Hoang v. Diamond

MINH VU HOANG, et vir. v. CINDY DIAMOND, et al.

No. 1526

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2013

August 7, 2015

UNREPORTED

Meredith, Woodward, Alpert, Paul E. (Retired, Specially Assigned), JJ.

Opinion by Meredith, 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.

Appellants in this case are Minh Vu Hoang and Thanh Hoang ("appellants"), a married couple who are before this Court asserting that their home at 9101 Clewerwall Drive in Bethesda was wrongfully foreclosed upon and sold by the appellees in this case, namely: Cindy Diamond, Esq. and Bruce Brown, Esq., the substitute trustees who handled the foreclosure and sale; Fay Servicing, LLC, the loan servicer; Citigroup Global Markets Realty Corp.; and Citibank, N.A. (all "appellees"). Following the foreclosure sale, the denial of appellants' exceptions, and the ratification of the sale by the court, appellants filed a purported "Counterclaim and Third-Party Complaint" against appellees, attacking the foreclosure proceedings that had already concluded. Appellees filed a motion to dismiss the counterclaim and third-party complaint, and that motion was granted by the Circuit Court for Montgomery County. Appellants then noted this appeal.

QUESTIONS PRESENTED

Appellants have presented the following questions to this Court:

1. Was the lower court legally correct by denying the Appellant a hearing before rendering a decision disposing of a claim?

2. If the lower court had transmuted Appellees' Motion to Dismiss into a motion for summary judgment, was [its] basis for granting summary judgment to all counts of the counterclaim legally correct while Maryland Rule 2-501 requires a trial court to decide issues of law, not fact?

3. While Maryland permissive counterclaim rule was created so that the grounds asserted in the counterclaim could have been a good defense to the foreclosure and Appellants have repeatedly raised their defense. Was the lower court erroneous when it disallowed Appellants to file their counterclaim within the foreclosure action and before the foreclosure hearing for ratification of sale?

4. Whether the lower court erred in considering matters outside the complaint in deciding appellees' motion to dismiss for [r]es judicata?

5. Whether the lower court [was] legally incorrect to apply a foreclosure as res judicata to the existence of a foreclosure-triggering default, when in counterclaim suit, the homeowner alleges there is no default? When "the prior" adjudication is not final or conclusive[?]

For the reasons explained below, we conclude that the circuit court did not err in granting appellees' motion to dismiss appellants' "Counterclaim and Third-Party Complaint." We affirm.

FACTS AND PROCEDURAL HISTORY

In the motion to dismiss that generated the instant appeal, appellees argued that all of the issues raised by appellants in their "Counterclaim and Third-Party Complaint" either had been, or could and should have been, raised previously by appellants in their attempts to oppose the foreclosure, and that res judicata therefore barred any further claims appellants might seek to make. The motion to dismiss was granted without a hearing, and, although the court did not issue an opinion explaining its conclusions, its grant of appellees' motion to dismiss on res judicata grounds was correct, as the following timeline of relevant events demonstrates.

Foreclosure Proceedings

The foreclosure proceedings at issue here began on February 17, 2011, with the filing of the Order to Docket by appellees. Attached as exhibits to the Order to Docket were the following documents evidencing appellants' default and appellees' right to foreclose:

1) A copy of the May 4, 1990 Promissory Note from appellants to Home Savings of America, F.A. ("HSA") in the principal amount of $1,000,000.00;

2) A certified copy of the Deed of Trust dated May 4, 1990, and recorded among the Montgomery County Land Records at Liber 9313, Folio 445 fromappellants to Randy Weiss, Esquire, as Trustee for the benefit of HSA; the Deed of Trust vested in the Trustee a power of sale with respect to the property at issue;

3) A Deed of Appointment of Substitute Trustees dated February 4, 2011, setting forth that:

a) The Deed of Trust gave to the Note Holder an irrevocable power to appoint Substitute Trustees;

b) Citi Property Holdings, Inc., as the Note Holder, was exercising the power to appoint Cindy R. Diamond and Bruce D. Brown as Substitute Trustees "with identically the same title and estate in and to the land, premises and property conveyed by said Deed of Trust, and with all rights, powers, trusts, and duties of Randy Weiss, Esq., predecessor in trust, with like effect as if originally named as Trustees under said Deed of Trust.";

4) An affidavit of Right to Foreclose and Statement of Deed of Trust Debt, reflecting a payoff total as of March 3, 2011 of $1,112,745.38, with interest accruing at $152.87 per day;

a) The Affidavit of Right to Foreclose was notarized by a notary public in Humboldt County, California, who certified that the Asset Manager of SN Servicing Corporation, servicing agent for Citi Property Holdings, Inc., personally appeared and "made oath in due form of law" that CPH "has the right to foreclose pursuant to the terms of the Deed of Trust";

5) Affidavits reflecting that neither appellant was serving in the military;

6) An Affidavit of Default and Right to Foreclose; and

7) Notices required by § 7-105.1 of the Real Property Article.¹

On August 29, 2011, appellant Minh Vu Hoang filed a "Motion to Stay Sale of Property and Dismiss Action to Foreclose," in which she attacked the sufficiency of the documentation underlying the foreclosure, specifically asserting:

1. That there was no "competent evidence" of an assignment of interest in the property from the original lender, Home Savings of America ("HSA"), which appeared on the 1990 re-finance deed of trust appellees here sought to foreclose, to any of the appellees or entities controlled or represented by appellees;

2. That there was "absolutely no documentation of the mechanism by which CMLTI Asset Trust is now the alleged Secured Party on whose behalf the putative Substitute Trustee, Cindy Diamond, is now proceeding herein";

3. That, in the absence of "a valid instrument that vests CMLTI Asset Trust with the rights, title and interests of the Beneficiary of the Deed of Trust, and the Secured Party of the Promissory Note, CMLTI Asset Trust has no standing to proceed" to foreclose on appellants' property;

4. That, with regard to CitiProperty Holdings, Inc. ("CPH"), which had been identified in the Order to Docket as the current holder of the Deed of Trust, there was no "competent evidence of CPH's interest in the subject property";

5. That CPH therefore lacked standing to foreclose, or to appoint substitute trustees;

6. That, although CitiGroup Global Markets Realty Corp. ("CGMRC") was "explicitly designated" in the Notice of Intent to Foreclose as the secured party, there is "no instrument by which HSA assigned, transferred or conveyed its rights, title, and interests in the Note and/or Deed of Trust to CGMRC";

7. That, since there was no recorded instrument by which HSA transferred its interest in the property to any entity, Quantum Servicing Corporation and Washington Mutual Bank, F.A. lacked standing to proceed to foreclosure;

8. That there was no recorded instrument demonstrating an assignment of interest in the loan to Fay Servicing, LLC, the loan servicer at the time the Notice of Intent was docketed;

9. That the appointment of the Substitute Trustees was void;10. That the Promissory Note attached to the Order to Docket was "barely legible"; was not an original copy, in any event; and was not supported by affidavit, as required by Rule 14-207(b)(3);

11. That there were "irregularities" on the affidavits that had been submitted, that led appellants to conclude that they were "robo-signed," and were otherwise — along with "all the documents included in the Order to Docket, except the Deed of Trust" — "'rogue documents,' i.e., computer-generated form affidavits . . . [with] the appearance of legitimacy, but [ ] entirely rogue, or sham, in nature."

(Emphasis added.)

Hoang requested that the court stay the sale of the property and dismiss the foreclosure, given that appellant asserted that she had, in this motion,

clearly established that the documentation that accompanies the Order to Docket by which this action to foreclose was initiated is woefully inadequate, and so highly suspect that the identity of the Secured Party is unknown; the purported servicing agent is acting without due authorization; the affidavits required by Rule 14-207 were executed under oath by persons acting on behalf of a loan servicing agent that was not duly empowered to represent the unknown Secured Party's interests, independent of, and out of the presence of the Notary; and, the Promissory Note is not verified as a true and accurate copy of the original, nor is its ownership certified.

On August 31, 2011, the court denied the "Motion to Stay and Dismiss" by order, without elaboration. On the same day, appellant Thanh Hoang filed the same "Motion to Stay and Dismiss" as had been filed by appellant Minh Hoang on August 29.

On September 9, 2011, appellees filed an opposition to the "Motion to Stay and Dismiss," in which they asserted, first, that the Motion to Stay and Dismiss should be denied as untimely, but also that it failed on the merits.² Appellees laid out the chain of title of theNote and Deed of Trust at issue, attaching the relevant assignments as exhibits. Appellees' opposition also refuted the other "vague, non-specific allegations regarding the loan documents" appellants made in their motions to stay and dismiss, pointing out that appellants' argument...