Opinion
41274/04.
Decided October 5, 2007.
Defendants move for leave to amend their answer, pursuant to CPLR § 3025(b) to include the affirmative defense of lack of capacity to sue; for an order dismissing plaintiff's complaint pursuant to CPLR § 3211(a)(3) because she lacked capacity to sue; and for a stay of the trial pending the resolution of this motion.
Plaintiff commenced this personal injury action against defendants by filing the summons and complaint on December 21, 2004. On or about February 15, 2005, defendants interposed an answer and demand for verified bill of particulars. On October 3, 2005, plaintiff filed a voluntary petition for bankruptcy in the United States Bankruptcy Court, District of Delaware wherein she failed to list this lawsuit as an asset. On or about October 24, 2005, plaintiff served an amended supplemental summons and complaint and defendants interposed an answer thereto on or about November 21, 2006. Plaintiff never amended her bankruptcy petition to include this lawsuit as an asset. Defendants first learned on the eve of trial that plaintiff had filed for bankruptcy and had received a discharge. Consequently, defendants move to amend their answer and dismiss the complaint.
"Leave to amend or supplement pleadings should be freely granted unless the amendment sought is palpably improper or insufficient as a matter of law, or unless prejudice and surprise directly result from the delay in seeking the amendment." Maloney Carpentry, Inc. v. Budnik , 37 AD3d 558 (2nd Dept 2007). See CPLR § 3025(b); Ricca v. Valenti , 24 AD3d 647 , 648 (2nd Dept 2005); Fisher v. Braun, 227 AD2d 586 (2nd Dept 1996). "The decision to allow or disallow the amendment is committed to the court's discretion." Edenwald Contracting Co. Inc. v City of New York, 60 NY2d 957 (1983). See Mayers v. D'Agostino, 58 NY2d 696, 698 (1982); Pergament v. Roach , 41 AD3d 569, 572 (2nd Dept 2007).
In support of their motion, defendants submit a copy of plaintiff's bankruptcy petition. In her Statement of Financial Affairs, plaintiff is asked to "[l]ist all suits and administrative proceedings to which the debtor (plaintiff herein) is or was a party within one year immediately preceding the filing of this bankruptcy case." In response, plaintiff checked the box entitled "None," which was incorrect since plaintiff had commenced the within action on or about December 21, 2004. On February 6, 2006, an order was issued by United States Bankruptcy Judge Peter J. Walsh granting plaintiff a discharge pursuant to section 727 of title 11 of the United States Code (the Bankruptcy Code.) Defendants contend that their proposed amendment is neither palpably improper nor insufficient as a matter of law inasmuch as plaintiff filed for bankruptcy and failed to include the within action in her bankruptcy estate. Moreover, plaintiff's failure to include this action in her bankruptcy petition precludes her from claiming surprise or undue prejudice by the proposed amendment. Plaintiff does not dispute the fact that she filed for bankruptcy and neglected to list this personal injury lawsuit as an asset. In view of the foregoing, defendants' motion to amend their answer to include the affirmative defense of lack of capacity to sue is granted.
The Bankruptcy Code broadly defines the property of a debtor to include causes of action existing at the time of the commencement of the bankruptcy action. See 11 USC § 541(a)(1); Weitz v. Lewin, 251 AD2d 402 (2nd Dept 1998). "A debtor's failure to list a legal claim as an asset on his or her bankruptcy petition causes the claim to remain the property of the bankruptcy estate. . . ." Coogan v Ed's Bargain Buggy Corp., 279 AD2d 445 (2nd Dept 2001). Therefore, the bankruptcy debtor's title to the cause of action vests in the trustee in bankruptcy and "precludes a debtor from pursuing the claim on his or her own behalf (citations omitted)." Coogan v Ed's Bargain Buggy Corp., 279 AD2d at 445. See Weiss v. Goldfeder, 201 AD2d 644, 645 (2nd Dept 1994); Schepmoes v. Hilles, 122 AD2d 35, 36 (2nd Dept 1986); Basri v. Metropolitan Life Ins. Co., 306 AD2d 302 (2nd Dept 2003) (holding that the supreme court correctly concluded that plaintiff lacked the capacity to prosecute an action where he failed to properly schedule his claim against the defendant as an asset in his prior Chapter 11 bankruptcy proceeding); Bromley v. Fleet Bank, 240 AD2d 611 (2nd Dept 1997).
It is undisputed that plaintiff filed for bankruptcy and failed to list this action as an asset. The trustee in bankruptcy did not know of the existence of this action which accrued prior to the close of the bankruptcy proceedings and ultimately the discharge. Since the action was "neither abandoned nor administered in the case, nor the subject of a court order," the causes of action remained the property of the bankruptcy estate and plaintiff lost the capacity to sue on her own behalf. Schepmoes v. Hilles, 122 AD2d at 36, supra. See 11 USC § 554(d); Lapis Enterprises, Inc. v. International Blimpie Corp., 84 AD2d 286, 290 (2nd Dept 1981); Emergency Beacon Corp. v. Polish, 71 AD2d 995 (2nd Dept 1979). Therefore, plaintiff lacks standing to maintain the within action.
Consequently, defendants' motion to amend its answer to include the affirmative defense of lack of capacity to sue is granted; defendants' motion to dismiss the complaint pursuant to CPLR § 3211(a)(3) is likewise granted and plaintiff's complaint is hereby dismissed.
The foregoing shall constitute the Decision and Order of the Court.