In Re: Aurora Commercial Corp.

Background

Gerard M. Pierre, representing himself, appealed a September 14, 2020 order from the United States Bankruptcy Court for the Southern District of New York. That order disallowed and expunged Pierre’s second proof of claim against Aurora Loan Services, LLC. The second claim sought additional compensation based on allegations concerning the 2009 foreclosure of Pierre’s property, alleged violations of the automatic bankruptcy stay and procedural due process, and the amount of a $300 payment he received through a federal mortgage-foreclosure review program.

Pierre’s first proof of claim had already been disallowed and expunged. In an earlier related proceeding, the district court affirmed that ruling, concluding that the claims concerning the foreclosure were barred by applicable time limits and the equitable doctrine of laches, which can bar a claim when a party unreasonably delays bringing it and the delay causes unfairness. Pierre did not appeal that earlier ruling.

Pierre filed the second claim after the bankruptcy court had scheduled a hearing on the first claim. He maintained that the second claim amended the first and therefore related back to the first claim’s filing date. The bankruptcy court held a separate hearing on the second claim and ruled that it merely restated the first claim, so it was disallowed and expunged on the same grounds.

Issues and arguments

Pierre argued that the bankruptcy court should have considered the second claim during the hearing on the first claim. He also argued that the second claim was timely because it amended the first claim, that Aurora had waived its objection by not addressing the second claim at the earlier hearing, and that Aurora should be barred from objecting under judicial estoppel. Judicial estoppel is a doctrine that can prevent a party from taking a position inconsistent with one it successfully took earlier in the same litigation.

Pierre further argued that he was denied procedural due process because he did not receive an adequate opportunity to be heard on the second claim. Finally, he attempted to raise an Administrative Procedure Act claim concerning the federal regulators’ review of his foreclosure and the amount of his payment.

District court’s analysis

The district court held that the bankruptcy court properly disallowed and expunged the second claim. The court explained that Pierre repeatedly characterized the second claim as an amendment to, and expansion of, the first claim and acknowledged that both claims arose from the same underlying facts. Adding statements or requesting more compensation did not change that result.

The court held that claim preclusion, also called res judicata, independently barred the second claim. Claim preclusion prevents later litigation when an earlier final judgment was issued by a court with authority over the matter, involved the same parties or their legal equivalents, and concerned the same claim or cause of action. The court found all four requirements satisfied because the first claim had been finally disallowed and expunged, the earlier ruling had been affirmed, and the second claim involved the same parties and foreclosure-related cause of action.

The court rejected Pierre’s waiver and judicial-estoppel arguments. Aurora did not waive its objection by failing to address the second claim at the earlier hearing because Pierre filed that claim only five days before the hearing, while bankruptcy rules required an objection to be filed and served at least 30 days before a hearing. The court also found that Aurora had consistently opposed Pierre’s claims as time barred, so its position had not changed.

The court did not decide whether the bankruptcy court could have rejected the second claim solely because it was filed after the claims bar date. The bankruptcy court had not based its ruling on that ground.

The court also rejected Pierre’s due-process argument. It found that the bankruptcy court gave him two opportunities to be heard: the October 23, 2019 hearing and the September 3, 2020 hearing devoted in part to the second claim. At the second hearing, the bankruptcy court explained that it was providing a full hearing to protect Pierre’s procedural rights even though the claim was subject to disallowance on the same grounds as the first claim.

As to the Administrative Procedure Act claim, the district court ruled that Pierre had not raised that claim in the bankruptcy court and therefore had waived it on appeal. The court also held that the April 2013 notice and $300 payment did not qualify as reviewable final agency action. The notice stated that the payment resulted from a settlement agreement and did not determine Pierre’s rights or obligations or create legal consequences. The court concluded that Pierre had not alleged a viable Administrative Procedure Act claim and dismissed those arguments.

Disposition

Judge Edgardo Ramos affirmed the bankruptcy court’s September 14, 2020 order and dismissed Pierre’s appeal. The district court directed the clerk to close the case and mail a copy of the opinion to Pierre.