Opinion
106822/02.
Decided May 20, 2004.
Defendants Thomas Constantino, M.D., Staten Island Cardiology Associates and Staten Island University Hospital (collectively "the Constantino defendants") move for an order: (1) pursuant to CPLR 3025(b) granting them leave to amend their answer to assert the affirmative defense that plaintiffs lack capacity to sue; and, (2) pursuant to CPLR 3211(a)(3) and the United States Bankruptcy Code granting dismissal of this action on the ground that plaintiffs lack the capacity to sue.
Defendants Joseph T. McGinn, Jr. as well as St. Vincent's Hospital and Medical Center of New York (collectively "the McGinn defendants") cross-move for the same relief.
Plaintiffs Lucia and Anthony Ciancimino cross-move for an order: (1) pursuant to CPLR 1000(a) and 3025(b) granting leave to serve a supplemental summons and amended complaint to substitute Trustee Kenneth A. Welt, as representative of plaintiffs' bankruptcy estate, as party plaintiff nunc pro tunc; (2) setting this matter down for a compliance conference on a date certain; and, (3) extending plaintiffs' time to file a note of issue.
Plaintiffs' cross-motion states that it is made pursuant to CPLR 1000(a). This must be an inadvertent error because no such provision exists. Plaintiffs probably intended to move pursuant to CPLR 1001(a) ("Necessary joinder of parties").
Background
Plaintiffs commenced this medical malpractice action on April 3, 2002 alleging that defendants caused Lucia Ciancimino to sustain personal injuries as a result of negligent cardiac management and surgery between December 4, 1999 to November 7, 2000. Both plaintiffs were deposed.
At her February 3, 2003 deposition Lucia Ciancimino testified that plaintiffs had filed a bankruptcy petition. On February 28, 2003, the Constantino defendants served a demand on plaintiffs seeking production of any and all records relating to the bankruptcy proceeding. See, Constantino defendants' moving papers ("Constantino Supp."), Ex. H. By letter dated April 1, 2003, plaintiffs rejected the demand as irrelevant and unduly burdensome. Id., Ex. I. Thereafter, defendants conducted an independent investigation to locate the court where the bankruptcy proceeding had been brought and to obtain a copy of the bankruptcy file. They ascertained that on April 3, 2001, plaintiffs had filed a petition in Florida under Chapter 7 of the Bankruptcy Code and that plaintiffs received a bankruptcy discharge on July 17, 2001. None of the above is disputed. Significantly, it is also undisputed that plaintiffs failed to disclose their malpractice claims against the Constantino and McGinn defendants as a contingent asset in the bankruptcy proceeding.
Shortly after plaintiffs' attorney in this medical malpractice action contacted him for the second time (the first contact was in April 2002 and the second was not until approximately August 2003), the bankruptcy trustee moved to reopen the Cianciminos' Chapter 7 case "in order to administer any monies received in the medical malpractice lawsuit * * * bearing Index Number 106822/02." Affirmation in Opposition, Exhibits, Affidavit of Kenneth A. Welt, at ¶ 5. The bankruptcy has been reopened and the trustee wishes the suit to continue. Id., at ¶¶ 6, 9.
On August 19, 2003, the Constantino defendants moved for an order granting leave to amend their answer to assert the affirmative defense of lack of capacity to sue (CPLR 3211[a][3]) and dismissing the complaint on that ground. The McGinn defendants cross-moved for the same relief. Defendants argue that their motion and cross-motion should be granted because plaintiffs lost their right to commence this action by failing to list their malpractice claims as a contingent asset in their bankruptcy proceeding.
In opposition, plaintiffs argue that: they did not intentionally conceal this action from the bankruptcy trustee; they were not "debtors-in-possession"; the bankruptcy trustee was aware of this action because defendant Staten Island University Hospital was initially listed as a creditor and plaintiffs' attorney initially advised him of this action in April 2002; "the Court of Appeals did not intend cases like the instant case to be dismissed;" and, an amendment of defendants' answers will prejudice plaintiffs and serve no purpose other than to delay the resolution of this action on the merits since the bankruptcy trustee will have to refile plaintiffs' lawsuit under CPLR 205(a) and be caused to incur additional expense.
Analysis
Plaintiffs have always lacked standing to commence this action because they failed to list their malpractice claims as a contingent asset in the bankruptcy proceeding. See, Constantino Supp., Ex. J; Dynamics Corp. of America v. Marine Midland Bank-New York, 69 N.Y.2d 191, 195-197 (1987); Cafferty v. Thompson, 223 A.D.2d 99, 100-101 (3d Dep't 1996), lv. denied 88 N.Y.2d 815 (1996); Goldstein v. St. John's Hosp., 267 A.D.2d 426 (2d Dep't 1999).
In Reynolds v. Blue Cross of Northeastern New York, Inc., 210 AD2d 619, 620 (3d Dep't 1994], the Appellate Division, under similar circumstances, explained that:
"The failure of plaintiffs to list the pending causes of action in the schedule of assets in the bankruptcy vested title in the trustee, leaving plaintiffs without capacity to sue and requiring the complaint to be dismissed. * * * Once the plaintiffs, as debtors, filed bankruptcy, the trustee stood in their shoes as legal representative of the estate and had the legal capacity to commence and prosecute these causes of action arising prior to the bankruptcy. * * * While the trustee in bankruptcy has capacity to sue in his or her own name * * *, substitution of the trustee is not now available to cure the deficiency as a party with no capacity to sue cannot be replaced with one who has capacity in these circumstances." Id. (citations omitted).
The Appellate Division has further concluded that failure to include malpractice causes of action that clearly accrued before termination of a bankruptcy proceeding in the estate (on the proper schedules) warrants dismissal of a medical malpractice action brought in the bankrupt plaintiffs names. Hansen v. Madani, 263 A.D.2d 881, 883 (3d Dep't 1999). The court explained that:
"Even after the bankruptcy case was reopened and the schedules amended, plaintiffs were still precluded from bringing the action because the claim was the property of the bankruptcy trustee * * *. In fact, even the substitution of the trustee as plaintiff would not cure the incapacity." Id. (citations omitted) (emphasis added).
Plaintiffs' arguments against dismissal are without merit. Plaintiffs' intentions with regard to disclosure of the claims are entirely irrelevant. See, Dynamics Corp. of America v. Marine Midland Bank-New York, supra, 69 NY2d, at 197 (innocent failure to schedule claims is immaterial). The fact that plaintiffs were not debtors-in-possession is also irrelevant because the same disclosure rules apply to Chapter 7 petitioners. See, DeLarco v. Dewitt, 136 A.D.2d 406, 408 (3d Dep't 1988); see also, Reynolds v. Blue Cross of Northeastern New York, Inc., supra, 210 A.D.2d, at 619. Listing defendant Staten Island University Hospital as a creditor in the bankruptcy proceeding, moreover, could not possibly sufficiently apprise the trustee of plaintiffs' malpractice claims herein. Plaintiffs' attorney admittedly did not advise the trustee of this action until "April 2002," which was long after plaintiffs' bankruptcy discharge.
Additionally, arguments about the intentions of the Court of Appeals are speculative. This Court must follow long-standing precedent and apply the rule adopted in cases such as Dynamics Corp. of America and Reynolds v. Blue Cross of Northeastern New York. Plaintiffs' claim of prejudice (in that the trustee will have to recommence this action anew) cannot take precedence over well-settled law, particularly since defendants timely motions stem from plaintiffs' own failure — even if it was an innocent failure — to advise the trustee of their malpractice claims during the course of their bankruptcy proceeding.
Finally, cases cited by plaintiffs are readily distinguishable. For example, Murray v. Board of Educ. of the City of New York, 248 B.R. 484 (S.D.N.Y. 2000), involved a Chapter 13 bankruptcy. The court stated that while "Chapter 7 and Chapter 11 debtors lose standing to maintain civil suits — which must be brought and/or maintained by their bankruptcy trustees — it is clear that Chapter 13 debtors like plaintiff are not subject to this restriction." This case, in contrast to Murray, pertains to a Chapter 7 debtor.
If the trustee would like to proceed with this action, and it appears that he would, he must attempt to recommence it pursuant to CPLR 205(a).
Accordingly, it is
ORDERED that the Constantino defendants' motion and the McGinn defendants' cross-motion for an order granting them leave to amend their answers to assert the affirmative defense of lack of capacity to sue and granting dismissal of the complaint on the ground that plaintiffs lack capacity to sue are granted; it is further
ORDERED that the proposed amended answers attached to defendants' moving papers shall be deemed served nunc pro tunc as of the date defendants' motion and cross-motion were served; it is further
ORDERED that plaintiffs' cross-motion is denied in its entirety; and it is further
ORDERED that the Clerk is respectfully directed to enter judgment accordingly.
This constitutes the decision and order of the court.