It’s Not Always Easy To Dismiss A Case

Most of the time, Courts are happy to have a case dismissed from their docket.  An Eastern District of Texas, Sherman Division, opinion is an exception to that general situation.  The opinion is styled, Mike And Jacqueline Sanchez v. Safeco Insurance Company of Indiana.

The Sanchez’s filed a Motion to Dismiss Without Prejudice and the Court denied the motion.  Here is why.

The Fifth Circuit 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 re-filed.
The following factors are taken into consideration when determining whether the court should deny a Rule 41(a)(2) 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.
When a plaintiff fails to seek dismissal until a late stage of trial, after the defendant has exerted significant time and effort, then a court may, in its discretion, refuse to grant a voluntary dismissal.
The four factors stated above are grounds for refusing the dismissal without prejudice.  First, Safeco has already incurred expenses in defending this action.  Second, the Sanchez’s have not efficiently or diligently prosecuted this lawsuit.  Most notably, they failed to take the appropriate steps to avoid a cap of their recoverable attorneys’ fees.  This carelessly led to their motion for reconsideration of the cap of their fees and apparently, their motion is hopes for refiling the case without a cap on those fees.  Third, the Sanchez’s claimed to seek dismissal “to provide the statutory notice required by Sections 542 and 542A of the Texas Insurance Code.  Aside from offering little explanation as to why the parties could resolve their claim at this juncture, the real reason for the proposed dismissal appears to be their desire to pursue their case without a cap on attorney’s fees.  Fourth, the Court has already ruled on Safeco’s Motion for Summary Judgment, further mitigating against dismissing this case without prejudice.