Definition of Dismissal by stipulation

Once a defendant has served an answer to the plaintiff's complaint, the plaintiff may obtain a dismissal without prejudice by entering a formal agreement, a stipulation, with the defendant. The parties agree to the terms of the dismissal, which must be filed with the court and the court passes an order of dismissal that enforces the stipulation of the parties. A dismissal by stipulation is a dismissal without prejudice unless the parties otherwise agree and record their agreement in the text of the stipulation.

Example of a State Statute and Case law on Stipulated Dismissal (Arizona)

Ariz. R. Civ. P. 41

Rule 41. Dismissal of actions

(a) Voluntary dismissal; by plaintiff or by order of court; effect.

1. Subject to the provisions of Rule 23(c), or Rule 66(c), or of any statute, an action may be dismissed (A) by the plaintiff without order of court by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever first occurs, or (B) by order of the court pursuant to a stipulation of dismissal signed by all parties who have appeared in the action. Such an order may be signed by a judge, a duly authorized court commissioner, the clerk of court or a deputy clerk. Unless otherwise stated in the notice or order of dismissal, the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of any state an action based on or including the same claim.

The stipulated dismissal of a plaintiff's original action becomes final when the time for filing an appeal passes. Once the dismissal is final, the trial court no longer has jurisdiction over the case. In effect, the case no longer existed because voluntary dismissal of a suit leaves the situation as though the suit had never been brought. [Lewis v. N.J. Riebe Enters., 170 Ariz. 384 (Ariz. 1992)]

Nothing is adjudicated between parties to a stipulated dismissal and none of the issues is actually litigated in the case of a judgment entered by confession, consent, or default. A consent judgment may be conclusive as to an issue only if the parties have manifested such intent in the agreement. Otherwise, the issue remains unresolved. [4501 Northpoint LP v. Maricopa County, 209 Ariz. 569 (Ariz. Ct. App. 2005)]