It is an abuse of discretion for a district court to find no legal prejudice, and thus to grant voluntary dismissal, where the non-moving party has demonstrated a valid statute of limitations defense.
Plaintiff was the owner of an IRA account with the defendant company. She filed suit after an employee of the company illegally stole the funds for his own benefit. The suit alleged the defendant had breached a fiduciary duty and was negligent when it handled the funds without verifying the employees were qualified by the IRS to handle them. The defendant moved to dismiss the claims on statute of limitations grounds. The trial court granted its motion. The plaintiff now argues that the negligence claims remain viable because it was filed within the statute of limitations and the defendant’s motion to dismiss was only aimed at the breach of fiduciary duty claim.
Was the plaintiff entitled to the ability to re-file her suit in another jurisdiction?
No, the court did not grant the plaintiff’s voluntary dismissal because it would have caused legal prejudice to the defendant.
The court held that the voluntary dismissal rule, which would have allowed her to re-file her negligence claim in another jurisdiction, was not a matter as of right. Instead, the court held that the prospect of a second suit against the defendants (in another jurisdiction with a longer statute of limitations) would cause plaint legal prejudice. Thus, the appellate court affirmed the lower court’s ruling.