Oaks at La Tourette Condominium IV v Spinella

[*1] Oaks at La Tourette Condominium IV v Spinella 2016 NY Slip Op 51232(U) Decided on August 18, 2016 Civil Court Of The City Of New York, Richmond County Straniere, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on August 18, 2016
Civil Court of the City of New York, Richmond County

Oaks at La Tourette Condominium IV, Claimant

against

Grace Spinella, Defendant



SCR 65003/12



Claimant

Merlino & Gonzalez

394 Manor Road

Staten Island, NY 10314

Defendant — Self Represented
Philip S. Straniere, J.

Recitation, as required by CPLR 2219(a), of the papers considered in the review of this

Motion to Vacate Judgment

Papers Numbered

Notice of Motion and Affidavits Annexed 1

Other

Upon the foregoing cited papers, the Decision/Order on this Motion is as follows:

Claimant, The Oaks at LaTourette Condominium IV, commenced this small claims action against the defendant, Grace Spinella, in February 2012, alleging that the defendant failed to pay condominium charges and assessments. On April 28, 2012 an arbitrator awarded the claimant a judgment in the amount of $2,747.92. Claimant was represented by counsel. Defendant represented herself.

Currently before the court is defendant's motion to have the judgment vacated and removed as a lien based on the fact claimant received a discharge in bankruptcy in the Eastern District of New York on May 9, 2013. Defendant has attached a copy of the discharge order and Schedule F of her petition listing this small claims court judgment as an unsecured claim. Defendant's motion is unopposed. The court has subsequently learned that the attorney of record in the small claims action no longer represents the condominium association and has moved its office from the one indicated in the case file. [*2]Also no notice was given directly to the claimant.

Rather than address the validity of the notice to the claimant, the court will deal with the merits of the underlying application.

The Civil Court case record for this matter indicates that after being awarded a judgment by the arbitrator, claimant purchased a transcript of the judgment. A search of the Richmond County Clerk's judgement docket and lien book discloses that the within small claims judgment was docketed against the defendant and her real property on November 20, 2012.

Real Property Law (RPL) Article 9-B, is known as the Condominium Act. One section, RPL §339-z gives a condominium a lien for unpaid common charges. Another section, RPL §339-aa, clarifies that the condominium lien is only effective from and after filing a verified notice of the lien with the recording officer where the declaration of the condominium was filed. In this case, with the Richmond County Clerk.

A search of the County Clerk records reveals that the Board of Managers of claimant filed a "Notice Under the Condominium Act for Unpaid Common Charges" against defendant indicating defendant owed $1,970.28 for common charges as of November 29, 2011. This lien was recorded against defendant's real property on November 30, 2011. A further search discloses that on May 16, 2016 counsel for claimant in that transaction filed a Certificate of Satisfaction of Lien indicating that the claim for unpaid common charges of $1,970.28 had been fully satisfied.

Ostensibly that should be sufficient to resolve the issue of whether the judgment has been satisfied. Unfortunately, the pleading in a small claims action is so sketchy it is impossible to determine if the time period and amount claimed due set forth in the filed lien of November 2012 is the same time period and amount claimed due included in the small claims pleading of February 2012 which became a judgment lien in November 2012.

It should be noted that had the claimant not filed the satisfaction of lien, the lien would not have been discharged in bankruptcy. Many debtors are unware that having a debt discharged in bankruptcy does not extinguish a lien or a judgment reduced to lien filed against the debtor's real property. In order to discharge a lien of record a special order is required from the bankruptcy court, most debtors fail to take these steps and learn that consumer debt reduced to a judgment lien remains a problem to be dealt with even after a bankruptcy discharge [Bank of New York v Magri, 226 AD2d 412 (1996)].

A possible avenue available to the defendant to resolve this matter is a special proceeding pursuant to Debtor & Creditor Law §150. This statute provides:

Cancellation of record of judgment discharged in bankruptcy1. At any time after one year has elapsed since a bankrupt or debtor has been discharged from his [FN1] debts, pursuant to the acts of Congress relating to bankruptcy, the bankrupt or debtor, may apply, upon proof of the bankrupt's or debtor's discharge to the court in which the judgment was rendered against him, for an order, directing that a discharge or a qualified discharge of record be marked upon the docket of the judgment. 2. If it appears upon the hearing that the bankrupt or debtor has been discharged from payment of that judgment or the debt upon which it was recovered, an order must be made directing that a discharge or qualified discharge be marked on the docket of the judgment.3. If it appears that any lien of the judgment upon real property owned by the bankrupt or debtor prior to the commencement of the bankruptcy proceedings was invalidated or surrendered in the bankruptcy proceeding or set aside in an action brought by the receiver or trustee, the order shall direct that a discharge be marked on the docket of the judgment.4. If (a) it does not appear whether the judgment was a lien on real property owned by the bankrupt or debtor prior to the commencement of the bankruptcy proceeding, or (b) if it appears that the judgment was a lien on such real property and it is not established to the satisfaction of the court that the lien was invalidated or surrendered on the bankruptcy proceeding or set aside in an action brought by the receiver or trustee, the order shall direct that a qualified discharge be marked on the docket of the judgment. If the court directs that a qualified discharge be marked on the docket of the judgment it shall specify in its order which of the two grounds stated above was the basis of its order .5. Intentionally Omitted6. Notice of the application accompanied by copies upon which it is made, must be served upon the judgment creditor, or his attorney of record in the action in which the judgment was rendered, in the manner prescribed for service of a notice in an action, .

Applying the statute to the facts currently before the court, it may be concluded that this procedure is available to the defendant as it is more than one year since she was discharged in bankruptcy (May 9, 2013) and the defendant was discharged from payment of the debt in that proceeding. Although the debt was discharged, there is nothing in the record to indicate that the lien upon real property arising from the judgment was invalidated or surrendered. Therefore, defendant is only entitled to a "qualified discharge." However, claimant has sought the relief by bringing a motion in the underlying small claims action when case law has held that a "special proceeding" must be commenced pursuant to Civil Practice Law & Rules (CPLR) Article 4 [Guasti v Miller, 203 NY 259 (1911)].

Because of the discrepancy between the time period and amount claimed due in the condominium lien, which was satisfied, and the date and the amount of the small claims judgment, which remains a lien on the real property, in an effort to resolve the situation without having the defendant commence a special proceeding, the matter will have to be rescheduled after proper notice is given to claimant and its counsel.

The matter will be rescheduled for Friday, October 28, 2016 at 9:30 AM at the courthouse 927 Castleton Avenue, Staten Island, New York, Part 56. The court will notify [*3]counsel for claimant listed on the discharge of lien of the date (Howard Bernstein); counsel of record in the small claims action (Merlino & Gonzalez) and the condominium association.

The foregoing constitutes the decision and order of the court.

Dated: August 18, 2016

Staten Island, NY

___________________________

HON. PHILIP S. STRANIERE

Judge, Civil Court Footnotes

Footnote 1:Statute is not gender neutral