HARRELL, J.
We are asked, in this case, to consider the scope of this Court's decision in Maddox v. Cohn, 424 Md. 379, 36 A.3d 426 (2012). The record, as it reached this Court after issuance of a writ of certiorari, suggests that the Administrative Judge of the Circuit Court for Montgomery County may have directed a colleague, who heard what amounted to exceptions to a notice issued by the Administrative Judge proposing to dismiss the subject foreclosure action, to vacate the foreclosure sale and order a resale because the advertisement of the foreclosure sale included an impermissible fee under Maddox. The hearing judge, feeling bound by her understanding of this direction, followed suit. We conclude that the hearing judge abused her discretion in yielding deference to the Administrative Judge's apparent view.
Ordinarily, finding an abuse of discretion would lead directly to a remand for the hearing judge (or whoever might be assigned to hear this matter anew) to exercise discretion; however, this record is sufficient for us to reach the two underlying arguments regarding the scope of Md. Rule 14-207.1 and Maddox raised in this case by Appellants. Thus, we hold that the screening procedures utilized here by the Circuit Court for Montgomery County, pursuant to Md. Rule 14-207.1, are permissible. Finally, we hold Maddox inapposite to this case because here the fee was contemplated by a Maryland rule. We reverse the order vacating the foreclosure sale and remand for further proceedings.
On 2 May 2011, Mark H. Wittstadt and Gerard Wm. Wittstadt, Jr., as Substitute Trustees under a deed of trust, initiated in the Circuit Court for Montgomery County a foreclosure action against Ethel E. Wynn and Jeffrey L. Wynn ("the Wynns"), the defaulting borrowers under the underlying deed of trust and note.
On 17 October 2011, the property was sold at auction to the Appellant, 101 Geneva LLC, a third party purchaser, for $225,000.
On 24 January 2012, prior to any ratification by the Circuit Court of the foreclosure sale, Maddox v. Cohn, 424 Md. 379, 36 A.3d 426 (2012), was decided. Apparently, the Administrative Judge for the Circuit Court assumed personally, post-Maddox, the responsibility to review the
A different judge of the Circuit Court presided at a hearing on 10 May 2012 to address these exceptions. The hearing judge stated, on the record, that she consulted prior to the hearing with the Administrative Judge and that "he believes it's an impermissible fee pursuant to Maddox v. Cohn." She stated that setting the case on her motions docket was a "mistake" because "[i]t is usually reviewed by, decided by [the Administrative Judge] because for the exact reason he wants consistency in these cases. And he has decided as a policy matter as he reads that case, this case would fall under the same reasoning and therefore the sale has to be rescinded." She further stated that "since that's his determination I feel bound by that," even though she acknowledged that she thought the Substitute Trustees and 101 Geneva "do have some legitimate arguments that may be persuasive to him that this should not fall under that case. But I'm not going to make that call because he has instructed me otherwise." After the hearing concluded, an order was entered vacating the sale of the property to 101 Geneva and ordering a resale.
101 Geneva appealed to the Court of Special Appeals. On 16 November 2012, prior to any decision by the Court of Special Appeals, this Court granted a writ of certiorari based on the petition of Appellants.
For purposes of condensing and simplifying the questions presented,
"It is well settled that a trial judge who encounters a matter that falls within the realm of judicial discretion must exercise his or her discretion in ruling on the matter." Gunning v. State, 347 Md. 332, 351, 701 A.2d 374, 383 (1997) (citing Colter v. State, 297 Md. 423, 426, 466 A.2d 1286, 1288 (1983)). "A proper exercise of discretion involves consideration of the particular circumstances of each case." Id., 347 Md. at 351, 701 A.2d at 383-84. The court's failure to exercise this discretion results in a failure to fulfill this function and "is, itself, an abuse of discretion," G.E. Capital Mortg. Servs., Inc. v. Edwards, 144 Md.App. 449, 455, 798 A.2d 1187, 1190-91 (2002) (citing Merritt v. State, 367 Md. 17, 27, 785 A.2d 756, 762 (2001)), which "`ordinarily requires reversal.'" Gunning, 347 Md. at 351, 701 A.2d at 383 (quoting Maus v. State, 311 Md. 85, 108, 532 A.2d 1066, 1077 (1987)). See also Gray v. State, 368 Md. 529, 565, 796 A.2d 697, 718 (2002) (noting that "our cases hold that the actual failure to exercise discretion is an abuse of discretion"); Johnson v. State, 325 Md. 511, 520, 601 A.2d 1093, 1097 (1992) ("The failure to exercise discretion when its exercise is called for is an abuse of discretion.").
In determining whether the hearing judge was called upon to exercise her discretion in this case, we look to Md. Rule 14-207.1, which governs a circuit court reviewing the pleadings and papers filed in foreclosure actions for compliance with the Maryland rules and statutes. The plain language of Md. Rule 14-207.1 states that, if the court finds the papers and pleadings to be in non-compliance with the rules or statutes, the court "may" notify parties that it will dismiss the case or will issue "some other appropriate order," unless the plaintiff shows "the papers are legally sufficient or that the deficiency has been cured." Md. Rule 14-207.1(a) (emphasis added). This language grants a circuit court discretion in these decisions. See Shepherd v. Burson, 427 Md. 541, 559-60, 50 A.3d 567, 578 (2012) (holding that the circuit court exercised properly its discretion under Md. Rule 14-207.1 to deny the motion to dismiss the foreclosure action). Moreover, the vacatur of a foreclosure sale, like the bifurcation in Turnbull, "is a judicial decision affecting the rights and interests of litigants, and, as such, it is generally within the discretion of trial judges to rule on the matter." St. Joseph Med. Ctr., Inc. v. Turnbull, 432 Md. 259, 283, 68 A.3d 823, 837 (2013). Therefore, once the exceptions to the Rule 14-207.1 Notice of Non-Compliance were assigned to the hearing judge, it was within her province to make a discretionary decision on the arguments.
Despite being vested with this discretion, the hearing judge failed to appreciate or exercise her discretion, in favor of an "unyielding adherence to [a] predetermined
Additionally, the lower court's decision to vacate the sale "was not grounded on the exercise of judicial discretion; rather the record ... is clear that" the hearing judge deferred to the Administrative Judge's decision that the fee at issue was impermissible under Maddox. Id. At the hearing, the hearing judge opined that it was a "mistake" for the motions hearing to be set on her docket. She explained, "It is usually reviewed by, decided by [the Administrative Judge] because for the exact reason he wants consistency in these cases." She acknowledged that the Substitute Trustees and 101 Geneva had "some legitimate arguments," but refused "to make that call because he [the Administrative Judge] has instructed me otherwise."
If the off-the-record colloquy between the judges occurred as the hearing judge recalled, our recent decision in St. Joseph Medical Center, Inc. v. Turnbull, 432 Md. 259, 68 A.3d 823 (2013), would be on point. An administrative judge may not infringe on a trial judge's exercise of discretion. Specifically, we stated,
Id., 432 Md. at 277, 68 A.3d at 834 (emphasis added). In any event, because the hearing judge failed to exercise her discretion, she abused her discretion. Accordingly, we vacate the order vacating the sale.
Next, we consider whether we should remand this case for further proceedings or whether we may reach any of the other contentions in this case. The Attorney General argues that, because the hearing judge abused her discretion by not exercising it, we should set aside the order vacating the sale and remand this case to the Circuit Court for reconsideration of Appellants' exceptions to the Administrative Judge's 29 February 2012 Notice of Non-Compliance. According to the Attorney General, this "Court should not reach the merits of the permissibility of the particular fee that is the subject of this dispute because the record provides an insufficient basis on which to rule." The Attorney General reasons that further proceedings are necessary because the Circuit Court did not address these issues on the record as it was and thus did not develop an explanation or support for its decision to vacate the sale. We disagree and find that the record, as it currently stands, contains a sufficient foundation for us to reach the merits of the underlying arguments.
The advertisement, which is included in the record, provides the term of sale with the disputed fee. A copy of the Notice of Non-Compliance, which was issued by the Administrative Judge and which deemed the advertisement improper under Maddox, is provided. Further, the record is clear that all the parties and the relevant Circuit Court judges understood the charge to which the Notice of Non-Compliance referred.
The Attorney General further suggested in his Motion to Vacate and Remand that the lack of a true opposing party (such as the Wynns, the defaulting borrowers, or perhaps an unsuccessful bidder or would-be-bidder) meant that we should remand this case and wait for perhaps another appeal, with a better developed record, to address these issues. The Wynns have not participated in this case at any level and, thus, were we to remand the case, there is scant prospect that a party would have any incentive or interest in putting forth evidence to develop better the record. We find that this probable lack of an
Moving on to the merits of the flagship contentions in this case, we address first 101 Geneva's and the Substitute Trustees' challenges to the Circuit Court's screening procedures under Md. Rule 14-207.1(a). Second, we address whether the additional fee imposed in the event of a default by a successful auction bidder is impermissible under Maddox.
Appellants challenge on several grounds the Circuit Court's procedures for reviewing papers and pleadings in foreclosure sale proceedings under Md. Rule 14-207.1. We shall address each of these challenges, as well as the Attorney General's responding arguments, in turn. At the end of the day, we find no merit in any of Appellants' contentions in this regard. Thus, we conclude that the screening procedures are proper under Md. Rule 14-207.1.
Appellants argue that the Circuit Court's post-sale review of the papers and pleadings in the foreclosure sale was inappropriate. In support of the proposition that the review must be conducted prior to a foreclosure sale, Appellants rely upon Shepherd v. Burson, 427 Md. 541, 50 A.3d 567 (2012), Bates v. Cohn, 417 Md. 309, 9 A.3d 846 (2010), and Greenbriar Condominium Phase I Council of Unit Owners v. Brooks, 387 Md. 683, 878 A.2d 528 (2005). As the Attorney General notes correctly, such reliance is misplaced. None of these cases imply any limitation on a court's authority to consider whether the papers and pleadings filed in a foreclosure action are sufficient legally. Rather, these cases provide guidance for what exceptions a homeowner/borrower must assert pre-sale and which may be asserted post-sale.
Appellants assert also that the advertisement of sale does not constitute a "pleading[] or paper[]" and, thus, is not subject to review under Md. Rule 14-207.1. In response, the Attorney General argues that "[t]he advertisement of sale indisputably is filed in an action to foreclose a lien, and although it is not a pleading, it is certainly a `paper' within the meaning of Rule 14-207.1(a)." (footnote omitted). The Attorney General asserts that "[a]lthough the term `paper' is not defined in the Maryland Rules, its use in Rule 14-207.1(a) and elsewhere in the Rules shows that it is intended to encompass the broad universe of documents filed in litigation other than those that fall within the meaning of `pleading.'"
This Court addressed recently the definition of "papers," as used in the Maryland Rules, in Duckett v. Riley, 428 Md. 471, 52 A.3d 84 (2012). In that case, we considered whether a completed civil case information report constituted a "paper" for purposes of noting a jury trial election under Md. Rule 2-325(a). We began our analysis by noting,
Duckett, 428 Md. at 478-79, 52 A.3d at 88.
We then confronted the "critical question... whether a case information report is, or can be, a `paper.'" Id., 428 Md. at 479, 52 A.3d at 88. This was not the common understanding of "paper" because the common practice provided that counsel should file a separate paper requesting a jury trial. Id., 428 Md. at 479, 52 A.3d at 88-89. We concluded that, because another Maryland Rule, Rule 2-112(a), "refers to both `paper' and `information report', the term `paper' does not embrace a case
The present case differs from Duckett in two significant respects. First, in contrast to the common practice for requesting a jury trial in a civil case, common practice in foreclosure proceedings does not distinguish between the advertisement of sale and other papers filed in the action. Instead, the advertisement of sale serves as a critical component of the filings because it sets forth the terms of the sale. Second, no other rule refers discretely to both "paper" and "advertisement of sale" in any action, much less in a foreclosure action. As such, we find that, for purposes of Md. Rule 14-207.1(a), "paper" does encompass an advertisement of sale.
According to Appellants, the Circuit Court's Notice of Non-Compliance shifted the burden impermissibly to the Substitute Trustees and 101 Geneva to show why the sale should not be vacated. Appellants argue that the Circuit Court's actions "were tantamount to the Circuit Court taking `exceptions' to a sale that had already occurred, pursuant to Md. Rule 14-305(d)(1)." In so characterizing the Circuit Court's actions, they err. The Circuit Court did not take "exceptions" to a sale pursuant to Md. Rule 14-305(d)(1),
As the Attorney General notes (again correctly), the plain language of Md. Rule 14-207.1 sets forth the procedure for when a circuit court "determines that the pleadings or papers filed do not comply with all statutory and Rule requirements." Md. Rule 14-207.1(a). Pursuant to Md. Rule 14-207.1, a circuit court may notify the parties of the non-compliance and may dismiss the action or take some other appropriate action "if the plaintiff does not demonstrate within 30 days that the papers are legally sufficient or that the deficiency has been cured." Id. (emphasis added). Thus, the Circuit Court recognized properly that Md. Rule 14-207.1 places the burden where it should be to prove compliance or cure the deficiency.
Lastly, in regards to the challenges to the Circuit Court's 14-207.1 procedures, 101 Geneva and the Substitute Trustees assert that the Circuit Court's screening procedures interfere with the Substitute Trustees' fiduciary duties. Trustees "have discretion to outline the manner and terms of sale," but that discretion is not unlimited. Simard v. White, 383 Md. 257, 312, 859 A.2d 168, 200 (2004) (quoting White v. Simard, 152 Md.App. 229, 241, 831 A.2d 517, 524 (2003), aff'd Simard v. White, 383 Md. 257, 859 A.2d 168 (2004)). In particular, this discretion is limited by the requirement that "[the trustees'] actions [must be] consistent with the deed of trust and the goal of securing the best obtainable price." Id. (quoting White v. Simard, 152 Md.App. at 241-42, 831 A.2d at 524-25). It is well-settled that the circuit courts may act pursuant to the Maryland rules and statutes to enforce this requirement. See Maddox, 424 Md. at 399-400, 36 A.3d at 438. Thus, we conclude the Circuit Court's screening of the advertisement of sale in this case does not infringe impermissibly upon the Substitute Trustees' fiduciary duties.
At last, we turn to the beating heart of the matter: whether Maddox controls this case.
Id., 424 Md. at 399-400, 36 A.3d at 438.
We find the present case to be distinguishable easily from Maddox. Maddox is inapposite on the grounds of the narrow holding alone, namely, that, unlike the fee in Maddox, the fee in the present case is contemplated by a court rule. See id., 424 Md. at 386, 399-400, 36 A.3d at 430, 438. Md. Rule 14-305(g) provides, "If the purchaser
The distinction does not rest, however, on Maddox's narrow holding alone. An analysis of the reasoning in the majority opinion in Maddox distinguishes further it from the present case. The Maddox court found the following additional facts troubling in that case: first, the lender bought-in the subject residential property at the foreclosure sale; second, the fee was not subject to court review for reasonableness; and third, because the possible imposition of the advertised fee likely had a chilling effect on both potential bidders and the maximum sum to be obtained at the foreclosure sale, the inclusion of the additional fee as a term of sale was a violation of the trustee's fiduciary duties and of public policy. None of these factors exist in the present case.
101 Geneva was a third party purchaser. The lender in Maddox bought-in the property at the foreclosure sale. "When the purchaser at the foreclosure sale is the mortgagee or his assignee, the Courts will examine the sale closely to determine whether or not the sale was bona fide and proper. The Courts will set aside such a sale upon slight evidence of partiality, unfairness, or want of the strictest good faith." Fagnani v. Fisher, 418 Md. 371, 395, 15 A.3d 282, 296 (2011) (quoting Southern Maryland Oil, Inc. v. Kaminetz, 260 Md. 443, 450, 272 A.2d 641, 645 (1971)) (internal quotation marks omitted). The Maddox majority expressed similar concern that the lender bought-in the subject property. Specifically, the majority opinion noted that imposing the Maddox fee was "an attempt to reduce the lender's costs of foreclosure in deficiency situations by transferring some of the costs to prospective third-party bidders." Maddox, 424 Md. at 399, 36 A.3d at 438. The concerns of front-loading and shifting of the expenses of the secured party, with attendant exposure to the defaulting borrower, and the corresponding heightened scrutiny of a lender buy-in, however, are inapplicable where a third party purchaser bought the subject property. Therefore, all related concerns for lender-buy-in situations disappear and heightened scrutiny concerns are dispelled.
Second, although the Maddox fee was "relatively minor," the majority was uncomfortable with the boundless nature of the fee. Judge Cathell, writing for the majority, noted that "[the fee] is not subject to the audit process or direct court approval in the foreclosure process and the reasonableness of such fees depends only upon the judgment of the attorneys and the lenders attempting to impose them." Maddox, 424 Md. at 397-98, 36 A.3d at 437. Such concerns do not apply here. The fee here is subject to direct court approval in the foreclosure process, pursuant to Rule 14-305(g). "If the purchaser defaults, the court, on application and after notice to the purchaser, may order a resale at the risk and expense of the purchaser or
Lastly, and most significantly, the majority in Maddox found that, because the imposition of the fee could divert money from the successful bid price of the sale of the subject property, the fee violated the trustee's fiduciary duties. In a foreclosure sale, the trustee has a duty "to protect the interest of all concerned persons to the foreclosure sale and to use reasonable diligence in producing the largest revenue possible for the mortgaged property ..." and "obligation to ensure that the sale was conducted so as to maximize the price received for the property." Maddox, 424 Md. at 395, 36 A.3d at 435 (quoting Pizza v. Walter, 345 Md. 664, 679, 681, 694 A.2d 93, 100, 101 (1997), mandate withdrawn, 346 Md. 315, 697 A.2d 82 (1997) (withdrawing by joint motion pursuant to settlement agreement)) (emphasis added in Maddox) (citations and internal quotation marks omitted). In determining whether a trustee failed to meet his or her duties, "`[t]he test is: Was the property sold under such conditions and terms as to advertisement and otherwise, as a prudent and careful man would employ, seeking to obtain the best price for his own property.'" Id. (quoting Waters, et al. v. Prettyman, Surviving Trustee, 165 Md. 70, 74, 166 A. 431, 433 (1933)). See also Ten Hills Co. v. Ten Hills Corp., 176 Md. 444, 454, 5 A.2d 830, 835 (1939) ("It is axiomatic that the trustee [is] bound to exercise the same degree of care, diligence and judgment in selling the property that a prudent man of ordinary business experience would exercise in selling own property to the best advantage.") (citations omitted).
In applying this test in Maddox, the majority found first that "[i]t is reasonable to presume that any purchaser willing to pay that added legal fee might also be willing to have added to his bid, if necessary, the amount of that fee." Maddox, 424 Md. at 386, 36 A.3d at 430. The majority concluded then that, because "the imposition of the fee diverts a sum, however minimal it may be in some instances, from the sum that might be bid at the sale," it costs the mortgagor "the benefit of the extra sum ... either as part of a surplus or as a reduction in the deficiency for which the mortgagor might be liable." Maddox, 424 Md. at 386, 36 A.3d at 430. Therefore,
Id.
In contrast, however, a "prudent and careful man" may be well-advised to utilize a conditional fee-shifting reimbursement, such as the one in this case, to discourage bidders from defaulting. Moreover, unlike the fee in Maddox, the fee here does not apply automatically in every case, but rather only if a successful bidder defaults.
Moreover, the court found that, because the clause "only operates if the purchaser defaults after the sale is ratified," the clause did not have a chilling effect. Id., 152 Md.App. at 252, 831 A.2d at 531. "[T]he only bidders that such a term would discourage are those who expect to default or want the option to default." Id. The court stated that it could not "see how discouraging bidders who never intended to complete settlement on their bids could be against public policy" because "the exclusive purpose of a foreclosure sale is to timely and efficiently recoup the balance remaining on the mortgage account." Id. (emphasis added).
Similarly, we do not see how this conditional fee would have an improper chilling effect on securing bidders at a maximum sale price. In fact, we note that the "reasonable and prudent man" should make every reasonable attempt to dissuade defaulting bidders who would delay unnecessarily the foreclosure proceedings.
Because this fee does not raise the same concerns as the fee in Maddox, this case falls outside of Maddox. We find it far more similar to "the setting of the terms,
BARBERA, C.J., McDONALD and WATTS, JJ., concur and dissent.
WATTS, J., Concurring and dissenting, in which BARBERA, C.J., and McDONALD, J., join.
I respectfully concur, in part, and dissent, in part.
I agree that the hearing judge abused her discretion in failing to exercise her discretion as to whether to ratify the foreclosure sale.
I also agree that the screening procedures utilized by the circuit court pursuant to Maryland Rule 14-207.1(a) are proper, but I write separately to set forth my reasoning. Rule 14-207.1(a) permits circuit courts to "adopt procedures to screen pleadings and papers filed in an action to foreclose a lien." If, as a result of the screening, the circuit court "determines that the pleadings or papers filed do not comply with all statutory and Rule requirements, it may give notice" that the action will be dismissed "or that some other appropriate order will be entered by reason of the non-compliance if the plaintiff does not demonstrate within 30 days that the papers are legally sufficient or that the deficiency has been cured." Md. R. 14-207.1(a).
Rule 14-207.1(a) broadly permits circuit courts to conduct screenings of pleadings and papers in foreclosure actions, even if no objection or exception has been filed, and to take action in accordance with the Rule thereafter if non-compliant pleadings or papers are found. Of significance, the Rule does not confine a circuit court's screening to only those pleadings and papers filed prior to a foreclosure sale, but rather applies to all of the pleadings and papers filed in "an action to foreclose a lien." In contrast, prior to the adoption of Rule 14-207.1 in 2010, Maryland Rule 14-207(c) provided for screening of "orders to docket and complaints to foreclose a lien." Md. R. 14-207(c) (2009). By its very language, Rule 14-207(c) limited the screening of pleadings and papers in a foreclosure action to those pleadings and papers filed pre-sale, specifically, those pleadings and papers contained within the order to docket or complaint to foreclose. Conspicuously, Rule 14-207.1(a) does not contain such a limitation. Indeed, in proposing the new screening procedures in Rule 14-207.1(a), the Rules Committee signaled an intent to broaden the scope of a circuit court's ability and authority to conduct screenings, with particular focus to be paid to the affidavits and certificates filed in a foreclosure action. Nothing in the placement of Rule 14-207.1 within Chapter 200, Foreclosure of Lien Instruments, indicates an intent to limit the Rule strictly to pre-sale screenings.
As to Maryland Rule 14-305, concerning post-sale procedures and ratification, I am not convinced that the Rule precludes a circuit court from conducting a screening of the pleadings and papers filed post-sale pursuant to Rule 14-207.1(a).
I now part company with the majority. I respectfully disagree with upholding the $750 attorneys' fee and determining that the fee is permissible under the circumstances presented in this case. Although I agree that the permissibility of $750 attorneys' fee at issue in the instant case is not directly controlled by this Court's holding in Maddox v. Cohn, 424 Md. 379, 36 A.3d 426 (2012), I would have affirmed the circuit court's judgment because the $750 attorneys' fee and ten-day default period are inconsistent with the circuit court's discretion under Rule 14-305(g), and because of the lack of information in the record about the origin and reasonableness of the $750 attorneys' fee and the ten-day
First, nothing in the record explains how the terms of the advertisement of sale came to be; i.e., the record is silent as to how the Substitute Trustees selected the $750 attorneys' fee or ten-day default period. At oral argument, this Court inquired specifically into the origins of the $750 attorneys' fee and ten-day default period. Counsel for the Substitute Trustees stated that he believed the ten-day default period was an "arbitrary" time limit developed through practice over time, but that the ten-day default period typically was not enforced because trustees desire that sales go to settlement. Similarly, counsel for 101 Geneva, LLC responded that the ten-day default period arose from custom and practice based upon the operation of Maryland Rule 2-534 as to when an action became final.
Second, but equally important, in my view, the terms of the advertisement of sale—namely, the $750 attorneys' fee and ten-day default period—usurp the circuit court's discretion under Maryland Rule 14-305(g). Rule 14-305(g) provides: "If the purchaser defaults, the court, on application and after notice to the purchaser, may order a resale at the risk and expense of the purchaser or may take any other appropriate action." Here, the terms of the advertisement of sale, by already obligating a defaulting purchaser to pay attorneys' fees "plus all costs incurred," circumvent the circuit court's authority to order resale under Rule 14-305(g) and to determine the expenses to be incurred by the defaulting purchaser. Counsel for the Substitute Trustees admitted that the advertisement of sale does not even specifically require that the appropriate motion for resale be made pursuant to Rule 14-305(g),
Significantly, under the plain language of the advertisement of sale, a defaulting purchaser incurs the $750 attorneys' fee so long as the trustees have filed the appropriate motion to resell in the circuit court; i.e., the payment of the $750 attorneys' fee by the defaulting purchaser is not conditioned upon the circuit court's grant of the motion to resell or the circuit court's issuance of an order for resale. Moreover, the advertisement of sale calls for the defaulting purchaser to pay for "all costs incurred" in addition to the $750 attorneys' fee, but the phrase "all costs incurred" is ambiguous at best. The phrase does not indicate whether "all costs incurred" include all costs incurred with the original sale upon which the purchaser defaulted, or all costs incurred with the resale, or both. In sum, although there may be circumstances where an advertisement of sale contains terms consistent with Rule 14-305(g), neither the plain language of the advertisement at issue nor the statements made at oral argument concerning the terms of the advertisement convince me that the terms of this advertisement of sale are permissible or consistent with Rule 14-305(g) and the circuit court's authority under that Rule to order resale.
As a final matter, I believe that the rationale of the Court of Special Appeals in White v. Simard, 152 Md.App. 229, 831 A.2d 517 (2003), aff'd, 383 Md. 257, 859 A.2d 168 (2004), concerning the chilling effect of attorneys' fees on bidding, is applicable. In White, 152 Md.App. at 252, 831 A.2d at 530, the Court of Special Appeals stated that a trustee's duty in a foreclosure sale is "to ensure that the sale is made under circumstances `fairly calculated to bring the best obtainable price[,]'" and to refrain from any action "that would have a chilling effect on the bidding." (Citation omitted). See also Maddox, 424 Md. at 397, 36 A.3d at 436-37 ("The attempt... to impose an additional legal fee by a unilateral imposition in an advertisement of sale ... [has the] actual effect [of] the opposite of maximizing the sums bid at the sale."). The $750 attorneys' fee in this case would have a chilling effect on a segment of the mortgage foreclosure purchasing market; specifically, on small or single-property purchasers/homebuyers— those who use the foreclosure market as an opportunity to purchase a first home at a discounted price. In such cases, if presented with the opportunity to bid on a property where the advertisement of sale contains the $750 attorneys' fee versus a property where the advertisement of sale does not contain such a fee in the event of default, I have no doubt that many potential small or single-home purchasers would bid on the latter property rather than risk incurring $750 in attorneys' fee and "all costs" in the event of default. As such, in my view, inclusion of the mandatory $750 attorneys' fee and the costs provision would have a chilling effect on bidding by small or single-property purchasers and runs afoul of a trustee's duty to maximize bidding at foreclosure sales.
For all of the reasons above, I respectfully concur, in part, and dissent, in part.
According to the Attorney General, the hearing judge "had the authority and responsibility to exercise discretion in adjudicating the claims before her." The Administrative Judge did not divest her of any discretion or authority. Because the hearing judge chose not to exercise her discretion, the Attorney General conceded that she abused her discretion. The Attorney General argued that, because the hearing judge abused her discretion, "a remand is required to allow the circuit court, in the first instance, to rule on the issues raised in the responses of 101 Geneva and the Substitute Trustees to the Notice of Non-Compliance."
Second, the Attorney General urged this Court to decline to address the remaining issues. The Attorney General asserted that deciding these other issues is not desirable nor in the public interest because of the incomplete record which is devoid of any decision by the Circuit Court, as well as the lack of an opposing party to advocate against 101 Geneva's position and develop better the record.
Because neither the Attorney General's nor the Substitute Trustees' and 101 Geneva's briefs framed the questions presented identically to those questions for which we granted certiorari, we feel no loyalty to the original phrasing and organization of the certiorari questions.
To the extent that the Appellants meant that the Notice of Non-Compliance's reference to a violation of Maddox was not proper under Rule 14-207.1 because Maddox is not per se a rule or a statute, we find that argument unpersuasive. The narrow holding of Maddox is that a fee unauthorized by a Maryland Rule, statute, or the underlying mortgage, deed of trust or note is impermissible. Maddox, 424 Md. at 399-400, 36 A.3d at 438. Accordingly, if we rephrase the Notice of Non-Compliance, it states, in other words, that the fee is unauthorized by a Maryland Rule or statute. As such, the notice fits within the purview of Rule 14-207.1.
In Shepherd, we addressed the sufficiency of a Notice of Intent to Foreclose which failed to identify one of the secured parties as required by the Maryland Rules, but which did identify a secured party and contained sufficient information to allow the homeowner/borrower to pursue a loan modification if she so desired. The Court found that "[a] foreclosing party should ordinarily identify, in the Notice of Intent to Foreclose, each entity that is a `secured party' with respect to the deed of trust to be foreclosed. However, a failure to disclose every secured party is not always a basis for dismissal of a foreclosure action." Shepherd, 427 Md. at 560, 50 A.3d at 578. Despite advance notice of fourth months prior to the sale in that case, the homeowner did not move for a dismissal of the foreclosure action on the grounds of a defective notice for more than a year after the disclosure of the notice. In such circumstances, the Court concluded "the dismissal of the foreclosure action was not required." Id.
While these cases are instructive for exceptions by a homeowner/borrower, they are inapplicable in the context of a court reviewing papers and pleadings for legal sufficiency under Md. Rule 14-207.1(a).
Linda Meyer, "Nothing We Say Matters": Teague and New Rules, 61 U. CHI. L.REV. 423, 423 (1994).
The reason for this norm is that judicial decisions declare generally what the law is from the beginning. See, e.g., Coastal Tank Lines v. Canoles, 207 Md. 37, 50, 113 A.2d 82, 88 (1955), overruled in part on other grounds by Deems v. W. Maryland Ry. Co., 247 Md. 95, 231 A.2d 514 (1967) ("Reversal by judicial decision declare[s] the law as it has been from the beginning.") (citations and internal quotation marks omitted). The limited exception to this general norm is where a decision overrules prior law and declares a new principle of law. See Owens-Illinois, Inc. v. Zenobia, 325 Md. 420, 470-72, 601 A.2d 633, 658 (1992) (setting forth the governing principles to determine whether a new decision should be applied prospectively only).
Maddox did not declare a new principle of law. As the Attorney General noted in its brief (again correctly), "[i]ndeed, it is apparent that this Court, in directing that the order ratifying the sale in Maddox be vacated, did not believe it was applying new substantive law retroactively to overturn vested rights." Thus, because we applied the Maddox principles to the parties in Maddox, even though the event in dispute—the sale—occurred in the past, we find similarly that the Circuit Court did not err here in analyzing whether Maddox applies.
It is notable that although raised at oral argument neither the Substitute Trustees nor 101 Geneva, LLC argued on brief that the advertised fee was justified by Rule 14-305(g). And, of course, the amicus curiae that we invited to participate did not brief an argument that was not made.
