Greenpoint v. Schlossberg

• Decision Date: 15 December 2005
• Docket Number: No. 144 September Term, 2004.,144 September Term, 2004.
• Citation: 390 Md. 211,888 A.2d 297
• Parties: GREENPOINT MORTGAGE FUNDING, INC., et al. v. Roger SCHLOSSBERG, Receiver. World Savings Bank, et al. v. Roger Schlossberg, Receiver.
• Court: Court of Special Appeals of Maryland

888 A.2d 297

390 Md. 211

GREENPOINT MORTGAGE FUNDING, INC., et al. v. Roger SCHLOSSBERG, Receiver.

World Savings Bank, et al. v. Roger Schlossberg, Receiver.

No. 144 September Term, 2004.

Court of Appeals of Maryland.

December 15, 2005.

COPYRIGHT MATERIAL OMITTED

G. Vann Canada, Jr. (Miles & Stockbridge, P.C., on the brief), Rockville, for Appellants.

Brian M. Kurtyka (Roger Schlossberg of Schlossberg & Kurtyka, P.A., on the Brief), Hagerstown, for Appellees.

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

CATHELL, Judge.

In this consolidated appeal, Greenpoint Mortgage Funding, Inc., et al. and World Savings Bank, et al. (described variably hereafter collectively as "appellants" or "lenders") seek relief from the May 24, 2004, Memorandum Opinions and Orders of the Circuit Court for Washington County, which provided that the notices of lis pendens, filed by Preston S. Cecil and Curtis B. Hane as former receivers, along with Roger Schlossberg, current receiver and appellee, (hereafter "appellee," "Mr. Schlossberg" or "receiver"), with the Clerk of the Circuit Court for Montgomery County, and with the Clerk of the Circuit Court for Prince George's County, but not indexed correctly, served as sufficient constructive notice to appellants of a pendente lite lien against certain property.

Both Greenpoint and World Savings appealed to the Court of Special Appeals and, before that court could consider the appeal, we granted on our own initiative a writ of certiorari on March 11, 2005, Greenpoint Mortgage Funding, Inc. v. Schlossberg, 385 Md. 511, 869 A.2d 864 (2005), in order to address the following questions:

"I. Did the Circuit Court err by holding that the filing of the notices of lis pendens on behalf of the original receivers pursuant to Rule 12-102(b), Maryland Rules of Procedure, was sufficient to place the two mortgage lenders on constructive notice of the receivers' powers over the two parcels of real property?

II. Did the failure to properly index the notices of lis pendens in the name of the owner of the properties negate the effect of filing the notices of lis pendens as to the appellants [Greenpoint Mortgage and World Savings Bank, the lenders]?"

We hold in respect to question one that the trial court erred. We answer the second question in the affirmative. Even if a lis pendens had been properly created by the express order of the judge in the underlying divorce case,¹ we hold that the failure to properly index the notices negated the effect of the filing as to the appellants. We further hold that Maryland statutes require that all instruments affecting title to real property that are recorded, must also be indexed. And we hold that a party seeking to establish a notice of lis pendens is charged with the duty to assure the correctness of the recording and indexing of the instrument he or she has filed. Failing correct indexing, the notice of lis pendens in the instant case was, or would have been, insufficient to provide constructive notice to appellants.

I. Facts

In 1996, the Circuit Court for Washington County determined it prudent to appoint receivers in the pending divorce case of Moses Karkenny v. Nahil Karkenny.² By court order dated March 26, 1996, and clarified by order dated April 9, 1996, Curtis B. Hane and Preston S. Cecil were appointed receivers, and their counsel, Roger Schlossberg, was appointed co-receiver, for the purpose of preserving and liquidating properties located in Prince George's County and in Montgomery County owned by Moses H. Karkenny.³

Messrs. Hane and Cecil, along with Mr. Schlossberg, then filed with the Clerk of the Circuit Court for Montgomery County on April 30, 1996, what purported to be a Notice of Lis Pendens in Civil No. 151,150. They filed a similar notice with the Clerk of the Circuit Court for Prince George's County on May 1, 1996. The notices' captions, prepared by the appellee, i.e., the receiver, which were likely copied from the divorce complaint, displayed Moses Karkenny as the plaintiff/counter-defendant and Nahil Karkenny as the defendant/counter-plaintiff. Thus, Nahil Karkenny was the defendant in the original divorce action.⁴

Enumerated within the body of the Notices of Lis Pendens were several properties owned by Moses Karkenny, which were to be subject to the notices. In the body of the Montgomery County mis-indexed Notice of Lis Pendens, the listing of real property subject to the proceedings in the divorce case and asserted to be in the custody of the receivers included fourteen specifically designated properties as well as "any and all other property in which any interest is owned by or vested in the said Moses Karkenny." The Prince George's County notice listed five specific properties in addition to the more encompassing description of "any and all other property in which any interest is owned by or vested in the said Moses Karkenny."⁵

Messrs. Hane and Cecil resigned from their receivership appointments in 1996 and 1999, respectively, and in both cases, Mr. Schlossberg was appointed as the sole successor receiver.

On September 29, 1999, Moses Karkenny, individually, executed and delivered a deed of trust apparently creating an encumbrance in favor of World Savings Bank and its trustee as to the Glaizewood Avenue property in order to secure a loan in the amount of $98,000.00. This deed of trust was recorded in the Land Records of Montgomery County on October 21, 1999.

Again, on November 24, 1999, Moses Karkenny executed in favor of Greenpoint Mortgage a promissory note for a loan in the principal amount of $45,500.00, secured by a deed of trust encumbering the Greenery Lane property. The deed of trust was then recorded among the Land Records of Montgomery County on May 25, 2000.

On August 30, 2002, Mr. Schlossberg filed in the Circuit Court for Washington County two "Complaint[s] for Declaratory Judgment and Related Injunctive Relief,"⁶ which included appended copies of the respective purported Notices of Lis Pendens the receivers had filed in mid-1996 and which bore the Clerk's "filed" stamp. In each complaint, Mr. Schlossberg stated that "by virtue of the timely filing of the Lis Pendens Notice, any persons interested in any of the property of the said Moses Karkenny located in Montgomery County, Maryland [or Prince George's County] were provided constructive and actual notice of the pendency of the Divorce Case and Receivership, as well as the vested title of the Receivers therein."

The appellants filed answers, and on November 22, 2002, and on January 3, 2003, Greenpoint Mortgage and World Savings, respectively, filed motions for summary judgment. Each motion was accompanied by a title examiner's affidavit attesting that an inspection of the Civil Docket maintained by the Clerk of the Circuit Court for Montgomery County in which the notice of lis pendens was filed did not show a notice of lis pendens indexed in the name of Moses Karkenny. Apparently, the Clerk of the Circuit Court for Montgomery County as well as the Clerk of the Circuit Court for Prince George's County, both had indexed the notice of lis pendens under the name of Nahil Karkenny, not in the name Moses Karkenny, because the receiver had filed a notice containing a caption that incorrectly indicated (or at least created confusion as to whether) Nahil Karkenny was the party against whom a lis pendens was sought, instead of the party seeking it. The Circuit Court for Washington County denied Greenpoint Mortgage's motion for summary judgment on January 7, 2003, and denied World Bank's motion for summary judgment on January 17, 2003.

Following discovery, in July 2003, appellants again filed a motion for summary judgment on the basis of the previous affidavits, an additional title examiner's affidavit, as well as Mr. Schlossberg's answers to interrogatories, which indicated that an examination of the indexes related to the Land Records, Judgment Records and Civil Docket maintained by the Clerk of the Circuit Court for Montgomery County in 1999 in the name of Moses Karkenny would not have revealed the existence of the Notice of Lis Pendens that had been filed in 1996 because, apparently, the notice was not indexed under the name of Moses Karkenny.

On September 26, 2003, Moses Karkenny, who remained a defendant in Mr. Schlossberg's suits, filed pro se motions to dismiss the receiver's complaints. At oral argument on the motions for summary judgment on October 3, 2003, the Circuit Court granted Mr. Schlossberg's oral motion to file amended complaints and directed the parties to file supplementary memoranda in respect to the effect of the receivership on the titles to the Greenery Lane and Glaizewood Avenue properties.

Mr. Schlossberg answered Mr. Karkenny's motions to dismiss on October 14, 2003, and filed amended complaints on October 21, 2003, which clarified the scope of the claim as to the receiver's right to custody and control of the Greenery Lane and Glaizewood Avenue properties and sought orders compelling Greenpoint Mortgage and World Savings Bank to execute full releases of the deeds of trust encumbering those properties. The next day, the Circuit Court denied Moses Karkenny's motion to dismiss. The parties filed the requested supplementary memoranda. Mr. Schlossberg argued that his filing of the notice of lis pendens in compliance with Md. Rule 12-102(b)⁷ had provided the necessary constructive notice of the receivership to any future party seeking to encumber property titled to Moses Karkenny.

On the other hand, appellants urged that it was the responsibility of the Receiver and his or her predecessors to verify the proper recording and indexing of the notice of lis pendens by the Clerks of the Circuit Court, and either failing a correct indexing so as to provide constructive notice or failing appellants' actual notice of the Washington County suit, appellant's interests in particular property titled to Moses...