1995 WL 129240 (N.D.Cal.)

Not Reported in F.Supp.,

United States District Court, N.D. California.

Victor BEAUZAY; John T. Healey; G. Gregory Smith, Plaintiffs, v.

The CORPORATION OF LLOYD’s, a corporation; The Society of Lloyd’s, London; The Council of Lloyd’s, London; and Harold Hallin, individually, Defendants.

C-94-20859-JW.

March 23, 1995.

ORDER RE PLAINTIFFS’ MOTIONS TO REMAND AND TO DISQUALIFY COUNSEL, DEFENDANTS’ MOTION TO DISMISS, AND DEFENDANT HALLIN’S MOTION TO COMPEL ARBITRATION AND FOR DISMISSAL; AND PLAINTIFFS’ NOTICE OF VOLUNTARY DISMISSAL

WARE, District Judge.

[*1]  On February 17, 1995, the Court heard oral argument on Plaintiffs’ Motion to Remand, Plaintiffs’ Motion to Disqualify Counsel, Defendants’ Motion to Dismiss and Defendant Harold Hallin’s Motion to Compel Arbitration and for Dismissal. After the hearing and on the same date, Plaintiffs filed a Notice of Voluntary Dismissal pursuant to Federal Rule of Civil Procedure 41(a)(1). Thereafter, Defendants filed a response seeking to vacate Plaintiffs’ Notice of Dismissal.

BACKGROUND

This case has a rather complex and convoluted procedural history. Plaintiffs originally filed this action in the Santa Clara County Superior Court on December 30, 1993. On January 20, 1994, Defendant Wells Fargo Bank, N.A. removed the action to this Court pursuant to 28 U.S.C. § 1441(b) and 12 U.S.C. § 632. [FN1] On January 26, 1994, Plaintiffs voluntarily dismissed all defendant banks. Plaintiff Smith voluntarily dismissed all Defendants on March 24, 1994. On March 29, 1994, Plaintiffs dismissed all of the Members’ Agency Defendants and, on March 31, 1994, dismissed Defendants Harold Hallin (“Hallin”) and William Moody. Defendant Hallin was dismissed without prejudice.

On April 11, 1994, Plaintiffs filed an amended complaint adding a violation of California Securities Laws and adding Harold Hallin as a Defendant. In addition, Plaintiff Smith was added back into the suit. On June 15, 1994, this Court issued an order striking Plaintiffs’ amended complaint and denying Plaintiffs’ Motion to Remand. Plaintiffs moved for reconsideration. On September 28, 1994, this Court issued an order granting Plaintiffs’ Motion for Reconsideration and Plaintiffs’ Motion for Leave to Amend. [FN2] The Court also remanded the action to state court finding that the addition of Defendant Hallin destroyed diversity jurisdiction.

On October 26, 1994, Defendant Hallin filed a Notice of Removal asserting federal question jurisdiction under 9 U.S.C. § 205 (the Convention on the Recognition and Enforcement of Foreign Arbitral Awards). [FN3]

DISCUSSION

Defendants claim that Plaintiffs’ notice of motion for voluntary dismissal should be vacated because (1) Plaintiffs have previously dismissed this action and (2) Defendant Hallin’s motion to compel arbitration is analogous to a summary judgment motion.

A. Previous Dismissal

Plaintiffs argue that this Court should find that a dismissal of less than all defendants by all plaintiffs is not a dismissal of an “action” for purposes of Rule 41(a)(1). Thus, Plaintiffs assert that, because all Plaintiffs did not dismiss all Defendants at any time, there has not been a dismissal of an “action” under Rule 41(a)(1).

Plaintiffs urge the Court to adopt the holding enunciated by the Second Circuit in Harvey Aluminum v. American Cynamid Co., in which the court held that there is an absolute distinction between an “action” and a “claim.” Harvey Aluminum v. American Cynamid Co., 203 F.2d 105, 108 (2nd Cir.1953) cert. denied 345 U.S. 964. The Second Circuit interpreted the term “action” to only apply to the entire controversy and not to an individual “claim” or “cause of action.” The Ninth Circuit, however, has rejected this argument. Lake at Las Vegas Investors v. Pacific Malibu Dev., 933 F.2d 724, 728 (9th Cir.1991).

[*2]  The Ninth Circuit’s opinion in Lake did, however, adopt the Second Circuit’s interpretation of Rule 41(a)(1), in regards to whether a dismissal must be a dismissal of all defendants. Id. at 728. The Ninth Circuit held that Rule 41(a)(1) may be invoked to dismiss fewer than all parties in some situations, but did not decide whether a Rule 41(a)(1) dismissal of less than all parties should be sufficient in every instance to trigger the two dismissal bar. Id. (quoting Wakefield v. Northern Telecom, Inc., 769 F.2d 109, 114 (2d Cir.1985) (noting that Harvey Aluminum, 203 F.2d 105, is against the weight of authority)).

In Lake, plaintiff initially filed its claim in state court. The entire complaint was then voluntarily dismissed. The plaintiff subsequently refiled, and the case was removed by defendant to federal court. Plaintiff then voluntarily dismissed all claims against a single defendant, Transcontinental. The Ninth Circuit held that, for purposes of Rule 41, this factual scenario triggers the two dismissal bar. Id. at 728. This Court is satisfied that the case at bar is sufficiently similar to Lake to invoke its holding.

However, the Court finds that Rule 41(a)(1)’s two dismissal bar only applies to Plaintiff G. Gregory Smith and Defendant Harold Hallin.

1. Plaintiff, G. Gregory Smith

Smith voluntarily dismissed all claims against all Defendants on March 24, 1994. Accordingly, Smith’s Notice of Voluntary Dismissal of this action on February 17, 1995 will be deemed an adjudication on the merits of Smith’s claims against all Defendants. Smith’s claims against Defendants are hereby DISMISSED with prejudice from this action.

2. Defendant, Harold Hallin

The two dismissal bar also applies to the claims brought against Defendant Harold Hallin. Plaintiffs voluntarily dismissed Hallin on March 31, 1994. Accordingly, Plaintiffs’ Notice of Voluntary Dismissal of Defendant Hallin on February 17, 1995 will be deemed an adjudication on the merits of Plaintiffs’ claims against Defendant Harold Hallin. Defendant Harold Hallin is hereby DISMISSED with prejudice from this action.

B. Motion to Compel Arbitration

Defendants claim that their Motion to Compel Arbitration [FN4] is equivalent to a motion for summary judgment for Rule 41(a)(1) purposes. The Court disagrees.

The Ninth Circuit has held that a motion to compel arbitration is not the equivalent of a summary judgment motion. See Hamilton v. Shearson-Lehman American Express, Inc., 813 F.2d 1532, 1535 (9th Cir.1987). Defendants’ attempt to extend this holding by arguing that “voluminous paperwork” was also filed with the Motion to Compel Arbitration does not change this result. No matter how Defendants wish to characterize their motion, a motion to compel arbitration is not a 12(b)(6) motion, and as such, it cannot be converted into a summary judgment motion. Compare Yosef v. Passamaquoddy Tribe, 876 F.2d 283 (2nd Cir.1989) (finding that a 12(b)(6) motion can be converted in some situations into a summary judgment motion).

CONCLUSION

[*3]  1. Plaintiff G. Gregory Smith’s claims against Defendants are hereby DISMISSED with prejudice.

2. Defendant Harold Hallin is hereby DISMISSED with prejudice from this action.

3. Pursuant to Plaintiffs’ Notice of Voluntary Dismissal filed on February 17, 1995, the remainder of this action is hereby dismissed without prejudice.

4. Plaintiffs’ Motion for Remand, Plaintiffs’ Motion to Disqualify Counsel, Defendants’ Motion to Dismiss and Defendant Hallin’s Motion to Compel Arbitration and for Dismissal are DENIED AS MOOT.

IT IS SO ORDERED.

FN1. 12 U.S.C. § 632 confers jurisdiction on the federal district courts over suits arising out of national banks engaging in banking activity with foreign companies.

FN2. The amended complaint was deemed filed as of April 11, 1994.

FN3. This case was originally assigned to San Francisco and reassigned to the San Jose division of this Court on December 20, 1994.

FN4. Defendant Hallin filed a Motion to Compel Arbitration on January 6, 1995, which is currently under submission.