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Catbridge Machinery, LLC v. Cytec Engineered Materials

July 18, 2012

CATBRIDGE MACHINERY, LLC, PLAINTIFF,
v.
CYTEC ENGINEERED MATERIALS,
DEFENDANTS.



The opinion of the court was delivered by: Wigenton, District Judge.

OPINION

Before the Court is Defendant Cytec Engineered Materials' ("CEM" or "Defendant") Objection to the Report and Recommendation ("R&R") of United States Magistrate Judge Madeline Cox Arleo filed on April 19, 2012, granting Catbridge Machinery, LLC's ("Catbridge" or "Plaintiff") Motion to Vacate its January 16, 2012 Voluntary Dismissal ("Motion"). This Court has jurisdiction pursuant to 28 U.S.C. § 1331. Venue is proper under 28 U.S.C. § 1391(b). This Motion is decided without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth herein, this Court ADOPTS Magistrate Judge Arleo's R&R filed on April 19, 2012, in its entirety.

FACTUAL AND PROCEDURAL HISTORY

On September 6, 2011, Plaintiff filed a suit in the Superior Court of New Jersey, Law Division, Passaic County, against Cytec Industries, Inc. ("Cytec"), d/b/a Cytec Engineered Materials, for breach of contract ("Cytec Action"). (R&R at 2.) Catbridge alleged that Cytec owed it money from two Equipment Purchase Agreements for machinery ("Contracts"). On September 27, 2011, attorney Christopher Weiss ("Weiss"), on behalf of Cytec, served Plaintiff with a notice to withdraw the complaint in the Cytec Action pursuant to N.J. Ct. Rule 1:4-8 and N.J. Stat. Ann. § 2A:15-59.1. (Id.) Cytec maintained that it was improperly sued because it was not a party to the Contracts. (Id.) Thereafter, on October 11, 2011, Cytec filed a motion to dismiss. (Id.) On October 25, 2011, Plaintiff's attorney, Robert Zeller ("Zeller"), contacted Weiss to inform him that Catbridge would be filing a motion to voluntarily dismiss the complaint. (Id.) Subsequently, on October 31, 2011, Plaintiff filed a voluntary dismissal. (Id.)

On November 17, 2011, Plaintiff filed this action for breach of contract against Defendant in the Superior Court of New Jersey, Law Division, Morris County, alleging that Defendant owed it $682,500 under the Contracts. (Id. at 1, 3.) This action is based on the same set of facts as the Cytec Action. However, in this action, Plaintiff adds that the mandatory arbitration provision in the Contracts is inapplicable. (Id. at 3.)

On December 9, 2011, Weiss, on behalf of Defendant, served Plaintiff with an N.J. Ct. Rule 1:4-8 Notice. (Id. at 3.) On January 3, 2012, CEM removed the action to this District. (Id.) Defendant sought this Court to compel arbitration. (Id.) Although Zeller requested that CEM waive its demand for arbitration, CEM maintained that arbitration was contractually mandated and asked Catbridge to voluntarily dismiss the action and proceed with arbitration. (Id.) Weiss, however, inquired whether Plaintiff would agree to voluntarily dismiss the action without prejudice and proceed with arbitration. (Id.) On January 5, 2012, Plaintiff informed CEM that it would file a voluntary dismissal of the action and pursue arbitration. (Id. at 4.) There is no dispute that Zeller informed Weiss that Catbridge would file a motion for voluntary dismissal of the action without prejudice and file for arbitration after CEM provided it with the assigned civil action number for this case. (Id.) However, there is a dispute as to whether the parties entered into a verbal agreement whereby Catbridge would voluntarily dismiss this action without prejudice in exchange for filing a petition for arbitration. Catbridge contends that the parties entered into such an agreement. (Id.) On the other hand, CEM asserts that there was no such agreement because the parties were contractually obligated to enter into arbitration. (Id.)

Consistent with the parties' agreement, on January 10, 2012, Defendant provided Plaintiff with a civil action number and on January 16, 2012, Plaintiff filed a notice of voluntary dismissal. (Id.) Weiss asserts that after receiving the notice of voluntary dismissal, he discovered the "two-dismissal rule," which provides that a second voluntary dismissal without prejudice operates as a final judgment on the merits. (Id.) See Fed. R. Civ. P. 41(a)(1)(B). Subsequently, on January 20, 2012, Weiss informed Zeller that CEM's position was that the second voluntary dismissal rendered this action "adjudicat[ed] on the merits." (R&R at 4-5.)

Thereafter, on January 23, 2012, Zeller informed Weiss that the "two-dismissal rule" did not apply to this action because the second voluntary dismissal was done pursuant to an agreement with CEM. (Id. at 5.) Weiss asserted that the "two-dismissal rule" applied. (Id.)

The instant action arose. Catbridge contends that the "two-dismissal rule" does not apply because the second dismissal was done pursuant to the parties' agreement to arbitrate the dispute. (Id.) Alternatively, Plaintiff asserts that the exceptional circumstances attendant in this case support relief under Federal Rule of Civil Procedure 60(b)(6). (Id.) On the other hand, CEM maintains that the "two-dismissal rule" applies and bars Plaintiff from pursuing this action. Defendant also argues that there are no exceptional circumstances here to warrant relief under Rule 60(b)(6). (Id. at 6.)

Judge Arleo concluded that this action was not barred by the "two-dismissal rule" because CEM was not a party in the Cytec Action or in privity with Cytec. (Id. at 8.) Alternatively, Judge Arleo found Catbridge was entitled to relief under Rule 60(b)(6). (Id. at 9.)

LEGAL STANDARD

A district court may "designate a magistrate judge to conduct hearings . . . and to submit to a judge of the court proposed findings of fact and recommendations for the disposition" of certain matters pending before the court. 28 U.S.C. § 636(b)(1)(B). The Federal Magistrate Act "distinguishes between two categories of matters that a district judge can refer to a magistrate judge." Nat'l Labor Relations Bd. v. Frazier, 966 F.2d 812, 816 (3d Cir. 1992). The two categories are pretrial matters and dispositive matters. § 636(b)(1)(A); Nat'l Labor Relations Bd., 966 F.2d at 816. Pretrial matters are reconsidered "where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law." § 636(b)(1)(A). On the other hand, dispositive matters are reviewed under the de novo standard. § 636(b)(1)(C). Once a magistrate judge has filed her recommendation with the court, within a fourteen day period after being served, "any party may serve and file written objections to such proposed findings and recommendations . . . [and a] judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." Id. See also Brown v. Astrue, 649 F.3d 193, 195 (3d Cir. 2011) ("If a party timely and properly files such a written objection, the District Court 'shall make a de novo determination' of those portions of the report . . . or recommendations to which objection is made."). Thus, this Court will review Defendant's objections to Judge Arleo's R&R under the de novo standard of review.

DISCUSSION

Defendant objects to Judge Arleo's R&R on the following grounds: (1) the "two-dismissal rule" applies in this matter because it is in privity with Cytec; and (2) Plaintiff has not shown the existence of extraordinary circumstances to warrant vacation of the January 16, 2012 ...


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