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Schweiger v. Midfirst Bank

United States District Court, D. Maryland

March 23, 2018



          James K. Bredar Chief Judge.

         Glenn Schweiger appeals the order of the Bankruptcy Court granting Appellee MidFirst Bank's request for relief from the automatic stay. The appeal has been briefed (ECF Nos. 5, 6), and the matter is ready for decision. No hearing is necessary. Local Rule 105.6 (D. Md. 2016). The Bankruptcy Court's order will be affirmed.

         I. Background

         According to documents filed in the Bankruptcy Court, Schweiger executed a deed of trust on April 10, 2007, to secure the repayment of a mortgage loan on the residential property of 4421 Shamrock Avenue, Baltimore, Maryland 21206. (Bankr. D. Md. No. 17-19857, ECF Nos. 19-2, 19-3.) At some point, the loan went into default. A foreclosure proceeding was filed by the substitute trustees on May 25, 2017, in the Circuit Court for Baltimore City. (Case No. 24O17001022.) A notice dated June 29, 2017, was sent to Schweiger stating that a foreclosure sale would be conducted on July 20, 2017, at 11:00 a.m., by public auction at the courthouse door. (Bankr. D. Md. No. 17-19857, ECF No. 4.) The sale occurred at the appointed time.[1] (Id.)

         At 11:38 a.m., roughly half an hour after the foreclosure sale on July 20, 2017, Schweiger filed his Chapter 7 petition. (Id. ECF No. 1.) On September 12, 2017, MidFirst Bank filed its motion for relief from the automatic stay in order to continue with the foreclosure proceedings, including eviction of the property's occupants. (Id. ECF No. 19.) On September 26, Schweiger moved to convert his case from Chapter 7 to Chapter 13, and the motion was granted on September 28. (Id. ECF Nos. 21, 22.) The Bankruptcy Court thereafter conducted a hearing on MidFirst's motion and granted the motion, thereby allowing MidFirst to proceed with the ratification of the foreclosure sale and to secure possession of the property. (Id. ECF No. 29.)

         II. Standard of Review

         In an appeal from Bankruptcy Court, this Court reviews factual findings for clear error and conclusions of law de novo. Gold v. First Tenn. Bank Nat'l Ass'n (In re Taneja), 743 F.3d 423, 429 (4th Cir. 2014). A finding is clearly erroneous only if, after reviewing the record, the reviewing court is left with “a firm and definite conviction that a mistake has been committed.” Klein v. PepsiCo, Inc., 845 F.2d 76, 79 (4th Cir. 1988).

         III. Question Presented

         As stated by Schweiger, the question presented to this Court is, “Did the Bankruptcy Court commit an error of law by granting relief from the automatic bankruptcy stay on behalf of a mortgage holder on property owned by the Debtor because the bankruptcy was filed after the foreclosure sale on the property?” (Appellant's Br. 1, D. Md. No. JKB-17-3255, ECF No. 5.)

         IV. Analysis

         Schweiger's basic contention is that lifting the automatic stay was in error because he has a right of redemption after the foreclosure sale and before ratification of the foreclosure sale. After reviewing the applicable statutes and case law, the Court concludes Schweiger's argument is without merit.

         Schweiger relies upon 11 U.S.C. § 1322(c)(1) as granting him a right of redemption in the circumstances presented here. Section 1322 specifies what should be included in a Chapter 13 plan for restructuring an individual's debts. Accordingly, such a plan may, under § 1322(b)(2), “modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor's principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims.” Then, “[n]otwithstanding subsection (b)(2) and applicable nonbankruptcy law[, ] a default with respect to, or that gave rise to, a lien on the debtor's principal residence may be cured under paragraph (3) or (5) of subsection (b) until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law.” 11 U.S.C. § 1322(c)(1).

         Schweiger argues mightily that what happened on July 20, 2017, prior to the filing of his bankruptcy petition and well prior to the conversion of his petition to Chapter 13, was something less than a foreclosure sale because it must be ratified in order to complete the sale. Reference to clearly stated Maryland law-the “applicable nonbankruptcy law”-defeats his argument.

         Maryland statutory law restricts a debtor's right to cure a default with respect to residential property: “The mortgagor or grantor of residential property has the right to cure the default by paying all past due payments, penalties, and fees and reinstate the loan at any time up to 1 business day before the foreclosure sale occurs.” Md. Code Ann., Real Prop. § 7-105.1(p)(1) (West 2017). Even if this deadline for cure is extended by 18 U.S.C. § 1322(c)(1) ...

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