Wednesday, November 13, 2013

Nonsuit: Voluntary Dismissal of Debt Suit under Rule of Procedure 162 (TRCP)


TRCP 162: THE TEXAS NONSUIT RULE

WHAT IS A NONSUIT?

A plaintiff's formal act of dropping a lawsuit is called nonsuit. It is done by notice of nonsuit or a motion for nonsuit under Rule 162 of the Texas Rules of Civil Procedure, cited as Tex. R. Civ. P. 162.  A motion is not even required because the judge has no discretion and must dismiss the lawsuit if no counterclaim remains on file and the case is not already in trial (for limited exceptions, see below). For the same reason, a hearing is not required either. Even in an ongoing trial, the plaintiff may still take a nonsuit if its attorney has not already finished presenting its case.

TRCP 162: THE NONSUIT RULE

The nonsuit rule gives the plaintiff the right to unilaterally terminate the lawsuit prior to trial as long as no counterclaim are on file and (s)he has not already presented all but rebuttal evidence at trial.

Text of Texas Rule of Procedure Number 162 (Nonsuit rule) as an image

If counterclaims are on file, the plaintiff may still nonsuit its own claim(s), but it will not affect the opposing party's counterclaim, meaning that the lawsuit will continue on the counterclaim only. Even though it is not a counterclaim, a pending motion for sanctions will not be affected either if it is directed against the plaintiff or its attorney rather than against the Defendant (but there may be some room for argument on the issue, depending on the basis for sanctions).

EFFECT OF NONSUIT 

A nonsuit is effective when filed in writing, or dictated into the record, but the expiration of the court's plenary power, and the deadline to file a post-judgment motion, is based on the date the judge actually signs the order of dismissal, which may be a few days or more later. Once that happens, the lawsuit is officially over. A dismissal order may be delayed if the opposing party (the defendant) has a motion for sanctions pending, because the nonsuit does not nix such a motion.

The dismissal is supposed to be without prejudice rather than with prejudice because a termination by nonsuit does not involve an adjudication of the merits of the plaintiff's claims. The only thing the judge gets to do is sign the dismissal order, and that is considered a "ministerial" act, meaning that no "judging" in the common sense of the term is involved. But see -- > Dismissal with prejudice rather than without prejudice after nonsuit.

Cost of court in the nonsuit context are rarely an issue. The dismissal order may state that costs shall be borne by the party incurring same, but in a simple debt case all costs (in the form of filing and service fees) will already have been paid by the plaintiff, and they cannot be shifted to the defendant without a judgment against the defendant. Typically, there were no depositions in a debt collection case that ends with a nonsuit, which could otherwise entail significant costs because of the high fees charged by court reporters (typically assessed based on number of pages of double-spaced transcription of testimony).

SETTING ASIDE A PRIOR NONSUIT / DISMISSAL ORDER 

While the filing of the nonsuit leaves no discretion with the judge, a judge's approval is  needed to undo it. This requires a motion to set aside the dismissal order, or other type of post-judgment motion. It may take the form of a motion for new trial even if there was no trial, and even though the notion of a new one  makes no sense under the circumstances. It could also be termed a motion to reinstate, which is the term more commonly used when the plaintiff seeks to revive a lawsuit that the court has dismissed on its own intiative (-- > DWOP; -- >  Dismissal for want of prosecution).

Like post-judgment motions under other circumstances, a motion to set aside the dismissal following a nonsuit, must be filed before the trial court's plenary power over the judgment (in this case, judgment of dismissal) expires. Such a post-judgment motion could be based on discovery of new evidence; or the plaintiff may claim that the nonsuit was filed in error. If the stated basis is dubious, the defendant's counsel may wish to oppose it. Otherwise, it may not be worth contesting it. If, for example, the plaintiff's counsel represents to the court that the nonsuit was accidentally filed in the wrong case, the trial judge will probably grant the motion and reinstate the case on the docket as an active case.

If the plaintiff files and nonsuit and the case is dismissed by the judge even though a claim for affirmative relief by the defendant against the plaintiff was pending at the time, the defendant may want to file a motion attacking the dismissal order as erroneous under Rule 162. The same time-line applies to the Defendant's motion (unless neither defendant nor defendant's counsel did not get notice of the dismissal, in which case another rule of procedure may provide a viable exception to the otherwise applicable deadline).

THE OPPOSING PARTY HAS NO SAY 

There is normally no basis for the defendant to complain of a nonsuit because the plaintiff's right to nonsuit is virtually absolute. For the same reason, there is no basis for an appeal by the other party. Even if the dismissal is with prejudice, it will rarely be worth complaining about it because such language is generally to the defendant's benefit. It can be used to support the defense of res judicata should the plaintiff refile the same lawsuit later, perhaps with a different attorney.

SPECIAL SCENARIO: PARTIAL SUMMARY JUDGMENT BEFORE NONSUIT

If a partial summary judgment has previously been granted in a pending case, the nonsuit does not vacate it. Instead, the nonsuit will make it final for purposes of appeal, as long as  the nonsuit covers all claims that remained pending after the partial summary judgment order was signed.

The rationale for the rule that a partial summary judgment is unaffected by a subsequent nonsuit is that such judgment constitutes a judicial decision on the merits. To attack it, it would have to be made the subject of a timely post-judgment motion or challenged by appeal after the partial summary judgment is rendered final by the nonsuit (dismissal) order that disposes of the rest of the lawsuit.

A common scenario in debt litigation is the following: The plaintiff's attorney has obtained a default judgment or a summary judgment against one of two defendants, and the plaintiff then nonsuits the second defendant so it can start enforcement action against the first based on a final judgment against that defendant. If the statute of limitations is not running out, a separate lawsuit can be filed against the second defendant later, should the collection efforts on the judgment against the first defendant be unsuccessful.

If the statute of limitations is an issue, the plaintiff may instead seek a severance so as to obtain a final enforceable judgment against one defendant while continuing the lawsuit against the other (-- > Motion to sever). This would also preclude that defendant from arguing that collateral estoppel should bar the claim against her. She might try that defense in a second, separate lawsuit, reasoning that the claim has already been litigated and resulted in a final judgment, -- a final judgment against someone else (the co-defendant in the first lawsuit) and that the plaintiff should not be allowed to split  the same debt claim.

Partial summary judgments involving some cause of actions or claim, but not others, are unlikely in debt suit litigation because the underlying facts and damages are the same for different theories of recovery. Thus, if the creditor's attorney obtains a judgment for breach of contract, the other theories (if any) will become moot because the plaintiff cannot recover the same damages twice using a different legal theory (-- > single satisfaction rule, alternative theories of recovery).

In any event, most likely the summary judgment order will not even specify the successful legal theory and will include the words that all relief not granted is denied, thus indicating that nothing remains to be decided. -- > Mother Hubbard Clause; interlocutory vs. final summary judgments; -- > finality of judgments for purposes of appeal.)



1 comment:

  1. If you are issued an Order Granting Notice of Non-Suit signed by a judge, do you still owe the debt cited in the case?

    ReplyDelete