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Darnley v. Ameriquest Mortgage Co.

January 8, 2010

CURBY DARNLEY, PLAINTIFF,
v.
AMERIQUEST MORTGAGE CO., DEFENDANT.



The opinion of the court was delivered by: Dora L. Irizarry, United States District Judge

MEMORANDUM & ORDER

Pro se debtor-appellant Curby Darnley appeals from an order of the United States Bankruptcy Court for the Eastern District of New York entered on July 6, 2006, denying his motion to reopen a chapter 13 case to vacate a judgment of foreclosure and reinstate the matter on the calendar. For the reasons set forth below, the bankruptcy court's July 6, 2006 decision is affirmed.

I. Background*fn1

Appellant resided in a two family home at 228 Lexington Avenue, Brooklyn, New York (the "property") since prior to 1998. On or about October 22, 1999, after appellant defaulted on his mortgage payments, Chemical Bank began foreclosure proceedings on the property in the Supreme Court of the State of New York, Kings County ("state court"). On August 8, 2000, the state court issued a judgment of foreclosure and sale on the property, which was entered on August 23, 2000. Appellant's motion to vacate the judgment of foreclosure was denied by the state court on December 14, 2001.

On June 4, 2002, appellant sought an Order to Show Cause in state court to postpone the foreclosure and sale of the property. The court issued an order precluding the foreclosure referee from transferring the deed and directed the referee to inform all bidders that the transference of the deed was stayed.

The referee sold the house at a public auction on the following day, on June 5, 2002, to Sultan Development, Inc., Mr. Victor Sultan, Mr. Jamil M. Alabac, and Muhammed Ali. The property was then assigned to Ms. Gloria Harris on July 28, 2002. The closing, delivery of the deed to Ms. Harris, and signing of the referee's report of sale took place on August 14, 2002. The deed ultimately was transferred in November 2002 to the owner of record, at the time, Sal Gelardi, who purchased the property from Ms. Harris on August 27, 2002. Mr. Gelardi defaulted on his mortgage, and appellee Ameriquest Mortgage Company, Chemical Bank's successor in interest, sought foreclosure on the property.

Appellant filed for bankruptcy seven times over a five year period, including most relevantly on July 16, 2002. Each of those bankruptcies was dismissed. The filing dates, dismissals and the relevant period of the automatic stays are listed below.

Case NumberFiling DateDismissal OrderAutomatic Stay 98-118282/13/984/27/982/13/98-4/27/98 98-2621011/17/981/22/9911/17/98-1/22/99 99-127033/2/994/15/993/2/99-4/15/99 99-127033/2/994/15/993/2/99-4/15/99 00-2133510/24/003/6/0110/24/00-3/6/01 01-157284/30/017/9/014/30/01-7/9/01 02-189347/16/0210/11/027/16/02-10/11/02 03-101511/7/033/10/031/7/03-3/10/03

On April 17, 2006, appellant moved in bankruptcy court to restore this matter to the trial calendar and vacate the judgment of foreclosure that resulted in the June 5, 2002 auction sale.

After his motion was denied on July 6, 2006, appellant filed the instant appeal on August 10, 2006.

Appellant asserts on appeal that any transfer of the property is null and void because the June 5, 2002 foreclosure sale violated the automatic stay provisions of the federal bankruptcy code. In the alternative, appellant contends that the June 5, 2002 foreclosure sale contravened the New York Supreme Court stay ordered on June 4, 2002. Appellee opposes on grounds that there was no federal bankruptcy stay in effect at the time of the foreclosure sale, and that the state court proceedings are not relevant to this court.

II. Discussion

The court holds a pro se petitioner's submissions to "less stringent standards than formal pleadings drafted by lawyers." Haines v. Kerner, 404 U.S. 519, 520 (1972). As such, the court will interpret appellant's petition to raise the strongest arguments that it suggests. Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir. 2006) (emphasis omitted).

The court finds that the June 5, 2002 foreclosure sale did not violate the automatic stay provisions of the bankruptcy code. "When a debtor's legal and equitable interests in property are terminated prior to the filing of the petition with the Bankruptcy Court that was intended to preserve the debtor's interest in such property, the Bankruptcy Court cannot then cultivate rights where none can grow." In re Island Helicopters, Inc., 211 B.R. 453, 464 (E.D.N.Y. 1997) (quoting In re Butchman, 4 B.R. 379, 381 (S.D.N.Y. 1980)). Indeed, "[i]t is settled law in New York that a valid judgment and sale in a mortgage foreclosure action entitle the purchaser at the sale to receive a deed to the premises upon compliance with the terms of the sale and that the mortgagor has no right to redeem the premises after the sale but before the ...


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