Lightning Capital Holdings LLC v. Erie Painting & Maint., Inc.

• Decision Date: 06 April 2017
• Citation: 149 A.D.3d 1229,51 N.Y.S.3d 680
• Court: New York Supreme Court — Appellate Division
• Parties: LIGHTNING CAPITAL HOLDINGS LLC, Respondent, v. ERIE PAINTING AND MAINTENANCE, INC., et al., Appellants.

149 A.D.3d 1229
51 N.Y.S.3d 680

LIGHTNING CAPITAL HOLDINGS LLC, Respondent,
v.
ERIE PAINTING AND MAINTENANCE, INC., et al., Appellants.

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

April 6, 2017.

51 N.Y.S.3d 681

Magavern Magavern Grimm, LLP, Buffalo (Edward J. Markarian of counsel), for appellants.

Harris Beach, PLLC, Albany (Victoria A. Graffeo of counsel), for respondent.

Before: McCARTHY, J.P., GARRY, ROSE, MULVEY and AARONS, JJ.

AARONS, J.

Appeal from an order of the Supreme Court (J. Sise, J.), entered September 14, 2015 in Montgomery County, which denied defendants' motion for summary judgment dismissing the amended complaint.

In 2009, defendant Erie Painting and Maintenance, Inc. contracted with the New York State Thruway Authority to perform rehabilitation work on a dam. In connection with this project, All Seasons Contracting, Inc. purportedly supplied and rented equipment and materials to Erie. In June 2010, All Seasons filed a petition for chapter 11 bankruptcy. During the pendency of the bankruptcy proceeding, plaintiff purchased All Seasons' assets and acquired its interest in its business contracts. On September 6, 2011, an order was entered dismissing All Seasons' bankruptcy petition.

In October 2012, plaintiff commenced this action alleging that, from April 1, 2010 to September 1, 2011, All Seasons submitted invoices to Erie totaling $428,908.80 with respect to equipment and materials rented from All Seasons to Erie and that Erie failed to pay such invoices. The amended complaint also asserted derivative claims against defendant Western Surety Company, which, in 2009, had issued a payment bond on behalf of Erie for the purpose of protecting all labor and material suppliers. Following joinder of issue, defendants moved for summary judgment dismissing the amended complaint. Supreme Court denied the motion, prompting this appeal by defendants.

"Upon the filing of a voluntary bankruptcy petition, all property which a debtor owns, including a cause of action, vests in the bankruptcy estate" (Central Natl. Bank, Canajoharie v. Scotty's Auto Sales, Inc., 138 A.D.3d 1263, 1264, 29 N.Y.S.3d 677 [2016] [internal quotation marks, brackets, ellipsis and citation omitted], lv. dismissed 28 N.Y.3d 1044, 43 N.Y.S.3d 242, 65 N.E.3d 1277 [2016] ). As such, a debtor's failure to list a legal claim as an asset in its bankruptcy proceeding precludes the debtor from pursuing such claim on its own behalf inasmuch as the

51 N.Y.S.3d 682

claim remains the property of the bankruptcy estate (see Mehlenbacher v. Swartout, 289 A.D.2d 651, 652, 734 N.Y.S.2d 290 [2001] ; George Strokes Elec. & Plumbing v. Dye, 240 A.D.2d 919, 920, 659 N.Y.S.2d 129 [1997] ; see generally Whelan v. Longo, 7 N.Y.3d 821, 822, 822 N.Y.S.2d 751, 855 N.E.2d 1165 [2006] ). "The only...