                                                                           FILED
                            NOT FOR PUBLICATION                             MAY 19 2010

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS




                            FOR THE NINTH CIRCUIT



DIAMOND STATE INSURANCE                          No. 09-16733
COMPANY, an Indiana corporation,
                                                 D.C. No. 3:08-cv-00296-LRH-
              Plaintiff - Appellant,             GWF

  v.
                                                 MEMORANDUM *
GENESIS INSURANCE COMPANY; et
al.,

              Defendants - Appellees.



                    Appeal from the United States District Court
                             for the District of Nevada
                     Larry R. Hicks, District Judge, Presiding

                       Argued and Submitted May 10, 2010
                            San Francisco, California

Before: REINHARDT, W. FLETCHER and N.R. SMITH, Circuit Judges.

       Diamond State Insurance Company appeals the district court’s dismissal

with prejudice of its declaratory judgment action against Washoe County School

District and Genesis Insurance Company. We affirm.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      Diamond State first argues that the district court did not have the authority to

convert its motion to dismiss without prejudice into a motion to dismiss with

prejudice. We disagree. Rule 41(a)(2) of the Federal Rules of Civil Procedure

states that: “an action may be dismissed at the plaintiff’s request only by court

order, on terms that the court considers proper.” The phrase “terms that the court

considers proper” provides district courts the discretion to dismiss with or without

prejudice. See Hargis v. Foster, 312 F.3d 404, 412 (9th Cir. 2002) (“Rule 41 vests

the district court with discretion to dismiss an action at the plaintiff's instance

‘upon such terms and conditions as the court deems proper.’ That broad grant of

discretion does not contain a preference for one kind of dismissal or another.”).

      Diamond State next argues that, even if the district court had the authority to

dismiss with prejudice, it erred by dismissing this case with prejudice. We

disagree. “We review a district court’s determination of the terms and conditions

of dismissal under Rule 41(a)(2) for an abuse of discretion.” Id. (citation omitted).

In Westlands Water District v. United States, 100 F.3d 94, 96 (9th Cir. 1996), we

stated, “[w]hen ruling on a motion to dismiss without prejudice, the district court

must determine whether the defendant will suffer some plain legal prejudice as a

result of the dismissal.” Here, the district court found that there would be plain

legal prejudice to Genesis were it to dismiss the case without prejudice instead of


                                      Page 2 of 3
with prejudice. The district court noted that the settlement agreement released any

and all claims by any of the parties for anything arising out of the underlying suit.

Thus, dismissing without prejudice would essentially allow Diamond State to

“revoke its promise.” Therefore, “[t]o protect [Genesis’s] interest in entering and

upholding the settlement agreement,” the court denied the motion to dismiss

without prejudice and instead dismissed with prejudice. Any possible legal

prejudice to Diamond State as a result of a dismissal with prejudice was

outweighed by the possible legal prejudice to Genesis that could result from a

dismissal without prejudice. Moreover, the settlement agreement stated only that

Diamond State would “dismiss” the case; it did not indicate whether that dismissal

would be with or without prejudice. Thus, the district court’s order did not

contradict the plain language of the settlement agreement. The district court did

not abuse its discretion, and we affirm.




      AFFIRMED.




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