OPINION
I. FACTS 1
Presidential Airways, Inc. (“Presidential”), a Maryland corporation with its principal place of business located in Hern-don, Virginia, operated from February 1988 until December 1989 as a feeder airline for United Airlines, Inc. (“United”), a Delaware corporation having its principal place of business in Chicago, Illinois. Specifically, Presidential operated as a “United Express” carrier covering short flights between small cities in the eastern United States and Washington, D.C.’s Dulles International Airport. This arrangement included the issuance to Presidential of a license to use certain of United’s marks and logos. As a result, Presidential incurred various obligations to United. In turn, United would book reservations for Presidential and collect customers’ airfares. This resulted in United’s indebtedness to Presidential based on a percentage of what it had received from the customers.
In order to facilitate the settlement of their accounts, United and Presidential employed the Airlines Clearing House, Inc. (“ACH”), which is a Delaware corporation. ACH is employed by numerous airlines and a formal “Agreement Relating to the Settlement of Interline Accounts through Airlines Clearing House, Inc.,” the standard industry agreement, was to be utilized by United and Presidential in this case. As a general proposition, ACH would calculate on a monthly basis the credits and debits incurred by participating airlines. Thereafter, to the extent a party was to receive payment from another party, ACH trans *875 ferred the funds from the debtor’s account to the creditor’s account. In the case at bar, it is alleged that each month United ultimately would be indebted to Presidential. However, since the transfer of funds never occurred until month’s end, the amounts owed to Presidential pending ACH’s settlement of accounts represented accounts receivable.
On March 30, 1988, it appears that Presidential entered into a contract with Pioneer Commercial Funding Corporation (“Pioneer”), a New York corporation with its principal place of business located in Armonk, New York. Pioneer’s business was the lending of money and in this case, the contract stated that Pioneer would provide funding for Presidential’s day-to-day operations in the form of a credit line secured by Presidential’s accounts receivable. Pioneer’s security interest was perfected in Virginia and ACH was given explicit instructions that Pioneer was to receive Presidential’s accounts receivable directly each month, rather than having them first go to Presidential only to be subsequently transferred to Pioneer. Between March 1988 and October 1989, Pioneer loaned an unspecified amount to Presidential pursuant to this agreement. Until August 1989, Pioneer was reimbursed through Presidential’s accounts receivable as provided for in the contract. Thereafter, however, the troubles leading to this litigation began.
Before addressing the exact claims in the cases before us, the foregoing must be slightly amended to explain the existence of the second suit before us. It appears that in April 1988, and every month thereafter until October 1989, Security Pacific National Bank (“Security Pacific”) actually loaned the funds to Pioneer that were subsequently loaned to Presidential. These loans to Pioneer were secured by an assignment of the same Presidential accounts receivable that previously had been assigned to Pioneer by Presidential. Like Pioneer, Security Pacific perfected its security interest in Virginia, as well as in New York and California. Pioneer thereafter notified ACH of Security Pacific’s security interest in Presidential’s accounts receivable. 2 Through August 1989, all the parties apparently met their respective obligations. Due to events which will be discussed, however, Pioneer defaulted on its obligations to the Bank Group in October 1989. In part, this instigated the filing of an involuntary chapter 7 bankruptcy petition against Pioneer in the Southern District of New York on January 30, 1990. 3
One final factual issue must be addressed. It appears that sometime in early 1988, before the Pioneer/Presidential relationship commenced, United loaned $3.5 million to Presidential on an unsecured basis. A promissory note, in turn, was given by Presidential to United. This loan was refinanced at some point and, thereafter, additional loans were made from United to Presidential, the exact total of which is unclear. In August 1989, Presidential issued another a promissory note to United for $3.5 million. This time, however, the note specifically guaranteed payment to United from the same accounts receivable previously assigned to Pioneer and reassigned to the Bank Group. In September 1989, pursuant to United’s demand, Presidential allegedly informed ACH to set off United’s obligations for that month by the $3.5 million. Consequently, when ACH did its monthly accounting on September 28, United’s obligations to Presidential were reduced by $3.5 million and, in turn, Presidential’s accounts receivable for that period were reduced by that same amount since less money was transferred by ACH from United’s account to Presidential’s account. Both Pioneer and the Bank Group, who had perfected security interests in those accounts receivable, claim to have been damaged by this setoff.
*876 Thereafter, on October 26, 1989, Pioneer filed the first of the pending actions against United for conversion and tortious interference with contract, claiming that United knew of the Pioneer/Presidential contract when it took the setoff. Pioneer’s complaint seeks damages for the setoff United actually received, as well as additional, yet unspecified, sums for the future Presidential accounts receivable that would become due to Pioneer, but would be going instead to United pursuant to Presidential’s instructions. With regard to these alleged future damages, we note that Presidential filed for chapter 11 bankruptcy protection in the Eastern District of Virginia on the same day the Pioneer complaint was filed. On March 5, 1990, that proceeding was converted to a chapter 7 proceeding and Kermit Rosenberg, Esq. was appointed as trustee by Bankruptcy Judge Bostetter. In its papers and at oral argument before this court, Pioneer’s counsel recognized that United would not be receiving further setoffs as of the date Presidential filed for bankruptcy. Thus, notwithstanding any claims for future damages asserted in its complaint, at present Pioneer is only seeking damages for any setoffs actually taken by United prior to Presidential’s bankruptcy filing.
Turning to the Bank Group’s action, which was filed on April 3, 1990, the Banks seek damages from United for, inter alia, impairment of security interests, claiming that their perfected security interest in Presidential’s accounts receivable was violated by United’s receipt of setoffs. Besides the September setoff previously alluded to, 4 the Bank Group also alleges that two other setoffs totaling approximately $4 million were taken between October 23 and October 25, just days before Presidential’s bankruptcy filing and the filing of Pioneer’s complaint. Thus, the Bank Group seeks approximately $6.7 million from United.
Presently before us are United’s motions to stay or dismiss the two actions. United argues that the automatic stay provisions of the Bankruptcy Code (the “Code”) require the granting of a stay. Moreover, it argues that even if the automatic stay provisions are inapplicable, equity demands that these cases be stayed pending a final resolution of Presidential’s and Pioneer’s bankruptcy proceedings. Alternatively, United argues that the cases actually should be dismissed on a number of grounds. First, United argues that Presidential is an indispensable party to both actions under the Federal Rules of Civil Procedure. The Code, however, prohibits the joining of Presidential in these actions and, thus, United contends we must dismiss these cases. Additionally, with respect to the Pioneer action, United claims that Pioneer has failed to properly state a claim for either conversion or tortious interference with contract. Similarly, United contends that count three of the Bank Group’s complaint, which relates to impairment of a security interest, must be dismissed for failure to state a claim.
II. DISCUSSION
We will first address the application for a stay of proceedings and then turn to the motions to dismiss.
A. Motions for a Stay
The Bankruptcy Code provides that “a petition filed under section 301, 302, or 303 of this title ... operates as a stay, applicable to all entities, of— ... (3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.” 11 U.S.C. § 362(a)(3) (1988). The general purpose of section 362’s mandate is to provide a debtor with “a breathing spell from his creditors.”
Teachers Ins. & Annuity Ass’n v. Butler,
United makes slightly different arguments in its applications for a stay in each of the cases before us. In the Pioneer action, the complaint was filed before Pioneer knew Presidential had gone into bankruptcy and, therefore, as previously noted, Pioneer originally sought damages not only for the setoffs United received prior to the complaint’s filing, hut also for any future setoffs United might take. Consequently, United’s motion for a stay initially focused on the possible future setoffs, which were still accounts receivable and, according to United, property of Presidential’s estate.
See In re Contractors Equip. Supply Co.,
Pioneer argues that since there is no longer any connection between the funds set off and Presidential’s estate, the automatic stay provisions are no longer applicable. In response, United admits it has found no cases supporting a stay in a situation where a plaintiff is only seeking to recoup setoffs already taken,
see
Reply Brief for Defendant at 5, yet seeks a stay nonetheless. We find that the automatic stay provisions are not implicated with respect to the setoffs United has already taken.
Cf. In re Nat’l Equip. & Mold Corp.,
As recognized by the Supreme Court, “the power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.”
Landis v. North Am. Co.,
In an effort to alleviate United’s concerns, the respective plaintiffs contacted Presidential’s trustee, Mr. Rosenberg, to ascertain whether he would agree to waive a preference action. While Mr. Rosenberg would not make such an agreement, he has represented that if United were to lose the instant actions, he would not start a preference action against United. Instead, a preference action would be instituted against Pioneer and/or the Bank Group, depending upon which party prevailed. However, if United were to prevail, Mr. Rosenberg has suggested that he might, in fact, bring a preference action against United. See In re Presidential Airways, Inc., No. 89-02188 (Bankr.E.D.Va. Nov. 19, 1990) (order). 6 United argues that this representation is insufficient since it may be forced to defend the actions before this court and, even if it prevails, then defend a preference action brought by Presidential’s trustee in Virginia. Thus, United contends, even if the threat of multiple liability is extinguished, the threat of multiple litigation is sufficient to necessitate a stay of these proceedings.
We find that United is not entitled to any such protection against multiple litigation. United has been assured that it will not be subject to multiple liability and that is all it can ask for. The threat of multiple litigation is simply the cost of doing business and we will not stay the instant actions because of this threat. Incidentally, we note that the threat of multiple litigation is also faced by Pioneer and the Bank Group because any prevailing party may be subject to a preference action. 7
In United’s motion for a stay in the Bank Group action, many of the same contentions are raised. There are, however, two additional points raised. First, since one of the Bank Group’s claims is for impairment of a security interest, United refers to section 362(a)(4) of the Code, which stays “any act to create, perfect, or enforce any lien against property of the estate.” 11 U.S.C. § 362(a)(4) (1988). United argues that the lien the Bank Group is seeking to enforce is against property of the estate. Once again, however, there is no authority supporting the proposition that the funds already received by United, a non-bankrupt third-party, are property of Presidential’s estate. Thus, the Bank Group’s action is not an attempt to enforce a lien against property of the estate. The second argument United proffers is that while the Pioneer action interferes with Presidential’s estate, the Bank Group action actually interferes with both Presidential’s and Pioneer’s bankrupt estates. In essence, United contends that if both Pioneer and the Bank Group are seeking the same funds from United, the Bank Group’s claim that it has a superior security interest interferes with Pioneer’s claim for these funds. The Bank Group, however, while contending that the automatic stay was not applicable, nonetheless received relief from the automatic stay in the Pioneer bankruptcy action. See In re Pioneer Commercial Funding Corp., No. 90-B-20085 (Bankr.S.D.N.Y.Mar. 30, 1990) (stipulation and order). Thus, the issue is moot. Moreover, both Pioneer and the Bank Group seem to agree that the Bank Group has priority over Pioneer to the extent of its interest and, thus, there does not appear to be any conflict between the Bank Group and Pioneer.
*879 For all the foregoing reasons, United’s motions for a stay of both the Pioneer and Bank Group actions are denied.
B. Motions to Dismiss
1. Failure to Join an Indispensable Party
United has moved to dismiss both actions pursuant to Federal Rule of Civil Procedure 12(b)(7), claiming that both Pioneer and the Bank Group have failed to join an indispensable party in their respective actions. United claims that Presidential is the necessary party, but that its pending bankruptcy proceeding prevents it from being joined in these actions. Therefore, United argues, the cases should be dismissed.
Federal Rule of Civil Procedure 19, which governs the joinder of parties, requires a two-pronged analysis. First, a court must determine whether a party should be joined because:
(1) in the person’s absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person’s absence may (i) as a practical matter impair or impede the person’s ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.
Fed.R.Civ.P. 19(a). If a party fits within these parameters, but cannot be joined in the action, the court must then “determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable.” Fed.R.Civ.P. 19(b). The rule then lists four different factors to consider in making this “equity and good conscience” determination, but at this stage we need not address them. We only point out the Second Circuit’s mandate that a court “should take a flexible approach when deciding what parties need to be present for a just resolution of the suit.”
Jaser v. New York Property Ins. Underwriting Ass’n,
In the cases at bar, United argues that Presidential is indispensable based on rule 19(a)(1) and both provisions of rule 19(a)(2).
8
We will address these provisions in turn. As to rule 19(a)(1), the section focuses on whether complete relief can be accorded among those already parties in the absence of the third, ostensibly indispensable, party. Since this section focuses on the parties already present, both Pioneer and the Bank Group argue that any potential claims that Presidential may have against United in a preference action have no bearing on this inquiry. In other words, the rights of Pioneer and the Bank Group vis-a-vis United can be resolved in the actions before this court and it is unnecessary to involve Presidential in these proceedings.
See Arkwright-Boston Mfrs. Mut. Ins. Co. v. City of New York,
Turning now to rule 19(a)(2), the first question is whether Presidential “claims an interest relating to the subject of the action.” Fed.R.Civ.P. 19(a)(2). We note that Presidential’s trustee has never made any formal claim to these funds, but rather, has merely sought to preserve any rights to a preference action that might exist. For that matter, since Presidential received loans from United, Pioneer, and, indirectly, the Bank Group in exchange for its pledge of an interest in its accounts receivable, it is unlikely that Presidential would have had any rights whatsoever to these funds had it not filed for bankruptcy protection. It would be ironic if the mere fortuity of Presidential’s bankruptcy filing would allow it to be deemed an indispensable party to an action involving funds it would have had no cognizable rights to had it remained solvent. Nonetheless, we will assume for these purposes that Presidential has made such a claim.
The question then becomes whether United can establish that if Presidential is absent either Presidential’s ability to protect its rights will be impaired, Fed.R. Civ.P. 19(a)(2)(i), or United will be faced with a substantial risk of multiple or inconsistent obligations, Fed.R.Civ.P. 19(a)(2)(ii). As to the first question, United argues that since the parties are seeking Presidential’s accounts receivable, Presidential’s interests may be impaired. As we previously noted, however, in conjunction with our discussion of the automatic stay issue, while Pioneer initially was seeking to recover future accounts receivable, in light of Presidential’s bankruptcy it has limited the scope of its claims before us to those setoffs already taken, just as the Bank Group has done. As to the funds already in United’s coffers, our earlier determination that these are not property of Presidential’s estate remains applicable.- To the extent Presidential retains a right to assert a preference action, it can adequately protect its rights through this vehicle. There is no need for Presidential to join the actions at bar to protect its rights.
The next inquiry, and the argument United focuses most heavily upon, is whether United will be faced with multiple or inconsistent judgments if Presidential is absent from these suits. As we previously noted, Presidential’s trustee has stated that while he will not waive the right to bring a preference action, he will only make such a claim against the prevailing parties in the actions before us. Thus, United faces no risk of multiple liability, no less the substantial risk required by the rule. Moreover, there is no risk of inconsistent judgments because while the actions before us concern the propriety of United’s actions vis-a-vis Pioneer and the Bank Group, a preference action involves United and Presidential and wholly different issues. The only risk to United is the risk of multiple litigation if it prevails before us. This threat alone is insufficient to make Presidential a necessary party as it is the risk of multiple liability, which does not exist in these cases, that matters.
See Arkwright-Boston Mfrs.,
For all the foregoing reasons, we find that Presidential is not an indispensable party. United’s motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(7) are denied. 9
2. Failure to State a Claim
United has moved pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss Pioneer’s claims for both conversion and tortious interference with contract, and the Bank Group’s claim for impairment of a
*881
security interest. On a motion pursuant to rule 12(b)(6), a complaint’s claims are taken “at face value,”
California Motor Transp. Co. v. Trucking Unlimited,
a. Pioneer Action
As an initial matter, we note that both causes of action United seeks to dismiss are governed by state law. At this stage, it appears that three states’ laws can possibly apply: New York, where Pioneer is located; Illinois, where United is located; or Virginia, where Presidential is located. However, since the parties agree that either Illinois or New York law would govern these claims and that the laws of these states are virtually identical on the relevant issues, we need not presently resolve this choice-of-law question and instead will refer to both Illinois and New York law. Moreover, to the extent the Uniform Commercial Code (the “UCC”) is at issue, the parties concede that there is no material difference between the versions adopted by New York and Illinois with respect to the issues before us.
i. Failure to Demand Payment Pursuant to UCC 9-318
United first moves to dismiss both the conversion and tortious interference with contract claims based on Pioneer’s alleged failure to both notify United that the accounts receivable had been assigned and specifically demand payment from United. United relies on New York’s Uniform Commercial Code section 9-318(3) for this proposition. That section reads:
The account debtor is authorized to pay the assignor until the account debtor receives notification that the amount due or to become due has been assigned and that payment is to be made to the assign-ee. A notification which does not reasonably identify the rights assigned is ineffective. If requested by the account debtor, the assignee must seasonably furnish reasonable proof that the assignment has been made and unless he does so the account debtor may pay the assignor.
N.Y.U.C.C. § 9-318(3) (McKinney 1990). 10 United argues that the clause “notification ... that payment is to be made to the assignee” requires an actual demand for payment by the assignee to the debtor. Since Pioneer failed to allege making such a demand, United argues that Pioneer has forfeited its legal remedies and, therefore, cannot claim that United was unjustified in taking the setoff. Pioneer, in turn, claims that section 9-318 is inapplicable in the case at bar because its security interest has priority over any right to a setoff possessed by United. Moreover, Pioneer contends that even if section 9-318 is applicable, there is simply no requirement that a demand for payment be made. Finally, if such a demand is required, Pioneer argues that it satisfied this requirement by instructing ACH to transfer Presidential’s accounts receivable directly to its account and by perfecting its security interest. 11
The first question raised, therefore, is whether or not section 9-318 applies in this situation. The parties do not dispute the fact that article 9, which governs secured transactions, is applicable in this case. While holders of setoff rights are not required to file under article 9 to protect their rights, N.Y.U.C.C. § 9 — 104(i) (McKinney 1990), the UCC nonetheless governs the priority of setoff rights versus secured interests.
See MNC Commercial Corp. v. Joseph T Ryerson & Son,
At this time, we must proceed with a more detailed analysis of United’s argument. United focuses on section 9-318(3), which establishes the rights of a debtor to pay an assignor until it receives “notification that the amount due or to become due has been assigned and that payment is to be made to the assignee.” N.Y.U.C.C. § 9-318(3). United interprets the second clause of this section as requiring the as-signee to explicitly
demand
payment from the debtor, in addition to giving notice of the assignment.
See Haas v. Metro-Goldwyn-Mayer, Inc.,
Section 9-318(3) governs the rights of a debtor to pay an assignor until it receives certain notices, and perhaps demands, from an assignee. The section is designed to prevent a debtor from being forced to pay twice,
see Warrington v. Dawson,
The key provision in section 9-318, and one which United touches on in a cursory fashion, is sub-division 1.
See Chase Manhattan Bank,
[T]he rights of an assignee are subject to (a) all the terms of the contract between the account debtor and assignor and any *883 other defense or claim arising therefrom; and
(b) any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives notification of the assignment.
N.Y.U.C.C. § 9-318(1) (McKinney 1990). Under this section an assignee retains its assigned rights, but these rights may be subject to claims the account debtor could have raised against the assignor.
See Chase Manhattan Bank,
Turning to section 9-318(1), sub-division (a) requires our review of the Presidential/United contract to see if a right of setoff is established therein. If it is, Pioneer takes its assignment subject to that right, regardless of when United received notification of the assignment. United contends that its right to a setoff did arise out of the same contract as its obligation, thereby implicating section 9-318(l)(a), but admits that this issue is not presently before us. United’s Reply Memorandum of Law at 16 n. 14. Turning to section 9-818(l)(b), therefore, the provision specifically states that the assignee takes subject to the debtor’s claims against the assignor that accrue prior to the debtor’s receipt of notification of the assignment. United suggests that notification of the assignment in this context requires both notification of the assignment and a demand for payment, which is precisely the interpretation it gives to section 9-318(3). Unfortunately, this proposition ignores the fact that the language used in sub-divisions 1 and 3 of section 9-318 is not identical. While a two-pronged notice requirement is mandated by sub-division 3, only notification of the assignment is required under sub-division 1. If notification of the assignment in sub-division 1 means both notification of the assignment and a demand for payment as United contends, it would be redundant to specifically include both requirements in sub-division 3. Looking at the specific language of the statute, it appears clear that the responsibilities incumbent upon an assignee under section 9-318(1) are less stringent than those required by section 9-318(3). This may be a function of the differing purposes of the two provisions. United’s attempt to merge the sections ignores the statutory language and clouds the true issues before us. 13
Having decided that notification under section 9-318(l)(b) does not require a demand for payment, the next issue we would ultimately need to resolve is whether United’s purported right to a setoff accrued before or after the account debtor received notification of the assignment. N.Y.U.C.C. § 9 — 318(l)(b);
see Chase Manhattan Bank,
For all the foregoing reasons, we find United’s contention that a demand for payment was required as a condition precedent to Pioneer’s claims to be without merit. Since this is the final ground raised for dismissing the claim of tortious interference with contract, 14 that cause of action *884 will stand. There is, however, an additional argument raised with respect to the conversion claim.
ii. Specifically Identifiable Property
Conversion is the “[unauthorized and wrongful exercise of dominion and control over another’s personal property.” Black’s Law Dictionary 300 (5th ed. 1979).
[T]o establish a cause of action in conversion, the plaintiff must show legal ownership or an immediate superior right of possession to a specific identifiable thing and must show that the defendant exercised an unauthorized dominion over the thing in question, to the alteration of its condition or to the exclusion of the plaintiffs rights. Tangible personal property or specific money must be involved.
Independence Discount Corp. v. Bressner,
United argues that Pioneer’s complaint does not allege the conversion of specifically identifiable property and, thus, must be dismissed. As previously discussed, United sold tickets for Presidential flights and when customers paid United for these tickets, United incurred an obligation to Presidential. These obligations became accounts receivable for Presidential. At month’s end, United sent an account statement to ACH listing these accounts payable, Complaint ¶ 15, and ACH then would settle the parties’ accounts by offsetting their mutual obligations. This ultimately resulted in a net obligation running from United to Presidential and any necessary payments — or, more accurately, trans
fers
— were then made. In the month at issue, however, United set off a portion of the amount it owed Presidential to account for debts it was owed by Presidential, thereby substantially reducing the funds Presidential received for that month. United contends that the funds claimed by Pioneer were received from customers and then placed into United’s general coffers to be used for any corporate purpose, provided, of course, that at month’s end the amounts owed to Presidential were duly transferred to ACH. Thus, Pioneer claims, the funds at issue are not specifically identifiable.
See id.
(“there was no specific fund from which payment had to be made, hence there could be no conversion”). Moreover, United contends that even if it could not use the funds for any purpose, the fact that Presidential’s accounts receivable held by ACH included obligations of airlines besides United meant that the funds were commingled and again, ceased being specifically identifiable. At most, United argues, it had a general obligation to pay Presidential — actually ACH — but “the general rule is that conversion will not lie for money represented by a general debt or obligation.”
In re Thebus,
United correctly cites the general rule that the mere establishment of a debt- or/creditor relationship is insufficient to create a cause of action for conversion when the debtor fails to satisfy its obligations. This stems from the fact that no specifically identifiable money has been taken or is owed. In the case at bar, United is a debtor and Pioneer, by virtue of the assignment from Presidential, is a creditor. While the technical relationship between the parties suggests the general rule should apply, the underlying facts distinguish this case from the ordinary debt- or/creditor relationship. Pioneer is not simply alleging the conversion of money through the failure to satisfy a debt, but rather, is claiming the conversion of funds represented by accounts receivable held at ACH on its behalf. This distinction is not merely a matter of semantics since these *885 receivables, while resulting from accounting entries, nevertheless represent tangible, marketable assets which can be sold, secured, or traded. Indeed, Pioneer, and thereafter the Bank Group, secured its interest in Presidential’s receivables held at ACH in order to obtain a priority over these funds. 15 Thus, when United kept the funds it allegedly was required to transfer to ACH, it allegedly violated Pioneer’s proprietary rights in a specific and identifiable piece of property, namely Presidential’s accounts receivable.
Nonetheless, even if this action merely were to be considered one for the conversion of money, the claim would stand. There is no prohibition on instituting a conversion claim for money, provided it is “specific money.”
Independence Discount Corp.,
b. Bank Group Action
Count three of the Bank Group’s complaint alleges that United’s setoff im *886 paired its security interest in Presidential’s accounts receivable. United moves to dismiss this count, arguing that the UCC only permits such a claim to be asserted by a guarantor, which the Bank Group is not. Moreover, to the extent the cause of action exists outside the UCC, United contends that such relief is limited to a mortgagee whose secured property is being damaged or impaired.
We have previously recognized that this case involves property secured under article 9 of the UCC. Consequently, United suggests that it is only the UCC that can provide relief for the Bank Group under a theory of impairment of security interest, and that only a guarantor has such a remedy available under the UCC. In
Executive Bank of Fort Lauderdale v. Tighe,
Numerous courts have recognized such a cause of action outside the UCC.
By definition, impairment of security interest requires proof of “(1) a wrongful act of the defendant; (2) impairment of security resulting from that act; and (3) the amount of such impairment.”
Syracuse Sav. Bank v. Onondaga Silk Co.,
To the extent mortgagees are afforded relief under such a cause of action, it is often because they lack an immediate possessory interest in the property and this is the only way they can protect their rights. “ ‘A mortgagee may under special circumstances bring an action to recover damages for the impairment of his security, though he has not the right of immediate possession.’ ”
Heinaman,
Therefore, United’s motion to dismiss count three of the Bank Group’s complaint is denied.
III. CONCLUSION
United’s motions for stays in the Pioneer and Bank Group actions are denied. Likewise, its motions to dismiss pursuant to rules 12(b)(6) and 12(b)(7) of the Federal Rules of Civil Procedure are denied in all respects. The parties in both actions are directed to appear at a rule 16 scheduling conference on Monday, February 11, 1991 at 5:15 p.m.
SO ORDERED.
Notes
. At this stage, the two captioned actions have only been consolidated for discovery purposes.
We are presently faced with motions in each case to stay the proceeding or dismiss various counts of the complaint. Thus, we must take each complaint’s allegations as true. Since the two complaints were filed some five months apart from one another, slightly modified factual allegations are raised. In discussing the facts of these cases, we will attempt to offer one coherent and consistent presentation. This is not, however, to be taken as any formal fact-finding by the court. To the extent it is necessary, we will refer to the first-filed action, No. 89 Civ. 7147, as the "Pioneer” action, and the second-filed action, No. 90 Civ. 2296, as the "Bank Group” action.
. It appears that in October 1988, The Bank of Tokyo Trust Company and Banque Nationale de Paris, San Francisco Agency, purchased interests in Security Pacific’s loans to Pioneer. Since all three banks raise the same claims and are represented by the same counsel, we will simply refer to them as the "Bank Group.”
. On April 20, 1990, the proceeding was converted to a chapter 11 reorganization and remains sub judice.
. While Pioneer claims $3.5 million was set off in September, the Bank Group contends the amount actually was closer to $2.7 million. The precise total need not be determined presently and we will simply consider the amount to be $3.5 million because Pioneer’s complaint was filed first.
. Generally, 11 U.S.C. § 547(b) (1988) governs preference actions. As to the assertion of a preference to recoup a setoff, it appears that 11 U.S.C. § 553(b) (1988) should govern.
See Braniff Airways, Inc. v. Exxon Co.,
. Mr. Rosenberg offers one caveat. If the actions before this court are not resolved before the statute of limitations for asserting a preference claim would run, he would file a protective preference claim merely to preserve his rights. He reiterates, however, that he would not subject United to multiple liability if United loses the instant actions.
. United’s other argument in seeking an equitable stay is that it is unreasonable to allow the parties’ dispute to be divided between claims for the funds already set off and claims for future damages. We see no problem with having the cases before us focus on the setoffs already taken while claims in the Virginia bankruptcy action focus on future accounts receivable.
. Actually, the papers United submitted in the Pioneer action did not refer to rule 19(a)(1). Its papers in support of the motion to dismiss the Bank Group’s action, however, refer to rule 19(a)(1) as well.
. Having based our ruling upon United’s failure to satisfy rule 19(a)’s requirements, we need not address the factors enunciated in rule 19(b).
. As previously noted, the parties agree that New York’s UCC does not differ from Illinois’, or most other states’ for that matter, on this issue. While we have cited to New York’s statute, the cases we rely on are not so limited.
. Though the Pioneer complaint does not state when Pioneer’s secured interest was perfected, the Bank Group’s complaint alleges that the necessary filing was accomplished on April 1, 1988.
. We recognize that an argument possibly can be made that United’s setoff constituted a payment to Presidential because it decreased the debt Presidential owed. This argument has not been raised and, moreover, we do not believe such a situation is contemplated by section 9-318(3).
. Even if section 9-318(l)(b)’s notification requirement was meant to include both provisions of section 9-318(3), it is not settled that a specific demand for payment, as opposed to simply actual notice of the assignment and the assign-ee’s right to payment, is required by section 9-318(3).
. United actually makes little mention of the tortious interference claim, only suggesting that if a party’s actions are justified the cause of action cannot stand. United contends that its actions were justified because Pioneer never made a demand for payment. Having rejected that argument, we can similarly dispose of the *884 suggestion that United's actions were justified on this basis. Therefore, Pioneer's claim of tortious interference with contract cannot be dismissed.
. We have not been pointed to any authority stating that an action for conversion of accounts receivable can never be brought, and it appears that some courts may be willing to recognize the cause of action under the right factual circumstances.
See, e.g., Zokoych v. Spalding,
. As to the question of whether the funds are no longer specifically identifiable once they go to ACH, assuming they had been segregated in the first place, this appears to be a non-issue raised by United. As alleged, the funds in this case were converted before being sent to ACH. Thus, it seems irrelevant what would have happened to the funds had they ultimately reached ACH. Nonetheless, further factual development would be needed as to whether the funds were ordinarily commingled since ACH only handled airline accounts and the extent to which other airlines contributed to Presidential’s accounts receivable is unclear.
. Section 3-606 states that "[t]he holder discharges any party to the instrument to the extent that without such party’s consent the holder ... unjustifiably impairs any collateral for the instrument given by or on behalf of the party or any person against whom he has a right of recourse.” N.Y.U.C.C. § 3-606 (McKinney 1964).