Arbitration & Mediation

Plaintiff Avoids Proposal for Settlement by Dismissing Without Prejudice

By Christopher B. Hopkins, Esq.

Do plaintiffs have an advantage over defendants when it comes to avoiding fees and costs under a Proposal for Settlement? Perhaps, according to a technical procedural tactic employed in Shannon Smith v. Loews Miami Beach Hotel Operating Company (Wells, Rothenberg, Schwartz).

In this case, plaintiff brought a negligent infliction of emotional distress claim. The defendant served a Proposal for Settlement and then moved for summary judgment under the theory that the plaintiff could not overcome the impact rule. Shortly before the hearing, but after the expiration of the defendant's Proposal, the plaintiff filed a notice of voluntary dismissal without prejudice. Defendant moved for and was awarded fees under the Proposal.

Plaintiff ultimately argued that the voluntary dismissal without prejudice was not an adjudication on the merits and, therefore, the defendant should not prevail on its Proposal. The Panel noted Florida Rule of Civil Procedure 1.420(a)(1) which states that an action may be dismissed by plaintiff a notice of dismissal before a summary judgment hearing and that, unless otherwise stated, it is without prejudice (and not an adjudication of the merits) unless the plaintiff had previously filed a notice of voluntary dismissal. Case law notes this to be "almost an absolute right" to one free dismissal.

Proposals for Settlement, meanwhile, are triggered by (1) no liability judgment, (2) judgment of plaintiff which is 25% less than defendant's offer or (3) dismissal with prejudice. Citing a 1997 Florida Supreme Court case, the Third District noted that involuntary dismissal, dismissal with prejudice, and second voluntary dismissal serves as an adjudication on the merits.

Thus, it appears plaintiffs have the advantage of a "white flag of surrender" notice of voluntary dismissal without prejudice which would avoid the penalties of a Proposal for Settlement (as long as it is the first voluntary dismissal in the case).

Full post as published by Florida Arbitration Law on May 13, 2010 (boomark / email).