Court Opinion

ID: 3000138
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:01:34.756443+00
Date Added: 2024-06-11T15:03:20.571859
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                        ____________

No. 05-4248
BONNIE M. WOJTAS and RICHARD J. WOJTAS,
                                        Plaintiffs-Appellants,
                              v.

CAPITAL GUARDIAN TRUST COMPANY now known as
CAPITAL BANK & TRUST COMPANY,
                                Defendant-Appellee.
                   ____________
          Appeal from the United States District Court
             for the Western District of Wisconsin.
            No. 05 C 317—John C. Shabaz, Judge.
                        ____________
    ARGUED MAY 1, 2006—DECIDED FEBRUARY 15, 2007
                    ____________

 Before EASTERBROOK, Chief Judge, and MANION and
SYKES, Circuit Judges.
  SYKES, Circuit Judge. Bonnie and Richard Wojtas
appeal the district court’s denial of their motion to volun-
tarily dismiss their suit against the former custodian of
Bonnie Wojtas’s IRA account, Capital Guardian Trust
(“Capital”), and the court’s order dismissing the suit with
prejudice on statute of limitations grounds. The district
court determined that permitting voluntary dismissal
without prejudice under Rule 41(a)(2) of the Federal
Rules of Civil Procedure would deprive Capital of its
statute of limitations defense under Wisconsin law, re-
2                                              No. 05-4248

sulting in plain legal prejudice. The court then granted
judgment on the pleadings dismissing the suit as time-
barred. We affirm.

                     I. Background
  Plaintiff Bonnie Wojtas was the owner of an Individual
Retirement Account (“IRA”), the custodian of which was
the defendant Capital. In April 1999 Wojtas instructed
Capital to roll over the investment holdings in her IRA
into a new IRA account managed by Insurance Planning &
Design, Inc. (“Insurance Planning”). When the funds were
received by Insurance Planning, they were illegally
converted by an employee of that company who was later
convicted of mail fraud. Wojtas and her husband (who
claims a marital property interest in the stolen funds) sued
Capital in state court asserting common law claims for
breach of fiduciary duty and negligence. The suit alleged
Capital had breached duties owed to the Wojtases when
it transferred the IRA funds without first verifying that
the successor custodian was qualified by the Internal
Revenue Service to serve in such capacity. Capital removed
the action to the United States District Court for the
Western District of Wisconsin on the basis of diversity
of citizenship.
  Capital answered and eventually moved for judgment
on the pleadings pursuant to Fed. R. Civ. P. 12(c), arguing
that the Wojtases’ claims were barred by Wisconsin’s
two-year statute of limitations governing claims for
breach of fiduciary duty. See WIS. STAT. § 893.57; Beloit
Liquidating Trust v. Grade, 2004 WI 39, ¶ 40, 270 Wis. 2d
356, ¶ 40, 677 N.W.2d 298, ¶ 40. Capital argued that the
negligence and fiduciary duty claims were premised upon
the same alleged breach of duty and both should be sub-
ject to the two-year limitations period applicable to breach
of fiduciary duty claims. The complaint was filed more
No. 05-4248                                                3

than two years after the Wojtases asserted they learned
of their injury, when the employee of Insurance Planning
was indicted. In the alternative Capital argued that the
complaint failed to state a claim upon which relief could
be granted because Capital had no legal duty to independ-
ently investigate the successor custodian the Wojtases
had themselves selected.
  The Wojtases’ response to Capital’s motion addressed
the failure-to-state-a-claim argument, but was utterly
silent regarding the statute of limitations. Instead, the
Wojtases moved for voluntary dismissal of their suit
pursuant to Fed. R. Civ. P. 41(a)(2), asking that their
claims be dismissed without prejudice so they could refile
the action in Illinois, where a longer statute of limitations
applies to claims for breach of fiduciary duty. See 735 ILL.
COMP. STAT. 5/13-205.
  In a decision addressing both motions, the district court
denied the motion for voluntary dismissal and granted
the motion for judgment on the pleadings. The court
held that the Wojtases’ lack of response to Capital’s
statute of limitations argument meant they had “implicitly
acquiesced in defendant’s position that . . . [the] claims
against defendant Capital are barred by the Wisconsin
statute of limitations.” The court then held that voluntary
dismissal without prejudice would deprive Capital of its
statute of limitations defense, a loss that would con-
stitute the type of “plain legal prejudice” that makes
voluntary dismissal improper under Rule 41(a)(2). The
court noted that under Wisconsin law, expiration of the
applicable statute of limitations operates to extinguish a
plaintiff ’s cause of action in its entirety, rather than
merely barring the remedy in Wisconsin such that refil-
ing the same claim in another jurisdiction would be
permitted. See WIS. STAT. § 893.05 (When the limitations
period expires, “the right is extinguished as well as the
remedy.”). Regarding the propriety of voluntary dismissal
4                                               No. 05-4248

in this situation, the district court distinguished this
court’s decision in Bolten v. Gen. Motors Corp., 180 F.2d
379 (7th Cir. 1950), and endorsed the reasoning of the
Fifth and Eighth Circuits in Phillips v. Ill. Cent. Gulf R.R.,
874 F.2d 984 (5th Cir. 1989), and Metro. Fed. Bank v. W.R.
Grace & Co., 999 F.2d 1257 (8th Cir. 1993).

                      II. Discussion
  The Wojtases argue on appeal that the district court
erred in dismissing their negligence claim on statute of
limitations grounds. They acknowledge that they never
responded to Capital’s statute of limitations argument,
but take the position that Capital’s motion was directed
only at their claim for breach of fiduciary duty and never
actually sought dismissal of their negligence claim. Thus,
their argument goes, the negligence claim remains fully
viable because it was filed within the six-year statute of
limitations applicable to damages claims for injury to real
or personal property. See WIS. STAT. § 893.52 (“An action,
not arising on contract, to recover damages for an injury
to real or personal property shall be commenced within
6 years after the cause of action accrues or be
barred . . . .”). This argument completely ignores the con-
tent of Capital’s motion for judgment on the pleadings.
  As we have noted, Capital’s Rule 12(c) motion unambigu-
ously sought dismissal of both the fiduciary duty and
negligence claims, arguing that they were premised on the
same alleged breach of duty and were governed by the two-
year statute of limitations applicable to claims of breach
of fiduciary duty. Capital maintained that the negligence
claim was nothing more than a reiteration of the fiduciary
duty claim with a negligence label attached to it. The
Wojtases’ failure to offer any opposition to Capital’s
statute of limitations argument constituted a waiver.
Cincinnati Ins. Co. v. E. Atl. Ins. Co., 260 F.3d 742, 747
No. 05-4248                                               5

(7th Cir. 2001) (A failure to oppose an argument permits
an inference of acquiescence and “acquiescence operates as
a waiver.”). The district court noted the waiver and
ordered that “Capital’s motion for judgment on the plead-
ings that plaintiffs’ claims are barred by the applicable
Wisconsin statute of limitations is granted.” (Emphasis
added.) This was not error. The Wojtases’ argument that
Capital’s motion addressed only the fiduciary duty claim
is meritless.
  The Wojtases also contend they were entitled to volun-
tarily dismiss their suit under Rule 41(a)(2). When sought
after a defendant has filed an answer, voluntary dismissal
may be obtained only “upon order of the court and upon
such terms and conditions as the court deems proper.”
FED. R. CIV. P. 41(a)(2). Motions for voluntary dismissal
under Rule 41(a)(2) are committed to the district
court’s discretion, but it is an abuse of discretion for the
district court to permit the voluntary dismissal of an
action where the defendant would suffer “plain legal
prejudice” as a result. United States v. Outboard Marine
Corp., 789 F.2d 497, 502 (7th Cir. 1986); Kovalic v. DEC
Int’l, Inc., 855 F.2d 471, 474 (7th Cir. 1988). The Wojtases
argue that the prospect of a new lawsuit in Illinois does
not constitute plain legal prejudice to Capital, citing
Bolten, 180 F.2d at 382, for the proposition that facing a
second suit in another state with a longer statute of
limitations is not the type of prejudice that justifies the
denial of a Rule 41 motion for voluntary dismissal.
  In Bolten, the plaintiff sought voluntary dismissal under
Rule 41(a)(2) after the defendant filed a motion for sum-
mary judgment based on the expiration of the applicable
Illinois statute of limitations. The plaintiff admitted that
he planned to refile the lawsuit in Missouri, which had
a longer limitations period. This court held that the
discretion of the district court under Rule 41(a)(2) was
limited to the “terms and conditions” of dismissal, not the
6                                               No. 05-4248

right of the plaintiff to voluntarily dismiss his suit. The
Bolten opinion noted that “the adjudication on [the limita-
tions] issue had nothing to do with the merits of the case
and meant nothing more than that the action could not
proceed in the Illinois jurisdiction,” 180 F.2d at 382 (citing
Titus et ux. v. Wells Fargo Bank & Union Trust Co., 134
F.2d 223, 224 (5th Cir. 1943) (“Limitation statutes oper-
ate on the remedy. They do not extinguish the right.”)).
The court concluded that “while the defendant by the
allowance of the plaintiff ’s motion may be subjected to the
annoyance and expense of a suit on the merits, it will not
suffer any legal prejudice.” Id.
  The Wojtases’ reliance on Bolten is misplaced. To the
extent Bolten held that voluntary dismissal under Rule
41(a)(2) is a matter of right and not discretion, the case
has been explicitly repudiated. J.R. Adney v. Miss. Lime
Co. of Mo., 241 F.2d 43, 45-46 (7th Cir. 1957); Grivas v.
Parmelee Transp. Co., 207 F.2d 334, 336 (7th Cir. 1953).
This court noted in Adney that Bolten’s interpretation of
Rule 41(a)(2) “was subsequently rejected in Grivas . . . ,
where the court stated that the allowance of a motion
to dismiss under Rule 41(a)(2) is not a matter of right,
but is discretionary with the District Court both as to
whether a dismissal shall be allowed as well as to the
terms and conditions to be imposed if allowed.” 241 F.2d
at 45-46.
  Moreover, as the district court correctly concluded,
Bolten is distinguishable. Wisconsin law conferred on
Capital a vested right—not present in Bolten—that would
have been rendered useless if voluntary dismissal without
prejudice was granted. In Wisconsin the expiration of the
statute of limitations does more than merely close the
door of the courthouse. “The expiration of the limitations
period extinguishes the cause of action of the potential
plaintiff and it also creates a right enjoyed by the would-be
No. 05-4248                                                  7

defendant to insist on that statutory bar.” Colby v. Colum-
bia County, 202 Wis. 2d 342, 350, 550 N.W.2d 124, 128
(1996); see also WIS. STAT. § 893.05 (“When the period
within which an action may be commenced on a Wiscon-
sin cause of action has expired, the right is extinguished
as well as the remedy.”). Capital, having acquired a right
to assert the statute of limitations bar by operation of
Wisconsin law, would suffer plain legal prejudice if the
Wojtases’ motion for voluntary dismissal were granted. See
Metro. Fed. Bank, 999 F.2d at 1263 (it is an “abuse of
discretion for a district court to find no legal prejudice, and
thus to grant voluntary dismissal, where the nonmoving
party has demonstrated a valid statute of limitations
defense”); see also Phillips, 874 F.2d at 987. The district
court did not abuse its discretion in denying the motion
for voluntary dismissal.
                                                  AFFIRMED.

A true Copy:
       Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit

                    USCA-02-C-0072—2-15-07