N. Star Props. v. Ward

NORTH STAR PROPERTIES, LLC v. CARRIE M. WARD, et al.

No. 840-2020

Court of Special Appeals of Maryland

November 22, 2021

Circuit Court for Prince George's County CAEF 19-27522

Kehoe Ripken, Alpert, Paul E. (Senior Judge, Specially Assigned) JJ.

OPINION ^[*]

Alpert, J.

As a matter of contract and convention, foreclosure sale purchasers who deposit a portion of the purchase price commonly "pay interest upon the unpaid balance for the period between the time fixed for settlement and the date of actual settlement" and pay property taxes from the date of the sale. See Donald v. Chaney, 302 Md. 465, 477 (1985); AMT Homes, LLC v. Fishman, 228 Md.App. 302, 310 (2016). Yet if ratification of the sale or the ensuing settlement is delayed, the Court of Appeals has held that equitable exceptions may be warranted under certain circumstances, including when the delay is "caused by the conduct of other persons beyond the power of the purchaser to control or ameliorate." Donald, 302 Md. at 477.

In this appeal, we are asked to hold that the Circuit Court for Prince George's County erred or abused its discretion in refusing to abate post-sale interest and taxes under this exception, after the Chief Judge of the Court of Appeals of Maryland temporarily stayed pending foreclosure proceedings during the COVID-19 pandemic. We decline to do so. Applying lessons from AMT Homes, 228 Md.App. at 312, holding that a foreclosure purchaser was "not entitled to a reduction in the . . . payments it promised to pay simply because the court exercised its oversight role over a longer-than-ideal period of time" due to a court backlog, we conclude that the circuit court did not err or abuse its discretion in denying the motion of North Star Properties, LLC ("North Star"), appellant, to abate interest and taxes based on the public health emergency stay.

BACKGROUND

At a foreclosure sale conducted on December 3, 2019, North Star purchased 60 Joyceton Terrace, Upper Marlboro, Maryland 20774 (the "Property") for $191, 000. For convenience, we shall refer to North Star as the Foreclosure Purchaser, and to Carrie M. Ward and the other substitute trustees collectively as the Substitute Trustees.^[1]

The Foreclosure Purchaser deposited $23, 000. In pertinent part, the Contract of Sale for the Property provides:

Balance of the purchase price, together with interest on the unpaid purchase money at the current rate contained in the Deed of Trust Note from the date of sale to the date funds are received by the Sub. Trustees, payable in cash within ten days of final ratification of the sale by the Circuit Court. There will be no abatement of interest due from the purchaser in the event additional funds are tendered before settlement. TIME IS OF THE ESSENCE FOR THE PURCHASER. Adjustment of current year's real property taxes are adjusted as of the date of sale, and thereafter assumed by the purchaser.

(Italics added.)

On March 18, 2020, Mary Ellen Barbera, then Chief Judge of the Court of Appeals of Maryland, issued an "Administrative Order on Suspension of Foreclosures and Evictions during the COVID-19 Emergency" that was "effective immediately[.]" See https://mdcourts.gov/sites/default/files/admin-orders/20200316restrictedoperationsduetoc ovid19.pdf. The order stayed all "foreclosures of residential properties . . . pending in the circuit courts[.]"

On April 20, 2020, the Foreclosure Purchaser filed a Motion to Abate and Limit Interest, seeking to reduce both post-sale interest and taxes on the Property. Citing the Chief Judge's order, the Foreclosure Purchaser argued that because the "unforeseen stay of proceedings that was a response to the COVID-19 pandemic" differs from a foreseeable "court back log[, ]" it "would be inequitable and contrary to the holdings and spirit of existing case law" to make foreclosure purchasers "responsible for all interest and real property taxes from the date of the foreclosure sale up to the date of settlement." The Foreclosure Purchaser acknowledged that in these circumstances, abatement "would fully shift the additional costs from the foreclosure purchaser to the lender[, ]" but argued that the COVID-19 stay was not foreseeable in the same way "court back log was foreseeable[.]"

On June 3, 2020, Chief Judge Barbera issued an amended order lifting the stay on residential foreclosure proceedings, effective July 25, 2020. See https://www.mdcourts.gov/sites/default/files/admin-orders/20200603amendedliftingsuspe nsionduringcovidofforeclosuresevictionsandotherejectmentsinvolvingresidences.pdf.

By separate written orders entered August 14, 2020, the circuit court denied the Foreclosure Purchaser's motion for abatement and ratified the foreclosure sale. The court concluded that "the delay in ratifying the sale was due to an unprecedented pandemic and through no fault of any party[, ]" so that abating post-sale taxes would reallocate the "well-known" responsibility that "frames everyone's expectations." See AMT Homes, 228 Md.App. at 310. In addition, the court concluded that under AMT Homes, a "court is not deemed a 'person beyond the power of the purchaser to control or ameliorate.'" The court also concluded that it did not have jurisdiction to reallocate tax obligations to "the original homeowner" under these circumstances.

The Foreclosure Purchaser moved to alter or amend the order, arguing that the "[c]ourt only ruled on Foreclosure Purchaser's request to abate real property tax and did not rule on Foreclosure Purchaser's request to abate interest." In opposition, the Substitute Trustees, invoking the decision and reasoning in AMT Homes and pointing to the language in the Contract of Sale, argued that the Foreclosure Purchaser agreed to pay interest and taxes from the sale date and that the court's inability to consider the sale during the stay "falls within the universe of risks properly allocated to purchasers, and a cost of doing business in this space." AMT Homes, 228 Md.App. at 313.

By written order entered September 17, 2020, the circuit court denied the motion to alter or amend. Clarifying its earlier order, the court applied the same principles governing allocation of post-sale tax responsibility to post-sale interest.

The Foreclosure Purchaser noted this appeal on October 9, 2020. The court then ratified the auditor's report by order entered on January 11, 2021.

MOTION TO DISMISS

The Substitute Trustees move to dismiss this appeal on the ground that it is premature because it was noted on October 9, 2020 before the court ratified the auditor's report on January 11, 2021. In their view, the September 17, 2020, order denying the motion to alter or amend the August 14 orders regarding abatement and ratification rendered those rulings final and appealable only "as to the validity of the sale itself." Because the Foreclosure Purchaser's "appeal seeks to challenge a decision concerning the economic aspects of the foreclosure sale," the Substitute Trustees maintain that the subsequent order ratifying the auditor's report constituted the final appealable judgment. In turn, because the Foreclosure Purchaser failed to note an appeal from that order, the Substitute Trustees contend that dismissal is required on jurisdictional grounds.

"The requirement that a party appeal from only a final judgment is a jurisdictional requirement." Baltimore Home Alliance, LLC v. Geesing, 218 Md.App. 375, 381 (2014) (citation omitted). "Whether a judgment is final . . . is a question of law to be reviewed de novo." Id. (citation omitted).

To constitute a "final judgment," a "ruling must . . . determine and conclude the rights involved or . . . deny the appellant the means of further prosecuting or defending his or her rights and interests in the subject matter of the proceeding." Rohrbeck v. Rohrbeck, 318 Md. 28, 41 (1989) (emphasis in original; citations omitted). A final judgment "'leave[s] nothing more to be done in order to effectuate the court's disposition of the matter.'" Remson v. Krausen, 206 Md.App. 53, 72 (2012) (quoting Rohrbeck, 318 Md. at 41). "By contrast, an order 'that adjudicates less than an entire claim . . . is not a final judgment[.]'" Baltimore Home Alliance, 218 Md.App. at 381 (quoting Md. Rule 2-602(a)).

We conclude this appeal is not premature. In Huertas v. Ward, 248 Md.App. 187, 205 (2020), this Court explained that "an order ratifying a foreclosure sale is a final judgment as to any rights in the real property, even if the order refers the matter to an auditor to state an account." Here, the Foreclosure Purchaser, aggrieved by the denial of its motion to abate post-sale interest and taxes, noted a timely appeal within 30 days after the court denied its motion to alter or amend the abatement and ratification orders. It was not required to await the order ratifying the auditor's report.

The Substitute Trustees attempt to circumvent the holding in Huertas by pointing to language distinguishing that case from our decisions in McLaughlin v. Ward, 240 Md App. 76 (2019), and Baltimore Home Alliance, 218 Md.App. 375, where both of those foreclosure purchasers noted appeals before the court ratified the sale.^[2] See Huertas, 248 Md.App. at 205 n.7. Although we pointed out that both cases "involve[d] unusual factual scenarios, in which a purchaser challenged the economic aspects of a foreclosure proceeding[, ]" both appeals were premature because the parties' rights in the real property had not been adjudicated. See id. at 205-06. We explained that because "a foreclosure is principally an in rem proceeding concerning rights in real property[, ]" the ratification order "is a final judgment with respect to the in rem aspects of a foreclosure proceeding." Id. "The process of referring the case to...