Justia Bankruptcy Opinion Summaries

Articles Posted in New York Court of Appeals
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The Court of Appeals held that federal bankruptcy law did not preempt Plaintiff's state law claims asserted against non-debtor third parties for tortious interference with a contract.Plaintiff loaned $147,250,000 to nonparties "Mezz Borrower" and "Mortgage Borrower" (collectively, Borrowers). Borrowers later defaulted, and Plaintiff sought to conduct a foreclosure sale of Mezz Borrower's 100 percent membership interest in Mortgage Borrower pursuant to the pledge and security agreement. Mezz Borrower and Mortgage Borrower subsequently filed separate voluntary petitions for chapter 11 bankruptcy in federal court. Plaintiff then commenced this action in state court alleging that Defendants had tortiously interfered with the loan agreements between Plaintiff and the nonparty borrowers. Defendants - various affiliated persons and entities - moved for summary judgment on the ground that the action was preempted by the Bankruptcy Code. Supreme Court denied the motion, holding that the action was not preempted because it did not involve the bankruptcy. The Appellate Division reversed, concluding that Plaintiff's claims were preempted by federal law because damages arose only because of the bankruptcy filings. The Court of Appeals reversed, holding that Defendants failed to meet their burden of establishing that federal bankruptcy law preempted Plaintiff's tortious interference claims. View "Sutton 58 Associates LLC v. Pilevsky" on Justia Law

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The Court of Appeals affirmed the Appellate Division's order affirming Supreme Court's dismissal of Plaintiff's action brought under N.Y. Real Prop. Acts. Law 1504(1) to discharge a mortgage on grounds that the statute of limitations on Defendant's foreclosure claim had expired, holding that Defendant's claims were not time barred.Under N.Y. C.P.L.R. 204(a), New York law tolls the statute of limitations where the "commencement of an action has been stayed by a court or by statutory prohibition." At issue was whether the bankruptcy stay of any judicial proceedings against a debtor upon the filing of a bankruptcy petition qualifies as a "statutory prohibition" under section 204(a). Defendant filed two foreclosure actions against Plaintiff, Plaintiff filed two bankruptcy petitions, and automatic bankruptcy stays were imposed. Plaintiff brought this action asserting that the statute of limitations on Defendant's foreclosure claim had expired. Defendant moved to dismiss, arguing that the statute of limitations had not expired because it was tolled while the bankruptcy stay was in effect. Supreme Court dismissed, and the Appellate Division affirmed. The Court of Appeals affirmed, holding (1) the bankruptcy stay is a "statutory prohibition" within the ambit of the New York tolling statute; and (2) Defendant's claims were not time barred when Supreme Court granted Defendant's motion to dismiss. View "Lubonty v. U.S. Bank National Ass'n" on Justia Law