Opinion
115207/2008.
Decided February 2, 2009.
Ganfer Shore, LLP, By: Matthew N. Tobias, Esq., New York, New York, for Petitioner.
Petitioner Stephen B. Jacobs seeks an order discharging judgments against him entered and docketed in the Supreme Court of New York, New York County, due to a final order of discharge by the bankruptcy court. Respondents have defaulted in answering the petition.
According to the petition, petitioner consented to an entry of a $550,000 judgment against him in the action in Supreme Court, NY County, Peter Pantelidis, George Pantelidis, Bernd H. Allen, Phyllis Jalbert, and Louis Varone v Linplace Associates and Steven B. Jacobs, Index No. 26971/1992. Five judgments at issue in this petition were entered and docketed on September 14, 1994 with the County Clerk of New York County.
In October 1996, petitioner filed for Chapter 11 bankruptcy in the United States Bankruptcy Court of the Southern District of New York, listing the five judgments in Schedule F of the petition. See Verified Petition, Ex A. Petitioner was released from all dischargeable debts by order dated May 29, 1997 by the Bankruptcy Court. Id., Ex B. Because more than a year has passed since the bankruptcy discharge order and respondents have defaulted in opposing the petition, the petition is granted.
The petition does not state whether a qualified or an unqualified discharge of the judgments is sought. Debtor Creditor Law § 150 (4) (b) provides that,
"[I]f it appears that the judgment was a lien [on real property owned by the bankrupt prior to the commencement of bankruptcy proceedings] and it is not established to the satisfaction of the court that the lien was invalidated or surrendered in the bankruptcy proceedings 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."
"A qualified' discharge, as distinguished from an unqualified discharge, serves as notice to third parties that, notwithstanding the debtor-owner's discharge in bankruptcy, the property may, nonetheless, still be burdened by liens." Carman v European Am. Bank Trust Co., 78 NY2d 1066, 1067 (1991).
Here, Schedule A of the bankruptcy petition listed an apartment in New York County as real property. See Verified Petition, Ex A. The five judgments were docketed two years before petitioner's bankruptcy filing, "which, by operation of law, created a lien on the defendant's real property in that county." Bank of New York v Magri, 226 AD2d 412, 412 (2d Dept 1996) (citations omitted).
"[W]here the judgment in question is secured by a lien on real property, the debtor seeking to have the docket marked with an unqualified discharge' has the burden of establishing, to the satisfaction of the court, that the lien was actually abrogated or nullified in the bankruptcy proceeding." Carman, 78 NY2d at 1067. Plaintiff submitted only the judgment of the Federal Bankruptcy Court. Because "it is elementary, however, that liens and other similar secured interests ordinarily survive bankruptcy" ( ibid.), and "[i]nasmuch as the lien on the property attached prior to the bankruptcy petition" ( Bank of New York, 226 AD2d at 412), the Court must therefore grant a qualified discharge.
CONCLUSION
Accordingly, it is hereby ADJUDGED that this petition to discharge certain judgments pursuant to Debtor and Creditor Law § 150 is granted on default, and upon payment of applicable fees, if any, the Clerk is directed to mark a qualified discharge of record upon the docket of the following judgments:
1) Judgment in favor of Bernd H. Allen against Steven B. Jacobs, in the amount of $550,495.00, entered and docketed on September 14, 1994, in the action Peter Pantelidis, George Pantelidis, Bernd H. Allen, Phyllis Jalbert, and Louis Varone v Linplace Associates and Steven B. Jacobs, Index No. 26971/1992
2) Judgment in favor of Phyllis Jalbert against Steven B. Jacobs, in the amount of $550,495.00, entered and docketed on September 14, 1994, in the action Peter Pantelidis, George Pantelidis, Bernd H. Allen, Phyllis Jalbert, and Louis Varone v Linplace Associates and Steven B. Jacobs, Index No. 26971/1992
3) Judgment in favor of George Pantelidis against Steven B. Jacobs, in the amount of $550,495.00, entered and docketed on September 14, 1994, in the action Peter Pantelidis, George Pantelidis, Bernd H. Allen, Phyllis Jalbert, and Louis Varone v Linplace Associates and Steven B. Jacobs, Index No. 26971/1992
4) Judgment in favor of Peter Pantelidis against Steven B. Jacobs, in the amount of $550,495.00, entered and docketed on September 14, 1994, in the action Peter Pantelidis, George Pantelidis, Bernd H. Allen, Phyllis Jalbert, and Louis Varone v Linplace Associates and Steven B. Jacobs, Index No. 26971/1992
5) Judgment in favor of Louis Varone against Steven B. Jacobs, in the amount of $550,495.00 entered and docketed on September 14, 1994, in the action Peter Pantelidis, George Pantelidis, Bernd H. Allen, Phyllis Jalbert, and Louis Varone v Linplace Associates and Steven B. Jacobs, Index No. 26971/1992.