Taxi, LLC v. Mayor of Baltimore City

EYLER, DEBORAH S., J. In the Circuit Court for Baltimore City, Taxi, LLC (“Taxi”), the appellant, obtained a judgment of foreclosure of right of redemption for property known as 123 North Howard Street (“the Property”). More than 30 days after the judgment was entered, the Mayor and City Council of Baltimore (“City”), the ⁴³² appellee, moved to vacate it for lack of subject matter jurisdiction. The court granted the City’s motion and vacated the judgment. It also ordered the City to repay Taxi the principal sum it had paid for the tax certificate, without interest, costs, or fees.

After the court denied a motion for reconsideration, Taxi noted this appeal, raising three questions for review, which we have rephrased and shortened: I. Was the circuit court’s decision to vacate the judgment legally incorrect?

II

Was the circuit court’s decision to vacate the judgment an abuse of discretion?

III

Was the circuit court’s decision ordering the repayment of principal only legally incorrect? For the following reasons, we answer “Yes” to Question I and find it unnecessary to address the remaining questions. Accordingly, we shall vacate the order vacating the judgment of foreclosure of right of redemption. FACTS AND PROCEEDINGS On September 26, 2002, in the Circuit Court for Baltimore City, the City filed a petition to condemn three adjacent properties: 123, 125, and 127 North Howard Street. 123 North Howard Street, the Property at issue here, is a vacant lot.

The City requested immediate possession and title to the properties, which it planned to use for the Market Center Urban Renewal project. On the same day, the City filed a petition for immediate possession and title, seeking possession of the leasehold, reversionary, and sub-reversionary interests in the properties as of the retroactive date of August 16, 2002. In addition, the city deposited into court the sum of $600,000, which it alleged was the estimated value of the property interests subject to the condemnation petition. The City further alleged that the offered sum “is subject to the claims of mortgagees, judgment creditors, lienholders, and tenants, if any....” ⁴³³ The court issued an order granting the City immediate possession of the properties retroactive to August 16, 2002, and directing that legal title would vest within ten days after personal service was effected over all the defendants, with no answers being filed.

On November 4, 2002, the defendants, having been served, filed a petition to withdraw the funds that had been deposited into court by the City. The petition alleged that “[t]here are no mortgages or liens which have not been satisfied or which would have priority over [the defendants’] claim to the funds, with the exception of $312.61 due in Municipal liens.” The defendants asked that the clerk of court be directed to pay to them, with accrued interest, the sum of $599,687.39 (i.e., the deposited amount minus the $312.61 owed). The petition was signed under oath by the defendants’ attorney-in-fact, who attested that the matters and facts set forth in it were “true and correct to the best of my knowledge, information and belief.” There was no affirmation based on personal knowledge. By order of November 27, 2002, the court directed the clerk of the court to make the payments requested, together with a check in the amount of $312.61 to the Director of Finance, for municipal liens.

Although it is not absolutely clear from the record, it appears that legal title vested in the City on December 2, 2002. (Legal title clearly vested in the City after November 27, 2002.) Approximately six months later, on May 12, 2003, the City held its 2003 Tax Sale. The Property was included in the 2003 Tax Sale. Taxi purchased the Property from the City for $11,354.88.

The certificate of tax sale for the Property states that the $11,354.88 is the amount assessed against Wallace A. Mills “for taxes and other municipal liens due on the property at the time of sale,” plus interest, penalties, and expenses. Mills was a record owner of the Property prior to the condemnation action. On August 3, 2004, in the Circuit Court for Baltimore City, Taxi filed a complaint to foreclose the City’s right of ⁴³⁴ redemption in the Property. It named as defendants the City, the Director of the City Department of Taxes/Tax Collector, and the Property. 1 Taxi alleged, inter alia, that a search of the Baltimore City Land Records had identified the City as the record owner of the Property, having acquired title from an assessed owner by condemnation.

The affidavit of title search was attached, which showed that title had been conveyed by Wallace A. Mills to the City, effective August 16, 2002. 2 Taxi properly served the complaint on the City on August 19, 2004. The City did not file a motion or answer or otherwise respond to the suit. On February 15, 2005, counsel for Taxi filed an “Affidavit of Compliance for the Property Known as 123 N. Howard Street” attesting to service on the City, as the record owner of the Property; notice of the suit to the Tax Collector; posting of the Property by the Sheriffs Office; and publication as required by law. He further attested that the deadline for redeeming the Property, October 5, 2004, had passed, and no party had contacted him about the Property.

On March 7, 2005, the court issued a judgment foreclosing the City’s right of redemption in the Property. The judgment ordered the City’s Director of Finance to execute a deed to the Property to Taxi. The judgment was entered on March 14, 2005. On July 5, 2005, the City filed a motion to vacate the judgment, pursuant to Md.Code (1985, 2001 Repl.Vol.), section 14-845 of the Tax-Property Article (“TP”).

The City alleged that the May 12, 2003 Tax Sale of the Property was “void ab initio since the taxes comprising the sale were already dis ⁴³⁵ posed of by condemnation”; that the tax sale certificate therefore was not valid; and that, consequently, the court had been without subject matter jurisdiction to issue its judgment. The City further alleged that, because there was not a proper tax sale to begin with, and therefore there was no right in the Property to redeem, Taxi was entitled only to the return of the money it paid at the sale, and not to interest, costs, or attorneys’ fees. The City’s motion was supported by an affidavit by attorney Andrew Bailey. He attested that he is an Assistant City Solicitor for Baltimore City; that he is “familiar with the condemnation at 123 N. Howard Street”; that “[t]his condemnation occurred in August, 2002, at which time all taxes were disposed of and the City took title”; and “[o]nce title to property is vested in the City, said property is not subject to a Tax Sale.” The affidavit was signed under the penalty of perjury and upon the affiant’s knowledge, information, and belief.

There was no request for a hearing. On July 27, 2005, Taxi filed an opposition to the motion to vacate. It asserted that taxes had been assessed against the Property as of July 1, 2002, before the City filed its petition for condemnation, and that, in its petition, the City had alleged that “all taxes and other municipal liens and charges will be adjusted to the date that possession is granted to [the City].” Taxi argued that that allegation was an admission that taxes were owed on the Property when the petition was filed; and further pointed out that the order granting the City title to the Property did not say that title was free and clear of all liens. Taxi further asserted that the taxes owed on the Property had remained unpaid and an open lien until it paid them, in the tax sale, on May 12, 2003.

Taxi went on to state that the City had not participated in the foreclosure suit, despite having been properly served, and only filed its motion to vacate judgment after Taxi’s counsel contacted the City Solicitor’s office to obtain a deed to the Property. Taxi also complained that the City did not submit ⁴³⁶ any documents or records to support its motion or Mr. Bailey’s affidavit. Taxi filed a request for a hearing. On July 28, 2005, the court issued an order granting the City’s motion. 3 The order directed the City to repay Taxi the sum it had paid at the tax sale, without interest, costs, or attorneys’ fees.

Within ten days of the entry of that order, Taxi filed a motion for reconsideration. It again asserted that the tax sale certifícate for the Property was created as a result of unpaid taxes assessed as of July 1, 2002, and that those taxes had remained a lien against the Property until it was sold at the tax sale on May 12, 2003. It argued that the tax sale certificate, which it had appended to its petition to foreclose right of redemption, was prima facie evidence that the taxes had remained unpaid, under TP section 14-823; and that Mr. Bailey’s affidavit was legally insufficient to rebut that presumption. Taxi further argued that, under TP section 14-842, the validity of a tax sale is conclusively established in an action to foreclose the right of redemption, unless the defendant by answer pleads, with particularity, a defense of invalidity of the taxes or the sale, and raises and proves any jurisdictional defect or invalidity.

In this case, the City did not file an answer at all. On August 9, 2005, the City filed a brief reply. On November 9, 2005, the court entered an order denying the motion for reconsideration. Taxi noted a timely appeal.

DISCUSSION Taxi contends the circuit court’s decision to vacate the judgment foreclosing the City’s right of redemption in the Property was legally incorrect. It argues that, under the Tax Property Article, its certificate of sale was presumptive evi ⁴³⁷ dence of the validity of the tax sale. Moreover, the validity of the procedure to foreclose the right of redemption was “conclusively presumed,” because the City failed to raise the invalidity of the taxes or proceedings as an affirmative defense. It further argues that the City failed to show by clear and convincing evidence that the taxes were paid, as was required for the court to re-open the enrolled judgment.

The City responds that the court properly vacated the judgment. It agrees that it bore the burden of showing, by clear and convincing evidence, that the court had been without jurisdiction to foreclose its right of redemption in the Property. It argues that the affidavit of Mr. Bailey, attesting that he had “handled” the condemnation petition and that all taxes on the Property were “disposed of’ at the time of the condemnation, was clear and convincing evidence that the taxes had been paid prior to the 2003 Tax Sale. Citing Heartwood 88, Inc. v. Montgomery County, 156 Md.App. 333 , 846 A.2d 1096 (2004), the City maintains that, because the taxes had been paid, the tax sale certificate was invalid.

See Bugg v. State Roads Comm., 250 Md. 459, 461 , 243 A.2d 511 (1968) (stating that a tax sale of property on which taxes have been paid is invalid). In addition, the City asserts that the Property was placed in the 2003 Tax Sale because four miscellaneous unpaid bills were erroneously assessed against the Property by the City, sometime in November 2002, which (according to the City) was after it had acquired title. 4 The City makes no reference to the record to support this assertion, and indeed none can be made: there is nothing in the record to support it. The City also asserts, again without any reference to or support in the record, that placing the Property in the 2003 Tax Sale was an obvious error on the part of City employees. The City relies upon these unsupported assertions to conclude that the circuit court was without jurisdiction to enter the judgment foreclosing its right of redemption in the Property. ⁴³⁸ Pursuant to TP section 14-823, in an action to foreclose right of redemption, the certificate of tax sale is “presumptive evidence” of the truth of the statements in the certificate, of the purchaser’s title as described in the certificate, 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.” These presumptions mean that the party attacking the sale must offer evidence to controvert the presumed facts.

Josenhans, Inc. v. Jenkins, 203 Md. 465, 474 , 102 A.2d 257 (1954). In addition, under TP section 14-842, in a proceeding to foreclose right of redemption, the validity of the procedure for the assessment and imposition of the taxes for which the property was sold is “conclusively presumed,” unless a defendant “shall, by answer, set up as