Can IV Packard Square, LLC v. Schubiner

Filing 18

ORDER granting 14 Motion for Voluntary Dismissal Without Prejudice. Signed by District Judge David M. Lawson. (DTof)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
CAN IV PACKARD SQUARE, LLC,
Plaintiff,
v.

Case Number 18-11404
Honorable David M. Lawson

CRAIG SCHUBINER,
Defendant.
______________________________________/
OPINION AND ORDER GRANTING PLAINTIFF’S MOTION FOR VOLUNTARY
DISMISSAL, AND DISMISSING CASE WITHOUT PREJUDICE
On May 4, 2018, the plaintiff entity filed its complaint seeking to enforce an agreement by
the defendant to act as guarantor for a construction loan in the amount of approximately $54 million.
However, the plaintiff did not allege in the complaint any facts about the identity or citizenship of
any of the members of the plaintiff LLC entity. After the Court issued a show cause order, the
plaintiff sought to file that information under seal, contending that it feared that the defendant would
misuse that information for improper purposes. The Court did not find adequate cause to seal the
basic jurisdictional facts. Thereafter, the plaintiff opted to terminate the lawsuit, rather than disclose
the information, and has filed a motion for voluntary dismissal without prejudice. The defendant,
who has filed an answer to the complaint, opposes the motion and asks that the dismissal be with
prejudice, and also seeks attorney’s fees.
A plaintiff may dismiss his case on his own before a defendant becomes involved in the
lawsuit. Fed. R. Civ. P. 41(a)(1)(A)(i). But once a defendant files an answer or a motion for
summary judgment, the plaintiff may dismiss his case only by court order, and only “on terms that
the court considers proper.” Fed. R. Civ. P. 41(a)(2).

Defendant Schubiner has no quarrel with a dismissal, but he is not content to let the plaintiff
simply walk away. He says that the plaintiff has caused excessive delay, and that the defendant has
responded to two motions and incurred costs and attorney’s fees. Those circumstances, says the
defendant, justify dismissal that cannot be revisited and compensation for legal expenses.
The Court does not see it that way. This lawsuit has been pending for about ten weeks. The
motions the defendant choose to oppose — a motion to seal and a motion for voluntary dismissal
— did not require much effort. One might question that they even required a response, except
perhaps for tactical reasons.
A court has the discretion to grant a motion for voluntary dismissal if the defendant would
not suffer “‘plain legal prejudice’ as a result of a dismissal without prejudice, as opposed to facing
the mere prospect of a second lawsuit.” Grover v. Eli Lilly & Co., 33 F.3d 716, 718 (6th Cir. 1994)
(quoting Cone v. W. Virginia Pulp & Paper Co., 330 U.S. 212, 217 (1947)). When assessing
potential prejudice, courts generally will consider the “defendant’s effort and expense of preparation
for trial, excessive delay and lack of diligence on the part of the plaintiff in prosecuting the action,
insufficient explanation for the need to take a dismissal, and whether a motion for summary
judgment has been filed by the defendant.” Id. at 718 (citing Kovalic v. DEC Int’l, Inc., 855 F.2d
471, 474 (7th Cir. 1988)). These factors are merely a guide, and the plaintiff need not prevail on all
of them; nor is the district court required to make any findings on the sufficiency of the plaintiff’s
explanation for dismissal. Rosenthal v. Bridgestone/Firestone, 217 F. App’x 498, 502 (6th Cir.
2007) (citing Kovalic, 855 F.2d at 474 (quotation marks omitted)).
Taken literally, the first factor favors the plaintiff, since the defendant incurred no expenses
“prepar[ing] for trial.” There has been no scheduling order entered in the case, and no discovery has
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occurred. Contrary to the defendant’s assertion, there has been no dilatory action by the plaintiff.
The activity in this case has involved a jurisdictional question and the plaintiff’s apparent struggle
over revealing the identities of the LLC members behind the lawsuit. Although the cause of the
plaintiff’s angst over revelation is not readily apparent, the time taken to address the issue can hardly
be characterized as excessive delay. There has been no motion for summary judgment or motion of
any kind filed by the defendant.
A court’s primary consideration in ruling on a motion for voluntary dismissal under Rule
41(a)(2) motion is to protect the nonmoving party from unfair treatment. Grover, 33 F.3d at 718.
When a defendant claims unfairness over the expense of defending the lawsuit, it is useful to look
into why the expense was incurred. And as noted above, the defendant incurred attorney’s fees over
matters of procedural fencing, which likely could have been avoided.
Finally, the Court may require payment of costs or attorney’s fees upon dismissal of a case
under Rule 41 if appropriate. Smoot v. Fox, 353 F.2d 830, 833 (6th Cir. 1965). And occasionally,
“without prejudice” dismissals are accompanied by an award of costs. Ibid. But “no circuit court
has held that such costs are mandatory.” DWG Corp. v. Granada Investments, Inc., 962 F.2d 1201,
1202 (6th Cir. 1992).
In determining whether payment of costs or fees should be a condition of dismissal without
prejudice, courts generally consider: “(1) whether the plaintiff acted in good faith in bringing and
prosecuting the litigation; (2) whether the defendant incurred substantial expenses in defending the
action; (3) whether the plaintiff delayed in bringing the motion to dismiss; and (4) whether the work
performed can be used in a subsequently filed action.” Matthews v. General RV Center, Inc., 2017
WL 411354, at *1 (E.D. Mich. Jan. 31, 2017) (citations omitted). As discussed above, these factors,
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except the last, favor the plaintiff. It is unlikely that the work that defendant’s attorney put in this
case will serve his client at a later time. But as should be apparent by now, most of that work could
have been avoided by prudent litigation practice. Certainly, the defendant had a right to aggressively
pursue a dismissal of the case against him. But choosing that course, when another option was
available, places the responsibility for the costs of that choice squarely upon him, where the
American Rule assigns it. See Michigan Flyer, LLC v. Wayne Cty. Airport Auth., 162 F. Supp. 3d
584, 586-87 (E.D. Mich. 2016), aff’d, 860 F.3d 425 (6th Cir. 2017) (noting that the “American Rule”
“usually governs litigation in the United States,” and requires that “‘litigants must pay their own
attorney’s fees’”) (quoting Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 415 (1978)).
For the reasons discussed above, the “proper” “terms” for cessation of the case against the
defendant include a “without prejudice” designation and no award of costs or expenses.
Accordingly, it is ORDERED that the plaintiff’s motion for voluntary dismissal [dkt. #14]
is GRANTED.
It is further ORDERED that the complaint is DISMISSED WITHOUT PREJUDICE.
s/David M. Lawson
DAVID M. LAWSON
United States District Judge
Dated: July 25, 2018
PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or
first class U.S. mail on July 25, 2018.
s/Deborah Tofil
DEBORAH TOFIL

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