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CITIBANK, N.A. v. MCGUIRL

June 8, 1995

CITIBANK, N.A., Plaintiff, against JAMES F. McGUIRL, ET AL., Defendants.


The opinion of the court was delivered by: DEBORAH A. BATTS

 DEBORAH A. BATTS, United States District Judge.

 Plaintiff, Citibank, N.A., filed this action in New York state court to foreclose a mortgage on a condominium apartment unit in New York City. Defendants James F. and Marlene C. McGuirl, two of five defendants, removed the action to this Court and seek summary judgment. Plaintiff, on the other hand, seeks rejection of the motion for summary judgement as improper, and, either remand to the state court, or a determination of Citibank's unopposed motion to dismiss two notices of appeal filed by the McGuirls in state court. For the reasons set forth below, defendant's motion for summary judgment is stricken, and the case is remanded to the New York Supreme Court, Appellate Division, First Department, from which it was removed.

 BACKGROUND

 In 1987, James F. and Marlene C. McGuirl signed a mortgage loan note (the Note) payable to Citibank in the amount of $ 360,000, plus interest as provided therein; as collateral security for the Note, a mortgage of the property at 900 Park Avenue, Unit 3B, New York, New York (the premises), was executed concomitantly by the McGuirls in favor of Citibank. The McGuirls defaulted on the Note in 1989, and certain of the McGuirls' creditors placed them in involuntary bankruptcy in March of 1990, pursuant to Chapter 7 of the Bankruptcy Code, in the United States Bankruptcy Court for the District of Columbia.

 On August 27, 1990, the bankruptcy judge overseeing the action approved a Consent Order signed by the bankruptcy trustee, counsel for the McGuirls, and Citibank; the Consent Order provided the trustee ninety days to attempt to sell the premises, and further provided that should an appropriate contract of sale not be accomplished in the time allotted, the bankruptcy stay would be lifted to allow Citibank to foreclose on the premises.

 No sale was consummated within the contemplated ninety day period, and, over a year later, in October 1991, Citibank filed this action in the Supreme Court of New York County to foreclose on the premises. The McGuirls were duly served at that time, failed to appear, and, in fact, defaulted in 1991.

 A judgement of foreclosure and sale was entered on July 22, 1993 by the New York state court, followed by a sale at public auction on August 23, 1993, at which sale the highest bidder was the plaintiff Citibank, with a bid of $ 225,000. Citibank took title to the property on November 12, 1993.

 In December, 1993, Citibank moved to confirm the referee's report of the foreclosure sale as required under state law, at which time the McGuirls chose to oppose Citibank's motion. Over the McGuirls' opposition, Justice Carol H. Arber of the New York County Supreme Court confirmed the referee's report of sale on March 17, 1994, and the McGuirls subsequently moved for reargument. The motion for reargument was denied by Order dated June 30, 1994, but was followed by a second motion for reargument, which was sub judice when this action was removed. In August 1994, the McGuirls filed notices of appeal from the Orders of the Supreme Court dated March 17, 1994 and June 30, 1994.

 Finally, in November, 1994, the McGuirls filed a removal petition with this Court, followed by a motion for summary judgment in February, 1995. On March 16, 1995, the Honorable Lewis A. Kaplan *fn1" ordered defendants to show cause why the motion for summary judgment should not be dismissed and the action either remanded to state court or Citibank's motions to dismiss the appeals that were pending before the state appellate court granted.

 DISCUSSION

 I. Subject Matter Jurisdiction

 The McGuirls' objection to the underlying proceedings appear quite singular: they argue that because they were subject to bankruptcy protection both at the time of commencement of this action and currently, the bankruptcy trustee was the proper party defendant with respect to foreclosure of the premises. The McGuirls support this claim by arguing that only by abandoning the premises to the debtors could the debtors become the proper defendants. Likewise, they argue that the premises were never "abandoned" by the trustee to the debtors. *fn2"

 On the basis of this objection and the abandonment argument posited, the McGuirls argue for federal question jurisdiction in this Court, and allege that the New York state court made errors with respect to the federal bankruptcy law of abandonment. A brief review of New York law demonstrates that the result of the underlying action (a simple foreclosure) is unaffected by the answer to the McGuirls' bankruptcy argument; hence, the federal question suggested by the McGuirls is not at issue in this ...


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