United States District Court, D. Maryland, Southern Division
W. Grimm United States District Judge
the sixth year of Appellant Michael Leon Peterson's
continuing efforts to stop Flagstar Bank, FSB
(“Flagstar”) from foreclosing on his mortgaged
property at 15207 Joppa Place, Bowie, Maryland 20721 (the
“Property”). Most recently, Peterson appeals an
Order of the United States Bankruptcy Court for the District
of Maryland terminating an automatic stay of the foreclosure
proceedings in the Circuit Court for Prince George's
County, Maryland (“Foreclosure Action”). Having
reviewed the parties' briefs (ECF Nos. 11, 11-1, 12, 14,
14-1, 14-2),  the record in this Court, and the docket
in the Foreclosure Action, I find oral argument unnecessary.
See Fed. R. Bankr. P. 8012; Loc. R. 105.6. Because
collateral estoppel bars the argument underlying
Peterson's appeal-that Flagstar lacked standing to
foreclose on the Property-and barred the Bankruptcy Court
from considering the same argument, I will affirm the
Bankruptcy Court's Order Terminating Automatic Stay, ECF
No. 3-10, and dismiss the appeal.
purchased the Property (jointly with Patricia Peterson, not a
party to this appeal) through a mortgage loan (the
“Note”), secured by a Deed of Trust, ECF No.
11-2, in April 2008.
Br. 1. Unhappy with how the Note was handled, he attempted to
rescind it and stopped making payments on it. Id.;
Notice of Rescission, ECF No. 12-1, at 20. Flagstar, as the
successor on the Note, initiated the Foreclosure Action on
June 24, 2011. Curran v. Peterson
(“Foreclosure Action”), Civil No. CAE11-15096
(Cir. Ct. Prince George's Cnty., Md.). Peterson
challenged Flagstar's standing to foreclose on the
Property, and the state court found that Flagstar had
[T]he Note and Deed of Trust at issue were specifically
endorsed from the original lender, Universal Trust Mortgage
Corporation, to Flagstar Bank, FSB (hereinafter
‘Flagstar'). Under Paragraph 20 of the Deed of
Trust, Flagstar, as the successor/assign of the original
lender, has the right to appoint Substitute Trustees.
Considering the Substitute Trustees were properly appointed,
pursuant to Md. Code Ann., Com. Law § 3-301, they are
entitled to bring the current action on behalf of the
Jan. 9, 2014 Order in Foreclosure Action, ECF No. 12-1, at
17. Flagstar purchased the Property at a foreclosure sale one
year later. State Ct. Docket. The state court signed a Final
Order of Ratification on August 7, 2015; a Final Order on
October 9, 2015; and an order awarding possession to Flagstar
as the Foreclosure Purchaser on December 8, 2015.
Id. Peterson appealed the Final Order of
Ratification without success; the Maryland Court of Special
Appeals dismissed his appeal on November 23, 2016.
on December 11, 2015, Peterson filed for Chapter 13
bankruptcy. Bankr. Ct. Docket, ECF No. 1-1. He also
initiated an adversary proceeding in Bankruptcy Court,
Peterson v. Flagstar Bank, FSB, Adversary Proceeding
No. 16-133, alleging fraudulent transfer, which the court
dismissed for want of prosecution on November 21, 2016. ECF
No. 14-5; Bankr. Ct. Docket. Peterson had not vacated the
Property yet when he filed for bankruptcy, and his bankruptcy
filing automatically stayed the Foreclosure Action pursuant
to 11 U.S.C. § 362(a). Flagstar moved to lift the
automatic stay pursuant to 11 U.S.C. § 362(d)-(f)
because Peterson no longer had an ownership interest in the
Property. ECF Nos. 3-1, 3-5. Peterson opposed the motion,
arguing again that Flagstar lacked standing to foreclose on
the Property. Peterson Opp'n to Mot. 3-4, ECF No. 3-4;
Peterson Opp'n to Am. Mot. 4, 7, ECF No. 3-8. The
Bankruptcy Court granted the motion on June 30, 2016,
permitting the eviction process to proceed. ECF Nos. 3-9,
3-10. It is from that order that Peterson appeals.
appeal, Peterson argues that Flagstar lacked “Standing
in the original foreclosure [because it] fail[ed] to produce
the genuine Promissory Note, ” and he insists that, as
a result, the Bankruptcy Court lacked “jurisdiction . .
. to render any judgment in this matter until Standing is
proven.” Peterson Br. 3, 5. He also insists that he has
“newly discovered evidence” that “is core
to the lack of standing.” Id. at 2, 4. Whether
a party has standing is a question of law. See Frank
Krasner Enters., Ltd. v. Montgomery Cnty., MD, 401 F.3d
230, 234 (4th Cir. 2005). It is well established that this
Court “reviews a bankruptcy court's . . .
conclusions of law de novo.” In re Rood, 448
B.R. 149, 157 (D. Md. 2011); see In re Official Comm. of
Unsecured for Dornier Aviation (N. Am.), Inc., 453 F.3d
225, 231 (4th Cir. 2006).
argues that “[s]ince Appellant had to raise his
arguments challenging standing in the Circuit Court prior to
the sale it is clear that the bankruptcy court lacks
jurisdiction to adjudicate the issue of whether or not
Flagstar had standing to foreclose for a sale that took place
prior to the filing of the Bankruptcy case.” Flagstar
Br. 6. Flagstar does not cite any law in support of its
argument, and I will not construct its argument for it. In
any event, the Bankruptcy Court has “original but not
exclusive jurisdiction of all civil proceedings arising under
[the Bankruptcy Code], or arising in or related to
cases under [the Bankruptcy Code].” 28 U.S.C. §
1334(b) (emphasis added). § 1334(b) (emphasis added).
[A]n action is “related to” bankruptcy if
“the outcome could alter the debtor's rights,
liabilities, options or freedom of action (either positively
or negatively) and which in any way impacts upon the handling
and administration of the bankrupt estate.” A.H.
Robins Co., Inc. v. Piccinin, 788 F.2d 994, 1002 n.11
(4th Cir. 1986) (quotation marks and citation omitted).
Indeed, it is “difficult to imagine any instance in
which a bankruptcy court would not have jurisdiction if the
debtor were a party.” Id. (quotation marks and
In re Azalea Gardens Bd. & Care, Inc., 215 F.3d
1317, 2000 WL 688676, at *2 (4th Cir. 2000) (Table). Whether
Flagstar had standing to maintain the Foreclosure Action
certainly is related to Peterson's bankruptcy proceeding,
as it could affect the disposition of the Property. See
id.; A.H. Robins, 788 F.2d at 1002 n.11. But,
the Bankruptcy Court's jurisdiction does not mean that
the issue was properly before it. Rather, I must consider
whether preclusion barred the Bankruptcy Court (and now bars
this Court) from ...