| Nelson, L.P. v Jannace |
| 2011 NY Slip Op 06373 [87 AD3d 731] |
| August 30, 2011 |
| Appellate Division, Second Department |
| Nelson, L.P., Respondent, v Joseph Jannace et al.,Appellants. |
—[*1] Mirabella & Quinn, LLC, Garden City, N.Y. (David P. Mirabella of counsel), forrespondent.
In an action, inter alia, for specific performance of certain real estate contracts, thedefendants appeal from an order of the Supreme Court, Nassau County (Adams, J.), datedJanuary 26, 2010, which granted the plaintiff's motion pursuant to CPLR 5014 (1) for a renewaljudgment and denied their cross motion pursuant to Debtor and Creditor Law § 150 todirect that a discharge of record be marked upon the docket of a judgment of the same courtentered June 27, 2000, as amended January 25, 2001.
Ordered that the order is modified, on the law, by deleting the provision thereof denying thedefendants' cross motion pursuant to Debtor and Creditor Law § 150 to direct that adischarge of record be marked upon the docket of a judgment entered June 27, 2000, as amendedJanuary 25, 2001, and substituting therefor a provision granting the cross motion to the extent ofdirecting that a qualified discharge of record be marked upon the docket of the judgment; as somodified, the order is affirmed, with costs payable by the defendants, and the plaintiff is directedto pay the applicable fees required to commence a plenary action for a renewal judgment.
In an action, inter alia, for specific performance of two real estate contracts, Nelson, L.P.(hereinafter Nelson), obtained a decision in its favor after a trial. Prior to entry of the judgment,the defendant Joseph Jannace filed a petition for bankruptcy in the United States BankruptcyCourt for the Eastern District of New York. On June 27, 2000, the Supreme Court entered ajudgment in this action against the defendant Jane Woods only. Subsequently, Woods filed forbankruptcy, and received a discharge in bankruptcy a few months later.
In Jannace's bankruptcy case, a December 5, 2000, order of the Bankruptcy Court stated:
"Ordered, that the automatic stay against proceedings against the Debtor and against theproperty known as 284 Old Country Road, Hicksville, New York, pursuant to 11 U.S.C. §362 shall be, and hereby is, terminated ab initio, provided, however, that the collection [*2]or enforcement of any money judgments against the Debtor in favorof Nelson[ ] shall remain subject to the automatic stay and shall not be enforced without priororder and consent of this Court; and, it is further
"Ordered, that the limitation upon the New York State Supreme Court for the County ofNassau and upon the Nassau County Clerk contained in this Court's prior Order dated October 6,2000 declaring that judgments in favor of Nelson[ ] against the Debtor may not be recorded inNew York Supreme Court, Nassau County proceeding Index No. 96/020145 until further order ofthis Court, is hereby vacated."
On January 25, 2001, the Supreme Court issued an amended judgment against thedefendants, ordering that the two judgments constituted a single judgment with joint and severalliability. Jannace received a discharge in bankruptcy a few months later.
In 2009 Nelson moved pursuant to CPLR 5014 (1) for a renewal judgment, extending thelien on the defendants' real property for an additional 10 years. The defendants cross-movedpursuant to Debtor and Creditor Law § 150 to direct that a discharge of record be markedupon the docket of the judgment entered June 27, 2000, as amended January 25, 2001. TheSupreme Court granted the motion and denied the cross motion. The defendants appeal.
Judgment was properly entered against Woods prior to her bankruptcy filing. Contrary to thedefendants' contention, the amended judgment was properly entered after the Bankruptcy Courtterminated ab initio the automatic bankruptcy stay of actions against Jannace and permitted entryof the judgment. The docketing of the money judgment, by operation of law, created a lien on thedefendants' real property within the county (see CPLR 5018 [a]; 5203; Gihon, LLC v 501 Second St., LLC, 29AD3d 629 [2006]). Since a lien is valid for 10 years (see CPLR 5203 [a]), while amoney judgment is viable for 20 years (see CPLR 211 [b]), CPLR 5014 permits ajudgment creditor to apply for a renewal of the judgment lien for an additional 10-year period (see Gletzer v Harris, 12 NY3d468, 473 [2009]). The Supreme Court properly granted Nelson's motion pursuant to CPLR5014 (1) for a renewal judgment, despite the defendants' discharge in bankruptcy.
"[A] discharge in bankruptcy is a discharge from personal liability only and, without more,does not have any effect on a judgment lien" (Matter of Acquisitions Plus, LLC v Shapiro, 7 AD3d 957, 958[2004]; 11 USC § 524 [a] [1]). Judgment liens and other secured interests ordinarilysurvive bankruptcy (see Carman v European Am. Bank & Trust Co., 78 NY2d 1066[1991]; McArdle v McGregor, 261 AD2d 591 [1999]; Bank of N.Y. v Magri, 226AD2d 412 [1996]; see also Farrey v Sanderfoot, 500 US 291, 297 [1991]). Moreover, acreditor need not object to the debtor's discharge in bankruptcy in order to preserve its lien, sincethe discharge does not affect the lien (see Carman v European Am. Bank & Trust Co., 78NY2d 1066 [1991]; McArdle v McGregor, 261 AD2d 591 [1999]).
When the defendants received discharges in bankruptcy, their personal liability to theplaintiff on the judgment was discharged (see 11 USC § 524 [a] [1]). However, thedefendants did not meet their burden of establishing that the liens on their real property wereinvalidated or surrendered in the bankruptcy proceedings or set aside in an action brought by thereceiver or trustee. Accordingly, they were entitled only to a qualified discharge (seeDebtor and Creditor Law § 150 [4] [b]; Carman v European Am. Bank & TrustCo., 78 NY2d 1066 [1991]; Bank of N.Y. v Magri, 226 AD2d 412 [1996]; Matterof Leonard v Brescia Lbr. Corp., 174 AD2d 621 [1991]). "A 'qualified' discharge, asdistinguished from an unqualified discharge, serves as notice to third parties that,notwithstanding the debtor-owner's discharge in bankruptcy, the property may, nonetheless, stillbe burdened by liens" (Carman v European Am. Bank & Trust Co., 78 NY2d at 1067).
The defendants' remaining contentions are either without merit or improperly raised for thefirst time on appeal. Mastro, J.P., Hall, Lott and Cohen, JJ., concur.