Court Opinion

ID: 9465007
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:33:11.988114+00
Date Added: 2024-06-11T17:38:55.686882
License: Public Domain

SWYGERT, Circuit Judge,
dissenting.
Merit Insurance Company filed this lawsuit even though the basis of the action, a contract of reinsurance between the parties, contained a provision requiring arbitration of any controversy arising out of the contract. Defendant Leatherby Insurance Company then filed a motion to stay the proceedings and compel arbitration. The district court granted Leatherby’s motion and ordered arbitration. Four months later, after arbitration had begun, Merit filed a notice of dismissal against Leatherby pursuant to Rule 41(a)(1).
A Rule 41(a)(1) dismissal operates to leave the parties as if the lawsuit had never been brought. Moore v. St. Louis Music Supply Co., 539 F.2d 1191, 1194 (8th Cir. 1976). Thus, in dismissing its complaint against Leatherby after the court ordered arbitration, Merit was obviously heeding the words of Oliver Goldsmith:
For he who fights and runs away May live to fight another day; But he who is in battle slain Can never rise to fight again.
Here, Merit lost a crucial battle — its ability to sue in court. Nonetheless, because of a technical rule, Merit is able to dismiss its lawsuit, thereby negating the district court’s ordering of the arbitration, and is given another opportunity to try its fortune in another forum. The majority by its holding condones the practice. I cannot.
Rule 1 of the Federal Rules of Civil Procedure requires that the rules “shall be construed to secure the just . . . determination of every action.” Madden v. Perry, 264 F.2d 169, 175 (7th Cir. 1959). See also Kenney v. California Tanker Co., 381 F.2d 775, 777 (3d Cir. 1967), cert. denied, 390 U.S. 904, 88 S.Ct. 817, 19 L.Ed.2d 870 (1968). The rules are not to be applied talismanically; rather they should be construed so as to accomplish their purpose. As Judge Pell aptly observed:
[T]he Federal Rules of Civil Procedure were not designed to codify the rigid and elaborate, and often stultifying, rules of common law procedure. The federal rules should have flexibility, and even though . . . the rules are meant to . be observed, their application in any case should be examined in the light of the accomplishment of their particular purpose as well as in the general context of securing a fair trial for all concerned in the quest for the truth.
Pittsburgh-Des Moines Steel v. Brookhaven Manor Water Co., 532 F.2d 572, 576 (7th Cir. 1976) (internal quotes omitted).
At common law a plaintiff had the unqualified right to dismiss his suit without prejudice at any time before final judgment was entered. See 5 J. Moore, Federal Practice ¶ 41.02[1] (2d ed. 1977). This practice resulted in abuse and inequity. Consequently, the Federal Rules of Civil Procedure restricted this right by providing that voluntary dismissal without order of the court could be had only “by filing notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever first occurs . . .Rule 41(a)(l)(i). The purpose of the rule is to fix a point at which the resources of the court and the defendant are sufficiently committed that dismiss*145al without preclusive consequences can no longer be had as of right. See, e. g., In re Piper Aircraft Distribution System Antitrust Litigation, 551 F.2d 213, 220 (8th Cir. 1977).
The majority correctly notes that Leath-erby filed neither an answer nor a motion for summary judgment. Thus, under a literal interpretation of Rule 41(a)(1), Merit could have dismissed its complaint. The error in the majority’s reasoning, I submit, is that it fails to consider the spirit of the rule and fails to consider whether strict application of Rule 41(a)(1) in this case effectuates the policy at which the Rule was aimed.
I believe the record is clear that the resources of the court and Leatherby were so committed that it would be inequitable to permit Merit to utilize Rule 41(a)(l)(i). •Even more compelling is that the district court entered a “judgment” ordering arbitration. To allow Merit to dismiss its case after entry of this judgment is to waste the court’s resources and energy and to negate completely the effect of the court’s ordering of arbitration.
The majority claims that Leatherby could have protected itself from a voluntary dismissal by filing an answer. True, Leather-by could have filed an answer and, as a part thereof, raised the arbitration provision as an affirmative defense. But that technique would not have protected Leatherby from the injury it was sustaining — an allegedly improvident lawsuit. Only by filing a motion to stay could Leatherby obtain an immediate suspension of the court proceedings. M. Domke, Commercial Arbitration § 18.03 at 168 (1968).
In sum, I would hold that the motion to stay the proceedings pending arbitration was tantamount to a motion for summary judgment. Labels ought not govern the result when the underlying meaning and effect of a procedure is different from what the label ordinarily denotes.
I would reverse and remand for further proceedings.