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Snyder Insurance Services Inc. v. Kulin-Sohn Insurance Agency Inc.

United States District Court, D. Kansas

February 6, 2019

SNYDER INSURANCE SERVICES, INC. and RAYMOND F. SNYDER, Plaintiffs,
v.
KULIN-SOHN INSURANCE AGENCY, INC. and MARK R SOHN, Defendants.

          MEMORANDUM AND ORDER

          Daniel D. Crabtree United States District Judge.

         On October 15, 2018, plaintiffs filed a Motion for Voluntary Dismissal Without Prejudice under Federal Rule of Civil Procedure 41(a)(2). Doc. 45. Defendants filed a Response (Doc. 47) opposing plaintiffs' motion. And plaintiffs filed a Reply (Doc. 50). Defendants argue that the court should deny plaintiffs' motion entirely. Alternatively, defendants argue that the court should impose conditions on dismissal-namely, awarding defendants their costs and attorneys' fees. After considering the parties' arguments and the relevant law, the court grants plaintiffs' motion to dismiss without prejudice, but imposes certain conditions.

         I. Facts

         Plaintiff Snyder Insurance is an insurance brokerage company, which specializes in insuring amateur sports and children's fitness centers across the country. Plaintiff Raymond Snyder owns Snyder Insurance and serves as president and as an agent for the company. Defendant Kulin-Sohn is an Illinois-based insurance company, owned by defendant Mark R. Sohn. Plaintiffs have sued defendants for defamation and tortious interference with prospective business relations. In short, plaintiffs allege that defendants told several of plaintiffs' clients that plaintiffs had lied to them, misled them about their insurance coverage, and misled other gyms about their insurance coverage. As a result, plaintiffs contend that these clients did not renew their policies with plaintiffs, causing lost business, commissions, and broker fees.

         This case has progressed very little since plaintiffs filed it more than two years ago. Plaintiffs filed suit in state court in 2016. On August 1, 2016, defendants removed to this court. Doc. 1. Plaintiffs twice have amended their Complaint (Docs. 5, 32), and defendants have moved to dismiss four times (Docs. 3, 6, 12, 33). After the court's Memorandum and Order denying defendants' most recent Motion to Dismiss, defendants filed an Answer on June 20, 2018. Doc. 39. So, in about two years, the parties have completed the pleading stage-at least for now.

         Magistrate Judge Gerald L. Rushfelt issued a Revised Scheduling Order (Doc. 35) on March 26, 2018. Judge Rushfelt set trial for July 9, 2019. He directed the parties to complete all discovery by November 2, 2018, and file all dispositive motions by November 9, 2018. Doc. 35 at 1. And, the Order directed plaintiffs to disclose their experts by May 18, 2018.

         On October 15, 2018, plaintiffs filed a Motion for Voluntary Dismissal Without Prejudice (Doc. 45). Defendants filed a Response (Doc. 47) on November 5, 2018. Two days later, defendants also filed a Motion for Summary Judgment (Doc. 48). Plaintiffs filed a Reply (Doc. 50) to defendants' Response and then filed an Unopposed Motion for Extension of Time of Motion for Stay or Extension of Summary Judgment Briefing (Doc. 51). The court granted the Unopposed Motion and then extended plaintiffs' deadline to 21 days after the court rules on plaintiffs' Motion for Voluntary Dismissal Without Prejudice to file their Response to defendants' Motion for Summary Judgment, assuming the court's ruling on plaintiffs' Motion does not moot defendants' Motion for Summary Judgment.

         II. Legal Standard

         Rule 41(a)(2) provides that the court may allow a plaintiff to dismiss an action voluntarily “on terms the court considers proper.” Fed.R.Civ.P. 41(a)(2). “The rule is designed primarily to prevent voluntary dismissals which unfairly affect the other side, and to permit the imposition of curative conditions.” Phillips USA, Inc. v. Allflex USA, Inc., 77 F.3d 354, 357 (10th Cir. 1996) (quotation omitted). So, “[a]bsent ‘legal prejudice' to the defendant, the district court normally should grant such a dismissal.” Ohlander v. Larson, 114 F.3d 1531, 1537 (10th Cir. 1997) (first citing Am. Nat'l Bank & Trust Co. v. Bic Corp., 931 F.2d 1411, 1412 (10th Cir. 1991); then citing McCants v. Ford Motor Co., 781 F.2d 855, 856-57 (11th Cir. 1986)).

         The legal authorities don't provide a clear definition of “legal prejudice, ” but the Tenth Circuit has directed district courts to consider the following list of non-exhaustive factors as a starting point: (1) the opposing party's effort and expense in preparing for trial; (2) excessive delay and lack of diligence on the part of the movant; (3) insufficient explanation of the need for a dismissal; and (4) the present stage of the litigation. Id. (citing Phillips U.S.A., 77 F.3d at 358). The court may consider other factors. Id. “Each factor need not be resolved in favor of the moving party for dismissal to be appropriate, nor need each factor be resolved in favor of the opposing party for denial of the motion to be proper.” Id. (citing Phillips U.S.A., 77 F.3d at 358).

         But, legal prejudice “does not arise simply because a second action has been or may be filed against the defendant, which is often the whole point in dismissing a case without prejudice.” Brown v. Baeke, 413 F.3d 1121, 1124 (10th Cir. 2005) (citing Am. Nat'l Bank & Trust Co., 931 F.2d at 1412). Ultimately, “‘the district court should endeavor to insure substantial justice is accorded to both parties, and therefore the court must consider the equities not only facing the defendant, but also those facing the plaintiff.'” Lienemann v. Glock, Inc., No. 08-2484, 2009 WL 1505542, at *2 (D. Kan. May 27, 2009) (quoting Cty. of Santa Fe v. Pub. Serv. Co., 311 F.3d 1031, 1048 (10th Cir. 2002)).

         When considering the relative equities and endeavoring to insure substantial justice, the court may impose “terms and conditions as the court deems proper.” Brown, 413 F.3d at 1123 (internal citation omitted). Any “conditions should keep the parties in the same position in a subsequent lawsuit that they occupied before the plaintiff filed its motion to dismiss.” AgJunction LLC v. Agrian Inc., No. 14-CV-2069-DDC-KGS, 2015 WL 416444, at *4 (D. Kan. Jan. 30, 2015) (citing Pyles v. Boeing Co., 109 Fed.Appx. 291, 294 (10th Cir. 2004)). If the court imposes conditions on dismissal, the “moving party must be given a reasonable opportunity to withdraw his motion if he finds those conditions unacceptable or too onerous.” Gonzales v. City of Topeka, 206 F.R.D. 280, 283 (D. Kan. 2001) (internal citations and quotations omitted).

         III. Legal Prejudice Analysis

         The court first must determine whether defendants will sustain legal prejudice if it dismisses the case without prejudice. Without a finding of legal prejudice, the court should dismiss. Ohlander, 114 F.3d at 1537. The parties ask the court to consider six factors: (1) the defendants' effort and funds expended towards preparing for trial; (2) the plaintiffs' undue delay or lack of diligence in prosecuting the action; (3) the adequacy of the plaintiffs' explanation for needing to dismiss; (4) the plaintiffs' diligence in moving to dismiss; (5) the present stage of litigation; and (6) duplicative expenses involved in a likely second suit. Doc. 47 at 3; Doc. 50 at 4; see also Nunez v. IBP, Inc., 163 F.R.D. 356, 359 (D. Kan. 1995). The court will consider these six relevant factors here, below.

         A. The Opposing Party's Effort and Expense in Preparing for Trial and the Likelihood of Duplicative Expenses

         The court first addresses these two factors together. Plaintiffs contend that defendants have made no showing of effort or funds expended toward actual trial preparation. Defendants argue that they have made extensive efforts in preparing for trial, including marshaling significant evidence that refutes plaintiffs' claims. Doc. 47 at 3. Defendants also filed a Motion for Summary Judgment (Doc. 48) a little over three weeks after plaintiffs filed their Motion for Voluntary Dismissal Without ...


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