ROYAL PLAZA COMMUNITY ASSOCIATION, INC. v. Bonds

• Decision Date: 04 October 2005
• Docket Number: No. 5,5
• Citation: ROYAL PLAZA COMMUNITY ASSOCIATION, INC. v. Bonds, 884 A.2d 130, 389 Md. 187 (Md. 2005)
• Parties: ROYAL PLAZA COMMUNITY ASSOCIATION, INC. v. Eugene BONDS.
• Court: Maryland Court of Appeals

884 A.2d 130

389 Md. 187

ROYAL PLAZA COMMUNITY ASSOCIATION, INC. v. Eugene BONDS.

No. 5, September Term, 2005.

Court of Appeals of Maryland.

October 4, 2005.

J. Peter Puglia (Andrews & Puglia Law Group, LLC, Gaithersburg, on brief), for petitioner.

Susan Mays, Glen Burnie, for respondent.

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

CATHELL, J.

This case arises from an action to foreclose the equity of redemption with respect to real property sold at a tax sale in 1997. At issue is whether the Circuit Court of Prince George's County lacked jurisdiction to enter a valid order of foreclosure because Petitioner Eugene Bonds' ("Bonds"), assignor, Willie Lenson,¹ failed to follow the notice requirements provided by Md. Code (1985, 2001 Repl.Vol., 2004 Cum. Supp.), § 14-836(b) of the Tax-Property Article, as they apply to Respondent Royal Plaza Community Association, Inc.² ("HOA").

The HOA's petition for writ of certiorari presents one question for our review:

"Did the Court of Special Appeals err when it held that although a plaintiff in an action to foreclose the equity of redemption willfully failed to strictly follow the notice requirements under § 14-836(b) of the Tax-Property [A]rticle, the circuit court had jurisdiction to enter a valid order of foreclosure?"

The HOA's brief on appeal presents a number of additional questions, which we decline to discuss both because they were not presented in its petition for writ of certiorari and because, in any event, it would not be necessary to reach them even if they had been properly presented.

I. Facts

The piece of property this case concerns is a 4.42534 acre parcel ("the parcel") situated in the center of the Royal Plaza subdivision in Prince George's County. Royal Plaza is a community of residential townhouses built in the late 1980s and early 1990s. On May 22, 1989, Royal Plaza Associates Limited Partnership ("the developer")³ recorded in the Land Records of Prince George's County, four subdivision plats for the prospective Royal Plaza development. Each plat delineated a separate section of the development and designated common areas within each section for recreation or open space. The property in question was one of the designated common areas. This particular plat, Plat One, described the parcel as:

"PARCEL A TO BE CONVEYED TO THE HOMEOWNERS ASSOCIATION 192,767.87 SQ. FT. OR 4.42534 ACRES"

On July 27, 1989, the developer formed the HOA as a non-profit Maryland corporation. John Dowd, the general partner and resident agent of the developer, was listed as the HOA's resident agent and was a member of its board of directors. A specific purpose enumerated in the HOA's Articles of Incorporation is "to provide for or assure maintenance, preservation and architectural control of the Lots and Common Area within the [development.]" On May 3, 1991, the developer conveyed by deed two of the four common areas to the HOA. Parcel A, the property in question, for reasons not made clear in the record, was not conveyed to the HOA.

On May 12, 1997, there was a tax sale of the parcel and Willie Lenson ("Lenson") purchased the tax certificate for the property for the sum of $4,000. Lenson had a title search conducted on September 14, 1998, which confirmed that the developer was the sole owner of the property. On September 23, 1998, Lenson filed a Complaint to Foreclose the Equity of Redemption in the Circuit Court for Prince George's County. At the time of the tax sale and foreclosure, the developer was still the record title owner of the parcel. Lenson attempted to serve notice on the developer, but was unsuccessful.⁴ Lenson did not send written notice of the proceedings specifically to the HOA. It should be noted, however, that the HOA's resident agent, John Dowd, was also the developer's resident agent and listed the same address on record with the SDAT in his capacity as agent for both organizations.

On January 13, 2000, the Circuit Court foreclosed the right of redemption and conveyed full ownership of the parcel to Lenson. On October 22, 2001, well over a year later, the HOA filed a motion to vacate the judgment foreclosing the right of redemption on the parcel, along with a motion to intervene in the foreclosure action as a defendant.⁵ On November 6, 2001, before the motion was ruled on, Lenson sold the parcel to Bonds, who recorded his deed to the property on December 5, 2001.

On January 14, 2002, Bonds filed a motion to intervene as successor-in-interest to Lenson. On February 15, 2002, the Circuit Court granted both the HOA's and Bonds' motions to intervene. In addition, the court vacated the order foreclosing the right of redemption, finding that the HOA was entitled to receive actual notice of the complaint.

On January 3, 2003, Bonds amended the original complaint to foreclose the right of redemption to include a claim to quiet title. On September 10, 2003, ruling on a motion by Bonds, the Circuit Court dismissed the claim for lack of jurisdiction. Bonds filed a timely appeal. On December 29, 2004, the Court of Special Appeals reversed the Circuit Court's ruling, holding that Lenson's failure to send the HOA notice did not deprive the Circuit Court of jurisdiction to enter judgment and that the Circuit Court erred in vacating the judgment and remanded the case to the Circuit Court to reinstate the order foreclosing the right of redemption. Bonds v. Royal Plaza Community Associates, Inc., 160 Md.App. 445, 864 A.2d 257 (2004). The HOA filed a petition for writ of certiorari which we granted on April 7, 2005. At no time has the record owner of the tract of land, the developer, challenged the foreclosure of the right of redemption.

II. Discussion

The HOA contends that Bonds, as assignee of Lenson, failed to strictly follow the notice requirements under § 14-836(b) of the Tax-Property Article, and therefore, the Circuit Court for Prince George's County lacked jurisdiction to enter a valid order of foreclosure. Under the circumstances here present we find that the Circuit Court had jurisdiction to enter an order foreclosing the equity of redemption.

Sections 14-808 through 14-854 of the Tax-Property Article set out and govern the procedure for tax sales in Maryland. Section 14-832 of the Tax-Property Article requires that provisions relating to tax sales (§§ 14-832.1 through 14-854) "shall be liberally construed as remedial legislation to encourage the foreclosure of rights of redemption by suits in the circuit courts and for the decreeing of marketable titles to property sold by the collector." As we stated in Thomas v. Kolker, 195 Md. 470, 475, 73 A.2d 886, 888 (1950), "the legislature has declared that the public interest in marketable titles to property purchased at tax sales outweighs considerations of individual hardship in every case, except upon a showing of lack of jurisdiction or fraud in the conduct of the foreclosure." See also Lippert v. Jung, 366 Md. 221, 230, 783 A.2d 206, 211 (2001); Hardisty v. Kay, 268 Md. 202, 208, 299 A.2d 771, 774 (1973); Kaylor v. Wilson, 260 Md. 707, 712, 273 A.2d 185, 187 (1971).

The success and finality of tax foreclosure sales is essential to the marketability of title to property. This is further evidenced by § 14-845(a) of the Tax-Property Article which addresses the reopening of judgments generally:

"A court in the State may not reopen a judgment rendered in a tax sale foreclosure proceeding except on the ground of lack of jurisdiction or fraud in the conduct of the proceedings to foreclose; however, no reopening of any judgment on the ground of constructive fraud in the conduct of the proceedings to foreclose shall be entertained by any court unless an application to reopen a judgment rendered is filed within 1 year from the date of the judgment."

After a year has passed, the only occasions in which a judgment in a tax foreclosure sale will be reopened is if there was a lack of jurisdiction or actual fraud. Constructive fraud "shall be entertained" as a reason to reopen a judgment only if the claim is brought within one year from the date of the judgment. In the case sub judice, there was no claim or evidence of actual fraud in the record and the claim of the HOA was filed more than a year after the entry of the judgment.⁶

In determining whether the Circuit Court lacked jurisdiction we look to the pertinent sections of the Tax-Property Article. Section 14-835(a) of the Tax-Property Article addresses the "Form of complaint," stating that "[a] person shall file a complaint in the circuit court for the county in which the land is located" and § 14-834 provides for the jurisdiction of the court:

"§ 14-834. Jurisdiction of court.

The circuit court, on the filing of a complaint to foreclose the right of redemption, has jurisdiction to give complete relief under this subtitle, in accordance with the general jurisdiction and practice of the court, and with all laws and rules of court that relate to the circuit courts for the county in which the property is located, except as otherwise provided in this subtitle, to bar all rights of redemption and to foreclose all alienations and descents of the property occurring before the judgment of the court as provided in this subtitle and all liens and encumbrances on the property, except property taxes that arise after the date of sale, and to order an absolute and indefeasible estate in fee simple or leasehold to be vested in the holder of the certificate of sale."

Under the circumstances here present, an accurate interpretation of the notice requirements outlined in § 14-836 of the Tax-Property Article is determinative. Section 14-836, in its relevant parts, identifies the necessary parties to an action to foreclose the right of redemption, and what notice must be sent to those who are not necessary parties:

"§ 14-836. Parties.

(a) Plaintiffs. — The plaintiff in any action to foreclose the right of redemption shall be the

...