Sore Loser Contumaciously Runs Away From Court and Sanctions

When Plaintiff Lost the Coverage Issue it Abandoned its Suit

When a party files a lawsuit it is obligated to pursue that suit effectively or advise the court that it wishes to dismiss the suit because it is not viable. Just abandoning a lawsuit, ignoring the communications of opposite counsel, and the orders of the court is contumacious conduct that should, if possible, be severely punished.

In Reno Contracting, Inc. v. Crum & Forster Specialty Insurance Company, Case No.: 18-CV-0450 W (JLB), United States District Court Southern District of California (July 16, 2019) the Plaintiff lost a partial summary judgment finding no coverage and then changed lawyers and disappeared from the court and counsel.

BACKGROUND

Plaintiff Reno Contracting (“Reno”) sued Crum and Forster Specialty Insurance Company (“Crum & Forster”) alleging that Crum & Forster had failed to defend and indemnify it in underlying litigation per the terms of an insurance policy.

Defendant moved for partial summary judgment and the Court granted in part and denied in part that motion, holding per Rule 56(g) that “[t]he Reno Contracting Policy provided no insurance coverage for the underlying litigation.” Thereafter Plaintiff ceased participating in the case. Specifically, Plaintiff failed to lodge a Mandatory Settlement Conference (“MSC”) statement by the due date, failed to respond to a minute order alerting it of that fact, failed to appear at the MSC, and then failed to respond to an Order to Show Cause (“OSC”) or to appear at the OSC hearing. Judge Burkhardt imposed monetary sanctions on Plaintiff and its attorney, jointly and severally, in the amount of $2,473.52. The order imposing those sanctions on Plaintiff and Plaintiff’s counsel was returned as undeliverable.

Defendant, unable to communicate with the plaintiff,  moved to dismiss Plaintiff’s complaint with prejudice and for summary judgment. Plaintiff did not oppose either motion. For the reasons that follow, the motion to dismiss will be granted. The motion for summary judgment will be denied as moot.

LEGAL STANDARD

The rules regarding a Motion to Dismiss Pursuant to Fed. R. Civ. P. 41(b) provides: “If the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it. Unless the dismissal order states otherwise, a dismissal under this subdivision (b) … operates as an adjudication on the merits.”

A Rule 41(b) dismissal “must be supported by a showing of unreasonable delay.” A district court must further weigh: “(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its docket; (3) the risk of prejudice to the defendants; (4) the public policy favoring disposition of cases on their merits[,] and (5) the availability of less drastic sanctions.” Omstead v. Dell, Inc., 594 F.3d 1081, 1084 (9th Cir. 2010). Dismissal is appropriate where at least four factors support dismissal, or where three factors strongly support dismissal.

DISCUSSION

The court concluded that as a preliminary matter, Plaintiff  consented to the dismissal of this case by failing to oppose Defendant’s motion to dismiss. Plaintiff also caused unreasonable delay and the public’s interest in expeditious resolution of litigation favors dismissal. Reno has continuously violated Court orders and is nonresponsive to opposing counsel’s communications. There is no indication it intends to participate further in this lawsuit.

The Court’s need to manage its docket favors dismissal. Needlessly extending this case in the absence of a plaintiff prejudices Defendant. The opposing party should not be required to expend time and resources on a case that the plaintiff has ceased to pursue.

Although public policy favors disposition on the merits a full decision on the merits is not possible when a plaintiff has ceased to litigate. And as the Court’s partial summary judgment order held that the Reno Contracting Policy provided no insurance coverage for the underlying litigation and preceded, probably as a result of the order, Plaintiff’s disappearance from the case, to a limited extent, a decision on the merits has already taken place.

Less drastic alternatives are not available. In light of the foregoing, dismissal with prejudice is the appropriate remedy.  As Plaintiff’s motion to dismiss was granted, the case was dismissed with prejudice. Plaintiff’s motion for summary judgment was denied as moot.

ZALMA OPINION

The only punishment available to the court was dismissal with prejudice since the plaintiff and its counsel simply “disappeared.” If they were available to be punished they would have been. The only other option available to the court would be to order the Marshall to find the plaintiff and its counsel, arrest them and return them to the court to be held in contempt. Such action was not worth the effort and U.S. Marshall’s have more important duties than to track down disappearing parties and counsel.


© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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