City of New York v. 1820-1838 Amsterdam Equities, Inc. (In re 1820-1838 Amsterdam Equities, Inc.)

191 B.R. 18, 1996 U.S. Dist. LEXIS 27
CourtDistrict Court, S.D. New York
DecidedJanuary 4, 1996
DocketNo. 92-B-42490
StatusPublished
Cited by5 cases

This text of 191 B.R. 18 (City of New York v. 1820-1838 Amsterdam Equities, Inc. (In re 1820-1838 Amsterdam Equities, Inc.)) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of New York v. 1820-1838 Amsterdam Equities, Inc. (In re 1820-1838 Amsterdam Equities, Inc.), 191 B.R. 18, 1996 U.S. Dist. LEXIS 27 (S.D.N.Y. 1996).

Opinion

MEMORANDUM AND ORDER

KEVIN THOMAS DUFFY, District Judge.

Introduction

Creditor-Appellant, the City of New York, (“City”), appeals from an Amended Emergency Repair Order (“Order”) issued by Bankruptcy Judge Prudence B. Abram on November 9, 1994, and a subsequent ruling made at a November 10, 1995 hearing, wherein the Bankruptcy Judge denied the City’s request that she authorize the City to issue and enforce criminal summonses against the debtor and its officers for failure to cure violations of the City’s fire code in a commercial budding owned by the debtor. Debtor-Appellee 1820-1838 Amsterdam Equities, Inc. moves to dismiss the appeal as moot.

The central issues presented by this appeal are (1) whether the Bankruptcy Court exceeded its authority by issuing the Order against the City, which required the City to get prior authorization from the Bankruptcy Court before commencing civil and criminal proceedings against the debtor-appellee, 1820-1838 Amsterdam Equities (“debtor”) and its officers including Andonis Morfesis (“Morfesis”); (2) whether the Order constitutes an unreasonable infringement upon the City’s police powers; and (3) whether the issues are moot given that the Order was for a period of 45 days and, therefore, expired during the pendency of this appeal.

The City argues that the Bankruptcy Court should not have enjoined the City enforcement actions absent a showing of great and immediate irreparable injury to the debt- or; that the Bankruptcy Judge’s Order interferes with state and local criminal and administrative enforcement proceedings; and that even though the Order has since expired, the issues are not moot given that the rulings involved are “capable of repetition yet escaping review.” Roe v. Wade, 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973).

Background

The debtor in this ease is a single-asset corporation and the owner of a commercial building in upper Manhattan. On May 4, 1992, the debtor filed a voluntary petition in bankruptcy. On July 29, 1994 the City moved to dismiss the debtor’s Chapter 11 petition, and sought sanctions and an order of contempt against the debtor for failing to comply with the Bankruptcy Judge’s discovery order. The City moved for dismissal under 11 U.S.C. § 1112(b) on the grounds that the debtor had failed to meet its obligations as a debtor-in-possession, including the failure to timely file monthly operating and financial reports, the failure to make payment of post-petition taxes, the failure to compile a plan of reorganization, and the failure to comply with the court’s discovery order. In addition to the debtor’s monetary problems, the building in question was in violation of various building and fire codes, including blocked fire exits, deterioration of exterior walls, and unsafe window installation. The City also claimed that the debtor was in default for over $580,000 in back real estate taxes, water and sewer charges and other assessments. The City also alleged that the Bankruptcy petition had been brought in bad faith, and alleged that the mortgage held by Dominion Financial Corp. [20]*20(“Dominion”), the owner of the first mortgage of the property, was fraudulent.

The debtor did not deny the City’s allegations regarding their failure to make the necessary filings, but rather asserted that its delay in filing was due in part to its commencement of adversary proceedings against non-paying tenants and that it was working on a plan of reorganization with Dominion.

Bankruptcy Judge Abram heard oral arguments on the City’s motions on October 7, and October 20, 1994. At these hearings, Dominion pledged that it would make the repairs to the building that were necessary to comply with the City’s codes. On November 9,1994, the Bankruptcy Judge issued the Order, which allowed Dominion time to make the necessary repairs and gave them the assistance of the U.S. Marshal’s service to gain entry to the building. The Order also enjoined the City for 45 days from taking any enforcement actions against the debtor or its officers for failing to cure the violations of the City’s building and fire codes, without prior authorization from the Bankruptcy Court.

At a November 10, 1994 hearing, the City moved to strike that portion of the Order which provided for the 45-day non-enforcement period and again moved to dismiss the bankruptcy petition. Bankruptcy Judge Abram upheld the Order in its entirety and denied the City’s motion to dismiss the petition. Bankruptcy Judge Abram stated that the Order was aimed at preserving the jurisdiction of the court over the asset and that her intention was to safeguard the building for the debtor and its mortgageholders. She determined that this process could be dealt with more efficiently through the single forum of the Bankruptcy Court, rather than involving other courts through the enforcement of criminal sanctions.

Bankruptcy Judge Abram also found that the City had no reason to object to Dominion making the necessary repairs, since these repairs would cure the defects to the property of which the City complained. Bankruptcy Judge Abram also questioned the timing of the City’s motion, given that the City knew about these violations for a significant amount of time and did nothing to cure them until the property was already in bankruptcy.

On November 22, 1994 Judge Patterson heard the City’s emergency motion for leave to appeal the 45-day non-enforcement portion of the order and for a stay of the order pending appeal. Judge Patterson granted the City’s motion for leave to appeal the non-enforcement provision of the order and granted a stay of the Order to the extent that it prevented the City from bringing criminal, but not administrative, proceedings against the debtor.

On November 29,1994, Judge Sweet heard the City’s motion to appeal from Bankruptcy Judge Abram’s denial of the City’s motion to dismiss. Judge Sweet found that the denial of the motion to dismiss did not meet the requirements for an interlocutory appeal from the Bankruptcy Court.

On December 22, 1994, the City appealed Bankruptcy Judge Abram’s Order to the District Court.

Discussion

The debtor argues that this appeal should be dismissed as moot since the injunction portion of the Order in question expired during the pendency of this appeal, and therefore, has no continued effect. The City responds that although the effect of the injunction contained in the Order in this case may have lapsed, the question of whether the Bankruptcy Judge had the authority to issue such an order has not, and a resolution of that question is necessary to prevent similar orders being issued in the future.

A dispute is “capable of repetition yet evading review” where “ ‘(1) the challenged action [is] in its duration too short to be fully litigated prior to its cessation or expiration, and (2) there [is] a reasonable expectation that the same complaining party [will] be subjected to the same action again.’ ” In re Chateaugay Corp., 973 F.2d 141, 144 (2d Cir.1992), quoting Johnson Newspaper Corp. v. Morton, 862 F.2d 25, 30 (2d Cir.1988).

The City could not have possibly filed and fully adjudicated the issues in this appeal within the 45-day period during which the injunction had effect.

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191 B.R. 18, 1996 U.S. Dist. LEXIS 27, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-new-york-v-1820-1838-amsterdam-equities-inc-in-re-1820-1838-nysd-1996.