On September 27, 2024, Justice Patel of the New York County Commercial Division issued a decision in Aerogen LLC v. Tapjets Holdings Inc., 2024 NY Slip Op. 51341(U), declining to dismiss in favor of an earlier filed action when the later action involved more parties and contracts, explaining:
CPLR § 3211 (a)(4) allows dismissal of an action when 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. CPLR 3211(a)(4) vests a court with broad discretion in considering whether to dismiss an action on the ground that another action is pending between the same parties on the same cause of action.. The critical element is whether both suits arise out of the same subject matter or series of alleged wrongs. If the actions in the separate jurisdictions are between the same parties and either involve the same cause of action or seek to recover for the same alleged harm based on the same underlying events, then New York courts generally follow the so-called first-in-time rule, which provides the court which has first taken jurisdiction is the one in which the matter should be determined and it is a violation of the rules of comity to interfere.
Defendants contend that the Florida Action features the same: (1) subject matter; (2) documents on which the parties rely; and (3) activities. Defendants argue that the only differences between the two actions is the addition of one plaintiff and several corporate defendants. Defendants contend that the absence of these parties in the Florida Action is inconsequential as there are substantial similarities in the parties between the actions. Defendants argue that the Florida Action should take precedence under the first-in-time rule. Plaintiffs oppose Defendants contentions by arguing, first, that the present matter is broader as it: (1) involves all necessary parties, including Aerogen, Tsenaeva-Kesselman, and the other Tapjet Parties who are not included in Kesselman’s Florida Complaint; and (2) alleges additional claims arising out of the parties’ agreements. Plaintiffs contend that the first-in-time rule is inapplicable here as the actions are not sufficiently similar.
This Court is unconvinced by Defendants’ arguments. First, the present action is more comprehensive than the Florida Action. While courts maintain a generally favorable view of the first-in-time rule, the practice of determining priorities between pending actions on the basis of dates of filing is a general rule, not to be applied in a mechanical way, regardless of other considerations. Further, New York courts have routinely determined that more comprehensive actions are favored, even if they were not the first to be filed.
The Florida Action involves only two parties: Plaintiff Starship and Defendant Kesselman. That action seeks to recover under various contractual theories all alleging that Plaintiff Starship failed to honor the financial terms of only: the Bombardier Management Agreement; and (2) the Cirrus Management Agreement. By comparison, the present action includes additional parties: (1) Plaintiff Aerogen LLC; (2) Defendant Tapjets Holdings, Inc; (3) Defendant Tapjets, Inc.; (4) Defendant Tapjets Technologies, Inc.; and (5) Defendant Tsenaeva-Kesselman. Further, the present action seeks additional recovery by: (1) seeking books and records from Defendants Kesselman and Tapjets; (2) alleging breach of representations and warranties against Defendant Tapjets; (3) alleging fraudulent misrepresentations by Defendant Kesselman; and (4) alleging negligent misrepresentations by Defendant Tsenaeva-Kesselman. Finally, the present action seeks to recover under not just the Cirrus and Bombardier Management Agreements, but also under the full suite of interrelated agreements. Accordingly, the action before this Court is more comprehensive than the Florida Action.
Defendants unconvincingly contend that the additional parties here are simply a red herring as they are solely corporate entities. However, even if these additional parties are corporate entities, New York law identifies each of these parties as a separate legal entity with distinct legal rights. Furthermore, while dismissal under CPLR 3211(a)(4) is not necessarily defeated by substantial, as opposed to complete, identity of parties, which generally is present when at least one plaintiff and one defendant is common in each action, individual principals of a corporation are legally distinguishable from the corporation itself. Thus, while the inclusion of additional corporate entities may be a formality, to disregard the same would be to disregard any legal rights these entities may possess.
Considering the relative comprehensiveness of the present matter in comparison to the Florida Action, the discretionary nature of CPLR § 3211(a)(4), and the stay enacted in the Florida Action pending the final resolution of the present matter, the Court declines to dismiss the present matter pursuant to CPLR § 3211(a)(4).
(Internal quotations and citations omitted).