CSI IT LLC v. DUNGEY (2025)

Order, Supreme Court, New York County (Andrea Masley, J.), entered on or about July 2, 2024, which granted defendant's motion to dismiss the complaint pursuant to CPLR 3211(a)(4), unanimously affirmed, with costs.

Supreme Court providently exercised its discretion in dismissing the complaint on the ground that there is a prior pending action in Florida which involves a broader set of parties and issues than the instant action, was commenced before the New York action, and has discovery already underway (see Alvarez & Marshal Valuation Servs., LLC v. Solar Eclipse Inv. Fund III, LLC, 216 A.D.3d 447, 448, 189 N.Y.S.3d 167 [1st Dept. 2023];  Syncora Guar. Inc. v. J.P. Morgan Sec., LLC, 110 A.D.3d 87, 96, 970 N.Y.S.2d 526 [1st Dept. 2013]).

The forum selection clause in defendant's severance agreement selecting New York as the appropriate jurisdiction does not require a different result.  Defendant showed that enforcement of the forum selection clause would be unreasonable or unjust under these circumstances (see British W. Indies Guar. Trust Co. v. Banque Internationale A Luxembourg, 172 A.D.2d 234, 234, 567 N.Y.S.2d 731 [1st Dept. 1991]).  As found by the Florida court, the plaintiff in that action, CSI IT Holdings, LLC (Holdings), plaintiff's parent company, sued defendant for conduct in alleged breach of non-competition and non-solicitation restrictions in Holdings’ LLC Agreement.  Accordingly, defendant's counterclaim, alleging that CSI IT, LLC (CSI), plaintiff in this action, and Holdings breached the severance agreement, which partially released him from his non-competition restriction, was compulsory (see Londono v. Turkey Creek, Inc., 609 So.2d 14, 19 [1992]).  Thus, Holdings’ initiation of the Florida action compelled defendant to litigate to a binding conclusion his counterclaim against Holdings and CSI in a jurisdiction other than the one the parties selected, lest he waive the claim (see Paramount Pictures Corp. v. Allianz Risk Transfer AG, 141 A.D.3d 464, 467–468, 36 N.Y.S.3d 11 [1st Dept. 2016], affd 31 N.Y.3d 64, 73 N.Y.S.3d 472, 96 N.E.3d 737 [2018]).

In denying Holdings’ and CSI's motion to dismiss defendant's counterclaim on the grounds that Florida was an improper venue based on the forum selection clause in the severance agreement, the Florida court found that Holdings “waived [its] right to enforce the forum selection provision[ ] in the ․ Severance [Agreement]” by instituting the Florida action.  This finding further weighs against enforcing the forum selection clause here in order to avoid reaching an inconsistent result (see Buechel v. Bain, 97 N.Y.2d 295, 303, 740 N.Y.S.2d 252, 766 N.E.2d 914 [2001], cert denied 535 U.S. 1096, 122 S.Ct. 2293, 152 L.Ed.2d 1051 [2002]).