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.

.

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.

.

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.

.

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.,

(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,

(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,

(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,

(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,

(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.,

(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,

(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,

.

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,

(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,

; 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.,

(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.”

; See also Smith v. Lawler,

(1992) (finding that the court had general revisory power for 30 days after

the Judgment Foreclosing the Right of Redemption was entered).3 A final order

2 TP § 14-840 states:

The order of publication shall warn any person that has or claims to have an interest in the property to answer the complaint or to redeem the property on or before the date named in the order of publication and in case of failure to appear, answer, or redeem the property a judgment will be entered that forecloses all rights of redemption in the property. The date named may not be less than 60 days from the date of the order.

After the 30-day window, “for a period of one year, the judgment could have been 3

reopened for fraud (including constructive fraud) or lack of jurisdiction. After one year, the judgment could have been reopened only for actual fraud or lack of jurisdiction.” Smith v. 6 foreclosing the right of redemption may be reopened by the lower court by means of its

general revisory power. Seidel v. Panella, 81 Md. App 124, 131 (1989). In Seidel v.

Panella, the circuit court entered a final decree foreclosing the right of redemption,

however, it was later determined that the original owners had not been served. When the

owners became aware of the judgment, they moved to vacate the judgment within 30 days

of its entry. Id at 127. The court denied the owners’ motion, and on appeal, this Court held

that because the owners “moved to vacate the October 20 order within 30 days of its entry,

[thus] the court retained discretionary power to revise the judgment.” Seidel, 81 Md. App

at 131.

Thornton Mellon LLC’s Notice of Substitution and Ty Webb LLC’s Motion for an

Order Directing the City to Issue a Tax Deed to Assignee, were filed less than 30 days after

the Judgment Foreclosing the Right of Redemption was entered. The filings containing

the assignment, were filed and docketed the same day and were compliant with Md. Rule

1-322. The filings, while not captioned as such, were essentially, motions to revise the

original judgment and may be treated as such despite their caption. Pickett v. Noba, Inc.,

(1998) (“A motion may be treated as a motion to revise under Md.

Rule 2–535 even if it is not labeled as such.”). We note while the City did object to

Lawler,

(1992); Haskell v. Carey,

, 559–60 (1982); See also Seidel v. Panella, 81 Md. App 124, 131 (1989) (finding that under Haskell the Court of Appeals gave full effect to both Art. 81, § 113, the precursor to TP § 14-845 which required a finding of fraud or lack of jurisdiction to reopen the final decree foreclosing the right to redemption, and Cts. & Jud. Proc. § 6-408 . . . by concluding that § 113 applied only to enrolled judgments, judgments after which 30 days had lapsed) (citation omitted). 7 appellee’s filings, prior to the filings, the City did not request the language of the judgment

be modified or otherwise revised.

The City urges this Court to reverse the decision of the circuit court which held that

the assignment was valid and ordered that a deed be issued in the name of the assignee.

The City contends the circuit court’s decision would allow Thornton Mellon LLC to

“ignore deed transfer requirements.” The City avers that the decision “implicates the

marketability of tax sale titles, the accuracy of tax records and local governments’ revenue

from recordation and transfer taxes.” While the City concedes that a tax sale certificate,

prior to judgment, is assignable, it argues that “once the court enters Judgment Foreclosing

the Right of Redemption, the tax sale certificate no longer has any utility or value, and

there is nothing left to assign.” And to that end, “because the tax sale certificate represents

a lien that ceases to exist upon foreclosure, Thornton Mellon LLC’s purported assignment

of the certificate to Ty Webb LLC was a legal nullity.” Responsively, appellee argues the

language of TP § 14-821 “expressly permits the assignment of a certificate of sale.”

When interpreting a statute, our task is to discern and implement the

legislature's intent. See Triantis v. Triantis,

, 709–10 (2009); Kona

Properties, LLC v. W.D.B. Corp.,

, 550–51 (2015). We first “examin[e]

the plain meaning of the language used by the General Assembly.” Triantis,

; Mayor of Oakland v. Mayor of Mountain Lake Park,

(2006). The

statute is construed as a whole and will be applied as written when “the plain language of

the statute is unambiguous and consistent with the statute's apparent purpose[.]” See

Triantis, 184 Md. App. at 709–10. “We consider both the ordinary meaning of the

8 language of the statute and how that language relates to the overall meaning, setting, and

purpose of the act.”

“We avoid a construction of the statute that is unreasonable,

illogical, or inconsistent with common sense” or that requires us to “add or delete language

so as to reflect an intent not evidenced in the plain and unambiguous language of the

statute.” Triantis,

; Mayor of Oakland,

. Further, “if

the statute is part of a general statutory scheme or system, the sections must be read together

to ascertain the true intention of the [l]egislature.” Mazor v. State Dep't of Correction,

(1977).

In analyzing whether a certificate of sale is assignable, we turn first to the language

of §14-821 of the Tax – Property Article which reads, in pertinent part:

Except as provided in subsection (b) of this section, any 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. The assignment of certificate of sale may be made in accordance with the provisions of law relating to the short assignment of mortgages.

TP § 14-821. Applying the cardinal rule of statutory interpretation, we examine the plain

language of the statute and hold that it is unambiguous and expressly states that a certificate

of sale may be assigned. The legislature has provided one exception, in subsection (b),

inapplicable here, that does not allow a purchaser at a limited auction to assign its certificate

9 to another person.4 We hold, clearly, if the legislature had intended to further limit the

assignment of a certificate of sale, post judgment, it would have done so expressly.

Appellant also argues that the certificate of sale is a “legal nullity” upon foreclosure

and thus, has no value. We disagree. Following the entry of a judgment of foreclosure,

several additional steps are required to finalize the delivery of the deed. The certificate

holder must pay the purchase price balance, accrued taxes, interest, and penalties, if any

and thereafter, a deed is issued. TP §§ 14-818, -847. Thus, while a certificate of sale may

lose its value upon acceptance and delivery of the deed, the deed is not executed and

delivered until the purchase price balance, accrued taxes, interests, and penalties, if any,

are paid. See Greenfield v. Heckenbach,

(2002).

Here, the judgment had been entered 20 days prior to the request for substitution of

parties and the issuance of a deed in the name of the new party. The tax property statute

specifies that “the judgment of the court shall direct the collector to execute a deed to the

holder of the certificate of sale…” TP § 14-847(a)(1). Further, “the judgment shall direct

the supervisor to enroll the holder of the certificate of sale in fee simple or in leasehold, as

appropriate, as the owner of the property.” TP § 14-847(a)(1). Thus, the certificate of sale

is not a legal nullity and retains its value until the deed is executed and delivered.

Additionally, pursuant to § 14-823, the certificate of sale constitutes “presumptive

4 “Certificate issued at a limited auction” (b) A certificate of sale issued to a purchaser at a limited auction under § 14-817(d) of this subtitle may not be assigned to another person. TP § 14-821(b). 10 evidence” of the purchaser’s title to the property described in the certificate and of the

validity of all proceedings whereby the property was sold for the unpaid taxes. See TP §

14-823. In the present case, no deed had been issued by the City, nor was one executed,

delivered or recorded. In fact, § 14-847 provides, “[t]he deed shall be prepared by the

holder of the certificate of sale … and all expenses incident to the preparation and execution

of the deed shall be paid by the holder of the certificate of sale.” TP § 14-847 (b). This too

evidences that the certificate of sale is not a legal nullity.

The City further argues that a Judgment Foreclosing the Right of Redemption is not

assignable, citing § 14-844(b), and reasoning that because the express language “vests in

the certificate holder an absolute and indefeasible title in fee simple in the property,” it

“may only be conveyed by a document which meets the requirements of a deed and is

recorded in the appropriate land records.” Appellant cites Kingsley v. Makay,

,

27–8 (1969), however, the law discussed there deals with contracts for the sale of land

between private parties—not a certificate of sale which is acknowledged by the county tax

officials as a “conveyance of land” and evidence of title. TP § 14-823. Kingsley does make

clear that “legal title to land…does not pass, other than by operation of law, until a deed is

properly executed and recorded.” Id. Here, no deed had been executed and recorded in the

name of Thornton Mellon LLC and thus, the assignment of the judgment and substitution

of parties did not require the issuance of a new deed, rather the issuance of a post-judgment

deed in the name of the properly substituted owner.

In addition, the circuit court’s judgment ordered “that the Director of Finance shall

execute and deliver a Deed to the Plaintiff, his successors and assigns, in accordance with

11 the provisions of §§4-831 and 14-847 of the Tax-Property Article of the Maryland Code

Annotated.” The City noted no prior objection to the wording of the judgment, specifically

the words “successors and assigns,” yet argues that the wording of the judgment does not

mean what it says and is a remnant of the common law. We agree that such language can

be described as “words of limitation” and can indicate a fee simple title, however, here, the

court noted in its opinion, “[t]he express language of the judgment foreclosing rights of

redemption suggests that it is freely assignable.”

We also agree with the court’s analysis that a judgment constitutes a chose in action,

which is defined as:

1) A proprietary right in personam, such as a debt owed by another person, a share in a joint-stock company, or a claim for damages in tort; 2) The right to bring an action to recover a debt, money, or thing; or 3) Personal property that one person owns but another person possesses, the owner being able to regain possession through a lawsuit.

John B. Parsons Home, LLC v. John B. Parsons Found.,

(2014)

(quoting BLACK'S LAW DICTIONARY (9th ed. 2009)). Concerning the assignability of

a chose in action, the Court of Appeals in Summers v. Freishtat, stated; “a chose in action,

whether arising in tort or ex contractu, is generally assignable; the only limitation, in the

absence of a contrary statutory provision, is that the right of action be of a sort which would

survive the death of the assignor and pass to his personal representatives.” Summers v.

Freishtat,

(1975); See also Med. Mut. Liab. Ins. Soc’y of Md. v. Evans,

(1993); John B. Parsons Home, LLC,

.

In sum, we have found no expressed prohibition or clear legislative limit to the

assignability of either a certificate of sale or judgment foreclosing the right of redemption.

12 We, therefore, decline to declare a legislative intent where none exists. We further hold the

motions were filed within the confines of the court’s 30-day revisory power and were

properly granted by the court.

JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY AFFIRMED. COSTS TO BE PAID BY THE APPELLANT.

13 The correction notice(s) for this opinion(s) can be found here:

https://mdcourts.gov/sites/default/files/import/appellate/correctionnotices/cosa/1940s19cn.pdf