Livaie v Kosrae Sea Ventures Inc [2001] FMSC 5; 10 FSM Intrm. 206 (Kos. 2001) (22 May 2001)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION

Cite as Livaie v. Kosrae Sea Ventures, Inc,
[2001] FMSC 5; 10 FSM Intrm. 206 (Kos. 2001)

[2001] FMSC 5; [10 FSM Intrm. 206]

ALFRED LIVAIE,
Plaintiff,

vs.

KOSRAE SEA VENTURES, INC. and STATE OF KOSRAE,
Defendants.

__________________________________________

STATE OF KOSRAE,
Plaintiff,

vs.

NATIONAL FISHERIES CORPORATION,
Third Party Defendant

CIVIL ACTION NO. 2000-2009

ORDER AND MEMORANDUM

Martin Yinug
Associate Justice

Decided: May 22, 2001

APPEARANCES:

For the Plaintiff:
Sasaki George, Esq.
Micronesian Legal Services Corporation
P.O. Box 38
Tofol, Kosrae FM 96944

For the Defendant (Kosrae Sea Ventures):
Andrea Hillyer, Esq.
P.O. Drawer D
Kolonia, Pohnpei FM 96941

For the Defendant/Third-Party Plaintiff (Kosrae):
April Dawn M. Skilling, Esq.
Office of the Kosrae Attorney General
P.O. Box 870
Tofol, Kosrae FM 96944

For the Third-Party Defendant:
Craig D. Reffner, Esq.
Law Offices of Fredrick L. Ramp
P.O. Box 1480
Kolonia, Pohnpei FM 96941

[10 FSM Intrm. 207]

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HEADNOTES

Civil Procedure ; Motions
It is not the court's practice generally to hear oral argument on pre-trial motions. Livaie v. Kosrae Sea Ventures, Inc., [2001] FMSC 5; 10 FSM Intrm. 206, 208 (Kos. 2001).

Civil Procedure ; Dismissal
There are two types of voluntary dismissal under Rule 41(a): dismissals under 41(a)(1) do not require a court order; dismissals under 41(a)(2) do. Subsection (a)(1) permits dismissal by notice of dismissal when the notice is filed before the filing of an answer or a summary judgment motion, whichever occurs first, or by the stipulation of all parties who have appeared in the action. Subsection (a)(2) governs all other circumstances when a plaintiff seeks to dismiss a lawsuit and applies when a defendant opposes dismissal. Under Rule 41(a)(2) an action will not be dismissed at the plaintiff's instance save upon court order and upon such terms and conditions as the court deems proper. Livaie v. Kosrae Sea Ventures, Inc., [2001] FMSC 5; 10 FSM Intrm. 206, 208 (Kos. 2001).

Civil Procedure ; Dismissal
A defendant may not move for a voluntary dismissal of the plaintiff's action. Livaie v. Kosrae Sea Ventures, Inc., [2001] FMSC 5; 10 FSM Intrm. 206, 208 (Kos. 2001).

Civil Procedure ; Dismissal
The decision to grant or deny a voluntary dismissal under Rule 41(a)(2) is addressed to the sound discretion of the court and unless otherwise specified in the order, a dismissal under this paragraph is without prejudice. Livaie v. Kosrae Sea Ventures, Inc., [2001] FMSC 5; 10 FSM Intrm. 206, 208 (Kos. 2001).

Civil Procedure ; Dismissal
Under the terms of a dismissal with prejudice, a defendant secures the same relief as it would have had the case gone to trial and it had prevailed. Livaie v. Kosrae Sea Ventures, Inc., [2001] FMSC 5; 10 FSM Intrm. 206, 209 (Kos. 2001).

Civil Procedure ; Dismissal
Consideration of the terms and conditions appropriate for dismissal under Rule 41(a)(2) centers on the interests of parties before the court, not on a party's procuring a strategic advantage in future litigation with a different plaintiff or plaintiffs. Livaie v. Kosrae Sea Ventures, Inc., [2001] FMSC 5; 10 FSM Intrm. 206, 209 (Kos. 2001).

Civil Procedure ; Dismissal
When the plaintiff and other defendant and the third-party defendant seek dismissal with prejudice and a defendant/third-party plaintiff opposes and when the third-party claim is solely for indemnification, the defendant/third party plaintiff would have no liability on which to base an indemnification claim if the case were dismissed with prejudice. Dismissal of the entire action is then appropriate. Livaie v. Kosrae Sea Ventures, Inc., [2001] FMSC 5; 10 FSM Intrm. 206, 209 (Kos. 2001).

Civil Procedure ; Dismissal
While Rule 42(a)(2) expressly provides protection against the dismissal of counterclaims, no such protection is provided for cross-claims, or for third-party claims. The pendency of the third-party claim for indemnification is thus not a bar to dismissal. Livaie v. Kosrae Sea Ventures, Inc., [2001] FMSC 5; 10 FSM Intrm. 206, 209 (Kos. 2001).

[10 FSM Intrm. 208]

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COURT'S OPINION

MARTIN G. YINUG, Associate Justice:

All parties except the state of Kosrae ("Kosrae"), which opposes the motion, have moved to voluntarily dismiss this case under Rule 41(a)(2) of the FSM Rules of Civil Procedure. In addition to the motion and Kosrae's response, the court has received a reply from the plaintiff filed on May 11, 2001.

Kosrae has requested oral argument on the motion. It is not this court's practice generally to hear oral argument on pre-trial motions. The court is disinclined to depart from that rule in this instance. The request for oral argument is denied.

For the reasons that follow, the motion to voluntarily dismiss this action with prejudice is granted.

Plaintiff Aldred Livaie ("Livaie"), defendant Kosrae Sea Venture, Inc. ("KSVI"), and third-party defendant National Fisheries Corporation ("NFC") move to voluntarily dismiss this case under Rule 41(a)(2) of the FSM Rules of Civil Procedure. The reason is that there has been a three-way settlement among Livaie, KSVI, and NFC. NFC is a shareholder in KSVI and the managing agent for KSVI. Kosrae is not a party to the settlement and opposes dismissal, arguing that there are other potential plaintiffs similarly situated. Kosrae anticipates that those plaintiffs will be filing suits like the plaintiff's. Having gone to the time and expense of fully investigating the issues raised, Kosrae prefers a resolution of this case on its merits to secure its precedential effect. Kosrae also points to its pending third-party claim against NFC, which Kosrae wants to fully litigate.

There are two types of voluntary dismissal under Rule 41(a) of the FSM Rules of Civil Procedure: dismissals under 41(a)(1) do not require a court order; dismissals under 41(a)(2) do. Subsection (a)(1) permits dismissal by notice of dismissal where the notice is filed before answer or the filing of a motion for summary judgment, which ever occurs first. Dismissal under subsection (a)(1) is also permitted by the stipulation of all parties who have appeared in the action. Subsection (a)(2) governs all other circumstances where a plaintiff seeks to dismiss a lawsuit and applies here where Kosrae, who is both a defendant and a third-party plaintiff, opposes dismissal.

The parties bringing the motion are the plaintiff, the other defendant, and the third-party defendant. By its terms, Rule 41(a)(2) provides pertinently 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." (emphasis added). "A defendant may not move for a voluntary dismissal of the plaintiff's action." 8 JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE 41] at 41-127 (3d ed. 1999)1999). This is an academic point, however, since the court deems KSVI's and NFC's joinder in plaintiff Livaie's motion as their consent to it.

"The decision to grant or deny a voluntary dismissal under Rule 41(a)(2) is addressed to the sound discretion of the . . . court." Id.Id. 41.40[3] at 41-131, and cases cited in n.11. While this court does not go so far, the fact that Livaie has moved to dismiss with prejudice strongly favors

[10 FSM Intrm. 209]

dismissal. Under the terms of the dismissal with prejudice, Kosrae secures the same relief as it would have had the case gone to trial and Kosrae prevailed.

As previously noted, Kosrae opposes dismissal on the ground that dismissal would deprive it of a precedent in the similar suits that it anticipates. But procuring a strategic advantage of this sort is outside the prophylactic scope of Rule 41(a)(2), which provides pertinently that "an action shall not be dismissed . . e upoer of the the court aurt and upon such terms and conditions as the court deems proper." Consideration of the terms and conditions appropriate for dismissal centers on the interests of pa befoe court. As to futo future ture litigation with a different plaintiff or plaintiffs, Kosrae must abide that event. Even then, that prospect may not be so certain as Kosrae foresees. In his motion, Livaie recites that

[t]he state of Kosrae was only named as a party to this action because the Plaintiff believed that KSVI was an agency of the state of Kosrae. KSVI, however, is not an agency of the state of Kosrae. It is instead a corporation with two shareholders: the state of Kosrae and NFC.

Motion to Dismiss Under FSM Civ. R. 41, at 3 (Apr. 6, 2001). To the extent this case is similar to the cases Kosrae predicts, it is unlikely that those potential plaintiffs would name Kosrae as a defendant when Livaie has stated he named Kosrae in this case only on the basis of a misunderstanding of the relationship between KSVI and Kosrae. Livaie's enlightenment on the point reduces the likelihood that Kosrae would be a defendant in future suits, where Kosrae anticipates that those suits would in their essential allegations track the case at bar.

Kosrae has filed a third-party claim against NFC in this action, and contends that its claims in this regard are "not merely limited to the issue of indemnification," and wants to fully litigate those issues. Opp'n to Motion to Dismiss and Request for Hearing on the Motion at 2 (Apr. 19, 2001). The court disagrees with Kosrae's characterization of its third-party claim. The only request for relief set out in the prayer portion of the third-party claim (filed August 2, 2000) is that Livaie take nothing, and that "in the event that Kosrae is held liable to Livaie in any amount, that Kosrae be awarded a judgment against NFC in the same amount." Kosrae alleges that it has been damaged by NFC's breach of contract with Livaie. But considering the complaint and third-party complaint together, any actual damage to Kosrae resulting from NFC's breach would flow from Kosrae's vicarious liability to Livaie for that breach, and not as a result of anything that NFC has done to Kosrae directly. This is the same ; and only injury ; which the indemnification claim addresses. If the complaint is dismissed with prejudice as to Kosrae, Kosrae has no liability to Livaie, vicarious or otherwise. It follows that the potential injury upon which the third-party indemnification claim is based would not materialize. Moreover, while Rule 41(a)(2) expressly provides protection against the dismissal of counterclaims ("the action shall not be dismissed against the defendant's objection unless the counterclaim can remain pending for independent adjudication by the court"), no such protection is provided for cross-claims, 8 MOORE ET AL., supra, 41.40[8][d], -157, and the the same is true for third-party claims. The pendency of the third-party claim for indemnification is not a bar to dismissal. Dismissal of the entire action is appropriate.

Accordingly, Livaie's mo's motion to dismiss this action in its entirety and with prejudice is granted.

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