Opinion
04-18-2024
3B ASSOCIATES LLC, et al., Plaintiffs–Respondents, v. ECOMMISSION SOLUTIONS, LLC, et al., Defendants–Appellants.
Rutherford Christie LLP, New York (David S. Rutherford of counsel), for appellants. Gelber & Santillo PLLC, New York (R. Zachary Gelber of counsel), for respondents.
Rutherford Christie LLP, New York (David S. Rutherford of counsel), for appellants.
Gelber & Santillo PLLC, New York (R. Zachary Gelber of counsel), for respondents.
Renwick, P.J., Kapnick, Shulman, Rosado, O’Neill Levy, JJ.
Order, Supreme Court, New York County (Andrew Borrok, J.), entered November 21, 2023, which, insofar appealed from as limited by the briefs, granted plaintiffs’ motion to consolidate index No. 657637/17 (the breach of contract action) with index No. No. 652280/22 (the fraudulent conveyance action) and denied defendants’ cross- motion to stay discovery in the latter action until the former was resolved, unanimously reversed, on the law and the facts and in the exercise of discretion, without costs, the motion denied, and the crossmotion granted.
In 2016, plaintiff commenced a breach of contract action against defendant eCommission Solutions, LLC (eCommission). In 2022, plaintiff commenced a fraudulent conveyance action against eCommission and its president, Paul Hoffman, and his wife, alleging that Hoffman transferred millions from eCommission to himself with the intent to defraud creditors like plaintiff.
[1, 2] The actions should not have been consolidated. When one action sounds in contract and the other in tort, it is inappropriate to grant consolidation (see Screen Gems–Columbia Music v. Hansen Publ., 42 A.D.2d 897, 897–898, 347 N.Y.S.2d 703 [1st Dept. 1973], affd 35 N.Y.2d 885, 364 N.Y.S.2d 889, 324 N.E.2d 359 [1974]; see also Heydt Contr. Corp. v. Tishman Constr. Corp. of N.Y., 163 A.D.2d 196, 197–198, 558 N.Y.S.2d 47 [1st Dept. 1990]). Indeed, the breach of contract and fraudulent conveyance actions present different questions of law and fact (see e.g. Heydt Contr. Corp., 163 A.D.2d at 197, 558 N.Y.S.2d 47). Moreover, the fraudulent conveyance action will be moot if plaintiffs fail to win the breach of contract action (see Sokolow, Dunaud, Mercadier & Carreras v. Lacher, 299 A.D.2d 64, 74, 747 N.Y.S.2d 441 [1st Dept. 2002]). Finally, the two actions are at different stages, so that consolidation would lead to delay in trying the breach of contract action (see e.g. Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 94 A.D.3d 455, 456, 941 N.Y.S.2d 492 [1st Dept. 2012]; Suckishvili v. Visiting Nurse Serv. of N.Y., 74 A.D.3d 433, 433, 900 N.Y.S.2d 874 [1st Dept. 2010]; Tarshish v. Associated Dry Goods Corp., 232 A.D.2d 246, 247, 648 N.Y.S.2d 298 [1st Dept. 1996]).
Discovery in the fraudulent conveyance action should be stayed until the breach of contract action is resolved (see e.g. Belopolsky v. Renew Data, Corp., 41 A.D.3d 322, 322–323, 837 N.Y.S.2d 154 [1st Dept. 2007]).