Sleph v. Radtke

• Decision Date: 01 September 1987
• Docket Number: No. 1536,1536
• Citation: 545 A.2d 111,76 Md.App. 418
• Parties: Gerald SLEPH, et al. v. Frederick J. RADTKE, Jr. ,
• Court: Court of Special Appeals of Maryland

Page 418

76 Md.App. 418

545 A.2d 111

Gerald SLEPH, et al. v. Frederick J. RADTKE, Jr.

No. 1536, Sept. Term, 1987.

Court of Special Appeals of Maryland.

Aug. 5, 1988.

Charles E. Wehland, Ellicott City, and Sharon E. Haynie, Columbia, for appellants.

Lewis G. Wilson, Jr. (Donald P. Mazor, on the brief), Baltimore, for appellee.

Argued Before KARWACKI and ROBERT M. BELL, JJ., and JAMES S. GETTY, Associate Judge of the Court of Special Appeals (retired), Specially Assigned.

KARWACKI, Judge.

Gerald Sleph and Beverly Sleph, his wife, appeal from a deficiency decree entered against them by the Circuit Court for Baltimore City in favor of Frederick J. Radtke, Jr., the appellee. They pose these questions for our review:

1. Did the lower court err when it found that there was sufficient contact with the State of Maryland to establish personal jurisdiction over Gerald and Beverly Sleph under Maryland Courts and Judicial Proceedings Code Annotated § 6-103(b)(1)?

2. Did the lower court err when it found that there had been sufficient notice of foreclosure proceedings to Gerald and Beverly Sleph as required by Maryland Rule W74 a.2. (c)?

The Facts

The appellants are, and have been during all times material to this controversy, residents of Annandale, Virginia. In June of 1981 they were persuaded by Norris Ashe, trading as Norris Properties, a Washington, D.C. real estate broker, to invest in five commercial properties known as 1404-06-08-10-12 E. Lombard Street in Baltimore City. These storefront properties were in need of extensive restoration before they could be offered for rent. The appellants agreed to join with Ashe, his wife, and two of his associates, Richie Gaylen and Jackie Z. Woolf, in the purchase of the properties from appellee for an aggregate price of $43,000. The purchasers agreed among themselves that appellants would invest $13,000 in cash in the enterprise and that Mr. and Mrs. Ashe, Gaylen, and Woolf would be solely responsible for satisfying the payments on the mortgage securing the balance of the purchase price, in paying the real estate taxes on the properties and bearing the necessary cost of restoring the properties to a condition where they would be income producing. Under the terms of this oral agreement, appellants received a 79% interest in the five properties. Mr. and Mrs. Ashe were given a 7% interest. Mr. Gaylen and Mr. Woolf each received a 7% share.

Pursuant to this arrangement, appellants drew two checks representing their cash investment. Their $2,000.00 check accompanied the contract for the purchase of the properties, which was signed at their Virginia home. It was made payable to Kline Brothers, a listing broker for the sale of the properties. The second check in the amount of $11,000.00 was made payable to the attorney who conducted the settlement on the sale. Appellants did not attend that settlement but delivered their $11,000 check to Norris Properties.

Settlement was held in July of 1981. Deeds conveying the five properties to appellants and their fellow investors in the interests previously recited were executed by appellee. A purchase money mortgage to appellee in the amount of $33,000.00 had been executed by the appellants at their Virginia home prior to settlement. Mr. and Mrs. Ashe, Mr. Gaylen and Mr. Woolf also executed the mortgage as co-mortgagors. The mortgagors covenanted to repay the principal amount of the mortgage debt together with interest in monthly installments over the next eight years. The mortgagors also agreed that upon any default in the required payments, the entire debt would become due and payable to appellee.

Thereafter, appellants visited the properties sporadically and apparently were satisfied that the agreement which they had entered with their co-venturers was being performed. Appellants never inquired as to whether the required mortgage payments were being made, but relied on the promise of their co-investors to do so. On one occasion Mrs. Sleph received a complaint from the City of Baltimore concerning a housing code violation at the properties. She referred that matter to Mr. Ashe, and it was resolved by him.

In "early Fall" of 1984, Mrs. Sleph spoke with Norris Ashe by telephone. She testified:

I spoke with Norris Ashe on the phone, and asked--I finally got him on the phone, and I asked him what was happening. And he said that Lombard Street had gone to foreclosure. And I said, "What happened?" And he started--he said, "I don't know anything about it. It was Jackie Wolf." And I said, "Well, what does that mean? Where does that leave me?" And I said, "Where's Jackie--you know, what's going on?" And he said, "Well, Jackie Wolf's not associated with me anymore. I don't want to hear his name, and I don't have anything to do with him anymore." And I said, "But it was your company that--you know, where are we now? We've lost all this money that we've put into the money." I said "What did it sell for?" And he said, "It sold for 31,000." And I said, "What about the other two, because the mortgage is for 33?" And he said to me, "Well, they wanted the property back and they got it, and so why would they bother you for that, you know?" And that was the only time I ever heard the word "foreclosure," in that conversation.

The foreclosure proceedings of which the appellants were apparently unaware were instituted by appellee on October 28, 1983. Appellee's petition for foreclosure of the $33,000.00 mortgage executed by appellants and their co-investors alleged a default in that mortgage. On the same day appellee filed a statement of mortgage debt which claimed a principal balance on the mortgage debt of $32,695.02 with interest from May 1, 1983. On October 31, 1983, the court ordered a foreclosure sale.

On April 2, 1984, Donald P. Mazor, appellee's attorney and the trustee appointed by the court to conduct the sale, sent a letter jointly addressed to appellants, the Ashes, Gaylen, and Woolf "c/o Banner Realty, 2508 N. Charles Street, Baltimore, Maryland 21218" notifying them of the time, place, and terms of the sale scheduled for April 19, 1984. That letter was sent by certified mail with return receipt requested. In an affidavit of compliance with Rule W74 a.2. (c), the trustee attached a return receipt for that certified mail reflecting that it was received by S. Robinson on April 9, 1984, at the address to which it was sent.

The mortgaged properties were sold at public sale on April 19, 1984, for $31,000.00. The trustee reported the sale to the court on May 7, 1984. Thereafter, the court auditor examined the proceedings and stated his account, which reported that the net proceeds of the foreclosure sale were $15,114.20 less than the mortgage debt and accrued interest due the appellee. That account was finally ratified and confirmed by the court on September 13, 1984.

On October 25, 1984, appellee moved for a deficiency decree against appellants. Process was issued for the appellants on that motion. When the sheriff filed his return on the summons directed to 2508 N. Charles Street, he noted that when he attempted to serve the appellants at that address, he was informed by one Shirley Robinson that the appellants were unknown at that address. On January 23, 1985, appellee reissued process on the motion. Appellant Beverly Sleph received a copy of the motion and the summons issued by the court thereon by certified mail directed to her home in Virginia on January 31, 1985. Appellant Gerald Sleph was served with the motion and summons by a private process server at his home in Virginia on November 11, 1985.

After her receipt by certified mail of the motion for deficiency decree and summons, appellant Beverly Sleph wrote to the attorney for the appellee on February 16, 1985:

I have received a letter from you regarding a foreclosure filed by Frederick J. Radtke, Jr.

This is the first communication we have ever received regarding any foreclosure. We are unsure as to what has occurred.

Can you advise why this is our first notice and its meaning?

Looking forward to your reply.

Mr. Mazor answered that letter on February 25, 1985. He advised Mrs. Sleph that his client's mortgage on the Lombard Street properties had been foreclosed, and he informed her of the amount of the successful bid at the foreclosure sale and the amount of the deficiency between the mortgage debt due appellee and the net proceeds of the foreclosure sale. His letter continued:

Under the Rules of the State of Maryland, it is necessary that notice of the sale be given to the mortgagors not more than 15 days nor less than 5 days prior to the sale by certified mail. The only address known at that time for you was the office of Jackie Z. Woolf in Baltimore City on North Charles Street and, accordingly, notice of the sale was mailed to that address. I have subsequently learned of your address through an attorney who now represents Mr. and Mrs. Ashe and, accordingly, that is why you are now getting notice of the deficiency. The deficiency amounts to $15,224.20 and will be a judgment against you as entered by the Circuit Court for Baltimore City.

It would be appreciated if you would be kind enough to communicate with me for the purpose of determining when and how these funds will be paid.

On December 24, 1985, when neither appellant opposed appellee's motion for a deficiency decree, the court entered a decree in personam against them in the amount of $15,224.20. On March 13, 1986, the appellants filed a belated answer to appellee's motion for deficiency decree, and on April 4, 1986, they moved to strike the decree in personam entered against them. Appellants asserted that appellee's attorney had granted their attorney an extension of indeterminate length to reply to appellee's motion for deficiency decree. Appellee did not oppose the motion and the decree was set aside. The court then referred the case to a master for hearing, report and recommendation pursuant to ...