Diligent Enterprise Management, LLC v. AML Global Eclipse, LLC et al

Filing 17

ORDER: Plaintiff's request for a court order dismissing this case without prejudice is DENIED. Not later than Friday, June 14, 2024, Plaintiff must either (a) file a notice of voluntary dismissal with prejudice, or (b) file a letter proposing a jointly-agreed upon briefing schedule to address the threshold service, jurisdiction, and venue issues. SO ORDERED. (Signed by Judge Valerie E. Caproni on 6/4/2024) (mml)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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DILIGENT ENTERPRISE MANAGEMENT,
:
LLC,
:
:
Plaintiff,
:
:
-against:
:
AML GLOBAL ECLIPSE, LLC, DWC PINE
:
INVESTMENTS I, LTD., ALAN KLAPMEIER, :
JAMES CARROLL, STEVE SERFLING, RJ
:
SIEGLE, and MIKE WYSE,
:
:
:
Defendants. :
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USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 6/4/2024

24-CV-2228 (VEC)
ORDER

VALERIE CAPRONI, United States District Judge:
Plaintiff Diligent Enterprise Management, LLC (“Diligent”) requested a court order to
dismiss this case without prejudice pursuant to Fed. R. Civ. P. 41(a)(2). See Letter Mots., Dkts.
11, 15. Absent a court order, Diligent cannot voluntarily dismiss this case without prejudice
because it has already voluntarily dismissed identical claims. See Diligent Enterprise
Management, LLC v. AML Global Eclipse, LLC et al., 1:23-cv-10924 (VEC) (“Diligent I”); see
also Fed. R. Civ. P. 41(a)(1)(B) (“[I]f the plaintiff previously dismissed any federal- or statecourt action based on or including the same claim, a notice of dismissal operates as an
adjudication on the merits.”). For the reasons explained below, Plaintiff’s request for a court
order to dismiss this case without prejudice is DENIED.
BACKGROUND
Plaintiff filed Diligent I in the New York Supreme Court on November 17, 2023. See
Diligent I, Dkt. 1-1. Defendants removed the case to this Court on December 15, 2024. Id., Dkt.
1. The parties began briefing cross-motions to transfer and remand that would resolve threshold

jurisdictional and venue questions. See id., Dkt. 13 (order setting briefing schedule); Dkt. 16
(Plaintiff’s memorandum in support of motion to remand); Dkt. 22 (Defendants’ memorandum
in support of cross-motion to transfer). After the parties had filed their opening memoranda and
before briefing was complete, on March 15, 2024, Plaintiff voluntarily dismissed Diligent I, see
Diligent I, Dkts. 25–26, and filed this lawsuit (“Diligent II”) in New York state court. See Not.
of Removal, Dkt. 1, Ex. A.
On March 22, 2024, the parties appeared for a status conference to discuss next steps,
given the inevitable removal of this case. At the conference, Defendants confirmed their
intention to remove Diligent II. The parties agreed to meet and confer regarding a proposed
briefing schedule to address all threshold issues, including sufficiency of service, remand, and
transfer (i.e., to restart the briefing that was aborted when Diligent I was voluntarily dismissed).
On March 25, 2024, Defendant AML Global Eclipse, LLC, with the consent of the other
Defendants, removed Diligent II. See Not. of Removal, Dkt. 1. Even though the parties agreed
to submit a proposed briefing schedule, they did not do so. On April 9, 2024, the Court ordered
the parties to meet and confer and file a letter with a proposed briefing schedule by no later than
April 24, 2024. Order, Dkt. 9. On April 24, instead of filing a proposed a briefing schedule,
Plaintiff stated its intention to dismiss Diligent II. Letter, Dkt. 11. It asked the Court to set a
schedule to brief its request for a court order dismissing the Complaint without prejudice. Id.
The Court allowed the parties to submit three-page letters on whether dismissal without
prejudice would be appropriate here. Order, Dkt. 12.
DISCUSSION
Whether “to grant dismissal under Rule 41(a)(2) is left to the sound discretion of the
district court.” Fortis Bank S.A./N.V. (Cayman Islands Branch) v. Brookline Fin. LLC, 2012 WL
86448, at *2 (S.D.N.Y. Jan. 11, 2012). In exercising such discretion, courts typically consider
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(1) “the plaintiff’s diligence in bringing the motion,” (2) any “undue vexatiousness” on the
plaintiff’s part, (3) “the extent to which the suit has progressed, including the defendant’s effort
and expense in preparation for trial,” (4) “the duplicative expense of relitigation,” and (5) “the
adequacy of plaintiff’s explanation for the need to dismiss.” Zagano v. Fordham Univ., 900 F.2d
12, 14 (2d Cir. 1990).
Here, the factors weigh against allowing Plaintiff to dismiss this case without prejudice.
Plaintiff claims it has been diligent and that the suit has not progressed significantly because the
“action has been pending only a few weeks.” Letter, Dkt. 15 at 2. But that argument ignores the
fact that the same issues between the same parties had been pending before the Undersigned
since December 2023 when Diligent I was dismissed and Diligent II was commenced.
Further, Plaintiff has been unduly vexatious and created duplicative expenses for
Defendants, who have had to remove the same lawsuit twice. It made Defendants brief crossmotions to remand and transfer, which involved researching and drafting a 25-page
memorandum and compiling 44 exhibits. See Diligent I, Dkts. 22–24. Plaintiff’s perplexing
behavior — voluntarily dismissing the case and then re-filing an identical complaint the same
day — required the Court to schedule and conduct a status conference, which further wasted the
Court’s and the parties’ time. At that conference, Plaintiff represented to the Court that it was
willing to proceed with briefing the threshold motions in the new proceeding but then
backtracked on that representation, leading to further letter briefing on whether Diligent could
dismiss its newly-filed complaint without prejudice.
The litigation has progressed to motion practice and Defendants have invested significant
time and effort in defending Plaintiff’s claims; Plaintiff, in contrast, has offered no cogent
explanation for its sudden desire to dismiss that outweighs those factors. Plaintiff represents that
it cannot afford to litigate and has been unable to secure litigation funding. See Letter, Dkt. 15 at
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2–3. While that could be true, Plaintiff surely knew its financial condition before it dismissed
Diligent I and filed Diligent II. Id. at 2 (explaining that Plaintiff has had cost constraints and has
had conversations with funders since serving the first state court complaint in November 2023).
Armed with knowledge of its financial condition, it could have simply let its voluntarily
dismissal of Diligent I — which was without prejudice, see Diligent I, Dkts. 25–26 — stand. Its
decision to file a new complaint the very same day undermines its stated concerns about its
financial status and can only be described as vexatious.
CONCLUSION
Plaintiff’s request for a court order dismissing this case without prejudice is DENIED.
Not later than Friday, June 14, 2024, Plaintiff must either (a) file a notice of voluntary dismissal
with prejudice, or (b) file a letter proposing a jointly-agreed upon briefing schedule to address
the threshold service, jurisdiction, and venue issues.
SO ORDERED.
________________________
VALERIE CAPRONI
United States District Judge

Date: June 4, 2024
New York, New York

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