United States District Court, S.D. New York
OPINION & ORDER
A. CROTTY United States District Judge.
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. 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.
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,
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.
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.
Motion for Reconsideration
raises five arguments for why dismissal should not be with
prejudice. They are all unavailing.
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
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
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
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.
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.
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