Holmes v. Cannon

• Decision Date: 08 September 2016
• Docket Number: No. 20150238,20150238
• Citation: 2016 UT 42,387 P.3d 971
• Parties: Terry Holmes, Appellant, v. Chris Cannon, Appellee.
• Court: Utah Supreme Court

387 P.3d 971

2016 UT 42

Terry Holmes, Appellant,

v.Chris Cannon, Appellee.

No. 20150238

Supreme Court of Utah.

Filed September 8, 2016

Victor A. Sipos, Salt Lake City, for appellant.

Phillip E. Lowry, Bryson R. Brown, Salt Lake City, for appellee.

Justice Durham authored the opinion of the Court, in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Himonas, and Justice Pearce joined.

On Appeal of Interlocutory Order

Justice Durham, opinion of the Court:

INTRODUCTION

¶1 In Panos v. Smith's Food & Drug Centers, Inc. , 913 P.2d 363 (Utah Ct.App.1996), the court of appeals held that when a judge issues an order dismissing a case for failure to prosecute, but fails to explicitly provide that the case is dismissed with prejudice or pursuant to Utah Rule of Civil Procedure 41(b), the presumption is that the case is dismissed without prejudice.

¶2 Today we overrule Panos , concluding it was incorrectly decided. The plain language of rule 41(b) is clear that the presumption of prejudice applies broadly in most cases, including not only to cases where the judge specifies reliance on rule 41(b), but also to "any dismissal[s] not provided for in this rule." There are limited exceptions to the rule's presumption, including when a judge "otherwise specifies" that the case is not dismissed with prejudice.

¶3 Because we determine that the appellee in this matter is unable to establish reliance on the Panos decision for purposes of prospective application of our holding, we decline to afford it.

BACKGROUND

¶4 This litigation initially began twelve years ago, when Chris Cannon filed a lawsuit against the defendant individuals and companies he alleges are responsible for several tort and contract violations associated with an investment gone wrong. See Ted Knodel v. Terry Holmes , Civ. No. 040918738 (Utah 3rd D. Ct. August 22, 2013). After the case languished for several years, the district court issued an order requiring "the parties to appear ... and show cause why this case should not be dismissed for failure to prosecute. By failing to appear, the Court will enter an order of dismissal without further notice." Neither side's counsel appeared at the hearing, and the district court dismissed the case: "No parties present. The Court orders this case be dismissed." The judge did not indicate under which rule the case was to be dismissed.

¶5 Mr. Cannon did not attempt to set aside the dismissal, but rather filed a new action in the district court, asserting the same claims against the same defendants. Defendants filed a 12(b)(6) motion to dismiss, arguing that the dismissal operated as a dismissal with prejudice under rule 41(b). Mr. Cannon opposed the motion, arguing that rule 4–103(2) of the Utah Code of Judicial Administration presumes that failure-to-prosecute dismissals are dismissed without prejudice and citing the court of appeals' decision in Panos v. Smith's Food & Drug Centers, Inc. , 913 P.2d 363 (Utah Ct.App.1996).

¶6 The district court judge held a hearing on the defendants' 12(b)(6) motion to dismiss and then denied the motion, finding the Panos decision controlling. We granted defendants' petition for an interlocutory appeal pursuant to Utah Code section 78A–3–102(3)(j), and the district court stayed the action pending the outcome of this appeal. We review the district court's interpretation of our rules of procedure for correctness. Simler v. Chilel , 2016 UT 23, ¶ 9, 379 P.3d 1195 ("[T]he district court's interpretations of ... rules of procedure are questions of law reviewed for correctness." (second alteration in original) (citation omitted)).

ANALYSIS

I. PANOS INCORRECTLY RELIED ON RULE 4–103(2) OF THE UTAH CODE OF JUDICIAL ADMINISTRATION RATHER THAN RELYING ON UTAH RULE OF CIVIL PROCEDURE 41(B)

¶7 Utah Rule of Civil Procedure 41(b) is our rule on the effect of involuntary dismissals and provides in part:

For failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant¹ may move for dismissal of an action or of any claim against him.... Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction or for improper venue or for lack of an indispensable party, operates as an adjudication upon the merits.

¶8 We have interpreted "adjudication on the merits" to mean that the case is dismissed with prejudice—i.e., the plaintiff is barred from re-filing the same claim in the same court. See Fundamentalist Church of Jesus Christ of Latter–Day Saints v. Horne , 2012 UT 66, ¶¶ 22–23, 289 P.3d 502. Therefore, a case is presumptively dismissed with prejudice unless it falls under an exception. See Alvarez v. Galetka , 933 P.2d 987, 990 (Utah 1997) ("[I]t is a general rule that if a court grants an involuntary dismissal and does not specify whether it is with or without prejudice, it is assumed that the dismissal is with prejudice.").

¶9 The rule enumerates three express exceptions: lack of jurisdiction, improper venue, and lack of an indispensable party. Horne , 2012 UT 66, ¶ 23, 289 P.3d 502. "[T]he exceptions enumerated in rule 41 are [not] exhaustive.... The rule's list of non-preclusive dismissals ... simply illustrates the types of dismissals that do not preclude further litigation." Id. The dismissals mentioned are illustrative of non-preclusive dismissals as they all "result[ ] from an ‘initial bar’ to the court's adjudication of the parties' claims and defenses." Id. ¶ 24 (citation omitted); cf. Alvarez , 933 P.2d at 991 (describing the general rule that dismissals under rule 12(b)(6) are not preclusive and "the court normally will give plaintiff leave to file an amended complaint" (citation omitted)).

¶10 Additionally, district court judges maintain discretion to dismiss without prejudice when they choose to "otherwise specif[y]" that result. See Donahue v. Smith, 2001 UT 46, ¶ 8 n.3, 27 P.3d 552 ("[U]nder rule 41(b) the district court was not required to dismiss plaintiff's complaint with prejudice. Rule 41(b) provides that, ‘Unless the court in its order for dismissal provides otherwise, a dismissal under this subdivision ... operates as an adjudication upon the merits.’ Under the rule, it would not have been error for the district court to provide in its order that plaintiff's complaint be dismissed without prejudice." (second alteration in original)).

¶11 As in this case, Panos v. Smith's Food & Drug Centers, Inc. , 913 P.2d 363 (Utah Ct.App.1996), involved a dismissal for failure to prosecute. The judge's order for dismissal "did not indicate whether the dismissal was with or without prejudice, or pursuant to Rule 41(b) of the Utah Rules of Civil Procedure or Rule 4–103 of the Utah Code of Judicial Administration."² Id. at 364. After dismissal, the plaintiff filed a new complaint against the defendant. The defendant filed a motion to dismiss, arguing that under rule 41(b), the case was dismissed with prejudice. Id.

¶12 The court of appeals "refuse[d] to apply the Rule 41(b) presumption in favor of dismissal with prejudice when the trial court has failed to explicitly identify that it is dismissing the case pursuant to Rule 41(b), or at least indicate that it is dismissing the case with prejudice." Id. at 364–65. The court determined that in this situation, "we assume the dismissal was without prejudice under Rule 4–103(2) of the Utah Code of Judicial Administration." Id. at 365.

¶13 Rule 4–103(2) provides that

[i]f a certificate of readiness for trial has not been served and filed within 330 days of the first answer, the clerk shall mail written notification to the parties stating that absent a showing of good cause by a date specified in the notification, the court shall dismiss the case without prejudice for lack of prosecution.

Because rule 4–103(2) provides that the case is dismissed without prejudice, the court of appeals resolved the apparent conflict between rules 41(b) and 4–103(2) by determining that rule 4–103(2) is the default rule and that "[i]f a trial court wishes to dismiss a case with prejudice for failure to prosecute, the trial court must expressly indicate that dismissal is with prejudice or pursuant to Rule 41(b)." Panos , 913 P.2d at 365.

¶14 The problem is that the Panos interpretation of rule 41(b) and rule 4 –103 reverses the presumption contained in the plain language of rule 41(b). Rule 41(b) presumes that all involuntary dismissals—whether falling under rule 41(b) or any other rule —are dismissed with prejudice, unless the dismissal falls under one of the "initial bar" exceptions or the judge "otherwise specifies." In Panos , as in this case, the judge did not "otherwise specify" that the case was to be dismissed without prejudice, nor did the case fall under one of the exceptions. Therefore, we overrule Panos and hold that involuntary dismissals are presumptively dismissed with prejudice unless the judge otherwise specifies or the case falls under an exception.³

II. WE DECLINE TO APPLY OUR DECISION ONLY PROSPECTIVELY

¶15 The general rule of retroactivity in a civil case is that "the ruling of a court is deemed to state the true nature of the law both retrospectively and prospectively." Monarrez v. Utah Dep't of Transp. , 2016 UT 10, ¶ 28, 368 P.3d 846 (citation omitted).⁴ However, we will deviate from the default rule of retroactivity and apply our decision prospectively only when two requirements are met. First, the ruling must "result [from] a change in the law" that "significantly alter[s] the legal landscape by ending or overruling a relied-upon practice." Id. But it is not enough to make a "bare assertion ... that our decision overrules prior cases," id . (alteration in original) (citation omitted), because the party seeking prospective application of the ruling must also show either "justifiable reliance on the prior state of the law," or that retroactive application would create an undue burden. Id. (...