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Verma v. Deutsche Bank Trust Co.

United States District Court, D. Maryland, Southern Division

August 22, 2019

MADHU VERMA, Appellant,


          Paul W. Grimm, United States District Judge

         This case is on appeal from the U.S. Bankruptcy Court for the District of Maryland. Appellant Madhu Verma challenges a bankruptcy court order that effectively cleared the way for Deutsche Bank National Trust Company, the appellee here, to attempt to take possession of her home several years after the bank bought it in a foreclosure sale. Ms. Verma argues that Deutsche Bank does not, in fact, hold any interest in the property and that it lacked standing to participate in the bankruptcy proceeding.. She also argues that the bankruptcy court erred in lifting a stay that ' might, in theory, have barred the bank from taking legal action against her husband as a nominal co-owner of the property. I find neither of these arguments convincing. The bankruptcy court's order therefore will be affirmed.


         The real property at the center of this dispute is located in Boyds, Maryland. Ms. Vermass husband, Ravi Gogna, bought the property in January 2006 with the benefit of a secured loan from TBI Mortgage Co. See Deed of Trust 1, ECF No. 3-3. The deed of trust lists the street address as 18600 Black Kettle Drive. Id. The note accompanying the deed of trust features the same address, except the word "Drive" is scratched out, and word "Court" is printed just above it. Note 27, ECF No. 3-3.

         Financial difficulties followed, and by 2010, Mr. Gogna was defending a foreclosure action in the Circuit Court for Montgomery County. See Circuit Ct. Docket 8-11, ECF No. 3-6; Am. Report of Sale 34, ECF No. 3-17. A foreclosure sale ensued on May 30, 2012. On June 5, 2012, the substitute trustees filed a "Report of Sale" stating that they sold the property on May 30, 2012 to Deutsche Bank National Trust Company ("Deutsche Bank"), as trustee of the IndyMac INDX Mortgage Loan Trust 2006-AR7. See Report of Sale 11, ECF No. 3-4; Circuit Ct. Docket 16. The report misstated the propertyss street address as 18600 Black Kettle Court. See Report of Sale 11. A subsequent docket entry in the circuit court case noted that the report "has an incorrect address listed. Black Kettle Court should be Black Kettle Drive." Circuit Ct. Docket 18. Accordingly, on April 22, 2013, the substitute trustees filed an "Amended Report of Sale," which revised the street address to read "18600 Black Kettle Drive." Am. Report of Sale 34, ECF No. 3-17; see Circuit Ct. Docket 19. The circuit court judge ratified the foreclosure sale a few months later, on November 8, 2013. Ratification Order 13, ECF No. 3-4.

         Ms. Verma filed a petition for Chapter 13 bankruptcy relief on March 4, 2018. See Bankruptcy Ct. Docket 19, ECF No. 1-3. In taking this step, Ms. Verma availed herself of the various protections federal bankruptcy law accords debtors. These include an automatic stay -against most collection activities, a form of statutory protection that generally prevents creditors from collecting debts or foreclosing on property. See 11 U.S.C. § 362(a).

         Deutsche Bank, identifying itself as the indenture trustee for IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H2, filed a motion for relief from the automatic stay on June 25, 2018. See First Mot. for Relief, ECF No. 3-1. The motion sought to terminate the automatic stay "as to the real property at 18600 Black Kettle Drive, Boyds, Maryland 20841 to permit Movant to complete the foreclosure proceedings pending in the Circuit Court [of] Montgomery County at Civil No. 326303V and to permit the Movant to obtain possession of the real property after foreclosure." Id. at 2. It asserted that Ms. Verma "has no interest in the property because the foreclosure sale held on May 30, 2012, prior to the filing of this bankruptcy, divested the mortgagor of all rights of redemption and vested equitable title in the purchaser [Deutsche Bank] at the foreclosure sale." Id. The bank attached a number of documents to the motion, including, for some reason, the original Report of Sale featuring the "Black Kettle Court" address. See Report of Sale 11: The amended version of the report was not included.

         Ms. Vermass response to the motion zeroed in on the discrepancy over the propertyss address. There, counsel argued that Ms. Verma "was and is still the record owner of the property known as 18600 Black Kettle Driver Resp. to First Mot. 1, ECF No. 3-4 (emphasis in original). To support this contention, counsel enclosed a copy of a deed Ms. Verma and her husband recorded on July 24, 2013 - a few months after the substitute trustees had filed the Amended Report of Sale in the circuit court, but before the circuit court judge issued the order ratifying the sale. See July 2013 Deed 6, ECF No. 3-4. The deed purported to convey the "Black Kettle Drive" property "for no consideraiion" to Ms. Verma and her husband as tenants by the entiretyl[1] Id.

         The bankruptcy court on September 26, 2018, denied Deutsche Bank's motion without prejudice. See ECF No. 3-14. The bank refiled its motion five days later, urging the court as before to terminate the automatic stay as to the "Black Kettle Drive" property. 2d Mot. for Relief, ECF No. 3-15. This, time, among the other documents attached to the motion, the bank included the Amended Report of Sale, which featured the corrected street address. Am. Report of Sale. Ms. Vermass response to the motion noted the change but argued "the Amended Report attached by Movant was not ratified by the Montgomery County Circuit Court." ECF No. 3-18 (emphasis in original). Ms. Verma maintained that she was the owner of the property at 18600 Black Kettle Drive and that Deutsche Bank's interest was in 18600 Black Kettle Court. See id.

         The bankruptcy court granted Deutsche Bank's renewed motion following a hearing on November 5, 2018. See ECF No. 3-20. An ensuing order formally terminated the automatic stay "as to the real property located at 18600 Black Kettle Drive, Boyds, Maryland 20841." ECF No. 3-22. The order referred to Ms. Verma's husband, Mr. Gogna, as a "Non-fiiing Co-Debtor." Id.

         Ms. Verma filed this appeal that same day. See ECF No. .. Her appellate brief presented two issues: (1) "Did the bankruptcy court err in granting 'Motion for Relief from Stay' to a party who was not the note holder of the property 18600 Black Kettle Drive, Boyds, Md 20841?," and (2) "Did the bankruptcy court err in granting additional co-debtor relief under 11 U.S.C. 91301, despite not being requested in any of the pleadings and mentioned at any of the hearings?" Appellantss Br. 4. The briefing is now complete. See ECF Nos. 10, 11, 12. No. hearing is necessary. See Loc. R. 105.6; Fed.R.Bankr.P. 8019(b)(3) (stating that oral argument is not required if, after examining the briefs, the district court determines that "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"..


         A district court "sits as an appellate tribunal in bankruptcy." In re Birmingham,846 F.3d 88, 92 (4th Cir. 2017). As such, it reviews the bankruptcy court's findings of fact for clear error and its conclusions of law de novo. See Id. A finding of fact "is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." In re Rood, No. DKC 12-1623, 2013 WL 55650, at *2 (D. Md. Jan. 2, 2013) (quoting In re Fitzwater, No. 11-934, 2022 WL 4339559, at *2 (S.D.W.V. Sept. 21, ...

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