the offer was refused. She showed the criminal complaint to Robert Boyd, the store manager, who said it had been filed "because you attempted fraud in my store." Appendix at 2, par. 11. He also stated that he would not drop the complaint because the store would have to pay court costs and that "we have to set an example of you so others don't try to stop payment on goods." Id. These remarks were made in the presence of other customers, a man being interviewed for a job, and the appellants' son. Id.

In addition to visiting the store, Mrs. Rannels wrote to the corporate president of Nichols, Manfred Brecker, explaining the history of the transaction, disclosing that the Ephrata store was criminally prosecuting her under false charges stating that she had attempted fraud. She gave notice of the possible defamation to her character because of her position in the community: "Being the local PTA President and the Superintendent of my Sunday school I wanted you to be aware of the slanderous and libelous actions taken so far by your people and potential defamation of character when this does come to a hearing and a trial if necessary." Id. at 6, Exhibit "B." Mr. Brecker's letter in response allegedly showed that he had "a knowledge of the facts" and that he "condoned and supported the malicious prosecution and slandering and libeling" of appellant. Id. at 3, par. 14.

The complaint specifically averred that the assistant manager who filed the criminal complaint knew that Mrs. Rannels had not violated the bad check statute but had stopped payment due to a dispute over defective merchandise, Id. at 2, par. 9, and that "Robert Boyd, Manfred Brecker and Douglas Stauffer each knew that Mrs. Rannels had not committed any criminal act. . . ." Id. at 3, par. 15. Mrs. Rannels was acquitted of the criminal offense and later paid the store six dollars "in full settlement" of its claim. Id., pars. 16, 17.

With only the plaintiffs' complaint and exhibits before it, the district court granted Nichols' motion to dismiss. It found plaintiffs' claim for malicious prosecution fatally defective because plaintiffs failed to aver "factual allegations of a lack of probable cause" on the part of Nichols in bringing the criminal charges, determining that "the allegations of the complaint fall short and fail to supply the required factual allegations," and that plaintiffs did not aver malice. Rannels v. S. E. Nichols, Inc., 447 F. Supp. 417, 419-20 (E.D.Pa.1978). The defamation count was dismissed because "no special damages have been pleaded in this case." Id. at 421. We conclude that the district court erred in both of these critical decisions.


This court has previously described the relevant Pennsylvania law:

Under the law of Pennsylvania, which governs the rights of the parties to the present suit, the elements necessary to support an action for malicious prosecution are (1) the termination in the complainant's favor of the criminal proceedings involved in the action, (2) want of probable cause for the criminal proceedings, and (3) malice. Stinson v. Smith et al., 329 Pa. 177, 181, 182, 196 A. 843; Altman v. Standard Refrigerator Co., Inc., 315 Pa. 465, 477, 173 A. 411; Painter v. Roth et al., 118 Pa.Super. 474, 477, 180 A. 49; Randall v. Fenton Storage Co. (Randall v. Seligman ) (two cases), 117 Pa.Super. 212, 214, 177 A. 575.

Hornin v. Montgomery Ward & Co., 120 F.2d 500, 503 (3d Cir. 1941). Probable cause in malicious prosecution cases has been defined by the Pennsylvania Supreme Court as "a reasonable ground for belief, or . . . "a reasonable ground of suspicion supported by circumstances sufficiently strong in themselves to warrant a cautious man in the belief that the person accused is guilty of the offense with which he is charged.' The test is the prosecutor's belief of the existence ...

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