Opinion
No. FST CV 05-4004667 S
December 29, 2005
MEMORANDUM OF DECISION
The plaintiff, Mizuho Corporate Bank, brought the present action against the defendant, Michael Lauer, in a two-count complaint dated April 29, 2005, seeking an order of foreclosure on two mortgages on which the defendant has defaulted. On August 22, 2005, the defendant moved for an order staying the proceedings on the grounds that the United States District Court for the Southern District of Florida had issued an injunction enjoining the commencement or prosecution of any civil suit against the defendant. The injunction was issued on January 8, 2004, following the defendant's filing for bankruptcy, individually and on behalf of his related companies, in the District Court.
It is not clear under what chapter of the Bankruptcy Code the defendant filed for protection.
Pursuant to the terms of the injunction "any party . . . with notice of this Order [is enjoined] from initiating, maintaining, or in any way prosecuting in any other court any proceeding, suit or action against any of the above-named Defendants and/or Relief Defendants."
"The purpose of the Bankruptcy Law . . . is to place the property of the bankrupt, wherever found, under the control of the court, for equal distribution among the creditors." Straton v. New, 283 U.S. 318, 320-21, 51 S.Ct 465, 75 L.Ed. 1060 (1931). "Upon adjudication, title to the bankrupt's property vests in the trustee with actual or constructive possession, and is placed in the custody of the bankruptcy court." Isaacs v. Hobbs Tie Timber Co., 282 U.S. 734, 737, 51 S.Ct. 270, 75 L.Ed. 645 (1931). "After a bankruptcy court assumes custody of a bankrupt's estate, it has power to enjoin all suits elsewhere which seek to dispose of, or adjudicate claims upon, his property . . ." Manhattan Co. v. New York, N.H. H.R. Co., 171 F.2d 482, 483 (2d Cir. 1948).
See also 11 U.S.C. § 362(a) which operates generally to stay any acts creating, perfecting or enforcing any lien against property of the estate.
The holder of a lien "may not, without the bankruptcy court's permission, institute proceedings in a state court to enforce it, since his so doing might interfere with the orderly administration of the estate. Thus a mortgagee will be restrained from instituting or proceeding further in a foreclosure action, begun after the date of the petition in bankruptcy." Straton v. New, supra, 283 U.S. 321. "Where the [mortgaged] land lies outside the limits of the district in which the bankruptcy court sits, ancillary proceedings may be instituted in the district court of the United States for the district in which the land is, and an injunction against foreclosure issued by the court of ancillary jurisdiction." Isaacs v. Hobbs Tie Timber Co., supra, 282 U.S. 738.
As the district court proceeding pre-dates the date the present action was commenced, this court must abide by the bankruptcy laws and grant the defendant's motion to stay the present proceedings. The court grants the defendant's motion to stay the proceedings.