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Severance of Action Against Defendant Which Filed for Bankruptcy Proper

In a medical malpractice case, the Second Department determined Supreme Court properly severed the action against a defendant which had filed for bankruptcy from the actions against the other defendants.  Plaintiff was 86 years old and delaying the proceedings would therefore have prejudiced him:

“In furtherance of convenience or to avoid prejudice the court may order a severance of claims, or may order a separate trial of any claim, or of any separate issue. The court may order the trial of any claim or issue prior to the trial of the others” (CPLR 603).

Where a defendant in an action files for chapter 11 bankruptcy relief, the automatic stay provisions of 11 USC § 362(a) do not extend to the nonbankrupt defendants … . Therefore, in such circumstances, it is within the discretion of the trial court to direct a severance of the action as against the bankrupt defendant … . Generally, the balance of the equities lies with plaintiffs when severance is sought because the case against one defendant is stayed pursuant to 11 USC § 362(a), and that is particularly so in this personal injury action where a delay would be prejudicial to the plaintiffs … .

Here, as the prejudice to the 86-year-old injured plaintiff in being required to await the conclusion of the bankruptcy proceeding before obtaining any remedy outweighs any potential inconvenience to the defendants, the Supreme Court providently exercised its discretion in granting the plaintiffs’ motion pursuant to CPLR 603 to sever the action … and directing the action to proceed against the remaining defendants … . Katz v Mount Vernon Dialysis LLC, 2014 NY Slip Op 06947, 2nd Dept 10-15-14

 

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