Case Study

Adam Leitman Bailey, P.C. Prevails on First Department Motion Vacating the Dismissal of an Appeal

In a contested foreclosure action where the Court failed to enforce its own self-executing order to dismiss a competing lienholder’s counterclaims for its failure to comply with discovery orders, Adam Leitman Bailey, P.C. filed a notice of appeal on behalf of its lender client.  Within the lender’s time to perfect the appeal, a defendant borrower filed a bankruptcy petition, staying all proceedings.

Despite the bankruptcy stay, the First Department dismissed the appeal for failure to timely perfect.  Adam Leitman Bailey, P.C. continuously contacted the First Department by telephone and letters reiterating that the bankruptcy stay prohibited Adam Leitman Bailey, P.C. from taking any action to perfect the appeal and, therefore, the appeal should be restored.  Despite all efforts, the First Department refused to vacate the dismissal.

In response, Adam Leitman Bailey, P.C. filed a motion to vacate the dismissal arguing that good cause for vacatur of the dismissal was established by the automatic bankruptcy stay preventing the appeal from being perfected.  Additionally, Adam Leitman Bailey, P.C. argued that there was substantial merit to the appeal given that the defendant failed to comply with the self-executing order.

In opposition, the competing lienholder argued that the order being appealed was between the two lienholders, and not the defendant borrower who filed bankruptcy, so, therefore, the bankruptcy stay should not apply.

In reply, Adam Leitman Bailey, P.C. firmly established that the fundamental nature of the automatic stay under 11 U.S.C. § 362 was to halt all proceedings seeking to collect debts or recover property of the bankruptcy debtor, which was clearly the underlying basis of the foreclosure action that was subject to the appeal.

The First Department granted Adam Leitman Bailey, P.C.’s motion in its entirety and extended the time to perfect the appeal.

Jeffrey R. Metz, Esq. of the Appellate Practice Group and Jackie Halpern Weinstein, Esq. and Danny Ramrattan, Esq. of the Title Litigation and Foreclosure Groups at Adam Leitman Bailey, P.C. secured this result for its client.