All Recycling, LLC v. Forti, 2022-50267

CourtNew York City Court
Writing for the CourtHON. LYNDON D. WILLIAMS, CITY JUDGE
PartiesAll Recycling, LLC, Plaintiff, v. Joseph Forti and NCR AUTO CORES & SECURITY, INC., Defendants.
Decision Date08 April 2022
Docket Number2022-50267,0426-21

All Recycling, LLC, Plaintiff,
v.

Joseph Forti and NCR AUTO CORES & SECURITY, INC., Defendants.

No. 2022-50267

Docket No. 0426-21

City Court of Mount Vernon

April 8, 2022


Unpublished Opinion

Patricia E. Habas, Esq.

Rogers, Habas & Eisen, PC

Attorney for Plaintiff

H. Bruce Bronson, Esq.

Bronson Law Offices, P.C.

Attorney for Defendant - NCR Auto Cores & Security, Inc.

Joseph Forti Defendant

HON. LYNDON D. WILLIAMS, CITY JUDGE

Procedural History/Facts

Plaintiff commenced this action on June 2, 2021 seeking to recover $14, 842.00 from defendants for failure to pay for goods delivered to defendants. On August 31, plaintiff filed an amended Verified Complaint seeking to suspend it's claims against the corporate defendant ("NCR") and sever the claims between the defendants. Plaintiff submitted a letter dated August 31, 2021, attached to the Verified Complaint, stating that NCR filed a Chapter 11 bankruptcy petition on October 22, 2019 (Case No.19-23869) in the Southern District of New York. Plaintiff states that NCR failed to list plaintiff as a known debtor and as such, plaintiff did not receive notice of the bankruptcy proceeding. Plaintiff's counsel, Krisly Zamor, states that NCR's counsel, H. Bruce Bronson, sent plaintiff actual written notice of the bankruptcy on June 17, 2021.

Defendant Joseph Forti has not appeared in this proceeding.

Motion to Dismiss

On November 10, 2021, the corporate defendant filed a motion seeking to dismiss the action. Defense counsel Bronson affirmed that he represented NCR in the bankruptcy action. He affirmed that the instant proceeding was commenced in violation of the automatic stay provisions of the United States Bankruptcy Code, as the filing of the bankruptcy petition triggered the automatic stay. Counsel affirms that this matter cannot be bifurcated and the action must be deemed void and dismissed in its entirety.

On December 23, 2021, plaintiff's filed an affirmation in opposition to the corporate defendant's motion seeking to dismiss the action as void. Counsel Zamor affirms that after filing the letter and amended complaint on August 31, 2021, the plaintiff has made no effort to continue pursuing its claims against the corporate defendant but solely Mr. Forti, who has failed to appear in this action. Counsel argues that this action is not subject to dismissal because plaintiff, upon learning of the bankruptcy action, ceased prosecution of the instant action by seeking to suspend its claims against the corporate defendant and to sever its claims against each defendant.

On December 29, 2021, the corporate defendant filed an affirmation in response to plaintiff's opposition. NCR argues that it is undisputed that this proceeding was commenced in violation of the automatic stay. The bankruptcy action was filed on October 22, 2019. This action was commenced on June 2, 2021 and counsel for plaintiff was notified of the bankruptcy on or before July 1, 2021. NCR argues that contrary to plaintiff's claims, the case has not and cannot be bifurcated because the claims against Joseph Forti arise solely from actions taken by him in his capacity as an agent for NCR. Thus counsel argues that NCR is a necessary party to the action and officers are protected by the automatic stay when they are essential to the debtor's reorganization. NCR further argues that the plaintiff has not ceased prosecution against NCR or stayed the case upon the notice of bankruptcy since plaintiff continues to file motions seeking judgment and collection with a caption that names the debtor/corporate defendant. Counsel argues that prior to filing a motion for a default judgment, plaintiff should have filed a motion seeking severance of the action against NCR. Counsel argues that all of the actions taken by the plaintiff must be deemed void as willful violations of the automatic stay. Finally, plaintiff argues that the effort to obtain a default judgment against the debtor's sole owner and operator would prejudice all parties to the bankruptcy action.

In a February 4, 2022 letter to the court, plaintiff argues that the automatic stay provisions do no apply to Defendant Forti, a non-bankrupt defendant. Plaintiff further argues that Mr. Forti is liable individually because he signed his name on the check, without indication of his representative capacity. Plaintiff further maintains that the corporate defendant is not a necessary party and that delay in proceeding against Mr. Forti will cause undue prejudice to plaintiff. Plaintiff argues that the corporate defendant has not amended its bankruptcy petition to include plaintiff, even with knowledge of plaintiff as a legitimate creditor. Plaintiff argues that defendant's bankruptcy plan has been finalized and approved prior to plaintiff's notice of same and without including plaintiff's claim. Thus plaintiff argues that severance of the claims against the defendants is warranted under these circumstances.

In a February 7, 2022 letter, the corporate defendant argues that if plaintiff wanted to remove NCR as an unnecessary party it should have done so in a timely motion to bifurcate the case. Accordingly, NCR argues that the action remains void ab initio and must be dismissed in its entirety. Counsel argues that NCR's plan has not been finalized or approved in bankruptcy court, and thus there is no prejudice to plaintiff to pursue its claims in accordance with proper procedures. NCR maintains that should this matter be allowed to continue against Mr. Fort that he be given an opportunity to answer the complaint on his own behalf as to plaintiff's claims against him.

Motion for Default Judgment

On December 3, 2021, plaintiff filed a motion for default judgment against Defendant Joseph Forti. In support of the motion, Hal Roth states that he is a member of All Recycling, LLC. He affirms that up until June 2019, plaintiff and NCR had an ongoing business relationship, wherein NCR requested and All Recycling provided, car tires, aluminum wheels, and scrap metal in exchange for a rate set by NCR. Upon delivery to the Mount Vernon, NY or Waterbury, CT office locations, NCR employees or Defendant Forti himself signed for receipt of the goods. Mr. Roth affirms that plaintiff provided NCR with $17, 186.80 worth of scrap material. A copy of the purported invoices are attached to the papers as Exhibit 10. However, the court notes that the invoices are illegible. Mr. Roth affirms that between June 2019 and July 2019 Defendant Forti promised to make payment to plaintiff through a series of text messages. Copies of text messages are attached to the papers as Exhibit 11. Mr. Roth affirms that NCR made a payment via check # 3129 in the amount of $14, 842.00 on May 15, 2019. A copy of the check is attached as Exhibit 2. However, on June 10, 2019, plaintiff received notice from its bank that check was dishonored for insufficient funds. On June 8, 2019, NCR made a payment via check #3149 in the amount of $818.00. Mr. Roth affirms that based upon advice from plaintiff's bank, plaintiff did not cash the check so as to avoid the incurring bounced check fees once again due to a dishonored check. A copy of the returned check is attached as Exhibit 12.

Defendant Forti has not appeared and has filed no papers in opposition to the motions.

Conclusions of Law

Bankruptcy Stay

"Federal bankruptcy law automatically stays the commencement or continuation of any judicial proceedings against a debtor upon the...

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