Quillens v. Parker

RODOWSKY, J. In the northeast quadrant of West North Avenue and McCulloh Street in Baltimore City is a carwash. During the times relevant to this appeal, the owner of the carwash property was the appellant, Leefen Quillens (Mr. Quillens). As security for a loan, he executed a deed of trust on the carwash site, the rights under which are held by the other ⁵⁵ appellant, Rapid Funding Corporation (Rapid Funding). Rapid Funding, on September 25, 2003, instituted foreclosure, under a power of sale, in Case No. 24-03-003193 in the Circuit Court for Baltimore City.

The lender’s agent made affidavit that the debt was at least $1 million. At a public sale held on January 30, 2004, Rapid Funding bought in for $650,000. The contest before us arises because Mr. Quillens also failed to pay real property taxes. The appellees are the holders of tax sale certificates on various parcels or lots, as described in the property assessment accounts, that are within the area encumbered by the deed of trust. 1 All of the lots are in Ward 13, Section 8, Block 3423.

When appellees brought actions in the Circuit Court for Baltimore City to foreclose the rights of redemption as to the various tax account lots, appellants opposed foreclosure on jurisdictional grounds. Aggrieved by the rejection of their arguments, appellants brought this appeal. There are three appellee interests, Kathleen V. Parker (Ms. Parker), Geuk Lee and Chun Ja Lee (the Lees), and the Mayor and City Council of Baltimore (the City). Ms. Parker brought Action No. 24-C-03-004785 on June 30, 2003, in order to foreclose the right of redemption in Lots 13 through 16, respectively, known as 2303, 2305, 2307, and 2309 McCulloh Street.

Ms. Parker had acquired certificates for each of these lots at a tax sale on May 13, 2002. On March 20, 2000, the Lees brought Action No. 24-C-00-001372 to foreclose the right of redemption in Lot 11A, known as 1130 West North Avenue. The certificate of sale for 1130 West North Avenue describes the “Lot Size” as “improvement only.” The Lees ⁵⁶ acquired their certificate at a tax sale on May 17, 1999. 2 By Civil Action No. 24-C-03-003229, filed May 6, 2003, the City sought to foreclose the right of redemption in Lot 12, known as 2301 MeCulloh Street. The City had bought in that property at a tax sale on May 14, 2001.

By Action No. 24-C-03-003142, filed May 2, 2003, the City sought to foreclose the right of redemption in Lot 17, known as 2311 MeCulloh Street. The City had bought in that property at the tax sale of May 14, 2001. The four above-described tax cases were consolidated with and into Rapid Funding’s action to foreclose the deed of trust, and the orders for this appeal have caused to be brought up to this Court the original records in all five consolidated actions. Only in the two actions by the City had the circuit court entered an order foreclosing the right of redemption prior to the noting of these appeals.

Additional facts will be stated in the discussion of the respective questions presented, which we have reordered and set forth below. 1. “Did the lower court err in refusing to consider that challenge to the court’s jurisdiction which is based on the fact that, because one of the certificates fails to describe any conveyable parcel of real property, there is no jurisdiction and no remedy available under Title 14, Subtitle 8 of the Tax-Property Article?” 2. “Did the lower court err in finding valid those certificates, the redemption price of which included amounts for which the City had earlier purchased certificates not used, within the statutorily prescribed time frame, in a foreclosure proceeding?” ⁵⁷ 3. “Did the lower court err in refusing to require that the holders of certificates present their claims against the proceeds of sale in the mortgage foreclosure case?” 4. “Did the lower court err in entering judgments foreclosing rights of redemption in two cases after appellants had filed their notice of appeal?” Overview By virtue of Maryland Code (1986, 2001 Repl.Vol., 2005 Cum. Supp.), § 14-844(b) of the Tax-Property Article (TP), 3 each of the parcels involved here was in the posture described in A. Gordon, IV, Gordon on Maryland Foreclosures § 8.1, at 363 (4th ed.2004), where the author states: “After the title bring-to-date ... is completed it will sometimes appear that the real property taxes have not been paid. This is not a problem unless: 1. the property has actually been sold in a tax sale, and 2. the statutory waiting period has run, and 3. the tax sale purchaser has filed suit to foreclose the equities of redemption, and 4. served the petition on all interested parties, and 5. the property ... is about to pass to the purchaser, extinguishing the mortgage lien.” Under the tax sale statute, an owner in the above-described position, who chooses not to redeem the property from the certificate holder at the amount determined by the holder, has two options by way of response to a petition to foreclose the ⁵⁸ right of redemption. “These are a challenge to the tax sale itself and a challenge to the amount required to redeem.” Dawson v. Prince George’s County, 324 Md. 481, 488 , 597 A.2d 952, 955 (1991). See TP § 14-842, discussed infra, and § 14-829.

Appellants have chosen to assert that the tax sales are void. Nevertheless, “[t]he right to redeem ... continuéis] until finally barred by decree of the circuit court in which the foreclosure proceeding is filed.” TP § 14-833(b). Here, we shall hold that the appeals in the Lees and Parker cases are premature, for want of a final judgment. Consequently, there will be a window of opportunity in those two actions, after the filing of this opinion and before the entry of a final judgment in the circuit court, for appellants to consider whether the redemption option is preferable.

In the two City cases, we shall hold that there is a final judgment of foreclosure, which we shall affirm. I Appellants argue that “the lower court erred in determining that it had in rem jurisdiction with respect to a tax sale certificate which does not describe a parcel of real property.” This argument is directed only to Lot 11A, the Lees case. There are two notices of assessment for 1130 West North Avenue. One, for Lot 9, values only the land, and the other, for Lot 11A, values only the improvements.

The thrust of the argument is that Lot 11A contains no real property. Consequently, appellants submit, citing Holland v. Billingsley, 208 Md. 635 , 119 A.2d 380 (1956), that the advertisement of the tax sale contained an inadequate description, thereby voiding the tax sale. Further, appellants argue, any tax sale deed from the collector to the Lees would be required to use the advertisement description of the property and similarly would be defective, so that there can be no remedy in the Lees’ action to foreclose the right of redemption. Appellees respond by pointing out that § l-101(cc) defines “ ‘[r]eal property,’ ” for purposes of the Tax-Property Article, to mean “any land or improvements to land.” (Emphasis added).

Appellees further point out that appellants have no standing to object on ⁵⁹ behalf of the Lees, who are the parties seeking, without objection, to enforce rights under the tax sale certificate for Lot 11A. We do not reach these questions on this appeal. There is no final judgment, because there is no judgment foreclosing the right of redemption. On August 25, 2005, the circuit court entered an order fixing the redemption amount for Lot 11A at $41,812.72, and set a per diem rate of interest.

That order further provided “that if the said redemption amount is not paid within sixty (60) days of the date of this Order ... judgment shall be entered in favor of [the Lees] foreclosing the right of redemption in [Lot 11A].” The action to foreclose the right of redemption has not been terminated, because the right to redeem continues until foreclosed. Indeed, the order itself shows that it was not intended to be final. See Makovi v. Sherwin-Williams Co., 311 Md. 278 , 533 A.2d 1303 (1987); see also Edwards Sys. Technology v. Corbin, 379 Md. 278, 285 , 841 A.2d 845, 849 (2004).

In opposition to dismissal of their appeal, appellants submit that, under Scheve v. McPherson, 44 Md.App. 398 , 408 A.2d 1071 (1979), there is a final judgment. 4 Scheve was an appeal from an order under what is today Maryland Rule 2-535(a) (the 30-day revisory power) that had been exercised to reopen a judgment foreclosing the right of redemption from a tax sale. Factually, the circuit court based its ruling on a telephone call from the attorney for the owner to the attorney for the certificate holder, made two days before the expiration of the time for redemption, in which the owner’s intent to redeem was communicated. This Court held that, although a reopening of a judgment, by exercise of the revisory power, ordinarily is not a final judgment, the order in Scheve constituted a final judgment. ⁶⁰ This Court reasoned that there was “no further opportunity for appellants [the certificate holders] to protest or to prosecute their claim.” 44 Md.App. at 404 , 408 A.2d at 1075 . Striking of the foreclosure order, thereby “reviving a right of redemption that could then be exercised merely by paying the amounts fixed by the court, was the one and final act that adjudicated the rights of the parties and, save for appellate review, terminated the justiciable controversy among them.” Id.

(footnote omitted). In a footnote, this Court further explained that, to have concluded otherwise, would have permitted the owners effectively “to preclude an appeal by simply not applying for such a further order” and allowing the right to redeem to “continue indefinitely[.]” Id. n. 5, 408 A.2d at 1075 n. 5. Scheve is distinguishable from the instant matter because there the aggrieved parties were the certificate holders whose opportunity for appellate review of the striking of their judgment of foreclosure could have languished in a legal limbo were that order held to be interlocutory. Here, the appellants are aggrieved by the circuit court’s ruling rejecting their defenses and permitting the foreclosure action to proceed.

Appellants can obtain appellate review of that ruling by appealing a final judgment foreclosing redemption, if there is no redemption in the interim. They are not, however, permitted to obtain appellate review of an interlocutory ruling merely setting the redemption amount. Appellants will have to decide, without an appellate advisory opinion, whether to redeem or to take the risk that a judgment foreclosing the right of redemption will be affirmed. With respect to the Parker case, the arguments which appellants make on the merits are similar to those which they make in the City case, discussed in Part II below.

But the order appealed from in the Parker case is even more remote from a final judgment than the order appealed from in the Lees case. The August 26, 2005 order appealed from in the Parker case established the validity of the tax sale certificates issued to Ms. Parker. It further provided that Ms. Parker may proceed with her case “and upon submission of an ⁶¹ affidavit of compliance that is satisfactory to this Court, may obtain a judgment foreclosing the right of redemption” on Lots 13 through 16. The order for appeal was noted on September 22, 2005.

Our analysis with respect to the appealability of the order in the Lees case is applicable here. For these reasons we shall dismiss the appeals in the cases of Ms. Parker and of the Lees. II Appellants next argue that the “lower court erred in finding valid certain tax sale certificates reciting a minimum purchase price which includes amounts which are not taxes and for which liens do not attach to the pertinent property.” We need consider this argument only with respect to the City cases, in which orders foreclosing the right of redemption were entered on October 12, 2005. Appellants’ argument ultimately rests on TP § 14—833(c).

That section, and its relevant context, read as follows: “(a) Time for filing generally.—Except as provided in subsections (e) and (f) of this section, at any time after 6 months from the date of sale a holder of any certificate of sale may file a complaint to foreclose all rights of redemption of the property to which the certificate relates. “(b) Continuation of right to redeem.—The right to redeem shall continue until finally barred by decree of the circuit court in which the foreclosure proceeding is filed. “(c) Void certificate—Time limitations.—(1) The certificate is void unless a proceeding to foreclose the right of redemption is filed within 2 years of the date of the certificate of sale. “(d) Same—Cessation of holder’s right, title, and inter est.—(1) If a certificate is void under subsection (c) of this section, then any right, title, and interest of the holder of the certificate of sale, in the property sold shall cease and all money received by the collector on account of the sale ⁶² shall be deemed forfeited, and shall be applied by the collector on the taxes in arrears on the property.” Appellants’ argument, which applies to both Lots 12 and 17, can best be illustrated by using actual numbers. We shall use the Lot 17 numbers. On May 15, 1995, the City conducted a tax sale at which it bought in Lot 17 for $3,298.81, the then total of the liens on that property. On May 14, 2001, the City again included Lot 17 in a tax sale at which time the total lien claim was $9,331.71, including the $3,298.81.

The City bought in the property at the gross amount. The City’s action to foreclose the right of redemption on Lot 17 was brought within two years from the May 14, 2001 tax sale. Appellants contend not only that, under § 14-833, the tax sale certificate from the 1995 sale became void, but also that the lien was lost for the taxes due at the 1995 sale, which, in the case of Lot 17, would be $3,298.81. Under this argument, the City is said to be an unsecured creditor as to $3,298.81 for Lot 17.

Extending that concept, appellants argue that the inclusion of the pre-1995 debt in the amount required to redeem certificates issued to the City in the 2001 sale renders those certificates entirely void. In the words of appellants, “[o]nce a certificate held by the City is void as the result of passage of time, it cannot offer the pertinent property for sale at a price which includes the amount recited in such certificate and thereupon issue a new certificate purporting to pass unto its purchaser a lien securing payment of such amount. Such new certificate is void because it is not contemplated, permitted, described or authorized by the Statute.” Appellants’ Brief at 17. The argument has no merit.

It is a “settled principle that laws enacted for the collection of general taxes must be interpreted with very great liberality; consequently, construction should not be undertaken with an eye to defeating the legislation, but with both eyes focused on giving it force, if reasonably possible.” Surratts Assocs. v. Prince George’s County, 286 Md. 555, 566 , 408 A.2d 1323, 1329 (1979). The ⁶³ plain language of § 14-833(c) voids only the certificate issued to the holder, not the hen for the benefit of the public fisc in the amount of the indebtedness. “All [that the City] thus far has received is a certificate of purchase which, unless sold or assigned [Maryland Code (1957), Article 81] (§ 89) [now TP § 14-825], authorizes, within a statutorily prescribed time frame, foreclosure of redemption rights [Maryland Code (1957), Article 81] (§ 88) [now TP § 14-824(c) ] if payment by the owner is not in the meantime made.” Id. at 567, 408 A.2d at 1329. The first lien for real property taxes for the years of delinquency is not dependent on a valid tax sale certificate. The lien is created by statute.

TP § 14-804(a) provides that “[ajll unpaid taxes on real property shall be, until paid,