Bill Phillips v. Illinois Central Gulf Railroad ( 1989 )

GEE, Circuit Judge:

Facts and Proceedings Below

The plaintiff brought this personal injury action against Illinois Central Gulf Railroad (ICG) more than one year, but less than tv/o, after the accident that forms its basis. The plaintiff is a Texas resident; ICG is a Delaware corporation whose “presence” in Texas, Louisiana and Mississippi varies and is not clear in the record. The accident occurred in Louisiana. The statute of limitations for this case is two years in Texas, one year in Louisiana and six years in Mississippi.

Initially, the plaintiff filed suit in Texas state court. ICG removed the case to the Western District of Texas and filed a motion to dismiss for lack of personal jurisdiction and a motion to transfer. During the three month pendency of ICG’s motion, the plaintiff conducted no discovery on any issue of personal jurisdiction, did not request dismissal without prejudice under Rule 41(a)(1) or (2), and made no request that, if ordered, the transfer be to any specific state — such as Mississippi. Moreover, the plaintiff declined or neglected to inform the court that his case was time-barred in Louisiana. At the hearing on ICG’s motion, Judge Bunton held that the plaintiff failed to establish that ICG had sufficient contacts with Texas to warrant his exercising personal jurisdiction over ICG and transferred the case to the Eastern District of Louisiana, giving no indication whether the transfer was based on 28 U.S.C. § 1404(a) or on § 1406(a).¹

When the case arrived in Louisiana, ICG filed a motion for summary judgment on the ground that the action was time-barred under Louisiana’s one-year prescriptive period. In response, the plaintiff filed a motion to amend the transfer order to send the case to Mississippi, a motion to retrans-fer the case to the Western District of Texas, and a motion to dismiss without prejudice under Rule 41(a)(2). The court granted ICG’s motion for summary judgment and, given the “procedural posture” of the case, denied the plaintiff’s motion to dismiss without prejudice, as well as his other motions. The court dismissed the case with prejudice.

Analysis

I. Plaintiff’s Motion To Dismiss Without Prejudice

The plaintiff contends that the district court erred in denying his motion to dismiss without prejudice. Because the defendant in this action had filed an answer and a motion for summary judgment, the plaintiff’s motion to dismiss is governed by Fed.R.Civ.Proc. 41(a)(2). This rule states, in relevant part,

... An action shall not be dismissed at the plaintiffs instance save upon order of the court and upon such terms and conditions as the court deems proper.... Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice.

Usually a court will grant a Rule 41(a)(2) motion providing for a dismissal without prejudice unless the defendant will suffer clear legal prejudice, other than the prospect of a subsequent suit on the same facts. Durham v. Florida East Coast Rwy. Co., 385 F.2d 366, 368 (5th Cir.1967). Dismissal without prejudice under this rule is, however, within the sound discretion of the trial court and may be reviewed only for an abuse of that discretion. McCants v. Ford Motor Co., Inc., 781 F.2d 855, 857 (11th Cir.1986) (citations omitted). We must, therefore, determine whether the district court abused its discretion in denying the plaintiff's motion.

Before us, the plaintiff maintains that, in denying his motion to dismiss without prejudice, the district court erroneously concluded that the pendency of the defendant’s motion for summary judgment advancing a limitations defense automatically precluded granting that motion. In his view, the pendency of such a summary judgment motion should be irrelevant in a transferred case and should be only one of many factors to be considered even where the plaintiff has selected the forum. He further contends that a dismissal without prejudice while a motion for summary judgment on a statute of limitations defense is pending should be denied only if the plaintiff has been guilty of bad faith or abusive practices. That being so, because he did not select the forum or engage in abusive practices, in his view the district court abused its discretion in denying his motion.

In support of his contentions the plaintiff cites McCants v. Ford Motor Co., Inc., 781 F.2d 855 (11th Cir.1986). In McCants the plaintiff brought a wrongful death action in Alabama based on an accident that had occurred in Mississippi. As the case progressed, the defendant amended its answer to assert that the action was barred by the applicable Alabama statute of limitations. In consequence of the amendment, the plaintiff sought dismissal without prejudice under Rule 41(a)(2). The defendant objected to the dismissal, arguing that the loss of a statute of limitations defense constituted plain legal prejudice which prevented dismissal.

In upholding the district court’s order granting the plaintiff’s motion to dismiss, the Eleventh Circuit stated:

... [T]he likelihood that a dismissal without prejudice will deny the defendant a statute of limitations defense does not constitute plain legal prejudice and hence should not alone preclude such a dismissal. Id. at 858.

The McCants’ court went on to state:

... We find no evidence in the record to suggest that appellee or counsel acted in bad faith in filing this action in Alabama. ... Under the circumstances, we cannot find appellant to have suffered any plain legal prejudice other than the prospect of a second lawsuit on the same set of facts.

The plaintiff also cites Bolten v. General Motors Corporation, 180 F.2d 379 (7th Cir.1950); Klar v. Firestone Tire & Rubber Co., 14 F.R.D. 176 (S.D.N.Y.1953), and Germain v. Semco Service Machine Co., Inc., 79 F.R.D. 85 (E.D.N.Y.1978). In each of these cases the courts upheld grants of dismissal without prejudice despite the fact that the dismissal deprived the defendant of a statute of limitations defense.

In contrast, the defendant contends that the loss of a statute of limitations defense always constitutes the type of clear legal prejudice that mandates the denial of a Rule 41(a)(2) motion. In support of this contention the defendant cites Placid Oil Co. v. Ashland Oil, Inc., 792 F.2d 1127 (Em.App.1986); Love v. Silas Mason, 66 F.Supp. 753 (W.D.La.1946); and Bamdad Mechanic Co. Ltd. v. United Technologies Corp., 109 F.R.D. 128 (D.Del.1985). In each of these cases the plaintiff moved for dismissal under Rule 41(a)(2) after the defendant had raised a statute of limitations defense. In each case the court held that loss of the statute of limitations defense constituted the type of plain legal error which precluded granting dismissal under Rule 41(a)(2).

In reaching this conclusion the court in Placid Oil noted:

When considering a dismissal without prejudice, the court should keep in mind the interests of the defendant, for it is his position which should be protected. 9 Wright & Miller, Federal Practice & Procedure: Civil, §§ 2362, 2364 at 149, 165 (1971), citing LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 604 (5th Cir.1976).

The court stated that a dismissal without prejudice should not be granted

... when the plaintiff’s purpose is so to maneuver the litigation that the defendant will lose his existing advantage.

The court then held that precisely that situation exists where the plaintiffs motive in seeking a dismissal without prejudice is to avoid the defendant’s statute of limitations defense.

The plaintiff contends that the decisions in Placid Oil and Bamdad Mechanic were based on the court’s finding that the plaintiffs in those actions engaged in “egregious forum shopping and other abusive conduct. ...” The plaintiff further maintains that, absent such conduct, denial of a motion to dismiss without prejudice is an abuse of discretion. We do not agree. The decisions in Placid Oil and Bamdad Mechanic were based on the court’s determination that loss of a statute of limitations defense would constitute substantial legal prejudice to the defendants in those cases. These cases, therefore, conflict directly with those cited by the plaintiff.

We have not yet addressed the issue of whether loss of a statute of limitations defense constitutes the type of clear legal prejudice that precludes granting a motion to dismiss without prejudice. After reviewing the decisions of other courts on this issue we are persuaded, however, that those cases denying the motion to dismiss are better reasoned. We agree that the mere prospect of a second lawsuit on the same facts is not sufficiently prejudicial to the defendant to justify denial of a Rule 41(a)(2) motion to dismiss. See e.g., Durham v. Florida East Coast Rwy. Co., 385 F.2d 366, 368 (5th Cir.1967). In this case, however, the facts in the second lawsuit would differ in that the defendant would be stripped of an absolute defense to the suit — the difference between winning the case without a trial and abiding the unknown outcome of such a proceeding. If this does not constitute clear legal prejudice to the defendant, it is hard to envision what would.

The plaintiff argues that this holding should not be applicable to cases transferred pursuant to 28 U.S.C. § 1406(a) or § 1404(a). In support of this argument the plaintiff cites Goldlawr, Inc. v. Heiman, 369 U.S. 463, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962). In Goldlawr the Court held that even a court lacking personal jurisdiction over a defendant could transfer a case under 28 U.S.C. § 1406(a) in lieu of dismissing the action. The Court found this decision consistent with the purpose of § 1406(a) which was to avoid “the injustice which had often resulted to plaintiffs from dismissal of their actions merely because they had made an erroneous guess with regard to the existence of some elusive fact of the kind upon which venue provisions often turn.” Id. at 466, 82 S.Ct. at 915. These considerations are equally applicable where a transfer is made under § 1404(a). Koehring Company v. Hyde Const. Co., 324 F.2d 295, 297-98 (5th Cir.1963). According to the plaintiff, a dismissal with prejudice based on a statute of limitations defense following a transfer under either § 1406(a) or § 1404(a) is improper because it would defeat the purpose of those statutes.

We agree that transfer of a case is appropriate to remove an “ ‘obstacle [to] ... an expeditious and orderly adjudication’ on the merits [of a case].” Aguacate Consol. Mines, Inc. v. Deeprock, Inc., 566 F.2d 523 (5th Cir.1978). This purpose has been fácil-itated by the adoption of 28 U.S.C. § 1631. That section provides that when a civil action is transferred in the interests of justice

... the action ... shall proceed as if it had been filed in ... the court to which it is transferred on the date upon which it was actually filed in ... the court from which it is transferred.

We do not believe, however, that Congress intended that the defendant in every transferred case be deprived of all statute of limitations defenses. The curative effects of §§ 1404(a), 1406(a) and 1631 were intended to apply only in those circumstances where the action would have been timely filed in the transferee court at the time of filing in the transferor court. In this case the plaintiff filed in Texas after the prescriptive period had expired in Louisiana. The defendant’s statute of limitations defense therefore remains valid.

II. The Transfer Order

The plaintiff contends that the district court for the Western District of Texas abused its discretion when it transferred the case to the Eastern District of Louisiana. Under § 1404(a) a district court may transfer a case for the convenience of the parties or in the interest of justice. Phillips contends that the interest of justice is a separate factor that, alone, may require the court to deny a motion to transfer. Phillips further contends that, in this case, the interest of justice was thwarted by the fact that the transfer resulted in a statute of limitations problem.

Assuming that the interest of justice is an independent inquiry under § 1404(a), justice did not require that the district court in Texas deny the defendant’s motion to transfer. The plaintiff knew or should have known that he would encounter a one-year prescriptive period in Louisiana. He could have requested that the Texas district court transfer the case to Mississippi rather than to Louisiana or could have requested a dismissal without prejudice. He did neither. A transferor court is not required to anticipate all of the implications of a transfer, especially where, as here, the complaining party failed to do so. Under these circumstances we cannot say that the Texas district court abused its discretion in transferring the case to Louisiana.

III. The Motion For Summary Judgment

The plaintiff contends that the district court erred in granting the defendant’s motion for summary judgment. In its motion the defendant alleged, and the plaintiff concedes, that the plaintiff’s claims were time-barred under Louisiana law. Plaintiff contends, however, that the Louisiana court should have applied the Texas statute of limitations. He further contends that we should remand this case to the Louisiana district court to determine whether it is the Texas or the Louisiana prescriptive period that applies to this case.

According to the plaintiff, a transferee court must apply the law of the transferor court unless the transferor court lacked jurisdiction over the defendant. The plaintiff argues that an uncontroverted affidavit that he filed in the Louisiana court created a fact issue as to whether the Texas court had personal jurisdiction over the defendant. According to the plaintiff, because the affidavit created a fact issue on personal jurisdiction, choice of law is still at issue and summary judgment on the basis of Louisiana law was improper.

The plaintiff misconstrues the holding of the Texas district court. The Texas district court held that the plaintiff had failed to establish that the defendant had sufficient contacts with Texas to allow the court to exercise personal jurisdiction over it. In doing so, the Texas court left nothing for the Louisiana court to decide on the issue of personal jurisdiction. The plaintiff’s affidavit is merely an attempt to reopen an issue which has already been decided. Because the Texas district court lacked personal jurisdiction over the defendant, the Louisiana district court properly applied the Louisiana statute of limitations to this action arising from a Louisiana tort. Ellis v. Great Southwestern Corp., 646 F.2d 1099 (5th Cir.1981).

The judgment of the district court is, therefore,

AFFIRMED.

1 . These read as follows:

§ 1404.

(a) For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

§ 1406.

(a) The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.