Zorzit v. 915 W. 36th St. Llc, 978

• Decision Date: 02 February 2011
• Docket Number: 2009.,Sept. Term,No. 978,978
• Citation: 12 A.3d 698,197 Md.App. 91
• Parties: John ZORZITv.915 W. 36TH STREET, LLC, et al.
• Court: Court of Special Appeals of Maryland

197 Md.App. 91

12 A.3d 698

John ZORZIT

v.915 W. 36TH STREET, LLC, et al.

No. 978

Sept. Term

2009.

Court of Special Appeals of Maryland.

Feb. 2, 2011.

Arnold M. Zerwitz, Dundalk, MD, for appellant.Jan I. Berlage (Gohn, Hankey & Stichel, LLP, on the brief), Baltimore, MD, for appellee.Panel: WOODWARD, GRAEFF, ARRIE W. DAVIS, (Retired, Specially Assigned), JJ.WOODWARD, J.

This appeal arises from a decision of the Circuit Court for Baltimore City granting the abatement of interest accruing on the unpaid balance of the purchase price at a foreclosure sale from the date of such sale to the date of settlement. Appellant, John Zorzit, is the court-appointed substitute trustee who presided over the foreclosure sale. Appellees, 915 W. 36th Street, LLC and 919 W. 36th Street, LLC,¹ are the purchasers of the foreclosure properties.

Appellant presents one question for our review, which we have slightly rephrased: Did the circuit court abuse its discretion in abating the interest incurred by appellees from the date of the foreclosure sale to the date of settlement? For the reasons set forth herein, we shall affirm in part and reverse in part and remand the case for further proceedings.

BACKGROUND

Kalliopi LeVanis and George LeVanis (“former owners”) owned three properties located in Baltimore City at 915, 917, and 919 West 36th Street. Each property was subject to a separate deed of trust in favor of the lender, Nick's Amusements, Inc. Upon the former owners' default, appellant, the substitute trustee on the three deeds of trust, petitioned the Circuit Court for Baltimore City for a decree for sale of the properties. Pursuant to the circuit court's Decree for Sale of Property dated February 14, 2008, appellant advertised the properties for sale at public auction. See Md. Rule 14–210(a). The “Terms of Sale” portion of the advertisement stated, in relevant part:

Interest to be paid on the unpaid purchase money at the rate of 10% per annum from the date of sale to the date funds are received in the office of the Substitute Trustee. In the event settlement is delayed for any reason, there shall be no abatement of interest.

On June 30, 2008, appellees purchased the properties at the foreclosure sale for $1,200,000. The terms of sale in the advertisement stipulated that a deposit of $50,000 was required at the time of sale and that “[t]he deposit must be increased to 10% of the purchase price within 3 business days.” In accordance with those terms, appellees made a total deposit of $120,000, of which $50,000 was paid at the time of the foreclosure sale. The remaining balance of $1,080,000 was due at settlement. After appellant filed a report of sale, the clerk of the circuit court issued a notice of sale on July 16, 2008, indicating that unless good cause to the contrary was shown by August 15, 2008, the court would ratify the sale of the properties. See Rule 14–305(e).

On August 15, 2008, the former owners filed exceptions to the foreclosure sale. See Rule 14–305(d)(1). Appellant filed an opposition to the exceptions on August 25, 2008, arguing that the exceptions showed no grounds for setting aside the foreclosure.² On October 31, 2008, the circuit court denied the former owners' exceptions and issued an order ratifying the sale of the properties. See Rule 14–305(d)(2). The settlement on the sale of the properties occurred on December 8, 2008. The settlement statement, which was signed by both appellant and appellees, indicated that appellees paid $47,584.71 in interest at the closing.

On January 5, 2009, appellees filed a motion for abatement of interest in the circuit court. The motion sought an equitable abatement of the interest in the amount of $47,584.71. Appellees' motion stated their basic argument:

13. As recently as this month, the Maryland Court of Special Appeals reiterated this Court's authority to abate interest attributable to a delay in a foreclosure action beyond the purchaser's control.

* * *

17. [T]he right to petition this Court for abatement of interest is so fundamental that it cannot be abdicated by contract.

18. The ratification of the 36th Street Property foreclosure sale was significantly delayed because of the exceptions filed by the Previous Owners.

19. [Appellees] had no control over the filing or litigation of the Previous Owners' exceptions, but [were] held hostage by the process for months.

20. In contrast, [appellant] was completely responsible for the sale of the 36th Street Property and actively involved in litigating these exceptions to that sale.

(Citations omitted).

Appellant filed an opposition to appellees' request for an abatement of interest. In that opposition, appellant asserted that the former owners' exceptions to the foreclosure sale were the sole cause of any delay in settlement. Appellant also noted that appellees agreed to the terms of sale set forth in the published advertisement when they signed the auctioneer's memorandum of purchase. Among those terms was the following sentence: “In the event settlement is delayed for any reason, there shall be no abatement of interest.”

A hearing was held in the circuit court on June 8, 2009. At the conclusion of the hearing, the court ruled in favor of appellees and abated the entire interest imposed on appellees, in the amount of $47,584.71. The court explained:

[I]t is very, very, very clear from [Judge Moylan's] opinion [in Thomas v. Dore, 183 Md.App. 388, 961 A.2d 655 (2008) ] and the caselaw that he cited within his opinion ... that the equity does trump a notice of sale, first of all. What's in the full notice means nothing, really.

It's a rebuttable presumption that the person knew there would be no abatement of interest, and that presumption can clearly be rebutted, and he lists the three exceptions. And the exception I believe we're dealing with in this case is clearly that the delay was caused by the conduct of other persons beyond the power of the purchaser to control or ameliorate.... [T]he question is not whether the Substitute Trustee did anything wrong, so let's be clear about that.... But clearly, anybody outside the purchaser's control that causes a delay is something the Court needs to look at. And in this case it's very clear after everything has been argued that the debtor, from what I can see, caused the delay by filing the exceptions, which have been denied....

The purchaser has no control over this debtor, and I believe that this case fits within the arguments established and the caselaw established in Thomas v. Dore.

After the court made its ruling, appellant's counsel continued to argue that appellant was entitled to the payment of interest from the date of the foreclosure sale, June 30, 2008, to September 15, 2008.³ The hearing judge rejected this argument, stating that nothing in the record enabled her to compute the amount of interest that accrued during that time period.

This timely appeal followed.

STANDARD OF REVIEW

“Whether to abate the payment of interest by a [foreclosure sale] purchaser ... is a decision entrusted to the discretion of the hearing judge.” Thomas v. Dore, 183 Md.App. 388, 405, 961 A.2d 655 (2008). We therefore review a circuit court's decision to abate interest under the “familiar abuse of discretion standard.” Baltrotsky v. Kugler, 395 Md. 468, 477 n. 7, 910 A.2d 1089 (2006).

This Court has aptly noted that “a ruling reviewed under an abuse of discretion standard will not be reversed simply because the appellate court would not have made the same ruling.” North v. North, 102 Md.App. 1, 14, 648 A.2d 1025 (1994). Rather, an abuse of discretion might occur when the trial court's decision “either does not logically follow from the findings upon which it supposedly rests or has no reasonable relationship to its announced objective.” Id.

DISCUSSION

On appeal, appellant contends that the circuit court “erred” by abating the entire interest due at settlement. Appellant first argues that appellees were obligated to pay the interest on the unpaid balance of the purchase price accruing from June 30, 2008, the date of the foreclosure sale, to August 15, 2008, the initial date prescribed for final ratification, and from October 31, 2008, the date of final ratification, to December 8, 2008, the date of settlement. Specifically, appellant asserts that appellees advance “no argument but that the Appellee [sic] was obligated to pay interest for the first 45 [sic] days (between June 30 and August 15, 2008).” For the period from the actual ratification date of October 31, 2008 to the date of settlement, December 8, 2008, appellant contends that “there is no basis under the principles of equity for awarding Appellee[s] what amounts to a windfall for interest abatement for those 38 days.”

Appellant further asserts that the circuit court's decision to abate the interest accruing from August 15, 2008 to October 31, 2008 also constituted an abuse of discretion, because the trial judge failed to exercise any discretion in granting the abatement of such interest. Appellant maintains that

[a] judge exercising discretion could have readily concluded that two and one-half months delay was simply a reasonable foreseeable cost of making a purchase stemming from a foreclosure sale or that given the short period of time the Court might have considered Appellee's [sic] suggestion [at the circuit court hearing] that the interest and costs from August 15 to October 31, 2008 should be divided.

Appellees counter that the circuit court properly abated all of the accrued interest. According to appellees, this Court's opinion in Thomas and the Court of Appeals' opinion in Baltrotsky are dispositive of the case sub judice. In particular, appellees note that in both Thomas and Baltrotsky, as in the present case, the ratification of the foreclosure sale was delayed because the previous owners filed exceptions. Appellees thus claim that the equitable principles supporting the abatement of interest that...