Frey v. Stoneman
In Frey v. Stoneman, 150 Ariz. 106, 110, 722 P.2d 274, 278 (1986), the Arizona Supreme Court expressly determined that "a dismissal for failure to prosecute is not procedural, and is a favorable termination which indicates the innocence of the accused if it reflects on the merits of the action."
This is consistent with the Restatement:
Civil proceedings may be terminated in favor of the person against whom they are brought . . . 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. Restatement (Second) of Torts 674 cmt. j (1977).
Frey directly acknowledged:
"The Restatement makes clear that a withdrawal or a failure to prosecute is favorable in fact only when shown to be so by the surrounding circumstances." 150 Ariz. at 111 n.7, 722 P.2d at 279 n.7.
"The question is whether, under the particular circumstances and merits of the underlying case, termination was actually favorable." Id. at 110, 722 P.2d at 278.
In Frey, the court made it clear that "there is no bright line which can be drawn to determine when a termination on less than adjudication of the merits is favorable." 150 Ariz. at 110, 722 P.2d at 278.
It recognized "where there has been no adjudication on the merits the existence of a 'favorable termination' of the prior proceeding generally must be found in the substance rather than the form of prior events and often involves questions of fact. . . . If the action was dismissed because of voluntary withdrawal or abandonment by the plaintiff, the finder of fact may well determine that this was, in effect, a confession that the case was without merit." Id. at 111, 722 P.2d at 279.