Howell v. Brozzetti , 658 N.Y.S.2d 708 ( 1997 )

Carpinello, J.

Appeal from a judgment of the Supreme Court (Rose, J.), entered February 9, 1996 in Broome County, upon a decision of the court in favor of defendants.

This case involves a breach of contract claim for the sale of real property owned by plaintiff in the Town of Chenango, Broome County. The contract was entered into as a result of a public auction. Defendants, the contract vendees, answered and counterclaimed seeking rescission of the contract on the ground that plaintiff was incapable of conveying marketable title because the property lacked a legal right of access.

During the pendency of the instant appeal, on February 10, 1997, plaintiff filed a chapter 13 (11 USC) petition in bankruptcy pursuant to the Federal Bankruptcy Code. While there is a question as to the ability of an estate to file such a petition, that issue must be resolved by Bankruptcy Court. The immediate issue for our determination is whether the filing operates as a stay of the instant appeal.

The automatic stay imposed by 11 USC § 362 is applicable only to a "proceeding against the debtor” (11 USC § 362 [a] [1]; see, Koolik v Markowitz, 40 F3d 567, 568). The stay is mandatory and operates even at the appellate level (see, e.g., Parker v Bain, 68 F3d 1131, 1135; Cathey v Johns-Manville Sales Corp., 711 F2d 60, 62; see generally, Maritime Elec. Co. v United Jersey Bank, 959 F2d 1194, 1206). Significantly, an answer that asserts a counterclaim against a plaintiff who subsequently files a petition in bankruptcy "is an 'action or proceeding against the debtor’ within the meaning of [the statute], notwithstanding the fact that the plaintiff initiated the lawsuit” (Koolik v Markowitz, supra, at 568, quoting 11 USC § 362 [a] [1]).

Because plaintiff appeals from a judgment which, inter alia, awarded defendants rescission of the contract and the return of their down payment as requested in their counterclaim (compare, Carley Capital Group v Fireman’s Fund Ins. Co., 889 F2d 1126, 1127), we conclude that this appeal is stayed by plaintiff’s bankruptcy petition until Bankruptcy Court grants relief from the automatic stay or it lapses (see, Parker v Bain, supra, at 1137; Koolik v Markowitz, supra; cf., Beltrone v General Schuyler & Co., 229 AD2d 857).

Cardona, P. J., Mercure, Crew III and White, JJ., concur. Ordered that the decision is withheld, and appeal stayed until further order of Bankruptcy Court.