Sutton Place Development Company, a Florida Corporation, Henry Weiss and Carol Weiss v. Abacus Mortgage Investment Company

RIPPLE, Circuit Judge.

In this case, we are asked to determine whether the district court correctly applied the so-called “two dismissal” rule of Fed.R.Civ.P. 41(a)(1)1 in the rather atypical situa*638tion presented by this litigation. Because we respectfully disagree with the decision of the district court, we reverse its judgment and remand the case for further proceedings.

I

A. Background

The plaintiffs-appellants, Sutton Place Development Company and its principals, Henry and Carol Weiss (collectively referred to as Sutton Place) were involved in the development of a residential condominium in…