Paglin v. Saztec Intern., Inc.

• Decision Date: 17 September 1993
• Docket Number: No. 92-0350-CV-W-8.,92-0350-CV-W-8.
• Citation: 834 F. Supp. 1184
• Parties: Renan C. PAGLIN, et al., Plaintiffs, v. SAZTEC INTERNATIONAL, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

834 F. Supp. 1184

Renan C. PAGLIN, et al., Plaintiffs, v. SAZTEC INTERNATIONAL, INC., et al., Defendants.

No. 92-0350-CV-W-8.

United States District Court, W.D. Missouri, W.D.

September 17, 1993.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Neil L. Johnson, C.W. Crumpecker, Jr., Swanson, Midgley, Gangwere, Clarke & Kitchin, Kansas City, MO, for plaintiffs.

Lynne C. Kaiser, Rachel H. Baker, Seigfreid, Bingham, Levy, Selzer & Gee, P.C., Kansas City, MO, for defendants.

ORDER

STEVENS, Chief Judge.

This case is before the court on the motions of plaintiffs to dismiss voluntarily counts V (42 U.S.C. § 1981), VI (Title VII), and VII (42 U.S.C. § 1981) without prejudice, and on the motions of the defendants for summary judgment. For the reasons set forth below, plaintiffs' motion for a voluntary dismissal is denied in favor of granting plaintiffs leave to amend their pleadings, and the defendants' motions for summary judgment are denied.

I. Factual Summary

The essential facts of this case are as follows:

Plaintiff Renan Paglin ("Paglin") was the developer, principal shareholder, and president of Global Office Technologies ("GOT"), a medical transcription service. In 1990, Paglin and defendants Robert Dunne ("Dunne"), Gary Abernathy ("Abernathy"), and Richard Thompson ("Thompson") began negotiating an agreement for the sale of GOT to defendant Saztec International, Inc. ("Saztec"). Paglin alleges that, during these negotiations, defendants Dunne, Abernathy, and Thompson represented to Paglin that he would have the same authority to manage the GOT business after its sale to Saztec as he had prior to the sale.

On July 12, 1991, Paglin, GOT, and defendant Chartnet, Inc. ("Chartnet") — a newly formed Saztec subsidiary — entered into an Asset Purchase Agreement. See Def. Chartnet's Mot. Summ. J. Counts II, V, & VII Ex. D ("Asset Purchase Agreement"). Pursuant to this agreement, Chartnet purchased GOT's assets in exchange for, among other things, the execution of an Employment Agreement between Chartnet and Paglin. See id. Ex. E ("Employment Agreement"). The Employment Agreement provides that Paglin will remain as executive director, and perform the duties of executive director, for two years. Id. ¶ 2. The Employment Agreement also provides that Paglin "will be initially reporting to Donald E. Mack, Senior Vice President of SAZTEC International, Inc." Id. Defendants Dunne, Abernathy, and Thompson are officers and/or directors of both Saztec and Chartnet.

Plaintiffs allege that, shortly after the sale of GOT to Chartnet, defendant Donald Mack ("Mack") began "forcibly taking over the duties of Executive Director" at Chartnet, and that defendants Dunne, Abernathy, and Thompson "engaged in a pattern of harassment and disparaging and oppressive conduct" toward Paglin. First Am. Compl. ¶¶ 21-22. Paglin repeatedly requested a job description, which the defendants refused to provide. On September 19, 1991, defendant Thompson instructed Chartnet employees that Mack was in complete charge of Chartnet, and in a letter dated November 27, 1991, Thompson formally terminated the Employment Agreement between Chartnet and Paglin.

As a result of the foregoing events, Paglin and GOT filed the instant action against Saztec, Chartnet, Dunne, Abernathy, Thompson, and Mack, alleging claims for breach of the Employment Agreement and Asset Purchase Agreement (counts I and II), fraud (count III), tortious interference with a contract (Count IV), racial discrimination (counts V, VI, and VII), and breach of a fiduciary duty (count VIII).

Defendants filed motions for summary judgment on all eight counts. Plaintiffs have filed a motion to dismiss counts V, VI, and VII voluntarily without prejudice.

II. Plaintiffs' Motion to Dismiss

Plaintiffs seek to dismiss voluntarily without prejudice the race discrimination claims plead in counts V, VI, and VII of their first amended complaint. Defendants seek to have those claims dismissed with prejudice.

First, the court rejects defendants' suggestion that counts V, VI, and VII should be dismissed with prejudice. Fed.R.Civ.P. 41(b) authorizes the involuntary dismissal of an action or claim when a plaintiff fails to prosecute or comply with the Federal Rules of Civil Procedure or an order of the court. None of these circumstances is present in the instant case.

Accordingly, defendants' request that the court dismiss counts V, VI, and VII with prejudice is rejected.

Second, plaintiffs' motion to dismiss voluntarily counts V, VI, and VII of their first amended complaint without prejudice is denied. Fed.R.Civ.P. 41(a)(2) governs the type of dismissal plaintiffs evidently seek. However, Rule 41(a)(2) refers to dismissal of "an action," as opposed to an individual claim or claims. The language of Rules 41(a)(1), 41(b), and 41(d) refer to both actions and claims, indicating that the drafters of Rule 41 drew a distinction between those two terms and intended them to have different meanings. See Fed.R.Civ.P. 41(a)(1) (referring to "an action based on or including the same claim"); id. 41(b) (authorizing involuntary dismissal of "an action or any claim"); id. 41(d) (referring to "an action based on or including the same claim").

Thus, while the Eighth Circuit apparently has not yet addressed the question, the court concludes that Fed.R.Civ.P. 41(a) authorizes a plaintiff to dismiss voluntarily an "action," but does not apply when a plaintiff seeks to dismiss some, but not all, of his or her claims. Instead, a motion to eliminate individual claims from a multicount complaint should be treated as a motion to amend the pleadings brought pursuant to Fed.R.Civ.P. 15(a). A number of cases have taken this approach, and the court adopts the reasoning and rule of those decisions. See Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1392 (9th Cir.1988); Gronholz v. Sears, Roebuck & Co., 836 F.2d 515, 517-18 (Fed.Cir. 1987); Management Investors v. United Mine Workers, 610 F.2d 384, 394 & n. 22 (6th Cir.1979); United States v. Outboard Marine Corp., 104 F.R.D. 405, 414 (N.D.Ill.1984), aff'd, 789 F.2d 497 (7th Cir.), cert. denied, 479 U.S. 961, 107 S.Ct. 457, 93 L.Ed.2d 403 (1986); C. Van Der Lely N.V. v. F.lli Maschio S.n.c., 561 F.Supp. 16, 19-20 (S.D.Ohio 1982), aff'd, 748 F.2d 1568 (Fed.Cir.1984); Smith, Kline & French Labs. v. A.H. Robins Co., 61 F.R.D. 24, 27-31 (E.D.Pa.1973); see also Exxon Corp. v. Maryland Casualty Co., 599 F.2d 659, 662 n. 10 (5th Cir.1979).

Accordingly, plaintiffs' motion to dismiss voluntarily counts V, VI, and VII without prejudice is denied, and the court instead will treat plaintiffs' filing as a motion to amend the pleadings.

Fed.R.Civ.P. 15(a) declares that leave to amend "shall be freely given when justice so requires," and establishes a liberal amendment policy. See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962); Buder v. Merrill Lynch, Pierce, Fenner, & Smith, Inc., 644 F.2d 690, 694 (8th Cir.1981); see also 6 Charles A. Wright et al., Federal Practice & Procedure § 1488 (1990). Thus, while leave to amend is not to be granted automatically, Deasy v. Hill, 833 F.2d 38, 40 (4th Cir.1987), cert. denied, 485 U.S. 977, 108 S.Ct. 1271, 99 L.Ed.2d 483 (1988), a court ordinarily will grant a party's motion under Rule 15(a) absent "undue delay, bad faith or dilatory motive on the part of the movant ... or undue prejudice to the opposing party." Foman, 371 U.S. at 182, 83 S.Ct. at 230.

In the instant case, the court finds that plaintiffs should be granted leave to amend their first amended complaint to eliminate the race discrimination claims currently plead in counts V, VI, and VII. Plaintiffs certainly should have withdrawn their race discrimination claims at an earlier stage in these proceedings, and their tardiness undoubtedly has required the defendants to conduct unnecessary discovery.

Nevertheless, allowing plaintiffs to withdraw their discrimination claims at this time will simplify and focus the issues presented by this case, remove a difficult and sometimes emotional subject from the trial, and expedite the presentation of evidence. In addition, granting plaintiffs leave to amend will spare the defendants the effort and expense of preparing and presenting their defense to counts V, VI, and VII, and eliminate the risk of an unfavorable judgment. These considerations negate any claims of undue prejudice by the defendants.

Accordingly, pursuant to Fed.R.Civ.P. 15(a), the court grants plaintiffs leave to amend their first amended complaint to eliminate counts V, VI, and VII from their current pleadings.¹ Plaintiffs shall file their amended complaint within ten days from the date of this order.

III. Defendants' Motions for Summary Judgment

Defendants have filed motions for summary judgment on all eight counts of plaintiffs' first amended complaint. In view of the fact that plaintiffs' amended pleadings will omit the claims for race discrimination currently plead in counts V, VI, and VII, the court need only consider the defendants' motions for summary judgment on counts I, II, III, IV, and VIII. For the reasons set forth below, the defendants' motions for summary judgment on these counts are denied.

A. The Summary Judgment Standard²

Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The court must view the record in the light most favorable to the nonmoving party, and draw all reasonable inferences in favor of the nonmovant. Raschick v. Prudent Supply, Inc., 830 F.2d 1497, 1499 (8th Cir.1987), cert. denied, 485 U.S. 935, 108 S.Ct. 1111, 99 L.Ed.2d 272 (1988). The party seeking summary judgment bears the initial burden of demonstrating that an essential...