Wojtas v. Capital Guardian Trust Co.

• Decision Date: 15 February 2007
• Docket Number: No. 05-4248.,05-4248.
• Citation: 477 F.3d 924
• Parties: Bonnie M. WOJTAS and Richard J. Wojtas, Plaintiffs-Appellants, v. CAPITAL GUARDIAN TRUST COMPANY now known as Capital Bank & Trust Company, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

477 F.3d 924

Bonnie M. WOJTAS and Richard J. Wojtas, Plaintiffs-Appellants, v. CAPITAL GUARDIAN TRUST COMPANY now known as Capital Bank & Trust Company, Defendant-Appellee.

No. 05-4248.

United States Court of Appeals, Seventh Circuit.

Argued May 1, 2006.

Decided February 15, 2007.

Kraig A. Byron (argued), Wilson Law Group, Madison, WI, for Plaintiffs-Appellants.

Stephan J. Nickels (argued), Foley & Lardner, Madison, WI, for Defendant-Appellee.

Before EASTERBROOK, Chief Judge, and MANION and SYKES, Circuit Judges.

SYKES, Circuit Judge.

Bonnie and Richard Wojtas appeal the district court's denial of their motion to voluntarily dismiss their suit against the former custodian of Bonnie Wojtas's IRA account, Capital Guardian Trust ("Capital"), and the court's order dismissing the suit with prejudice on statute of limitations grounds. The district court determined that permitting voluntary dismissal without prejudice under Rule 41(a)(2) of the Federal Rules of Civil Procedure would deprive Capital of its statute of limitations defense under Wisconsin law, resulting in plain legal prejudice. The court then granted judgment on the pleadings dismissing the suit as time-barred. We affirm.

I. Background

Plaintiff Bonnie Wojtas was the owner of an Individual Retirement Account ("IRA"), the custodian of which was the defendant Capital. In April 1999 Wojtas instructed Capital to roll over the investment holdings in her IRA into a new IRA account managed by Insurance Planning & Design, Inc. ("Insurance Planning"). When the funds were received by Insurance Planning, they were illegally converted by an employee of that company who was later convicted of mail fraud. Wojtas and her husband (who claims a marital property interest in the stolen funds) sued Capital in state court asserting common law claims for breach of fiduciary duty and negligence. The suit alleged Capital had breached duties owed to the Wojtases when it transferred the IRA funds without first verifying that the successor custodian was qualified by the Internal Revenue Service to serve in such capacity. Capital removed the action to the United States District Court for the Western District of Wisconsin on the basis of diversity of citizenship.

Capital answered and eventually moved for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c), arguing that the Wojtases' claims were barred by Wisconsin's two-year statute of limitations governing claims for breach of fiduciary duty. See WIS. STAT. § 893.57; Beloit Liquidating Trust v. Grade, 2004 WI 39, ¶ 40, 270 Wis.2d 356, ¶ 40, 677 N.W.2d 298, ¶ 40 (Wis.2004). Capital argued that the negligence and fiduciary duty claims were premised upon the same alleged breach of duty and both should be subject to the two-year limitations period applicable to breach of fiduciary duty claims. The complaint was filed more than two years after the Wojtases asserted they learned of their injury, when the employee of Insurance Planning was indicted. In the alternative Capital argued that the complaint failed to state a claim upon which relief could be granted because Capital had no legal duty to independently investigate the successor custodian the Wojtases had themselves selected.

The Wojtases' response to Capital's motion addressed the failure-to-state-a-claim argument, but was utterly silent regarding the statute of limitations. Instead, the Wojtases moved for voluntary dismissal of their suit pursuant to Fed.R.Civ.P. 41(a)(2), asking that their claims be dismissed without prejudice so they could refile the action in Illinois, where a longer statute of limitations applies to claims for breach of fiduciary duty. See 735 ILL. COMP. STAT. 5/13-205.

In a decision addressing both motions, the district court denied the motion for voluntary dismissal and granted the motion for judgment on the pleadings. The court held that the Wojtases' lack of response to Capital's statute of limitations argument meant they had "implicitly acquiesced in defendant's position that . . . [the] claims against defendant Capital are barred by the Wisconsin statute of limitations." The court then held that voluntary dismissal without prejudice would deprive Capital of its statute of limitations defense, a loss that would constitute the type of "plain legal prejudice" that makes voluntary dismissal improper under Rule 41(a)(2). The court noted that under Wisconsin law, expiration of the applicable statute of limitations operates to extinguish a plaintiff's cause of action in its entirety, rather than merely barring the remedy in Wisconsin such that refiling the same claim in another jurisdiction would be permitted. See WIS. STAT. § 893.05 (When the limitations period expires, "the right is extinguished as well as the remedy."). Regarding the propriety of voluntary dismissal in this situation, the district court distinguished this court's decision in Bolten v. Gen. Motors Corp., 180 F.2d 379 (7th Cir.1950), and endorsed the reasoning of the Fifth and Eighth Circuits in Phillips v. Ill. Cent. Gulf R.R., 874 F.2d 984 (5th Cir.1989), and Metro. Fed. Bank v. W.R. Grace & Co., 999 F.2d 1257 (8th Cir.1993).

II. Discussion

The Wojtases argue on appeal that the district court erred in dismissing their negligence claim on statute of limitations grounds. They acknowledge that they never responded to Capital's statute of limitations argument, but take the position that Capital's motion was directed only at their claim for breach of fiduciary duty and never actually sought dismissal of their negligence claim. Thus, their argument goes, the negligence claim remains fully viable because it was filed within the six-year statute of limitations applicable to damages claims for injury to real or personal property. See WIS. STAT. § 893.52 ("An action, not arising on contract, to recover damages for an injury to real or personal property shall be commenced within 6 years after the cause of action accrues or be barred...."). This argument completely ignores the content of Capital's motion for judgment on the pleadings.

As we have noted, Capital's Rule 12(c) motion unambiguously sought dismissal of both the fiduciary duty and negligence claims, arguing that they were premised on the same alleged breach of duty and were governed by the two-year statute of limitations applicable to claims of breach of fiduciary duty. Capital maintained that the negligence claim was nothing more than a reiteration of the fiduciary duty claim with a negligence label attached to it. The Wojtases' failure to offer any opposition to Capital's statute of limitations argument constituted a waiver. Cincinnati Ins. Co. v. E. Atl. Ins. Co., 260 F.3d 742, 747 (7th Cir.2001) (A failure to oppose an argument permits an inference of acquiescence and "acquiescence operates as a waiver."). The district court noted the waiver and ordered that "Capital's motion for judgment on the pleadings that plaintiffs' claims are barred by the applicable Wisconsin statute of limitations is granted." (Emphasis added.) This was not error. The Wojtases' argument that Capital's motion addressed only the fiduciary duty claim is meritless.

The Wojtases also contend they were entitled to voluntarily dismiss their suit under Rule 41(a)(2). When sought after a defendant has filed an answer, voluntary dismissal may be obtained only "upon order of the court and upon such terms and conditions as the court deems proper." FED.R.CIV.P. 41(a)(2). Motions for voluntary dismissal under Rule 41(a)(2) are committed to the district court's discretion, but it is an abuse of discretion for the district court to permit the voluntary dismissal of an action where the defendant would suffer "plain legal prejudice" as a result. United States v. Outboard Marine Corp., 789 F.2d 497, 502 (7th Cir.1986); Kovalic v. DEC Int'l, Inc., 855 F.2d 471, 474 (7th Cir.1988). The Wojtases argue that the prospect of a new lawsuit in Illinois does...