Tenas-Reynard v. Palermo Taxi Inc.

Decision Date30 March 2016
Docket Number14 Civ. 6974 (PGG)
CourtU.S. District Court — Southern District of New York


Plaintiff, a French citizen, brings this personal injury action in connection with a car accident that occurred while she was a passenger in a taxicab in Manhattan. Defendant Palermo Taxi, Inc., the owner of one of the automobiles involved in the collision, has filed a Chapter 11 bankruptcy petition in the Eastern District of New York. (Dkt. No. 53) Under 11 U.S.C. § 362(a), the filing of a bankruptcy petition triggers an automatic stay of litigation against the debtor. Defendants MCI Taxi Inc. and Jean Michel Yapi have moved for summary judgment on Plaintiff's claims against them. (Dkt. No. 481) Plaintiff has moved to amend the Complaint to add a new cause of action against a new defendant. (Dkt. No. 59) This order addresses the scope of the Section 362 stay and resolves the pending motions.


Plaintiff Josette Marie Tenas-Reynard - a resident of Paris, France - brings this action against Palermo Taxi, Inc. ("Palermo"), Mahbubur Mollah (collectively, the "Palermo Defendants"), MCI Taxi Inc., and Jean Michel Yapi (collectively, the "MCI Defendants"), pursuant to this Court's diversity jurisdiction. (Cmplt. (Dkt. No. 1) at ¶¶ 1-5; Bornes Decl. Ex. E, Pltf. Dep. (Dkt. No. 50-5) at 9) On December 3, 2011, Plaintiff was a passenger in a taxicab owned by Palermo and operated by Mollah. (Pltf.'s Response to MCI Defendants' R. 56.1 Stmt. (Dkt. No. 80) ("Pltf. 56.1 Resp.") at ¶ 8; see also Bornes Decl., Ex. E, Pltf. Dep. (Dkt. No. 50-5) at 14:16-223; id., Ex. D, Mollah Dep. (Dkt. No. 50-4) at 17:10-23) Yapi was driving a taxicab owned by MCI that day.4 (See Pltf. 56.1 Resp. (Dkt. No. 80) at ¶ 7; Bornes Decl., Ex. C, Yapi Dep. (Dkt. No. 50-3) at 29:6-18)

While driving on Fifth Avenue in the vicinity of 34th Street in Manhattan, Yapi heard an ambulance siren. (See Pltf. 56.1 Resp. (Dkt. No. 80) at ¶ 4; Bornes Decl., Ex. C, Yapi Dep. (Dkt. No. 50-3) at 37:24-38:23) Yapi then stopped his vehicle: "[w]hen I heard a siren, Iwas looking for where it was coming from, and I saw the car in the left lane stop. The first car, the first lane, the car stopped. The second lane, the car stopped. . . . When I stopped, the accident happened." (Id. at 38:16-23)

The cab driven by Mollah collided with the rear of Yapi's stopped cab. (See Pltf. 56.1 Resp. (Dkt. No. 80) at ¶¶ 7-8; Bornes Decl., Ex. D, Mollah Dep. (Dkt. No. 50-4) at 20) At his deposition, Mollah testified that he heard a siren before the collision, and that "all the cars around there" had stopped "when they heard the ambulance." (Bornes Decl., Ex. D, Mollah Dep. (Dkt. No. 50-4) at 21:14-21:12)

Yapi testified that he applied a "[a] very soft brake" to stop his car after he observed cars in the first and second lanes stop to allow the ambulance to pass. (See MCI Def. R. 56.1 Stmt. (Dkt. No. 49) at¶ 3; Bornes Decl., Ex. C, Yapi Dep. (Dkt. No. 50-3) at 45:14-18) Yapi estimates that it took 10 to 15 seconds for his cab to come to a halt after he first began applying the brake. (Id. at 45:14-18) Mollah testified, however, that Yapi "stop[ped] short," and that Mollah's vehicle collided with Yapi's vehicle because when Mollah "pressed the brake . . . it did not work." (Bornes Decl., Ex. D, Mollah Dep. (Dkt. No. 50-4) at 21:15-19; see also MCI Def. R. 56.1 Stmt. (Dkt. No. 49) at ¶ 15)

Plaintiff testified that she was unconscious from the moment of impact until she woke up in a hospital the next day. She has no memory of the circumstances of the collision. (Pltf. Reply 56.1 Stmt. (Dkt. No. 68) at ¶ 10; see also Bornes Decl., Ex. E, Pltf. Dep. (Dkt. No. 50-5) at 21:24-22:2)


Plaintiff filed this action on August 27, 2014. (Cmplt. (Dkt. No. 1) The Complaint alleges that Mollah and Yapi are liable for negligently operating a moving vehicleoccupied by a passenger in violation of New York City Taxi and Limousine Commission Rule 54-13(a)(2) and New York Vehicle and Traffic Law § 1129(a), (Cmplt. (Dkt. No. 1) at ¶¶ 23, 28), and that Palermo and MCI are liable under New York Vehicle and Traffic Law § 388 and New York City Administrative Code § 19-530 as the owners of the vehicles and taxicab medallions. (Id. at ¶¶ 24-25, 29-30)

On September 15, 2014, MCI and Yapi filed their Answer, in which they assert a cross-claim against defendants Palermo and Mollah. (Dkt. No. 4) On October 3, 2014, Palermo and Mollah their Answer, which asserts a cross-claim against MCI and Yapi. (Dkt. No. 5)

MCI and Yapi have moved for summary judgment on Plaintiff's claims against them, arguing that Yapi was not negligent as a matter of law. (Dkt. Nos. 48) Plaintiff opposes the motion. (Dkt. Nos. 78)

Plaintiff has also moved to amend the Complaint to add a claim for vicarious liability against Woodside Management Inc., which leased Palermo's vehicle to Mollah. (Dkt. No. 59) Plaintiff claims that Mollah is an employee of Woodside and that Woodside is therefore liable for Mollah's negligence. (Pltf's Mtn. to Am. Br. (Dkt. No. 61) at 2, 4-5) All Defendants oppose this motion. (Dkt. Nos. 63, 65)


On July 22, 2015, Palermo filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Eastern District of New York. (See Dkt. No. 53) Palermo's petition was consolidated with more than twenty other petitions filed by related entities. (Stadtmauer Decl. (Dkt. No. 83) at ¶ 10) That matter is pending in the Eastern District as In re: HYPNOTIC TAXI LLC, et. al., Debtors, Case No. 15-43300 (CEC). (Id. at ¶¶ 10-11) None of the Defendants brought Palermo's bankruptcy petition to this Court's attention.

In a July 31, 2015 letter, Plaintiff requested that this Court issue an order confirming that the Bankruptcy Code's automatic stay applies only to defendant Palermo and not to any other defendant. (Dkt. No. 54) In an August 17, 2015 letter, Defendants Mollah and Palermo argue that the automatic stay applies to all Defendants. (Dkt. No. 55) In an August 17, 2015 letter, Plaintiff reiterates that the automatic stay applies only to claims against Palermo. (Dkt. No. 56)

On March 4, 2016, Plaintiff filed a motion seeking an order "staying this action as to defendant Palermo only" and granting her permission to "supplement her application to amend the complaint to include [] additional evidence adduced in the bankruptcy case."5 (Stadtmauer Decl. (Dkt. No. 83) at ¶ 1) On March 9, 2016, Defendants MCI and Yapi filed an affirmation in opposition to Plaintiff's motion. (Dkt. No. 85) The MCI Defendants state that they "take no position with regard to the stay as against Palermo," but otherwise do not address the scope of the automatic stay in any fashion. (Id. at ¶ 2) On March 15, 2016, Defendants Palermo and Mollah filed an opposition to Plaintiff's motion. (Dkt. No. 86) The Palermo Defendants' opposition addresses only Plaintiff's motion to amend, however, and says nothing about the scope of the automatic stay.

A. Applicable Law

A Chapter 11 bankruptcy petition "operates as a stay, applicable to all entities, of[] . . . the commencement or continuation . . . of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before thecommencement of the case. . . ." 11 U.S.C. § 362(a). The stay "is meant to give 'the debtor a breathing spell from [its] creditors [and] . . . permit [] the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove [it] into bankruptcy.'" Variable-Parameter Fixture Development Corp. v. Morpheus Lights, Inc., 945 F. Supp. 603, 606 (S.D.N.Y. 1996) (quoting S. Rep. No. 95-989, at 54-55 (1978), reprinted in U.S. Code Cong. & Admin. News 1978, 5787, 5840-41). "In addition, the automatic stay allows the bankruptcy court to centralize all disputes concerning property of the debtor's estate in the bankruptcy court so that reorganization can proceed efficiently, unimpeded by uncoordinated proceedings in other arenas." In re Ionosphere Clubs, Inc., 922 F.2d 984, 989 (2d Cir. 1990).

The automatic stay does not, however, prevent a case from proceeding against non-bankrupt co-defendants absent unusual circumstances. "It is well-established that stays pursuant to § 362(a) are limited to debtors and do not encompass non-bankrupt co-defendants." Teachers Ins. And Annuity Ass'n of Am. v. Butler, 803 F.2d 61, 65 (2d Cir. 1986) (citing Fortier v. Dona Anna Plaza Partners, 747 F.2d 1324, 1329-30 (10th Cir. 1984); Williford v. Armstrong World Indus., Inc., 715 F. 2d 124, 126-27 (4th Cir. 1983); Lynch v. Johns-Manville Sales Corp., 710 F.2d 1194, 1196-97 (6th Cir. 1983); Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir. 1983); Austin v. Unarco Indus., Inc., 705 F.2d 1, 4-5 (1st Cir. 1983); Pitts v. Unarco Indus., Inc., 698 F.2d 313, 314 (7th Cir. 1983) (per curiam)). "Chapter 11, unlike Chapter 13, contains no provision to protect non-debtors who are jointly liable on a debt with the debtor." Id. at 65. This limitation prevents "vast and unwarranted interference with creditors' enforcement of their rights against non-debtor co-defendants." Queenie Ltd v. Nygard Int'l, 321 F.3d 282, 288 (2d Cir. 2003).

There are, however,

limited and unusual exceptions to th[e] rule[ that claims against non-debtor co-defendants fall outside the scope of an automatic stay]. . . . For example, a stay may be extended to a non-bankrupt co-defendant if there are "unusual circumstances" in that the debtor and the co-defendant are so closely related that the "debtor may be said to be the real party defendant" and that a judgment against the nondebtor co-defendant "will in effect be a judgment or finding against the

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