Commercial Division Blog

Posted: May 17, 2017 / Categories Commercial, Court Rules/Procedures, Motion to Dismiss; Motion for Judgment on the Pleadings

First-Filed New York Action Dismissed in Favor of More Comprehensive Texas Action

On May 9, 2017, the First Department issued a decision in IRX Therapeutics, Inc. v. Landry, 2017 NY Slip Op. 03702, affirming the dismissal of a first-filed New York action in favor of a more comprehensive subsequently-filed action in Texas, explaining:

[T]he motion court providently exercised its discretion in dismissing this action based on the pendency of an action in federal court in Texas concerning the same alleged contract. In the Texas action, defendant and two other individuals not named as parties in this action allege that plaintiff breached a contract. The Texas action is thus more comprehensive than this declaratory judgment action and will address defendant's claim that the parties never entered into an enforceable contract; moreover, dismissal of this action in favor of the Texas action will avoid duplicative, vexatious litigation. Further, the record shows that the dispute has a significant nexus with Texas since the three individuals seeking to enforce the alleged contract with plaintiff are Texas residents, all work contemplated under the alleged contract was to be done in Texas, and plaintiff reached out to defendant for the specific purpose of expanding its business into Texas and making use of defendant's connections there in an effort to raise capital.

Although this action was filed first, chronology is not dispositive, particularly since both actions are at the earliest stages of litigation, and since the format of this action (i.e., a declaratory judgment action) suggests that it was responsive to defendant's threat of litigation. The record also suggests that plaintiff commenced this action preemptively in an effort to gain a tactical advantage and deprive defendant of his choice of forum.

(Internal citations omitted).