Allstate Mortgage & Co. v. Mayor of Baltimore City

BERGER, J. This case arises from a tax sale foreclosure in the Circuit Court for Baltimore City. On October 7, 2011, appellant, Barbara Frank, t/a Allstate Mortgage & Company (“appellant”), filed a “Petition for Proper Payment of Surplus Proceeds and Statement of Claim” regarding real property known as 2835-2855 West Franklin Street (“the Property”). On March 5, 2012, the trial court held a hearing on appellant’s petition. Following an initial hearing, the court ordered several witnesses subpoenaed for a later hearing on the matter.

The second hearing was held on May 2, 2012. Thereafter, the court denied appellant’s petition. Appellant filed a timely appeal and presents one issue for our review, which we rephrase as follows: ³⁹⁷ Whether the circuit court erred in denying appellant’s petition for proper payment of surplus proceeds and statement of claim. 1 For reasons discussed below, we affirm the judgment of the Circuit Court for Baltimore City. FACTS AND PROCEEDINGS By a deed dated July 25, 1997, Opportunity Plus Investment Company, LLLP (“Opportunity Plus”) 2 acquired the Property in Baltimore City for the purchase price of $150,000.00.

The purchase of the Property was financed, in part, by a loan from the sellers in the amount of $123,490.58 secured by a mortgage on the Property that was executed by “Opportunity Plus Investment Company, LLLP / By: Darryl M. Coleman, General Partner.” By an assignment of mortgage dated November 27, 2007, the mortgage on the Property was purchased by Allstate Mortgage & Company (“Místate Mortgage”)—a proprietorship solely owned by Barbara Frank (“Frank”). On or about May 18, 2009, following a tax sale of the Property, Baltimore City issued a tax sale certificate to ETS Maryland, LLC (“ETS Maryland”). On February 16, 2010, ETS Maryland filed a complaint to foreclose rights of redemption on the Property, naming Opportunity Plus, the Property’s record title owner, as the defendant. Appellant was named a co-defendant, which at the time, held a mortgage secured by the Property.

Thereafter, the tax sale certificate was pur ³⁹⁸ chased by 2335 Franklin, LLC (“2335 Franklin”)—the sole member of which was Frank. On September 2, 2010, 2335 Franklin was substituted as the plaintiff in the action. On February 2, 2011, the circuit court issued a judgment foreclosing the right of redemption in favor of 2335 Franklin. As a result, Baltimore City conveyed the Property to 2335 Franklin by deed dated April 15, 2011, which was recorded on June 1, 2011.

On June 6, 2011, Asset Recovery Advisors, LLC (“Asset Recovery”), 3 acting on behalf of Coleman, filed a claim with Baltimore City’s Finance Department for payment as the “person entitled” under Md.Code (2011), § 14-818(a)(4) of the Tax-Property Article (“TP”) to the “balance over the amount required for the payment of taxes, interest, penalties, and costs of sale.” On June 13, 2011, the Baltimore City Finance Department paid the surplus amount of $72,112.80 by check payable to “Darryl Coleman/Asset Recovery.” On October 7, 2011, appellant filed a petition for proper payment of surplus proceeds and statement of claim. In denying appellant’s petition, the court explained: We have a mortgag[ee] who says they should have gotten some money from the surplus of the tax sale. We have the City that already paid out the money to whom they believed based upon information given to them was the proper person. Mr. Coleman, for all the City knew in the information they had, especially since he’s the only person—I looked at that State tax thing, he’s the only person listed.

He’s the resident agent. There are no other people listed for this Opportunity Plus Investment Company. So that’s who the City knew, based on a document that the State, was an authorized person for Opportunity Plus Investment Company, LLLP, which was in forfeit status for not just 60 days, 90 days or a year, but for like almost eight years when this ³⁹⁹ happened. So no one is supposed to guess, and that shouldn’t be what any clerk should have to do, “Oh, maybe this company has a new president” or “Maybe somebody is there,” that’s just too much guesswork.

They’re forfeited. He’s listed a resident agent. He’s come in. They’re entitled.

Asset Recovery is the company that has found this, and the City cut the check. Whether or not Mr. Coleman acted in good faith, and that’s why fraud was mentioned, or gave misinformation is not the determining factor here, but what the City had in front of it, whether or not—it’s like other administrative agencies. Did it follow whatever policies and procedures it had? They’ve had to find somebody to give the surplus to, and they have someone listed on a State record as the resident agent who can accept the check along with Asset Recovery.

The mortgag[ee] has a right to make a claim after the fact in other ways, but this is not the proper forum at this point for the mortgagor to step up and say “Oh, you owe me money.” Well, guess what? Opportunity Plus Investment Company, whatever its status is, doesn’t foreclose it from being sued or the people that were partner or that are a part of it from being sued by the mortgage because they didn’t pay. So in that case, the petition for proper payment of surplus proceeds is denied. And the proceeds will remain.

I’m not putting them back into Court. You have other avenues of collecting the money, Mr. Frank. I’m sure you’re capable of doing that. This timely appeal followed.

DISCUSSION The material first-level facts are not in dispute. The issue decided by the circuit court, and pursued by appellant on appeal, is purely legal. Accordingly, we shall conduct a de novo review. Strub v. C & M Builders, LLC, 193 Md.App. 1, ⁴⁰⁰ 10 , 996 A.2d 399 (2010), rev’d, 420 Md. 268 , 22 A.3d 867 (2011) (quoting Hall v. Univ. of Md. Med.

Sys. Corp., 398 Md. 67, 82 , 919 A.2d 1177 (2007)). Appellant contends that the circuit court erred in denying its petition for proper payment of surplus proceeds from the tax sale foreclosure of the Property. Specifically, appellant argues that Coleman was not the “person entitled to the balance,” and therefore, appellee, Mayor & City Council of Baltimore City (“appellee”), failed to adhere to TP § 14-818(a)(4), as well as its own internal procedures for issuing surplus proceeds.

Conversely, appellee maintains that it fully complied with the requirements of TP § 14-818(a)(4) and with its own procedures and protocols adopted to implement TP § 14-818(a)(4). We agree with appellee. “It is well settled that the interpretation of a statute is a judicial function and requires us to determine and effectuate the legislature’s intent.” Heartwood 88, Inc. v. Montgomery Cnty., 156 Md.App. 333, 358 , 846 A.2d 1096 (2004) (citations omitted). “We give the words of a statute their ordinary and usual meaning. If the statute is not ambiguous, we generally will not look beyond its language to determine legislative intent. When a term or provision is ambiguous, however, we consider the language ‘in light of the ... objectives and purpose of the enactment.’ ” Id. at 359 , 846 A.2d 1096 (citations omitted).

If we cannot discern the legislature’s intent from “the statutory language alone, we may ... look for evidence of intent from legislative history or other sources.” Allstate Ins. Co. v. Kim, 376 Md. 276, 290 , 829 A.2d 611 (2003). Moreover, we may consider “ ‘the consequences resulting from one meaning rather than another, and adopt that construction which avoids an illogical or unreasonable result, or one which is inconsistent with common sense.’ ” Chesapeake Charter, Inc. v. Anne Arundel County Bd. of Educ., 358 Md. 129, 135 , 747 A.2d 625 (2000). A. Plain Language of TP § H-818(a)(I) The specific provision governing the distribution of surplus proceeds stemming from a tax sale foreclosure is contained in ⁴⁰¹ TP § 14-818(a)(4).

In its entirety, TP § 14—818(a)(4) reads as follows: (4) Any balance over the amount required for the payment of taxes, interest, penalties, and costs of sale shall be paid by the collector to: (i) the person entitled to the balance; or (ii) when there is a dispute regarding payment of the balance, a court of competent jurisdiction pending a court order to determine the proper distribution of the balance. Appellant suggests that TP § 14—818(a)(4) requires the collector—in this instance, appellee—to pay over the surplus balance to the entitled person when there is no doubt as to who is entitled to the surplus. Appellant further argues that the distribution of such proceeds “requires some level of diligence on the part of the City, particularly a review of the underlying tax sale matter to see if some other party to that action, other than the party asserting a claim to the Surplus Proceeds, may have a right to the proceeds.” Alternatively, appellee claims that appellant “stretches the provision [when there is a dispute] to somehow require the City, even in the absence of any known or suspected ‘dispute,’ to exhaustively investigate the bona fides of every claimant and, further, to undertake full-blown title and business records searches to assess whether there might be any other potential claimants as well.” B. Legislative History, Purpose, and Scope of TP § H-818(a)(Ip) 1. Statutory Antecedents The precursor to TP § 14-818, as it relates to the payment of surplus proceeds, appeared in 1943, as the last sentence of then Article 81, § 82 (1939, 1947 Supp.).

As enacted by Chapter 761, Acts of 1943, that sentence provided that: Upon receipt of [the full purchase price], ... the Collector shall execute and deliver a proper deed to the purchaser and shall hold any balance over and above the amount ⁴⁰² required for the payment of taxes, penalties, and costs of sale, for