In re Italiano
| Decision Date | 23 October 1986 |
| Docket Number | Adv. No. 85-0254.,Bankruptcy No. 85-05350 |
| Citation | 66 BR 468 |
| Parties | In re Carmella Ursula ITALIANO, Debtor. Harry KELLMAN, Trustee for Carmella Ursula Italiano, Plaintiff, v. Vincent J. PALESE, Defendant. |
| Court | U.S. Bankruptcy Court — District of New Jersey |
Archer & Greiner by Nona L. Ostrove, Haddonfield, N.J., for Harry Kellman, Trustee.
Jubanyik, Varbalow, Tedesco & Shaw by Barry N. Shaw, Collingswood, N.J., for Vincent J. Palese.
The matter presently before the court is in connection with a complaint filed by the Chapter 7 Trustee of the estate of Carmella Ursula Italiano. Before the court is the Trustee's motion for judgment on the pleadings and alternatively for summary judgment and a cross-motion of the defendant herein for judgment on the pleadings and alternatively for summary judgment. The complaint was filed by Harry Kellman, the Trustee of the debtor's estate. By his complaint, the Trustee seeks to void any lien claimed by Vincent J. Palese (Palese) against certain real estate of the debtor Carmella Ursula Italiano located at 825 Mercer Street, Cherry Hill, New Jersey, and determining that Palese is an unsecured creditor of the estate.
On February 24, 1986, a hearing on the instant matter was conducted before this court. The Trustee at that time stipulated to the facts set forth by the defendant, Palese, except for the exact amount of the Palese claim. Accordingly, no testimony was taken and the motions for summary judgment and judgment on the pleadings were submitted upon the following stipulated facts.
On December 13, 1982, Bleeps, Inc. sold its business, a restaurant and bar to Fait, Inc., a corporation owned or controlled by the debtor, Carmella U. Italiano and her brother-in-law, Joseph Italiano (now deceased). In order to finance the purchase of "Bleeps", Fait, Inc.,1 the debtor and Joseph Italiano borrowed the sum of Two Hundred Seventy Five Thousand Dollars ($275,000.00) from Bleeps, Inc. evidenced by a promissory note dated December 13, 1982 repayable with interest at the rate of twelve (12%) percent per annum, in equal monthly installments of Three Thousand Twenty Eight Dollars ($3,028.00) commencing on January 13, 1983 and continuing on the same day of each consecutive month thereafter for seventy-one (71) months. (Answer of Palese Exhibit "A"). On or about April 12, 1983, the owner of the aforesaid note (Bleeps, Inc.) assigned said note to Vincent J. Palese ("Palese"). (Answer of Palese Exhibit "B").
On or about May 13, 1984 an installment became due on the aforesaid promissory note. The May, 1984 installment was not paid to Palese and, in accordance with the terms of the aforesaid promissory note, Palese made demand for payment and accelerated all payments due under said note. The aforesaid note further provides for reasonable attorneys' fees and all costs in the event of a default by the debtor Carmella Italiano.
On or about December 13, 1982, Charles E. Korostynski loaned to Fait, Inc. the sum of Twenty Five Thousand Dollars ($25,000.00) pursuant to a certain promissory note executed on that date. The aforesaid promissory note and all of the obligations contained therein were co-signed by the debtor, Carmella Italiano. (Answer of Palese Exhibit "C"). On or about July 6, 1984, Charles Korostynski assigned to Palese all of his right, title and interest in said promissory note. (Answer of Palese Exhibit "D").
The aforesaid promissory note required payments to be made by Fait, Inc. in the amount of Eight Hundred Dollars ($800.00) per month commencing on January 13, 1983 and continuing on the thirteenth (13th) day of every month thereafter with interest at the rate of ten (10%) percent per annum until the thirteenth (13th) day of May, 1986 when the entire balance would be due and owing.
On or about March 13, 1984 the monthly installment payment due under said note was not paid. In accordance with said note, Palese subsequently made demand for payment and accelerated all payments due under said note.
The debtor signed both promissory notes as a co-maker of the notes, and also as a guarantor thereof.
On September 17, 1984, Palese filed suit against the debtor in the Superior Court, Law Division, Camden County, Docket No. L-0161981-084. On October 25, 1984, the debtor filed her answer contesting Palese's complaint. On February 14, 1985, Palese filed his motion for summary judgment against the debtor and on March 1, 1985, the Honorable E. Stevenson Fluharty, Judge of the Superior Court of New Jersey, signed an order granting summary judgment in favor of Palese against the debtor in the amount of Three Hundred Fourteen Thousand One Hundred Twenty Nine and 04/100 Dollars ($314,129.04), interest from March 1, 1985, attorneys' fees (to be certified) and costs. (Answer of Palese Exhibit "E").
As of October 11, 1985, the date of the filing of the debtor's petition, Palese asserts that there was due and owing by the debtor to Palese the sum of One Hundred Eighty Three Thousand Four Hundred Nineteen and 99/100 Dollars ($183,419.99). (Answer of Palese Exhibit "F").
In connection with the attempts by the parties to amicably resolve their differences, the debtor, at the suggestion of her attorneys, agreed to discovery by deposition as to her assets and liabilities on November 30, 1984. Pursuant to said deposition, Palese through counsel inquired into the extent of the debtor's assets available for the payment of the loans due him by the debtor. (Answer of Palese Exhibit "G").
In May, 1985, at a time when negotiations between the parties were not resulting in payment to Palese, Palese requested the Clerk of Superior Court to issue a writ of execution against the debtor. Accordingly, on May 31, 1985, John M. Mayson, Clerk of the Superior Court of New Jersey, issued a Writ of Execution. The Writ of Execution was directed to the Sheriff of Camden County, New Jersey, directing the Sheriff to "satisfy the said judgment out of the personal property of the judgment debtor(s) within your County, and if sufficient personal property cannot be found, then out of the real property in your County belonging to the judgment debtor(s) at the time when the judgment was entered or docketed in the office of the Clerk of this Court, or at any time thereafter. . . ." (Answer of Palese Exhibit "H").
On June 5, 1985, counsel for Palese forwarded the Writ of Execution to the Sheriff of Camden County by letter of Constance D. O'Mara, Esquire dated June 5, 1985 to William Simon, Sheriff of Camden County, which stated:
Enclosed please find a Writ of Execution. Please levy on the debtor\'s personal property and real property at the same time. We have enclosed herewith three copies of the legal description of the real property located at 825 Mercer Street, Cherry Hill, New Jersey along with a check for your fees in this matter. If you need anything further with regard to this matter please contact the undersigned. (Emphasis in original).
The Sheriff of Camden County by letter dated June 17, 1985, advised as follows:
By letter dated after October 29, 1985 from Eleanor Simpson, Law Execution Clerk in the Office of the Sheriff of Camden County to counsel for Palese, it was confirmed that the Writ of Execution of Palese was "clocked in our office on June 6, 1985." Eleanor Simpson also stated therein:
Also is a copy of our letter dated June 17, 1985 to you, and a copy of the real estate levy that was made on June 13, 1985.
(Answer of Palese Exhibit "H"). The debtor's 26 year old son has admitted that after consulting with his mother, the debtor, he refused entry to the Sheriff for the purpose of performing the personal property levy.
On or after the date the writ was received by the Sheriff, June 6, 1985, there were additional attempts by the parties to negotiate a resolution of their differences. However, on September 24, 1985, after Palese had determined that an amicable resolution would not be possible, Palese filed a motion with the Superior Court of New Jersey for an order authorizing the Sheriff to disable the locks on the real property of the debtor at 825 Mercer Street, Cherry Hill, New Jersey for the purpose of completing the levy on the debtor's personal property in her residence. On October 11, 1985, Judge Theodore Z. Davis, Judge of the Superior Court of New Jersey signed an Order to Disable Locks and to Gain Entrance for the Purpose of Personal Property Levy at the debtor's residence. (Answer of Palese Exhibit "I").
On that same date, October 11, 1985, the debtor, Carmella Ursula Italiano filed a petition under Chapter 7 of the Bankruptcy Code. Harry Kellman was thereafter appointed the Trustee of the debtor's estate by the United States Trustee for the District of Delaware and New Jersey.
The Trustee, in his complaint, asserts that New Jersey law requires a judgment creditor to levy upon the personal property of a judgment debtor before levying upon the real property of a judgment debtor. The Trustee argues that since Mr. Palese failed to secure a levy on the debtor's personal property, the lien Mr. Palese claims to have on the debtor's real property is void. The Trustee concludes that Mr. Palese is an unsecured creditor of the bankruptcy estate. Accordingly, the Trustee requests that this court enter an order declaring void any lien claimed by Palese against the real estate of the debtor at 825 Mercer Street, Cherry Hill, New Jersey, and determining that Palese is an unsecured creditor of the bankruptcy estate.
On January 6, 1986, Mr. Palese filed an Answer to the Trustee's adversary complaint. In his Answer, Mr. Palese...
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