Wilmington Savings Fund Society v. Campbell ( 2021 )

NOT DESIGNATED FOR PUBLICATION
No. 122,653
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
WILMINGTON SAVINGS FUND SOCIETY, FSB d/b/a CHRISTIANA TRUST,
Not in its Individual Capacity but Solely as Trustee for Brougham Fund 1 Trust,
Appellant,
v.
JOSEPH CAMPBELL and LAURA J. CAMPBELL,
Appellees.
MEMORANDUM OPINION
Appeal from Johnson District Court; JAMES F. VANO, judge. Opinion filed June 11, 2021.
Reversed and remanded with directions.
Kersten L. Holzhueter, of Spencer Fane LLP, of Kansas City, Missouri, for appellant.
Mark E. McFarland, of Hinkle Law Firm LLC, of Lenexa, for appellees.
Before BUSER, P.J., ATCHESON and SCHROEDER, JJ.
PER CURIAM: The Johnson County District Court granted summary judgment in
this mortgage foreclosure action for Defendants Joseph and Laura Campbell because two
earlier foreclosure actions against them had been dismissed without prejudice by court
orders entered on plaintiffs' motions. In doing so, the district court misapplied the statute
governing successive dismissals of civil actions. We, therefore, reverse the summary
judgment and remand to the district court with directions to reinstate this foreclosure
action. We do so because K.S.A. 60-241(a) plainly requires that result notwithstanding
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the questionable practices of the lawyers representing the mortgage holders in the earlier
actions and the district court's failure to carefully police those practices.
FACTUAL AND PROCEDURAL HISTORY
On appeal, the parties agree the district court accurately set out the relevant facts
in its memorandum decision and order granting summary judgment. We do not look
behind that agreement and sketch an abbreviated account of the litigation history
pertinent to the statutory issue before us.
In 2002, the Campbells initially mortgaged the real property that has since been
subject to the foreclosure proceedings. We infer the property to be a developed residential
lot. We skip ahead about a decade:
⦁ BMO Harris Bank, as the mortgage holder, filed a foreclosure action against the
Campbells in 2013 in the district court. Lawyers with South & Associates represented the
bank. The bank filed a motion for summary judgment that was fully briefed by both
sides. With a ruling on summary judgment pending, the bank filed a motion in April 2014
requesting an order dismissing the action without prejudice. Under Supreme Court Rule
133(b) (2021 Kan. S. Ct. R. 214), a party filing a motion in a civil action must allow the
opposing party seven days after service of the motion to file a response unless the district
court directs otherwise. The rule has been in effect in its present form since July 2012
and, therefore, governed the dismissal motion the bank submitted to the district court.
The lawyers for the bank served the motion on the lawyers representing the
Campbells but obtained a signed dismissal order from a district court judge four days
after filing the motion and without setting the matter for hearing. The order expressly
stated the dismissal was without prejudice.
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⦁ Later in 2014, PrimeStar Trust acquired the mortgage and corresponding note.
PrimeStar, represented by South & Associates, filed a new foreclosure action in February
2015. The Campbells filed an answer, although how that case progressed isn't entirely
clear from the record in front of us. In any event, Primestar filed a motion to dismiss
without prejudice in August 2016 and obtained a signed order of dismissal from a district
court judge the next day without a hearing. In its memorandum decision in this case, the
district court characterized the August 2016 order as "seemingly without prejudice," a
reference we take to mean the order did not explicitly state one way or the other. That
order is not included in the record on appeal, so we rely on what's in the memorandum
decision, as the parties have agreed.
The agreed-upon facts do not indicate the lawyers for the Campbells objected to
the order of dismissal or sought to set it aside under K.S.A. 60-259 or K.S.A. 60-260.
We, therefore, assume no such objections or efforts were made.
⦁ Wilmington Savings Fund Society, FSB d/b/a Christiana Trust, not in its
individual capacity but solely as Trustee for Brougham Fund 1 Trust, the plaintiff in this
case, acquired the mortgage and note. Wilmington Savings, represented by lawyers from
Martin Leigh, P.C., filed this foreclosure action against the Campbells in December 2017.
Wilmington Savings and the Campbells filed cross-motions for summary judgment. As
we have indicated, the district court entered summary judgment for the Campbells on the
grounds that the voluntary dismissal of the 2014 action necessarily was on the merits
under K.S.A. 60-241(a), thereby precluding this foreclosure action. Wilmington Savings
has duly appealed.
LEGAL ANALYSIS
The standards governing summary judgment motions in the district court and on
appeal are settled and often repeated. We do not belabor them here, since the parties do
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not suggest there are any disputed issues of material facts bearing on the district court's
ruling. Essentially, the courts must give the nonmoving party the benefit of any disputed
facts and any reasonable inferences drawn from the facts. If the moving party is entitled
to judgment as a matter of law on that review of the record, then summary judgment
properly may be entered. See Estate of Randolph v. City of Wichita, 57 Kan. App. 2d 686,
689-90, 459 P.3d 802, rev. denied 312 Kan. 891 (2020). The issue here turns on the
application of K.S.A. 60-241(a) to the undisputed facts and, thus, presents a question of
law.
In pertinent part, K.S.A. 2020 Supp. 60-241 provides:
"(a) Voluntary dismissal. (1) By the plaintiff. (A) Without a court order. Subject
to subsection (e) of K.S.A. 60-223, K.S.A. 60-223a and K.S.A. 60-223b, and
amendments thereto, and any applicable state statute, the plaintiff may dismiss an action
without a court order by filing:
(i) A notice of dismissal before the opposing party serves either an answer or a
motion for summary judgment; or
(ii) a stipulation of dismissal signed by all parties who have appeared. When the
dismissal is by stipulation, the clerk of the court must enter an order of dismissal as a
matter of course.
(B) Effect. Unless the notice or stipulation states otherwise, the dismissal is
without prejudice. But if the plaintiff previously dismissed any federal- or state-court
action based on or including the same claim, a notice of dismissal operates as an
adjudication on the merits.
(2) By court order; effect. Except as provided in paragraph (1), an action may be
dismissed at the plaintiff's request only by court order, on terms that the court considers
proper. If a defendant has pleaded a counterclaim before being served with the plaintiff's
motion to dismiss, the action may be dismissed over the defendant's objection only if the
counterclaim can remain pending for independent adjudication. Unless the order states
otherwise, a dismissal under this paragraph is without prejudice."
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On appeal, Wilmington Savings submits the district court erred in concluding the
dismissal order ending the second foreclosure action effectively operated as a notice of
dismissal and, therefore, amounted to an adjudication on the merits. We agree with
Wilmington Savings, given the plain language of K.S.A. 60-241(a).
By its terms, K.S.A. 2020 Supp. 60-241(a) regulates the voluntary dismissal of
civil actions and draws a clear difference in procedure and effect between dismissals by
court order, on the one hand, and dismissals by either notice of the plaintiff or stipulation
of the parties, on the other hand. As provided in K.S.A. 2020 Supp. 60-241(a)(1)(B), if a
plaintiff has once dismissed an action, a dismissal by notice of a second action based on
or including the same claim amounts to an adjudication on the merits. As such, the
second dismissal effectively creates a res judicata bar to a third action. See Jian Yang Lin
v. Shanghai City Corp., 950 F.3d 46, 50 (2d Cir. 2020) (construing comparable provision
of Fed. R. Civ. P. 41[a]); 9 Wright & Miller, Federal Practice and Procedure: Civil 4th §
2368 (2021). This is commonly known as "the two-dismissal rule." See Sumner v. Law
Offices of Jerry Berg, P.A., 20 Kan. App. 2d 572, Syl. ¶ 2, 890 P.2d 742 (1995).
The rule aims to prevent John Doe from litigiously harassing Richard Roe by
serially filing and then dismissing by notice what functionally amounts to the same
action. 9 Wright & Miller, Federal Practice and Procedure: Civil 4th § 2368. A dismissal
by notice after an initial dismissal on any procedural basis interposes a legal bar to a third
filing. And it applies to actions filed in different jurisdictions. But the rule comes into
play only if the second dismissal is by notice. Sumner, 20 Kan. App. 2d at 573-74; 9
Wright & Miller, Federal Practice and Procedure: Civil 4th § 2368. Although the
pertinent language of K.S.A. 60-241(a) has been amended in the 25 years since Sumner,
those changes have been editorial rather than substantive. So Sumner continues to
correctly state the rule and how it operates.
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Here, both dismissals preceding this action were by district court order. Those
dismissals, therefore, did not trigger the two-dismissal rule in K.S.A. 2020 Supp. 60-
241(a)(1)(B). And the district court erred in dismissing this action in reliance on the rule.
In this respect, K.S.A. 60-241(a) is plain and unambiguous. District courts and
appellate courts alike are obligated to review and apply statutes as they are written. In
construing a comprehensive statute, such as this one governing dismissal of civil actions,
an appellate court must, as a first priority, strive to honor the legislative intent and
purpose. In re Marriage of Traster, 301 Kan. 88, 98, 339 P.3d 778 (2014). The court
should look initially to the words of the statutes to discern legislative intent. Bussman v.
Safeco Ins. Co. of America, 298 Kan. 700, 725-26, 317 P.3d 70 (2014). If those words are
clear, they control. Judicial review should not, then, add something to the statutory
language or take away something already there. Casco v. Armour Swift-Eckrich, 283 Kan.
508, Syl. ¶ 6, 154 P.3d 494 (2007).
Here, the district court disregarded those principles to hold the court-ordered
dismissal of the second foreclosure action ought to be treated as a dismissal by notice
when it plainly was not. The district court noted that the lawyers for the plaintiff
mortgage holder in the second action violated Rule 133 by obtaining a judge's signature
on the dismissal order before the seven-day period for the Campbells to respond to the
motion had expired. That's true. But neither K.S.A. 60-241(a) nor Rule 133 contains an
exception expanding the two-dismissal rule in that circumstance.
As we have indicated, the Campbells could have challenged the adequacy of the
dismissal order in the second action. They did not. As a result, they forbore the
opportunity to ask that the district court impose conditions on granting the dismissal
without prejudice in that action. See K.S.A. 60-241(a)(2) (district court may order
dismissal on plaintiff's motion "on terms [it] considers proper"). Trial courts may require
the plaintiff to pay all or some portion of the defendant's litigation expenses, often
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including attorney fees, as a condition for entering a dismissal order or as a condition
precedent to filing another substantially similar action. See 9 Wright & Miller, Federal
Practice and Procedure: Civil 4th § 2366 (2021) (considering Fed. R. Civ. P. 41). The
district court's prerogative to impose conditions on a plaintiff in an order of dismissal
affords the defendant a measure of protection against the oppressive filing of repetitive
actions. That judicial authority shares a common objective with the two-dismissal rule,
but it applies to court-ordered dismissals rather than to dismissals by notice.
As we have also indicated, the lawyers for the mortgage holder in the second
foreclosure action were, at best, neglectful and, at worst, indifferent to their duties under
Rule 133 and the Campbells' right to fair notice and an opportunity to be heard on the
motion to dismiss. The district court judge who signed the order in the second case
apparently failed to take adequate steps to see that Rule 133 had been honored. But those
deficiencies in the second foreclosure action do not create a license for the district court
in this case to retool K.S.A. 60-241(a) to give the Campbells the benefit of the two-
dismissal rule.
The district court's judicial magic in this case rested on two impermissible
deviations from K.S.A. 60-241(a). First, as the district court acknowledged, it treated the
dismissal order in the second action as the legal equivalent of a notice of dismissal. In
addition, however, the plaintiff in the second action could not have dismissed by notice
because the Campbells had already filed an answer in that case. And K.S.A. 60-
241(a)(1)(A)(i) expressly precludes a plaintiff from dismissing by notice after the
defendant has answered or moved for summary judgment. So that's another
unacknowledged problem with the district court's reasoning in granting the Campbells'
motion for summary judgment. In short, courts can neither simply ignore statutory
language nor recast the facts as something they are not to carry out what they perceive to
be the spirit of the law rather than its letter. The district court did just that here, and its
summary judgment for the Campbells must be set aside.
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In the interest of completeness, we consider and discount Gioia v. Blue Cross
Hospital Service, 641 F.2d 540 (8th Cir. 1981), on which both the district court and the
Campbells heavily rely. We recognize that our courts frequently draw on federal case
authority to construe civil procedure statutes that have direct counterparts in the Federal
Rules of Civil Procedure. See Rebarchek v. Farmers Co-op Elevator, 272 Kan. 546, 552,
35 P.3d 892 (2001); Sumner, 20 Kan. App. 2d at 574; In re Marriage of Bos, No.
109,850, 2014 WL 1796155, at *4 (Kan. App. 2014) (unpublished opinion). Regardless,
however, Gioia is readily distinguishable.
The case before the Eighth Circuit Court of Appeals in Gioia was the third action
between the parties. The first had been filed and dismissed in Missouri state court; the
second had been filed and dismissed in federal district court. The third was filed in the
same federal district court. The district court dismissed the third action based on the two-
dismissal rule, and the appellate court affirmed. In the second action, Gioia filed what he
captioned as a "Memorandum for Clerk" that purported to dismiss the suit without
prejudice on the plaintiff's insistence. The filing did not conform to any recognized
motion or notice contemplated in the federal procedural rules, although the requested
result would have been something akin to a dismissal by notice. The district court judge
in the second action signed a handwritten margin note on the filing stating, "So ordered."
No separate order of dismissal was entered.
In the third action, the district court construed the dismissal in the second action to
be by notice rather than by court order, effectively disregarding the margin note. The
appellate court affirmed, while acknowledging what it characterized as "multiple
procedural errors" over the course of the litigation. 641 F.2d at 541. The district court,
apparently with the acquiescence of the parties, identified the controlling issue before it
to be simply whether the manner of dismissal in the second action was by notice or by
order. As the appellate court pointed out, neither the district court nor the parties
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considered the possibility that a dismissal by notice would have been ineffective in the
second action. 641 F.2d at 543 & n.6. That's a significant difference from the record here.
As we have explained, a notice of dismissal could not have been effective in the
second foreclosure action here specifically because the Campbells had filed an answer.
So the dismissal of that action must have been by court order, obviating application of the
two-dismissal rule. In this case, the district court could not remake (or more accurately
ignore) that fact to reach an outcome it considered intrinsically fairer than the one
required under the plain meaning of K.S.A. 60-241(a).
On appeal, Wilmington Savings asserted an alternative argument for reversing the
district court: The restrictions on successive actions in K.S.A. 60-241(a) should not
apply because a different plaintiff brought each of the three mortgage foreclosure actions
against the Campbells. Because we have otherwise granted Wilmington Savings the relief
it seeks, we decline to consider this argument.
MOTION FOR ATTORNEY FEES
Wilmington Savings has timely filed a motion and supporting materials to recover
its attorney fees on appeal from the Campbells. Under Supreme Court Rule 7.07(b) (2021
Kan. S. Ct. R. 51), we may award attorney fees on appeal if the district court had the
authority to award fees. Wilmington Savings cites provisions in the mortgage and the
related note that permit the recovery of attorney fees from the Campbells in an action
against them to remedy a breach. We read those provisions as requiring Wilmington
Savings to obtain a judgment materially remedying the claimed breach as a necessary
condition for recovering its attorney fees. In other words, Wilmington Savings must be a
prevailing party in this action.
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In this appeal, Wilmington Savings has succeeded in reversing the summary
judgment against it. The result, however, merely returns this case to the district court for
further proceedings presumably leading to a judgment on the merits. An award of
attorney fees to Wilmington Savings would be premature until it obtains a merits
judgment in its favor. We, therefore, deny the motion for attorney fees on appeal.
Reversed and remanded to the district court with directions to reinstate this action
and for further proceedings consistent with this opinion. .
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