UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
IN RE:
KATHRYN TOGGAS DEBTOR/APPELLANT Civ. Action No. 19-3589 (EGS)
Bankr. Case No. 19-598 (Chapter 13)
MEMORANDUM OPINION
Kathryn Toggas appeals the Bankruptcy Court’s Order
Amending Order Dismissing Case, Granting in Part “Motion to
Vacate Dismissal Order, for Relief from Codebtor Stay, and for
Imposition of an Equitable Servitude for Two Years,” and
Imposing an Equitable Servitude on Real Property Located at 3112
Legation St., NW, Washington, DC 20015 (the “Order”). Upon
consideration of the briefs, the applicable law, and the entire
record, the Court AFFIRMS the Bankruptcy Court’s Order.
I. Background
On September 9, 2019, Ms. Toggas filed a voluntary petition
for relief under Chapter 13 of the Bankruptcy Code. See A.R.,
ECF No. 3-1 at 1-8 (Civ. Action No. 19-3589). 1 Ms. Toggas and her
husband, Thomas Toggas, are the owners of their residence,
1 When citing electronic filings throughout this Opinion, the Court cites to the ECF page number, not the page number of the filed document. 1 located at 3112 Legation St., NW, Washington, DC, 20015. See
A.R. ECF No. 3-1 at 2, 3, 46 (Civ. Action No. 19-3589). Mr.
Toggas is the borrower on a May 23, 2008 loan in the amount of
$1,350,000 secured by the Legation Street property. See A.R.,
ECF No. 3-1 at 24, 29, 30-45 (Civ. Action No. 19-3589). Mr.
Toggas failed to make the payment due on August 15, 2019, and as
of September 11, 2019, the loan was in default for 122 payments.
See A.R., ECF No. 3-1 at 17 (Civ. Action No. 19-3589).
On September 11, 2019, the Bankruptcy Court entered an
Order to File Mailing Matrix or Show Cause, directing Ms. Toggas
to file a mailing matrix, which is required to be filed with
every bankruptcy petition per Local Bankruptcy Rule 1007-2 and
which Ms. Toggas had failed to file with her petition. See A.R.,
ECF No. 3-1 at 10 (Civ. Action No. 19-3589). On September 19,
2019, the case was dismissed based on Ms. Toggas’ failure to
respond to the Court’s September 11, 2019 Order to File Mailing
Matrix or Show Cause. See A.R., ECF No. 3-1 at 10 (Civ. Action
No. 19-3589).
On October 16, 2019, U.S Bank National Association as Legal
Title Trustee for Truman 2016 SC6 Title Trust (“Movant” or
“Appellee”) filed a Motion to Vacate Dismissal Order, For Relief
from CoDebtor Stay, and for Imposition of an Equitable Servitude
for Two Years (Real Property Located at 3112 Legation St., NW,
2 Washington, DC 20015). 2 See A.R., ECF No. 3-1 at 15-23 (Civ.
Action No. 19-3589). On November 4, 2019, Ms. Toggas filed an
opposition to the motion, see A.R., ECF No. 3-1 at 19-23 (Civ.
Action No. 19-3589); but failed to appear at the November 6,
2019 hearing on the motion, see Bankruptcy Petition #: 19-00598-
ELG, ECF No. 27, PDF With Attached Audio File.
Thereafter, on November 8, 2019, the Bankruptcy Court
granted the motion in part. See A.R., ECF No. 3-1 at 32-34 (Civ.
Action No. 19-3589). Among other things, rather than vacating
the dismissal order, the Bankruptcy Court amended it “to provide
that an equitable servitude is imposed upon the Property, which
servitude shall prevent any stay under 11 U.S.C. §§ 362 and 1301
from attaching to the Property by reason of any new bankruptcy
being filed by any person or entity holding an interest in the
Property.” A.R., ECF No. 3-2 at 33. (Civ. Action No. 19-3589).
Ms. Toggas sought a stay pending appeal, arguing that the
Bankruptcy Court had improperly granted the Motion to Vacate
Dismissal because the movant’s grounds for seeking relief did
not fall within the grounds for relief enumerated in Federal
2 “Bankruptcy Courts have the authority to issue an in rem order that operate[s] as an equitable servitude on property to preclude the debtor and his successors from taking advantage of the automatic stay of 11 U.S.C. § 362(a) for a period sufficient to enable the creditor holding the secured claim to consummate a foreclosure.” In re Snow (Great Western Bank v. Snow) 201 B.R. 968 (Bankr. C.D.Cal. 1996), 3 Rule of Civil Procedure 60(b)(1)-(5). See A.R., ECF No. 3-1 at
37-44 (Civ. Action No. 19-3589). In opposing the stay, Movant
stated that the Order “permitted the Creditor’s foreclosure sale
to proceed on November 13, 2019, at which the Creditor was the
successful bid purchaser of the Property. The Creditor is now
proceeding with postsale actions necessary to consummate its
sale, including ratification of the sale and any action
necessary thereafter to obtain possession of the Property.”
Appendix to Appellee’s Brief, ECF No. 6 at 43-44.
On December 22, 2019, the Bankruptcy Court denied Ms.
Toggas’ Motion for Stay Pending Appeal. See A.R., ECF No. 3-1 at
45-49 (Civ. Action No. 19-3589). The Bankruptcy Court concluded
that Ms. Toggas had no likelihood of success on appeal because,
among other things, the Court did not vacate the dismissal
order, but rather amended the order to grant an equitable
servitude. See A.R., ECF No. 3-1 at 46-47 (Civ. Action No. 19-
3589). In determining the harm to the movant and other parties,
the Bankruptcy Court observed that Ms. Toggas “has filed
numerous bankruptcy petitions in recent years, often immediately
preceding the date for which a foreclosure sale was scheduled.
The debtor has thus been engaging in a blatant form of ‘tag
bankruptcy.’” A.R., ECF No. 3-2 at 48 (Civ. Action No. 19-3589).
From May 2018 through September 2019, Ms. Toggas filed a
total of seven Chapter 13 petitions in the Bankruptcy Court for
4 the District of Columbia of which this Court takes Judicial
Notice. See In re Omnicare, Inc. Sec. Litig., 769 F.3d 455, 466
(6th Cir. 2014) (finding that judicial notice “applies to
appellate courts taking judicial notice of facts supported by
documents not included in the record on appeal”); Lewis v. Drug
Enforcement Admin., 777 F. Supp. 2d 151, 159 (D.D.C.
2011) (“The court may take judicial notice of public
records from other court proceedings.”). Each case was
dismissed shortly after being filed for the same procedural
reason as in the instant case: Ms. Toggas failed to respond to
the Order to File Mailing Matrix or Show Cause. See Bankruptcy
Petition #: 18-00312; Bankruptcy Petition #: 18-00649;
Bankruptcy Petition #: 19-00036; Bankruptcy Petition #: 19-
00146; Bankruptcy Petition #: 19-00340; Bankruptcy Petition #:
19-00463. The filing of each of these cases cancelled a
scheduled foreclosure sale. See A.R., ECF No. 3-1 at 19-20 (Civ.
Action No. 19-3589).
On November 11, 2019, Ms. Toggas filed a Notice of Appeal,
which is ripe for review.
II. Standard of Review
This Court has jurisdiction over appeals of decisions of
the bankruptcy court. See 28 U.S.C.
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
IN RE:
KATHRYN TOGGAS DEBTOR/APPELLANT Civ. Action No. 19-3589 (EGS)
Bankr. Case No. 19-598 (Chapter 13)
MEMORANDUM OPINION
Kathryn Toggas appeals the Bankruptcy Court’s Order
Amending Order Dismissing Case, Granting in Part “Motion to
Vacate Dismissal Order, for Relief from Codebtor Stay, and for
Imposition of an Equitable Servitude for Two Years,” and
Imposing an Equitable Servitude on Real Property Located at 3112
Legation St., NW, Washington, DC 20015 (the “Order”). Upon
consideration of the briefs, the applicable law, and the entire
record, the Court AFFIRMS the Bankruptcy Court’s Order.
I. Background
On September 9, 2019, Ms. Toggas filed a voluntary petition
for relief under Chapter 13 of the Bankruptcy Code. See A.R.,
ECF No. 3-1 at 1-8 (Civ. Action No. 19-3589). 1 Ms. Toggas and her
husband, Thomas Toggas, are the owners of their residence,
1 When citing electronic filings throughout this Opinion, the Court cites to the ECF page number, not the page number of the filed document. 1 located at 3112 Legation St., NW, Washington, DC, 20015. See
A.R. ECF No. 3-1 at 2, 3, 46 (Civ. Action No. 19-3589). Mr.
Toggas is the borrower on a May 23, 2008 loan in the amount of
$1,350,000 secured by the Legation Street property. See A.R.,
ECF No. 3-1 at 24, 29, 30-45 (Civ. Action No. 19-3589). Mr.
Toggas failed to make the payment due on August 15, 2019, and as
of September 11, 2019, the loan was in default for 122 payments.
See A.R., ECF No. 3-1 at 17 (Civ. Action No. 19-3589).
On September 11, 2019, the Bankruptcy Court entered an
Order to File Mailing Matrix or Show Cause, directing Ms. Toggas
to file a mailing matrix, which is required to be filed with
every bankruptcy petition per Local Bankruptcy Rule 1007-2 and
which Ms. Toggas had failed to file with her petition. See A.R.,
ECF No. 3-1 at 10 (Civ. Action No. 19-3589). On September 19,
2019, the case was dismissed based on Ms. Toggas’ failure to
respond to the Court’s September 11, 2019 Order to File Mailing
Matrix or Show Cause. See A.R., ECF No. 3-1 at 10 (Civ. Action
No. 19-3589).
On October 16, 2019, U.S Bank National Association as Legal
Title Trustee for Truman 2016 SC6 Title Trust (“Movant” or
“Appellee”) filed a Motion to Vacate Dismissal Order, For Relief
from CoDebtor Stay, and for Imposition of an Equitable Servitude
for Two Years (Real Property Located at 3112 Legation St., NW,
2 Washington, DC 20015). 2 See A.R., ECF No. 3-1 at 15-23 (Civ.
Action No. 19-3589). On November 4, 2019, Ms. Toggas filed an
opposition to the motion, see A.R., ECF No. 3-1 at 19-23 (Civ.
Action No. 19-3589); but failed to appear at the November 6,
2019 hearing on the motion, see Bankruptcy Petition #: 19-00598-
ELG, ECF No. 27, PDF With Attached Audio File.
Thereafter, on November 8, 2019, the Bankruptcy Court
granted the motion in part. See A.R., ECF No. 3-1 at 32-34 (Civ.
Action No. 19-3589). Among other things, rather than vacating
the dismissal order, the Bankruptcy Court amended it “to provide
that an equitable servitude is imposed upon the Property, which
servitude shall prevent any stay under 11 U.S.C. §§ 362 and 1301
from attaching to the Property by reason of any new bankruptcy
being filed by any person or entity holding an interest in the
Property.” A.R., ECF No. 3-2 at 33. (Civ. Action No. 19-3589).
Ms. Toggas sought a stay pending appeal, arguing that the
Bankruptcy Court had improperly granted the Motion to Vacate
Dismissal because the movant’s grounds for seeking relief did
not fall within the grounds for relief enumerated in Federal
2 “Bankruptcy Courts have the authority to issue an in rem order that operate[s] as an equitable servitude on property to preclude the debtor and his successors from taking advantage of the automatic stay of 11 U.S.C. § 362(a) for a period sufficient to enable the creditor holding the secured claim to consummate a foreclosure.” In re Snow (Great Western Bank v. Snow) 201 B.R. 968 (Bankr. C.D.Cal. 1996), 3 Rule of Civil Procedure 60(b)(1)-(5). See A.R., ECF No. 3-1 at
37-44 (Civ. Action No. 19-3589). In opposing the stay, Movant
stated that the Order “permitted the Creditor’s foreclosure sale
to proceed on November 13, 2019, at which the Creditor was the
successful bid purchaser of the Property. The Creditor is now
proceeding with postsale actions necessary to consummate its
sale, including ratification of the sale and any action
necessary thereafter to obtain possession of the Property.”
Appendix to Appellee’s Brief, ECF No. 6 at 43-44.
On December 22, 2019, the Bankruptcy Court denied Ms.
Toggas’ Motion for Stay Pending Appeal. See A.R., ECF No. 3-1 at
45-49 (Civ. Action No. 19-3589). The Bankruptcy Court concluded
that Ms. Toggas had no likelihood of success on appeal because,
among other things, the Court did not vacate the dismissal
order, but rather amended the order to grant an equitable
servitude. See A.R., ECF No. 3-1 at 46-47 (Civ. Action No. 19-
3589). In determining the harm to the movant and other parties,
the Bankruptcy Court observed that Ms. Toggas “has filed
numerous bankruptcy petitions in recent years, often immediately
preceding the date for which a foreclosure sale was scheduled.
The debtor has thus been engaging in a blatant form of ‘tag
bankruptcy.’” A.R., ECF No. 3-2 at 48 (Civ. Action No. 19-3589).
From May 2018 through September 2019, Ms. Toggas filed a
total of seven Chapter 13 petitions in the Bankruptcy Court for
4 the District of Columbia of which this Court takes Judicial
Notice. See In re Omnicare, Inc. Sec. Litig., 769 F.3d 455, 466
(6th Cir. 2014) (finding that judicial notice “applies to
appellate courts taking judicial notice of facts supported by
documents not included in the record on appeal”); Lewis v. Drug
Enforcement Admin., 777 F. Supp. 2d 151, 159 (D.D.C.
2011) (“The court may take judicial notice of public
records from other court proceedings.”). Each case was
dismissed shortly after being filed for the same procedural
reason as in the instant case: Ms. Toggas failed to respond to
the Order to File Mailing Matrix or Show Cause. See Bankruptcy
Petition #: 18-00312; Bankruptcy Petition #: 18-00649;
Bankruptcy Petition #: 19-00036; Bankruptcy Petition #: 19-
00146; Bankruptcy Petition #: 19-00340; Bankruptcy Petition #:
19-00463. The filing of each of these cases cancelled a
scheduled foreclosure sale. See A.R., ECF No. 3-1 at 19-20 (Civ.
Action No. 19-3589).
On November 11, 2019, Ms. Toggas filed a Notice of Appeal,
which is ripe for review.
II. Standard of Review
This Court has jurisdiction over appeals of decisions of
the bankruptcy court. See 28 U.S.C. § 158(a)(1) (conferring
jurisdiction on federal district courts “to hear appeals ...
from final judgments, orders, and decrees” 5 of bankruptcy courts). On appeal from a bankruptcy court, a
district court “may affirm, modify, or reverse
a bankruptcy judge's judgment, order, or decree or remand with
instructions for further proceedings.” Fed. R. Bankr. P. 8013.
A district court reviews a bankruptcy court's findings of
fact only for indication that they are clearly
erroneous. Id.; see also In re Johnson, 236 B.R. 510, 518
(D.D.C.1999). “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.” Johnson, 236 B.R.
at 518 (quoting United States v. U.S. Gypsum Co., 333 U.S. 364,
395 (1948)). A bankruptcy court's legal conclusions, however,
are reviewed de novo. See In re WPG, Inc., 282 B.R. 66, 68
(D.D.C. 2002) (citing Cooter & Gell v. Hartmarx Corp., 496 U.S.
384, 405(1990). The party seeking to reverse
the bankruptcy court's ruling bears the burden of proof and may
not prevail by showing “simply that another conclusion could
have been reached.” Id. (quotation marks omitted).
6 III. Analysis
A. The Bankruptcy Court Did Not Err Amending Its Dismissal Order to Provide For an Equitable Servitude In Appellee’s Favor
Ms. Toggas does not challenge the merits of the imposition
of the equitable servitude, but rather requests reversal of the
Order based on three procedural claims. First, Ms. Toggas argues
that the Bankruptcy Court erred because there were no grounds
pursuant to Federal Rule of Civil Procedure 60(b)(1)-(5) (made
applicable in Bankruptcy Proceedings by Bankruptcy Procedure
9024) for the Bankruptcy Court to vacate the dismissal order and
second, that the bankruptcy Court erred because Appellee was not
a party pursuant to that Rule who could seek to have the
dismissal order vacated because the order was not entered
against the Appellee. Br. of Debtors-Appellants, ECF No. 5 at 8-
11. However—and as Appellee points out—the Bankruptcy Court did
not vacate the dismissal order. Rather, it amended the order to
provide for an equitable servitude in favor of the Appellee. For
this reason, Appellee contends that the Appellant’s claims of
error are moot. Br. for the Appellee, ECF No. 6 at 6-7. Ms.
Toggas replies that the Court should ignore Appellee’s argument
because, according to her, the Dismissal Order was not amended
because: (1) Appellee did not move to amend the Dismissal Order;
and (2) Appellee provided no grounds for amending the Dismissal
7 Order. Reply Br. of Debtors-Appellants, ECF No. 8 at 4. Ms.
Toggas’ understanding is inaccurate, however, because the
Bankruptcy Court did not vacate the Dismissal Order, but rather
amended it to impose an equitable servitude. A.R., ECF No. 3-2
at 33. (Civ. Action No. 19-3589). Accordingly, because Ms.
Toggas’ claims based on Federal Rule of Procedure Rule 60(b)(1)-
(5) are not relevant to the action that the Bankruptcy Court
actually took, her claims are without merit.
Third, Ms. Toggas argues that the Bankruptcy Court erred
because Appellee did not seek the imposition of an equitable
servitude “during the bankruptcy procedure.” Br. of Debtors-
Appellants, ECF No. 5 at 11. However, while the Dismissal Order
was entered on September 11, 2019, and before the Movant’s
Motion to Vacate the Dismissal Order was filed on October 16,
2019, the case has not been closed. See generally Docket for
Bankruptcy Petition #: 19-00598. Even if the case had been
closed, the Bankruptcy Court retained jurisdiction for certain
purposes. See In re Hardy, 209 B.R. 371, 373 (Bankr. E.D.Va.
1997) (“Notwithstanding the fact that [debtor's] bankruptcy case
is closed and all scheduled debts have been discharged, the
Court retains jurisdiction over the debtor's case for certain
purposes,” including when a “party claims a right or remedy
created by one of the specific Bankruptcy Code sections.”)
(citations omitted); cf. Matter of Querner, 7 F.3d 1199, 1201–02
8 (5thh Cir. 1993) (when main bankruptcy case dismissed or closed,
court has discretion to retain jurisdiction or dismiss related
proceedings). For these reasons, Ms. Toggas’ claim is without
merit.
If Ms. Toggas had challenged the merits of the Bankruptcy
Court’s imposition of the equitable servitude, such a challenge
would have been without merit. From May 2018 through September
2019, Ms. Toggas filed a total of seven Chapter 13 bankruptcy
petitions. Each was dismissed soon after it was filed on the
same procedural grounds and each resulted in cancelling a
scheduled foreclosure sale. Furthermore, Mr. Toggas’ missed
payments date to August 2009, and his debt at the time Ms.
Toggas filed her seventh bankruptcy petition in a 16-month
period was $2,350,000 on a $1,350,000 loan. See A.R., ECF No. 3-
1 at 20 (Civ. Action No. 19-3589). Based on this pattern of
conduct, there is ample factual and legal basis for the
imposition of the equitable servitude. See In re Chappelle, No.
00-0020, 2000 WL 33529767 (Bankr. D.D.C. Feb. 27, 2000)
(defendants’ abuse of the bankruptcy system, which included
filing six bankruptcy filings withing three years and a three
year mortgage default, warranted imposing an equitable
servitude). See also In re Yimam, 214 B.R. 463 (Bankr. D. Md.
1997) (equitable servitude appropriate where debtor and spouse
filed seven bankruptcy cases “all designed to forestall creditor
9 action” over a four-year, three-month period and failed to make
a mortgage payment within the last five years); In re Abdul
Muhaimin, 343 B.R. 159 (Bankr. D. Md. 2006) (equitable servitude
appropriate where “appropriate based on the three bankruptcy
cases filed in 17 months by the Debtor or Mr. Muhaimin, two of
which were filed on the day of or the day prior to a scheduled
foreclosure sale. This pattern of conduct, while not proven to
be fraudulent as to creditors, nonetheless is the type of
conduct that constitutes a continuing abuse of the bankruptcy
process.”).
IV. Conclusion
For the foregoing reasons, the Court AFFIRMS the Bankruptcy
Court’s Order. An appropriate Order accompanies this Memorandum
Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan United States District Judge January 21, 2022