December 18, 2017

Client Avoids Rule 41(E) Dismissal; Petrovski v. Neiswinger

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This summer, we told you about a pair of cases involving an attorney, Sam Vazanellis who appears to have abruptly left his Indiana law practice to live in Greece. One case (McKinley, Inc. v. Skyllas) involved his cousin, who had summary judgment granted against her when Vazanellis failed to respond, and a denial of a Rule 60(B) motion affirmed once his malfeasance was discovered. And another (Roumbos v. Vazanellis) dealt with a legal malpractice claim after Vazanellis blew a statute of limitations. This case is another example of how Mr. Vazanellis hurt his clients, but it results in a more positive outcome for the client.

Petrovski hired Vazanellis to represent him in a personal injury claim arising from an automobile accident involving Petrovski and Neiswinger. Vazanellis sent a letter to State Farm, Neiswinger’s insurer, stating that Neiswinger caused the accident and that Petrovski was being treated for his injuries.

Vazanellis later filed a complaint on Petrovski’s behalf the day before the statute of limitations expired. Vazanellis tried serving Neiswinger vis certified mail, but it was returned as “unsuccessful.” Vazanellis never tried re-serving Neiswinger.

Petrovski did not hear anything about the case for months, and his attempts to contact Vazanellis about it went unreturned. Vazanellis was later suspended from the practice of law, and a lawyer from his firm informed Petrovski of the suspension about four months later.

Petrovski hired new counsel to take his case. But around this same time, Neiswinger learned of the suit and appeared in order to file a motion to dismiss under Rule 41(E) for failure to prosecute. After a hearing, the trial court granted the motion “without prejudice.” Petrovski appealed.

On appeal, the Court looked to the many factors which must be weighed when determining whether a case should be dismissed for failure to prosecute. And it found that some of them weighed in favor of dismissing; the delay was long (20 months), and it was all Vazanellis’s fault (which the Court said that Petrovski was bound by). But the rest did not.

But the remaining factors, 5-9, favor allowing Petrovski to prosecute his complaint. Neiswinger claims that the prejudice to him is “inherent[]” due to the passage of time, but he cites no evidence that he has been prejudiced, such as the unavailability of a specific witness. Although Neiswinger claims that he and State Farm learned about the lawsuit for the first time in January 2017, State Farm knew that Petrovski retained counsel less than two weeks after the accident, which lessens any claim of prejudice. In addition, there is only one period of delay (albeit a long one) in this case, and once Petrovski got a handle on the situation, he retained new counsel, who filed an appearance and put things in motion. Notably, Petrovski acted before Neiswinger filed the motion to dismiss. Finally, there is a clear preference for deciding cases on the merits. Although the trial court dismissed Petrovski’s complaint “without prejudice,” because the statute-of-limitations period in this case had already expired, Petrovski was unable to refile the complaint. Accordingly, the trial court’s dismissal operated as a dismissal with prejudice.

Thus, the Court reversed the trial court’s decision and reinstated the lawsuit.

The Court’s reasoning highlights a practice pointer for those who wish to obtain a dismissal under Rule 41(E). While the fact of a delay certainly works in your favor, your argument in favor of dismissal will be stronger if you can point to some specific way that your client has been prejudiced by the delay. Otherwise, your attempt to obtain a dismissal may just wake up a sleeping opponent.

Incidentally, the trial court also dismissed the complaint under Rule 12(B)(5) for insufficiency of service of process. It relied in part on Federal Rule of Civil Procedure 4(m), which has a 90-day time limit for serving a complaint. The Court noted that this federal rule does not have an Indiana equivalent, and strongly hinted that it would be improper for an Indiana state court to rely on that federal rule.

Lesson:

A dismissal for failure to prosecute under Rule 41(E) involves a 9-factor analysis with evidence of specific prejudice being a particularly significant consideration.