Yoffe v. Keller Industries, Inc.

• Decision Date: 13 September 1978
• Docket Number: No. 76-2288,76-2288
• Citation: 580 F.2d 126
• Parties: Donald YOFFE, Plaintiff-Appellant, v. KELLER INDUSTRIES, INC., a corporation and Henry A. Keller and Norman S. Edelcup, Individuals, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 126

580 F.2d 126

Donald YOFFE, Plaintiff-Appellant, v. KELLER INDUSTRIES, INC., a corporation and Henry A. Keller and Norman S. Edelcup, Individuals, Defendants-Appellees.

No. 76-2288.

United States Court of Appeals Fifth Circuit.

Sept. 13, 1978.

Lipkin, Stutzman, Marshall & Bohorad, Pottsville, Pa., Marc Cooper, Robyn Greene, Miami, Fla., for plaintiff-appellant.

Robert Orseck, Joel D. Eaton, Richard E. Reckson, Miami, Fla., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before BROWN, Chief Judge, THORNBERRY and CLARK, Circuit Judges.

BROWN, Chief Judge:

Plaintiff Donald Yoffe appeals from that part of an order granting his motion for a voluntary dismissal without prejudice under F.R.Civ.P. 41(a)(2) that requires him to pay the defendants' attorneys' fees and costs as a condition of the dismissal. Yoffe attacks both the imposition and the amount of the fee award, claiming that the District Court Judge exceeded his authority in granting the award and erred in determining the amount due. Specifically, Yoffe asserts that the Judge admitted hearsay evidence without a proper foundation, improperly restricted the plaintiff's right to cross-examine, and failed to take all the requisite factors into account in setting the fee award. We hold that, under a review limited to determining whether the plaintiff has suffered "legal harm," the District Court acted within its discretion in awarding the amount adjudged as the defendants' reasonable attorneys' fees and costs. On that finding, we then hold that the plaintiff is not entitled to appeal the District Court's order, and therefore dismiss the appeal.

From Pennsylvania To Florida And Back

The plaintiff's motion for a voluntary dismissal took place against a background of complex, or at least confusing, procedural maneuvers. In 1967, Donald Yoffe and his father, Jack Yoffe, entered into a contract with Keller Industries (Keller) under which Keller would receive all the stock in two corporations owned by the Yoffes in exchange for a fixed amount of Keller stock. In 1972, the elder Yoffe filed suit against Keller in Pennsylvania state court on a cause of action arising out of this contract. In May 1974, Donald, the younger Yoffe, filed a diversity suit against Keller and two individual defendants ¹ in the Federal District Court in the Southern District of Florida, alleging that the contract had been breached ² and seeking specific performance, damages, and punitive damage's against the individual defendants. ³ Discovery proceeded in the Florida case, and, at a pretrial conference held on October 17, 1974, the District Court Judge denied plaintiff's motion for further discovery and set a trial date for November. The case was delayed once and subsequently rescheduled for trial in early January of 1975.

Meanwhile, back in Pennsylvania, the father's long dormant suit began to show signs of life. In April 1974, Keller filed a petition in the Pennsylvania suit to compel the son, Donald Yoffe, to be joined as an indispensible party plaintiff. The state court issued a rule to show cause why this joinder should not be compelled and directed that all threatened and pending prosecutions be stayed. Four days after Donald filed his diversity suit in federal court in Florida, Keller petitioned the Pennsylvania court for a rule to show cause why Donald was not in contempt of the state court's stay order. On October 18, 1974, the day after the pretrial conference was held in Florida, Donald Yoffe moved to be made a party plaintiff in the Pennsylvania litigation. However, Keller then withdrew its motion to compel Donald's joinder and opposed his motion to become a party plaintiff on the ground that the Florida suit was proceeding quickly. On October 31, Donald's motion to become a Pennsylvania plaintiff was granted.

On December 17, 1974, Donald Yoffe filed a motion for voluntary dismissal without prejudice in the federal district court. ⁴ The Judge heard Keller's arguments in opposition ⁵ and, by order of January 28, granted the plaintiff's motion. Pursuant to the terms of Rule 41(a)(2), the Judge ordered that "the plaintiff shall pay all costs and expenses, including reasonable attorneys' fees incurred by defendants in this case." ⁶ The plaintiff appealed from this order but the Fifth Circuit dismissed the appeal, undoubtedly on the basis that an appeal prior to an order setting the amount of fees was premature.

A lengthy hearing was held to determine the amount of fees and costs the defendants had incurred in the litigation. Three law firms represented the defendants in the federal suit. Mudge, Rose, Guthrie & Alexander (Mudge, Rose) of New York had been retained to defend Keller Industries in both the Florida and Pennsylvania suits. Mudge, Rose in turn had engaged Podhurst, Orseck & Parks, of Miami, to defend Keller as local counsel, and Levine, Reckson & Reed, also of Miami, to represent the two individual defendants. ⁷ The claim for costs and fees for these three firms, plus miscellaneous costs, totaled approximately $134,789.22. ⁸ The District Judge heard testimony from representatives of the three law firms as to the services they performed and from two expert witnesses who opined as to the reasonableness of the fees charged. The Court also considered documentary evidence, including statements submitted to Keller by the law firms, time sheets, a computer printout of time spent by the Mudge, Rose attorneys on behalf of Keller in the Florida suit, and a summary of Mudge, Rose's work for Keller.

At the conclusion of the hearing, the District Judge allowed attorneys' fees and costs in the total amount of $44,523.20. This sum allowed only a portion of the fees of Mudge, Rose, and granted the other fees and expenses claimed for services prior to January 1975 in full. The plaintiff appeals, challenging both the imposition of fees and costs and the amount set.

Have We An Appeal?

Our major difficulty is to determine whether the plaintiff can appeal the order granting his Rule 41(a)(2) motion on the condition that he pay $44,000 in costs and attorneys' fees. Rule 41(a)(2) provides, in pertinent part:

Except as provided in paragraph (1) 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.

The rule gives district courts the discretion to grant a motion for voluntary dismissal, a discretion designed "to allow the plaintiff to withdraw his action from the court without prejudice to future litigation." The authority to attach conditions to the order of dismissal "prevents defendants from being unfairly affected" thereby. LeCompte v. Mr. Chip, Inc., 5 Cir., 1976, 528 F.2d 601; Alvarado v. Maritime Overseas Corp., 5 Cir., 1976, 528 F.2d 605; American Cyanamid Co. v. McGhee, 5 Cir., 1973, 317 F.2d 295. ⁹

In LeCompte, supra, this Court stated the usual rule governing the appealability of orders granting motions for voluntary dismissal:

"Where the trial court allows the plaintiff to dismiss his action without prejudice, the judgment, of course, qualifies as a final judgment for purposes of appeal. Ordinarily, though, plaintiff cannot appeal therefrom, since it does not qualify as an involuntary adverse judgment so far as the plaintiff is concerned." 5 Moore's Federal Practice P 41.05(3), at 1068 (2d ed. 1975), Citing Scholl v. Felmont Oil Corp., 327 F.2d 697, 700-701 (6th Cir. 1964); Accord, 9 Wright & Miller, Federal Practice & Procedure: Civil § 2376, at 247 (1971).

528 F.2d at 603; See also Alvarado v. Maritime Overseas Corp., 5 Cir., 1976, 528 F.2d 605. This rule is premised on the rationale that:

the plaintiff has acquired that which he sought, the dismissal of his action and the right to bring a later suit on the same cause of action, without adjudication of the merits. The effect of this type of dismissal is to put the plaintiff in a legal position as if he had never brought the first suit. Maryland Casualty Co. v. Latham, 41 F.2d 312, 313 (5th Cir. 1930); Humphreys v. United States, 272 F.2d 411, 412 (9th Cir. 1959).

Id. The LeCompte opinion points out that most cases under the Rule imposed conditions that require the payment of costs and attorneys' fees, and acknowledges that:

(i)n one sense, any requirement imposed upon a plaintiff as a condition for allowing him a voluntary dismissal amounts to some degree of prejudice to his action, as a practical matter.

However, the opinion goes on to state that:

generally the conditions imposed do not create prejudice in a legal sense to the bringing of another suit. Rather, the usual conditions attached to a voluntary dismissal involve prejudice only in a practical sense (E. g., paying costs or expenses producing documents, producing witnesses). The imposition of this type condition does not amount to the type of "legal prejudice" which would entitle a plaintiff to appeal the grant of the dismissal he obtains.

The question before us is whether, under the terms set for the Circuit in LeCompte, the District Court's $44,000 condition is the type of "legal" prejudice that would entitle the plaintiff to an appeal at this juncture.

In LeCompte itself, this Court did reach the merits of the plaintiff's challenge to the conditions imposed on his voluntary dismissal. But the requirements imposed by the District Court in that case went far beyond the payment of fees and costs. The trial judge set the following conditions to the dismissal:

(1) that any subsequent suit must be filed in the same court; (2) that plaintiff must show extraordinary circumstances to justify reopening the case; and (3) that plaintiff must make an affirmative demonstration to the court's satisfaction that a valid cause of action can be maintained against defend...