GAF Corp. v. Transamerica Ins. Co.
| Decision Date | 03 September 1981 |
| Docket Number | Nos. 79-2560,80-1473,s. 79-2560 |
| Citation | 214 U.S.App.D.C. 208,665 F.2d 364 |
| Parties | GAF CORPORATION, Appellant, v. TRANSAMERICA INSURANCE COMPANY. GAF CORPORATION, Appellant, v. TRANSAMERICA INSURANCE COMPANY. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeals from the United States District Court for the District of Columbia (D.C. Civil Action Nos. 78-00461 and 78-0461).
Robert E. O'Malley, Washington, D. C., with whom Jan Schneider and John D. Field, III, Washington, D. C., were on the brief for appellant.
Laidler B. Mackall, Washington, D. C., with whom Loren Kieve, Washington, D. C., was on the brief for appellee.
Before ROBB, Circuit Judge, SWYGERT *, Senior Circuit Judge for the Seventh Circuit, and GINSBURG, Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge SWYGERT.
Plaintiff-appellant GAF Corporation appeals from an order awarding attorneys' fees to the Transamerica Insurance Company after a voluntary dismissal by GAF of its actions against Transamerica and several other defendants. We agree that attorneys' fees should be awarded, but because the district court failed to explain how it had reached the award, we remand for a new determination of the amount.
This long and acrimonious litigation has its roots in the manufacture, during the 1930's-1970's, of products containing asbestos, which is now known to cause cancer and asbestosis in human beings. The Ruberoid Company began to manufacture various products containing asbestos in 1937. GAF acquired Ruberoid in 1967, assuming thereby any liability Ruberoid might have incurred as a result of its earlier activities. Beginning in 1969, when the hazards of asbestos became widely known, various plaintiffs began suing GAF, seeking damages for personal injury, and in some cases death, allegedly resulting from the claimants' exposure to asbestos products manufactured by Ruberoid and GAF. By the mid-1970's, at least four hundred such suits had been filed.
In 1978, GAF brought suit in the United States District Court for the District of Columbia, seeking a declaratory judgment that three insurance companies (primary carriers) were obliged to defend and indemnify GAF in these tort suits. The defendants were Fireman's Fund Insurance Company (Fireman's Fund), Insurance Company of North America (INA), and Transamerica, the successor-in-interest to the American Surety Company of New York, which GAF alleged to have issued primary liability insurance to Ruberoid from 1951-53.
INA and Fireman's Fund filed answers to GAF's complaint, essentially admitting that they had insured GAF, and addressing only the major substantive issue: whether the date of the claimant's exposure to asbestos or the date of manifestation of asbestosis symptoms determines which insurance company must indemnify and defend GAF in each case. 1 Transamerica, however, moved for summary judgment in June, 1978. It contended that a diligent search of its files had failed to turn up any evidence that American Surety had issued such a policy in 1951. GAF states that it has lost the actual policy, either through flood damage or through routine destruction of documents by GAF or Ruberoid.
No activity in the case occurred from June, 1978 to November, 1978. During this period, however, the number and dollar amount of the claims against GAF increased spectacularly; by late 1978, GAF faced nearly 750 claims, and it became likely that the dollar amount of these claims would reach the level at which some of GAF's "excess" general liability insurance carriers would be called upon to provide indemnification under their policies. Furthermore, GAF and one of the defendants, INA, agreed that an indispensable party had not been and could not be joined in the District of Columbia suit. 2
On November 28, 1978, INA moved to dismiss the action for failure to join an indispensable party as required by Fed.R.Civ.P. 19(a) and (b). In lieu of answering the motion, GAF filed its own motion on December 8, 1978, asking the court to grant voluntary dismissal of the action pursuant to Rule 41(a)(2). In that motion, GAF admitted that Home Insurance Company (HIC) was probably an indispensable party at this point in the litigation, and that joinder of HIC would destroy diversity jurisdiction. GAF indicated that it had filed suit in New Jersey state court, in which all necessary parties could be joined. 3
On December 12, 1978, only four days after GAF's motion for voluntary dismissal had been filed, and six days before the time had expired for parties to respond, the district judge granted GAF's motion to dismiss without prejudice, directing each party to bear its own costs. 4 On December 15, 1978, three days before the time to respond expired, Transamerica filed an opposition to GAF's motion for voluntary dismissal, along with an opposition to INA's earlier motion to dismiss for lack of an indispensable party. 5 Transamerica argued that HIC was not an indispensable party and that GAF should not be allowed to deprive it of a judgment on the merits of its summary judgment motion. It added that any disposition of the case should be on the merits rather than a voluntary dismissal or dismissal for lack of subject matter jurisdiction.
On December 19, 1978, Transamerica filed a motion for reconsideration of the December 12 order dismissing the case without prejudice. The court held oral argument on that motion on January 29, 1979. At that hearing, the judge vacated the earlier dismissal order and heard argument on Transamerica's motion for summary judgment, as well as on GAF's renewed motion for voluntary dismissal. On February 12, 1979, the court denied Transamerica's motion for summary judgment and again dismissed the case without prejudice. The court treated the dismissal as voluntary under Rule 41(a) and not as an involuntary dismissal for lack of jurisdiction. The jurisdictional issue was not discussed. No fees or costs were awarded by this order.
Transamerica filed a notice of appeal, and GAF subsequently filed a motion for summary affirmance which this court granted by a per curiam order dated July 26, 1979. In that order, a motion panel granted the motion
On August 15, 1979, Transamerica filed a motion with the district court for attorneys' fees and costs associated with the voluntary dismissal of GAF's suit against it, arguing that the case was "misbegotten" and vexatious. Transamerica asserted that GAF knew from the beginning that it had no evidence of the specific terms and conditions of the policy by which American Surety, Transamerica's predecessor-in-interest, allegedly insured Ruberoid. Therefore, Transamerica claimed, GAF's suit was not brought in good faith. GAF responded to Transamerica's motion on September 10, arguing primarily that Transamerica was not entitled to attorneys' fees because it had failed to move for attorneys' fees in the past, and because many of the expenses incurred were "self-initiated" rather than "responsive." The district court ordered GAF to pay Transamerica $37,258.75 in attorneys' fees and $1,579.43 in costs for defending the declaratory judgment action brought by GAF and later "voluntarily" dismissed. GAF appealed this award.
On March 7, 1980, GAF filed a motion in the district court to reconsider the award of attorneys' fees to Transamerica. GAF based this motion upon "newly discovered evidence" that Transamerica allegedly knew or should have known that American Surety had in fact insured Ruberoid during the disputed period and that relevant documents and information were withheld from the plaintiffs in bad faith. GAF argued that Transamerica's actions amounted to fraud or misrepresentation within the meaning of Fed.R.Civ.P. 60(b), and that in light of these new facts, an award of attorneys' fees against GAF was without a reasonable basis. On April 24, 1980, the district court denied GAF's motion without oral argument. GAF appealed the denial of its motion for reconsideration. The two appeals were consolidated by order of this court.
Upon remand, the district court awarded attorneys' fees pursuant to authority granted it in Rule 41(a)(2) of the Federal Rules of Civil Procedure. That rule 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." The purpose of the "terms and conditions" clause is to protect a defendant from any prejudice or inconvenience that may result from a plaintiff's voluntary dismissal. 6 Attorneys' fees and costs are commonly awarded as one such "term and condition" for a voluntary dismissal, for those costs were undertaken unnecessarily in such a case. 7 A plaintiff does not, however, lose all right to challenge the conditions imposed. Under the rule, a plaintiff has the choice between accepting the conditions and obtaining dismissal and, if he feels that the conditions are too burdensome, withdrawing his dismissal motion and proceeding with the case on the merits. Our scope of review is narrow in such cases. The trial court's determination of "terms and conditions" may be overturned only if the court abused its discretion. 8
GAF makes several contentions on appeal. First, it argues that an award of attorneys' fees is not proper when the plaintiff's motion for voluntary dismissal is based on the court's probable lack of jurisdiction. If the court has no jurisdiction, then dismissal is not truly voluntary. Dismissal is required, and it would be "inappropriate for the court to engage in the balancing process required by Rule 41(a)(2)." 9 This circuit has never decided if "terms and conditions" could be imposed...
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