United States District Court, D. Utah
MEMORANDUM DECISION AND ORDER DISMISSING
PLAINTIFFS' CLAIMS WITH PREJUDICE
N. PARRISH DISTRICT JUDGE
the court is Plaintiffs' Rule 41 Motion to Dismiss with
Prejudice and for Stay of Summary Judgment Briefing (ECF No.
152). The court previously granted Plaintiffs' request
that it stay all briefing on Mentor Capital, Inc.'s
Motion for Summary Judgment. For the reasons set forth below,
the court grants the remainder of Plaintiffs' motion.
Plaintiffs' claims are dismissed with prejudice as moot.
Gena and Susan Golden have moved to dismiss their claims with
prejudice. They contend that their claims are moot because
Defendant Mentor Capital, Inc. has paid them the relief they
seek in this action. Mentor agrees that Plaintiffs'
claims should be dismissed with prejudice. But it contends
that the dismissal should be conditioned on it being declared
the prevailing party. Defendants Michael L. Labertew and
Labertew & Associates do not oppose dismissal and have
not asked the court to declare them prevailing parties as a
condition to dismissal.
Dismissal Under Federal Rule of Civil Procedure
contends that the court should dismiss Plaintiffs' claims
on the condition that Mentor be declared a prevailing party.
This will allow Mentor to seek costs and attorneys' fees.
Plaintiffs oppose Mentor's request. Plaintiffs argue that
Mentor should not be declared a prevailing party because it
paid Plaintiffs the damages they seek in this case. The court
agrees with Plaintiffs.
Rule 41(a)(2), courts may dismiss an action, upon a
plaintiff's request, “on terms the court considers
proper.” This rule allows courts to dismiss a case on
the condition that a defendant is declared a prevailing
party. See AeroTech, Inc. v. Estes, 110 F.3d 1523,
1527-28 (10th Cir. 1997). Similarly, a court may dismiss a
case on the condition that a defendant is awarded costs,
attorneys' fees, or both. See Id. at 1526-28.
The Tenth Circuit has held that “a defendant is a
prevailing party under Rule 54 when, in circumstances not
involving settlement, the plaintiff dismisses its case
against the defendant, whether the dismissal is with or
without prejudice.” Id. at 1527 (emphasis
added) (quoting Cantrell v. Int'l Bhd. of Elec.
Workers, 69 F.3d 456, 456 (10th Cir. 1995)).
Mentor Capital is not a prevailing party because it paid
Plaintiffs the damages they seek in this action. Plaintiffs
have moved to dismiss their claims with prejudice on the
grounds that they have received the relief sought under their
claims. Specifically, Mentor paid Plaintiffs the damages they
seek in this action pursuant to a judgment in another case,
see Mentor Capital Inc. v. Bhang Chocolate
Co., No. 3:14-cv-03630-LB, ECF No. 55 at 2 (N.D. Cal.
filed Aug. 11, 2014). This judgment allowed Plaintiffs to
return their Mentor stock to Mentor in exchange for the
consideration they paid for the stock. In short, Mentor
returned to Plaintiffs the money they invested in Mentor.
Mentor Capital and Plaintiffs have not entered into a formal
settlement agreement. But they have “settled”
their claims because Mentor paid to Plaintiffs the damages
they seek in this case. See Settle, Black's
Law Dictionary (10th ed. 2014) (“2. To end or
resolve (an argument or disagreement, etc.); to bring to a
conclusion (what has been disputed or uncertain) <they
settled their dispute>.”). The parties have come to
a de facto settlement that allowed Plaintiffs to
tender their shares to Mentor for the consideration they paid
for those shares. Requiring the parties to enter into a
formal settlement agreement to avoid the rule that a
defendant is a prevailing party when the plaintiff dismisses
a case against the defendant would produce an absurd result:
Mentor would be declared the prevailing party despite the
fact that it gave Plaintiffs the relief they requested. Thus,
despite the fact that Plaintiffs seek to voluntarily dismiss
their claims, Mentor is not a prevailing party
because the parties have settled the claims at issue, thereby
rending them moot.
Costs Under Rule 54(d)(1)
Mentor has not moved for costs at this time, the court turns
to the issue of whether Mentor would be entitled to costs if
it were a prevailing party. Rule 54(d)(1) provides that
“[u]nless a federal statute, these rules, or a court
order provides otherwise, costs-other than attorney's
fees-should be allowed to the prevailing party.” In
short, Rule 54(d)(1) creates a “presumption that the
district court will award costs to the prevailing party,
” and the “district court must provide a valid
reason for not awarding costs to a prevailing party.”
AeroTech, 110 F.3d at 1526. A district court's
denial of costs under Rule 54(d)(1) is reviewed for abuse of
it is presumed that a district court will award costs to a
prevailing party, there are a number of circumstances in
which a district court may properly deny costs to a
prevailing party. Id. For instance, “a denial
of costs does not constitute an abuse of discretion when the
prevailing party is only partially successful.”
Id. (citing Cantrell, 69 F.3d at 459). The
Tenth Circuit has also suggested that a district court may
decline to award costs when “the prevailing party acted
in bad faith, the prevailing party received only nominal
damages, the nonprevailing party was indigent, the issues
were close and difficult, or the costs were unreasonably high
or unnecessary.” Id. (citing
Cantrell, 69 F.3d at 459).
even assuming that Mentor were declared a prevailing party,
the court would not grant it costs under Rule 54(d)(1).
Mentor was not even “partially successful” in
this action. Shortly after the case was filed, Mentor
unsuccessfully attempted to dismiss Plaintiffs' claims.
Mentor also unsuccessfully sought sanctions against
Plaintiffs. Plaintiffs eventually prevailed, over
Mentor's opposition, on their motion for partial summary
judgment. Plaintiffs have only now decided to
dismiss their claims with prejudice because Mentor has paid
them for their Mentor stock pursuant to a judgment in another
case. This was also a “close and difficult case,
” weighing against an award of costs to either side.