Court Opinion

ID: 4494025
Source: CourtListenerOpinion
Date Created: 2020-01-22 18:00:15.76213+00
Date Added: 2024-06-11T08:48:34.416815
License: Public Domain

PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT
               _______________

                     No. 18-3060
                   ______________

   FRANK A. PAPERA; CHARLOTTE E. PAPERA;
     FRANK A. PAPERA REVOCABLE TRUST,
                                   Appellants

                          v.

PENNSYLVANIA QUARRIED BLUESTONE COMPANY;
    F. CONRAD AND SONS; FRED D. CONRAD;
            THERESA A. CONRAD
               _______________

    On Appeal from the United States District Court
        for the Middle District of Pennsylvania
               (D.C. No. 3:16-cv-02205)
     District Judge: Honorable James M. Munley
                  _______________

     Submitted Under Third Circuit L.A.R. 34.1(a)
               on September 12, 2019

    Before: HARDIMAN, GREENAWAY, JR., and
              BIBAS, Circuit Judges.

               (Filed: January 22, 2020)
                      _______________

Harry T. Coleman
41 North Main Street
Suite 316
Carbondale, PA 18407
       Counsel for Appellants

John J. Minora
Minora Minora Colbassani Ratchford Krowiak & Mattioli
700 Vine Street
Scranton, PA 18510
       Counsel for Appellees
                     _______________

                 OPINION OF THE COURT
                     _______________

BIBAS, Circuit Judge.
   We construe ambiguities in dismissal orders against claim
preclusion. So we will not read a dismissal order as dismissing
involuntarily, or voluntarily with prejudice, unless it says so
clearly and expressly.
    Frank and Charlotte Papera thought that they had reached a
settlement with the defendants, so they sought a dismissal of
their lawsuit. The District Court entered a dismissal order. It
gave the parties sixty days to either send the Court a settlement
agreement for its approval or move to reopen the case. But the
parties did neither. After this deadline passed, the Court simply
closed the suit.

                                2
    When the settlement discussions fell through, the Paperas
refiled the same complaint. The second suit came to the same
district judge, who dismissed it based on claim preclusion. But
claim preclusion was inapt because the Court never clearly
stated that it was dismissing involuntarily or voluntarily with
prejudice. So we will vacate and remand.
                      I. BACKGROUND

    The Paperas own a quarry. They agreed to let the Pennsyl-
vania Quarried Bluestone Company mine the property. Ac-
cording to the Paperas, they repeatedly asked the Company to
clean up the property, remove abandoned equipment, and pay
for the mined stone. The Company never did. So the Paperas
sued it and its owners in the U.S. District Court for the Middle
District of Pennsylvania.
    The District Court sent the case to mediation. In May 2016,
the Paperas returned with good news, reporting that the parties
had “resolved [the case] amicably.” App. 38. They asked the
Court for “a sixty (60) day Order of Dismissal.” Id. And they
promised to follow up with a “Remediation Agreement,”
which they would then ask the Court to approve. Id.
    So the Court filed an order tentatively dismissing the case.
The May 2016 Order was two sentences long, saying only that
the case is dismissed and the parties had sixty days to finalize
the settlement. Papera v. Pa. Quarried Bluestone Co., No.
3:15-cv-00476, ECF No. 18 (M.D. Pa. May 10, 2016). For
more information, the parties had to read the order’s minute
entry: The case was dismissed “without prejudice.” App. 4
(ECF No. 18). The parties could move “to reinstate the action

                               3
if settlement [wa]s not consummated.” Id. To do so, they would
have to show good cause within sixty days. Id.
   But the settlement apparently fell through. The District
Court never got any settlement agreement. After the sixty-day
period elapsed, the Court did not file an order dismissing with
prejudice.
    In September 2016, nearly four months after the dismissal
order, the Paperas asked for a conference call “regarding the
future status of the litigation.” Papera v. Pa. Quarried Blue-
stone Co., No. 3:16-cv-2205, 2018 WL 4051748, at *1 (M.D.
Pa. Aug. 24, 2018). On that call, the Court reportedly told the
Paperas that “it no longer had jurisdiction over the case” and
that it had administratively closed it. Id.; Appellants’ Br. 20.
We have no transcript of this call.
    A month later, the Paperas filed a new case in the same Dis-
trict Court. The new complaint was almost identical to the old
one. This case was characterized as a related case to the origi-
nal suit, so it was assigned to the same judge.
    Pennsylvania Quarried Bluestone answered the complaint
and, after discovery, moved to dismiss it. The District Court
properly treated this motion as a motion for summary judgment
and, in August 2018, granted it based on claim preclusion. And
it declined to reopen the May 2016 Order under Federal Rule
of Civil Procedure 60(b) because the Paperas had not suffered
“a gross injustice.” Papera, 2018 WL 4051748, at *4.
   The Paperas timely appealed the grant of summary judg-
ment. The District Court had diversity jurisdiction under 28
U.S.C. § 1332(a)(1), and we have jurisdiction under § 1291. We

                               4
review the District Court’s grant of summary judgment de
novo. Sheridan v. NGK Metals Corp., 609 F.3d 239, 250 n.12
(3d Cir. 2010).
II. BECAUSE THE ORDER DISMISSING THE PAPERAS’ FIRST
 SUIT DID NOT CLEARLY SAY THAT THE DISMISSAL WAS
     INVOLUNTARY OR WITH PREJUDICE, IT DID NOT
            PRECLUDE THEIR SECOND SUIT

    The Paperas challenge the District Court’s holding that
claim preclusion bars their second suit. Although some dismis-
sals preclude relitigating claims, the Paperas argue that theirs
did not. To assess their argument, we must figure out what kind
of dismissal the District Court entered. Dismissals can be either
voluntary or involuntary. Fed R. Civ. P. 41(a), (b). The kind of
dismissal bears on whether it was with prejudice. And the prej-
udicial effect of a dismissal guides our claim-preclusion anal-
ysis.
   A. The voluntariness of a dismissal bears on whether it
      is with prejudice

    To assess whether a dismissal was with prejudice, we must
first ask whether it was voluntary or involuntary. The default
rule is different for each type.
    For voluntary dismissals, the default rule is that a plaintiff’s
first dismissal is without prejudice. Fed. R. Civ. P. 41(a). To
overcome that default rule, the plaintiff’s notice of dismissal or
the district court’s order entering the voluntary dismissal must
“state[ ] otherwise.” Id.

                                 5
    For involuntary dismissals, the default rule is the opposite.
“Unless the dismissal order states otherwise,” it “operates as
an adjudication on the merits” and so (as discussed below) is
with prejudice. Fed. R. Civ. P. 41(b). The default rule applies
to, among other things, dismissals for failure to prosecute or to
comply with a court order or rules. Id. The rule does carve out
exceptions for dismissals based on venue, jurisdiction, or fail-
ure to join indispensable parties. Id. And courts may carve out
other exceptions to this default rule. Semtek Int’l Inc. v. Lock-
heed Martin Corp., 531 U.S. 497, 503 (2001). Setting those
aside, involuntary dismissals are presumptively with prejudice.
   B. For a dismissal to preclude claims, it must be with
      prejudice

    Only a prior dismissal with prejudice (whether voluntary or
involuntary) precludes later relitigating the dismissed claims.
Claim preclusion is traditionally said to require a “judgment on
the merits.” United States v. Athlone Indus., Inc., 746 F.2d 977,
983 (3d Cir. 1984). But that term of art is confusing because it
does not require an actual verdict or summary judgment; a
sanction for failure to follow court rules, for instance, can qual-
ify too. See Fed. R. Civ. P. 41(b); Semtek, 531 U.S. at 502. The
on-the-merits requirement is better understood in terms of its
functional equivalent: whether a dismissal is with prejudice.
Semtek, 531 U.S. at 505–06; 9 Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure § 2373, at 739–43
& n.4 (3d ed. 2008) (“ ‘[W]ith prejudice” is an acceptable form
of shorthand for ‘an adjudication upon the merits.’ ”).
    A dismissal with prejudice “operates as an adjudication on
the merits,” so it ordinarily precludes future claims. Landon v.

                                6
Hunt, 977 F.2d 829, 832–33 (3d Cir. 1992); accord Lawlor v.
Nat’l Screen Serv. Corp., 349 U.S. 322, 327 (1955). Con-
versely, a “ ‘[d]ismissal . . . without prejudice’ is a dismissal that
does not ‘operat[e] as an adjudication upon the merits,’ Rule
41(a)(1), and thus does not have a [claim-preclusive] effect.”
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 396 (1990);
see Semtek, 531 U.S. at 505.
   C. We construe ambiguities in dismissals against claim
      preclusion

    When we are uncertain what kind of dismissal the district
court entered, we construe ambiguities against claim preclu-
sion. We do so because a dismissal with prejudice “is a severe
and disfavored remedy” that is “only appropriate in limited cir-
cumstances.” Alvin v. Suzuki, 227 F.3d 107, 122 (3d Cir. 2000);
Emerson v. Thiel Coll., 296 F.3d 184, 190 (3d Cir. 2002). And
the party asserting claim preclusion bears the burden of prov-
ing all the elements. Taylor v. Sturgell, 553 U.S. 880, 907
(2008). That includes proving that a dismissal was with preju-
dice and so can preclude claims.
    To implement that burden of proof, we adopt two clear-
statement rules: For purposes of claim preclusion, we will con-
strue unclear dismissal orders as voluntary rather than involun-
tary. And we will construe unclear first voluntary dismissals as
without prejudice, so they will not preclude relitigating the
same claims. Only a clear and explicit statement will suffice to
make a dismissal involuntary, or voluntary with prejudice.
   Our sister circuits apply similar clear-statement rules. Take
the Fourth Circuit’s decision in Choice Hotels International,

                                  7
Incorporated v. Goodwin & Boone, 11 F.3d 469 (4th Cir.
1993). There, the parties had reached a “tentative settlement”
and sought a voluntary dismissal. Id. at 470. So the district
court conditionally dismissed “without prejudice,” requiring
the parties “to move for good cause within 30 days to reopen
this action if settlement is not consummated.” Id. The plaintiff
never submitted a settlement agreement but refiled the same
suit after the thirty days expired. Id.
    The Fourth Circuit treated the first order as a dismissal
without prejudice because “nowhere did the [first] dismissal
order state explicitly that the dismissal would be prejudicial if
its condition was not satisfied.” Id. at 473. It adopted a clear-
statement rule: Unless a district court “explicit[ly] and
clear[ly]” states that “its voluntary dismissal is prejudicial if its
stated conditions are not met,” courts must treat its dismissal
as without prejudice. Id. at 471. That clear-statement rule, it
reasoned, “promotes our strong preference that cases be de-
cided on their merits.” Id. at 472. It also gives plaintiffs fair
warning before inflicting the “drastic consequence” of cutting
off litigation. Id.
    The Fourth Circuit built its clear-statement rule on the de-
cisions of several other circuits. See, e.g., Plumberman, Inc. v.
Urban Sys. Dev. Corp., 605 F.2d 161, 162 (5th Cir. 1979) (per
curiam) (“Because the [earlier dismissal] order did not other-
wise specify, the dismissal is without prejudice. Consequently
it can have no res judicata effect.”); see also McKenzie v. Dav-
enport-Harris Funeral Home, 834 F.2d 930, 934 (11th Cir.
1987) (holding that a voluntary stipulation of dismissal “must

                                 8
be considered without prejudice because it was not expressly
provided for in the document”). We now join these courts.
   D. The District Court’s order did not explicitly state
      that its voluntary dismissal was or would become a
      dismissal with prejudice

    The clear-statement rules resolve this case. The Paperas
told the District Court that the parties had reached a settlement
and asked for an order of dismissal. At the parties’ request, the
Court entered the May 2016 Order. So this was a first voluntary
dismissal under Rule 41(a). And the Court did not make clear
that the dismissal of the first suit was involuntary or with prej-
udice. True, the Court may have meant to dismiss the suit in-
voluntarily with prejudice for failure to prosecute or comply
with its orders. After all, the Paperas did not present a settle-
ment agreement within the agreed-upon sixty days. But the Or-
der here did not say that its dismissal was involuntary. Nor did
the motion or order specify that any voluntary dismissal would
become one with prejudice.
    Nothing else in the record clearly or explicitly specifies that
this dismissal was either involuntary or with prejudice. The
Court did not, for instance, file a separate order dismissing for
failure to prosecute or for another ground listed in Rule 41(b).
Nor did it involuntarily dismiss during the conference call. It
asserted simply that “it no longer had jurisdiction over the
case” because of the May 2016 Order. Papera, 2018 WL
4051748, at *1. Nor did it do so by closing the case. Adminis-
trative closure merely clears a docket. But it is not a dismissal
because courts retain jurisdiction and can reopen

                                9
administratively closed cases. See, e.g., Papotto v. Hartford
Life & Accident Ins. Co., 731 F.3d 265, 275 (3d Cir. 2013).
    In sum, a silent or unclear record will not do. The Paperas,
like the plaintiff in Choice Hotels, failed to move to reopen
during the specified period for doing so. But nothing in the rec-
ord warned them that the resulting dismissal would preclude
relitigating their claims. And because this was their first dis-
missal, Rule 41(a) tells us that it was without prejudice. Thus,
it does not preclude their second suit.
                           *****
    Because the Order dismissing the first suit contained no
clear, explicit statement that it was an involuntary dismissal or
a dismissal with prejudice, we read it as a voluntary dismissal
without prejudice. So it could not preclude this suit. We will
thus vacate and remand for further proceedings.

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