Slattery v. Friedman

WENNER, Judge. The genesis of this appeal is the entry of a judgment of foreclosure of the rights of appellants, Edward J. Slattery, Jr., Nancee C. Slattery, Thomas M. Slattery, and Nancy B. Slattery (the Slatterys), to redeem property purchased at a Montgomery County tax sale by appellee, Alan Friedman (Friedman). Friedman’s attempts to notify the Slatterys of the filing of his complaint to foreclose their rights of redemption, ¹⁰⁹ both by mail and by personal service, were unsuccessful. Thus, the circuit court entered judgment of foreclosure in favor of Friedman without the Slatterys’ knowledge.

After the Slatterys’ motion to vacate the judgment was denied by the Circuit Court for Montgomery County, this appeal was noted. We have restated the issues presented on appeal by the Slatterys: I. Whether Friedman’s attempts to serve the Slatterys with a copy of the complaint for foreclosure of the Slatterys’ right of redemption satisfied the requirements set forth in Maryland Code, Tax-Property Article, § 14-839.

II

Whether, when the balance of the purchase price and any further taxes due are not paid within 90 days following entry of the judgment of foreclosure as required by Maryland Code, Tax-Property Article, § 14-847(d), but are paid before a motion to vacate is filed, the court retains power to reopen a judgment of foreclosure under that section. For the reasons set forth below, we shall vacate the judgment and remand this case to the circuit court for further proceedings. 1 Facts In July 1974 the Slatterys purchased Parcel 26, Block 23, “CAPITAL VIEW PARK”, designated as 3108 Lee Street in Silver Spring, Montgomery County, Maryland (the property). 2 The tax account number for Parcel 26, Block 23 was 995230. Shortly after the Slatterys had purchased the property, they learned that the Maryland National Capital Park and Planning ¹¹⁰ Commission (MNCPPC) had a proposed plan to straighten Capital View Avenue, cutting through the middle of Parcel 26, Block 23. Thomas Slattery wrote the MNCPPC, explaining that the Slatterys had intended to subdivide the property, and that this was now not possible.

He therefore sought to have “all or a reasonable part of the land described above be placed in reservation with commensurate relief from tax payments.” MNCPPC approved his request, and a plat entitled “RELOCATION CAPITAL VIEW AVENUE” was prepared and placed on record. The proposed relocation of Capital View Avenue was designated on the plat as “Parcel B” and placed in reservation for public use pursuant to Montgomery County Code Sec. 50-31. Section 50-31, subsection (a)(3) provides: Taxes. The board shall advise taxing and assessing bodies of all public reservations, and such public reservations shall be exempt from all state, county and local taxes during the reservation period.

Parcel B was assigned, tax account number 1705866, was designated tax-exempt, and remained in reservation for nine years. The remainder of the Slatterys’ property, which we shall call “Parcel A,” consisted of a parcel on each side of Parcel B and retained tax account number 995230. In 1974, Thomas Slattery’s mailing address was 10201 Meredith Avenue, Silver Spring, Maryland, the return address that appears on the deed to the Slatterys. It is not clear to us whether this address was ever entered on the tax rolls of Montgomery County.

We do know, however, that at the time Parcel B was removed from reservation in 1984, the tax roll for Parcel B contained an incorrect mailing address for the Slatterys—600 Broadwood Drive, Rockville, Maryland. According to the Slatterys, 600 Broadwood Drive, Rockville, Maryland had at one time been entered as their address on the initial tax account number for the property, the number now assigned to Parcel A. Although the Slatterys’ mailing address for Parcel A had been corrected, their mailing address for Parcel B had not. We have not, however, been provided with any information about when entry of the incorrect mail ¹¹¹ ing address was made or discovered; how it was discovered; when and by whom it was discovered; at what point or by whom it was corrected for Parcel A; and what the Slatterys’ correct mailing address was at that time. In any case, the taxes for Parcel B were not paid in 1984.

In June of 1985, Friedman purchased Parcel B at tax sale for $3000, and paid the overdue taxes—$136.60. Friedman was not required to pay the remainder until the Slatterys’ right to redeem Parcel B was foreclosed. 3 In June of 1987, Friedman filed a complaint in the Circuit Court for Montgomery County seeking to foreclose the Slatterys’ right of redemption. Friedman sent a copy of the complaint by certified mail, return receipt requested, to each of the Slatterys at 10201 Meredith Avenue, Silver Spring, Maryland 20901; and at 600 Broadwood Drive, Rockville, Maryland 20850. All of the letters were returned marked “undeliverable.” Friedman then attempted to have summonses served upon Edward and Nancee Slattery at the Meredith Avenue address; the summonses were returned non-est Friedman also attempted to have summonses served upon Thomas and Nancy Slattery at the Broadwood Avenue address.

These summonses were also returned non-est Finally, Friedman attempted to serve all of the Slatterys at the Broadwood Avenue address, and these summons were returned non-est On November 5, 1987, judgment was entered in favor of Friedman, foreclosing the Slatterys’ right of redemption and vesting fee simple title to Parcel B in Friedman. Nevertheless, Friedman failed to pay the balance due from the tax sale. The Slatterys contend that when Parcel B was removed from reservation, the collector of taxes should have consolidated Parcels A and B and re-assigned tax account number 995230 to Parcel B. According to the Slatterys, they believed this had been done, did not expect to receive a tax bill for Parcel B, and believed they were paying taxes on the entire ¹¹² property in 1984 and subsequent years. The Slatterys assert that they first learned in late February of 1989 that Parcel B had been sold at tax sale, upon receiving a call from one William Gries of the MNCPPC.

On May 5, 1989, Friedman paid the balance due from the tax sale. On May 11, 1989, the Slatterys moved to Strike Final Judgment. On October 31, 1990, the Slatterys’ filed an Amended Motion of Interested Parties to Strike and/or Vacate Final Judgment. The amended motion was denied on January 2, 1991.

The Statutory Scheme Maryland Code, Tax-Property Article, Title 14, Subtitle 8, Part III (§§ 14-808 through 14-854) (1986, 1992 Cum.Supp.), provides the procedure for a tax sale. 4 Notice is given to the owner at the last address shown on the tax roll, § 14-812, and by publication. § 14-813. Sale is to the highest bidder at public auction. The successful bidder is required to pay an amount sufficient to cover taxes due on the property, interest, penalties, and sale expenses on the date of the sale; the remainder need not be paid until the owner’s right of redemption has been foreclosed. §§ 14-817, 14-818. The successful bidder receives an assignable certificate of sale setting forth the bidder’s rights. § 14-820.

The property may be redeemed by the owner until the owner’s right of redemption has been foreclosed. §§ 14-827, 14-828, 14-820(b). With certain exceptions, the holder of the certificate of sale may petition the circuit court to foreclose the owner’s right of redemption within two years from the tax sale. § 14-833. The holder of the certificate of sale is the plaintiff; the owner of the property and the owner of the leasehold title, mortgagees, and trustees under deeds of trust recorded against the property, if any, are defendants. § 14-836. Service is made ¹¹³ upon the defendants according to § 14-889, which reads in pertinent part: (a) Notice to defendants.■—(1) The plaintiff shall show in the title of the complaint the last address known to the plaintiff or to the attorney filing the complaint of each defendant, as obtained from: (i) any records examined as part of the title examination; (ii) the tax rolls of the collector who made the sale, as to the property described in the complaint; and (iii) any other address that is known to the plaintiff or the attorney filing the complaint.

(2) Paragraph (1) of'this subsection does not require the plaintiff or the attorney for the plaintiff to make any investigations or to search any other records or sources of information other than those stated. (b) Same—Declared reasonable and sufficient.—The provisions of this section as to notice to persons who may have an interest in propeity sold for nonpayment of taxes, coupled with the order of publication and the other publicity and notices as ordinarily accompanies the sale of such property, as well as the knowledge of the taxes and the consequences for nonpayment of the taxes is declared: (1) to be reasonable and sufficient under all of the circumstances involved, and necessary in light of the compelling need for prompt collection of taxes; and (2) to supersede any other requirement in other cases or civil causes generally. Notice that a petition for foreclosure has been filed is published when the summons is issued. § 14-840. A final judgment foreclosing the owner’s right of redemption and vesting fee simple title in the plaintiff is entered after the limit set in the order of publication and time to respond to the summons have expired. § 14-844.

The judgment may be reopened only on the ground of lack of jurisdiction or of fraud in the conduct of the foreclosure proceeding. No judgment may be reopened on the ground of constructive fraud unless an application to ¹¹⁴ reopen the judgment is filed within one year from the date of judgment. § 14-845. The judgment foreclosing the owner’s right of redemption requires the holder of the certificate of sale to pay the balance of the purchase price, together with all taxes, interest and penalties accruing from the date of sale. Once payment has been made, the collector of taxes is required to convey the property to the holder of the certificate of sale. § 14-847(a).

If the required payment is not made within 90 days, the court may strike the judgment for good cause shown upon motion of an interested party. § 14-847(d). The Case Law In St. George Antiochian Orthodox Christian Church v. Aggarwal, 326 Md. 90, 101-04 , 603 A.2d 484 (1992), 5 the Court of Appeals applied the standard of actual knowledge set forth in Owens-Illinois, Inc. v. Zenobia, 325 Md. 420 , 601 A.2d 633 (1992), to the requirement that notice to defendants be sent to any address “known to the plaintiff or the attorney filing the complaint.” The Court concluded that where the plaintiff or his attorney becomes aware that the address given on the tax rolls is a “bad address,” i.e., is not a correct address for the owner of the property, the plaintiff and his attorney will be held to “know” an address of the owner within the meaning of the statute when, except for manifest indifference to information shown in the land records or the tax rolls, they would have actually discovered that address. Aggarwal, 326 Md. at 203 , 603 A.2d 484 . With respect to the title examination required by § 14-839(a)(l)(i), the Court said, “[mjerely relying upon a conventional title abstract may not be sufficient, at least where a question has arisen concerning the validity of the address appearing in the tax rolls,” id., because “[a]n ordinary title abstract is generally concerned with the validity of title and incumbrances against the property, and ¹¹⁵ not necessarily with information contained in the land records that would shed light on the address of the last owner.” Id.

In Aggarwal , a parcel of unimproved property was donated to a church. The church mistakenly believed that the property was exempt from taxes, and was not aware that tax bills were being sent to the address of the vacant lot. Hence, the taxes were not paid, and the property was sold at tax sale. Aggarwal purchased the property at tax sale and used the address found on the tax rolls, i.e. the address of the vacant lot, when attempting to serve the church with notice of his petition to foreclose the church’s right of redemption.

Judgment was entered in favor of Aggarwal in June of 1987. The church learned of the tax sale nearly two years later, and moved to reopen the judgment. Although the deed by which the church obtained the property did not contain the church’s address, it contained the name of the title company that had handled the transaction. The Court of Appeals concluded that Aggarwal’s failure to contact the title company seeking the church’s address was “at least the type of manifest indifference which we have held cannot be countenanced without offending concepts of due process in a case of this kind.” Id. at 104 , 603 A.2d 484 .

Thus, under § 14-839(a), Aggarwal’s attorney was deemed to have “known” the church’s address. Consequently, Aggarwal’s failure to serve notice on the church “resulted in the court not acquiring jurisdiction of the person of the defendant, and necessitat[ed] vacating the order foreclosing the right of redemption.” Id. Subsequent to Aggarwal , we decided two cases addressing under what circumstances a plaintiff seeking to foreclose the owner’s right of redemption, or his/her attorney, will be deemed to “know” an owner’s address within the meaning of § 14-839. In Kennedy v. Cummings, 91 Md.App. 21 , 603 A.2d 1251 (1992), the defendants, although paying municipal taxes, did not realize that they were obligated to pay county taxes after their property had been annexed into the Town of Indian Head.

Inasmuch as the county failed to update its tax ¹¹⁶ rolls, and its tax rolls did not contain the address of the Cummings’ property following annexation, service mailed to the Cummings’ former address was returned “Moved—Not Forwardable.” Kennedy contended that the title examination required by § 14-839 and that required by § 14-836 are the same. Section 14-836, entitled “Defendants,” provides that the record title holder is to be determined from a search of the county land records, the records of the register of wills of the county, and the records of the circuit court for the county. Kennedy therefore believed that he was not required to examine the municipal tax records in an effort to obtain the Cummings’ address. We noted, however, that although § 14-836 contains three sources from which a defendant’s name is to be determined, § 14-839(a) requires the plaintiff to show in the title of the complaint the defendant’s last known address as obtained from any records examined as part of the title examination.

We found this search to be of a broader scope than that contained in § 14-836 and that it encompasses any records found in a title examination performed in accordance with generally accepted standards of title examination. 6 Kennedy, 91 Md.App. at 31 , 603 A.2d 1251 . We then held that generally accepted standards of title examination require an examination of municipal tax records when the property is within municipal boundaries. Id. at 31-32 , 603 A.2d 1251 . In Scott v. Seek Lane Venture, Inc., 91 Md.App. 668 , 605 A.2d 942 , cert. denied, 327 Md. 626 , 612 A.2d 257 (1992), Scott ¹¹⁷ purchased a property at tax sale owned by Seek Lane Venture, Inc. (Seek Lane).

Seek Lane, having forfeited its charter, was a defunct corporation. Despite knowing that Seek Lane was defunct, Scott mailed notice of her petition to foreclose Seek Lane’s right of redemption to a post office box address obtained from the land records. It was returned as undeliverable. We affirmed the trial court’s determination that this was not proper service.

We explained that once a corporation has forfeited its charter, it is no longer in