Jones v. Ward
| Decision Date | 24 February 2022 |
| Docket Number | 1071, Sept. Term, 2020 |
| Citation | 254 Md.App. 126,270 A.3d 1024 |
| Parties | Phyllis M. JONES v. Carrie M. WARD, et al. |
| Court | Court of Special Appeals of Maryland |
Argued by: Kellee Baker (KB Law Firm, Greenbelt, MD), on brief, for Appellant.
Argued by: Matthew Cohen (Christine N. Johnson, Rockville, MD), on brief, for Appellee.
Reed, Ripken, Lynne A. Battaglia (Senior Judge, Specially Assigned) JJ.
This appeal involves a challenge to the Circuit Court for Prince George's County's order denying Appellant Phyllis Jones's ("Jones") Motion to Stay and/or Dismiss Foreclosure Proceedings. Jones argues that the circuit court denied the motion in error because the trustees1 who initiated the foreclosure proceeding, Appellees (collectively "Substitute Trustees"), did not have standing to bring the action. According to Jones, numerous defects in the chain of title called into question the foreclosing lender's right to enforce the note secured by her property. For the reasons discussed below, we shall affirm.
On June 24, 2004, Jones obtained a loan from World Savings Bank, FSB ("World Savings Bank") for $360,000, which was executed by a Note and a Deed of Trust secured by her property at 17005 Longleaf Drive, Bowie, Maryland 20716 ("the Property"). In the Note, Jones agreed to pay $360,000 to World Savings Bank and "its successors and/or assignees, or anyone to whom the Note is transferred." World Savings Bank recorded the Deed of Trust. On August 31, 2004, an Assistant Custodian of Records for World Savings Bank signed a Lost Note Affidavit affirming that World Savings Bank was the lawful owner of the Note, the Note had not been "canceled, altered, assigned, endorsed, negotiated, or hypothecated," and the Note was lost. Despite this, Wells Fargo, N.A. ("Wells Fargo") came to own the Note through a series of acquisitions in which Wachovia acquired World Savings Bank, and Wells Fargo then acquired Wachovia.
On November 7, 2014, Jones entered into an agreement with Wells Fargo to modify the loan. The modification altered the payment terms. In July of 2016, Wells Fargo executed a Lost Note Affidavit stating that it was the owner of the Note, the Note had not been assigned or sold, and the Note had been lost. On September 8, 2016, Wells Fargo executed an additional Lost Note Affidavit in connection with a contemplated sale to PRMF Acquisition, stating that Wells Fargo "is the lawful owner of the Note" and it had not "sold, cancelled, altered, assigned or hypothecated the Note, except with respect to the sale of the Note and loan to PRMF Acquisition LLC ("Purchaser"), to which this Lost Note Affidavit relates." Then on May 31, 2017, Wells Fargo executed another Lost Note Affidavit stating that it "is the lawful owner of the Note," and affirming that the Note had been inadvertently lost, and had not been sold, altered, or assigned.
On August 22, 2017, Wells Fargo transferred its ownership of the Note to Truman 2016 SC6 Title Trust LLC ("Truman I") and transferred servicing rights to Rushmore Loan Management Services ("Rushmore"). An assignment of the Deed of Trust to Truman I was recorded in the County Land Records. In March of 2018, Truman I transferred its ownership in the Note to Truman 2016 SC6 MD ML, LLC ("Truman II"), of which the assignment was likewise recorded.
On November 21, 2018, Rushmore sent Jones a letter notifying her that Truman II was the new creditor that holds title to the loan, and that Rushmore was responsible for servicing the loan. Truman II, acting through Rushmore, appointed appellees as Substitute Trustees.
Earlier, in February of 2016, Jones defaulted on her mortgage payments due under the Note. A notice of intent to foreclose was sent to Jones in June of 2018 based on her continued default, and on April 18, 2019, Substitute Trustees initiated a foreclosure action by filing an Order to Docket in the Circuit Court for Prince George's County.2 Included with the Order to Docket was a copy of an affidavit certifying that Truman II owned the Note and that the attached copy of the note was true and accurate. Jones filed a Motion to Stay and/or Dismiss Foreclosure Proceedings. According to Jones, dismissal was appropriate because the Substitute Trustees failed to demonstrate that Truman II was the owner of the Note, and therefore Substitute Trustees did not have standing to bring the action. The court signed an order on September 26, 2019, temporarily staying the foreclosure sale until after a decision had been rendered following a full evidentiary hearing on Jones's motion.
Prior to the hearing, on January 9, 2020, Rushmore, acting as the authorized loan servicer for Truman II, executed a Lost Note Affidavit stating that Truman II was the lawful owner of the Note and detailing the lengthy transfer history of the Note. In addition, the affidavit stated that "[Truman II] agrees to hold harmless and indemnify any party which has relied on this affidavit, should any claim be made against them by reason of claimed ownership of the Note[.]" The affidavit was signed by Enadia Pierce, the Assistant Vice President of Rushmore. The affidavit stated it was witnessed by the notary "on this day of 1-9-2020 before me, a Notary Public in the State of Maryland, in and for the County of Montgomery[.]" The notarial seal was from the State of Texas.
On January 14, 2020, the court held the hearing on Jones's motion wherein it heard testimony and oral argument from each side. The parties stipulated to the following exhibits: a copy of the Note signed by Jones; a copy of the Deed of Trust; a copy of the Modification Loan Agreement with Wells Fargo; a letter dated August 3, 2017, informing Jones that Rushmore would begin servicing her loan and a letter dated September 5, 2017, summarizing Jones's debt; assignments of the deed of trust from Wells Fargo to Truman I and Truman I to Truman II; a copy of a letter dated August 25, 2018, titled "Notice of Sale of Ownership"; a document reflecting the payment history on the loan; and the prior lost note affidavits, with the exception of the January 9, 2020 lost note affidavit. Jones objected to the admission of that affidavit, arguing that it was facially invalid given the inconsistencies in the Maryland notary attestation and the Texas notarial seal.
In response, Substitute Trustees argued that the Texas notarial seal did not make the affidavit invalid, given that Pierce had signed the affidavit. Additionally, Substitute Trustees stated that Rushmore's assistant secretary and custodian of records, Roger Martin ("Martin"), was available to testify to the veracity of the affidavit's contents. Martin testified that the signatory on the affidavit, Ms. Pierce, worked in the Dallas office of Rushmore, but he did not know whether she was located in Maryland or Texas on January 9, 2020. Martin also testified that the January 9, 2020 affidavit came into his possession after it was sent directly to Rushmore. He further stated that, as custodian of records for Rushmore, he maintains records for loans that Rushmore services in the ordinary course of business, and the January 9, 2020 affidavit was one of those records. Martin testified that he reviewed the documents described in the January 9, 2020 affidavit and verified the truth of the information contained in the January 9, 2020 affidavit. The court found Martin's testimony to be credible and it admitted the affidavit as a business record, along with the other exhibits.
Next, the circuit court heard argument on her motion, and Jones contended that the foreclosure action should be dismissed because Substitute Trustees lacked the requisite standing to foreclose. According to Jones, Substitute Trustees could not demonstrate that they were nonholders in possession of the Note because the Note was lost, the copy of the Note attached to the Order to Docket was unendorsed, and the documents provided by Substitute Trustees were insufficient to prove transfer history.3 In particular, Jones argued that the September 8, 2016 lost note affidavit stated that the Note was transferred to PRMF Acquisition, Inc. In response, Substitute Trustees argued that they were not attempting to enforce the note as nonholders in possession but as parties entitled to enforce a lost note under Maryland Commercial Law Article ("CL") § 3-309 . Substitute Trustees stressed that Jones did not contest that she was in default of her payments, nor did she suggest that another purported owner of the Note had contacted her seeking payment. They further argued that the documents amply proved the transfer history. The court took the matter under advisement.
On February 12, 2020, the court issued an order denying Jones's motion. In its written opinion, the court reviewed the foreclosure history and stated that Jones obtained a loan from World Savings Bank in 2004, which the court referred to as "Loan I." The court treated Jones's later loan modification agreement with Wells Fargo as a "refinance," which the court referred to as "Loan II." In its analysis, the court found that Loan I (with World Savings Bank) was "undisputed," and that Wells Fargo "inherited the rights and interests previously obtained by World Savings Bank," through equitable subrogation. The court found that "when Wells Fargo lost the original Loan Modification Agreement," which the court treated as Loan II, Wells Fargo executed "several lost note affidavits in accordance with Maryland law." The court thereafter found that Loan II was "properly assigned from Wells Fargo to [Truman I] then to [Truman II]," Truman II retained ownership with Rushmore as its servicer, and the court accepted Rushmore's January 2020 lost note affidavit. The court concluded that Substitute Trustees, on behalf of Rushmore, were entitled to enforce the note. The court lifted the temporary stay on the property and allowed foreclosure proceedings to commence.
Jones filed a Motion for Reconsideration ...
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