Cannon v. Holmes

This opinion is subject to revision before final
publication in the Pacific Reporter
2016 UT 42
IN THE
SUPREME COURT OF THE STATE OF UTAH
TERRY HOLMES,
Appellant,
v.
CHRIS CANNON,
Appellee.
No. 20150238
Filed September 8, 2016
On Appeal of Interlocutory Order
Third District, Salt Lake Dep’t
The Honorable Laura Scott
No. 140905719
Attorneys:
Victor A. Sipos, Salt Lake City, for appellant
Phillip E. Lowry, Bryson R. Brown, Salt Lake City, for appellee
JUSTICE DURHAM authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE HIMONAS, and JUSTICE PEARCE joined.
JUSTICE DURHAM, opinion of the Court:
INTRODUCTION
¶1 In Panos v. Smith’s Food & Drug Centers, Inc., 913 P.2d 363
(Utah Ct. App. 1996), the court of appeals held that when a judge
issues an order dismissing a case for failure to prosecute, but fails to
explicitly provide that the case is dismissed with prejudice or
pursuant to Utah Rule of Civil Procedure 41(b), the presumption is
that the case is dismissed without prejudice.
¶2 Today we overrule Panos, concluding it was incorrectly
decided. The plain language of rule 41(b) is clear that the
presumption of prejudice applies broadly in most cases, including
not only to cases where the judge specifies reliance on rule 41(b), but
HOLMES v. CANNON
Opinion of the Court
also to “any dismissal[s] not provided for in this rule.” There are
limited exceptions to the rule’s presumption, including when a judge
“otherwise specifies” that the case is not dismissed with prejudice.
¶3 Because we determine that the appellee in this matter is
unable to establish reliance on the Panos decision for purposes of
prospective application of our holding, we decline to afford it.
BACKGROUND
¶4 This litigation initially began twelve years ago, when Chris
Cannon filed a lawsuit against the defendant individuals and
companies he alleges are responsible for several tort and contract
violations associated with an investment gone wrong. See Ted Knodel
v. Terry Holmes, Civ. No. 040918738 (Utah 3rd D. Ct. August 22,
2013). After the case languished for several years, the district court
issued an order requiring “the parties to appear . . . and show cause
why this case should not be dismissed for failure to prosecute. By
failing to appear, the Court will enter an order of dismissal without
further notice.” Neither side’s counsel appeared at the hearing, and
the district court dismissed the case: “No parties present. The Court
orders this case be dismissed.” The judge did not indicate under
which rule the case was to be dismissed.
¶5 Mr. Cannon did not attempt to set aside the dismissal, but
rather filed a new action in the district court, asserting the same
claims against the same defendants. Defendants filed a 12(b)(6)
motion to dismiss, arguing that the dismissal operated as a dismissal
with prejudice under rule 41(b). Mr. Cannon opposed the motion,
arguing that rule 4-103(2) of the Utah Code of Judicial
Administration presumes that failure-to-prosecute dismissals are
dismissed without prejudice and citing the court of appeals’ decision
in Panos v. Smith’s Food & Drug Centers, Inc., 913 P.2d 363 (Utah Ct.
App. 1996).
¶6 The district court judge held a hearing on the defendants’
12(b)(6) motion to dismiss and then denied the motion, finding the
Panos decision controlling. We granted defendants’ petition for an
interlocutory appeal pursuant to Utah Code section 78A-3-102(3)(j),
and the district court stayed the action pending the outcome of this
appeal. We review the district court’s interpretation of our rules of
procedure for correctness. Simler v. Chilel, 2016 UT 23, ¶ 9, -- P.3d –-
(“[T]he district court’s interpretations of . . . rules of procedure are
questions of law reviewed for correctness.” (second alteration in
original) (citation omitted)).
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Opinion of the Court
ANALYSIS
I. PANOS INCORRECTLY RELIED ON RULE 4-103(2) OF THE
UTAH CODE OF JUDICIAL ADMINISTRATION RATHER THAN
RELYING ON UTAH RULE OF CIVIL PROCEDURE 41(B)
¶7 Utah Rule of Civil Procedure 41(b) is our rule on the effect of
involuntary dismissals and provides in part:
For failure of the plaintiff to prosecute or to comply
with these rules or any order of court, a defendant 1
may move for dismissal of an action or of any claim
against him. . . . Unless the court in its order for
dismissal otherwise specifies, a dismissal under this
subdivision and any dismissal not provided for in this
rule, other than a dismissal for lack of jurisdiction or
for improper venue or for lack of an indispensable
party, operates as an adjudication upon the merits.
¶8 We have interpreted “adjudication on the merits” to mean
that the case is dismissed with prejudice—i.e., the plaintiff is barred
from re-filing the same claim in the same court. See Fundamentalist
Church of Jesus Christ of Latter-Day Saints v. Horne, 2012 UT 66, ¶¶ 22-
23, 289 P.3d 502. Therefore, a case is presumptively dismissed with
prejudice unless it falls under an exception. See Alvarez v. Galetka, 933
P.2d 987, 990 (Utah 1997) (“[I]t is a general rule that if a court grants
an involuntary dismissal and does not specify whether it is with or
without prejudice, it is assumed that the dismissal is with
prejudice.”).
¶9 The rule enumerates three express exceptions: lack of
jurisdiction, improper venue, and lack of an indispensable party.
Horne, 2012 UT 66, ¶ 23. “[T]he exceptions enumerated in rule 41 are
1 Although the rule provides that “a defendant” may move for
dismissal, courts have the inherent power to dismiss cases sua sponte.
See Wilson v. Lambert, 613 P.2d 765, 768 (Utah 1980) (“[T]he court
retains inherent power to dismiss an action [under rule 41(b)] for
failure to prosecute pursuant to its own motion.”); Link v. Wabash
R.R. Co., 370 U.S. 626, 629, 630-631 (1962) (“The authority of a federal
trial court to dismiss a plaintiff’s action with prejudice because of his
failure to prosecute cannot seriously be doubted. . . . The authority of
a court to dismiss sua sponte for lack of prosecution has generally
been considered an ‘inherent power,’ governed not by rule or statute
but by the control necessarily vested in courts to manage their own
affairs so as to achieve the orderly and expeditious disposition of
cases.”).
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Opinion of the Court
[not] exhaustive. . . . The rule’s list of non-preclusive
dismissals . . . simply illustrates the types of dismissals that do not
preclude further litigation.” Id. The dismissals mentioned are
illustrative of non-preclusive dismissals as they all “result[] from an
‘initial bar’ to the court’s adjudication of the parties’ claims and
defenses.” Id. ¶ 24 (citation omitted); cf. Alvarez, 933 P.2d at 991
(describing the general rule that dismissals under rule 12(b)(6) are
not preclusive and “the court normally will give plaintiff leave to file
an amended complaint” (citation omitted)).
¶10 Additionally, district court judges maintain discretion to
dismiss without prejudice when they choose to “otherwise specif[y]”
that result. See Donahue v. Smith, 2001 UT 46, ¶ 8 n.3, 27 P.3d 552
(“[U]nder rule 41(b) the district court was not required to dismiss
plaintiff’s complaint with prejudice. Rule 41(b) provides that, ‘Unless
the court in its order for dismissal provides otherwise, a dismissal
under this subdivision . . . operates as an adjudication upon the
merits.’ Under the rule, it would not have been error for the district
court to provide in its order that plaintiff’s complaint be dismissed
without prejudice.” (second alteration in original)).
¶11 As in this case, Panos v. Smith’s Food & Drug Centers, Inc., 913
P.2d 363 (Utah Ct. App. 1996), involved a dismissal for failure to
prosecute. The judge’s order for dismissal “did not indicate whether
the dismissal was with or without prejudice, or pursuant to Rule
41(b) of the Utah Rules of Civil Procedure or Rule 4-103 of the Utah
Code of Judicial Administration.” 2 Id. at 364. After dismissal, the
plaintiff filed a new complaint against the defendant. The defendant
filed a motion to dismiss, arguing that under rule 41(b), the case was
dismissed with prejudice. Id.
2 The Panos opinion recites that the original notice to appear in
that case was “pursuant to Rule 4-103,” but references a later order
as follows: “After presumably finding good cause not to dismiss the
case [on the first order],” the court ordered “counsel to settle [the]
case or file a Certificate of Readiness for Trial.” 913 P.2d at 364. “If
neither are done, the case will be dismissed without further
notice. . . .” Id. Thus, it is arguable, although not clear, that the
ultimate dismissal in Panos was in a rule 4-103 proceeding and
entitled to be treated as without prejudice. Notwithstanding that
argument, the language of Panos does not reference it when it
concludes, “If a trial court wishes to dismiss a case for failure to
prosecute, the trial court must expressly indicate that dismissal is
with prejudice or pursuant to Rule 41(b). Otherwise, we assume the
dismissal was without prejudice under Rule 4-103(2) of the Utah
Code of Judicial Administration.” Id. at 365 (footnote omitted).
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¶12 The court of appeals “refuse[d] to apply the Rule 41(b)
presumption in favor of dismissal with prejudice when the trial
court has failed to explicitly identify that it is dismissing the case
pursuant to Rule 41(b), or at least indicate that it is dismissing the
case with prejudice.” Id. at 364–65. The court determined that in this
situation, “we assume the dismissal was without prejudice under
Rule 4-103(2) of the Utah Code of Judicial Administration.” Id. at 365.
¶13 Rule 4-103(2) provides that
[i]f a certificate of readiness for trial has not been
served and filed within 330 days of the first answer, the
clerk shall mail written notification to the parties
stating that absent a showing of good cause by a date
specified in the notification, the court shall dismiss the
case without prejudice for lack of prosecution.
Because rule 4-103(2) provides that the case is dismissed without
prejudice, the court of appeals resolved the apparent conflict
between rules 41(b) and 4-103(2) by determining that rule 4-103(2) is
the default rule and that “[i]f a trial court wishes to dismiss a case
with prejudice for failure to prosecute, the trial court must expressly
indicate that dismissal is with prejudice or pursuant to Rule 41(b).”
Panos, 913 P.2d at 365.
¶14 The problem is that the Panos interpretation of rule 41(b)
and rule 4-103 reverses the presumption contained in the plain
language of rule 41(b). Rule 41(b) presumes that all involuntary
dismissals—whether falling under rule 41(b) or any other rule—are
dismissed with prejudice, unless the dismissal falls under one of the
“initial bar” exceptions or the judge “otherwise specifies.” In Panos,
as in this case, the judge did not “otherwise specify” that the case
was to be dismissed without prejudice, nor did the case fall under
one of the exceptions. Therefore, we overrule Panos and hold that
involuntary dismissals are presumptively dismissed with prejudice
unless the judge otherwise specifies or the case falls under an
exception. 3
3 Article VIII, section 4 of the Utah Constitution gives the Utah
Supreme Court the power to “adopt rules of procedure and evidence
to be used in the courts of the state.” In Article VIII, section 12 the
Judicial Council is empowered to adopt rules for the “administration
of the courts of the state.” The Code of Judicial Administration, in
which rule 4-103(2) appears, has been promulgated in accordance
with that authority. Rule 4-103 is contained in “Article I. Calendar
Management” of the rules, and is titled “Civil Calendar
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Opinion of the Court
II. WE DECLINE TO APPLY OUR DECISION ONLY
PROSPECTIVELY
¶15 The general rule of retroactivity in a civil case is that “the
ruling of a court is deemed to state the true nature of the law both
retrospectively and prospectively.” Monarrez v. Utah Dep’t of Transp.,
2016 UT 10, ¶ 28, 368 P.3d 846 (citation omitted). 4 However, we will
deviate from the default rule of retroactivity and apply our decision
prospectively only when two requirements are met. First, the ruling
must “result [from] a change in the law” that “significantly alter[s]
the legal landscape by ending or overruling a relied-upon practice.”
Id. But it is not enough to make a “bare assertion . . . that our
decision overrules prior cases,” id. (alteration in original) (citation
omitted), because the party seeking prospective application of the
ruling must also show either “justifiable reliance on the prior state of
the law,” or that retroactive application would create an undue
burden. Id. (citation omitted). We conclude that the second
requirement is not met in this case.
¶16 As to the first requirement that the ruling “significantly
alter[s] the legal landscape by ending or overruling a relied-upon
Management.” Its intent is “to establish a procedure which allows
the trial courts to manage civil case processing,” and, according to
the court of appeals in Meadow Fresh Farms, Inc. v. Utah State Univ.
Dep’t of Agric. & Applied Sci., “merely codifies . . . an inherent power
of the trial court to dismiss a case sua sponte for lack of prosecution
under Rule 41(b).” 813 P.2d 1216, 1218 n.3 (Utah Ct. App. 1991).
The difficulty, unrecognized by the court of appeals in Panos, is
that the portion of rule 403(2) providing that “the court shall dismiss
the case without prejudice” cannot alter the requirement in rule 41(b)
that the order of dismissal must specify on its face that it is without
prejudice to avoid the presumption that the dismissal is on the
merits. The Judicial Council has no authority to override a rule of
civil procedure. Thus, even though rule 403(2) on its face purports to
give trial judges the power to dismiss for lack of prosecution only
without prejudice, trial judges cannot properly exercise that power
without complying with rule 41(b)’s “otherwise specifies” language.
The difficulty in the future can be easily resolved by amending
rule 4-103 to require that all dismissals entered pursuant to the rule
must contain the language “without prejudice,” and by developing
forms consistent with that requirement.
4 The presumption is reversed for statutes, where the general rule
is that “[a] provision of the Utah Code is not retroactive, unless the
provision is expressly declared to be retroactive.” UTAH CODE § 68-3-
3.
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practice,” our decision today overrules the court of appeals’ decision
in Panos v. Smith’s Food & Drug Centers, Inc., 913 P.2d 363 (Utah Ct.
App. 1996). As discussed in Part I supra, Panos held that unless the
trial court explicitly says the dismissal is with prejudice or pursuant
to rule 41(b), it is dismissed without prejudice. Today we
“significantly alter the legal landscape” by reversing what was a
clear interpretation of a rule of civil procedure—made by an
appellate court—and determine that if an order of dismissal is silent,
it is dismissed with prejudice as required by rule 41(b).
¶17 As to the second requirement, the party requesting
prospective application must show either “‘justifiable reliance on the
prior state of the law’ or that ‘the retroactive operation of the new
law may otherwise create an undue burden.’” Monarrez, 2016 UT 10,
¶ 28. Mr. Cannon does not argue that overruling Panos will create an
undue burden; therefore, we focus exclusively on whether he
justifiably relied on Panos’s clear interpretation of Utah Rule of Civil
Procedure 41(b) and Utah Rule of Judicial Administration 4-103.
¶18 We have held that “[l]itigants ought to be able to rely on our
constructions of our rules and statutes. . . .” Carter v. Lehi City, 2012
UT 2, ¶ 15, 269 P.3d 141. In Carter, a group of voters wanted to
amend city ordinances through the initiative process. After the city
council declined to include the initiatives on the ballot, the group
filed a petition for an extraordinary writ. The relevant statute
required the group to file its petition “‘within 10 days after the
refusal’ of the initiative by the ‘local clerk.’” Id. ¶ 11. The group filed
its petition on the eleventh day. However, we had earlier held, in
Low v. City of Monticello, 2002 UT 90, 54 P.3d 1153, that Utah Rule of
Civil Procedure 6(e) extended the ten-day period by an additional
three days to account for mail service, which would have made the
group’s petition timely, a ruling on which petitioners specifically
relied in calculating their time. Oral Argument at 1:44 – 4:04, Carter
v. Lehi City, 2012 UT 2, 269 P.3d 141 (No. 20110482),
https://www.utcourts.gov/opinions/streams/sup/.
¶19 We overruled Low to the extent that it “adopted a
construction of rule 6(e) that is contrary to its text. Rule 6(e) has no
application to the ten-day filing requirement for extraordinary
writs . . . as the statutory period is triggered by refusal of an initiative
and not its service to a party.” Carter, 2012 UT 2, ¶ 15. However, if we
had followed the general rule in Carter and applied this ruling
retroactively, it would have “result[ed] in dismissal of the petition as
untimely.” Id. ¶ 14. We therefore did not extend this holding
retroactively with respect to the group of voters in Carter because we
determined that “[l]itigants ought to be able to rely on our
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constructions of our rules and statutes. . . .” Id. ¶ 15. And where we
had previously clearly interpreted one of our rules to apply in this
specific situation and the petitioner had actually relied on that
interpretation, we held that the group was “entitled to rely on our
opinion in Low and should not be punished for accepting it as
controlling so long as it stood unreversed.” Id.
¶20 Unlike the petitioners in Carter, Mr. Cannon has not asserted
on appeal nor demonstrated in the record any decision or act
undertaken or not pursued in reliance on Panos. He has not even
asserted that he was aware of the Panos decision until the motion to
dismiss was filed in this case. Absent such a demonstration of
justified reliance, his argument for prospective-only application of
our decision must fail.
CONCLUSION
¶21 Today we overrule Panos v. Smith’s Food & Drug Centers, Inc.,
913 P.2d 363 (Utah Ct. App. 1996), and hold that the plain text of
Utah Rule of Civil Procedure 41(b) controls whether a case is
dismissed with or without prejudice. Because the district court judge
in this case did not specify that the case was to be dismissed without
prejudice, and this case does not fall within an exception to rule
41(b), the case should have been dismissed with prejudice. Further,
we hold that in the absence of a showing of reliance on the court of
appeals earlier opinion in Panos, Mr. Cannon is not entitled to a
prospective-only application of our ruling.
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