The opinion of the court was delivered by: PETER K. LEISURE
In this action, plaintiff, Bull & Bear Group, Inc. and counterclaim defendant Bassett S. Winmill (collectively "Bull & Bear"), now move the Court, pursuant to Fed. R. Civ. P. 56, for summary judgment or, in the alternative, for an order, pursuant to Colorado River Water Conservation District v. United States, 424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976), abstaining from the exercise of jurisdiction and remanding this action to the Supreme Court of the State of New York, New York County. Defendant/counterclaim plaintiff James W. Fuller ("Fuller") opposes this motion, and cross-moves for summary judgment. For the following reasons, the Court declines to exercise its jurisdiction over this action, and remands the case to New York Supreme Court.
This diversity action was initiated in the New York Supreme Court by Verified Complaint dated July 10, 1991, and was removed to this Court on July 16, 1991. The action, which is related to a series of cases currently pending in state court between these same parties, arises out of a dispute concerning a promissory note, dated December 16, 1986 (the "Note"), which Fuller executed in favor of Bull & Bear while employed as president, chief operating officer and director of the firm.
The opening salvo in this series of actions was fired in November 1988, when Bull & Bear commenced an action on the Note in the New York Supreme Court ("the 1988 Action"). Although the parties' cross-motions for summary judgment in the 1988 Action were denied by the Supreme Court by Order dated May 12, 1989 (Myriam J. Altman, J.), the Appellate Division, by Memorandum Decision dated February 14, 1991, vacated the denial and granted summary judgment on the Note in favor of Bull & Bear. See Bull & Bear Group, Inc. v. Fuller, 170 A.D.2d 275, 565 N.Y.S.2d 807, 808 (1st Dept.), appeal dismissed, 78 N.Y.2d 1110, 578 N.Y.S.2d 873, 586 N.E.2d 56 (1991). Although Fuller has sought to prevent enforcement of the judgment in the 1988 Action, it appears that all routes of appeal have been exhausted, and that Bull & Bear's judgment of approximately $ 700,000 will soon be satisfied. See Memorandum of Law of Plaintiff Bull & Bear Group, Inc. and Counterclaim Defendant Bassett S. Winmill in Support of Motion for Summary Judgment or Remand ("Plaintiff's Motion"), at 21; Reply Memorandum of Law of Plaintiff Bull & Bear Group, Inc. and Counterclaim Defendant Bassett S. Winmill in Support of Motion for Summary Judgment or Remand, at 12-13.
After entry of judgment in favor of plaintiff in the 1988 Action, Fuller commenced a suit against Bull & Bear and Winmill in New York Supreme Court on May 29, 1991 ("May 1991 Action"). According to Fuller, the May 1991 Action contained "substantive claims that Fuller had raised in the  Action which, he contended, had not been litigated on the merits." Defendant's Memorandum of Law in Opposition to Plaintiff's and Counterclaim Defendant's Motion for Summary Judgment or Remand, and in Support of Defendant's Motion for Summary Judgment ("Defendant's Response"), at 4.
Bull & Bear then commenced the instant action in state court, seeking reimbursement of collection costs associated with the Note. After removing the case to this Court, Fuller filed an answer, on August 13, 1991, which included counterclaims identical to the claims asserted in the May 1991 Action and the defenses raised in the 1988 Action. See Defendant's Response, at 5 ("Fuller restated his claims in the [May 1991] Action as counterclaims in this action.").
Despite the tortured procedural history of this action, the issues currently before the Court are relatively narrow. Paragraph 4 of the Note provides that:
The maker agrees to promptly reimburse the Payee for expenses of every kind, including, without limitation, attorneys' fees, incurred by the Payee in connection with the collection or enforcement of any or all obligations under this note.
See Affidavit of Lansing R. Palmer, Esq., sworn to on September 20, 1991, Exh. C. Believing this Note term to be an indemnification provision, for which a cause of action does not accrue until after payment of costs, Bull & Bear did not include the reimbursement claim in the 1988 action. Rather, it commenced the instant reimbursement action after collection costs were paid.
Fuller responded by contending that its responsibility for collection costs was part and parcel of its single obligation under the Note. Thus, Fuller has asserted, as an affirmative defense in this action, that principles of res judicata preclude Bull & Bear from splitting its claims on the Note into two actions. In response, Bull & Bear has moved for summary judgment, claiming that the Court can strike Fuller's defenses and determine that he is liable for collection costs on the Note as a matter of law. Fuller has cross-moved, asserting that Bull & Bear is barred by principles of res judicata from bringing the instant suit.