LaSalle Bank, N.A. v. Reeves

SHARER, Judge. In the Circuit Court for St. Mary’s County, appellant, LaSalle Bank, NA, filed an amended complaint for declaratory relief seeking reformation of a deed of trust which, appellant asserted, inaccurately described the property that secured the deed of trust. Named as defendants below were appellees, Elizabeth A. Reeves and the Delaware Tribe of Western Oklahoma. 1 On grounds that the statute of limitations barred appellant’s claim, the circuit court granted appellees’ motion to dismiss. 2 In this timely appeal, appellant raises two issues which, as rephrased, are: 3 1. Whether the circuit court erred in ruling that appellant’s claim was barred by the three-year statute of limitations set forth in Md.Code Ann., Cts. and Jud.

Proc. § 5-101. 2. Whether the circuit court erred in applying the statute of limitations for civil actions rather than applying the equitable doctrine of laches. Appellees have raised an issue of jurisdiction and immunity: I. Did the Circuit Court err in ruling that LaSalle’s claim was barred by the 3 year statute of limitations set forth in Md. Cts. & Jud. Proc.Code Ann. § 5-101?

II

Did the Circuit Court err in applying the statute of limitations for civil actions rather than applying the equitable doctrine of laches? ³⁹⁶ The tribal owner is entitled to its defense of immunity and the case must be dismissed. For the reasons that follow, we shall reverse the judgment of the circuit court as it relates to the limitations/laches issue. Finding the want of a necessary party, we shall remand to the circuit court for further proceedings. FACTUAL and PROCEDURAL BACKGROUND In our recital of the facts, we shall eliminate the somewhat serpentine series of transactions that ultimately gave rise to this litigation, and focus on the present parties.

Reeves owned an improved lot, consisting of three acres more or less, in Chaptico, St. Mary’s County (“the Property”). In 1998, Reeves negotiated a loan, secured by a deed of trust on the Property. In 2000, Reeves applied to refinance the loan, to be secured by another deed of trust on the Property in the same amount. On February 24, 2000, a deed of trust was executed for the benefit of LaSalle’s predecessor in interest, Residential Lending Corporation.

The legal description set out in the deed of trust, however, was incorrect. In fact, the description defined a parcel consisting not of 3 acres, but of only 1.411 acres. The smaller parcel described, however, was within the larger parcel. On March 6, 2000, the refinanced loan, and all relevant documents, including the deed of trust, were assigned to LaSalle.

On April 23, 2002, for reasons not entirely clear from the record, Reeves executed a quitclaim deed, recorded among the land records of St. Mary’s County, conveying any interest she held in the Property to the Delaware Tribe. Reeves defaulted in June 2002, and LaSalle instituted foreclosure proceedings. LaSalle “bought in” the Property at the foreclosure sale. In preparation for resale of the foreclosed Property, LaSalle discovered the mistake in the description in the deed of trust.

In its amended complaint, filed on December 7,2004, appellant asked the circuit court to reform the deed of trust by substituting a correct description of the Property secured, encompassing the entire three acres as intended by the parties, and ³⁹⁷ to impute the corrected description to the Property actually sold at the foreclosure sale. Appellees responded with a motion to dismiss. The circuit court held hearings on February 16, 2005, and March 2, 2005. On March 2, the court granted Reeves’s motion to dismiss, ruling that the claim was barred by the three-year statute of limitations.

The Circuit Court’s Ruling The circuit court set forth its analysis in an oral opinion as follows: Here, as I understand it, are the facts that are relevant to my ruling. I have been asked to reform a deed of trust signed on February 24, 2000, ... [The] Deed of trust was signed by Ms. Reeves, deeding to Schedule A Trustee, ... for [the] benefit of Superior Bank to collateralize a loan of some $300,000. The deed of trust before the Court, and filed in the land records of Saint Mary’s County, deeded 1.41 acres as the ... security for the loan. On July 21, 200[0] ...

Ms. Reeves filed a voluntary petition ... in bankruptcy. Superior Bank, the predecessor to [appellant], moved ... for relief from ... the bankruptcy stay, the property known as lot five and seven as shown on a plat entitled White Plains Farm, which we all agree is the property in issue here, [and] also property shown as lots one, two and eight, White Plains Farm. In any event, no matter how described by the bankruptcy court, we all agree it is the property in issue here. [ ] On February 5, 2001, a consent order granting relief from the stay as to 24889 Lucie Beall Lane ... was ... granted, [to] the plaintiff, Superior Bank, ... lifting the stay on that property, and they proceeded to foreclosure. ... [0]n November 10th, the year 2003, the [appellant] being the successor in interest to Superior Bank, to this deed of trust, and to the loan, filed in this Court a motion for declaratory relief, a complaint for declaratory relief, asking that this Court declare that the deed of trust, ... be reformed because of a mutual mistake. And the ³⁹⁸ summary judgment asked that the Court-suggests to the Court that there is no disagreement as to the facts in this case[.] [Reeves] filed a motion, ... to dismiss as being beyond the time period provided in the statute of limitations^] The problem is, the statute she cited was for the civil actions, absent specialities, and that is the three year statute that controls civil actions.

If this case is such a civil action as the statute of limitations refers to, then the timing herein makes her correct and this matter must stand dismissed. And I thought that was going to be rather easy until I did some research, realizing that this is an equitable action. Then the question is, does the doctrine of laches control? Laches is a — doctrine that denies to parties the use of the Court if they sleep on their rights.

And by doing so, there would be some injury to the other party. So issues I have to decide are essentially, one is the civil, the statute of limitations for civil filing controlling. If that is not controlling, what is the term of laches that would be reasonable in this case, or does laches even apply to this case, and then is reformation in order? If when the courts, when equitable actions were abolished in [19]84 by being merged into law actions, bring us pretty much in line with then the federal system, procedure.

They did not abolish the equitable principles and doctrines. However, the statute of limitations, there was no curing statute for the doctrine of laches, and though I think [counsel for appellant] is correct, that if latches [sic] were [sic] the controlling doctrine, I don’t think laches would apply in this case, I don’t think [the time] would have run because I do not find there to be any injury whatsoever to the [appellees] in this case. The [appellees] would really be put in the position they intended to be in the first place. So I find that the doctrine of laches, if it were applicable to this case, laches would not have yet run because there is no harm done to the defendant.

However, I find the ³⁹⁹ doctrine of latches [sic] does not control. I find that the civil — the statute of limitations as to the civil actions ... does control[.] And, therefore, this case was filed beyond that statute, and for that reason, will have to be dismissed. However, I make a further finding to make it a little bit simpler on whoever may be reviewing this, in that statute, as I have ruled it does, does not apply to this case. And if I, as I have ruled that laches would not have run, reasonably run at this point because there is no harm to the [appellee] then I would have been compelled by the facts before me to grant [appellant’s motion for] summary judgment because it is clearly set out in sworn testimony of the [appellee] that she intended the very relief, she intended the very facts to exist that the relief seeks to accomplish.

In plain English, she says in her deposition she meant to deed the 3 acres that she put the yellow line around. She says that under oath. Actually, I shouldn’t be taking testimony today but I allowed her to get on the-I ordered her to get on the witness stand to testify, but the bottom line is I think that has to be dismissed because I believe the statute of limitations controls. PROCEDURAL HISTORY We shall refrain from confusing the reader with a detailed recital of the myriad motions, responses, and other pleadings filed in the circuit court, many of which, facially, appear to approach being frivolous.

It is sufficient for the purpose of this opinion to note that appellant filed a complaint, and later an amended complaint, for declaratory relief, seeking, in essence, reformation of the erroneously drawn deed of trust. After a good deal of paper skirmishing, the matter came on for hearing in the circuit court on appellant’s amended complaint for declaratory judgment and Reeves’s motion to dismiss. The hearing below proceeded with the argument of counsel, at least to the point at which the court invited Reeves to become a witness. That, in our view, amounted to consideration by the court of matters outside the pleadings and served ⁴⁰⁰ to convert the motion to dismiss to a motion for summary judgment.

See Md. Rule 2-322(c); Vogel v. Touhey, 151 Md.App. 682, 703-04 , 828 A.2d 268 (2003). Hence, we shall review the circuit court’s findings and judgment under the standard prescribed for summary judgment proceedings. 4 STANDARD of REVIEW In reviewing a grant of summary judgment, we are concerned with whether a dispute of material fact exists. Hartford Ins. Co. v. Manor Inn of Bethesda, Inc., 335 Md. 135,144 , 642 A.2d 219 (1994). “A material fact is a fact the resolution of which will somehow affect the outcome of the case.” King v. Bankerd, 303 Md. 98, 111 , 492 A.2d 608 (1985) (citing Lynx, Inc. v. Ordnance Prods., Inc., 273 Md. 1, 8 , 327 A.2d 502 (1974)). “[A] dispute as to facts relating to grounds upon which the decision is not rested is not a dispute with respect to material fact and such dispute does not prevent the entry of summary judgment.” Salisbury Beauty Schs. v. State Bd. of Cosmetologists, 268 Md. 32, 40 , 300 A.2d 367 (1973).

In the ⁴⁰¹ instant case, the parties concede the lack of dispute of a material fact. In fact, both parties moved for summary judgment. The Court of Appeals also has stated that “the standard of review for a grant of summary judgment is whether the trial court was legally correct.” Goodwich v. Sinai Hosp. of Baltimore, Inc., 843 Md. 185 , 204, 680 A.2d 1067 (1996). The trial court, in accordance with Md. Rule 2-501(e), shall grant a motion for summary judgment “if the motion and response show that there is no genuine dispute as to any material fact and that [the moving party] is entitled to judgment as a matter of law.” The purpose of the summary judgment procedure is not to try the case or to decide the factual disputes, but to decide whether there is an issue of fact which is sufficiently material to be tried.

See id. at 205-06, 680 A.2d 1067 ; Coffey v. Derby Steel Co., 291 Md. 241, 247 , 434 A.2d 564 (1981); Berkey v. Delia, 287 Md. 302, 304 , 413 A.2d 170 (1980). Thus, once the moving party has provided the court with sufficient grounds for summary judgment, the non-moving party must produce sufficient evidence to the trial court that a genuine dispute to a material fact exists. See, e.g., Hoffman Chevrolet, Inc. v. Washington County Nat’l Sav. Bank, 297 Md. 691, 712 , 467 A.2d 758 (1983).

This requires “producing] facts under oath, based on personal knowledge of the affiant to defeat the motion. Bald, unsupported statements or conclusions of law are insufficient.” Id. With these considerations in mind, we turn to the case sub judice. TRIBAL IMMUNITY/JURISDICTION Before discussing the substantive question of whether the circuit court erred in applying the statute of limitations, rather than laches, to appellant’s claim, we shall address the threshold issue of the potential immunity of the Delaware Tribe from state court action, and the resulting questions of jurisdiction and necessary parties. 5 See Mahan v. Mahan, 320 Md. 262, ⁴⁰² 273 , 577 A.2d 70 (1990) (“Failure to join a necessary party constitutes a defect in the proceedings that cannot be waived by the parties, and may be raised at any time, including for the first time on appeal.”); see also Md. Rule 2-324.

Reeves argues to this Court that “the [circuit court] could not escape impacting the land rights of the Delaware Nation as well as their tribal immunity in this suit and therefore trigger federal question jurisdiction.” Reeves further argues that the Delaware Tribe was a necessary party to this litigation, given the existence of the quitclaim deed, and that, in view of the United States Supreme Court’s decisions in the area of tribal immunity from suit in state courts, the circuit court incorrectly entertained arguments in this case which could affect the rights of the tribe. See Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751 , 760, 118 S.Ct. 1700 , 140 L.Ed.2d 981 (1998). As we have noted, certain Indian tribes are immune from the jurisdiction of the state courts.

See Wolfchild v. United States, 72 Fed.Cl. 511, 536 (2006). Immunity is afforded only those tribes that are included on a roster (“the List”) that is created pursuant to the Federally Recognized Indian Tribe List Act of 1994, 25 U.S.C, §§ 479a et seq. (“the Act”). The List is maintained by the Department of the Interior (“DOI”) and the DOI is granted jurisdiction to add to, or delete from, the list particular tribes or nations, in compliance with the procedures established by the federal Administrative Procedure Act (“the APA”), and properly published.

The status of the Delaware Tribe was uncertain until it was added to the List by the DOI in September 1996. “[T]he Delaware Tribe of Indians is a tribal entity recognized and eligible for funding and services from the Bureau of Indian Affairs by virtue of its status as an Indian Tribe.” 61 Fed. Reg. 50 , 863 (Sept. 27, 1996). Soon thereafter, however, the Cherokee Nation filed suit against the DOI, asserting that the ⁴⁰³ agency violated provisions of the APA by extending recognition to the Delawares. See Cherokee Nation of Okla. v. Babbitt, 944 F.Supp. 974 (D.D.C.1996). Following a ruling on procedural grounds, the litigation was transferred to the District Court for the Northern District of Oklahoma.

On appeal, the U.S. Court of Appeals for the Tenth Circuit conducted an extensive, and instructive, explication of the history of the affinity of the Delawares and the Cherokee Nation, based upon two memorialized events. The first was an 1866 treaty between the United States government and the Cherokee Nation; the second was an “Articles of Agreement” between the Cherokee Nation and the Delawares, executed on April 8, 1867, and properly ratified by President Andrew Johnson. The Articles of Agreement called for the consolidation of the Delawares within the Cherokee Nation. Cherokee Nation of Okla. v. Norton, 389 F.3d 1074, 1079-81 (10th Cir.2005).

The Norton Court, quoting from Cherokee Nation v. Journeycake, 155 U.S. 196, 210-11 , 15 S.Ct. 55 , 39 L.Ed. 120 (1894), noted that “the ‘Delawares became incorporated into the Cherokee Nation, and are members and citizens thereof!;.]’ ” Norton, supra, 389 F.3d at 1081 . The Tenth Circuit, applying the 1866 treaty, the 1867 agreement, and Journeycake , held that the DOI, in placing the Delawares on the Federally Recognized Indian Tribe List, had violated the Tribe List Act, and ordered the listing voided. 6 Id. at 1087. In compliance with that decision, the DOI removed the Delaware Tribe from the List. 70 Fed. Reg. 226 , 71194 (November 25, 2005). Therefore, at the time the Circuit Court for St. Mary’s County dismissed appellant’s complaint for declaratory judgment, the Delaware Tribe was no longer a recognized tribe and was, in the abstract, subject to the jurisdiction of the state court.

However, because of the effect ⁴⁰⁴ of Norton, swpra, and the subsequent action of the DOI, the Delaware Tribe had been subsumed into the Cherokee Nation. Thus, in our view, the Cherokee Nation became a necessary party to the instant declaratory judgment action. For that reason, we shall hold that there is the want of a necessary party, and remand to the circuit court for farther appropriate proceedings, to include whether jurisdiction lies in the circuit court or in federal court. LIMITATIONS OR LACHES? 7 The Merger of Law and Equity, the Doctrine of Laches, and Statutory Limitations Because resolution of appellant’s issues requires analysis of interrelated concepts, we shall consider the issues as one, rather than separately.

In this appeal we are confronted by considerations of the merger of law and equity, as applied to a purely equitable proceeding, in the context of the doctrine of laches vis a vis the application of statutory limitations to actions at law. The circuit court, by granting Reeves’s motion to dismiss, essentially ruled that, as a result of the merger, the doctrine of laches was inapplicable to appellant’s claims as a matter of law. We believe that ruling to be erroneous. “The merger of law and equity was accomplished in this State on July 1, 1984, as part of a comprehensive revision of the Maryland Rules of Procedure.” Higgins v. Barnes, 310 Md. 532, 534 , 530 A.2d 724 (1987); see also Md. Rule 2-301 (“There shall be one form of action known as ‘civil action.’ ”). “The effect of this Rule is to eliminate distinctions between law and equity for purposes of pleadings, parties, court sittings, and dockets.” Comm, note to Md. Rule 2-301. Further, The merger of law and equity that was carried out by the 1984 revision of the Maryland Rules of Procedure was not ⁴⁰⁵ intended to abolish all differences between legal and equitable claims and the defenses to them, but only to abolish the pleading distinctions between law and equity and to assure that all claims and defenses are determined in one court.

Thus, while the merger makes possible the joinder in a single action of claims previously cognizable only as separate actions at law or in equity, it does not avoid the occasional necessity of identifying the character and historical genesis of each claim for purposes of determining entitlement to a jury trial, the extent of jurisdiction, the application of particular principles, or the like. 9 Maryland Law Encyclopedia, Equity § 5 (2000) (citing, inter alia, South Down Liquors, Inc. v. Hayes, 80 Md.App. 464 , 564 A.2d 119 (1989), aff'd on other grounds, 323 Md. 4 , 590 A.2d 161 (1991)). As a starting point for our analysis, we quote Judge Battaglia’s considerable discussion of the doctrine of laches in Ross v. Board of Elections, 387 Md. 649, 668-70 , 876 A.2d 692 (2005): Laches “is a defense in equity against stale claims, and is based upon grounds of sound public policy by discouraging fusty demands for the peace of society.” Parker v. Board of Election Supervisors, 230 Md. 126,130 , 186 A.2d 195 (1962). The doctrine of laches arose out of the equity courts of England and developed during a period in which equity courts were not subject to statutes of limitations passed by Parliament. Because stale demands, usually involving the loss of witnesses or records, offended the Chancellor’s sense of fairness, courts of equity customarily refused to grant an equitable remedy in appropriate eases.

In Buxton v. Buxton, 363 Md. 634 , 770 A.2d 152 (2001), we recently had the opportunity to examine the elements of laches: [T]he word, itself, derives from the old French word for laxness or negligence.... The passage of time, alone, does not constitute laches but is simply ‘one of many ⁴⁰⁶ circumstances from which a determination of what constitutes an unreasonable and unjustifiable delay may be made.’ In that regard, there is a relationship between laches and the statute of limitations, although the statute does not govern. We held that, ‘[i]n a purely equitable action, a lapse of time shorter than the period of limitations may be sufficient to invoke the doctrine; and, where the delay is of