Are You Even Eligible for a Dismissal?

By: Matthew D. Quinn

In my inaugural blog post, I discussed how a voluntary dismissal under “Rule 41 has been the salvation and downfall of many a trial lawyer.”  G. Gray Wilson, N.C. Civil Procedure, Sec. 41-2 (4th ed).  As discussed, it’s undoubtedly true that a dismissal under Rule 41 can breathe life into a damaged case by allowing the plaintiff a mulligan.  Yet there are many hidden pitfalls to taking a voluntary dismissal, such as the two-dismissal rule discussed in my prior blog post.

One of the more fundamental, yet seemingly hidden, dangers involves whether the plaintiff is even eligible for a voluntary dismissal.  At first blush, the language of Rule 41 is deceptively liberal with respect to a plaintiff’s right to file a voluntary dismissal.  Indeed, the text of Rule 41 imposes only one limitation upon a plaintiff’s eligibility for a voluntary dismissal: the dismissal must be filed “before the plaintiff rests his case.”  Similarly, North Carolina’s Appellate Courts have described the right of a plaintiff to file a voluntary dismissal in expansive terms:

The purpose of our long-standing rule allowing a plaintiff to take a voluntary dismissal and refile the claim within one year even though the statute of limitations has run subsequent to a plaintiff’s filing of the original complaint is to provide a one-time opportunity where the plaintiff, for whatever reason, does not want to continue the suit. The range of reasons clearly includes those circumstances in which the plaintiff fears dismissal of the case for rule violations, shortcomings in the pleadings, evidentiary failures, or any of the myriad reasons for which the cause of action might fail.

Brisson v. Santoriello, 351 N.C. 589, 597 (2000) (emphasis added).

But in reality, the matter is hardly so straightforward.  In fact, this most elementary part of Rule 41—that the plaintiff may file a voluntary dismissal provided he has not “rest[ed] his case”—is hardly simple.

When does a plaintiff “rest his case”?  Surely we all envision this critical moment occurring at trial, typically before a jury.  Hence, the troubled litigator might feel herself justified in believing that a voluntary dismissal is wise if a summary judgment hearing goes poorly.  Perhaps surprisingly, however, case law interpreting Rule 41 states that, once the plaintiff’s attorney concludes his summary judgment argument, he may have already “rest[ed] his case.”  Consider the following quote from the N.C. Court of Appeals:

The decision of the court resulting from a motion for summary judgment is one on the merits of the case. All parties have an opportunity to present evidence on the question before the court. Where a party appears at a summary judgment hearing and produces evidence or is given an opportunity to produce evidence and fails to do so, and the question is submitted to the court for decision, he has “rested his case” within the meaning of Rule 41(a)(1)(i)[.] He cannot thereafter take a voluntary dismissal under Rule 41(a)(1)(i). To rule otherwise would make a mockery of summary judgment proceedings.

Maurice v. Hatterasman Motel Corp., 38 N.C. App. 588, 591-92 (1978).

There are additional restrictions upon the eligibility for a voluntary dismissal.  For example, a plaintiff cannot take a voluntary dismissal if the defendant asserts a pending counterclaim that seeks “affirmative relief . . . for which the defendant might maintain an action entirely independent of plaintiff’s claim, and which he might proceed to establish and recover even if plaintiff abandoned his cause of action.”  McCarley v. McCarley, 289 N.C. 109, 113-14 (1976).  Numerous cases apply this “affirmative relief” rule to prevent a voluntary dismissal, including the following:

• Swygert v. Swygert, 46 N.C. App. 173 (1980) (counterclaim for absolute divorce);

• Bradley v. Bradley, 206 N.C. App. 249 (2010) (counterclaim for judicial dissolution and liquidation of corporation and appointment of receiver);

• Gardner v. Gardner, 48 N.C. App. 38 (1980) (counterclaim for alimony);

• Layell v. Baker, 46 N.C. App. 1 (1980) (counterclaim for negligence); and

• Giliken v. Pierce, 98 N.C. App. 484 (1990) (counterclaim for negligence).

Adding further to our difficulties, we must be mindful that not all counterclaims seek the type of “affirmative relief” that prohibits a plaintiff’s voluntary dismissal—instead, the counterclaim must seek affirmative relief of a nature that would “survive independently without the plaintiff’s underlying claim.”  Williams v. Poland, 154 N.C. App. 709, 711 (2002).  For example, a defendant’s request for attorney’s fees will typically not prevent the plaintiff from filing a voluntary dismissal.  Kohn v. Mug-a-Bug, 94 N.C. App. 594, 597 (1989), overruled on other grounds, Bryson v. Sullivan, 330 N.C. 644 (1992).  Similarly, a cross-claim for indemnification typically will not prevent a plaintiff’s voluntary dismissal because indemnity is “contingent upon plaintiff’s recovery and is in no way ‘affirmative relief.’”  Travelers Ins. Co. v. Ryder Truck Rental, Inc., 34 N.C. App. 379, 380-81 (1977).

There may be yet another difficulty in evaluating the eligibility for a voluntary dismissal.  The N.C. Supreme Court has stated that a voluntary dismissal may “not be done in bad faith.” Brisson v. Santoriello, 351 N.C. 589, 597 (2000). Obviously, no reader of this blog would presume to file a voluntary dismissal in bad faith.  However, the “bad faith” exception does not appear in the text of Rule 41 and therefore serves to illustrate that, before filing a voluntary dismissal, it is essential to perform research beyond simply reading the rule.

Rule 41 can be lifesaving for a lawsuit, but it’s rife with complications.  In fact, I expect to write several more blog posts about additional problems posed by Rule 41.  Be careful, and always do your research before filing a voluntary dismissal.

If you have any civil litigation issues or questions, I would love to hear from you.  I can be reached at mdq@lewis-roberts.com or 919-981-0191.