FSDW, LLC v. First Nat. Bank

• Decision Date: 17 June 2004
• Docket Number: No. 03CA0348.,03CA0348.
• Citation: 94 P.3d 1260
• Parties: FSDW, LLC, a Colorado limited liability company, Plaintiff-Appellee, v. FIRST NATIONAL BANK, Conservator for Daniel Dennis Dumont, a protected person; G.W. Hurst, Trustee of the G.W. Hurst Trust; Valerie A. Stewart; Gerald W. Hurst, Jr.; Charlotte M. Prough; Stephanie A. Smith; Delphin J. Dumont; and Joyce E. Thompson, Defendants-Appellants.
• Court: Colorado Court of Appeals

94 P.3d 1260

FSDW, LLC, a Colorado limited liability company, Plaintiff-Appellee, v. FIRST NATIONAL BANK, Conservator for Daniel Dennis Dumont, a protected person; G.W. Hurst, Trustee of the G.W. Hurst Trust; Valerie A. Stewart; Gerald W. Hurst, Jr.; Charlotte M. Prough; Stephanie A. Smith; Delphin J. Dumont; and Joyce E. Thompson, Defendants-Appellants.

No. 03CA0348.

Colorado Court of Appeals, Div. V.

June 17, 2004.

Howard and Francis, L.L.P., Steven G. Francis, Fort Collins, Colorado, for Plaintiff-Appellee.

Frey Korb Haggerty & Michaels, P.C., Mark L. Korb, Charles C. Tucker, Fort Collins, Colorado, for Defendant-Appellant First National Bank as conservator for Daniel Dennis Dumont, a protected person.

Harold F. Hurst, Kiowa, Colorado, for Defendants-Appellants Conservator for Daniel Dennis Dumont, a protected person; G.W. Hurst, Trustee of the G.W. Hurst Trust; Valerie A. Stewart; Gerald W. Hurst, Jr.; Charlotte M. Prough; Stephanie A. Smith; Delphin J. Dumont; and Joyce E. Thompson.

Opinion by Judge RUSSEL.

In this action for the partition of real property, defendants appeal the trial court's judgment entered on an order granting plaintiff's motion for voluntary dismissal. We reverse and remand for further proceedings.

In February 2002, plaintiff, FSDW, LLC, filed a partition action, alleging that it was the owner of an undivided 2/7 interest in real property in Larimer County. It sought the appointment of a disinterested commissioner who would sell the property at a public sale pursuant to § 38-28-107, C.R.S.2003. Plaintiff named several parties as defendants, most of whom (the trust defendants) were represented by the same attorney. First National Bank, as conservator for Daniel Dumont, also named as a defendant, was separately represented.

The trust defendants answered, alleging as a "matter of avoidance" that plaintiff had wrongfully clouded their title and should pay a statutory penalty or damages. The bank also answered and filed a cross-claim against one of the trust defendants, seeking reformation of the deed that had conveyed the property to plaintiff's grantor.

In December 2002, plaintiff moved to dismiss the action. The trust defendants consented to dismissal on the condition that plaintiff sign a quitclaim deed and pay their attorney fees and costs. The bank similarly responded that the case "cannot be dismissed" unless plaintiff signed a quitclaim deed and paid its attorney fees and costs.

The trial court dismissed the case, ordering each party to bear its own fees and costs. The court's order was silent as to whether the dismissal was with or without prejudice.

Defendants then appealed, asserting that the trial court erred in dismissing the case without imposing terms and conditions. The trust defendants also asserted that the court should not have dismissed their "matter of avoidance," and the bank similarly asserted that the court should not have dismissed its cross-claim.

Plaintiff moved to dismiss the appeal, arguing that an order of dismissal is not appealable when it is without prejudice. A motions division of this court agreed, citing C.R.C.P. 41(a)(2) for the proposition that voluntary dismissal is presumed to be without prejudice. Defendants then filed a motion for reconsideration. The motions division reversed its position, ordering that the appeal proceed. The division cited the rule regarding involuntary dismissal, C.R.C.P. 41(b)(1).

I. Appealability

Plaintiff again argues that this court lacks jurisdiction. We disagree.

We first explain why we are considering plaintiff's argument. As noted, the motions division has already ruled that the order is appealable. We generally will decline to revisit rulings of the motions division, especially when they reflect some discretionary consideration. But when presented with serious questions regarding our own jurisdiction, we may reconsider the ruling. In this regard, our approach parallels that of other appellate courts. See Rezzonico v. H & R Block, Inc., 182 F.3d 144, 149 (2d Cir.1999)("reexamination of a question regarding our jurisdiction is especially important whenever there is reason to believe that it may be lacking"); Stifel, Nicolaus & Co. v. Woolsey & Co., 81 F.3d 1540, 1543-44 (10th Cir.1996)(law of the case does not bar reconsideration of motions panel's decision; such decisions are made without the benefit of full briefing, which may result in a less than thorough exploration of the issues).

We next consider whether the trial court's order was with prejudice, as the motions division found, or without prejudice, as plaintiff contends. We agree with plaintiff. It is undisputed that the trial court ordered dismissal pursuant to C.R.C.P. 41(a)(2). This rule states, in pertinent part: "Unless otherwise specified in the order, a dismissal under this subsection (2) is without prejudice." Because the trial court's order did not otherwise specify, the dismissal here was without prejudice.

Consequently, the dismissal was not "final" in the sense that it will preclude further litigation. Plaintiff's claims, and defendants' counterclaims and cross-claims, may be brought again. See Am. Water Dev., Inc. v. City of Alamosa, 874 P.2d 352, 380 (Colo.1994)

(AWDI) (C.R.C.P.41(a)(2) is intended to allow plaintiff to dismiss a claim that may be asserted later); Sharp Bros. Contracting Co. v. Westvaco Corp., 878 P.2d 38, 43 (Colo.App.1994) (dismissal on procedural grounds is not a final judgment and does not give rise to res judicata).

Plaintiff argues that, because the trial court's order does not preclude further litigation, it is not appealable. On its face, this argument would appear to have merit. By statute, this court has jurisdiction over "appeals from final judgments of the district courts." Section 13-4-102(1), C.R.S.2003 (emphasis added). And Colorado courts generally hold that, to be appealable, a district court's order must preclude further action. See, e.g., Levine v. Empire Sav. & Loan Ass'n, 192 Colo. 188, 190, 557 P.2d 386, 387 (1976)

("an order of dismissal is to be treated as a judgment for the purposes of taking an appeal when it finally disposes the particular action and prevents further proceedings as effectually as would any formal judgment") (quoting Herrscher v. Herrscher, 41 Cal.2d 300, 259 P.2d 901 (1953)); Norby v. Charnes, 764 P.2d 407, 408 (Colo.App.1988) (dismissal of a complaint without prejudice is generally not a final and appealable order).

Plaintiff's argument is further supported by a passage from Brody v. Bock, 897 P.2d 769, 777 (Colo.1995), which suggests that voluntary dismissals under C.R.C.P. 41(a)(2) are not appealable:

A final judgment is a jurisdictional prerequisite to review on appeal. People v. Proffitt, 865 P.2d 929, 931 (Colo.App.1993). Generally, a trial court's dismissal of a claim without prejudice does not constitute a final judgment for purposes of appeal because the factual and legal issues underlying the dispute have not been resolved. C.R.C.P. 41(a)(2); District 50 Metro. Recreation Dist. v. Burnside, 157 Colo. 183, 186-87, 401 P.2d 833, 835 (1965); Norby v. Charnes, [supra].

Nevertheless, we conclude that the trial court's order was appealable.

We first note that Brody v. Bock, supra,

does not settle the question. Although Brody suggests that dismissal without prejudice is nonappealable, it does so only in dictum. On this issue, Brody's holding is more limited: the order was appealable because the court concluded that it was a dismissal with prejudice. See Brody v. Bock, supra, 897 P.2d at 777.

Next, we consider two cases that were decided after Brody. These decisions address whether plaintiffs may appeal from orders granting voluntary dismissal without prejudice under C.R.C.P. 41(a)(2). In Jensen v. Matthews-Price, 845 P.2d 542, 543 (Colo.App.1992), a division of this court observed that a plaintiff ordinarily may not appeal from an order granting voluntary dismissal. The reason, said the division, is that "such dismissal cannot be characterized as an involuntary adverse judgment against the plaintiff." But the division held that the general prohibition did not apply because the plaintiffs had reserved their right to appeal an award of sanctions imposed under C.R.C.P. 11. Jensen, supra, 845 P.2d at 543.

The Colorado Supreme Court elaborated on this rationale in AWDI, supra. Quoting Jensen, the court noted the general rule that a plaintiff may not appeal from voluntary dismissal under C.R.C.P. 41(a)(2) because the order is not adverse. AWDI, supra,874 P.2d at 378. But the court held that, when dismissal is conditioned on terms to which the plaintiff does not agree, the plaintiff may appeal, challenging the unwanted terms and conditions as "legal prejudice." AWDI, supra,874 P.2d at 378.

It is significant that, under Jensen and AWDI, the plaintiff's right of appeal depends not on whether dismissal is with prejudice, but on whether the trial court has imposed sanctions or unwanted terms and conditions. The requisite "finality" apparently arises from the fact that sanctions, terms, and conditions can affect the plaintiff's substantial rights and thus constitute an independent form of legal prejudice.

By logical implication, Jensen and AWDI suggest that a defendant also may appeal when a case is dismissed under C.R.C.P. 41(a)(2). If the presence of unwanted terms or conditions can constitute legal prejudice to the plaintiff, the absence of desired terms or conditions can constitute legal prejudice to the defendant. Accordingly, when a trial court grants the plaintiff's motion for voluntary dismissal without prejudice under C.R.C.P. 41(a)(2), and does so (1) over the defendant's objection, (2) without imposing terms and conditions that the defendant requests, or (3) without making allowances for the defendant's counterclaims, the court's order is sufficiently final to support the defendant's appeal.

We have examined cases from other jurisdictions on this issue,...