Dismissal Can Be Hard In Federal Court – Got To Have Experienced Insurance Lawyer

Having an experienced insurance law attorney is vital.  Otherwise you can end up with a situation that occurred in the Eastern District of Texas, Sherman Division.  The case is styled, Mike and Jacqueline Sanchez v. Safeco Insurance of Indiana.

The Sanchez’s filed a Motion to Dismiss Without Prejudice.  In other words, the Sanchez wished to dismiss their lawsuit against Safeco.  However, by filing the motion “without prejudice” would allow them to refiled the lawsuit against Safeco.  For this reason, Safeco contested the motion.

The United States Fifth Circuit Court of Appeals recognizes that as a general rule, motions for voluntary dismissal should be freely granted unless the non-moving party will suffer some plain legal prejudice other than the mere prospect of a second lawsuit.  The primary purpose of Rule 41(a)(2) is to prevent voluntary dismissals which unfairly affect the other side, and to permit the imposition of curative conditions.

Courts have found plain legal prejudice when the plaintiff moves to dismiss the case at a late stage of the proceedings after the parties have exerted significant time and effort, the plaintiff seeks to avoid an imminent adverse ruling, or if dismissal would cause the defendant to be stripped of an otherwise available defense if the case were to be refiled.

The following factors are taken into consideration when determining whether the court should deny a motion for voluntary dismissal: (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.

Safeco asserts that Sanchez only seeks dismissal in order to refile and take the steps necessary to evade a cap on their attorney’s fees.  Since Sanchez previously filed a motion for reconsideration of the Court’s cap on their attorney fees, the Court agrees that this is the predominant and, in all likelihood, the sole motive for their motion to dismiss.  This does not prove that dismissal will subject Safeco to plain legal prejudice but the late stage of this case does.  Safeco removed the case to Court eight months ago, the parties have conducted discovery and filed several motions, the Court has already denied Safeco’s motion for summary judgment, and the Final Pretrial Conference is scheduled soon.  In turn, the case is at a late stage of the proceedings after the parties have exerted significant time and effort.  Thus, dismissal of the case without prejudice will subject Safeco to plain legal prejudice and the motion was denied.

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