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Higginson v. Linden Capital L.P.

Supreme Court, New York County

August 2, 2013

KRAIG HIGGINSON, KENT WILLIAMS and CARL BERG, Plaintiffs,
v.
LINDEN CAPITAL L.P., TENOR OPPORTUNITY MASTER FUND, LTD and ARI OPPORTUNITY FUND, LTD., Defendants. Index No. 653142/12

Unpublished Opinion

Motion Date: 3/18/13.

BRANSTEN, J.

Defendants Linden Capital L.P., Tenor Opportunity Master Fund, Ltd., and Aria Opportunity Fund, Ltd. (collectively, "Defendants") bring the instant motion to dismiss the complaint ("the Complaint") filed by Plaintiffs Kraig Higginson ("Higginson"), Kent Williams ("Williams), and Carl Berg ("Berg"; together with Higginson and Williams, the "Plaintiffs"). Defendants' motion to dismiss Plaintiffs' Complaint is granted.

This is a declaratory judgment action, stemming from an intellectual property transaction between the parties. Plaintiffs are a group of investors, who were involved in the creation of an electric automobile company called VIA Motors. (Compl. ¶ 9). In Fall 2010, VIA Motors bought intellectual property assets from a company financed by Defendants - Raser Technologies, Inc. As part of the transaction, VIA Motors issued shares of its company to Raser in exchange for the intellectual property. Id. at ¶ 11. In a separate but related transaction, Plaintiffs and Defendants entered into a contract, dated June 2, 2011 (the "June 2, 2011 contract" or "agreement"), and a commitment letter under which VIA Motors agreed to purchase back its shares from Raser. The Contingent Additional Consideration portion of the June 2, 2011 contract is at the heart of this dispute. Id. At ¶ 12.

In the Contingent Additional Consideration portion of the agreement, Plaintiffs agreed to pay an additional $2, 000, 000 to Raser if Raser and/or the Defendants obtained the release of all "liens, claims and encumbrances of any kind or nature whatsoever asserted by Pratt & Whitney Power Systems, Inc. against any intellectual property assets owned or controlled by VIA." See Compl. Ex. A at ¶ "Higginson Group Consideration, (b)". ¶ Defendants met this condition, the June 2, 2011 required Plaintiffs to make payment before June 9, 2011. Id. at 115.

Plaintiffs allege that Defendants did not meet this mandatory provision and that payment of the Contingent Additional Consideration therefore was not warranted. Id. at ¶16.

Defendants claim that they extinguished all claims on the intellectual property; however, once it became clear that the payment from Plaintiffs was not coming, Defendants sent a letter to Plaintiffs demanding payment. This demand letter threatened that if payment was not made by September 1, 2012, litigation would ensue. See Affirmation of Robert A. Rich, Ex. 3 at 2; Pls.' Opp. Br. at 4.

When payment was not made, Plaintiffs filed the instant complaint in this Court. In this action, Plaintiffs seek a declaratory judgment that they are not obligated to pay the Contingent Additional Consideration under the June 2, 2011 contract because they claimed the conditions of this payment were not met. On September 27, 2012, Defendants filed a complaint in the Southern District of New York (the "District Court Action") asserting breach of contract and seeking payment of the Contingent Additional Consideration.

II. Discussion

Defendants now bring the instant motion to dismiss the complaint filed in this Court pursuant to CPLR 3211(a)(4). Defendants contend that this action was commenced "in an improper effort to pre-empt a federal suit against them for breach of contract, and to adjudicate a baseless defense to that action as putative 'Plaintiffs.'" (Defs.' Moving Br. At 1.)

A. Standard of Law

CPLR § 3211(a)(4) states a party may move for a motion to dismiss 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; the court need not dismiss upon this ground but may make such order as justice requires." CPLR § 3211(a)(4).

Dismissal under CPLR § 3211 (a)(4) is warranted when the relief sought is "the same or substantially the same" with respect to the two pending actions. White Light Prod., Inc. v. On the Scene Prod., Inc., 231 A.D.2d 90, 94 (1st Dep't 1997). This criteria is not met when "relief demanded is antagonistic and inconsistent, or purposes of two actions are entirely different." Id.at 94. Furthermore, in order to reach dismissal, "it is necessary that there be sufficient ...


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