101 Geneva LLC v. Murphy, 887
| Decision Date | 04 March 2019 |
| Docket Number | No. 887,887 |
| Parties | 101 GENEVA LLC v. THOMAS D. MURPHY, SUBSTITUTE TRUSTEE, et al. |
| Court | Court of Special Appeals of Maryland |
Circuit Court for Howard County
Case No. 13-C-11-87827
UNREPORTED
Fader, C. J., Friedman, Kenney, James A., III (Senior Judge, Specially Assigned), JJ.
Opinion by Kenney, J.
*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.
Appellant, 101 Geneva LLC ("101 Geneva"), challenges the judgment of the Circuit Court for Howard County awarding damages to Cambridge Financial Services, lender, and Thomas D. Murphy, substitute trustee, (collectively "Cambridge"), based on its breach of an agreement to purchase a foreclosed property in 2012. The circuit court determined that the resale of the property, in 2015, was at 101 Geneva's risk and expense and denied its motion to reconsider, vacate, and dismiss. 101 Geneva appealed, and Cambridge filed a cross-appeal. We have rephrased and consolidated the questions presented1 as:
For the reasons that follow, we answer those questions in the negative, but will remand for a possible calculation adjustment.
George Arthur Willson, II borrowed from Cambridge $880,000 secured by a deed of trust on real property in 2007. When he defaulted on the debt, Cambridge foreclosed, and 101 Geneva purchased the property for $896,000.2 It executed a memorandum of purchase at public auction on March 5, 2012, and paid a deposit of $100,000 to the substitute trustees3, which was deposited with the Clerk of the Court. We will refer to this as the "First Sale."
On April 5, 2012, Sidney Willson, the borrower's mother, filed a petition asserting a title interest in the property. Mrs. Willson, the former owner of the property, claimed alife estate based on the 1989 deed to her son. She also claimed entitlement4 to one-third of the sale proceeds. We will refer to this as the "one-third proceeds claim."
In response, 101 Geneva filed, on May 29, 2012, a motion to be released from its purchase at the First Sale, arguing that Mrs. Willson's claims rendered title to the property unmarketable. During a hearing on August 3, 2012, Mrs. Willson and 101 Geneva agreed that 101 Geneva would withdraw its motion in exchange for her agreement that, if the First Sale closed, her one-third proceeds claim would not encumber the title, regardless of whether she received any share of the sales proceeds. In a post-hearing memorandum, Mrs. Willson agreed that, if the First Sale closed, it would be the only sale to which her title claim might apply.
After a hearing on October 23, 2012, the circuit court, noting that "the profits issue has been resolved and is moot," denied 101 Geneva's motion for release. The circuit court ratified the First Sale on November 1, 2012. On November 30, 2012, 101 Geneva notified the trustees that it would not proceed to closing, and appealed to this Court.5 Weaffirmed the circuit court's judgment in an unreported opinion, 101 Geneva LLC v. Wittstadt, No. 1960, September Term, 2012 (Md. Ct. Spec. App. Dec. 12, 2013).
Because Mrs. Willson's agreement was contingent on the closing of the First Sale, her one-third proceeds claim continued to cloud the title to the property. Over the next three years, Cambridge attempted to find a substitute purchaser for the property and to settle the title claim, but Mrs. Willson refused to extend her agreement to any purchasers other than 101 Geneva. Mrs. Willson died on October 8, 2014, and Cambridge reached an agreement with her estate to dismiss the title claim with prejudice on May 6, 2015.
On May 21, 2015, the substitute trustees filed a Petition to Resell Property at Sole Risk and Expense of Defaulting Purchaser ("Petition to Resell"), pursuant to Maryland Rule 14-305(g). 101 Geneva opposed the Petition to Resell at its risk, arguing that the substitute trustees did not seek a resale in a timely manner. After a hearing, the circuit court, on September 21, 2015, granted the Petition to Resell, in part, but reserved on whether the resale would be at 101 Geneva's risk and expense.
At the November 16, 2015 resale, Cambridge was the sole bidder and purchased the property for $700,000 (the "Second Sale"). The Second Sale was ratified on March 25, 2016. The Auditor's Report and Account was filed on August 12, 2016.
Cambridge reopened the risk and expense issue by filing Exceptions to the Auditor's Report and Account and Renewal of Petition to Resell ("Exceptions"). It asserted that 101 Geneva was liable for the risk and expense of the Second Sale and for the interest and property taxes on the property; that the damages totaled $710,396.73; and that the $100,000 deposit held in escrow by the Clerk of the Court should be disbursed to Cambridge in partial satisfaction of 101 Geneva's liability. 101 Geneva opposed the Exceptions, arguing that the Second Sale was too remote from the First Sale date and that Cambridge had not mitigated its damages.
On April 10, 2017, 101 Geneva filed a motion for summary judgment, which Cambridge opposed. And, Cambridge filed its own motion for summary judgment, alleging damages of $689,307.95. 101 Geneva opposed that motion, arguing that it was not responsible for damages as a result of the Second Sale and was entitled to the return of its $100,000 deposit.
At a hearing on June 1, 2017, the circuit court determined that 101 Geneva was generally liable for the risk and expense of resale. But, because it did not "believe that Cambridge [had] acted appropriately between November 30, 2012 and May 21, 2015," it pro-rated and recalculated 101 Geneva's liability: Difference between base and resale prices: $196,000.00 Interest ($338.03 per day) from March 5, 2012 to November 30, 2012
(301 days): $101,747.03 Interest ($338.03 per day) from May 21, 2015 to November 16, 2015
(178 days): $60,217.40 2012 Taxes: $8,842.11 2015 Taxes: $5,724.48 Actual expenses related to resale: $4,510.006
Total liability: $377,031.81
It granted Cambridge's motion for summary judgment to that extent and denied 101 Geneva's. The court, on June 9, 2017, ordered: that 101 Geneva pay $377,031.81 to Cambridge; that the clerk of the court disburse the $100,000 deposit to Cambridge, along with the accrued interest, in partial satisfaction of 101 Geneva's liability; and that the Auditor's Report and Account be modified as per the order.
In response, 101 Geneva filed, on June 21, 2017, an Emergency Motion to Vacate and Re-enter Deficiency Order and a Motion to Reconsider and Vacate Ratifications of Sales and Order. It requested dismissal of the foreclosure action on the basis that none of the substitute trustees or their law firms were licensed as debt collectors. After a hearing, the court, on June 22, 2017, denied the emergency aspect of the motion to vacate. It denied 101 Geneva's motion to reconsider, vacate, and dismiss on June 23, 2017.
On July 7, 2017, 101 Geneva appealed from the June 9, 2017 and June 23, 2017 orders. Cambridge noted a cross-appeal on July 17, 2017.
In its motion to reconsider, vacate, and dismiss, 101 Geneva contended that, in order to institute the foreclosure, the substitute trustees were required to be licensed as debt collectors under Maryland law. We review that claim de novo. See Blackstone v. Sharma, 461 Md. 87, 110-11 (2018), reconsideration denied, (Oct. 3, 2018); Anderson v. Burson, 424 Md. 232, 243 (2011).
101 Geneva asserts that "[t]his case is clearly an attempt to collect consumer debt" and the "sale and resulting order ratifying the sale were . . . attempts to collect consumer debt." It contends that foreclosing trustees, including the substitute trustee in this case, are required to be licensed as debt collectors, and their lack of licenses is a jurisdictional defect that requires dismissal of the foreclosure action.
In its first question on appeal, 101 Geneva cites generally the Maryland Consumer Debt Collection Act ("MCDCA"), which is codified at Md. Code Ann., Com. Law ("CL") § 14-201, et seq. This appears to be appellant's only reference to the MCDCA in any of its filings or in its briefs. In its June 21, 2017 motion to reconsider, vacate, anddismiss and in the argument section of its brief, 101 Geneva cites not the MCDCA, but rather provisions of the Maryland Collection Agency Licensing Act ("MCALA"), Md. Code (1992, 2015 Rep. Vol.), Bus. Reg. ("BR") § 7-301, et seq.
Cambridge contends that the MCALA does not require attorneys acting as substitute trustees in a foreclosure action to be licensed as collection agencies.
The MCALA requires that "[e]xcept as otherwise provided in this title, a person must have a license whenever the person does business as a collection agency in the State." BR § 7-301(a). A collection agency is defined, inter alia, as a person who engages directly or indirectly in the business of:
101 Geneva acknowledges several exceptions to the MCALA's licensing requirements in BR § 7-102(b), but asserts that these exceptions, including the exemption for lawyers7, do not apply to the trustees in this case.
We turn first to the cases cited by 101 Geneva to support its licensing argument. Citing Blackstone v. Sharma, 233 Md. App. 58 (2017), it asserts that a lawsuit to collect consumer debt filed by a non-licensed debt collection agency must be dismissed,...
To continue reading
Request your trial