E-Alert Case Updates

No “Dismissal With Prejudice” Provided By MD. RULE 2-507(b)

Hariri, et al. v. Dahne, et al.
No. 151 (Md., March 9, 2010)
By: Lydia S. Hu, Law Clerk
Semmes, Bowen & Semmes (www.semmes.com)

The Court of Appeals of Maryland held that MD. RULE 2-507(b) does not permit dismissal “with prejudice.” Accordingly, the Court affirmed the judgment of the Circuit Court for Baltimore County in its order that the case be dismissed without prejudice.

On October 14, 2003, Plaintiffs filed a Complaint in which they asserted that Dr. Hariri had breached a covenant not to compete in a contract under seal that was signed by the parties on October 3, 2000. Dr. Hariri was never served with a copy of that Complaint. On February 7, 2005, Plaintiffs filed a second Complaint in which they asserted that Dr. Hariri and five other defendants had breached the same covenants not to compete, signed under seal. Three of the defendants to the second Complaint were served by certified mail with a copy of the Complaint. Those defendants included: 1.) Dr. Hariri, served on September 6, 2007, approximately 2½ years after the second Complaint was filed; 2.) Dr. Thomas Blaik, served on September 6, 2007, approximately 2½ years after filing of the second Complaint; and, 3.) Dr. Belle, served on October 3, 2007, approximately 2½ years after filing of the second Complaint.

On September 14, 2007, the Clerk issued a notification to parties of contemplated dismissal pursuant to MD. RULE 2-507. The notice required that within thirty (30) days, parties must show good cause to defer entry of an order of dismissal. A variety of other filings followed including:

• September 19, 2007 — Dr. Hariri filed Answer to Complaint
  
• October 15, 2007 — Plaintiffs filed Motion to Defer Dismissal under MD. RULE 2-507
  
• October 29, 2007 — Dr. Blaik filed Motion to Dismiss Complaint with Prejudice for Failure to State a Claim Upon Which Relief can be Granted and Request for Sanctions
  
• November 6, 2007 — Dr. Belle filed an Answer to Complaint
  
• November 13, 2007 — Plaintiffs filed six count Amended Complaint

Finally, on November 15, 2007 Dr. Hariri and Dr. Hatfield filed a Motion to Dismiss for Lack of Prosecution Pursuant to MD. RULE 2-507(c). In that filing, the parties requested dismissal with prejudice.

After a hearing, the Circuit Court held that the case be dismissed without prejudice. Drs. Hariri, Hatfield and Blaik appealed to the intermediate appellate court, but the Court of Appeals took certiorari before the Court of Special Appeals even had an opportunity to hear or rule on the case. The issue was whether the trial court erroneously determined that it lacked the authority to grant dismissal with prejudice pursuant to MD. RULE 2-507, when the defendant was belatedly served and the Court failed to dismiss the action pursuant to MD. RULE 2-507(c).

When an action is dismissed pursuant to MD. RULE 2-507, the plain language of the Rule expressly provides that dismissal be entered “without prejudice.” In pertinent part, the Rule provides:

(b) For lack of jurisdiction — An action against any defendant who has not been served or over whom the court has not otherwise acquired jurisdiction is subject to dismissal as to that defendant at the expiration of 120 days from the issuance of original process directed to that defendant.

(c) For lack of prosecution — An action is subject to dismissal for lack of prosecution at the expiration of one year from the last docket entry, other than an entry made under this RULE, RULE 2-131, or RULE 2-132, except that an action for limited divorce or for permanent alimony is subject to dismissal under this section only after two years from the last such docket entry.

(d) Notification of contemplated dismissal — When an action is subject to dismissal pursuant to this RULE, the clerk, upon written request of a party or upon the clerk's own initiative, shall serve a notice on all parties pursuant to RULE 1-321 that an order of dismissal for lack of jurisdiction or prosecution will be entered after the expiration of 30 days unless a motion is filed under section (e) of this Rule.

(e) Deferral of dismissal — On motion filed at any time before 30 days after service of the notice, the court for good cause shown may defer entry of the order of dismissal for the period and on the terms it deems proper.

The purpose of the rule is not meant to punish Plaintiffs for action or inaction, but rather to rid the docket of stale cases. The contract in question was executed under seal. The statute of limitations applicable to these actions is twelve (12) years. Accordingly, Plaintiff could have brought this lawsuit as late as 2008 and still would have been within the applicable statute of limitations. Even if the Clerk had entered dismissal for lack of service at the first opportunity, the Plaintiffs had ample time to re-file.

Accordingly, the Court of Appeals held that only a dismissal without prejudice can be had pursuant to MD. RULE 2-507 and affirmed the trial court’s ruling.