Opinion
02-06-2017
Seymon DAVIDKIN, Plaintiff, v. Michael RIZZUTO and Chief Energy Corp., Defendants.
Gregory A. Nahas, Esq., Law Office of Yuriy Prakhin, P.C., Brooklyn, for Plaintiff. David W. Fink, Esq., Lewis Johs Avallone Aviles, LLP, Islandia, for Defendants.
Gregory A. Nahas, Esq., Law Office of Yuriy Prakhin, P.C., Brooklyn, for Plaintiff.
David W. Fink, Esq., Lewis Johs Avallone Aviles, LLP, Islandia, for Defendants.
EDGAR G. WALKER, J.
Defendants' motion seeking leave to amend their answer to assert the affirmative defense that the plaintiff lacks the legal capacity to sue pursuant to CPLR 3025(b), deeming the answer served, and dismissing the plaintiff's individual cause of action pursuant to CPLR 3211(a)(3) is denied in its entirety.
On December 10, 2013 the plaintiff filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court, Eastern District of New York. This case arises out of a motor vehicle accident that occurred on February 22, 2014. The plaintiff commenced this action on March 10, 2014. The plaintiff never listed his personal injury claim against the defendants as an asset on his Schedule B form, which is required to be filed with the voluntary petition. On March 13, 2014, the plaintiff was granted a discharge by the United States Bankruptcy Court pursuant to 11 U.S.C. § 727.
In support of their motion the defendants argue that the complaint should be dismissed as the plaintiff lacks the legal capacity to bring this suit due to his failure to list it on his schedules at any point during the pendency of the bankruptcy despite his knowledge of the cause of action prior to the bankruptcy discharge.
In opposition to the defendants' motion, the plaintiff argues that the defendants' motion must fail because the motor vehicle accident at issue occurred "after the commencement of the bankruptcy, and is therefore, by definition, not part of the bankruptcy estate."
In reply to the plaintiff's opposition to their motion, the defendants contend that the plaintiff "incorrectly interprets the law regarding the filing of the bankruptcy petitions, ignoring the fact that if and when a claim accrues during the pendency of the bankruptcy, plaintiff's failure to include it in his petition will later deprive plaintiff of the legal capacity to sue on those omitted claims."
The defendants cite to several decisions of the Appellate Division which appear to support their position. However, in certain unique areas of law which either according to the Constitution or Federal legislation require a uniform body of national law, state courts are bound to follow federal law. Alvez v. American Export Lines, 46 N.Y.2d 634, 415 N.Y.S.2d 979, 389 N.E.2d 461 (1979). Bankruptcy law is one such area. Lane v. Marshall, 89 A.D.2d 579, 452 N.Y.S.2d 238 (2d Dept.1982).
The Bankruptcy Act provides that the bankruptcy estate is comprised of property of the debtor "as of the commencement of the case." 11 U.S.C. § 541(a)(1). This court is "bound to apply the statute as interpreted by Supreme Court decision or, absent such, in accordance with the rule established by lower Federal courts if they are in agreement." Flanagan v. Prudential–Bache Sec., 67 N.Y.2d 500, 506, 504 N.Y.S.2d 82, 495 N.E.2d 345 (1986). See also Alvez, supra. Only in the absence of such Federal precedent are state courts free to interpret the statute without reference to the decision of any lower federal courts. Flanagan, supra.
The question of whether, under the current Bankruptcy Act, a cause of action which accrues after commencement of a bankruptcy case but prior to discharge has not been addressed by the United States Supreme Court. When the state cases cited by the defendants were decided there had been a split among the Federal District Courts which had addressed the issue. However, there is now uniformity among the Federal Courts of Appeals which have interpreted the Federal statute that such a cause of action belongs to the debtor and not the estate. Cadle v. Schlichtmann, 267 F.3d 14 (1st Cir.2001) ; In re Jackson, 593 F.3d 171 (2d Cir.2010) ; In re Majestic Star Casino, LLC, 716 F.3d 736 (3d Cir.2013) ; Avis v. Gold, 178 F.3d 718 (4th Cir.1999) ; In re Burgess, 438 F.3d 493 (5th Cir.2006) ; In re Shelbyville Road Shoppes, LLC, 775 F.3d 789 (6th Cir.2015) ; In re Stinnett, 465 F.3d 309 (7th Cir.2006) ; In re Vote, 276 F.3d 1024 (8th Cir.2002) ; In re Mwangi, 764 F.3d 1168 (9th Cir.2014) ; Casey v. Hochman, 963 F.2d 1347 (10th Cir.1992) ; In re Witko, 374 F.3d 1040 (11th Cir.2004). Therefore, this Court is no longer bound by the earlier decisions of the Appellate Division to the contrary. Pursuant to the Federal rule a cause of action accruing after the filing of the bankruptcy petition is the property of the debtor. As such, the plaintiff has the capacity to sue and the defendants' motion is denied in its entirety.
But see Everett v. Judson 228 U.S. 474, 33 S.Ct. 568, 57 L.Ed. 927 (1913), which held that pursuant to a similar provision in a prior Bankruptcy Act, the trustee has vested title to property "as it was at the time of the filing of the petition." 33 S.Ct. at 569.