513 B.R. 25
Bankr. E.D.N.Y.2014Background
- Debtor 231 Fourth Avenue Lyceum, LLC owns Brooklyn property encumbered by P.B. #7 LLC’s mortgage; P.B. obtained a foreclosure judgment prepetition and holds a secured claim of ≈ $6.6M.
- Debtor filed Chapter 11 on the eve of sale; operating reports showed no income and Debtor was designated a single-asset real estate (SARE) debtor under § 362(d)(3).
- Court ordered Debtor either to propose a confirmable plan within a reasonable time or begin monthly adequate-protection payments; Debtor filed amended plans/disclosure statements but produced no evidence plan was feasible.
- On March 3, 2014 the court granted P.B.’s motion to lift the automatic stay under § 362(d)(3), finding no reasonable possibility of confirmation and rejecting collateral attacks on the Foreclosure Judgment.
- Debtor moved to reargue (filed 15 days after entry); court treated the filing as untimely under Rule 59(e)/Bankr. R. 9023 and evaluated it under Rule 60(b), but found no basis for relief and denied the motion.
Issues
| Issue | Plaintiff's Argument (Debtor) | Defendant's Argument (P.B.) | Held |
|---|---|---|---|
| Timeliness / procedural basis for reargument | Motion timely or should relate back; extra days apply under rules | Motion filed 15 days after entry; untimely under Bankr. R. 9023 and Rule 59(e); must be treated under Rule 60(b) | Motion untimely under Rule 59(e)/9023; evaluated under Rule 60(b) and denied (no applicable ground) |
| Ability to collaterally attack Foreclosure Judgment (jurisdiction / delay under CPLR 3215(c)) | State court lacked jurisdiction because plaintiff delayed more than one year and failed to show cause for delay | Rooker–Feldman and res judicata bar collateral attack; state court presumed to have had jurisdiction | Debtor barred from collateral attack by Rooker–Feldman and res judicata; alleged CPLR error does not show lack of jurisdiction |
| Effect / validity of Union St. Tower decision re: air rights and adjacent lot | The cited state-appellate decision is a nullity because the plaintiff later amended complaint; thus air-rights equity might exist | The state decision remains in force; amendment postjudgment under state CPLR does not nullify the appellate judgment; disputed rights not in Plan | Even if decision were flawed, disputed air-rights/lot not addressed in Plan and would not make Plan feasible; court did not err in relying on state decision |
| New post-petition state-court “counterclaims of equity” allegedly decided | There is a post-petition state-court decision awarding Debtor equity interests in substantial assets, which affects feasibility | Debtor failed to identify the action, the decision, or include it in the Plan/record | Argument inadequately supported and irrelevant to the record; court properly relied on existing record when lifting stay |
Key Cases Cited
- Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (Rooker–Feldman bars federal review of state-court judgments)
- Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77 (2d Cir.) (framework for applying Rooker–Feldman)
- McKithen v. Brown, 626 F.3d 143 (2d Cir.) (federal courts lack jurisdiction when Rooker–Feldman elements are met)
- Rexnord Holdings v. Bidermann, 21 F.3d 522 (2d Cir.) (judicial proceedings conclude when judge directs entry of judgment)
- Kelleran v. Andrijevic, 825 F.2d 692 (2d Cir.) (res judicata applies to default judgments)
- Williams v. Citigroup Inc., 659 F.3d 208 (2d Cir.) (procedural rule on amending complaints post-judgment; must vacate judgment first)