Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-01879/USCOURTS-azd-2_10-cv-01879-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Insurance Contract

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

American Family Mutual Insurance

Company, 

Plaintiff, 

vs.

Elisia R. Baca, et al., 

Defendants. 

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No. CV-10-01879-PHX-NVW

ORDER

Before the Court is American Family’s Motion for Voluntary Dismissal with

Prejudice and Defendants’ Joint Motion for Order to Show Cause as to Plaintiff’s Failure

to Comply with This Court’s May 19, 2011 Order to Deposit the $300,000 Policy Limits. 

(Docs. 69, 70.) Finding that oral argument on these motions would not assist the Court,

the Court denies American Family’s requests for oral argument.

As urged by Defendant Baca, American Family filed this interpleader action in

state court to determine how insurance benefits should be allocated among four

passengers involved in a single-vehicle accident and their health care providers. It

offered to deposit the policy limits of $300,000 in exchange for Defendants’ release of

their claims against American Family and its insureds.

Defendant King removed the case to this Court, and American Family’s motion to

remand to state court was denied. American Family subsequently attempted to deposit

the interpled funds with the Clerk of the Court, but the deposit was denied because

Case 2:10-cv-01879-NVW Document 77 Filed 06/21/11 Page 1 of 3
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American Family had not obtained a court order granting leave to deposit the interpled

funds. Subsequently, in response to a motion by Defendants, the Court granted American

Family leave to deposit the interpled funds with the Clerk of the Court based on the

assumption that American Family wanted to deposit the funds. Meanwhile, American

Family learned that Defendants did not intend to release their claims against American

Family’s insureds in exchange for a portion of the interpled funds and therefore

concluded that continuing with the interpleader would not be in its insureds’ best interest.

Therefore, American Family moves to voluntarily dismiss this action with

prejudice pursuant to Fed. R. Civ. P. 41(a)(2), which permits voluntary dismissal “at the

plaintiff’s request only by court order, on terms that the court considers proper.” 

Generally, in ruling on a motion for voluntary dismissal, a district court must consider

whether the defendants “will suffer some plain legal prejudice as a result of the

dismissal.” Hamilton v. Firestone Tire & Rubber Co., 679 F.2d 143, 145 (9th Cir. 1982). 

“Plain legal prejudice, however, does not result simply when defendant faces the prospect

of a second lawsuit or when plaintiff merely gains some tactical advantage.” Id.

“Further, it is clear that the mere inconvenience of defending another lawsuit does not

constitute plain legal prejudice.” Id. Dismissal with prejudice precludes American

Family from reasserting its claim against Defendants in another federal suit, and it does

not preclude Defendants from initiating their own actions against American Family. 

Thus, American Family’s voluntary dismissal with prejudice will not cause Defendants to

suffer “some plain legal prejudice.”

Defendants contend they “incurred significant expense and exerted substantial

effort in this interpleader action,” but do not explain how their expenses and exertions of

effort are relevant to whether dismissal would impose “plain legal prejudice.” In fact,

they state that the parties “were very close to an agreed upon distribution of the $300,000

policy limits” and their draft stipulated order requests “that the relief provided to

American Family in the action match the prayer requested in the complaint.” The prayer

requested in the complaint expressly includes giving the insureds a release and

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satisfaction of any claims made against them. It would thus appear that the parties are

close to resolving their claims without any need for Court involvement. 

The Court finds that dismissal with prejudice does not impose any plain legal

prejudice on Defendants. It further finds that dismissal with prejudice without imposing

any sanctions and with each party to bear its own fees and costs is proper.

IT IS THEREFORE ORDERED that American Family’s Motion for Voluntary

Dismissal with Prejudice (Doc. 69) is granted and Defendants’ Joint Motion for Order to

Show Cause as to Plaintiff’s Failure to Comply with This Court’s May 19, 2011 Order to

Deposit the $300,000 Policy Limits (Doc. 70) is denied as moot.

IT IS FURTHER ORDERED that all requests for attorneys’ fees and/or sanctions

related to either motion (Docs. 69 and 70) are denied. 

IT IS FURTHER ORDERED that any pending deadlines, conferences, or hearings

in this case are vacated. The Clerk shall terminate this case.

DATED this 21st day of June, 2011.

Case 2:10-cv-01879-NVW Document 77 Filed 06/21/11 Page 3 of 3