United States District Court, E.D. California
MEMORANDUM AND ORDER
MORRISON C. ENGLAND UNITED STATES DISTRICT JUDGE
the present action, Plaintiff Lassen Municipal Utility
District ("Plaintiff") sought to nullify its
December 2007 purchase of the so-called Hayden Hill 69kv
power transmission line ("the Line") in Lassen
County, California. According to Plaintiff, its former
General Manager, Frank Cady, lacked the requisite authority
to execute a sales contract for purchase of the Line from
Defendants Kinross Gold, U.S.A. Inc. and Lassen Gold Mining,
Inc. ("Defendants"). Plaintiff's lawsuit, which
contained causes of action for declaratory relief and
restitution, was removed to this Court under the auspices of
its diversity jurisdiction pursuant to 28 U.S.C. §
1332(a). Plaintiff now moves for voluntary dismissal of its
lawsuit pursuant to Federal Rule of Civil Procedure
41(a)(2). For the reasons set forth below, that
Motion is GRANTED.
lawsuit was initially filed in state court on December 15,
2010, and Defendants removed the matter to this Court on
January 27, 2011. On April 2, 2012, Plaintiff moved for
summary judgment on grounds that Frank Cady lacked the
requisite authority to bind Plaintiff to the Purchase and
Sales Agreement (‘PSA") at issue. ECF No. 27. That
Motion was denied by this Court's Memorandum and Order
filed March 8, 2013 (ECF No. 93). Since that ruling, the trial
in this matter was continued three times on the Court's
own motion because of its impacted caseload. Then, on March
10, 2016, about a month before the rescheduled April 11, 2016
trial date, Plaintiff filed the Motion for Voluntary
Dismissal now before the Court. (ECF No. 113). As a result of
that Motion, the Court vacated the April 11, 2016 trial
pending its decision on the Motion to Dismiss. Defendants
proceeded to oppose Plaintiff's Motion (ECF No.116), and
Plaintiff filed a Reply to that Opposition. (ECF No. 117).
Defendants do not ostensibly oppose Plaintiff's request
that this lawsuit be dismissed, they nonetheless request that
various conditions be imposed by the Court as a precondition
for dismissal. Defendants argue that they are prejudiced by
Plaintiff's decision to voluntarily dismiss the action on
the eve of trial, and contend that permitting dismissal at
this juncture would deprive them of their ability to prevail
on their affirmative defense of ratification. Contrary to
Plaintiff's assertion otherwise, that defense asserts
that Plaintiff had in fact ratified the purchase of the Line
from Defendants. Defendants accordingly seek declaratory
relief to that effect should Plaintiff's request for
dismissal be granted. Similarly, Defendants also ask that the
Court order Plaintiff to 1) assume its reclamation
obligations under the PSA; 2) to post adequate security for
those obligations; and 3) to obtain its own Special Use
Permit for reclamation activities.
according to Defendants, they should be awarded
attorney's fees, both as a prevailing party both under
the provisions of the PSA and in accordance with California
law and the provisions of the sales agreement, and pursuant
to the Court's inherent authority because Plaintiff's
persistence in continuing to litigate this matter was
district court should grant a motion for voluntary dismissal
under Rule 41(a)(2) unless a defendant can show that it will
suffer some plain legal prejudice as a result. Waller v.
Fin. Corp. of Am., 828 F.2d 579, 583 (9th Cir. 1987);
see also Hamilton v. Firestone Tire & Rubber Co.,
679 F.2d 143, 145-46 (9th Cir. 1982). Rule 41(a)(2) provides:
Except as provided in paragraph (1) of this subdivision of
this rule, an action shall not be dismissed at the
plaintiff's instance save upon order of the court and
upon such terms and conditions as the court deems proper. If
a counterclaim has been pleaded by a defendant prior to the
service upon the defendant of the plaintiff's motion to
dismiss, the action shall not be dismissed against the
defendant's objection unless the counterclaim can remain
pending for independent adjudication by the court. Unless
otherwise specified in the order, a dismissal under this
paragraph is without prejudice.
Ninth Circuit has clarified that legal prejudice means
"prejudice to some legal interest, some legal claim,
some legal argument." Smith v. Lenches, 263
F.3d 972, 976 (9th Cir. 2001) (quoting Westlands Water
Dist. v. United States, 100 F.3d 94, 96 (9th Cir.
1996)). In so holding, the Court further explained that
"uncertainty because a dispute remains unresolved"
or because "the threat of future litigation . . . causes
uncertainty" does not result in plain legal prejudice.
Id. at 976. Moreover, plain legal prejudice does not
result merely because the defendant will be inconvenienced by
having to defend in another forum or where a plaintiff would
gain a tactical advantage by that dismissal.
Hamilton, 679 F.2d at 145.
decision to grant or deny a request to dismiss pursuant to
Rule 41(a)(2) is a matter subject to a district court's
sound discretion. Sams v. Beech Aircraft Corp., 625
F.2d 273, 277 (9th Cir. 1980). In exercising that discretion,
"[a] district court should grant a motion for voluntary
dismissal under Rule 41(a)(2) unless a defendant can show
that it will suffer some plain legal prejudice as a
result." Smith v. Lenches, 263 F.3d 972, 975
(9th Cir. 2001) (citing Waller v. Fin. Corp. of Am.,
828 F.2d 579, 583 (9th Cir. 1987).
indicated above, Defendants first request that this Court
condition any dismissal of Plaintiff's complaint on the
provision of several forms of affirmative relief, including:
(1) the enforcement of the PSA against Plaintiff as well as
orders that Plaintiff assume its reclamation obligations
under the sales agreement; (2) that Plaintiff post adequate
security for those obligations; and (3) that Plaintiff obtain
its own Special Use Permit for reclamation activities.
Defendants argue that it will be prejudiced absent such
conditions and that accordingly any dismissal must be
predicated upon them.
request for affirmative relief ignores the fact that they
have filed no counterclaim during the more than five years
that this matter has been pending. As a matter of law, no
prejudice results from a dismissal where defendants
"have not counterclaimed or otherwise filed for
affirmative relief." Burnett v. Godshall, 828
F.Supp. 1439, 1443 (N.D. Cal. 1993); Roberts v.
MacDonald, 967 F.2d 590 at *2 (9th Cir. 1992) (no
prejudice where dismissal sought before any counterclaim is
pending). The Court agrees with Plaintiff's observation
that imposition of the declaratory conditions advocated by
Defendants would amount to Defendants "receiving a
decision on the merits with respect to declaratory relief
claims it has never pursued and never established."
Pl.'s Reply, ECF No. 117, 9:5-7. Moreover, the Court
rejects Defendants' claim that dismissal of the present
matter would foreclose Defendants' future right to seek
relief against Plaintiff for some potential future breach of
the PSA. Those issues are different and would not be barred
under res judicata principles if Plaintiff's own lawsuit,
which contends that Cady lacked authority to bind Plaintiff
to the subject purchase agreement, is ...