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U.S. Bank, N.A. v. 1905 2nd Street NE, LLC

Court of Appeals of Columbia District

March 6, 2014

U.S. BANK, N.A., Appellant,
1905 2ND STREET NE, LLC et al., Appellee.

Argued Feb. 27, 2013.

Michael S. Steadman, with whom Michael N. Russo, Annapolis, MD, was on the brief, for appellant.

Patrick J. Kearney, Bethesda, MD, with whom Michael J. Bramnick was on the brief, for appellee 1905 2nd Street NE, LLC.

Rawle Andrews Jr., for appellee Wilson.

Page 1285

Before BLACKBURNE-RIGSBY and BECKWITH, Associate Judges, and KING, Senior Judge.

BECKWITH, Associate Judge.

Appellant U.S. Bank appeals the partial grant of appellee 1905 2nd Street NE, LLC's motion for summary judgment in what is essentially a competition of claims in title interest to property previously owned by Calvert Wilson at 1905 2nd Street N.E. in the District of Columbia. The trial court granted U.S. Bank's motion for summary judgment in part and denied it in part, granting summary judgment to appellees Calvert Wilson and 1905 2nd Street NE, LLC (1905 LLC), on three of U.S. Bank's claims based on res judicata. While the question of law underlying appellant's claims is related to the subject of prior litigation, U.S. Bank has not been involved in any of those prior lawsuits, and was not a party in privity as required for res judicata to apply. We therefore reverse the trial court's grant of summary judgment on the quiet title, equitable lien, and equitable mortgage counts and remand so that the trial court may consider the merits of U.S. Bank's claims.


In 1996, Calvert Wilson acquired fee simple title interest in residential real property located at 1905 2nd Street N.E. and financed the purchase through a mortgage with Summit Mortgage Group. After a series of assignments, Mr. Wilson's debt was ultimately held by ABN AMRO Mortgage Group, Inc. (ABN AMRO). In 2001, Wilson's personal finances grew strained and he filed for personal bankruptcy. In 2004, ABN AMRO initiated foreclosure proceedings against him.

At this time, sales representatives from a company called Home Savers, LLC (sometimes called Home Savers, Plus, LLC) approached Mr. Wilson about foreclosure rescue arrangements. Managed by Barrett Ware and others, Home Savers creates subsidiary limited liability corporations in order to buy and sell real property. According to deposition testimony, Home Savers, through its subsidiary 1905 LLC, suggested a buy-back rescue arrangement in which Mr. Wilson would sell the property to 1905 LLC, avoid foreclosure, and eventually buy the property back from the company. Mr. Wilson vehemently declined this arrangement, insisting that he was unwilling to sell his property. After multiple assurances that he would not be selling his property, however, Mr. Wilson accepted 1905 LLC's second suggested arrangement, which 1905 LLC characterized as an equity sharing agreement. Under this arrangement, 1905 LLC paid the outstanding arrears on the property to avoid foreclosure, which amounted to $30,535.14. Mr. Wilson signed a deed (the foreclosure rescue deed) placing title interest in the property in 1905 LLC, and the company agreed to hold the deed in escrow unless and until Mr. Wilson was unable to obtain a refinance loan of at least $230,000 within sixty days and pay 1905 LLC $122,656.07 of that sum. If Mr. Wilson did not refinance and pay the company within sixty days, the parties agreed that 1905 LLC would record the deed. 1905 LLC granted Mr. Wilson a number of extensions, both in writing and verbally, while Mr. Wilson sought refinancing beyond the sixty-day window.

Throughout that time period, Mr. Wilson attempted to find a lender to refinance his home. Eventually, he obtained a refinance loan from New Century Mortgage Company (New Century), U.S. Bank's predecessor in interest, in the amount of $262,000. In exchange, Mr. Wilson granted a deed of trust interest against his home, giving New Century a security interest

Page 1286

in the property. This deed was signed on November 7, 2005, but New Century did not record the deed until November 16, 2005. On November 9, 2005, however— seven days prior to the recording of New Century's deed— 1905 LLC recorded its foreclosure rescue deed, believing that Mr. Wilson would not be able to secure refinancing. Shortly after Mr. Wilson obtained refinancing through New Century, he saw a paper on the door of his house stating that 1905 LLC owned the property.

In January 2006, Mr. Wilson filed a lawsuit in United States District Court against 1905 LLC and its two sales representatives challenging the validity of the foreclosure rescue deed. Wilson v. Home-Savers, LLC, et al., Case Number 06-0069(JDB) (D.D.C. April 24, 2006). Mr. Wilson argued that the foreclosure rescue deed was invalid because it was signed during the pendency of Mr. Wilson's bankruptcy proceedings. Because that claim arose under the Bankruptcy Code (11 U.S.C. ยง 101 et seq. ), U.S. District Court Judge John Bates issued an order referring it to the U.S. Bankruptcy Court. In August 2006, U.S. Bankruptcy Judge S. Martin Teel, Jr., ruled that the deed was valid under bankruptcy law because at the time that the foreclosure rescue deed was signed, the property was vested in Mr. Wilson, not the bankruptcy estate, ...

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