Allstate Insurance v. Harvey

126 F.R.D. 76, 1989 U.S. Dist. LEXIS 6229, 1989 WL 59113
CourtDistrict Court, D. Kansas
DecidedMay 22, 1989
DocketNo. 85-4309-R
StatusPublished

This text of 126 F.R.D. 76 (Allstate Insurance v. Harvey) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allstate Insurance v. Harvey, 126 F.R.D. 76, 1989 U.S. Dist. LEXIS 6229, 1989 WL 59113 (D. Kan. 1989).

Opinion

MEMORANDUM AND ORDER

ROGERS, District Judge.

This long-pending litigation is now before the court upon the motion of defendant [77]*77Cimarron Insurance Company to dismiss its third-party complaint without prejudice and motions made in response to the motion to dismiss without prejudice. Before addressing these motions, a recap of the factual background and procedural history of this case is warranted.

Allstate Insurance Company filed this lawsuit on July 15,1985 asking for a declaration that it had no duty to defend three defendants—Dannie Harvey, O.R. Whitaker, and the Citizens State Bank of Liberal, Kansas—in litigation filed on June 19, 1984 in this district. That litigation was a sex discrimination and tort action filed by Dannie Harvey against O.R. Whitaker and the Citizens State Bank of Liberal, Kansas. Whitaker added a counterclaim against Harvey in the case.

The Bank and Whitaker demanded that Cimarron Insurance Company provide a defense and pay any settlement or judgment against them. Cimarron denied any duty to defend or pay a settlement or judgment. Cimarron proceeded, however, to defend the lawsuit pursuant to a denial of coverage and reservation of rights notification.

Demands were made upon plaintiff Allstate and Hartford Accident & Indemnity Company, Fidelity & Deposit Company of Maryland, Jefferson Insurance Company of New York, Kansas Bankers Surety Company, St. Paul Fire and Marine Insurance Company, AMCO Insurance Company and AMBAC Indemnity Corporation to provide a defense or share in the defense costs and contribute to a settlement of the claim. All of these companies refused to participate in the defense or settlement of the case with the exception of Kansas Bankers Surety Company, which contributed $25,000 in defense costs.

Cimarron was allowed to intervene in the case at bar on August 23, 1985. Cimarron filed a cross claim against Whitaker and the Bank asking for a declaration that it had no duty to defend or indemnify them on the claims made by Harvey. Cimarron also filed a separate claim against Allstate requesting a declaratory judgment that Allstate had a duty to defend and indemnify Whitaker and the Bank or to share the defense costs with Cimarron.

In September 1985, the sex discrimination case was settled for $360,000.00.

On November 20, 1986, Cimarron was permitted to amend its pleadings in the instant case to join parties. Cimarron sought a declaration that seven insurance companies had a duty to defend Whitaker and the Bank in the sex discrimination case and to indemnify or contribute to the settlement and the cost of defense. The joined parties were: AID Insurance Services, Fidelity and Deposit Company of Maryland, Hartford Accident and Indemnity Company, Jefferson Insurance Company of New York, Kansas Bankers Surety Company, MGIC Indemnity Corporation, and St. Paul Fire and Marine Company. Later, AMBAC Indemnity Corporation was substituted for MGIC Corporation, and AMCO Insurance Company was substituted for Aid Insurance Services.

Since that time, motions to dismiss for lack of jurisdiction have been filed; summary judgment motions have been filed; Allstate has filed a motion to dismiss its complaint; and numerous discovery motions have been filed. The case has consumed fifteen files with 458 docket entries.

Cimarron now asks that all of its claims be dismissed without prejudice under FED. R.CIV.P. 41(a)(2). Cimarron contends that dismissal without prejudice will permit a realignment of parties, eliminate the need to consider many pending motions, and enable a more orderly handling of the case. Cimarron also suggests that it would be most inefficient if a lot of work was done in this case only to have the jurisdictional objections sustained. Of course, a dismissal for lack of subject matter jurisdiction would not bar the refiling of the case in another forum.

The original parties to this action do not oppose Cimarron’s motion. The motion is opposed by several of the insurance companies who were joined by Cimarron in this case. These parties ask that the motion be denied or that severe conditions be placed upon the relief requested by Cimarron. Some of these parties filed motions assert[78]*78ing an absence of jurisdiction. At this point, however, these parties seem to be asking the court to ignore their jurisdictional arguments and decide the merits of the case.

FED.R.CIV.P. 41(a)(2) permits this court to dismiss claims without prejudice “upon such terms and conditions as the court deems proper.” After an answer or a motion for summary judgment is filed, a complaint cannot be dismissed without prejudice unless the court so orders. The main purpose of requiring an order from the court before a party may dismiss a claim is to prevent unfair prejudice to the parties opposing the claim. 9 Wright & Miller, FEDERAL PRACTICE & PROCEDURE § 2364 (1971). Generally, motions under FED.R.CIV.P. 41(a)(2) should be allowed unless the opposition will suffer some plain legal prejudice other than the prospect of a second lawsuit. Id. The mere fact that a party gains some tactical advantage from dismissing the action without prejudice generally does not warrant denying the motion. McCants v. Ford Motor Co., 781 F.2d 855, 857 (11th Cir.1986). Of course, the court has the discretion to place conditions upon a dismissal without prejudice in order to mitigate any prejudice which might be suffered if the action is refiled.

The Eighth Circuit recently listed factors other courts have considered in deciding motions under FED.R.CIV.P. 41(a)(2):

In Pace v. Southern Express Co., 409 F.2d 331, 334 (7th Cir.1969), the court identified the following factors to be considered in deciding a Rule 41(a)(2) motion: (1) the defendant’s effort and the expense involved in preparing for trial, (2) excessive delay and lack of diligence on the part of the plaintiff in prosecuting the action, (3) insufficient explanation of the need to take a dismissal, and (4) the fact that a motion for summary judgment has been filed by the defendant. In Ferguson v. Eakle, 492 F.2d 26, 29 (3d Cir.1974), the Third Circuit identified other types of prejudice which might support the denial of a motion for voluntary dismissal: (1) emotional and psychological trauma associated with the experience of defending another lawsuit, (2) the prejudice resulting from uncertainty over title to land, and (3) the absence of a justification for the proposed dismissal.

Paulucci v. City of Duluth, 826 F.2d 780, 783 (8th Cir.1987).

In the case at bar, a serious jurisdictional issue exists which provides a justification for dismissal without prejudice. Diversity jurisdiction was present for the original complaint in this case. Diversity does not exist among all the parties to the ancillary claims brought by Cimarron. For instance, both Cimarron and Kansas Bankers Surety are corporations with their principal place of business in this state. Diversity is also lacking between Cimarron and the original defendants. In

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Bluebook (online)
126 F.R.D. 76, 1989 U.S. Dist. LEXIS 6229, 1989 WL 59113, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allstate-insurance-v-harvey-ksd-1989.