Olewin v. Nobel, No. 1 CA-CV 20-0706 (App. Div. I, January 5, 2023) (J. Brown) https://www.azcourts.gov/Portals/0/OpinionFiles/Div1/2023/CV%2020-0706%20Olewin%20OP%20Final.pdf

SERVICE OF MOTION TO REOPEN LAWSUIT DISMISSED FOR LACK OF PROSECUTION EFFECTIVE WHEN MAILED TO DEFENDANT'S STATUTORY AGENT/TWO DISMISSAL RULE UNDER ARIZ. R. CIV. PRO. 41(a) NOT APPLICABLE TO MOTION TO DISCONTINUE LAWSUIT & INVOLUNTARY DISMISSAL WITHOUT PREJUDICE

Plaintiff Olewin owned a business called Nobel with Staples. They split up and with Nobel agreeing to redeem Olewin's 50% interest in the company for $160,000.  Nobel never paid Olewin. Olewin sued Nobel and Staples in Arizona and obtained a default against Nobel, failing to reduce the default to judgment.  This action was dismissed “without prejudice” by the court for lack of prosecution.  Meanwhile, Olewin pursued the same claim against Staples and Nobel in New York and Michigan. The New York action was “discontinued” and the Michigan action dismissed without prejudice.  Olewin then filed a “Motion to Reopen” the Arizona lawsuit serving it upon Nobel's statutory agent and lawyer by mail. Olewin then had the default reduced to judgment.  Nobel moved to set aside the judgment on the grounds service of the motion was defective and that the prior dismissals rendered the default judgment void under Rule 41 of the Arizona Rules of Civil Procedure.  The trial court granted the motion and the Arizona Court of Appeals reversed and remand.

Following service of a summons and complaint, rule 5(c)(2) of the Arizona Rules of Civil Procedure allows for service of subsequent documents on a limited liability company via mail on the statutory agent. However, rule 5(c)(4) requires service by a process service of attempts to overturn a judgment after the time to appeal that judgment has expired.  That said, a trial court's dismissal for lack of prosecution without prejudice is not an appealable judgment so Rule 5(c)(4) does not apply . Therefore, service by mail on Nobel's statutory agent here was effective service.

Under rule 41(a)(1)(B)—the two-dismissal rule-- “if the plaintiff previously dismissed an action in any court based on or including the same claim, a notice of dismissal operates as an adjudication on the merits.” The defendant argues the prior dismissals of this claim in Arizona, New York, and Michigan bar the reopening of this claim under rule 41.

The dismissal for lack of prosecution was involuntary, not done at the behest of the plaintiff, and was expressly a dismissal without prejudice, so it does not qualify as a voluntary dismissal under rule 41.  The New York action was terminated upon the plaintiff's motion of “discontinuance without prejudice.”  Rule 41 states a dismissal occurs when a “timely notice of dismissal is filed or court order of dismissal by stipulation is filed. A motion to discontinue is neither, so it does not constitute a voluntary dismissal under rule 41. Accordingly, the Michigan dismissal was the first voluntary dismissal of plaintiff's claim. Rule 41(a)'s two-dismissal rule does not apply.