On July 30, 2024, Justice Reed of the New York County Commercial Division issued a decision in Dragons 516 Ltd. v. SMI USA Group LLC, 2024 NY Slip Op. 50977(U), holding that insufficient similarity of suits defeated a motion to dismiss in favor of a prior pending action, explaining:
SMI-USA and SMI-138 seek to dismiss the petition pursuant to CPLR 3211(a)(4) on the grounds that another action is currently pending before the court, specifically Dragons 516 Limited v Knights Genesis Investment Limited (Sup Ct, NY County, index No. 653187/2021) (the 2021 action), which was commenced on May 14, 2021. The instant proceeding was commenced on September 23, 2022.
CPLR 3211 (a) (4) permits the court to dismiss a claim on the basis that 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. To warrant dismissal on that basis a comparison must first be made of the allegations of the two complaints to determine whether the suits are indeed for the same cause of action.
The proceeding commenced here is different in nature from the claims in the 2021 action for fraud, fraud and conspiracy to defraud, conversion, and aiding and abetting conversion. Here, petitioner seeks turnover from respondents on the basis that these entities were the recipients of allegedly fraudulent transfers. On the other hand, the 2021 action hinges on the allegation that these entities fraudulently conspired with GDC to induce petitioner to provide a loan to GDC. While the two proceedings arise from the largely the same circumstances, they are not the same cause of action. By way of illustration, even if the court finds in that action that SMI-USA and SMI-138 did not fraudulently induce plaintiff to provide the loan, the court could still find that they were the recipients of GDC’s fraudulent transfers into or out of the 50 Lex’s TD Bank account. Therefore, CPLR 3211 (a) (4) does not apply.
(Internal quotations and citations omitted).