Atax New York, Inc. v. Canela 1
- John Cronan
- 1:21-cv-05916
- U.S. District Court · Southern District of New York
- 3
In Atax New York v. Canela 1, Judge Cave denied both requests without prejudice, ordered discovery responses, and canceled the status conference.
The order directly affected the plaintiffs in Atax New York, Inc. v. Canela 1 and defendants Sterling Mateo, Walber Lugo, and Arcadio Consulting, Inc. It required the plaintiffs to respond to discovery and left the defendants free to renew a request to seek dismissal for failure to prosecute.
What happened
Atax New York, Inc. v. Canela 1 concerns requests arising from a lack of progress in the case. Three defendants asked for permission to file a motion to dismiss, saying the plaintiffs had not answered discovery requests. The plaintiffs asked for a conference about either ending the case or sending it to state court.
The court said the case could not be sent to state court because the plaintiffs originally filed it in federal court. The plaintiffs also could not stop responding to discovery or stop prosecuting the case. The court ordered them to answer the defendants’ discovery requests by November 16, 2022.
Judge Sarah L. Cave denied both requests without prejudice. She said the defendants could renew their request to seek dismissal for failure to prosecute if the plaintiffs did not respond, allowed the plaintiffs to pursue specified procedures for voluntarily ending the case, and canceled the scheduled status conference.
The detailed version
- Atax New York, Inc. v. Canela 1 · No. 1:21-cv-05916
- John Cronan
- Nov. 9, 2022
Background
Defendants Sterling Mateo, Walber Lugo, and Arcadio Consulting, Inc. asked for permission to file a motion to dismiss. They asserted that the plaintiffs had not answered interrogatories and requests for production served on October 9, 2022, and had told them they did not want to continue with the case or provide discovery. They also said the plaintiffs were willing to end the case if the defendants withdrew their counterclaim for abuse of process. The defendants declined to withdraw that counterclaim unless the plaintiffs paid $56,250 in attorneys’ fees.
The plaintiffs asked for a court conference to discuss either ending all claims by both sides or asking to send the case to New York State Supreme Court in Bronx County, with damages capped at $61,500.
Court’s Analysis
The court rejected the proposed transfer to state court because the plaintiffs had started this action in federal court. The court explained that a case that began in federal court could not be sent to a state court where it had never been filed. The earlier state-court action mentioned in the opinion had been dismissed with permission to renew in federal court, but it had not been removed to federal court and did not provide a basis for sending this case back to state court.
The court also stated that the plaintiffs could choose to end the case, but they could not disregard their obligations to prosecute the case or respond to discovery. The court identified two procedures the plaintiffs could use to voluntarily discontinue the action: obtain a signed stipulation from the defendants under Federal Rule of Civil Procedure 41(a)(1)(A), or ask the court to dismiss the case under Rule 41(a)(2).
Ruling
Both requests were denied without prejudice. The plaintiffs were ordered to serve responses to the defendants’ October 9, 2022 discovery requests by November 16, 2022. If they failed to respond, the defendants could renew their request for permission to seek dismissal of the complaint under Rule 41(b) for failure to prosecute. Because of the lack of progress since the October 4, 2022 initial conference, the court canceled the telephone status conference scheduled for November 17, 2022. The clerk was directed to close the docket entry for the defendants’ request.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.