ORTIZ v. NEW YORK MEDICAL GROUP (2008)

Order, Supreme Court, New York County (Alice Schlesinger, J.), entered October 11, 2007, which denied third-party defendant Kapit's motion to dismiss the third-party complaint on the ground that third-party plaintiff New York Medical Group (NYMG) lacks capacity to sue, having been previously liquidated in bankruptcy, unanimously affirmed, without costs.

 A liquidation proceeding is closed only when a final decree is entered (Seinfeld v. Allen, 169 Fed.Appx. 47, 49 [2d Cir.2006] ).   NYMG knew of the claim against it by plaintiffs before the bankruptcy was closed, and cannot assert that it could not have included as an asset in the bankruptcy estate the claim it possessed against third-party defendant Kapit (see Dynamics Corp. of Am. v. Marine Midland Bank-N.Y., 69 N.Y.2d 191, 196-197, 513 N.Y.S.2d 91, 505 N.E.2d 601 [1987];  Barranco v. Cabrini Med. Ctr., 50 A.D.3d 281, 855 N.Y.S.2d 431 [2008] ).   If a claim owned by a bankrupt is of value, his creditors are entitled to it, and he cannot, by withholding knowledge of its existence from the trustee, obtain a release from his debts and still assert title to-and collect upon-the claim for his own benefit (see First Natl. Bank v. Lasater, 196 U.S. 115, 25 S.Ct. 206, 49 L.Ed. 408 [1905] ).   However, this third-party claim against Dr. Kapit sounds in indemnification, and any recovery against NYMG, an empty shell without assets, must necessarily be paid by insurance, if at all;  the indemnification claim thus could not have benefitted the bankruptcy estate of NYMG because it was not an asset of that estate (see 11 U.S.C. § 541[b][1] ).   Unlike in Dynamics Corp. and Barranco, this claim against third-party defendant does not belong to the estate.   NYMG was not “discharged” (11 U.S.C. § 1141[d][3] ), but remains a liquidated company.   Accordingly, its status is akin to a dissolved corporation winding up its affairs, and as such it has the capacity to bring the third-party claim in its individual capacity (see Tedesco v. A.P. Green Indus., Inc., 8 N.Y.3d 243, 832 N.Y.S.2d 141, 864 N.E.2d 65 [2007] ).