Rossi v. U.S. Bank

• Decision Date: 01 August 2022
• Docket Number: Civil Action GLR-21-2752
• Parties: RONALD P. ROSSI, JR., Appellant, v. US BANK NATIONAL ASSOCIATION, as Trustee for BAFC 2006-D, et al., Appellees.
• Court: U.S. District Court — District of Maryland

RONALD P. ROSSI, JR., Appellant, v. US BANK NATIONAL ASSOCIATION, as Trustee for BAFC 2006-D, et al., Appellees.

Civil Action No. GLR-21-2752

United States District Court, D. Maryland

August 1, 2022

MEMORANDUM OPINION

George L. Russell, III United States District Judge.

THIS MATTER is before the Court on the Appeal noted by Appellant Ronald Paul Rossi, Jr., from Orders issued by the United States Bankruptcy Court for the District of Maryland (the “Bankruptcy Court”) entering judgment in favor of Appellees U.S. Bank National Association, as Trustee for BAFC 2006-D, and Altisource Solutions, Inc., in Rossi's Adversary Proceeding, No. DER-18-12 (D.Md.) (the “Adversary Case”). (ECF Nos. 1, 1-1, 1-2).

Rossi presents two questions in the Appeal:

A. Whether the lower court erred as a matter of law in granting summary judgment in favor of Appellees on Mr Rossi's trespass claim (Count V of the Amended Complaint).

B. Whether the lower court erred as a matter of law in ruling that there was no automatic stay under 11 U.S.C. § 362(a) in place by operation of law when Appellees engaged in acts to enforce a lien against Mr. Rossi's property (Count III of the Amended Complaint).

(Br. Appellant [“App't Br.”] at 3, ECF No 15). The Appeal is ripe for disposition and no hearing is necessary. See Fed.R.Bankr.P. 8019(b)(3); Local Rule 105.6 (D.Md. 2021). For the reasons set forth below, the Court will find in the negative as to both questions presented in the Appeal and affirm the Order of the Bankruptcy Court dismissing the Adversary Case.

I. BACKGROUND

A. Factual Background

In January 2006, Rossi borrowed $840,000 to build a dwelling at 2108 Rose Hill Lane in Gambrills, Maryland (the “Property”). (Adjustable Rate Note at 1, ECF No 161).^[1] He secured the repayment of the loan with a Deed of Trust on the Property (the “Deed of Trust”). (Deed Trust 1-3, 14, ECF No. 16-1).^[2] Appellee U.S. Bank National Association, as Trustee for BAFC 2006-D (“US Bank”), owns the beneficiary interest in the Deed of Trust. (Decl. D. Raleigh [“Raleigh Decl.”] ¶ 16, ECF No. 16-1;^[3] Apr. 23, 2021 Hr'g Tr. [“MSJ Hr'g”] at 8:18-19, ECF No. 15-1).^[4] Under Paragraph 9 of Exhibit A to the Deed of Trust, if Rossi (i) “fails to perform the covenants and agreements contained” therein or (ii) “there is a legal proceeding that might significantly affect Lender's interest in the Property and/or rights under” the Deed of Trust, “such as a proceeding in bankruptcy,” then the “Lender may do and pay for whatever is reasonable or appropriate to protect the Lender's interest in the Property and rights under” the Deed of Trust, “including protecting and/or assessing the value of the Property, and securing and/or repairing the Property.” (Deed Trust at 7-8).

Rossi defaulted on the loan on September 2, 2008 and has made no payments on the loan since that time. (Raleigh Decl. ¶¶ 12, 13). On November 10, 2015, the substitute trustees under the Deed of Trust filed a foreclosure action against the Property in the Circuit Court for Anne Arundel County (the “Foreclosure Suit”). (Cir.Ct.Md. Docket at 1, ECF No. 16-1).^[5] A foreclosure auction was scheduled to take place and did take place on June 28, 2017. (MSJ Hr'g at 8:19-24).

On June 27, 2017, the day before the foreclosure auction, Rossi became the subject of an involuntary bankruptcy petition in the Bankruptcy Court, Pet. No. 17-18747. (Am. Compl. ¶ 8, ECF No. 15-1).^[6] Under 11 U.S.C. § 362(a), such a petition would ordinarily cause an automatic stay to go into effect as to any proceedings potentially affected by the bankruptcy, including foreclosure proceedings. Pursuant to 11 U.S.C. § 362(c), however, no stay was imposed because Rossi had filed two bankruptcy cases that were dismissed within the prior one-year period.^[7] (MSJ Hr'g at 7:19-8:2); see 11 U.S.C. § 362(c)(4)(A)(i) (“[I]f 2 or more single or joint cases of the debtor were pending within the previous year but were dismissed . . . the stay under subsection (a) shall not go into effect upon the filing of the later case.”).

The next day, U.S. Bank filed a motion for relief from the automatic stay, even though, in fact, no automatic stay was in place. (MSJ Hr'g at 8:25-9:3). Despite believing a stay was in place, U.S. Bank continued to engage in efforts to enforce the mortgage lien, including obtaining a ratification of sale in the underlying foreclosure proceedings. (MSJ Hr'g at 9:3-9:6). The Bankruptcy Court-which was similarly unaware that the automatic stay was not in place-held a hearing on U.S. Bank's request to lift the nonexistent stay on September 18, 2017. (Id.). The Bankruptcy Court denied the motion for relief from automatic stay and found that the actions U.S. Bank took to continue the foreclosure sale had violated the automatic stay. (Sept. 18, 2017 Hr'g Tr. [“Mot. Relief Hr'g”] at 14:8-20, ECF No. 15-1).^[8] Specifically, the Bankruptcy Court held:

The motion for relief from automatic stay is going to be denied. I don't believe that there is cause to grant relief from the automatic stay when a lender has acted to continue the foreclosure sale over the existence of the automatic stay during a course of several months leading up to a ratification.

I am not finding today that there was a knowing or willful violation of the automatic stay. The lender has no witnesses in court. I don't have any idea. The Debtor hasn't presented any evidence as to exactly what happened.

But, at the very least, everything that has happened in state court after June 27th, when the involuntary petition was filed, is void; is in violation of the automatic stay.

So, I am going to deny the motion because I don't think there is cause under these circumstances . . . I am not making any findings as to what the outcome of . . . some sort of motions for sanctions or relief against the lender for violation of the automatic stay under Section 362(k).

(Id. at 14:8-15:2).

Rossi alleges that Appellee Altisource Solutions, Inc. (“Altisource”), acted as an agent for U.S. Bank and, in that capacity, directed its employees to inspect Rossi's property. (Am. Compl. ¶¶ 74, 76). Rossi further alleges that despite the ruling by the Bankruptcy Court, U.S. Bank and Altisource continued to engage in efforts to enforce the mortgage lien, including filing a final auditor's report, declining to void the foreclosure sale, and visiting the Property to harass Rossi and his tenants and invitees. (Am. Compl. ¶¶ 63-66).

In his Opposition to Appellees' Motion for Summary Judgment in the Adversary Case, Rossi cited to his deposition to describe the alleged harassment he experienced:

While awaiting this Court's ruling on their motion [f]or relief from automatic stay, Defendant U.S. Bank through Defendant [Altisource] directed the Vendor to enter the property, interact with the occupants, deliver materials from Defendants, and photograph the property. Plaintiff testified that after his tenant Zadie moved in around April 2017 she was approached by the Vendor “a lot of times” causing Plaintiff to become “very embarrassed.” [Dep. R. Rossi] at 54:8-15. He testified that the Vendor would give Zadia notices regarding the foreclosure and U.S. Bank's alleged right to take possession of the property and evict all occupants. In addition to these interactions with Zadia, Plaintiff also testified that if he saw the materials left by Vendor before Zadia or another tenant, he “would take them and throw them away real quick.” Id. at 54:16-17. Although he testified to only having a few examples of the materials left by the Vendor, Plaintiff explained “there's a lot more of them than I have here.” Id. at 54:3-5.

The unreasonableness of Defendants' agents is most evident in the interactions documented from September 24, 2017 to October 4, 2017. In that short 11-day period, Plaintiff's documentary evidence shows that Defendants' agents came to the property at least 3 times. Plaintiff testified that during these visits, Defendants' agents were “hostile to [Plaintiff]” even after Plaintiff advised the agents of [the Bankruptcy] Court's ruling . . . regarding Defendant U.S. Bank's violations of the automatic stay and the order to rescind the foreclosure sale. Id. at 54:18-21.

The evidence and testimony presented by Plaintiff shows that during one of the visits in this 11-day period, Defendants' agents were particularly hostile toward Plaintiff and the occupants of the property. On that day - September 30, 2017 - the agents returned to the property after having just been there less than a week before. Plaintiff's testimony is that they approached tenant Zadie as they had in the past and gave her even more materials indicating that the home had been sold and she would need to move. Plaintiff and his son, Anthony Rossi, then both testified that they had an altercation with the agents. According to their testimony, for which Defendants have offered no contradictory evidence, the agents were yelling at Plaintiff and his son and at one point revved the engine of their truck toward Plaintiff's son. [Dep. A. Rossi] at 11:10-15. Anthony Rossi testified that he was “fearful for the situation” and “had no idea if they were about to attack [him or] if they were about to try to run [him] over.” Id. at 11:12-15.

(Opp'n Defs.' Mot. Summ. J. [“MSJ Opp'n”] at 18-20, ECF No. 15-1).^[9] B. Procedural Background

Rossi filed the Adversary Case on January 16, 2018. (ECF No. 1-2). Rossi's fifteencount Amended Complaint asserts four separate counts for willful violation of the automatic stay (Counts I-IV); trespass to land (Count V); respondeat superior (Count VI); intentional misrepresentation (Count VII); negligent misrepresentation (Count VIII); tortious interference with contractual relationship (Count IX) disparagement of title ...