Opinion
30174/2017E
05-15-2020
Griselda FERNANDEZ, Plaintiff, v. NEW YORK CITY HOUSING AUTHORITY, Dimitri Enterprises Inc., and STV Construction, Inc., and NA Villus Tile, Inc. d/b/a Navillus Contracting, Defendants. New York City Housing Authority, Third-Party Plaintiff, NA Villus Tile Inc. d/b/a NA Villus Contracting, Third-Party Defendant.
Plaintiff is represented by Glenn H. Shore, Esq.,, 100 William St, Rm 1901, New York, NY 10038. Defendant/Third-Party Plaintiff New York City Housing Authority is represented by Janine Silver, Esq., Newman Myers Kreines Gross Harris, P.C., 40 Wall St Fl 26, New York, NY 10005. Defendant Dimitri Enterprises Inc is represented by Steven D Zecca, Esq., Ahmuty, Demers & Mcmanus, Esqs., 199 Water Street 16th Floor, New York, NY 10038. Defendant STV Construction, Inc is represented by Kevin G Faley, Esq., Morris Duffy Alonso & Faley, 2 Rector Street, New York, NY 10006. Defendant/ Third-Party Defendant Na Villus Tile, Inc. d/b/a Navillus Contracting is represented by Esq., Patrick William Kenny, Esq., Barry McTiernan & Moore, LLC, 2 Rector St Fl 14, New York, NY 10006.
Plaintiff is represented by Glenn H. Shore, Esq.,, 100 William St, Rm 1901, New York, NY 10038.
Defendant/Third-Party Plaintiff New York City Housing Authority is represented by Janine Silver, Esq., Newman Myers Kreines Gross Harris, P.C., 40 Wall St Fl 26, New York, NY 10005.
Defendant Dimitri Enterprises Inc is represented by Steven D Zecca, Esq., Ahmuty, Demers & Mcmanus, Esqs., 199 Water Street 16th Floor, New York, NY 10038.
Defendant STV Construction, Inc is represented by Kevin G Faley, Esq., Morris Duffy Alonso & Faley, 2 Rector Street, New York, NY 10006.
Defendant/ Third-Party Defendant Na Villus Tile, Inc. d/b/a Navillus Contracting is represented by Esq., Patrick William Kenny, Esq., Barry McTiernan & Moore, LLC, 2 Rector St Fl 14, New York, NY 10006.
Llinét M. Rosado, J.
This personal injury action arises out of an alleged incident that occurred on January 16, 2017, at approximately 1:00 a.m., in apartment 14A at the premises located at 660 Arnow Avenue, Bronx, NY The premises are owned by defendant third/party plaintiff, New York City Housing Authority ("NYCHA").
The Third-Party defendant, Navillus Tile, Inc. d/b/a Navillus Contracting ("Navillus"), moves for an Order granting its motion to dismiss and dismissing the plaintiff's complaint, the third-party plaintiff's complaint, and all cross-claims against Navillus, with prejudice, pursuant to CPLP Rule 3211(a)(5) on the ground that they are barred (hereinafter the "motion 002").
NYCHA moves for an Order striking Navillus' Fourteenth Affirmative Defense and denying Navillus' motion to dismiss. NYCHA moves this Court to direct that the instant litigation, including discovery, proceed as to the primary and the Third-Party action, pursuant to CPLP Rule 3122 (b) (hereinafter the "motion 003").
These motions are consolidated for the purposes of this decision.
The Third-Party defendant ultimately argues four points in support of its motion: (1) there is a federally created bar date, which was set by the United States Bankruptcy Court, for Navillus' bankruptcy proceeding, and a proper notice was given to NYCHA and the other parties, and/or the Bankruptcy Court did not require Navillus to notify NYCHA's attorney regarding the bar date; (2) no party in this proceeding filed a proof of claim as required under the Bankruptcy Code; (3) under 11 U.S.C. section 1141 (a) and (d), paragraphs 18-21 of the Confirmation Order, and Article XII of the Plan, claims that arose prior to or while Navillus was in bankruptcy and would be released, discharged, and issued an injunction; and (4) that there is no case law or applicable statute to oppose the affirmative defense pursuant to CPLR 3211(a)(5).
The Third-Party plaintiff, on the other hand, alleges that there was no proper notice of the bar date, proof of claim notice, proof of claim form, or any other communication of documents regarding Navillus' bankruptcy. NYCHA argues that Navillus did not establish, by proof in admissible form, that a proper and adequate proof of claim notice and proof of claim form were served on the Third-Party plaintiff. Additionally, the Third-Party plaintiff argues that it may pursue indemnification and assumption of defense and reimbursement by Navillus and its insurer pursuant to the subject contract with Navillus. Therefore, the Third-Party plaintiff contends that the requirement to provide notice, sufficient to provide due process, was not satisfied, and thus, the argument that the claim against Navillus is discharged due to its bankruptcy is inapplicable.
BACKGROUND
On February 23, 2017, the plaintiff served a notice of claim on NYCHA alleging that she had sustained personal injuries on January 16, 2017 as a result of leaking conditions caused by a defective roof of her building and the ceiling of her apartment. The plaintiff commenced a lawsuit against NYCHA on October 26, 2017.
Navillus filed Chapter 11 bankruptcy on November 8, 2017. Hon. Sean H Lane of the United States Bankruptcy Court, Southern District of New York, issued an Order granting Debtor's (Navillus) Seventh Omnibus Objection Seeking to Disallow and Expunge Claims ("Disallow and Expunge Claims"). Subsequently, on October 11, 2018, Hon. Sean H Lane issued an Order Confirming Consensual Amended Chapter 11 Plan of Reorganization of Navillus Tile, Inc. D/B/A Navillus Contracting under Chapter 11 of the Bankruptcy Code. As a result, on December 27, 2018, Navillus' bankruptcy proceedings concluded with a final decree issued by Hon. Sean H. Lane.
Meanwhile, the Third-Party plaintiff's investigation shows that NYCHA and Navillus had entered into a contract for the exterior restoration, roof replacement, and related work at the premises at issue on August 31, 2015. Pursuant to the contract, Navillus was obligated to defend and indemnify the Third-Party plaintiff and obtain a commercial general liability policy and additional liability policies for all claims and lawsuits arising out of the work performed by Navillus and its subcontractors.
On March 29, 2017, based upon the contract, a demand for assumption of defense and indemnification as to the aforementioned claim was served on Starr Indemnity & Liability Company ("Starr"), one of the insurers who is a carrier of the commercial general liability for Navillus, by regular and certified mail. Also, the Third-Party plaintiff served a copy of the demand for assumption of indemnification in reference to the claim of the plaintiff made to National Union Fire Insurance Company of Pittsburgh P.A. ("National Union") as the excess/umbrella liability carrier for Navillus. The Third-Party plaintiff alleges that the letters to Starr and National Union were also mailed to Navillus. Furthermore, the Third-Party plaintiff served receipt of acknowledgement of the claim on York Risk Services Group ("York"), the third-party administrator for Starr, by certified mail, on April 18, 2017 and May 16, 2017.
The Third-Party plaintiff filed a Third-Party complaint against the Third-Party defendant on March 14, 2019, and the plaintiff amended the complaint and added Navillus as a defendant.
DISCUSSION
Proper Notice
First, Navillus argues that the Bankruptcy Court did not require that NYCHA's attorney in this case be notified of the bar date. Second, Navillus claims that the notice of the bar date was provided to NYCHA, and that, in fact, Navillus served the proper notice on NYCHA at both 90 Church Street and 250 Broadway as indicated in the sworn Affidavit of Service of Ira Nikelsberg ("Exhibit BB").
On the other hand, the Third-Party plaintiff argues that, through the acknowledgement of the claim by York ("Exhibit E and Exhibit F"), Navillus and Starr had full knowledge of this case, and that Newman Myers Kreines Harris, P.C. ("counsel") represented NYCHA for this case prior to Navillus' Chapter 11 filing for bankruptcy. However, neither Navillus nor Starr notified NYCHA's counsel that Navillus was filing for bankruptcy.
The Court found that, through Exhibit E and Exhibit F, the Third-Party plaintiff provided proper notice to Navillus and Starr. However, Navillus and Starr did not advise, communicate, and/or notify NYCHA's attorney. Therefore, Navillus and/or Starr failed to give proper and adequate notice of the filing for bankruptcy by Navillus to NYCHA.
Proof of Claim
Navillus argues that no party in this action filed a "proof of claim" against Navillus as required under the United States Bankruptcy Code. Navillus contends that the proof of claim was to be served within 30 days of the date of the affidavit of service of the notice.
On January 9, 2018, the co-defendants, Dimitri and STV, and NYCHA were served with the notice regarding the proof of claim, and on May 10, 2018, the plaintiff was served with the notice regarding the proof of claim. May 7, 2018 was the latest date by which any of the parties herein could have served a Proof of Claim as a creditor of Navillus. None of the parties served the proof of claim or raised any objections regarding Navillus' bankruptcy proceeding. Therefore, Navillus argues that all claims in this case by any party against Navillus must be dismissed with prejudice.
The Third-Party plaintiff argues that the proof of claim form and the deadline notification were not served on NYCHA's attorney nor was counsel notified. In addition, the Third-Party plaintiff argues that Navillus has failed to establish that the proof of claim notice, proof of claim form, and deadline, which were allegedly mailed to NYCHA, were directed to a specific person or department, or division, or title or designation of NYCHA's employee. A copy of the specific proof of claim notice, proof of claim form and deadline, and any other documents or correspondence included in such mailing specific to NYCHA were not included. Therefore, this Court cannot ascertain whether the aforementioned documents referred to the claim and the plaintiff's lawsuit against NYCHA. Furthermore, a copy of any such mailing was not forwarded to counsel despite the fact that Navillus should have been aware of the legal representation as to the claim and lawsuit.
The Court finds that, through Exhibit BB, the Proof of Claim Form and the Bar Date Notice were served to the parties listed on the Exhibit BB. However, Exhibit BB only provides a generalized form of the Proof of Claim and the Bar Date Notice that was allegedly served upon all creditors listed on the Exhibit BB. In addition, Navillus failed to establish that Navillus served the Proof of Claim and the Bar Date Notice to a specific officer or person or department or division of NYCHA. Therefore, the Court finds that Navillus has failed to provide the proof of service of the claim notice, the proof of claim form and/or the deadline to file the claim form to NYCHA's attorney. As such, NYCHA was not provided due process, and Navillus has not demonstrated entitlement to dismissal.
Affirmative Defense
Pursuant to CPLR 3122(b), the Third-Party plaintiff seeks an order striking Navillus' Fourteenth Affirmative Defense that the third-party action is barred because Navillus was discharged in bankruptcy. Third-Party plaintiff argues that the case should not be dismissed and that the instant litigation, including discovery, should proceed as to the primary and third-party action. The Third-Party plaintiff contends that since the insurance policies were not part of the bankruptcy estate, the insurance policies were not covered by the Final Decree. Therefore, the Third-Party action for defense, contractual and common-law indemnification, contribution, and breach of contract was not barred against Navillus and Navillus' insurer.
In addition, the Third-Party plaintiff argues that the Third-Party action is not barred because the Third-Party plaintiff seeks to establish Navillus' liability in the underlying personal injury action so as to proceed directly against Navillus' insurer for the indemnification, the assumption of defense, and the reimbursement by the insurer under Navillus' insurance policies which were in effect on the date of the accident.
The Court has held that a claim asserted for the sole purpose of establishing the liability of a party's insurer is not barred by that party's discharge in bankruptcy. Calleja v. Al 229 W. 42nd St. Prop. Owner LLC , 157 AD3d 558, 69 N.Y.S.3d 626 (1st Dept. 2018) ; see Roman v. Hudson Tel. Assoc. , 11 AD3d 346, 784 N.Y.S.2d 484 (1st Dept. 2004) ; Lumbermans Mut. Cas. Co. v. Morse Shoe Co. , 218 AD2d 624, 630 N.Y.S.2d 1003 (1st Dept. 1995).
Insurance Law Section 3420 law permits the pursuit of an action solely for the purpose of obtaining a judgement or settlement so as to be able to proceed directly against a liability insurer. NY Ins. Law § 3420 (McKinney, Westlaw currently through L.2019, chapter 758 & L.2020, chapters 1 to 25, 59); see Pomerantz v. In-Stride, Inc. , 39 AD3d 522, 835 N.Y.S.2d 589 (2nd Dept. 2007). Furthermore, such an action is permissible even after a discharge in bankruptcy. Pomerantz , 39 AD3d at 524.
Here, the Third-Party plaintiff seeks to strike Navillus' Affirmative Defense that the Third-Party action is barred because Navillus was discharged from the action due to its bankruptcy. The sole purpose of the Third-Party action is to obtain a judgement or settlement so that NYCHA is able to proceed directly against Starr under Navillus' insurance policies. Based on the aforementioned case law and the applicable sections of the Insurance Law, the Court strikes Navillus' affirmative defense of discharge in bankruptcy.
Accordingly, it is hereby
ORDERED, that the Third-Party defendant's motion is denied (002); and it is further
ORDERED, that the Third-Party plaintiff's motion is granted (003); and it is further
ORDERED, that the parties shall appear for a pretrial conference on June 29, 2020, in Room 705, or by Skype Business, if the Court has not resumed in-person activity due to the pandemic.
This constitutes the decision and order of the court.