National Specialty Insurance Company v. AIG Domestic Claims Inc et al

Filing 32

ORDER granting 30 Motion to Dismiss Without Prejudice of its Remaining Cause of Action, dismissing the action without prejudice. Signed by Honorable Joseph F Anderson, Jr on 01/28/10.(bshr, )

IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF SOUTH CAROLINA C O L U M B IA DIVISION N a tio n a l Specialty Insurance Company, ) in d iv id u a lly and as assignee of Trans ) S e le c t d/b/a Select Transport Systems ) ) P l a in tif f , ) ) v. ) ) AIG Domestic Claims; and National ) U n io n Fire Insurance Company of ) P itts b u rg h , PA, ) ) D e f e n d a n ts . ) ) C /A No. 3:09-1183-JFA

ORDER

T h is matter comes before the court on plaintiff National Specialty Insurance C o m p a n y's ("National Specialty") motion to [dkt. # 30] voluntarily dismiss all remaining c la im s against National Union Fire Insurance Company of Pittsburgh, PA ("National U n io n " ). The motion has been fully briefed and the court finds that oral argument will not a ss ist the decisional process. For the reasons that follow, National Specialty's motion is g ra n te d . I. F ac t u al and Procedural Posture A t some point prior to 2004, Select Transportation Systems ("Select") purchased a c o n tra c t for liability insurance from National Specialty using the Jamison Group as its in s u ra n c e agent. Select thereafter purchased two trucks that were never added to the N a tio n a l Specialty policy. The trucks were involved in separate accidents on April 5, 2004 a n d October 30, 2004. National Specialty alleges that it became liable to indemnify Select

u n d e r Federal Motor Carrier Safety Administration regulations despite the trucks never being a d d e d to the policy. National Specialty settled the April 5, 2004 claim for $277,500.00, and th e October 30, 2004 claim for $105,574.62. Thereafter, National Specialty filed suit against th e Jamison Group asserting negligence and obtained a default judgment on April 29, 2008 in the amount of $417,434.56 in a suit captioned National Specialty Insurance Company, In d iv id u a lly and as assignee of Trans Select d/b/a Select Transportation Systems vs. The J a m is o n Group, Inc., and Marvin Williams, 2007-CP-23-3705. National Specialty filed the present case in the Richland County Court of Common P le a s on March 25, 2009 asserting claims for bad faith against National Specialty and AIG, a n d seeking declaratory relief to determine whether the errors and omissions insurance carrier o f the Jamison Group, National Union, provides coverage for the default judgment. The case w a s removed on the basis of diversity jurisdiction to United States District Court on May 5, 2 0 0 9 . In its answer, National Union admits the existence of the errors and omissions policy (th e "National Union policy"), while maintaining denial of coverage. AIG admits that it is th e authorized claims administrator for National Union. O n October 16, 2009, National Union and AIG Domestic Claims ("AIG") moved to d ism iss all claims against AIG, and the claim of bad faith against National Union [dkt. # 18]. T h e court heard argument on the motion on January 7, 2010, where the motion was taken u n d e r advisement. On January 14, 2010, the court granted the motion to dismiss, leaving o n ly the declaratory judgment action against National Union. On January 19, 2010, National

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S p e c ia lty moved to voluntarily dismiss this case without prejudice; National Union opposes v o lu n tar y dismissal. II. D is c u ss io n T h e general purpose of Rule 41 is to let a plaintiff start litigation over. See, e.g., M c C a ll -B e y v. Franzen, 777 F.2d 1178, 1184 (7th Cir. 1985), Moore's Federal Practice § 4 1 .1 0 (3d. 1997). Pursuant to Rule 41(a)(1)(A), a plaintiff may dismiss an action without a c o u rt order by filing a notice of dismissal before the defendant answers or files a motion for s u m m a ry judgment, or the plaintiff files a stipulation of dismissal signed by all parties who h a v e appeared. Fed. R. Civ. P. 41(a)(1)(A)(i)­(ii). In all other cases, including here, an ac tio n may be dismissed at the plaintiff's request only by court order and on terms the court c o n s id e rs proper. Fed. R. Civ. P. 41(a)(2). A plaintiff's motion under Rule 41(a)(2) for dismissal without prejudice "should not b e denied absent substantial prejudice to the defendant." Andes v. Versant Corp., 788 F.2d 1 0 3 3 , 1036 (4th Cir. 1986); see also Davis v. USX Corp., 819 F.2d 1270, 1273 (4th Cir. 1 9 8 7 ). Prejudice of a sort to weigh in favor of denying a motion to voluntarily dismiss has b e e n described as "plain legal prejudice." See Sox v. Estes Exp. Lines, 92 F.R.D. 71 (D .C .S .C . 1981), see also Moore's Federal Practice § 41.40[5][a]. The prospect of a second la w s u it, and its inherent delay, is not considered plain legal prejudice. Sox, 92 F.R.D. at 72. P la in legal prejudice is shown when actual legal rights are threatened or when monetary or o ther burdens appear to be extreme or unreasonable. See Moore's Federal Practice 41.40[6].

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A d d itio n a l factors commonly assessed when considering a Rule 41(a)(2) motion include: (1) th e extent to which litigation has progressed, including the defendant's effort and expenses to date, (2) the plaintiff's diligence in prosecuting the action or in bringing the motion, (3) th e duplicative expense of relitigation, and (4) the adequacy of plaintiff's explanation for the n ee d to dismiss. Canzater v. Meyers, 2009 WL 1951813 (D.S.C. 2009); see also Moore's F e d e ra l Practice 41.40[6]. National Union, as the only remaining defendant, argues that the court should consider (1 ) National Union's effort and expense in preparing for trial, (2) excessive delay and lack o f diligence on the part of National Specialty, (3) insufficient explanation of the need for v o lu n ta ry dismissal, and (4) the present stage of the litigation. National Union represents that it has expended approximately seventy hours defending th is litigation; it has filed (1) a notice of removal, (2) an answer, (3) initial disclosures, (4) n u m e ro u s discovery requests and responses, (5) and a motion to dismiss. National Union a lso alleges that National Specialty's lack of diligence in securing an assignment of rights f ro m the Jamison Group has substantially delayed the proceedings, as National Specialty did n o t attempt to acquire an assignment prior to October 2009, some seven months after filing its summons and complaint. Despite National Union's arguments, the court finds voluntary dismissal appropriate in this case. First, seventy hours spent defending this litigation, while hardly insignificant, c a n n o t be said to impose unreasonable or extreme costs on National Union. Second, while

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N a tio n a l Specialty's lack of diligence certainly played a role in delaying this litigation and c o u ld have been avoided, the confusion arising from the demise of the Jamison Group m o llif ie s the effect of National Speciality's lack of industry. Third, National Specialty does n o t appear to intend to harass National Union, but rather to refile when its claims are more d e v e lo p e d . Fourth, no summary judgment motions have yet been filed, the discovery period r u n s for another month, and trial is not scheduled to begin for a minimum of six months. A c c o rd in g ly, the stage of the litigation is not prejudicially advanced. The court notes that the National Specialty's failure to secure an assignment prompted i t s motion for voluntary dismissal, and that any costs incurred by National Union in d e f e n d in g the current litigation may, in the court's discretion, be awarded pursuant to Rule 4 1 (d )(1 ) upon National Specialty refiling any claims brought in this action. Fed. R. Civ. P. 4 1 (d ). III. C o n c lu s io n F o r the foregoing reasons, National Specialty's motion to voluntarily dismiss is g ra n te d [dkt. # 30], and the case is dismissed without prejudice. IT IS SO ORDERED.

Jan u ary 28, 2010 C o lu m b ia , South Carolina

J o s e p h F. Anderson, Jr. U n ite d States District Judge

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