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In re D'Angelo

United States District Court, Eastern District of Pennsylvania

March 31, 2015

IN THE MATTER OF JAMES ALBERT D’ANGELO, SR., and CAROLYN MARIE D’ANGELO Bankruptcy No. 11-14926

MEMORANDUM

DuBois, J.

I. INTRODUCTION

This is a bankruptcy appeal. Debtors James Albert D’Angelo, Senior, and Carolyn Marie D’Angelo (collectively, “debtors”) appeal from a decision of the United States Bankruptcy Court for the Eastern District of Pennsylvania granting J.P. Morgan Chase Bank, N.A.’s (“JPM”) Motion to Dismiss Second Amended Adversary Complaint and for Abstention. The Bankruptcy Court dismissed debtors’ only remaining claim, Count Nine of debtors’ Second Amended Complaint, in which debtors seek avoidance of an equitable lien pursuant to 11 U.S.C. § 547(b). For the following reasons, the Court affirms the rulings of the Bankruptcy Court.

II. BACKGROUND

The facts of the case have been previously set forth in the opinions of the Bankruptcy Court. See In re D’Angelo, 505 B.R. 650 (Bankr. E.D. Pa. 2014) (dismissing amended complaint and granting motion to dismiss); In re D’Angelo, No. 11-00744, 2012 WL 27541 (Bankr. E.D. Pa. 2012) (granting motion for fees and costs); In re D’Angelo, 475 B.R. 424 (Bankr. E.D. Pa. 2012) (dismissing amended complaint in part, abstaining in part, and denying motion for preliminary injunction). Further, this Court has previously recounted such facts in detail in its Memoranda dated March 20, 2013 and August 7, 2012. The Court repeats those facts in this Memorandum only as necessary to resolve the issues presently before the Court.

This bankruptcy proceeding arises from a dispute regarding property previously owned by debtors in Doylestown, Pennsylvania, on which JPM sought to foreclose in state court. Debtors previously owned real estate located at 102 Pickwick Drive in Doylestown, Pennsylvania (“Doylestown property”). A mortgage on the Doylestown property, dated August 11, 2005, secured a note of $1, 462, 500. Through a series of assignments, JPM became the mortgage holder and, on July 3, 2006, filed a foreclosure action in the Court of Common Pleas of Bucks County (“Court of Common Pleas” or the “state court”), J.P. Morgan Chase Bank National Association v. D’Angelo et al., No. 2006–6047 (“foreclosure action”).

Debtors opposed the foreclosure proceedings, asserting that the mortgage and note, in addition to several other mortgages, were invalid because they were forged by James D’Angelo, Junior (“D’Angelo Junior”), Mr. D’Angelo’s son. Debtors sought a declaratory judgment in the Court of Common Pleas that the note and mortgage were invalid, void or otherwise unenforceable due to D’Angelo Junior’s forgery. The declaratory judgment action, D’Angelo et al. v. JP Morgan Chase Bank, N.A., et al., No. 2007–00041–26–1, was consolidated with the foreclosure action in the Court of Common Pleas.

On April 11, 2011, the Court of Common Pleas granted partial summary judgment to JPM and imposed an equitable lien of $1, 339, 387.30, effective August 11, 2005, against the Doylestown property (“equitable lien”).[1] The equitable lien was awarded because one of debtors’ prior mortgages was satisfied when D’Angelo Junior obtained the allegedly fraudulent August 11, 2005 mortgage, which was later assigned to JPM. See In re D’Angelo, 475 B.R. at 436.[2] Debtors acknowledge that the original mortgage that was satisfied was valid and enforceable. Id.

That same day, debtors filed a Chapter 13 bankruptcy petition in the United States Bankruptcy Court for the Eastern District of Pennsylvania.[3] On April 9, 2012, debtors filed a Complaint in Bankruptcy Court, in which they sought to invalidate JPM’s interests in the Doylestown property and to avoid the equitable lien, pursuant to 11 U.S.C. § 544(a) and (b). This filing commenced the instant Adversary Case Number 12–301. On July 19, 2012, the Bankruptcy Court dismissed, in part, the Adversary Proceeding, without prejudice. Debtors subsequently appealed to this Court.

While debtors’ appeal was pending, on August 17, 2012, they commenced another adversary proceeding, Adversary Case Number 12–535, in which they sought to avoid as a preferential transfer pursuant to 11 U.S.C. § 547 the equitable lien against their former residence.

The Bankruptcy Court subsequently consolidated Adversary Case Number 12–535 with the instant adversary proceeding pursuant to the Bankruptcy Court’s Order dated June 25, 2013. The proceeding remained in suspense during debtors’ then-pending appeal before this Court.

By Order dated March 20, 2013, this Court affirmed the Bankruptcy Court’s dismissal of debtors’ claim to avoid the equitable lien against their residence pursuant to § 544(a) and (b), and held that the Bankruptcy Court properly concluded that it was barred by the Rooker-Feldman doctrine from disturbing the state court’s equitable lien order.

On May 17, 2013, debtors filed a Second Amended Complaint, containing nine counts. JPM filed a Motion to Dismiss Second Amended Adversary Complaint and for Abstention on June 3, 2013. At the end of a hearing addressing the Motion, held on July 2, 2013, the Bankruptcy Court dismissed Counts One through Eight of the Amended Complaint as restatements of claims subject to the Bankruptcy Court’s previous dismissal memorandum. However, the court took Count Nine, in which debtors assert that the April 11, 2011 equitable lien order is avoidable pursuant to 11 U.S.C. § 547(b), under advisement.

On February 21, 2014, the Bankruptcy Court dismissed with prejudice Count Nine, the only remaining count of the Amended Complaint, and granted JPM’s Motion to Dismiss in its entirety. Debtors ...


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