Rochelle's Daily Wire

District Judge Joan M. Azrack of Central Islip, N.Y., laid down the rules for lodging a pre-filing injunction against a vexatious litigant.

The chapter 7 debtor had not paid a mortgage since 2014. The lender began foreclosure proceedings in state court, where the debtor argued that the lender lacked standing. The state court confirmed the lender’s standing as the mortgage-holder, but the debtor filed a chapter 7 petition before the lender could obtain a judgment of foreclosure.

In bankruptcy court and in federal district court, the debtor repeatedly sued the lender on several theories, including fraud. The debtor even filed a disciplinary complaint against the lender’s counsel. The debtor also repeatedly argued that the lender lacked standing. The debtor lost every time.

Eventually, the lender filed a motion in bankruptcy court to modify the stay to permit foreclosure. Bankruptcy Judge Robert E. Grossman of Central Islip, N.Y., modified the stay and also entered a pre-filing injunction on the lender’s motion.

Without permission from the bankruptcy court, the injunction barred the debtor from seeking any affirmative relief in bankruptcy court against the lender, its employees and counsel.

The debtor appealed both the lift-stay order and the injunction. Judge Azrack upheld Judge Grossman in an opinion on January 15.

With regard to the lender’s standing, Judge Azrack noted that the state court decided that the lender had standing as the holder of the mortgage by assignment. She ruled that the debtor was barred from challenging standing on the merits and under the Rooker-Feldman doctrine.

Upholding the stay modification was easy. Judge Azrack said that the debtor’s arguments were “utterly meritless.” The property was worth only $360,000, while the debt was almost $700,000.

Finally, Judge Azrack turned to the filing injunction. She said that the “Bankruptcy Court clearly had subject matter jurisdiction to enter a filing injunction against Debtor in a bankruptcy case that Debtor herself filed.”

On the merits, Judge Azrack said there is “no strict numerosity requirement that must be met before a court may exercise its discretion to enjoin a litigant from filing future actions.” Rather, the court considers the “record as a whole” and the “likelihood that the litigant will continue to abuse the judicial process.”

In the case on appeal, Judge Azrack said that the “Debtor has abused the judicial process by pursuing multiple actions and filing numerous pleadings, discovery demands, notices, and motions in the Bankruptcy Court as well as in this Court. Notably, many of these filings involved repeated unsuccessful attempts to challenge [the lender’s] standing with regard to the Property.”

In addition, she said that the debtor had “made various irrelevant and vexatious filings in her underlying bankruptcy case, including filing a grievance against [the lender’s] counsel.”

Judge Azrack upheld the filing injunction, finding that Judge Grossman had not abused his discretion.