E-Alert Case Updates

The Court Cannot Reconsider a Voluntary Dismissal

Omega US Ins., Inc. v. Penn. Nat’l Mut. Cas. Ins. Co.
Case No. ELH-11-2297 (D. Md. January 13, 2012)
by Gregory L. Arbogast, Associate
Semmes, Bowen & Semmes (www.semmes.com)

While the Court’s memorandum in Omega US Ins., Inc. merely arises out of a status conference, it addressed an important issue that was apparently misunderstood by the parties. When a plaintiff voluntarily dismisses a defendant before the defendant has answered, the defendant is automatically dismissed, irrespective of the Court’s approval. Apparently, this tenet is often forgotten because the U.S. District Court for the District of Maryland has engaged in the practice of approving the dismissal or of “marginally approving the dismissal.” The Court’s approval, however, is merely ministerial and it does not actually serve a substantive function. In Omega, Judge Hollander needed to remind the parties of this important rule.

Omega US Ins., Inc. is a declaratory judgment action in which Omega US Insurance, Inc. (“Omega”) sought to disclaim coverage for its insured, RN’G Construction, Inc. (RN’G). Omega also sued Pennsylvania National Mutual Casualty Insurance Company (“Penn National”), Timothy W. Whalen, Evonne J. Whalen, Joyce M. Lookabaugh, and Con-Way Truckload (“Con-Way”) as necessary parties. RN’G sought coverage for an accident involving one of its trucks. The United States District Court for the District of Maryland acquired jurisdiction over the case based on diversity.

Omega subsequently amended its Complaint to name two (2) additional Defendants: the Maryland State Highway Administration (“SHA”) and Long Fence Company Inc. (“Long Fence”). Significantly, the Court raised the issue of whether SHA was in fact part of the State of Maryland, or an alter-ego of the State of Maryland. This is significant, because ordinarily a state is not a citizen for diversity purposes. If the agency is an alter-ego of the state, however, then the agency will be considered a citizen of the state for diversity purposes. If SHA were considered a citizen of Maryland, it would destroy diversity.

To avoid this potential jurisdictional issue, Omega voluntarily dismissed SHA before SHA answered the Amended Complaint. The United States District Court issued a ruling in which it marginally approved the dismissal. Defendants, however, asked that Judge Hollander reconsider her decision approving the dismissal in light of the jurisdictional issues presented by adding SHA as a party. Judge Hollander, however, issued this opinion to remind the parties that she approved the dismissal by margin Order as a ministerial function to assist the clerk’s office in dismissing SHA as a party. She stressed that her decision had no real or legal effect on the dismissal. Instead, the rules permit Omega to voluntarily dismiss SHA before SHA answers without leave of court. Therefore, she could not reconsider her decision to dismiss SHA.