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Superior Court Prevents AT&T From Voluntarily Dismissing the Majority of Defendants

AT&T Wireless Services, Inc. v. Federal Ins. Co., 2005 WL 2155695 (Del. Super. Ct. Aug. 18, 2005). The Plaintiff filed a notice of partial dismissal in an attempt to dismiss certain defendants. The defendants who were purportedly dismissed moved to quash the notice of dismissal. The court found that one defendant insurer could be dismissed because the entire action was being voluntarily dismissed. However, the court granted the motion to quash as to the other defendant because the dismissal only eliminated certain claims as opposed to the entire action. Plaintiff also sought leave of the court to dismiss a second group of defendants pursuant to Rule 41(a)(2). The court denied this motion. In 2002 AT & T Wireless Services, Inc. ("AWS") merged with TeleCorp PSC, Inc. Following the merger the TeleCorp shareholders filed a derivative action alleging that the TeleCorp directors had breached their fiduciary duties. The Court of Chancery approved a settlement of $47.5 million. AWS filed an action in Superior Court seeking reimbursement from TeleCorp's insurance carries and its own primary insurer, Faraday Capital Limited ("Faraday"), and its excess insurer, National Union Fire Insurance Company ("National Union"). Subsequently, the plaintiff filed an identical action in Washington and attempted to voluntarily dismiss both Faraday and National Union. The defendants moved to quash AWS's notice of dismissal. Specifically, AWS attempted to dismiss claims against National Union arising out of or relating to the policies issued to AWS. However, National Union was also a TeleCorp carrier. Therefore, AWS's narrow dismissal would not actually completely dismiss it from the action. Accordingly, the court granted National Union's motion to quash. Conversely, because Faraday would be completely dismissed from the action, the court denied Faraday's motion to quash. AWS also attempted to dismiss the TeleCorp insurers pursuant to Rule 41(a)(2). After considering Delaware's factors for "plain legal prejudice," the court denied the motion to dismiss. Authored by: Jason C. Jowers 302-888-6860 jjowers@morrisjames.com