Brouillard v. DLJ Mortgage Capital, Inc.

60 V.I. 763, 2014 V.I. Supreme LEXIS 28
Supreme Court of The Virgin Islands·Decided April 25, 2014·No. S. Ct. Civil No. 2013-0092·Published·Cited by 6 cases

Opinion

OPINION OF THE COURT

(April 25, 2014)

Per Curiam.

This matter comes before this Court pursuant to a “Notice of Bankruptcy” filed on February 6, 2014, by Appellants Claude Mott Brouillard and Mei-Wa Cheng Brouillard,1 as well as a response filed by Appellee DLJ Mortgage Capital, Inc. For the reasons that follow, we dismiss this appeal without prejudice to its re-filing upon the conclusion of the bankruptcy case currently pending in the United States Bankruptcy Court for the District of Connecticut or the lifting of the automatic statutory bankruptcy stay by that court.

I. BACKGROUND

On April 15, 2011, First Bank Puerto Rico initiated an action for debt and foreclosure against the Brouillards due to their failure to make timely payments on mortgage for real property. During the pendency of the lawsuit, First Bank assigned its mortgage to DLJ Mortgage Capital. Ultimately, the Superior Court entered summary judgment against the Brouillards, and issued a September 26, 2013 Judgment directing them to pay the sum of $381,972.28.

The Brouillards timely filed a joint notice of appeal with this Court on October 25, 2013. However, on February 6, 2014, the Brouillards filed a “Notice of Bankruptcy” with this Court, in which they informed the Court that Claude had filed a petition for bankruptcy with the United States Bankruptcy Court for the District of Connecticut. The Brouillards requested that this Court stay this appeal, as it pertained to Claude, in accordance with 11 U.S.C. § 362, which provides, in pertinent part, that the filing of certain bankruptcy petitions “operates as a stay, applicable to all entities, of . . . the commencement or continuation ... of a judicial, administrative, or other action or proceeding against the debtor that was [765] or could have been commenced before the commencement of the [bankruptcy] case.” 11 U.S.C. § 362(a)(1).

DLJ Mortgage Capital responded to the Brouillards’ filing on March 25, 2014. In its response, DLJ Mortgage Capital agreed that section 362(a) applied to this matter, notwithstanding the fact that this appeal had been initiated by the Brouillards, since courts have universally held that an appeal from a case filed against a debtor is a “continuation ... of a judicial, administrative, or other action or proceeding against the debtor.” See, e.g., Teachers Ins. & Annuity Ass’n of Am. v. Butler, 803 F.2d 61, 64-65 (2d Cir. 1986); Cathey v. Johns-Manville Sales Corp., 711 F.2d 60, 62 (6th Cir. 1983); Ellison v. Northwest Eng’g Co., 707 F.2d 1310, 1311 (11th Cir. 1983); Association of St. Croix Condo. Owners v. St. Croix Hotel Corp., 682 F.2d 446, 449 (3d Cir. 1982). Furthermore, DLJ Mortgage Capital contends that even though only Claude filed for bankruptcy, Mei-Wa’s appeal should also not proceed since the Superior Court found them jointly and severally liable, and thus upholding the grant of summary judgment against Mei-Wa may adversely affect Claude’s bankruptcy estate. See, e.g., McCartney v. Integra Nat’l Bank North, 106 F.3d 506, 510-11 (3d Cir. 1997); A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986); Marroquin v. D & N Funding, Inc., 943 S.W.2d 112, 115 (Tex. App. 1997). On March 26, 2014, the Brouillards filed a “Supplement to- Notice of Bankruptcy,” where they likewise now agree that Mei-Wa’s appeal should also not proceed.

II. DISCUSSION

We have jurisdiction over this civil appeal pursuant to title 4, section 32(a) of the Virgin Islands- Code, which provides that “[t]he Supreme Court shall have jurisdiction over all appeals arising from final judgments, final decrees or final orders of the Superior Court, or as otherwise provided by law.” 4 V.I.C. § 32(a). It is well established that Congress, in enacting 11 U.S.C. § 362(a) and its predecessor statute, did not divest state and territorial courts of jurisdiction over proceedings against those who have sought bankruptcy protection in federal court. See Hill v. Harding, 107 U.S. 631, 633-34, 2 S. Ct. 404, 27 L. Ed. 493 (1883); In re James, 940 F.2d 46, 51 (3d Cir. 1991). Rather, Congress exercised its constitutional authority to enact “uniform Laws on the subject of Bankruptcies throughout the United States,” U.S. CONST. art. I, § 8, cl. 4, to suspend such proceedings while a bankruptcy petition remains pending. James, 940 F.2d at 51 (citing Hill, 107 U.S. at 634).

[766] We agree with the Brouillards and DLJ Mortgage Capital that 11 U.S.C. § 362(a) compels this Court to suspend this appeal, as it relates to both of the Brouillards, during the pendency of Claude’s bankruptcy petition. Nevertheless, we disagree with the parties that section 362 mandates that this Court indefinitely hold this appeal in abeyance. While Congress, by enacting section 362, has directed state and territorial courts to suspend judicial proceedings that have been initiated or commenced against a bankruptcy petitioner, it has not codified a specific procedure for suspending such proceedings. Cf. Allen v. HOVENSA, L.L.C., 59 V.I. 430, 435 (V.I. 2013) (“Although the substantive provisions of the FAA unquestionably preempt contrary local laws, ‘[tjhere is no federal policy favoring arbitration under a certain set of procedural rules.’ ” (quoting World Fresh Market v. P.D.C.M. Assocs., S. Ct. Civ. No. 2011-0051, 2011 V.I. Supreme LEXIS 29, at *6 (V.I. Aug. 25, 2011) (unpublished))).

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Brouillard v. DLJ Mortgage Capital, Inc., 60 V.I. 763, 2014 V.I. Supreme LEXIS 28 (virginislands 2014).

60 V.I. 763 (Brouillard v. DLJ Mortgage Capital, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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