By Jason Tenenbaum, Attorney
Every litigator has a file they would like to make disappear. New York lets a plaintiff do that, up to a point, through the voluntary discontinuance provisions of CPLR 3217. What the statute does not promise is that walking away costs nothing.
A 2015 decision from the Appellate Term in a small no-fault billing dispute remains the clearest illustration I know of where the price gets set, and I have watched practitioners misread it for a decade.
The two roads out
CPLR 3217(a) lets a party discontinue without a court order in three situations: by serving a notice of discontinuance before a responsive pleading is served or, where no responsive pleading is required, within 20 days after service of the pleading asserting the claim; by a stipulation signed by all parties; or, in certain real property cases, by filing a certificate. Outside those situations, subdivision (b) applies: the action may be discontinued only “upon order of the court and upon terms and conditions, as the court deems proper.”
That last phrase is where the money is. Courts are reluctant to force a plaintiff to litigate, and they grant discontinuance without prejudice as a matter of course unless the defendant shows prejudice to a substantial right or some other improper consequence.
But the discretion to attach conditions is real, and attorney’s fees are a condition.
Walden-Bailey Chiropractic v Erie Insurance
The facts were ordinary. Walden-Bailey Chiropractic, a Buffalo provider, sued Erie Insurance in the Civil Court in Queens County to recover assigned no-fault benefits. The case was litigated for three years: motions, discovery, repeated court appearances.
In February 2013 the provider made an oral application to discontinue without prejudice, which the Civil Court granted. Erie later moved to vacate or modify the discontinuance and sought attorney’s fees and sanctions; the court denied that motion in January 2014, and Erie appealed.
Erie’s theory was that the provider had discontinued in order to re-file in the Bronx, where it hoped a witness would not be required to establish its billing. The provider had in fact later commenced a Bronx action for the same benefits.
The Appellate Term for the Second, Eleventh and Thirteenth Judicial Districts, in Walden-Bailey Chiropractic v Erie Ins. Co., 50 Misc 3d 51, decided October 19, 2015, did not adopt that theory. It observed that the record did not establish that the provider had expressed an intention to discontinue in Queens in order to sue in the Bronx, and it repeated the settled distinction: a motion to change venue affirmatively selects another forum, while a discontinuance merely makes it possible for the action to be brought elsewhere. The discontinuance without prejudice stood.
And then the court modified the order anyway, granting the branch of Erie’s motion that sought attorney’s fees.
The reasoning was not about forum shopping. It was that the defendant had defended the action for three years, through motion practice, discovery and repeated appearances, and was entitled to recover the reasonable fees it incurred in that defense up to the date of discontinuance “in order to eliminate any possible prejudice attributable to the discontinuance.” The matter was remitted to the Civil Court to fix the amount.
What the case actually holds
Three things, and practitioners tend to remember only the first.
First, a late-stage discontinuance can carry a fee condition even where the discontinuance itself is granted without prejudice. The two are not in tension. The plaintiff keeps its claim; the defendant is made whole for the work the plaintiff’s timing wasted.
Second, the fee award did not depend on proving improper purpose. Erie alleged forum shopping and failed to establish it, and got fees anyway. The predicate was the extent of the defense, not the plaintiff’s motive.
That matters because defendants sometimes over-invest in proving bad faith when the duration and intensity of the defense would carry the application on their own.
Third, the award had a defined endpoint: fees “up to the date of discontinuance.” Not fees in the second action, not fees for the fee application. Practitioners who cite the case for a broader entitlement are reading in what the court left out.
Practice notes
For plaintiffs: if a case has to be discontinued after substantial defense activity, expect the fee condition and price it in. Move early rather than late; early-stage discontinuances, before discovery and motion practice, are rarely opposed and almost never conditioned. If the reason for discontinuing is a venue problem, consider whether a motion to change venue under CPLR 510 is the more honest vehicle, since it is what the court will suspect anyway.
For defendants: document the defense.
The fee application in Walden-Bailey succeeded on a record showing three years of motions, discovery and appearances. Contemporaneous time records, segregated by matter, are what the Civil Court will need on remittal. And ask for the fee condition in the opposition to the discontinuance motion itself, rather than in a later motion to modify; Erie’s route worked, but it added a year and an appeal.
I keep the decision, the procedural history, and my original 2015 reaction to it in a Walden-Bailey case note on the firm’s site. My reaction at the time was that a Buffalo provider suing in Queens and then in the Bronx should raise eyebrows. Mine did. The court’s holding was narrower than my eyebrows, and that is the useful lesson.
Jason Tenenbaum is the principal of the Law Office of Jason Tenenbaum, P.C. in Huntington Station, New York. He has practiced since 2002, concentrating in no-fault insurance, personal injury and appellate litigation, and has published analysis of New York decisions since 2008.
