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Kelsey v. Citimortgage

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


May 19, 2010

MICHAEL J. KELSEY, PLAINTIFF-APPELLANT,
v.
CITIMORTGAGE, INC., DEFENDANT-RESPONDENT.

On appeal from Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-379-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted April 27, 2010

Before Judges Wefing and Grall.

Plaintiff Michael J. Kelsey appeals from an order of the Law Division dismissing his complaint against defendant CitiMortgage, Inc. Plaintiff filed his complaint in the Law Division in Morris County on November 18, 2008. On March 9, 2009, defendant moved to dismiss the complaint. On plaintiff's application, the matter was transferred to Sussex County on May 13, 2009. While defendant's motion to dismiss was pending, plaintiff requested adjournments and a continuance but did not oppose the motion on the merits. On August 5, 2009, Judge Gannon dismissed the complaint with prejudice, and on September 29, 2009, he issued an amended order and a written explanation of his findings and legal conclusions. He wrote:

In this action, [p]laintiff has sued [d]efendant on theories of [n]egligence and [b]ad [f]aith arising out of [d]efendant's alleged violations of an automatic bankruptcy stay, [11 U.S.C.A. § 362,] which became effective when [p]laintiff filed for Chapter 13 bankruptcy protection on October 21, 2002.

This [c]court is simply barred from hearing claims asserting violations of a bankruptcy stay that sound in state law, because such claims are preempted by federal bankruptcy law. See Eastern Equipment and Services Corp. v. Factory Point National Bank, 236 F.3d 117, 120 (2d Cir. 2001). Accordingly, any relief for a violation of the stay must be sought in the Bankruptcy Court.

Plaintiff has not provided a copy of the complaint he filed in the Law Division.*fn1 On appeal he presents only one argument:

the Law Division "prematurely dismissed [his complaint] in error and/or without all of the [aforementioned] facts being considered or argued . . . ." The facts asserted in plaintiff's brief include nothing relevant to his argument, and the documents appended to the brief have no apparent relevance to his claim of error.

Plaintiff does not contest that Judge Gannon's characterization of the claims asserted in his complaint as "arising out of [d]efendant's alleged violations of an automatic bankruptcy stay, [11 U.S.C.A. § 362]." Thus, he has abandoned that claim. Muto v. Kemper Reinsurance Co., 189 N.J. Super. 417, 420-21 (App. Div. 1983).

In the absence of any argument that plaintiff's state law claims arise from something other than alleged violations of the automatic bankruptcy stay, we conclude that the dismissal of this complaint was proper and not premature. Federal bankruptcy law provides a remedy for violations of the automatic stay. 11 U.S.C.A. § 362(k)(1) (with exceptions that permit recovery for actual damages for certain violations committed in good faith; "an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages"). "Courts that have examined th[e] issue [of preemption] have held that the federal Bankruptcy Code preempts any state law claims for a violation of the automatic stay . . . ." E. Equip. & Servs. Corp. v. Factory Point Nat'l Bank, 236 F.3d 117, 121 (2d Cir. 2001). The reasons for that conclusion are summarized in Eastern Equipment as follows:

This preemption arises because: (1) Congress placed bankruptcy jurisdiction exclusively in the district courts under 28 U.S.C. § 1334(a); (2) Congress created a lengthy, complex and detailed Bankruptcy Code to achieve uniformity; (3) the Constitution grants Congress exclusive power over the bankruptcy law, see U.S. Const. art. I, § 8, cl. 4; (4) the Bankruptcy Code establishes several remedies designed to preclude the misuse of the bankruptcy process; and (5) the mere threat of state tort actions could prevent individuals from exercising their rights in bankruptcy, thereby disrupting the bankruptcy process.

[236 F.3d at 121.]

Affirmed.


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