Sunday, June 17, 2018

Hold the Phone

Orange is for voluntary dismissal . . .
because we say so

Federal National Mortgage Association v. Johnston, 2018 VT 51

By Elizabeth Kruska

I’m writing this post while I’m on hold. Fortunately for me (and by extension, for you, gentle reader), this particular company with whom I’m on hold has something better than hold music: hold facts! Since I’ve been on hold I’ve learned about the origin of Flag Day, the exact time of the summer solstice this year in the Central Time Zone, fireworks injuries, and the meanings of various colors of roses during the Victorian Era.

Here’s the scoop in this case. Federal National Mortgage Association (let’s call them “the Bank” because that’s loads easier) owned a particular parcel of property in Rutland, which was mortgaged by the defendants, the Johnstons. Reading between the lines, it would appear the Johnstons got behind in making their payments, and in June 2016, the Bank filed an eviction action. There was an issue with service (that issue being “service did not happen”), and as a result the action was dismissed in November of 2016.

In March 2017, the Bank filed another eviction action, alleging that the Johnstons were the former mortgagors and current occupants of the property. The Johnstons didn’t answer the complaint right away, and in June 2017 (possibly on Flag Day, but the opinion doesn’t mention this), the Bank moved to dismiss the action. The court entered a dismissal without prejudice.

On July 10, 2017, the Johnstons filed an appearance and answer in the case, and argued the case should have been dismissed with prejudice because between suit 1 and the end of suit two, the Bank actually sold the property in a foreclosure sale. The court ruled that the dismissal of suit two was without prejudice because it was voluntarily dismissed by the Bank. 

The Johnstons appeal, and SCOV affirms.

First of all, SCOV reviews procedural rules de novo, or anew, on appeal. The Bank moved to dismiss suit two voluntarily pursuant to V.R.C.P. 41. That rule says that if a plaintiff files a civil action and then asks for it to be dismissed before the defendant answers, the court shall dismiss the action without an order of the court. Think about why this makes sense. Everyone filing in civil court is there voluntarily. Nobody forces a plaintiff to file suit against anyone else. If a plaintiff realizes, for whatever reason, that it makes sense to dismiss, nobody’s forcing the plaintiff to stick around if it’s so early in the case that there hasn’t even been an answer to the complaint yet. I don’t know if the Victorians had designated a rose color for “voluntary dismissal of a civil action.” I’m going to pick orange as the right color rose for this, if no reason other than orange roses are lovely.

The Johnstons argued in their July 2017 filing that since there had been a prior dismissal, that under the “two-dismissal rule” the second one should be with prejudice. SCOV disagrees and points out this wasn’t ripe. Under V.R.C.P 41, if a plaintiff files an action that is dismissed, that dismissal acts as an adjudication on the merits if the plaintiff subsequently files the same action. Meaning, a plaintiff doesn’t get to file and dismiss the same action repeatedly.

But, if the dismissal happens completely voluntarily—before the defendant gets to answer, the dismissal is without prejudice and doesn’t act to preclude a subsequent suit based on the same facts. Because of the way this unfolded, the court determined, and SCOV determines the two-dismissal argument wasn’t ripe to be heard. There would need to be a third case filed by the Bank to get to the point of determining whether that case should be dismissed with prejudice. It’s also a little unclear whether the November 2016 suit’s dismissal would actually operate to preclude a second action, but that’s better left for a different day.

And speaking of different days, I just learned via “hold facts” that the exact time of the Summer Solstice in the Central Time Zone this year is 5:07 a.m. So, you know . . . . Use that as you will.

Anyway, since the defendants answered the March 2017 suit about four months after the case was filed, and in the month following the dismissal. The court didn’t have an open case at this point, and has no authority to rule on a case that no longer exists. First of all, the defendants hadn’t answered, making the plaintiff’s dismissal purely voluntary. The court couldn’t condition a dismissal on anything—the court’s job is just to dismiss. Second, the case didn’t even exist anymore. The defendants were no longer subject to any sort of suit, so there was zero prejudice in the fact the court wouldn’t hear their arguments about whether the dismissal should be with or without prejudice.

Last, the Johnstons argue that since the property had been sold, the case is moot anyway. Again, the trial court didn’t have authority to hear this or make any sort of decision on it, since by the time the answer was filed the dismissal was already entered.

So, SCOV affirms.

Also, I’d be remiss in not mentioning that many fireworks-related accidents happen in early July, so if you want to use fireworks, make sure you do so safely. Thank you, “Hold Facts!”

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