NMCA: Dismissing With Prejudice Without Client Authority Can Be Fixed Under Rule 1-060

In a recent ruling out of the New Mexico Court of Appeals, Rogers v. Board of County Commissioners of Torrance County, Judge Hanissee answers the question of when an attorney who mistakenly dismisses his client’s case with prejudice can fix his mistake. Everyone loves a good civil procedure opinion, and this one lets us look at some basic concepts of litigation and see how they work together.

“With Prejudice”

We often hear that a case is dismissed with or without prejudice. If you aren’t an attorney, you might not know what that means. It certainly isn’t obvious from the phrase itself. But the concept is simple. According to Black’s Law Dictionary, “with prejudice” means “with loss of all rights; in a way that finally disposes of a party’s claim and bars any future action on that claim.” Likewise, “without prejudice” means without loss of rights. So, when a case is dismissed with prejudice, the case is done and cannot be re-litigated. But when a case is dismissed without prejudice, it is as if it never happened, and the plaintiffs are free to file the same lawsuit again.

In Rogers, the plaintiffs filed two cases based on the same underlying facts: one in state court, and one in federal court. In order to better position the federal case, the plaintiff agreed with his attorney to drop the state case. Plaintiff’s attorney then sought consent from the County to dismiss the state case without prejudice. But, the County preferred a dismissal with prejudice, which would have prevented the plaintiff from refiling the suit later. Apparently in an effort to show that the state case would not be refiled, the plaintiff’s attorney did in fact ask for a dismissal with prejudice.

Res Judicata

Unfortunately, due to something called “res judicata,” dismissing the state case did not position the plaintiff better in the federal case. Res judicata is a doctrine that can prevent the same parties from litigating an issue multiple times. It come into play when there has been a final judgment on the merits between the parties. And a dismissal with prejudice, unlike a dismissal without prejudice, is considered a final judgment on the merits.

After the plaintiff dismissed the state case with prejudice, the County asked to dismiss the federal case on the basis of res judicata. Essentially, it argued that since the state court had decided the issue, and plaintiff should not be allowed to sue a second time. Shortly thereafter, plaintiff’s counsel asked the state court to change the order of dismissal from one with prejudice to one without.

Rule 1-060

The Rules of Civil Procedure allow parties to change final judgments in certain circumstances. In particular, Rule 1-060 allows the court to change a judgment when there has been a mistake or excusable neglect. Plaintiff asked the state court to use Rule 1-060 to correct the mistake he made in dismissing the state case with prejudice. The County responded that plaintiff’s attorney had made a bad strategic decision and should have to live with the consequences. The state court agreed, and this appeal followed.

On appeal, the Court had to grapple with whether a lawyer’s mistaken action that had the unintended consequence of terminating litigation could be excused as a mistake under Rule 1-060. Because there was no state law on this question, the Court looked to federal law. Somewhat surprisingly, the federal court in New Mexico had already dealt with a very similar case and predicted how it believed the state court would rule.

The federal court noted that the question was difficult because of the tension between how the law treats attorney mistakes that are without client authority and mistakes that are made with client authority. Some mistakes are simply bad lawyering, and the client must live with the consequences (and/or file the malpractice lawsuit). But clients should not be punished for attorney mistakes made without their knowledge or consent. As the federal court observed, the distinction is between decisions which dispose of the case (which require consent), and other routine attorney decisions which do not dispose of the case (and therefore do not require consent). Agreeing with the federal courts, the Court of Appeals held that Rule 1-060 can apply to attorney actions that are without authority and bar the client from litigating an issue or claim in the future.

Having decided that, the Court needed to address whether the dismissal with prejudice was authorized. Its analysis was straightforward: since the client agreed to dismissal in order to improve the federal case, he had not authorized an action that would result in the dismissal of his federal claims. It therefore reversed the district court’s decision not to allow the judgment to be modified.

Lawyers Make Mistakes, but Most Mistakes Can Be Fixed

I had the good fortune to begin my career as a clerk for great judges in both New Mexico and federal courts of appeals. It is the nature of such work that one spends a lot of time thinking about mistakes made by lawyers. One of the lessons I learned was that all lawyers–even the best ones–make mistakes. But the good news is that most of the time, those mistakes can be fixed. In this case, the lawyer made a mistake, but he quickly recognized it and took the correct actions to fix it. It took an appeal, his client’s claims survived. The County probably is not happy, but that’s probably a good result.

Need help with your New Mexico appeal? I’d love for you to give me a call. If I can’t help you I will try to point you to someone who can.