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Khan v. Citibank

United States District Court, D. Maryland

May 26, 2017

JAMAL KHAN Plaintiff,
CITIBANK, Defendant.


          Paula Xinis United States District Judge

         This case is an appeal from an Order of the Bankruptcy Court that lifted an automatic stay imposed pursuant to 11 U.S.C. § 362(a), thereby allowing Appellee Citibank to pursue eviction proceedings against Appellant Jamal Khan and Samina Khan. See ECF No. 1-1. Oral argument is deemed unnecessary in this case because the facts and legal arguments are adequately presented in the briefs and records, and the decisional process would not be significantly aided by oral argument. Fed.R.Bankr.P. 8019; see also Md. Local R. 105.6. The appeal will be dismissed as moot.

         I. BACKGROUND

         On December 21, 2005, Appellant Jamal Khan ("Khan") executed a promissory note and deed of trust in favor of Pulte Mortgage, LLC relating to the property located at 1410 Meadowsweet Drive, Sandy Spring, Maryland 20860 (the "Property"). ECF No. 3-3. Khan failed to make the required monthly payments under this loan. As a result, on May 10, 2010, the substitute trustees under the deed of trust filed a judicial foreclosure complaint seeking foreclosure and sale of the Property. See Cohn v. Khan, Case No. 331795V (Montgomery Cnty. Cir. Ct. May 10, 2010); ECF No. 22-2. A foreclosure sale occurred, in which the Property was sold to Appellee Citibank, N.A., as Trustee on behalf of GSR Mortgage Loan Trust 2006-AR2 ("Citibank"). See ECF No. 22-3.

         Khan filed a Motion of Exceptions to Sale on September 16, 2010. See ECF No. 22-4. After a hearing, the Montgomery County Circuit Court ratified the foreclosure sale to Citibank on May 10, 2011. See ECF No. 22-5. The substitute trustee's deed, which demonstrated Citibank's ownership of the Property, was recorded in the Montgomery County Property Records on June 16, 2011. See Substitute Trustees' Deed, ECF No. 3-3 at 32.

         After the Property was sold to Citibank, and after Khan attempted to vacate the ratification of the sale, the Montgomery County Circuit Court granted Citibank possession of the Property on November 21, 2013. See Order of Possession, ECF No. 22-6. Khan appealed several of the state court's rulings. However, the trial court's orders were affirmed, and so a Writ of Possession was issued to Citibank on April 29, 2016. See Montgomery Cnty. Docket, ECF No. 22-2 at 17.

         On May 2, 2016, Citibank executed a deed of trust to JSH Properties, LLC ("JSH") for the Property. See Deed, ECF No. 3-9. Khan filed his Chapter 13 Bankruptcy Petition with the United States Bankruptcy Court for the District of Maryland the next day. Citibank filed a Motion for Relief from the Automatic Stay on June 27, 2016, because Citibank wished to move forward with the eviction and Khan still resided at the Property. See ECF No. 3-1. On July 13, 2016, Khan opposed Citibank's motion for relief from the automatic stay. See ECF No. 3-5. Nonetheless, the deed conveying the Property to JSH was recorded on July 18, 2016. See ECF No. 22 at 8.

         On July 25, 2016, the bankruptcy court held a hearing on Citibank's motion for relief from the stay. See Bankr. Transcript, ECF No. 22-7. The bankruptcy court granted the motion for relief. It first noted that the movant, Citibank, submitted a substitute of trustees' deed dated June 8, 2011, which evidenced Citibank's ownership of the Property and its standing to pursue the pending motion for relief. See ECF No. 22-7 at 8. The bankruptcy court went on to explain that Khan as the debtor had been completely disposed of all legal and equitable title to the Property and therefore only held a mere possessory interest in it. Because a mere possessory interest is not subject to a plan of reorganization, the court found cause to lift the stay under 11 U.S.C. § 362(d)(1).

         Three days after the July 25th hearing, Co-Debtor Samina Khan filed a motion to deny relief from the stay imposed pursuant to 11 U.S.C. § 1301 for Citibank's failure to properly serve her. See ECF No. 3-6. Samina Khan also filed a "motion to dismiss" the lift of stay for largely the same reasons. See ECF No. 3-8. The bankruptcy court held a hearing on August 22, 2016 at which Samina Khan failed to appear.

         On August 22, 2016, Khan also moved to dismiss the relief from stay arguing, inter alia, that Citibank had no legal standing to pursue a motion to lift the stay because it had sold the Property to JSH on May 2nd, the day before Khan filed for bankruptcy. The bankruptcy court struck the motion for failure to comply with its filing procedures. See ECF No. 1-2 at 2.

         On September 9, 2016, the bankruptcy court issued an order denying Samina Khan's requested relief. See ECF No. 1-1. That same order also lifted the automatic stay. Id. On the same day, Jamal Khan filed a notice of appeal of the bankruptcy court's order. Khan, however, did not request that the bankruptcy court stay its order pending his appeal, and so transfer of the property to JSH proceeded to conclusion.


         A district court, sitting as an appellate court in bankruptcy, reviews the bankruptcy court's findings of fact for clear error, and its conclusions of law are reviewed de novo. Fed. R. Bankr. P. 8013; see also First Nat'lBank of Md. v. Stanley (In re Stanley), 66 F.3d 664, 667 (4th Cir. 1995).

         III. ...

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