Mayor & City Cncl of Balt. v. Thornton Mellon

Mayor and City Council of Baltimore v. Thornton Mellon, LLC, et al. No. 1940, Sept. Term, 2019 Opinion by Shaw Geter, J. Taxation > Certificate of Sale The certificate of sale or assignment of the certificate of sale is presumptive evidence in all courts in all proceedings by and against the purchaser, and the purchaser's representatives, heirs and assigns, of the truth of the statements in the certificate of sale or assignment of the certificate of sale, of the title of the purchaser to the property described in the certificate of sale or assignment of the certificate of sale, and of the regularity and validity of all proceedings had in reference to the taxes for the nonpayment of which the property was sold and the sale of the property. Md. Code Ann., Tax-Prop. § 14-823 . Taxation > Assignment of Certificate of Sale A certificate of sale executed and delivered by the collector to the purchaser is assignable and an assignment of the certificate of sale vests in the assignee, or the legal representative of the assignee, all the right, title, and interest of the original purchaser. Md. Code Ann., Tax-Prop. § 14-821 .

Taxation > General Revisory Power A motion for substitution of plaintiff and motion for an order directing issuance of a tax deed to the assignee, filed less than 30 days after the Judgment Foreclosing the Right of Redemption was entered, although not captioned as motions to revise judgment, are treated as such. Statutory Interpretation > Assignment of Certificate of Sale The Maryland General Assembly did not, in its construction of the Maryland Tax Property Article, limit the assignment of a certificate of sale post judgment. Md. Code Ann., Tax- Prop. § 14-821 . Statutory Interpretation > Assignment of Judgment There is no expressed prohibition or clear legislative limit to the assignability of a judgment foreclosing the right of redemption.

A judgment constitutes a “chose in action,” which, whether arising in tort or ex contractu, is generally assignable. Circuit Court for Baltimore City Case No. 24-C-18-001043 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 1940 September Term, 2019 ______________________________________ MAYOR AND CITY COUNCIL OF BALTIMORE v. THORNTON MELLON, LLC, ET AL. ______________________________________ Kehoe, Berger, Shaw Geter, ______________________________________ Opinion by Shaw Geter, J. ______________________________________ Filed: January 28, 2021 Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. 2021-02-18 12:22-05:00 Suzanne C. Johnson, Clerk This appeal arises from a Judgment Foreclosing the Right of Redemption and an Order of the Circuit Court for Baltimore City directing the City of Baltimore to issue a Tax Deed to Appellee’s assignee, Ty Webb LLC. Appellee, Thornton Mellon LLC, initially purchased the property in question at a tax sale and later filed a complaint to foreclose the right of redemption. The court entered a judgment and ordered the City to issue a deed to appellee.

Shortly thereafter, appellee filed a Notice of Substitution stating that it had assigned both the certificate of sale and judgment to Ty Webb LLC. Ty Webb LLC then filed a motion requesting an order that the City issue a tax deed to it as assignee. The City opposed and following a hearing, the court denied the City’s motion to strike the notice of substitution, finding that the assignment was valid and granted Ty Webb LLC’s motion to direct the City to issue the tax deed. Appellant timely appealed and presents the following question for our review which we have consolidated and rephrased:1 1 Appellant’s original questions presented are stated as follows: Did the circuit court err in ordering the City to issue a tax sale deed to Ty Webb LLC rather than the tax sale purchaser, Thornton Mellon LLC, when Thornton Mellon LLC waited until after the court’s final decree to purport to assign its certificate of sale and the judgment foreclosing the right of redemption to Ty Webb LLC, and neither company filed the purported assignment with the circuit court?

A. Is a tax sale certificate no longer assignable once a court enters judgment foreclosing the right of redemption? B. Is a judgment foreclosing the right of redemption non-assignable? C. Must the assignment of a judgment be filed in the circuit court before the assignee can enforce the judgment in the assignee’s name? 1. Did the circuit court err in ordering the City of Baltimore to Issue a Tax Sale Deed to Appellee’s assignee, Ty Webb LLC?

FACTUAL BACKGROUND On May 15, 2017, appellee, Thornton Mellon LLC, a real estate investment company, purchased a residential property located at 812 Wedgewood Rd. Baltimore, Maryland, at a Baltimore City tax sale. After the original owner failed to redeem the property, Thornton Mellon LLC, on February 26, 2018, filed a Complaint to Foreclose the Right of Redemption in the Circuit Court for Baltimore City. On July 10, 2019, the court entered a Judgment Foreclosing the Right of Redemption that ordered, in part, the plaintiff be “vested with an absolute and indefeasible fee simple title.” The Judgment further ordered the City to “execute and deliver a Deed to the Plaintiff, his successors and assigns, in accordance with the provisions of §§ 14-831 and 14-847 of the Tax-Property Article of the Maryland Code Annotated . . . [.]” On July 31, 2019, Thornton Mellon LLC filed a Notice of Substitution stating its interest in the Property had been assigned to Ty Webb LLC and requested that Ty Webb LLC be substituted as plaintiff.

Ty Webb then filed a Motion for an Order Directing the City to Issue a Tax Deed to Assignee. The City filed a Motion to Strike the Notice of Substitution and to Strike, or Alternatively, Respond to the Motion for Order Directed to the City of Baltimore to Issue a Tax Deed to Assignee. At a hearing scheduled by the court, the City argued that under the statutory scheme of the Maryland Tax Property Article, the assignment of a Judgment Foreclosing the Right of Redemption is not permitted, nor is a post-judgment assignment of a tax sale certificate. 2 The court denied the City’s Motion to Strike Notice of Substitution and granted Ty Webb LLC’s Motion for an Order Directing the City to Issue a Tax Deed to Assignee, holding that the plain language of § 14-821 of the Maryland Tax Property Article does not limit the assignability of either a tax sale certificate or a Judgment Foreclosing the Right of Redemption. MOOTNESS As a preliminary matter, Thornton Mellon LLC argues the City failed to raise on appeal, whether the circuit court’s ruling denying its Motion to Strike the Notice of Substitution, was error.

Thus, appellee argues appellant’s remaining arguments are moot. Conversely, the City contends “the propriety of the purported substitution is subsumed within the circuit court’s ruling that the City must issue a deed in the name of Ty Webb LLC,” which is the question the City did present. To be sure, “question[s] not presented or argued in an appellant's brief [are] waived or abandoned and [are], therefore, not properly preserved for review.” Health Servs. Cost Review Comm’n v. Lutheran Hosp. of Maryland, Inc., 298 Md. 651, 664 (1984).

In the present case, we hold that appellant has preserved for our review the issue of substitution because it is, as appellant noted, “linked inextricably” to the overall question presented. We note further that we may consider the merits of a moot case, (1) “where a controversy that becomes non-existent at the moment of judicial review is capable of repetition but evading review[]”; or (2) where a question of law, if not immediately decided, will harm the public interest. See Comptroller of the Treasury v. Zorzit, 221 Md. App. 274, 292 (2015). 3 Assuming arguendo, that this case is moot, it appears there is a continuing issue regarding the substitution of parties after a foreclosure judgment has been granted and the issuance of a deed in the new party’s name. During oral argument, counsel advised this Court that there are several similarly situated cases that have now been stayed pending this appeal.

As such, even if moot, these matters are capable of repetition and the public interest will be harmed if we do not decide these issues. STANDARD OF REVIEW Pursuant to Maryland Rule 8-131(c): When an action has been tried without a jury, the appellate court will review the case on both the law and the evidence. It will not set aside the judgment of the trial court on the evidence unless clearly erroneous and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses. “[A]ppellate courts accept and are bound by findings of fact in the lower court unless they are clearly erroneous.” Cunningham v. Feinberg, 441 Md. 310, 322 (2015) (internal quotation omitted). “A factual finding is clearly erroneous if there is no competent and material evidence in the record to support it.” Hoang v. Hewitt Ave. Assocs., LLC, 177 Md. App. 562, 576 (2007).

BACKGROUND The laws governing tax sales are codified in Title 14 of the Maryland Tax – Property Article (hereafter “TP”) TP § 14-818. Generally, when a property owner fails to pay his or her property taxes, all the unpaid taxes are deemed liens on the property until paid. See TP §14-804(a); Simms v. Scheve, 298 Md. 1, 3 (1983). “Following proper notice to the proper parties, a sale of [a] property may be effected by the county's tax collector 4 once an owner’s tax payments are in arrears.” LaValley v. Rock Point Aero Sport Club, Inc., 104 Md. App. 123, 126 (1995); TP § 14-808. The sale of the property takes place at a public auction in accordance with the tax statute and the property is sold in fee or leasehold to the highest good-faith bidder.

See TP § 14-817(a)(2). The purchaser is then issued a certificate of sale which “evidences the sale.” See TP § 14-823; Gordon Family P’ship v. Gar on Jer, 348 Md. 129, 139 (1997). Pursuant to the Tax Property Article, the certificate of sale is freely assignable and may be recorded. TP §§ 14-821 to 14-822; Gordon Family P’ship, 348 Md. at 139 .

No later than the day after the sale, the purchaser must pay “the full amount of taxes due on the property sold . . . together with interest and penalties on the taxes, expenses incurred in making the sale, and the high-bid premium, if any.” TP § 14-818(a)(1)(i). “[T]he residue of the purchase price remains on credit.” Id. The delinquent property owner may redeem the property “any time until the right of redemption has been finally foreclosed by paying the required sum to the collector, who [then] transfers the money to the [tax sale] purchaser in exchange for the tax sale certificate.” Quillens v. Moore, 399 Md. 97, 113 (2007); TP § 14-827. If the property fails to be redeemed within six months after the date of sale, the certificate holder may file a complaint to foreclose the right of redemption. TP § 14-833(a)(1). “The [complaint] must be filed within two years or the certificate is void.” Quillens, 399 Md. at 113 ; TP § 14-833(c)(1).

Once the complaint is filed and the purchaser “takes all steps necessary to foreclose the right of redemption, the court must enter a judgment foreclosing the prior owner’s right of redemption after the time period set in the 5 order of publication and the summonses expire.”2 Scheve v. Shudder, Inc., 328 Md. 363, 368 (1992); TP §§ 14-840, -844. A judgment for the plaintiff “vests in the plaintiff an absolute and indefeasible title in fee simple in the property . . . [.]” TP § 14-844. The judgment of the court shall direct the collector to execute a deed to the holder of the certificate of sale. After final judgment is entered, “the collector may not execute or deliver a deed to any purchaser other than the governing body of a county until the balance of the purchase price has been paid in full, together with all taxes and interest and penalties on the taxes accruing after the date of sale.” TP §§ 14-818, -847.

DISCUSSION A circuit court has general revisory power and control over a judgment “[f]or a period of 30 days after the entry of a judgment, or thereafter pursuant to motion filed within that period.” Md. Code Ann., Cts. & Jud. Proc. § 6-408 ; See also Smith v. Lawler, 93 Md. App. 540, 551 (1992) (finding that the court had