Sterling v. 1279 St. Johns Place, LLC (In re Sterling)

565 B.R. 258
CourtDistrict Court, S.D. New York
DecidedMarch 3, 2017
Docket16 Civ. 3296 (KPF); Bankr. No. 14-12608 (SHL)
StatusPublished
Cited by4 cases

This text of 565 B.R. 258 (Sterling v. 1279 St. Johns Place, LLC (In re Sterling)) 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
Sterling v. 1279 St. Johns Place, LLC (In re Sterling), 565 B.R. 258 (S.D.N.Y. 2017).

Opinion

OPINION AND ORDER

KATHERINE POLK FAILLA United States District Judge

Over the course of his Chapter 7 bankruptcy proceeding, Appellant Everton Aloysius Sterling has appealed several decisions of the presiding United States Bankruptcy Judge, Sean H. Lane, to the United States District Court for the Southern District of New York. See, e.g., In re Everton Aloysius Sterling, No. 16 Civ. 351 (KPF); In re Everton Aloysius Sterling, No. 16 Civ. 1446 (PKC); In re Everton Aloysius Sterling, No. 16 Civ. 6639 (AJN); In re Everton Aloysius Sterling, No. 17 Civ. 248 (ALC). In a prior Order, this Court dismissed one of his appeals — from a December 22, 2015 order of the Bankruptcy Court (the “December 22 Order”)— for lack of subject matter jurisdiction because of its untimeliness. See In re Everton Aloysius Sterling, No. 16 Civ. 351 (KPF), Dkt. #9 (S.D.N.Y. Mar. 30, 2016). The instant appeal is a second challenge to the proceedings that resulted in the December 22 Order, and it also fails. To the extent that this Court may consider Appellant’s current claims on appeal, they fall in the face of the Bankruptcy Court’s proper exercise of its considerable discretion.

BACKGROUND1

A. Factual Background

1. Overview

The relevant timeline is detailed in the Bankruptcy Court’s December 22 Order, from which this summary is excerpted. (See Bankr. Dkt. #65 at 2-4). Appellant does not seriously dispute this sequence of events, though he vigorously, disputes whether certain entities had rights in (and, by extension, had the legal ability to assign or transfer their rights in) the properties in question.

At issue here are three real properties, located at 551 Knickerbocker Avenue, Brooklyn, New York (the “Brooklyn Property”); 1320 East. 222 Street, Bronx, New York (the “Bronx Property”), and Block and Lot 4730/7 on East '222 Street, also in the Bronx (the “Bronx Lot,” and together with the Brooklyn Property and the Bronx Property, the “Three Properties”). On December 23, 2011, Appellant executed a note in favor of Columbia Capital Co. in the amount of $190,000.00 (the “Brooklyn Note”). The Note was secured by the Brooklyn Property, pursuant to a mortgage executed by Appellant on December 23, 2011 (the “Brooklyn Mortgage”). On August 20, 2012, the Brooklyn Mortgage was assigned by Columbia Capital Co. to 222 Funding Associates. Subsequently, an “allonge” — a sheet of paper on which additional endorsements can be made — was attached to the Brooklyn Note and signed by Columbia Capital Co., paying the Note to the order of 222 Funding Associates.

On August 23, 2012, Appellant, in his role as President of Latou Realty Corp. (“Latou”), executed a note in favor of 222 Funding Associates in the amount of $275,000.00 (the “Second Note”). The Second Note was, in turn, secured by each of [262]*262the Three Properties, pursuant $o a mortgage that Appellant executed that same day (the “Second Mortgage”)- An allonge was later attached to the Second Note and signed by 222 Funding Associates, paying this Note to the order of Appellee 1279 St. Johns Place LLC.

On August 23, 2012, the Brooklyn Note and the Second Note were consolidated into the principal sum of $465,000.00 (the “Consolidated Note”). On the same date, Appellant, as President of Latou, consolidated the Brooklyn Mortgage and the Second Mortgage in favor of 222 Funding Associates by executing a consolidation modification spreader agreement on all of the Properties (the “Consolidated Mortgage”). To facilitate the execution of the Consolidated Note and the Consolidated Mortgage, on August 23, 2012, Appellant deeded the Three Properties to Latou.

A few months later, however, in November 2012, Latou defaulted on the Consolidated Mortgage. 222 Funding Associates subsequently filed a foreclosure action against the Bronx Property and the Bronx Lot in Bronx Supreme Court. See 222 Funding v. Latou Realty, Index No. 380272/2013 (the “Foreclosure Action”).2 On November 26, 2013—on the eve of a pending motion for the entry of a judgment of foreclosure and sale — Latou deeded the Three Properties back to Appellant without the knowledge of 222 Funding Associates or Appellee. Appellee, to which 222 Funding Associates had assigned the Consolidated Mortgage in June 2014 by means of an allonge on the Consolidated Note, claims that these transfers were undertaken to delay the Foreclosure Action.

2. The Chapter 7 Petition

Appellant filed a voluntary petition under Chapter 7 of the Bankruptcy Code on September 14, 2014. (Bankr. Dkt. #1). The progress of the petition, according to the U.S. Trustee, was hindered by Appellant’s conduct, including (i) his incomplete financial disclosures; (ii) his filing of an “Affidavit of Discharge,” which included a “final counter offer” pursuant to which any effort to take Appellant’s property would result in “damages of Five Million Dollars ($5,000,000.00) in lawful United [Sjtates dollars”; (iii) his imposition on various court documents of the watermark “REFUSAL FOR CAUSE WITHOUT DISHONOR — DO NOT CONSENT — Return Without Prejudice,” followed by his signature as “Authorized Representative All Rights Reserved UCC 1-308”; .and (iv) his refusal to answer questions posed by the U.S. Trustee on the grounds that “pursuant 12 U.S.C. § 95a(2) [a statute specifying regulatory powers of the President in times of war] the matter has been discharged.” (Bankr. Dkt. #29).3

[263]*263On July 27, 2015, the U.S. Trustee filed a complaint to commence an adversary proceeding (the “Adversary Proceeding”) objecting to Appellant’s discharge pursuant to 11 U.S.C. §§ 727(a)(3), 727(a)(5), and 727(a)(6). (Bankr. Dkt. #39). In his supporting papers, the Trustee detailed Appellant’s longstanding refusal to disclose fully his financial situation.

3. The Lift-Stay Motion, the Motion for Injunctive Relief, and the Motion to Strike

On September 25, 2015, Appellee moved to lift the stay in order to commence a foreclosure action against the Three Properties (the “Lift-Stay Motion”); it sought as well in rem relief with respect to the Properties themselves. Among other facts, Appellee related that: (i) Appellant had listed the Three Properties in his bankruptcy filings without listing any secured mortgages or claims against them; (ii) Appellant had failed to list Appellee (or its predecessor in interest, 222 Funding Associates) as a secured creditor; and (iii) Ap-pellee believed that the timing of various assignments and the petition itself were designed to delay the foreclosure sale of the Bronx Property and the Bronx Lot. (Bankr. Dkt. #40). Among other exhibits to the motion, Appellee included copies of the underlying mortgages, notes, and al-longes thereto. (Id.).

Appellant responded on October 15, 2015, by seeking an order to show cause why a temporary restraining order and/or a preliminary injunction should not be imposed to stay foreclosure proceedings (the “Motion for Injunctive Relief’). (Bankr. Dkt. #42).

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Cite This Page — Counsel Stack

Bluebook (online)
565 B.R. 258, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sterling-v-1279-st-johns-place-llc-in-re-sterling-nysd-2017.