121 A.3d 191
Md. Ct. Spec. App.2015Background
- Three consolidated Baltimore City tax-sale foreclosure cases where certificate holders (Heartwood→Kona; ETS→LienLogic/DRR-ETS) foreclosed owners’ redemption rights but failed to pay post-judgment taxes and the bid surplus required to obtain deeds.
- Certificate holders assigned certificates among related LLCs sharing addresses/counsel; subsequent buyers later obtained later tax-sale certificates after nonpayment.
- Former owners or mortgagees (WDB, NBS, S&S) moved in the circuit court to enforce the foreclosure judgments and compel payment of the bid surpluses (and for money judgments to aid enforcement).
- Certificate holders argued (inter alia) defective service/jurisdiction, that Hardisty v. Kay was superseded by statutory changes, that interested parties couldn’t recover surpluses (mortgagees), and that relief would cause unjust enrichment or offend public policy.
- The circuit court granted the motions to enforce and entered money judgments; the certificate holders appealed. The Court of Special Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Jurisdiction/service to enter/enforce foreclosure judgments | Plaintiffs (owners/mortgagees) argued the court had jurisdiction and plaintiffs submitted to it; affidavits and actual notice existed | Certificate holders argued service was defective so judgments lacked jurisdiction and could not be enforced | Court held purchasers cannot complain about notice provisions aimed to protect owners; Appellees had notice/participated, so jurisdiction and standing to enforce were proper |
| 2. Whether §14-847(d) motions to strike judgment (for nonpayment within 90 days) required striking | Plaintiffs (owners) opposed striking; showed conflict of interest and no additional "good cause" beyond statutory predicate | City/second purchasers moved to strike based on failure to pay within 90 days | Court exercised discretion: mere nonpayment within 90 days alone (without additional good cause shown) did not compel striking; denial was not an abuse of discretion |
| 3. Whether a court may enter a money judgment compelling payment of bid surplus (Hardisty) | Plaintiffs invoked Hardisty to compel payment of surplus by certificate holders; also sought monetary judgments to enforce relief | Certificate holders argued Hardisty was superseded by statutory changes and/or limited to owners (not mortgagees) | Court held Hardisty remains good law; circuit courts have equitable power to compel payment to persons entitled to surplus, including mortgagees/other interested parties who had notice |
| 4. Motion-formalities (Md. Rule 2-311(c)) | Plaintiffs cited proper statutory provisions and Hardisty to support motions | DRR-ETS argued motions to enforce failed to cite correct statutory authority and should be struck | Court held motions adequately pleaded statutory basis and denied motion to strike; citation technicality did not invalidate relief |
| 5. Unjust enrichment / double recovery concern | Plaintiffs contended enforcing judgments would not unjustly enrich them and satisfaction would be recognized by collector | Certificate holders warned mortgagees could obtain surplus then later foreclose, yielding double recovery | Court held payment of the judgment would be recognized by the collector and prevent double recovery; no unjust enrichment found |
| 6. Public policy — effect on tax compliance incentives | Plaintiffs argued statute and precedent control; equitable enforcement furthers marketable title and statute goals | Certificate holders argued monetary judgments undermine tax-collection incentives and public policy | Court deferred to legislative policy; enforcement consistent with statutory scheme and public policy goals |
Key Cases Cited
- Hardisty v. Kay, 268 Md. 202 (1973) (affirming circuit court authority to compel a tax-sale purchaser to pay bid surplus by money judgment)
- Scheve v. Shudder, Inc., 328 Md. 363 (1992) (tax-sale notice/foreclosure procedure and limitation on purchasers challenging notice intended for owners)
- Simms v. Scheve, 298 Md. 1 (1983) (substantial compliance required for effective tax sale)
- Armstrong Enterprises v. Citizens Building & Loan Ass’n of Montgomery County, 244 Md. 545 (1966) (equitable practice to compel disbursement of surplus after foreclosure sale confirmed)
- Magraw v. Dillow, 341 Md. 492 (1996) (property-law principles on lienholders and related precedent cited approvingly)