Paulucci v. City of Duluth

• Decision Date: 20 August 1987
• Docket Number: No. 86-5452,86-5452
• Citation: 826 F.2d 780
• Parties: Jeno F. PAULUCCI and Lois Paulucci, Appellants, v. CITY OF DULUTH and Lake Superior Paper Industries, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 780

826 F.2d 780

8 Fed.R.Serv.3d 835

Jeno F. PAULUCCI and Lois Paulucci, Appellants, v. CITY OF DULUTH and Lake Superior Paper Industries, Appellees.

No. 86-5452.

United States Court of Appeals Eighth Circuit.

Submitted June 8, 1987.

Decided Aug. 20, 1987.

Frank R. Berman, Minneapolis, Minn., for appellants.

Paul F. Schweiger, Duluth, Minn., for appellees.

Before McMILLIAN, Circuit Judge, FAIRCHILD, ^* Senior Circuit Judge, and JOHN R. GIBSON, Circuit Judge.

McMILLIAN, Circuit Judge.

Jeno F. Paulucci and Lois Paulucci (the Pauluccis) appeal from a final judgment entered in the District Court ¹ for the District of Minnesota denying their motion for voluntary dismissal under Fed.R.Civ.P. 41(a)(2) and granting summary judgment in favor of the City of Duluth (the City) and Lake Superior Paper Industries (LSPI). Paulucci v. City of Duluth, No. Civ. 5-86-99 (D.Minn. Oct. 30, 1986). The Pauluccis alleged that the City's taking of their property for a non-public use violated their Fifth and Fourteenth Amendment rights. For reversal, the Pauluccis argue that the district court (1) abused its discretion in failing to consider whether an award of attorney's fees and costs would eliminate any prejudice the City and LSPI would suffer as a result of the voluntary dismissal, (2) abused its discretion in holding that certain expenses incurred by the City and LSPI justified the denial of their motion to voluntarily dismiss, and (3) erred in granting summary judgment in favor of the City and LSPI on res judicata (claim preclusion) and collateral estoppel (issue preclusion) grounds because there was no final judgment in the state court action. For the reasons discussed below, we affirm the judgment of the district court.

The Pauluccis, residents of the City, owned property which the City sought to acquire in order that LSPI could build a paper mill on the site. The City contended that the paper mill would benefit the economically depressed area of Northern Minnesota by providing employment for area residents. The City brought an eminent domain action in state court under Minnesota's "quick-take statute." Minn.Stat. Sec. 117.042. LSPI and the Pauluccis filed objections to the condemnation. LSPI moved to intervene and the state trial court granted the unopposed motion. The state trial court scheduled the evidentiary hearing for April 18, 1986. Prior to this date, on April 14, 1986, the Pauluccis filed an affidavit requesting the removal of the state trial judge. After conference with counsel, the judge recused himself.

The next day, on April 15, 1986, the Pauluccis removed the case from state court to federal court. Following oral argument on the joint motion of the City and LSPI for remand to the state court, the district court remanded the case to the state court. The Pauluccis' petition to the Eighth Circuit for a writ of mandamus and prohibition was denied.

On May 6, 1986, the state trial court held a condemnation hearing on the limited issues of public use and necessity and the City's compliance with statutory and legal requirements. On June 6, 1986, the state trial court rendered its decision, finding sufficient authority and public necessity for the City's taking of the Pauluccis' land. The Minnesota Supreme Court granted accelerated review on appeal, bypassing the Minnesota Court of Appeals. The Minnesota Supreme Court heard argument on July 6, 1986, and affirmed the decision of the state trial court on the same date. City of Duluth v. State 390 N.W.2d 757 (Minn.1986).

On July 5, 1986, the state trial court issued an order appointing commissioners to hear arguments on the value of the property. As of the date of the filing of the briefs in this case, the hearing had not been completed.

The Pauluccis began the present action in federal district court on April 17, 1986. They alleged an unauthorized, illegal and unconstitutional taking of their property by the City in violation of the Fifth and Fourteenth Amendments. They alleged also that LSPI wrongly caused the City to take the land for LSPI's "sole private use.". The City and LSPI filed answers. On July 15, 1986, the Pauluccis filed a proposed amended complaint, which added new claims of trespass and conspiracy, and sought damages and declaratory and injunctive relief.

On August 7, 1986, the City filed a motion for dismissal under Fed.R.Civ.P. 12(b)(6) or for summary judgment on the grounds that the complaint was barred by collateral estoppel and res judicata. On August 8, 1986, LSPI filed a motion for dismissal or in the alternative for summary judgment, contending that the amended complaint failed to state a claim against LSPI. LSPI also sought attorney's fees and costs.

On August 15, 1986, the Pauluccis withdrew their motion to amend their complaint. On the same day, they filed a motion to voluntarily dismiss their action under Fed.R.Civ. 41(a)(2). ²

The district court denied the motion for voluntary dismissal. The court, ruling from the bench, stated that the City and LSPI had been prejudiced by "considerable expenses, not only in connection with prior legal proceedings, but in connection with a summary judgment motion and hearing, and in connection with discovery supporting the same."

The district court also granted the City's and LSPI's motions for summary judgment. The district court found that the Pauluccis' claim was barred by res judicata and collateral estoppel. LSPI's request for attorney's fees and costs was denied.

In this appeal, the Pauluccis argue first that the district court abused its discretion in denying their Rule 41(a)(2) motion for voluntary dismissal. Rule 41(a)(2), applicable once an answer or motion for summary judgment has been served, provides in relevant part: "[A]n 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.... Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice."

The purpose of Rule 41(a)(2) is primarily to prevent voluntary dismissals which unfairly affect the other side. Courts generally will grant dismissals where the only prejudice the defendant will suffer is that resulting from a subsequent lawsuit. Conafay By Conafay v. Wyeth Laboratories, 793 F.2d 350, 352-53 (D.C.Cir.1986); Kern v. TXO Prod. Corp., 738 F.2d 968, 970-71 (8th Cir.1984). An appellate court will reverse the district court's decision on a Rule 41 motion only if the district court abuses its discretion.

The Pauluccis contend that the district court abused its discretion in denying their motion because the court failed to consider whether an award of attorney's fees and costs to the City and LSPI would eliminate any prejudice that might result from a voluntary dismissal. They also assert that the only harm resulting from the voluntary dismissal is the costs of this lawsuit to the date of the dismissal.

The City and LSPI respond that they are harmed not only by the costs of the present lawsuit, but also by the continuing uncertainty over the title to the land. To date, millions of dollars have been expended on the paper mill; these funds, as well as future financing for the project, are jeopardized by continued uncertainty about title to the land.

We hold that the district court did not abuse its discretion in denying the Pauluccis' motion to voluntarily dismiss. In deciding whether to permit voluntary dismissal, a district court is not limited to considering just the expenses and costs related to the lawsuit. In Pace v. Southern Express Co., 409 F.2d 331, 334 (7th Cir.1969), the court identified the following factors to be considered in deciding a Rule 41(a)(2) motion: (1) the defendant's effort and the expense involved in preparing for trial, (2) excessive delay and lack of diligence on the part of the plaintiff in prosecuting the action, (3) insufficient explanation of the need to take a dismissal, and (4) the fact that a motion for summary judgment has been filed by the defendant. In Ferguson v. Eakle, 492 F.2d 26, 29 (3d Cir.1974), the Third Circuit identified other types of prejudice which might support the denial of a motion for voluntary dismissal: (1) emotional and psychological trauma associated with the experience of defending another lawsuit, (2) the prejudice...