UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ------------------------------------x

FEDERAL NATIONAL MORTGAGE ASSOCIATION, MEMORANDUM & ORDER Plaintiff, 1:24-cv-04569(EK)(LKE)

-against-

AZ 400 HERKIMER LLC, et. al,

Defendants.

------------------------------------x ERIC KOMITEE, United States District Judge: AZ 400 Herkimer LLC has filed a letter informing the Court of its pending bankruptcy case, In re Az 400 Herkimer, Case No. 24-44566 (Bankr. E.D.N.Y). See ECF 25. In light of that proceeding, plaintiff’s claims against AZ 400 are automatically stayed. See

(a). AZ 400 goes on to argue that the automatic stay should extend to its codefendants in this case. See ECF 27, 29, 33. It is far from clear, however, that the stay should be extended that far. AZ 400 invokes In Re Fogarty,

, 73 (2d Cir. 2022) (automatic stay violated by foreclosure sale where debtor was a named defendant and had a possessory, but not financial, interest in the property of the estate). Even after Fogarty, however, courts in this circuit have generally stayed proceedings against non-debtor codefendants “only when a claim against the non-debtor will have an immediate adverse economic consequence for the debtor's estate.” Saraf v. Ebix, Inc., No. 23-cv-1182,

, at *1 n.1 (2d Cir. Mar. 27, 2024) (quoting Queenie, Ltd. v. Nygard Int'l,

, 287 (2d Cir. 2003)); see also CDS Bus. Servs., Inc. v. H.M.C. Inc., No.

19-cv-5759,

, at *9 (E.D.N.Y. Apr. 28, 2023) (rejecting application of the automatic stay to a guarantor and noting a “Section 362 stay is not ordinarily extended to entities such as sureties, guarantors, co-obligors, or others with a similar legal or factual nexus to the Chapter 11 debtor”). And In re Roman Cath. Diocese of Rockville Ctr., New York,

(Bankr. S.D.N.Y. 2023), the primary case that AZ 400 relies on for its reading of Fogarty, does not dictate a contrary outcome, as the bankruptcy court in Diocese extended the stay to non-debtor codefendants based on the agreement of the creditors’ committee.

.

Nevertheless, the claim against Defendant Ahmed for a “deficiency” judgment cannot be adjudicated until the foreclosure action and sale conclude. This case is therefore administratively stayed until the bankruptcy case concludes, absent further direction from the Court. See Dietz v. Bouldin,

, 47 (2016). The parties are directed to file a letter providing an update as to the status of the bankruptcy proceedings by April 30, 2025, or within a week of the conclusion of the bankruptcy proceedings, whichever occurs first. SO ORDERED.

/s/ Eric Komitee ERIC KOMITEE United State s District Judge

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