2015 FORECLOSURE-RELATED DECISIONS BY THE MARYLAND APPELLATE COURTS
The Court of Special Appeals hears a large number of appeals from the circuit courts on issues relating to foreclosure sales. The 40 opinions by the Court of Special Appeals, reported or unreported, that were issued during calendar year 2015 in this area are listed below, followed by a summary of each case. The Court of Appeals denied certiorari in four cases in 2015, but it decided no foreclosure related cases during that year.
All but one of the cases decided in 2015 involved residential foreclosures. Only Bear Creek Slip Holders' Ass'n, Inc. v. Drazin did not; it involved the foreclosure of a marina.
Three of the 2015 cases are particularly noteworthy. In Fisher v. Ward the Court of Special Appeals held that a foreclosure trustee need not be physically present at a foreclosure sale, and that the trustee's "constructive presence" would suffice. In that case, the requirement of "constructive presence" was satisfied with the trustee being on a cellphone with the auctioneer during the auction. Fisher involved a routine residential foreclosure, but the reasoning of the case should apply to any foreclosure sale where the trustee's physical presence is not significant. Considering that many foreclosure sales are at the courthouse and not at the property, how often is the physical presence of the trustee at the sale useful over and above having the trustee on the line with the auctioneer? The idea that trustees need to be physically present at foreclosure sales has been around so long that the Court of Special Appeals had to find dicta from Nineteenth Century cases in order to cite support for its decision.
In Greentree Series V, Inc. v. Hofmeister the Court of Special Appeals held that a deposit posted by a purchaser at a foreclosure sale may not be forfeited if the purchaser does not close as required and the advertisement of sale provides for an alternate remedy. In so doing, the court aligned the rules relating to application and possible forfeitures of deposits in foreclosure sales with the rules that apply to regular contracts of sale.
In the unreported case of O'Sullivan v. McNair the Court of Special Appeals held that trustees who also serve as the lawyers in a foreclosure proceeding may not receive an attorneys' fee regardless of what the deed of trust provides. The court said that this is because if the trustees represent themselves there is no attorney-client relationship. (They are entitled to a trustee's commission.) This decision directly contradicts Gaither v. Tolson, 84 Md. 637, 36 A. 449 (1897), and its progeny, which hold that the same person may serve both as trustee and attorney in a foreclosure proceeding and be separately compensated for each role. Gaither v. Tolson was not cited in O'Sullivan v. McNair.
The most frequent issue addressed by the Court of Special Appeals in its other 2015 foreclosure cases related to the timeliness of challenges to foreclosure sales. The court stated repeatedly during 2015 that before a foreclosure sale occurs the mortgagor may challenge the legitimacy of the foreclosure procedure, including whether the debt was owed, whether the lien was valid, and whether the lender had the right to foreclose. After the sale, the mortgagor may challenge the manner in which the foreclosure sale was conducted, including whether sufficient notice was given. After that, a foreclosure sale is valid and may be challenged only on the limited grounds of fraud, mistake, or irregularity. The failure of mortgagors to file the type of objection or exception that is required under these rules resulted in the dismissal of a number of complaints in 2015, regardless of their merits.
LIST OF FORECLOSURE CASES DECIDED BY THE COURT OF SPECIAL APPEALS IN 2015
The cases that do not have citations to "Md. App." are unreported. The case names are linked to the full cases. Each sentence below a case name is a link to a PDF document that contains a case summary of each of the cases listed here.
1. Anderson v. O'Sullivan, 224 Md. App. 501, 121 A.3d 181 (2015).
Court rejects Redemption Theory and Vapor Money Theory as bases to challenge foreclosure sales.
2. Asim v. Fishman, No. 76 SEPT.TERM 2014 (Md. Ct. Spec. App. Mar. 16, 2015).
Court of Special Appeals did not consider claim that had not been presented to the circuit court.
3. Baklor v. O'Sullivan, No. 1468 SEPT.TERM 2013, 2015 WL 5969783 (Md. Ct. Spec. App. Aug. 24, 2015).
Foreclosure sale ratified without evidence that lender fraudulently induced borrower to forego pre-sale objections.
4. Barcus v. Nadel, No. 0036 SEPT.TERM 2014, 2015 WL 9394099 (Md. Ct. Spec. App. Dec. 23, 2015).
Without a meritorious basis for objection, foreclosure sale is ratified.
5. Bear Creek Slip Holders' Ass'n, Inc. v. Drazin, No. 2058 SEPT.TERM 2014, 2015 WL 9257674 (Md. Ct. Spec. App. Dec. 17, 2015).
Association of marina slip owners did not have standing to object to the foreclosure sale.
6. Best v. Driscoll, 223 Md. App. 768, cert. denied, 445 Md. 4, 122 A.3d 974 (2015).
Counterclaim was timely filed, but its substance was decided in denial of motion to stay and dismiss foreclosure sale.
7. Betskoff v. Rosenberg, 223 Md. App. 768, cert. denied, 445 Md. 5, 122 A.3d 974 (2015).
Foreclosure sale ratified as challenger did not provide any evidence of a defect.
8. Brown v. Dore, No. 38 SEPT.TERM 2013 (Md. Ct. Spec. App. Jan. 26, 2015).
After foreclosure sale, court considered whether notice was correctly given, but sale was ratified anyway.
9. Buckingham v. Fisher, 223 Md. App. 82, 115 A.3d 248 (2015).
Failure to allege all elements of fraud caused dismissal of exceptions.
10. Butcher v. Rosenberg, 223 Md. App. 769 (2015).
Motion for reconsideration is not cure for untimely original motion.
11. Carter-Ford v. O'Sullivan, No. 0654 SEPT.TERM 2014, 2015 WL 5920351 (Md. Ct. Spec. App. July 15, 2015).
Claim of failure to comply with loss mitigation analysis must be raised before foreclosure sale.
12. Carver v. Fisher, 223 Md. App. 769, cert. denied, 445 Md. 5, 122 A.3d 974 (2015).
ADA, Maryland Mortgage Fraud Protection Act, and Federal Reverse Mortgage Act may not be used to challenge foreclosures.
13. Clark v. Rosenberg & Associates, No. 2364 SEPT.TERM 2013, 2015 WL 5822052 (Md. Ct. Spec. App. July 9, 2015).
Exceptions that should have been filed before sale were untimely after foreclosure sale.
14. Cummings v. Cohn, No. 0087 SEPT.TERM 2014, 2015 WL 9590710 (Md. Ct. Spec. App. Dec. 31, 2015).
Court of Special Appeals reverses ratification of sale based on new evidence regarding notification.
15. Crawford v. Ward, No. 0141 SEPT.TERM 2014, 2015 WL 5893516 (Md. Ct. Spec. App. July 17, 2015), cert. denied, 445 Md. 126, 126 A.3d 4 (2015).
Consolidated case affirms dismissals of several exceptions to a foreclosure sale.
16. de la Oliva v. O'Sullivan, Substitute Trustee, et al., No. 02144 SEPT.TERM 2014, 2015 WL 7938899 (Md. Ct. Spec. App. Dec. 3, 2015).
Challenge to foreclosure sale more than 30 days after ratification is limited to allegation of extrinsic fraud.
17. Devan v. Bomar, 225 Md. App. 258, 123 A.3d 686 (2015).
Even though lender improperly called loan on death of mortgagor, foreclosure sale stands because challenge was late.
18. Dowe v. O'Sullivan, No. 2177 SEPT.TERM 2014, 2015 WL 7421266 (Md. Ct. Spec. App. Nov. 20, 2015).
Legally adequate notice of sale was given even if claimant did not learn of sale from such notice.
19. Eckard v. Brown, No. 1602 SEPT.TERM 2013 (Md. Ct. Spec. App. Feb. 10, 2015).
Ratified foreclosure sale and subsequent order of possession allowed to stand without allegation of fraud.
20. Fasusi v. Brown, No. 1236 SEPT.TERM 2014, 2015 WL 6442171 (Md. Ct. Spec. App. Oct. 23, 2015).
Denial of exception may not be appealed before the ratification of the foreclosure sale.
21. Fisher v. Ward, 226 Md. App. 149 (2015).
Trustee need not physically attend a foreclosure sale if the trustee is "constructively" present on the telephone.
22. Galtchu v. Ward, No. 0268 SEPT.TERM 2014 (Md. Ct. Spec. App. Feb. 24, 2015).
Challenges after a foreclosure sale are limited to sale irregularities, computation of the debt, and fraud.
23. Gipson v. Dore, No. 1361 SEPT.TERM 2014, 2015 WL 5968659 (Md. Ct. Spec. App. Aug. 20, 2015).
To void a foreclosure sale, purchase price must be so low as to shock the conscious of the court.
24. Greentree Series V, Inc. v. Hofmeister, 222 Md. App. 557, 114 A.3d 230 (2015).
Forfeiture of deposit posted at a foreclosure sale is an unenforceable penalty.
25. Harding v. M&T Bank, No. 1891 SEPT.TERM 2014, 2015 WL 6157601 (Md. Ct. Spec. App. Oct. 20, 2015).
Issues relating to a lender's right to foreclose must be raised before the sale.
26. Hobby v. Burson, 222 Md. App. 1, 110 A.3d 796 (2015).
Challenge relating to foreclosure mediation fails.
27. Hoang v. Diamond, No. 1526 SEPT.TERM 2013, 2015 WL 6105460 (Md. Ct. Spec. App. Aug. 7, 2015).
Res judicata bars mortgagors' claims which were or could have been decided in a companion case.
28. Jiminez v. Wittstadt, No. 1583 SEPT.TERM 2014 (Md. Ct. Spec. App. July 7, 2015).
Pre-sale objections may not be made post-sale; validity of title may not be collaterally attacked afterwards.
29. Khan v. Burson, 223 Md. App. 769 (2015).
Deficiency judgment permitted after foreclosure sale even though documents were structured as co-ownership.
30. Khan v. Cohn, 223 Md. App. 769 (2015).
Ratified foreclosure sale could not be challenged even though advertisement had impermissible provision.
31. Killion v. Dore, No. 0703 SEPT.TERM 2014 (Md. Ct. Spec. App. April 23, 2015).
Person in possession of promissory note has the right to foreclose.
32. M & T Bank v. Sarris, No. 2022 SEPT.TERM 2014, 2015 WL 9257269 (Md. Ct. Spec. App. Dec. 17, 2015).
Surplus funds from foreclosure of first deed of trust go to the holder of the second deed of trust.
33. Matthews v. Ward, 223 Md. App. 776 (2015).
Borrower may appeal from denial of exceptions rather than only the ratification of sale.
34. Mshana v. Burson, No. 1812 SEPT.TERM 2014, 2015 WL 6114373 (Md. Ct. Spec. App. Sept. 30, 2015).
Without allegation of extrinsic fraud, Court of Special Appeals affirms denial of objections.
35. Mustafa v. Ward, 223 Md. App. 777 (2015).
Change in loan servicer does not affect status of substitute trustees.
36. Nixon v. Dore, No. 0034 SEPT.TERM 2014 (Md. Ct. Spec. App. Feb 9, 2015).
Foreclosure sale is not stayed due to mortgagor's failure to comply with Rule 14-211.
37. Okon v. Dore, No. 501 SEPT.TERM 2014 (Md. Ct. Spec. App. Mar. 25, 2015).
Compliance with Rule 14-211 is required to stay or dismiss foreclosure sale.
38. O'Sullivan v. McNair, No. 1854 SEPT.TERM 2014, 2015 WL 7076306 (Md. Ct. Spec. App. Nov. 12, 2015).
Court of Appeals denies attorneys' fees in foreclosure sale when trustees served as their own counsel, implicitly overruling 118-year-old precedent.
39. Rahrman v. Geesing, No. 2109 SEPT.TERM 2013 (Md. Ct. Spec. App. June 24, 2015).
Issues relating to lender's right to foreclose must be raised prior to foreclosure sale; no quiet title action pending foreclosure.
40. Sucklal v. Wittstadt, No. 0324 SEPT.TERM 2015, 2015 WL 9257017 (Md. Ct. Spec. App. Dec. 16, 2015).
Claim that lender has no right to foreclose must be raised before the sale.