Musacchio v. The Hertz Corporation
2:20-cv-05705
E.D.N.YApr 4, 2025Background
- Plaintiff Stephen Musacchio brought suit in federal court against The Hertz Corporation seeking damages under New York Labor Law § 740.
- Prior to the lawsuit, Hertz had filed for Chapter 11 bankruptcy in the District of Delaware, triggering the automatic stay under 11 U.S.C. § 362.
- Musacchio filed his complaint after the automatic stay took effect, but was unaware of Hertz’s bankruptcy at the time.
- After learning of the bankruptcy, Hertz promptly notified the court and invoked the automatic stay.
- The court stayed the litigation pending resolution of the bankruptcy but later allowed motion practice when Hertz argued the complaint was void ab initio due to the automatic stay violation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether action filed after bankruptcy stay is void | Plaintiff unaware of bankruptcy, and Hertz delayed in raising stay | Complaint void ab initio under clear bankruptcy rules regardless of notice | Action is void ab initio and must be dismissed |
| Effect of lack of notice on validity of filing | Lack of actual notice should excuse violation | Automatic stay applies regardless of actual notice | Lack of notice is immaterial |
| Alleged bad faith/stealthy silence by defendant | Hertz’s silence should estop them from seeking dismissal | Defendant disclosed bankruptcy early, no bad faith or strategic delay | No stealthy silence or gamesmanship by defendant |
| Proper forum for relief from stay | Sought relief/stay here based on equities | Only bankruptcy court can grant relief or annul the stay | Relief from stay must be sought in bankruptcy court |
Key Cases Cited
- Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522 (2d Cir. 1994) (actions commenced after bankruptcy filing in violation of automatic stay are void ab initio)
- Ostano Commerzanstalt v. Telewide Sys., Inc., 790 F.2d 206 (2d Cir. 1986) (relief from automatic stay must be sought in bankruptcy court)
- Matter of Arbitration Between Barbier & Shearson Lehman Hutton Inc., 943 F.2d 249 (2d Cir. 1991) (only bankruptcy court may grant relief from automatic stay)