Opinion
No. 06-0885-cv.
June 28, 2007.
UPON DUE CONSIDERATION of this appeal from a final decision of the United States District Court for the Western District of New York (Elfvin, J.), it is hereby ORDERED, ADJUDGED, AND DECREED, that the judgment of the District Court is VACATED and the case REMANDED.
APPEARING FOR APPELLANT: PHILIPPE L. GUARINO, Mougins, France (Lawrence J. Mattar, Of Counsel, Mattar, D'Agostino Gottlieb, LLP, Buffalo, NY, on the brief).
APPEARING FOR APPELLEES: DAVID B. SMITH, Feuerstein Smith, LLP, Buffalo, NY.
PRESENT: HON. ROBERT D. SACK, HON. BARRINGTON D. PARKER, HON. PETER W. HALL, Circuit Judges.
Appellant L. Andrew Bernheim ("Bernheim") appeals from the judgment of the Honorable John T. Elfvin, United States District Judge for the Western District of New York, entered January 11, 2006, dismissing Bernheim's claims without prejudice. We assume the parties' familiarity with the facts, procedural history of the case, and issues presented on appeal.
Bernheim asserts in his Complaint that he is a shareholder in the entity D.A. Elia Construction Co. ("D.A. Elia"), and that, as a result of his status as a shareholder, he is entitled to certain funds allegedly misappropriated by Defendants — several persons and entities also involved in the ownership and operation of D.A. Elia. On April 27, 2005, Defendants moved to dismiss Bernheim's complaint. At the time Judge Elfvin had that motion to dismiss under consideration, there were also pending before the Bankruptcy and District Court in the Western District of New York proceedings to resolve a fee dispute between Damon Morey, LLP and D.A. Elia. D.A. Elia Constr. Corp. v. Damon and Morey, LLP, No. 04-CV-975A, 2006 WL 1720361 (W.D.N.Y. June 19, 2006), aff'g In re D.A. Elia Construction Corp., No. 94-10866 K (Bankr. W.D.N.Y. Oct. 19, 2004) (order approving final attorney fee application). The dispute concerned Damon Morey's representation of D.A. Elia in its Chapter 11 reorganization, a case in which Bernheim had filed a proof of claim dated March 31, 1994. Those proceedings would determine the amount of the surplus that would be left in D.A. Elia's estate at the conclusion of that case. On August 12, 2005, at a time when Defendants' motion to dismiss in this case had been filed but not yet ruled upon, Bernheim filed in the District Court a motion to intervene in the fee dispute.
Bernheim's status as a shareholder in D.A. Elia — and the rights that flow from that status — remains in dispute and is the issue upon which his right to relief in this action depends. It is also an issue relevant to both Bernheim's standing to intervene in the bankruptcy fee dispute and the validity of the claim he filed in D.A. Elia's Chapter 11 proceedings in 1994. Thus, in light of "the necessity of avoiding duplicative litigations, thereby conserving judicial resources," First City Nat. Bank and Trust Co. v. Simmons, 878 F.2d 76, 80 (2d Cir. 1989), Judge Elfvin acted well within his discretion when he dismissed Bernheim's claims without prejudice and allowed Bernheim's status as a shareholder to be resolved by the Court which first had occasion to consider it. See Curtis v. Citibank, N.A., 226 F.3d 133, 138 (2d Cir. 2000) ("Because of the obvious difficulties of anticipating the claim or issue-preclusion effects of a case that is still pending, a court faced with a duplicative suit will commonly . . . dismiss it without prejudice . . . . ").
Subsequent to Judge Elfvin's dismissal, however, it became clear that Bernheim's shareholder status will not be resolved either by the Bankruptcy Court, see Findings of Fact, Conclusions of Law and Recommendation to the District Court, No. 94-10866 K at 2, 4 (Bankr. W.D.N.Y. Oct. 2, 2006) (Bankruptcy Court stating that it directed the Debtor to close the case, that it considered all claims related to the estate to have been resolved and was of the view that all remaining matters in the case would be resolved "in a new civil action by Bernheim, such as has been dismissed by Judge Elfvin `without prejudice'"), nor by the District Court in the context of Bernheim's motion to intervene, see D.A. Elia Construction Corp. v. Damon Morey, LLP, No. 04-CV-975A, 2006 WL 1720361, at *4 (W.D.N.Y. June 19, 2006) (declining to resolve Bernheim's shareholder status and noting the issue to have been the subject of litigation pending before Judge Elfvin). Thus, because the threat of duplicative litigation no longer exists, and the Western District of New York is the proper forum for the adjudication of Bernheim's claims, we now vacate the District Court's dismissal of those claims and remand with the instruction that the District Court reinstate Bernheim's complaint.
For the foregoing reasons, the judgment of the District Court is hereby VACATED and the case REMANDED with the instruction that the District Court reinstate Bernheim's complaint.