Blaylock v. Shearson Lehman Brothers, Inc.

Robert BLAYLOCK, Michael Ibsen, and Steve
Perry v. SHEARSON LEHMAN BROTHERS, INC.

96-1176                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered November 20, 1997


1.   Civil procedure -- nonsuit -- absolute right prior to submission of case
     to jury -- discretionary after final submission. -- Rule 41(a) of the
     Arkansas Rules of Civil Procedure has been interpreted as
     creating an absolute right to a nonsuit prior to submission of
     the case to the jury or to the court; although the rule does
     not provide for it, the supreme court has held that it is
     within the court's discretion to permit a nonsuit without
     prejudice even after final submission of the case.

2.   Civil procedure -- nonsuit -- new action may be filed within one year or
     within limitations period. -- When a nonsuit has been made
     effective, a new action may be filed within one year of the
     nonsuit or within the applicable statute of limitations,
     whichever is longer.

3.   Judgment -- when effective -- "entered" defined. -- A judgment or
     decree must be entered to be effective; under Ark. R. Civ. P.
     58 and Arkansas Supreme Court Administrative Order No. 2, the
     term "entered" means that the judgment or decree must be "set
     forth on a separate document" and filed by the clerk in the
     court's docket book.

4.   Civil procedure -- nonsuit -- court order necessary to grant -- judgment
     or decree must be entered. -- The supreme court held, with respect
     to all dismissals from litigation, including those voluntary
     dismissals without prejudice to which a plaintiff may have an
     absolute right, that a court order is necessary to grant a
     nonsuit and that the judgment or decree must be entered to be
     effective.  

5.   Action -- class action -- commencement tolls statute of limitations. --
     The commencement of a class action tolls the running of the
     statute of limitations as to purported members of the class
     during the pendency of the litigation.

6.   Limitation of actions -- appellants' complaint was erroneously dismissed
     as time barred -- matter reversed and remanded. -- Where no order or
     decree granting a nonsuit in a related action was found in the
     abstract, nor any entry reflecting such action on or before 
     October 17, 1994, when the abstract ended its references to
     the related case with the trial court's granting of summary
     judgment against some plaintiffs and dismissing the action of
     others but not including appellants in either order, the
     supreme court concluded that no nonsuit was effectively
     granted, that appellants were not dismissed from the related
     lawsuit, that the one-year savings statute was never
     activated, and that the general five-year statute of
     limitations applicable to securities fraud continued to be
     tolled as long as appellants were not dismissed from the
     related action; thus, the supreme court held that appellants'
     August 17, 1995, complaint was erroneously dismissed as time
     barred and reversed and remanded the matter for further
     proceedings.


     Appeal from Sebastian Circuit Court; John Holland, Judge;
reversed and remanded.
     Robert R. Cloar, for appellants.
     Parker, Hudson, Rainer & Dobbs, by: David G. Russell and Nancy
H. Baughan; and Hardin, Dawson & Terry, by: Rex M. Terry, for
appellee.

     Ray Thornton, Justice.
     This case presents the question whether a voluntary dismissal,
or nonsuit, by a plaintiff is automatically effective as soon as it
is filed, or whether a court order or docket entry is required to
dismiss the action without prejudice and start the clock ticking on
the statutory savings period.  The trial court found that a nonsuit
becomes effective upon filing, without any action by the trial
court; the court further found that, as a consequence, the August
17, 1995 complaint filed by appellants Robert Blaylock, Michael
Ibsen, and Steve Perry was time barred.  We disagree and reverse
and remand.
     While it is well settled that a person who files a lawsuit may
voluntarily dismiss that lawsuit and has a statutory right to
refile the action within one year pursuant to Ark. Code Ann.
section 16-56-126 (1987), we have never before addressed the
question whether the nonsuit is effective upon filing or whether
some action by the court is required.  In reaching that issue, we
consider the following rule of civil procedure on voluntary
dismissals:
     Voluntary Dismissal: Effect Thereof.  Subject to the
provisions of Rule 23(d) and Rule 66, an action may be
dismissed without prejudice to a future action by the
plaintiff before the final submission of the case to the
jury, or to the court where the trial is by the court,
provided, however, that such dismissal operates as an
adjudication on the merits when filed by a plaintiff who
has once dismissed in any court of the United States or
of any state an action based upon or including the same
claim, unless all parties agree by written stipulation
that such dismissal is without prejudice.  In any case
where a set-off or counterclaim has been previously
presented, the defendant shall have the right of
proceeding to trial on his claim although the plaintiff
may have dismissed the action.
Ark. R. Civ. P. 41(a) (1997).  We have long interpreted this rule
as creating an absolute right to a nonsuit prior to submission of
the case to the jury or to the court.  Whetstone v. Chadduck, 316
Ark. 330, 871 S.W.2d 583 (1994); Doan v. Bush, 130 Ark. 566, 198 S.W. 261 (1917).  Although the rule does not provide for it, we
have held that it is within the court's discretion to permit a
nonsuit without prejudice even after final submission of the case. 
Wright v. Eddinger, 320 Ark. 151, 894 S.W.2d 937 (1995).  When a
nonsuit has been made effective, a new action may be filed within
one year of the nonsuit or within the applicable statute of
limitations, whichever is longer.  Shelton v. Jack, 239 Ark. 875,
395 S.W.2d 9 (1965).
     We have stated that, for a judicial order to take effect, a
judgment or decree must be "entered" to be effective.  Standridge
v. Standridge, 298 Ark. 494, 769 S.W.2d 12 (1989).  We said in
Standridge that under Ark. R. Civ. P. 58 and Arkansas Supreme Court
Administrative Order No. 2, the term "entered" means that the
judgment or decree must be "set forth on a separate document" and
filed by the clerk in the court's docket book.  Id. at 497, 769 S.W.2d  at 14.  This decision reflects the importance of having the
court maintain control of its docket as well as providing an
accurate record of the status of the litigation.  This control
protects the integrity of information, and the court and parties to
the litigation rely on it when reviewing court orders and docket
entries in the case.
     The requirement for an order may also be inferred from our
decisions reversing a trial court's denial of a plaintiff's
absolute right to a voluntary nonsuit.  We have provided relief for
such an erroneous denial by reversing and remanding with
instruction to the trial court to grant the nonsuit, rather than
determining that the nonsuit was effective at the time it was
requested.  Brown v. St. Paul Mercury Ins. Co., 300 Ark. 241, 778 S.W.2d 610 (1989).
     Decisions from other jurisdictions reflect sound reasoning for
requiring court action to effectuate a nonsuit.  The Virginia
Supreme Court has interpreted its state statute dealing with
nonsuits to require a court order to be effective.  Nash v. Jewell,
227 Va. 230, 315 S.E.2d 825 (1984).  The court in Nash discussed
the importance of having some court action on the issue as follows:
[C]ourts act by orders and decrees.  There is no
termination of litigation until the court enters an
appropriate order.  Therefore, before entry of such an
order the plaintiff may reconsider his decision to take
a nonsuit.  He has no right to withdraw the nonsuit, but
he has a right to move the trial court to permit
withdrawal.  The granting or denial of the motion is a
matter for the trial court to determine in the exercise
of judicial discretion.
Id. at 237, 315 S.E.2d  at 829 (citations omitted).
     In Dorney v. Dorney, 98 N.H. 159, 96 A.2d 198 (1953), the New
Hampshire Supreme Court stated that merely filing the motion for
voluntary dismissal does not automatically end the action.  The
court explained its reasoning as follows:
The plaintiff cannot discontinue his suit without the
privity of the court.  The nature of the motion is such
that some action on it by the court is contemplated and
required.  The circumstances under which it is filed
determine whether the granting of it is a matter of the
Court's discretion or a matter of right.  Even in the
latter situation, some act or agreement of the plaintiff
may have estopped him from exercising the right or costs
may be assessed as a condition of the dismissal.  An
order of the court granting such a motion is not in
itself a judgment but is only the basis upon which a
final decree may be entered at the established judgment
day, unless otherwise ordered.  Judgment is the law's
last word in a judicial controversy.  It is not until a
judicial determination has been reduced to judgment that
an action is finally terminated.
Id. at 160, 96 A.2d  at 199 (citations omitted).
     For all the reasons we have stated, we choose to apply the
holding of Standridge to all dismissals from litigation, including
those voluntary dismissals without prejudice to which a plaintiff
may have an absolute right.  We therefore hold that a court order
is necessary to grant a nonsuit and that the judgment or decree
must be entered to be effective.  Further, we determine that, under
the facts before us, the trial court erred in dismissing the case
as time barred.  We now turn to the facts of this case.
     This is the third case filed on behalf of appellants against
the appellee Shearson Lehman Brothers, Inc.  All three cases
alleged violations of the Arkansas Securities Act relating to the
sales of stock to appellants and were grounded upon causes of
action that arose in 1986.  The five-year statute of limitations
for filing an action for securities fraud, Ark. Code Ann.  23-42-
106(f) (Supp. 1995), would have run in 1991, except that the
commencement of a class action tolls the running of the statute as
to purported members of the class during the pendency of the
litigation.  American Pipe & Constr. Co. v. Utah, 414 U.S. 538
(1974).
     Appellants were purported members of the class in the first of
the three cases, Gentile v. Shearson, a proposed class action
against appellee, filed on October 16, 1990.  On March 3, 1993,
class certification was denied.  Gentile is not before us in this
appeal, but it acted to toll the running of the five-year statute
of limitations.
     Two days later, 140 plaintiffs, including appellants, filed an
action on substantially the same grounds.  That case, Morton v.
Shearson Lehman Brothers, Inc., is likewise not before us in this
appeal; however, some of the facts from Morton are relevant to this
third case, which is now before us.  During the proceedings in
Morton, appellants joined more than eighty plaintiffs in filing a
document captioned a "nonsuit" on July 6, 1993.  The abstract in
this appeal discloses that no action was taken by the Morton trial
court on the nonsuit filed on July 6, 1993.  The abstract shows
also that counsel for plaintiffs subsequently attempted to amend
the nonsuit on two occasions for the stated purpose of restoring
some nonsuiting plaintiffs to active status.  The court did not act
on either of these first two "amended nonsuits."  Then, on July 6,
1994, counsel for plaintiffs filed another "amendment to nonsuit"
to restore appellants to active status.
     As a result of appellee's objections to this third attempt to
amend the nonsuit, a hearing was held on August 17, 1994.  Appellee
argued that it was too close to trial for appellants to be restored
to active status, and appellants' counsel contended that the
nonsuit had not become effective because no court action had been
taken.  The Morton trial court, in denying the request to restore
appellants to active status, said the following from the bench:
"Okay.  Right or wrong, you're gonna need to refile those, I'm
sorry."  Appellants do not appeal that decision, or any other
action taken by the trial court in Morton.
     This third case, Blaylock v. Shearson, was filed on August 17,
1995, seeking relief on the original cause of action.  Appellee
moved to dismiss Blaylock on the basis that the claim was time
barred.  By its order filed June 3, 1996, the trial court found
that appellants' claims were nonsuited on July 6, 1993, and it
dismissed the complaint as time barred.
     Appellee argues that the trial court's dismissal was not
erroneous for the following reasons:  (1) the July 6, 1993 nonsuit
in Morton was effective when filed, (2) the voluntary dismissal
from Morton on July 6, 1993 terminated the tolling of the five-year
statute of limitations, and (3) appellants' filing of Blaylock was
time barred because both the five-year statute of limitations and
the one-year statutory savings period had run before the Blaylock
complaint was filed.  These arguments lack merit.
     Because of our holding that a judgment or decree must be
entered before a nonsuit becomes effective, we have carefully
examined the abstract and find no order or decree granting a
nonsuit in Morton, nor any entry reflecting such action on or
before October 17, 1994, when the abstract before us ends its
references to the Morton case.  Based upon our conclusion that no
nonsuit was effectively granted, it follows that appellants were
not dismissed from the Morton lawsuit, that the one-year savings
statute was never activated, and that the general five-year statute
of limitations applicable to securities fraud continues to be
tolled for so long as appellants are not dismissed from Morton. 
The trial court in Morton granted a summary judgment against some
plaintiffs on October 17, 1994, and on the basis of a settlement,
dismissed the action of other plaintiffs on the same date. 
However, the abstract shows that appellants were not included in
either order.
     From the abstract before us, we conclude that appellants'
August 17, 1995 complaint was erroneously dismissed as time barred,
and we reverse and remand for further proceedings.