 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued March 17, 2015                 Decided June 16, 2015

                        No. 14-7048

               IN RE: DEBRA M. STEVENSON,

        EUGENE SMITH AND DEBRA M. STEVENSON,
                     APPELLANTS

                            v.

   FIRST AMERICAN TITLE INSURANCE COMPANY, ET AL.,
                     APPELLEES


                Consolidated with 14-7049


       Appeals from the United States District Court
               for the District of Columbia
                   (No. 1:13-cv-00258)
                   (No. 1:13-cv-00440)


    Eugene Smith, pro se, argued the cause for appellants.
With him on the briefs was Debra M. Stevenson, pro se.

    Michael S. Steadman argued the cause for appellees.
With him on the brief was Michael N. Russo.

   Before: GRIFFITH and KAVANAUGH, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
                               2


    Opinion    for   the   Court   filed   by   Circuit   Judge
KAVANAUGH.

     KAVANAUGH, Circuit Judge: Debra Stevenson and her
son Eugene Smith jointly own a house in Washington, D.C.
When Stevenson and Smith bought the house, they took out a
mortgage. In 2005, they decided to refinance the mortgage.
They obtained a new $115,000 mortgage with a 6.5% interest
rate from Wells Fargo Bank. In exchange for the new
mortgage, Wells Fargo required Stevenson and Smith to sign
a deed of trust. The deed of trust gave Wells Fargo certain
rights to the house if Stevenson and Smith failed to repay the
mortgage.

     Later in 2005, Stevenson decided to refinance the
mortgage a second time in order to obtain some cash.
Stevenson refinanced with plaintiff HSBC Bank.1 HSBC
offered Stevenson a $135,000 mortgage with a 9.65% interest
rate, with approximately $6,000 in cash provided up front to
Stevenson. But there was a wrinkle: Only Stevenson signed
the paperwork for the mortgage. Smith refused to sign the
paperwork because he thought that the interest rate was too
high.

    Surprisingly, HSBC went ahead with the mortgage
without Smith’s signature. HSBC paid off the Wells Fargo
mortgage in full, releasing Stevenson and Smith from the
obligation to pay that mortgage. In exchange, Stevenson

    1
     HSBC is the successor in interest to Fremont Investment and
Loan. Fremont Investment and Loan originally entered into the
mortgage with Stevenson. Fremont Investment and Loan later sold
the mortgage. For simplicity, we will use “HSBC” to refer to
HSBC and Fremont.
                                 3
signed a deed of trust. That deed of trust gave HSBC certain
rights to Stevenson’s half-interest in the house if Stevenson
failed to repay the mortgage. But Smith did not sign the deed
of trust, and HSBC did not obtain any rights to Smith’s half-
interest in the house. As a result, without paying a cent,
Smith ended up with a half-interest in the house free of both
the Wells Fargo mortgage and the HSBC mortgage.

     Soon thereafter, Stevenson declared bankruptcy and
stopped making mortgage payments. But HSBC could not
foreclose because Smith had not signed the HSBC deed of
trust. HSBC filed this suit in Bankruptcy Court seeking
equitable subrogation.2 The doctrine of equitable subrogation
permits courts to declare that the owner of a mortgage
(HSBC) has the same rights as an earlier-in-time owner of
another mortgage (Wells Fargo) on the same property, if
certain conditions are met. The purpose of equitable
subrogation is “to prevent forfeiture and unjust enrichment.”
Eastern Savings Bank, FSB v. Pappas, 829 A.2d 953, 957
(D.C. 2003) (internal quotation marks omitted).

     Equitable subrogation would give HSBC the same rights
to Stevenson and Smith’s house that Wells Fargo obtained in
the first refinancing. That would presumably make it easier
for HSBC to initiate foreclosure proceedings and, in HSBC’s
view, prevent unjust enrichment of Smith.

    Stevenson and Smith counter that the doctrine of
equitable subrogation does not apply here. They also argue


    2
       There are nominally three plaintiffs in this suit: HSBC, First
American Title Insurance Company, and Wells Fargo Bank. First
American Title Insurance Company issued a lender’s title insurance
policy on the mortgage, and Wells Fargo Bank is the servicing
agent for the mortgage.
                                  4
that even if equitable subrogation applies, the mortgage is
invalid under D.C. and federal lending laws.

     In thorough opinions, the Bankruptcy Court concluded
that HSBC is entitled to equitable subrogation and rejected
Stevenson and Smith’s claims that the mortgage is invalid
under D.C. and federal lending laws. The District Court
agreed with the Bankruptcy Court’s conclusions. We affirm.

                                  I

     We first consider the equitable subrogation issue. Our
review is de novo. See In re Hope 7 Monroe Street Limited
Partnership, 743 F.3d 867, 873 (D.C. Cir. 2014).3

    Everyone agrees that equitable subrogation in this case is
a matter of D.C. law. Under D.C. law, HSBC is entitled to
equitable subrogation if it meets each prong of a five-part test:
(1) HSBC paid off the Wells Fargo mortgage to protect
HSBC’s “own interest”; (2) HSBC has not “acted as a
volunteer”; (3) HSBC “was not primarily liable” for the Wells

     3
       Stevenson and Smith argue that the Bankruptcy Court did not
have “authority over issues concerning Smith since he was a non-
debtor.” Stevenson and Smith Br. 30. We reject that argument. As
the Bankruptcy Court correctly stated, HSBC’s claim for equitable
subrogation is “related to the bankruptcy case” and is “non-core in
nature. The bankruptcy court is authorized to hear and make
proposed findings of fact and conclusions of law in such non-core
‘related to’ proceedings.”      In re Stevenson, No. 06-00306,
Adversary Proceeding No. 07-10005, 2013 WL 8149438, at *1 n.1
(Bankr. D.D.C. Jan. 4, 2013) (quoting 28 U.S.C. § 157(c)(1)).
Stevenson and Smith’s defenses to the validity of the mortgage are
“a core proceeding going to enforceability of Fremont’s deed of
trust against Stevenson’s interest in the real property and resolution
of the debtor-creditor relationship.” Id. at *1 (citing 28 U.S.C.
§ 157(b)(2)(K), 157(b)(2)(O)).
                               5
Fargo mortgage; (4) HSBC paid off the entire Wells Fargo
mortgage; and (5) subrogation would “not work any injustice
to the rights of others.” Eastern Savings Bank, FSB v.
Pappas, 829 A.2d 953, 961 (D.C. 2003) (internal quotation
marks omitted).       We have some sympathy for the
commonsense premise of Smith’s argument – after all, Smith
never signed the HSBC mortgage paperwork, and no
signature means no signature. But we must apply D.C. law.
And under D.C. law, all five prongs of the equitable
subrogation test are met here.

     The first four prongs are straightforward in this case.
First, HSBC paid off Stevenson and Smith’s Wells Fargo
mortgage to protect HSBC’s own interest. By paying off the
Wells Fargo mortgage, HSBC ensured that it would have a
priority position in any future foreclosure proceedings.
Second, and for the same reason, HSBC did not act as a
volunteer. A lender is not a volunteer if it advances “money
intending to get something for it.” Id. at 961 n.14 (internal
quotation marks omitted). Here, HSBC paid off the Wells
Fargo mortgage intending to get something for it – in this
case, a priority position in any future foreclosure proceedings.
Third, HSBC was not liable for Stevenson and Smith’s Wells
Fargo mortgage. Fourth, HSBC paid off the entire Wells
Fargo mortgage.

     The fifth prong is less straightforward under the facts of
this case, but we conclude that equitable subrogation would
not work an injustice. To begin with, equitable subrogation
does not in any way affect Stevenson’s rights. And equitable
subrogation likewise does not work an injustice on Smith.
The Bankruptcy Court held that HSBC is entitled to equitable
subrogation on the same terms as the Wells Fargo mortgage.
So Smith is obligated to HSBC only for the balance of the
Wells Fargo mortgage, and only at the lower interest rate of
                              6
the Wells Fargo mortgage. Equitable subrogation simply
prevents Smith from enjoying a windfall. It does not work an
injustice because it makes him no worse off than he would
have been under the Wells Fargo mortgage had Stevenson
never agreed to the mortgage with HSBC. See id. at 960-61.

    In short, HSBC has met D.C. law’s five-part test for
equitable subrogation.

     Stevenson and Smith nevertheless contend that equitable
subrogation is not available here. Stevenson and Smith point
out that HSBC knew that Smith refused to sign the deed of
trust. And as a result, HSBC knew that it would not obtain
any rights to Smith’s half-interest in the house. Stevenson
and Smith argue that equitable subrogation is not available if
a lender has actual knowledge that it will not receive the same
rights to a property as the previous lender and goes ahead
with the mortgage anyway.

     Under D.C. law, it is unsettled whether “actual
knowledge bars equitable subrogation.” Id. at 959 n.11. We
must therefore decide that question in the first instance.
Because “no D.C. Court of Appeals case is directly on point,
we reason by analogy from D.C. cases to predict how that
court would decide the question in a case like this.” Earle v.
District of Columbia, 707 F.3d 299, 310 (D.C. Cir. 2012)
(internal quotation marks omitted).4

     In an analogous case, Eastern Savings Bank, FSB v.
Pappas, 829 A.2d 953 (D.C. 2003), the D.C. Court of
Appeals relied on two sources of authority to determine
whether a plaintiff was entitled to equitable subrogation.
First, the D.C. Court of Appeals applied the basic principles

    4
       The D.C. Court of Appeals is of course free to adopt a
different approach.
                                7
established by Burgoon v. Lavezzo, 92 F.2d 726 (D.C. Cir.
1937).5 And second, the D.C. Court of Appeals consulted the
Restatement (Third) of Property. To answer the question in
this case, we will use the same sources.

     In Burgoon, the court stated that equitable subrogation “is
a creation of equity, and is administered in the furtherance of
justice.” Burgoon, 92 F.2d at 735 (internal quotation marks
omitted). The court endorsed an approach in which “no
attention should be paid to technicalities which are not of an
insuperable character, but the broad equities should always be
sought out so far as possible.” Id. at 734 (internal quotation
marks omitted). The court therefore adopted a “rule requiring
liberal application of the doctrine of subrogation.” Id. at 735.

     Burgoon did not address whether actual knowledge bars
equitable subrogation. But Burgoon did adopt a rule requiring
“liberal” application of the doctrine of equitable subrogation,
albeit under somewhat different circumstances. And under
the “more liberal approach” to equitable subrogation, actual
knowledge does not bar application of the doctrine. Bank of
America, N.A. v. Prestance Corp., 160 P.3d 17, 26 (Wash.
2007) (en banc); see also East Boston Savings Bank v. Ogan,
701 N.E.2d 331, 335 (Mass. 1998) (Knowledge “is not
necessarily fatal to” a claim for equitable subrogation, “if
equity would nonetheless dictate the recognition of
subrogation.”) (internal quotation marks omitted).

     In addition to Burgoon, the D.C. Court of Appeals looks
to the Restatement for guidance on questions of law involving
equitable subrogation. The Restatement has adopted the more

    5
       Burgoon was decided by the old U.S. Court of Appeals for
the District of Columbia, which had combined federal and local
jurisdiction. The D.C. Court of Appeals has stated that “Burgoon is
binding upon us.” Eastern Savings Bank, 829 A.2d at 958 n.10.
                              8
liberal approach to equitable subrogation, under which actual
knowledge does not bar application of the doctrine. See
Restatement (Third) of Property: Mortgages § 7.6 cmt. e
(1997); see also Bank of America, 160 P.3d at 25-26
(describing Restatement position as “the more liberal
approach”).

     Applying the principles of Burgoon and the Restatement,
we conclude as a matter of D.C. law that actual knowledge
does not bar equitable subrogation. HSBC is therefore
entitled to equitable subrogation here.

     That conclusion is buttressed by one other consideration.
In Burgoon, the court determined that equitable subrogation
was appropriate because the lender could have achieved the
same result by taking an assignment of the original loan. See
92 F.2d at 736. The same is true here. Instead of taking out a
new mortgage on the house, HSBC could have asked Wells
Fargo to assign Wells Fargo’s mortgage to HSBC. Through
assignment, HSBC would have obtained Wells Fargo’s rights
to Smith’s half-interest in the house.

    In sum, HSBC is entitled to equitable subrogation under
D.C. law.

                              II

     In addition to arguing that equitable subrogation is not
available, Stevenson and Smith also raised several defenses
under D.C. and federal lending laws to the validity of the
HSBC mortgage. The Bankruptcy Court rejected them, as do
we.

    First, the Bankruptcy Court struck three of Stevenson and
Smith’s defenses as improperly pled. For each defense,
Stevenson and Smith either failed to disclose the defense
                               9
during discovery or failed to disclose or allege any facts
supporting the defense. The Bankruptcy Court accordingly
struck all three defenses. The District Court affirmed.

     We review the Bankruptcy Court’s decision to strike
Stevenson and Smith’s defenses for abuse of discretion. Cf.
In re Greater Southeast Community Hospital Foundation,
Inc., 586 F.3d 1, 4 (D.C. Cir. 2009). We agree that Stevenson
and Smith either failed to disclose those defenses during
discovery or failed to allege any facts to support the defenses.
The Bankruptcy Court did not abuse its discretion by striking
those defenses.

     Second, the Bankruptcy Court ruled that Stevenson and
Smith forfeited most of their remaining defenses. Under the
rules of the Bankruptcy Court, Stevenson and Smith had to
raise those defenses in a timely answer to HSBC’s complaint.
See Fed. R. Bankr. P. 7012(a). Stevenson and Smith failed to
file a timely answer to the complaint. Because of that failure,
the plaintiffs incurred $1,260 in additional attorney’s fees.
The Bankruptcy Court ruled that Stevenson and Smith could
file an untimely answer to the complaint if they first paid
$1,260 of the plaintiffs’ attorney’s fees. Stevenson and Smith
refused to pay the fees. Accordingly, the Bankruptcy Court
decided that Stevenson and Smith were not permitted to file
an answer to the complaint, and that Stevenson and Smith as a
result forfeited most of their defenses. The District Court
concluded that the Bankruptcy Court’s actions were
appropriate under the circumstances.

     We review the Bankruptcy Court’s decision on this point
for abuse of discretion. Cf. English-Speaking Union v.
Johnson, 353 F.3d 1013, 1021 (D.C. Cir. 2004). When a
party fails to meet a filing deadline, a lower court has
discretion to sanction that party. One possible sanction is to
                              10
require the party who missed the filing deadline to pay the
reasonable legal fees incurred by the other side as a result of
the late filing. See id. at 1023. In this case, Stevenson and
Smith had multiple opportunities to correct their untimely
filing and did not do so. Under the circumstances, requiring
Stevenson and Smith to pay $1,260 in legal fees as a
condition of filing an untimely answer to the complaint was
reasonable. The Bankruptcy Court did not abuse its discretion
by holding that Stevenson and Smith forfeited most of their
defenses.

     Third, the Bankruptcy Court granted summary judgment
to HSBC on Stevenson and Smith’s remaining defenses. The
District Court affirmed the Bankruptcy Court. We review the
Bankruptcy Court’s legal conclusions on this point de novo.
See In re Hope 7 Monroe Street Limited Partnership, 743
F.3d 867, 873 (D.C. Cir. 2014); United States v. Spicer, 57
F.3d 1152, 1159 (D.C. Cir. 1995). The Bankruptcy Court’s
legal conclusions are correct.

     Stevenson and Smith argue that the HSBC mortgage
violates the federal Truth in Lending Act because Stevenson
paid several fees during the refinancing that were not properly
disclosed as finance charges. The Bankruptcy Court correctly
noted that under the circumstances, the bank was not required
to disclose the fees as finance charges. See 15 U.S.C.
§ 1602(bb)(4). Stevenson and Smith also argue that the
HSBC mortgage is invalid because HSBC’s predecessor bank
was not properly licensed under Section 26-1103(a) of the
D.C. Code. But banks are exempt from the licensing
requirements of Section 26-1103(a). See D.C. Code § 26-
1102(1). This includes industrial banks such as Fremont,
HSBC’s predecessor. See id. (exempting any “bank . . .
incorporated or chartered under the laws of . . . any state”
from the D.C. Code’s licensing requirements); cf. Blue v.
                            11
Fremont Investment & Loan, 562 F. Supp. 2d 33, 44 & n.10
(D.D.C. 2008) (Fremont exempt from the District’s licensing
requirements for banks because it was chartered under the
laws of California).

                           ***

    We have considered all of the arguments raised by
Stevenson and Smith. We affirm the judgment of the District
Court.

                                               So ordered.
