Case ess Doc 39 Filed 10/17/13 Entered 10/18/13 09:08:24

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1 UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF NEW YORK x In re Chapter 7 EDWIN E. CALLE, Case No ess Debtor x ORDER ON MOTION TO VOID FORECLOSURE SALE WHEREAS, on August 23, 2012, Edwin Calle filed a petition for relief under Chapter 7 of the Bankruptcy Code (the 2012 Petition ); and WHEREAS, on March 29, 2006, the Debtor obtained a loan from First Horizon Home Loan Corporation ( First Horizon ) in the amount of $538,050, and delivered a note to First Horizon in that amount (the Note ); and WHEREAS, the First Horizon note was secured by a mortgage (the Mortgage ) on the Debtor s property located at Sloan Street, Springfield Gardens, NY 11413; and WHEREAS, by assignment dated April 21, 2006, First Horizon assigned its interest in the Note and Mortgage to LaSalle Bank National Association, as trustee ( LaSalle ), on behalf of the holders of the GSAMP Trust 2006-HE4 Mortgage Pass-Through Certificates, Series HE4 (the GSAMP Trust ); and WHEREAS, on November 23, 2011, the GSAMP Trust by and through U.S. Bank National Association, as Trustee, successor-in-interest to Bank of America, N.A., as successor by merger to LaSalle, appointed Select Portfolio Servicing, Inc. ( SPS ) as servicer for the loan evidenced by the Note and Mortgage, Doc. No. 27-6; and WHEREAS, on April 10, 2009, LaSalle commenced an action against the Debtor in Supreme Court, Queens County, Index No. 9507/2009, seeking a judgment of foreclosure and

2 sale based on his default under the Note and Mortgage; and WHEREAS, on June 1, 2010, the Supreme Court, Queens County, entered a judgment of foreclosure and sale in favor of LaSalle with respect to the Debtor s property located at Sloan Street, Springfield Gardens, NY (the Property ); and WHEREAS, the foreclosure sale was stayed when the Debtor filed the 2012 Petition; and WHEREAS, on October 10, 2012, the 2012 Petition was automatically dismissed effective October 9, 2012, pursuant to Bankruptcy Code Section 521(i)(1), based on the Debtor s failure to file certain documents required by Bankruptcy Code Section 521; and WHEREAS, on March 21, 2013, the Debtor filed a petition for relief under Chapter 7 of the Bankruptcy Code (the 2013 Petition ), and the case was assigned to Honorable Jerome Feller; and WHEREAS, the parties state that the Property was sold at a foreclosure sale on March 22, 2013 (the Foreclosure Sale ); and WHEREAS, on April 3, 2013, Judge Duane A. Hart, Supreme Court, Queens County (the State Court ), issued an order staying the Foreclosure Sale; and WHEREAS, on May 16, 2013, the Debtor filed a motion seeking an order declaring the foreclosure sale conducted in violation of the automatic stay void ab initio, directing the Referee to return the deposit to the purchaser at the Foreclosure Sale, enjoining further action in the State Court while the automatic stay is in effect, directing the parties to engage in loss mitigation, and for other and further relief as the Court deems just and proper (the Motion to Void Foreclosure Sale ); and WHEREAS, on June 14, 2013, this case was administratively reassigned to Honorable 2

3 Elizabeth S. Stong; and sale; and WHEREAS, on July 3, 2013, an order was entered discharging the Debtor; and WHEREAS, on July 26, 2013, SPS filed opposition to the motion to void the foreclosure WHEREAS, on August 1, 2013, the Debtor filed a reply to the opposition; and WHEREAS, on August 2, 2013 and September 6, 2013, the Court held hearings on the Motion at which the Debtor and SPS appeared and were heard; and WHEREAS, on October 4, 2013, at the parties request, the Court marked the matter submitted and reserved decision; and WHEREAS, Section 362(a) provides: [A] petition filed under... this title... operates as a stay, applicable to all entities, of (1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;... (6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title.... Bankruptcy Code Section 362(a); and WHEREAS, the automatic stay is effective immediately upon the filing of the petition... and any proceedings or actions described in section 362(a)(1) are void and without vitality if they occur after the automatic stay takes effect. Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 527 (2d Cir. 1994) (citing 48th St. Steakhouse, Inc. v. Rockefeller Grp., Inc. (In re 48th St. Steakhouse, Inc.), 835 F.2d 427, 431 (2d Cir. 1987), cert. denied sub nom. Rockefeller Grp., Inc. 3

4 v. 48th Street Steakhouse, Inc., 485 U.S (1988)); and WHEREAS, in the Second Circuit, actions taken in violation of the automatic stay generally are held to be void ab initio. In re Ebadi, 448 B.R. 308, 313 (Bankr. E.D.N.Y. 2011) (citing Rexnord Holdings, 21 F.3d at 527 and 48th St. Steakhouse, 835 F.2d at 431); In re Olejnik, 2010 WL , at *5 (Bankr. E.D.N.Y. Oct. 28, 2010) (citing Rexnord and 48th Street Steakhouse); and WHEREAS, in Ebadi, the court found that a foreclosure sale must be vacated where it had been accomplished in violation of the automatic stay even if the violation were done unknowingly. 448 B.R. at 318 (internal citations omitted); and WHEREAS, the Foreclosure Sale was held after the 2013 Petition was filed, in violation of the automatic stay. NOW, THEREFORE, it is hereby ORDERED, that the Foreclosure Sale is declared void ab initio; and it is further ORDERED, that all other relief requested in the Motion to Void Foreclosure Sale is denied. Dated: Brooklyn, New York October 17, Elizabeth S. Stong United States Bankruptcy Judge

5 TO: Edwin E. Calle Sloan Street Springfield Gardens, NY Brian McCaffrey Brian McCaffrey, PC Sutphin Blvd. 1st Floor Jamaica, NY Richard J. McCord Certilman Balin Adler & Hyman 90 Merrick Avenue East Meadow, NY