No. 85-247
I N THE SUPREME COURT OF THE STATE OF MONTANA
1986
HENRY CANTRELL and L I L L I A N
CANTF.ELL ,
P l a i n t i f f s and A p p e l l a n t s ,
MARK HENDERSON and CARDINAL
DRILLING, a corporation,
D e f e n d a n t s and R e s p o n d e n t s .
APPEAL FROM: D i s t r i c t C o u r t of t h e T e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of F e r g u s ,
T h e H o n o r a b l e P e t e r R a p k o c h , Judge p r e s i d i n g .
COUNSEL OF RECORD:
For Appellant:
Huntley & Eskin; Gene Huntley, Baker, Montana
F o r Respondent:
Alexander & Baucus; G a r y M. Zadick, G r e a t F a l l s ,
Montana
S u b m i t t e d on B r i e f s : Dec. 20, 1985
Decided: A p r i l 29, 1986
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
Plaintiffs sued in the Tenth Judicial District Court for
Fergus County claiming damages for personal injuries suffered
in a motor vehicle accident. Following plaintiffs' motion to
dismiss the defendant Mark Henderson, he was dismissed with
prejudice. Cardinal Drilling then moved for summary judgment
on the grounds that its employee Mr. Henderson had been
dismissed with prejudice. That motion was granted. Plain-
tiffs appeal. We affirm the District Court in part and
reverse In part.
The issues on appeal:
1. Did the District Court err in dismissing defendant
Mr. Henderson with prejudice?
2. Should the District Court's dismissal of Cardinal
Drilling be reversed?
3. Did the District Court err in refusing to permit
discovery of earlier statements of Mark Henderson taken by
defendant ' s insurance company?
The agreed facts are that at about 10:OO a.m. on
December 11, 1981, Mark Henderson, while in the course and
scope of his employment for Cardinal Drilling, was driving a
Cardinal Drilling truck south on U.S. 191 in Fergus County,
Montana. The plaintiffs were driving north on the same
highway with Mrs. Cantrell at the wheel. As the vehicles
approached each other, apparently Mr. Henderson dozed and his
truck started to drift across the center line. Either be-
cause the Cantrell automobile was struck or because of the
swerve by Mrs. Cantrell to avoid beinq struck, the Cantrell
vehicle went off the highway and turned over, injuring both
Mr. and Mrs. Cantrell. Cardinal Drilling maintains that its
truck did not get closer than three to five feet from the
Cantrells.
The Cantrells sued Mark Henderson and Cardinal Drilling.
Mr. Henderson and Cardinal Drilling answered, denying the
allegations of negligence and alleging contributory negli-
gence on the part of the Cantrells. The plaintiffs filed an
amended complaint stating a claim for punitive damages. A
trial date of December 17, 1984 had been fixed.
On October 25, 1984 the plaintiffs moved the court to
dismiss the action against the defendant Mark Henderson. On
November 7, 1984 Cardinal Drilling responded to the motion to
dismiss and stated that it had no objection to Mark Henderson
being dismissed from the case "on the condition that such
dismissal be with prejudice." By order dated November 9,
1984 the District Court dismissed the action as to defendant
Mark Henderson, with prejudice.
On March 7, 1985 Cardinal Drilling filed a motion for
summary judgment. After a hearing, the District Court en-
tered its order granting judgment to defendant Cardinal
Drilling with costs. Plaintiffs appeal that judgment. As a
part of that appeal, plaintiffs appeal an order dated October
15, 1984 which denied the plaintiffs' motion to compel
production.
I
Did the District Court err in dismissing Mr. Henderson
with prejudice?
Plaintiffs contend that the District Court should have
disregarded the request for a dismissal- with prejudice by
Cardinal Drilling, and granted the motion for dismissal
without prejudice. Dismissal of a party is governed by Rule
41, M.R.Civ.P. The portion of the rule which is applicable
where the defendants have answered is Rule 41 (a)(2),
M.R.Civ.P., which states in part:
(2) By order of court. Except as pro-
vided in paragraph (1) of this subdivi-
sion of this rule, an action shall not be
dismissed at the plaintiff's instance
save upon order of the court and upon
such terms and conditions as the court
deems proper. ... Unless otherwise
specified in the order a dismissal under
this paragraph is without prejudice.
From the wording of the rule, it is clear that a district
court has authority to condition a dismissal upon such terms
and conditions as it deems proper, and that the court also
has the power to dismiss with prejudice or without prejudice,
subject to the provision that the dismissal is without preju-
dice unless otherwise stated. It was appropriate for Cardi-
nal Drilling to file its motion in response to plaintiffs'
motion to dismiss, and for it to request a dismissal with
prejudice. Plaintiffs have not proven facts requiring a
limitation upon the discretion granted. to the District Court
with regard to dismissal. We conclude that the District
Court acted within its discretion when it entered an order of
dismissal. We will discuss further the prejudice aspect of
the dismissal.
Plaintiffs argue that the question is controlled by the
case of Petritz v. Alhertsons, Inc. (1980), 187 Mont. 1 0 2 ,
608 P.2d 1089. Plaintiffs seek to apply the conclusion in
Petritz that even though the plaintiff might have obtained
some tactical advantage, the Court would not bar a dismissal.
That does not apply here. The District Court in this case
did not bar a dismissal; it granted dismissal with prejudice.
Cardinal Drilling argues that the issue is no longer
worthy of consideration because the statute of limitations
has run so far as the Henderson claim is concerned. We do
not find that argument persuasive. The sole reason for
dismissal of Cardinal Drilling is that Mr. Henderson had been
dismissed with prejudice. Cardinal Drilling also argues that
this issue was not timely raised. The dismissal of Mr.
Henderson was interlocutory in nature, and this issue was
briefed and argued. before the District Court.
We conclude that where the plaintiffs moved for dismiss-
al without specifying whether dismissal should be with or
without prejudice, that issue was left to the discretion of
the trial court in accordance with the provisions of Rule
41 (a) (2), M.R.Civ.P. See 9 Wright and Miller, Federal Prac-
- - Procedure,
tice and. § 2367, at 184. We hold that the Dis-
trict Court did not err in dismissing Mr. Henderson with
prejudice.
I1
Should the District Court's dismissal of Cardinal Drill-
ing be reversed?
The District Court concluded that State ex rel. City of
Havre v. District Court (Mont. 1980), 609 P.2d 275, 37
St.Rep. 552, applies and controls the present case. It held
that the plaintiffs' motion to dismiss defendant Mark Hender-
son and the granting of that motion with prejudice was equiv-
alent to the stipulation between the parties in City -
of
Favre. The District Court therefore granted Cardinal Drill-
ing's motion to dismiss.
City of Havre arose in connection with the shooting of a
fleeing burglar by a Havre police officer. That officer was
named as a defendant along with the City of Havre and County
of Hill. The plaintiff and the police officer stipulated to
dismissal of the police officer with prejudice and the trial
court so ordered. Thereafter, the police officer's employ-
ers, City of Havre and County of Hill, moved for summary
judgment on the basis that the release of their employee
operated as a judgment on the merits. This Court held that a
stipulation to dismiss a defendant employee with prejudice
was "tantamount to a judgment on the merits," and that,
accordingly, such a dismissal exonerated the defendant em-
ployers. The Court held that it would not look behind the
words "with prejudice."
One month before the City - Havre case was decided,
of
this Court ruled on the parallel issue of dismissal of one of
several joint tortfeasors. Kussler v. Burlington Northern,
Inc. (1980), 186 Mont. 82, 606 P.2d 520. In that case the
Court held that a release of one joint tortfeasor "with
prejudice" does not release all of the joint tortfea.sors,
unless the document intends to do so, or the payment is full
compensation, or the release expressly so provides. Kussler,
606 P.2d at 524. That decision was supported by an examina-
tion of the reasoning of other jurisdictions and the Restate-
ment (Second) of Torts. The Court adopted the view that the
common law rule to the contrary "is a trap for the unwary, it
stifles the desire of the victim to compromise, and it leads
to results not intended by the parties." Kussler, 606 P. 2d
This Court later distinguished the facts in City -
of
Havre from a case involving substitution of the proper party
for parties mis-joined.. White v. Lobdell (Mont. 1982), 638
P.2d 1057, 39 St.Rep. 1. In White, the defendant realty
company was first incorrectly identified in the complaint as
a partnership. The members of the partnership were subse-
quently dismissed with prejudice, and the corporation was
substituted party. The District Court applied City
Havre and concluded that dismissal of the individua.1~
was, in
effect, dismissal of the corporation, since the corporation
could only be liable through the acts of its agents or em-
ployees. This Court reversed, holding that - -
City of Havre was
not applicable, and that what had occurred was "not a
substantive dismissal with prejudice of an agent or employee,
but rather the substitution of a proper party before the
court." White, 6 3 8 P.2d at 1 0 6 0 .
We now reexamine the issue of whether a dismissal with
prejudice of a defendant employee exonerates the defendant
employer. There is a split of authority on this issue, as
this Court noted in City - Havre, 6 0 9 P.2d
- of at 2 7 7 . We
conclude that the better rule is that dismissal of a defen-
dant "with prejudice" does not release other defendants who
may be liable under a theory of respondeat superior, unless
the document intends to do so, or the payment is full compen-
sation, or the release expressly so provides. This is con-
sistent with Kussler and White and reflects the tactical
reality of dismissals of less than all defendants in
multi-party tort litigation. It also reflects the inappro-
priateness in modern practice of an interpretation which
finally disposes of substantive issues based on a technical
misstep by counsel. To the extent that it is inconsistent
with this rule, we expressly overrule our holding in - -of
City
Havre. We do this not without considering and weighing the
importance of stare decisis and the central role of precedent
in our system of legal justice. For reasons of fairness
fully discussed in our opinion in Kussler, 6 0 6 P.2d at 524,
the force of this ruling shall apply only to this case and to
judgments of dismissal entered after the date of this
decision.
Applying the rule to the present case, it appears from
the position taken by counsel for Cardinal Drilling that the
purpose of dismissing Mark Henderson "with prejudice" was to
protect him from further litigation. The defendant's re-
sponse to plaintiffs1 motion to dismiss, which was the basis
for granting the motion dismiss with prejudice, stated:
On October 25, 1984, Plaintiffs moved to
dismiss Defendant Mark Henderson. Rule
41 (a)(2) , M.R.Civ.P., controls a motion
to dismiss in the absence of a stipula-
tion from all parties. The Court is to
grant such a motion only "upon such terms
and conditions as the Court deems prop-
er." Defendants have no objection to
Mark Henderson being dismissed from this
case on the condition that such dismissal
be with prejudice . Defendants assume
that this is Plaintiffs1 intent. It
would be unjust and improper for a dis-
missal to be without prejudice so that
Mr. Henderson could be sued again at some
later time. Therefore, Defendants simply
request that the Order of Dismissal
clearly specify that it is with
prejudice.
We conc1ud.e that the dismissal of Mark Henderson "with preju-
dice" was not intended to adjudicate the merits of this
matter. None of the circumstances set forth in I