In Re Dabrowski

257 B.R. 394, 2001 Bankr. LEXIS 13, 2001 WL 32728
CourtUnited States Bankruptcy Court, S.D. New York
DecidedJanuary 4, 2001
Docket18-37158
StatusPublished
Cited by43 cases

This text of 257 B.R. 394 (In Re Dabrowski) is published on Counsel Stack Legal Research, covering United States Bankruptcy 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
In Re Dabrowski, 257 B.R. 394, 2001 Bankr. LEXIS 13, 2001 WL 32728 (N.Y. 2001).

Opinion

DECISION ON MOTION FOR CONSTRUCTION OF DISCHARGE ORDER, FINDING OF CONTEMPT, ACCOUNTING, AND RELATED RELIEF

ROBERT E. GERBER, Bankruptcy Judge.

Introduction and Summary

Robert Dabrowski (“Debtor”), the debt- or in a previously closed chapter 7 case in this Court, is the tenant in a rent-regulated apartment in New York City (“Apartment”). As described more fully below, he and Pari Dulac, the landlord of the Apartment in which the Debtor lives (“Landlord”), differed over the maximum collectible rent and the rent regulation regime that was applicable to his Apartment, and litigated extensively, before the filing of the Debtor’s bankruptcy case, with respect to those issues in the regulatory agency with jurisdiction over such matters, the Office of Rent Administration of New York State’s Division of Housing and Community Renewal (“DHCR”). After administrative proceedings lasting 10 years, the DHCR ruled that the Debtor’s Apartment *397 was subject to “Rent Stabilization” (rather than “Rent Control,” an alternative regulatory regime under which the rent would be lower), and that the Debtor owed the Landlord retroactive additional rent of approximately $42,000 (the “Retroactive Rent”).

With the $42,000 in Retroactive Rent due to the Landlord, the Debtor then filed a petition for bankruptcy relief in this Court. His chapter 7 trustee took no action to either assume or reject the lease, and the Landlord, although given notice of the Debtor’s chapter 7 filing, took no action in the case. At the conclusion of the Debtor’s bankruptcy case, an order was duly entered by Judge Garrity of this Court (the “Discharge Order”) discharging the Debtor from all of his pre-petition debts — including, the Debtor argues, the Retroactive Rent.

The Landlord thereafter commenced a “summary non-payment proceeding” in the New York City Civil Court’s Housing Part (“Housing Court”) seeking possession of the Apartment and the arguably discharged rent; her papers sought both eviction and a money judgment for the unpaid Retroactive Rent. In a decision now under appeal in the state courts, 1 a New York City Housing Court Judge granted summary judgment in the Landlord’s favor to the extent of dismissing the bankruptcy defense raised by the Debtor, ruling that the debt had not been discharged. After unsuccessfully moving to reargue, the Debtor duly appealed the Housing Court decision, and then sought relief here.

Having also moved for an order reopening his case, 2 the Debtor moves for an order:

(a) clarifying the Discharge Order insofar as it related to the Retroactive Rent;
(b) holding the Landlord in civil and/or criminal contempt for taking actions prohibited or said to be prohibited by the Discharge Order, in connection with the commencement and prosecution of the summary non-payment proceeding;
(c) setting the matter down for an evidentiary hearing on any issues of fact;
(d) awarding costs and legal fees incurred in relation to the motion;
(e) awarding damages arising from the alleged failure to comply with the Discharge Order;
(f) directing the Landlord to render an accounting as to any sums paid post-petition by the Debtor that were applied to any pre-petition debts; and
(g) granting any further relief as might be just to enforce the Discharge Order.

The motion is granted in part and denied in part, 3 as set forth more fully below.

Based on the above facts, and those stated in more detail below, the Debtor argues that the Retroactive Rent was discharged, just like any other pre-petition debt, and that the Landlord’s nonpayment proceeding, and/or the relief sought in it— seeking a money judgment for that debt, along with possession — was violative of the Discharge Order and the injunction against such actions under Bankruptcy Code section 524. In addition to asking this Court to clarify the Discharge Order to explicitly say that any request for the Retroactive Rent would be violative of the Discharge Order, the Debtor seeks to hold *398 the Landlord in contempt for that violation.

In opposition, the Landlord argues that the Housing Court was correct in determining that the DHCR Debt was not discharged. But she also raises a significant threshold issue, articulated as one of res judicata, as to whether this Court can determine the discharge issue now that the Housing Court has done so.

For the reasons described below, with respect to the most significant of the issues:

(a) This Court is not bound by the judgment of the Housing Court with respect to the bankruptcy discharge issue (which, as noted below, unfortunately is erroneous), as that judgment is void under Bankruptcy Code section 524(a)(1) and the caselaw thereunder;
(b) The “deemed rejection” under Bankruptcy Code section 365(d)(1) of the Debtor’s “lease” (or, more accurately, the bundle of statutory and contractual rights and obligations associated with the Debtor’s occupancy of the Apartment), relied on by the Housing Court, is not determinative of the discharge issue;
(c) The $42,000 debt was, in fact (contrary to the determination of the Housing Court), discharged, under Bankruptcy Code section 727(b), as implemented under Bankruptcy Code section 524(a) and the Discharge Order, and the Landlord accordingly may not sue for the Retroactive Rent;
(d) The Landlord nevertheless may proceed, in rem, to recover possession of the Apartment, if state law permits recovery of possession of the Apartment as a consequence of the nonpayment of the Retroactive Rent; this Court does not regard it as violative of the Discharge Order if any of the Landlord’s remedies are limited to proceeding in rem (such as proceeding solely to recover possession, or bringing an action in the nature of ejectment), or if the Landlord, in any subsequent proceedings in state court (including, if such is possible, in summary proceedings in the Housing Court), clearly, unequivocally, and irrevocably renounces any entitlement to any money damages award;
(e)Once the federal law defining the nature and scope of the discharge is clarified, the state courts are better suited to determine the parties’ rights and responsibilities incident to the Debtor’s continuing occupancy of the Apartment. Assuming (though this may be debatable) that this Court has subject matter jurisdiction over the determination of the rights of the Debtor and the Landlord with respect to the Apartment once the coverage of the Discharge Order is determined, this Court believes that the state courts provide the more appropriate forum to determine, as one or more questions of state law, whether the Debtor may occupy the Apartment if he pays only the rent accruing after his bankruptcy filing, and chooses (as his right) not to pay the discharged Retroactive Rent.

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Cite This Page — Counsel Stack

Bluebook (online)
257 B.R. 394, 2001 Bankr. LEXIS 13, 2001 WL 32728, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-dabrowski-nysb-2001.