NO.

17-929

In the Supreme Court of the United States

IN RE DANIEL L. JUNK AND CHRISTINE H. JUNK

On Petition for Writ of Mandamus to

The United States District Court for the
Southern District of Ohio, Eastern Division

RESPONDENT’S BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF MANDAMUS

John B. Pinney, Esq.

Counsel of Record
Graydon Head & Ritchey LLP
312 Walnut Street, Suite 1800
Cincinnati, OH 45202
Telephone: (513) 629-2730
Facsimile: (513) 651-3836
Email: jpinney@graydon.law

Counsel for Respondent

CitiMortgage, Inc.

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

 i

DISCLOSURE OF CORPORATE
AFFILIATIONS AND FINANCIAL INTEREST
Pursuant to Supreme Court Rule 29(6), Respondent
CitiMortgage, Inc. makes the following disclosure:
1. Is said party a subsidiary or affiliate of a
publicly-owned corporation? If the answer is
YES, list below the identity of the parent
corporation or affiliate and the relationship
between it and the named party:
Yes. Citigroup Inc., a publicly traded corporation is
affiliated with Respondent CitiMortgage, Inc. 70% of
the shares of CitiMortgage, Inc. are owned by Citibank,
N.A. and the remaining 30% are owned by Citigroup
Retail Services LLC. Also, 80% of the shares of
Citigroup Retail Service LLC are owned by Citicorp
USA; 15% of the shares of Citigroup Retail Services
LLC are owned by CFNA Receivables (DE), Inc.; 3% of
the shares of Citigroup Retail Services LLC are owned
by CFNA Receivables (MD), Inc.; and the remaining 2%
of the shares of Citigroup Retail Services LLC are
owned by CFNA Receivables (NC), Inc. Citicorp USA;
CFNA Receivables (DE), Inc.; CFNA Receivables (MD),
Inc.; and CFNA Receivables (NC), Inc. each is a wholly-
owned subsidiary of Citibank, N.A. Citibank, N.A. is a
wholly-owned subsidiary of Citicorp. Citicorp is a
wholly-owned subsidiary of Citigroup Inc.
 ii

2. Is there a publicly-owned corporation, not a

party to the appeal, that has a financial interest
in the outcome? If the answer is YES, list the
identity of such corporation and the nature of
the financial interest:
Yes. 70% of the shares of CitiMortgage, Inc. are owned
by Citibank, N.A. and the remaining 30% are owned by
Citigroup Retail Services LLC. Also, 80% of the shares
of Citigroup Retail Service LLC are owned by Citicorp
USA; 15% of the shares of Citigroup Retail Services
LLC are owned by CFNA Receivables (DE), Inc.; 3% of
the shares of Citigroup Retail Services LLC are owned
by CFNA Receivables (MD), Inc.; and the remaining 2%
of the shares of Citigroup Retail Services LLC are
owned by CFNA Receivables (NC), Inc. Citicorp USA;
CFNA Receivables (DE), Inc.; CFNA Receivables (MD),
Inc.; and CFNA Receivables (NC), Inc. each is a wholly-
owned subsidiary of Citibank, N.A. Citibank, N.A. is a
wholly-owned subsidiary of Citicorp. Citicorp is a
wholly-owned subsidiary of Citigroup Inc. Citigroup
Inc. is a publicly traded corporation.
 iii

TABLE OF CONTENTS
DISCLOSURE OF CORPORATE AFFILIATIONS
AND FINANCIAL INTEREST . . . . . . . . . . . . . . i
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . iv
STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . 1
JURISDICTIONAL STATEMENT . . . . . . . . . . . . . . 8
SUMMARY OF THE ARGUMENT . . . . . . . . . . . . 11
ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
A. The Bankruptcy Court Had Subject Matter
Jurisdiction and Constitutional Authority to
Approve the Settlement Between the
Chapter 7 Trustee and CitiMortgage. . . . . . 13
B. The Rescission Argument Was Already
Considered and Rejected in the Foreclosure
Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
 iv

TABLE OF AUTHORITIES
CASES
In re A & C Props.,
784 F.2d 1377 (9th Cir. 1986) . . . . . . . . . . . . . . 12
In re Ambac Fin. Grp., Inc.,
457 B.R. 299 (Bankr. S.D.N.Y. 2011), aff’d, 2011
U.S. Dist. LEXIS 149610, 2011 WL 6844533
(S.D.N.Y. Dec. 29, 2011), aff’d, 487 F. App’x 663
(2d Cir. 2012) . . . . . . . . . . . . . . . . . . . . . . . . 13, 14
In re Am. Med. Sys., Inc.,
75 F.3d 1069 (6th Cir. 1996) . . . . . . . . . . . . . . . . 8
Ashton Revocable Living Tr. v. Mukamal
(In re Palm Beach Fin. Partners, L.P.),
527 B.R. 518 (S.D. Fla. 2015) . . . . . . . . . . . . . . 14
In re Bailey,
421 B.R. 841 (Bankr. N.D. Ohio 2009) . . . . . . . 11
Bard v. Sicherman (In re Bard),
49 F. App’x 528 (6th Cir. 2002) . . . . . . . . . . . . . 12
In re Brown,
13-8037, 2014 Bankr. LEXIS 1018, 2014 WL
997340 (B.A.P. 6th Cir. Mar. 17, 2014) . . . . . . 8, 9
Darrah v. Franklin Credit (In re Darrah),
337 B.R. 313 (Bankr. N.D. Ohio 2005) . . . . . . . 11
Fid. Bank, Nat’l Ass’n v. M.M. Group, Inc.,
77 F.3d 880 (6th Cir. 1996) . . . . . . . . . . . . . . . . . 9
Folz v. Bancohio Nat’l Bank,
88 B.R. 149 (Bankr. S.D. Ohio 1987) . . . . . . . . 11
 v

Harker v. Troutman (In re Troutman Enters., Inc.),

286 F.3d 359 (6th Cir. 2002) . . . . . . . . . . . . . . . . 8
Jesinoski v. Countrywide Home Loans, Inc.,
574 U.S. ___, 135 S. Ct. 790, 190 L. Ed. 2d 650
(2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
In re Junk,
566 B.R. 897 (S.D. Ohio Bankr. 2017) . . . . . . . . 6
Kenton Cty. Bondholders Comm. v. Delta Air Lines,
Inc. (In re Delta Air Lines, Inc.),
374 B.R. 516 (S.D.N.Y. 2007), aff’d, 309 F. App’x
455 (2d Cir. 2009) . . . . . . . . . . . . . . . . . . . . . . . . 14
Gooch v. Life Inv’rs Ins. Co. of Am. (In re Life Inv’rs
Ins. Co. of Am.),
589 F.3d 319 (6th Cir. 2009) . . . . . . . . . . . . . . . . 8
Mallard v. U.S. Dist. Ct.,
490 U.S. 296 (1989) . . . . . . . . . . . . . . . . . . . . . . . 8
Meritage Homes Corp. v. JPMorgan Chase Bank,
N.A.,
474 B.R. 526 (Bankr. S.D. Ohio 2012) . . . . . . . . 9
Monus v. Lambros,
286 B.R. 629 (Bankr. N.D. Ohio 2002) . . . . . . . . 9
In re Motors Liquidation Co.,
522 B.R. 13 (Bankr. S.D.N.Y. 2014) . . . . . . . . . 14
Rankin v. Lavan (In re Rankin),
438 F. App’x 420 (6th Cir. 2011) . . . . . . . . . . . . 12
Realan Inv. Partners, LLLP v. Meininger
(In re Land Res., LLC),
505 B.R. 571 (M.D. Fla. 2014) . . . . . . . . . . . . . . 13
 vi

Ritenour v. Osborne,
No. 10-60274-KMM, 2012 U.S. Dist. LEXIS
35967, 2012 WL 912947 (S.D. Fla. Mar. 16,
2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
S.E.C. v. Basic Energy & Affiliated Res. Inc.,
273 F.3d 657 (6th Cir. 2001) . . . . . . . . . . . . . 8, 11
Spenlinhauer v. O’Donnell,
261 F.3d 113 (1st Cir. 2001) . . . . . . . . . . . . 10, 11
Stern v. Marshall,
564 U.S. 462 (2011) . . . . . . . . . . . . . . . . . . . . . . 13
Travelers Cas. & Sur. v. Corbin
(In re First Cincinnati, Inc.),
286 B.R. 49 (B.A.P. 6th Cir. 2002) . . . . . . . . . . . 9
United States v. Kurlemann,
No. 1:10-CR-14-3, 2010 U.S. Dist. LEXIS 94570,
2010 WL 3743648 (S.D. Ohio Sept. 10, 2010) . . 11
Watson v. LLP Mortg., Ltd (In re Watson),
No. 3:2011-0012, 2016 U.S. Dist. LEXIS 77684,
2016 WL 3349666 (D.V.I. June 15, 2016) . . . . . 14
Will v. Calvert Fire Ins. Co.,
437 U.S. 655 (1978) . . . . . . . . . . . . . . . . . . . . . . . 8
STATUTES
11 U.S.C. § 105(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
11 U.S.C. § 323 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11 U.S.C. § 348 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 U.S.C. § 363(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11 U.S.C. § 363(m) . . . . . . . . . . . . . . . . . . . . . . . . . 6, 8
 vii

11 U.S.C. § 522 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 U.S.C. § 541(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11 U.S.C. § 541(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 9
11 U.S.C. § 554 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 U.S.C. § 704 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 U.S.C. § 704(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11 U.S.C. § 1101 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 U.S.C. § 1107 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 U.S.C. § 1107(a) . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 U.S.C. § 1108 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 U.S.C. § 1112(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 4
28 U.S.C. § 157 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
28 U.S.C. § 157(b)(2)(A) . . . . . . . . . . . . . . . . . . . . . 13
28 U.S.C. § 157(b)(2)(N) . . . . . . . . . . . . . . . . . . . . . 13
28 U.S.C. § 157(b)(2)(O) . . . . . . . . . . . . . . . . . . . . . 13
28 U.S.C. § 1334 . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
RULES
Fed. R. Bankr. P. 9019(a) . . . . . . . . . . . . . . . . . . . . 12
 1

STATEMENT OF THE CASE

This is not the first time Petitioners have appeared
before this Court. On June 16, 2016, the same day on
which it was filed, this Court denied Petitioners’
application (15A1267) for a stay of mandate pending
the filing and disposition of a petition for a writ of
certiorari.
In November 2006, Petitioners Daniel L. Junk (“Mr.
Junk”) and Christine H. Junk (“Mrs. Junk,” or
collectively, the “Junks”) executed a $1.2 million note
in favor of American Home Mortgage. {13-551391;
Doc. 104; Page 7.} The note was secured by a mortgage
on real property located in South Carolina. {Id.} After
making payments on the note for just over two years,
the Junks stopped making their payments in early
2009, and then took extraordinary steps to be relieved
of their mortgage obligation. {Id.} The Junks first sent
a written request for documents and information
stating that the failure to respond would provide the
Junks with a power of attorney to act for American
Home Mortgage; the Junks also sent a notice to
Respondent CitiMortgage, Inc. (“CitiMortgage”), the
then-current servicer of the loan, purporting to rescind
the note and mortgage. {Id.} Mr. Junk then signed and
filed documents with the recorder of Beaufort County,
South Carolina, purportedly acting as an agent of
American Home Mortgage, stating that the mortgage

1
This case number refers to the bankruptcy case the Junks filed
on June 27, 2013 with the United States Bankruptcy Court for the
Southern District of Ohio, Eastern Division. Subsequent case
numbers will reflect later cases initiated by the Junks in various
appellate courts.
 2

was released and satisfied and that the entire debt

secured by the mortgage had been paid in full. {Id.}
Shortly thereafter, the Junks commenced a state
court lawsuit in Beaufort County, South Carolina,
seeking to quiet title to the property in their names.
{Id.} At the time they filed the lawsuit, they had
reason to believe that CitiMortgage was the owner of
the loan and that Bayview had become its servicer.
{Id.} But instead of naming CitiMortgage and Bayview
as defendants in the quiet title action, the Junks
purported to serve them via publication as “John Doe”
defendants. {Id.} Bayview then commenced a
foreclosure action against the Junks, alleging that the
Junks owed nearly $1.2 million plus interest, taxes,
insurance and costs. {Id.} The judicial officer presiding
over the quiet title action and the foreclosure action—
the Honorable Marvin H. Dukes, the Beaufort County
Master-in-Equity—found that CitiMortgage was not a
proper “John Doe” defendant in the quiet title action,
dismissed the quiet title action without prejudice to the
Junks asserting such claims in the foreclosure action,
and substituted CitiMortgage as the plaintiff in the
foreclosure action in place of Bayview. {Id. at 8.} The
Master-in-Equity later dismissed a third-party
complaint the Junks had filed in the foreclosure action
against over 20 defendants for civil conspiracy and
other alleged wrongdoing and dismissed with prejudice
each of the counterclaims the Junks had filed against
CitiMortgage. {Id.}
Accomplishing all of this in the state court litigation
took five hearings, several orders, and approximately
two years, leaving only the counts asserted in the
foreclosure complaint and the defenses asserted by the
 3

Junks to be decided by the Master-in-Equity. {Id.} The

Junks, though, filed multiple appeals, including an
appeal of an order the appellate court had previously
found to be non-appealable, substantially delaying the
process of adjudicating whether CitiMortgage was
entitled to a foreclosure judgment. {Id.} Some of the
appeals had been dismissed and others were yet to be
decided when the Junks filed a voluntary petition in
the United States Bankruptcy Court for the Southern
District of Ohio, Eastern Division (“Bankruptcy Court”)
under Chapter 11 of the Bankruptcy Code on June 27,
2013 (“Bankruptcy Case”). {13-55139; Doc. 1}2 The
Junks then filed an adversary proceeding on November
5, 2013 (“Adversary Proceeding”) in which they made
the same arguments they were making in South
Carolina in support of their position that the note and
mortgage are supposedly unenforceable. {13-55139;
Doc. 56; Adv. Pro. No. 13-02390; Doc 1.}
CitiMortgage requested that the Bankruptcy Court
grant it relief from the automatic stay so that the state
court foreclosure litigation relating to the note and the
mortgage could continue. {13-55139; Doc. 77.}
CitiMortgage also asked that the Bankruptcy Court
either dismiss or abstain from hearing the Adversary
Proceeding. {Id.} On July 2, 2014, in a joint order, the
Bankruptcy Court granted CitiMortgage relief from the
automatic stay so it could continue to litigate the South
Carolina foreclosure case, abstained from deciding any
counts in the Adversary Proceeding challenging the
enforceability of the note and mortgage, and ordered
the remainder of the Adversary Proceeding to be held

2
The Junks had moved from South Carolina to Ohio in 2012.
 4

in abeyance pending the issuance of final, non-

appealable orders by the South Carolina court (“Stay
Relief and Abstention Order”). {13-55139; Doc. 104.}
The Junks filed a timely notice of appeal of the Stay
Relief and Abstention Order and elected to have the
appeal heard by the United States District Court for
the Southern District of Ohio, Eastern Division
(“District Court”).
After entering the Stay Relief and Abstention
Order, the Bankruptcy Court issued a detailed order
for the Junks to show cause why a Chapter 11 trustee
should not be appointed or why their case should not be
dismissed or converted to a Chapter 7 case (“Show
Cause Order”) {13-55139; Doc. 122.} The Show Cause
Order made clear that 11 U.S.C. § 105(a) and
applicable case law authorized the Bankruptcy Court
to sua sponte order conversion or dismissal upon notice
to parties in interest. {Id. at footnote 1.} The Show
Cause Order also set a hearing on the motion filed by
CitiMortgage under 11 U.S.C. § 1112(b) to dismiss the
Junks’ Chapter 11 case or convert it to a Chapter 7
case (“CitiMortgage Motion”), although it set forth
additional grounds which were not asserted in the
CitiMortgage Motion.
At the conclusion of the January 9, 2015 hearing,
the Bankruptcy Court read numerous reasons into the
record why it was converting the Junks’ Chapter 11
case to one under Chapter 7 of the Bankruptcy Code.
These reasons were incorporated by reference into the
Bankruptcy Court’s January 13, 2015 Order
Converting Chapter 11 Case to a Case Under Chapter
7 of the Bankruptcy Code (“Conversion Order”) {13-
55139; Doc. 136.} When the Junks appealed the
 5

Conversion Order, the Bankruptcy Court issued its

Corrected and Modified Bench Ruling on (A) Order
Directing Daniel Junk and Christine Junk to Appear
and Show Cause Why a Chapter 11 Trustee Should Not
be Appointed or Their Case Should Not Be Converted
to Chapter 7 and (B) CitiMortgage, Inc.’s Motion to
Dismiss or Convert (“Corrected Ruling”) {13-55139;
Doc. 148.}3
On August 28, 2015, the District Court issued its
opinion affirming the Bankruptcy Court with respect to
the Stay Relief and Abstention Order {14-01428; Doc.
21} and Conversion Order {15-00377; Doc. 24}, which
the District Court made a final judgment on September
2, 2015{14-01428; Doc. 22 / 15-00377; Doc. 25}. The
next day, the Junks appealed those decisions to the
United States Court of Appeals for the Sixth Circuit
(“Sixth Circuit”) and moved to stay further proceedings
in the Bankruptcy Case pending the appeal {15-3986;
Doc. 1}. The Sixth Circuit denied the Junks’ motion to

3
The Bankruptcy Court found that, not only had continuing losses
resulted in a diminution of the estate, but there was also no
reasonable likelihood of rehabilitation, that the Junks failed to
make property insurance payments with respect to the South
Carolina property, failed to pay post-petition real estate taxes,
failed to make required payments of quarterly fees to the United
States Trustee (“UST”), that the Junks sold property of the estate
and obtained post-petition loans without obtaining the requisite
Court approval, and that the Junks exhibited a lack of candor to
the Bankruptcy Court. In addition, the Bankruptcy Court found
that the Junks’ monthly operating reports contained a number of
material misrepresentations regarding property insurance and
real estate taxes, and that the reports improperly characterized as
gross income from salary and wages tens of thousands of dollars
they had received as gifts or loans, or from the sale of property of
the estate.
 6

stay pending the appeal on November 17, 2015 {15-

3986; Doc. 15-2}, affirmed the decision of the District
Court on May 19, 2016 {15-3986; Doc. 21-2}, and denied
the Junks’ petition for rehearing on July 8, 2016. {15-
3986; Doc. 25-2}.
On September 13, 2016, the Chapter 7 Trustee filed
an application to compromise with CitiMortgage {13-
55139; Doc. 201}, which he amended on October 26,
2016 {13-55139; Doc. 207}. During this timeframe, the
Sixth Circuit considered and rejected the Junks’ Joint
Petition for a Writ of Prohibition, noting that: “… upon
the bankruptcy court’s approval of a compromise, the
Junks may appeal.” {16-4122; Doc. 4-2}.
On April 19, 2017, the Bankruptcy Court entered its
Opinion and Order on Amended Motion of Chapter 7
Trustee for an Order (1) Authorizing and Approving the
Compromise of Claims with CitiMortgage, Inc., Its
Affiliates, Predecessors or Successors in Interest,
(2) Authorizing and Approving the Transfer of Real
Estate Located at 181 Oldfield Way, Bluffton, South
Carolina and Lot 50 Adjacent Thereto to CitiMortgage,
Inc., and (3) Enjoining the Debtors from Violating the
Terms of the Compromise and Sale (the “Opinion”)
{Case No. 13-55139; Doc. 223; In re Junk, 566 B.R. 897
(S.D. Ohio Bankr. 2017)}.
In its Opinion, the Bankruptcy Court specifically
determined that CitiMortgage qualified as a “good faith
purchaser” within the meaning of § 363(m) of the
Bankruptcy Code. {Id.} On April 24, 2017, the
Bankruptcy Court entered its Order Granting
Amended Motion of Chapter 7 Trustee for an Order
(1) Authorizing and Approving the Compromise of
Claims with CitiMortgage, Inc., Its Affiliates,
 7

Predecessors or Successors in Interest, (2) Authorizing

and Approving the Transfer of Real Estate Located at
181 Oldfield Way, Bluffton, South Carolina and Lot 50
Adjacent thereto to CitiMortgage Inc., and
(3) Enjoining the Debtors from Violating the Terms of
the Compromise and Sale (the “Sale Order”) {Case
No. 13-55139; Doc. 225}. The Sale Order incorporated
the Opinion in its entirety4.
The Junks appealed the Sale Order and elected to
have the appeal heard by the Bankruptcy Appellate
Panel of the Sixth Circuit (the “BAP”). {Case No. 13-
55139; Doc. 227}. Both the Bankruptcy Court and the
BAP denied the Junks’ motions for stay of proceedings
pending appeal. {Case No. 13-55139; Doc. 231; Case
No. 17-8016; Doc. 4-2}. On July 13, 2017, the BAP

4
The Junks have repeatedly defied Paragraph 11 of the Sale
Order, which contained the following protection for CitiMortgage
(identified as “CMI” therein) from further vexatious litigation
tactics by the Junks: “The Debtors, and all persons, parties or
entities, claiming by, through or under them, are hereafter
enjoined from taking actions of any type, kind or character, against
CMI and/or the Releasees based on claims of any type, kind or
character that were resolved by or through the Agreement,
including, but not limited to, all claims arising out of, or relating
directly or indirectly, to the mortgage loan evidenced by the Note
and Mortgage (including any qualified written requests, notices of
error, or requests for information under the Real Estate
Settlement Procedures Act and/or the Truth In Lending Act), the
Real Estate, the Rescission Claim, the NY Claim, the CFPB Claim,
the Opt-Out Claims, the South Carolina Litigation, the Adversary
Proceeding, the Bankruptcy Case, any claims reserved by the
Trustee, and any claims that were asserted by, or could have been
asserted by, the Debtors in any other forum or before any other
court or tribunal, other than a proceeding to enforce the terms of
this Order in this Court.”
 8

dismissed the appeal as moot pursuant to 11 U.S.C.

§ 363(m). {Case No. 17-8016; Doc. 14-2}. On August 14,
2017, the Junks filed a Writ of Mandamus in the Sixth
Circuit, which was denied on October 23, 2017. {Case No.
17-3831; Doc. 3-1}. However, the Junks failed to appeal
the BAP’s July 13, 2017 ruling to the Sixth Circuit.
JURISDICTIONAL STATEMENT
The BAP’s July 13, 2017 ruling that its review of
the Sale Order was moot pursuant to 11 U.S.C.
§ 363(m) was a final, appealable order. Although the
Junks did not appeal the BAP decision to the Sixth
Circuit, they could have. Their failure to pursue that
available remedy does not render it inadequate. The
remedy of mandamus is a drastic one to be invoked
only in extraordinary situations where the petitioners
can show a clear and indisputable right to the relief
sought. Will v. Calvert Fire Ins. Co., 437 U.S. 655, 662
(1978). It is not available when petitioners have (or in
this case had) “adequate alternative means to obtain
the relief they seek.” In re Am. Med. Sys., Inc., 75 F.3d
1069, 1078 (6th Cir. 1996) (quoting Mallard v. U.S. Dist.
Ct., 490 U.S. 296, 309 (1989)). It is also not “intended to
substitute for appeal after a final judgment.” Gooch v.
Life Inv’rs Ins. Co. of Am. (In re Life Inv’rs Ins. Co. of
Am.), 589 F.3d 319, 323 (6th Cir. 2009).
Moreover, lack of standing is also a jurisdictional
bar to appellate review. Harker v. Troutman (In re
Troutman Enters., Inc.), 286 F.3d 359, 364 (6th Cir.
2002). A reviewing court may raise the issue of
standing sua sponte at any time because it is “under an
independent obligation to police [its] own jurisdiction.”
S.E.C. v. Basic Energy & Affiliated Res. Inc., 273 F.3d
657, 665 (6th Cir. 2001); accord In re Brown, 13-8037,
 9

2014 Bankr. LEXIS 1018, 2014 WL 997340 (B.A.P. 6th

Cir. Mar. 17, 2014). “Appellate standing in bankruptcy
cases is more limited than Article III standing or the
prudential requirements associated therewith.” Id. In
order to have standing to appeal a bankruptcy court
order, an appellant must be a “person aggrieved” by the
order. Fid. Bank, Nat’l Ass’n v. M.M. Group, Inc., 77
F.3d 880, 882 (6th Cir. 1996). This doctrine limits
standing to those persons who “have been directly and
adversely affected pecuniarily by the order . . . . Only
when the order directly diminishes a person’s property,
increases his burdens, or impairs his rights will” an
appellant have standing to appeal. Id.; Travelers Cas.
& Sur. v. Corbin (In re First Cincinnati, Inc.), 286 B.R.
49, 51 (B.A.P. 6th Cir. 2002) (citations omitted). The
burden of proving that a party is a “person aggrieved”
is on the party asserting standing to pursue an appeal.
Fid. Bank, 77 F.3d at 882. Courts rarely find that a
Chapter 7 debtor is a “person aggrieved” by a
bankruptcy court order regarding the disposition of
property of the estate because the debtor no longer
holds any interest in the estate’s property unless
exempted or abandoned. Monus v. Lambros, 286 B.R.
629, 634 (Bankr. N.D. Ohio 2002).
The commencement of a bankruptcy case creates an
“estate” consisting of all legal or equitable interests of
the debtor in property. 11 U.S.C. § 541(a)(1)5. Upon

5
Subsection 541(a)(1) of the Bankruptcy Code defines property of
the estate as “all legal or equitable interests of the debtor in
property as of the commencement of the case.” This includes all
choses in action and claims by the debtor against others. See, e.g.,
Meritage Homes Corp. v. JPMorgan Chase Bank, N.A., 474 B.R.
526, 559 (Bankr. S.D. Ohio 2012).
 10

their filing of a voluntary petition for relief under

Chapter 11, the Junks became “debtors-in-possession.”
11 U.S.C. § 1101. As debtors-in-possession, the Junks
retained possession and control of the estate while
undergoing reorganization under Chapter 11. 11
U.S.C. §§ 1107 & 1108. As debtors-in-possession, the
Junks would be expected to perform many of the
functions that a trustee performs under a Chapter 7
case, 11 U.S.C. § 1107(a), and would remain in the role
of debtors-in-possession until or unless certain events
occur. One of these events is the conversion of their
Chapter 11 case to one under Chapter 7. 11 U.S.C.
§ 348.
Upon conversion of a Chapter 11 case to one under
Chapter 7, a trustee is appointed to administer the case
and liquidate the assets of the estate, 11 U.S.C. § 704,
that is, assets which have not been “exempted” by the
debtor (excepted/permitted to be withdrawn from the
estate), 11 U.S.C. § 522, or “abandoned” by the trustee
(excluded from the estate/given up), 11 U.S.C. § 554.
The primary role of the Chapter 7 trustee is to gather
and liquidate assets of the bankruptcy estate. That role
includes pursuing and settling any causes of action
which belonged to the debtor at the commencement of
the case. By necessity, the advent of the Chapter 7
estate and the appointment of the Chapter 7 trustee
divest the Chapter 7 debtor of all right, title and
interest in nonexempt property of the estate at the
commencement of the case. Since title to property of
the estate no longer resides in the Chapter 7 debtor,
the debtor typically lacks any pecuniary interest in the
Chapter 7 trustee’s disposition of that property.
Spenlinhauer v. O’Donnell, 261 F.3d 113, 118 (1st Cir.
 11

2001) (citing 11 U.S.C. §§ 541(a) and 704(a)); see also

11 U.S.C. § 323.
Here, when Myron Terlecky was appointed as the
Chapter 7 Trustee of the Junks’ bankruptcy estate on
January 14, 2015, he became the only party with
standing to pursue any possible causes of action
concerning the South Carolina property. 11 U.S.C.
§ 541(a); In re Bailey, 421 B.R. 841 (Bankr. N.D. Ohio
2009); Folz v. Bancohio Nat’l Bank, 88 B.R. 149, 150
(Bankr. S.D. Ohio 1987); accord United States v.
Kurlemann, No. 1:10-CR-14-3, 2010 U.S. Dist. LEXIS
94570, 2010 WL 3743648 (S.D. Ohio Sept. 10, 2010).
Absent an abandonment of the South Carolina property
by the Chapter 7 Trustee, which has not occurred in
this case, the Junks no longer have any right or
authorization to pursue litigation relating to the South
Carolina property. See, e.g., Darrah v. Franklin Credit
(In re Darrah), 337 B.R. 313 (Bankr. N.D. Ohio 2005);
S.E.C. v. Basic Energy & Affiliated Res. Inc., 273 F.3d
657, 665 (6th Cir. 2001). Accordingly, any property
belonging to the Junks at the commencement of their
Chapter 11 case became under the control of the
Chapter 7 Trustee upon conversion. The Junks now
lack standing to seek appellate review.
SUMMARY OF THE ARGUMENT
Although the Junks did not appeal the BAP’s
July 13, 2017 decision to the Sixth Circuit, they could
have. A writ of mandamus is not intended as a
substitute for appeal after a final judgment. Moreover,
upon conversion of the Junks’ bankruptcy case, the
Chapter 7 Trustee became the only party with standing
to pursue any possible causes of action concerning the
South Carolina property. Rather than litigate, the
 12

Chapter 7 Trustee exercised his express authority

under Rule 9019(a) of the Federal Rules of Bankruptcy
Procedure to seek a compromise of all claims involving
the South Carolina property. But even if the Chapter
7 Trustee wanted to pursue such claims (including
rescission) against CitiMortgage, the purported claims
have already been considered and dismissed with
prejudice in the South Carolina foreclosure case.
ARGUMENT
Because the Chapter 7 Trustee had the express
authority under Rule 9019(a) of the Federal Rules of
Bankruptcy Procedure to seek a compromise or
settlement of claims involving the South Carolina
property, this is not a situation where the Bankruptcy
Court exceeded its jurisdiction. The purpose of a
compromise “is to allow the trustee and the creditors to
avoid the expenses and burdens associated with
litigating sharply contested and dubious claims.” Bard
v. Sicherman (In re Bard), 49 F. App’x 528, 530 (6th
Cir. 2002) (quoting In re A & C Props., 784 F.2d 1377,
1380!81 (9th Cir. 1986)). “The bankruptcy court has
significant discretion to approve . . . a proposed
settlement.” Rankin v. Lavan (In re Rankin), 438 F.
App’x 420, 426 (6th Cir. 2011). Because the Junks do
not have a clear and indisputable right to relief, this
Court should dismiss their petition for a writ of
mandamus.
 13

A. The Bankruptcy Court Had Subject Matter

Jurisdiction and Constitutional Authority
to Approve the Settlement Between the
Chapter 7 Trustee and CitiMortgage.
Because this is a core proceeding, see 28 U.S.C.
§ 157(b)(2)(A), (N) and (O), there is no doubt the
Bankruptcy Court had subject matter jurisdiction to
hear and determine whether to approve the proposed
settlement under 28 U.S.C. §§ 157 and 1334. The
Bankruptcy Court also had the constitutional authority
to enter a final order. For even after Stern v. Marshall,
564 U.S. 462 (2011), bankruptcy courts have the
constitutional authority to enter final orders approving
settlements under Rule 9019(a) of the Federal Rules of
Bankruptcy Procedure. See Realan Inv. Partners,
LLLP v. Meininger (In re Land Res., LLC), 505 B.R.
571, 580-82 (M.D. Fla. 2014); In re Ambac Fin. Grp.,
Inc., 457 B.R. 299, 308 (Bankr. S.D.N.Y. 2011), aff’d,
2011 U.S. Dist. LEXIS 149610, 2011 WL 6844533
(S.D.N.Y. Dec. 29, 2011), aff’d, 487 F. App’x 663 (2d
Cir. 2012).
Yet according to the Junks, the Bankruptcy Court
lacked subject matter jurisdiction and constitutional
authority to approve the settlement because issues
remained to be adjudicated in the South Carolina state
courts, including the issue of whether certain loan
documents are enforceable. This argument is based on
a fundamental misunderstanding of what happens
when a bankruptcy court approves a settlement under
Rule 9019 of the Federal Rules of Bankruptcy
Procedure.
First, the approval of a settlement by a bankruptcy
court in no way requires or constitutes an adjudication
 14

of the merits of the claims being settled. See, e.g.,

Ashton Revocable Living Tr. v. Mukamal (In re Palm
Beach Fin. Partners, L.P.), 527 B.R. 518, 523 (S.D. Fla.
2015); Kenton Cty. Bondholders Comm. v. Delta Air
Lines, Inc. (In re Delta Air Lines, Inc.), 374 B.R. 516,
526 (S.D.N.Y. 2007), aff’d, 309 F. App’x 455 (2d Cir.
2009); Ambac Fin. Grp., 457 B.R. at 308. Further, the
constitutional authority to enter a final order also
extends to the Chapter 7 Trustee’s request to sell
property of the estate under 11 U.S.C. § 363(b) of the
Bankruptcy Code. See Watson v. LLP Mortg., Ltd (In
re Watson), No. 3:2011-0012, 2016 U.S. Dist. LEXIS
77684, 2016 WL 3349666, at *8-10 (D.V.I. June 15,
2016); In re Motors Liquidation Co., 522 B.R. 13, 27
(Bankr. S.D.N.Y. 2014); Ritenour v. Osborne, No. 10-
60274-KMM, 2012 U.S. Dist. LEXIS 35967, 2012 WL
912947, at *2 (S.D. Fla. Mar. 16, 2012). Accordingly,
the Junks’ petition for a writ of mandamus must be
rejected.
B. The Rescission Argument Was Already
Considered and Rejected in the
Foreclosure Case.
Even if the Court were to find that the Junks have
standing to rehash their rescission arguments, on April
24, 2012, the Master-in-Equity in the South Carolina
foreclosure case entered an order dismissing with
prejudice the counterclaims asserted by the Junks
against CitiMortgage for fraud, negligent
misrepresentation, breach of contract, civil conspiracy,
slander of title, and rescission under the Truth in
Lending Act. {13-55139; Doc. 104; Page 27.} (Emphasis
supplied.) The Master-in-Equity flatly rejected the
rescission argument for three separate and
 15

independent reasons: (a) the Junks did not tender the

loan proceeds (or allege that they had the ability to
tender the loan proceeds); (b) the claim was time-
barred because the attempted rescission was not made
within three business days of the loan closing6; and
(c) the claim was time-barred because the statute of
limitations for a damages claim under TILA is one
year. {Id.} Accordingly, Jesinoski v. Countrywide
Home Loans, Inc., 574 U.S. ___, 135 S. Ct. 790, 190 L.
Ed. 2d 650 (2015) (addressing the manner in which a
borrower must assert a rescission claim – written
notice versus a lawsuit) has no application to the time-
barred claim asserted by the Junks in the South
Carolina litigation.
While the Bankruptcy Court did find that the Junks
sent a notice purporting to rescind the note and
mortgage, see Stay Relief and Abstention Order, 512
B.R. at 589, 592, the Bankruptcy Court also found that
the South Carolina Master-in-Equity had dismissed the
Junks’ rescission claim under TILA with prejudice for
three reasons: (1) because the claim was “barred by the
applicable statute of limitations[;]” (2) because “the
Junks had failed to state a claim for relief [in that] they
had ‘failed to plead or otherwise allege in the
counterclaims that they possessed the ability to tender
the loan proceeds as required to maintain a TILA
rescission counterclaim’ but instead were ‘seek[ing] to
avoid their mortgage obligation altogether while
keeping the house[;]’” and (3) because “the Junks did
not exercise the right, if any, to rescind in a timely

6
The three year period for rescission only applies if “material
disclosures” were not given – and there was no allegation that
“material disclosures” were not given.
 16

fashion.” Id. at 601, 608. (“[I]n his order dismissing

the counterclaims against CitiMortgage the Master-in-
Equity ruled that the Junks failed to make a timely
rescission demand.”).
In its Stay Relief and Abstention Order, the
Bankruptcy Court correctly determined that state law
issues predominated over bankruptcy issues, that the
disputed property is located in South Carolina, and
that the courts of that state have already invested
significant resources in the litigation between
CitiMortgage and the Junks, among others, since 2009.
Moreover, the Bankruptcy Court determined that
granting relief from the automatic stay and abstaining
from deciding the issues to be decided by the state
courts in South Carolina would promote judicial
economy, and litigating those issues in South Carolina
should impose relatively few costs on creditors while
not hindering the efficient administration of the estate.
Finally, the Bankruptcy Court correctly determined
that this appears to be a classic case of forum shopping
by the Junks, who after receiving one adverse ruling
after another in the state courts of South Carolina,
were attempting to rehash in the Adversary Proceeding
the very same arguments they had been making in the
South Carolina court system since 2009.
Likewise, throughout the multitude of appeals
involving this luxury home, the District Court, the
BAP, and the Sixth Circuit have all correctly
determined that this protracted litigation orchestrated
by the Junks should come to an end.
 17

CONCLUSION
For the foregoing reasons, CitiMortgage respectfully
requests that the petition for writ of mandamus be
denied.
Respectfully submitted,

John B. Pinney, Esq.

Counsel of Record
Graydon Head & Ritchey LLP
312 Walnut Street, Suite 1800
Cincinnati, OH 45202
Telephone: (513) 629-2730
Facsimile: (513) 651-3836
Email: jpinney@graydon.law

Counsel for Respondent

CitiMortgage, Inc.