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Mustafa v. Pennymac Corp.

United States District Court, D. Maryland

March 29, 2017

FATIMA MUSTAFA and KAMAL MUSTAFA, Pro Se Debtors-Appellants,
v.
PENNYMAC CORP., BY PENNYMAC LOAN SERVICES, LLC, ITS SERVICING AGENT Appellee FATIMA MUSTAFA and KAMAL MUSTAFA, Pro Se Debtors-Appellants
v.
PMT NPL FINANCING BY PENNYMAC LOAN SERVICES, LLC, ITS SERVICING AGENT Appellee

          MEMORANDUM OPINION

          PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE

         Pro Se Debtor-Appellant Fatima Mustafa appeals four orders issued in a single bankruptcy proceeding, In re Fatima Mustafa, Ch. 13 Case No. TJC 15-20053 (Bankr. D. Md.), which have been docketed in this Court as four separate cases. See Civ. Nos. PJM 16-494, PJM 16-523, PJM 16-3828, PJM 16-4007. The first two appeals pertain to lift-stay orders with respect to post-foreclosure proceedings involving two separate properties; the other two appeals relate to orders dismissing the underlying bankruptcy, specifically:

- In Civ. No. PJM 16-494 Mustafa v. PennyMac Corp., by Pennymac Loan Services, LLC, its servicing agent (“Pennymac”), the Mustafas[1] seek relief from a lift-stay Order that would allow Pennymac to proceed with a post-foreclosure sale of residential property at 18306 Bubbling Spring Terrace, Boyds, Maryland (“Bubbling Spring property”). ECF No. 1-1. That property, originally purchased by the Mustafas on May 18, 2005, was sold in a foreclosure sale on October 17, 2014. ECF No. 9 at 7. The sale has not yet been ratified by the Circuit Court for Montgomery County. ECF No. 2-17.
- In Civ. No. PJM 16-523 Mustafa v. PMT NPL Financing 2015-1 by Pennymac Loan Services, LLC, its servicing agent (“PMT”), the Mustafas seek relief from a lift-stay Order allowing PMT to proceed with the eviction of the Mustafas from 14406 Autumn Branch Terrace, Boyds, Maryland (“Autumn Branch property), also residential property. ECF No. 1-1. The Mustafas originally purchased that property on May 5, 2005. ECF No. 203. It was sold in a foreclosure sale on May 14, 2014, which the Circuit Court for Montgomery County ratified on August 13, 2014. ECF No. 7 at 7.
- In Civ. No. PJM 16-3828 Mustafa v. Branigan, Fatima Mustafa seeks relief from the Bankruptcy Court's Order dismissing the proceeding. See ECF No. 1-1.
- In Civ. No PJM 16-4007 Mustafa v. Branigan (“Mustafa II”), Fatima Mustafa seeks relief from the Bankruptcy Court's Order denying her motion to reinstate the bankruptcy case. ECF No. 1-1.

         In this Opinion, the Court deals only with the appeals of the two lift-stay orders. For the reasons that follow, the Court AFFIRMS the Orders of the U.S. Bankruptcy Court for the District of Maryland in both cases.

         II.

         The U.S. District Court has jurisdiction to review final decisions of the U.S. Bankruptcy Court under 28 U.S.C. § 158(a). The District Court reviews the Bankruptcy Court's conclusions of law de novo and findings of fact for clear error. In re Merry-Go-Round Enterprises, Inc., 400 F.3d 219, 224 (4th Cir. 2005).

         Fatima Mustafa filed a voluntary petition for bankruptcy under Chapter 7 of the Bankruptcy Act on July 20, 2015, which was converted to a Chapter 13 proceeding on August 24, 2015. Civ. No. PJM 16-523, ECF No. 6 at 8. A stay of the post-foreclosure proceedings in state court with respect to both referenced properties was automatically imposed by the commencement of the bankruptcy proceeding, pursuant to 11 U.S.C. §362(a). Orders lifting automatic stays are final and appealable. Safety-Kleen, Inc. v. Wyche, 274 F.3d 846, 864 n. 4 (4th Cir. 2001).

         “On request of a party in interest, ” a Bankruptcy Judge may lift a stay automatically imposed by the commencement of a bankruptcy proceeding after notice and a hearing if, among other reasons, “the debtor does not have an equity in such property; and such property is not necessary to an effective reorganization.” 11 U.S.C. § 362 (d)(2). In this case, finding that the Mustafas neither had an equity in the properties and that properties were not necessary to an effective reorganization, Judge Catliota of the Bankruptcy Court filed a lift-stay order with respect to the Bubbling Spring property on February 10, 2016, following a hearing on February 1, 2016, Civ. No. PJM 16-494, ECF No. 1, and did the same with respect to the Autumn Branch property on February 23, 2016, following a hearing on February 22, 2016. Civ. No. PJM 16-523, ECF No. 1.

         In both their appeals, the Mustafas argue that Judge Catliota erred in lifting the stays because (1) neither Appellee had standing or was a “party in interest” and (2) the Mustafas, as debtors, in fact, had equity in the Autumn Branch and Bubbling Spring properties.

         The Court disagrees.

         a. ...


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