United States District Court, D. Maryland
XINIS United States District Judge
and Cyriacus Okoro (“Debtors”) appeal two orders
of the United States Bankruptcy Court for the District of
Maryland dismissing their adversary proceeding for lack of
subject matter jurisdiction and denying their motion for
reconsideration. Appellate Record, ECF No. 1. Oral argument is
deemed unnecessary because the facts and legal arguments are
adequately presented in the briefs and record, and the
decisional process would not be significantly aided by oral
argument. See Fed. R. Bankr. P. 8019(b)(3); see
also Local Rule 105.6. For the reasons stated below, the
October 18, 2016 and November 18, 2016 decisions of the
bankruptcy court are AFFIRMED.
March 3, 2016, before filing for bankruptcy, Debtors brought
a civil action in this Court against several defendants,
including Wells Fargo Bank, N.A. (“Wells Fargo”).
Okoro v. Wells Fargo Bank, et al., No. 16-CV-616-PX
(the “District Court Action”). The District Court
Action asserted claims for violations of the Real Estate
Settlement Procedures Act (“RESPA”) and other
laws related to Debtors' mortgage loan that was serviced
by Wells Fargo. The property at 7211 Oakley Rd. in Glenn
Dale, Maryland (the “Real Property”) secured the
disputed mortgage. See Appellate Record, ECF No. 4
at 7 (Appellants' Br.). The District Court Action was
dismissed for failure to state a claim on October 6, 2016,
which the Fourth Circuit affirmed on April 7, 2017. See
Okoro v. Wells Fargo Bank, N.A., No. CV PX 16-0616, 2016
WL 5870031 (D. Md. Oct. 6, 2016), aff'd sub
nom., No. 16-2274, 2017 WL 1291278 (4th Cir. Apr. 7,
February 16, 2016, Debtors initiated bankruptcy proceedings
under Chapter 7 of the Bankruptcy Code in the United States
Bankruptcy Court for the District of Maryland. In re
Okoro, 16-11751 (D. Md. Bankruptcy Court) (petition
filed February 16, 2016) (hereinafter “Bankruptcy
Proceedings”). Debtors listed the District Court Action
and the Real Property as assets on the Schedules A/B of Real
and Personal Property they filed in the Chapter 7 Bankruptcy
Case. Bankruptcy Proceedings, ECF No. 38 at 9 (Amended
April 8, 2016, Debtors initiated an adversary proceeding in
Bankruptcy Court against Wells Fargo and Manufacturers and
Traders Trust Company, a/k/a M&T Bank, successor by
merger to Hudson City Savings Bank, FSB (collectively
“Appellees”), alleging violations of RESPA and
fraud and seeking a declaratory judgment that Wells Fargo
lacked a valid mortgage on Debtors' property. Okoro
v. Wells Fargo Bank Home Mortgage et al., 16-00185 (D.
Md. Bankr.), ECF No. 1 (hereinafter the “Adversary
Proceeding”); Appellate Record, ECF No. 2-1. Meanwhile
in the Bankruptcy Proceedings, the Chapter 7 Trustee filed a
Report of No Distribution on May 19, 2016, finding that no
assets were in the bankruptcy estate to administer to
creditors. Bankruptcy Proceedings, ECF No. 47.
2, 2016, the bankruptcy court issued an order for Debtors to
show cause why the Adversary Proceeding should not be
dismissed, explaining that only the Chapter 7 trustee has
standing to prosecute an action on behalf of the bankruptcy
estate. Appellate Record, ECF No. 2-7. On June 6, 2016,
Debtors moved for an order of abandonment of the claims
asserted in the District Court Action, and the Chapter 7
Trustee did not object. Bankruptcy Proceedings, ECF No. 50.
On June 28, 2016, the bankruptcy court granted Debtors'
motion, and ordered that the claims in the District Court
Action were abandoned pursuant to 11 U.S.C. § 554 and
Fed.R.Bankr.P. 6007. Bankruptcy Proceedings, ECF No. 51.
August 8, 2016, the bankruptcy court dismissed the Adversary
Proceeding because the trustee had abandoned the District
Court Action, and the court found those claims were identical
to those raised in the Adversary Proceeding. Appellate
Record, ECF No. 2-9. The bankruptcy court determined that the
District Court Action, therefore, was no longer part of the
bankruptcy estate. Id. Accordingly, the bankruptcy
court concluded that it lacked jurisdiction to adjudicate the
Adversary Proceeding on the identical claims and dismissed
the action. Id. at 4-5.
moved for reconsideration of the bankruptcy court's order
of dismissal on August 18, 2016. Appellate Record, ECF No.
2-10. Before the Court ruled on this motion, the Debtors'
discharge was issued on October 7, 2016. Bankruptcy
Proceedings, ECF No. 53.Then, on October 18, 2016, the
bankruptcy court denied Debtors' motion for
reconsideration, finding it lacked subject matter
jurisdiction because the Debtors failed to state a
dischargeability claim under the Bankruptcy Code and the
claims raised in the Adversary Proceeding would have no
conceivable effect on the bankruptcy estate because the
trustee had abandoned both the Real Property and the claims
raised in the District Court Action. Appellate Record, ECF
No. 2-13. The instant appeal followed on October 27, 2016.
Appellate Record, ECF No. 1.
STANDARD OF REVIEW
district court reviews the bankruptcy court's conclusions
of law de novo. See Cypher Chiropractic Ctr. v.
Runski, 102 F.3d 744, 745 (4th Cir. 1996). Whether the
bankruptcy court erred when it dismissed the Adversary
Proceeding for lack of subject matter jurisdiction is a
question of law, and so the bankruptcy court's decision
here is reviewed de novo. Moreover, the decision of
a bankruptcy court “must be affirmed if the result is
correct” even if the lower court relied upon
“‘a wrong ground or gave a wrong
reason.'” SEC v. Chenery Corp., 318 U.S.
80, 88 (1943) (quoting Helvering v. Gowran, 302 U.S.
238, 245 (1937)); see also Cty. Fuel Co. v. Equitable
Bank Corp., 832 F.2d 290, 294 (4th Cir. 1987) (citing
Chenery and affirming district court's judgment
in a bankruptcy case on different grounds). This principle
guides district courts to “affirm the bankruptcy court
on any ground supported by the record.” Wells Fargo
Bank, N.A. v. Farag, No. 5:15-CV-422-BO, 2016 WL
2944561, at *2 (E.D. N.C. May 18, 2016) (quoting In re
Cobham, 551 B.R. 181, 189 (E.D. N.C. ),
aff'd, 669 F. App'x 171 (4th Cir. 2016),
reh'g denied (Nov. 29, 2016) (quoting
Helvering, 302 U.S. at 238)). Otherwise “[i]t
would be wasteful to send a case back to a lower court to
reinstate a decision which it had already made but which the
appellate court concluded should properly be based on another
ground within the power of the appellate court to
formulate.” Chenery, 318 U.S. at 88 (1943).
matter jurisdiction must be determined at the time an action
commences, even if the facts supporting this jurisdiction
subsequently change. See Freeport-McMoRan, Inc. v. K N
Energy, Inc.., 498 U.S. 426, 428 (1991) (“[I]f
jurisdiction exists at the time an action is commenced, such
jurisdiction may not be divested by subsequent
events.”); In re Celotex Corp., 124 F.3d 619,
626 (4th Cir. 1997) (“[I]f ‘related to'
[bankruptcy] jurisdiction actually existed at the time of
Rapid's removal of the Contribution Action to the
district court, ” the subsequent resolution of the
bankruptcy estate “could not divest the district court
of that subject matter jurisdiction.”); cf. In re
Roy, Bankruptcy No. 09-2972, 2010 WL 2928463, at *4
(Bankr. N.D.W.Va. July 26, 2010) (“Because the
bankruptcy court had subject matter jurisdiction over the
Debtors' adversary complaint at the time it was filed,
the court has not lost subject matter jurisdiction over the
adversary complaint even though . . . the Debtors' main
bankruptcy case has closed.”).
bankruptcy court's jurisdiction to review claims is
limited to those that (1) “arise under” the
Bankruptcy Code; (2) “arise in” the Bankruptcy
Code; or (3) “relate to” cases brought under the
Bankruptcy Code. In re Kirkland, 600 F.3d 310,
316-18 (4th Cir. 2010). Debtors contend their claim
“arises under” the Bankruptcy Code because they
brought their adversary proceeding to determine the
“dischargeability” of the mortgage debt.
Id.at 20. Debtors also argue that the bankruptcy
court had “related to” jurisdiction over its
pre-confirmation adversary proceeding. Appellate Record, ECF
No. 4 at 22 (Appellants' Br.). Finally, Debtors assert
that because the trustee's abandonment of the claim
“has no ...