CALLEJA v. AI 229 WEST 42ND STREET PROPERTY OWNER LLC (2018)

Order, Supreme Court, Bronx County (Alison Y. Tuitt, J.), entered November 2, 2016, which, to the extent appealed from, denied third-party defendant Daffy's Inc.'s motion to dismiss the third-party complaint as against it, unanimously affirmed, with costs.

The court correctly determined that this third-party action against Daffy's Inc. is not barred by the “Stipulated Order” in Daffy's bankruptcy proceeding, in which third-party plaintiff AI 229 West 43rd Street Property Owner, LLC, waived and released any claims or causes of action relating to or arising under its lease with Daffy's, and the lease was “rejected and terminated.”  The motion papers make it clear that AI 229 West seeks to establish Daffy's liability in the underlying personal injury action for the sole purpose of recovering under Daffy's insurance policy in effect at the time of the accident.  Because the policy would not inure to Daffy's pecuniary benefit, it was not part of the bankruptcy estate, and thus it is not covered by the Stipulated Order (see In the Matter of Edgeworth, 993 F.2d 51, 55–56 [5th Cir. 1993] ).  Moreover, this Court has recognized 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” (Roman v. Hudson Tel. Assoc., 11 A.D.3d 346, 347, 784 N.Y.S.2d 31 [1st Dept. 2004], citing Lumbermens Mut. Cas. Co. v. Morse Shoe Co., 218 A.D.2d 624, 630 N.Y.S.2d 1003 [1st Dept. 1995] ).

To the extent Daffy's argues that there is no evidence in the record that it had insurance coverage at the time of the underlying accident and that the third-party complaint is not limited either to the insurance coverage or by any stated amount, these arguments do not compel the dismissal of the third-party complaint as against Daffy's at this stage.  AI 299 West, which admits unequivocally that Daffy's is not liable for any claim in its bankruptcy case or against its estate, will have to establish the facts to support its claim for insurance proceeds.  The bankruptcy court's retention of exclusive jurisdiction over issues arising from the bankruptcy does not affect AI 229 West's claim since, as indicated, the insurance proceeds are not included in the bankruptcy estate.