The firm recently secured victory on behalf of a client seeking dismissal of a Bankruptcy Trustee’s Adversary Complaint seeking to recover amounts allegedly owed to the Debtor. The Complaint arose out of a September 18, 2018 “Agreement between Contractor and Subcontractor” (the “Contract”) entered by Debtor and Defendant. The Contract provides that Debtor was subcontracted by Defendant to perform certain services with respect to a refurbishment project for the New York Department of Sanitation at the West 59th Street Marine Transfer Station in Manhattan, New York (the “Project”). However, Debtor indisputably: (i) failed to complete its work; (ii) failed to pay its subcontractors, suppliers, and unions; and (iii) failed to provide necessary lien waivers, releases, and affidavits, all before abandoning the project. Now, years later, Plaintiff filed her Complaint seeking to recover amounts alleged to be due under the Contract notwithstanding Debtor’s manifest misconduct and breaches.
Partners Joshua S. Bauchner and Vicent Roldan asserted numerous bases for dismissal, ultimately convincing the Court to grant Defendant’s motion to dismiss. They argued: First, Plaintiff’s Section 542(a) claim fails a matter of law because there are no specific funds or other property subject to “turnover’ to the estate. As a matter of law, Section 542(a) cannot be asserted when the trustee merely asserts a claim to an alleged pre-petition debt, as here. Second, Plaintiff’s Section 502(d) disallowance claim requires a viable claim under Section 542(a); thus, if the Section 542(a) claim is dismissed, the Section 502(d) claim also fails. The claim additionally was subject to dismissal because it is premature in the absence of Plaintiff securing a judgment on her Section 502(d) claim and Defendant does not yet have a claim in this Bankruptcy which would be subject to disallowance. Third, once the Section 542(a) and 502(d) claims are dismissed, the only remaining claims are non-core claims. The claim additionally was subject to dismissal because it is premature
Upon consideration of these arguments, the Court dismissed the Complaint in its entirety enabling our client to free itself at the nascent stages of the proceeding.