PAUL W. GRIMM, District Judge.
This is the sixth year of Appellant Michael Leon Peterson's continuing efforts to stop Flagstar Bank, FSB ("Flagstar") from foreclosing on his mortgaged property at 15207 Joppa Place, Bowie, Maryland 20721 (the "Property"). Most recently, Peterson appeals an Order of the United States Bankruptcy Court for the District of Maryland terminating an automatic stay of the foreclosure proceedings in the Circuit Court for Prince George's County, Maryland ("Foreclosure Action"). Having reviewed the parties' briefs (ECF Nos. 11, 11-1, 12, 14, 14-1, 14-2),
Peterson purchased the Property (jointly with Patricia Peterson, not a party to this appeal) through a mortgage loan (the "Note"), secured by a Deed of Trust, ECF No. 11-2, in April 2008. Peterson Br. 1. Unhappy with how the Note was handled, he attempted to rescind it and stopped making payments on it. Id.; Notice of Rescission, ECF No. 12-1, at 20.
Jan. 9, 2014 Order in Foreclosure Action, ECF No. 12-1, at 17. Flagstar purchased the Property at a foreclosure sale one year later. State Ct. Docket.
Meanwhile, on December 11, 2015, Peterson filed for Chapter 13 bankruptcy.
On appeal, Peterson argues that Flagstar lacked "Standing in the original foreclosure [because it] fail[ed] to produce the genuine Promissory Note," and he insists that, as a result, the Bankruptcy Court lacked "jurisdiction . . . to render any judgment in this matter until Standing is proven." Peterson Br. 3, 5. He also insists that he has "newly discovered evidence" that "is core to the lack of standing." Id. at 2, 4. Whether a party has standing is a question of law. See Frank Krasner Enters., Ltd. v. Montgomery Cnty., MD, 401 F.3d 230, 234 (4th Cir. 2005). It is well established that this Court "reviews a bankruptcy court's . . . conclusions of law de novo." In re Rood, 448 B.R. 149, 157 (D. Md. 2011); see In re Official Comm. of Unsecured for Dornier Aviation (N. Am.), Inc., 453 F.3d 225, 231 (4th Cir. 2006).
Flagstar argues that "[s]ince Appellant had to raise his arguments challenging standing in the Circuit Court prior to the sale it is clear that the bankruptcy court lacks jurisdiction to adjudicate the issue of whether or not Flagstar had standing to foreclose for a sale that took place prior to the filing of the Bankruptcy case." Flagstar Br. 6. Flagstar does not cite any law in support of its argument, and I will not construct its argument for it. In any event, the Bankruptcy Court has "original but not exclusive jurisdiction of all civil proceedings arising under [the Bankruptcy Code], or arising in or related to cases under [the Bankruptcy Code]." 28 U.S.C. § 1334(b) (emphasis added).
In re Azalea Gardens Bd. & Care, Inc., 215 F.3d 1317, 2000 WL 688676, at *2 (4th Cir. 2000) (Table). Whether Flagstar had standing to maintain the Foreclosure Action certainly is related to Peterson's bankruptcy proceeding, as it could affect the disposition of the Property. See id.; A.H. Robins, 788 F.2d at 1002 n.11. But, the Bankruptcy Court's jurisdiction does not mean that the issue was properly before it. Rather, I must consider whether preclusion barred the Bankruptcy Court (and now bars this Court) from determining Flagstar's standing or whether, as Peterson contends, the Bankruptcy Court erred in failing to address the issue.
Flagstar's "jurisdictional" argument that the Bankruptcy Court could not "adjudicate the issue of whether or not Flagstar had standing to foreclose" because the state court previously rejected Peterson's challenge to Flagstar's standing, Flagstar Br. 6, could be construed as an assertion that the Bankruptcy Court was precluded from addressing Flagstar's standing. Similarly, Flagstar contends that Peterson's argument in this Court "that he could challenge the right to foreclose in the Bankruptcy Court . . . is barred by the doctrine of res judicata." Id. at 7. Yet, Flagstar asserts that res judicata bars relitigation of "the same issues conclusively decided in a prior action," id. (emphasis added), which more accurately describes the doctrine of collateral estoppel. Compare Garrity v. Md. State Bd. of Plumbing, 135 A.3d 452, 459 (Md. 2016) (noting that collateral estoppel pertains to issues decided), with Capel v. Countrywide Home Loans, Inc., Nos. WDQ-09-2374, WDQ-09-2439, 2010 WL 457534, at *3 (D. Md. Feb. 3, 2010) (noting that res judicata pertains to claims decided). In any event, to "avoid [ ] . . . unnecessary judicial waste," the Court may consider collateral estoppel sua sponte, and dismiss on that ground, if it "is on notice that it has previously decided the issue presented." Arizona v. California, 530 U.S. 392, 412 (quoting United States v. Sioux Nation, 448 U.S. 371, 432 (1980) (Rehnquist, J., dissenting) (citations omitted)), supplemented, 531 U.S. 1 (2000); see also Alston v. Equifax Info. Servs., LLC, No. TDC-15-3343, 2016 WL 5349716, at *3 (D. Md. Sept. 22, 2016) (noting that "courts may raise the issue of collateral estoppel sua sponte"). Likewise, this Court may consider the preclusive effects of a state court decision sua sponte if it has notice that the state court previously decided the issue before it. See Wimbush v. United Parcel Serv., Inc., No. RWT-16-3200, 2016 WL 5870034, at *2 (D. Md. Oct. 7, 2016) (dismissing case sua sponte on res judicata principles where, even though "this Court did not previously decide the issues presented, it [was] on notice that the Circuit Court for Prince George's County, Maryland and the Maryland Court of Special Appeals ha[d] decided the[] issues").
When a federal court litigant asserts that a state court judgment has preclusive effect, "[the] federal court must give to [the] state court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered." Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984). The Foreclosure Action was a Maryland state court proceeding, and under Maryland law, res judicata provides grounds for dismissal if a defendant establishes that "(1) the present parties are the same or in privity with the parties to the earlier dispute, (2) the claim presented is identical to the one determined in the prior adjudication, and (3) there has been a final judgment on the merits." Capel, 2010 WL 457534, at *3 (citing Anne Arundel County Bd. of Educ. v. Norville, 887 A.2d 1029, 1037 (Md. 2005)). Under Maryland law, for collateral estoppel to bar relitigation of an issue, the defendant must demonstrate that (1) "the issue decided in the prior adjudication [was] identical with the one presented in the action in question"; (2) "there [was] a final judgment on the merits"; (3) "the party against whom the plea is asserted [was] a party or in privity with a party to the prior adjudication"; and (4) "the party against whom the plea is asserted [was] given a fair opportunity to be heard on the issue." Garrity, 135 A.3d at 459 (quoting Colandrea v. Wilde Lake Cmty. Assoc., 761 A.2d 899 (Md. 2000)).
Here, Peterson contends that Flagstar lacks standing to foreclose on his Property. Peterson Br. 6. As noted, he raised the same issue in the Foreclosure Action, and the state court rejected his argument. Jan. 9, 2014 Order in Foreclosure Action. And, Peterson was a party to the Foreclosure Action and had the opportunity to be heard in state court on this issue. See id.
Additionally, the Property was sold through the Foreclosure Action; the state court ratified the sale on August 7, 2015; and the court entered an order of judgment on December 8, 2015, awarding possession to Flagstar.
Peterson contends:
Jesinoski, ET UX, and Yvanova v. New Century Mortgage Corporation Case No. S218973, Cal. Sup. Ct. February 18, 2016.
Peterson Br. 4. In his view, this is "newly discovered evidence" that is "core to the lack of standing." It is unclear whether he refers to his alleged rescission or the legal opinion as "newly discovered evidence." The case Peterson appears to cite, Yvanova v. New Century Mortgage Corporation, 365 P.3d 845 (Cal. 2016), is a state court decision that is not binding on this Court. Moreover, a legal opinion is law, not evidence. Further, if Peterson had rescinded the loan on June 18, 2015, it would not constitute newly discovered evidence because it would predate the Final Order of Ratification that the state court signed on August 7, 2015. And, the only evidence Peterson offers is a Notice of Rescission dated December 23, 2015. Regardless of the date, he does not explain how a notice of rescission signed after the foreclosure sale would be effective. Even if the case he identified or the Notice of Rescission was relevant to Flagstar's standing and could form the basis for a motion for reconsideration in state court, the doctrine of collateral estoppel still would bar this Court from considering this issue. See Garrity, 135 A.3d at 459.
In sum, the Bankruptcy Court had jurisdiction but collateral estoppel barred both that court and this Court from determining Flagstar's standing to foreclose on the Property. The Bankruptcy Court's Order Terminating Automatic Stay, ECF No. 3-10, IS AFFIRMED, and this appeal IS DISMISSED.
A separate order will issue.