Third Party Claims Dismissed As Moot Are With Prejudice Unless Otherwise Specified

In Stratton Corp. v. Engelberth Construction, 2015 VT 75 (May 29, 2015), the Vermont Supreme Court ruled that a general contractor’s claim against its subcontractor was dismissed when the general contractor did not timely challenge the dismissal.

Issue: Contractor was sued by the Developer for negligence in relation to a construction project. Contractor raised the statute of limitations as a defense, but also filed third party complaints against the subcontractors it employed on the project. The trial court granted Contractor’s motion for summary judgment, and stated all claims against third parties were moot and would be dismissed unless a party opposed. Contractor did not oppose the dismissal of the claims against the third party subcontractors. When the Developer later appealed the dismissal of its claim against the Contractor, Contractor moved to amend the trial court’s dismissal of the third party claims to “without prejudice.” The Developer and the Contractor settled, and the trial court issued another order dismissing all claims arising out of the project of any sort. Contractor moved to clarify again, arguing that its third party claims had never been adjudicated. The trial court denied Contractor’s request, stating that under V.R.C.P. 41(b)(3), a dismissal operated as an adjudication on the merits unless otherwise specified. Since Contractor did not oppose the original dismissal of claims against the third parties, the claims were dismissed. Contractor appealed.

Holding: The Court held the trial court acted within its discretion and properly applied V.R.C.P. Rule 41(b)(3). The Court found that the trial court provided ample notice to Contractor that it intended to dismiss the third party claims, and the Contractor did not object. Therefore, the claims against the third party subcontractors were properly dismissed. Further, the Court ruled that Contractor’s argument that V.R.C.P. 14 was the only vehicle to dismiss a third party claim was without merit. The order of the trial court is affirmed.