Hatfield v. Herz, 96 Civ. 5530 (PKL).
| Decision Date | 25 June 1998 |
| Docket Number | No. 96 Civ. 5530 (PKL).,96 Civ. 5530 (PKL). |
| Citation | 9 F.Supp.2d 368 |
| Parties | John B. HATFIELD, Jr., Plaintiff, v. Stuart M. HERZ, Defendant. Stuart M. HERZ, Third-Party Plaintiff, v. HAAS, GREENSTEIN, COHEN, GERSTEIN & STARR, P.C., Third-Party Defendant. |
| Court | U.S. District Court — Southern District of New York |
Deforest & Duer, New York City, Jeffrey F. Glen, of counsel, for Plaintiff.
Siller Wilk, L.L.P., New York City, Matthew F. Schwartz, of counsel, for Defendant-Third-Party Plaintiff.
L'Abbate, Balkan, Colavita & Contini, L.L.P., Garden City, New York, Peter L. Contini, of counsel for Third-Party Defendant.
Third-party defendant Haas, Greenstein, Cohen, Gerstein & Starr, P.C. ("Haas" or the "Haas law firm") moves to stay and sever the third-party action instituted against it by defendant/third-party plaintiff Stuart M. Herz ("Herz"). Plaintiff John B. Hatfield, Jr. ("Hatfield") filed a Complaint in this Court alleging legal malpractice by Herz, his attorney in an earlier action. Herz then instituted a third-party action against Haas for indemnification and/or contribution. For the reasons stated below, the Haas law firm's motion to stay and sever the third-party action is denied.
The instant motion is the latest development in a series of three separate cases arising out of the same set of events. The three cases are:
(1) an action in state court for business extortion, initiated by Alexander Miliken, naming Hatfield as a defendant (the "Miliken Action");
(2) an action in state court for legal malpractice, initiated by Hatfield against the Haas law firm; and
(3) the instant action for legal malpractice, initiated by Hatfield against Herz.
In the Miliken Action, Miliken alleged that Hatfield and other board members and shareholders of a cooperative apartment corporation (the "Co-op") improperly had attempted to prevent Miliken from subleasing his unit of the Co-op. In May of 1993, Justice Walter Tolub presided over a bench trial in the Miliken Action and decided in favor of Miliken. Justice Tolub found the defendants liable for $8,500 in compensatory damages as well as plaintiff's attorney's fees, which were not fixed. He also assessed $50,000 in punitive damages against Hatfield individually.
Herz represented the defendants at trial. Hatfield then replaced Herz, hiring the Haas law firm to handle his appeal of Justice Tolub's decision. It is undisputed that the Haas law firm failed to file the appeal within the allotted time period (see Report of Referee, Index No. 14799-92, at 4), and that the Appellate Division dismissed Hatfield's appeal on September 22, 1994. In July of 1997, Justice Tolub ruled that the defendants in the Miliken Action were responsible for plaintiff's attorneys' fees in the amount of $115,510. Hatfield then filed a Notice of Appeal, contesting the award of attorneys' fees and renewing his appeal of Justice Tolub's prior awards of compensatory and punitive damages. On February 19, 1998, the Appellate Division denied the appeal as moot, having been dismissed previously.
On July 15, 1996, Hatfield initiated in New York State Supreme Court an action against Haas for legal malpractice. See N.Y.Sup.Ct. Index No. 96-112533. Hatfield asserted that Haas should be found liable for its failure to file a timely appeal in the Miliken Action. The suit currently is pending in state court.
On July 23, 1996, Hatfield filed a Complaint in this Court, alleging that Herz had committed legal malpractice in connection with his representation of Hatfield in the Miliken Action. Herz denied Hatfield's allegations and asserted as an affirmative defense that any damages sustained by Hatfield were caused in whole or in part by the conduct of third parties not within Herz's control. See Answer, ¶¶ 30-31. Herz then filed a third-party Complaint against the Haas law firm, claiming that Haas must indemnify Herz or contribute to any damages for which Herz is held liable because such damages resulted from the Haas's failure to file a timely appeal in the Miliken Action. Haas now moves to stay and sever the third-party action.
As the United States Supreme Court has instructed, federal courts have a "virtually unflagging obligation ... to exercise the jurisdiction given them." Colorado River Water Conservation District v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). Even when there is a concurrent action in state court, the Supreme Court has ruled that "`the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction....'" Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 15, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (quoting Colorado River, 424 U.S. at 818, 96 S.Ct. 1236). However, under exceptional circumstances, a federal district court may stay the federal proceeding if the existence of a concurrent state proceeding mandates a stay in order to achieve wise judicial administration. See Cone, 460 U.S. at 15, 103 S.Ct. 927. The circumstances under which a stay is granted must be "extraordinary and narrow." Colorado River, 424 U.S. at 813, 96 S.Ct. 1236. There exists a heavy presumption against staying the federal action. See Cone, 460 U.S. at 16, 103 S.Ct. 927.
As set forth by the Court of Appeals for the Second Circuit, the factors relevant to determining whether to stay a federal action because of a parallel state action are:
(5) the avoidance of piecemeal litigation, and
(6) whether state or federal law supplies the rule of decision.
See Bethlehem Contracting Co. v. Lehrer/McGovern, Inc., 800 F.2d 325, 327 (2d Cir.1986); see also De Cisneros v. Younger, 871 F.2d 305, 307 (2d Cir.1989); Alliance of American Insurers v. Cuomo, 854 F.2d 591, 602-03 (2d Cir.1988). In applying these factors, the Court "does not rest on a mechanical checklist, but on a careful balancing of the important factors as they apply in a given case, with the balance heavily weighted in favor of the exercise of jurisdiction." Cone, 460 U.S. at 16, 103 S.Ct. 927.
A careful balancing of these important factors militates against granting a stay in this case. The Court now analyzes each of the six factors set forth by the Second Circuit in Bethlehem Contracting in the context of this action.
(1)(2) The Assumption by Either Court of Jurisdiction Over any Res and the Inconvenience of the Federal Forum
The Second Circuit has recommended the exercise of federal jurisdiction in cases where there is no question of res and the federal forum is equally convenient to all parties. See De Cisneros, 871 F.2d at 307; see also Bethlehem Contracting, 800 F.2d at 327. In the instant action, neither court has assumed jurisdiction over any property and the federal court is as accessible to the parties as the state court is. Therefore, the absence of these two factors in the moving party's favor "point[s] toward exercise of federal jurisdiction." De Cisneros, 871 F.2d at 307.
(3) The Order in Which Jurisdiction Was Obtained
As noted in the Background section of this Opinion, the state action against Haas was initiated by Hatfield prior to the filing of the Complaint in the instant action. However, the relative progress of the two actions in two separate forums, rather than the mere order of filing, determines whether this factor favors staying an action. See Cone, 460 U.S. at 21, 103 S.Ct. 927. Priority of the actions "should not be measured exclusively by which complaint was filed first, but rather in terms of how much progress has been made in the two actions." Id.; see also Zemsky v. City of New York, 821 F.2d 148, 153 (2d Cir.1987); Prudential Securities Inc. v. Arain, 930 F.Supp. 151, 158 (S.D.N.Y. 1996) (); Congress Talcott Corp. v. Roslin, No. 95 Civ. 7698, 1996 WL 499337 (S.D.N.Y. Sept.4, 1996) (); Federal Deposit Insurance Corp. v. Four Star Holding Co., No. 97 Civ. 4184, 1998 WL 205323 (S.D.N.Y. Apr.24, 1998).
In comparing the relative progress of the two proceedings at issue here, it is evident that the instant action has progressed far more rapidly than the state action for legal malpractice has. In the primary federal action, Herz has answered Hatfield's Complaint and commenced a third-party action. Discovery has commenced, as the parties have exchanged documents, served interrogatories, and scheduled depositions. See Affirmation of Matthew F. Schwartz on Behalf of Herz at 2. As Herz asserted as an affirmative defense that third parties were responsible for Hatfield's loss, evidence concerning Haas's actions necessarily has been implicated in discovery. The state action against Haas, on the other hand, has not advanced far beyond filing.1 Thus, the instant action has progressed ahead of the state action, negating "the clearest of justifications" for staying the federal action. Colorado River, 424 U.S. at 819, 96 S.Ct. 1236. Therefore, the third factor of the six-factor test militates against staying this action.
(4) Whether the State Court Proceeding Will Adequately Protect the Rights of the Party Seeking to Invoke Federal Jurisdiction
The state court proceeding would not adequately protect Herz's rights because he is not a party to that action....
To continue reading
Request your trial
-
Hatfield v. Herz
...1998, Opinion and Order denying Haas, Greenstein's motion to sever the third-party action from the principal suit. See Hatfield v. Herz, 9 F.Supp.2d 368 (S.D.N.Y.1998). Accordingly, the Court recounts only those facts relevant to the disposition of the instant In May 1992, Hatfield was sued......
-
People ex rel. Spitzer v. Operation Rescue Nat.
...this argument without merit. "Severance is a `procedural device to be employed only in exceptional circumstances.'" Hatfield v. Herz, 9 F.Supp.2d 368, 373 (S.D.N.Y.1998) (quoting Marisol A. v. Giuliani, 929 F.Supp. 662, 693 (S.D.N.Y.1996), aff'd 126 F.3d 372 (2d Cir.1997)). The Rochester de......
-
N. Jersey Media Grp. Inc. v. Fox News Network, LLC
...granted only in 'exceptional circumstances.'" (citing United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966); Hatfield v. Herz, 9 F. Supp. 2d 368, 373 (S.D.N.Y. 1998)), district courts have broad discretion to sever any party or claim from an action. See Cia. Embotelladora del Pacifi......
-
Burdine v. Metro. Direct Prop. & Cas. Ins. Co., Case No. 3:17-cv-00093-GFVT
...Cola Co., 256 F.R.D. 133, 133 (S.D.N.Y 2009) (citing United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966); Hatfield v. Herz, 9 F. Supp.2d 368, 373 (S.D.N.Y. 1998)). Rule 42 governs the bifurcation of civil trials. See Fed. R. Civ. P. 42(b). It states in relevant part, "For convenie......