917 F.2d 27
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.
Carmen CERCIELLO, Lena Cerciello, J. Kenneth Ryan, Barbara
A. Ryan, Sunbelt NCK, Inc., Sunbelt LAC, Inc.,
BLACKBURN TRUCK LINES HOLDING COMPANY, INC., et al., Defendants,
Bobby J. Burns, Joyce Burns, Defendants-Appellants.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Oct. 1, 1990.
Decided Oct. 23, 1990.
Appeal from the United States District Court for the Central District of California; William D. Keller, District Judge, Presiding.
Before ALARCON and WILLIAM A. NORRIS, Circuit Judges, and MARSH* District Judge.
Bobby Burns, a defendant in the district court, appeals from the denial of his motion to condition the dismissal of the case without prejudice on payment of a portion of his attorneys's fees. We affirm.
I. THE FACTS
Bobby Burns, Carmen Cerciello, and several other parties owned various trucking companies and related enterprises. In October of 1984, they decided to merge their companies, which would then operate under the umbrella of a single holding company. As part of the merger, Burns sold his stock in the holding company to the Trustee of the holding company's Employee Stock Ownership Plan for $1,500,000. Burns received $750,000 in cash and a promissory note for the balance. The note was guaranteed by the various companies owned by the holding company, Cerciello, and the other parties to the merger.
The merger was less than successful. On August 1, 1986, Cerciello and other parties to the merger (collectively, Cerciello) filed suit in the U.S. District Court for the Central District of California seeking rescission and damages. The suit alleged fraud, securities violations, breach of contract, and other courses of action. The district court had jurisdiction under 28 U.S.C. Sec. 1331 and the doctrine of pendent jurisdiction.
Several depositions were taken, documents were exchanged, and the case was set for trial in July, 1987. Shortly before the trial date, Cerciello advised the court that a settlement had been reached and the case was taken off calendar.
Meanwhile, in July, 1987, Burns had filed a separate action in state court. The basis of this action was that Cerciello, the other parties to the merger, and the various companies owned by the holding company had breached their guarantee on the promissory note. This action has involved extensive pre-trial activity. Burns has filed copies of depositions taken in the federal action with the state court. He has also asked the court to take notice of a number of the pleadings in the federal action.
The settlement of the federal action was not immediately consummated. During a status conference on November 3, 1988, the court invited Burns to join his state court claims as part of the district court action. Burns declined. Instead, he has continued to litigate this matter in other courts. He filed additional actions in both federal and state courts in July, 1989. These actions are based on the same claims as set forth in the state court actions filed in July 1987.
In March, 1989, Cerciello reached a settlement with all parties but Burns. Cerciello moved for dismissal without prejudice of the district court action against Burns. The court granted Cerciello's motion subject to the stipulation that the discovery in this action could be used in other litigation. The court denied Burns' motion that the dismissal be conditioned on payment of his attorneys' fees.
Burns appeals from the denial of attorneys' fees. We have jurisdiction under 28 U.S.C. Sec. 1291.
II. THE STANDARD OF REVIEW
Rule 41 of the Federal Rules of Civil Procedure governs dismissal of an action by the plaintiff. Rule 41(a)(2) provides that "an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper." The purpose of the rule is "to permit a plaintiff to dismiss an action without prejudice so long as the defendant will not be prejudiced or unfairly affected by dismissal." Stevedoring Services v. Armilla Int'l B.V., 889 F.2d 919, 921 (9th Cir.1989) (citations omitted).
The decision as to the terms and conditions that should be imposed, if any, is within the discretion of the trial court. Sams v. Beech Aircraft Corp., 625 F.2d 273, 277 (9th Cir.1980).
We review the district court's decision for abuse of discretion. Stevedoring Services, 889 F.2d at 921.
III. FED.R.CIV.P. 41(a)(2)
On its face, Rule 41(a)(2) grants broad discretion to the trial court. The Rule does not require the district court to impose any terms or conditions. Nor does it limit the terms or conditions that may be imposed.
Courts often condition a dismissal without prejudice on the plaintiff's payment of the defendant's costs, including attorneys' fees. See 5 J. Moore, J. Lucas & J. Wicker, Moore's Federal Practice p 41.06 (2d ed. 1988). But such payment is not a prerequisite for dismissal without prejudice. See Stevedoring Services v. Armilla Int'l B.V., 889 F.2d 919, 921 (9th Cir.1989).
Some courts have recognized that there are circumstances in which such an award would be inappropriate. See 5 J. Moore, J. Lucas & J. Wicker, Moore's Federal Practice, supra. Other courts have specifically held that the payment of attorneys' fees is not required when a plaintiff seeks voluntary dismissal. See Stevedoring Services, 889 F.2d at 921 (citing Puerto Rico Maritime Shipping Auth. v. Leith, 668 F.2d 46 (1st Cir.1981)).
We have also recognized that it is not an abuse of the district court's discretion to deny attorneys' fees for particular reasons. In Stevedoring Services v. Armilla Int'l B.V., 889 F.2d 919 (9th Cir.1989), we considered a district court decision to dismiss without prejudice without payment of attorneys' fees. The district court reasoned that the defendant was not entitled to legal fees because (1) the plaintiff had raised a substantial legal question which, upon adverse determination, was dispositive of the action, (2) the plaintiff had acted in good faith with a realistic chance of success, (3) the imposition of costs and fees might discourage early dismissal, (4) it would be anomalous to award fees upon dismissal in a case where the defendants would not be awarded costs and fees if they prevailed at trial. Id. at 920-921. We found that the first consideration, alone, was sufficient to support the district court's decision and did not address the additional grounds. Id. at 922.
Burns makes three principal arguments in support of his contention that the district court abused its discretion in denying an award of attorneys' fees. First, he argues that the subsequent actions can not be parallel proceedings because they plead different causes of action. Next, he argues that he has asked only for expenses that were the result of the federal action and which will not be useful in the subsequent proceedings. Finally, he argues that even the material which could be useful may become irrelevant because rulings by the courts hearing the subsequent actions may prevent him from pursuing his claims.
The first argument, that the material from the federal action can not be useful to the later proceedings because they are based on different grounds, is unpersuasive. The original federal action and all three of Burns' subsequent actions arise from the same transaction and involve the same parties. The fact that the legal theory upon which Cerciello seeks relief is different from the theory upon which Burns seeks relief does not demonstrate that the factual issues which determine the actions are not the same.
A reading of the complaint in the state court action reveals that it concerns the same transaction and involves the same questions at issue in this matter. Questions as to the validity of the original merger, the representations made by the parties to the transaction, the terms of the transaction, the intent of the parties, are common to each case.
It is not unusual in litigation for adverse parties to see the events of the past from different perspectives. Here, Cerciello sees them as a basis for avoiding the merger contract and not performing on his guarantee to Burns. Burns sees them as a basis for requiring Cerciello to honor the contract and to perform on the guarantee.
The district court is far more familiar with this case than we are. It has made a specific finding that the issues are exactly the same in each action. Thus, the work product of Burns' attorneys is likely to be useful to him in the state court action. Accordingly, there is no unfairness in denying attorneys' fees for work performed in this action.
Next, Burns argues that he has only asked the district court for expenses for activities that would not be transferable to the state court action. He points out that he has only requested reimbursement for expenses incurred prior to filing the state court action. He emphasizes that he has asked only for reimbursement for such things as meetings with co-counsel, review of status conference reports, work performed in complying with local rules of the district court, and preparing witness lists for the federal trial.
But this argument misses the point. In any litigation, there are procedural requirements and pre-trial activities. These may not be directly linked to any particular finding, but they advance the litigation and the determination of the factual issues.
Rule 41(a)(2) does not impose a duty on the district courts to comb through a defendant's legal bills, isolating those that are the result of unique federal requirements or specific to certain proceedings, and to award those expenses to the defendant. Instead, Rule 41(a)(2) is designed to allow the district court to "exercise its broad equitable discretion ... to weigh the relevant equities and do justice between the parties in each case." McCants v. Ford Motor Co., Inc., 781 F.2d 855, 857 (11th Cir.1986).
In this case, no unfairness exists. Like the plaintiff in Stevedoring Services, Cerciello raised legitimate questions as to the validity of the merger agreement. Though the settlement of the federal action has, to a large degree, resolved these issues as far as Cerciello is concerned, they remain in contention in Burns' actions. The proceedings in the federal court have advanced the resolution of those issues, providing Burns with material which is likely to be useful in the subsequent actions he has filed. Had Cerciello not brought his action, those issues would have been considered in Burns' actions. Thus, Burns' costs have not been "wasted." Compare American Cyanamid Co. v. McGhee, 317 F.2d 295 (5th Cir.1963) (dismissal without prejudice conditioned on payment of defendant's attorneys' fees prior to subsequent action) with Davis v. USX Corp., 819 F.2d 1270, 1276 (4th Cir.1987) (abuse of discretion to condition dismissal without prejudice on payment of defendant's attorneys' fees when "the work and resources expended ... will be easily carried over to litigation ... in state court").
Moreover, it is Burns who has created the situation in which duplicative actions are proceeding. The district court found that the state court action raised "the exact same issues" as the federal claim and invited him to join his claims in the federal action. He declined and chose to pursue those claims elsewhere.
Finally, Burns argues that because decisions made by the courts in which his actions have been filed may prevent him from obtaining relief, the material obtained in the federal action may become useless to him. The fact that he may lose on the merits of his claim, or that it may be dismissed on jurisdictional grounds, does not demonstrate that the district court erred in concluding that material obtained in the federal action might assist him in pursuing those claims. The record shows that discovery materials obtained by Burns' attorneys in the federal action have already been used in the state court action.
The plaintiffs in this case raised substantial issues of law in their original claims. As a party to the original transaction, Burns was necessarily joined in this action. Not only did Cerciello have a realistic chance of prevailing on his claim, but the case was settled with the other parties.
Moreover, this settlement obviates Cerciello's need to pursue this action. Thus, it appears that he did not seek dismissal to pursue the action elsewhere or to prejudice Burns. Instead, it appears to be simply an attempt to end the litigation.
Finally, this is not a case where the plaintiff sought a dismissal in order to vex or harass the defendant with later actions. It is the defendant who chose to split the resolution of this situation between various courts.
The district court did not abuse its discretion in refusing to condition the dismissal without prejudice on payment of Burns' attorneys' fees. AFFIRMED.
* Honorable Malcolm F. Marsh, United States District Judge for the District of Oregon, sitting by designation.
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3