Grippe v Silverite Constr. Co., Inc.

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Grippe v Silverite Constr. Co., Inc. 2012 NY Slip Op 31638(U) June 12, 2012 Supreme Court, Nassau County Docket Number: 22354/10 Judge: Thomas Feinman Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SHORT FORM ORDER SUPREME COURT - STATE OF NEW YORK COUNTY OF NASSAU Present: Hon. Thomas Feinman Justice TRIAL/IAS P ART 9 NASSAU COUNTY DANIEL GRIPPE Plaintiff INDEX NO. 22354/10 x X X - against - SIL VERITE CONSTRUCTION COMPANY , INC. Defendant. MOTION SUBMISSION DATE: 4/18/12 MOTION SEQUENCE NOS. 2 , 3 SILVERITE CONSTRUCTION COMPANY , INC. Third- Par Plaintiff - against - AIRFLEX INDUSTRIAL , INC. , AIRFLEX CORP. McGLONE TRUCKIG , INC. and SEAN McGLONE Third- Party Defendants. The following papers read on this motion: Notice of Motion and Affdavits..................... Notice of Cross- Motions and Affidavits......... Affrmations in Opposition...................... ....... Reply Affirmations.......................................... RELIEF REOUESTED The third-pary defendants , Airflex Industrial , Inc. , and Airflex Corp. , (hereinafter referred ), move for an order pursuant to CPLR 93025(b) permitting Airflex to amend its answer to include the defense of lack of capacity to sue , and for dismissal of plaintiff s complaint and, the third- par action pursuant to CPLR 93211(a)(3), CPLR 3211(a)(5) andjudicial estoppel. to as " Airflex The defendant/third- par plaintiff, Silverite Construction Company, Inc. , (hereinafter referred to as Silverite ), and the third-par defendants , McGlone Trucking, Inc. and Sean McGlone , (hereinafter referred to as " McGlone ), cross-move separately for the same relief. The plaintiff submits opposition. The movants submit reply affrmations. [* 2] BACKGROUND The plaintiff initiated this action to recover for personal injuries sustained on November 21 2008. The plaintiff claims that he was struck by a falling louver that was improperly hoisted and improperly secured , whereby while the louver was being installed , the attachment hooks pulled out causing the louver to fall , striking the plaintiff causing plaintiff serious injuries. The following procedure in plaintiff s banuptcy filing is not disputed. Plaintiff fied for banptcy pursuant to Chapter 7 of the United States Banptcy Cour on Februar 27 , 2009 , filed the requisite Schedule B listing all personal property and claims , and amended the schedule two times thereafter. The plaintiff did not submit this claim in his banptcy fiing. On August 23 2010 , the Banpty Judge issued a final decree discharging the trstee and closing the Chapter 7 filing of the plaintiff. Approximately three months later , plaintiff initiated the instant action. APPLICABLE LAW A debtor is required to submit a schedule of assets and liabilities to the Banptcy Court v. Long Island pre-petition causes of action belonging to the debtor (Meneses Railroad Co. 2009 US Dist. Lexis 20471). Such property includes " causes of action belonging to the debtor which accrued prior to the fiing of the banptcy petition (Id.) A plaintiff, who fails to list a claim in the schedule of assets filed with the banptcy cour , lacks the capacity to sue. v. St. John s Episcopal Hospital 267 AD2d 426). The debtor s failure to list a legal (Goldstein claim as an asset on the debtor s petition precludes a debtor from pursuing the claim on his own (Coogan v. Ed' s Bargain Buggy behalf, and the claim remains the propert of the banptcy estate. 279 AD2d 445). The argument that the debtor innocently failed to schedule a claim is Corp. (Vegas- Ruiz v. Keller 9 Misc3d 1123A). unavailing. including " all NY. 69 NY2d 191 , held that plaintiff could not pursue its damages action as and against the defendant , Marine , as The Court of Appeals in Dynamics Corp. Of Am. v. Marine Midland Bank plaintiff failed to disclose the claim in the banptcy proceeding, as it was not listed in its filed schedules as an asset. " Having failed to disclose the claims , so that they might be " dealt with" in the banptcy, DCA (plaintiff) cannot now pursue them individually in this action. That DCA (plaintiff) may have innocently failed to schedule as unliquidated claims the causes of action it now The Cour fuher added " (w)ithout a rule precluding such a seeks to pursue is immaterial." (Id.) debtor from later pursuing claims about which it knew or should have known at the time of filing its petition , a debtor- in-possession might employ less than diligent efforts to ascertain and disclose all potential claims , thus undermining its obligation to the estate and prejudicing the interests of the unsecured creditors This rule ensues that ' a debtor may not conceal assets and then , upon termination of the banptcy case , utilize the assets for (his) own benefit." (Meneses v. Long Island R. Co., supra citing Kunica v. St. Jean Financial, Inc. 233 B.R. 46 , D. D. N. Y. 1999). Accordingly, cours have held that because an unscheduled claim is the property of debtor banptcy estate , a debtor who attempts to pursue such a claim after emerging from banuptcy lacks standing to do so. (Meneses, supra). The Courts have invoked the doctrine of judicial estoppel to prevent a pary who failed to disclose a claim in a banptcy proceeding from asserting the claim in a subsequent action. v. Weiss 2006 WL 2792769; (Negron Meneses, supra). It is well settled that the doctrine of judicial estoppel or estoppel against inconsistent positions precludes a pary from taking a position in one [* 3] legal proceeding which is contrar to that which he or she took in a prior proceeding, simply because Ford Motor Credit Co. v. Edrich 32 AD3d 412 , citing (Festinger his or her interests have changed. v. Devon 163 AD2d 573, and Kimco of NY v. Colonial Funding Corp. 215 AD2d 435; 101 AD2d 591). " The doctrine rests upon the v. Larchwood Constr. Corp. Environmental Concern principle that a litigant should not be permitted ... to lead a cour to find a fact one way and then contend in another judicial proceeding that the Larchwood v. (Environmental Concern same fact should Constr. Corp. , be found otherwise supra quoting Note , The Doctrine of Preclusion Against Inconsistent Positions in Judicial Proceedings , 59 Har. Law Rev. 1132). The doctrine is invoked to estop paries from adopting contrar positions because the judicial system canot tolerate this ' playing " fast and loose with the courts (Id. citing Scarano v. Central Ry Co. 203 F2d 510). Weiss 2006 WL 2792769, stated that " (i)n banptcy context the rationale for these (estoppel) decisions is that the integrity of the banptcy system depends on full The Cour in Negron v. v. St. Jean Fin. Inc. , 233 Kunica and honest disclosure by debtors of all of their assets... (Id. citing 104 (SDNY 1996). Thus v. Kleban 918 F Supp 98 Rosenshein B.R. 46 , 58 (SDNY 1999) (quoting a number of cours have invoked judicial estoppel to prevent a par who failed to disclose a claim (See e. in banptcy proceedings from asserting that claim after emerging from banptcy. Weyerhaeuser Co. 141 F Appx Lewis v. Cir. 2006); v. Potter 453 F 3d446 , 449 (7 Cannon-Stokes Burnes In re Superior Crewboats, Inc. 374 F3d 330 336 (5th Cir. 2004), 427- 28 (6th Cir. 2005); 420 Payless Wholesale Distrib. , Inc. Pemco Aeroplex, Inc. 291 F3d 1282 , 1288 (11 Oneida Motor Freight, Inc. v. United Jersey Bank Alberto Culver, Inc. 989 F2d 570 (15t Cir. 1993); In re Galerie Des Kleban 918 F. Supp at 104; Kunica 233 B.R. at 46; 848 F2d414 (3d Cir. 1988); 259- 60 (SDNY 1985), affd 1986 WL 6230 (SDNY May Monnaies of Geneva, Ltd. 55 B. R. 253 , 1986). " A plaintiff s failure to list her medical malpractice claim against the defendants in a th Cir. 2002); v. banuptcy proceeding resulted in the divesture of plaintiffs title to the claim. (Bajanov Grossman 36 AD3d 572). Leave to amend is freely given , and should be granted where the proposed &mendment is (Watson v. Getman 260 AD2d 472). The defendant was granted leave to amend its answer and assert the affirmative defense of lack of capacity to sue when the defendant discovered that plaintiff filed a petition for relief under Chapter neither palpably insufficient or totally devoid of merit. 7 of the United States Banuptcy Code , and did not disclose the subject propert. (Nunez 21 AD3d 355). The Cour granted the defendant leave to amend , finding the amendment Mo usa uras permissible and not devoid of merit because plaintiff failed to disclose her pre- petition ownership interest in the subj ect propert and the related cause of action in her banptcy filing schedule. (Id. DISCUSSION Here , it is undisputed that plaintiff failed to disclose the instant claim in his schedule of assets in his banptcy proceeding. His failure to list the claim as an asset on his petition for banptcy v. supra; Dynamics Corp. of Am. estopped from asserting his claim. to disclose to the Marine Midland Bank (Negron banuptcy court Ed' s Bargain Buggy Corp., The plaintiff is judicially Plaintiff had an affrmative obligation (Cougan precludes him from pursuing the claim on his own behalf. v. Weiss, supra). v. NY, supra). all of his legal or equitable interests , and "the obligation to disclose assets is not limited to those assets to which a debtor has a legal claim. Rather , a debtor must disclose all legal and equitable interests. . . " to the banptcy cour. (Id. [* 4] Plaintiff provides that he informed his banptcy attorney that he suffered a "jobsite accident" but his lawyer didn t ask him where he fied any claim or action as a result of the accident. Plaintiff also avers that he " did not believe that any claim (he) might have had against Silverite (defendant herein) was an item that need to be disclosed" . As already provided plaintiffs self- v. Marine Midland, proclaimed " innocent" failure to schedule the claim is " immaterial" (Dynamics Even the " (a)dvice of counsel is generally not a defense to the v. Keller, supra). supra; Vegas- Ruiz Cannon-Stokes 453 F3d at 449). v. Weiss, supra citing application of judicial estoppel" (Negron Cour that she and her husband did not disclose an asset under Cathy Negron thereto explained to the Judicial estoppel does not preclude a debtor s reliance on the advice of the advice of counsel. (Id.) counsel in omitting claims from a banptcy petition as the debtor was aware of facts giving rise to the claims. (In re Coastal Plains 179 F3d 197). Here , plaintiff was aware of the facts that gave rise to the instant claim. On the one hand , plaintiff avers that he didn t believe he had a claim against Silverite with respect to the jobsite accident. Yet , on the other hand , plaintiff avers that he " dismissed" his claim against the city with respect to the jobsite accident. These assertions , juxtaposed , not only reflect that he was aware of the facts that gave rise to the instant action and claim herein , but that his proclaimed innocence , or inadvertent omission to list the claim as an asset , is a bit disingenuous. Moreover , approximately within three months of emerging from banptcy, plaintiff filed the instant claim in Supreme Cour , Nassau County. This is the exact scenario the cours have intended to prevent by invoking the doctrine of judicial estoppel , and in holding that a debtor in these circumstances , lacks standing to pursue the claim. As already provided , without a rule precluding a debtor from pursuing a claim that he knew about , or should have known about at the time of his bairuptcy petition, a debtor will employ " less than diligent efforts to ascertain and disclose all potential claims , thus undermining its obligation to the estate and prejudicing the rights of the unsecured creditors (Dynamics v. Marine Midland, supra). In any event , plaintiff s assertion that he dismissed his claim against the city is unsubstantiated. Plaintiff s self-serving conclusory assertion is insufficient alone to raise an issue v. (Zuckerman City of New York 49 NY2d 557). offact. Plaintiff, in opposition , also requests that this Cour adjourn the instant motions until such time as the bankptcy cour can entertain and grant a motion to re-open plaintiff s banptcy case to administer the additional asset. Plaintiff, upon service of the instant motions , has moved before the banptcy cour to re-open the banptcy proceeding so that the trustee , thereto , may be later substituted for plaintiff in this action. That is because plaintiff sfailure to schedule the asset vested title in the trustee , leaving plaintiff without the capacity to sue , requiring the complaint to be Blue Cross of Northeastern NY. 210 AD2d 619 , citing Weiss v. Goldfeder Stitch v. Oakdale Dental Center 157 AD2d 1011). However substitution is not 201 AD2d 644; available to cure the deficiency as a pary with no capacity to sue canot be replaced with one who v. Bennet 38 AD3d v. Blue Cross, supra). In Gazes has capacity in these circumstances (Reynolds , who did not list the claim in the banptcy proceeding in the 287 , the Cour held that the debtor schedule of assets , lacked the capacity to commence the action and the " subsequent attempt to Gazes the banptcy trustee , as plaintiff, does not cure the defect" substitute dismissed. (Reynolds v. If debtors could omit personal injur actions or other lawsuits , and then simply move to reopen once caught , nondisclosure would be altogether too attractive. The public interest in the systemic integrity of the banptcy process dictates that a banptcy court should withhold relief Cafferty 398 B. R. 512; that encourages concealment of assets by debtors. (In re Marie M Lowery, v. Thompson 223 AD99 , 102). [* 5] .' The Cours have held that dismissal is appropriate under the circumstances at bar , cognizant that the trustee may commence a new action in a representative capacity on behalf of plaintiffs banptcy estate , and in doing so , wil receive the benefit of the 6-month extension pursuant to v. Mt. v. Ancona citing Carrick v. General Hospital 51 NY2d 242; George (Pinto CPLR ~205. 160 Misc2d 571). v. Littauer Hosp. Assn. Goldberg Sinai Hosp. 47 NY2d 170; CONCLUSION In light of the foregoing, it is hereby ORDERED that the defendant , and the third- pary defendants , are hereby granted leave to amend their answer and assert the defense of lack of capacity to sue, and it is hereby further ORDERED that the defendants ' motion and cross-motions are granted in their entirety, and therefore , plaintiffs complaint , and the third-par complaint , are hereby dismissed in their entirety. Dated: June 6 , 2012 cc: Sacks and Sacks LLP Goldberg, Segalls , LLP Lawrence , Worden , Rainis & Bard , P. ENTERED JUN NASS COUNTY 1 2 7.0'7. F'CE

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