Verma v. Herr

Filing 11

MEMORANDUM OPINION (c/m to Appellant 12/22/22 sat). Signed by Judge Deborah K. Chasanow on 12/22/2022. (sat, Chambers)

Case 8:22-cv-00779-DKC Document 11 Filed 12/22/22 Page 1 of 6

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
IN RE: MADHU VERMA
:
_________________________________
:
MADHU VERMA
Appellant
:
v.

:

REBECCA A. HERR
Appellee

Civil Action No. DKC 22-779

:
MEMORANDUM OPINION

Presently before this court is an appeal by Appellant Madhu
Verma of the Bankruptcy Court’s March 18, 2022, order dismissing
her bankruptcy case, imposing a two-year bar to refiling, and
imposing sanctions in the amount of $3,000. 1

(ECF No. 8-2).

A

more detailed factual background to this case is laid out in an
opinion for a related appeal.

See Civil Action No. DKC 22-0452,

ECF No. 8.
In sum, Appellant’s property (the “Property”) was foreclosed
upon and sold to Deutsche Bank National Trust Company (“Deutsche
Bank”) between 2010 and 2013.

Appellant filed a petition for

Chapter 13 bankruptcy relief on March 4, 2018.

After obtaining

relief from the automatic stay as to the Property that was issued
Appellant attached to her Notice of Appeal the Bankruptcy
Court’s March 29, 2022, order denying her motion to amend the March
18, 2022, order, but the Notice of Appeal itself states that the
“order . . . appealed from” is the “Dismissal of Bankruptcy.” (ECF
No. 1 at 2, 1-1).
Given the arguments Appellant makes in her
brief, this court construes the appeal as one of the Bankruptcy
Court’s March 18, 2022, order.
1

Case 8:22-cv-00779-DKC Document 11 Filed 12/22/22 Page 2 of 6

based on Appellant’s bankruptcy filing, Deutsche Bank sold the
Property to Jacques Francis and Nadia Allen (the “Owners”).

The

Owners filed a wrongful detainer action in Maryland state court on
June 14, 2021, where they obtained a judgment against Appellant on
November 17, 2021.

Appellant removed the action to the United

States Bankruptcy Court for the District of Maryland on January 7,
2022.

The Bankruptcy Court dismissed the adversary proceeding on

February 18, 2022, finding the removal to have been improper, and
remanded to the state court.
The

Bankruptcy

Court

entered

an

Order

to

Show

Cause

in

Appellant’s bankruptcy case with respect to Appellant’s improper
removal of the wrongful detainer action.

(ECF No. 1-2 at 4).

The

Owners also filed a motion for sanctions against Appellant. (Id.).
The Bankruptcy Court held a hearing on March 10, 2022, and it
issued

an

bankruptcy

order
case

on
and

March
imposing

18,
a

2022,

dismissing

two-year

bar

to

Appellant’s
refiling

sanctions in the amount of $3,000 in attorney’s fees.
2).

and

(ECF No. 8-

Appellant has appealed that order.
This court has jurisdiction to review final decisions of the

Bankruptcy Court under 28 U.S.C. § 158(a), reviewing the Bankruptcy
Court’s conclusions of law de novo and findings of fact for clear
error.

In re Merry-Go-Round Enters., Inc., 400 F.3d 219, 224 (4th

Cir. 2005).

A Bankruptcy court “may convert a case under [chapter

13] to a case under chapter 7 of [title 11], or may dismiss a case
2

Case 8:22-cv-00779-DKC Document 11 Filed 12/22/22 Page 3 of 6

under [chapter 13], whichever is in the best interests of creditors
and the estate, for cause, including . . . unreasonable delay by
the debtor that is prejudicial to creditors.” 11 U.S.C. § 1307(c).
It may do so sua sponte if “necessary or appropriate to enforce or
implement
process.”

court

orders

or

rules,

11 U.S.C. § 105(a).

or

to

prevent

an

abuse

of

Additionally, under the Federal

Rules of Bankruptcy Procedure, a bankruptcy court may “impose an
appropriate sanction upon” an attorney or unrepresented party who
presents to the court a filing that is “being presented for any
improper purpose, such as to harass or to cause unnecessary delay
or needless increase in the cost of litigation.”
9011(b)-(c).

Such

a

sanction

“shall

be

Fed.R.Bankr.P.

limited

to

what

is

sufficient to deter repetition of such conduct or comparable
conduct by others similarly situated,” which may include “an order
directing payment to the movant of some or all of the reasonable
attorneys’ fees and other expenses incurred as a direct result of
the violation.”
Here,

the

Id. at 9011(c)(2).
Bankruptcy

Court

determined

that

Appellant’s

removal of the wrongful detainer action exhibited a “lack of good
faith and abuse of process,” as it was part of a “scheme to . . .
hinder and delay the foreclosure and evictions proceedings.”
No. 8-2 at 3-6).

(ECF

The Bankruptcy Court cited as also part of that

scheme the following actions by Appellant:

3

Case 8:22-cv-00779-DKC Document 11 Filed 12/22/22 Page 4 of 6

1) After the automatic stay was lifted as to the Property
based on her bankruptcy filing, Appellant sought to add her son to
the title on the Property without seeking court authorization, had
him file his own bankruptcy petition to obtain an automatic stay
as to the Property, and had him refile another bankruptcy petition
after the first was dismissed with prejudice;
2)

Appellant

had

her

husband

also

file

two

sequential

bankruptcy petitions for the same purpose;
3) Appellant filed a “Motion to Confirm Termination or Absence
of Stay” that requested that the Bankruptcy Court declare the order
terminating the automatic stay to be no longer in force, only four
months after the conclusion of her appeal of that order, and
rehashed the same arguments that were previously rejected; and
4) After the Bankruptcy Court entered an order confirming the
continued validity of the order terminating the stay, Appellant
filed a motion to vacate the order terminating the stay, which
rehashed the same arguments or arguments that “should have been
raised previously.”
Based on the foregoing actions by Appellant, this court
concludes that the Bankruptcy Court appropriately dismissed the
case with prejudice.

There is no reason to doubt the Bankruptcy

Court’s determination that Appellant has acted with the improper
purpose of delaying the foreclosure and eviction proceedings, and
Appellant has not even denied as much in her brief.
4

Instead, she

Case 8:22-cv-00779-DKC Document 11 Filed 12/22/22 Page 5 of 6

has rehashed many of the same arguments she previously raised, and
that other courts have repeatedly rejected.

She also argues that

the sanctions were improper because they were not requested by the
“real party in interest,” which she says is the Chapter 13 Trustee.
However, the Bankruptcy Court has the authority to dismiss a case
sua sponte and issue sanctions “on its own initiative.”

See 11

U.S.C. § 105(a); 11 U.S.C. § 1307(c); Fed.R.Bank.P. 9011(c)(1)(B).
Given the history of filing and refiling bankruptcy petitions
among

Appellant’s

imposition

of

a

family

two-year

members,
bar

on

the

refiling

Bankruptcy
also

seems

Court’s
to

be

appropriate “to deter repetition of such conduct or comparable
conduct by others similarly situated.”

Fed.R.Bank.P. 9011(c)(2).

Finally, the imposition of a $3,000 sanction in the form of
attorney’s fees to Frost & Associates, LLC was also warranted. 2
Attorney’s fees are an appropriate sanction when a court finds
that a party has acted in bad faith.
U.S. 32, 45-46 (1991).

Chambers v. NASCO, Inc., 501

The Bankruptcy Court’s findings support

its conclusion that Appellant’s removal of the wrongful detainer
case, in addition to her and her family’s other actions, were bad

Frost & Associates, LLC represented Daniel Staeven at the
Show Cause Hearing. Daniel Staeven was the attorney for the Owners
in the state court and was named as a defendant in the adversary
proceeding when Appellant removed the wrongful detainer action.
The Bankruptcy Court did not award attorney’s fees to the Owners
“because their attorney’s fees were incurred in State Court.” (ECF
No. 8-2 at 7).
2

5

Case 8:22-cv-00779-DKC Document 11 Filed 12/22/22 Page 6 of 6

faith attempts to delay the eviction proceedings that resulted in
added costs to the other parties involved.
For the foregoing reasons, the Bankruptcy Court’s dismissal
of the case and imposition of sanctions and a two-year bar on
refiling will be affirmed. 3

A separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

Also pending is Appellants’ motion for default judgment.
(ECF No. 10). That motion will be denied.
3

6