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Pescrillo v. HSBC Bank USA, National Association

United States District Court, W.D. New York

January 30, 2015

RALPH T. PESCRILLO, Appellant,
v.
HSBC BANK USA, NATIONAL ASSOCIATION, Appellee.

DECISION AND ORDER

WILLIAM M. SKRETNY, Chief District Judge.

I. INTRODUCTION

Ralph T. Pescrillo appeals from the bankruptcy court's (Kaplan, J.) Order granting HSBC Bank USA, National Association's ("HSBC") request for relief from the bankruptcy stay provisions pursuant to 11 U.S.C. ยง 362(d)(1) as it relates to HSBC's interest in real property known as 7328 Buffalo Avenue, 118 74th Street, and 3803 Packard Road ("the properties"), all situated in Niagara Falls, N.Y.[1] For the reasons that follow, the bankruptcy court's decision is affirmed.[2]

II. BACKGROUND

The underlying facts are not in dispute. In June 2007, Gift's-Villa LLC, a New York limited liability company, executed a $464, 000 note and mortgage on the properties in favor of HSBC. Under the terms of the note, Gift's-Villa was to pay the principal sum of $464, 000 in 84 monthly installments between August 1, 2007, and July 1, 2014, with the remaining balance due thereafter.

Beginning in 2010, Gift's-Villa failed to meet its monthly payment obligations. This resulted in HSBC obtaining a judgment of foreclosure and sale for the properties and Gift's-Villa filing a Chapter 11 bankruptcy petition to, at least in part, avoid the foreclosure sale. The bankruptcy court dismissed Gift's-Villa's petition on March 14, 2013, for failure to prosecute.

Several months later, in May 2013, one of the owners of Gift's-Villa, Wendy Gift, transferred her ownership interest to an investment group consisting of U Wash, Inc. and R.T.P. Property Management, LLC.[3] Gift's-Villa, under this new ownership group, continued to own the properties.

In the meantime, HSBC, with Gift's-Villa's bankruptcy petition having been dismissed, scheduled a second foreclosure sale for May 22, 2013. But on the eve of the sale, Gift's-Villa filed a second Chapter 11 bankruptcy petition, which again stayed the foreclosure sale. Several more months later, in December 2013, Pescrillo purchased U Wash, Inc.'s ownership share of Gift's-Villa. After an unsuccessful attempt to settle the matter through a stipulated order, the bankruptcy court dismissed Gift's-Villa's second petition on July 3, 2014, again for failure to prosecute.

Two more events occurred in early July 2014: first, the balloon payment on the mortgage became due on July 1, 2014; second, Gift's-Villa conveyed the properties to Pescrillo by way of quitclaim deed on July 3, 2014. Thereafter, on September 30, 2014, Pescrillo filed a Chapter 11 bankruptcy petition to restructure various real property tax arrears on his various real estate holdings, a filing that again occurred on the eve of HSBC's scheduled foreclosure sale. HSBC then sought an order from the bankruptcy court terminating the automatic stay provisions as it related to the properties. The bankruptcy court granted HSBC's request on December 10, 2014, over Pescrillo's opposition, finding that HSBC was entitled to relief from the stay due to a lack of contractual privity between HSBC and Pescrillo. HSBC promptly scheduled a fourth foreclosure sale for February 3, 2014.

This timely appeal followed.

III. DISCUSSION

A. Standard of Review

A district court reviews a bankruptcy court's findings of fact for clear error and its legal conclusions de novo. See In Re Lehman Brothers Holdings, Inc., No. 14-CV-8680 (VEC), 2015 WL 247403, at *2 (S.D.N.Y. Jan. 20, 2015)(citing cases). But the decision whether to grant relief from an automatic stay is one committed to the bankruptcy court's discretion and is therefore reviewed under an abuse-of-discretion standard. See In re Bousa, No. 05 Civ. 230(PKL), 2005 WL 1412961, at *3 (S.D.N.Y. June 15, 2005); In re Adelphia Commc'n Corp., 298 B.R. 49, 52 (S.D.N.Y. 2003) (quoting In re Mazzeo, 167 F.3d 139, 142 (2d Cir. 1999)). A bankruptcy court abuses its discretion when it commits a clear error of judgment or bases its decision on an erroneous view of the law or ...


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