Opinion
No. 17–CV–1618 (JFB)
03-22-2018
Lawrence HOLZER, et al., Appellants, v. R. Kenneth BARNARD, et al., Appellees.
Appellants are proceeding pro se. The chapter 7 trustee is Robert Kenneth Barnard, 3305 Jerusalem Avenue, Suite 215, Wantagh,. NY 11793. Mr. Barnard is represented by Adam Lawrence Rosen and Lon J. Seidman of Diamond McCarthy LLP, 620 Eighth Avenue, 39th Floor, New York, NY 10018; and Anthony C. Acampora, Justin S. Krell, and Ronald J. Friedman of Silverman Acampora LLP, 100 Jericho Quadrangle, Suite 300, Jericho, NY 11753. Appellees are Judith Fellheimer and Alan S. Fellheimer of Fellheimer & Eichen LLP, 45 Rockefeller Plaza, Suite 2000, New York, NY 10111. The U.S. Trustee is represented by Alfred M. Dimino of the U.S. Department of Justice, Office of the United States Trustee, Long Island Federal Courthouse, 560 Federal Plaza, Central Islip, NY 11722.
Appellants are proceeding pro se.
The chapter 7 trustee is Robert Kenneth Barnard, 3305 Jerusalem Avenue, Suite 215, Wantagh,. NY 11793. Mr. Barnard is represented by Adam Lawrence Rosen and Lon J. Seidman of Diamond McCarthy LLP, 620 Eighth Avenue, 39th Floor, New York, NY 10018; and Anthony C. Acampora, Justin S. Krell, and Ronald J. Friedman of Silverman Acampora LLP, 100 Jericho Quadrangle, Suite 300, Jericho, NY 11753. Appellees are Judith Fellheimer and Alan S. Fellheimer of Fellheimer & Eichen LLP, 45 Rockefeller Plaza, Suite 2000, New York, NY 10111. The U.S. Trustee is represented by Alfred M. Dimino of the U.S. Department of Justice, Office of the United States Trustee, Long Island Federal Courthouse, 560 Federal Plaza, Central Islip, NY 11722.
MEMORANDUM AND ORDER
JOSEPH F. BIANCO, United States District Judge
Lawrence Holzer ("Holzer") and Global Appraisal Solutions, LLC ("Global," and collectively, "appellants") appeal from the rulings of the United States Bankruptcy Court for the Eastern District of New York (the "Bankruptcy Court") at a February 28, 2017 hearing in In re Ideal Mortgage Bankers, Ltd. (Bankr. E.D.N.Y. Case No. 8–10–79280–las, the "Ideal Mortgage bankruptcy"). Appellants appeal the Bankruptcy Court's rulings, memorialized in written orders issued on March 8, 2017, (1) granting the motion of Fellheimer & Eichen LLP ("F & E") to withdraw as attorneys of record for Global under Local Bankruptcy Rule 2090–1(d), and (2) denying Holzer and Global's motion requesting relief from the automatic stay imposed in the bankruptcy case, pursuant to 11 U.S.C. § 362(a), to permit them to pursue alleged claims against non-debtor third parties (the "March 8, 2017 Orders"). Holzer is proceeding pro se on behalf of himself and Global.
The instant appeal challenges the Bankruptcy Court's rulings on two of the four motions argued at the hearing.
For the purpose of this opinion, the "March 8, 2017 Orders" refers to the two orders on appeal. The Court does not discuss the other two orders the Bankruptcy Court issued that day.
On April 27, 2017, R. Kenneth Barnard, Esq., the chapter 7 trustee (the "Trustee") of the estate in the Ideal Mortgage bankruptcy, moved to dismiss this appeal on the grounds that (1) Holzer is not an attorney and, therefore, cannot represent Global, and (2) Global's appeal rests on indisputably meritless legal theories. On August 25, 2017, F & E submitted a notice containing relevant filings from the bankruptcy, including F & E's motion to withdraw as counsel for Global.
Holzer has since submitted letters to the Court in this and other cases, but has not submitted an opposition to the Trustee's or F & E's submissions. As set forth below, after a de novo review, the Court finds the instant appeal to be without merit and affirms the March 8, 2017 Orders of the Bankruptcy Court.
I. BACKGROUND
The Court summarizes the facts and history relevant to the instant appeal based on filings in the Ideal Mortgage bankruptcy and related appeals, and the parties' affidavits and exhibits in this case.
A. Facts
The following brief summary is taken from the Court's opinion in a separate Holzer v. Barnard matter, denying Holzer and Global's appeal of an earlier decision in the same underlying bankruptcy proceeding ("the July 27, 2016 Memorandum and Order"). 3 No. 15-CV-6277 (JFB), 2016 WL 4046767 (E.D.N.Y. July 27, 2016). Additional facts relating to the Ideal Mortgage bankruptcy and appellants' claims can be found therein.
1. Appellants' Claims Against Ideal Mortgage
Ideal Mortgage Bankers Ltd., a/k/a Lend America, a/k/a Consumer First Lending Key ("Ideal Mortgage" or "Debtor"), was a mortgage lender in Suffolk County, New York that originated loans and participated in mortgage orientation programs sponsored by the United States Department of Housing and Urban Development ("HUD"). By the end of 2009, the Debtor lacked sufficient funds to continue its business, and on or about December 1, 2009, the Debtor lost its ability to originate loans backed by HUD. On December 4, 2009, the New York State Banking Department issued a cease and desist order that required the Debtor to cease engaging in activities as a mortgage banker. Various officers of the Debtor, including Michael Ashley ("Ashley"), chief business strategist, and Helene DeCillis ("DeCillis"), chief operating officer, were criminally investigated, and allegations surfaced that the Debtor misappropriated funds available under its warehouse line of credit.
As part of the Debtor's loan origination process, either the Debtor or the potential borrower would select one of five appraisal management companies on the Debtor's approved vendor list to conduct an appraisal of the property for which the Debtor served as the originating lender. Global, which is wholly owned by Holzer, was one of the appraisal management companies on the Debtor's approved vendor list.
On or about November 19, 2009, Global filed an action against the Debtor in this Court, seeking to recover amounts that Global claimed the Debtor owed it for unpaid appraisals. The Debtor defaulted in the action and, as a result, on April 6, 2010, Global obtained a default judgment against the Debtor. On May 17, 2010, Global obtained an execution judgment directing the Sheriff of Suffolk County to satisfy the default judgment from any of the Debtor's real or personal property within Suffolk County. The writ of execution was returned unsatisfied.
On November 29, 2010, Global filed another action in this Court, this time seeking to recover alleged fraudulent transfers made by the Debtor to Ashley, Ashley's relatives, and Ashley's affiliated entities (the "Global Fraudulent Conveyance Action"). On November 30, 2010, an involuntary chapter 7 petition was filed against the Debtor, commencing the Ideal Mortgage bankruptcy underlying the instant appeal. As a result, the Global Fraudulent Conveyance Action was automatically stayed pursuant to 11 U.S.C. § 362(a).
2. F & E's Representation of Global
As the parties jointly set forth in their Mutual Release (discussed infra ), in October 2009, Global retained F & E to represent Holzer and Global in claims against Ideal Mortgage. F & E thereafter filed the November 2009 and November 2010 actions in this Court discussed supra , and, on February 3, 2011, filed a proof of claim in the Ideal Mortgage bankruptcy in the amount of Global's default judgment against the Debtor. F & E also filed a notice of appearance and an amended proof of claim in the bankruptcy.
On May 2, 2012, this Court dismissed the Global Fraudulent Conveyance Action, finding that only the Trustee, not Global, had standing post-petition to file a fraudulent conveyance action to recover the Debtor's property from third parties on behalf of the Debtor's bankruptcy estate. Global then terminated F & E, and the two parties entered into the aforementioned Mutual Release on May 24, 2012.
Global thereafter retained the Law Office of Morse Geller, which filed a notice of appearance on July 11, 2012. On August 22, 2012, Global filed a notice to substitute Marjory Cajoux as Global's counsel. Cajoux was later terminated, after which Global retained Douglas M. Clemmons. Clemmons never filed a notice of appearance or any other papers with the Bankruptcy Court, and was not admitted to practice in the Eastern District of New York. At that point, Holzer proceeded to file papers in the bankruptcy case pro se on behalf of both himself and Global as its managing member.
3. Holzer's Appeals
Holzer has filed numerous appeals based on decisions in the underlying bankruptcy case. As mentioned supra , for instance, on July 27, 2016, this Court affirmed the Bankruptcy Court's October 14, 2015 decision denying Global's Claims Allowance Motion. As discussed infra , the instant appeal was filed on March 22, 2017. Also presently before the Court are appeals in Holzer v. Barnard , No. 17–cv–3956 (JFB) (E.D.N.Y June 30, 2017), and Ideal Mortgage Bankers, Ltd. v. Barnard , No. 17–cv–4817 (JFB) (E.D.N.Y Aug. 15, 2017). (ECF No. 12 at 1.) The Court notes these other appeals because Holzer files across dockets, sometimes submitting letters in one docket that appear to address his other cases.
For instance, as the Court noted in its August 24, 2017 Order, discussed infra , Holzer filed a letter in Holzer v. Barnard , No. 17–cv–3956, ECF No. 4, requesting to "stay all proceedings in [the] Bankruptcy case." The Court understood Holzer to intend the request for a stay of all proceedings to apply to the instant appeal. (ECF No. 12 at 1–2.)
B. Procedural History
The parties submitted numerous filings in the Ideal Mortgage bankruptcy that relate to the instant appeal. Here, the Court primarily discusses the filings referenced in the March 8, 2017 Orders and the parties' submissions on appeal.
1. F & E's Motion to Withdraw as Attorneys of Record for Global
On October 21, 2016, F & E filed a motion, pursuant to Local Bankruptcy Rule 2090–1(d), requesting that the Bankruptcy Court allow the firm to withdraw as attorneys of record for Global nunc pro tunc as of November 30, 2011. (Br. Dkt. 505.) The Bankruptcy Court considered this motion (Br. Dkt. 482), Holzer's opposition, filed on November 23, 2016 (Br. Dkt. 485), and Holzer's additional objections, filed on February 10, 2017 (Br. Dkt. 493) and February 21, 2017 (Br. Dkt. 503). (Br. Dkt. 505.) On February 28, 2017, the Bankruptcy Court heard arguments by F & E, who appeared in support of the motion, and Holzer, who appeared in opposition. (Id. ) The Bankruptcy Court issued an order on March 8, 2017, stating that it "concluded that [F & E] has shown satisfactory reasons for withdrawal," and "after due deliberation, and for the reasons set forth on the record of the hearing," F & E was relieved as attorneys of record for Global, effective as of the date of the Bankruptcy Court's order. (Id. )
The Bankruptcy Court summarized F & E's motion in its "Order Granting Motion of Fellheimer & Eichen LLP to Withdraw as Attorneys of Record for Global" issued on March 8, 2017. (Ideal Mortgage bankruptcy docket ("Br. Dkt.") 505.)
2. Appellants' Motion for Relief From the Automatic Stay
On February 1, 2017, Holzer filed a motion seeking relief from the automatic stay imposed in the Ideal Mortgage bankruptcy, pursuant to 11 U.S.C. § 362(a), "to permit him to pursue alleged claims against non-debtor third parties, i.e., the debtor's former officers." (Br. Dkt. 506.) The Bankruptcy Court considered this motion (Br. Dkt. 492), the Trustee's opposition, filed on February 21, 2017 (Br. Dkt. 501), and Holzer's response, filed on February 27, 2017 (Br. Dkt. 504). (Br. Dkt. 506.) The Bankruptcy Court held a hearing on this motion on February 28, 2017, during which it "advised the parties that the automatic stay under 11 U.S.C. § 362(a) protects only a debtor and does not protect non-debtor third parties." (Id. ) Thus, "after due deliberation, and for the reasons set forth on the record of the February 28 hearing," the Bankruptcy Court issued an order on March 8, 2017 denying the relief sought from the automatic stay. (Id. )
The Bankruptcy Court summarized Holzer's motion in its "Order Denying Relief from the Automatic Stay" issued on March 8, 2017. (Br. Dkt. 506.)
3. The Instant Appeal
On March 22, 2017, Holzer filed a notice of appeal of the Bankruptcy Court's March 8, 2017 Orders. (ECF No. 1.) Holzer stated in his notice that he and Global are the appellants, and that they are "interchangeable for the sake of this Notice and are a creditor in the estate of Ideal Mortgage Bankers." (Id. at 1.) He indicated that they had filed claims in the bankruptcy "through Legal Counsel." (Id. ) Holzer also noted that he had petitioned for restitution in the parallel criminal case against the Debtor's former officers, and "respectfully request[ed] the hearing on [his appeal] be held by Judge Bianco simultaneous or adjacent to the hearing in the criminal case." (Id. at 2.)
Holzer refers to the "Lender's Former Officers" in his notice of appeal without defining this group. "Lender" refers to Ideal Mortgage, which Holzer also refers to as "Debtor." Based on a review of Holzer's motion, the term "Lender's Former Officers" is still unclear, but includes "Michael Ashley, Helene, Decillis, and codefendants." This ambiguity does not, however, impact the Court's analysis.
On April 27, 2017, the Trustee filed a motion to dismiss the appeal. (ECF No. 5.) The Court received filings from the record of the bankruptcy case on May 3, 2017 (ECF No. 8) and August 25, 2017 (ECF No. 11). The August 25, 2017 submission was F & E's aforementioned notice, containing its motion to withdraw as counsel and other relevant filings. (Id. )
To date, appellants have not submitted an opposition to the Trustee's motion to dismiss the appeal or to F & E's motion to withdraw as attorneys of record. Holzer has, however, submitted numerous other letters to this Court regarding this matter. On August 7, 2017, Holzer filed a letter in Holzer v. Barnard , No. 17–cv–3956 (JFB), ECF No. 4, requesting that the Court " ‘stay all proceedings in [the] Bankruptcy case and write a scheduling order for briefs and evidentiary hearing’ pertaining to a motion for restitution that he separately filed in a criminal matter pending before this Court." (Id. at 1–2.) In response, on August 24, 2017, the Court ordered that "if appellants wish to stay these pending bankruptcy appeals, they must make a motion pursuant to Federal Rule of Bankruptcy Procedure 8007." (Id. at 2.) Appellants have not made such a motion.
The Court has fully considered all of the submissions of the parties.
II. STANDARD OF REVIEW
This Court has jurisdiction to hear appeals from bankruptcy courts under 28 U.S.C. § 158(a), which provides that "[t]he district courts of the United States shall have jurisdiction to hear appeals ... from final judgments, orders, and decrees ... [and] with leave of the court, from other interlocutory orders and decrees ... of bankruptcy judges." 28 U.S.C. § 158(a). Part VIII of the Federal Rules of Bankruptcy Procedure outlines the procedure governing such appeals. Fed. R. Bankr. P. 8001.
The Court will review the Bankruptcy Court's legal conclusions de novo and its factual findings for clear error. In re Bayshore Wire Prods. Corp. , 209 F.3d 100, 103 (2d Cir. 2000) ("Like the District Court, we review the Bankruptcy Court's findings of fact for clear error, its conclusions of law de novo , and its decision to award costs, attorney's fees, and damages for abuse of discretion." (internal citations omitted) ); In re Ionosphere Clubs , 922 F.2d 984, 988–89 (2d Cir. 1990). In addition, "[t]he Court may affirm on any ground that finds support in the record, and need not limit its review to the bases raised or relied upon in the decisions below." In re Miller , Nos. 08–cv–4305 (JGK), 08–cv–4306 (JGK), 2009 WL 174902, at *1 (S.D.N.Y. Jan. 26, 2009) ; Bristol v. DeRosa , No. 09-CV-3730 (JFB), 2010 WL 3924911, at *2 (E.D.N.Y. Sept. 30, 2010).
The Trustee argues that Global's appeal should be dismissed on the grounds (1) that Holzer, who is not an attorney, cannot represent Global, and (2) Global's claims are meritless.
This Court resolved the issue of whether Holzer could represent Global in the July 27, 2016 Memorandum and Order. The Court found sufficient grounds existed to deny Holzer's motion "based on lack of standing alone," because "Holzer could not properly proceed pro se on behalf of Global, nor could Global assign its claim to Holzer to allow him to prosecute" their alleged joint claims. Holzer , 2016 WL 4046767, at *5. For the reasons set forth in the July 27, 2016 Memorandum and Order, and incorporated herein by reference, the Court agrees with the Trustee that Holzer cannot represent Global. In any event, the appeal by Global (like the appeal by Holzer) lacks merit for the reasons set forth infra .
A. F & E's Motion to Withdraw as Attorneys of Record for Global
The Bankruptcy Court concluded that F & E has "shown satisfactory reasons for withdrawal" (Br. Dkt. 505 at 1), and should therefore be relieved as attorneys of record for Global. This Court agrees.
As Judge Scarcella explained during the hearing on this motion, the question of whether F & E should be permitted to withdraw turns on standards set forth in Local Bankruptcy Rule 2090–1(d), Rule of Professional Conduct 1.16(c), and case law within this circuit. Local Bankruptcy Rule 2090–1(d) governs the "Withdrawal or Substitution of Attorneys of Record," and establishes the following standard: "An application for such an order [allowing an attorney to withdraw or be relieved or displaced] shall include a showing by affidavit of satisfactory reasons for withdrawal or displacement and the posture of the case, including the status of any pending matters." E.D.N.Y. LBR 2090–1(d). Rule of Professional Conduct 1.16(c) governs "Declining or terminating representation," and discusses certain circumstances under which lawyers may withdraw. This rule states that, generally, "a lawyer may withdraw from representing a client" under circumstances that include when "withdrawal can be accomplished without material adverse effect on the interests of the client," "the client insists upon taking action with which the lawyer has a fundamental disagreement," or "the client insists upon presenting a claim or defense that is not warranted under existing law and cannot be supported by good faith argument for an extension, modification, or reversal of existing law," among others. N.Y.R. of Prof'l Conduct 1.16(c) (2011).
In its motion requesting to withdraw as counsel, F & E describes its relationship with Holzer and Global, starting when Holzer retained F & E in 2009. (Br. Dkt. 482 ¶ 2.) The motion describes F & E's filings on behalf of Global in this Court and the Bankruptcy Court, and F & E's termination of its representation. (Id. ¶¶ 2–7.) On November 15, 2011, F & E filed a motion in the Global Fraudulent Conveyance Action, seeking to withdraw as counsel for Global and "citing an irreconcilable conflict between [F & E] and Global's member Holzer arising from demands for legal filings from Holzer that were, in the opinion of [F & E], inconsistent with the law." (Id. ¶ 6.) On November 30, 2011, the Court granted F & E's motion in the Global Fraudulent Conveyance Action to withdraw as counsel. (Id. ¶ 7; Br. Dkt. 482–1.) F & E states that "[b]etween November 30, 2011 and May 24, 2012 Holzer continued to demand that [F & E] take actions on his behalf despite [F & E's] withdrawal as counsel from the Global [Fraudulent Conveyance Action]." (Br. Dkt. 482 ¶ 8.) As discussed supra , the parties entered into a Mutual Release agreement on May 24, 2012. (Id. ¶ 9; ECF No. 8–1 at 21–25.) As F & E summarizes, under this agreement, appellants released the firm "from all claims, liabilities, obligations actions, causes of action, and agreements, present and future which Global and Holzer ever[ ] had or could have in the future including all claims that could have been sought in the Ideal Bankruptcy or arise from the Claim and Amended Claim." (Br. Dkt. 482 ¶ 10.)
Despite their Mutual Release and the fact that appellants have since been represented in the bankruptcy by other attorneys, F & E claims that appellants have breached their agreement and continued to communicate with F & E regarding this case. F & E notes in its motion that, "[c]ontrary to the terms of the Mutual Release, Holzer continues to communicate with [F & E] through nasty and threatening emails," and provides several examples:
a. June 17, 2016—email threat[en]ing to charge Fellheimer in the New York media with corruption because Holzer did not receive from Fellheimer a copy of a Motion filed by Holzer. ( [Bkr. Dkt. 482–3.] )
b. October 11, 2016—[email] [c]laiming that Fellheimer was jointly liable with HUD and the Trustee for the payment of Global's claims in the Bankruptcy and threating to file and publish ethics charge against Fellheimer if Fellheimer does not obtain an order from the Bankruptcy Court releasing Judith Fellheimer, Esquire and Alan Fellheimer, Esquire from representing [Global] in the Bankruptcy. ( [Bkr. Dkt. 482–5.] )
c. October 19, 2016—email with threats of violence unless Fellheimer will "appear". ( [Bkr. Dkt. 482–6.] )
F & E refers to itself in this motion as both "Fellheimer" and "F & E."
(Id. ¶ 17.) Holzer's aforementioned October 19, 2016 email warns F & E:
When I am not writing to you, I am now posting about you and the Trustee, and I am a hairpin trigger away like I was RUSSIA ABOUT to blow Obama to Kingdom Come .... Whatever analogy you wanna call it, you should call it your "notice to appear."
(Br. Dkt. 482–6.)
The Bankruptcy Court considered this motion, Holzer's opposition and additional objections, and arguments at the February 28, 2017 hearing, and determined that F & E's motion to withdraw should be granted. First, Judge Scarcella explained at the hearing that Holzer only alleged issues relating to the services F & E had provided, rather than addressing the narrow question before the court of whether to permit F & E to withdraw as counsel. Next, applying the standard set forth in Local Bankruptcy Rule 2090–1(d), Judge Scarcella found that: (1) F & E had presented satisfactory reasons for withdrawing, and (2) the status of pending matters did not weigh against F & E, as F & E was not representing appellants in any pending matters.
In response to Judge Scarcella's determination at the hearing that F & E did not represent Holzer in any pending matters, Holzer attempted to raise claims that he wants to bring against F & E for dissatisfaction with their services. Judge Scarcella explained that this was a separate issue, and that his narrow ruling permitting withdrawal of counsel would not preclude Holzer from bringing such claims against F & E in a different action.
Judge Scarcella also found that these facts led to the same determination that F & E should be permitted to withdraw under Rule of Professional Conduct 1.16(c). In particular, he found F & E's concern that Global was taking action with which the firm fundamentally disagreed, and presenting claims or defenses that could not be supported by existing law or good faith argument, to be a satisfactory reason for withdrawal. As F & E noted in the instant motion, this Court granted F & E leave to withdraw as counsel for Global in 2011 after F & E filed a motion "citing an irreconcilable conflict between [F & E] and [Holzer] arising from demands for legal filings from Holzer that were, in the opinion of [F & E], inconsistent with the law." (Br. Dkt. 482 ¶ 6.) Additionally, Judge Scarcella found that, as F & E had not represented Global on this matter in years, its withdrawal would have no material adverse impact on Global's case.
The Court agrees with Judge Scarcella's analysis under the applicable legal standards. Further, the Court finds that the parties' submissions demonstrate that there has been a "breakdown of the attorney-client relationship" of the type that has driven other courts in this circuit to permit withdrawal of counsel. See, e.g., In re Tosif , No. 12-71932-AST, 2012 WL 4832335, at *3 (Bankr. E.D.N.Y. Oct. 10, 2012). The Court, therefore, finds that the Bankruptcy Court correctly granted F & E's motion for relief as attorneys of record for Global, and affirms the Bankruptcy Court's March 8, 2017 Order.
B. Appellants' Motion for Relief from the Automatic Stay
The Bankruptcy Court denied appellants' motion seeking relief from the automatic stay, pursuant to 11 U.S.C. § 362(a), on the basis that it was unable to provide the relief sought. Appellants requested relief from the stay to pursue alleged claims against non-debtor third parties. The Bankruptcy Court correctly found that 11 U.S.C. § 362(a) protects the Debtor only, and that there was, therefore, no stay to lift with respect to non-debtor parties. This Court agrees, and affirms the decision denying the motion for relief from the automatic stay.
The Court notes that it addressed appellants' motion for relief from the automatic stay with respect to the Debtor in its July 27, 2016 Memorandum and Order. Appellants had requested in their Claims Allowance Motion, discussed supra , for the Bankruptcy Court to lift the automatic stay so that Global could have its claim against the estate paid immediately. Holzer , 2016 WL 4046767, at *3. The Bankruptcy Court denied Global's request that the stay be lifted, and this Court affirmed. Id. at *13–14. Here, the Court addresses only appellants' present request for relief from the stay with respect to the non-debtor third parties.
Section 362(a) of the Bankruptcy Code provides that the filing of a bankruptcy petition "operates as a stay, applicable to all entities," of actions and acts including:
the commencement or continuation ... of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title; ...
the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title; ... [and]
any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate ....
11 U.S.C. § 362(a) (emphasis added). The plain language of the statute provides for a stay only as to a debtor, and case law within this circuit confirms that limitation. See, e.g., Queenie, Ltd. v. Nygard Int'l , 321 F.3d 282, 287 (2d Cir. 2003) ("It is well-established that stays pursuant to § 362(a) are limited to debtors and do not encompass non-bankrupt co-defendants." (quoting Teachers Ins. and Annuity Ass'n v. Butler, 803 F.2d 61, 65 (2d Cir. 1986) ) ).
In Queenie, the Second Circuit noted that there were circumstances in which a stay could apply to non-debtors, but that the exception "normally [applies] only when a claim against the non-debtor will have an immediate adverse economic consequence for the debtor's estate." 321 F.3d at 287. The Court provided examples of claims against non-debtors that could be stayed under this exception: "a Claim to establish an obligation of which the debtor is a guarantor, a claim against the debtor's insurer, and actions where ‘there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant.’ " Id. at 287–88 (internal citations omitted).
Holzer requests relief from the automatic stay to pursue claims against the Debtor's former officers. There is, however, no such stay in place as to the former officers. Nor would Holzer want there to be: his appeal requests that the Court lift the non-existent stay as to these non-debtor parties.
Here, the automatic stay protects only the Debtor. As discussed supra, the Court recognizes that there are narrow exceptions under which an automatic stay can extend to non-debtor parties, but there is no evidence here that such an exception applies.
Judge Scarcella correctly informed Holzer at the hearing on this motion that the Bankruptcy Court could not grant his request to lift the automatic stay because the stay does not extend to non-debtors. This Court, therefore, affirms the Bankruptcy Court's denial of Global's motion for relief from the automatic stay.
Judge Scarcella even went so far as to note that Holzer was free to pursue any claims he might have against non-debtor third parties, without concern as to the stay. Judge Scarcella included as a caveat, however, that he was making no determination as to the merits of Holzer's potential claims.
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IV. CONCLUSION
For the foregoing reasons, appellants' appeal of the Bankruptcy Court's March 8, 2017 Orders is denied. The Court affirms the rulings of the Bankruptcy Court in all respects. The Clerk of the Court shall enter judgment accordingly and close the case.
SO ORDERED.