United States District Court,
E.D. New York.
In re Shay LIBERMAN, Debtor.
No. 99-CV-1178(ADS), 99-CV-1179(ADS).
Jan. 31, 2000.
Orders were entered by the United States Bankruptcy Court for the Eastern
District of New York, denying Chapter 13 debtor's requests to void lien on his
homestead, granting creditor relief from stay, and dismissing debtor's Chapter
13 petitions. Debtor appealed. The District Court, Spatt, J., held that debtor
could not avoid lien arising from creditor's foreclosure on its purchase-money
mortgage, on theory that lien impaired homestead exemption to which debtor would
otherwise be entitled under New York law.
Affirmed; appeals denied.
West Headnotes
[1] Bankruptcy 2792
51k2792 Most Cited Cases
[1] Homestead 96
202k96 Most Cited Cases
Chapter 13 debtor could not avoid lien arising from creditor's foreclosure on
its purchase-money mortgage, on theory that lien impaired homestead exemption to
which debtor would otherwise be entitled under New York law; lien did not impair
debtor's New York homestead exemption, which could not be invoked to protect
real property from judgment or lien that arose from mortgage lender's
foreclosure on its mortgage. Bankr.Code, 11 U.S.C.A. § 522(f); N.Y.McKinney's
CPLR 5206.
[2] Homestead 96
202k96 Most Cited Cases
New York homestead exemption, which generally allows debtor to exempt real
property worth up to $10,000 in value from judgments and liens, may not be
invoked when judgment or lien results from mortgage lender's foreclosing on its
mortgage. N.Y.McKinney's CPLR 5206.
*558 Shay Liberman, Pro se.
Kenneth Kirschenbaum, Kirschenbaum & Kirschenbaum, P.C., Garden City, NY, for
Creditor Citibank, N.A.
ORDER
SPATT, District Judge.
Presently before the Court are two appeals by the pro se Debtor, Shay Liberman,
from orders in the Bankruptcy Court for the Eastern District of New York denying
his requests to void a lien on his home under 11 U.S.C. § 522(f), granting
Creditor Citibank, N.A. relief from the automatic stay, and dismissing
Liberman's Chapter 13 petitions.
The events at issue are difficult to discern, given Lieberman's pro se status
and limited command of the English language, and the failure of Citibank to file
opposition papers. Nevertheless, a review of the Bankruptcy Court docket and
Liberman's filings indicates that at in June of 1998, Citibank commenced a
foreclosure action in New York State Supreme Court, Suffolk County, following
Liberman's default on a mortgage in the amount of approximately $150,000 in
principal, interest, and fees. The Supreme Court apparently ruled in favor of
Citibank, directing a foreclosure sale of Liberman's house at 345 Elmore St.,
Central Islip, N.Y. Liberman appealed this decision to the Appellate Division,
Second Department, but the order of foreclosure was affirmed on June 7, 1999.
Citibank N.A. v. Liberman, 93 N.Y.2d 1041, 697 N.Y.S.2d 569, 719 N.E.2d 930 (2d
Dept.1999) (table).
In the meantime, Liberman filed a voluntary petition for a Chapter 13
reorganization on October 1, 1998 in the Bankruptcy Court for the Eastern
District of New York, seeking to halt the foreclosure sale. On October 29,
1998, Liberman filed a motion to vacate the lien held by Citibank under the
provisions of 11 U.S.C. § 522(f). On November 18, 1998, Citibank opposed that
motion and cross-moved to lift the automatic stay to allow Citibank to proceed
with the foreclosure sale. Liberman asserts that he was not given sufficient
time to respond to Citibank's cross-motion.
Although no transcript of the December 1, 1998 hearing on the motions was
included in the record by Liberman, a minute entry in the docket indicates that
United States Bankruptcy Judge Stan Bernstein orally denied Liberman's motion to
vacate the lien, granted Citibank's motion for relief *559 from the automatic
stay, and dismissed the bankruptcy case. Judge Bernstein directed counsel for
Citibank to submit a written order reflecting the oral rulings. While Citibank
was preparing that order, it notified Liberman on or about December 10, 1998
that a foreclosure sale of his house was scheduled for January 27, 1999. In
response, acting on information he claims was given to him by an unnamed person
at "the Court," Liberman filed a second Chapter 13 petition in Bankruptcy Court
on January 22, 1999, again seeking to obtain an automatic stay of the
foreclosure sale.
On February 2, 1999, Judge Bernstein sua sponte issued an order to show cause,
directing Liberman to show cause why both cases should not be dismissed; why an
order should not be entered preventing him from filing any further petitions for
180 days; and directing Citibank to show why it should not be sanctioned for
scheduling a foreclosure sale before a signed order dismissing the initial case
was entered. A hearing was held on February 9, 1999, for which Liberman has
again provided no transcript as part of the record, at which time Judge
Bernstein apparently dismissed both cases with prejudice; barred Liberman from
filing further petitions for 180 days; and imposed a conditional sanction of
$900 against Liberman if he failed to comply with the court's order. Judge
Bernstein entered a written order reflecting this ruling on February 12, 1999.
Liberman then filed the present appeals from Judge Bernstein's February 12, 1999
orders.
On March 29, 1999, Liberman filed a motion before this Court to stay the sale
of his home. This Court granted such a stay until May 4, 1999, provided that
by April 27, 1999, Liberman tendered the sum of $2,188, representing three
weeks' rental value of the home, to Ocwen Bank, the assignee of Citibank's
mortgage. Following several adjournments and hearings at which Liberman did
not appear for alleged medical reasons, this Court eventually denied Liberman's
motion for a stay of the foreclosure sale and directed the parties to file
briefs on the appeal of the Bankruptcy Court's orders. Liberman's house was
apparently sold in May of 1999, although it is unclear whether the deed was held
in escrow by Ocwen Bank pending the outcome of these appeals. Liberman
submitted a brief in support of his appeal, but neither Citibank nor Ocwen Bank
submitted opposing papers.
DISCUSSION
[1] Although the grounds for Liberman's appeal are far from clear, it appears
from his brief that he is generally attacking Judge Bernstein's denial of his
motion to vacate Citibank's liens under 11 U.S.C. § 522(f). That statute
states, in relevant part:
(f) (1) Notwithstanding any waiver of exemptions, ... the debtor may avoid the
fixing of a lien on an interest of the debtor in property to the extent such
lien impairs an exemption to which the debtor would have been entitled ... if
such lien is
(A) a judicial lien, other than a judicial lien that secures a debt [relating to
a domestic relations order].
Under the Bankruptcy Code, a debtor is entitled to exempt certain property
from the estate in bankruptcy pursuant to 11 U.S.C. § 522(b). The Bankruptcy
Code allows states to define what property may be exempted, 11 U.S.C. §
522(b)(2)(A), and New York State has expressly done so. N.Y. Debtor & Creditor
Law § 282. In New York, a debtor may exempt from a bankruptcy estate the same
property that is protected against judgment executions under N.Y. CPLR § 5205
and § 5206. Id.
[2] Section 5206 of the CPLR allows a debtor to exempt real property of up to
$10,000 in value from judgments and liens, "unless the judgment was recovered
wholly for the purchase price thereof." This final clause has the effect of
preventing adebtor from invoking the exemption when the judgment or lien results
from a mortgage *560 lender's foreclosure on the mortgage. In In re Onyan, 163
B.R. 21 (Bankr.N.D.N.Y.1993), the debtor presented essentially the same argument
urged by Liberman here: namely that the debtor could avoid a mortgage-type lien
on his residence by virtue of the provisions of 11 U.S.C. § 522(f). However,
the Bankruptcy Court held that "the homestead exemption [of CPLR 5206] may not
be employed to defeat the claim of a creditor foreclosing on a first or second
mortgage on the property." Id. at 25; see also In re Ellerstein, 105 B.R. 214,
216 (Bankr.W.D.N.Y.1989) ("in the event of a mortgage foreclosure action ... the
exemption does not apply").
In this case, the record before this Court suggests that Citibank's lien was
derived from a mortgage foreclosure action. Liberman admits as much in his
brief:
On July 23, 1990 Plaintiff-Appellant signed the mortgage contract for a 30 years
loan of $96,000 at yearly interest rate of 10.50% to pay for the premises known
as 345 Elmore Street. On or about July 12, 1995, Citibank, N.A. commenced an
action against Shay Liberman in the Supreme Court of the State of New York ...
On June 2, 1998 order issued in this action by the Hon. Robert W. Doyle to
foreclose and sale. (Emphasis added).
Based on the fact that Citibank's lien on the property resulted from a
mortgage foreclosure involving the purchase price, the $10,000 exemption in CPLR
5206 is therefore not available to Liberman, In re Onyan, supra, at least to the
extent that the foreclosure sale price of the house did not exceed $96,000, the
purchase price of the home. Liberman's filings do not indicate what price the
foreclosure sale eventually fetched, but he admits in his brief that the house
had a market value of only $56,000.
Therefore, the Court finds that Liberman is not entitled to claim an impairment
of his exemption under 11 U.S.C. § 522(f), since no such exemption exists. In
any event, the Court further notes that Section 522(f), by its own terms, "shall
not apply with respect to a judgment arising out of a mortgage foreclosure."
Thus, even if Liberman could somehow argue that New York State's exemption rules
were inconsistent with the federal law, the Bankruptcy Code itself warrants
denial of his motion to avoid Citibank's morgage lien. In re Parks, 227 B.R.
20, 24 n. 5 (Bankr.W.D.N.Y.1998) ("a judgment of foreclosure is understood to be
excluded from the definition of judgment lien" by subsection [c] ).
For these reasons, Judge Bernstein's February 12, 1999 decisions denying
Liberman's motion to avoid Citibank's lien and dismissing Liberman's Chapter 13
petitions are AFFIRMED and Liberman's appeals are DENIED. The Clerk of the
Court is directed to close both of these cases.
SO ORDERED
244 B.R. 557, 43 Collier Bankr.Cas.2d 787
END OF DOCUMENT
United States District Court,E.D. New York.In re Shay LIBERMAN, Debtor.
No. 99-CV-1178(ADS), 99-CV-1179(ADS).
Jan. 31, 2000.
Orders were entered by the United States Bankruptcy Court for the Eastern District of New York, denying Chapter 13 debtor's requests to void lien on his homestead, granting creditor relief from stay, and dismissing debtor's Chapter 13 petitions. Debtor appealed. The District Court, Spatt, J., held that debtor could not avoid lien arising from creditor's foreclosure on its purchase-money mortgage, on theory that lien impaired homestead exemption to which debtor would otherwise be entitled under New York law.
Affirmed; appeals denied.
West Headnotes
[1] Bankruptcy 279251k2792 Most Cited Cases
[1] Homestead 96202k96 Most Cited Cases
Chapter 13 debtor could not avoid lien arising from creditor's foreclosure on its purchase-money mortgage, on theory that lien impaired homestead exemption to which debtor would otherwise be entitled under New York law; lien did not impair debtor's New York homestead exemption, which could not be invoked to protect real property from judgment or lien that arose from mortgage lender's foreclosure on its mortgage. Bankr.Code, 11 U.S.C.A. § 522(f); N.Y.McKinney's CPLR 5206.
[2] Homestead 96202k96 Most Cited Cases
New York homestead exemption, which generally allows debtor to exempt real property worth up to $10,000 in value from judgments and liens, may not be invoked when judgment or lien results from mortgage lender's foreclosing on its mortgage. N.Y.McKinney's CPLR 5206. *558 Shay Liberman, Pro se.
Kenneth Kirschenbaum, Kirschenbaum & Kirschenbaum, P.C., Garden City, NY, for Creditor Citibank, N.A.
ORDER
SPATT, District Judge.
Presently before the Court are two appeals by the pro se Debtor, Shay Liberman, from orders in the Bankruptcy Court for the Eastern District of New York denying his requests to void a lien on his home under 11 U.S.C. § 522(f), granting Creditor Citibank, N.A. relief from the automatic stay, and dismissing Liberman's Chapter 13 petitions.
The events at issue are difficult to discern, given Lieberman's pro se status and limited command of the English language, and the failure of Citibank to file opposition papers. Nevertheless, a review of the Bankruptcy Court docket and Liberman's filings indicates that at in June of 1998, Citibank commenced a foreclosure action in New York State Supreme Court, Suffolk County, following Liberman's default on a mortgage in the amount of approximately $150,000 in principal, interest, and fees. The Supreme Court apparently ruled in favor of Citibank, directing a foreclosure sale of Liberman's house at 345 Elmore St., Central Islip, N.Y. Liberman appealed this decision to the Appellate Division, Second Department, but the order of foreclosure was affirmed on June 7, 1999. Citibank N.A. v. Liberman, 93 N.Y.2d 1041, 697 N.Y.S.2d 569, 719 N.E.2d 930 (2d Dept.1999) (table).
In the meantime, Liberman filed a voluntary petition for a Chapter 13 reorganization on October 1, 1998 in the Bankruptcy Court for the Eastern District of New York, seeking to halt the foreclosure sale. On October 29, 1998, Liberman filed a motion to vacate the lien held by Citibank under the provisions of 11 U.S.C. § 522(f). On November 18, 1998, Citibank opposed that motion and cross-moved to lift the automatic stay to allow Citibank to proceed with the foreclosure sale. Liberman asserts that he was not given sufficient time to respond to Citibank's cross-motion.
Although no transcript of the December 1, 1998 hearing on the motions was included in the record by Liberman, a minute entry in the docket indicates that United States Bankruptcy Judge Stan Bernstein orally denied Liberman's motion to vacate the lien, granted Citibank's motion for relief *559 from the automatic stay, and dismissed the bankruptcy case. Judge Bernstein directed counsel for Citibank to submit a written order reflecting the oral rulings. While Citibank was preparing that order, it notified Liberman on or about December 10, 1998 that a foreclosure sale of his house was scheduled for January 27, 1999. In response, acting on information he claims was given to him by an unnamed person at "the Court," Liberman filed a second Chapter 13 petition in Bankruptcy Court on January 22, 1999, again seeking to obtain an automatic stay of the foreclosure sale.
On February 2, 1999, Judge Bernstein sua sponte issued an order to show cause, directing Liberman to show cause why both cases should not be dismissed; why an order should not be entered preventing him from filing any further petitions for 180 days; and directing Citibank to show why it should not be sanctioned for scheduling a foreclosure sale before a signed order dismissing the initial case was entered. A hearing was held on February 9, 1999, for which Liberman has again provided no transcript as part of the record, at which time Judge Bernstein apparently dismissed both cases with prejudice; barred Liberman from filing further petitions for 180 days; and imposed a conditional sanction of $900 against Liberman if he failed to comply with the court's order. Judge Bernstein entered a written order reflecting this ruling on February 12, 1999. Liberman then filed the present appeals from Judge Bernstein's February 12, 1999 orders.
On March 29, 1999, Liberman filed a motion before this Court to stay the sale of his home. This Court granted such a stay until May 4, 1999, provided that by April 27, 1999, Liberman tendered the sum of $2,188, representing three weeks' rental value of the home, to Ocwen Bank, the assignee of Citibank's mortgage. Following several adjournments and hearings at which Liberman did not appear for alleged medical reasons, this Court eventually denied Liberman's motion for a stay of the foreclosure sale and directed the parties to file briefs on the appeal of the Bankruptcy Court's orders. Liberman's house was apparently sold in May of 1999, although it is unclear whether the deed was held in escrow by Ocwen Bank pending the outcome of these appeals. Liberman submitted a brief in support of his appeal, but neither Citibank nor Ocwen Bank submitted opposing papers.
DISCUSSION
[1] Although the grounds for Liberman's appeal are far from clear, it appears from his brief that he is generally attacking Judge Bernstein's denial of his motion to vacate Citibank's liens under 11 U.S.C. § 522(f). That statute states, in relevant part: (f) (1) Notwithstanding any waiver of exemptions, ... the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent such lien impairs an exemption to which the debtor would have been entitled ... if such lien is (A) a judicial lien, other than a judicial lien that secures a debt [relating to a domestic relations order]. Under the Bankruptcy Code, a debtor is entitled to exempt certain property from the estate in bankruptcy pursuant to 11 U.S.C. § 522(b). The Bankruptcy Code allows states to define what property may be exempted, 11 U.S.C. § 522(b)(2)(A), and New York State has expressly done so. N.Y. Debtor & Creditor Law § 282. In New York, a debtor may exempt from a bankruptcy estate the same property that is protected against judgment executions under N.Y. CPLR § 5205 and § 5206. Id.
[2] Section 5206 of the CPLR allows a debtor to exempt real property of up to $10,000 in value from judgments and liens, "unless the judgment was recovered wholly for the purchase price thereof." This final clause has the effect of preventing adebtor from invoking the exemption when the judgment or lien results from a mortgage *560 lender's foreclosure on the mortgage. In In re Onyan, 163 B.R. 21 (Bankr.N.D.N.Y.1993), the debtor presented essentially the same argument urged by Liberman here: namely that the debtor could avoid a mortgage-type lien on his residence by virtue of the provisions of 11 U.S.C. § 522(f). However, the Bankruptcy Court held that "the homestead exemption [of CPLR 5206] may not be employed to defeat the claim of a creditor foreclosing on a first or second mortgage on the property." Id. at 25; see also In re Ellerstein, 105 B.R. 214, 216 (Bankr.W.D.N.Y.1989) ("in the event of a mortgage foreclosure action ... the exemption does not apply").
In this case, the record before this Court suggests that Citibank's lien was derived from a mortgage foreclosure action. Liberman admits as much in his brief: On July 23, 1990 Plaintiff-Appellant signed the mortgage contract for a 30 years loan of $96,000 at yearly interest rate of 10.50% to pay for the premises known as 345 Elmore Street. On or about July 12, 1995, Citibank, N.A. commenced an action against Shay Liberman in the Supreme Court of the State of New York ... On June 2, 1998 order issued in this action by the Hon. Robert W. Doyle to foreclose and sale. (Emphasis added). Based on the fact that Citibank's lien on the property resulted from a mortgage foreclosure involving the purchase price, the $10,000 exemption in CPLR 5206 is therefore not available to Liberman, In re Onyan, supra, at least to the extent that the foreclosure sale price of the house did not exceed $96,000, the purchase price of the home. Liberman's filings do not indicate what price the foreclosure sale eventually fetched, but he admits in his brief that the house had a market value of only $56,000.
Therefore, the Court finds that Liberman is not entitled to claim an impairment of his exemption under 11 U.S.C. § 522(f), since no such exemption exists. In any event, the Court further notes that Section 522(f), by its own terms, "shall not apply with respect to a judgment arising out of a mortgage foreclosure." Thus, even if Liberman could somehow argue that New York State's exemption rules were inconsistent with the federal law, the Bankruptcy Code itself warrants denial of his motion to avoid Citibank's morgage lien. In re Parks, 227 B.R. 20, 24 n. 5 (Bankr.W.D.N.Y.1998) ("a judgment of foreclosure is understood to be excluded from the definition of judgment lien" by subsection [c] ).
For these reasons, Judge Bernstein's February 12, 1999 decisions denying Liberman's motion to avoid Citibank's lien and dismissing Liberman's Chapter 13 petitions are AFFIRMED and Liberman's appeals are DENIED. The Clerk of the Court is directed to close both of these cases.
SO ORDERED
244 B.R. 557, 43 Collier Bankr.Cas.2d 787
END OF DOCUMENT