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Current Developments in the Commercial Divisions of the
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Posted: July 25, 2014

Even Where CPLR 3211(a)(4) Does Not Require Dismissal, Cases Can be Consolidated

On July 10, 2014, Justice Schweitzer of the New York County Commercial Division issued a decision in 11 E. 68th St. LLC v. Madison 68 Realty LLC, 2014 NY Slip Op. 31872(U), analyzing the rules for dismissal or consolidation when there are two pending actions regarding similar subject matter.

In 11 E. 68th St. LLC, the defendant filed an action relating to a real estate deal done bad. The next day, the plaintiff filed a similar action. The defendant moved to dismiss the second-filed action pursuant to CPLR 3211(a)(4). The court ultimately decided to consolidate the actions, rather than dismiss the second-filed on, but in doing so, it explained a number of issues relevant to a motion to dismiss in favor of a prior pending proceeding:

Under the first-filed rule, the action that is commenced first is the action in which a complaint was first filed. A case in which a complaint is filed only a day before the filing of a complaint in another action is generally immune from dismissal based on CPLR 3211(a)(4) under the first-filed rule.

Pursuant to CPLR 3211(a)(4), a court has broad discretion as to the disposition of an action when another action is pending and may dismiss one of the actions where there is a substantial identity of the parties and causes of action. The critical element is that both suits arise out of the same subject matter or series of alleged wrongs. Courts must ultimately determine whether the relief sought is the same or substantially the same. If the court finds such symmetry in the parties’ claims, then it has wide discretion to decide whether to dismiss. stay, or consolidate the current suit. The critical issue in determining this motion is whether [the plaintiff’s] claims in this action arise out of the same subject matter or alleged wrongs as [the defendant’s] claims in the first-filed complaint. The fact that two lawsuits emanate from a common transaction or occurrence is not necessarily sufficient to warrant dismissal based upon CPLR 3211(a)(4). . . .

The assertion of claims in both actions by a party is not required for a finding of identity of issues under CPLR 3211(a)(4). The fact that [the defendant’s] claim concerning the units in the first-filed action is for declaratory relief does not attenuate the court’s belief that a dismissal, stay, or consolidation may be warranted. The action for a declaratory judgment having been first commenced, this court is not ousted of its jurisdiction by the proceeding later brought and that the situation is an appropriate one for a declaratory judgment. If the court were to determine that dismissal of this action would be premature, then a stay of the instant case pending the outcome of the first-filed action might be appropriate  pursuant to the court’s powers under CPLR 3211(a)(4).

After reflecting on the options at its disposal, however, the court concludes that consolidating the instant action into the first action is the most equitable and rational outcome, and will avoid the waste of judicial resources and the risk of inconsistent verdicts. Under CPLR 602(a), a court . . . may order the actions consolidated, assuming both involve a common question of law or fact and are both pending before a court. The action that was commenced first is the action that should retain priority. The first-filed rule also typically applies to consolidation orders under CPLR 602(a). Even if the complaint in the first action was filed only a few days before a subsequent action, the first filed rule demands that consolidation be into the first-filed action.

(Internal quotations and citations omitted) (emphasis added).

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