Opinion ID: 1219144
Heading Depth: 2
Heading Rank: 1

Heading: Whether AWDI can Contest the Conditions of Dismissal of the Tributary Claim

Text: The objectors contend that having asked for and enjoyed the benefit of voluntary dismissal without prejudice, AWDI cannot now be heard to complain about the terms imposed as a condition of the dismissal by the court. The terms were imposed pursuant to C.R.C.P. 41(a)(2), which provides in relevant part: [Subject to an exception not applicable here], 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 subsection (2) is without prejudice. Fed.R.Civ.P. 41(a)(2) is virtually identical, so federal precedent will be helpful in resolving this issue. See United States v. Bell, 724 P.2d 631, 645 n. 18 (Colo.1986); Harding Glass Co., Inc. v. Jones, 640 P.2d 1123, 1125 n. 3 (Colo.1982); United Bank of Denver Nat'l Assoc. v. Shavlik, 189 Colo. 280, 282, 541 P.2d 317, 318 (1975). Generally, a plaintiff may not appeal from an order granting its request for voluntary dismissal. Jensen v. Matthews-Price, M.D., 845 P.2d 542, 543 (Colo.App.1992); accord Unioil, Inc. v. E.F. Hutton & Co., Inc., 809 F.2d 548, 555-56 (9th Cir.1986), cert. denied, 484 U.S. 822, 108 S.Ct. 83, 98 L.Ed.2d 45 (1987) & 484 U.S. 823, 108 S.Ct. 85, 98 L.Ed.2d 47 (1987); LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 603 (5th Cir.1976); see also 9 Wright & Miller § 2376. This rule is premised on the rationale that such a dismissal cannot be characterized as an involuntary adverse judgment against the plaintiff. Jensen, 845 P.2d at 543; see also 5 James Wm. Moore et al., Moore's Federal Practice ¶ 41.05[3] (2d ed. 1993). As the United States Court of Appeals for the Fifth Circuit has noted, when such a dismissal is granted, 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. LeCompte, 528 F.2d at 603. In the present case, however, the dismissal was conditioned on terms imposed by the court under C.R.C.P. 41(a)(2) and to which AWDI never assented. The Colorado Court of Appeals has stated that rather than accept the terms and conditions of dismissal, if a trial court places `terms and conditions' upon a dismissal under C.R.C.P. 41(a)(2) which are unacceptable to plaintiff, plaintiff is entitled to elect to proceed with the litigation. Powers v. Professional Rodeo Cowboys, 832 P.2d 1099, 1104 (Colo.App.1992); accord, e.g., Marlow v. Winston & Strawn, 19 F.3d 300 (7th Cir.1994); Unioil, 809 F.2d at 554; see also 9 Wright & Miller § 2366. We have not previously been required to decide whether a plaintiff who disagrees with the legal or factual basis for terms or conditions imposed in an order dismissing a claim on the plaintiff's motion may choose not to proceed with litigation of the claim and yet preserve a right to challenge the terms and conditions on appeal. The federal circuits have not adopted a single consistent analytic approach in deciding whether a plaintiff can appeal conditions imposed upon it under Fed.R.Civ.Proc. 41(a)(2) pursuant to a voluntary dismissal without prejudice. Cauley v. Wilson, 754 F.2d 769, 770 (7th Cir.1985); see also discussion in Unioil, 809 F.2d at 555-56. Some cases have held that conditions imposed in voluntary dismissal orders can be challenged on appeal only if they amount to legal prejudice. Unioil, 809 F.2d at 555-56; LeCompte, 528 F.2d at 603. The condition of payment of the opposing party's costs and expenses has been stated to constitute prejudice in a practical sense but not legal prejudice. Unioil, 809 F.2d at 555-56; LeCompte, 528 F.2d at 603. The same court that decided LeCompte, however, has suggested that there will be cases in which the amount of money set as the price of a voluntary dismissal without prejudice is so clearly unreasonable as to amount to appealable `legal prejudice'.... We will examine each case to ensure that the terms and conditions accompanying the grant of a plaintiff's Rule 41(a)(2) motion are not so outrageous as to demand a full appellate review. Yoffe v. Keller Indus., Inc., 580 F.2d 126, 131 (5th Cir.1978), cert. denied, 440 U.S. 915, 99 S.Ct. 1231, 59 L.Ed.2d 464 (1979); see also Mortgage Guaranty Ins. Corp. v. Richard Carylon Co., 904 F.2d 298, 300-01 (5th Cir. 1990); Scholl v. Felmont Oil Corp., 327 F.2d 697, 700 (6th Cir.1964). This approach tends to intermingle the issue of entitlement to review and that of the reasonableness of the payment imposed. The Seventh Circuit Court of Appeals in Cauley adopted a more direct approach and permitted review of a condition to voluntary dismissal in order to assess abuse of discretion. The court explained: [A] plaintiff may understand that the dismissal without prejudice is conditioned on paying attorneys' fees yet disagree with the amount of fees awarded. Thus an order awarding attorneys' fees may qualify as an involuntary adverse judgment even though the plaintiff requested and received the Rule 41(a)(2) dismissal. Cauley, 754 F.2d at 771; see GAF Corp. v. Transamerica Ins. Co., 665 F.2d 364, 367-68 (D.C.Cir.1981). We adopt the approach in Cauley and also consider it appropriate to take cognizance of challenges to the legal propriety of imposing terms and conditions of dismissal, which we view as an assertion of legal prejudice. See Unioil, 809 F.2d at 555-56; LeCompte, 528 F.2d at 603. Of course, it must also be shown in order to challenge a term or condition of dismissal on appeal that the party seeking dismissal did not actually acquiesce in imposition of the condition. Mortgage Guaranty, 904 F.2d at 300. In the present case AWDI was aware that terms and conditions would be imposed incident to its voluntary dismissal. When the trial court orally granted AWDI's motion to dismiss on October 10, 1991, the court stated that the dismissal was subject to the condition that AWDI pay to the objectors all attorney fees and expert witness fees and other fees and expenses incurred by the objectors that are otherwise appropriate during the pendency of this litigation which relate to the tributary claim. AWDI then proceeded to trial on October 15, 1991, on the nontributary claim alone. Although aware of the terms and conditions imposed, AWDI never acquiesced to them. AWDI asserted in proceedings before the trial court that such terms and conditions were not legally permissible and has consistently maintained this position in the trial court and on appeal. The court in LeCompte determined that the plaintiff had not acquiesced to the conditions of dismissal where he not only objected to the inclusion of the defendant's proposed conditions in the dismissal order, but vigorously renewed his objections after the court issued its order, andfailing to obtain reliefthen brought an appeal. The fact that the plaintiff never sought to have the voluntary dismissal set aside was not considered dispositive. LeCompte, 528 F.2d at 604. We hold that a party such as AWDI that obtains a voluntary dismissal of its claims subject to terms and conditions to which it consistently maintains its objections may challenge those terms and conditions as legally impermissible or as an abuse of discretion on appellate review. We consider it especially appropriate to address the challenge to the amount of the fees and expenses imposed here, because the amount had not been quantified at the time AWDI decided to go forward with the nontributary claim alone.