Maddox v. Cohn
36 A.3d 426
| Md. | 2012Background
- Foreclosure sale advertisements imposed a $295 attorney fee not in the mortgage, rules, or instrument, alleged to be a common but unauthorized practice.
- Trial court found the fee improper but ratified the sale, staying the ratification pending appeal.
- Court of Special Appeals affirmed, concluding the fee was improper but not charged in this case, and the appellant lacked standing to challenge it.
- Maryland Supreme Court granted certiorari on questions about unilateral imposition of fees and whether improper conditions affect proper/fair sale.
- Court held that charging external legal fees not authorized by contract, statute, or rule contravenes trustees’ duty to maximize sale proceeds and public policy.
- Remanded for resale; reversed the ratification and directed proceedings consistent with the opinion, emphasizing legislative-driven protections for mortgagors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the added legal fee authorized by contract or rule? | Maddox argues fee not authorized and improper. | Appellees contend practice common and within discretion. | Not authorized; improper. |
| Does unilateral imposition of the fee prevent a fair and properly made sale? | Sale fairness was compromised by improper condition. | Trial judge deemed sale not unfair; fee did not corrupt sale. | Sale was not properly made; fee improper. |
| Should appellate court reverse ratification and remand for resale due to fee practice? | Ratification should be set aside for improper advertisement. | Courts previously affirmed ratification despite such issues. | Court reverses; remands for resale. |
Key Cases Cited
- Simard v. White, 383 Md. 257 (2004) (trustees' duties and sale discretion; protection of mortgagors)
- Wells Fargo Home Mortgage, Inc. v. Neal, 398 Md. 705 (2007) (power of sale foreclosure; expeditious but defenses allowed)
- Pizza v. Walter, 345 Md. 664 (1997) (exceptions to bona fide purchaser rule; sale fairness)
- Waters v. Prettyman, Surviving Trustee, 165 Md. 70 (1933) (test for maximizing price; trustee discretion not unlimited)
- Gould v. Chappell, 42 Md. 466 (1875) (improper haste or unduly injudicious sale invalidates ratification)
- Bilbrey v. Strahorn, 153 Md. 491 (1927) (trustee may not charge extra expenses; must refund)
- Citibank Federal Savings Bank v. New Plan Realty Trust, 131 Md.App. 44 (2000) (sheriff's rejection of bidder; affects competition and price)
- Maddox v. Cohn, 199 Md.App. 63 (2011) (addressed applicability of fee-authorizing provisions in foreclosures)