In Gunn v. Palmieri, 158 AD2d 671 [2nd Dept. 1990] the defendants sought and obtained a stay of the proceedings in Richmond County Supreme Court, pursuant to CPLR 2201, pending the determination of a motion made by the plaintiffs in the Eastern District of New York to reinstate their parallel federal action there. While plaintiffs' appeal from the stay ruling was pending, the federal court denied the reinstatement motion. The Second Department held that while the original grant of the stay was "a proper exercise of discretion at that time," the Eastern District's denial of the reinstatement motion required that the stay be vacated.
The Second Department was unimpressed by the fact that the plaintiffs had already filed a notice of appeal from the order denying reinstatement even though there was a risk that the Eastern District would be reversed. The Appellate Division concluded that "the interests of justice would not be served by a further stay of the action pending the appeal" (Id).