Canaj v. Baker

• Decision Date: 06 March 2006
• Docket Number: No. 72, September Term, 2005.,72, September Term, 2005.
• Citation: 391 Md. 374,893 A.2d 1067
• Parties: CANAJ, INC. v. BAKER AND DIVISION PHASE III, et al.
• Court: Court of Special Appeals of Maryland

893 A.2d 1067

391 Md. 374

CANAJ, INC. v. BAKER AND DIVISION PHASE III, et al.

No. 72, September Term, 2005.

Court of Appeals of Maryland.

March 6, 2006.

COPYRIGHT MATERIAL OMITTED

Michael S. Rubenstein, Baltimore, for appellant.

Kyriakos P. Marudas, Asst. City Solicitor (Ralph S. Tyler, City Solicitor and William R. Phelan, Jr., Principal Counsel of Baltimore City Department of Law, Baltimore), on brief, for appellees.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

CATHELL, J.

Between March 14, 2003, and June 29, 2004, the Circuit Court for Baltimore City foreclosed Canaj, Inc.'s (appellant) right of redemption to a number of properties sold at a tax sale on August 8, 2001. Appellant had moved to dismiss the foreclosure proceedings as to only two of the properties, 523 Senker Place and 2300 Brunt Street. It filed no prejudgment motions to dismiss as to any of the other of its properties. As to those two properties only, the foreclosure actions were dismissed by express agreement of the parties.

After having failed to file any prejudgment motions to dismiss in respect to any of the other properties on the grounds here raised, appellant, following the foreclosure, on August 19, 2004, moved to vacate all of the judgments and void the tax sales as to the other properties based on fraud, mistake or irregularity. The trial judge denied the motions and appellant filed an appeal in the Court of Special Appeals. This Court, on its own motion, granted certiorari before the case was heard by the intermediate appellate court. Canaj, Inc. v. Baker and Division III, 389 Md. 398, 885 A.2d 823 (2005).

I. Facts

Appellant was the owner of fourteen properties located in Baltimore City ("City"). For over seven years appellant failed to pay property taxes, leading the City to attempt to dispose of the properties at a tax sale. Baker and Division III¹ ("Baker") purchased the properties at the tax sale on August 8, 2001. Baker filed timely complaints seeking to foreclose appellant's rights of redemption on November 5, 2001. The proceedings were consolidated into two separate cases in the Circuit Court for Baltimore City: 24-C-01-005462 ("5462") and 24-C-01-005463 ("5463").² The court issued judgments foreclosing appellant's right of redemption on March 14, 2003 (571 Baker Street);³ April 27, 2004 (592 Baker Street); May 11, 2004 (575 Baker Street); and June 29, 2004 (588 Baker Street); and on June 11, 2004, for all the properties in case 5462.

On August 19, 2004, forty-one days after the last foreclosure judgment was entered, appellant, represented by new counsel filed a motion seeking in essence, vacation of the judgments based upon allegations of fraud, mistake or irregularity. The Circuit Court held a hearing on the motion on April 4, 2005, and on April 5, 2005, it filed an order making the following findings:

"1. That there was no fraud, mistake or irregularity within the meaning of Maryland Rule 2-535.⁴

"2. That there is no lack of jurisdiction or constructive fraud as defined in Section 14-845 of the Tax-Property Article of the Maryland Code.

"3. That the City of Baltimore is precluded from collecting any taxes [against the original owner] on the properties included in the above-referenced case."⁵

Appellant subsequently filed this appeal.

The following questions are presented for our review:

"1. Did the circuit court have jurisdiction to enter judgments foreclosing the right of redemption on the Appellant's properties in view of the fact that a requirement of the applicable statute was ignored causing the properties to be illegally included in the special tax sale held by the Mayor and City Council of Baltimore City?

"2. Did the lower court lack jurisdiction to enter judgements foreclosing the right of redemption on Appellant's properties because of constructive fraud?

"3. Did the lower court deprive the Appellant of its properties without due process of law in violation of the Declaration of Rights of Maryland and the Fourteenth Amendment of the United States Constitution?"

We shall hold for the reasons that follow that the Circuit Court properly entered the judgments of foreclosure against the appellant, that Baltimore City's actions did not constitute constructive fraud, and that appellant's due process rights were not violated.

We shall first address some threshold issues presented at the trial court level in respect to the motions to vacate, which were not resolved due to the trial court's reliance on other reasons in support of its judgment. We shall address the unresolved issues because we necessarily must confront them as they concern a condition precedent to challenging a tax sale where it is conceded that taxes are sufficiently delinquent to authorize a tax sale. See Brewer v. Brewer, 386 Md. 183, 872 A.2d 48 (2005). Even though we shall be holding that the condition precedent has not been met, and we shall also hold that appellant waived the issues it now raises in respect to the relevant tax sales, we shall, nonetheless, address the issues actually decided by the trial court because they raise very important issues; issues that will continue to arise in tax sale proceedings, especially in Baltimore City where tax sales are used to address the City's very real problem with abandoned and vacant properties.

Although not presented in the appellant's or the City's briefs, we address the condition precedent issue and we shall also discuss the unresolved waiver issue, both pursuant to Maryland Rule 8-131, which provides in relevant part:

"(a) Generally. The issues of jurisdiction of the trial court over the subject matter and, unless waived under Rule 2-322, over a person may be raised in and decided by the appellate court whether or not raised in and decided by the trial court. Ordinarily, the appellate court will not decide any other issue unless it plainly appears by the record to have been raised in or decided by the trial court, but the Court may decide such an issue if necessary or desirable to guide the trial court or to avoid the expense and delay of another appeal.

. . .

"(2) No prior appellate decision. Except as otherwise provided in Rule 8-304 (c), when the Court of Appeals issues a writ of certiorari to review a case pending in the Court of Special Appeals before a decision has been rendered by that Court, the Court of Appeals will consider those issues that would have been cognizable by the Court of Special Appeals."

Judge Raker, writing for the Court in Jones v. State, 379 Md. 704, 712-13, 843 A.2d 778, 783 (2004), discussed the second sentence of Rule 8-131(a), opining that:

"The second sentence of Rule 8-131(a) sets forth the general proposition that an appellate court ordinarily will not consider an issue that was not raised or decided by the trial court. The plain language of the rule, however, makes clear that the prohibition is not absolute. See Crown Oil v. Glen, 320 Md. 546, 561, 578 A.2d 1184, 1191 (1990) (noting that, inasmuch as Rule 8-131(a) employs the term `ordinarily,' it permits exceptions, and appellate courts have occasionally decided cases on issues not previously raised). The word `ordinarily' in Rule 8-131(a) anticipates that an appellate court will, on appropriate occasion, review unpreserved issues. This has been the practice of the Maryland appellate courts, as well as of the federal courts and our sister states, dating well before Rule 8-131(a). See Atlantic Mutual v. Kenney, 323 Md. 116, 122, 591 A.2d 507, 510 (1991) (noting that Rule 8-131(a) is simply enunciatory of the practice which has existed since 1825); see also Annot., Issue First Raised on Appeal, 76 A.L.R. Fed. 522 (1986). In State v. Bell, 334 Md. 178, 638 A.2d 107 (1994), we concluded:

`It is clear from the plain language of Rule 8-131(a) that an appellate court's review of arguments not raised at the trial level is discretionary, not mandatory. The use of the word "ordinarily" clearly contemplates both those circumstances in which an appellate court will not review issues if they were not previously raised and those circumstances in which it will.'

Id. at 188, 638 A.2d at 113. Thus, under the Rule, an appellate court has discretion to excuse a waiver or procedural default and to consider an issue even though it was not properly raised or preserved by a party."

The first sentence of subsection (a) of the rule is as relevant as is the second sentence, especially considering the circumstances at issue in this case.

As this Court has stated before, the primary purpose of the Rule "is `to ensure fairness for all parties in a case and to promote the orderly administration of law.'" State v. Bell, 334 Md. 178, 189, 638 A.2d 107, 113 (1994), (quoting Brice v. State, 254 Md. 655, 661, 255 A.2d 28, 31 (1969), quoting Banks v. State, 203 Md. 488, 495, 102 A.2d 267, 271 (1954)); Basoff v. State, 208 Md. 643, 650, 119 A.2d 917, 921 (1956).

In order to ensure that fairness, Judge Raker for the Jones Court stated that "appellate courts should make two determinations concerning the promotion or subversion of 8-131(a)'s twin goals." 379 Md. at 714, 843 A.2d at 784. "First, the appellate court should consider whether the exercise of its discretion will work unfair prejudice to either of the parties" and "[s]econd, the appellate court should consider whether the exercise of its discretion will promote the orderly administration of justice." Id. at 714-15, 843 A.2d at 784. In the case sub judice, the condition precedent issue appears to have been presented below, but not decided. Because, as explained below, the Circuit Court correctly denied appellant's motions to vacate the judgments based upon statutory provisions, addressing the condition precedent and waiver issues under the Rule does not unfairly prejudice either party. There are no contested facts relating to whether the taxes have, in fact, been paid. All parties to the present appeal agree that taxes...