Ward v. Wells Fargo Bank, N.A.

• Decision Date: 17 April 2014
• Docket Number: 12–CV–1626.,Nos. 12–CV–749,s. 12–CV–749
• Citation: 89 A.3d 115
• Court: D.C. Court of Appeals
• Parties: April J. WARD and James L. Scales, Appellants, v. WELLS FARGO BANK, N.A., Appellee. and James L. Scales and April J. Ward, Appellants, v. Wachovia Mortgage Prentice Hall Corporation System, et al., Appellees.

89 A.3d 115

April J. WARD and James L. Scales, Appellants,

v.WELLS FARGO BANK, N.A., Appellee.andJames L. Scales and April J. Ward, Appellants,

v.Wachovia Mortgage Prentice Hall Corporation System, et al., Appellees.

Nos. 12–CV–749, 12–CV–1626.

District of Columbia Court of Appeals.

Argued Sept. 11, 2013.

Decided April 17, 2014.

Ian Stumpf, Washington, DC, for appellants.

Azer Akhtar, Vienna, VA, for appellee Wells Fargo Bank, N.A. in No. 12–CV–749.

Michael S. Barranco, with whom Sarah E. Meyer, Towson, MD, was on the brief, for appellee Wells Fargo Bank, N.A., in No. 12–CV–1626.

Azer Akhtar, Vienna, VA, for appellee Rosenberg & Associates, LLC in No. 12–CV–1626.

Before EASTERLY and McLEESE, Associate Judges, and PRYOR, Senior Judge.

McLEESE, Associate Judge:

Appellants James L. Scales and April J. Ward, who are married, purchased a residence together. After they defaulted on two loans, appellee Wells Fargo Bank, N.A. foreclosed on the residence. Wells Fargo also filed an action for possession of the residence. Mr. Scales and Ms. Ward filed a separate action challenging the foreclosure in Superior Court, alleging numerous claims against Wells Fargo and appellee Rosenberg & Associates, LLC (“R & A”), a law firm that participated in the foreclosure. The trial court denied relief to Mr. Scales and Ms. Ward and entered a non-redeemable judgment of possession to Wells Fargo. We affirm.

I.

Except as noted, the following facts are undisputed. In April 2004, Mr. Scales and Ms. Ward purchased as tenants by the entirety a property located at 400 Orange Street, S.E., Washington, D.C. By 2006, they had two outstanding loans on the property: a $216,000 mortgage relating to the purchase of the property and an equity line of credit (“ELOC”) with a limit of $27,000. Mr. Scales and Ms. Ward obtained both loans from World Savings Bank, F.S.B.—a predecessor in interest to Wells Fargo.¹

Mr. Scales and Ms. Ward subsequently moved to 5907 Herring Court, Waldorf, Maryland. Mr. Scales and Ms. Ward notified Wells Fargo of their new address with respect to the mortgage, but the parties dispute whether Mr. Scales and Ms. Ward properly notified Wells Fargo of their new address with respect to the ELOC. From 2006 to 2012, Mr. Scales and Ms. Ward rented the Orange Street property to a tenant who paid them approximately $1700 per month.

In 2009, Mr. Scales and Ms. Ward defaulted on both loans. As a result, Wells Fargo took steps to foreclose on the property, relying solely on the default with respect to the ELOC. Wells Fargo hired R & A to initiate foreclosure proceedings. On December 8, 2009, R & A sent a notice of intent to foreclose to Mr. Scales and Ms. Ward at the Orange Street address. The 2009 notice stated that the foreclosure sale would occur on January 12, 2010.

In January 2010, Mr. Scales filed a complaint in Superior Court and moved for a temporary restraining order (“TRO”) and preliminary injunction to prevent foreclosure, alleging that Wells Fargo was not the proper holder of the ELOC note. Mr. Scales's TRO motion listed Orange Street as Mr. Scales's home address.

The trial court granted a TRO and cancelled the foreclosure sale, based on Mr. Scales's promise to cure the default within two days. The trial court gave Mr. Scales's case priority because the court understood from Mr. Scales that the foreclosure action involved Mr. Scales's home.

Mr. Scales failed to cure the default. As a result, the trial court granted Wells Fargo's motion to dismiss the TRO action and re-scheduled the foreclosure sale for March 23, 2010. R & A again sent notice of intent to foreclose to the Orange Street address.

On March 23, 2010, Wells Fargo purchased the property at the foreclosure sale. On March 30, 2010, Wells Fargo served a thirty-day notice to quit on Mr. Scales and Ms. Ward at the Orange Street address. The deed of sale reflecting Wells Fargo's purchase was executed on May 7, 2010, and recorded on June 30, 2010.

In May 2010, Wells Fargo filed a complaint against Mr. Scales and Ms. Ward in the Landlord–Tenant Branch of the Superior Court for possession of the Orange Street property. In July 2010, Mr. Scales and Ms. Ward filed suit against R & A and Wells Fargo in the Civil Division of the Superior Court, alleging among other things wrongful foreclosure and breach of contract. ² Mr. Scales and Ms. Ward sought damages as well as equitable relief including set-aside of the foreclosure sale and an injunction preventing the eviction proceedings. The trial court initially consolidated the two cases.

The trial court subsequently determined that Mr. Scales and Ms. Ward had effectively asserted a plea-of-title defense in the possession action, by challenging the foreclosure in the wrongful-foreclosure action. Under the Landlord & Tenant Rules, a defendant who asserts a plea-of-title defense to an action for possession must do so in writing and must make appropriate arrangements for an “undertaking,” Super. Ct. L & T R. 5(c) (2014), which “is a form of bond used ... to assure compensation of the plaintiff not only for lost rent during the period of litigation while the defendant occupies the premises but also for the cloud on the title and related damages and cost.” Lindsey v. Prillman, 921 A.2d 782, 785 (D.C.2007) (internal quotation marks omitted). The trial court ordered Mr. Ward and Ms. Scales to comply with Rule 5, but they refused to do so. The trial court therefore struck the request for an equitable set-aside of the foreclosure and severed the possession action from the wrongful-foreclosure action.

In April 2012, the trial court entered a non-redeemable judgment for possession in favor of Wells Fargo in the possession action, holding among other things that Mr. Scales and Ms. Ward did not have standing to challenge the possession action because they had not filed a plea of title and thus were “stranger[s] to the [Orange Street] property[.]”

During the pendency of the possession action, the trial court entered a protective order requiring Mr. Scales and Ms. Ward to pay $1700 per month into the court's registry. The trial court subsequently reduced the payments to $850 per month. The trial court eventually vacated the protective order, concluding that such an order was more appropriate in a suit based on possession for non-payment of rent. By that time, Mr. Scales and Ms. Ward had paid $7015 into the court's registry. The trial court subsequently disbursed the funds to Wells Fargo.

In the wrongful-foreclosure action, the trial court first dismissed a number of the claims as barred by the statute of limitations or for failure to state a claim upon which relief could be granted. The trial court later granted summary judgment to R & A and Wells Fargo on the remaining claims.

II.

Mr. Scales and Ms. Ward raise three challenges to the trial court's handling of the possession action. We see no basis for reversal.

A.

First, Mr. Scales and Ms. Ward argue that the trial court should have dismissed them as defendants in the possession action.³ Specifically, they argue that they were not proper defendants in that action, because they did not occupy the Orange Street property or lease it from Wells Fargo and because the trial court found that they were not challenging Wells Fargo's title to that property. We conclude that Mr. Scales and Ms. Ward were proper defendants in the possession action.

The defendants in an action for possession must be “detain[ing] possession of real property without right, or after [their] right to possession has ceased....” D.C.Code § 16–1501 (2012 Repl.). This court does not appear to have squarely addressed the meaning of the phrase “detains possession” under § 16–1501. It is clear, however, that an action for possession may be brought against a defendant who is not currently occupying the property at issue. SeeD.C.Code § 16–1502 (2012 Repl.) (where defendant in action for possession cannot be found in District of Columbia, summons may be served on tenant or on person over age of sixteen residing on or in possession of premises, and “if no one is in actual possession” summons may be served by posting on property).

We take guidance from the law applicable to ejectment actions, because the action for possession was created to provide for “summary relief in those cases where ... the action of ejectment would lie.” Pernell v. Southall Realty, 416 U.S. 363, 375, 94 S.Ct. 1723, 40 L.Ed.2d 198 (1974) (internal quotation marks omitted; ellipses in Pernell );Service Parking Corp. v. Trans–Lux Radio City Corp., 47 A.2d 400, 403 (D.C.1946) (“statutory [action for possession] proceeding substituted for the ancient remedy of ejectment”). Under District of Columbia law, an ejectment action may be brought against defendants who are not occupying or in actual possession of the property. See, e.g.,D.C.Code § 16–1101(a)(1) (2012 Repl.) (actions in ejectment may be brought against person “actually occupying the premises claimed, either in person or by tenant ”) (emphasis added); Spruill v. Brooks, 68 A.2d 204, 205–06 (D.C.1949) (action for ejectment may be brought “against anyone occupying the premises, either in person or by tenant or against any person exercising acts of ownership adversely to the plaintiff”) (discussing D.C.Code § 16–501 (1940)). See generally, e.g.,28A C.J.S. Ejectment § 48 (2014) ( “Actual or personal possession or an actual occupancy or residence [by the defendant in an ejectment action] is unnecessary ....”); cf. Dun–Donnelly Publ'g Corp. v. Kenvic Assocs., 225 A.D.2d 373, 639 N.Y.S.2d 42, 42–43 (1996) (primary tenant who sublet premises was in possession of property, and thus was subject to action for non-payment of rent, even though primary tenant was “not presently in physical possession of the premises”).

Under these principles, Mr. Ward and Ms. Scales were “detaining possession” of the property for purposes of Wells Fargo's action for possession. They were renting the property to a third party for...