77 A.3d 1064
Md.2013Background
- Substitute trustees advertised a foreclosure sale containing a term that a successful purchaser who failed to settle within 10 days "agrees to pay the Sub-Trustees’ attorney fees of $750.00, plus all costs incurred." The property was sold to 101 Geneva LLC.
- After sale but before ratification, this Court decided Maddox v. Cohn, which held that advertising an additional fee for purchasers was impermissible unless authorized by contract, statute, or rule.
- The Montgomery County Administrative Judge reviewed foreclosure filings under Md. Rule 14-207.1 and issued a Notice of Non-Compliance concluding the advertised $750 fee violated Maddox.
- A different circuit judge heard exceptions but stated she felt bound by the Administrative Judge’s view and vacated the sale, ordering a resale, without independently exercising her discretion.
- 101 Geneva appealed to the Court of Special Appeals; this Court granted certiorari. The Court of Appeals held the hearing judge abused her discretion by deferring and vacated the order vacating the sale.
- On the merits, the Court held the county’s screening under Md. Rule 14-207.1 was permissible and that Maddox did not bar the conditional fee because Md. Rule 14-305(g) contemplates court-ordered resale expenses for defaulting purchasers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the hearing judge abused discretion by deferring to the Administrative Judge and vacating the sale without considering parties’ arguments | 101 Geneva: judge failed to exercise independent discretion and improperly deferred; vacatur was incorrect | Administrative Judge/AG: screening judge has authority and consistency concerns; but conceded hearing judge abused discretion if she failed to exercise it | Court: hearing judge abused discretion by unyielding deference; vacatur of the sale was itself vacated (i.e., the order vacating the sale reversed) |
| Whether Md. Rule 14-207.1 permits sua sponte post-sale screening of pleadings/papers (including advertisements) and issuance of a Notice of Non-Compliance | 101 Geneva: post-sale screening improper; advertisement is not a "paper" for Rule 14-207.1 | State/AG: Rule 14-207.1 authorizes broad screening of pleadings and papers filed in foreclosure actions, including post-sale filings and advertisements | Court: Rule 14-207.1 permits sua sponte post-sale screening; advertisement of sale is a "paper" under the Rule and notice procedure (30 days to cure) is proper |
| Whether the Rule 14-207.1 notice impermissibly shifted burden to trustees or infringed trustee fiduciary duties | 101 Geneva: notice functioned like exceptions and improperly shifted burden and interfered with trustees’ duties | State: Rule language places burden on plaintiff to demonstrate papers are sufficient or cure defects; screening does not usurp trustees’ fiduciary role | Court: Rule properly places burden on plaintiff to show compliance/cure; screening does not impermissibly infringe trustees’ duties |
| Whether the conditional $750 fee in the advertisement is barred by Maddox | 101 Geneva/Substitute Trustees: fee is permissible as a conditional, post-default shifting of resale expenses | State/AG/Administrative Judge: Maddox prohibits advertising such fees unless authorized | Court: Maddox is inapplicable because the fee is contemplated by Md. Rule 14-305(g) (court-ordered resale at purchaser’s risk/expense) and the conditional fee differs from the unauthorized fee in Maddox; the fee here permissible (reasonableness and specifics remain for the trial court if enforcement becomes necessary) |
Key Cases Cited
- Maddox v. Cohn, 36 A.3d 426 (Md. 2012) (prohibits advertising an unauthorized purchaser-fee absent contract, statute, or rule)
- St. Joseph Med. Ctr., Inc. v. Turnbull, 68 A.3d 823 (Md. 2013) (administrative judge may not divest a trial judge of authority; judges must act within scope of their roles)
- Shepherd v. Burson, 50 A.3d 567 (Md. 2012) (discusses proper exercise of discretion under Rule 14-207.1 and timing of pre-/post-sale defenses)
- Simard v. White, 859 A.2d 168 (Md. 2004) (trustee’s discretion in setting sale terms is limited by duty to obtain best price; court oversight appropriate)
- White v. Simard, 831 A.2d 517 (Md. Ct. Spec. App. 2003) (upheld conditional post-default clauses that operate only upon purchaser default and deter bad-faith bidders)
- Gunning v. State, 701 A.2d 374 (Md. 1997) (failure to exercise discretion is itself an abuse of discretion)