Opinion
106254/11
01-11-2012
Thor Gallery at Beach Place, LLC, Plaintiff, v. Standard Parking Corp., Defendant.
Plaintiff: Matalon Shweky Elman PLLC Defendant: Becker & Poliakoff, LLP
Appearances of Counsel are as follows:
Plaintiff: Matalon Shweky Elman PLLC
Defendant: Becker & Poliakoff, LLP
Doris Ling-Cohan, J.
Upon the foregoing papers, it is ordered that this motion to dismiss is granted, as detailed below.
This is an action for a declaratory judgment that the lease agreement between a tenant, defendant Standard Parking (the "Defendant" or "Standard") and a landlord, plaintiff Thor Gallery (the "Plaintiff" or "Thor"), is valid. Plaintiff owns The Gallery at Beach Place, a shopping center in Florida ("the mall"). Standard operates a parking garage at the mall, pursuant to a ten-year lease agreement with Thor, dated January 4, 2008.
According to defendant, after the lease was executed, inter alia, several of the mall's "anchor" tenants vacated. Further, as businesses vacated, defendant alleges that Thor allowed the mall to fall into a state of disrepair, causing defendant diminished revenue.
As a result, on or about May 16, 2011, Standard sent Thor a letter, through counsel, claiming that the lease was fraudulently induced and not enforceable based upon Thor's failure to disclose pending eviction proceedings, failure to maintain certain occupancy levels and failure to keep the mall in good condition.
Following receipt of the May 16, 2011 letter from Standard, Thor filed this action on May 27, 2011, seeking a declaratory judgment that the lease is enforceable and that Standard is not entitled to relief from its terms. Ten days later, Standard brought suit in Florida (the "Florida suit"), asserting the claims articulated in its letter.
Standard now seeks to dismiss the instant action pursuant to CPLR § 3211(a)(4), which states that a cause of action must be dismissed when "there is another action pending between the same parties for the same cause of action", and pursuant to CPLR § 327(a), based upon forum non conveniens.
Standard argues that this case was commenced by Thor, solely to obtain its own choice of forum and a strategic advantage, because it became aware of Standard's intent to commence a lawsuit. Standard claims that New York's "first in time" rule should not apply here because such a policy would discourage good faith efforts to a achieve a settlement by favoring that party which sues first. Standard asks this court to dismiss the case so as not to promote a policy encouraging a race to the courthouse. Further, Standard argues that this case has no substantial geographical nexus to New York.
In opposition, Thor argues that Standard's motion should be denied since this case was filed first, imploring the court to adhere to the "first in time" rule. Thor further emphasizes its contacts with New York as the appropriate forum, in that it drafted, negotiated, and executed the lease in New York, and Standard maintains a corporate office and transacts business in New York.
The "first in time" rule normally directs the court to yield in favor of another action which was filed first. H. M. Hamilton & Co. v American Home Assur. Co. 21 AD2d 500, 506, 251 NYS2d 215, 221 (1st Dep't 1964) (holding that "[g]enerally the court which has first taken jurisdiction is the one in which the matter should be determined and it is a violation of rules of comity to interfere"). However, it has been held that the "first in time" rule "should not be applied in a mechanical' way, and . . . special circumstances may warrant deviation from this rule." L-3 Comms. Corp. v SafeNet, Inc., 45 AD3d 1, 7-8 (1st Dep't 2007). Most notably, the rule should not be followed where a first-filed action is "vexatious, oppressive or instituted to obtain some unjust or inequitable advantage," or meant to provide "a tactical advantage . . . seeking a more favorable forum for litigation" Id. (citing White Light Productions, Inc. v On the Scene Productions, Inc., 231 AD2d 90, 97 (1st Dep't 1997) (citing H.M. Hamilton & Co. v American Home Assur. Co., 21 AD2d 500, 507 (1st Dep't 1964))).
Here, as detailed below, circumstances warrant that the within action be dismissed and that the issues between the parties be resolved in the context of the Florida suit.
At the outset the court notes that, pursuant to CPLR §3001, this court "may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed." CPLR 3001(emphasis supplied). To be justiciable, a controversy must "involve present, rather than hypothetical, contingent or remote, prejudice" to a party. American Ins. Assn. v Chu, 64 NY2d 379, 383, cert denied 474 US 803 (1985). This court is "not empowered to render advisory opinions, or determine abstract, moot, hypothetical, remote or academic questions." Matter of Ideal Mut. Ins. Co., 174 AD2d 420, 421 (1st Dept 1991) (citing 3 Weinstein-Korn-Miller, NY Civ Prac ¶ 3001.03). The First Department has specifically held that "[t]he hypothetical possibility that a lawsuit might be filed is not sufficiently immediate and real to constitute a justiciable controversy". Spitzer v Schussel, 48 AD3d 233, 234 (1st Dep't 2008)(citations omitted). Thus, at the time this case was commenced by Thor, since it was based merely upon a threat of litigation by Standard, the within case was not a justiciable controversy, and dismissal is warranted on that basis alone. See Spitzer v Schussel, 48 AD3d at 234.
As indicated above, subsequent to the filing of this lawsuit, defendant initiated a lawsuit in Florida which would resolve the issues between the parties. "[W]here there is another action pending, which when tried, will dispose of all the issues involved in the declaratory judgment action", "the court should not, in the exercise of discretion, entertain an action for a declaratory judgment. Reynolds Metals Co. v Speciner, 6 AD2d 863 (1st Dep't 1958); see also Ithaca Textiles, Inc. v Waverly Lingerie Sales Co., 24 AD2d 133, aff'd 18 NY2d 885 (1966) (holding that "[t]he rule is clear that a declaratory judgment action should not be entertained if another action between the same parties raising the same issues was already pending . . .chronology is not the sole test to be applied in resolving . . . whether a declaratory judgment action should be entertained. Consideration must be given to the utility and necessity of a purely alternative remedy'."[citations omitted]); Florence v Krasucki, 78 AD2d 579 (4th Dep't 1980) (stating that "plaintiffs' pending action in federal court for money damages against the same defendants will determine essentially the same issues as those raised in the instant [declaratory judgment] action"); Salomon Bros., Inc. v West Virginia State Bd. Of Investment, 152 Misc 2d 289, 293-294 (Sup Court, New York County 1990) (stating that "[a]lthough plaintiffs got to the courthouse a few days before defendants, the fact is that there is now pending in West Virginia a normal damages action . . . That is the appropriate forum for the resolution of this controversy.").
Further, while Plaintiff correctly notes that a party moving to dismiss on forum non conveniens grounds generally has a heavy burden to show that litigating in New York would be inconvenient, such is not the standard on a §3211(a)(4) motion. See Highgate Pictures, Inc. v De Paul, 153 AD2d 126, 129 (1st Dep't 1990). A showing of a non-tenuous connection, or even a substantial nexus between a case and a chosen jurisdiction does not automatically warrant that a case be maintained in a chosen forum, merely because it was commenced first. See White Light Productions, Inc. v On the Scene Productions, Inc., supra at 96 (holding that "the primary concern in this situation is not which court has jurisdiction or even which court should hear the dispute. The parties are properly subject to the jurisdiction of the courts of both [jurisdictions]. In the interest of judicial economy, the question is which court should defer, as a matter of comity, to the other in order to avoid vexatious litigation and duplication of effort...").
In deciding whether dismissal is warranted, the key issue is whether the first suit was filed preemptively, to obtain an inequitable advantage. L-3 Comms. Corp. v. SafeNet, Inc., supra at 7;see also Certain Underwriters at Lloyd's, London v Hartford Acc. & Indem. Co., 16 AD3d 167, 168 (1st Dep't 2005). Similar to the within case, in SafeNet, the court found that the declaratory judgment action was filed purposely to gain a tactical advantage after a threat of litigation. Id. at 8; see also White Light Productions, Inc. v On the Scene Productions, Inc. supra at 97. The SafeNet court noted that the relief sought was a declaratory judgment, which "strongly suggest[ed] that it was responsive to [defendant's] threat of litigation." Id. at 9.
Similarly, in the within case, plaintiff's claim is also for a declaratory judgment. This action was clearly filed defensively, almost immediately after receiving a letter threatening suit from Standard, in order to preempt a suit by Standard in Florida.
Further, it is clear from the facts that Standard is the "true plaintiff" in the dispute between the parties, since in the Florida action, Standard seeks damages for fraud in connection with the parties' lease agreement, while Thor seeks only to nullify Standard's claims. Id. The more efficient way to litigate this case is through the Florida suit, which was commenced reasonably close in time to the instant action, raises additional causes of action than those asserted herein, and would allow the court to determine both the enforceability of the lease and the viability of Standard's claims for damages in one case. See Flintkote Co. v American Mut. Liab. Ins. Co., 103 AD2d 501, 505 (2nd Dep't 1984) (holding that "while priority in the bringing of actions is a factor to be considered in choice of forum litigation, it is not controlling, especially when commencement of the competing actions has been reasonably close in time."). By commencing the within case, Thor unreasonably asks this court to first determine the enforceability of the lease, only to await a second lawsuit by Standard for damages, in the event that lease is found to be invalid. This is precisely the inequitable result, and waste of judicial resources, that the exception to the "first in time" rule seeks to avoid.
Moreover, while defendant may not have satisfied the heavy burden required on a motion to dismiss based upon forum non conveniens, it cannot be ignored, that New York's connection to this case, when compared to that of Florida, is comparatively small, and favors dismissal. Significantly, the subject property is located in Florida and, it is not disputed that the lease is subject to Florida law. Further, while details as to specific witnesses has not been supplied, it would appear that relevant witnesses as to the property's condition, etc., are likely to reside in Florida, the location of the property.
Accordingly, it is
ORDERED defendant's motion to dismiss is granted and plaintiff's complaint is dismissed; and it is further
ORDERED that the Clerk of the Court shall enter judgment of dismissal, with costs to defendant; and it is further
ORDERED that within 30 days of entry of this order, defendant shall serve a copy of this order, with a notice of entry, on plaintiff.
Dated: _____________________________________________