Source: http://www.wallstreetmainstreet.com/2010/08/
Timestamp: 2019-04-22 12:54:14+00:00

Document:
Justice Giacobbe of the Supreme Court of the State of New York, County of Richmond, rendered an informative decision which should serve as a warning to homeowner's who seek to game the system by making multiple filings for bankruptcy.
In brief, three different family members of the same household made multiple filings for bankruptcy, each in succession during a single sixteen month period, in order to delay a foreclosure action. Justice Giacobbe notes that it is well settled that upon the filing of a debtor's bankruptcy petition, an automatic stay is triggered preventing the commencement or continuance of any lawsuit to recover claims against the debtor. 11 U.S.C. 362(a)(1). The stay is mandatory in nature and is intended to give the debtor "breathing room" by putting a stop on all collection efforts. Soars v. Brockton Credit Union, 107 F3d 969 (1st Cir. 1979). However, where family members or other individuals with a "unity of interest" are found to act in collusion to avoid their just debts by abusing the relief afforded by bankruptcy, the courts may vacate the bankruptcy stay and allow inter alia foreclosure actions to proceed. In the instant matter, Justice Giacobbe found that the defendants and a third non-party family member, each acted in collusion to improperly delay a foreclosure action with multiple bankruptcy filings. Justice Giacobbe vacated all temporary restraints and allowed the foreclosure to proceed notwithstanding the bankruptcy stay. Justice Giacobbe cites the following federal authority in support of his holding: In re Wong, 30 BR 87, 89 (U.S. Bank. Ct. C.D. Cal. 1983); In re Thirtieth Place, Inc., 30 BR 503 (U.S. Bank. A.P. 9th Cir 1983); see also, In re Kinney, 51 BR 840 (U.S. Bank. Ct. C.D. Cal 1985).
In a decision rendered on August 3, 2010, Justice Joseph J. Maltese of the Supreme Court of the State of New York, Richmond County, vacated a judgment of foreclosure and sale pursuant to CPLR 5015(a) and held that a homeowner’s misplaced reliance on a non-attorney’s “expertise” in foreclosure litigation constitutes a “reasonable excuse” for the purposes of vacating a homeowner's default pursuant to CPLR 5015(a).
The residential real estate foreclosure crisis has ensnared communities, both large and small from coast to coast. And as this crisis continues to unfold before the eyes of the courts and the public, the unsavory actions taken by mortgage brokers, lenders and some predatory refinance facilitators is outrageous. While the public only begins to learn of the causes of the current rampant foreclosure filings, the courts have already begun to see a cadre of unscrupulous individuals promising foreclosure cure-alls that prey upon those already approaching an economic rock bottom.
Here, while the defendant realized that she was not savvy enough to navigate the field of foreclosure litigation on her own, she put her trust in a licensed realtor, rather than in a new attorney. The record indicates that Herricson Torres, a licensed realtor, purportedly assisted [RC] in preparing this order to show cause to help guide her through the litigation process demonstrates the rampant economic opportunism of a growing industry that preys on those least able to support it. Mr. Torres’s actions are the very definition of the unauthorized practice of law. (Emphasis supplied).
This court finds that [RC’s] subsequent reliance on Torres’s “expertise” to stop the foreclosure sale as evidence of a larger problem in the area of foreclosure litigation…Based on the totality of the circumstances the court finds that [RC’s] reliance on Herricson Torres’s “expertise”, rather than on a licensed attorney constitutes a reasonable excuse for her default.
A defendant seeking to vacate a default judgment must demonstrate both a reasonable excuse for the default, and the existence of a meritorious defense. Orwell Bldg. Corp. v. Bessaha, 5 A.D.3d 573 (2d Dep’t 2004). A motion to vacate a default is addressed to the sound discretion of the trial court and, absent an abuse of discretion, the court’s decision will not be disturbed. Gleissner v. Singh, 264 A.D.2d 811 (2d Dep’t 1999). Public policy favors the resolution of cases on their merits, and courts have broad discretion to grant relief from pleading defaults where the defaulting party has a meritorious claim or defense, the default was not willful, and the opposing party was not prejudiced. Harris v. City of New York, 30 A.D.3d 461 (2d Dep’t 2006). The determination of whether there is a reasonable excuse for a default is a discretionary, sui generis determination to be made by the court based on all relevant factors, including the extent of the delay, whether there has been prejudice to the opposing party, whether these has been willfulness, and the strong public policy of resolving cases on the merits. Harcztark v. Drive Variety, Inc., 21 A.D.3d 876 (2d dep’t 2005).
Here, Justice Maltese found that a defendant homeowner’s misplaced reliance on the expertise of a non-attorney in foreclosure litigation constitutes a “reasonable excuse” within the meaning of CPLR 5015(a).
The defendant homeowner eventually received legal assistance from Margaret Becker, Esq., from Staten Island Legal Services, and later from Robert E. Brown, Esq. of the Law Offices of Robert E. Brown, P.C., who expanded on the defendant homeowner’s initial order to show cause resulting in the favorable decision rendered by Justice Maltese discussed herein.

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