A bankruptcy court judge has ruled that a St. James-based construction company’s lawsuit against the Town of Smithtown must remain in state court and cannot be included in federal court proceedings.
Judge Robert E. Grossman, a U.S. Bankruptcy Court judge in the Eastern District of New York, ordered on Aug. 2 that Jadeco Construction Corp.’s litigation be remanded back to state court, after the company filed a notice to remove its lawsuit seeking more than $770,000 and include it in the company’s Chapter 11 bankruptcy proceedings.
Joel Shafferman, Jadeco’s Manhattan-based bankruptcy attorney, said a contractual dispute over unpaid invoices for sidewalk, road and curb work with the town was key to the company’s Chapter 11 filing on April 6, court records show.
Jadeco’s claim against Smithtown, along with the company’s equipment and vehicles, “is the sole means of implementation to pay creditors,” Shafferman wrote. The company, once one of the town’s largest vendors, faces more than $1.4 million in unsecured claims to creditors, according to the filing.
Shafferman also argued that the bankruptcy court was capable of adjudicating the lawsuit more expeditiously, citing an affidavit from Janine Rayano, the attorney representing Jadeco in state court, who said “any litigation concerning a breach of contract in Suffolk County Supreme Court” is on average four to six years from start to finish. Rayano could not be reached for comment Tuesday.
But Kenneth Seidell, an attorney with Smithtown-based Devitt Spellman Barrett LLP, which is representing Smithtown, argued in court documents that “Ms. Rayano’s self-serving affidavit should not be considered by this court.” He also said that Jadeco’s removal of the state court action at a time when it was proceeding toward trial and the town’s summary judgment motion “was for the sole purpose of causing unnecessary delay and inconvenience” upon the town, records show.
Seidell could not be reached Tuesday for comment.
Grossman said that the breach of contract dispute under state law was not entirely related to the bankruptcy proceeding, and that the bankruptcy court’s docket is filled through early summer 2017.