CHANDRA ANAND, et al.
LAURA H. G. O'SULLIVAN, et al., SUBSTITUTE TRUSTEES
Court for Montgomery County Case No. 413367V
Meredith, Beachley, Zarnoch, Robert A. (Senior Judge,
Specially Assigned), JJ.
January 2007, Chandra and Renu Anand (the
"Anands"), appellants, refinanced the indebtedness
they owed on their home by borrowing funds from Saxon Home
Mortgage ("Saxon"). Saxon advanced total funds of
$729, 100, of which $500, 000 was evidenced by a promissory
note secured by a first lien deed of trust on the Anands'
property. Saxon subsequently transferred the first lien deed
of trust note to Deutsche Bank National Trust Company
("Deutsche Bank"), as trustee for Saxon Asset
Securities Trust 2007-2.
August 2008, the Anands defaulted on their loans from Saxon.
Following the default, in an effort to avoid a foreclosure
sale of their property, the Anands litigated in several
proceedings, including cases with Saxon, Deutsche Bank, the
previous substitute trustees, and the current substitute
trustees, as well as other parties not involved in this
appeal. At various points during their efforts to avoid
foreclosure, the Anands alleged that they had rescinded their
loans from Saxon pursuant to the federal Truth in Lending Act
(sometimes referred to as "TILA"), 15 U.S.C. §
1635, via letters mailed to Saxon on March 4, 2009, and
August 19, 2009.
appeal stems from an order to docket foreclosure of the first
lien deed of trust, filed in the Circuit Court for Montgomery
County on December 30, 2015, by the current substitute
trustees (Laura H.G. O'Sullivan, Erin M. Shaffer, Diana
C. Theologou, Chasity Brown, Lauren Bush, and Rachel Kiefer,
appellees). Prior to any sale, the Anands moved to dismiss
the foreclosure proceedings and sought injunctive relief to
prevent further foreclosure efforts, contending that their
loans from Saxon had been rescinded in 2009, and that the
deed of trust lien was therefore void pursuant to the federal
Truth in Lending Act. On April 18, 2016, the circuit court
denied the Anands' motions, holding that their claims of
rescission were barred by the doctrine of res
judicata, and there was no reason to stay the
foreclosure. The Anands moved for reconsideration of the
circuit court's order, and that motion was denied on June
1, 2016. In the meantime, on May 27, 2016, the Anands filed
an ex parte motion for a temporary restraining order
and a preliminary injunction to prevent the foreclosure sale
of their property during their appeal. On June 9, 2016, the
circuit court denied the Anands' motion for a preliminary
injunction during their appeal.
Anands frame their questions for our review as follows in
the Circuit Court committed errors of law and/or clearly
erroneous findings of fact in its denial of Defendant's
Motion to Dismiss, Motion for Reconsideration of the same,
and the Preliminary Injunction aspects of the Ex Parte Motion
for Injunctive Relief [and] for Preliminary Injunction for
the following reasons:
A. The alleged lender, through the Substitute Trustees, is
not entitled to enforce a lien previously rendered void by
virtue of Defendants having tendered a notice of rescission
under and pursuant to the Federal Truth in Lending Act and
Regulation Z and in accordance with Jesinoski v.
Countrywide Home Loans, Inc., 135 S.Ct. 790 (2015).
B. The doctrines of res judicata and/or collateral
estoppel are inapplicable so as to give preclusive effect to
any argument that the lien imposed by virtue of a Deed of
Trust has been rendered irremediably void.
we agree with the circuit court's conclusion that the
Anands' present claims relative to rescission are barred
by the doctrine of res judicata, we affirm the
judgments of the Circuit Court for Montgomery County.
& PROCEDURAL BACKGROUND
January 24, 1996, Chandra Anand acquired real property
located at 19909 Knollcross Drive, Germantown, Maryland 20876
(the "Property"), for $308, 600. On April 8, 1997,
Chandra Anand conveyed his interest in the Property to
himself and his wife, Renu Anand, as tenants by the
entireties. The Anands have held title to the Property as
tenants by the entireties since that time.
January 24, 2007, the Anands refinanced the debt they owed on
the Property by borrowing $729, 100 from Saxon Home Mortgage,
evidenced, in part, by a $500, 000 promissory note that was
secured by a first lien deed of trust. As part of the
refinancing transaction, the Anands also entered into a
second mortgage with Saxon in the amount of $182, 100, and
received $47, 000 cash. Only the first lien deed of trust is
at issue in this appeal. Saxon subsequently transferred the
first lien deed of trust note to Deutsche Bank, as trustee
for Saxon Asset Securities Trust 2007-2.
August 2008, the Anands defaulted on their loans.
December 30, 2008, in an effort to have the lien on the
Property adjudicated to be unenforceable, the Anands filed
suit in the Circuit Court for Montgomery County against
Deutsche Bank, Saxon, and the predecessor substitute
trustees, asserting causes of action for negligence, federal
Truth in Lending Act violations, and mortgage fraud. On
January 20, 2009, while the Anands' first suit was
pending, the predecessor substitute trustees initiated
foreclosure proceedings against the Property by filing an
order to docket foreclosure pursuant to the first deed of
March 4, 2009, Chandra Anand mailed Saxon a document
captioned "Actual Notice to Rescind; Request for
Accounting, Notice Pursuant to R.E.S.P.A." In the notice
purporting to rescind the loans from Saxon, Mr. Anand
asserted that he had not been provided certain disclosures
required under TILA and Regulation Z -- the regulations
promulgated pursuant to TILA -- and stated in part:
I have conducted a reasonable investigation and inquiry into
this matter and concluded that SAXON MORTGAGE, INC., the
originator of this transaction, provided one
"acknowledge receipt of two copies of NOTICE OF RIGHT TO
CANCEL" and said document is patently false. . . . The
failure to provide all material disclosures correctly made as
that term is defined and under 15 U.S.C. § 1635(a); Reg.
Z §§ 226.23(a) in a form that I may keep subjects
this transaction to the unconditional right to rescind within
three days which has not yet begun to run due to your failure
to provide accurate notices of my right to cancel.
April 2, 2009, Saxon responded to Mr. Anand's March 4
notice to rescind. Saxon asserted that the notice did not
constitute a "Qualified Written Request" under the
Real Estate Settlement Procedures Act, and that Saxon was not
obligated to respond to the notice. Nevertheless, Saxon
responded to some of the requests made in Mr. Anand's
letter for additional information, and also stated: "Our
review of your account indicates that the servicing of your
mortgage loan has been entirely lawful and appropriate."
But Saxon's letter did not specifically address Mr.
Anand's allegation regarding Saxon's failure to
provide the Anands with all required disclosures outlining
their right to rescind their loans under TILA.
August 19, 2009, the Anands sent Saxon a second notice to
rescind their loans. In their second notice to rescind, the
Anands did not expressly contend that Saxon's failure to
supply the notices required by TILA provided the basis for
rescinding their loans, as the Anands had contended in their
first notice to rescind. Rather, in their second notice to
rescind, the Anands asserted grounds not previously outlined
in their first notice as the basis for rescinding their loans
from Saxon, stating in relevant part:
We hereby exercise our right to rescind the loan transaction
in its entirety under the three day rule, the three year
limitation, and under the usury and general claims theories
and causes of action. By failing to disclose the true lender
and using subterfuge to hide the fact that the
"lender" at closing was paid to pose as the lender
when in fact an undisclosed unregistered third party had
rented the charter or lending license of the "lender,
["] the limitation on our rights to rescind was extended
indefinitely. Under state and federal law, the mortgage is
now extinguished and your rights under the trustee deed have
terminated. We hereby rescind the above referenced loan
and/or declare it to be Null and Void and demand
treble damages for the face value of the note, on the grounds
set forth below . . . .
(Bold emphasis and all-caps omitted.) The letter summarily
set forth five "grounds" in paragraphs labeled: 1.
Appraisal Fraud; 2. Fraud in the inducement; 3. Fraud in the
execution; 4. Usury; and 5. PAYMENT.
April 22, 2010, the circuit court granted a motion to dismiss
the Anands' first suit against Deutsche Bank, Saxon, and
the predecessor substitute trustees, with prejudice. That
judgment was not appealed by the Anands.
Property was scheduled to be sold at auction on June 16,
2010. But, on June 10, 2010, the Anands filed a second suit
against Deutsche Bank, Saxon, and the predecessor substitute
trustees, asserting negligence claims against Saxon, and
mortgage fraud claims against all the defendants, in addition
to seeking declaratory and injunctive relief to prevent the
foreclosure sale of the Property. The Anands' second suit
did not include claims under TILA or contend that the loans
from Saxon had previously been rescinded.
14, 2010, two days prior to the scheduled foreclosure sale of
the Property, Mr. Anand filed an ex parte motion for
a temporary restraining order to prevent the foreclosure
sale. On June 15, 2010, the circuit court determined that it
would treat the motion as one for a preliminary injunction,
and scheduled a hearing on the matter. As a result, the
foreclosure sale did not occur on June 16, 2010, as
scheduled. Following a hearing, during which Mr. Anand's
counsel conceded that, in the Anands' second suit, the
claims against Saxon for negligence and mortgage fraud were
barred by the dismissal with prejudice of the Anands'
first suit, the court ruled that it would grant Saxon's
motion requesting that Saxon be dismissed. Further, with
respect to Deutsche Bank and the then substitute trustees,
the court ruled that "all of those matters which were or
could have been litigated in that case [i.e., the
Anands' first suit] are barred by the doctrine of res
judicata, that is to say, claim preclusion in the words of
the Restatement (Second) of Judgments." The court denied
the motion for a preliminary injunction. Mr. Anand appealed
the circuit court's denial of the motion.
October 31, 2011, Renu Anand individually filed a voluntary
petition for bankruptcy under Chapter 7 of Title 11 of the
United States Code. Ms. Anand's bankruptcy petition did
not dispute the validity of the lien on the Property or
assert that it had been rescinded. As a result of Ms.
Anand's bankruptcy petition, however, the foreclosure
proceedings were dismissed by the predecessor substitute
April 3, 2012, this Court filed an unreported opinion in
which we affirmed the circuit court's denial of the
Anands' motion for a temporary restraining order and
preliminary injunction. See Chandra Anand v. Deutsche
Bank National Trust Company, etc., et al., No.
1871, Sept. Term 2010, slip op. at 11 (filed April 3, 2012)
(hereinafter referred to as "Chandra Anand
I"). The Anands thereafter voluntarily dismissed
their second suit on February 13, 2013.
February 2013, the Anands also filed a third suit in the
Circuit Court for Montgomery County regarding the Saxon
loans. That suit eventually made its way to the United States
Court of Appeals for the Fourth Circuit, which described the
procedural history of that suit as follows:
In February 2013, the Anands brought a quiet title action in
the Circuit Court for Montgomery County, Maryland. They
sought a declaration that Ocwen [the loan servicer] and
Deutsche Bank no longer [held] any interest in their home,
and an order requiring Ocwen and Deutsche Bank to release
their liens and barring them from foreclosing on the
property. This relief was justified, the Anands argued,
because the alleged [mortgage] insurance payments [that the
Anands assumed had been paid to Deutsche Bank ...