Commercial Division Blog

Posted: July 12, 2015 / Categories Commercial, Motion to Dismiss; Motion for Judgment on the Pleadings

Court Should Not Have Allowed Party to Discontinue to Avoid Decision on Motion to Dismiss

On June 18, 2015, the First Department issued a decision in Jericho Group, Ltd. v. Mid-Town Development L.P., 2015 NY Slip Op. 05276, holding that a plaintiff should not have been allowed to discontinue an action without prejudice to avoid an adverse decision.

In Jericho Group, the plaintiff filed a "notice of withdrawal of the action, in effect a discontinuance, . . . well after defendants filed their motion to dismiss." The First Department reversed the trial court's denial of the motion to dismiss as moot, explaining that the notice of withdrawal was served late

and was apparently served to avoid an adverse decision on the pending motion to dismiss the complaint with prejudice. Thus, the notice was ineffective and a nullity.

The instant case is the third action commenced by plaintiffs against essentially the same defendants, setting forth the same allegations concerning a contract between the parties from 2002. The first action was commenced in 2004. After defendants' motion to dismiss was denied, an appeal ensued. We reversed and dismissed the complaint. Plaintiffs thereafter moved in Supreme Court to vacate the judgment of dismissal, which motion was granted. We again reversed, finding there were no grounds to vacate the judgment.

In 2007, plaintiffs commenced a second action against the same defendants along with two additional defendants regarding the same contract and same issues as in the 2004 action. Defendants again moved to dismiss, which motion was granted. We affirmed. In that decision, we found that the 2007 action was barred by collateral estoppel and res judicata, since the 2004 action, based on the same transaction, had been dismissed on the merits.

This action, with the addition of additional defendants, seeks the same relief as the 2004 and 2007 actions. Defendants' motion to dismiss was made on the grounds that the action is barred by collateral estoppel and res judicata. Plaintiffs did not submit opposition, despite several extensions of time to respond, and then they attempted to file a discontinuance of the action without prejudice on the day before the final return date of the motion. To remit this matter to the trial court to resolve this aspect of the motion would be a waste of judicial resources, given the history of the litigation between these parties and the fact that the doctrines of collateral estoppel and res judicata would warrant the granting of defendants' motion.

Accordingly, exercising our power to review questions of law and fact, defendants' motion to dismiss the complaint with prejudice is granted.

(Internal quotations and citations omitted).