United States District Court, D. Maryland, Southern Division
ROBERT S. CRAIG, et al., Appellants,
MICHAEL P. CORBIN, et al., Appellees.
J. HAZEL, UNITED STATES DISTRICT JUDGE
Robert S. Craig and Barbara Craig (the "Craigs")
and debtors Michael P. Corbin and Beth Anne Corbin (the
"Corbins") have filed cross-appeals of the rulings
of the United States Bankruptcy Court for the District of
Maryland (the "Bankruptcy Court") entered on June
12. 2015 and August 27. 2015 in the matter of Craig, et
al. v. Corbin, et al., No. 13-00679 WIL. The Craigs
argue that the Bankruptcy Court erred by: finding that there
was no settlement agreement between the parties: not
including post-judgment interest on the sanctions judgment as
part of the Craigs" damages; and granting the
Corbins" motion for reconsideration. The Corbins argue
that the Bankruptcy Court erred by: determining that the
debts owed to the Craigs are non-dischargeable; granting an
award of damages to the Craigs for loss of use and/or rent;
and granting an award of damages for unpaid property tax. For
the reasons discussed below, this Court remands the issue of
post-judgment interest to the Bankruptcy Court and affirms
the rulings related to all other issues presented.
Bankruptcy Court had subject matter jurisdiction over the
complaints filed by Appellants pursuant to 28 U.S.C. §
1334 and 28 U.S.C. § 157. According to 28 U.S.C. §
157(b)(2)(I), a proceeding to determine the dischargeability
of debts is a core proceeding that bankruptcy courts may hear
and determine so long as such matters are referred to the
bankruptcy court by the district court. Pursuant to Local
Rule 402. this Court referred such matters to the bankruptcy
judges of this District.
Court has jurisdiction to hear appeals from final judgments,
orders, and decrees of bankruptcy judges entered in cases and
proceedings referred to the bankruptcy judges. 28 U.S.C.
§ 158(a)(1) (2012).
State Court Proceedings
four years of missed mortgage payments by the Corbins led to
foreclosure on the property located at 4540 Delauter Road.
Frederick. Maryland 21702, the Craigs successfully bid for
the property at a foreclosure sale held on September 8. 2010.
A. 76. On November 3. 2010. the Corbins,
self-represented, filed a Request for Hearing of Exceptions
to Foreclosure Sale, which they amended with the assistance
of counsel on December 1. 2010. A. 77. The filing included
allegations of unclean hands by the Craigs and that Mr. Craig
had obtained confidential documents belonging to the Corbins.
A. 77. The Craigs intervened on December 7. 2010 and deposed
Mr. Corbin, who conceded that the allegedly confidential
documents were publicly available. A. 77.
December 28. 2010, the Corbins, the Craigs. and their
respective attorneys, Mr. Garza and Ms. Powell, met to put an
"agreement on the record and to make sure that everybody
understands the terms and that everybody is agreed to the
terms of this settlement." A. 109. According to the
Corbins, Mr. Garza did not outline the terms of the agreement
prior to the meeting but merely advised that he had reached
an agreement that they should agree to. A. 240.
the meeting, Ms. Powell, who represented the Craigs. stated
that the Corbins could remain on the property until May 12.
2011. but the offer was "contingent on the bank agreeing
not to charge the Craigs interest on the loan for that
additional four-month period." A. 109-10. After the
Corbins agreed to the settlement on the record. Ms. Powell
asked Mr. Craig if he understood the terms of the agreement,
which led to the following exchange:
Mr. Craig: I do. We agree to them with the one qualification.
My understanding was - oh, no. It is not a modification.
It's just a clarification of what we discussed before.
The monthly rent that we discussed was going to be accrued
also retroactive, I thought, during that period that this
forbearance is occurring. That if they don't move out in
time, that also accrues.
Mr. Garza: That's what she said.
Mr. Craig: Well, no. the way she presented it was from the
12lh on the rent would be accrued. What I'm
clarifying is that the rent actually accrues from the sale
date up to that date.
Ms. Powell: Oh. 1 see what you are saying. Yes.
Mr. Craig: And if. in fact, they move out. that doesn't
come onto the table. If. in fact, they do, that gets
Mr. Garza: Let me be - the agreement is that the rent would
accrue if they don't move out as of January 11"'
Ms. Powell: Right.
Mr. Garza: - and go forward.
Mr. Craig: There you go. Thank you very much. That's a
much more eloquent clarification.
A. 116-17. Mrs. Craig then agreed to the settlement without
further qualification and the meeting was adjourned. A. 117.
this meeting, on January 7. 2011. the Corbins filed another
set of exceptions without the assistance of counsel. A. 77.
In a January 11. 2011 hearing before the Circuit Court for
Frederick County. Maryland. Ms. Powell denied the existence
of any settlement agreement citing a failure to meet the
condition precedent of obtaining bank approval to waive
interest. ECF No. 22 at 5 (citing A. A-5. 7:20-8:3).
Additionally. Ms. Powell's January 19. 2011 letter to Mr.
Garza stated the following:
With respect to any purported settlement, as you know, the
lender's consent was a necessary prerequisite to any
agreement. Further, it was my client's intent that any
waste by your client would also result in accrual of rent. In
addition, when I received (not by service) the additional
exceptions filed by your clients it was painfully clear that
they had absolutely no intention of carrying out any
agreement had one been reached. Accordingly, any settlement
offer by my client is withdrawn. I am sorry that things have
transpired this way but it was not of our doing.
Opp'n ex re!. Beth Anne Corbin, Michael P.
Corbin. Ex. C. Craig v. Corbin. No. 13-00679 (Bankr.
D. Md. Mar. 11, 2014).
ruling granting final ratification of the foreclosure sale
was entered in favor of the Craigs on February 23. 2011. and
the Craigs attempted to close on the property on March 3.
2011. A. 78. However, the Corbins filed a Motion to Alter.
Amend, or Revise Judgment that halted the closing. A. 78.
26. 2011. the Circuit Court for Frederick County. Maryland
granted a motion for sanctions against the Corbins. finding
that the "Corbins have "abused the legal
procedure' and filed meritless exceptions for the
improper purpose of delaying these proceedings.""
A. 81 (citation omitted). The July 20. 2011 Order awarded
sanctions in the amount of SI 3.004.14. which included
$11.806.50 for attorney's fees and $1.197.64 for
disbursements. A. 83-84. ...