FIRST EQUITY FEDERAL v. PHILLIPS DEVELOPMENT

• Decision Date: 18 June 2002
• Docket Number: No. 20010417.,20010417.
• Citation: 2002 UT 56,52 P.3d 1137
• Parties: FIRST EQUITY FEDERAL, INC., on its own behalf and on behalf of Aspen Meadows Homeowners Assoc., Plaintiffs and Appellees, v. PHILLIPS DEVELOPMENT, LC, Peter O. Phillips, Lydia Phillips, Alden B. Turnbow, Larry Andrews, John E. Phillips and Gregory Skabelund, Defendants and Appellants.
• Court: Utah Supreme Court

52 P.3d 1137

2002 UT 56

FIRST EQUITY FEDERAL, INC., on its own behalf and on behalf of Aspen Meadows Homeowners Assoc., Plaintiffs and Appellees, v. PHILLIPS DEVELOPMENT, LC, Peter O. Phillips, Lydia Phillips, Alden B. Turnbow, Larry Andrews, John E. Phillips and Gregory Skabelund, Defendants and Appellants.

No. 20010417.

Supreme Court of Utah.

June 18, 2002.

Rehearing Denied August 5, 2002.

Graden P. Jackson, Salt Lake City, for plaintiffs.

Michael F. Skolnick, Wendell K. Smith, Salt Lake City, for defendants.

DURRANT, Associate Chief Justice:

¶ 1 This appeal concerns the application of the two-dismissal provision of rule 41(a)(1) of the Utah Rules of Civil Procedure. In two previous actions against the defendants, First Equity Federal, Inc., obtained dismissals of claims identical to the claims set forth in this suit. Specifically, First Equity had earlier filed a notice of dismissal pursuant to rule 41(a)(1) in a state court action and obtained a dismissal pursuant to an ex parte motion to dismiss in a federal court action.

¶ 2 Based on this procedural history, the defendants moved the district court to dismiss the present action, arguing that First Equity had filed a notice of dismissal, or the equivalent of such a dismissal, on two separate occasions and that its suit was precluded by rule 41(a)(1). The district court denied this motion. We affirm because the plain language of rule 41(a)(1) does not extend to motions to dismiss.

BACKGROUND

¶ 3 When reviewing a district court's denial of a defendant's motion to dismiss, we "accept the factual allegations in the complaint as true and draw all reasonable inferences from those facts in a light most favorable to [the] plaintiff." Pendleton v. State Bar, 2000 UT 96, ¶ 5, 16 P.3d 1230 (internal quotation and citation omitted). We recite the facts accordingly.

¶ 4 On August 25, 2000, First Equity filed a complaint in First Judicial District Court against the defendants, alleging several causes of action in connection with two large parcels of real property in Cache County, Utah. First Equity then filed a complaint in federal court raising similar claims against the defendants on September 17, 2000. It did so because one of the defendants, Peter O. Phillips, had filed for bankruptcy and jurisdiction over him was necessary and proper in federal court.

¶ 5 On September 22, 2000, First Equity filed a voluntary notice of dismissal pursuant to rule 41(a)(1) of the Utah Rules of Civil Procedure and thereby dismissed its state court action without prejudice. See Utah R. Civ. P. 41(a)(1). On October 25, 2000, the bankruptcy proceeding involving Phillips was dismissed over First Equity's objection, thereby leaving First Equity without a basis for jurisdiction to pursue the claims it had filed against the defendants in federal court. First Equity then filed a motion to have its federal suit remanded to state court on October 30, 2000. One month later, it moved to dismiss its federal suit without prejudice. It did not notify the defendants of these two motions.¹

¶ 6 Before obtaining a decision on either motion, First Equity returned to First Judicial District Court on December 6, 2000, and filed a complaint against the defendants. This complaint, which is the basis for the action presently before us, included the same claims as raised previously.

¶ 7 On December 18, 2000, First Equity's ex parte motion to dismiss its federal court action against the defendants was granted. The federal district court that granted this motion later clarified that its order of dismissal resulted from its lack of jurisdiction over First Equity's lawsuit and that the dismissal was without prejudice.

¶ 8 Thereafter, the defendants moved to dismiss the present action on the ground that First Equity had violated the two-dismissal provision of rule 41(a)(1) of the Utah Rules of Civil Procedure. The district court conducted a hearing on this issue on March 26, 2001. It denied the defendants' motion to dismiss in a memorandum opinion issued on April 17, 2001, reasoning, inter alia, that First Equity did "the right thing" in moving to dismiss its federal court claims because the dismissal was necessary.

¶ 9 We granted defendants' petition for an interlocutory appeal pursuant to rule 5 of the Utah Rules of Appellate Procedure on July 18, 2001. See Utah R.App. P. 5(a). On appeal, the defendants assert that the district court erred in three respects in denying their motion to dismiss. First, they contend that First Equity filed a notice of dismissal, or the equivalent of such a dismissal (i.e., an ex parte motion to dismiss), on two separate occasions and that its suit is precluded by the two-dismissal provision of Utah Rule of Civil Procedure 41(a)(1). To support this argument, they rely on Thomas v. Heirs of Braffet, 6 Utah 2d 57, 305 P.2d 507 (1956), for the proposition that rule 41(a)(1) treats a motion to dismiss the same as a notice of dismissal. Second, they assert that it does not matter what motive First Equity had for requesting the motion to dismiss. Finally, they claim that First Equity was not compelled to dismiss its federal lawsuit because it had other options, such as pursuing its remand motion.

¶ 10 In response, First Equity claims that the federal court's order of dismissal did not qualify as a second notice of dismissal under rule 41(a)(1) of the Utah Rules of Civil Procedure for two reasons. First, it argues that Thomas is distinguishable because the motion to dismiss it filed in its federal lawsuit against the defendants was compulsory, not perfunctory. Specifically, it contends that it was compelled to dismiss its federal lawsuit against the defendants because it would have been a violation of rule 11 to continue with the suit while knowing that the court lacked subject matter jurisdiction. Second, it alleges that the purpose behind rule 41(a)(1) was not violated because the motion to dismiss it filed in federal court was not intended to harass the defendants or abuse the legal system.

ANALYSIS

I. STANDARD OF REVIEW

¶ 11 "We review the district court's denial of [the] defendants' motion to dismiss for correctness, granting no deference to the district court's ruling." Pendleton, 2000 UT 96 at ¶ 5, 16 P.3d 1230. Where this review requires us to examine a rule of civil procedure, we look to the express language of that procedural rule and to the cases interpreting it. See First Sec. Bank v. Conlin, 817 P.2d 298, 299 (Utah 1991). We may affirm the decision rendered below denying the defendants' motion to dismiss on a ground on which the district court did not rely. See O'Neal v. Div. of Family Servs., 821 P.2d 1139, 1141 (Utah 1991). Indeed, it is well established that an appellate court may affirm the judgment appealed from

if it is sustainable on any legal ground or theory apparent on the record, even though such ground or theory differs from that stated by the trial court to be the basis of its ruling or action, and this is true even though such ground or theory is not urged or argued on appeal by appellee, was not raised in the lower court, and was not considered or passed on by the lower court.

Dipoma v. McPhie, 2001 UT 61, ¶ 18, 29 P.3d 1225 (quoting Limb v. Federated Milk Producers Ass'n, 23 Utah 2d 222, 225-26 n. 2, 461 P.2d 290 (Utah 1969) (citation and emphasis omitted)).

II. THE PLAIN LANGUAGE OF RULE 41(a)(1) OF THE UTAH RULES OF CIVIL PROCEDURE DOES NOT EXTEND TO MOTIONS TO DISMISS

¶ 12 The defendants argue that this lawsuit is barred by the two-dismissal provision of rule 41(a)(1) of the Utah Rules of Civil Procedure. We disagree.

¶ 13 According to the express language of rule 41(a)(1) of the Utah Rules of Civil Procedure, a "notice of dismissal" regarding a claim that has previously been dismissed "operates as an adjudication upon the merits" with respect to that claim. Utah R. Civ. P. 41(a)(1). In fact, rule 41(a)(1) declares that

an action may be dismissed by the plaintiff without order of court by filing a notice of dismissal at any time before service by the adverse party of an answer or other response to the complaint permitted under these rules. Unless otherwise stated in the notice of dismissal, the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of any state an action based on or including the same claim.

Id. (emphasis added).

¶ 14 Here, it is undisputed that the claims raised by First Equity in its federal court action against the defendants had been voluntarily dismissed in a prior state court proceeding. It is also undisputed that First Equity's federal court action was dismissed as a result of an ex parte motion to dismiss.² Accordingly, in order to determine whether First Equity's suit is precluded by the two-dismissal rule, we must ascertain whether a motion to dismiss qualifies as a notice of dismissal under rule 41(a)(1).

¶ 15 Relying on Thomas v. Heirs of Braffet, 6 Utah 2d 57, 305 P.2d 507 (1956), the defendants assert that the ex parte motion to dismiss filed by First Equity in its federal lawsuit against them constituted a second notice of dismissal. In Thomas, this Court refused to draw a distinction between a notice of dismissal and a "perfunctory" motion to dismiss, stating that "[w]hether the plaintiff proceeds merely by filing a notice of dismissal, or has the court sign an order, it is an ex parte dismissal without notice to the other side." Id. at 513 (emphasis added). In explaining its decision, the Thomas court reasoned that a perfunctory motion to dismiss was indistinguishable from a notice of dismissal "because the usual practice in this State is to present an order of dismissal for the judge to sign, which he does as a matter of course where there has been no appearance on the other side." Id. Thus, Thomas clearly expanded the meaning of a notice of dismissal to...