Mergenthaler v. Thaler et al
MEMORANDUM AND OPINION - For the foregoing reasons, Appellant's request for a stay pending appeal is DENIED and all four of Appellant's matters are sue sponte consolidated into case 15-CV-2034. All future filing related to the pending appe als shall be filed in case 15- CV-02034. The Clerk of the Court is directed the following matters CLOSED: 15-CV-02031, 15-CV-02032, and 15-CV-02033. The Clerk of the Court is further directed to mail a copy of this Memorandum & Order to the pro se litigant. So Ordered by Judge Joanna Seybert on 4/29/2015. C/M (Valle, Christine)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
In re MERGENTHALER
DEAN OSEKAVAGE d/b/a PATHFINDERS
USA as assignee of Judith Wetzstein,
MEMORANDUM & ORDER
Peter Mergenthaler, pro se
3 Wood Edge Court
Water Mill, NY 11976
Andrew M. Thaler:
Andrew M. Thaler, Esq.
Thaler Law Firm PLLC
675 Old Country Road
Westbury, NY 11590
Christine Black, Esq.
Office of the U.S. Trustee
560 Federal Plaza
Central Islip, NY 11572
Melissa Beth Levine, Esq.
Gold Benes LLP
1854 Bellmore Avenue
Bellmore, NY 11710
Mark A. Cuthbertson, Esq.
Law Offices of Mark A. Cuthbertson
434 New York Avenue
Huntington, NY 11743
SEYBERT, District Judge:
(“Appellant”) motion seeking a stay pending appeal of four orders
issued by Bankruptcy Judge Robert E. Grossman.
four separate bankruptcy appeals before the undersigned along with
the same order to show cause in each case.
on April 21, 2015.
Oral argument was held
For the foregoing reasons, Appellant’s request
for a stay is denied and his cases are sue sponte consolidated.
Appellant obtained a divorce from his first wife, Judith
Wetzstein, in Florida on March 23, 1998. (Compl., Case No. 8-1474517, Docket Entry 1, at 3.)
On that date, Appellant signed a
Marital Rights and Property Settlement Agreement (the “Settlement
Agreement”), in which he promised to pay certain sums of money to
(Compl. at 3.)
The Settlement Agreement was
incorporated into a Florida Divorce Judgment.
never made any payments under the Settlement Agreement to Ms.
(Order to Show Cause (“OTSC”), Docket Entry 5,1 Ex.
Unless otherwise specified, all references to docket entries
correspond to the docket for case No. 15-CV-02034.
On July 17, 2006, Ms. Wetzstein assigned the Florida divorce
judgment to Dean Osekavage d/b/a Pathfinders USA, a debt collection
Company. (Compl. at 4.) Five years later, on November 20, 2011,
Ms. Wetzstein sadly committed suicide.
(See Decl. of Roger D.
Olson, Docket Entry 6, ¶ 3.)
In September of 2011, Osekavage commenced an action in
New York State Supreme Court, Suffolk County before Judge Arthur
G. Pitts (the “State Court Case”) against Appellant and his current
wife, Rosemary Mergenthaler, seeking to domesticate the Florida
(Compl. at 4.)
On April 19, 2012, Judge Pitts
granted Osekavage’s motion for summary judgment against Appellant
and issued an order finding as follows:
Ordered that the judgment is granted against
the defendant Peter Mergenthaler, in the
amount of $1,517,508.26, which sum represents
the original principle amount of the judgment
plus interest from Florida, together with
interest now calculated from January 13, 2012,
pursuant to a finding that the defendant is in
default of his obligations under a “Final
Judgment of Dissolution of Marriage” entered
on March 23, 1998 by the 15th Judicial Circuit
Court, Palm Beach County, Florida.
(Compl. Ex. 1.)
On May 3, 2012, based upon the above order,
$1,560,052.74. (Compl. Ex. 1.)
On March 25, 2014, the Suffolk County Supreme Court
appointed Mark A. Cuthbertson, Esq. as receiver of the home in
which Appellant lives with his wife, located at 3 Wood Edge Court,
Water Mill, NY 11976 (“the Property”).
(Declaration of Melissa
Levine (“Levine Decl.”), Docket Entry 6-2, ¶ 6.)
It is undisputed
that the Property is solely owned by Appellant’s wife, Rosemary
(Levine Decl. ¶ 6.)
Nevertheless, on December 14, 2014, the New York State
Supreme Court issued a judgment against Rosemary Mergenthaler in
the amount of $1,658,528.26 and placed a lien on the Property.
(Levine Decl. ¶ 5.)
The court issued the judgment pursuant to New
York Debtor and Creditor Law section 273 based upon a finding that
Appellant used monies he should have paid to his ex-wife to acquire
and provide upkeep for the Property.
(Levine Decl. ¶ 5.)
On July 17, 2014, Cuthbertson--in his role as receiver
of the Property--commenced an eviction action against Appellant
and his wife.
Cuthbertson then entered into a contract to sell
the Property for $1,850,000 on August 20, 2014.
Appellant filed for Chapter 7 bankruptcy on October 10,
(See Bankruptcy Petition, Case No. 14-74517, Docket
Entry 1, at 13.)
In his bankruptcy petition, Appellant claimed
that he did not own any real property.
Dean Osekavage is listed
as Appellant’s largest creditor in his bankruptcy petition, with
a claim of $1,600,000. (Bankruptcy Petition at 19.) Subsequently,
Osekavage and Pathfinders USA commenced an adversarial proceeding
(the “Adversarial Proceeding”) against Appellant on January 5,
2015 to prevent Appellant from discharging Osekavage’s judgment.
(Levine Decl. ¶ 15.)
In Appellant’s Chapter 7 Bankruptcy Action, the Court
issued an order lifting the automatic stay with respect to the
(Order, Case No. 8-14-74517, Docket Entry 24.)
oral argument, Judge Grossman explained that he was lifting the
automatic stay with respect to the Property because Appellant did
not have title to the Property.
Judge Grossman specifically
[T]he property at issue here is not property
of your estate. You don’t own it. You don’t
have an economic interest in the property.
All you may have is a possessory right which
allows you to sleep there. You may convince
a state court judge not to evict you. You may
not. That’s the state court. That’s not done
here. There’s nothing for me to do here.
(Levine Decl. Ex. F-1 at 7:15-21.)
Judge Grossman subsequently
denied three motions filed by Appellant seeking reconsideration of
(Levine Decl. ¶¶ 17, 22, 27.)
In the Adversarial Proceeding, Judge Grossman granted
Osekavage’s motion for summary judgment on April 3, 2015 and held
that (1) “the obligation underlying Plaintiff’s judgment was a
voluntarily assigned to Osekavage by the Appellant’s ex-spouse,
and (3) Osekavage’s judgment was not dischargeable in bankruptcy.
(Levine Decl. Ex. W.)
Appellant filed appeals of the following orders issued
judgment order in the Adversarial Proceeding (Case No. 15-CV2034); (2) the Bankruptcy Court’s order denying Appellant’s motion
to reconsider the court’s decision to lift the automatic stay (Case
Appellant’s supplemental motion for reconsideration of the same
order (Case No. 15-CV-2032); and (4) the Bankruptcy Court’s order
denying Appellant’s second supplemental motion to reconsider the
same order (Case No. 15-CV-2033).
Appellant now seeks to stay execution of the Bankruptcy
Court’s decisions until his appeals are resolved.
(See OTSC at 1-
Plaintiff claims that the Bankruptcy Court should not have
lifted the automatic stay with respect to the Property and should
not have found that Osekavage’s judgment was not dischargeable in
Liberally construed, Appellant makes two arguments
that apply to both claims: (1) Appellant argues that because
illegitimate and (2) Appellant argues that Osekavage should not be
allowed to collect on a judgment against Appellant by levying on
a house that only his wife owns.
(See OTSC ¶ 25.)
Stay Pending Appeal
In deciding whether to grant a stay pending appeal, I
must consider the following four factors:
(1) whether the stay applicant has made a
strong showing that he is likely to succeed on
the merits; (2) whether the applicant will be
irreparably injured absent a stay; (3) whether
issuance of the stay will substantially injure
proceeding; and (4) where the public interest
In re Vytautas Vebeliunas, No. 01-CV-1108, 2002 WL 535503, at *1
(S.D.N.Y. Apr. 10, 2002) (quoting In re Marine Pollution Serv.,
Inc., 89 B.R. 344, 345 (S.D.N.Y. 1988)); Hirshfeld v. Board of
Education, 984 F. 3d 35, 39 (2d Cir. 1993).
The party seeking a
stay pending appeal bears the burden of proving entitlement to the
United States v. Private Sanitation Industry Ass’n of
Nassau/Suffolk, Inc., 44 F.3d 1082, 1084 (2d Cir. 1995). The Court
will consider each factor in turn.
irreparable harm because they will be evicted from their home
absent a stay.
(Reply Br., Docket Entry 8, ¶¶ 38-41.)
argues in opposition that Appellant’s rights will not be affected
(Opp. Br., Docket Entry 6-45, at 15.)
Appellant will undeniably suffer irreparable harm if he is evicted
from his home, regardless of the fact that he merely has a
possessory interest in the Property.
In re Slater, 200 B.R. 491,
irreparable harm if she was evicted from the home she lived in for
Plaintiff represented that he has nowhere else to
go and he recently declared bankruptcy. Therefore, the Court finds
that the irreparable harm factor weighs in favor of Appellant.
Likelihood of Success on the Merits
“[T]he proper standard governing the strength-of-the-
bankruptcy court order is ‘substantial possibility’ of success on
the merits--i.e., the same standard utilized on a motion to stay
a district court’s order pending appeal to the Court of Appeals.”
In re Gen. Credit Corp., 283 B.R. 658, 660 (S.D.N.Y. 2002).
Although Appellant finds faults with four of Judge Grossman’s
Orders, only two substantive issues are relevant to his appeals:
(1) whether the Bankruptcy Court correctly lifted the automatic
stay with respect to the Property at issue and (2) whether the
Bankruptcy Court correctly decided that Osekavage’s judgment is
Whether the Bankruptcy Court Properly Lifted the
The Bankruptcy Court lifted the automatic stay with
respect to the Property at issue because it was not part of
Appellant’s bankruptcy estate.
“Section 541 of the Bankruptcy
Code provides that the commencement of a bankruptcy case ‘creates
an estate . . . comprised of . . . all legal or equitable interests
of the debtor in property as of the commencement of the case.’”
Bloch v. Bloch, No. 09-CV-3963, 2010 WL 3824125, at *3 (E.D.N.Y.
Sept. 23, 2010) (quoting 11 U.S.C. § 541).
“Whether or not a
debtor has an interest in property sufficient to bring it within
the ambit of ‘property of the estate’ is determined by state law
or other applicable nonbankruptcy law.”
In re Taub, 427 B.R. 208,
219 (Bankr. E.D.N.Y. 2010) (internal citation and quotation marks
omitted), aff’d, No., 2011 WL 1322390 (E.D.N.Y. Mar. 31, 2011).
“Under New York law, one spouse’s rights in marital property owned
by the other are inchoate and do not vest until entry of a judgment
DiGeronimo v. Weissberg, 354 B.R. 625, 637 (E.D.N.Y.
bankruptcy estate depends upon who has title to the property when
the petition is filed.
See Musso v. Ostashko, 468 F.3d 99, 105-
06 (2d Cir. 2006) (Under New York law, “[a] spouse without legal
title has no interest in marital property prior to obtaining a
quotation marks omitted)).
Here, it is undisputed that the Property at issue is
Appellant’s wife did not file for bankruptcy along with her
Therefore, the Bankruptcy Court’s decision to lift the
automatic stay with respect to the Property was straightforward,
and Appellant has not shown that he is likely to succeed on the
merits with respect to his appeals related to Judge Grossman’s
decision to lift the automatic stay.
Whether the Bankruptcy Court Correctly Decided that
Osekavage’s Judgment was not Dischargeable
Following a hearing, the Bankruptcy Court decided that
Osekavage’s state court judgment against Appellant was a domestic
spousal maintenance and child support . . . are not dischargeable
and thus survive the bankruptcy discharge.”
Bloch v. Bloch, 2010
WL 3824125, at *2; see 11 U.S.C. § 523(a)(5); In re Bezoza, 271
B.R. 46, 51 (S.D.N.Y. 2002).
As is relevant to this appeal, the
term “domestic support obligation” means:
[A] debt that accrues before, on, or after the
date of the order for relief in a case under
this title, including interest that accrues on
that debt as provided under applicable
nonbankruptcy law notwithstanding any other
provision of this title, that is (A) owed to
or recoverable by (i) a spouse, former spouse,
or child of the debtor [that is] . . . . (B) in
the nature of alimony, maintenance, or
support . . . . [and was] not assigned to a
obligation is assigned voluntarily by the
spouse, former spouse, child of the debtor, or
such child’s parent, legal guardian, or
responsible relative for the purpose of
collecting the debt.
11 U.S.C.A. § 101.
professional debt collector, his state court judgment is not
legitimate and is therefore unenforceable.
argument misses the point.
The only issue before the Bankruptcy
Court with respect to Osekavage’s status as a creditor was whether
Osekavage’s judgment was a domestic support obligation.
granted in state court were properly obtained is not a question
that the Bankruptcy Court--or this Court--has jurisdiction to
decide. “[B]ecause only the United States Supreme Court may review
a final decision of a state court, federal district courts do not
have jurisdiction over claims that have already been decided, or
that are ‘inextricably intertwined’ with issues that have already
been decided, by a state court.”
Bridgewater Operating Corp. v.
Feldstein, 346 F.3d 27, 29 (2d Cir. 2003); see Walker v. New York,
345 F. Supp. 2d 283, 289 (E.D.N.Y. 2004) (holding that the Rooker–
Feldman doctrine barred the plaintiff’s claims because “the relief
sought by Plaintiff [was] essentially retrospective: relief from
a past judgment ordered against him by the state courts”),
aff’d, 150 F. App’x 28 (2d Cir. 2005).
Here, Osekavage obtained
a judgment against both Appellant and his wife in state court.
This Court will not re-litigate whether those judgment were validly
granted in state court.
Moreover, Appellant does not raise any
specific challenge to the Bankruptcy Court’s decision classifying
Osekavage’s judgment as domestic support obligation.
it is unlikely Appellant will succeed on the merits with respect
to his appeal of the Bankruptcy Court’s summary judgment decision.
iii. Injury to Other Parties
The third element of the analysis looks to the harm that
could befall the party opposing the stay.
company will suffer some harm if a stay is granted because it will
be subject to further delay.
Specifically, there is a cash
purchaser waiting to take possession of the Property and Osekavage
will have to pay additional insurance premiums to keep the property
(Opp. Br. at 15.)
The Public Interest
The final factor looks to the public interest. 28 U.S.C.
§ 471 Contemplates the just, speedy, and inexpensive resolutions
of civil disputes.
This matter has been litigated for the better
part of a decade in at least three separate courts.
judgments have been rendered against both Appellant and his wife.
Thus, the public interest will not be served by delaying this
dispute any further.
Considering the Factors Together
Considering all of the above factors, Appellant has not
demonstrated that a stay is warranted pending appeal.
Appellant has not shown that he is likely to succeed on the merits.
Although eviction is a grave remedy, if Appellant is evicted from
his home it will be because he litigated and lost in state court.
This Court will not intervene in state court proceedings when
Appellant is not likely to prevail on his appeals.2
Under Federal Rule of Civil Procedure 42(a), a court may
consolidate multiple cases that “involve a common question of law
FED. R. CIV. P.
consolidate related cases sue sponte provided that the “savings of
sacrifice of justice.”
Devlin v. Transp. Commc’ns. Int’l Union,
175 F.3d 121, 130 (2d Cir. 1999) (emphasis in original) (quoting
Consorti v. Armstrong World Indus., Inc., 72 F.3d 1003, 1007 (2d
Johnson v. Celotex Corp., 899 F.2d 1281, 1284–85 (2d
Here, although each of Appellant’s cases stem from
separate orders issued by the Bankruptcy Court, all of the orders
Osekavage also argues that two of Appellant’s cases should be
dismissed because he did not timely file notices of appeal within
fourteen days after each order was entered, as required by
Bankruptcy Rule 8002(a)(1). However, the Court need not address
the issue of timeliness to resolve Appellant’s motions for a stay.
(1) relate to the same facts, (2) involve the same parties, and
(3) were issued by the same Judge.
Indeed, it would be more
confusing to allow Appellant’s cases to proceed separately than to
Therefore, consolidation is appropriate here.
For the foregoing reasons, Appellant’s request for a
stay pending appeal is DENIED and all four of Appellant’s matters
are sue sponte consolidated into case 15-CV-02034.
filing related to the pending appeals shall be filed in case 15CV-02034. The Clerk of the Court is directed the following matters
CLOSED: 15-CV-02031, 15-CV-02032, and 15-CV-02033.
The Clerk of
the Court is further directed to mail a copy of this Memorandum &
Order to the pro se litigant.
/s/ Joanna Seybert_______
Joanna Seybert, U.S.D.J.
April 29, 2015
Central Islip, New York
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