Puerto Rico Maritime Shipping Authority v. Leith, 81-1069

• Decision Date: 15 December 1981
• Docket Number: No. 81-1069,81-1069
• Citation: 668 F.2d 46
• Parties: PUERTO RICO MARITIME SHIPPING AUTHORITY, Plaintiff, Appellee, v. Robert LEITH and Puerto Rico Line, Inc., Defendants, Third-Party Plaintiffs, Appellants, v. PUERTO RICO MARINE MANAGEMENT, INC., Caribbean Bunkering Co. and John Doe, Third-Party Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 46

668 F.2d 46

PUERTO RICO MARITIME SHIPPING AUTHORITY, Plaintiff, Appellee, v. Robert LEITH and Puerto Rico Line, Inc., Defendants, Third-Party Plaintiffs, Appellants, v. PUERTO RICO MARINE MANAGEMENT, INC., Caribbean Bunkering Co. and John Doe, Third-Party Defendants, Appellees.

No. 81-1069.

United States Court of Appeals, First Circuit.

Argued Sept. 14, 1981.

Decided Dec. 15, 1981.

Gerardo A. Carlo, San Juan, P. R., with whom Joseph Chalverus-Bertrand, San Juan, P. R., was on brief, for defendants, third-party plaintiffs, appellants.

Herbert W. Brown, III, San Juan, P. R., with whom Jimenez & Fuste, San Juan, P. R., was on brief, for plaintiff, appellee.

Before CAMPBELL, Circuit Judge, VAN DUSEN, Senior Circuit Judge, ^* BOWNES, Circuit Judge.

VAN DUSEN, Senior Circuit Judge.

This is an appeal from a voluntary dismissal under Rule 41(a)(2) of the Federal Rules of Civil Procedure, granted without prejudice and without the imposition of costs or attorney's fees. We affirm the dismissal as within the discretion of the district court.

I.

On May 27, 1977, Puerto Rico Line, Inc., through its president, Robert Leith, contracted to sell over 3,000 barrels of fuel oil to Puerto Rico Maritime Shipping Authority (PRMSA), through its agent, Puerto Rico Marine Management, Inc. (PRMMI). ¹ PRMMI arranged for the Caribbean Bunkering Company, Inc. to pick up the fuel oil from the tanker, SS PISCES, and to deliver it to vessels of PRMSA. Payment of $30,140.90 was made to Puerto Rico Line, Inc. in early July 1977.

The defendants, Robert Leith and Puerto Rico Line, Inc., contend that this oil was part of a larger shipment intended for the Puerto Rico Water Resources Authority, ² but the oil was rejected by that agency because its sulphur content was too high for use in the Water Resources Authority's electric power plants. Nevertheless, the defendants claim that the fuel oil was still suitable for PRMSA's vessels since they were permitted to use fuel oil with a higher sulphur content.

The plaintiff, PRMSA, asserts that the fuel oil delivered was in fact fuel oil mixed with water, or "slop," and that the defendants knew the oil was worthless slop when they contracted to sell it. ³

Approximately two years later, on July 24, 1979, PRMSA brought suit in the United States District Court for the District of Puerto Rico to recover $33,606.10 in damages. Jurisdiction was alleged under the court's admiralty jurisdiction, Fed.R.Civ.P. 9(h) and 28 U.S.C. § 1333 (1976).

On November 9, 1979, the defendants filed a motion to dismiss based on three grounds, two of which are relevant here. First, the defendants claimed that the plaintiff's complaint failed to allege sufficient facts to give the district court admiralty jurisdiction. Second, the motion alleged that the plaintiff's suit was barred by laches, because the complaint was filed more than two years after the contract was signed and more than one year after the allegedly analogous Puerto Rican statute of limitations had run. ⁴ On January 2, 1980, the defendants moved for a stay of discovery pending a ruling on their motion to dismiss. The district court denied both motions on June 6, 1980, but stated that the motion to dismiss could be renewed after discovery was completed. Discovery continued, with frequent applications to the court. ⁵ The defendants' motion to dismiss, based on the same grounds as the motion of November 9, 1979, was renewed on September 17, 1980.

On October 31, 1980, the plaintiff filed an Informative Motion and Motion Requesting Dismissal Without Prejudice. This motion stated:

"2. Plaintiff, after carefully analyzing the facts as they have come up through discovery in the last few months, is of the opinion that this Honorable Court may lack admiralty jurisdiction in this case and, therefore, requests that this action be dismissed without prejudice.

"7. For information pruposes (sic), plaintiff will continue to pursue this case in the local courts until justice is finally done."

The defendants responded on November 12, 1980, with a motion requesting 20 days to oppose the plaintiff's motion. ⁶ The defendants asserted in this November 12 motion that the court did have admiralty jurisdiction over this suit. ⁷

Therefore, in December 1980, two different motions to dismiss were pending before the district court. One was the defendants' motion to dismiss for lack of jurisdiction and laches, although the defendants apparently were no longer pressing the jurisdictional claim. The second was the plaintiff's motion for a voluntary dismissal because of a possible lack of subject matter jurisdiction. On December 18, 1980, the district court chose to grant plaintiff's motion for a voluntary dismissal pursuant to Rule 41(a)(2).

The defendants appeal this order of dismissal on three grounds. First, they contend that the district judge abused his discretion in dismissing the case without prejudice. ⁸ Second, the district judge allegedly abused his discretion by not imposing costs and attorney's fees on the plaintiff. Finally, the defendants argue that a hearing should have been held before the judge dismissed the suit without prejudice.

II.

Rule 41(a) of the Federal Rules of Civil Procedure provides for voluntary dismissals. Rule 41(a)(1) permits a voluntary dismissal by the plaintiff either before an answer or a summary judgment motion is served or on the stipulation of all parties. Since the plaintiff's motion here was filed in the late stages of discovery, paragraph (2) applies:

"(2) By Order of Court. Except as provided in paragraph (2) of this subdivision of this rule, an 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.... Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice."

Fed.R.Civ.P. 41(a)(2). The district court's decision to grant a motion to dismiss under Rule 41(a)(2) is reviewable only for abuse of discretion. Alamance Industries, Inc. v. Filene's, 291 F.2d 142, 146 (1st Cir.), cert. denied, 368 U.S. 831, 82 S.Ct. 53, 7 L.Ed.2d 33 (1961); United States v. Lyman, 125 F.2d 67, 70 (1st Cir. 1942).

The defendants claim that the district judge abused his discretion when he dismissed the suit without prejudice under Rule 41(a)(2) instead of dismissing the case with prejudice, as requested in the defendants' motion of November 9, 1979, renewed September 17, 1980. As a preliminary matter, we find no error in the district judge's decision to address the plaintiff's motion instead of the defendants'. Because the defendants were no longer pressing their jurisdictional defense, the defendants' motion primarily involved the defense of laches. This involved both a complicated legal question concerning the choice of the analogous Commonwealth statute of limitations, as well as a factual issue involving the harm caused by the delay to the defendants. Instead of resolving the difficult laches question, the district court appropriately chose to address the plaintiff's motion for a voluntary dismissal. As the Fifth Circuit has stated: "(t)he basic purpose of Rule 41(a)(2) is to freely permit the plaintiff, with court approval, to voluntarily dismiss an action so long as no other party will be prejudiced." LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 604 (5th Cir. 1976). Here, because the district court apparently found that the interests of the defendants would not be prejudiced, it acted properly when it "freely permit(ted)" the plaintiff to voluntarily dismiss. We conclude that the district court did not err in addressing the plaintiff's motion under Rule 41(a)(2) without regard to the defendants' pending motion to dismiss. ⁹

We also hold that the district judge did not abuse his discretion in dismissing the suit without prejudice under Rule 41(a)(2). Dismissal without prejudice should be permitted under the rule unless the court finds that the defendant will suffer legal prejudice. Neither the prospect of a second suit nor a technical advantage to the plaintiff should bar the dismissal. See Hoffmann v. Alside, Inc., 596 F.2d 822, 823 (8th Cir. 1979); LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 604 (5th Cir. 1976); In re International Airport Inn Partnership, 517 F.2d 510, 512 (9th Cir. 1975); Stern v. Barnett, 452 F.2d 211, 213 (7th Cir. 1971); 9 Wright & Miller, Federal Practice and Procedure § 2363, at 165 (1971).

The defendants imply that the plaintiff's suit was brought and prosecuted to harass the defendants because they are competitors of the plaintiff. Yet the record indicates ample grounds on which the district court could conclude that the plaintiff has acted in good faith, ¹⁰ regardless of the eventual resolution of the controversy. The defendants also object to the lengthy and costly discovery involved in this suit. But this discovery has not been wasted, as much of it remains relevant to the suit currently pending in a court of the Commonwealth of Puerto Rico. ¹¹ Furthermore, the defendants have not alleged that they will be precluded from raising any defenses, or asserting any claims, in the Commonwealth court. ¹² Therefore, because the record does not require a finding of legal prejudice to the defendants, we conclude that the district court did not abuse its discretion in granting the plaintiff's motion for a voluntary dismissal without prejudice.

III.

The defendants argue that the district judge abused his discretion in granting the voluntary dismissal without imposing costs and attorney's fees on the plaintiff. While voluntary dismissals are often conditioned on the payment of the defendant's costs, we hold that the district judge did not abuse his discretion in dismissing this case without imposing any terms or conditions.

In Cone v. West Virginia Paper Co., 330 U.S. 212, 217, 67 S.Ct. 752, 755, 91 L.Ed. 849 (1947), the Supreme Court noted that "(t)raditionally, a plaintiff ... has had an...