Iouldacheva v Filene's Basement Corp.

Annotate this Case

Download PDF

Iouldacheva v Filene's Basement Corp. 2004 NY Slip Op 30326(U) July 6, 2004 Sup Ct, NY County Docket Number: 0602280/00 Judge: Emily Jane Goodman Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. SCANNED ON 711212004 [* 1] d SUPREME COURT OF THE STATE OF NEW Y RK / EMILY JANE G PRESENT: ~ I..-*.'-- - NEW YORK ~ ~ COUNTY ~ PART 1 1% 0602280/2000 I IOULDACHEVA, MASOUDA INDEX NO. vs FlLENE'S BASEMENT COW. MOTION DATE MOTION SEQ. NO. SEQ 1 DlSMISS MOTION CAL. NO. ACTION The followlng papers, numbered 1 to were read on this motion to/for PAPERS NUMBERED Notice of Motion/ Order to Show Cause - Affidavits - Exhibits Answering Affidavits - ... Exhibits Replying Affidavlts Cross-Motion: n Yes Upon the foregoing papers, it is ordered that this motion THIS MOTION IS DECIDED IN ACCORDANCE WIT^ THE ACCOMPANYING MEMORANDUM DECISION \r. ,T Check one: W F I N A L DISPOSITION Check if aclDroDriate: r-i DO NOT PCIST ON-FINAL DISPOSITION A ~ [* 2] Index -against- FILENE'S BASEMENT CORP., Dcfcndan t. _________________________________---------------------------------X GOODMAN, J.: In this False imprisonment action, defendant Filene's Bascmcnt Corp., rnovcs to dismiss the complaint filed against it by plainiirf Masouda loudachcva on thc ground that it violated the automatic stay provisions of the Bankruptcy Code andor the discharge injunction imposcd by the Confirmation Order. Plaintiff opposes this motion. HACKGKOUND Thc undcrlying action concerns an incident that occur-r-edon June 28, 1999, whilc plaintiff was shopping at defendant's store located at 2220 Broadway in New York City. Plaintiff alleges that, on that day, she was unlawfully detained and ai-rested after defendant wr-ongfully accused her of shoplifting. Plaintiff was latcr acquittcd aftcr a criminal trial. On August 23, 1999, defendant filed for bankruptcy protection with thc United Statcs Bankruptcy Court for- thc District of Massachusetts, Eastern Division (thc Bankruptcy Court), pursuant to Chapter 1 1 of Titlc 1 1 of the United States Codc (thc Bankruptcy Codc). Approxinialely nine months later, in a complaint dated May 1 I , 2000, plaintiff brought this action against defedilnt, asserting causes of action for false imprisonment and malicious pr-oseculion. As a resull of her alleged injuries, plainliff seeks two million dollars plus piinitivc [* 3] damages from dcfcndant. Defendant did not rile an answer to the complaint and at no time did plaintiff scck rclief from thc Bankruptcy Court to pursue this action. In Pact, since defendant was scrved with the complaint on June 16,2000, no action whatsoever was taken by eithcr party in this mattcr, until this motion to dismiss. On October 23, 2000, an order was entcrcd by the Bankruptcy Court confinning defendant's amcnded joint plan of liquidation datcd June 16, 2000 (the Confirmation Order). Paragraph 7 of h e Confirmation Order statcs that all crcditors wilh a claim arising bcfore August 23, 1999 were rcquired to rile a proof of claim hy June 8, 2000. Paragraph 7 further stales: Any such claim that was not filcd prior to that time is forever barred and shall be conclusively deemed discharged and disallowed for thc purposes of voting on the Plan or receiving any distributions thereunder. IIISCUSSTON Dcfendant seeks to dismiss the complaint on the ground that it violatcd the automatic stay provisions of the Bankruptcy Code andor the discharge injunction imposed by the ConCirmation Ordcr. As an initial mattcr, this court has jurisdiction to dctermine whcthcr the automatic stay applies to proceedings before it (see In rc Bona, 124 RR 11 [US Dist Ct, SD N Y 19911; Neuman, 71 BR 567, 583-74 [Bankr SD NY 19871 [state court could have decidcd whether autoinatic stay applied to procecdings bcfore it]; scc also Jaiiis v Janis, 179 Misc 2d 199, 201-202 [Sup Ct, Weslchestcr County 19981). This court vlso has the powcr to deteiinrnc thc effect o f t ; discharge i n bankruptcy (see I,umbcrnians Mut. Casualtv Co. v Morse Shoc Co., 218 AD2d 624 [I" Dept 19951). 2 [* 4] "The filing of a Chaptcr 1 1 bankruptcy petition triggers an automatic stay of any judicial proceeding or othcr act against the property of the [debtor] that was or could have been commenced before the filing of the petition" [In re Dairy Marl Conveniencc Storcs, Inc, 351 F3d 86, 90 12d Cir 20031, citing I I IJSC 9 362[a]). The aulomatic stay has bccn dcscribed by [he Second Department as follows: The automatic stay is one of the fundamental debtor protcctions provided by the bankruptcy law (seeMidlantic Natl. Rank v New Jersey Dept. of Envl. Prot., 474 US 494, SO3 [1986]; In re Best Payphones, 279 T3R 92,97 [US Uist Ct, SD N Y 20021; Eastern Rcfractorics Co. v Forty EiEhl Insulations, 157 F3d 169, 172 [2d Cir 19981). It is eflective immediately upon filing without furlher action (see Best Payphones, 279 BR at 97; Eastern Rcfractories, 157 F3d at 172; Rcxnord Holdings v Eidcrmann, 21 F3d 522,527 L2d Cir 19941). Moreover, it is not limited to [he litigants, and extends to thc non-bankruptcy court as well. "Oncc triggcrcd by a dcbtor's bankruptcy petition, the automatic stay suspends any nonbankruptcy court's authority to continue *judicialprocccdings then pending against the debtor. This is so bccausc scction 362's slay is mandatory and 'applicable to all cntities', including stale and lederal courts'' (Maritime Elec. Co. v llnitcd Jcrscy Bank, 959 F2d 1194, 1206 [3d Cir 19911, quoting 1 1 USC 6 362[a]; see Best Pavphones, 279 1 1 at 97) 31 (Car-r v McGiiff, -AD2d , 2004 WL 1341842, * I [2d nepl20041). Plaintiff's alleged ignorance of dcfcndant's bankruptcy proceeding does not altcr thc application of thc automatic stay, bccausc the automatic stay is triggered us against all entities upon thc filing of a bankruptcy petition, irrespective of whether thc partics to the proceedings stayed are aware that it petition has been filed (E NLT Computer Services Cow. v Capital Computer Syslerns, Inc., 755 F2d 1253, 1258 [61hCir 19851; In re Boston Rusincss Machines, 87 BR 867, 870 [Dankr ED Pa 19881; In re Koresko, 91 BR 689, 701 [Bankr ED Pa 19881). In any event, whilc plaintiff dcnics knowlcdge o l delendant's bankruptcy procecding at the time she commenced her aclion, plaintiff has bccn aware of defendant's bankruptcy procccding since a1 [* 5] least August 2002, wlicn defendant sent a lctter to plaintiff s counsel advising him of thc bankruptcy filing and the automatic stay. Thc majority of Fcdcral Appcals courts, including the Second Circuit and thc First Circuit (thc location of the Bankruptcy Court), hold that any procccdings or action dcscr-ihed in scction 362(a)(1) arc void and without vitality if they occur aftcr the automatic stay takes cffcct. Payphones, 279 BK at 97-98 [citations omitted]; scc d s o In rc Soares, 107 F3d 969, 976 [ l Cir 19971. Courts i n the First Department follow the majority rulc (SCC c.g., Drcxcl Bur-nham Lambcr-t, Inc. v Tcrex Corp., 184 AD2d 328 1 Dcpt 19921 [affirming lowcr court s dismissal of defendant s affirmative defenses and counterclaims as sukiject to the automatic stay and directing that defendant ohtain relief from Ihe shy horn the bankruptcy coul-t]; Evans v Schneidel-, 183 Misc2d 114, 116[CivCt,NYCounty 1999],affd188Misc2d193 [AppTeini, l Dept2001j [ acts taken i n violation of automatic stay created by filing of bankruptcy petition are generally deemed void , ciling Kalb v Feuerstein, 308 US 433 (1940)l; 151-69 N a d e Ave Assoc. v Jiminez, 147 Misc 2d 443 [Civ Ct, N Y County 19901 [dcbtor s cntry into a stipulation of scttlcrncnt post-pctition decmcd null and void]; see also m,2004 WL 1341842 [orders entcrcd by the Supreme Court while the auloinatic stay was in effect were void]; Bell v NiaEl-a Mohawk Power Corn, 173 Misc 2d 1042 [Sup Ct, Albany County 19971 [slip-and-fall action commenced during pendency of bankruptcy case is void ab initio]). In accordance with the above, the court holds that the commencement of this action was i n violation of 11 L J X 0 362 and was, therefore, void and without vitality. Notwithstanding thc fact that the filing of this action violated the automatic stay and is, 4 [* 6] thererore, void, plaintiff contends that she should bc authorized to pursue her claim against defendant. Specifically, plaintiff contends, inter alia, that since shc did not receive notice of delendanr s bankruptcy proceeding, she could not file a timely proof of claim in accordance with h e Confirmation Ordcr. Upon thc cntry of the Confirination Ordcr, thc automatic stay was cxtinguished and replaced with a pcrniancnt injunction under scction 524(a) of the Bankruptcy Code, which operates as ;in injunction againsl the commenccment or continuation of an action or an act to collecl ii dischargcd dcbt & 11 USC Before a debtor can obtain 3 524(u)(2);11 USC 363[c][2][c]). ~i discharge o l a claim in bankruptcy .., the Due Process clausc of the Filth Amendment dictates that a deblor s creditors rcceive notice o l the debtor s bankruptcy case and applicable bar datc so that creditors have an opportunity to make any clainis thcy may have against the debtor s estatc (In re XO Cornmunicntions, Tnc., 301 BR 782, 791 792 [Bankr SD N Y 2003J). However, notwithstanding whcther plaintifl received adequate notice of dcfcndant s bankruptcy proceeding, no valid claim against defendant currcntly exists because this action is void ab initio. Even if this court was to find plaintiff s claim nondischargeable, dcfcndant maintains that plaintiff would bc time-ban-ed lrom filing suit, since thc dlcgcd injury occurred i n 1999, and is goveined by a one-year statutc of limitations under CPLR 215 (3). Fiirthci-iiioi-e,plaintiff s assertion that the coiuplaint operated :s an informal p r o d of i claim is wilhout merit. To qualify as an infoiinal proof of claim, a document purporting to evidence such claim must (1) have been limely filed with the bankruptcy court and have become part of thc judicial record, (2) state the existcnce and nature of thc dcbt, (3) state lhe amoLint of [* 7] thc claim against the estatc, and (4) evidencc the creditor s intent to hold the debtor liablc for the dcbt [In rc Houbigant. Inc., 190 BR 185 [Baiikr SD N Y 19951; sec also In re Northeast Olficc and Comniercial Properties. Inc., 178 RR 915 [Bankr D Mass 19951). According to the record, plaintiff s cl:iim did not appcar in the record of the defcndant s hankruptcy case. Thcrefore, thc complaint cannot qualify as an infoolmil proof olclairn. Moreover, T,umberinans (21 8 AD2d 624), relied upon by plaintiff for the proposition that defendant s insurcr rcmains obligatcd to defend the complaint, is Liictually distinguishable. In Lumbermans, [he plaintiff sought to rccover from the debtor s insurer aftcr the deblor was discharged in bankruptcy lid.at 6261. Howevcr, in Lumhcrmans, the statute of limitations on thc plaintiff s claim was not at issuc. Here, by contrast, no valid, unexpired claim exists since the slatutc of limitations has clearly run. This court does not have jurisdiction to annul thc automatic stay to revive thc void complaint (s re Cavanaugh, 271 BR 414,423 [Bankr D Mass 200I]), nor has plaintill In provided this court wilh any authority lo allow her to file a new complaint notwithstanding the running of thc statute of limitations. Thus, plaintiff may bc time-barred from filing a ncw complaint. However, plaintiff may not bc without remedy. The Bankruptcy Court has the powcr to modify the dischargc injunction (SCC Perez v Cumherland Farms, Inc., 213 BR 622 (Bankr D I Pursuant to seclion 108 of the Bankruptcy Codc, if the statutc of limitations governing a plaintiff s claini against a dcbtor expires during the pendcncy of the automatic stay, thc plaintiff has 30 days to refile thc action from thc time of notice that thc bankruplcy court has ordercd the stay lifted (G I1 USC 108[c]). Although plaintilf contends that she did not reccivc notice of defendant s d i s c h q c , she has hccn aware of thc bankruptcy proceeding since at least 2002, but madc no motion before this court or the Bankruptcy Court to yreservc hcr rights. 6 [* 8] Mass 1997), as well as the power to validate an action taken in violation of the automatic stay (sec Soar-es, 107 F3d at 976). Thus, upon appropriate motion, the Bankruptcy Court may: (I) find that the statule of limitations is tolled pursuant to scction 108 of the Bankruptcy Codc, if plaintiff did not receive adequate notice of defendanl s discharge; or (2) reopen defcndant s bankruptcy case and annul the aulornatic stay to allow plaintiff to continue this action. Thus, this decision is without pre-judice l o plaintiff s right to pctition the Bankruptcy Court for such relief, if so advised. CONCLUSlON Accordingly, it is ORDERED that the molion by defendant to dismiss thc complaint is granted to the extent of staying further prosecution of any proceedings in this action, except for an application to vacatc or modify said stay; and it is furthcr ORDERED that any application for relief made to the Bankruptcy Court in thc procceding known as In rc FBI Distrihution Corp. fIWa Filene s Basement, Inc., before the United States Bankruptcy Court for the District of Massachusctts, Dockel No. 99-16984, must be brought within 90 days of thc date of this order; and it is further ORDERED that either party may make an application by order to show cause to vacate or modify this stay upon the final detcrmination of, modification of, or vacatur of the automatic stay issucd by the Bankruptcy Court in the proceeding known as In re FBI Distribution Cort). f/k/a Filenc s Bascment, Tnc., or if no application [or relief is madc to thc Bankruptcy Court within 90 7 [* 9] days of thc date of this order. Datcd: July 6, 2004 JANKIGOODMAN J.S.C. EMILY 8

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.