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Dotson v. Zucker, Goldberg & Ackerman

A-4457-04T5 (N.J. Super. App. Div. 2006) (Unpublished)

SETTLEMENTS — There is no basis for a state court to decide a claim arising from a negotiated settlement in the Bankruptcy Court.

Following an entry of foreclosure, a property owner filed for chapter 13 bankruptcy. In an negotiated settlement, the property owner agreed to pay $220,000 to his secured creditor by a certain deadline. Among other things, the settlement provided that if the property owner failed to make timely payment, the secured creditor would be relieved of the constraints of the automatic stay imposed by bankruptcy laws. The property owner did not pay, claiming the secured creditor frustrated his ability to raise the money. The property owner filed a motion to enforce litigant’s rights, which the bankruptcy court denied. The property owner then sued in state court claiming the secured creditor breached the settlement agreement. The Appellate Division found no basis to decide a state court claim arising from a negotiated settlement in the bankruptcy court and agreed with the lower court that the case had to be dismissed.

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