CPLR 3217(a)(1) untimely unilateral voluntary discontinuance

CPLR 3217(a)(1)

BDO USA, LLP v Phoenix Four, Inc., 2014 NY Slip Op 00410 [1st Dept. 2014]

The motion court erred in deeming defendants' motions withdrawn. Indeed, the parties never "stipulated" to discontinue BDO's action. Rather, BDO unilaterally filed a notice of voluntary discontinuance. This notice was untimely because BDO served it after defendants filed their motions to dismiss (see CPLR 3217[a][1]; Polgar v Focacci, 2 Misc 3d 836, 839-840 [Sup Ct, NY County 2003]; David D. Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3217:8 ["[t]he defendant who has moved to dismiss under CPLR 3211 has already done as much in the litigation (and more) than if she had merely answered the complaint"]). Indeed, if a motion to dismiss is not a "responsive pleading" within the meaning of CPLR 3217(a)(1), a plaintiff would be able to freely discontinue its action without prejudice solely to avoid a potentially adverse decision on a pending dismissal motion. This Court has made clear that such conduct is improper (see Rosenfeld v Renika Pty. Ltd., 84 AD3d 703 [1st Dept 2011]; McMahan v McMahan, 62 AD3d 619, 620 [1st Dept 2009]). Thus, BDO's notice was ineffective and a nullity, and the motion court should not have deemed defendants' motions withdrawn (see Citidress II Corp. v Hinshaw & Culbertson LLP, 59 AD3d 210, 211 [1st Dept 2009]; Tutt v Tutt, 61 AD3d 967 [2d Dept 2009]).

That BDO served its notice of discontinuance in an attempt to circumvent the Administrative Judge's order denying its request to have its action assigned to the Commercial Division may be a valid basis for granting a discontinuance with prejudice (see e.g. Rosenfeld, 84 AD3d at 703; McMahan, 62 AD3d at 619; NBN Broadcasting v Sheridan Broadcasting Networks, 240 AD2d 319 [1st Dept 1997]; Hirschfeld v Stahl, 242 AD2d 214 [1st Dept 1997]). However, given the unusual procedural history that led to the commencement of this action, we decline to discontinue the action with prejudice. Specifically, this action arose from defendant SRC's failure to properly notify this Court of the settlement the parties had reached in the contribution action before the mediator. Indeed, although the parties had reached a settlement, and the mediator specifically directed the parties to inform this Court of the settlement, SRC unilaterally took the position that the settlement was not effective and that the appeal should continue. As a result, this Court dismissed the contribution action before the parties finalized a [*5]written agreement, thus precluding BDO from enforcing the oral agreement (see BDO Seidman LLP, 92 AD3d 426; BDO Seidman LLP, 70 AD3d 556).

Because the motion court deemed Phoenix's motion to dismiss withdrawn without having considered its merit, we remand the action for further proceedings, including consideration of the motion.

Empahsis is mine.

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