Ambiguous Dismissal Order Bars Claim Preclusion

Ambiguities in dismissal orders are construed against claim preclusion. In Papera v. Pennsylvania Quarried Bluestone Co., the parties moved to dismiss their suit after agreeing to a settlement. As requested by the parties, the court entered a dismissal order. However, after the settlement failed to consummate, the plaintiffs refiled their previously dismissed claim. The district court dismissed the case after holding that the plaintiffs were barred from relitigating their previous claims. The U.S. Court of Appeals for the Third Circuit disagreed. In a precedential opinion, the appellate court reversed the district court’s ruling and adopted two new rules when construing ambiguous dismissal orders.

A Proposed Settlement Unravels

The Paperas owned a quarry and agreed to let the Pennsylvania Quarried Bluestone Company mine the property. While Pennsylvania Quarried mined the property, the Paperas made repeated requests to the company to remove abandoned property and to pay for the mined stone. However, these requests went unfulfilled, and the Paperas brought suit in federal court.

The district court sent the case to mediation. After mediation, the parties returned to the district court believing they had reached a settlement and moved for the entry of a 60-day dismissal order. The court entered a two-sentence dismissal order stating the case was dismissed and that the parties had 60 days to finalize their settlement. However, the parties never reached a final settlement, and after the expiration of the allotted 60 days, the district court administratively closed the suit.