Insite Corp. v. Walsh Constr. Co. P.R. (In Re Insite Corp.)

LIPEZ, Circuit Judge.

*141 The appellant in this case is a bankrupt subcontractor, Insite, which claims that a general contractor, Walsh, improperly withheld payments belonging to its bankruptcy estate. Insite sought to recover the payments by initiating an adversary proceeding against Walsh in bankruptcy court in Puerto Rico. The bankruptcy court found that the withheld payments were not property of Insite's estate, the district court affirmed, and Insite now appeals to us.

Applying the Supreme Court's decision in Pearlman v. Reliance Insurance Co. , 371 U.S. 132 , 141-42, 83 S.Ct. 232 , 9 L.Ed.2d…