Highlight Canyon, LLC v. Cioffoletti
| Docket Number | S-18243 |
| Decision Date | 11 August 2023 |
| Parties | HIGHLIGHT CANYON, LLC, Appellant, v. JOHN CIOFFOLETTI; VALDEZ CREEK MINING LLC; ROBERT A. COINER; DORIS A. COINER; SHERRI COINER GERHARZ, CLAUDE H. MORRIS, JR.; CLEARWATER MOUNTAIN MINING; and LUCKY MINE GROUP, LLP, Appellees. |
| Court | Alaska Supreme Court |
Appeal from the Superior Court of the State of Alaska, No 3PA-17-01911 CI Third Judicial District, Palmer, Kristen C Stohler, Judge.
Appearances:
Curtis Martin, Curtis W. Martin Law Office, Palmer, for Appellant.
Jennifer M. Coughlin, Landye Bennett Blumstein, LLP Anchorage, for Appellees.
Before: Winfree, Chief Justice, Carney, Borghesan, and Henderson, Justices. [Maassen, Justice, not participating.]
1. INTRODUCTION
The superior court may dismiss a case for want of prosecution if "the case has been pending for more than one year without any proceedings having been taken" unless the plaintiff shows good cause for the delay.[1] In this case the court dismissed a mining company's claims when its sole filing in the prior year was a substitution of counsel. We hold that the substitution of counsel was not a "proceeding" that terminated the period of delay. We also conclude that actions taken by the company after the defendant moved to dismiss for lack of prosecution do not preclude dismissal. And because the company failed to clearly explain its dilatory conduct, the superior court did not abuse its discretion by finding no good cause for the failure to prosecute. We therefore affirm dismissal.
11. FACTS AND PROCEEDINGS
Highlight Canyon, LLC (Highlight) is a limited liability company headquartered in Palmer. David Norton is a member and principal of Highlight Canyon. In May 2010 Norton contracted with Robert Coiner and Claude Morris of Clearwater Mountain Mining (Clearwater) and Lucky Mine Group, LLP (Lucky Mine) for exclusive rights to develop several gold mining claims belonging to those businesses. Highlight's contract to develop the claims was to continue "through 2013" with an option to renew Highlight's exclusive right to mine every five years. But Clearwater and Lucky Mine sold their mining claims to Valdez Creek Mining, LLC (Valdez Creek) in April 2013.
Highlight Canyon originally filed a civil action against Clearwater, Lucky Mine, Valdez Creek, and other defendants in 2013. In 2016 the superior court dismissed that lawsuit without prejudice for failure to prosecute, explaining that the case had been pending for three years with no substantive activity.
Highlight re-filed in July 2017, more than four years after Clearwater and Lucky Mine terminated the agreement. The 2017 complaint asserted claims for breach of contract, tortious interference with a contract, tortious interference with a prospective economic advantage, and conversion. After Highlight voluntarily dismissed some of its claims, the superior court allowed the company to file an amended complaint on September 5, 2017.
In June 2019 the parties exchanged preliminary witness lists in anticipation of a November 2019 trial. Valdez Creek served discovery requests that same month and received timely responses to the requests for admission in July 2019. Highlight requested an additional 30 days to respond to the interrogatories and requests for production, which Valdez Creek granted. In August and September 2019, Highlight's attorney repeatedly promised that he was working on Valdez Creek's discovery requests and would provide responses soon. Highlight provided unsigned partial responses to the interrogatories in October 2019 but failed to produce any of the requested documents. Given the inadequate discovery, the parties jointly moved to continue the November 2019 trial. The court advised the parties to request a trial setting conference when ready.
At a trial setting conference in August 2020, Highlight's counsel announced his intent to withdraw. Highlight's attorney agreed with the defendants that the case had "flat-lined" and characterized the lawsuit as "stalled" and "languished." He did not file a motion to withdraw for good cause until December 2020. The motion asserted that communication between Highlight and its attorney had deteriorated to the point that he could no longer effectively represent the company. The court granted the unopposed motion to withdraw on December 30, 2020.
In January 2021 Norton appeared pro se at a status hearing. Norton explained that the COVID-19 pandemic had "complicated [his transactions with his attorney] a great deal because [the attorney] had requested that [Highlight] put together funds that [were] substantial." Because Highlight is an LLC, the lawsuit could not proceed until Highlight retained new counsel.[2] Upon Norton's request, the superior court granted Highlight 60 days to secure new counsel before the next status hearing.
At a March 2021 hearing attorney Curtis Martin - who had represented Highlight in the initial 2013 action that had been dismissed for failure to prosecute - made an appearance on behalf of Highlight. Martin explained that Highlight had retained him earlier in the week, that he had not yet requested the case file from Highlight's prior counsel, and that he was appearing at the status hearing "hoping to get some cues from the court and [the defendants' attorney] on where [the case was] at and what [the parties] need[ed] to proceed." The superior court postponed the status hearing for yet another month.
When the parties reconvened in April 2021 Highlight remained unprepared. Martin explained that he had received the case file from Highlight's attorney the week before but that the file did not contain any responses to the defendants' June 2019 discovery requests. "I know that's bad," Martin conceded. Martin promised that Highlight was "working" on the requests for production. Valdez Creek announced its intent to file a motion to dismiss for failure to prosecute. The superior court postponed the status hearing for a third time, to August 2021, to determine "if and when the case is going to be proceeding."
Valdez Creek filed a motion to dismiss under Alaska Civil Rule 41(e) in May 2021. Highlight opposed the motion, arguing that its attorney's withdrawal constituted "proceedings" that precluded dismissal. Highlight also argued that the COVID-19 pandemic had prevented it from obtaining new counsel for an extended period. Highlight produced some discovery responses in early August 2021.
The court denied Valdez Creek's motion to dismiss. It reasoned that "[a]lthough Plaintiffs have not been diligent in prosecuting this case over the last year, there have been extenuating circumstances due to the global COVID-19 pandemic." Valdez Creek moved for reconsideration.
On reconsideration the superior court granted Valdez Creek's motion and dismissed Highlight's case with prejudice. It stated that "COVID-19 does not excuse undiligent prosecution" and that Highlight had been "dilatory in pursuing its claims since as early as October 2019 - five months before the COVID-19 declaration." The superior court also held that substitution of counsel did not "excuse over a year of delay . . . where Plaintiff's prior counsel withdrew due to a breakdown in communication with Plaintiff . . . [and] [b]ecause Martin represented Plaintiff in the original three-year action, he should be relatively familiar with the case's history." Finally, the superior court held that Highlight's behavior constituted "extreme circumstances" warranting a dismissal with prejudice. The superior court held Highlight "personally and primarily responsible for all of the unexcused delays" and noted that "[t]his is the second time Plaintiff's case is being dismissed for Plaintiff's failure to pursue the litigation." The superior court also explained that the delay had caused defendants actual prejudice because both Robert Coiner and Claude Morris - the Clearwater and Lucky Mine equity holders who had contracted with Norton - had died since the events in dispute took place.
Highlight appeals.
III. DISCUSSION
"Before ordering dismissal pursuant to Rule 41(e), the trial court must undertake a two-step inquiry: it must initially inquire whether the party facing dismissal has engaged in any proceedings within the previous one-year period; if not, then it must next inquire whether good cause exists for the delay."[3] This appeal challenges both steps of the superior court's analysis. First, Highlight challenges the superior court's finding that the case went over a year with no "proceedings" for the purposes of Rule 41(e). We review this issue, the interpretation of a court rule, de novo.[4] Second, Highlight challenges the superior court's ruling that there was no good cause for the delay. "The decision whether to dismiss an action under Civil Rule 41(e) lies within the sound discretion of the trial court."[5] We review this ruling for abuse of discretion.[6]
Alaska Rule of Civil Procedure 41(e)(1)(A) permits the superior court to dismiss a case for want of prosecution if "the case has been pending for more than one year without any proceedings having been taken." This rule serves three policy objectives.[7] First, it promotes judicial economy: "[A]s an administrative matter, it allows the court to 'clear [its] calendar of cases that are not being prosecuted diligently.' "[8] Second, Rule 41(e) "forces plaintiffs to keep their cases moving at a reasonable speed."[9] Third, "Rule 41(e) 'serves to protect a defendant from undue delays which might subject him to harassment or force settlement of an otherwise nonmeritorious lawsuit.' "[10]
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