246 A.3d 720
Md. Ct. Spec. App.2021Background
- In June–July 2005 Mitchell contracted to buy a Bowie, MD house with a 30‑year fixed‑rate first mortgage. At the July 11, 2005 closing she says she discovered adjustable‑rate documents, stopped the closing, and had the signed papers marked "VOID." She sent a cancellation letter to Fremont; Fremont responded it had cancelled the adjustable transaction and converted the loan to a fixed‑rate product and returned the voided papers stamped "CANCELLED AND SATISFIED IN FULL."
- No new fixed‑rate loan documents were executed, but Mitchell moved into the house and made fixed‑rate payments for years. The adjustable‑rate deed/note (without VOID stamps) were later recorded in the land records on July 14, 2005.
- After defaults beginning in 2013, substitute trustees filed an order to docket (2015) attaching adjustable‑rate instruments; Mitchell moved under Md. Rule 14‑211 to stay sale and dismiss, asserting the instruments were invalid/forged.
- This Court previously remanded for a hearing because Mitchell presented a facially valid defense that the instruments had been altered/forged. On remand a nine‑day evidentiary hearing was held over two years.
- The circuit court found Mitchell and her realtor credible, concluded the adjustable‑rate lien instruments were invalid (voided/cancelled in 2005), denied the foreclosure and closed the case. The substitute trustees appealed; this opinion affirms.
Issues
| Issue | Plaintiff's Argument (Mitchell) | Defendant's Argument (Substitute Trustees) | Held |
|---|---|---|---|
| Whether the note and deed of trust attached to the order to docket are valid and support foreclosure | The adjustable‑rate instruments were voided/cancelled in July 2005 and Fremont converted the loan to a fixed‑rate; therefore the instruments the trustees rely on are invalid | The recorded/attached adjustable‑rate instruments are genuine and support foreclosure; Mitchell fabricated the cancellation story | Court: substantial evidence supports Mitchell; lien instruments were invalid and trustees lacked right to foreclose; dismissal affirmed |
| Whether Mitchell's testimony was "legally impossible" or inherently incredible so it could be disregarded | Testimony is consistent with correspondence and long‑term fixed payments; not physically impossible | Her story cannot explain later disbursements/recording; implausible that funds were disbursed without proper documents | Court: testimony not legally impossible; conflicts were ordinary credibility issues for factfinder; testimony credited |
| Whether the court abused its discretion by denying limited pre‑hearing discovery requested by trustees | N/A (Mitchell opposed discovery) | Limited discovery was necessary to test authenticity because documents and communications were in Mitchell's possession | Court: trustees acquiesced to a Rule 14‑211 evidentiary hearing and never objected; denial not an abuse of discretion |
| Whether trustees could obtain an equitable mortgage as alternative relief raised after close of evidence | N/A (Mitchell argued equitable lien was waived and unfairly raised late) | Even if instruments defective, equity should impose an equitable lien because parties intended the property to secure the $444,728 loan | Court: trustees raised equitable‑mortgage theory for first time post‑hearing; claim waived and not considered by trial court; trial court did not err |
| Whether exclusion of Mitchell’s late‑disclosed handwriting expert was erroneous (Mitchell cross‑appeal) | Excluding the expert prejudiced Mitchell; disclosure untimely but evidence was important | Trial court enforced disclosure timing and fairness; trustees had right to review/depose expert | Court: trial court acted within discretion to exclude untimely expert; no reversible error |
Key Cases Cited
- Wells Fargo Home Mortgage, Inc. v. Neal, 398 Md. 705 (2007) (power‑of‑sale foreclosures are summary in rem proceedings and must be free of fraudulent, illegal, or inequitable conduct)
- York Motor Exp. Co. v. State, for Use of Hawk, 195 Md. 525 (1950) (testimony establishing physically impossible facts may be disregarded)
- Kucharczyk v. State, 235 Md. 334 (1964) (testimony that is internally contradictory on core facts may be devoid of probative value)
- Taylor Elec. Co., Inc. v. First Mariner Bank, 191 Md. App. 482 (2010) (doctrine of equitable mortgage applies when parties intended a mortgage but legal form is defective)
- Pettiford v. New Generation Tr. Serv., 467 Md. 624 (2020) (appellate standard: factual findings not set aside unless clearly erroneous; give due regard to trial court credibility determinations)
- MAS Assocs., LLC v. Korotki, 465 Md. 457 (2019) (if any competent material evidence supports trial court findings, they are not clearly erroneous)