IN RE GALVAGNI, (Bankr.N.D.N.Y. 2000)

ROBERT E. LITTLEFIELD, JR., United States Bankruptcy Judge.

The current matter was brought before the court by an Order to Show Cause as to why the court should not, pursuant to 11 U.S.C. § 105, modify a lift stay order that it had issued on November 18, 1999.

Since the Debtor's request is for injunctive relief it should have been brought by adversary proceeding. Fed.R.Bankr.P. 7001(7), In re Zahn Farms, 206 B.R. 643 (2d. Cir. BAP 1997). However, all parties have consented to pursue this matter by motion practice rather than by adversary proceeding.

Jurisdiction

This is a core proceeding and the court has jurisdiction pursuant to 28 U.S.C. § 157(b)(2)(G) and 1334(b)

Facts

Based upon the pleadings and oral arguments before it, the court finds the following facts:

• Ms. Galvagni ("Debtor") currently resides in a mobile home which is located at the Wilton Mobile Park ("Creditor"). The Debtor has resided at these premises, with her two children, since February 1997.

• Since the Creditor's park accommodates three or more mobile homes it is subject to New York State Real Property Law § 233. This section is commonly known as the Mobile Home Owner's Bill of Rights.

• In February 1997, when the Debtor moved onto the park, she signed a one-year lease to expire in December 1997. On December 13, 1997, she renewed this lease for an additional one-year period to expire December 31, 1998.

• The Debtor's payment history indicates a series of accumulating arrearages and lump sum payments creating credit balances. Accompanying these cycling payments are normal monthly payments.

• On June 17, 1998, the Debtor filed a Chapter 13 petition. Her case number 98-14135 was active until dismissed, without prejudice, on April 29, 1999.

• On November 19, 1998, the Creditor sent a letter to the Debtor indicating that she owed a portion of September's rent, all of October's rent and November's rent. This letter also indicated that if immediate payment was not made, summary proceedings would be commenced. In addition to the rents due, the Debtor was charged for service of process and the Creditor's attorney's fees.

• On December 4, 1998, the Creditor sent the Debtor a 30 day demand letter.

• On January 11, 1999, the Creditor commenced a proceeding in Wilton Town Court, seeking a warrant to dispossess the Debtor from the premises.

• On January 26, 1999, the Debtor and Creditor entered into a stipulation of settlement. However, the Debtor was unable to fully comply with this stipulation.

• On April 13, 1999, the Creditor notified the Debtor, in writing, that it had obtained a warrant to remove her from the premises and that to prevent the eviction, the Debtor would be required to submit $890.25 to the Creditor immediately. The Debtor did not submit the payment, however, the warrant was not executed at that time.

• On April 29, 1999, the Debtor's case number 98-14135, was dismissed without prejudice.

• On July 2, 1999, the Debtor filed a second Chapter 13 petition initiating the current case number 99-13997.

• On November 18, 1999, the Creditor requested that this court lift stay to allow it to proceed on the warrant of removal. The Creditor's motion was unopposed and the court ordered the stay lifted.

• On December 13, 1999, the Debtor presented an Order to Show Cause to amend the lift stay motion and restrain the Creditor from evicting her from the property.

• A hearing was held, the matter reserved and a briefing schedule was issued.

Arguments

The Debtor argues that the Creditor did not comply with New York State Real Property Law § 233 when obtaining the warrant of removal. She further contends that in obtaining the warrant the Creditor violated the automatic stay. She requests injunctive relief and damages.

The Creditor argues that the Debtor's tenancy had terminated by default, breach of lease and/or by the proceedings to evict. It argues that because of this termination, its actions were legitimate and proper.

Discussion

Requirements for Injunctive Relief

The Second Circuit has enunciated the general requirements a party must establish when seeking injunctive relief, including demonstrating:

(1) that the injunction is necessary to prevent irreparable harm and (2) either a likelihood of success on the merits or a sufficiently serious question going to the merits of the claim as to make it a fair ground for litigation plus a balance of hardships that tips decidedly in favor of the moving party (citations omitted). Phillip v. Fairfield Univ., 118 F.3d 131 (2d. Cir. 1997).

The Debtor has established the requirements for the requested relief.

• Irreparable Harm

Although there is no concrete definition of irreparable harm, the Circuit has developed functional guideposts stating, "These cases stand for the general proposition that irreparable harm exists only where there is threatened imminent loss that will be very difficult to quantify at trial." Tom Doherty Assoc., Inc., v. Saban Entertainment, Inc., 60 F.3d 27 (2d Cir. 1995). In this case, there is little doubt that the Debtor will face irreparable harm if injunctive relief is not granted. She has indicated that she and her children have lived in the Creditor's mobile home park for several years and that they have no other place to live. (Debtor's Affidavit, pg. 2). If the Creditor is allowed to remove the Debtor's mobile home from its property and she is unable to secure another location for the home, the personal and emotional loss to her and her family will be difficult to quantify at trial.

2. Sufficiently Serious Question

The Debtor invokes New York State Real Property Law § 233 arguing that the Creditor has failed to fulfill its obligation under this statute. This statute states in part:

e. Leases. 1. The manufactured home park owner or operator shall offer every manufactured home tenant prior to occupancy, the opportunity to sign a lease for a minimum of one year, which offer shall be made in writing.

2. (i) On or before, as appropriate, . . . (b) the ninetieth day next preceding the expiration date of any existing written lease between a manufactured home owner then in good standing and a manufactured home park owner or operator, the manufactured home owner or operator shall submit to each such manufactured home owner a written offer to lease for a term of at least twelve months from the commencement date thereof unless the manufactured home park owner or operator has previously furnished the manufactured home owner with written notification of a proposed change. . . .

Pursuant to the statute, this Creditor should have, on October 1, 1998, offered the Debtor a lease for an additional year. This simply was not done. Instead on November 19, 1998 the Creditor sent the Debtor a letter, also required by state law, detailing past due rent payments consisting of a portion of September's rent, all of October's rent and all of November's rent and directing the Debtor to pay these charges within 30 days. The fact that the Creditor did not comply with the state law raises a sufficiently serious question going to the merits of the claim and, therefore, the Debtor has satisfied the second prong necessary for injunctive relief.

On October 1, 1998 this Debtor was in good standing pursuant to this statute, since at that time she only owed a portion of the previous months rent. New York State Real Property Law § 233(e)(ii) states, "For the purposes of this paragraph, a manufactured home owner shall be deemed in good standing if he or she is not in default in the payment of more than one month's rent to the manufactured home park owner. . ."

• Balance of Hardships

The Debtor has also demonstrated that the balance of hardships tips decidedly in her favor. As noted, for the Creditor to remove the Debtor's mobile home from its park when the Debtor has no other location to place the home would be harmful to her and her family. On the other hand, the Debtor has continued to make, timely, monthly payments to the Creditor. The Creditor suffers no hardship in the Debtor's continued presence on the property, provided that she continues to make timely payments.

The Debtor has demonstrated all the requirements necessary for injunctive relief.

Violation of the Automatic Stay

The Creditor argues that the Debtor's tenancy ended by expiration, default, breach of lease, and/or by the proceedings to evict. This court's finding that the Debtor was entitled to a lease renewal in October 1998, for 1999, does not mean that the parties could not have terminated the lease in some other manner. This court cannot make the determination of whether the Debtor was in good standing in 1999, and thus subject to a further lease extension, because she argues that a portion of the monies that she had paid to the Creditor was applied to attorney's fees and court costs incurred in the eviction proceeding.

It is uncontested that the Creditor undertook the eviction proceedings in violation of the automatic stay, and therefore, the warrant of removal is void. 48th Street Steakhouse, Inc. v. Rockefeller Group, Inc., 835 F.2d 427 (2d Cir. 1987). To redress this violation, the Debtor requests that the Creditor's attorney's fees and costs that she has paid pursuant to those proceedings be reallocated to her rents due. That request is granted. The Debtor also requests $5,000. in punitive damages and that her bankruptcy attorney's fees be paid. This court will not summarily grant a punitive damage award. However, a scheduling order will be issued and a hearing date will be set to ascertain damages, if any, for this violation.

The court can not determine from the accounting provided exactly how much was paid in attorney's fees. The Debtor argues that she was billed for certain attorney's fees more than once. The court is confident that the parties can reconcile their differences on this matter. However, if they cannot, either party may request a status conference and a hearing will be scheduled.

This court cannot determine the status of the relationship between the parties pursuant to New York State Real Property Law because of the reallocation issue and more importantly, a state court is in a superior position to make such a determination. As stated above, the warrant of removal is void as being obtained in violation of the automatic stay. Since this court premised the lifting of the automatic stay on this invalid warrant, and because the Debtor has met her burden, the request for injunctive relief is granted. The Creditor is enjoined from pursuing this warrant of removal.

The court assumes that the Debtor, through her landlord/tenant attorney, has initiated a state court proceeding pursuant to New York Real Property Law § 233(u). This section states, "In the event of a breach by a manufactured home park owner or operator of any requirements of this section, the manufactured home tenant may commence an action for damages actually incurred as a result of such breach. . ." If the court's assumption is incorrect it will, absent objection, hear argument on this issue when it holds its hearing on damages resulting from the automatic stay violation.

This decision does not preclude the Creditor from, with sufficient cause, moving to lift the stay in order to obtain a valid warrant of removal.

Conclusion

In sum the court finds the following:

• The Debtor was, pursuant to New York State Law, entitled to have a lease extension offered to her in October 1998, for January to December 1999.

• The eviction proceeding undertaken by the Creditor in January 1999, contravened the automatic stay; the warrant is void and all monies paid by the Debtor for the Creditor's attorney's fees and costs are to be reallocated to rent payments.

• The court cannot determine the parties relationship vis a via New York State Law prior to this reallocation. Additionally, this court will defer any such determination to the state court.

• A scheduling order will be issued and an evidentiary hearing will be held by this court to ascertain any monetary damages, if any, caused by the Creditor's violation of the automatic stay.

• The Debtor has fulfilled the requirements for injunctive relief and her request for such relief is granted.

It is so ORDERED.