CARLA E. CRAIG, Chief United States Bankruptcy Judge.
This matter comes before the Court on the motion of Pietro Giambrone ("Mr. Giambrone") for a stay pending appeal of this Court's order granting VNB New York LLC ("VNB") relief from the automatic stay pursuant to 11 U.S.C. § 362(d) with respect to 122 Holcomb Avenue, Staten Island, NY 13012. (ECF No. 38.)
This Court has jurisdiction of this proceeding pursuant to 28 U.S.C. § 1334(b), and the Eastern District of New York standing order of reference dated August 28, 1986, as amended by order dated December 5, 2012. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (G), and (O). This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.
The following facts are undisputed, or are matters of which judicial notice may be taken.
On November 18, 2015, Mr. Giambrone filed a voluntary petition under chapter 13 of the Bankruptcy Code, commencing Case No. 15-45222-ESS. Mr. Giambrone did not file any schedules or statements in the case, and the case was automatically dismissed on January 5, 2016 pursuant to 11 U.S.C. § 521(i)(1).
On June 14, 2016, Brigid Giambrone ("Mrs. Giambrone"), Mr. Giambrone's wife, filed a voluntary petition under chapter 11 of the Bankruptcy Code commencing Case No. 16-42610-CEC. Mrs. Giambrone's Schedule A reflected an ownership interest in the following eight real properties: (1) 108 Holcomb Avenue, State Island, New
On August 15, 2016, VNB filed a motion seeking relief from the automatic stay with respect to the 122 Holcomb Property. (Case No. 16-42610, ECF No. 30.) VNB obtained a pre-petition Judgment of Foreclosure and Sale from the New York State Supreme Court, Richmond County on September 8, 2015, based upon a mortgage and note that matured on May 1, 2009. (Case No. 16-42610, ECF No. 30.) Mrs. Giambrone opposed the motion. After a hearing held on September 14, 2016, the Court issued an order on September 27, 2016, denying the motion, conditioned on Mrs. Giambrone's payment of monthly adequate protection payments of $ 3,500 to VNB for the duration of the bankruptcy case. (Case No. 16-42610, ECF No. 47.)
Mrs. Giambrone's path to plan confirmation was lengthy and challenging. She filed multiple proposed plans and disclosure statements (Case No. 16-42610-CEC, ECF Nos. 45, 59, 67, 68, 77, 78, 95, 96, 105, 106, 110, 111, 125, 126, 139, 140, 150, 151.) The Sixth Amended Plan of Reorganization Dated March 20, 2017 (the "Sixth Amended Plan") proposed to pay VNB's claim with an interest rate of 2.87%. (Sixth Amended Plan at 9, Case No. 16-42610-CEC, ECF No. 150.) At the end of a 60-month payment plan, Mrs. Giambrone proposed to make a balloon payment to VNB of approximately $ 526,191.00. (Sixth Amended Plan at 9, Case No. 16-42610-CEC, ECF No. 150.)
The Sixth Amended Plan further provided:
(Sixth Amended Plan at 16, Case No. 16-42610-CEC, ECF No. 150.)
VNB objected to the confirmation of the Sixth Amended Plan, arguing that Mrs. Giambrone did not established her ability to refinance and make the required balloon payment, and therefore, the plan was not
The Court denied confirmation of the Sixth Amended Plan after a lengthy confirmation hearing on May 24, 2017, in which the Court heard testimony from three witnesses, including Mr. and Mrs. Giambrone. On August 2, 2017, the Court read a decision into the record finding that the Sixth Amended Plan was not feasible and failed to satisfy the statutory requirements of § 1129(a)(11) and § 1129(b)(2). On August 4, 2017, the Court issued an order denying confirmation of the Sixth Amended Plan. (Case No. 16-42610-CEC, ECF No. 193.)
Subsequently, Mrs. Giambrone filed her Seventh Amended Disclosure Statement and Seventh Amended Plan. (Case No. 16-42610-CEC, ECF Nos. 196, 197.) The Seventh Amended Plan provided for the sale of the 122 Holcomb Property to satisfy VNB's claim in full. (Seventh Amended Plan at 9, Case No. 16-42610-CEC, ECF No. 197.) The Seventh Amended Plan further provided that, although Mrs. Giambrone anticipated that the property would be sold within six months of the plan's effective date, if the sale does not close by the 180th day after the effective date, VNB can file an Affirmation of Non-Compliance and the Court can issue an order granting VNB relief from the automatic stay with respect to its secured claim on the 122 Holcomb Property.
A confirmation hearing was held on November 8, 2017, and no objections were interposed. On January 26, 2018, the Court issued an order confirming the Seventh Amended Plan. (Case No. 16-42610-CEC, ECF No. 233.)
Six months later, on July 31, 2018, VNB filed an affirmation of non-compliance, stating that the 122 Holcomb Property was not sold as required by the Seventh Amended Plan, and requested relief from the automatic stay. (Case No. 16-42610-CEC, ECF No. 261.) On October 16, 2018, the Court issued an order lifting the automatic stay to permit VNB to exercise its rights under applicable law with respect to the 122 Holcomb Property. (Case No. 16-42610-CEC, ECF No. 279.)
On December 10, 2018, Mrs. Giambrone filed a motion seeking entry of a final decree closing the case, and represented that the plan was substantially consummated, notwithstanding the failure to sell the 122 Holcomb Property. (Motion for Final Decree at 5, Case No. 16-42610-CEC,
Eleven days later, on January 9, 2019, Mr. Giambrone commenced this case by filing a voluntary petition under chapter 11 of the Bankruptcy Code. (ECF No. 1.) Mr. Giambrone's Schedule A/B lists almost the same properties as Mrs. Giambrone's Schedule A/B, including the 122 Holcomb Property.
On February 7, 2019, VNB filed a motion seeking in rem relief from the automatic stay pursuant to § 362(d)(1), (2), and (4) with respect to the 122 Holcomb Property, or alternatively, seeking dismissal of the case pursuant to § 1112(b) as a bad faith filing. (VNB Motion for Relief from the Stay, ECF No. 18.) VNB asserted that this case was filed the day before VNB's scheduled foreclosure sale of the 122 Holcomb Property. (VNB Motion for Relief from the Stay at 3, ECF No. 18.) VNB argued that relief from the stay is warranted under § 362(d)(1) because the case was filed in bad faith, and that in rem relief is warranted pursuant to § 362(d)(4) because this case is part of a scheme to delay and hinder VNB involving multiple bankruptcies affecting the 122 Holcomb Property.
Mr. Giambrone opposed VNB's motion, arguing that his cases and Mrs. Giambrone's case are not a "concerted effort to delay foreclosure," and they should not be considered "serial filers." (Opposition at ¶ 5, ECF No. 19.) He argued that his chapter 13 case was only "automatically dismissed [under § 521], significantly, NOT for cause." (Opposition ¶ 5, ECF No. 19.) He further argued that Mrs. Giambrone's case should not be considered as part of a schedule to hinder or delay because that case resulted in a confirmed of a chapter 11 plan. (Opposition ¶ 5, ECF No. 19.) Mr. Giambrone also argued that drawing a negative inference against him based upon Mrs. Giambrone's case violates due process because Mr. Giambrone was not subject to the Court's jurisdiction in that case. (Opposition at ¶ 5, ECF No. 19.) Mr. Giambrone further argued that the Seventh Amended Plan "only afforded [them] a six month window to sell," and that the refusal of tenants to vacate the property resulted in limited interest from prospective buyers. (Opposition at ¶ 6, ECF No. 19.) Mr. Giambrone pointed out that VNB's motion concedes that there is equity in the property. (Opposition at ¶ 9, ECF No. 19.)
A hearing on VNB's motion was held on February 20, 2019, at which the Court determined that Mr. Giambrone's current case was part of a scheme to delay and hinder VNB. The Court based this conclusion upon Mr. Giambrone's prior filing and Mrs. Giambrone's case, in which VNB was granted relief from the stay upon Mrs. Giambrone's failure to sell the 122 Holcomb Property within 180 days of the plan's effective date, and the fact that all three filings stayed VNB's scheduled sales of the property (Tr. at 10, 14, 15, 18, 19, 21, ECF No. 35.)
On March 18, 2019, Mr. Giambrone filed a notice of appeal of the Lift Stay Order. (ECF No. 29.). On April 26, 2019, Mr. Giambrone filed this motion to stay the Lift Stay Order pending appeal, stating that a sale of the 122 Holcomb Property was scheduled for May 2, 2019. (ECF Nos. 38, 39). VNB opposes the motion.
An application for a stay pending appeal from a decision of a bankruptcy court is governed by Rule 8007 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"). Fed. R. Bankr. P. 8007(a). The decision to grant or deny a stay pending appeal lies within the discretion of the bankruptcy court.
To obtain a stay pending appeal under Bankruptcy Rule 8007, a party must establish that
The movant bears a "heavy" burden and must "show satisfactory evidence on all four criteria." Id. (citations omitted). In determining whether to grant a stay pending appeal, the Second Circuit balances the factors.
Mr. Giambrone argues that the 122 Holcomb Property is "the only property of the bankruptcy estate and is the sole purpose of the debtor's reorganization." (Motion for Stay ¶ 1, ECF No. 38.) He argues that this Court erred when it considered Mrs. Giambrone's case in the analysis under § 362(d)(4) of whether this filing is part of a scheme to hinder or delay VNB. Mr. Giambrone argues that, because the auction sale is scheduled for May 2, 2019, he will be irreparably harmed if the sale is not stayed pending appeal of the Lift Stay Order. (Motion for Stay ¶ 4, ECF No. 38.)
VNB, noting that Mr. Giambrone waited over one month from entry of the Lift Stay Order to seek a stay pending appeal, argues that Mr. Giambrone has not satisfied his burden to obtain a stay.
The fact that that the property will be sold absent a stay does not automatically constitute irreparable harm. "An injury that may be fully remedied by monetary damages does not constitute irreparable harm."
Mr. Giambrone has not established that there is a substantial possibility that he will succeed in his appeal of the Lift Stay Order. He cites no authority to support his argument that his wife's bankruptcy case should not be factored into the § 362(d)(4) analysis. It should be noted that relief under § 362(d)(4) may be warranted upon the filing of two bankruptcy cases affecting the same real property. This is the third bankruptcy case that was filed on the eve of a foreclosure sale of the 122 Holcomb Property.
Section 362(d)(4) provides for relief from the automatic stay with respect to an act against real property "if the court finds that the filing of the petition was part of a scheme to delay, hinder, or defraud creditors that involved either — (A) transfer of all or part ownership of, or other interest in, such real property without the consent of the secured creditor or court approval; or (B) multiple bankruptcy filings affecting such real property." 11 U.S.C. § 362(d)(4).
The purpose of § 362(d)(4), which was added to the Bankruptcy Code in 2005, is to prevent repeated bankruptcy filings by persons or entities claiming an interest in real property from frustrating the secured creditor's attempted exercise of rights under state law. A scheme to hinder, delay or defraud warranting relief under § 362(d)(4) need not involve filings by the same person or entity; repeat filings by different persons or entities may be found to constitute the requisite scheme to hinder, delay or defraud justifying relief under § 362(d)(4).
The presence of such a scheme could not be any clearer from the sequence of events in these cases. In 2015, Mr. Giambrone filed a chapter 13 case which stopped a
On December 28, 2019, a final decree was entered in Mrs. Giambrone's case, on Mrs. Giambrone's motion in that case, stating that the confirmed plan had been substantially consummated. On January 9, 2019, Mr. Giambrone filed the instant case on the eve of VNB's scheduled foreclosure sale, to frustrate the completion of the last open item provided for under Mrs. Giambrone's confirmed plan — VNB's foreclosure on the 122 Holcomb Property. This sequence of events provides ample grounds to conclude that this bankruptcy case was filed as part of a scheme to hinder or delay VNB's exercise of its rights with respect to the 122 Holcomb Property.
Mr. Giambrone's motion for a stay fails to address the remaining two factors that must be weighed in order to obtain a stay pending appeal, the absence of any substantial injury to other parties if the stay were granted, and public interest favoring a stay. With respect to impact of the stay, VNB notes that there appears to be minimal equity in the 122 Holcomb Property, which is being eroded rapidly by the accrual of judgment interest at 9%. To the extent that the public interest is implicated here, it is not served by allowing this bankruptcy filing to frustrate the completion of the confirmed plan in Mrs. Giambrone's case.
Because an analysis of the required factors does not weigh in favor of granting a stay pending appeal, Mr. Giambrone's motion is denied.
