Balt. Home Wholesalers, LLC v. Kuhn

BALTIMORE HOME WHOLESALERS, LLC, v. MICHAEL V. KUHN, et al., SUBSTITUTE TRUSTEES

No. 1537

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2019

March 25, 2021

Circuit Court for Prince George's County

Case No. CAEF1814792

UNREPORTED

Leahy, Nazarian, Wells, JJ.

Opinion by Wells, J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

BP Fisher Law Group, LLC ("BP Fisher") employed Appellee, Michael V. Kuhn, as an associate attorney. BP Fisher represented Select Portfolio Servicing, Inc. ("Select Portfolio Servicing"), noteholders on a mortgage that Lajuan Poole and Costella Tyler had on their home. During his employment at BP Fisher, Kuhn signed documents that made himself, along with three other BP Fisher associates,¹ a substitute trustee on the loan. In December 2018, Appellant Baltimore Home Wholesalers, LLC ("Baltimore Home Wholesalers") purchased the property from Select Portfolio Servicing after the latter foreclosed on Poole and Tyler's home. A $32,000.00 deposit was made payable to BP Fisher.

Less than one month after the sale, Kuhn was fired from his position at BP Fisher. Later, in June 2019, Baltimore Home Wholesalers brought suit against BP Fisher after discovering that the firm was insolvent. During the proceedings against BP Fisher, Kuhn filed a motion asking that he be removed as a substitute trustee. After reviewing arguments from Kuhn and Baltimore Home Wholesalers, the Circuit Court for Prince George's County removed Kuhn as a substitute trustee. Baltimore Home Wholesalers now appeals. While this appeal is pending, the foreclosure case is still ongoing in the circuit court, as no final judgment has been entered.

Before this Court, Baltimore Home Wholesalers raises two issues for our review,which we have rearranged as two separate questions:²

1. Is the circuit court's order removing Kuhn as a substitute trustee appealable prior to the circuit court entering a final judgment?

2. Should the circuit court have removed Kuhn as a substitute trustee?

For the reasons that follow, we hold that Baltimore Home Wholesalers' appeal is untimely. As such, we must dismiss the appeal. Consequently, we decline to answer the second question.

FACTUAL AND PROCEDURAL BACKGROUND

A. Parties Involved

Lajuan Poole and Costella Tyler formerly owned a home at 5813 Dewey Street, Cheverly, Maryland ("the property"). The couple granted a deed of trust to Encore Credit Corporation in 2005. More than a decade later, when this controversy arose, U.S. Bank National Association ("US Bank") was the trustee and Select Portfolio Servicing was the holder of the note on the property.³ Michael V. Kuhn, Caitlin Schultz, William K. Smart, and Tracey D. Jean-Charles became substitute trustees on the loan in December 2018. Atthe time that the Substitute Trustees came into their positions, they were all employees of the law firm, BP Fisher. The noteholder, Select Portfolio Servicing, was a client of BP Fisher.

B. Foreclosure and Purchase of Property

By May 2018, Poole and Tyler had defaulted on their home loan. US Bank thereafter commenced foreclosure proceedings in the Circuit Court for Prince George's County. At the December 2018 foreclosure sale, the property was sold to Baltimore Home Wholesalers for $235,000. Baltimore Home Wholesalers paid a $32,000.00 sales deposit. On behalf of BP Fisher, Kuhn signed the Report of Sale regarding the transfer of the property to Baltimore Home Wholesalers on January 11, 2019.

C. Termination of Kuhn's Employment and Sale of Law Firm

On January 11, 2019, the same day that Kuhn signed the Report of Sale, Kuhn was terminated from his employment at BP Fisher. Four days later, Select Portfolio filed suit against BP Fisher, alleging that BP Fisher's escrow account was overdrawn by millions of dollars. BP Fisher filed for bankruptcy the same day.

Upon learning of BP Fisher's bankruptcy, on June 26, 2019, Baltimore Home Wholesalers filed a Motion to Vacate its December 2018 purchase of the property at issue. The following month, after a hearing, a circuit court judge ordered the sale vacated. Baltimore Wholesalers demanded the substitute trustees return the $32,000.00 deposit.

D. Kuhn's Removal as Substitute Trustee

Kuhn filed a motion to revise in which he argued that he should be removed as a substitute trustee. Before the circuit court, Kuhn advanced three main points. First, Kuhnargued that because he was fired from BP Fisher less than a month after becoming a substitute trustee and because he never had any control of nor signing authority of the funds at issue, he should not have to remain a substitute trustee. Second, he asserted that as an "innocent trustee," he cannot be liable to Baltimore Home Wholesalers. Finally, Kuhn contended that his termination of employment from BP Fisher meant that he was no longer responsible to return the $32,000.00 sales deposit.

Baltimore Home Wholesalers contended that as a substitute trustee, Kuhn has continuing fiduciary duty regardless of his employment status. Baltimore Home Wholesalers asserts that "[w]hatever Mr. Kuhn's employment circumstance [may be], he cannot just walk away from this case having taken [Baltimore Home Wholesalers'] deposit money and not assured the safekeeping of it."

After considering the arguments from both parties, the circuit court entered an order in favor of Kuhn and removed him as a substitute trustee. On the same day, the circuit court also removed Kuhn as the attorney of record. Baltimore Home Wholesalers filed this appeal.

DISCUSSION

I. THE CIRCUIT COURT'S REMOVAL OF KUHN AS A SUBSTITUTE TRUSTEE WAS NOT TIMELY APPEALED

A. The Parties' Contentions

Baltimore Home Wholesalers and Kuhn both address the appealability of the circuit court's order in their briefs, with, predictably, Baltimore Home Wholesalers contending that the order is currently appealable and Kuhn contending that it is not.

Baltimore Home Wholesalers argues that this Court has jurisdiction to hear this appeal because the circuit court's order is a collateral order and confers jurisdiction to this Court under the collateral order doctrine. Specifically, Baltimore Home Wholesalers views the circuit court's order as a "complete adjudication for its return by [] Substitute Trustees . . . which falls within the Collateral Order Doctrine." Baltimore Home Wholesalers argues the requirements for the collateral order doctrine are met because the circuit court's order:

(1) conclusively determined the question of the return of the Appellant's deposit and those responsible for its return; (2) resolved the important issue as to who should return the deposit; (3) resolved an issue completely separate from the merits of the foreclosure action; and (4) would be effectively unreviewable on appeal from a final judgment disposing of the foreclosure action itself inasmuch as [Kuhn] has no standing to participate further in it given the vacating of the sale.

Aside from this assertion and its citation to St. Joseph Med. Ctr., Inc. v. Cardiac Surgery Assocs., P.A., 392 Md. 75, 84 (2006), Baltimore Home Wholesalers provides no further explanation of how the circuit court's order is appealable under the collateral order doctrine.

Kuhn first notes that the circuit court's order removing him as a substitute trustee was granted without prejudice. Second, Kuhn notes that only he, and not the three remaining Substitute Trustees, were served with a copy of Baltimore Home Wholesalers' Motion for Judgment Against Substitute Trustees. Kuhn anticipates that upon conclusion of this appeal, the remaining Substitute Trustees will oppose the motion "based upon Maryland case law and the principles regarding an innocent trustee." Finally, Kuhn claims:

[T]here has been no conclusive determination nor complete adjudication of the issues regarding the ultimate, legal responsibility for the repayment of the deposit, nor has the important issue been resolved regardingwho should return the deposit, as required by St. Joseph Med. Ctr., Inc. [], 392 Md. 75, 86 [], before the Collateral Order Doctrine can be said to apply.

Like Baltimore Home Wholesalers, Kuhn fails to further explain his belief that the collateral order doctrine is not satisfied.

B. Standard of Review

The order on which Baltimore Home Wholesalers appeals comes from Kuhn's Motion to Revise Order of the Court. In ruling on the motion, the circuit court revised its judgment and removed Kuhn as a substitute trustee. Accordingly, one court order effectively replaced the prior order. Yarema v. Exxon Corp., 305 Md. 219, 240 (1986). Because the alleged error of the circuit court was one of law, "we accord no deference to the lower courts' decisions here" and review the questions presented de novo. Beall v. Holloway-Johnson, 446 Md. 48, 76 (2016) (citing White v. Pines Cmty. Improvement Ass'n, Inc., 403 Md. 13, 31 (2008) and Gebhardt & Smith LLP v. Md. Port Admin., 188 Md. App. 532, 564 (2009)).

C. Analysis

1. Collateral Order Doctrine

Parties "may appeal from a final judgment entered in a civil or criminal case by a circuit court" to this Court. Maryland Code Annotated, (1973, 2013 Repl. Vol.), Courts and Judicial Proceedings Article ("CJP Article") § 12-301. The key term from this section is that appeals may come from a final judgment. Regarding final judgments, the Court of Appeals has opined:

If a ruling of the court is to constitute a final judgment, it must have at least three attributes: (1) it must be intended by the court as an unqualified,final disposition of the matter in controversy, (2) unless the court properly acts pursuant to Md. Rule 2-602(b), it must adjudicate or complete the adjudication of all claims against all parties, and (3) the clerk must make a proper record of it in accordance with Md. Rule 2-601.

Rohrbeck v. Rohrbeck, 318 Md. 28, 41 (1989), cited with...