JAMES P. SALMON (Retired, Specially Assigned), J.

Hosea Anderson and his wife, Bernice Anderson, live at 6534 Frietchie Row, Columbia, Maryland (the "Residence"). In 2006, the Andersons decided to refinance their home. Accordingly, on October 13, 2006, Mr. Anderson signed an "Adjustable Rate Balloon Note" promising to pay the lender, Wilmington Finance, Inc. ("Wilmington"), the amount he had borrowed ($227,250.00), plus interest, in monthly installments of $1,541.87. Payments were to continue for 30 years. Among its many provisions was the following: "[Borrower] understands that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payment under this Note is called the `Note Holder.'"

To secure payment of the amounts due under the Note, Bernice Anderson and Hosea Anderson signed a Deed of Trust on October 13, 2006. The Deed of Trust referenced Wilmington as the "Lender," defined "Borrower" as the Andersons, and listed the "Trustee" as Dominican First Title, LLC ("Dominican").

The Deed of Trust spelled out the involvement of Mortgage Electronic Registration Systems, Inc. ("MERS"),1 viz:

Several important events took place about four months after the Note and Deed of Trust were executed. On February 12, 2007, MERS, as beneficiary and as nominee of Wilmington, transferred its beneficial rights under the Note and Deed of Trust to Morgan Stanley Capital Holdings, Inc. Two days later, on February 14, 2007, MERS, as beneficiary and as nominee of Wilimington, transferred its servicing rights under the Note and Deed of Trust to Saxon Mortgage Services, Inc. ("Saxon"). The Andersons began making their mortgage payments to Saxon as a result of this assignment of servicing rights.

Sometime after February 12, 2007, but before March 1, 2007 (the precise date is unknown), Morgan Stanley Mortgage Capital Holding, Inc. transferred its ownership of the Note to Morgan Stanley ABS Capital I Inc. On March 1, 2007, Morgan Stanley ABS Capital I Inc. "sold, transferred, assigned, set-over and conveyed to Deutsche Bank Trust Company Americas, as Trustee and Custodian for Morgan Stanley Home Equity Loan Trust, MSHEL 2007-2 (hereinafter "Deutsche") all right, title, and interest in and to the Note...."

Starting in the spring of 2007, Mr. Anderson fell behind on the payments due under the Note.

On February 21, 2008, Erik W. Yoder of Shapiro & Burson LLP, as attorney for Substitute Trustees John S. Burson, William M. Savage, Gregory N. Britto, Jason Murphy, Kristine D. Brown and Erik W. Yoder (collectively, "Substitute Trustees"), filed a Line to Docket Foreclosure with respect to the Andersons and their Residence in the Circuit Court for Howard County. The Line was accompanied by (i) A certified copy of the Deed of Trust, (ii) Appointment of Substitute Trustees, (iii) Statement of Indebtedness, (iv) Affidavit of Non-Military Status, (v) Attorney's Certification Under Rule 1-313, and (vi) Motion for Acceptance of Lost Note Affidavit with Exhibit A (Affidavit of Lost Note) and proposed Order. These documents identified the "Lender" under the Note and Deed of Trust as:

The Motion for Acceptance of Lost Note Affidavit asked the court "to accept a lost note affidavit in lieu of the original note in this case on the grounds that the original note is lost and cannot be found by the Plaintiff or the Noteholder." The Lost Note Affidavit, attached to the motion as Exhibit A, stated, in relevant part: "... Lender was the note holder under [the Deed of Trust] . . . and that said note ... has been lost or destroyed and cannot be produced."

On February 26, 2008, the court signed an Order stating that "a lost note affidavit evidencing the indebtedness secured by the deed of trust which is the subject of this foreclosure action be accepted in lieu of the original."

To prevent foreclosure on his Residence, Hosea Anderson, on March 13, 2008, filed for relief in the United States Bankruptcy Court for the District of Maryland. Thereafter, Mrs. Anderson filed for bankruptcy as well—in the same court. Their filings stayed the foreclosure proceeding then pending in the circuit court.

The Andersons reached an agreement with Saxon, the servicer of the Deed of Trust, in the bankruptcy cases. On June 2, 2008, the bankruptcy court entered a Consent Order reflecting an agreement reached between the Andersons and Saxon. The Consent Order provided, inter alia, that the automatic stay was terminated so as to permit Saxon "to commence foreclosure proceedings in accordance with State Law and pursuant to the terms of the [Deed of Trust]." In exchange for the lifting of the stay, Saxon agreed to forbear from foreclosing on the Residence if the Andersons cured their arrearages in six equal monthly payments of $804.44. The Order further provided that if the Andersons failed to make these payments when due, then they would have two cure opportunities, after which any additional failure would cause the Consent Order to automatically terminate and allow Saxon to proceed with foreclosure.

Due to a decline in Mr. Anderson's income, the Andersons were unable to make the payments called for in the Consent Order and as a consequence the foreclosure proceedings initiated by the Substitute Trustees recommenced.

A foreclosure sale of the Residence was scheduled for November 18, 2008. On November 12, 2008, the Andersons filed a motion for injunction to stay foreclosure proceedings in the Circuit Court for Howard County. Movants alleged that the Substitute Trustees and Deutsche had no legal standing to foreclose on the Residence because they had failed to establish that Deutsche was the lawful owner or holder of the Note and Deed of Trust.

The circuit court, on November 17, 2008, pursuant to a motion by the Andersons, filed a temporary restraining order ("TRO") enjoining the sale scheduled for November 18th. A hearing on the TRO was set for November 26, 2008. After the November 26, 2008 hearing, the circuit court enjoined the foreclosure proceedings until an evidentiary hearing could be held to address the issue of whether the Substitute Trustees had a right to foreclose on the Residence.

The evidentiary hearing was held on March 31, 2009. At the hearing it was revealed that the Note signed by the Andersons did not contain an indorsement. Instead, the Substitute Trustees produced a separate undated document entitled "Allonge to Note."2 The Allonge to Note read:

At the hearing, the Substitute Trustees called, as their sole witness, Dennis Sugrue, Esquire, an associate attorney at the law firm of Shapiro & Burson, which is the law firm at which all the Substitute Trustees are employed. The testimony of Mr. Sugrue, coupled with the exhibits that were admitted by court, proved that: 1) the Allonge was signed by Wilmington—at the earliest—sometime in March 2007, and 2) by February 14, 2007, Wilmington had divested itself of all its rights in the Note. Based on that proof, the Andersons argued that the Allonge was worthless because it was signed at a point when Wilmington had no rights or interest to convey.

The Andersons' main contention at the evidentiary hearing was that in order for Deutsche to have a right to name the Substitute Trustees it (Deutsche) would have to demonstrate that it was a holder of the Note. According to the Andersons, if Deutsche was not a holder then it had no right to appoint anyone to foreclose on the property. The Andersons supported their "not a holder" argument by pointing out, correctly, that the Note was not indorsed by anyone in Deutsche's chain of title except Wilmington, and that when Wilmington indorsed it, by signing the Allonge, it had given up all its rights, title and interest in the Note.

The Substitute Trustees stressed that the Andersons had never controverted the fact that the loan was in default and that Hosea Anderson had not paid the money due under the Note for a long period of time. They also pointed out that during the lengthy period the Note had been in default, no one else had claimed ownership of the Note. This proved, circumstantially, that it would be impossible to suppose that some third party owned the Note. The Substitute Trustees also pointed out that the Andersons, in the bankruptcy court, had both listed the creditor who held a first lien on their Residence as "Saxon Mortgage," the servicers of the Andersons' loan.

The motions judge, after hearing argument from counsel, delivered an oral opinion in which he said, inter alia:

On April 3, 2009, three days after the circuit court lifted the injunction, Michael G. Rinn, Esquire, Trustee for the Bankruptcy Estate of Hosea Anderson, filed a complaint in the bankruptcy action titled "Complaint to Avoid and Recover Lien, for Declaratory Judgment and for other relief." Included in the allegations set forth in Mr. Rinn's complaint were the following:

Among other relief, the Trustee asked the court to declare that the interest "of the Trustee in and to the ... [Residence] or the proceeds thereof be declared superior to the unperfected interest of [Deutsche and the Substitute Trustees]".

On April 30, 2009, the Andersons filed the subject interlocutory appeal from the decision of the Circuit Court for Howard County lifting the injunction.

On November 30, 2009, the Trustee who had filed the complaint in the bankruptcy court on behalf of Hosea Anderson filed a pleading entitled "Voluntary Stipulation of Dismissal with Prejudice" that dismissed the complaint filed in the bankruptcy court on behalf of Hosea Anderson.

In the subject appeal, the Andersons raise two questions:

There is no need to answer the second question presented. And, as to the first question, we shall hold that although Deutsche was not a "holder" as that term is defined in the Uniform Commercial Code, as enacted in Maryland, Deutsche nevertheless had a right to enforce the Note and to appoint the Substitute Trustees. Therefore, the motions judge did not err in lifting the injunction.

I.

Substitute Trustee's Motion to Dismiss Appeal

As part of their brief, the appellees filed a motion to dismiss this appeal "because the case is moot due to the application of the doctrine of res judicata...." In support of their motion, the Substitute Trustees argue:

In R & D 2001 LLC v. Rice, 402 Md. 648, 663, 938 A.2d 839 (2008), the Court said:

Appellee claims that although the issue the Andersons present in this appeal was not raised in the bankruptcy case filed by Mr. Anderson's trustee, the issue could have been decided in the complaint the trustee filed.

The doctrine of res judicata is here inapplicable. For starters, Michael G. Rinn was the trustee for the bankruptcy estate of Hosea Anderson. The Trustee did not represent Bernice Anderson. Moreover, insofar as is shown in the record, he was not "in privity with" Mrs. Anderson. Thus, the parties in the present litigation were not "the same or in privity with the parties to the earlier litigation."

Second, contrary to the Substitute Trustee's position, Mr. Rinn, the bankruptcy trustee for Mr. Anderson, could not have successfully raised in the bankruptcy court the same issue that is raised by the Andersons in this appeal. If the bankruptcy trustee had attempted to raise that same issue, the bankruptcy trustee could not have overcome the bar of the res judicata doctrine because the bankruptcy trustee filed his complaint for declaratory relief after the Circuit Court for Howard County had rejected the Andersons' argument that the appellees had no right to foreclose. For res judicata, purposes it does not matter that the Andersons appealed that adverse ruling. See Campbell v. Lake Hallowell Homeowners Ass'n, 157 Md.App. 504, 525, 852 A.2d 1029 (2004) (the pendency of an appeal does not affect the finality of a judgment for res judicata purposes).

II.

In their brief, the Substitute Trustees expend a great deal of effort discussing whether they had the burden of proving their standing to institute the foreclosure proceedings. They contend that because this case was an In rem proceeding, they had no burden of proving that they had standing. The appellants, on the other hand, assert that the Substitute Trustees were required to prove standing even though appellants were the ones who sought an injunction.

It is unnecessary for us to decide which party had the burden of proof, because here the facts were undisputed. Assuming, arguendo, that the appellees did have the burden of proving that they had standing, as explained below, they proved it. And the appellants agree, at least tacitly, that if the Substitute Trustees had the power to foreclose, the Andersons were not entitled to an injunction.3 See Restatement (Third) of Property, Mortgages § 5-4(c) (a mortgage may be enforced only by, or on behalf of, a person who is entitled to enforce the obligation the mortgage secures.). See also Balance Ltd., Inc. v. Short, 35 Md.App. 10, 14, 368 A.2d 1116 (1977). The decisive issue is a legal one, viz: whether Deutsche had a right to enforce the Note.

III.

Maryland Code (2002 Repl.Vol.), Commercial Law Article, section 3-301 provides:

The Substitute Trustees say in their brief, on several occasions, that Deutsche was the "holder" of the Note, but they do not demonstrate why this is so.

The term "holder" is defined in section 1-201(20) of the Commercial Law Article, ("CL") to mean, in relevant part:

The Note signed by Mr. Anderson was not payable to bearer. Moreover, Deutsche does not qualify as an "identified person that is the person in possession." The only "identified person" mentioned in the Note is Wilmington.

While it is true that the Allonge does specifically name Deutsche, this is of no consequence because the evidence at trial established that Wilmington, after February 14, 2007, had nothing to transfer to Deutsche. By February 14th, Wilmington had transferred the Note to Morgan Stanley Mortgage Capital Holding, Inc., and had transferred its servicing rights to Saxon. This all happened before Deutsche was even appointed trustee of the Home Equity Loan Trust.

The Substitute Trustees argue, in the alternative, that even if Deutsche was not a "holder," Deutsche qualified as "a non-holder in possession of the instrument who has the rights of a holder...." They rely on section 3-301(ii), of the Commercial Law Article, which provides that a non-holder in possession of the instrument who has the rights of a holder can enforce the instrument.

The evidence at trial proved, without contradiction, that Deutsche was in possession of the Note signed by Hosea Anderson. The Official Comment to the Uniform Commercial Code, concerning section 3-301 reads, in material part, as follows: "A non-holder in possession of an instrument includes a person that acquired rights of a holder by subrogation or under section 3-203(a). It also includes any other person who under applicable law is a successor to the holder or otherwise acquires the holder's rights". (Emphasis added).

The question then becomes: Does Deutsche fit within the definition of "a non-holder in possession of a note" because, "under applicable law, it was a successor to the holder or otherwise acquires the holders rights?" We shall answer that question in the affirmative.

The documents introduced into evidence by the Substitute Trustees showed that the only entity that qualified as a "holder" in Deutsche's chain of title was Wilmington, because no other entity had a valid indorsement. But, the evidence also showed, without dispute, that Deutsche was one of the "successors to the holder." Therefore, the evidence produced showed that Deutsche met the definition of a "Note holder in possession of an instrument." As such, under section 3-301 of the Commercial Law Article, Deutsche was a "person entitled to enforce" the Note.

Of course, the validity of the above analysis depends upon whether, "under applicable law," Deutsche was a "successor to the holder or otherwise acquires the holder's rights."

Section 3-203(a) of the Commercial Law Article reads:

In this case all Deutsche's predecessors in the chain of title received delivery of the Note with the purpose of giving them the right to enforce the Note. Without a right of enforcement, the Note would have been worthless.4 Wal Mart Stores, Inc. v. Holmes, 416 Md. 346, 375, 7 A.3d 13 (2010) ("An obligation can only be `legal,' however, when it is susceptible of legal enforcement. A duty without a means for enforcing it is not a legal duty at all.").

Section 3-203(b) of the Commercial Law Article provides that "transfer of an instrument whether or not transfer is a negotiation [i.e., indorsed], vests in the transferee any right to the transferor to enforce the instrument, including any rights as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument." See Tackett v. First Sav. of Arkansas, 306 Ark. 15, 810 S.W.2d 927, 930 (1991) (transferee obtains right of transfer despite lack of indorsement and thus has right to enforce instrument). This provision embodies what has come to be known as the "shelter" or "umbrella principle." Adams v. Madison Realty & Dev., Inc., 853 F.2d 163, 169 (3d Cir.N.J. 1988). The Adams Court said:

(Emphasis added.)

Wilmington was a holder in due course. Wilmington transferred the Note to Morgan Stanley Mortgage Capital Holding, Inc., which thereby acquired all of Wilmington's rights to enforce the instrument including any right as a holder in due course. The second transferee, Morgan Stanley ABS Capital I Inc., in turn, acquired all the rights held by its transferor, Morgan Stanley Mortgage Capital Holding, Inc. And, when Morgan Stanley ABS Capital I Inc. "sold, transferred, assigned, and conveyed" to Deutsche all its rights, title, and interest it had in the Note, Deutsche acquired all the rights that had vested in its transferor because the shelter principle operates cumulatively. Id. Thus, under applicable law, because it was not alleged that anyone in the chain of title had engaged in fraud or illegality,6 Deutsche was a "successor to the holder" of the Note and had the same rights as Wilmington had to name the Substitute Trustees to enforce its collection rights.

Accordingly, under the facts proven at the evidentiary hearing, the Andersons did not have a right to an injunction because Deutsche was a non-holder in possession of the Note who had the rights of a holder.

IV.

In support of their claim that they had a right to have the court keep the injunction in force, the Andersons raise several issues not raised in their opening brief and not raised in the trial court. For instance, they stress that in the deed of appointment, in which the appellees were named as Substitute Trustees, the holder of the Note was said to be Deutsche Bank Trust Company Americas. Appellants point out, however, that the Allonge and the pooling agreement that were introduced into evidence at the March 31, 2009 hearing, the entity identified as holding the Note was said to be "Deutsche Bank National Trust Company." According to the Andersons, because of this misnomer, the Substitute Trustees have no power to exercise the power of sale in the Deed of Trust.

We shall decline to address any of the issues raised by the Andersons for the first time in their reply brief. See Strauss v. Strauss, 101 Md.App. 490, 509, n. 4, 647 A.2d 818 (1994) ("the scope of a reply brief is limited to the points raised in the appellee's brief, which, in turn, address[es] the issues originally raised by appellant ... A reply brief cannot be used as a tool to inject new argument."). See also Gazunis v. Foster, 400 Md. 541, 554, 929 A.2d 531 (2007), and cases therein cited.

JUDGMENT AFFIRMED; COSTS TO BE PAID BY APPELLANTS.