The opinion of the court was delivered by: Mordue, Chief U.S. District Court Judge
MEMORANDUM-DECISION AND ORDER
Plaintiffs Stephen and Nancy Rogers move pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure to voluntarily discontinue this action with prejudice and request that each party bear its own costs. Defendant, the Black and Decker Corporation, does not oppose plaintiffs' motion, but cross-moves for an award of costs and sanctions.
This action stems from a fire that occurred on December 26, 2000, at the home of plaintiffs Stephen and Nancy Rogers in Fayetteville, New York. In their complaint, plaintiffs allege that a Black and Decker battery charging unit in their garage malfunctioned and caused the fire. Although this action is filed in the name of Stephen and Nancy Rogers, it is a subrogation action by Peerless Insurance Company, which compensated plaintiffs pursuant to a homeowners insurance policy for the damages they sustained as a result of the fire.
Plaintiffs commenced this action on February 12, 2003, in New York State Supreme Court for the County of Onondaga. Defendants removed the case to federal court in accordance with 28 U.S.C. § 1441(b) citing diversity jurisdiction pursuant to 28 U.S.C. § 1446. The parties have completed discovery. Following the issuance of a report by the National Highway Transportation Safety Administration that a malfunction of a cruise control switch in the engine compartment of affected Lincoln Navigators, like the one parked in plaintiffs' garage at the time of the fire, could cause a fire, and the recall of those Lincoln Navigators, plaintiffs moved to discontinue this action with prejudice pursuant to Rule 41(a)(2).
Plaintiffs request an order discontinuing this action with prejudice. Rule 41(a)(2) states that: "an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper." Defendant does not oppose plaintiffs' request for dismissal. Accordingly, plaintiffs' motion to discontinue this action with prejudice is granted.
Defendant opposes so much of plaintiffs motion as seeks an order directing that the parties bear their own costs, and requests an award of sanctions for the legal fees and costs defendant accrued litigating this action alleging that Peerless abused the litigation process in this case. Plaintiffs oppose defendant's cross-motion.
Defendant contends that the Court has inherent authority to sanction a party who has litigated in bad faith or willfully abused the litigation process. In support of its motion, defendant submitted voluminous evidentiary materials to show that Peerless knew from the inception of this case that there was conflicting evidence regarding the cause of the fire and and that Peerless persistently abused the litigation process in this case. As a result, defendant requests that the Court grant plaintiffs' motion for voluntary discontinuance, but opposes the portion of plaintiffs' motion which seeks an order directing that each party bear its own costs.
"[U]nder the American Rule, absent statutory authorization or an established contrary exception, each party bears its own attorney's fees." Colombrito v. Kelly, 764 F.2d 122, 133 (2d Cir. 1985). One such exception is "the court's inherent authority to award fees when a party litigates frivolously or in bad faith." Id. The Second Circuit has explained that "[t]he bad faith exception permits an award upon a showing that the claim is entirely without color and has been asserted wantonly, for purposes of harassment or delay, or for other improper reasons. Neither meritlessness alone, nor improper motives alone, will suffice." Id. (internal citations omitted).
In this case, as plaintiffs concede, there was a conflict among plaintiffs' own experts as to the cause of the fire at the time plaintiffs commenced this action. It is, however, undisputed that at least one expert, William Patrick, opined that the failure of a Black and Decker ...