Opinion
No. 00 Civ. 8651 (LTS)(HBP)
March 19, 2002
MEMORANDUM ORDER
In this fraudulent conveyance action, plaintiff Superintendent of Insurance, as Liquidator of Nassau Insurance Company, seeks to recover the value of certain residential property conveyed from Richard DiLoreto to his wife, defendant Jeanne DiLoreto. The action is premised upon claims asserted in litigation and civil contempt proceedings brought against Richard DiLoreto. Defendant has moved to dismiss the complaint, arguing that the commencement of the action violated the automatic stay that arose pursuant to section 362(a) of the Bankruptcy Code ( 11 U.S.C. § 362(a)) upon the November 12, 1998 filing of a bankruptcy petition by Richard Di Loreto. It is undisputed that the Bankruptcy Court has not granted relief from the automatic stay to permit this action to proceed. Defendant also asserts improper service of process. The Liquidator has apparently served, but has never filed with the Court, a cross-motion for summary judgment, contending that the automatic stay does not apply to the instant action and seeking entry of judgment in his favor and/or provisional relief.
The question of the applicability of the automatic stay has been a topic of considerable attention in the course of these proceedings, and the Court has granted stays and extensions of time to permit the Liquidator to explore intervention in this action by the trustee of Richard DiLoreto's bankruptcy estate, and/or to seek relief from the automatic stay to permit this action to proceed to the extent the action is affected by the automatic stay. There has been no intervention, nor any word from the Liquidator as to even an application for relief from the automatic stay. By order dated July 26, 2001, the Court notified the parties that the instant motion would be deemed fully submitted as of August 10, 2001. No further submissions in respect of the motion were received after that order was entered. A further pretrial conference was held on January 11, 2002, at which counsel for the Liquidator appeared and requested additional time to file his papers in opposition to the dismissal motion and in support of his cross-motion for summary judgment, as well as to seek intervention by the trustee of Defendant's husband's bankruptcy estate. The Court extended to January 14, 2002, the deadline for submission of papers in respect of the instant motion and set January 31, 2002, as the deadline for any intervention application. No further motion papers were received and there has been no application to intervene. Defendant's motion to dismiss is, accordingly, ripe for adjudication.
The Court, having reviewed and considered thoroughly the papers filed in respect of the motion, finds that this action is void and must be dismissed in light of the automatic stay.
The papers reviewed and considered by the Court in connection with this motion include a courtesy copy of Plaintiff's Memorandum of Law in Opposition to Defendant's Motion to Dismiss and in Support of Plaintiff's Cross-Motion for summary judgment. Although the Court received courtesy copies of papers in support of Plaintiff's cross-motion for summary judgment, neither the cross-motion nor Plaintiff's opposition to the motion to dismiss was filed with the Court.
Section 362(a) of the Bankruptcy Code provides in relevant part that the filing of a bankruptcy petition "operates as a stay, applicable to all entities, of . . . (2) the enforcement, against the debtor or against property of the estate, or a judgment obtained before the commencement of [a bankruptcy] case under this title; (3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate; . . . [and] (6) any act to collect, assess, or recover a claim agianst the debtor that arose before the commencement of the case under this title." 11 U.S.C.A. § 362(a) (West 1993 Supp. 2001.) The automatic stay thus imposed is quite broad, as is the Bankruptcy Code's definition of property of teh estate, which encompasses "all legal or equitable interests of the debtor in property as of the commencement of the [bankruptcy] case." 11 U.S.C.A. § 541(a) (West 1993.) Such interests are property of the estate, "wherever located and by whomever held." Id.
The Second Circuit has recognized that a fraudulent conveyance cause of action is subject to the automatic stay, as a prohibited action to recover a claim against the debtor. In re Colonial Realty Co. v. Hirsch, 980 F.2d 125, 131-32 (2d Cir. 1992). Actions taken in violation of the automatic stay are void. Id. at 137.
This action is hereby dismissed, without prejudice, as violative of the automatic stay. In light of the conclusion reached on the automatic stay issue, the Court does not reach the other issues raised by the parties.
SO ORDERED.