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Yimby, Inc. v. Fedak

United States District Court, S.D. New York

March 6, 2017

YIMBY, INC., Plaintiff,

          OPINION & ORDER

          PAUL A. CROTTY United States District Judge.

         Plaintiff Yimby, Inc. ("Yimby") brought this action against defendants Nikolai Fedak and New York Yimby LLC, (together, "Defendants") seeking to recover property Defendants allegedly wrongfully took, and also seeking money damages. Plaintiff moved for a temporary restraining order ("TRO") on February 10, 2017. Dkt. 22. The same day, after a hearing on the motion, the Court granted a TRO in Plaintiffs favor.[1] Id. On Wednesday, February 15, 2017, Plaintiffs counsel, Anthony D. Dougherty, advised the Court that it could no longer rely on material evidence submitted in support of Plaintiff s TRO motion. Dkt. 31-2. The letter stated that Plaintiff "consented to allow [counsel] to seek dismissal of this matter in its entirety." Id. It continued that Defendants' counsel, Steven M. Wagner, "agreed to dismiss the matter" but noted that Mr. Wagner "may move for sanctions against the plaintiff." Id. The Court held a conference the same day.

         At the conference, it became apparent to the Court that an employment agreement purportedly signed by Mr. Fedak ("Employment Agreement") had been forged by Plaintiffs CEO, Daniel George. Mr. George's declaration filed in support of the TRO motion was false, as well. The Employment Agreement-attached to the operative complaint and submitted in support of the TRO-was of central importance to the Court's decision to grant the TRO, and, as described by Plaintiffs counsel, a "linchpin" to the case itself. Feb. 15, 2017 Conf. Tr., Dkt. 36-2, at 8:17-19 ("The linchpin, as we understood and analyzed the case, centered on a signed employment agreement. . .."). The Court therefore explained that it would dismiss the action pursuant to Fed.R.Civ.P. 41(a)(2). Id., at 6:2-10, 12:10-22.

         On February 16, 2017, the Court dismissed the action "pursuant to Fed.R.Civ.P. 41(a)(2)." Dkt. 31. The Court also ordered "that by February 24, 2017, Plaintiff pay Defendants $30, 000 for Defendants' attorney's fees, time, and expenses." Id. On February 21, 2017, Mr. Wagner notified the Court that Plaintiff had not complied with certain of the Court's February 16, 2017 orders and had indicated that it would not pay the $30, 000. See Dkt. 32. On February 22, 2017 the Court held a conference. At the conference, Mr. Wagner requested that the Court amend its February 16, 2017 Order "to have dismissal be with prejudice." Feb. 22, 2017 Conf. Tr., Dkt. 36-3, at 4:17-23. There was no objection. On February 23, 2017, the Court ordered "that the February 16, 2017 dismissal of this action pursuant to Fed.R.Civ.P. 41 (a)(2) is with prejudice." Dkt. 33.

         On March 1, 2017, Plaintiff filed a motion (1) for reconsideration of the Court's dismissal with prejudice; and (2) requesting an additional 90 days to make the $30, 000 payment to Defendants. Dkt. 35. On March 2, 2017, Defendants filed their opposition. Dkt. 36. On March 3, 2017, the Court heard argument on Plaintiffs motion. For the reasons described below, Plaintiffs motion to reconsider is denied.


         I. Motion for Reconsideration

         Plaintiff raises five arguments for why dismissal should not be with prejudice. They are all unavailing.

         First, Plaintiff argues that Mr. Dougherty's February 15, 2017 letter operated as a notice of voluntary dismissal, pursuant to Rule 41 (a)(1)(A)(i). Thus, according to Plaintiff, because the letter did not state that dismissal was to be with prejudice, the dismissal necessarily was without prejudice under the Second Circuit's ruling in Youssefv. Tishman Constr, Corp., 744 F.3d 821 (2d Cir. 2014).

         In Youssef, the plaintiff filed a sealed qui tarn action in the Southern District of New York alleging violations of the federal and New York False Claims Act. Youssef, 744 F.3d at 822. The seal was extended several times while the New York Attorney General and the U.S. Attorney's Office considered whether to proceed. Id. They eventually declined to prosecute. Id. Thereafter, and before the defendants answered or moved for summary judgment (indeed the defendants had not yet even been served), the plaintiffs counsel submitted a letter to the district court seeking dismissal of the action. Id. The letter stated "I have spoke[n] to my client and in view of the government's decision not to intervene he has decided not to pursue this matter any further." Id.

         The district court then dismissed the action without prejudice as to the United States and the State of New York, but with prejudice as to the plaintiffs claims. Id. Approximately eight months later, the plaintiff re-filed his claim in the Eastern District of New York. Id. at 822-23. The plaintiff alleged that only after re-filing his claim did he learn that the Southern District had dismissed his case with prejudice. Id. at 823. He thereafter requested that the Southern District court modify its order to be without prejudice. Id. The district court declined to modify its order, and the plaintiff appealed. Id. On appeal, the Second Circuit explained that for voluntary dismissals under Rule 41(a)(1), unless the plaintiff indicates it seeks dismissal with prejudice, a district court has no discretion to order that the dismissal be anything other than without prejudice. See Id. at 824-25.

         The problem for Plaintiff is that the Court dismissed the action pursuant to Rule 41(a)(2), not Rule 41(a)(1). It is not at all clear why Youssef should have any application. In Youssef, the plaintiffs counsel clearly stated that the plaintiff would not "pursue this matter any further." Here, in contrast, Mr. Dougherty's letter reflects a request for the Court to take action and order the matter dismissed. If Plaintiff were noticing its dismissal of the action pursuant to Rule 41(a)(1)(A)(i), there would have been no need to "seek" dismissal from the Court.

         Also, unlike in Youssef where the plaintiff purportedly had no knowledge that the court had ordered dismissal with prejudice, Plaintiff here was aware that the Court would be granting dismissal pursuant to Rule 41(a)(2). The Court stated in open court-at a conference that Mr. Dougherty attended-that it would dismiss the case pursuant to Rule 41(a)(2). Feb. 15, 2017 Conf. Tr. at 6:2-12. If Mr. Dougherty had intended by his letter to dismiss the action pursuant to Rule 41(a)(1)(A)(i), he could have so informed the Court. But he did not. Instead, he reaffirmed that Plaintiffs CEO consented for Mr. Dougherty to come before the Court to "seek the withdrawal of the complaint, " and stated that Plaintiff was withdrawing the complaint "[i]f it so pleases the Court." Id. at 5:16-17, 12:10-22. Mr. Dougherty further explained that Mr. Wagner intended to seek sanctions. Id. at 5:9-12. As a result, the request for dismissal was more in line with a request pursuant to Rule 41(a)(2), because the Court would then be able to determine whether it considered sanctions a proper term in ordering dismissal.

         Second, Plaintiff posits that the Court ordered the dismissal of this action with prejudice in response to Plaintiffs failure to comply with the February 16, 2017 Order. Not so. The Court's February 23, 2017 modification to the dismissal was solely meant to clarify its February 16, 2017 Order. At all times since the Court determined that the Employment Agreement was forged and that Mr. George had submitted a false declaration in connection with the TRO motion, the Court has contemplated that Plaintiff should not be permitted to continue its lawsuit against Defendants. Allowing Plaintiff to walk away from a forged signature and a false declaration, so that the lawsuit could be restarted as though ...

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