Summary
mentioning that “all of the cases that allow claims to continue against a bankrupt defendant” require that the “debtor bears none of the expense of the defense”
Summary of this case from HDR Architecture, P.C. v. Maguire Group Holdings (In re Maguire Group Holdings, Inc.)Opinion
89 Civ. 5996 (JSM).
January 17, 2002.
OPINION AND ORDER
Fourth Party Defendant Bank of Baroda ("Baroda") moves to dismiss the First Amended Fourth Party Complaint on the grounds that (1) it is not a proper impleader action within the meaning of Rule 41, Fed.R.Civ.Proc., (2) the indemnification claim does not state a cause of action, and (3) the claims under the Racketeer Influenced and Corrupt Organizations Act are barred by both res judicata and the statute of limitations.
The fourth party action is all that remains of this matter after more than ten years of litigation between these parties.
The facts that underlie this dispute are set out in detail in Bank of India v. Trendi Sportswear, Inc., 239 F.3d 428 (2d Cir. 2000), Indu Craft, Inc. v. Bank of Baroda, 87 F.3d 614 (2d Cir. 1996), Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490 (2d Cir. 1995), Indu Craft, Inc. v. Bank of Baroda, No. 87 Civ. 7379, 1991 WL 107438 (S.D.N.Y. June 11, 1991), Indu Craft, Inc. v. Bank of Baroda, No. 87 Civ. 7379, 1993 WL 535116 (S.D.N.Y. Dec. 17, 1993), Indu Craft, Inc. v. Bank of Baroda, No. 87 Civ. 7379, 1995 WL 479516 (S.D.N.Y. Aug. 10, 1995), and previous opinions in this case dated January 29, 1991 and September 14, 1998. They will not be repeated here, except as necessary to deal with the issues now before the Court.
Indu Craft is a New York corporation, which was formerly in the business of importing garments from several Asian countries and selling them to customers in the U.S. through its commonly owned affiliate, Trendi Sportswear, Inc. ("Trendi"). A line of credit from Baroda made it possible for Indu Craft to conduct its importing business. Trendi relied, in turn, on credit facilities from Bank of India ("BOI") to finance its activities. In this connection, on December 5, 1985, Trendi executed a Demand Promissory Note and a General Security Agreement to BOI, each in the amount of $500,000.
Since its discharge in bankruptcy under Chapter 11 of the Bankruptcy Code, Indu Craft's sole shareholder is a Hong Kong corporation called Tze Wung Consultants, Ltd.
Both BOI and Baroda are owned, operated and controlled by the government of India.
Beginning in March 1987, Baroda reduced Indu Craft's advance limit, and began to delay and refuse to issue letters of credit for Indu Craft's benefit. These delays and refusals seriously damaged Indu Craft's business as its suppliers either delayed shipment of goods or entirely stopped producing goods for its account. As a result, Indu Craft was unable to supply goods to Trendi in a timely manner, and ultimately ceased operations in November 1987. Indu Craft's inability to supply goods to Trendi allegedly caused Trendi to default in turn on its debt to BOI.
On October 15, 1987, Indu Craft filed an action against Baroda and others, alleging that Baroda had breached the covenant of good faith and fair dealing implied in the credit agreement, tortiously interfered with Indu Craft's contracts, and committed a prima facie tort in retaliation for Indu Craft's decision not to invest in an investment opportunity offered to it by Baroda's principal officer in New York (the "1987 action"). This case, Indu Craft, Inc. v. Bank of Baroda, 87 Civ. 7379, ultimately was tried in July 1992, and resulted in a verdict in Indu Craft's favor in the amount of $2,519,822.29 (after adjustment on appeal).
Meanwhile, in September 1989, BOI commenced this action against Trendi, seeking payment of (1) $500,000, plus interest, due on the Note, and (2) $1,844,895.19, plus interest, for Trendi's default on other credit facilities extended by BOI. In May 1990, Trendi filed a third party action against Indu Craft, alleging that Indu Craft's failure to supply goods in accordance with its contract had caused Trendi's default in its obligations to BOI. The third party complaint also sought lost profit damages in the amount of $2,818,640.66, and $2,300,000 for loss of business reputation and good will, both of which, it alleged, were the direct result of Indu Craft's breach of contract. Indu Craft then filed a fourth party complaint against Baroda, seeking indemnification in the event that Indu Craft was found liable to Trendi.
In 1990 and 1991, Indu Craft made several attempts to have Trendi's third party claims, and its own corresponding indemnification claims against Baroda, heard in the 1987 action. In October 1990, this Court stayed the third and fourth party claims in this case, pending the resolution of the 1987 Action. Then, in April 1991, BOI was awarded summary judgment against Trendi in the amount of $1,844,895.19, plus $400,000 in interest. Nevertheless, Indu Craft was precluded from presenting evidence of damages to Trendi during the trial of the 1987 Action.
On July 25, 1997, Indu Craft filed for protection under Chapter 11 of the Bankruptcy Code, and Trendi filed a claim in the bankruptcy proceeding for the damages alleged in the third party complaint in this case. Subsequently, Indu Craft consented to entry of judgment against it in that proceeding in the amount of $21,101,348.47 for damages to Trendi's business as a result of Indu Craft's inability to deliver goods as required pursuant to contracts between Indu Craft and Trendi. The amount of this judgment was not the subject of litigation.
The Plan of Reorganization (the "Plan") provided, in § 5.2, that Trendi, ANZ (an unrelated party), and Hemant Mehta (the owner of both Indu Craft and Trendi) would "receive the net proceeds of any recovery in Baroda II [defined in the Plan, § 1.37, as the fourth party action in this case], . . . after deduction for the reimbursement to Tze Wung Consultants, Ltd ("Tze Wung") of its funding of the Plan, the funding of the Baroda II litigation pursuant to a future agreement, legal fees, costs and disbursements." The Plan went on to state that, "The Debtor consents to judgment being entered against it in the third party action in Baroda II for the amount of Trendi's claim as determined in the Bankruptcy Court." (Notice of Motion, Ex. E at 16, § 5.2; Ex. H at 3, ¶ 1.) Thus, the Plan clearly contemplated that Indu Craft would pursue its fourth party indemnification claim against Baroda. However, it is also important to note that the Disclosure Statement dated November 20, 1997, stated that "[t]here can be no assurance that the Debtor will recommence the litigation in Baroda II, or that such litigation, if commenced would be resolved in the Debtor's favor." (Notice of Motion, Ex. C at 31 ("Risk Factors").)
Indu Craft was discharged and released from bankruptcy on May 17, 2000. The Discharge Order stated that "the Debtor is discharged and released from any and all claims of creditors; and . . . the holders of claims against the Debtor are enjoined and restrained from instituting or continuing any action to collect such debts." (Notice of Motion, Ex. N at 2.)
I. The Propriety of the Impleader
Baroda now claims, as it has in previous motions, that the third and fourth party complaints do not state proper impleader claims under Fed.R.Civ.Proc. Rule 14(a). As the Second Circuit stated in Indu Craft, Inc. v. Bank of Baroda, 239 F.2d 428, 438 (2d Cir. 2000),
[t]o sustain an impleader action, the third party defendant, or in this case, the fourth party defendant "must be liable secondarily to the original defendant, or that the third party [or fourth party] must necessarily be liable over to the defendant [or third party defendant] for all or part of the plaintiff's [or third party plaintiff's] recovery, or that the defendant [or third party defendant] must attempt to pass on to the third party [or fourth party] all or part of the liability asserted against the defendant [or third party defendant]." This means that the impleader action must be dependent on, or derivative of, the main or third party claim.
(emphasis added) (citations omitted).
The Second Circuit went on to find that this Court, and it, had ancillary jurisdiction over Trendi's third party claim against Indu Craft and Indu Craft's fourth party claim against Baroda.
It declined to determine the propriety of the impleader actions, leaving that issue for determination by this Court in the first instance. Id.
It may well be true, as Baroda argues, that the third party complaint did not constitute a proper impleader action, since Indu Craft's liability to Trendi, if any, was not dependent on Trendi's being found liable to BOI pursuant to the Demand Promissory Note and General Security Agreement. However, at this juncture, that third party claim has been terminated by the judgment for Trendi against Indu Craft in the Bankruptcy Court, and the only part of this action that remains is the fourth party claim by Indu Craft against Baroda. That fourth party claim does meet the criteria for a proper impleader action because the fourth party plaintiff (Indu Craft) is attempting to pass on to the fourth party defendant (Baroda) all or part of the liability asserted against it by the third party plaintiff (Trendi). The claim by Indu Craft against Baroda is derivative of Trendi's claim against Indu Craft in that Indu Craft would have no claim against Baroda if it were not itself found to be liable to Trendi. Thus, the liability of the fourth party defendant is dependent upon the outcome of the third party claim, as required by Rule 14. See Int'l Paving Systems, Inc. v. Van-Tulco, Inc., 866 F. Supp. 682, 686-87 (E.D.N.Y. 1994). Accordingly, this Court finds, in its discretion, that the First Amended Fourth Party Complaint states a permissible impleader claim.
This Court has jurisdiction over the fourth party claim pursuant to 28 U.S.C. § 1332(a).
II. The Indemnification Claims
The next question is whether Indu Craft's indemnification claims against Baroda are barred by the confirmation of the Plan and Indu Craft's discharge under Chapter 11 of the Bankruptcy Code. It is black letter law in New York that an indemnification claim does not arise until the party seeking indemnification has an out-of-pocket loss to be reimbursed. Perno v. For-med Medical Group, P.C., 176 Misc.2d 655, 673 N.Y.S.2d 849, 851 (Sup.Ct. N.Y. County 1998), app. dism., 254 A.D.2d 845, 679 N.Y.S.2d 280 (1st Dep't 1998) (citing North Star Reinsurance Corp. v. Continental Ins. Co., 82 N.Y.2d 281, 294, 604 N.Y.S.2d 510 (1993)). Thus, a party that "`has not and will not sustain any actual out-of pocket loss' as the result of a claim raised against it has no indemnification claim against a third party." Perno at 851 (quoting Pennsylvania General Ins. Co. v. Austin Powder Co., 68 N.Y.2d 465, 470, 510 N.Y.S.2d 67 (1986)). See also Harris v. Standard Accident Ins. Co., 297 F.2d 627, 635 (2d Cir. 1961), cert. denied, 369 U.S. 843 (1962) ("The New York cases hold that a person secondarily liable for a tort cannot get indemnity from one primarily liable by merely proving that he has suffered an adverse judgment. `The contract of indemnity implied by law in favor of one who is legally liable for the negligence of another covers loss or damage, and not mere liability.' Thus, until the judgment is actually paid, there is no damage and no recovery."). Therefore, since Indu Craft has been discharged from its obligation to pay Trendi the judgment entered against it in the bankruptcy proceeding, and Trendi is barred from seeking to enforce that judgment against Indu Craft, Indu Craft's action for indemnification cannot succeed, as a matter of law, and must be dismissed.
Indu Craft argues that this case is different because the Plan of Reorganization approved by the Bankruptcy Court contemplated the pursuit of this action. This argument is unavailing. While it is true that Trendi agreed to give up its claim, except to the extent that Indu Craft is successful in recovering in this action, the language of the Plan does not actually bind Indu Craft to pursue this litigation. Moreover, even a clear obligation to pursue the litigation would not create a viable claim where none exists.
In the Perno case, which bears a great deal of similarity to this one, the plaintiff had agreed in the defendant's bankruptcy case that it would "waive distribution on any claim that [he had] against [defendant], above and beyond what is collected on those claims that [defendant] would be asserting against the [third party defendants]; so that [defendant] would not have to go out of pocket to pay any claim to [plaintiff], only the money that [defendant] would be getting for contribution or indemnification or whatever, from the [third party defendants] . . . would be used to pay that claim." 673 N.Y.S.2d at 851. In that case, plaintiff's attorney said in court, on the record, "we are still prosecuting the claims against the debtor, but would limit collection only to what is indemnified." Id. In that case, the Court then found that the defendant debtor "will never have any claims based in indemnification against any of the doctors against whom it wished to cross-claim." It reasoned that:
Despite the fact that [the plaintiff], in entering into the bankruptcy settlement agreement, retained the right to pursue her action against [defendant] to judgment, and despite the fact that she might conceivably be entitled to a money judgment against [defendant] based on [defendant's] vicarious liability for the torts of one or more of the defendant doctors, [the plaintiff] expressly renounced any right to execute a judgment against [defendant], so as to subject [defendant] to any out-of-pocket loss. Absent any possibility of an out-of-pocket loss, [defendant] can never claim to have sustained any injury for which any other party can be found liable under a theory of indemnification. Consequently, [defendant] may not pursue cross claims against these parties based on indemnification.Id. (emphasis added).
Given that the Trendi judgment against Indu Craft has not been paid, and cannot be enforced against Indu Craft, Indu Craft's claim for indemnification against Baroda cannot stand, as a matter of law, and the Fourth Party Complaint must be dismissed.
Indu Craft argues that this conclusion is incorrect, however, because, as the Second Circuit held in Green v. Welsh, 956 F.2d 30, 33-35 (2d Cir. 1992), that pursuant to 11 U.S.C. § 524(e), the relief given by a bankruptcy discharge is not intended to benefit third parties. TheGreen case, however, and the cases on which Green relied, dealt specifically with plaintiffs who were permitted to proceed against a discharged debtor solely to establish liability, as a prerequisite to recovery, permitted by state law, from an insurer or other surety. See,e.g., In re: Jet Florida Systems, Inc., 883 F.2d 970, 976 (11th Cir. 1989); In re: Walker, 927 F.2d 1138, 1142-44 (10th Cir. 1991). The principal distinction between these cases and Indu Craft's fourth party action is that, as detailed above, New York State law does not permit recovery on an indemnity claim where the party seeking indemnification has not suffered an out of pocket loss.
Moreover, all of the cases that allow claims to continue against a bankrupt defendant look to several criteria when deciding whether § 524(e) applies to permit an action against a debtor to continue. In In re Catania, 94 B.R. 250, 253 (D.Mass. 1989), the Court set out three criteria to insure that the fresh start objective of the Bankruptcy Code is respected when litigation against the debtor is allowed to continue. It stated that: (1) the plaintiff can maintain the action against the debtor only when it is necessary to establish liability against a third party; (2) the plaintiff can maintain the action against the debtor only if the debtor bears none of the expense of the defense; and (3) most important, the plaintiff may not execute on any judgment he may obtain against the debtor, either against the debtor personally, or against his assets. Id. at 253 (citing In re White, 73 B.R. 983 (D.D.C. 1987)).
In this case, Indu Craft remains a defendant only to permit entry against it of the judgment entered in the Bankruptcy Court, and to establish Baroda's liability over for the judgment. Nevertheless, Baroda is, as stated above, neither an insurer nor a surety. Its liability to Trendi is not automatically proven by the fact that Indu Craft has consented to entry of a judgment against itself in Trendi's favor.
In addition, in the event that Baroda were held liable to Indu Craft for Trendi's damages, it would be entitled to challenge the amount of Trendi's damages notwithstanding the entry of the judgment for $21,101,348.47 in the Bankruptcy Court. First, Baroda is not a party in interest with Indu Craft, against whom principles of collateral estoppel would apply. Quite the contrary, Baroda and Indu Craft's relations have been adversarial throughout the litigation that has taken place over the past fourteen years.
Moreover, even if Baroda could be placed into Indu Craft's shoes, the judgment was entered pursuant to a stipulation in a context in which Indu Craft, which was being released from liability except to the extent that it later collected any payment from Baroda, had no incentive to litigate the amount of damages, and in fact did not challenge them in any way.See Remington Rand Corp. v. Amsterdam-Rotterdam Bank, N.V., 68 F.3d 1478, 1486 (2d Cir. 1995) ("[C]ollateral estoppel . . . is not to be mechanically applied, for it is capable of producing extraordinarily harsh and unfair results. As an example, a special concern arises if the first determination was made in circumstances where the losing party had little incentive to litigate the issues fully.").
The second Catania criteria — that the debtor will not bear the expense of the litigation — is discussed at length in many cases, which usually rely in large part on the view that the debtor is unlikely to incur any expenses in defending the suit because the discharge leaves it free to default, compelling the insurer to pay the costs of litigation. Green, 956 F.2d at 34 (citing In re: Jet Florida Systems, Inc., 883 F.2d at 976). See also In re: Holtkamp, 669 F.2d 505, 508-09 (7th Cir. 1982) (decided under 11 U.S.C. § 362(d))("Allowing the civil action to go forward did not jeopardize [the] bankrupt estate because his insurance company assumed full financial responsibility for defending that litigation."). In the Jet Florida case, the Eleventh Circuit expressed its concern that the assets of the debtor not be used to defend such litigation:
We are, however, concerned by the prospect that reversing the decision of the bankruptcy court in this case would frustrate the fresh-start policy embodied in the Code in one way — by requiring the bankrupt to spend sums in defending this lawsuit. We are cognizant that in actions such as these, the cost of litigation can sometimes surpass the actual amount of liability. Therefore, to allow suits of this nature to go forward could possibly have the effect of draining funds that would more properly be used in the revitalization of the reorganized corporation.883 F.2d at 976.
It then found, however, that given the facts of that case, the practical and economic realities were such that the fresh start policy of the Bankruptcy Code would not be defeated by permitting the action against the debtor in order to establish the insurer's liability to the plaintiff. Id.
With respect to this concern, however, this case is more like In re: Columbia Gas Transmission Corp., 219 B.R. 716, 720 (S.D.W. Va. 1998), where, pursuant to the contract involved, the excess insurer could not have any liability until after the debtor had paid a $250,000 self-insured retention. In that case, the Court held that the fact that the debtor had been discharged from paying its share precluded any claim for the excess coverage. In addition, the Court stated that requiring the debtor to defend against the claims would in itself cause economic loss in violation of the fresh start policy of the Bankruptcy Code. Id., 219 B.R. at 721.
In this case there apparently is an agreement by Tze Wung to fund the litigation against Baroda. However, the extent of this agreement is unclear since the Plan, § 5.2, refers to a "future agreement" and provided that Tze Wung would be repaid prior to distribution of any proceeds realized from the litigation. Notice of Motion, Ex. E at 16. In addition, it is relevant that possibly complex litigation, as explained above, would be required to establish Baroda's liability, and the amount of that liability, on the fourth party claims.
Section 1.37 of the Plan refers to a "New Loan" to the Debtor in the amount of $600,000 to be used for the prosecution of post-Effective Date claims, including but not limited to Baroda II. (Notice of Motion, Ex. E at 8.)
Finally, this case runs afoul of the third Catania requirement. None of the cases that have permitted an action to continue pursuant to § 524(e) have involved situations in which the defendant debtor would be required to make payment on a judgment to the plaintiff before its claim against the third party came into being. This requirement of payment means that the claim asserted against Indu Craft is not merely a "nominal liability", as required by In re: Edgeworth, 993 F.2d 51, 54 (5th Cir. 1993). Thus, New York law to the effect that a claim for indemnification does not accrue prior to actual payment of a judgment, McDermott v. City of New York, 50 N.Y.2d 211, 216-18, 428 N.Y.S.2d 643 (1980); Bay Ridge Air Rights, Inc. v. New York, 44 N.Y.2d 49, 54, 404 N.Y.S.2d 73 (1978), precludes the continuation of this suit on Trendi's behalf by Indu Craft, which cannot make payment to Trendi in the absence of a prior payment by Baroda. Since § 524(e) does not permit execution against a debtor's assets (and Trendi in any event specifically gave up such a right), maintenance of this action would not be permitted under the third, and most important requirement stated in In re: Catania, 94 B.R. at 253.
III. The RICO Claims
In addition to its claim against Baroda for indemnity, in its First Amended Fourth Party Complaint, Indu Craft alleges claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c),(d) ("RICO"). However, to the extent that these claims are asserted by Indu Craft against Baroda for damages to its own business, the facts are the same as those involved in the 1987 Action. In fact, many of the jury's findings in that action are recited in Indu Craft's First Amended Fourth Party Complaint.
In addition, in order to allege a pattern or practice of racketeering activity as defined in 18 U.S.C. § 1961, the First Amended Fourth Party Complaint charges that Baroda engaged in similar extortion of other customers. (First Amended Fourth Party Complaint, ¶¶ 79 — 90.) Indu Craft apparently knew of at least some of these activities in 1987 and 1988. (See, e.g., First Amended Fourth Party Complaint, ¶¶ 68, 100, 104.) Moreover, the First Amended Fourth Party Complaint states that all of the acts took place between 1984 and 1990 (see id., ¶¶ 118, 120, 140), and makes it apparent that Indu Craft was at least upon inquiry notice as to all of them at the time that the 1987 Action was tried in 1992, although apparently Indu Craft did not attempt to plead a claim under the RICO statute in that case.
There has been no showing that Indu Craft would not have been permitted to present its evidence of similar extortion by Baroda of other customers if it had articulated a RICO claim at that time. In fact, the First Amended Fourth Party Complaint states in ¶ 78(a) that in the trial of the 1987 Action, Anil Chokshi (son of the Executive Vice President of Baroda in charge of North American Operations, and an alleged member of the criminal enterprise alleged in the First Amended Fourth Party Complaint), (First Amended Fourth Party Complaint, ¶¶ 43, 127 — 130), invoked the Fifth Amendment to avoid answering questions regarding his receipt of payments from customers of Baroda and other related issues. (See also First Amended Fourth Party Complaint, ¶¶ 88, 99-100.) There also is no allegation that Indu Craft did not discover these facts in a timely manner due to fraudulent concealment, although there are allegations of destruction of documents and tampering with witnesses. (First Amended Fourth Party Complaint, ¶¶ 101, 107.) Indu Craft obviously was aware of these matters at the time of the trial of the 1987 Action.
Thus, the allegations contained in the First Amended Fourth Party Complaint fall within the rule stated by the Second Circuit in the previous appeal in this case: "Upon a final judgment on the merits, parties to a suit are barred as to every matter that was offered and received to sustain or defeat a cause of action, as well as to any other matter that the parties had a full and fair opportunity to offer for that purpose." Bank of India v. Trendi Sportswear, Inc., 239 F.3d 428, 439 (2d Cir. 2000) (quoting Manhattan Eye Ear Throat Hosp. v. NLRB, 942 F.2d 151, 155-56 (2d Cir. 1991)). See also Churchill v. Star Enterprises, 3 F. Supp.2d 625 (E.D.Pa. 1998), aff'd, 183 F.3d 184 (3d Cir. 1999) (ADA and PHRA claims were precluded by a previous case in which plaintiff successfully asserted a claim under the FMLA, even though she could not have filed the other claims until after issuance of a right to sue letter).
Presumably to get around the inevitable conclusion that Indu Craft was required to present its RICO claims in the 1987 Action, Indu Craft now attempts to tie those claims to its purported subsequent injury as a result of the entry of judgment against it in the Bankruptcy proceeding. Thus, ¶ 124 of the First Amended Fourth Party Complaint states that:
Indu Craft has been injured in its business or property by reason of Baroda's violation of 18 U.S.C. § 1962(c). As a direct and proximate result of Baroda's violations, Indu Craft has been injured in that, inter alia, it is exposed to civil liability to Trendi for the judgment obtained against Trendi by BOI and for the judgment Trendi obtained against Indu Craft in Bankruptcy Court.
(See also First Amended Fourth Party Complaint, ¶¶ 131, 138, 143, 151.) However, the mere fact that Trendi has now obtained a judgment against Indu Craft, does not create an additional later injury. The injury, if any, took place when Indu Craft was originally "exposed to civil liability" as a result of Trendi's filing its third party complaint herein. Moreover, since all claims against Indu Craft have been discharged, and Trendi has limited its recovery on the judgment to any proceeds realized in this fourth party action, it is difficult to see what RICO damages Indu Craft can claim.
On the other hand, if the facts supporting the RICO claims are not based in the same facts that were involved in the 1987 Action, but were known to Indu Craft in 1990, as apparently they were (see First Amended Fourth Party Complaint, ¶¶ 54-109), they are barred by the four year RICO statute of limitations. Agency Holding Corp. v. Malley-Duff Assocs., 483 U.S. 143, 156, 107 S.Ct. 2759 (1987); In re: Merrill Lynch Limited Partnerships Litigation, 154 F.3d 56, 60 (2d Cir. 1998) ("[T]his Circuit has adopted an `injury discovery' rule in RICO cases which holds that `a plaintiff's action accrues against a defendant for a specific injury on the date that plaintiff discovers or should have discovered that injury.'" (citing Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1102 (2d Cir. 1988), cert. denied, 490 U.S. 1007 (1989)).
Indu Craft argues that the fact that the third and fourth party actions were stayed between October 5, 1990 and the July 1997 bankruptcy filing tolls the statute of limitations on these claims. However, a stay of an action does not ordinarily toll the statute of limitations on related claims that are not asserted therein. Cf. Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 95 S.Ct. 1716, 1723 (1975) (pendency of Title VII proceeding did not toll the statute of limitations with respect to plaintiff's claims pursuant to 42 U.S.C. § 1981); Churchill v. Star Enterprises, 183 F.3d 184, 191 (3rd Cir. 1999) ("Attorneys should organize litigation they are pursuing to avoid claim preclusion.");Abdallah v. City of New York, 95 Civ. 9247 (MGC), 2001 WL 262709 (S.D.N.Y. Oct. 29, 2001); Wood v. McDonald, 1998 U.S. Dist. Lexis 8486 (N.D.Cal. May 29, 1998), aff'd, 176 F.3d 486 (1999) (a pending adversary proceeding in the Bankruptcy Court did not toll the statute of limitations on a § 1983 claim).
Despite the stay, Indu Craft could have sought leave to amend the fourth party complaint, or could have filed a separate action, within the time permitted by the statute of limitations. See Churchill, 3 F. Supp.2d at 629-30 n. 4 (citing Johnson v. Railway Express Agency, Inc., 95 S.Ct. 1716 (1975)). Consequently, Indu Craft's RICO claims must be dismissed as precluded, and/or time-barred under the four year statute of limitations.
IV. Conclusion
For all of the foregoing reasons, Baroda's motion to dismiss the First Amended Fourth Party Complaint is granted, and the First Amended Fourth Party Complaint is dismissed.
SO ORDERED.