District Court of Nassau County, First District, November 19, 2019

Jeffrey W. Toback, P.C., Long Beach, for petitioner.

Lawrence Law Group, Queens Village, for respondents.

Petitioner commenced this commercial holdover proceeding against respondents 126 Henry Street Inc., doing business as Village Auto Clinic, 126 Henry Street LLC, doing business as Village Auto Clinic, Clarence Murray, Clarence Murray, Jr., and XYZ Corp.

Petitioner acquired title to 126 Henry Street, Hempstead, New York (section 34, block 400, lots 127-130, 623-624) by the tax deed executed by Beaumont A. Jefferson as Nassau County Treasurer on November 19, 2018.

The petition, dated December 19, 2018, states that a 10-day notice to quit was served upon the respondents on December 8, 2018. Respondents are alleged to be in possession without permission.

This court, during the pendency of this case, ordered respondents to pay use and occupancy to the petitioner in the amount of $5,000 on or before April 1, 2019. Petitioner moved by order to show cause to hold respondents in contempt of court for their alleged failure to pay the $5,000. On July 3, 2019, respondents opposed the motion for contempt and cross-moved for dismissal and the following relief:

"1) Determine, pursuant to Nassau County Administrative Code (NCAC) §§ 5-57.1[d], 5-50.0[a] [2], 5-51[.0], 5-40.0, 5-50.0[b], the amount to be paid in satisfaction to the Petitioner or such other persons or parties that the Court shall determine to set aside the Deed of the County Treasurer and to satisfy the lien upon which such deed was based;

"2) Compel Petitioner, the County Treasurer, and any other necessary party as the Court shall determine to accept such payment from the Respondents as the full complete satisfaction as determined in accordance with the requirements of NCAC § 5-57.1[d] to set aside the Deed of the County Treasurer and to satisfy the lien upon which such deed was based;

"3) Dismiss Petitioner's action, pursuant to NCAC § 5-57.1[d], as if no deed had been issued, upon payment of said amount of satisfaction within the time determined by the Court; or in the alternative;

"4) Dismiss Petitioner's action, pursuant to CPLR § 3211 (a) (7), for failure to state a claim upon which relief can be granted as Petitioner failed, pursuant{**65 Misc 3d at 1073} to NCAC § 5-57.1[d], to specially plead in its petition that Petitioner extends the right to the Respondent(s) 'to set aside the deed of the County Treasurer and to satisfy the tax lien on which such deed was based by making a satisfaction pursuant to the terms of section 5-50.0 of the code as if no deed had been issued.'; or in the alternative

"5) Dismiss Petitioner's action, pursuant to CPLR § 3211 (a) (10), for failure to name a necessary and indispensable party; or

"6) Grant such other relief as the Court shall determine."

Petitioner submitted opposition papers to the said cross motion, dated October 31, 2019. Then, respondents submitted their reply affirmation, dated November 11, 2019. For the first time, in the reply affirmation, respondents aver that this proceeding should be dismissed because the prior owner of the premises, Betty Cater, had filed for bankruptcy protection under chapter 13 (11 USC):

"4. Recently, the Respondents have learned that Betty Cater, the actual owner of the property, which is the subject of the Petitioner's petition, filed for Bankruptcy Protection under Chapter 13 of the United States Bankruptcy Code on November 9, 2018 (In re: Betty Cater, United States Bankruptcy Court, Eastern District of New York [Central Islip], Case No. 8-18-77593-ast) (see Exhibit 'A').

"5. As such, pursuant to 11 USC § 362 (a) on November 9, 2019 [sic], an automatic stay was triggered.

"6. On November 19, 2018, the Nassau County Treasurer issued a tax deed to the Petitioner in violation of the automatic stay (see JP Morgan Chase, N.A. v Hagemeyer, 47 Misc 3d 705, 708 [Suffolk County Supreme Court, 2015]).

"7. Since the issuance of the tax deed violates an automatic stay, the Petitioner's tax is void.

"8. Furthermore, while the Bankruptcy action was pending, on December 19, 2018, the Petitioner commenced this action. This action also violates the automatic stay. However, even if it did not, this action is founded upon a void deed."

Respondents have also submitted the live database report from the U.S. Bankruptcy Court for the Eastern District of {**65 Misc 3d at 1074}New York, of bankruptcy petition No. 8-18-77593, for the debtor Betty Cater. This report demonstrates that on November 9, 2018, Betty Cater filed a chapter 13 voluntary petition for individuals. The report states that on January 16, 2019, a "Notice of Proposed Dismissal for debtors failure to pay the balance due on filing fees in the Amount of: $270.00. (mnc) (Entered: 01/16/2019)" was issued. The document further states that on January 18, 2019, an "Order Dismissing Case with Notice of Dismissal (RE: related documents(s) 20 Chapter 13 Trustee's Motion to Dismiss Case). Signed on 1/18/2019 (ymm) (Entered: 01/18/2019)" was issued dismissing the chapter 13 case for nonpayment of the filing fees.

This court holds that the County Treasurer's deed dated November 19, 2018, is void because the deed was issued in violation of the automatic stay of 11 USC § 362 (a). Once the owner of the property, Betty Cater, filed for chapter 13 protection, this triggered the automatic protection of 11 USC § 362 (a). This automatic stay renders void the November 19, 2018 deed and the summary proceedings instituted by petitioner in December of 2019.

In Eastern Refractories Co. Inc. v Forty Eight Insulations Inc. (157 F3d 169, 172 [2d Cir 1998]), the court stated that actions taken between the bankruptcy petition filing and the entry of the termination order are void ab initio:

"The Bankruptcy Code empowers bankruptcy courts to take measures that grant relief from the automatic stay, including 'terminating, annulling, modifying, or conditioning' the stay, under certain circumstances. 11 U.S.C. § 362(d). These measures have different operation and effect. An order 'terminating' an automatic stay operates only from the date of entry of the order. See In re Albany Partners, Ltd., 749 F.2d 670, 675 (11th Cir.1984) (quoting 2 Collier's Bankruptcy Manual ¶ 362.06 (3d ed. 1983)). Such an order thus permits a creditor to re-initiate its lawsuit (or start another one) after the termination order is entered but does not affect the status of actions taken between the filing of the bankruptcy petition and the entry of the termination order—such actions are void ab initio."

Carr v McGriff (8 AD3d 420, 422 [2d Dept 2004]) clearly confirms that actions or proceedings done in contravention of section 362 (a) (1) are void:{**65 Misc 3d at 1075}

"The United States Bankruptcy Code provides for an automatic stay of certain prescribed actions against the debtor or the debtor's property (see 11 USC § 362 [a]). The automatic stay is one of the fundamental debtor protections provided by the bankruptcy law (see Midlantic Natl. Bank v New Jersey Dept. of Envtl. Protection, 474 US 494, 503 [1986]; In re Best Payphones, 279 BR 92, 97 [SD NY 2002]; Eastern Refractories Co. v Forty Eight Insulations, 157 F3d 169, 172 [2d Cir 1998]). It is effective immediately upon filing without further action (see In re Best Payphones, supra; Eastern Refractories Co. v Forty Eight Insulations, supra; Rexnord Holdings v Bidermann, 21 F3d 522, 527 [2d Cir 1994]). Moreover, it is not limited to the litigants, and extends to the nonbankrupcty court as well. 'Once triggered by a debtor's bankruptcy petition, the automatic stay suspends any non-bankruptcy court's authority to continue judicial proceedings then pending against the debtor. This is so because [section] 362's stay is mandatory and "applicable to all entities", including state and federal courts' (Maritime Elec. Co. v United Jersey Bank, 959 F2d 1194, 1206 [3d Cir 1991], quoting 11 USC § 362 [a]; see In re Best Payphones, supra).

" '[A]ny proceedings or actions described in section 362 (a) (1) are void and without vitality if they occur after the automatic stay takes effect' (Rexnord Holdings v Bidermann, supra at 527; see In re Best Payphones, supra). This includes most post-petition judicial actions. Although ministerial court actions are excepted (see Rexnord Holdings v Bidermann, supra [entry of judgment by clerk is not a continuation of judicial proceeding under section 362 (a) (1)]), the issuance of a decision by a judge is clearly prohibited and, therefore, void (see In re Best Payphones, supra at 97-98; In re Soares, 107 F3d 969, 975 [1st Cir 1997] [state court's post-petition direction to enter a default judgment against the debtor violated the automatic stay and was void])."

See also In re D'Alfonso (211 BR 508 [ED Pa 1997]), holding that dismissal of the bankruptcy proceeding does not validate actions, which constituted violations of the automatic stay during pendency of the case.

Based upon the foregoing, petitioner has no standing to bring the summary proceeding at bar because the County Treasurer's{**65 Misc 3d at 1076} deed, dated November 19, 2018, is void. The dismissal of Betty Cater's chapter 13 case on January 18, 2019, did not retroactively validate the County Treasurer's deed and subsequent summary proceedings in December of 2018. Any action taken on or between November 9, 2018, and January 19, 2019, is void.

Finally, it should be noted that this court considered respondents' argument on the bankruptcy issue, despite being raised for the first time in the respondents' reply affirmation, because this issue, as a matter of law, is completely dispositive of this case. (See Eujoy Realty Corp. v Van Wagner Communications, LLC, 22 NY3d 413 [2013]; Held v Kaufman, 238 AD2d 546 [2d Dept 1997].)

Petitioner has no standing to bring this summary proceeding because the deed by which it acquired title is void as same was issued in violation of the automatic bankruptcy stay.