Plaintiff May Dismiss Without Prejudice On Eve Of Mandatory Settlement Conference

In Franklin Capital Corp. v. Wilson, 148 Cal. App. 4th 187, 55 Cal. Rptr. 3d 424 (4th Dist. Feb. 28, 2007), the plaintiff attempted to take a voluntary dismissal without prejudice on the eve of a mandatory settlement conference with the court. Nevertheless, the court held the conference, vacated the voluntary dismissal and entered dismissal with prejudice. By that time, plaintiff’s counsel already had a long record of missed court hearings and had been ordered to pay sanctions.

Nevertheless, the appellate court found that a plaintiff has an absolute right pursuant to statute to take a voluntary dismissal without prejudice at any time prior to commencement of “trial” or the pendency of an impending dispositive procedure, and that the mandatory settlement conference did not fall under any of those categories. Thus, the trial court had no authority to convert the voluntary dismissal to one with prejudice.

Voluntary Dismissal For Lack Of Jurisdiction Not With Prejudice Under Rule 41(a)(1)

The Seventh Circuit has clarified the interaction between Fed.R.Civ.P. 41(a)(1) and 12(h)(3).

In Murray v. Conseco, Inc., 467 F.3d 602 (7th Cir. Oct. 25, 2006), defendants moved to dismiss for failure to state a claim and for lack of subject-matter jurisdiction. Plaintiffs conceded the jurisdictional point and filed a “notice of consent to dismiss.” Defendants convinced the district court that this was both a voluntary dismissal under Rule 41(a)(1) and also the second time plaintiffs dismissed, and therefore the dismissal was required to be with prejudice under that rule.

On appeal, the Seventh Circuit reversed because this was not a voluntary dismissal within the definition of Rule 41(a)(1) due to its being filed later in the proceedings. Instead, plaintiff was complying with the mandate that the court be advised as soon as becoming aware of jurisdictional problems. The court’s dismissal was made in compliance with Rule 12(h)(3), not Rule 41(a)(1), and the two-dismissal rule was not implicated.

Reinstatement Under Rule 60(b) Tolls Statute Of Limitations As Of Original Filing

In Stanley v. Foster, 464 F.3d 565 (5th Cir. Sept. 12, 2006), the court considered as a matter of first impression the interplay between two rules dealing with the effect of a dismissal.

In general, if a court dismissed a complaint without prejudice the statute of limitations may continue to run. As a result, the action that the plaintiff was hoping to pursue through an amended complaint may have become time-barred. However, another legal concept holds generally that if a dismissal order is later set aside, the cause is reinstated as though the judgment had never been entered. Taken literally, that would mean that the reinstatement date has no independent significance.

The court in Stanley apparently agreed. Examining the effect upon the statute of limitations of a successful Rule 60(b) motion that reinstated a complaint, the court held that in such a situation the date of the original filing, not of the 60(b) ruling, is the proper date for purposes of the statute of limitations.