153 Misc. 2d 695 | N.Y. City Civ. Ct. | 1991
OPINION OF THE COURT
By order to show cause Daryl Ann Dress, also known as
The threshold question is whether this court is stayed by the Bankruptcy Act or is jurisdictionally empowered to decide an application for restoration to possession by a respondent in bankruptcy whose lease was terminated before the bankruptcy filing.
Bankruptcy Act § 362 provides in relevant part:
"(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title * * * operates as a stay, applicable to all entities, of—
"(1) The commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title * * * or to recover a claim against the debtor that arose before the commencement of the case under this title * * *
"(2) The enforcement, against the debtor or against the property of the estate, of a judgment obtained before the commencement of the case under this title”.
Section 362 (b) (10) excludes from the stay "any act by a lessor to the debtor under a lease of nonresidential real property that has terminated by the expiration of the stated term of the lease before the commencement of or during a case under this title to obtain possession of such property”.
Property of the estate is defined in section 541 of the Bankruptcy Act. Excluded from the property of the estate is any interest of the debtor as a lessee under a lease of nonresidential real property that has terminated at the expiration of the stated term of such lease before the commencement of the bankruptcy case. (11 USC § 541 [b] [2].)
Whether this court has jurisdiction over this matter depends therefore on whether DADS had any interest in a lease of nonresidential property at the time the bankruptcy was filed. Resolution of this question will determine whether respondent’s application is subject to the automatic stay imposed by section 362 (a) or exempt from the stay under section
At the very outset, it must be acknowledged that a court of law has, at the very least, the jurisdictional power and the competence to determine if it has subject matter jurisdiction over a case brought before it. It is therefore for this court to examine the facts and analyze the applicable law to determine whether respondent’s motion may be adjudicated in the Civil Court or whether section 362 (a) of the Bankruptcy Act stays the hand of this forum.
The facts are as follows. In April 1991 petitioner commenced a commercial nonpayment summary proceeding to recover from the net lessee, 142 West Realty Corp. (142 West), the sum of $141,150 representing three months’ rental arrears. The action was settled pursuant to stipulation dated April 5, 1991 according to which terms final judgment was entered and a warrant of eviction issued forthwith and stayed on condition 142 West comply with the terms of the stipulation. On June 12, 1991 the court granted petitioner’s order to show cause to amend the petition to add respondent undertenants, Henry Bergmann & Company, Inc. (Bergmann) and DADS. On August 8, 1991 petitioner and 142 West and the undertenants entered into a new stipulation which made certain changes to the original stipulation of April 5, 1991. Pursuant to the second stipulation, the parties agreed that in the event the net lessee 142 West failed to make payments in accordance with the first stipulation, the landlord had the right to immediately execute upon the warrant and evict 142 West, Bergmann and DADS. Upon 142 West’s failure to comply with the payment provisions, petitioner on September 25, 1991 caused the Marshall to serve a 72-hour notice of eviction upon the parties concerned and scheduled the eviction for November 1, 1991. The eviction was delayed in response to respondent’s promise to make payment. The promise was not fulfilled. Respondents then moved by order to show cause to stay the eviction. On the return date, November 8, 1991, the Honorable Judge Jane Solomon denied respondents’ application, stayed execution of the warrant through November 14, 1991 and declared that no further 72-hour notice would be required. On November 13, 1991 respondents once again brought on an order to show cause to stay the
On November 22, 1991 DADS moved by order to show cause for an order restoring it to possession, claiming the eviction had been illegal because an involuntary bankruptcy petition had been filed against it on November 20, 1991, the day before the eviction, and because petitioner had failed to serve upon it a 72-hour notice. It is this motion which is now before me.
The issuance of a warrant of eviction cancels the lease agreement and annuls the landlord-tenant relationship. The rule of law is embodied in RPAPL 749 (3). (See also, Iltit Assocs. v Sterner, 63 AD2d 600 [1st Dept 1978].) The same section also empowers the court to "vacate such warrant for good cause shown prior to the execution thereof.” Even after the warrant has been executed, the dispossessed party may move the court for an order of restoration to the premises upon such terms as may be just provided it is proven that the eviction was wrongful. (CPLR 5015; North E. Bronx Hillside Corp. v Smith, NYLJ, Sept. 4, 1991, at 23, col 2 [Civ Ct, Bronx County].)
Respondent’s assertion that petitioner failed to serve a 72-hour notice of eviction is totally without merit. Both Judge Solomon and Judge Fisher-Brandveen specified in their respective orders that no further 72-hour notice was required before the eviction by the Marshall. Nonetheless, petitioner did serve such notice as evinced by a copy thereof submitted with its opposition papers.
Thus, respondent’s claim that the eviction was illegal rests solely on the claim that petitioner was stayed from proceeding with the dispossession because DADS was in bankruptcy as of the day before the eviction.
It is not disputed that " 'A discharge in bankruptcy does not constitute a payment, or extinguishment, or a cancellation of the debt. Despite the discharge, a landlord can still avail itself of its statutory remedy to recover possession of premises for non-payment of rent.’ ” (840 W. End Assocs. v World Wide Destinations Unlimited, NYLJ, Apr. 5, 1991, at 27, col 3 [App Term, 1st Dept]; see also, In re Hepburn, 27 Bankr 135 [ED
However, this conclusion has been superseded by In re Lady Liberty Tavern Corp. (94 Bankr 812 [SD NY]) which was decided in 1988. The case was commenced in an eviction proceeding in Civil Court, New York County, where the landlord, on default, was awarded a final judgment of possession and issued a warrant based on a lease violation. The Marshall served a 72-hour notice of eviction on Lady Liberty on December 19, 1986 and Lady Liberty filed its chapter 11 petition on December 22. The automatic stay of the State court eviction came into effect upon that filing. In Bankruptcy Court the landlord argued that the stay was either inapplicable or should be vacated with respect to the State court eviction
The only distinction to be made between the Lady Liberty case (supra) and the present proceeding, other than that it was based on a default judgment in the Civil Court, is that Lady Liberty filed for voluntary bankruptcy, whereas here the bankruptcy filing was involuntary. This distinction, however, does not operate to alter the fact that DADS had no leasehold interest in the premises in question at the time of the filing of the bankruptcy petition. There is nothing whatever in the Lady Liberty discussion to indicate that such a distinction would have led to another result. The decision is solidly bottomed on the fact that the debtor’s lease had been terminated before the bankruptcy filing and consequently that there was no leasehold interest in the debtor’s estate to revive or to protect. Moreover, the Civil Court’s judgment had to be given preclusive effect. Hence, the automatic stay of Bankruptcy Act § 362 (a) was not operative.
Section 362 (b) exempts from the automatic stay any act by a lessor under a lease of nonresidential real property that has "terminated by the expiration of the stated term of the lease before the commencement” of a bankruptcy action. A fair but
Here a final judgment of possession and a warrant of eviction against respondent were issued by the Civil Court. Issuance of the warrant canceled the lease agreement (RPAPL 749 [3]), thereby terminating DADS’ leasehold interest in the nonresidential real property. As these events occurred before the bankruptcy filing, DADS no longer held an interest in the property when the bankruptcy action was commenced. Accordingly, under section 362 (b) of the Bankruptcy Act and the holding of Lady Liberty (supra), petitioner was exempt from the automatic stay and could exercise its statutory right to recover possession of its property by executing on the warrant. It follows, obviously, that petitioner was not required to move in Bankruptcy Court to vacate a stay that did not apply. Thus respondent’s claim that the eviction was illegal because the eviction was stayed and petitioner therefore should have moved to vacate the stay in Bankruptcy Court before executing on the warrant is groundless. It must also follow that if the eviction is exempt from the stay, then the Civil Court may exercise jurisdictional power to determine an application challenging the propriety of the eviction which was executed pursuant to a warrant issued by it and entitled to preclusive effect.
For the reasons stated above, respondent’s motion to be restored to possession is denied.