Bankers Trust Company of California, N.A. v. Zhou

• Decision Date: 17 August 2006
• Docket Number: 8140N.
• Parties: BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Trustee, Respondent, v. WEN ZHOU, Appellant, et al., Defendants. MICHAEL WONG, Intervenor-Appellant.
• Court: New York Supreme Court — Appellate Division

32 A.D.3d 278

821 N.Y.S.2d 152

2006 NY Slip Op 06249

BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Trustee, Respondent, v. WEN ZHOU, Appellant, et al., Defendants MICHAEL WONG, Intervenor-Appellant.

8140N.

Appellate Division of the Supreme Court of the State of New York, First Department.

August 17, 2006.

Order, Supreme Court, New York County (Judith J. Gische, J.), entered on or about February 25, 2005, which granted plaintiff's motion to amend the judgment of foreclosure and sale, order of reference, summons and complaint and lis pendens, nunc pro tunc, and denied the cross motion of defendant and intervenor-appellant to vacate the summons and complaint, lis pendens and judgment, affirmed, with costs.

In this action to foreclose on a condominium unit, plaintiff's motion to amend the judgment of foreclosure and sale and other pertinent papers in the action was properly granted, nunc pro tunc, to correct a minor typographical error in the description of the unit (see Key Bank Natl. Assn. v Stern, 14 AD3d 656 [2005]). The prior bankruptcy of the intervenor did not render invalid the court's amendment of the judgment of foreclosure and other papers. The intervenor was not the record owner of the unit when the foreclosure was commenced, and, furthermore, his bankruptcy proceeding was dismissed. Therefore, the automatic bankruptcy stay expired before the motion to amend the judgment of foreclosure was even made. Moreover, the foreclosure proceeding never reached the stage where the property was noticed for sale. The court also properly determined that entry of an amended judgment of foreclosure and sale was appropriate on a subsequent notice of pendency (see CPLR 6516).

We have considered appellants' remaining arguments and find them without merit.

Concur—Buckley, P.J., Friedman, Marlow and Nardelli, JJ.

McGuire, J., dissents in a memorandum as follows:

This action was stayed pursuant to 11 USC § 362 from the date the deed between defendant-appellant Zhou, as grantor, and intervenor-appellant Wong, as grantee, was recorded to the date the order was entered dismissing Wong's bankruptcy petition. Accordingly, I respectfully dissent.

By a deed, recorded November 13, 2000, intervenor-appellant Michael Wong transferred ownership of a condominium unit located at 225 East 86th Street to defendant-appellant Wen Zhou. Zhou obtained a mortgage to purchase the unit from Business Mortgage, Inc. The mortgage was ultimately assigned to plaintiff Bankers Trust Company of California.

On April 19, 2001, plaintiff commenced this action against Zhou to foreclose the mortgage, and an order appointing a referee to compute was subsequently entered. Notwithstanding (perhaps because of) the pending foreclosure action, Zhou deeded the unit back to Wong in an instrument recorded on January 7, 2002. Previously, on September 19, 2001, Wong had filed a voluntary chapter 11 bankruptcy petition, listing the unit as one of his assets. By a judgment of foreclosure and sale, dated August 22, 2002, Supreme Court confirmed the Referee's report computing the amount due under the note and mortgage and directed that the unit be sold. On June 4, 2003, an order was entered dismissing Wong's bankruptcy petition.

In September 2004, plaintiff moved to amend, nunc pro tunc, certain of the pleadings in this action, including the judgment of foreclosure and sale, to correct a minor error in the description of the unit. Wong cross-moved for leave to intervene, and to vacate the judgment of foreclosure and sale on the ground, among others, that the action had proceeded in violation of the mandatory bankruptcy stay imposed by 11 USC § 362. By the order appealed from, dated February 22, 2005, Supreme Court granted the motion and denied the cross motion. This appeal ensued.

"The automatic stay [mandated by section 362] is activated immediately on the filing of a voluntary chapter 11 petition under Bankruptcy Code § 301, and remains in effect . . . until the entry of an order under Bankruptcy Code § 362 (c) (2) . . . dismissing the chapter 11 case . . . . Judicial actions and proceedings, as well as extrajudicial acts, in violation of the automatic stay, are generally void and without legal effect, unless countenanced by the court in which the chapter 11 petition is pending" (Interstate Commerce Commn. v Holmes Transp., Inc., 931 F2d 984, 987-988 [1st Cir 1991] [citations omitted]; see Rexnord Holdings, Inc. v Bidermann, 21 F3d 522, 527 [2d Cir 1994]). A stay pursuant to section 362 "is automatic and is effective nationwide without notice" (2 Collier, Bankruptcy Practice Guide ¶ 38.02 [1], at 38-8; see In re Bresler, 119 BR 400, 402 [ED NY 1990]; In re Young, 14 BR 809, 811 [ND Ill 1981]; Haig, Commercial Litigation in New York State Courts § 49.15 [4 West's NY Prac Series 2d ed]).

Here, Zhou deeded the unit to Wong in an instrument recorded on January 7, 2002, while Wong's chapter 11 bankruptcy petition was pending. On that date, accordingly, Wong's interest in the unit—an "after-acquired" interest—immediately became part of Wong's bankruptcy estate (see 11 USC § 541 [a] [7]), triggering the automatic stay (see In re Mews Assoc., L.P., 144 BR 867 [WD Mo 1992]; In re Dakota Indus., Inc., 31 BR 23 [D SD 1983]; Matter of Sundale Assoc., Ltd., 23 BR 230 [SD Fla 1982]; Matter of Moore, 22 BR 200 [MD Fla 1982]), and precluding all courts, save the bankruptcy court in which the bankruptcy petition was pending, from taking any further actions with respect to the unit (see ...