Cent. Nat'l Bank v. Scotty's Auto Sales, Inc.

• Decision Date: 14 April 2016
• Docket Number: 520627.
• Citation: 138 A.D.3d 1263,2016 N.Y. Slip Op. 02876,29 N.Y.S.3d 677
• Parties: CENTRAL NATIONAL BANK, Canajoharie, Respondent, v. SCOTTY'S AUTO SALES, INC., Defendant, and Elaine Amidon, Appellant.
• Court: New York Supreme Court — Appellate Division

138 A.D.3d 1263

29 N.Y.S.3d 677

2016 N.Y. Slip Op. 02876

CENTRAL NATIONAL BANK, Canajoharie, Respondent,

v. SCOTTY'S AUTO SALES, INC., Defendant,andElaine Amidon, Appellant.

520627.

Supreme Court, Appellate Division, Third Department, New York.

April 14, 2016.

Elaine Amidon, Rome, appellant pro se.

Wood & Seward, LLP, Gloversville (Jeremiah Wood of counsel), for respondent.

Before: PETERS, P.J., GARRY, ROSE, DEVINE and CLARK, JJ.

PETERS

, P.J.

Appeal from an order of the Supreme Court (Catena, J.), entered June 10, 2014 in Montgomery County, which denied defendant Elaine Amidon's motion for a new trial.

In January 1993, plaintiff commenced this action against defendants for breach of contract and money owed on a note and security agreement executed by defendant Scotty's Auto Sales, Inc. and personally guaranteed by its president, defendant Elaine Amidon. Defendants answered, asserting numerous counterclaims against plaintiff as well as cross claims against an officer of Scotty's Auto Sales (see CPLR 3019[d]

). A bench trial was held in August 1998 but, before a decision was rendered, Amidon filed a petition for chapter 7 bankruptcy and the action was stayed. Although Amidon was issued a discharge in bankruptcy in August 1999, the action remained dormant for more than a decade. During that time, the Supreme Court Justice assigned to the case retired and all of his files and records, including those pertaining to the instant action, were apparently destroyed. In November 2011, Supreme Court (Sise, J.) concluded that a decision could not be rendered in the instant action due to the unavailability of the trial records and, as a result, the court declared a mistrial and ordered that the parties could move for a new trial in the interest of justice pursuant to CPLR 4402

. Amidon's subsequent motion for such relief was denied by Supreme Court (Catena, J.) on the ground that Amidon's failure to schedule the instant counterclaims and/or cross claims in her bankruptcy proceeding deprived her of legal capacity to pursue them in this action. Amidon appeals.

It is fundamental that, “[u]pon the filing of a voluntary bankruptcy petition, all property which a debtor owns ..., including a cause of action, vests in the bankruptcy estate” (De Larco v. DeWitt, 136 A.D.2d 406, 408, 527 N.Y.S.2d 615 [1988]

; see 11 U.S.C § 541 [a][1]; Thruway Invs. v. O'Connell & Aronowitz, 3 A.D.3d 674, 677, 772 N.Y.S.2d 716 [2004] ; Hansen v. Madani, 263 A.D.2d 881, 882, 693 N.Y.S.2d 332 [1999] ). Such a cause of action “can only revert to the debtor to be pursued in his or her individual capacity if the claim is ‘dealt with’ in the bankruptcy, which necessitates it being listed as an asset [in the schedule of assets] and either abandoned by the bankruptcy trustee or administered by the bankruptcy court for the benefit of the creditors” (Mehlenbacher v. Swartout, 289 A.D.2d 651, 652, 734 N.Y.S.2d 290 [2001] ; see

Dynamics Corp. of Am. v. Marine Midland Bank–N.Y., 69 N.Y.2d 191, 195–196, 513 N.Y.S.2d 91, 505 N.E.2d 601 [1987] ). Accordingly, “a debtor's failure to list a legal claim as an asset in his or her bankruptcy proceeding causes the claim to remain the property of the bankruptcy estate and precludes the debtor from pursuing the claim on his or her own behalf” (George Strokes Elec. & Plumbing v. Dye, 240 A.D.2d 919, 920, 659 N.Y.S.2d 129 [1997] ; see

Webber v. Scarano–Osika, 94 A.D.3d 1304, 1305, 943 N.Y.S.2d 240 [2012] ; Culver v. Parsons, 7 A.D.3d 931, 933, 777 N.Y.S.2d 536 [2004] ).

Here, it is undisputed that Amidon failed to list her counterclaims and cross claims in the schedule of assets filed in the bankruptcy proceeding, and there is no evidence that the schedule was ever amended to reflect those claims. Although Amidon proffered evidence indicating that the bankruptcy trustee was aware of the existence of such claims, it is settled that “ ‘actual knowledge by a trustee of a claim is not a substitute for proper scheduling’ ” (Rudin v. Hospital for Joint Diseases, 34 A.D.3d 376, 376, 826 N.Y.S.2d 21 [2006]

, quoting Burton v. 215 E.

77th Assoc.,

284 A.D.2d 122, 122, 725 N.Y.S.2d 337 [2001] ; see

Bromley v. Fleet Bank, 240 A.D.2d 611, 612, 659 N.Y.S.2d 83 [1997] ; Donaldson, Lufkin...