The dispute may have stemmed from a two-car crash on Vineland Avenue just before 9:30 a.m.
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One person emerged from his vehicle armed with a machete, officials said. The other driver pulled a gun and opened fire on him, police said.
The man with the machete was shot in the chest and is in stable condition at Staten Island University Hospital.
The 50-year-old alleged gunman, who served as a police officer for less than a year in 2001, stayed on the scene.
News of what happened spread quickly throughout the generally quiet neighborhood.
"And then you hear something like this and its very scary, you don't hear things like this on this side of Staten Island," neighbor Mary Arrigo said.
Neighbors say the incident is an unfortunate reminder of how quickly situations can escalate.
"You never know who you are dealing with, so you have to maintain your cool and let it slide," Arrigo said.
It is not yet clear if either man involved will face any charges.
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