White Light Productions, Inc. v. On the Scene Productions, Inc.

• Decision Date: 17 July 1997
• Citation: 660 N.Y.S.2d 568,231 A.D.2d 90
• Parties: WHITE LIGHT PRODUCTIONS, INC., et al., Plaintiffs-Appellants, v. ON THE SCENE PRODUCTIONS, INC., etc., et al., Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 568

660 N.Y.S.2d 568

231 A.D.2d 90

WHITE LIGHT PRODUCTIONS, INC., et al., Plaintiffs-Appellants, v. ON THE SCENE PRODUCTIONS, INC., etc., et al., Defendants-Respondents.

Supreme Court, Appellate Division First Department.

July 17, 1997.

Gerald E. Singleton, of counsel (Frankfurt, Garbus, Klein & Selz, P.C., attorneys), for plaintiffs-appellants,

Cathy Fleming, of counsel (Fleming, Roth & Fettweis, attorneys), for defendants-respondents On the Scene Productions/New York, Sally Jewitt and Stacie Hunt.

Before ROSENBERGER, J.P., and ELLERIN, RUBIN, WILLIAMS and ANDRIAS, JJ.

RUBIN, Justice.

This dispute arises out of the operation of a general partnership formed under the laws of the State of California between On The Scene Productions, Inc., a California corporation, and White Light Productions, Inc., a New Jersey Corporation. The shares of White Light Productions are wholly owned by the individual plaintiff Mark Haefeli, a resident of New Jersey, and the shares of On The Scene Productions are similarly owned by the individual defendants Sally Jewitt and Stacie Hunt, both residents of California. On The Scene Productions, Inc. made a capital contribution of $100,000, and White Light Productions, Inc. made a capital contribution of $50,000 to the partnership, named On The Scene Productions/NY (OTSP/NY). The partnership agreement states that its purpose is "to engage in the business of electronic publicity and to provide partnership clientele with live or taped television and radio productions." The complaint elaborates that it was the partners' intention to provide services to clients located in New York similar to those provided by On The Scene Productions to its California clients, namely multimedia, video and film production services.

In furtherance of the partnership's business, OTSP/NY maintained an office at 475 Park Avenue South in New York City. Plaintiff Haefeli performed the day-to-day functions of OTSP/NY in New York, while defendants Hunt and Jewitt maintained OTSP/NY's books and records, collected its receivables, and paid its bills from the partnership's principal place of business, located at 5900 Wilshire Boulevard, Los Angeles, California. In her affidavit in support of the motion to dismiss the complaint, Ms. Jewitt states that she periodically traveled "to New York to meet with the plaintiff, Mark Haefeli, in order to discuss the operation of the partnership. However, all decisions required to be made by the partnership, as set forth in the partnership agreement, were made by declarant and Stacie Hunt in Los Angeles, California."

According to the affidavit of Mark Haefeli, "The business of OTSP/NY and the partnership between the parties came to an abrupt end on or about November 13, 1995, when defendant [On the Scene Productions, Inc.], acting through defendants Sally Jewitt and Stacie Hunt, locked me out of the offices of OTSP/NY and notified White Light Productions, Inc. in writing that the partnership had been terminated." The complaint in this matter charges that defendants breached their agreement by wrongfully terminating the partnership and by failing to account for the capital contribution made by White Light Productions and for its share of the partnership's profits; that the individual defendants breached their fiduciary duty to plaintiffs by failing to keep accurate accounts; that the individual defendants retained various items of personal property belonging to Mr. Haefeli; that they are engaging in unfair competition by continuing to transact business as OTSP/NY, using awards that he won to solicit customers; and that they are interfering with plaintiffs' contractual relations with clients. The complaint seeks monetary damages, an accounting and imposition of a constructive trust on revenues received by defendants on behalf of OTSP/NY.

While there is no suggestion that this action was improperly commenced, the record does not disclose when the summons with notice were filed in the Supreme Court Clerk's office (CPLR 304). Service was made upon defendant partners on February 12 and February 15, 1996, and defendants served plaintiffs with a demand for the complaint on April 1, 1996.

In the meantime, defendants instituted their own action by filing a complaint in Superior Court, Los Angeles County, California on November 22, 1995. Service in that action was not effected on Mr. Haefeli until March 29, 1996, and White Light Productions has contested the service allegedly made upon it on April 2, 1996. The complaint in the California action similarly charges wrongful termination of the partnership and breach of fiduciary duty. It seeks dissolution of the partnership, an accounting, "consequential and incidental" monetary damages and injunctive relief.

By motion dated May 7, 1996, defendants sought to dismiss the complaint in this action on the ground that there is another action pending in California (CPLR 3211[a][4] ) and that this Court lacks jurisdiction over the individual defendants or, in the alternative, to dismiss or stay the action on the ground of forum non conveniens (CPLR 327). Shortly thereafter, White Light Productions filed a motion in California Superior Court, dated June 11, 1996, to stay or dismiss that action.

Supreme Court granted the motion and dismissed the complaint in the exercise of discretion on the ground that another action is pending between the same parties for the same cause of action. The court found that the California action was commenced pursuant to § 411.10 of the California Code of Civil Procedure by filing the summons and complaint in the Superior Court. It noted that the motion to dismiss is predicated on a first-in-time defense in which the first action commenced is accorded priority, with exceptions being limited almost exclusively to situations in which the filing of the respective actions is virtually simultaneous. The court also noted that, by order dated June 11, 1996, the Superior Court, Los Angeles County stayed the action before it pending resolution of this motion.

At issue on appeal is whether the priority of the California and New York actions should be determined by the date on which they were filed or by the date on which service was effected. Also raised are the questions of whether there is sufficient similarity of the actions to render the instant matter an action "between the same parties for the same cause of action" (CPLR 3211[a][4] ) and whether, "in the interest of substantial justice" and convenience of the parties, this action should be heard in California (CPLR 327). The alternative grounds for relief are appropriate because, in deciding a motion to dismiss based on the pendency of another action, the analysis is similar to that employed in entertaining a motion predicated on forum non conveniens (Flintkote Co. v. American Mut. Liab. Ins. Co., 103 A.D.2d 501, at 506, 480 N.Y.S.2d 742, affd. 67 N.Y.2d 857, 501 N.Y.S.2d 662, 492 N.E.2d 790). However, where another action is pending, a major concern, as a matter of comity, is to avoid the potential for conflicts that might result from rulings issued by courts of concurrent jurisdiction (see, State of New York v. Thwaites Place Assocs., 155 A.D.2d 3, 7, 552 N.Y.S.2d 226, citing Pennsylvania v. Williams, 294 U.S. 176, 55 S.Ct. 380, 79 L.Ed. 841; see also, Pacesetter Systems v. Medtronic, Inc., 678 F.2d 93, 96, n. 3 [9th Cir.1982]; Product Eng'g and Mfg. v. Barnes, 424 F.2d 42, 44 [10th Cir.1970] ).

In order to reach this issue, it is necessary that there be sufficient identity as to both the parties and the causes of action asserted in the respective actions (Walsh v. Goldman Sachs & Co., 185 A.D.2d 748, 749, 586 N.Y.S.2d 608). With respect to the parties, the requirement is that there be substantial identity (Case Capital Corp. v. Morgan Invs., 154 A.D.2d 501, 546 N.Y.S.2d 127, citing Barringer v. Zgoda, 91 A.D.2d 811, 458 N.Y.S.2d 42; Siegel, N.Y. Prac § 262, at 391 [2d ed] ). The instant action names the individual defendants Jewitt and Hunt together with On The Scene Productions, Inc., the corporate partner controlled by them, as parties defendant, whereas the California action was instituted in the name of the corporate partner alone. The presence of additional parties, however, will not necessarily defeat a motion pursuant to CPLR 3211(a)(4) where, as here, "both suits arise out of the same subject matter or series of alleged wrongs" (Kent Dev. Co. v. Liccione, 37 N.Y.2d 899, 901, 378 N.Y.S.2d 377, 340 N.E.2d 740).

With respect to the subject of the actions, the relief sought must be "the same or substantially the same" (id.; Siegel, Practice Commentaries, McKinney's Cons. Laws of N.Y., Book 7B, CPLR 3211.15 at 26-27). This criterion is lacking where "the relief demanded is antagonistic and inconsistent" (Arred Enters. Corp. v. Indemnity Ins. Co., 108 A.D.2d 624, 627, 485 N.Y.S.2d 80) or "[t]he purposes of the two actions are entirely different" (id.; see also, Matter of Sullivan, 289 N.Y. 323, 325-326, 45 N.E.2d 819 [suit brought in individual and representative capacity, respectively]; Alpert v. 28 Williams St. Corp., 63 N.Y.2d 557, 568, n. 4, 483 N.Y.S.2d 667, 473 N.E.2d 19 [same] ). A difference in the characterization of damages does not create "in and of itself, a substantial difference between the actions" (Stanley Elec. Serv. v. City of New York, 26 A.D.2d 951, 275 N.Y.S.2d 222, lv. dismissed 19 N.Y.2d 629, 278 N.Y.S.2d 412, 224 N.E.2d 902).

As noted previously, both actions assert wrongful termination of the partnership and breach of fiduciary duty and seek, as relief, an accounting and dissolution of the partnership together with consequential and incidental monetary damages. With respect to the additional relief sought by plaintiffs in this action, it has not been demonstrated, either under the laws of this State or those of California, that the imposition of a constructive trust would not merely be redundant in view of the statutory...