Opinion
No. SA-02-CA-1176-RF.
April 27, 2005
ORDER REJECTING THE MEMORANDUM AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
BEFORE THE COURT is the Memorandum and Recommendation of the United States Magistrate Judge, filed in the above-styled and numbered cause on November 18, 2004. The Magistrate Judge recommended that Defendant Mark Galvan's Motion for Voluntary Dismissal Without Prejudice of his Counterclaims Against Plaintiffs (Docket No. 78) be denied. Defendant Galvan filed Objections to the Memorandum and Recommendation on December 6, 2004. After due consideration, the Court is of the opinion that the Magistrate Judge's Memorandum and Recommendation should be REJECTED.
BACKGROUND
The record reflects that Plaintiffs Lloyd Campbell and Campbell Seed Plant, Ltd. (collectively referred to as "Campbell") brought suit against Defendants following the demise of a real estate contract under which Galvan was to purchase 302 acres of land for residential housing and for the development of water rights. Campbell alleges causes of action against Galvan for breach of contract, fraud, negligence, and other state-law claims. On December 28, 2003 during the pendency of this lawsuit, Campbell sold the entirety of real estate and water rights to a third party, Oblate/2673 Partners, Ltd. ("Oblate"). On February 17, 2004, Galvan filed counterclaims against Campbell in this action. Galvan also filed a lis pendens in the Comal County, Texas Real Property Records. Galvan now seeks to voluntarily dismiss his counterclaims against Campbell without prejudice so that he can file suit in state court. Galvan seeks this dismissal because he argues that he obtained documents through discovery that show Oblate was aware of his interest in the property at the time it purchased real estate and water rights from Campbell and that Oblate, Campbell, and First American Title conspired to dispossess him of his rights.
After review of Defendant Galvan's Motion and Plaintiffs' Response, Magistrate Judge John Primomo recommended that Defendant's Motion be denied. Magistrate Judge Primomo acknowledged that Oblate's inclusion was necessary for the proper adjudication of his counterclaims against Campbell, but he recommended that voluntary dismissal was inappropriate pursuant to Fed.R.Civ.P. 41(a)(2), (c) because it would further expand the case and create pie cemeal litigation.
STANDARD OF REVIEW
The Court reviews de novo a Magistrate Judge's Memorandum and Recommendation if a party files specific objections within ten days of service. The Court need not consider objections that are frivolous, conclusive, or general in nature. If there are no specific objections to a Magistrate Judge's Memorandum and Recommendation, the District Court is to review it for findings and conclusions that are either clearly erroneous or contrary to law. In the instant case, Movant timely filed specific objections to the Magistrate Judge's Memorandum and Recommendation, thus warranting de novo review by the Court.
Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
See United States v. Wilson, 864 F.2d 1219, 1221 (5th Cir. 1989).
ANALYSIS
After de novo review, the Court rejects the Memorandum and Recommendation for the reasons articulated. Citing C. Wright A. Miller, Federal Practice and Procedure, the Fifth Circuit recognizes that "courts have generally followed the traditional principle that dismissal should be allowed unless the defendant will suffer some plain legal prejudice other than the mere prospect of a second lawsuit. It is not a bar to dismissal that plaintiff may obtain some tactical advantage thereby." Plaintiffs contend that they have suffered plain legal prejudice because they have expended significant effort preparing for trial and because Defendant has demonstrated a lack of diligence. Despite these conclusory allegations, Plaintiffs have not shown that the case has proceeded far in discovery, causing excessive litigation costs.
Manshack v. Southwestern Elec. Power Co., 915 F.2d 172, 174 (5th Cir. 1990) (citing 9 C. Wright A. Miller, Federal Practice and Procedure § 2364, at 165 (1971)).
Manshack, 915 F.2d at 174; see also Robles v. Atlantic Sounding Co., Inc., 77 Fed.Appx. 274, 275 (5th Cir. 2003) (not selected for publication).
Plaintiffs' Response to Defendant Galvan's Motion for Voluntary Dismisal, Docket No. 80, p. 2.
See Manshack at 174.
Binding Fifth Circuit case law instructs lower courts as follows: "[F]aced with a Rule 41(a)(2) motion the district court should first ask whether an unconditional dismissal will cause the non-movant to suffer plain legal prejudice. If not, it should generally, absent some evidence of abuse by the movant, grant the motion." A series of Fifth Circuit cases show that plain legal prejudice occurs where the grant of a motion for voluntary dismissal causes the non-movant to lose an otherwise available defense. Other Fifth Circuit cases indicate that filing a motion for voluntary dismissal at a late stage in the litigation also can be grounds for denying the motion. In the matter at hand, Plaintiffs have not argued that the voluntary dismissal would strip them of any otherwise available defenses. Galvan claims that with respect to his counterclaims, the only discovery Campbell has conducted consisted of a set of requests for admissions. Moreover, Defendant Galvan argues that although the lawsuit has been ongoing for several years, his counter-claims against Oblate and Campbell did not accrue until December 2003. Based on the discussion above and de novo review of the record, this Court rejects the Magistrate Judge's Memorandum and Recommendation and GRANTS Defendant's Motion for Voluntary Dismissal Without Prejudice of his Counterclaims Against Plaintiffs.
Elbaor v. Tripath Imaging, Inc., 279 F.3d 314, 317 (5th Cir. 2002).
Robles, 77 Fed.Appx. at 275 (not selected for publication); Elbaor, 279 F.3d at 318-19 (vacating and remanding district court's dismissal because non-movant could potentially lose a statute of limitations defense); Ikospentakis v. Thalassic S.S. Agency, 915 F.2d 176, 178-80 (5th Cir. 1990) (vacating and remanding because non-movant could lose forum non conveniens defense); Phillips v. Illinois Cent. Gulf R.R., 874 F.2d 984 (5th Cir. 1989) (defendant's loss of a statute of limitations defense constituted clear legal prejudice).
Robles, at 275 (not selected for publication); Manshack at 174 ("In some circumstances we would probably agree that a voluntary dismissal granted after an adverse trial court ruling could inflict `legal prejudice' on the defendant."); Davis v. Huskipower Outdoor Equip. Corp., 936 F.2d 193, 199 (5th Cir. 1991) ("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.").
CONCLUSION
Accordingly, the Court ORDERS that the Memorandum and Recommendation be REJECTED and Defendant's Motion for Voluntary Dismissal Without Prejudice of his Counterclaims Against Plaintiffs be GRANTED. It is ORDERED that Plaintiffs claims against Defendants shall proceed in this Court, but Defendant Galvan's counterclaims against Plaintiffs shall be DISMISSED WITHOUT PREJUDICE.
It is SO ORDERED.