The opinion of the court was delivered by: Conboy, District Judge:
Defendant Vicom Video, Inc. ("Vicom Video") has moved to
dismiss or stay this breach of contract action in deference to
a previously commenced action pending in Ireland. For the
reasons set forth below, the motion is granted and the case is
On August 1, 1989, plaintiff Caspian Investments, Ltd.
("Caspian"), a British corporation, entered into a loan
agreement ("the Agreement") with defendant Vicom Video through
which it consented to loan Vicom Video $1,490,000 by way of
two separate transactions. Vicom Video, a Georgia corporation
that sells and rents video tapes, is a wholly-owned subsidiary
of Vicom Holdings, Ltd. ("Vicom Holdings"), an Irish
Vicom Video and Vicom Holdings are joint obligors under the
Agreement; Vicom Holdings pledged to guarantee and become
surety to Vicom Video for prompt payment of "all Vicom Video's
liabilities, present and future," up to $700,000. Bicks Aff.
¶ 16. Both parties agree that Vicom Holdings, as guarantor of
the loan, is responsible for any default by Vicom Video. Butler
Supp. Aff. ¶ 6; Defendants' Memo of Law in Support of Motion
for Sanctions at 3. Caspian provided $440,000, the first
installment of the loan, to Vicom Video on August 1, 1989. The
loan was to be repaid in April 1990.
Vicom Video did not repay the loan on the April due date.
The restraining order was discharged on May 14th, and on May
25th Caspian filed an injunctive suit in the High Court of
Ireland "to prevent the reorganization [of Vicom Holdings]
until Caspian could be guaranteed that sufficient assets would
remain to cover the loan agreement guarantee." Plaintiff's
Memo of Law at 3.
Vicom Holdings repaid the entire loan and interest on behalf
of Vicom Video between June and September of 1990. However,
Caspian alleges that Vicom Video and Vicom Holdings did not
fulfill various additional obligations, including a commitment
to issue shares of Vicom Video stock to Caspian. Caspian
claims that, as a result, Vicom Video must pay a higher
"default" interest rate.
On January 23, 1991, the Irish High Court ordered Caspian to
furnish adequate security for Vicom Holdings' costs in the
Irish action; the Irish action has been stayed until Caspian
produces the security payment.
Meanwhile, on December 7, 1990, Caspian brought suit in the
Southern District of New York against Vicom Video and Vicom
Holdings (docket No. 90 Civ. 7848). In its complaint, Caspian
set forth claims for breach of contract and sought a
declaratory judgment requiring Vicom Video and Vicom Holdings
to fulfill their obligations under the Agreement, including
payment of $250,000 (representing the value of a disputed
"put" option), and the default interest. Caspian premised
subject matter jurisdiction over this dispute on diversity
pursuant to 28 U.S.C. § 1332. Complaint ¶ 4.
On January 29, 1991, Vicom Video and Vicom Holdings moved to
dismiss the Southern District action on procedural grounds.
First, the defendants contended that the court lacked subject
matter jurisdiction over the dispute because Caspian is a
British corporation, Vicom Holdings was incorporated in
Ireland, and the presence of aliens on both sides of an action
defeats diversity jurisdiction. Second, Vicom Video and Vicom
Holdings contended that Caspian lacked authority to maintain
the suit because Caspian is not authorized to do business in
New York and is therefore barred from maintaining a suit under
N.Y. Bus. Corp. Law § 1312.*fn1 The defendants also moved, in
the alternative, to dismiss or stay the action in deference to
the previously commenced action pending in Ireland.
Rather than file an opposition to Vicom Video and Vicom
Holdings' motion to dismiss, Caspian filed a "Response" in
which it agreed voluntarily to withdraw the complaint "in the
interest of judicial economy," although Caspian protested that
Vicom's objection was merely "technical," and supportable only
through a "quirk of subject matter jurisdiction practice."
Plaintiff's Response to Defendants' Motion to Dismiss at 1.
Thereafter, Caspian filed a notice of voluntary dismissal
without prejudice pursuant to Fed.R.Civ.P. 41(a)(1). This
order was never signed by the Court, and the file for No. 90
Civ. 7848 has not been closed. On the same day it filed its
Rule 41(a)(1) notice, Caspian filed a new action against Vicom
Video alone (docket No. 91 Civ. 1004), alleging the same
causes of action as it had asserted in its original Southern
District complaint.*fn2 On March 7, 1991, Vicom Video
submitted an additional Memo of
Law in support of its motion to dismiss, in which it
reiterates and incorporates by reference some of the defenses
it had put forth in response to Caspian's first complaint.
Vicom Video contends that Caspian's continued violation of
N.Y.Bus.Corp. Law § 1312*fn3 is now particularly egregious
because Caspian was on notice of this defect prior to filing
the second action, and moves again that the action be
conditionally dismissed or stayed. Alternatively, Vicom Video
moves that the New York action be dismissed or stayed pending
the resolution of the previously commenced Irish lawsuit.
Caspian responds that a stay would be inappropriate because
Vicom Video is not a defendant in the Irish action and because
the defendants had agreed to a New York forum.
Finally, Vicom Video moves for the imposition on Caspian of
sanctions pursuant to Fed.R.Civ.P. 11 based on Caspian's
complaint in No. 90 Civ. 7848, which asserted a ...