Opinion
300721/2008.
Decided July 30, 2010.
Leonard Benowich Esq., White Plains, NY, for Plaintiff.
Richard E. Trachtenberg Esq., Martin Silver, P.C., Hauppauge, NY, for Defendant KR Management, LLC.
Edward C. Kesselman Esq., New York, NY, for the LaForce Defendants and Defendant Bank of America, NA.
Frank J. Haupel Esq., DelBello Donnellan Weingarten Wise Wiederkehr, LLP, White Plains, NY, for Defendants Datiz and Amarante.
Scott Tenenbaum Esq., Winget, Spadafora Schwartzberg, LLP, New York, NY, for Defendant Professional Abstract, LLC.
Robert P. Johnson Esq., Naidich Wurman Birnbaum Maday, LLP, Great Neck, NY, for Defendant Haynes.
Plaintiff, originally having moved to sever its claims against defendant Wissak, now seeks to discontinue them. C.P.L.R. §§ 603, 3217(b) and (c). Wissak does not oppose the discontinuance of plaintiff's claims, but maintains his own cross-claims against other defendants. Several of them do oppose discontinuance of plaintiff's claims against him. Insofar as the record of plaintiff's motion reveals, the other defendants in turn cross-claim against him, and at least one of them also counterclaims against plaintiff.
For the reasons explained below, the court grants plaintiff's motion to the extent of discontinuing only plaintiff's claims against Wissak. In sum, the court concludes as follows. (1) Even if Wissak, who is in bankruptcy, is the most culpable defendant, plaintiff, particularly if it has resolved its claims against the bankrupt defendant, may discontinue them. (2) The remaining defendants, none of whom is in bankruptcy or is identified in interest with Wissak, may convert their cross-claims against him to a third party action. See C.P.L.R. § 1007. (3) Neither the discontinuance nor the conversion of claims will prejudice those co-defendants' cross-claims or their defenses or any counterclaims against plaintiff. (4) Nor will this relief contravene the bankruptcy court's stay against commencing, continuing, or recovering a claim against the bankrupt defendant.
I. BACKGROUND
Although Wissak was involved in the transactions that underlie this action and thus may be a material witness in the action, plaintiff has obtained its relief against him. Therefore plaintiff's request for discontinuance is more than a tactical maneuver; plaintiff realizes that a basis for any further claim by plaintiff against him is lacking. See, e.g., Lui v. Chinese-American Planning Council, 300 AD2d 80 (1st Dep't 2002); DuBray v. Warner Bros. Records, 236 AD2d 312, 314 (1st Dep't 1997); Oneida Indian Nation of NY v. Pifer , 43 AD3d 579 , 580 (3d Dep't 2007); White v. County of Erie, 309 AD2d 1299, 1301 (4th Dep't 2003).
Plaintiff previously invested funds with Wissak and entered real estate transactions with him, in which he sold or mortgaged real property on plaintiff's behalf. One such parcel was at 3756 Paulding Avenue in Bronx County, which plaintiff owned, and Wissak sold, ostensibly on its behalf, for $ 345,000 to defendant KR Management, LLC. A principal of KR Management owned an interest in defendant Professional Abstract, LLC, a title abstract company that acted as nonparty Chicago Title Insurance Company's agent in connection with this conveyance and that plaintiff claims Wissak selected to close the conveyance. KR Management in turn conveyed the property to defendants Trevor and Judy LaForce. The LaForce defendants borrowed $480,000 from defendant Bank of America, NA, secured by a mortgage in that amount on 3756 Paulding Avenue.
Another such parcel was at 2324 Fish Avenue in Bronx County, which plaintiff also owned, and Wissak also sold, ostensibly on its behalf, for $450,000 to defendant Haynes, whom plaintiff claims Wissak employed, and who resold the property for $551,000 to defendants Datiz and Amarante. They borrowed $551,000 from defendant Lend America, Inc., secured by two mortgages totalling that amount on 2324 Fish Avenue. After Wissak failed to remit the proceeds from these transactions to plaintiff, he acknowledged his various debts to plaintiff and executed a promissory note to plaintiff, which it enforced via a judgment against Wissak in Westchester County Supreme Court.
In this action, plaintiff claims it never authorized Wissak's sale of 3756 Paulding Avenue or 2324 Fish Avenue and therefore seeks a judgment declaring that plaintiff owns the two pieces of property and voiding the transfers to KR Management, to the LaForces, to Haynes, and to Datiz and Amarante and the mortgages defendant purchasers gave to defendant mortgagees. Although Wissak may have been a wrongdoer, which may give co-defendants claims against him, these claims by plaintiff do not even seek relief against him, since he makes no claim to the property. Instead, already having obtained relief against him, plaintiff now claims entitlement to further relief against co-defendants from the consequences of Wissak's wrongdoing.
II. STAY OF THIS ACTION IMPOSED BY WISSAK'S BANKRUPTCY PETITION
After plaintiff commenced this action in January 2008, Wissak filed a bankruptcy petition, triggering the automatic stay of:
the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before commencement of the case under this title, or to recover a claim against the debtor that arose before commencement of the case under this title.
11 U.S.C. § 362(a)(1). In sum, this provision stays commencement or continuation of any action or proceeding against the debtor in bankruptcy based on a claim that arose before his bankruptcy petition. Discontinuance of an action against the debtor hardly constitutes a "continuation." Id.
A. THE STAY'S EFFECT ON PLAINTIFF'S CLAIMS AGAINST WISSAK
Defendants Datiz and Amarante maintain nonetheless that this court, by proceeding to grant discontinuance of plaintiff's claims against Wissak, would violate the stay and thus exceed this court's authority. Had plaintiff commenced this action arising from a pre-petition claim against Wissak after he petitioned for bankruptcy, in contravention of the stay and rendering the action void, this court would be authorized to grant his motion to dismiss the claims against him in this action. Levant v. National Car Rental, Inc. , 33 AD3d 367, 368 (1st Dep't 2006). Granting plaintiff's motion to discontinue its claims against him after he petitioned for bankruptcy does not perceptibly exceed that authority.
Conversely, had plaintiff or co-defendants proceeded to obtain relief on their claims against Wissak after he petitioned for bankruptcy, rendering that relief void in contravention of the stay, this court would lack any further authority to reinstate the relief even after the bankruptcy court lifted the stay. Emigrant Sav. Bank v. Rappaport , 20 AD3d 502, 503 (2d Dep't 2005); Homeside Lending, Inc. v. Watts , 16 AD3d 551 , 552 (2d Dep't 2005). Plaintiff seeks just the opposite here: to forego relief against Wissak after he has petitioned for bankruptcy.
Yet were Wissak to move to vacate relief on another party's claims against him in this action, sought after his bankruptcy petition and during the stay, this court would be authorized to grant his motion, even after the bankruptcy court lifted the stay, to vacate that relief against him sought during the stay. Carr v. McGriff , 8 AD3d 420 , 421 (2d Dep't 2004). Again, granting plaintiff's motion to discontinue its claims for relief against him post-petition does not perceptibly exceed that authority. Decisions that the stay prohibits are ones "against the debtor" in bankruptcy that permit the commencement or continuation of an action or recovery of a claim against him. 11 U.S.C. § 362(a)(1); Emigrant Sav. Bank v. Rappaport, 20 AD3d at 503; Homeside Lending, Inc. v. Watts, 16 AD3d at 552; Carr v. McGriff, 8 AD3d at 422. See Education Resources Inst., Inc. v. Concannon , 69 AD3d 539 , 540 (1st Dep't 2010).
Granting a discontinuance of plaintiff's claims against Wissak does not bind or otherwise adversely affect Wissak and thus invade the protection that the automatic stay affords him. In sum, seeking or granting discontinuance of claims against a debtor in bankruptcy, without more, does not violate the automatic stay, according to its express statutory terms. 11 U.S.C. § 362(a)(1).
B. THE STAY'S EFFECT ON PLAINTIFF'S CLAIMS AGAINST CO-DEFENDANTS AND ON THEIR CROSS-CLAIMS AGAINST WISSAK
While the bankrupt defendant Wissak is unnecessary to the relief plaintiff seeks in this action, he may be necessary to co-defendants' defenses to plaintiff's claims against co-defendants and their cross-claims against him. See Rosenbaum v. Dane Murphy, 189 AD2d 760, 761 (2d Dep't 1993). Plaintiff does not seek discontinuance of its claims against any defendant besides Wissak; neither does any defendant seek discontinuance of cross-claims against Wissak; and he maintains his own cross-claims against the other defendants.
By its terms, the automatic stay does not extend to prohibit continuation of claims against non-bankrupt parties, as long as those claims do not affect the bankrupt defendant's property. 11 U.S.C. § 362(a)(1); Winters v. Dowdall , 63 AD3d 650 , 652 (1st Dep't 2009); Merrill Lynch, Pierce, Fenner Smith, Inc. v. Oxford Venture Partners, LLC , 13 AD3d 89 (1st Dep't 2004); CenTrust Servs. v. Guterman, 160 AD2d 416, 418 (1st Dep't 1990); Rosenbaum v. Dane Murphy, 189 AD2d at 761. Therefore, absent unusual circumstances extending the stay to claims against non-bankrupt defendants, all claims and cross-claims may proceed against defendants other than Wissak. Queenie Ltd. v. Nygard International, 321 F.3d 282, 287 (2d Cir. 2003). See Winters v. Dowdall, 63 AD3d at 652; Merrill Lynch, Pierce, Fenner Smith, Inc. v. Oxford Venture Partners, LLC , 13 AD3d 89 ; CenTrust Servs. v. Guterman, 160 AD2d at 418. Those limited circumstances involve claims against non-bankrupt parties that would immediately and adversely impact the bankrupt party's property. Queenie Ltd. v. Nygard International, 321 F.3d at 288.
1. Defendants' Defenses and Counterclaims Against Plaintiff's Claims and Their Cross-Claims Against Co-Defendants
Plaintiff claims the deed conveying 3756 Paulding Avenue to KR Management, now held by the LaForce defendants, was forged or delivered under false pretenses, aided and abetted by KR Management. KR Management's defenses claim it purchased plaintiff's property in good faith, and plaintiff's own culpable conduct was the cause of any damages to plaintiff, which plaintiff has failed to mitigate, and for which Wissak's settlement with plaintiff and collateral sources, C.P.L.R. § 4545(c), have compensated plaintiff. KR Management interposes no counterclaim, but cross-claims for contribution against Wissak and Professional Abstract based on their culpable conduct.
Plaintiff claims the deed conveying 2324 Fish Avenue to Haynes, now held by Datiz and Amarante, similarly was forged or delivered under false pretenses. The defenses by Datiz and Amarante center around plaintiff's delegation of authority to Wissak or another agent to sell plaintiff's property, its lack of reliance on his co-defendants' actions, their justifiable reliance on an agent's authority, and their purchase of the property at arm's length, for value, in good faith, and without notice of plaintiff's claims. Their conclusory defenses referring to the statute of frauds, NY Gen. Obligs. Law § 5-703, and the parol evidence rule suggest that the written contracts transferring and mortgaging the property govern, not any considerations outside those documents. Their defenses such as payment, accord and satisfaction, ratification, election of remedies, waiver, and estoppel, as well as specific reliance on plaintiff's March 2007 settlement and forbearance agreement with Wissak, all echo the conclusion that plaintiff no longer may maintain a claim against Wissak in the first instance. The conclusory laches and statute of limitations defenses imply that it is now too late to undo what Wissak did.
The conclusory defenses of plaintiff's unclean hands and its bad faith imply its own culpable conduct, by negligently conveying authority to an agent, which a separate defense claims must reduce or negate its damages. Another defense claims plaintiff has failed to mitigate any damages. Datiz and Amarante interpose no counterclaim, but cross-claim for contribution and indemnification against all co-defendants based on their culpable conduct.
The record of plaintiff's motion does not include any answer by Professional Abstract or Haynes, although they oppose the motion. Wissak, defendant mortgagee Bank of America, and assignee Saxon Mortgage Services Inc. of defendant mortgagee Lend America do not oppose plaintiff's motion, but other defendants support their opposition to the motion with those three defendants' answers interposing counterclaims and cross-claims.
Plaintiff claims Wissak, with the knowing assistance of one or more co-defendants, fraudulently contracted to sell 3756 Paulding Avenue and 2324 Fish Avenue, forged and procured false acknowledgements of the deeds to the property and other instruments effectuating the sales and their financing. He repeats most of the defenses by Datiz and Amarante, except those defenses related to their purchase of the property at arm's length, for value, in good faith, and without notice of plaintiff's claims. While Wissak claims he acted based on plaintiff's delegation of authority to him, on the other hand he claims he owed no contractual or other legal duty to plaintiff. He also interposes no counterclaim, but cross-claims for contribution and indemnification against all co-defendants based on their culpable conduct.
Plaintiff claims that mortgagee Bank of America never obtained a valid mortgage against 3756 Paulding Avenue. Hence Bank of America claims an interest adverse to plaintiff in 3756 Paulding Avenue, based on this defendant's loan to the mortgagor LaForce defendants secured by a mortgage on the property, which the bank holds in due course, and which is a perfected security interest, precluding any interest adverse to the bank's interest. NY U.C.C. §§ 3-302, 9-312, 9-322a. Bank of America also repeats the defenses based on plaintiff's delegation of authority to agents, the statute of frauds, accord and satisfaction, ratification, waiver, estoppel, settlement, res judicata, laches, and unclean hands. The bank also claims it owed no duty to plaintiff and further claims a third party's superseding act caused any damages to plaintiff, which it has failed to mitigate, and which the culpable conduct by plaintiff and its agents in any event must reduce or negate.
Bank of America counterclaims against plaintiff and cross-claims against co-defendants for a judgment that those other parties' interests in 3756 Paulding Avenue are subordinate to the bank's interest, and its title is paramount to plaintiff's claim to the property, as the bank purchased the property for value and without notice of the seller's fraud. R.P.A.P.L. §§ 1503, 1515, 1541. Since the bank maintains these claims against only parties that claim an interest in the property, these claims would not implicate Wissak. Bank of America cross-claims against all co-defendants, however, for contribution and indemnification based on their culpable conduct.
Finally, plaintiff also claims that defendant mortgagee Lend America never obtained a valid mortgage against 2324 Fish Avenue. The record of plaintiff's motion does not include any answer by Lend America, but Saxon Mortgage Services has answered, claiming it is the successor in interest to Lend America, based on its assignment of its mortgages against 2324 Fish Avenue to Saxon Mortgage Services. Therefore it claims an interest in the property based on these mortgages, for which the successive mortgagees, without notice of plaintiff's claims, gave value: Lend America's loan to mortgagors Datiz and Amarante and Saxon Mortgage Services' consideration for the assignment.
The Fish Avenue mortgagee's assignee, Saxon Mortgage Services, repeats the defenses by the Paulding Avenue mortgagee based on plaintiff's delegation of authority to agents, the statute of frauds, accord and satisfaction, ratification, waiver, estoppel, settlement, laches, unclean hands, and the reduction or elimination of plaintiff's damages by its culpable conduct. Saxon Mortgage Services also repeats the related defenses by the purchasers of 2324 Fish Avenue, Datiz and Amarante: plaintiff's lack of reliance on actions by defendant mortgagee Lend America and its assignee, their justifiable reliance on an agent's authority, the parol evidence rule, payment, election of remedies, the applicable statute of limitations, and bad faith. Unlike the mortgagee Bank of America, the other mortgagee's assignee interposes no counterclaims, but it does cross-claim against all co-defendants for contribution and indemnification based on their culpable conduct.
2. The Claims Between Plaintiff and Defendants Other Than Wissak and Between the Other Defendants May Proceed.
Plaintiff's claims against defendants other than Wissak, their defenses and any counterclaims, and their cross-claims against each other ordinarily would pose an immediate economic threat to Wissak's property only if there were an identity in interest between Wissak and another party, or the claims against Wissak derived from the claims against another party. Here, plaintiff and co-defendants have sought to distance themselves from Wissak. Plaintiff claims it never authorized him to sell its property. Defendants claim it did; or at least they justifiably relied on Wissak's authority to sell the property; and, in any event, they purchased the property from plaintiff through Wissak or from successor owners to plaintiff at arm's length, for value, in good faith, and without notice of plaintiff's claims. Its claims as to the liability of defendants other than Wissak are the product of Wissak's fraud or other wrongdoing, resolved in the Westchester County action. Plaintiff's claims against the other defendants thus derive from the claims against him, rather than the reverse.
Thus far, and particularly if plaintiff's claims against Wissak are discontinued, defendants have not shown that adjudicating claims between plaintiff and his co-defendants and between co-defendants necessarily will determine his liability on their cross-claims. Once plaintiff's claims for fraud and forgery against him are eliminated, his only potential exposure is if defendants are found liable to plaintiff or other defendants. Then Wissak may be liable to contribute to or indemnify those defendants found liable. Wissak's potential liability to them, however, based on contribution and implied indemnification, Bellevue S. Assoc. v. HRH Constr. Corp., 78 NY2d 282, 296-97 (1991); Mas v. Two Bridges Assoc., 75 NY2d 680, 687, 690-91 (1990); 17 Vista Fee Assoc. v. Teachers Ins. Annuity Assn. of Am., 259 AD2d 75, 80 (1st Dep't 1999); Service Sign Erectors Co. v. Allied Outdoor Adv., 175 AD2d 761, 762 (1st Dep't 1991), does not derive from a contract that also requires him to defend one or more defendants now, as the litigation proceeds. Automobile Ins. Co. of Hartford v. Cook , 7 NY3d 131 , 137 (2006); Town of Massena v. Healthcare Underwriters Mut. Ins. Co., 98 NY2d 435, 443-44 (2002); Agoado Realty Corp. v. United Intl. Ins. Co., 95 NY2d 141, 145 (2000); Continental Cas. Co. v. Rapid-Am. Corp., 80 NY2d 640, 648 (1993). See Garcia v. Mack-Cali Realty Corp. .52 AD3d 420, 421-22 (1st Dep't 2008); Crimi v. Neves Assoc., 306 AD2d 152, 153-54 (1st Dep't 2003). Defendants' claims for contribution and indemnification do not accrue until defendants seeking that relief pay for plaintiff's injury. Tedesco v. A.P. Green Indus., Inc. , 8 NY3d 243 , 247 (2007); Bellevue S. Assoc. v. HRH Constr. Corp., 78 NY2d at 299 n. 4; McDermott v. City of New York, 50 NY2d 211, 219 (1980); Equitable Life Assur. Socy. of U.S. v. Werner, 286 AD2d 632 (1st Dep't 2001). See Matter of American Druggists' Ins. Co. , 15 AD3d 268 (1st Dep't 2005). These potential economic consequences, albeit adverse to Wissak, are not immediate. Nor have defendants identified any other immediate economic consequences adverse to Wissak if claims and cross-claims against other defendants proceed.
III. DISCONTINUANCE
C.P.L.R. § 3217(b) provides that an action on a claim may be discontinued by the party asserting it "upon order of the court and upon terms and conditions, as the court deems proper." Burnham Serv. Corp. v. National Council on Compensation Ins., 288 AD2d 31, 32 (1st Dep't 2001). Motions to discontinue rarely warrant denial. The circumstances do not call for an exception here. Breytman v. Olinville Realty, LLC , 70 AD3d 573 , 574 (1st Dep't 2010); Burnham Serv. Corp. v. National Council on Compensation Ins., 288 AD2d at 32-33; Christenson v. Gutman, 249 AD2d 805, 806 (3d Dep't 1998); Great W. Bank v. Terio, 200 AD2d 608, 609 (2d Dep't 1994). See White v. County of Erie, 309 AD2d at 1300.
A. ABSENCE OF PREJUDICE TO ANY DEFENSES, COUNTERCLAIMS, AND CROSS-CLAIMS
Defendants unquestionably are entitled to adjudication of any defenses and counterclaims against plaintiff and cross-claims against co-defendants. E.g., White v. County of Erie, 309 AD2d at 1301-1302; Aison v. Hudson Riv. Black Riv. Regulating Dist., 279 AD2d 754, 755 (3d Dep't 2001); Matter of Bronsky-Graff Orthodontics, 270 AD2d 792, 793-94 (3d Dep't 2000). See Raquet v. Braun, 90 NY2d 177, 182 (1997); Bellevue S. Assoc. v. HRH Constr. Corp., 78 NY2d at 296-97; Education Resources Inst., Inc. v. Concannon, 69 AD3d at 540; Parada v. City of New York, 283 AD2d 314, 316 (1st Dep't 2001). Plaintiff may not avoid a determination of any defenses, counterclaims, or cross-claims in this action by jettisoning it altogether. Tucker v. Tucker, 55 NY2d 378, 384 (1982). Plaintiff's requested discontinuance of its claims against Wissak, however, does not avoid a potentially adverse decision on its claims against Wissak or other defendants or on any counterclaimsagainst plaintiff, see Lui v. Chinese-American Planning Council, 300 AD2d 80; Baltia Air Lines v. CIBC Oppenheimer Corp., 273 AD2d 55, 57 (1st Dep't 2000); DuBray v. Warner Bros. Records, 236 AD2d at 314; Oneida Indian Nation of NY v. Pifer, 43 AD3d at 580, to preserve plaintiff's claims, allow plaintiff to seek a determination of them from a different court, or gain other advantage in another action, for example. See Tucker v. Tucker, 55 NY2d at 384; Minkow v. Metelka , 46 AD3d 864 (2d Dep't 2007); Ruppert v. Ruppert, 192 AD2d 925, 926 (3d Dep't 1993).
Nor is plaintiff's request part of a pattern of commencing and discontinuing "seriatim complaints." Eugenia VI Venture Holdings, Ltd. v. MapleWood Equity Partners , 38 AD3d 264 , 265 (1st Dep't 2007). Plaintiff already litigated its claims against Wissak to a final conclusion in another action. See Citidress II Corp. v. Hinshaw Culbertson LLP , 59 AD3d 210 , 211 (1st Dep't 2009). Although Wissak might have sought a determination against plaintiff in this action on res judicata grounds, he has not done so. See id.; Oneida Indian Nation of NY v. Pifer, 43 AD3d at 581. No other defendants here were included in the prior action, to give them grounds to claim unnecessary expense, delay, or frustration in reaching a disposition of their dispute with plaintiff. See Eugenia VI Venture Holdings, Ltd. v. MapleWood Equity Partners, 38 AD3d at 265.
Nor have other defendants moved for dismissal of or judgment on any claims in this action, let alone for any determination that the requested discontinuance might avoid, causing defendants unnecessary expense, delay, or annoyance here; no dispositive motions are pending. See Citidress II Corp. v. Hinshaw Culbertson LLP, 59 AD3d at 211; Eugenia VI Venture Holdings, Ltd. v. MapleWood Equity Partners, 38 AD3d at 265; Minkow v. Metelka , 46 AD3d 864 . Discontinuing plaintiff's claims against Wissak does not preclude defendants from maintaining their defenses or claims and seeking relief based on them, e.g., Raquet v. Braun, 90 NY2d at 182; Bellevue S. Assoc. v. HRH Constr. Corp., 78 NY2d at 296-97; Education Resources Inst., Inc. v. Concannon, 69 AD3d at 540; Parada v. City of New York, 283 AD2d at 316, but simply necessitates conversion of defendants' cross-claims against Wissak into third party claims. Raquet v. Braun, 90 NY2d at 181-82; Eddine v. Federated Dept. Stores, Inc. , 72 AD3d 487 (1st Dep't 2010); Jones v. New York City Hous. Auth., 293 AD2d 371, 372 (1st Dep't 2002); Wayburn v. Madison Land Ltd. Partnership, 282 AD2d 301, 305 (1st Dep't 2001). See Education Resources Inst., Inc. v. Concannon, 69 AD3d at 540; Parada v. City of New York, 283 AD2d at 315-16; Torres v. W.J. Woodward Constr., Inc. , 32 AD3d 847 , 848 (2d Dep't 2006); White v. County of Erie, 309 AD2d at 1300.
Although plaintiff commenced this action in January 2008, the pending stay has hindered its progress to trial; disclosure is incomplete; and no note of issue has been filed. For this reason, too, defendants do not and could not successfully claim that the requested discontinuance would cause them to have incurred unnecessary expense or delay in this action. Burnham Serv. Corp. v. National Council on Compensation Ins., 288 AD2d at 33. See Madrid v. Nikac, 302 AD2d 250 (1st Dep't 2003); White v. County of Erie, 309 AD2d at 1300-1301.
Nor will the discontinuance hinder trial preparation. Insofar as Wissak is a witness material to other defendants' defenses against plaintiff's claims, to any counterclaims, or to their claims or defenses against each other, he still is subject to disclosure requests and to a subpoena, even as a nonparty. Education Resources Inst., Inc. v. Concannon, 69 AD3d at 540. See Access Capital v. DeCicco, 302 AD2d 48, 52-53 (1st Dep't 2002); Matter of Astor , 62 AD3d 867 , 869-70 (2d Dep't 2009). As long as co-defendants' claims against him loom, discontinuance of plaintiff's claims against him does not diminish his motive to show that he acted solely within the scope of his authority as plaintiff's agent. The burden to prove that he did not, to establish any derivative liability on other defendants' part, remains on plaintiff.
While Wissak does not oppose the discontinuance of plaintiff's claims against him, the record nowhere indicates these claims raise legal issues likely to recur, resolution of which is uncertain, and thus militating in favor of a decision on the claims' merits rather than their discontinuance. See Oneida Indian Nation of NY v. Pifer, 43 AD3d at 580; Ruppert v. Ruppert, 192 AD2d at 926. Moreover, if plaintiff has litigated these claims to a conclusion in another action, even via a settlement, and the claims here are the same, not subsequent recurrent claims, a decision on the merits would be precluded. People ex rel. Spitzer v. Applied Card Systems, Inc., 11 NY3d 105, 124-25 (2008); Olympic Tower Assoc. v. City of New York, 81 NY2d 961, 963 (1993); Bostany v. Trump Org. LLC , 73 AD3d 479 , 480-81 (1st Dep't 2010); Fabiano v. Philip Morris Inc. , 54 AD3d 146 , 151-52 (1st Dep't 2008). See Yonkers Contr. Co. v. Port Auth. Trans-Hudson Corp., 93 NY2d 375, 380 (1999); Sun Mei Inc. v. Chen , 21 AD3d 265 , 266 (1st Dep't 2005); Melnitsky v. North Fork Sav. Bank , 17 AD3d 170, 171 (1st Dep't 2005); McNamara v. Guazzoni , 16 AD3d 107 , 108 (1st Dep't 2005).
B. THE ALTERNATIVE OF DISCONTINUANCE VERSUS SEVERANCE UNDER THE STAY
Defendants have not claimed that plaintiff's change of course, from seeking a severance to seeking discontinuance of its claims against Wissak, caused defendants unnecessary expense or delay in opposing the originally requested severance. See Carter v. Howland Hook Hous. Co., Inc. , 19 AD3d 146 (1st Dep't 2005). They would be hard pressed to so claim, since plaintiff changed course largely in response to their vigorous opposition to a severance. Moreover, the contest over severance was instructive toward concluding that discontinuance instead was both permissible, given the bankruptcy stay, and warranted, given the Westchester County judgment. Severing claims against Wissak into their own separate action, in contrast, would be more akin to commencing or at least continuing an action or claims against him, 11 U.S.C. § 362(a)(1); Emigrant Sav. Bank v. Rappaport, 20 AD3d at 503; Homeside Lending, Inc. v. Watts, 16 AD3d at 552; Carr v. McGriff, 8 AD3d at 422, than simply converting claims to a different form that follows from discontinuing other claims. Education Resources Inst., Inc. v. Concannon, 69 AD3d at 540. See Eddine v. Federated Dept. Stores, Inc. , 72 AD3d 487 ; Jones v. New York City Hous. Auth., 293 AD2d at 372; Wayburn v. Madison Land Ltd. Partnership, 282 AD2d at 305.
Plaintiff's requested discontinuance of its claims against Wissak circumvents neither the bankruptcy stay nor any other prior orders, in this or another action. See Jamaica Hosp. Med. Ctr., Inc. v. Oxford Health Plans (NY), Inc. , 58 AD3d 686 , 687 (2d Dep't 2009); Minkow v. Metelka , 46 AD3d 864; Kaplan v. Village of Ossining , 35 AD3d 816 , 817 (2d Dep't 2006); Aison v. Hudson Riv. Black Riv. Regulating Dist., 279 AD2d at 755. Plaintiff, like all other parties, is stayed from commencing or continuing any action or proceeding against Wissak based on plaintiff's claims in this action, which arose before his bankruptcy petition.
Discontinuance does not raise the same concerns as severance of Wissak's claims, which could lead to inconsistent determinations whether Wissak acted as plaintiff's agent or committed fraud or forgery. Williams v. Property Servs. , 6 AD3d 255 , 256 (1st Dep't 2004); News Ltd. v. Australis Holdings Pty, 293 AD2d 276, 277 (1st Dep't 2002); Sichel v. Community Synagogue, 256 AD2d 276, 277 (1st Dep't 1998); Southworth v. Macko, 294 AD2d 920, 921 (4th Dep't 2002). See Lorne v. 50 Madison Ave. LLC , 73 AD3d 621 (1st Dep't 2010). Since plaintiff's claims against Wissak will not be litigated at all, no resources will be wasted trying common, overlapping, or intertwined issues regarding Wissak's liability and co-defendants' liability separately. Williams v. Property Servs., 6 AD3d at 256; News Ltd. v. Australis Holdings Pty, 293 AD2d at 277; Sichel v. Community Synagogue, 256 AD2d 276; Kelty v. G.M.L.B. Enterprises, Inc., 176 AD2d 483 (1st Dep't 1991).
Most importantly, defendants are provided the same opportunity to litigate their cross-claims against Wissak via a third party action against Wissak as if he continued as a direct defendant in the main action. While under either rubric the court may proceed to determine liability and relief only against co-defendants or against plaintiff on any counterclaims as long as the bankruptcy stay remains in effect, any such piecemeal approach would expedite the litigation as much as possible, not delay it. Rapini v. New Plan Excel Realty Trust, Inc. , 8 AD3d 1013 , 1014 (4th Dep't 2004); Rosenbaum v. Dane Murphy, 189 AD2d at 761; County of Chenago Indus. Dev. Agency v. Lockwood Greene Engrs., 111 AD2d 508, 509-10 (3d Dep't 1985). See Kelty v. G.M.L.B. Enterprises, Inc., 176 AD2d 483. Moreover, preparation for trial, including pursuit of disclosure and objections to it, may proceed on all issues. County of Chenago Indus. Dev. Agency v. Lockwood Greene Engrs., 111 AD2d at 509. See Blechman v. Peiser's Sons, 186 AD2d 50, 51 (1st Dep't 1992). All issues unsusceptible of an accelerated disposition, due to their immediate, adverse impact on Wissak's property or intricate, complex interdependence with cross-claims against him while still in bankruptcy, or otherwise, will be determined completely in a single, comprehensive trial. Kelty v. G.M.L.B. Enterprises, Inc., 176 AD2d 483; County of Chenago Indus. Dev. Agency v. Lockwood Greene Engrs., 111 AD2d at 509-10.
On the other hand, just as severance is best granted when it will simplify the proceedings or effect more rather than less efficiency, eliminating claims from the action will only simplify it and not cause any inefficiencies. Blechman v. Peiser's Sons, 186 AD2d at 51; Soule v. Norton, 299 AD2d 827, 828 (4th Dep't 1992). See Rapini v. New Plan Excel Realty Trust, Inc., 8 AD3d at 1014. These factors, combined with the factors discussed above, all indicate the absence of any prejudice to defendants' rights from a discontinuance of plaintiff's claims against Wissak and weigh in favor of granting that request. Pearson v. New York City Health Hosps. Corp. (Harlem Hosp. Ctr.) , 43 AD3d 92 , 95 (1st Dep't 2007), aff'd, 10 NY3d 852, 854 (2008); Burnham Serv. Corp. v. National Council on Compensation Ins., 288 AD2d at 32-33; Coleman, Grasso Zasada Appraisals v. Coleman, 281 AD2d 826, 827 (3d Dep't 2001); Great W. Bank v. Terio, 200 AD2d at 609. See Tucker v. Tucker, 55 NY2d at 383; DuBray v. Warner Bros. Records, 236 AD2d at 314; Oneida Indian Nation of NY v. Pifer, 43 AD3d at 580; White v. County of Erie, 309 AD2d at 1300-1301. Absent such potential prejudice to defendants, it would be an abuse of discretion to deny the discontinuance and compel plaintiff to litigate its claims against Wissak. Breytman v. Olinville Realty, LLC, 70 AD3d at 574; Burnham Serv. Corp. v. National Council on Compensation Ins., 288 AD2d at 32; Hockmeyer v. Bloch, 159 AD2d 444, 445 (1st Dep't 1990); Christenson v. Gutman, 249 AD2d at 806. See Tucker v. Tucker, 55 NY2d at 383; DuBray v. Warner Bros. Records, 236 AD2d at 314; White v. County of Erie, 309 AD2d at 1300-1301; Aison v. Hudson Riv. Black Riv. Regulating Dist., 279 AD2d at 755.
C. EFFICIENT AND EFFECTIVE DISPOSITION
No party currently requests relief or other action on claims against or by other defendants, so such issues are not now before the court. Nevertheless, if the bankruptcy stay permits claims against defendants other than Wissak to proceed, then one or more of those claims or defenses to the claims may provide discrete bases for a speedy partial disposition and vindication on those issues. Wissak remains subject to disclosure and to a subpoena regarding those issues. Education Resources Inst., Inc. v. Concannon, 69 AD3d at 540. See Access Capital v. DeCicco, 302 AD2d at 52-53; Matter of Astor, 62 AD3d at 869-70.
Insofar as the stay may prohibit proceeding to resolution of any issues, discontinuing plaintiff's claims against the bankrupt no more stymies this action than retaining them. Whether or not plaintiff maintains claims against Wissak, whichever party seeks to proceed on stayed claims, to defend against plaintiff or otherwise, may move to lift the stay. National Westminster Bank USA v. Petito, 202 AD2d 193 (1st Dep't 1994); Acevedo Boyle Contr. v. Greaney Constr. Corp., 285 AD2d 571, 572 (2d Dep't 2001); Great W. Bank v. Terio, 200 AD2d at 609. Even if defendants are stayed from recovering against Wissak, they may show that plaintiff's claimed injury is attributable to his actions and not theirs. Insofar as defendants seek indemnification, contribution, or other relief against Wissak, they do not lose those claims due to the stay, Education Resources Inst., Inc. v. Concannon, 69 AD3d at 540; see Raquet v. Braun, 90 NY2d at 182; Eddine v. Federated Dept. Stores, Inc. , 72 AD3d 487 ; Jones v. New York City Hous. Auth., 293 AD2d at 372; Parada v. City of New York, 283 AD2d at 315-16, and may seek recovery once the stay is lifted, via a motion or independently. National Westminster Bank USA v. Petito, 202 AD2d 193; Acevedo Boyle Contr. v. Greaney Constr. Corp., 285 AD2d at 572.
In sum, granting the limited discontinuance will not generate any more litigation than denying the discontinuance. Nor will adjudication of issues to which defendants are entitled be sidestepped.
IV. CONCLUSION
All these reasons dictate that, in these particular circumstances, the court grant plaintiff's motion to the extent of discontinuing only plaintiff's claims against defendant Wissak. C.P.L.R. § 3217(b). This decision constitutes the court's order. The court will mail copies to the parties' attorneys.