In the recent decision of Beatriz Valdes, et al. v. MCH Mariner’s Cove, LLC et al., Civil Action No. 7019-VCG (July 9, 2013), the Court of Chancery analyzed whether to dismiss a stagnant case filed eighteen months ago. Plaintiffs owned a house trailer on a leased lot in the Defendants’ trailer park. Plaintiffs desired to sell their trailer to a third party, a transaction that was contingent upon a transfer of the lot lease to the purchaser. Defendants refused to approve the lease transfer unless Plaintiffs paid for the removal of an abandoned oil tank on the leasehold. Plaintiffs have asserted that this violates the lease agreement.
After serving discovery in May 2012, Plaintiffs took no further action in this case. In May 2013, the Register in Chancery sent a letter notifying the parties that the matter was subject to dismissal under Chancery Court Rule 41(e), for failure to prosecute for more than one year. No response was received for six weeks after that letter was issued. On June 26, 2013, Plaintiffs moved for a voluntary dismissal without prejudice.
In their motion, Plaintiffs concede that Defendants have removed the oil tank from the leasehold and have consented to a transfer of the lease, thus mooting their equitable claims. However, Plaintiffs desire for the case not to be dismissed with prejudice, in order to retain monetary damages against Defendants. Defendants countered with a motion for dismissal with prejudice, under Chancery Rule 41(e).
The Court was not persuaded by Plaintiffs’ argument that the case should not be dismissed with prejudice at this time because net damages are likely low and net return on the litigation is questionable. Vice Chancellor Parsons likened the situation to the character in Joseph Heller’s Catch-22 novel who, challenged with Emiliano Zapata’s famous aphorism—it is better to die on your feet than live on your knees—replied that it is better to live on your feet than die on your knees. Joseph Heller, Catch-22, at 248 (1994).
Plaintiffs’ desire to “live on [their] feet” through a dismissal of the case without prejudice was rejected by the Court. Instead, Vice Chancellor Parsons ruled that either Plaintiffs must proceed with litigation—a potentially costly proposition with little upside—or face dismissal with prejudice. The Court determined that Defendants deserved a resolution of the matter, and that while Plaintiffs’ undesirable Catch-22 situation was noted, the Court dismissed the case with prejudice.