Empire Properties, LLC v. Hardy

CATHELL, J. This case concerns the proper timing and method for a purchaser of property at a foreclosure sale to seek to acquire actual possession of the purchased property from a mortgagor through judicial process. Empire Properties LLC (“Empire”), petitioner, purchased certain property at a foreclosure sale, a sale which subsequently was ratified by the Circuit Court for Prince George’s County, and Empire thereafter sought to acquire actual possession of said property through judicial means. Empire presented one question for our review, which we separate into two questions, as follows: 1. Whether, in a forcible entry and detainer action (an “FED” action) brought in a District Court of Maryland pursuant to Md.Code (1974, 2003 Repl.Vol., 2004 Supp.), § 8-402.4 of the Real Property Article, the District Court has the authority to grant possession of foreclosed real property to the purchaser of that property at foreclosure sale. 2.

Whether, after entry of the Order of the Circuit Court ratifying the foreclosure sale, but prior to payment of the balance of the purchase price and execution of a Trustee’s Deed to the foreclosure purchaser, the foreclosure purchaser is entitled to possession of the property. Under the circumstances of this particular case, we hold that the judicial method by which Empire sought to be awarded actual possession of the property from the holdover mortgagors was incorrect. Whereas Empire pursued a forcible entry and detainer action under § 8-402.4 of the Real Property Article in the District Court, the sole judicial method available allowing Empire to be awarded actual possession following a foreclosure sale prior to the audit and conveyance of the property is found in Maryland Rule 14-102(a) and is a judicial action within the exclusive province of the circuit courts of this State. ⁶³³ We further hold that, generally, where a purchase of property at a foreclosure sale is ratified by a Circuit Court, complete equitable title vests in the purchaser and the purchaser may then be entitled to possession of that property. I. Procedural History and Background On April 11, 2003, Empire purchased at a foreclosure sale property located at 4504 Powder Mill Road in Beltsville, Maryland.

The sale was thereafter ratified by the Circuit Court for Prince George’s County on June 13, 2003. At the time of the foreclosure sale, Donald and Joan Hardy, respondents, were the owners and mortgagors of the property at issue. They remained in possession of the premises subsequent to the ratification of the sale. On June 23, 2003, ten days after the ratification of the sale by the Circuit Court, Empire filed a forcible entry and detain-er action under then Md.Code (1974, 2003 Repl.

Vol), § 8-402.3 of the Real Property Article 1 in the District Court of Maryland sitting in Prince George’s County, seeking possession of the property. The case was heard before the District Court on July 29, 2003. At that time, Empire apparently had not paid the balance of the purchase price to the foreclosure trustees and had not received a deed for the property. On or about August 1, 2003, the District Court issued a written opinion denying Empire its request for possession, stating that the District Court did not have jurisdiction to grant Empire possession under § 8-402.3 unless Empire had a deed, or legal title, to the property in question.

Empire thereafter appealed the decision of the District Court to the Circuit Court for Prince George’s County. By Opinion and Order dated June 3, 2004 and entered on August 19, 2004, the Circuit Court affirmed the judgment of the District Court. ⁶³⁴ On September 20, 2004, petitioners filed a Petition for Writ of Certiorari to this Court. On December 8, 2004, we granted the petition. Empire v. Hardy, 384 Md. 157 , 862 A.2d 993 (2004).

The Hardys did not appear or participate in the proceedings before this Court.

II

Discussion A. Judicial Method of Acquiring Possession of Foreclosed Property. The initial question before this Court is whether Empire pursued the correct procedure in its attempt to acquire actual possession of the property it purchased at foreclosure sale, the said sale having been subsequently ratified by the Circuit Court. In essence, Empire contends that there exists at least two available judicial means to acquire actual possession of property purchased in a foreclosure sale — pursuing a “wrongful detainer” action in the District Court under § 8-402.4 of the Real Property Article or filing a motion for possession in the Circuit Court under Maryland Rule 14-102(a). As we shall explain, the judicial route that Empire chose to assert a right to possession when the Hardys remained on the property subsequent to the ratification of the foreclosure sale in the Circuit Court, where the purchase price for the property has not been paid, the audit not approved and no conveyancing documents executed, delivered or recorded, i.e., a forcible entry and detainer action brought under § 8-402.4 of the Real Property Article, was incorrect and not available to gain actual possession of property purchased at a foreclosure sale.

The method by which a purchaser at a foreclosure sale can seek to acquire actual possession of the property in the Circuit Court under the circumstances is made manifest in Maryland Rule 14-102(a), which states, in pertinent part: “Rule 14-102. Judgment awarding possession. (a) Generally. Whenever the purchaser of an interest in real property at a sale conducted pursuant to these Rules is entitled to possession, and the person in actual possession ⁶³⁵ fails or refuses to deliver possession, the purchaser may file a motion requesting the court to enter a judgment awarding possession of the property.” For whatever reason, 2 Empire chose not to bring a motion under Maryland Rule 14-102(a) to the Circuit Court requesting that court to award it possession of the property it purchased at the foreclosure sale, instead attempting to acquire actual possession in the District Court via § 8-402.4 of the Real Property Article, which states, in pertinent part: “ § 8-402.4.

Wrongful detainer. (a) ‘Wrongful detainer’ defined, — In this subtitle, ‘wrongful detainer’ means to hold possession of a property without the right of possession. (b) Possession pursuant to entitlement under law. — A person may not hold possession of property unless the person is entitled to possession of the property under the law. (c) Complaint; summons. — (1) If a person other than a tenant holding over violates subsection (b) of this section, a person claiming possession may make complaint in writing to the District Court of the county in which the property is located.

(2) On receipt of a complaint under paragraph (1) of this subsection, the court shall summons immediately the person in possession to appear before the court on the day specified in the summons to show cause, if any, why restitution of the possession of the property to the person filing the complaint should not be made. (e) Judgment of court; effect of personal service. — (1) If the court determines that the complainant is legally entitled to possession, the court shall: ⁶³⁶ (i) Give judgment for restitution of the possession of the property to the complainant; and (ii) Issue its warrant to the sheriff or constable commanding the sheriff or constable to deliver possession to the complainant.” Empire argues that “ § 8-02.4 [of the Real Property Article] gives the District Courts of Maryland the authority to grant possession of real property to the purchaser of property at the foreclosure sale upon ratification of the foreclosure sale, but prior to payment of the balance of the purchase price and execution of the Trustee’s Deed.” Determining whether Empire is correct requires this Court to examine the statute at issue. We commence our analysis of § 8-402.4 by attempting to ascertain the intent of the legislature. As we said in State v. Bell, 351 Md. 709 , 720 A.2d 311 (1998): “We have said that ‘[t]he cardinal rule of statutory interpretation is to ascertain and effectuate the intention of the legislature.’ Oaks v. Connors, 339 Md. 24, 35 , 660 A.2d 423, 429 (1995).

Legislative intent must be sought first in the actual language of the statute. Marriott Employees Fed. Credit Union v. Motor Vehicle Admin., 346 Md. 437, 444-45 , 697 A.2d 455, 458 (1997); Stanford v. Maryland Police Training & Correctional Comm’n, 346 Md. 374, 380 , 697 A.2d 424, 427 (1997) (quoting Tidewater/Havre de Grace, Inc. v. Mayor and City of Havre de Grace, 337 Md. 338, 344 , 653 A.2d 468, 472 (1995)); Cobum v. Cobum, 342 Md. 244, 256 , 674 A.2d 951, 957 (1996); Romm v. Flax, 340 Md. 690, 693 , 668 A.2d 1, 2 (1995); Oaks, 339 Md. at 35 , 660 A.2d at 429 ; Mauzy v. Hombeck, 285 Md. 84, 92 , 400 A.2d 1091, 1096 (1979); Board of Supervisors v. Weiss, 217 Md. 133, 136 , 141 A.2d 734, 736 (1958). Where the statutory language is plain and free from ambiguity, and expresses a definite and simple meaning, courts normally do not look beyond the words of the statute to determine legislative intent. Marriott Employees, 346 Md. at 445 , 697 A.2d at 458 ; Kaczorowski v. Mayor and City Council of Baltimore, ⁶³⁷ 309 Md. 505, 515 , 525 A.2d 628, 633 (1987); Hunt v. Montgomery County, 248 Md. 403, 414 , 237 A.2d 35, 41 (1968). “This Court recently stated that ‘statutory language is not read in isolation, but “in light of the full context in which [it] appear[s], and in light of external manifestations of intent or general purpose available through other evidence.” ’ Stanford v. Maryland Police Training & Correctional Comm’n, 346 Md. 374, 380 , 697 A.2d 424, 427 (1997) (alterations in original) (quoting Cunningham v. State, 318 Md. 182, 185 , 567 A.2d 126, 127 (1989)).

To this end, ‘[w]hen we pursue the context of statutory language, we are not limited to the words of the statute as they are printed.... We may and often must consider other “external manifestations” or “persuasive evidence,” including a bill’s title and function paragraphs, amendments that occurred as it passed through the legislature, its relationship to earlier and subsequent legislation, and other material that fairly bears on the fundamental issue of legislative purpose or goal, which becomes the context within which we read the particular language before us in a given case.’ ‘... [I]n State v. One 1983 Chevrolet Van, 309 Md. 327 , 524 A.2d 51 (1987), ... [although we did not describe any of the statutes involved in that case as ambiguous or uncertain, we did search for legislative purpose or meaning — what Judge Orth, wilting for the Court, described as “the legislative scheme.” [Id. at] 344-45, 524 A.2d at 59 . We identified that scheme or purpose after an extensive review of the context of Ch. 549, Acts of 1984, which had effected major changes in Art. 27, § 297. That context included, among other things, a bill request form, prior legislation, a legislative committee report, a bill title, related statutes and amendments to the bill.

See also Ogrinz v. James, 309 Md. 381 , 524 A.2d 77 (1987), in which we considered legislative history (a committee re ⁶³⁸ port) to assist in construing legislation that we did not identify as ambiguous or of uncertain meaning.” Kaczorowski, 309 Md. at 514-15 , 525 A.2d at 632-33 (some citations omitted).” Id. at 717-19, 720 A.2d at 315-16 (some alterations in original); see also Williams v. Mayor & City Council of Baltimore, 359 Md. 101, 115-17 , 753 A.2d 41, 48-49 (2000); Riemer v. Columbia Medical Plan, 358 Md. 222, 235-36 , 747 A.2d 677, 684-85 (2000); Laznovsky v. Laznovsky, 357 Md. 586, 606-07 , 745 A.2d 1054, 1065 (2000). Section 8-402.4 of the Real Property Article was enacted (as § 8-402.3) in 1999, by 1999 Md. Laws, Chap. 649. The law was passed as H.B. 605. The preamble paragraph in Chapter 649 3 provides: “AN ACT concerning Real Property — Landlord-Tenant Actions FOR the pmpose of revising provisions of law relating to landlords and tenants; clarifying the rent escrow procedures to be followed in certain landlord-tenant actions; providing miscellaneous requirements for lease option agreements, security deposits, landlords’ receipts, and residential leases; clarifying the procedures to be followed in instances of retaliatory evictions; authorizing the court to award certain late fees and additional accruing installments of rent in certain summary ejectment actions; authorizing the court to enter judgments for unpaid rent under certain circumstances in certain tenant holding over actions; authorizing a tenant who has not been personally served with a summons to make a limited appearance in certain landlord-tenant actions without becoming subject to the personal jurisdiction of the court; providing that the acceptance of payment under certain circumstances shall not constitute a waiver of certain ⁶³⁹ rights absent a specific written agreement to the contrary; defining certain terms; establishing procedures to be followed in wrongful detainer actions; establishing procedures to be followed where the title to real property is claimed to be disputed in a landlord-tenant action; clarifying the procedures to be followed when a party in certain landlord-tenant actions elects a trial by jury; authorizing the court to exercise injunctive powers in certain landlord-tenant actions, making technical and stylistic changes; and generally relating to the rights and obligations of landlords and tenants in actions involving landlords and tenants.” 1999 Md. Laws, Chap. 649 (emphasis added).

Chapter 649 makes it evident from the outset that the enactment primarily 4 concerns landlord-tenant actions— the title “Real Property — Landlord-Tenant Actions” was a part of the Act, moreover the Act provides that it was enacted “FOR the purpose of revising provisions of law relating to landlords and tenants....” In the case sub judice, there is no allegation that Empire is acting in the capacity of a landlord and that those Empire seeks to remove from the purchased foreclosure property, the Hardys, exist as Empire’s tenants on the property. Thus, here there existed no landlord-tenant relationship that could possibly have been subject to a forcible entry and detainer action brought under the purview of § 8-402.4 of the Real Property Article. Although the preamble paragraph of the enacted bill states, inter alia, that the statute at issue was enacted for the purpose of “establishing procedures to be followed in wrongful detainer actions” and the statute itself states that “ ‘wrongful detainer’ means to hold possession of a property without the right of possession,” § 8-402.4(a) of the Real Property Article, the statute primarily has effect in the context of a landlord-tenant relationship ⁶⁴⁰ under the law. This is made even more obvious by the very existence of the aforementioned Maryland Rule 14-102, which speaks directly to the proper procedure an aggrieved purchaser at a foreclosure sale can take in the Circuit Court when “the person in actual possession fails or refuses to deliver possession.... ” Maryland Rule 14-102(a).

As we recently stated in Laney v. State, 379 Md. 522 , 842 A.2d 773 (2004): “When a mortgagor loses the right to possess foreclosed property but fails to vacate the premises, the purchaser of that property, in lieu of actually taking possession, may seek a court order to remove the holdover mortgagor.... Maryland Rule llp-102(a) provides the right to use judicial process to acquire actual possession of an occupied premises. ... When the landowner receives such a judgment awarding possession, upon the landowner’s request, the ‘clerk [of the court] shall issue a writ directing the sheriff to place [the landowner] in possession of the property.’ Maryland Rule 3-647. Although this judicial process may be used to oust a mortgagor who no longer is entitled to possession, the use of the term ‘may’ in Rule 14-102(a) ... reflects the fact that the ouster process is not mandatory to obtain possession of the purchased property.

In other words, seeking the court’s assistance in dispossessing the holdover mortgagor is only one option available to the purchaser to obtain possession from a holdover mortgagor. Failure to exercise that option does not undermine the mortgagee’s ownership of the property nor the right to possession. Rather, a purchaser with the right to possess property may take possession of that property peacefully without the court’s assistance---- The right of peaceable self-help, therefore, is a viable mechanism for a title owner of property to obtain actual possession of real property from a holdover mortgagor.” Laney, 379 Md. at 541-43 , 842 A.2d at 784-85 (emphasis added) (footnotes omitted). Empire, in its brief, contends that “Rule 14-102 does not require the purchaser to file a motion in the Circuit Court, but merely states that he may,” and that ⁶⁴¹ “[tjhis is entirely consistent with the right of a foreclosure purchaser to proceed concurrently in ejectment, and in the foreclosure case.” It is pellucid that the method for a purchaser at a foreclosure sale to acquire actual possession from a holdover mortgagor prior to the approval of the audit, the payment of the purchase price and the delivery of the conveyancing documents, if the purchaser chooses to use the judicial process, is the method provided for in Maryland Rule 14-102 and not that of § 8-402.4 of the Real Property Article.

We merely discussed in Laney (a criminal case addressing the Fourth Amendment implications of whether a holdover mortgagor, following a foreclosure, has a reasonable expectation of privacy in the premises), that the use of the word “may” in the Rule indicates that, outside of the judicial process, “peaceable” self-help remedies can be pursued in order for a foreclosure sale purchaser to acquire actual possession. It does not mean, as Empire suggests, that alternate judicial means are available in the District Courts of this State wholly independent from Maryland Rule 14-102. Although Empire may seek to gain possession of the purchased property by filing a motion in the Circuit Court under Maryland Rule 14-102(a), it cannot under these circumstances seek the same result from the District Court under § 8-402.4 of the Real Property Article. 5 B. When is a Purchaser at Foreclosure Sale Entitled to Possession of the Purchased Property ? Empire contends that it is entitled to possession of the property in question where the foreclosure sale has been ratified by the Circuit Court but before payment of the purchase price and transfer of the deed.

It appears that Empire, according to a memorandum it filed in the Circuit ⁶⁴² Court on December 15, 2003, “has paid the balance of the purchase money and received a Trustee’s Deed for the Property.” Therefore, because the purchase price has been paid and a deed of trust has been executed and delivered to Empire, this argument appears to be moot. Nevertheless, because under the strictures of foreclosure rules and statutes it is very likely that future purchasers at foreclosure sales could be faced with the same issue as to when possession may be sought, but the issue would normally be mooted before appellate review could be consummated, we shall address Empire’s question in order to resolve when a foreclosure sale purchaser may seek possession of the property. See Attorney General v. Anne Arundel County School Bus Contractors Ass’n, 286 Md. 324, 328 , 407 A.2d 749, 752 (1979) (stating “[a] court may decide a moot question where there is an imperative and manifest urgency to establish a rule of future conduct in matters of important public concern, which may frequently recur, and which, because of inherent time constraints, may not be able to be afforded complete appellate review”). We must therefore begin by examining what the law of this State provides in relation to when a purchaser at a foreclosure sale can be said to be entitled to seek possession of the purchased property.

We note, first of all that there are conflicting statements in the various cases. Our review is somewhat further complicated by the fact that some of the early cases that have become landmark cases over the years involve other types of judicial sales, not mortgage foreclosures; by the fact that payment of the purchase price had in fact been paid in the seminal case, Lannay’s Lessee v. Wilson, 30 Md. 536 (1869); by the fact that in some cases the documents of indebtedness contained provisions for possession, 6 etc., and in some of these cases