CLAIM AGAINST THE BANKRUPT’S INSURER IS NOT BARRED BY THE INSURED’S DISCHARGE IN BANKRUPTCY (FIRST DEPT).

The First Department determined that a claim against the bankrupt’s (Daffy’s) insurer is not barred by the insured’s (Daffy’s) discharge in bankruptcy:

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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 [property owner] , 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 [the property owner] 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 … . 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” … . Calleja v AI 229 W. 42nd St. Prop. Owner, LLC, 2018 NY Slip Op 00338, First Dept 1-18-18

INSURANCE LAW (CLAIM AGAINST THE BANKRUPT’S INSURER IS NOT BARRED BY THE INSURED’S DISCHARGE IN BANKRUPTCY (FIRST DEPT))/BANKRUPTCY (INSURANCE LAW, CLAIM AGAINST THE BANKRUPT’S INSURER IS NOT BARRED BY THE INSURED’S DISCHARGE IN BANKRUPTCY (FIRST DEPT))