NO. 94-186

IN THE SUPREME COURT OF THE STATE OF MONTANA

1994

UNITED STATES FIDELITY

AND GUARANTY COMPANY,

a Maryland corporation,

Plaintiff and Appellant,

v. OCT 20 I%?4

THOMAS E. RODGERS,

d/b/a THE CLANSMAN,

Defendant and Respondent. STATEOFMONTANA

APPEAL FROM: District Court of the Seventeenth Judicial

District, In and for the County of Valley,

The Honorable John C. McKeon, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Barry G. O'Connell, Moore, O'Connell & Refling,

Bozeman, Montana

For Respondent:

Matthew W. Knierim, Christoffersen & Knierim,

Glasgow, Montana

Robert Hurly, Glasgow, Montana

Donald W. Molloy, Molloy Law Offices, Billings,

Montana

Filed:

Submitted on Briefs: August 11, 1994

Decided: October 20, 1994

Clerk
Justice William E. Hunt, Sr., delivered the Opinion of the Court.

The Seventeenth Judicial District Court, Valley County,

granted plaintiff United States Fidelity and Guaranty Company's

(USF&G) motion for VolUntary dismissal and awarded defendant

attorney fees and costs. USF&G appeals from that portion of the

District Court's memorandum opinion and order which awards fees and

costs to defendant. We reverse.

We frame the issues on appeal as follows:

1 . Did the amount of discovery conducted by Rodgers preclude

USF&G from filing a notice to dismiss under 41(a) (1) (i) ,

M.R.Civ.P.?

2 . Did the District Court abuse its discretion by

conditioning USF&G's voluntary dismissal upon its paying of

defendant's attorney fees and costs?

Thomas E. Rodgers owned the Clansman Bar in Glasgow, Montana.

O n October 28, 1992, fire completely destroyed the bar.

Preliminary investigation indicated that the fire was caused by

arson. Rodgers submitted a claim for insurance benefits under a

fire insurance policy issued by USF&G. On February 18, 1993, USF&G

filed a declaratory judgment action against Rodgers doing business

as the Clansman, seeking judicial determination of its rights and

responsibilities under the insurance policy.

On March 23, 1993, Rodgers filed a motion requesting that the

District Court grant him additional time in which to serve and file

his answer. Rodgers stated that depositions were scheduled for

April 15, 1993, and that the information which he expected to

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obtain from the depositions was necessary to file a meaningful and

responsive answer. USF&G did not object to the motion, and the

District Court ordered that Rodgers "may delay filing of its

responsive pleading to Plaintiff's Complaint until twenty (20) days

after the completion of the taking of depositions."

On June 24, 1993, USF&G filed a notice of voluntary dismissal

pursuant to 41(a)(l)(i), M.R.Civ.P. Prior to USF&G's notice of

dismissal on June 23, Rodgers did not file an answer or a summary

judgment motion. Rodgers resisted the notice of dismissal. Two

days later, USF&G filed a complaint for declaratory judgment in the

United States District Court for the District of Montana, Billings

Division. Except for the allegations of proper jurisdiction and

venue contained in paragraphs III and IV, the complaint filed in

federal court is virtually identical to the complaint filed in the

Montana District Court.

Rodgers moved the District Court to review the voluntary

dismissal filed by USF&G. In a memorandum opinion and order dated

December 21, 1993, the District Court concluded that USF&G "has the

right under Rule 41(a)(2) to dismiss, however this right is subject

to the exercise of discretion by this court to protect the

Defendant from the cost of having to prepare multiple cases in

differing forums." The District Court ordered that a hearing be

held later to determine Rodgers' costs and attorney fees. The

hearing to determine fees and costs was held on March 9, 1994,

after which the District Court ordered USF&G to pay Rodgers'

3
attorney fees of $19,713.75 and costs of $1314.85. USF&G appeals

the conditional dismissal and award of fees and costs.

We review conclusions of law to determine whether the district

court's interpretation of the law was correct. In re Marriage of

Burris (1993), 258 Mont. 265, 269, 852 P.2d 616, 618; Steer, Inc.

v. Dep't of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601,

603.

The issues raised on appeal require this Court to interpret

the provisions of 41(a), M.R.Civ.P., which provides:

Voluntary dismissal--effect thereof. (1) BY

plaintiff--by stipulation. Subject to the provisions of

Rule 23(e), of Rule 66, and of any statute of the state

of Montana, an action may be dismissed by the plaintiff

without order of court (i) by filing a notice of

dismissal at any time before service by the adverse party

of an answer or of a motion for summary judgment, which

ever [sic] first occurs, or (ii) by filing a stipulation

of dismissal signed by all parties who have appeared in

the action. Unless otherwise stated in the notice of

dismissal or stipulation, the dismissal is without

prejudice.

(2) By order of court. 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. If a counterclaim

has been pleaded by a defendant prior to the service upon

the defendant of the plaintiff's motion to dismiss, the

action shall not be dismissed against the defendant's

objection unless the counterclaim can remain pending for

independent adjudication by the court. Unless otherwise

specified in the order, a dismissal under this paragraph

is without prejudice.

Rules 41(a) and 41(d) of the Montana Rules of Civil Procedure

are identical in all respects to Rules 41(a) and 41(d) of the

Federal Rules of Civil Procedure. Because the language of the

state and federal rules is identical, the interpretation of the

4
federal rules have persuasive application to the interpretation of

the state rules. Petritz v. Albertsons, Inc. (1980), 187 Mont.

102, 608 P.2d 1089.

ISSUE 1

Did the amount of discovery conducted by Rodgers preclude

USF&G from filing a notice to dismiss under 41(a)(l)(i),

M.R.Civ.P.?

Because USF&G filed its notice of voluntary dismissal under

subsection (l)(i) of 41(a), M.R.Civ.P., the threshold question is

whether the notice was filed "before service by the adverse party

of an answer or of a motion for summary judgment . . . .I' Rule

41(a)(l)(i), M.R.Civ.P. An examination of the record reveals that

neither an answer nor a motion for summary judgment was filed by

Rodgers before USF&G filed its notice of dismissal.

Rodgers contends on appeal that, because he obtained "special

permission and a court order" allowing him to submit an answer 20

days after the completion of necessary depositions, it "was within

his right not to have filed an answer 'I because he had not completed

deposing necessary persons. He states that this is not 'Ia case

where nothing had occurred prior to the voluntary dismissal under

Rule 41(a)." By the time USF&G filed its notice of dismissal,

Rodgers asserts that "[t]he case had progressed so far that filing

a written pleading denying the allegations of the complaint was a

mere formality."

The Sixth Circuit Court of Appeals rejected an argument

substantially similar to Rodgers' in D.C. Electronics, Inc. v.

5
Nartron Corp. (6th Cir. 1975), 511 F.2d 294. Defendant Nartron

argued that,

since the purpose of Rule 41(a)(l)(i) "is to facilitate

the voluntary dismissal of an action, but safeguard abuse

of the right by limiting its application to an early

stage of the proceedings," courts are vested with the

discretion to determine whether a particular case has

progressed to a point at which voluntary dismissal is no

longer proper, even though an answer or motion for

summary judgment has yet to be filed.

D.C. Electronics, Inc., 511 F.2d at 296 (citation omitted). In

rejecting Nartron's argument, the court held that

[t]he drafters of Rule 41(a)(l)(i) . . . did not attempt

to effectuate their purpose by phrasing the rule in vague

terms or, as in Rules 41(a)(l)(ii) and 41(a)(2), by

calling for judicial involvement or the exercise of

judicial discretion.

D.C. Electronics, Inc., 511 F.2d at 297. Rule 41(a)(l)(i),

therefore, does not limit the filing of a notice to dismiss to a

general period of time at an early stage of the proceedings;

instead, the rule specifically permits the filing of a notice to

dismiss "at any time before service by the adverse party of an

answer or of a motion for summary judgment, which ever [sic] first

occurs." Rule 41(a)(l)(i), M.R.Civ.P.

The Seventh Circuit Court of Appeals also rejected an argument

similar to Rodgers' in Merit Ins. Co. v. Leatherby Ins. Co. (7th

Cir. 1978), 581 F.2d 137. Defendant Leatherby contended that

dismissal by notice should not be allowed where it would

lead to prejudice. It argue[d] that the drafters of the

rule [41(a)(l)(i), Fed.R.Civ.P.,] were concerned with

limiting the plaintiff's right to prevent the waste of

resources so that once the parties have committed

substantial resources to preparation of their case

voluntary dismissal would no longer be allowed.

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Leatherby claim[ed] that it ha[d] incurred substantial

legal costs and expenses in litigation.

Merit Ins. Co., 581 F.2d at 140. The court in Merit Ins. Co.

stated "that 'Rule 41 (a)(l)(i) is clear and unambiguous on its

face and admits of no exceptions that call for the exercise of

iudicial discretion by any court."' Merit Ins. Co., 581 F.2d at

141 (emphasis added) (citing D.C. Electronics, Inc., 511 F.2d at

298). Although Leatherby claimed that it had "expended great time

and effort," the court held that "[t]he mere institution of and

work on discovery . . . will not justify preclusion of a Rule

41(a)(l) notice." Merit Ins. Co., 581 F.2d at 143; see Sheldon v.

Amperex Electronic Corp. (E.D.N.Y. 1971), 52 F.R.D. 1, 7, aff'd,

449 F.2d 146 (2nd Cir. 1971); Scam Instruments Corp. v. Control

Data Corp. (7th Cir. 1972), 458 F.2d 885, 886; Pilot Freight

Carriers, Inc. v. Int'l Bhd. of Teamsters (5th Cir. 1975), 506 F.2d

914, 916, cert. denied, 422 U.S. 1048, 95 S. Ct. 2665, 45 L. Ed. 2d

700 (1975); see also Plains Growers, Inc. v. Ickes-Braun

Glasshouses, Inc. (5th Cir. 1973), 474 F.2d 250, 253. In both

Sheldon and Scam Instruments Corp., the courts refused to set aside

the plaintiffs' notices of dismissal under 41(a) (1) (i),

Fed.R.Civ.P., even though extensive discovery had been conducted

for more than a year in the former and approximately one year in

the latter. Sheldon, 52 F.R.D. at 6; Scam Instruments Corp., 458

F.2d at 886.

We conclude that, while in the instant case the defendant may

have engaged in substantial discovery, such progress did not amount

7
to and cannot take the place of a formal answer or motion for

summary judgment pursuant to 41(a)(l)(i), M.R.Civ.P. USF&G,

therefore, properly filed its notice of dismissal under

41(a)(l)(i), M.R.Civ.P.

ISSUE 2

Did the District Court abuse its discretion by conditioning

USF&G's voluntary dismissal upon its paying of defendant's attorney

fees and costs?

Rule 41, M.R.Civ.P., like its federal counterpart, "provides

three distinct and separate methods whereby an action may be

voluntarily dismissed." D.C. Electronics, Inc., 511 F.2d at 296.

Subsection (a)(l)(i) provides for dismissal upon the unilateral

filing of a notice of dismissal by the plaintiff: subsection

(a)(l)(ii) provides for dismissal by filing a stipulation in which

all parties have agreed to dismiss: and subsection (a)(2) provides

for dismissal by express order of the court. D.C. Electronics,

Inc., 511 F.2d at 296.

By its express language, 41(a)(2), M.R.Civ.P., gives the

district court discretion to dismiss an action upon the plaintiff's

motion and "upon such terms and conditions as the court deems

proper." Rule 41(a)(Z), M.R.Civ.P. Under 41(a)(l)(i), M.R.Civ.P.,

however, a voluntary dismissal by a plaintiff automatically

terminates the action upon the filing of the notice of dismissal

with the clerk of court. Miller v. Reddin (9th Cir. 1970), 422

F.2d 1264, 1266 (construing 41(a)(l)(i), Fed.R.Civ.P.); accord Scam

Instruments Corv., 458 F.2d at 888; Hyde Const. Co. v. Koehrinq Co.

8
(10th Cir. 1968), 388 F.2d 501, 507, cert. denied, 391U.S. 905, 88

s. ct. 1654, 20 L. Ed. 2d 419 (1968). Under 41(a)(l)(i),

M.R.Civ.P., no court order is required. Miller, 422 F.2d at 1266.

As the Fifth Circuit Court of Appeals stated, the proper filing of

a notice of dismissal

closes the file. There is nothing the defendant can do

to fan the ashes of that action into life and the court

has no role to play. This is a matter of right running

to the plaintiff and may not be extinguished or

circumscribed by adversary or court. There is not even

a perfunctory order of court closing the file. Its alpha

and omega was the doing of the plaintiff alone. He

suffers no impairment beyond his fee for filing.

American Cyanamid Co. v. McGhee (5th Cir. 1963), 317 F.2d 295, 297.

Moreover, 41(a)(l), M.R.Civ.P., provides "no authority for the

district court imposing conditions upon a motion clearly intended

to proceed under 41(a)(l)(i)." Scam Instruments Corp., 458 F.2d at

889; 9 Charles A. Wright & Arthur R. Miller, Federal Practice and

Procedure: Civil 5 2366, at 176 (1971). We conclude that the

District Court abused its discretion by conditioning USF&G's

voluntary dismissal upon its payment of Rodgers' fees and costs.

In its December 21, 1993, memorandum opinion, the District

Court cited Petritz for the proposition that the "court is vested

with 'wide discretion' to impose conditions, including an award of

attorney fees and costs, which will attach to a voluntary dismissal

under Rule 41." This Court's decision in Petritz, 608 P.2d 1089,

however, dealt exclusively with the application of Rule 41(a)(2).

The District Court in the instant case concluded that

[i]n interpreting the similar federal rule, the federal

courts have held that a trial court continues to have

9
jurisdiction to decide issues concerning Rule 11,

sanctions, and other remedial orders concerning discovery

practices even after the filing of a voluntary dismissal

under Rule 41(a) (2).

(Emphasis added.) Because USF&G filed its notice of dismissal

pursuant to 41(a)(l)(i), M.R.Civ.P., the District Court's reliance

on authority construing Rule 41(a)(2) is misplaced.

Finally, the District Court ordered that a hearing be held to

determi.ne "the amount of attorney fees and costs to be awarded

Defendant pursuant to Rule 41(d)." Rule 41(d), M.R.Civ.P.,

provides:

If a plaintiff who has once dismissed an action in any

court commences an action based upon or including the

same claim against the same defendant, the court may make

such order for the payment of costs of the action

previously dismissed as it may deem proper and may stay

the proceedings in the action until the plaintiff has

complied with the order.

Again, the District Court's application of this rule in this case

is erroneous. Rule 41(d), M.R.Civ.P., clearly vests the power to

award costs with the court in which the subsequent action is

commenced. While Rodgers may be entitled to relief under 41(d),

M.R.Civ.P., or 41(d), Fed.R.Civ.P., such relief must be sought from

the federal district court in which USF&G commenced the subsequent

action.

Reversed.

Justice

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11
October 20, 1994

CERTIFICATE OF SERVICE

I hereby certify that the following certified order was sent by United States mail, prepaid, to the

following named:

BARRY G. O’CONNELL

Moore, O’Connell & Refling

P.O. Box 1288

Bozeman, MT 59771-1288

Donald W. Molloy

MOLLOY LAW OFFICES

P.O. Box 1617

Billings, MT 59103-1617

MATTHEW W. KNIERIM

Christoffersen & Knierim

P.O. Box 29

Glasgow, MT 59230

Robert Hurly

Attorney at Law

P.O. Box 1170

Glasgow, MT 59230

ED SMITH

CLERK OF THE SUPREME COURT

STATE OF MONTANA