J. ASHLEY v. Burson

• Court: Maryland Court of Appeals
• Writing for the Court: HOLLANDER.
• Citation: J. ASHLEY v. Burson, 131 Md. App. 576, 750 A.2d 618 (Md. App. 2000)
• Decision Date: 26 April 2000
• Docket Number: No. 0226 Sept. Term, 1999.,0226 Sept. Term, 1999.
• Parties: J. ASHLEY CORP. v. John S. BURSON.

750 A.2d 618

131 Md. App. 576

J. ASHLEY CORP. v. John S. BURSON.

No. .

Court of Special Appeals of Maryland.

April 26, 2000.

Gary Greenwald (Law Offices of Howard L. Stern, on the brief), Camp Springs, for Appellant.

Garrett D. Green, Fairfax, for Appellees.

Argued before HOLLANDER, EYLER and THIEME, JJ.

HOLLANDER, Judge.

This dispute arises from exceptions filed by J. Ashley Corporation, appellant, to a trustees' foreclosure sale held on October 5, 1998. John S. Burson and William M. Savage, substitute trustees, are the appellees herein. Following a hearing, the Circuit Court for Prince George's County overruled appellant's exceptions. Thereafter, appellant noted this appeal and presents two questions for our consideration, which we have rephrased slightly:

I. Did the trial court err in overruling appellant's exceptions to the foreclosure sale on the ground that the Trustees appeared late at the appointed place of sale and began the sale forty-five minutes after it was scheduled to occur?

II. Did the trial court err by overruling appellant's exceptions to the foreclosure sale on the grounds that the Trustee accepted a written bid to purchase the secured property from the foreclosing party, who did not appear at the sale?

For the reasons stated below, we shall affirm.

FACTUAL SUMMARY¹

A foreclosure sale of appellant's property, which was located in Temple Hills, was scheduled to occur at the courthouse in Upper Marlboro on October 5, 1998, at 1:58 p.m. At issue here is the manner in which the sale was ultimately conducted.

On November 23, 1998, appellant filed exceptions to the sale. In the exceptions, appellant contended that Tracy Plummer, an agent for Washington Mutual Bank, FA, "bid the property in for $125,000.00 as the noteholder," and was not present "when the sale was knocked down." Appellant also alleged that the sale was scheduled to begin at 1:58 p.m., but neither the auctioneer nor the trustees appeared "until much later to start the auction." In support of its allegations, appellant submitted two affidavits. One was from Joseph L. Curtis, appellant's president, and the other was from Colease Dixon, "the holder of the second trust." Curtis averred that he was present at the auction at 1:58 p.m., but "neither the auctioneer nor the trustee appeared until much later into the next hour." He also claimed that Tracy Plummer "did not bid nor was present at the auction." Dixon's affidavit was almost identical to Curtis's affidavit with respect to the above-recited factual assertions.

In their answer to appellant's exceptions, appellees conceded that the Noteholder's agent submitted a written bid and was not present at the auction. They claimed, however, that it "was the only and highest bid." Moreover, appellees maintained that the trustees were present at the scheduled time of sale. Further, they asserted that the auctioneer, Ron West, was present "from the first of a series of sales commencing on or about 1:30 p.m.," and that the sale was held on time. In their affirmative defenses, appellees also contended that, even if appellant's allegations were true, appellant failed to allege harm or prejudice, and failed "to even speculate that prospective bidders appeared and left" because of the alleged delay. Appellees also asserted that "Nothing prohibits a lender at whose behest a Trustees' Sale is initiated from entering its one price written bid. There is no requirement that an agent of the lender ... be physically present to enter into bid. At this sale there was no competitive bidding."

At the exceptions hearing held on February 26, 1999, appellant's counsel advised the court that the sale was scheduled to begin at 1:58 p.m., but the proceeding began at least forty-five minutes late. Further, appellant's attorney argued that it was improper for the trustees to accept a written bid from someone who was not present at the sale. Appellant's counsel argued: "[Y]ou cannot make bids in writing by people who are not present at the foreclosure sale."

Appellant's counsel elected to proceed by way of proffer, representing to the court that he had two witnesses who were prepared to testify as follows: 1) the two witnesses "were present for the sale at 1:58 p.m. The Trustees showed up late to the sale"; and 2) that "people showed up at 1:58 p.m. asking about the sale, and when the Trustee wasn't there, they left."

As to the issue of delay, the court responded:

That's not a basis, so I will concede that. I will assume what you say is right. If it had been heard before that, before people had time to show up, I would be seriously upset.

With respect to the written bid submitted by the agent of the noteholder, the court reasoned that the "noteholder can bid through the Trustee.... [T]he Trustee [can] wear two hats."

In response to appellant's argument, appellees noted that the written exceptions did not include the contention, made for the first time at the hearing, that prospective bidders were present at the auction and left after the 1:58 p.m. starting time because of the delay. Appellees' counsel also pointed out that "it's not claimed that the Trustee was not present."

After appellant's counsel affirmatively indicated that there were no other grounds for exceptions, the court overruled the exceptions.

DISCUSSION

A.

Appellant complains that the trial court erred in overruling the exception that was predicated on the ground that the proceeding was unduly delayed because it began forty-five minutes later than scheduled. Appellees counter that appellant's complaint comes at the "eleventh hour" and that, in any event, it does not constitute a basis to set aside the sale. We agree with appellees.

At the outset, we observe that appellant contended in its brief and at oral argument that it proceeded below by way of proffer and that the court accepted its proffer as true. Appellees dispute that the court accepted counsel's assertions as part of the proffer. Upon our review of the record, we agree with appellees that the court did not indicate that it had accepted as true all of counsel's representations. As we noted, counsel for appellant advised the court that he had two witnesses who were available to testify. Yet he did not mention that the witnesses would testify to a delay of 45 minutes with respect to the start of the sale. Indeed, neither the written exceptions, the two affidavits appended to the written exceptions, nor the proffer itself referred to the sale occurring 45 minutes late. Instead, at the argument below, it was appellant's counsel who made that claim. With respect to the delay, appellant's counsel said only that the witnesses "were present for the sale at 1:58 p.m. The Trustees showed up late to the sale." He also proffered that people who were present for the sale left when it did not begin as scheduled. In response to the matter of the delay, the court said: "That's not a basis, so I will concede that. I will assume what you say is right."

Even if the length of the delay were accepted as part of the proffer, we perceive no error. We explain.

A foreclosure sale is governed by Md.Code (1974, 1996 Repl.Vol.1999 Supp.), § 7-105 of the Real Property Article ("R.P.") and the Maryland Rules. Maryland Rule 14-305(d) provides that if a party perceives an irregularity, it may file exceptions to the sale of property. The burden is not on the trustee to show that the sale was valid, however. Instead, the burden is upon the exceptant to show that the sale was invalid. Ten Hills Co. v. Ten Hills Corp., 176 Md. 444, 449, 5 A.2d 830 (1939) (citation omitted); PAS Realty, Inc. v. Rayne, 46 Md.App. 445, 446, 418 A.2d 1222, cert. denied, 289 Md. 739 (1980).

To be sure, "[t]he trustee is bound to exercise the same degree of care, diligence and judgment in selling the property that a prudent person of ordinary business experience would exercise in selling his or her own property to the best advantage." Pizza v. Walter, 345 Md. 664, 681, 694 A.2d 93 (1997); see James H. Robertson Mfg. Co. v. Chambers, 113 Md. 232, 238, 77 A. 287 (1910). Thus, "[t]he trustee not only represents the holder of the note secured by the deed of trust, but also the owners of the property," who may be entitled to any surplus remaining after payment of the note and related expenses. Waters v. Prettyman, 165 Md. 70, 75, 166 A. 431 (1933).

Nevertheless, a "`court will not set aside [a foreclosure] sale merely because it brings loss and hardship upon the mortgagor.' " Hurlock Food Processors Inv. Assocs. v. Mercantile-Safe Deposit and Trust Co., 98 Md.App. 314, 347, 633 A.2d 438 (1993),cert. denied, 334 Md. 211, 638 A.2d 752 (1994) (quoting Bachrach v. Washington United Coop., 181 Md. 315, 324, 29 A.2d 822 (1943)). In Hurlock, we said: "`It is essential to the prompt administration of justice that the rule be inviolably observed that no court shall set aside a foreclosure sale merely because of harmless errors or irregularities ... or for any slight or frivolous reasons not affecting the substantial rights of the parties.'" 98 Md.App. at 329,633 A.2d 438 (quoting Bachrach, 181 Md. at 320, 29 A.2d 822).

When a sale is attacked, "it must be shown that the trustee did not abuse the discretion reposed in him, and that the sale was made under such circumstances as might be fairly calculated to bring the best obtainable price." Waters, 165 Md. at 75, 166 A. 431. The Court in Waters made clear that, in selling the property, a trustee must "`act in a prudent and business-like manner, with a view to obtain as large a price as might, with due diligence and attention...."` Waters, 165 Md. at 75-76, 166 A. 431 (quoting Gould v. Chappell, 42 Md. 466, 470 (1875)) (original emphasis in Gould omitted). If the sale is made with "haste and imprudence," or if the trustee fails to invite competition or adopts "an injudicious and disadvantageous mode of selling the property," the sale should not be ratified. Gould, 42 Md. at 470. In sum,...