Petition for Writ of Certiorari — Leander Bacon, et ux., Petitioners v. United States, et al.

No. _______

In The

Supreme Court of the United States

LEANDER BACON AND IRIS I. DICK BACON,

Petitioners,

v.

UNITED STATES OF AMERICA;

NAVY FEDERAL CREDIT UNION (“NAVY FCU);

COMMONWEALTH ASSET SERVICES, LLC,

Respondents.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Fourth Circuit

PETITION FOR WRIT OF CERTIORARI

HENRY W. MCLAUGHLIN (VSB NO. 07105)

THE LAW OFFICE OF HENRY MCLAUGHLIN, P.C.

707 EAST MAIN STREET, SUITE 1050

RICHMOND, VIRGINIA 23219

Tel. (804) 205-9020

Facsimile (804) 205-9029

Email: henry@mclaughlinvalaw.com

Counsel of Record for Petitioners

LANTAGNE LEGAL PRINTING

801 East Main Street Suite 100 Richmond, Virginia 23219 (800) 847-0477

i

QUESTIONS PRESENTED

This case has involved an effort by a wounded

combat veteran and his wife seeking (a) an

injunction against eviction based on a disputed

foreclosure of their home; and (b) rescission of the

foreclosure and restoration to them of ownership of

the home. Subsequent to the decision by the Fourth

Circuit Court of Appeals (“the Court of Appeals”)

below, (a) has become moot because one of the

appellees, Navy Federal Credit Union, having

previously obtained title from the United States of

America, through the Veterans Administration (“the

VA”), executed a deed to the home to an investor,

which has filed an unlawful detainer summons

against the wounded combat veteran, which is now

pending in the Stafford County District Court.

There remain no grounds for the petitioners to seek

an injunction against eviction in this case because

none of the appellees in this case now claims

ownership of the home. Therefore, the appealable

issue in this petition for certiorari is whether there

are grounds to set aside the foreclosure.

The questions for consideration by this Court are

as follows:

1. Whether the Bacons’ complaint in this case

seeking inter alia restoration to them of title to their

home, has constituted an “ejectment” action.

2. If the Bacons’ complaint is an “ejectment” action,

whether their complaint is free of issue preclusion

(by reason of eviction orders by Virginia state courts)

because a Virginia statute provides that such

ii

eviction orders do not result in issue preclusion in

any later ejectment case.

3. If the Bacons complaint is free of issue

preclusion, whether their complaint is nevertheless

barred by the Rooker-Feldman doctrine because

their complaint, which they were required to bring in

federal court because the opposing claimant of title

to their home at that time was the VA, sought both

rescission of foreclosure and restoration of their title

and also an injunction against eviction of them by

the VA pursuant to the state eviction order.

iii

TABLE OF CONTENTS

QUESTIONS PRESENTED ........................................ i

TABLE OF AUTHORITIES ...................................... iv

OPINIONS AND ORDERS BELOW .......................... 1

JURISDICTION .......................................................... 1

STATUTORY PROVISIONS INVOLVED ................. 2

STATEMENT OF THE CASE .................................... 2

REASONS FOR GRANTING THE PETITION ......... 8

I.

THE BACONS’ COMPLAINT WAS

AN EJECTMENT ACTION AND

THEREFORE NOT BARRED BY

ISSUE PRECLUSION ................................. 8

II.

A WOUNDED COMBAT VETERAN

SHOULD NOT BE DENIED THE

OPPORTUNITY OPEN TO A

NON-VETERAN BY REASON OF

ROOKER-FELDMAN ................................ 10

CONCLUSION .......................................................... 13

iv

TABLE OF AUTHORITIES

CASES

American Reliable Ins. Co. v. Stollwell,

336 F. 3d 311, 316 (4th Cir. 2003) ............................. 11

Bourdelais v. JPMorgan Chase Bank, N.A.,

2012 U.S. Dist. LEXIS 158508

(E.D. Va. Nov. 5, 2012)................................................ 4

Brian D. Parrish and Teresa D. Parrish

v. Federal National Mortgage Association,

292 Va 44; 787; S.E. 2d 116 (June 16, 2016) ......... 6

District of Columbia Court of Appeals

v. Feldman, 460 U.S. 462, 482 (1983) .................... 7

Rooker v. Fidelity Tr. Co,

263 U.S. 413 (1923) ................................................. 7

Wachovia Bank v. Ranson Tyler Chevrolet,

73 Va. Cir. 143 (2007) ................................................. 4

Wood v. Orange County,

715 F. 2d 1543 (11th Circuit 1983) ...................... 11, 12

STATUTES

28 U.S.C. § 1254(1)...................................................... 1

28 U.S.C. § 1291 .......................................................... 1

38 U.S.C. § 36.4350 .........................................................3

Title 38 of the U.S. Code ............................................. 2

Va. Code Section 8.01-130 .................................. 2, 8, 9

Va. Code Section 8.01-132 .......................................... 9

1

PETITION FOR A WRIT OF CERTIORARI

Petitioners Leander Bacon and Iris I. Dick Bacon

(“the Bacons”) respectfully submit this petition for a

writ of certiorari to review the judgment of the

United States Court of Appeals for the Fourth

Circuit (“the Court of Appeals”)

OPINIONS AND ORDERS BELOW

The Court of Appeals issued an unpublished per

curium opinion (App. 1) on December 13, 2021 and

an Order on the same day (App. 3), and on February

22, 2022 issued an order denying the Bacons’

petition for rehearing en banc App. 24. The Court of

Appeals affirmed an order by the United States

District Court for the Eastern District of Virginia

(“the District Court”) which is at App. 4, which

dismissed the Bacons’ complaint with prejudice.

JURISDICTION

The Bacons’ complaint had to be filed in federal

court because their complaint had to join the

Veterans Administration (“the VA”) by suing the

United States of America. The District Court entered

a final order on June 12, 2020. The Bacons timely

appealed on July 12, 2020. The court of appeals had

jurisdiction to review the district court’s final

judgment pursuant to 28 U.S.C. § 1291. The court of

appeals filed it’s per curium opinion on December 13,

2021 and its order based on that opinion also on

December 13, 2021 affirming the U.S. District Court.

The court of appeals denied Petitioner’s timely

petition for rehearing en banc on February 22, 2022.

This Court’s jurisdiction rests on 28 U.S.C. § 1254(1).

2

STATUTORY PROVISIONS INVOLVED

Because one of the defendants was the VA, sued

as the United States of America, this case had to be

filed in federal court, although it was based on

Virginia contract law, which incorporated (as a

matter of state law) Title 38 of the U.S. Code in

effect at the time of the execution of the deed of trust

on the Bacons’ home, and the regulations of that

statute. The only other statute involved in this case

is a Virginia state statute, Va. Code Section 8.01130.

STATEMENT OF THE CASE

The Bacons filed their complaint in the District

Court seeking to prevent eviction based on a

disputed foreclosure and seeking rescission of their

foreclosure and return of ownership of their home to

them. [Joint Appendix (“JA”) before the Court of

Appeals, pp. 5-42]1 (The facts set forth hereinafter

are not in dispute because this case was dismissed

by the District Court, which was affirmed by the

Court of Appeals on motions to dismiss in which, for

purpose of such motions, the facts pled by the

Bacons were taken as correct (although not legal

conclusions). The Bacons pled those facts in the

alternative.

The facts pled by them and the

procedures involved in litigation between the parties

in this case are set forth below as follows:

1

References to the Joint Appendix, (stated herein after as “JA”

followed by the appropriate page(s), is to the Joint Appendix

before the Court of Appeals in this case, of record in the ECF

system of that Court in Case No. 20-1774 at Dkt 18.

3

The Bacons pled that in March 2014, they

entered into a VA mortgage loan, insured by the VA,

which included the following provision:

If the indebtedness secured hereby be

guaranteed or insured under Title 38, United

States Code, such Title and Regulations

issued thereunder and in effect on the date

hereof, shall govern the rights, duties, and

liabilities of Borrower and Lender.

-- JA 6,7 79; Compl. ¶ ¶ 7, 10, 11, Exh. B, p. 1 of

3 of VA Guaranteed Loan and Assumption Policy

Rider – VA GUARANTEED LOAN COVENANT)

In March 2014, one of the regulations to Title 38

of the U.S. Code was (and remains) 38 U.S.C. §

36.4350 providing, in part, the following:

The holder of a loan guaranteed or insured by

the Secretary shall develop and maintain a

loan servicing program which follow accepted

industry standards for servicing of similar

type conventional loans.

The Veterans Administration (“the VA”) prior to

a March 20, 2017 foreclosure of the Bacons’ home,

sent to Navy Federal Credit Union (“Navy Federal”)

a request to postpone the foreclosure. (JA 7, 40;

Compl. ¶ 17, Exh. C) The Bacons pled that the VA

assured Leander Bacon prior to the foreclosure that

it would request that Navy Federal postpone the

foreclosure. (JA 7, Compl. ¶16). Navy Federal

contended that if it had received that request prior

to the foreclosure, it would have stopped the

foreclosure ( JA 7, 41, Compl. ¶ 19. Exh. D) but did

4

not receive it until after the foreclosure, at which

Navy Federal made the high bid (Id.), for an amount

the Bacons averred was substantially less than the

value of the home. (JA 8, Compl. ¶ 22). The Bacons

pled alternative grounds for rescission of the

foreclosure, as follows:

(A) Navy Federal actually received the VA

request for foreclosure prior to the

foreclosure so that, by going forward with

the foreclosure anyway, Navy Federal

breached

nationally

accepted

lending

practices thereby breaching the terms of the

deed of trust which incorporated a VA

regulation requiring the owner of the loan to

comply with accepted industry standards.

(JA 7, 8, 9, Compl. ¶ ¶ 11, 20, 22, 24, 25)

(B) Alternatively, if the VA did not send the

request for postponement in time for Navy

Federal to receive it prior to the foreclosure,

the VA breached an implied covenant of good

faith and fair dealing incorporated into any

contract by Virginia common law not to act

in such a way as to deprive the other party

to a contract of the essential rights of the

contract. (JA 11, Compl. ¶ 33)2 The Bacons

2 The issue of whether the Bacons pled a claim of breach of an

implied covenant of good faith and fair dealing was not decided

by the Court of Appeals and therefore is not dealt with in detail

in this petition. However, there is case law construing Virginia

state law holding that, in a proper case, Virginia common law

recognizes an implied covenant of good faith and fair dealing.

See In Bourdelais v. JPMorgan Chase Bank, N.A., 2012 U.S.

Dist. LEXIS 158508 (E.D. Va. 2012).; Wachovia Bank v. Ranson

Tyler Chevrolet, 73 Va. Cir. 143 (2007)

5

averred this alternative claim of breach of

an implied covenant of good faith and fair

dealing on grounds that, in the alternative

to (A) above, the VA assured Leander Bacon

prior to the foreclosure it would request a

postponement of foreclosure, yet did not

make such request in time for it to be

received by Navy Federal prior to the

foreclosure. (JA 11, Compl. ¶ 34).

Having made the high bid, Navy Federal

assigned that bid to the VA, in return for payment of

the VA insurance on the mortgage lien, so that a

deed based on the foreclosure (executed under

Virginia’s non-judicial foreclosure provisions) was

made to the VA rather than to Navy Federal. (JA 8,

Compl. ¶ 23)

Taking into consideration the above issues

related to the foreclosure, the VA, Navy Federal, and

the substitute trustee who conducted the foreclosure

filed suit in state court seeking rescission of the

foreclosure, but later non-suited that case. (JA 9;

Comp. ¶ ¶ 26, 27)

Subsequently the VA filed an unlawful detainer

summons against Leander Bacon in the General

District Court of Stafford County, Virginia (“the

general district court”)

(JA 9, Compl. ¶ 24)

Although Leander Bacon defended against eviction

on the grounds set forth in (A) and (B) above, the

general district court entered an order awarding the

VA possession of the home. (Id.) Leander Bacon

appealed to the Circuit Court of Stafford County,

Virginia (“the state circuit court”) and pled that that

court lacked jurisdiction on grounds its appellate

6

jurisdiction was the same as the jurisdiction of the

general district court, which he contended lacked

jurisdiction on grounds he had pled a bona fide

challenge to the validity of the foreclosure, which he

contended deprived both the general district court

and the state circuit court of jurisdiction under the

holding of the Virginia Supreme Court in Brian D.

Parrish and Teresa D. Parrish v. Federal National

Mortgage Association, 292 Va 44; 787; S.E. 2d 116

(2016). (JA 9-10, ¶ 28) The state circuit court

denied that motion, holding that Leander Bacon

had not pled a bona fide challenge to the VA’s

title, and, on that basis, entered an order

awarding possession of the home to the VA. (JA

10, Compl. ¶ 25) Leander Bacon appealed to the

Virginia Supreme Court, which denied appeal and

denied a petition to rehear that denial. (JA 7,

Compl. ¶ 27)

The Bacons filed this case in the U.S. District

Court for the Eastern District of Virginia,

Alexandria Division (“the District Court”), seeking

rescission of the foreclosure and injunction

against eviction. (JA 5-42) In Count One of their

complaint, the Bacons pled that Navy Federal

received a VA request to postpone the foreclosure

but did not, thereby breaching a contract right of

the Bacons that Navy Federal comply with

accepted lending practices. (JA 7-10, 37; Compl.

Count One, Exh. B) In Count Two of their

complaint, the Bacons pled (in the alternative)

that the VA breached an implied covenant of good

faith and fair dealing by telling Leander Bacon it

was seeking postponement of foreclosure yet sent

such request so late it was not received before the

7

foreclosure. (JA 10-12; Compl. Count Two) In

both counts, the Bacons sought (a) an injunction

to prevent enforcement of the state court eviction

order; (b) rescission of the foreclosure; and (c)

return of legal title to the home to them. JA 10,

12, Compl. ¶ ¶ 30. 38 Concl. (Prayer for Relief). The

Bacons pled that the state court eviction decisions

were not issue preclusion because of a Virginia

statute, Va. Code Section 8.01-130. (JA 10, Compl.

¶ 27)

The District Court held that the complaint

was barred by the Rooker-Feldman doctrine (App.

3-22) (citing District of Columbia Court of Appeals,

v Feldman, 460 U.S. 462, 482 (1983) and Rooker v.

Fidelity Tr. Co, 263 U.S. 413 (1923). (App. 9-13)

The District Court also cited other grounds for

dismissal of the complaint. (App. 13-22)

On appeal, the Appeals Court affirmed based

on an unpublished per curium opinion which only

stated that the District Court had been correct as

to the Rooker Feldman doctrine. (App. 2) The

Bacons filed a petition for rehearing en banc,

which the Court of Appeals denied on February

22, 2022 (App. 24)

This case, at bottom, asks this Court to hold that

a wounded combat veteran should not be denied the

opportunity to file an affirmative challenge to a

contested foreclosure where required to file suit in

federal court because the VA (part of the federal

government) sought to lock him out of his home

where a non-veteran would be able to file such a

suit, the only difference being that the wounded

veteran must file in federal court (because suing the

8

VA) whereas a non-veteran could file in state court

suing a private foreclosing creditor.

REASONS FOR GRANTING THE PETITION

I. THE BACONS’ COMPLAINT WAS AN

EJECTMENT ACTION AND

THEREFORE NOT BARRED BY ISSUE

PRECLUSION

Va. Code Section 8.01-130, in effect at all time

relevant to this case, provides as follows:

Judgment not to bar action of trespass

or ejectment.—No judgment in an action

brought under the provisions of this article

shall bar any action of trespass or ejectment

between the same parties, nor shall any such

judgment or verdict be conclusive, in any

future action, of the facts therein found.

That statute applied to unlawful detainer actions

brought for the first time in a Virginia general

district court (a court not of record in Virginia). The

eviction action against Leander Bacon was originally

brought in the General District Court of Stafford

County, Virginia, was upheld on appeal by the

Circuit Court of Stafford County, Virginia after

which the Virginia Supreme Court denied appeal.

Consequently, Va Code Section 8.01-130 applies to

the eviction orders based on the unlawful detainer

summons brought by the VA against Leander Bacon.

It follows that if the Bacons’ complaint in this

case is an ejectment action, under the provisions of

9

Va. Code Section 8.01-130, their complaint is not

barred by issue preclusion.

As set forth by the Bacons below, the word

“ejectment” on the Internet has included a case to

seek to recover title to land. Va Code Section 8.01132 provides as follows:

No person shall bring such ejectment action

unless he has, at the time of commencing it,

a subsisting interest in the premises claimed

and a right to recover the same, or to recover

the possession thereof, or some share,

interest or portion thereof.

The language in that statute indicates

alternatives to the right to ejectment, one of such

alternatives being a right to possession, and a

different alternative being a right to recover the

property (not by possession) which supports a

conclusion that ejectment can include a suit to

recover title.

On grounds that their complaint in this case was

an ejectment action to recover title to their home, the

Bacons submit Va. Code Section 8.01-130 applies to

this case and, therefore, their complaint has not

been issue precluded by the eviction judgment

against Leander Bacon in the unlawful detainer case

initiated in the Stafford County General District

Court, with the same result in the Stafford County

Circuit Court, with appeal from that court denied by

the Virginia Supreme Court.

10

II. A WOUNDED COMBAT VETERAN

SHOULD NOT BE DENIED THE

OPPORTUNITY OPEN TO A NONVETERAN BY REASON OF ROOKERFELDMAN

In the courts below, the Bacons made the point,

not contested by the appellees, that when they filed

their complaint in this case, they were not able to

file an affirmative lawsuit seeking rescission of the

contested foreclosure of their home in state court,

rather had to file such suit in federal court because a

necessary defendant was the VA, a part of the

United States government, which had obtained an

eviction order against them, which, absent an

affirmative rescission lawsuit seeking an injunction

and foreclosure rescission, could result in a lock-out

of Leander Bacon, a wounded combat veteran, from

his home.

The appellees countered with two arguments

relevant to the Rooker-Feldman doctrine:

(A) That the state court eviction orders

constituted issue preclusion and that, as a

result, the Bacons were precluded from

contesting eviction by an affirmative lawsuit

seeking injunctive relief and rescission.

(B) That even if issue preclusion did not apply,

Rooker-Feldman precluded the District

Court from granting the Bacons any relief

because their complaint sought in federal

court to prevent enforcement of eviction

based on a state court decision upheld on

appeal.

11

The Bacons submit that Section I of their

argument above rebuts (A) above. As to (B) above,

the Bacons submit that the position taken by the

appellees, upheld by the District Court and the

Court of Appeals, should be overruled by this Court.

The District Court’s Order cited the Appeals

Court on Rooker-Feldman as follows:

‘[u]nder the Rooker-Feldman doctrine, a

‘party losing in state court is barred from

seeking what is substance would be

appellate review of state judgments in a

United States district court. American

Reliable Ins. Co. v. Stollwell, 336 F. 3d 311,

316 (4th Cir. 2003) (citing cases) This is so

because (1) Congress … vested the authority

to review state court judgments in the

United States in the United States Supreme

Court alone” and (2) “Congress has

empowered the federal district courts to

exercise only original jurisdiction.” (citing

case).

-- App. 10

In Wood v. Orange County, 715 F. 2d 1543 (11th

Circuit 1983), the Court of Appeals for the Eleventh

Circuit held that a litigant’s inability to raise a

federal issue in a state court proceeding created an

exception to the Rooker-Feldman doctrine and, as a

result, that doctrine did not take away federal court

jurisdiction to consider such issue in federal court.

The holding in that case is commonly referred to as

an exception to the Rooker-Feldman doctrine based

12

on lack of reasonable opportunity to raise issues in

the applicable state court proceeding.

This case is distinguishable from Wood v. Orange

County, supra. because in this case the Bacons were

not precluded from raising their claims as defenses

in the state eviction litigation. Rather, they were

precluded from raising those claims in a new state

court action which they would have been able to do

under state law, except that one of the defendants

(one of the appellees) is a part of the federal

government.

Despite the difference between Wood v. Orange

County, supra. and this case, the Bacons submit that

the equitable considerations are alike and, on that

basis, they ask this Court to hold that where state

law specifically provides that an eviction defendant

who does not prevail in defense of eviction in state

court can raise those same defenses to support an

affirmative rescission claim in state court, such

party should not be precluded from such an

affirmative lawsuit only because a necessary party

defendant is a federal agency so that such a lawsuit

would have to be filed in federal court.

Having based this petition on an issue of

fairness, the Bacons urge in favor of their petition

the fact that, as set forth above, all of the appellees

in this case effectively recognized the unfairness of

the foreclosure by filing a suit seeking foreclosure

rescission, yet obtained a non-suit of that lawsuit,

which was followed by the unlawful detainer

summons by the VA against Leander Bacon.

13

The Bacons ask this Court to consider this issue

one of first impression.

CONCLUSION

On the foregoing grounds, the Bacons pray that

this Court grant certiorari in this case.

Respectfully submitted,

LEANDER BACON

IRIS I. DICK BACON

BY_/S/ HENRY W. MCLAUGHLIN

COUNSEL

HENRY W. MCLAUGHLIN (VSB NO. 07105)

LAW OFFICE OF HENRY MCLAUGHLIN, P.C.

707 East Main Street, Suite 1050

Richmond, Virginia 23219

(804) 205-9020; fax (804) 205-9029

henry@mclaughlinvalaw.com

Counsel for Petitioners