1501 S., LLC v. Driscoll
| Decision Date | 23 July 2020 |
| Docket Number | No. 3470,3470 |
| Parties | 1501 SOUTHERN, LLC v. JOHN E. DRISCOLL, III, ET AL. |
| Court | Court of Special Appeals of Maryland |
Circuit Court for Prince George's County
UNREPORTED
Kehoe, Beachley, Shaw Geter JJ.
Opinion by Shaw Geter, 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.
This is an appeal from an order of the Circuit Court for Prince George's County that ratified a foreclosure sale of a commercial property in Oxon Hill, Maryland. Appellant, 1501 Southern, LLC ("1501"), the party in default, filed a Motion to Vacate the Court's Order, which the court denied. Appellant then filed a Motion to Alter or Amend the Order denying the Motion to Vacate, which the court also denied. This appeal followed.
Appellant presents three questions for our review:
We hold the court did not abuse its discretion in denying appellant's motion to vacate the ratification order and thus, decline to answer Questions Two and Three. For the reasons set forth below, we affirm.1
In July of 2015, appellant entered into a contract with S.F.C. to purchase property located in Oxon Hill, Maryland for $4,250,000.00. Appellant executed a Purchase Money First Deed of Trust and promissory note in favor of S.F.C., which were recorded. The loanwas to be paid in full by June 10, 2016. Khalib Babiker Mohamed Eltayeb signed the Deed of Trust as the "Managing Member and Trustee" of 1501. The Deed included a notice provision that service for any actions undertaken as a result of the transaction would be sufficient if done by personal service to the addresses provided in the document. Appellant provided its corporate address as 402 Southern Avenue, SE, Washington, D.C.
On July 19, 2016, appellee sent a letter advising appellant that it was in default and, if the default was not cured, S.F.C. would exercise its right to accelerate the loan. Appellees obtained a judgment against appellant in 2016, which was subsequently appealed and affirmed by this Court. Appellees then filed a foreclosure action in the Circuit Court for Prince George's County on February 22, 2018. Service was effectuated on February 24, 2018, by delivering a copy of the Order to Docket to Andre Johnson, described as "housemate of Khalib Babiker Mohamed Eltayeb, Member for 1501 Southern L.L.C. at the address of 4020 Southern Avenue SE, Washington, DC 20020." The Order to Docket was also posted on the property and mailed directly to the property. The mail was returned, however, because the property had no mailbox. Appellant did not respond or file any motions during the pendency of the foreclosure case.
On April 11, 2018, appellant was mailed notices of the foreclosure sale, through regular first-class postage and certified mail at the corporate address and the property address. The certified mail was returned as undeliverable; however, the first-class mail was not returned. Mail sent to the property was returned as there was still no mailbox there. Notice of the sale was published in the Washington Post for three consecutive weeks. OnMay 10, 2019, the property was sold to S.F.C. at a foreclosure sale.2 S.F.C., on May 29, 2019, entered into a contract to sell the property to a third party, A Determined Seed I, LLC. The foreclosure sale was ratified by Order on July 24, 2018. The deed was recorded on August 17, 2019, and the Auditor's report was filed 13 days later.
On September 13, 2019, appellant filed a motion to vacate, arguing lack of due process because it had not been served and given the opportunity to be heard. The motion was denied by the court on December 10, 2019, as "Defendant had constructive notice of the sale." Appellant then filed a motion to alter or amend on December 26, 2019. The motion was denied on February 6, 2020, and this appeal was noted on February 26, 2020.
101 Geneva, LLC v. Wynn, 435 Md. 233, 241 (2013) (internal citations and quotation marks omitted). "Moreover, the vacatur of a foreclosure sale . . . is a judicial decision affecting the rights and interests of litigants, and, as such, it is generally within the discretion of trial judges to rule on the matter." Id. at 242 (internal citations and quotation marks omitted). We reverse the denial of a motion to revise a final judgment only where "no reasonable person would take the view adopted by the [trial] court, or when the courtacts without reference to any guiding rules or principles." Powell v. Breslin, 430 Md. 52, 62 (2013) (internal quotation marks and citation omitted).
I. The trial court did not abuse its discretion in denying appellant's Motion to Vacate the Order Ratifying the Foreclosure Sale.
Maryland Rule 2-535(b) provides, "[o]n motion of any party filed at any time, the court may exercise revisory power and control over the judgment in case of fraud, mistake or irregularity." "Maryland courts have narrowly defined and strictly applied the terms fraud, mistake, [and] irregularity, in order to ensure finality of judgments." Thacker v. Hale, 146 Md. App. 203, 217 (2002) (internal quotation marks omitted). Irregularity has been defined as "'a failure to follow required procedure or process.'" Powell v. Breslin, 430 Md. 52, 72 (2013) (quoting Early v. Early, 338 Md. 639, 653 (1995)). To prevail on a motion under Rule 2-535(b), "the existence of fraud, mistake, or irregularity by clear and convincing evidence" must be demonstrated by the movant. Davis v. Attorney Gen., 187 Md. App. 110, 123-24 (2009) (internal quotation marks and citation omitted). For the court to vacate a judgment the movant "must establish that he or she acted in good faith and with ordinary diligence, and that he has a meritorious cause of action or defense." Id. at 124.
Foreclosure actions are in rem proceedings that allow for the disposal of property by the mortgagee upon the default of the borrower. See G.E. Capital Mortg. Servs., Inc. v.Levenson, 338 Md. 227, 245 (1995). "Title 14 of the Maryland Rules of Procedure,3 entitled 'Sales of Property,' sets forth the practice and procedure for foreclosures." Zorzit v. 915 W. 36th St., LLC, 197 Md. App. 91, 98 (2011). "Foreclosure proceedings are initiated by the filing of a document describing Pulliam v. Dyck-O'Neal, Inc., 243 Md. App. 134, 143 (2019).
Appellant contends "there is no evidence in the record to suggest, much less show that Andre Johnson or Andre Letren was expressly or impliedly authorized to receive service of process." Appellant argues the circuit court should have conducted an evidentiary hearing to determine whether appellant received notice.
In our view, the Title 14 Rules constitute the entirety of Maryland's foreclosure processes and do not provide the same notice requirements as are necessary for inpersonam proceedings. Appellant cites Rogers v. Hanley, 21 Md. App. 383 (1974) to support its position. However, that case involved a breach of contract and fraud claim that resulted in a default judgment with an award of damages against a corporation. Id. at 385. In rem proceedings are equitable matters and quite distinct. The Title 14 Rules, unlike the Title 2 Rules, do not mandate that a company's resident agent or person expressly or impliedly authorized to receive service be served in such cases.
Appellant also argues service did not comply with Rule 14-209. In a footnote, appellant acknowledges that the property in question is a commercial property and then states, ". . . Rule 14-211, which applies to both residential and commercial property refers to Rule 14-209 for service . . . In turn, Rule 14-209 references § 7-105.1(h)(1)."
We do not agree with this analysis. Maryland Rule 14-209, which refers to § 7-105.1(h) of the Real Property Article controls how notice is to be provided when a residential property foreclosure action is initiated. Section 7-105.1(h) outlines notice requirements prior to the foreclosure sale of residential property, stating that service includes providing a "copy of the order to docket or complaint to foreclose . . . and all other papers filed with it in the form and sequence prescribed by regulation . . . on the mortgagor or grantor by personal delivery of the papers to the mortgagee or grantor." Md. Code Ann., Real Prop. § 7-105.1(h).
There is no language in either section that references commercial property. Rule 14-209 states: "[w]hen an action to...
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