United States Court of Appeals

For the First Circuit

No. 21-1112

VS PR, LLC,

Plaintiff, Appellee,

v.

ORC MIRAMAR CORPORATION; OSVALDO RIVERA-CRUZ; EXELIX 

CONSTRUCTION, CORP.; WTB PARTNERS CORP.; DISTRICT 1, CORP.; 

OSVALDO RIVERA & ASSOCIATES, P.S.C.; DT CONSULTING ENGINEERING 

CORP.; ALDRE DEVELOPMENT, CORP.; JV CONSULTING ENGINEERING 

CORP.,

Defendants, Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Gustavo A. Gelpí, U.S. District Judge]

Before

Barron, Chief Judge,

Howard and Thompson, Circuit Judges.

Edilberto Berríos Pérez, with whom REC Law Services, PSC was 

on brief, for defendants-appellants.

Herman G. Colberg-Guerra, with whom María D. TrellesHernández, Pietrantoni Méndez & Álvarez LLC, Henry O. Freese 

Souffront, Carmen M. Alfonso Rodríguez, and McConnell Valdés LLC

were on brief, for plaintiff-appellee.
May 13, 2022
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BARRON, Chief Judge. This appeal arises from the 

decision by the United States District Court for the District of 

Puerto Rico to dismiss without prejudice a collection and 

foreclosure action that VS PR, a limited liability corporation, 

brought against several defendants. The defendants argue on appeal 

that the District Court should have dismissed the case with

prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1). 

We disagree, and so we affirm.

I.

VS PR originally filed suit in the Puerto Rico Court of 

First Instance on August 13, 2019, against ORC Miramar Corporation, 

Osvaldo Rivera Cruz, Exelix Construction Corp., W.T.B. Partners 

Corp., District 1 Corp., Osvaldo Rivera & Associates P.S.C., DT 

Consulting Engineering Corp., Aldre Development Corp., and JV 

Consulting Engineering Corp. VS PR alleged in the complaint in 

that case that the defendants had received two loans from VS PR 

that had been secured, in part, with real property. VS PR asked 

the Court of First Instance to declare the payment obligation for 

the loans due and sought to foreclose on the real property that 

secured one of the loans. 

On September 5, 2019, however, VS PR filed a notice of 

withdrawal, in which it requested that the Court of First Instance 

order the complaint withdrawn without prejudice. The Court of 
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First Instance "issue[d] a Judgment granting the Plaintiff [its] 

withdrawal without prejudice of the suit" on November 13, 2019. 

VS PR then filed the complaint that gave rise to this 

appeal on September 11, 2019, against the same defendants in the 

District of Puerto Rico in which VS PR alleged similar facts and 

sought the same relief. VS PR alleged that the federal court had 

subject matter jurisdiction over the suit pursuant to 28 U.S.C. 

§ 1332 because the parties were completely diverse and the amount 

in controversy exceeded $75,000. 

The defendants responded to the complaint by moving to 

dismiss the case for lack of subject matter jurisdiction. The 

defendants argued in relevant part that VS PR had not established 

that complete diversity between the parties existed, as required 

by 28 U.S.C. § 1332(a)(1), because VS PR is a limited liability 

corporation, such a corporation has the same citizenship as each 

one of its members, and VS PR had not alleged the citizenships of 

each of its members. 

VS PR argued in response that it had alleged in its 

complaint that there was complete diversity between the parties, 

and that it had shown in a Declaration of Jurisdictional Facts 

that its sole member -- another limited liability corporation --

was, by virtue of the citizenships of the members of that member 

corporation, a citizen of Delaware, Maryland, Massachusetts, 

Michigan, New Jersey, New York, Pennsylvania, and Virginia. 
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The defendants, with permission from the District Court,

filed a reply arguing that VS PR had acknowledged its complaint 

was insufficient to establish subject matter jurisdiction and that 

the Declaration of Jurisdictional Facts had "the same and 

additional flaws and deficiencies." The defendants pointed to 

specific members of the sole member of VS PR that were themselves 

limited liability corporations, state retirement systems, or 

partnerships or trusts whose citizenships VS PR had not adequately 

described. VS PR, also with permission from the District Court, 

filed a sur-reply, along with an unsworn Declaration Affirming 

Jurisdictional Facts. 

The District Court denied the defendants' motion to 

dismiss for lack of jurisdiction without prejudice on September 

11, 2020. The District Court at that time also directed the 

parties to submit a joint proposed timetable for jurisdictional 

discovery within a week. The District Court thereafter approved 

the plan the parties submitted. Following jurisdictional 

discovery, the defendants answered the complaint on December 1, 

2020, and continued to assert that the District Court did not have 

diversity jurisdiction over the case. 

On December 15, 2020, the defendants filed a motion in 

which they alleged that discovery "ha[d] yielded evidence of 

absence of diversity jurisdiction" following the investment of 

"[s]ignificant time, effort and resources" that were "devoted to 
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establish the factual and legal grounds upon which dismissal is to 

occur." The defendants indicated that they intended to file a 

counterclaim but would not do so in order to avoid "additionally 

burdening the Court and its valuable resources" when it was "highly 

probable" that the case would "be dismissed voluntarily or 

involuntarily." The defendants also indicated that they had 

instigated the "safe harbor" procedure under Federal Rule of Civil 

Procedure Rule 11(c)(2) to seek sanctions against VS PR.1

A week later, on December 22, VS PR filed a motion to 

dismiss the complaint voluntarily pursuant to Federal Rule of Civil 

Procedure 41(a)(2). The motion specifically noted that 

Rule 41(a)(2) provided for voluntary dismissal in cases in which 

"an answer or motion for summary judgment has been served." It 

also noted that "[u]nless otherwise ordered by the court, a 

dismissal under Fed. R. Civ. P. 41(a)(2) is without prejudice" 

(emphasis in original).2

1 Rule 11(c)(2) provides that "[a] motion for sanctions 

. . . must be served under Rule 5, but it must not be filed or be 

presented to the court if the challenged paper, claim, defense, 

contention, or denial is withdrawn or appropriately corrected 

within 21 days after service or within another time the court 

sets."

2 Rule 41(a) provides for three forms of "Voluntary 

dismissal":

(1) By the Plaintiff.

(A) Without a Court Order. Subject to 

Rules 23(e), 23.1(c), 23.2, and 66 and 

any applicable federal statute, the 

plaintiff may dismiss an action without 

a court order by filing:
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The defendants objected to the motion. They argued that 

VS PR had acknowledged that the District Court lacked subject 

matter jurisdiction due to a lack of complete diversity of the 

parties and that this "necessarily results in dismissal," such 

that the criteria used for determining if "the voluntary 

dismissal . . . is with or without prejudice" would not apply, as 

a dismissal for lack of subject matter jurisdiction was not an 

"ordinary garden variety voluntary dismissal." They further 

argued that the District Court not only had to dismiss the case on 

(i) a notice of dismissal before the 

opposing party serves either an 

answer or a motion for summary 

judgment; or

(ii) a stipulation of dismissal 

signed by all parties who have 

appeared.

(B) Effect. Unless the notice or 

stipulation states otherwise, the 

dismissal is without prejudice. But if 

the plaintiff previously dismissed any 

federal- or state-court action based on 

or including the same claim, a notice of 

dismissal operates as an adjudication on 

the merits.

(2) By Court Order; Effect. Except as provided 

in Rule 41(a)(1), an action may be dismissed 

at the plaintiff's request only by court 

order, on terms that the court considers 

proper. If a defendant has pleaded a 

counterclaim before being served with the 

plaintiff's motion to dismiss, the action may 

be dismissed over the defendant's objection 

only if the counterclaim can remain pending 

for independent adjudication. Unless the order 

states otherwise, a dismissal under this 

paragraph (2) is without prejudice.
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that ground but also had to do so with prejudice pursuant to Rule 

41(a)(1)(B). 

The District Court granted VS PR's motion for voluntary 

dismissal pursuant to Rule 41(a)(2) and dismissed VS PR's action 

without prejudice. The defendants timely appealed, on the ground 

that the dismissal must be with prejudice. 

II.

The defendants argue that, in consequence of the phrase 

"[e]xcept as provided in Rule 41(a)(1)" in Rule 41(a)(2), the 

requirement to dismiss an action with prejudice following a second 

voluntary dismissal that Rule 41(a)(1)(b) sets forth applies here, 

even though the voluntary dismissal that is at issue was made 

pursuant to a court order that did not provide for the dismissal 

to be with prejudice. Reviewing de novo, see, e.g., Crowley v. 

L.L. Bean, Inc., 361 F.3d 22, 25 (1st Cir. 2004) ("[W]e typically 

review the interpretation of a federal procedural rule de novo

. . . ."), we disagree.3

3 The defendants contend that because there is not 

complete diversity between the parties, we do not have subject 

matter jurisdiction to hear their appeal based on the diversity of 

the parties. They nonetheless contend that we do have subject 

matter jurisdiction based on the federal question that this appeal 

presents because their appeal turns on their contention that Rule 

41 compels that VS PR's action be dismissed with, rather than 

without, prejudice. We may assume that is so, because, as we will 

explain, there is no merit to the defendants' appeal. Cf. Alvarado

v. Holder, 743 F.3d 271, 276 (1st Cir. 2014) (noting that "we may 

occasionally bypass statutory jurisdiction," and "exercise 

'hypothetical jurisdiction'" "when precedent clearly dictates the 
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The Supreme Court of the United States has explained 

that "[t]housands of statutory provisions use the phrase 'except 

as provided in . . .' followed by a cross-reference in order to 

indicate that one rule should prevail over another in any 

circumstance in which the two conflict." Cyan, Inc. v. Beaver 

Cty. Emps. Retirement Fund, 138 S. Ct. 1061, 1070 (2018) (ellipsis 

in original). It follows that the "except as provided" phrase in 

Rule 41(a)(2) plainly addresses the "conflict," Cyan, 138 S. Ct. 

at 1070, that otherwise would exist between the bar that is set 

forth in paragraph (2) of Rule 41(a) to making a voluntary 

dismissal without a court order, see Fed. R. Civ. P. 41(a)(2) 

("[A]n action may be dismissed at the plaintiff's request only by 

court order" (emphasis added)), and the authorization for making 

a voluntary dismissal without a court order in certain 

circumstances that is set forth in paragraph (1) of Rule 41(a). 

The "except as provided" phrase does so by making clear that, 

notwithstanding the use of the word "only" in Rule 41(a)(2), 

dismissals without court orders are permitted in the circumstances 

provided for in Rule 41(a)(1)(A). The "[e]xcept as provided" 

phrase thus does not, at least in resolving that conflict, do the 

work that the defendants in bringing this appeal claim that it 

does, because the resolution of that conflict does not implicate 

result on the merits" (quoting Royal Siam Corp. v. Chertoff, 484 

F.3d 139, 143 (1st Cir. 2007))).
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the dismissal-with-prejudice requirement in Rule 41(a)(1) in the 

least. 

Moreover, there is no textual basis for concluding that 

the "[e]xcept as provided" phrase in Rule 41(a)(2) also resolves 

some other conflict between the two paragraphs of Rule 41(a) that 

would make the dismissal-with-prejudice requirement set forth in 

paragraph (1) of Rule 41(a) applicable to the kind of voluntary 

dismissal that paragraph (2) of Rule 41(a) addresses. And that is 

because there is no "conflict," Cyan, 138 S. Ct. at 1070, between 

the two paragraphs of Rule 41(a) that implicates the dismissalwith-prejudice requirement, given that the first paragraph 

addresses how an action must be dismissed only following "a notice 

of dismissal" while the second paragraph addresses how an action 

must be dismissed only following a voluntary dismissal pursuant to 

a court order. 

The defendants also fail to identify any precedent that 

would compel -- or even support -- their reading of Rule 41(a). 

In fact, the defendants acknowledge that there is no such authority 

from our circuit. And, while they point to Dvorak v. Granite Creek 

GP Flexcap I, LLC, 908 F.3d 248 (7th Cir. 2018), and Shaver v. 

Barrett Daffin Frappier Turner & Engel, L.L.P., 593 F. App'x 265 

(5th Cir. 2014), as if each provides support for their position, 

neither case speaks to the proper way to dismiss an action 

following a voluntary dismissal pursuant to a court order under 
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Rule 41(a)(2), which is the type of voluntary dismissal that is at 

issue here. 

The defendants do briefly gesture at an argument based 

on the purpose of Rule 41 by citing to a dictum in Cooter & Gell v. 

Hartmarx Corp., 496 U.S. 384 (1990), which states that "Rule 

41(a)(1) was intended to eliminate 'the annoying of a defendant by 

being summoned into court in successive actions and then, if no 

settlement is arrived at, requiring him to permit the action to be 

dismissed and another one commenced at leisure,'" id. at 397 

(quoting 2 Am. Bar Ass'n, Proceedings of the Institute on Federal 

Rules 350 (1938)). But, that dictum cannot overcome the text of 

Rule 41(a), which, as we have explained, requires that an action 

must be dismissed with prejudice following a voluntary dismissal 

pursuant to a court order only when the court order so provides. 

Nor are the defendants' remaining arguments of any help to them, 

because they address only whether the parties can stipulate that 

a second dismissal under Rule 41(a)(1) is without prejudice, rather 

than the prejudicial effect of a voluntary dismissal pursuant to 

a court order under Rule 41(a)(2).4

III.

Affirmed.

4 We thus need not address VS PR's argument that we 

should affirm the District Court's judgment on judicial estoppel 

grounds.