MTGLQ INVESTORS v. EMEGO (2026)

Upon the motion papers (NY St Cts Elec Filing [NYSCEF] Doc Nos. 100-119) considered on defendant Anthony Emego's motion brought by order to show cause (NYSCEF Doc No. 100) later redated (NYSCEF Doc No. 116) seeking to vacate a referee's deed and sale because defendant Anthony Emego had filed for protection under the United States Bankruptcy Code before the auction and thereby triggered the automatic stay (11 USC § 362 [a]), it is hereby

ORDERED that defendant's motion be, and it hereby is, DENIED with one bill of one hundred dollars motion costs awarded to plaintiff against Anthony Emego (CPLR 8202).

Undisputed is that the foreclosure auction occurred on July 23, 2025 (NYSCEF Doc No. 104, referee's report of sale) and that a third-party purchaser, Manas Development LLC was the winning bidder (id.). Also undisputed is that defendant Anthony Emego filed a petition with the United States Bankruptcy Court (EDNY) on July 22, 2025 under docket number 8-25-72780 (NYSCEF Doc No. 109).

The July 2025 filing was not defendant's first filing, nor was it defendant's second filing. It was at least defendant's third filing. The other two filings were:

Although the bankruptcy code affords relief to an honest but unfortunate debtor (Marrama v Citizens Bank of Massachusetts, 549 US 365 [2007]) and implements that relief from the moment of filing through a wide reaching automatic stay of all litigation and proceedings against the debtor and the debtor's property (11 USC § 362 [a]), the bankruptcy code has limits. One of those limits is the pivotal issue in this motion. Because defendant crossed over the limits, defendant was not entitled to and did not receive an automatic stay in respect of the July 2025 bankruptcy filing. Therefore, the auction and transfer of the realty by referee's deed to the winning bidder are valid. Defendant's motion is denied.

The relevant limit is, "if a single or joint case is filed by or against a debtor who is an individual under this title, and if 2 or more single or joint cases of the debtor were pending within the previous year but were dismissed, other than a chapter 7 after dismissal under section 707 (b), the stay under [11 USC § 362 (a)] shall not go into effect upon the filing of the later case" (11 USC § 362 [c] [4] [A] [i]). Here, looking back one year from defendant's July 22, 2025 bankruptcy filing, the other two cases cited above had been filed and dismissed. Neither was dismissed under section 707 (b) of the bankruptcy code. Defendant is an individual. Therefore, when defendant filed the July 22, 2025 bankruptcy petition, the automatic stay was not in effect.

Even when the automatic stay (11 USC § 362 [a]) does not go into effect, a bankruptcy debtor like this defendant on the July 22, 2025 petition has bankruptcy code rights to seek a stay (11 USC § 362 [c] [4] [B]), but nothing in this record shows that defendant sought such relief. Even if defendant had sought such relief, it was not granted before the foreclosure sale, so any such stay would not invalidate the sale (Stone v Viegelahn [Matter of Stone], 814 Fed Appx 857 [5th Cir 2020]). Therefore, here where neither the automatic stay nor a stay upon debtor application was in effect, the auction and transfer of the realty were valid.

Defendant's motion is denied.

Aletha V. Fields, J.