Burson v. Simard

35 A.3d 1154

424 Md. 318

John BURSON, et al.

v.David SIMARD.

No. 35

Sept. Term

2011.

Court of Appeals of Maryland.

Jan. 23, 2012.

Richard W. Drury (McMullen & Drury, P.A., Towson, MD), on brief, for Petitioners.

Byron L. Huffman (Byron L. Huffman, P.C., Columbia, MD), on brief, for Respondent.

Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, ADKINS, BARBERA and JOHN C. ELDRIDGE, (Retired, Specially Assigned), JJ.

ADKINS, J.

In yet another foreclosure case, we address the consequences of a default by the successful bidder at an auction of real property. After the auction sale was ratified, Respondent David Simard defaulted on his contract to purchase the real property in question. Simard admitted liability for the risk and expense of the initial resale, but when the purchaser at the resale defaulted as well, Simard balked at paying the expense and loss incurred at a second resale. Applying Maryland Rule 14–305(g), the Circuit Court for Baltimore County held that Simard was liable for the risk and expense of both resales. On Simard's appeal from this order, the Court of Special Appeals reversed in a reported opinion, interpreting Rule 14–305(g) to require that a defaulting purchaser be responsible for only one resale. See generally Simard v. Burson, 197 Md.App. 396, 410, 14 A.3d 6 (2011).

The Petitioners, the Substitute Trustees of the property,¹ filed a timely petition for certiorari which we granted, Burson v. Simard, 420 Md. 81, 21 A.3d 1063 (2011), to answer the following question:

When a foreclosure purchaser defaults, is he or she liable, under Maryland Rule 14–305(g), for the risk and expense of more than one resale? ²

We shall affirm the Court of Special Appeals. Absent special circumstances, a defaulting purchaser at a foreclosure sale of property is liable, under Rule 14–305(g), for only the one resale resulting from his or her default.

Facts and Legal Proceedings

On February 28, 2007, David Simard submitted the high bid ($192,000) at a foreclosure sale for the property known as 403 Cherry Hill Road, Reisterstown, MD 21136 (“property”). He then defaulted by failing to go to settlement. The Circuit Court for Baltimore County ordered that the property be “resold at the risk and expense of the defaulting purchaser, DAVID SIMARD[.]” At the second auction, on October 16, 2007 (“first resale”), the property was resold to Stan Zimmerman, for $163,000, but Zimmerman defaulted as well. The court then ordered that the property be resold once again, this time “ at the risk and expense of ... STAN ZIMMERMAN[.]” JBJ Real Estate, LLC, purchased the property for $130,000 on June 12, 2008 (“second resale”), and proceeded to settlement.

Pursuant to Md. Rule 14–305(f), the Circuit Court referred the final sale for an audit. The audit found that Simard was liable for the difference between the price that he originally agreed to pay for the property ($192,000) and the price for which it ultimately sold ($130,000). It also found him liable for expenses relating to the first and second resales. The audit found Stan Zimmerman liable for expenses relating to the second resale and the price differential between the first and second resales.

After the Circuit Court ratified the audit, Simard filed a motion for reconsideration, arguing that he was not liable for expenses or losses occurring after the first resale. The court denied his motion, holding that he was liable under Rule 14–305(g) for consequential damages relating to both resales.³ On Simard's appeal, the Court of Special Appeals reversed, holding that “ Rule 14–305(g) contemplates that, when a foreclosure purchaser defaults, the court may order a singular resale, not multiple resales, and the defaulting purchaser's ‘risk and expense’ attaches only to the one resale [.]” Simard, 197 Md.App. at 410, 14 A.3d at 14.

Interpretation of Rule 14–305(g)

The Trustees argue: “Contrary to the holdings of the Court of Special Appeals[,] Rule 14–305(g) does not contemplate that a defaulting purchaser's ‘risk and expense’ attaches only to the one resale resulting from his or her default.” Simard, on the other hand, argues that the correct interpretation of Rule 14–305(g), consistent with the decision in the Court of Special Appeals, is that “when a second resale is ordered, that sale is held at the risk of the second defaulting purchaser, not the first defaulting purchaser.” He contends that to interpret the rule as providing for multiple resales at the risk and expense of the original purchaser would run contrary to its “plain language.”

Rule 14–305(g) reads as follows:

If the purchaser defaults, the court, on application and after notice to the purchaser, may order a resale at the risk and expense of the purchaser or may take any other appropriate action.

“Because our interpretation of the ... Maryland Rules [is] appropriately classified as [a] question[ ] of law, we review the issues ... to determine if the trial court was legally correct[.]” Davis v. Slater, 383 Md. 599, 604, 861 A.2d 78, 80–81 (2004). As we observed in Zetty v. Piatt, 365 Md. 141, 152–153, 776 A.2d 631, 637–38 (2001):

In construing a rule, we apply principles of interpretation similar to those used to construe a statute. First, we must examine the words of the rule, giving them their ordinary and natural meaning. Where the language of the rule is clear and unambiguous, our analysis ends. Where the language of the rule is ambiguous, this Court will examine the history of the rule to aid in determining the reasonable intendment of the language used in the light of the purpose to be effectuated. The ultimate goal of this Court is to give the rule a reasonable interpretation in tune with logic and common sense. (Citations and quotations omitted.)

As Simard argues, the language of the rule, by referring to “a resale,” would seem to indicate that each defaulting purchaser is liable for one resale, not multiple resales. Compare N.C. Gen.Stat. Section 1–339.30(e) (“A defaulting bidder at any sale or resale ... is liable on the bid, and in case a resale is had because of such default, the defaulting bidder remains liable to the extent that the final sale price is less than the bid, and for all costs of the resale or resales.” (emphasis added)). Certainly, the Rules Committee and this Court are well aware of how to draft a rule providing for “ resales” at the risk and expense of “the purchasers,” instead of “a resale at the risk and expense of the purchaser[.]” Rule 14–305(g) (emphasis added).

This interpretation is consonant with the treatment in treatises on mortgage foreclosures. See Wiltsie on Mortgage Foreclosure (1939), § 773 (stating that “it is a general rule that where the purchaser at a mortgage foreclosure sale neglects or refuses to complete his contract according to the terms of sale, a resale may be ordered; and in case of a resale such purchaser will be liable for the costs of such resale and for the deficiency, if any” (emphasis added)); id. at § 735 (providing that “if the purchaser refuses or neglects to pay the purchaser money and to take the title, or otherwise to comply with the terms of sale, and a resale is consequently had, he is liable for any deficiency on the resale” (emphasis added)); see also Camden v. Mayhew, 129 U.S. 73, 83, 9 S.Ct. 246, 32 L.Ed. 608 (1889) (observing that the court “could have held [the defaulting purchaser] to his offer, and ordered a resale in the meantime at his risk, both in respect to the expenses of the resale and any deficiency resulting therefrom” (emphasis added)).

Countering, the Trustees correctly point out that, under Md. Rule 1–201(d), “words in the singular include the plural.” They argue that “Rule 14–305(g) should be interpreted ... to provide that the ‘risk and expense’ of the defaulting foreclosure purchaser at the original sale continue through multiple resales of the property” (emphasis added). We cannot rule out applying Rule 1–201(d) as we interpret Rule 14–305(g). Yet, to recognize that “words in the singular include the plural” does not compel the result that the Trustees desire. Indeed, that section, in its entirety, provides: “Words in the singular include the plural and words in any gender include all genders except as necessary implication requires.” Md. Rule 1–201(d) (emphasis added).

In Davis v. State, 196 Md.App. 81, 99, 7 A.3d 690, 700 (2010), the Court of Special Appeals applied the last clause of Rule 1–201(d) and held that the word “judge” in Rule 4–243(c) did not include the plural “judges.” The court held that “the ‘necessary implication’ of the language of Rule 4–243 require[d] a singular construction not only because of the procedural process contemplated by the rule ... but because of the practical impossibility” of effectuating the rule with a plural interpretation. Id. at 98, 7 A.3d at 700. We agree that practical and procedural difficulties can “necessarily imply,” in some instances, that words in the singular do not include the plural.

Thus, Rule 14–305(g), although not ambiguous on its face, allows room for interpretation as to whether a court may order that subsequent sales be held at the expense and liability of the original bidder. We must apply other methods of interpretation in arriving at a resolution of this issue.

Relying on our decision in Simard v. White, 383 Md. 257, 859 A.2d 168 (2004),⁴ the Trustees ask that we apply an interpretation of the rule that protects the interests of mortgagors and mortgagees. They aver that their interpretation, under which the original purchaser's liability “continue [s] through multiple resales of the property,” best accomplishes this goal. To be sure, the interpretation advocated by the Trustee would enhance the likelihood that mortgagors and lenders would secure a full recovery from their loss caused by the original purchaser's default, a desirable result. Yet, other considerations must be weighed.

To begin, we need to consider whether the Trustees'...