ASSET DATA CORP., Plaintiff, v. Anthony MASSARO, Defendant.
Upon the foregoing cited papers, and after two conferences, it is ordered that this application for an order, pursuant to CPLR 5015, vacating a default judgment entered on February 8, 2005, is granted. The judgment is hereby vacated and the action is dismissed.
Defendant seeks an order vacating the default judgment, pursuant to CPLR 5015, on the basis that the judgment was entered after he filed for bankruptcy and on the basis that the debt was discharged in bankruptcy and the application requests “such other and further relief as may be just.” While not included as an exhibit to the application for an order to show cause, on the initial hearing date of March 9, 2006, pro se defendant proffered an additional document, accepted by the Court on consent of plaintiff's attorney, entitled “Discharge of Debtor(s)/Order of Final Decree.” This document provides that defendant is granted a discharge under Section 727 of Title 11 of the United States Bankruptcy Code. The document is dated May 4, 2005 and indicates that the date of filing the petition was December 3, 2004. Defendant then realized that he had not brought to Court the “Schedule of Creditors,” which was part of his bankruptcy filing, and which listed plaintiff as a creditor. While the affidavit in support of defendant's request to vacate the judgment states, as a defense, that “[t]his claim is included in my Chapter 7 bankruptcy,” nevertheless, defendant sought a one day adjournment to bring in the document and that request was granted on consent.
On March 10, 2006, defendant provided the Court with the Schedule which, in fact, lists plaintiff as a creditor and indicates that the “Consideration for Claim” as a “Summons.”
Plaintiff opposes vacating the judgment on the basis that defendant was duly served with the summons and complaint and defendant has failed to state a meritorious defense or deny owing the debt. According to the affirmation in opposition, a default judgment was properly entered by the clerk of this Court against defendant on February 8, 2005 upon “Proper Affidavits and Verifications [which] were provided to the Clerk of the Court” and “[o]nce Defendant filed bankruptcy, we obeyed the stay and took no further action.” Annexed to the opposition papers are (1) the summons and complaint, (2) the affidavit of service, and (3) a copy of the judgment dated January 13, 2005 evincing entry of judgment on February 8, 2005.
It is well settled that in addition to the grounds set forth in CPLR 5015, a court which renders a judgment has the power to relieve a party from that judgment if it is taken through fraud, mistake, inadvertence, surprise, excusable neglect, “for sufficient reason and in the interests of substantial justice.” (Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 68, 760 N.Y.S.2d 727, 790 N.E.2d 1156 ; McKenna v. County of Nassau, 61 N.Y.2d 739, 472 N.Y.S.2d 913, 460 N.E.2d 1348 ; Ladd v. Stevenson, 112 N.Y. 325, 19 N.E. 842 .)
The affidavit of service of the summons and complaint, annexed to plaintiff's answering papers, indicates that service was effectuated, pursuant to CPLR 308(4), by conspicuous place service with the affixing occurring on November 2, 2004 and the mailing occurring on November 10, 2004. According to the stamp on the affidavit of service, the affidavit was filed with the Clerk of the Court on November 16, 2004.
Civil Practice Law and Rules 308(4) provides that an affidavit of service shall be filed within twenty days after the affixing or mailing, which ever is later, and service is complete “ten days after such filing.” Pursuant to CPLR 320(a), a defendant served by conspicuous place service is to appear within thirty days after service is complete. Thus, according to plaintiff's papers, the date service was complete was November 26, 2004 and defendant had thirty days from that date to appear, i.e. December 26, 2004. Prior to appearing, defendant filed his petition on December 3, 2004.
According to the Court docket and file, on January 18, 2005, plaintiff filed the judgment with the judgment clerk, together with plaintiff's attorney's affirmation and an affidavit both dated January 13, 2005 and an additional affidavit, dated December 28, 2004.
Upon the filing of a debtor's bankruptcy petition, pursuant to The United States Bankruptcy Code, an automatic stay of certain prescribed actions against the debtor is triggered and is effective immediately, without further action. (11 USC § 362[a].) This provision stays any act to commence or continue a lawsuit or other proceeding to recover a pre-petition claim against the debtor. (In re Best Payphones, Inc., 279 B.R. 92 [S.D.N.Y.2002].) The automatic stay is one of the fundamental debtor protections provided by the bankruptcy laws. (Midlantic National Bank v. New Jersey Dept. of Environmental Protection, 474 U.S. 494, 106 S.Ct. 755, 88 L.Ed.2d 859 .) The automatic stay is mandatory, applicable to all entities, including state and federal courts and is intended to give the debtor breathing room by stopping all collection efforts, all harassment, and all foreclosure actions. (Soares v. Brockton Credit Union, 107 F.3d 969 [1st Cir. 1997]; In re Siskin, 258 B.R. 554 [E.D.N.Y.1998].)
Any non-ministerial or judicial actions taken against a debtor are void ab initio if they occur after the automatic stay takes effect, absent relief from the automatic stay. (Rexnord Holdings v. Bidermann, 21 F.3d 522 [2d Cir.1994]; Matter of Dominguez, 312 B.R. 499 [S.D.N.Y.2004]; Carr v. McGriff, 8 A.D.3d 420, 781 N.Y.S.2d 34 [2d Dept.2004].) Only a bankruptcy court has jurisdiction to terminate, annul, or modify the automatic stay. (28 USC § 157[b][G]; Rexnord Holdings v. Bidermann, 21 F.3d 522, supra; In re Siskin, 258 B.R. 554, supra; Emigrant Savings Bank v. Rappaport, 20 A.D.3d 502, 799 N.Y.S.2d 533 [2d Dept.2005]; Homeside Lending v. Watts, 16 A.D.3d 551, 792 N.Y.S.2d 513 [2d Dept.2005]; Carr v. McGriff, 8 A.D.3d 420, 781 N.Y.S.2d 34 [2d Dept.2004].) A willful violation of the automatic stay may entitle a debtor to an award of actual damages, and, where appropriate, punitive damages. (11 USC § 362[k]; In re Crysen/Montenay Energy Co., 902 F.2d 1098 [2d Cir.1990].)
Certain ministerial court actions which entail no deliberation, discretion, or judicial involvement are not considered a continuation of judicial proceeding under 11 USC § 362(a)(1) and are excepted from the stay. (Soares v. Brockton Credit Union, 107 F.3d 969, supra; In re Best Payphones, Inc., 279 B.R. 92, supra.) This may include the entry of a judgment provided the underlying issue has been decided “in word and deed” before the petition date, “leaving for post-petition achievement only the clerical act of recording the [judgment].” (Rexnord Holdings v. Bidermann, supra at 527.) The stay remains in effect until the proceeding is closed, dismissed or the time a discharge is granted or denied. (11 USC § 362[c][A]-[C].)
In order to enter a default judgment pursuant to CPLR 3215, upon a defendant's failure to appear, a plaintiff must submit the “requisite proof” which includes affidavits setting forth the basis claim and the facts of the default, and that an additional mailing has been made, an affidavit of military investigation, the pleadings and an affidavit of service. (CPLR 3215[a], [f], [g][I]; 50 USC App. § 520 and Military Law § 303.)
Here, defendant filed a bankruptcy petition and was entitled to all the protections so doing afforded him under the bankruptcy law. (Midlantic National Bank v. New Jersey Dept. of Environmental Protection, 474 U.S. 494, 106 S.Ct. 755, 88 L.Ed.2d 859, supra.) The automatic stay should have stopped all collection efforts on plaintiff's part but did it not do so in light of plaintiff's further actions. Plaintiff did not, as claimed, “obey[ ] the stay” and take no further action. The entry of a default judgment pursuant to CPLR 3215 is not a ministerial act exempt from the automatic stay provision as it requires a determination based on the sufficiency of the proof submitted to the Clerk or the Court. (Id.; 11 USC § 362[a]; Soares v. Brockton Credit Union, 107 F.3d 969, supra; Carr v. McGriff, 8 A.D.3d 420, 781 N.Y.S.2d 34, supra.) In view of the above, as of December 3, 2004, this court was stayed from taking further action and should not have entered judgment against defendant on February 8, 2005. Moreover, as the debt is therefore unsecured by a judgment, it does not survive the discharge in bankruptcy. (cf. Carman v. European American Bank & Trust Co., 78 N.Y.2d 1066, 576 N.Y.S.2d 90, 581 N.E.2d 1345 .)
Inasmuch as defendant filed a petition in bankruptcy court on December 3, 2004 triggering an automatic stay tolling defendant's time to appear, (11 USC 362 [a] ,) inasmuch as defendant has thus never defaulted in this action, (CPLR 308  and 320[a],) inasmuch as plaintiff's application on January 13, 2005 for a default judgment was improper both as to the allegation that defendant had defaulted (id.; CPLR 3215) and improper as it was in contravention of the stay, (11 USC § 362[k]; In re Crysen/Montenay Energy Co., 902 F.2d 1098, supra; Ford Motor Credit Co. v. Florio, 229 B.R. 606 [S.D.N.Y.1999]; Carr v. McGriff, 8 A.D.3d 420, 781 N.Y.S.2d 34, supra,), and thus void ab initio, (Rexnord Holdings v. Bidermann, 21 F.3d 522, supra; Matter of Dominguez, 312 B.R. 499, supra; Carr v. McGriff, 8 A.D.3d 420, 781 N.Y.S.2d 34, supra,) and inasmuch as the debt has been discharged eliminating defendant's obligation to pay it, (11 USC § 727), defendant's application to vacate the judgement is granted. (CPLR 5015; Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 760 N.Y.S.2d 727, 790 N.E.2d 1156, supra; McKenna v. County of Nassau, 61 N.Y.2d 739, 472 N.Y.S.2d 913, 460 N.E.2d 1348, supra; Ladd v. Stevenson, 112 N.Y. 325, 19 N.E. 842, supra.)
In light of the bankruptcy discharge, upon vacatur, this action is hereby dismissed. (CPLR 3211[a].) This constitutes the decision and order of the Court.
DICCIA T. PINEDA-KIRWAN, J.