Acolyte Elec. Corp. v. City of New York
| Decision Date | 09 December 1986 |
| Docket Number | Misc. No. 86-0329. |
| Citation | 69 BR 155 |
| Parties | ACOLYTE ELECTRIC CORPORATION, Plaintiff, v. The CITY OF NEW YORK, et al, Defendants. |
| Court | U.S. Bankruptcy Court — Eastern District of New York |
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Pinks, Brooks Stern & Arbeit, Steven G. Pinks, Hauppauge, N.Y., for debtor.
McGoey & Martirano, New Rochelle, N.Y., special counsel to debtor.
Frederick A.O. Schwarz, Jr., Corp. Counsel, City of New York, Fred B. Ringel, Asst. Corp. Counsel, New York City, for defendants.
This report responds to two orders issued by the Honorable Jack B. Weinstein which deal with the motion of the defendants a) pursuant to 28 U.S.C. § 157(d) to withdraw the reference and, in effect, remove this adversary proceeding to the district court; and b) for abstention pursuant to 28 U.S.C. § 1334.
The first such order, dated August 8, 1986, refers to the undersigned for a determination of the following:
The second order, dated August 11, 1986, refers to the undersigned for recommendation of the following:
(a) Is the bankruptcy court constitutionally and statutorily empowered to conduct a jury trial in this proceeding in accordance with the City's demand therefore made on July 28, 1986?
Appendix 1 contains a copy of each of these orders.
Plaintiff/Debtor, Acolyte Electric Corporation ("Acolyte"), a New York corporation, maintains its principal place of business in Long Island City. During the period encompassed by the plaintiff's complaint, the defendants, Ameruso and Lipke, served as Commissioners of the New York City's Departments of Transportation and General Services, respectively.
On February 14, 1986, Acolyte commenced an action in the Supreme Court of New York County against the defendants herein for money damages for breach of contract.
On April 18, 1986, Acolyte filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code, and was thereafter continued in the management and control of its business and properties as a debtor-in-possession pursuant to 11 U.S.C. § 1107.
On June 9, 1986, the debtor-in-possession filed this adversary proceeding with the Clerk of the Bankruptcy Court of the Eastern District of New York. A summons, pretrial notice and complaint were then duly served on the defendants. Copy of the complaint is included as Appendix 2.*
The plaintiff alleges that on or around June 13, 1983 it contracted with the defendants to furnish labor, materials, tools and any equipment needed for the maintenance of illuminated traffic signals in the boroughs of The Bronx and Queens. Acolyte claims that although it performed all of the services required under this contract in a competent and workmanlike manner and fully complied with all of its provisions, the defendants "willfully, wrongfully, arbitrarily and capriciously" breached the contract and refused to fully compensate the plaintiff for the services rendered pursuant to the contract. Acolyte alleges numerous fruitless demands for its monies, and compliance with all statutory prerequisites to a suit against the municipality.
In its second cause of action, Acolyte contends that the defendants made certain unilateral changes in the contract requiring Acolyte to perform services not originally agreed upon. Acolyte claims that although it did indeed perform this additional work, it has not been duly compensated.
In its third cause of action, the plaintiff alleges a provision in the contract subjecting it to liability under a liquidated damage clause in the event of a failure to report to a specified job site upon notification that illuminated traffic control devices were in need of maintenance or repair. Acolyte contends that its entering into this contract was conditioned upon the following: (1) that the defendants would make available the materials needed to repair or replace the traffic control devices; (2) that such materials, as well as other important equipment, would be kept in good working condition by defendants; (3) that the telephone lines and computers be maintained in good working condition; (4) that the City's Inspector, and other official agencies, would properly report that illuminated traffic control devices, controllers, detectors, sensors, or their supports, have been damaged or defective or out of time; (5) that plaintiff would be notified of such problems at the time the call was received; (6) that temporary repairs by Acolyte would stop the time in which liquidated damages would be assessed; and that (7) defendants, as well as other City contractors, would properly perform work under their contracts and not interfere with plaintiff's performance of its contractual obligations.
Acolyte alleges that when it received notifications that traffic control devices had problems and needed repair, the defendant failed to provide it with the materials necessary to make such repairs for a lengthy period of time. In addition, it is alleged that the equipment which was made available to Acolyte was not in good working condition, and that any calls made to Acolyte were not properly recorded, screened or investigated. As a result of the foregoing, Acolyte contends that it was "wrongfully hindered, delayed and interfered with" in the performance of its work under the contract as a result of the defendants' failure to perform their contractual obligations.
Acolyte's fourth to eleventh causes of action are similar to the first three in claiming damages sustained from the defendants' alleged breach of contract and interference with its ability to timely perform under the contract. In its twelfth cause of action, the plaintiff claims that on September 24, 1985 it entered into a contract with the defendants in which it agreed to furnish and install labor and materials necessary and required in maintaining the street lighting system for the illumination of roads, parks and public places in the borough of Brooklyn. It is further alleged that although the plaintiff fully performed the duties required under the contract, the defendants wrongfully deducted $4,062.50 from the amount due plaintiff pursuant to a liquidated damages clause.
The defendants rebut Acolyte's complaint by asserting numerous affirmative defenses which state in substance that since Acolyte failed to comply with various provisions of the contract governing the procedure by which it was to notify the defendants of the claims set forth in the complaint, this action cannot be maintained. In addition, the defendants also contend that the complaint fails to state grounds upon which relief can be granted, and that this court lacks subject matter jurisdiction over the action.
On July 21, 1986, the defendants made a motion in the United States District Court of the Eastern District before the Honorable Jack Weinstein seeking an Order withdrawing the reference of this matter to the Bankruptcy Court of the Eastern District pursuant to 28 U.S.C. § 157(d) and for an Order requesting that the District Court enter its Order of Abstention pursuant to 28 U.S.C. § 1334(c). The defendants also requested an Order staying the proceedings before the Bankruptcy Court until a determination of this District Court motion could be made.
On July 28, 1986, the defendants filed a demand for a jury trial in this matter.
Judge Weinstein granted plaintiff's motion to the extent that the issues present were referred to this court as set forth above.
The Bankruptcy Reform Act of 1978 conferred bankruptcy jurisdiction in 28 U.S.C. § 1471 as follows:
The 1978 Act set forth the creation and composition of the bankruptcy court in 28 U.S.C. § 151 which stated:
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In re GF Corp., Bankruptcy No. 490-00621
...bankruptcy estate. Marathon, 458 U.S. at 71, 102 S.Ct. at 2871. In United Sec., Judge Cole, quoting from Acolyte Elec. Corp. v. City of New York, 69 B.R. 155, 175 (Bankr.E.D.N.Y. 1986), summarized this point as follows: If the reasoning of the cases which broadly construe "core proceeding" ......