Terrell Owens' Neighbor Has False Reports Case Dropped

The woman who was accused of making false claims about Terrell Owens to police during a heated confrontation between the two back in August is now off the hook in her criminal case ... TMZ Sports has learned Caitlin Davis' misdemeanor charge stemming from the incident has been dropped.

A spokesperson for the Broward State Attorney's Office tells us the case was dismissed on Feb. 2 -- after prosecutors said in documents they "would not be able to prove the elements of the charged crime with the facts that were presented."

Davis had initially been charged with one count of misdemeanor false reports after Owens said she lied to cops following an Aug. 3 argument they had gotten into in a Deerfield Beach, Fla. neighborhood.

Owens said at the time she made up a story that he had come after her after she had yelled at him for the way he was driving on the street.

Owens actually filmed part of their altercation -- and in the clip, you can hear Davis yell at the former NFL star, "You're a Black man approaching a white woman!"

The Hall of Fame wide receiver said he was grateful that a charge had been filed against Davis over it all ... saying to us at the time, "KAREN IS REAL."