California, United States of America
The following excerpt is from Hallmeyer v. Dimitropolous, C056452 (Cal. App. 5/7/2009), C056452 (Cal. App. 2009):
To determine whether a party has received a favorable termination, we consider the judgment as a whole in the prior action. Victory following a trial is not required. Rather, the termination must reflect the merits of the action and the plaintiff's innocence of the misconduct alleged in the lawsuit. (Siebel v. Mittlesteadt (2007) 41 Cal.4th 735, 741 (Siebel).)
A dismissal resulting from a settlement generally does not constitute a favorable termination. In such a case the dismissal reflects ambiguously on the merits of the action because it results from the joint action of the parties, leaving open the question of the defendant's guilt or innocence. (Fuentes v. Berry (1995) 38 Cal.App.4th 1800, 1808 (Fuentes).)
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