On October 23, 2024, Justice Chan of the New York County Commercial Division issued a decision in Woodcock Capital LLC v. Schildr Inc., 2024 NY Slip Op. 33809(U), dismissing counterclaims in favor a claims in an earlier-filed action, explaining:
CPLR 3211(a)(4) provides that a party may move to dismiss an action if there is another action pending between the same parties for the same cause of action in a court of any state or the United States. When considering such a motion, courts assess whether the two actions have a sufficient identity of parties. Courts also look at whether the two actions arise out of the same subject matter or series of alleged wrongs and seek similar relief.
Here, the Counterclaims and the Prior Action assert nearly identical factual allegations against nearly identical parties. For example, both pleadings refer to the same failed acquisition of Roofs membership interests from Ahmadov, the same misconduct underlying the creation of PRUSA, the same demands for an accounting by Ahmadov, and the same purportedly false accusations levied against Ahmadov in response to his demand for an accounting. These nearly identical factual allegations are, in turn, used to support the nearly identical causes of action. Given these circumstances, the Counterclaims and the Prior Action plainly seek the same relief for the same alleged injuries, and thus dismissal of the Counterclaims under CPLR 321l(a)(4) is warranted.
Defendants’ lone response in opposition is that dismissal of the Counterclaims pursuant to CPLR 3211(a)(4) would be prejudicial because plaintiffs chose to initiate this action rather than file counterclaims in the Prior Action. The court disagrees. Notably, New York follows a permissive counterclaim rule, which allows counterclaims to be raised through separate litigation. As a result, plaintiffs are well within their right to assert their claims through this lawsuit rather than doing so through counterclaims in the Prior Action. Consequently, as defendants offer no other basis to conclude that plaintiffs’ initiation of this action was improper, their claim of prejudice upon dismissal of the Counterclaims is without merit.
(Internal quotations and citations omitted).