Two Strikes and You’re Out: Federal Rule of Civil Procedure 41(a)(1)(B)’s Two-Dismissal Rule

Great Lakes Ins. SE v. Crabtree, No. 20-CV-81544, 2023 WL 3534170 (S.D. Fla. May 18, 2023).

            The Crabtrees purchased a vessel, S/V BRANDISON, and applied for insurance on it from Great Lakes, which issued a policy covering the vessel for $250,000. A fire at the vessel storage facility in Riviera Beach, Florida resulting in damage to the vessel. After filing a notice of loss for $250,000, the insurer denied coverage and sued the insureds in federal court in Montana but dismissed the suit, subsequently filing suit in the Southern District of Florida, which was again dismissed voluntarily by the Great Lakes.

            Yet again, Great Lakes reinitiated a suit in Montana federal court. At about the same time, the Crabtrees filed suit against Great Lakes in the Southern District of Florida and appearing pro se in Montana, requested dismissal of that suit for lack of personal jurisdiction. With the Montana action still pending, the Crabtrees then raised the two-dismissal rule, which was denied by the federal judge in Montana but who subsequently transferred the case to the Southern District of Florida.

            After various other pleadings were filed, the judge ordered the defendants to file a Motion for Summary Judgment on the “two-dismissal rule.” The trial judge phrased the issue thus: [W]hether the two-dismissal rule applies when (as here) one of the plaintiff's dismissals wasn't unilateral (i.e., where the plaintiff and the defendant informally agreed to one of the two dismissals).” 2023 WL 3534170 at *4.

            Rule 41 states: “Unless the notice or stipulation states otherwise, the dismissal is without prejudice. But if the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits.” Id. at *5. In this case, Great Lakes conceded that the two prior actions were in a competent jurisdiction with the parties and claims the same. Id. at *4.

            Great Lakes argued that the two-dismissal rule did not apply when one of the dismissals was agreed to by the defendant, relying on Poloron Prod., Inc. v. Lybrand Ross Bros. & Montgomery, 534 F.2d 1012 (2d Cir. 1976) and TCW Special Credits v. Fishing Vessel Chloe Z, 238 F.3d 431 (9th Cir. 2000).  But, as the court noted precedent of the Eleventh Circuit in which the present suit is pending suggests otherwise, citing ASX Inv. Corp. v. Newton, 183 F.3d 1265, (11th Cir. 1999) and Sealey v. Branch Banking & Tr. Co., 693 F. App'x 830, 834 (11th Cir. 2017).

            There is no exception in the rule as proposed by Great Lakes. “The two-dismissal rule is a narrowly tailored and potentially harsh rule, but the language is clear,’ and ‘we must apply it as written.” Id. at *7; Cabot Golf CL-PP 1, LLC v. Nixon Peabody, LLP, 575 F. App'x 216, 218–19 (5th Cir. 2014). The two-dismissal rule applies here. The insured’s Motion for Summary Judgment was granted, dismissing the claim of Great Lakes.