Aggregates (Carolina), Inc. v. Kruse

134 F.R.D. 23, 1991 U.S. Dist. LEXIS 2444, 1991 WL 24721
CourtDistrict Court, D. Puerto Rico
DecidedFebruary 26, 1991
DocketCiv. No. 90-1492 (JAF)
StatusPublished
Cited by6 cases

This text of 134 F.R.D. 23 (Aggregates (Carolina), Inc. v. Kruse) is published on Counsel Stack Legal Research, covering District Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aggregates (Carolina), Inc. v. Kruse, 134 F.R.D. 23, 1991 U.S. Dist. LEXIS 2444, 1991 WL 24721 (prd 1991).

Opinion

OPINION AND ORDER

FUSTE, District Judge.

The underlying action in this case is for violations of the securities laws, RICO violations, and a host of related local law claims, all arising out of a series of interrelated corporate transactions. The complaint alleges damages of several million dollars. All indications point to the probability that the substantive claims will be disposed of by settlement. There is, however, a hitch. Defendant Prudential Bache Securities Inc., (“PruBache”), against whom plaintiffs are no longer seeking relief, and who has yet to file an answer or a summary judgment motion, wishes to hold up the settlement on the theory that Pru-Bache should be compensated for the $8,000 in attorney’s fees it has allegedly expended to date in this matter, and that any dismissal as to it should be with prejudice. Plaintiff, attempting to save the settlement, filed a voluntary dismissal, without prejudice, of all claims against Pru-Bache under Fed.R.Civ.P. 41(a)(l)(i). Pru-Bache seeks to vacate the dismissal as against it because it wishes to remain in the settlement negotiations in order to negotiate for its legal fees and for a “with prejudice” dismissal. Alternatively, if the court sanctions a dismissal of PruBache, it seeks to have the dismissal with prejudice and conditioned on the payment of legal fees. Plaintiffs assert that PruBache has no basis in law to demand an attorney fee award, and characterize PruBache’s actions in obstructing the settlement in order to get such fees as “blackmail” worthy of Rule 11 sanctions.

Voluntary Dismissal

Federal Rule of Civil Procedure 41 states in relevant part:

(a) Voluntary Dismissal: Effect Thereof.
(1) By Plaintiff; by Stipulation. Subject to the provisions of Rule 23(e), of Rule 66, and of any statute of the United States, an action may be dismissed by the plaintiff without order of court (i) by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever first occurs, or (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the action. Unless otherwise stated in the notice of dismissal or stipulation, the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of any state an action based on or including the same claim.
(2) By Order of Court. Except as provided in paragraph (1) of this subdivision of this rule, an action shall not be dismissed at the plaintiff’s instance save upon order of the court and upon such terms and conditions as the court deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon the defendant of the plaintiff’s motion to dismiss, the action shall not be dismissed against the defendant’s objection unless the counterclaim can remain pending for independent adjudication by the court. Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice.

[25]*25Plaintiffs in this matter relied on Rule 41(a)(l)(i). They did not move for a voluntary dismissal, nor did they file a stipulation signed by all the parties. They simply filed a “Notice of Voluntary dismissal as to Codefendant Prudential Bache Securities, Inc.” Where a notice pursuant to the rule is properly and timely filed, the court has no discretion in the matter, and cannot condition the dismissal on any grounds. 9 C. Wright and A. Miller, Federal Practice and Procedure § 2362 (1971); Universidad Central Del Caribe, Inc. v. Liaison Committee on Medical Education, 760 F.2d 14 (1st Cir.1985). PruBache denies that plaintiffs had the option to rely on that rule.

PruBache, although it did not file an answer or summary judgment motion (which would preclude the applicability of that section of the rule) did file a “Motion to Sever, To Compel Arbitration and to Stay Such Arbitration Pending Results of Court Proceedings Against Remaining Defendants.” In essence, the motion to sever argues that since PruBache’s liability, if any, is derivative from the other defendants, the court should stay the entire matter as to PruBache until the issue of liability could first be determined as to the defendants from whom PruBache’s liability might flow, thereby obviating the need for PruBache to litigate the matter at all if the other defendants were exonerated. It also argued that if liability were found as to the other defendants, the plaintiffs’ claim as to PruBache should then be submitted for arbitration. PruBache argues that such a motion is the functional equivalent of a summary judgment motion, since it “calls for the resolution on the merits of whether on not the main codefendants perpetuated fraud against the plaintiffs.”

The motion was made before any substantive discovery, makes no substantive defense to the claim alleged, gives no factual scenario inconsistent with the facts alleged in the complaint, and makes no counterclaims. This document, whatever it may be, is not the functional equivalent of a summary judgment motion. It is not analogous to a summary judgment motion merely, as PruBache claims, because it calls for the resolution on the merits of claims against other defendants in the case. “A motion to compel arbitration and stay proceedings is not the equivalent of an answer or a motion for summary judgment.” Hamilton v. Shearson-Lehman American Express Inc., 813 F.2d 1532 (9th Cir.1987); Merit Ins. Co. v. Leatherby Ins. Co., 581 F.2d 137, 142 (7th Cir.1978) (cited with approval by the First Circuit in Universidad Central, 760 F.2d at 18); Wilson & Co. v. Fremont Cake & Meal Co., 83 F.Supp. 900 (D.Neb.1949). Even motions to dismiss under Rule 12(b)(6), though potentially dispositive of the case, are insufficient to divest plaintiff of its right to voluntarily dismiss. Leroux v. Lomas & Nettleton Co., 626 F.Supp. 962 (D.Mass.1986). We found no case law support for Pru-Bache’s position and we find it to be merit-less.

PruBache also argues, however, that the filing of answers by some of the defendants divests the plaintiffs of the power to use Rule 41(a)(l)(i) to dismiss as against any defendant, even if that particular defendant had not yet filed an answer or summary judgment motion. The Rule itself is arguably ambiguous. The wording “at any time before service by the adverse party of an answer or of a motion for summary judgment ...” could signify that the service of any answer or motion for summary judgment in a multiple defendant case would trigger the responsibility of the plaintiff to seek dismissal under other sections of the rule, or it could mean that a voluntary dismissal by plaintiff of any particular defendant is available (without stipulation or court order) up until the time that that defendant answers or moves for summary judgment. PruBache urges the former interpretation. We adopt the latter.

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Bluebook (online)
134 F.R.D. 23, 1991 U.S. Dist. LEXIS 2444, 1991 WL 24721, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aggregates-carolina-inc-v-kruse-prd-1991.