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HOLIDAY QUEEN LAND CORPORATION, Plaintiff-Appellant, v. Barton BAKER et al., Defendants, Insurance Company of North America, Defendant-Appellee

United States Court of Appeals for the Fifth Circuit1974-02-25No. No. 73-1119
489 F.2d 1031

Summary

Holding. The judgment against Holiday Queen is reversed and the case is remanded with instructions to reinstate Holiday Queen's complaint, which may then be dismissed without prejudice upon such terms and conditions as the trial court deems proper.

Holiday Queen filed a conspiracy and fraud lawsuit naming multiple defendants, including Insurance Company of North America (INA), which was joined over a year after the original complaint. During pretrial proceedings, the district court denied Holiday Queen's requests for a continuance and ruled that a key deposition would be inadmissible against INA. With trial set to begin in ten days and discovery closed, Holiday Queen moved for voluntary dismissal of INA. The trial court rejected this request, and when Holiday Queen failed to present evidence at trial, judgment was entered against it.

The appellate court reversed, holding that a defendant should not be allowed to prevent a voluntary dismissal absent clear prejudice beyond the mere prospect of facing a second lawsuit. INA, which had entered the case late and incurred minimal expenses, would suffer only the inconvenience of potential relitigation—not a substantial harm. The court found the district court's refusal to permit dismissal without prejudice was an abuse of discretion.

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Key issues

  • Standards for granting voluntary dismissal under Rule 41(a)(2)
  • Whether a late-joined defendant may prevent dismissal absent substantial prejudice
  • Proper grounds to deny a motion for continuance and reopen discovery

Procedural posture

Holiday Queen appealed the district court's denial of its motion for voluntary dismissal of INA and the resulting judgment entered against it when Holiday Queen failed to present evidence at trial.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

PER CURIAM:

Holiday Queen seeks review of the district court’s refusal to dismiss without prejudice, under Rule 41(a)(2), F. R.Civ.P., Holiday Queen’s action against Insurance Company of North America (INA). Holiday Queen sought voluntary dismissal of, IN A because of Holiday Queen’s inability to present evidence of its claim against INA on the date set for trial. As a result the district court entered judgment in favor of INA and dismissed Holiday Queen’s action with prejudice. We reverse.

INA was one of numerous defendants in a conspiracy and fraud case brought by Holiday Queen. Although the original complaint was filed July 12, 1971, it was not until July 11, 1972, after substantial discovery and joinder of various other defendants, that Holiday Queen joined INA as a defendant. INA answered on September 14, 1972. The court held pretrial conference on November 3, 1972 and denied a motion for continuance submitted by Holiday Queen and three defendants (not including INA). At the conference the court ruled that the deposition in which Holiday Queen discovered the facts underlying its claim against INA would be inadmissible against INA. In addition, the court refused to reopen discovery for purposes of retaking the deposition, with notice to INA. The court also notified the parties that the trial would commence in ten days, on November 13.

At a hearing on November 8, Holiday Queen renewed its motions for continuance and for voluntary dismissal of INA. Over Holiday Queen’s insistence that it could not properly proceed to trial and that no prejudice would befall INA should the dismissal be granted, the district court again denied the motions. On the date of trial the court, upon Holiday Queen’s failure to present evidence, entered its judgment.

As we noted in Durham v. Florida East Coast Ry. Co., 385 F.2d 366 (5th Cir. 1967), a court exercising its discretion in considering voluntary dismissal must:

follow the traditional principle that dismissal should be allowed unless the . defendant will suffer some plain prejudice other than the mere prospect of a second lawsuit. It is no bar to dismissal that plaintiff may obtain some tactical advantage thereby.

385 F.2d at 368 (quoting 2 Barron & Holtzoff Federal Practice and Procedure § 912, Wright’s ed. and adding emphasis).

INA came late to the case and suffered a minimum of expense. Had the court granted a voluntary dismissal, INA faced only the annoyance of a second litigation upon the same subject matter. Despite INA’s insistence that a second suit would be only a perpetuation of the frivolous and spurious, we conclude that INA would not have lost any substantial right by the dismissal.

Accordingly we reverse the judgment against Holiday Queen and remand with instructions that the Holiday Queen’s case be reinstated. On proper motion, the complaint against INA may be dismissed without prejudice upon such terms and conditions as the court deems proper.

Reversed and remanded with instructions.

. Rule 41(a).

(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 him 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.