United States District Court, D. Maryland
IN RE JEFFREY V. HOWES
L. Hollander United States District Judge.
March 21, 2016, Jeffrey V. Howes, the self-represented
Debtor/Appellant, noted an appeal to this Court from two
orders issued sua sponte by the United States
Bankruptcy Court for the District of Maryland (Gordon, J.) in
Howes's Chapter 13 bankruptcy case, RAG-12-30614. ECF
In particular, Howes challenges “Interim Order
Requiring Debtor to Escrow Funds Pending Final Judgment in
Adversary Proceeding” (ECF 1-2, the “Escrow
Order”), dated January 8, 2016, and “Order
Dismissing Case with Prejudice to Debtor's Refiling for
Twenty-Four Months” (ECF 1-1, the “Dismissal
Order”), dated March 4, 2016.
addition, on April 25, 2016, Howes filed “Motion to
Vacate or Stay Sua Sponte Order Dismissing Case and Requiring
Additional Escrow Payments to Trustee” (ECF 6), with
exhibits. A few days later, on May 4, 2016, Howes filed a
motion with the same title as ECF 6, which appears to amend
ECF 6. See ECF 10 (“Motion to Vacate”).
And, on May 13, 2016, Howes filed “Unopposed Motion to
Stay Briefing Schedule.” ECF 11 (“Motion to
appeal is related to Case ELH-14-2814 and to Case
ELH-15-1617. The 2014 case involved an appeal from the
Bankruptcy Court's dismissal of an adversary proceeding
filed by Howes and his wife in Howes's underlying Chapter
13 case. The adversary proceeding has its own case number,
RAG-13-510, although some pleadings are docketed in both the
adversary proceeding and the underlying bankruptcy case. In
ELH-14-2814, this Court affirmed the Bankruptcy Court's
dismissal of the adversary proceeding, and that ruling is now
on appeal to the Court of Appeals for the Fourth Circuit
(Appeal No. 15-2332).
respect to the case sub judice, there are no other
litigants. As a result, the Court has not had the benefit of
any opposing viewpoints. But, by Order of June 6, 2016, I
asked the Interim Chapter 13 Trustee to respond to the Motion
to Stay. ECF 12. In his response (ECF 13), the Interim
Chapter 13 Trustee explained that he is not a party to the
appeal; he had not requested the two orders that are the
subject of the appeal; and he has no interest in the outcome
of the appeal. Id. at 8-10. Nevertheless, the
Interim Chapter 13 Trustee provided a helpful analysis of the
issues raised in the Motion to Stay. Id. at 10-13.
Order of July 21, 2016, I directed Howes to submit a brief in
support of his appeal, due no later than August 26, 2016. ECF
14. Moreover, I noted that, in effect, the Motion to Vacate
and the Motion to Stay ask the Court to address the appeal on
the merits. Id.
on August 19, 2016, Howes filed his “Unopposed Motion
to Stay or Extend Briefing Schedule Pending Circuit Court
Ruling Authorizing Direct Appeal.” ECF 15. That motion
asked this Court either to stay the briefing in this case
until after the Fourth Circuit's decision as to the
appeal of the adversary proceeding or, in the alternative, to
grant a thirty-day extension to file the brief. Id.
By Order of August 23, 2016, I denied Howes's motion to
stay the briefing schedule, but I granted the request for
extension. ECF 17. Howes then filed his brief on September 6,
2016. ECF 18.
September 6, 2016, Howes filed “Debtor's Motion for
Stay Pending Appeal and Incorporated Memorandum.” ECF
19. In that motion, Howes asked the Court to stay the Escrow
Order and the Dismissal Order pending the outcome of this
appeal. Id. I denied the motion by Memorandum and
Order of September 15, 2016, stating that such a request must
first be made in the Bankruptcy Court. ECF 20; ECF 21.
this Memorandum Opinion resolves Howes's appeal of the
Bankruptcy Court's Escrow Order (ECF 1-2) and Dismissal
Order (ECF 1-1); his Motion to Vacate (ECF 10); and his
Motion to Stay (ECF 11).
hearing is necessary to resolve the pending motions.
See Local Rule 105.6. For the reasons that follow, I
shall affirm the two orders of the bankruptcy court. The
Motion to Vacate (ECF 10) essentially duplicates the
substance of the appeal. Therefore, I shall deny it as moot.
Moreover, I shall deny the Motion to Stay (ECF 11) as moot.
Factual Background and Procedural History
incorporate the factual and procedural history set forth in
my Memorandum Opinion with respect to Howes's appeal
concerning the disposition of his adversary proceeding. ECF
30 in ELH-14-2814. I repeat and amplify facts to the extent
that they are relevant and provide context for my analysis.
to Howes, on November 30, 2001, Howes and his wife, Tonya
Howes, executed a “Construction Note”
(“Note”) payable to The Columbia Bank, in the
amount of $696, 130. ECF 1 in RAG-13-510 (Adversary Complaint
or “A.P. Complaint”), ¶ 15; ECF 1-1 in
RAG-13-510 (Note). They also executed a deed of trust,
conveying their interest in the real property to Trustee for
The Columbia Bank, to secure the repayment of the Note. ECF 1
¶ 15 in RAG-13-510. The property that is the subject of
the deed of trust is located in Howard County, Maryland, and
serves as the principal residence of the Howes. Id.
Note was amended by a Loan Modification Agreement dated April
16, 2003. See ECF 1-15 in ELH-14-2814. The Loan
Modification Agreement, which reflects a loan balance of
$650, 000, provided that the Howes were to make a monthly
mortgage payment of $3, 793.22, reflecting both principal and
to Mr. Howes, the Howes “suffered a decline in their
income in 2008 . . ., with insufficient income to cover the
Note payments, so they used their savings to bridge the gap
until their savings were exhausted.” ECF 1 ¶ 17 in
RAG-13-510. They “defaulted on the Note on April 2,
2009, and then fell more than 60 days behind in June
2009.” Id. Thereafter, the Howes made several
partial mortgage payments in June, July, and August of 2009,
but ultimately stopped when they “discovered that they
were receiving no benefit from their payment . . . .”
Id. Mr. Howes stated that this was because Wells
Fargo was “holding their partial payments in suspense
and not applying them to their account . . . .”
Id. Howes claimed that from July 2009 through
September 2012, the Howes made extensive efforts to modify
the terms of their mortgage loan to make it “more
affordable.” See Id. ¶¶ 18-34.
meantime, U.S. Bank, “as principal, ” and Wells
Fargo, as “agent” of U.S. Bank,
“caused” a foreclosure case “to be filed
against the Howes, ” in the Circuit Court for Howard
County (“First Foreclosure Case”). Id.
¶ 36. According to Howes, the First Foreclosure Case was
voluntarily dismissed by the plaintiffs on January 3, 2011,
due to “defective” affidavits. Id.
¶¶ 36, 40.
claimed that on February 21, 2012, U.S. Bank, as
“principal, ” and Wells Fargo, as its
“agent . . . caused” the filing of another
foreclosure case (the “Second Foreclosure Case”)
against the Howes, also in the Circuit Court for Howard
County. Id. ¶ 36. According to the Howes, when
the Second Foreclosure Case was filed, neither U.S. Bank nor
Wells Fargo had the right to enforce the Note. Id.
¶ 41. This is because, at some point, the Howes's
Note was pooled with several other notes in a residential
mortgage-backed securitization trust, which was terminated in
January 2012. As a result, he alleged that it was not clear
who had the right to enforce the Note. Id.
¶¶ 42-43. The Second Foreclosure Case was stayed
because, on November 15, 2012, Howes, through counsel, filed
a voluntary petition for bankruptcy under Chapter 13 of the
United States Bankruptcy Code. Id. ¶ 49;
see ECF 1 in RAG-12-30614 (Chapter 13 Petition).
as Debtor, filed his proposed Chapter 13 Plan on December 13,
2012. ECF 13 in RAG-12-30614 (“First Plan”).
According to the First Plan, at the time that Mr. Howes filed
his bankruptcy case, he had outstanding arrears on his
mortgage of $35, 662. ECF 13 at 1 in
RAG-12-30614. The First Plan proposed thirty-five
monthly payments of $1, 018.98 each by Howes, directly to
Wells Fargo Home Mortgage, “as servicer.”
Fargo filed an “Objection to Confirmation of
Plan” on January 9, 2013. ECF 25 in RAG-12-30614. Wells
Fargo, identifying itself as “Servicer for U.S. Bank
National Association, as Trustee, ” stated,
id.: “The plan does not provide for full
payments of the arrearages. The plan provides for $35,
662.00, which is less than the amount of the full arrears.
The arrears are approximately $200, 196.79.”
Thereafter, U.S. Bank, which claimed to be the trustee for
the then-current holder of the Howes's mortgage debt,
filed a proof of claim contending that the outstanding
arrears were actually $200, 196.79. Claim 4-1 at 1 in
RAG-12-30614. Wells Fargo then filed an amended claim on
March 15, 2013, which identified Wells Fargo as the creditor,
rather than U.S. Bank. See Claim 4-2 at 1 in
RAG-12-30614 (“Claim Four”).
April 2, 2013, Howes filed “Debtor's Objection to
Allowance of Claim Filed by Wells Fargo Bank N.A.” ECF
36 in RAG-12-30614. In the objection, Howes claimed that Well
Fargo lacked “standing” to file the claim and
that the claim failed “to contain a credit for the
trial modification payments Debtor made.” Id.
Bankruptcy Court held a hearing on June 17, 2013, with
respect to Howes's objection to Claim Four. ECF 62 in
RAG-12-30614. Ultimately, it denied relief because Howes
failed to serve the assignees. ECF 65 in RAG-12-30614.
According to Howes, the Bankruptcy Court noted that Howes
could “initiat[e] an adversary proceeding incorporating
the claim objection to determine the party entitled to
enforce the Note.” ECF 1 ¶ 58 in RAG-13-510.
counsel, Howes and his wife filed a nine-count adversary
proceeding on September 3, 2013. ECF 1 in
RAG-13-510. They sued Wells Fargo Bank N.A.; U.S. Bank
N.A.; Carrington Mortgage Services, LLC
(“Carrington”); Christiana Trust, a Division of
Wilmington Savings Fund Society, FSB
(“Christiana”); and ten other
“unknown” defendants. Id. ¶¶
9-13. Plaintiff asserted: “None of the Defendants has
the right to enforce the Note and Deed of Trust lien under
applicable state law.” Id. ¶ 85.
adversary proceeding also included, inter alia, a
claim against Wells Fargo and U.S. Bank alleging “fraud
upon the court.” Id. ¶¶ 64-73
(“Count One”). The A.P. Complaint stated:
“Wells Fargo and U.S. Bank filed the Claim on behalf of
the Trust with the intent to defraud this Court, the Debtor,
and the estate created by this Bankruptcy Case, by hiding the
fact that the Trust terminated back in January 2012.”
Id. ¶ 65.
October 2013, defendants Carrington and Christiana filed a
motion to dismiss for failure to state a claim (ECF 5 in
RAG-13-510), which they subsequently amended. Id.,
ECF 16. Also in October 2013, Wells Fargo and U.S. Bank moved
to dismiss the adversary proceeding for failure to state a
claim. ECF 8 in RAG-13-510. On January 6, 2014, the
Bankruptcy Court held a hearing on the defendants'
motions. ECF 18 in RAG-13-510. The Bankruptcy Court requested
supplemental briefing to address the allegations that the
Trust had no legal right to enforce the Note. ECF 46 at 26-27
in RAG-13-510 (Transcript of 1/6/14 Hearing). At the end of
the hearing, Judge Gordon stated that he wanted to
“take a close look at the legal authorities, ”
and continued the hearing. Id. at 24.
Fargo and U.S. Bank submitted a supplemental brief on January
21, 2014. ECF 21 in RAG-13-510. The Howes responded on
February 5, 2014. ECF 22 in RAG-13-510.
Bankruptcy Court held another hearing on the motions to
dismiss on March 4, 2014. ECF 23 in RAG-13-510. At that
hearing, the Bankruptcy Court granted the motions to dismiss,
dismissing Count I of the A.P. Complaint with prejudice and
the remaining counts without prejudice. ECF 28 at 2-3 in
RAG-13-510. Thereafter, the Howes filed a motion to
reconsider with the Bankruptcy Court on May 27, 2014 (ECF 34
in RAG-13-510), which the Bankruptcy Court denied on July 22,
2014. ECF 36 in RAG-13-510.
September 4, 2014, Howes noted an appeal to this Court,
challenging the Bankruptcy Court's decision on the
motions to dismiss and the motion to reconsider. ECF 1 in
ELH-14-2814. On November 5, 2014, while the briefing in this
Court was ongoing, the Bankruptcy Court issued a
“Memorandum Opinion in Support of Order Dismissing
Complaint and Denying Motions to Reconsider, ” which
elaborated on its prior oral rulings. ECF 51 in RAG-13-510.
Memorandum Opinion and Order issued on September 30, 2015, I
affirmed the Bankruptcy Court's dismissal of the
adversary proceeding and its denial of the motion for
reconsideration. ECF 30 and ECF 31 in ELH-14-2814.
Thereafter, on October 27, 2015, Howes noted an appeal to the
Fourth Circuit. ECF 32 in ELH-14-2814. That appeal is
currently pending; oral argument was held on December 6, 2016
(Appeal No. 15-2332).
September 12, 2014, while the matter of the adversary
proceeding was pending in this Court, the Bankruptcy Court
issued an Order scheduling a confirmation hearing for
Debtor's Chapter 13 Plan, to be held on December 17,
2014. ECF 127 in RAG-12-30614. Howes attempted to have the
Bankruptcy Court stay the main bankruptcy case during the
pendency of the appeal as to the adversary proceeding. ECF
140 in RAG-12-30614. But, on December 9, 2014, the Bankruptcy
Court denied his request. ECF 142 in RAG-12-30614. On
December 15, 2014, in ELH-14-2814, Howes filed an
“Emergency Motion to Stay Plan Confirmation Pending
Appeal” (“Emergency Motion to Stay”).
See ECF 18-1 at 80 in ELH-16-840; ECF 23 in
to the Emergency Motion to Stay, ECF 18-1 at 80: “The
bankruptcy court scheduled a December 17, 2014 hearing on
confirmation of Mr. Howes' chapter 13 plan (the
‘Plan Confirmation Hearing'). Since the hearing on
plan confirmation may result in bankruptcy case dismissal,
Appellants seek an order from this Court” staying the
case, pending appeal.
for the Chapter 13 Trustee opposed the Emergency Motion to
Stay, arguing that “any stay should be conditioned
upon” “appropriate security.” ECF 18-1 at
73 in ELH-16-840. Christiana, Carrington, Wells Fargo, and
U.S. Bank each responded as well. ECF 25 in ELH-14-2814
(Christiana and Carrington); ECF 26 in ELH-14-2814 (US Bank
and Wells Fargo). By Order of December 16, 2016, I granted
the Emergency Motion to Stay, “subject to the posting
of a bond by appellants within 24 hours of the docketing of
this Order, in the bond amount of $100, 000.” ECF 29 in
ELH-14-2814. Further, I said, id. at 3: “In
the event that the bond (or other adequate security agreed to
by the Trustee and/or the bankruptcy court), is not timely
posted, the bankruptcy court may promptly reschedule the
hearing with respect to confirmation of the plan.”
December 17, 2014, Howes entered into a consent agreement
(the “Agreement”) with the U.S. Trustee,
“in lieu of posting the security bond.” ECF 10 at
5 (Motion to Vacate). Howes states that the terms of the
Agreement required him to increase his monthly plan payments
from $321 to $5, 980, satisfying the Court's security
requirement, pending resolution of the appeal. Id.
Howes then filed an amended Chapter 13 Plan on December 23,
2014, reflecting the Agreement. ECF 148 at 1 in RAG-12-30614.
on March 9, 2015, the Bankruptcy Court ordered several
modifications to the Agreement, “to better fit the
circumstances of this case.” ECF 153 at 2 in
RAG-12-30614. In particular, the Bankruptcy Court reduced to
five days the time for the Debtor to cure any deficiencies in
payment, running from the date of notice. Id. at 3.
The Bankruptcy Court also provided that the Debtor's
failure to cure a default within five days, or to make timely
payment more than twice, would result in the dismissal of the
bankruptcy case, with prejudice, for twenty-four months.
Id. Finally, the Bankruptcy Court ordered that a
confirmation hearing “shall be held within thirty (30)
days of the entry by the District Court of a final order
resolving the appeal.” Id.
Bankruptcy Court also provided its rationale for its
modifications to the Agreement. It said, id. at 1:
“Before this case was commenced on November 15, 2012,
the Debtor, by his own admission, managed to avoid paying his
home mortgage debt for almost a decade. Now, for the past two
years, the case has been mired in the status quo with the
Debtor continuing to sidestep his mortgage payment
obligations.” After discussing the history of the
adversary proceeding and the appeal, the Bankruptcy Court
also said, id. at 2: “In a word, the Court
believes the AP is by and large frivolous.”
filed a motion for reconsideration on March 23, 2015, asking
the Bankruptcy Court to reverse its order modifying the
consent agreement. ECF 156 in RAG-12-30614. The Bankruptcy
Court denied the motion for reconsideration on May 14, 2015.
ECF 161 in RAG-12- 30614. Howes then noted an appeal to this
Court from the Bankruptcy Court's order modifying the
terms of the Agreement and from its denial of his motion for
reconsideration. ECF 1 in ELH-15-1617. By Memorandum and
Order of December 8, 2015, I dismissed that appeal as moot,
given my resolution of the appeal as to the adversary
proceeding. ECF 13; ECF 14 in ELH-15-1617. Howes took no
further action with respect to that matter. See
Order of September 30, 2015, the stay of the underlying
bankruptcy case was lifted. ECF 31 in ELH-14-2814. The
Bankruptcy Court held a confirmation hearing on November 18,
2015, with respect to Howes's Amended Chapter 13 Plan.
ECF 185, ECF 188 in RAG-12-30614. According to the Bankruptcy
Court, “Debtor asserted at the hearing that he had made
all but 31 of the postpetition mortgage payments that had
come due.” ECF 1-2 at 5 n.7 in ELH-16-840. At that
hearing, the Bankruptcy Court indicated, id. 1-2 at
5, that it would
likely enter an order that required the Debtor to (a)
continue to make the $5, 980 monthly plan escrow payments to
the Trustee (b) deposit into an escrow account a sum
sufficient ($150, 970) to secure thirty-one (31) months of
unpaid postpetition mortgage payments and (c)
continue to deposit additional, "current" monthly
postpetition mortgage payments of $4, 870 into the same
postpetition escrow account.
the parties in the Chapter 13 case had asked the Bankruptcy
Court to issue the proposed order. Id. at 6-7. But,
the Bankruptcy Court gave Howes ten days to respond to its
proposal. Id. at 5 n. 7.
responded on November 30, 2015, in opposition to the
Bankruptcy Court's proposal. ECF 191 in RAG-12-30614. He
made three primary arguments, (1) the pending case in the
Fourth Circuit deprived the Bankruptcy Court of jurisdiction;
(2) no party had requested the relief proposed by the
Bankruptcy Court; and (3) such an order would be inconsistent
with a stay order ...