Legal opinions – Md. Court of Special Appeals

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Civil Procedure
Pre-filing orders

BOTTOM LINE: Pre-filing order granting an injunction vacated because, although the court had the authority to issue the sua sponte order, the party against whom the injunction was issued was not provided with an opportunity to contest the injunction before it issued.

CASE: Riffin v. Circuit Court, No. 2939, September Term 2008 (filed Jan. 5, 2010) (Judges Davis, ZARNOCH & Sharer (retired, specially assigned)). RecordFax No. 10-0105-01, 28 pages.

FACTS: James Riffin repeatedly and unsuccessfully sought judicial approval of his contention that he and certain entities owned by him were a “railroad” exempt from certain State and local environmental regulations.

Aside from filing a multitude of cases before trial and appellate courts, he also attempted to remove his litigation to federal court. After one such attempt in September 2007, the district court responded with a “Memorandum Opinion,” explaining the reasons why removal was improper, and stating that Riffin was required to seek leave before filing any further pro se civil actions in that court.

Thereafter, the Attorney’s Office wrote a letter to the chief judge of the Court of Special Appeals and the chief judge of the circuit court, detailing the procedural history and nature of Riffin’s prior pleadings and asking that he be declared a “frivolous litigant.”

In response, on February 3, 2009, Chief Judge John G. Turnbull II issued a “Memorandum Opinion,” in which he, inter alia, declared Riffin a “frivolous litigant” and ordered that he seek leave from the Administrative Judge before filing any future pleadings or civil actions in that court.

In a letter addressed to Chief Judge Turnbull, Chief Judge Krauser, and Chief Judge Robert Bell of the Court of Appeals, Riffin asked for leave of the courts to reply to the letter. Attached was a 17-page document entitled “James Riffin’s Answer to Mr. Beverungen’s Letter,” in which he argued that he was not a frivolous or vexatious litigant.

Several days later, Riffin sent another letter to Chief Judge Bell and Chief Judge Krauser, with a copy to Chief Judge Turnbull, outlining, inter alia, the events that occurred since he had received the letter from the Attorney’s Office, including his learning that Judge Turnbull had barred his entry to the courthouse. He further stated that should Baltimore County or Judge Turnbull wish that he be declared a “frivolous litigant,” the County should formally file a motion for sanctions and the Judge could order a hearing, where he would be permitted to refute the allegations against him.

Riffin thereafter filed a notice of appeal from the February 3, 2009 order. The Court of Special Appeals vacated the order and remanded for further proceedings.

LAW: When issuing the order, the circuit court cited Rule 1-341, though the rule’s plain language does not appear to provide the court with the power to issue a pre-filing order.  Even if it did, the court did not make an explicit evidentiary finding of bad faith or lack of substantial justification as required by Rule 1-341. See, e.g., Johnson v. Baker, 84 Md. App. 521, 528-29 (1990).

However, courts in other states have found such a power to exist even absent express statutory authority. See, e.g., DeNardo v. Cutler, 167 P.3d 674, 680-81 (Alaska 2007) (citing 42 Am. Jur. 2d Injunctions § 191, and federal and state law). Indeed, in Tilli v. Capobianco, 466 A.2d 1334, 1335 (Pa. 1983), the Pennsylvania Supreme Court stated: “Enjoin[ing] repeated frivolous actions by ‘pertinacious litigants’… [was] known to common law.”

Alternatively, numerous courts have recognized that equity allows courts to issue pre-filing orders in the form of injunctions. See, e.g., Bridgeport Hydraulic Co. v. Pearson, 91A.2d 778, 781 (Conn. 1952);

Most federal courts have identified the All Writs Act, 28 U.S.C. §1651(a), as the source of their power to issue pre-filing orders. See, e.g., Mayfield v. Klevenhagen, 941 F.2d 346, 348 (5th Cir. 1991). The “writ” most commonly identified by federal courts in cases involving pre-filing orders, particularly those involving their issuance sua sponte, is the injunction. See, e.g., Martin-Trigona v. Lavien, 737 F.2d 1254, 1261-62 (2d Cir. 1984).

A Maryland court has all the powers of the common law unless altered by statute. See Article 5 of the Maryland Declaration of Rights. In addition, Maryland courts have certain inherent powers to deal with vexatious litigants. See Needle, White, Mindel, Clarke & Hill, 81 Md. App. 463, 474 (1990).

Most significantly, a Maryland court has the express power to issue an injunction sua sponte. Rule 15-502(b) provides, “Subject to the rules in this Chapter, the court, at any stage of an action and at the instance of any party or on its own initiative, may grant an injunction upon the terms and conditions justice may require.”

Thus, a pre-filing order is a sua sponte injunction and, if properly issued, is a remedy available to a Maryland court to control the actions of a vexatious or frivolous litigant.

COMMENTARY: Riffin contended that the circuit court failed to afford him a due process right to be heard before requiring that he seek judicial approval for the filing of any pleading.

Every appellate court that has considered the question has held that before a trial court may sua sponte enter a pre-filing order, due process requires that it afford the alleged vexatious litigant notice and an opportunity to be heard. See, e.g., Cox v. Family Ct. of Rhode Island, 985 F.2d 32, 35-36 (1st Cir. 1993).

Moreover, Rule 2-311(f) provides that if a party requests a hearing on a motion, the court may not render a dispositive decision without a hearing. If this rule applied to an injunction on the court’s “own motion,” an in-person hearing would be required.

The Maryland Rules on injunctions, which mandate a hearing on a preliminary injunction, (Rule 15-505(a)), and a trial on the merits of a permanent injunction, (Rule 15-505(b)) would also seem to impact a sua sponte pre-filing order that is tantamount to an injunction.

Thus, the safest course of action for the circuit court on remand would be to accord Riffin an in-person hearing (if he desired one) after court-generated notice.

PRACTICE TIPS: A trial court “has inherent power to impose sanctions for continuing an action vexatiously, wantonly, or for oppressive reasons.” Needle, White, Mindel, Clarke & Hill, 81 Md. App. 463, 474 (1990).

Civil Procedure
Waiver of arbitration

BOTTOM LINE: Order to compel arbitration was proper because defendant did not, by its motions to dismiss plaintiff’s complaint, waive its right to arbitration.

CASE: Freedman v. Comcast Corporation, No.’s 435; 2102, September Term, 2008 (filed Jan. 28, 2010) (Judges Woodward, MATRICCIANI & Thieme (retired, specially assigned)). RecordFax No. 10-0128-01, 37 pages.

FACTS: Michael Freedman, a customer of Comcast Corporation, claimed that, at various times and under various circumstances, he dialed 1-800-COMCAST and he did not hear the warning that his phone call might be recorded for security or training purposes. According to Freedman, Comcast recorded these conversations in violation of the Maryland Wiretapping and Electronic Surveillance Act. CJ §10-402.

In May of 2007, Comcast distributed a bill insert that notified customers of changes to their Service Agreements, and gave notice of a new Arbitration Provision.

Freedman sued Comcast, simultaneously moving for a temporary restraining order (TRO). Comcast opposed the TRO and noted its right and intent to arbitrate Freedman’s claims. The circuit court denied Freedman’s TRO motion.

Comcast filed a motion to compel arbitration and stay or dismiss the complaint, as well as a separate motion to dismiss or for summary judgment. The circuit court granted Comcast’s motion to dismiss for failure to state a claim and denied Comcast’s motion to compel arbitration.

Freedman twice amended his complaint and each time Comcast moved to dismiss and to compel arbitration. The circuit court denied Comcast’s motion to dismiss but granted its motion to compel arbitration and stayed the case.

Freedman appealed to the Court of Special Appeals, which affirmed.

LAW: In Maryland, an order of a circuit court compelling arbitration completely terminates the action in the circuit court and is an appealable final judgment under CJ §12-301. Wells v. Chevy Chase Bank, F.S.B., 363 Md. 232, 241 (2001) (citing Horsey v. Horsey, 329 Md. 392, 402-404 (1993). See also The Maryland Uniform Arbitration Act (Maryland Arbitration Act), CJ §3-206(a).

When construing an arbitration provision, Maryland Courts follow the objective law of contract interpretation. Koons Ford of Balt., Inc. v. Lobach, 398 Md. 38, 47 (2007). “Because the right to arbitrate is a matter of contract, it is possible for parties to waive that right.” Charles J. Frank, Inc. v. Associated Jewish Charities, Inc., 294 Md. 443, 448 (1982). An arbitration agreement is waived by acts “inconsistent with an intention to insist upon enforcing such provisions.” Id. at 449. “The intention to waive must be clearly established and will not be inferred from equivocal acts or language.” Id.

Several actions may constitute waiver. Participation in a judicial proceeding that results in a final judgment may, in certain circumstances, waive the right to arbitrate. Some limited participation in judicial proceedings does not constitute a waiver. Whether an answer directed to the merits is filed is a factor. Participation in extensive discovery is a factor in determining waiver. Abramson v. Wildman, 184 Md. App. 189, 200-201 (2009).

“However, also relevant is whether a party utilized discovery devices that would not have been available in arbitration. Delay in attempting to compel arbitration, by itself, may not be conclusive, although coupled with prejudice to the other party can support a finding of waiver. The filing of suit can be a significant act in a waiver calculus, and in some instances it perhaps could be dispositive. Nevertheless, if there is a legitimate reason for participating in litigation, it will not be deemed a waiver.” Id.

Freedman argued that Comcast waived arbitration by 1) opposing Freedman’s motion for a TRO without invoking the Arbitration Provision and 2) conceding that the Arbitration Provision might not preclude injunctive relief. This was factually incorrect because Comcast’s TRO opposition expressly invoked and reserved the right to arbitrate even though it recognized that the Arbitration Provision itself permitted Freedman to invoke the court’s jurisdiction for the limited purposes of seeking injunctive relief.

Moreover, Comcast’s concession that Maryland law reserves the right to maintain the status quo by injunction was not inconsistent with Comcast’s intent to enforce the Arbitration Provision. Comcast merely recognized that Maryland law creates a narrow and default exception to the Arbitration Provision and that it had to act to preserve its interests. See The Redemptorists v. Coulthard Servs., 145 Md. App. 116, 156 n.9 (2002).

Although a motion for summary judgment does not necessarily waive arbitration, a motion for summary judgment could waive arbitration. In this case, it did not.

“We do not consider the act of filing a motion to dismiss on a jurisdictional ground to be an unequivocal demonstration…that [the movant] intended to waive its right to arbitrate the claims against it. See id.

Here, Comcast’s motion to dismiss relied upon a single document outside of the pleadings — a certificate issued by the Maryland Public Service Commission — in order to argue that Comcast was expressly exempted by the very statute giving rise to Freedman’s claims.

According to Rule 2-322(c), if the court had considered it necessary to refer to that attached document, Comcast’s motion to dismiss automatically would have been treated as a motion for summary judgment, subject to the procedures of Rule 2-501.

Comcast’s motion was, as in The Redemptorists, “limited to…a procedural flaw in the complaint that, if meritorious, could have disposed of the court’s jurisdiction to consider the complaint.” Id. at 143.

None of Comcast’s actions were sufficient to waive arbitration because, even when taken together, there was no manifest intent to waive arbitration. There was no evidence that Comcast’s actions prejudiced Freedman, nor was there reason to believe that compelling arbitration now would cause prejudice.

Accordingly, the judgment of the circuit court was affirmed.

COMMENTARY: Freedman also alleged that the Arbitration Provision was unconscionable.
An arbitration provision is void if it is unconscionable. Walther v. Sovereign Bank, 386 Md. 412, 426 (2005). Both procedural and substantive unconscionability must be present in order for a court to invalidate a contractual term as unconscionable. See Doyle v. Fin. Am., LLC, 173 Md. App. 370, 383 (2007).

Procedural unconscionability “deals with the process of making a contract” and “looks much like fraud or duress.” Walther, 386 Md. at 426. Substantively unconscionable terms are “unreasonably favorable to the more powerful party,” “impair the integrity of the bargaining process or otherwise contravene the public interest or public policy.” Id.

Here, the unilateral amendment notice was clear and conspicuous, having been distributed as a distinct document addressing only the Arbitration Provision. There was an equally clear and conspicuous opt-out provision, so that the term was not offered on a “take-it-or-leave-it” basis with respect to the entire agreement. See DIRECTV, Inc. v. Mattingly, 376 Md. 302 (2003).

Thus, the Arbitration Provision was not procedurally unconscionable, a determination which was enough to dispense with Freedman’s unconscionability argument. Nevertheless, the Court addressed Freedman’s substantive unconscionability arguments, finding each of them unpersuasive.

Accordingly, the Arbitration Provision was not unconscionable.

PRACTICE TIPS: While a clause in an arbitration provision which provides that either party may elect to arbitrate a dispute gives either party the option to compel arbitration, such a clause gives neither party the option to compel litigation. See Doyle v. Fin. Am., LLC, 173 Md. App. 370, 379 (2007).

Contract Law
Proof of breach

BOTTOM LINE: The circuit court properly denied relief to both the plaintiff and the counter-plaintiff in a breach of contract action because neither party carried its burden of persuading the court that the other party breached the contract.

CASE: Collins/Snoops Associates, Inc. v. CJF, LLC, No. 2273, September Term, 2007 (filed Jan. 27, 2010) (Judges Hollander, MEREDITH & Thieme (retired, specially assigned)). RecordFax No. 10-0127-02, 23 pages.

FACTS: Baltimore County entered into a contract with CJF, LLC to renovate three school buildings. CJF engaged Collins/Snoops Associates, Inc. as a subcontractor to perform over $2.69 million worth of plumbing, heating and air conditioning mechanical work as part of the renovations.

The subcontract agreement contained numerous references to CJF’s need for timely performance. The contract further required Collins/Snoops to begin work promptly and to complete the work as quickly as Collins/Snoops “may judge that the progress of the structure will permit.” The contract further called for diligent and uninterrupted performance.

After Collins/Snoops had completed only a portion of the specified mechanical work, CJF asserted that Collins/Snoops was not making acceptable progress in order to meet the strict deadlines required by the County. CJF terminated Collins/Snoops and engaged a replacement firm to take over the mechanical work on the schools. Subsequently, CJF itself was terminated by the County because the County was not satisfied with its progress.

CJF sued the County for wrongful termination, and, in the course of that litigation, CJF took the position that the County itself was the source of the delays. CJF and the County ultimately settled the suit, and CJF was paid an additional $875,000.

After the settlement between County and CJF, Collins/Snoops sued CJF, claiming that Collins/Snoops was owed $409,720 for the work and materials it had provided prior to the time it was terminated. CJF filed a counterclaim against Collins/Snoops, claiming damages that CJF alleged it had incurred as a consequence of Collins/Snoops’s failure to properly perform the obligations under the subcontract.

The trial court noted that there was evidence in the record that would support Collins/Snoops’s contention that the delays were caused by factors beyond its control, and there was evidence in the record to support CJF’s claim that Collins/Snoops failed to provide sufficient manpower to make satisfactory progress on the project. The court found that either CJF or Collins/Snoops had proven that the other breached the contract. Accordingly, the trial court granted judgment in favor of CJF and in favor of Collins/Snoops.

Collins/Snoops appealed to the Court of Special Appeals, which affirmed.

LAW: On a claim for breach of contract, the plaintiff (or counter-plaintiff) asserting the claim for damages bears the burden of proving all elements of the cause of action, including plaintiff’s own performance of all material contractual obligations. Johnson & Higgins v. Simpson, 163 Md. 574, 581 (1933).

“A typical example of a clause requiring strict compliance is one making time of the essence of the contract; substantial, although late, performance, is not generally sufficient to permit the party who has not performed in a timely manner to bring an action on the contract.” Id. at 431-32 (quoting 15 LORD, WILLISTON ON CONTRACTS, §44.53 at 224-25).

On Collins/Snoops’s claim for breach of contract, it had the burden of persuading the court that the lack of progress and delay was not attributable to any default in its contractual obligations. The subcontract agreement not only stated that time was of the essence, but also provided that subcontractor would work “regularly, diligently and uninterruptedly.” Thus, Collins/Snoops had to prove not only that it did work in accordance with the plans and specifications, but also that it complied with the provisions of the contract regarding timely performance. See Cambridge Tech. v. Argyle, 146 Md. App. 415, 434 (2002).

As for CJF’s counterclaim, it was CJF’s burden to persuade the court that Collins/Snoops was at fault for the delay.

Although the court found that Collins/Snoops performed some work on the project, it also found that Collins/Snoops performed at a much slower pace than the electrical subcontractor. Delays in Collins/Snoops’s work was not an insignificant matter; to the contrary, the County was so dissatisfied with the lack of progress that the County terminated CJF.

If the trier of fact’s state of mind on an issue is in equipoise, then the judgment or verdict must be against the party that had the burden of persuasion on that issue. Eidelman v. Walker & Dunlop, 265 Md. 538, 545 (1972). See also Metropolitan Mtg. Fd., v. Basiliko, 44 Md. App. 158, 167 (1979).

Given the trial court’s findings about the lack of timely progress by Collins/Snoops, which was at least partially attributable to the manner in which it staffed the job, there was no clear legal error in the trial court’s conclusion that Collins/Snoops had not proven by a preponderance of the evidence that Collins/Snoops had performed all of its material obligations under the contract. Cf. K & G Construction Co. v. Harris, 223 Md. 305, 315 (1960).

The trial court stated that on July 24, 2001, CJF terminated Collins/Snoops, because of its persistent failure to properly man the projects and its failure to progress with the work. With respect to its counterclaim, CJF relied on the court’s statement to prove Collins/Snoops’s liability. However, the statement merely recited CJF’s purported reason for terminating Collins/Snoops; it did not constitute the court’s finding that the reason was correct, and did not contradict the trial court’s overall finding that CJF failed to persuade the court that Collins/Snoops breached the contract.

Furthermore, CJF’s challenge to the trial court’s alternative finding, that CJF failed to prove its damages with reasonable certainty, was moot. In the absence of an established breach by Collins/Snoops, there was no need to consider the adequacy of CJF’s proof of its alleged damages.

Accordingly, the judgment of the circuit court was affirmed.

COMMENTARY: Collins/Snoops brought a claim against the president of CJF under the Construction Trust Statute, RP §9-202, which provides: “Any officer, director, or managing agent of any contractor or subcontractor, who knowingly retains or uses the moneys held in trust under §9-201 … for any purpose other than to pay those subcontractors for whom the moneys are held in trust, shall be personally liable to any person damaged by the action.”

Personal liability of an officer under the Construction Trust statute is predicated upon the existence of an unpaid debt owing to a subcontractor. Collins/Snoops failed to persuade the court that CJF owed any money to Collins/Snoops.

Furthermore, the mere insufficiency of funds cannot support a Construction Trust claim. Selby v. Williams Construction, 180 Md. App. 53, 64-65 (2008).

Accordingly, the trial court did not err in entering judgment for CJF’s president.

PRACTICE TIPS: Generally, quasi-contract claims, such as quantum meruit and unjust enrichment, cannot be asserted when an express contract defining the rights and remedies of the parties exists. See Caroline County v. Dashiell, 358 Md. 83 (2000).

County Law
Charter amendments

BOTTOM LINE: The finding that a Charter Amendment was unconstitutional was affirmed because the amendment usurped the County Council’s express legislative power, in that it required the Council to legislate on the subject of personnel matters affecting a certain group.

CASE: Fraternal Order v. Wicomico County, No. 2034 September Term 2008 (filed Feb. 1, 2010) (Judges EYLER, J., Kehoe & Sharer (retired, specially assigned)). RecordFax No. 10-0201-03, 15 pages.

FACTS: Section 5 of Article XI-A of the Maryland Constitution provides that an amendment to a charter may be proposed (1) by a county council or (2) by a petition filed with the county council, which contains the signatures of at least 10,000 registered voters in the county or 20% of the registered voters in the county if that number is less than 10,000.

In August of 2006, the Wicomico County Fraternal Order of Police, Lodge #111, Inc., and individual members of the Lodge initiated a petition to amend the County Charter and obtained the required number of signatures. The proposed amendment was to Article VI of the Charter, entitled “Personnel Provisions,” and, subject to adoption, required the County Council to enact a law providing for collective bargaining with binding arbitration with the deputies in the County Sheriff’s Office.

Pursuant to the Charter Amendment, the County Council, on December 18, 2007, passed Legislative Bill No. 2007-3, which provided, in part, that the arbitrator shall take into consideration “[t]he wages, hours, or terms and conditions of other employees performing similar services in comparable departments in other Maryland Eastern Shore counties, whether or not established by a collective bargaining agreement taking into consideration the cost of living index for the area in which any such comparable department is located.”  On January 9, 2008, the County Executive vetoed the bill. The County Council overrode the County Executive’s veto and, on January 15, 2008, enacted the legislation.

The Fraternal Order filed in circuit court a petition for writ of mandamus and complaint for declaratory relief, later amended, alleging that the legislation placed restrictions on the arbitrator and did not make the arbitrator’s decisions binding on the County Council, in violation of the Charter.

The County Council filed a counterclaim for declaratory relief, asserting that the Charter Amendment constituted “an exercise of the police power and an attempt to legislate by charter initiative” and requesting a declaratory judgment that the Charter Amendment was “invalid and unconstitutional under Article XI-A of the Maryland Constitution.” Alternatively, it sought a declaratory judgment that Legislative Bill No. 2007-3 fully complied with the Charter Amendment and was lawful in all respects. The council also filed a motion for summary judgment.

Following a hearing, the court granted the County Council’s motion, and found that the Charter Amendment was a citizen initiative, “the process by which the electorate petitions for and votes on a proposed law,” thereby circumventing the governing legislative body. See Bd. Of Supervisors of Elections v. Smallwood, 327 Md. 220, 232 n.6 (1992). It further found that the Charter Amendment did not amend the “form or structure” of government, which legally may be done by citizen initiative, but rather “usurp[ed] the County Council’s express legislative power”; thus the Amendment was unconstitutional. Accordingly, the court granted summary judgment in favor of the county.

The Fraternal Order filed a motion to alter or amend the judgment, asserting that because Bill 2007-03 provided that arbitration was binding only on the County Executive, the County Council had full discretion to implement or reject all or any part of a collective bargaining agreement. Thus, it requested that the court clarify its position and state whether or why the legislation was unconstitutional. The court denied the motion.

The Fraternal Order appealed to the Court of Special Appeals, which affirmed.

LAW: Article XI-A, §2 provides that the legislature shall grant express powers to the governments of charter counties and that such powers shall not be enlarged by a charter adopted under Article XI-A. Thus, a charter amendment “cannot transcend its limited office and be made to serve or function as a vehicle through which to adopt local legislation.” Cheeks v. Cedlair Corp., 287 Md. 595, 607 (1980). Section 3 also provides that the County Council “shall have full power to enact local laws…upon all matters covered by the express powers granted [by Article XI-A, §2].”

The legislative body of Wicomico County is the County Council and is “vested with all the law-making powers thereof.” Wicomico County Charter, art. III, §§302, 209. Voters cannot initiate local legislation because it is “repugnant” to Article XI-A, §3 of the Maryland Constitution. See Save Our Streets v. Mitchell, 357 Md. 237, 247 (2000). As a result, a charter amendment “within the context of Art. XI-A is necessarily limited in substance to amending the form or structure of government initially established by adoption of the charter.” Cheeks, 287 Md. at 607.

Thus, the question on appeal turned on whether the Charter Amendment changed the form and structure of government or whether it was legislative in nature.

In Griffith v. Wakefield, 298 Md. 381 (1984), the Court of Appeals stated that when a proposed amendment was “viewed as a whole,” it was clear that it was not intended to alter the form or structure of the Baltimore County government; rather, “the core of the amendment [was] the imposition of a comprehensive system of binding arbitration concerning a single group of county employees.” Id. at 388.

Here, the Charter Amendment required the County Council to enact legislation. It did not purport to change the form or structure of the government. Thus, on its face, it violated Art. XI-A, §3, which provides that the law-making power “shall” be vested in the legislative body, because it required the Council to legislate on the subject of personnel matters affecting a certain group and, through the Charter Amendment, the electorate was “attempting to circumvent the local legislative body and enact local law.” Griffith, 298 Md. at 388. Thus, it was unconstitutional.

Accordingly, because Legislative Bill 2007-03 was mandated by the Charter Amendment, it was invalid.

COMMENTARY: In Cheeks, 287 Md. at 595, a charter amendment created an agency with authority over landlord-tenant relations and a system for regulating rent prices and went into “lengthy detail” about the agency’s power and duty to regulate rent prices and impose penalties. Cheeks, 287 Md. at 602. As in Griffith, the amendment contained a detailed scheme. The Court, concluding that “the core of the amendment is the imposition of ceiling …which…constitutes an exercise of the police power in all respects similar to the enactment of a local law,” invalidated the amendment. Cheeks, 287 Md. at 609.

The Fraternal Order argued that Griffith and Cheeks were distinguishable because the present case did not contain a detailed scheme of binding arbitration. However, “the length and detail of a proposed charter amendment were not dispositive as to whether the proposed amendment constituted legislation or proper charter material.” Mitchell, 357 Md. at 253.

PRACTICE TIPS: A citizen initiative refers to “the process by which the electorate petitions for and votes on a proposed law,” thereby circumventing the governing legislative body. Bd. of Supervisors of Elections v. Smallwood, 327 Md. 220, 232 (1992). A referendum, by contrast, is the “process by which legislation passed by the governing body is submitted to the electorate for approval or disapproval.” Ritchmount Partnership v. Board, 283 Md. 48, 60 (1978).

Criminal Procedure
Defendant’s right to discharge counsel

BOTTOM LINE: Where, on the eve of trial, circuit court received notice of defendant’s desire to discharge his counsel, denial of defendant’s request was error because the court failed to ask for or consider defendant’s reasons for wanting to discharge his counsel.

CASE: Joseph v. State, No. 1477, September Term 2008 (filed Feb. 1, 2010) (Judges Davis, Wright & KENNEY (retired, specially assigned)). RecordFax No. 10-0201-02, 17 pages.

FACTS: In September 2007, Larry Joseph was arrested for the murders of Deon Morris and Channing Myrick. On the eve of trial, at approximately 5:10 p.m., the circuit court conducted a motions hearing. At the outset of that hearing, the prosecutor informed the court that Joseph “stated something to [him] about the release of his counsel.”

In response, the court immediately exclaimed: “That’s not going to happen.” Then, without asking him if or why he wanted to release his counsel, the court told Joseph that, if he did so, he would have to represent himself or retain a new attorney by the next morning because the trial was not going to be postponed. Joseph elected to retain his counsel.

The trial proceeded the following day with Joseph’s then-current counsel defending him. Several eyewitnesses testified that Joseph shot and killed Morris and Myrick. Joseph was convicted.

Joseph appealed to the Court of Special Appeals, which reversed.

LAW: “A defendant’s request to discharge counsel implicates two fundamental rights that are guaranteed by the Sixth Amendment to the United States Constitution: the right to the assistance of counsel and the right to self representation.” State v. Campbell, 385 Md. 616, 626-27 (2005). On the other hand, “[t]he right to counsel may be waived by the defendant provided that he knows what he is doing and his choice is made with his eyes open.” Id. at 627.

Rule 4-215 protects both the right to counsel and the right to self-representation and ensures that decisions to waive counsel would pass constitutional muster. Id. at 629. Thus, if a defendant requests permission to discharge an attorney, “the court shall permit the defendant to explain the reasons for the request.” Rule 4-215(e).

This rule is not self-executing and comes into effect when “a defendant requests permission to discharge an attorney.” Id. The rule, however, does not indicate how the request is to be made, and it “is silent as to what level of discourse is required to discharge counsel.” Henry v. State, 184 Md. App. 146, 171 (2009). Any statement by the defendant from which the court could reasonably conclude that the defendant desired self-representation would be sufficient. Leonard v. State, 302 Md. 111, 124 (1985).

Once the court is alerted to the defendant’s desire to discharge his counsel, it “should engage in a simple three-step process.” Hawkins v. State, 130 Md. App. 679, 687 (2000). The court should first ask the defendant why he wishes to discharge counsel, give careful consideration to the defendant’s explanation, and then rule whether the explanation offered is meritorious.” Id. Thus, the onus is on the trial judge to ensure the reason for requesting dismissal of counsel is explained. Id. at 686.

If the reason given is meritorious, a court is “obligated to grant the request and give the defendant time to retain new counsel.” Williams v. State, 321 Md. 266, 273-74 (1990). If it is not, a court may proceed in one of three ways: “(1) deny the request and, if the defendant rejects the right to represent himself and instead elects to keep the attorney he has, continue the proceedings; (2) permit the discharge in accordance with the Rule, but require counsel to remain available on a standby basis; (3) grant the request in accordance with the Rule and relieve counsel of any further obligation.” Id. at 273.

Here, all that was required to trigger the mandated inquiry from the court was that the court be put on notice of Joseph’s desire to discharge counsel, and that clearly happened in this case. Specifically, the prosecutor’s statement was sufficient to alert the judge of Joseph’s desire to discharge his counsel and that further inquiry was required. Thus, the court violated Rule 4-215(e) by failing to ask for or consider Joseph’s reasons for wanting to discharge his counsel before denying the request.

Accordingly, the judgment of the circuit court was reversed.

COMMENTARY: Joseph contended that his convictions should be reversed because he was denied his right to a fair trial before an impartial judge. Joseph pointed to 46 questions or comments by the trial judge that allegedly assisted the prosecution, and he argued that the net effect of those interjections deprived him of a fair trial.

Fundamental to a defendant’s right to a fair trial is an impartial and disinterested judge. Archer v. State, 383 Md. 329, 357 (2004). In addition, a criminal defendant is entitled “to a judge who has the appearance of being impartial and disinterested.” Id. It is because judges occupy a distinguished and decisive position that they are required to maintain high standards of conduct. Their conduct during a trial has a direct bearing on whether a defendant will receive a fair trial because their opinion or manifestations thereof usually will significantly impact the jury’s verdict. In addition, if the defendant has elected to be tried by a jury, it is the province of that jury to decide the guilt or innocence of the defendant. Jefferson-El v. State, 330 Md. 99, 106 (1993); see Smith v. State, 182 Md. App. 444, 486-87 (2008).

Accordingly, the Court of Special Appeals stated that, in the event of a retrial in this case, those principles should be applied to assure Joseph a fair trial, presided over by a judge who is, and who appears to be, impartial.

PRACTICE TIPS: Under the plain error doctrine, “an appellate court may in its discretion in an exceptional case take cognizance of plain error even though the matter was not raised in the trial court[,]” Rubin v. State, 325 Md. 552, 587-88 (1992), particularly where the error “vitally affects a defendant’s right to a fair trial.” State v. Daughton, 321 Md. 206, 211 (1990).

Criminal Procedure
Sentencing

BOTTOM LINE: Where defendant received consecutive sentences for convictions of driving while under the influence of alcohol and driving while under the influence of alcohol per se, both of which arose out of the same incident, under the rule of lenity the lesser sentence should have merged into the greater sentence.

CASE: Washington v. State, No. 0063, September Term, 2008 (filed Jan. 28, 2010) (Judges Davis, Zarnoch & SHARER (retired, specially assigned)). RecordFax No. 10-0128-00, 12 pages.

FACTS: Eric Washington was stopped after a patrol officer observed him driving erratically. Because the officer smelled alcohol on Washington’s breath, Washington was arrested and given an alcohol breath test at the police station. The result showed a blood alcohol content of .25 — more than three times the legal threshold of .08.

Washington was convicted on separate counts of driving while under the influence of alcohol and driving while under the influence of alcohol per se. He was sentenced, as a subsequent offender, to two consecutive prison terms of 2 years and 18 months.

Washington appealed to the Court of Special Appeals, which vacated the sentence for driving while under the influence of alcohol per se.

LAW: “Under the Double Jeopardy Clause, a defendant is protected against multiple punishments for the same conduct, unless the legislature clearly intended to impose multiple punishments.” Jones v. State, 357 Md. 141, 156 (1999).

TR §21-902(a) consists of two distinct provisions that proscribe the operation of a motor vehicle by persons who are under the influence of alcohol. Subsection (a)(1) provides that “[a] person may not drive…any vehicle while under the influence of alcohol.” Subsection (a)(2) provides that “[a] person may not drive…any vehicle while under the influence of alcohol per se.” The latter term is defined to mean “having an alcohol concentration at the time of testing of 0.08 or more as measured by grams of alcohol per 100 milliliters of blood or grams of alcohol per 210 liters of breath.” TR §11-174.1(a).

Under TR §27-101(k), the General Assembly has established sentences for violations of “any of the provisions of §21-902(a),” including enhanced sentences for repeat offenders.

In Meanor v. State, 364 Md. 511, 526 (2001), the Court of Appeals held that DUI and DUI per se are separate offenses under the required evidence test because each has “an element not found in the other.” See id. at 519-24.

Because the two offenses are separate, the trial court was not required to merge the convictions for DUI and DUI per se. Nevertheless, whether Washington’s DUI per se sentence must be merged into his DUI sentence is an analytically separate question. That is because, even when two offenses are separate under the required evidence test, in some circumstances multiple punishments may not be permitted in order to avoid a violation of the constitutional guarantee against double jeopardy. See Abeokuto v. State, 391 Md. 289, 356 (2006).

The rule of lenity, originally formulated as a principle of statutory construction, stems from a policy “that the Court will not interpret a … criminal statute so as to increase the penalty that it places on an individual when such an interpretation can be based on no more than a guess as to what [the legislature] intended.” Monoker v. State, 321 Md. 214, 222-23 (1990). Thus, “a court will not impose multiple punishments but will, for sentencing purposes, merge one offense into the other … [with] the offense carrying the lesser maximum penalty ordinarily merg[ing] into the offense carrying the greater maximum penalty.” Abeokuto, 391 Md. at 356.

This judicially created rule governs construction of statutory offenses rather than common law crimes. See id. It applies when “there is no indication that the legislature intended multiple punishments for the same act[.]” Id. If there is uncertainty about whether the legislature intended multiple punishments for a single act, that doubt will be resolved against multiple sentences. See id.

Washington’s position presented an issue of first impression because there are no reported cases addressing the propriety of consecutive sentences for DUI and DUI per se convictions arising out of a single act of driving. Cf. Turner v. State, 181 Md. App. 477, 491 (2008).

However, in Jones, 357 Md. at 167, the Court of Appeals concluded that driving on a suspended license and driving on a revoked license, offenses established under different subsections of TR §16-303, are separate offenses for purposes of conviction. But the Court separately addressed the issue of whether defendants could be punished twice when their conduct that triggered each charge was the same act, i.e., the single act of driving. Id. at 163. The Court concluded that “the Legislature intended that punishment should be tied to the act of driving and only one sentence per driving episode [should] be permitted.” Id. at 164. The Court treated the availability of sentencing enhancements, increasing the penalty for “subsequent violations” from one year to two years, as evidence that the legislature did not anticipate that a single act of driving on a license that had been both suspended and revoked would result in consecutive sentences. Id.

Here “[t]he unit of prosecution” for the intoxicated driving offenses in subsections 21-902(a)(1) and (2) “is the act of driving.” An analogous “single act of driving” interpretation of the statute for sentencing purposes was appropriate here, given the repeat offender sentencing scheme available for intoxicated driving convictions, and the absence of any indication that the legislature intended that a person convicted of both DUI and DUI per se, based on one uninterrupted driving episode, could face consecutive sentences for violating both subsections of 21-902(a).

Moreover, there is nothing in the language or history of §21-902(a) to conclude that, in adding DUI per se to the existing DUI offense, the General Assembly intended to authorize such multiple punishment in cases where a single act of intoxicated driving results in both DUI and DUI per se convictions. Thus, when a defendant is convicted of both DUI and DUI per se, arising out of the same act of driving, the lesser sentence, in this case the one for DUI per se, merges into the greater sentence, in this case the sentence for DUI, under the rule of lenity.

Accordingly, the sentence imposed by the circuit court was vacated.

COMMENTARY: The State mistakenly relied on Meanor as authority for the proposition that the General Assembly intended multiple punishments. However, the legislative history cited by the State merely confirms that the same maximum penalty exists for the two offenses, without addressing whether such sentences may be made consecutive when they arise from the same act of intoxicated driving.

Meanor did not address the issue of multiple punishments for DUI and DUI per se convictions stemming from a single driving event because the trial court in that case merged the two offenses for sentencing purposes. In the Court of Appeals, Meanor challenged only his convictions for DUI and DUI per se, complaining that, because he was never cited for DUI per se, “the trial court erred in instructing the jury that he was intoxicated if his blood alcohol level was 0.10 or more” and in permitting him to be convicted of DUI per se. See Meanor, 364 Md. at 513.

Thus, Meanor did not resolve the question of whether a person properly convicted of both DUI and DUI per se, based on a single act of driving, should have those offenses merged for sentencing purposes.

PRACTICE TIPS: Although Maryland authorizes multiple punishments for use of a handgun in the commission of an armed robbery under an “aggravating factor” rationale, the legislature has not authorized consecutive sentences for merely carrying a weapon during the commission of a robbery. See, e.g., Eldridge v. State, 329 Md. 307, 318-20 (1993).

Labor & Employment
Law Enforcement Officers’ Bill of Rights

BOTTOM LINE: Where police officer was terminated without any prior notice, the circuit court properly ordered his reinstatement with all back pay and benefits because, under the Law Enforcement Officers’ Bill of Rights, he was guaranteed the right to a hearing prior to the taking of disciplinary action.

CASE: Cave v. Elliott, No. 56, September Term, 2007 (filed Jan. 27, 2010) (Judges Salmon, WOODWARD & Wenner (retired, specially assigned)). RecordFax No. 10-0127-00, 34 pages.

FACTS: Calvin Elliott was employed as a Deputy Sheriff with the Howard County Sheriff’s Office from September 24, 2001 until October 28, 2005 when, without prior notice, he was terminated. In lieu of notice of his termination, Elliott was to receive two weeks’ pay.

Elliott filed a complaint for show cause order pursuant to the Law Enforcement Officers’ Bill of Rights (LEOBR), PS §3-105, in the circuit court. Elliott requested that the court issue an order requiring the Sheriff’s Office and Howard County Sheriff Charles Cave to show cause, if any, why the rights provided by the LEOBR should not be afforded to Elliott. In addition, Elliott requested that the court issue an order directing Cave and the Sheriff’s Office to restore Elliott to his former position and to remit all back pay and benefits.

The circuit court for Howard County entered the show cause order. Thereafter, all of the judges of the circuit court for Howard County recused themselves from the case, and the parties consented to a transfer of the case to the circuit court for Carroll County.

The circuit court for Carroll County found that Elliott was denied the right to a hearing under the LEOBR prior to his termination. The court ordered Elliott’s reinstatement to his former position and remittance of all back pay and benefits.

Cave filed a motion for reconsideration, which was hand-delivered to the circuit court for Carroll County. The time stamp indicated that the motion was received on December 22, 2006, at 13:08. The caption of the motion, however, read, “In The Circuit Court For Howard County,” and the case number appearing on the motion was the case number assigned by the circuit court for Howard County prior to the transfer of the case to the circuit court for Carroll County.  The motion contained the correct names of the parties.

Instead of docketing Cave’s motion for reconsideration, the civil clerk of the circuit court for Carroll County returned the miscaptioned motion to Cave’s counsel, striking out the time and date stamp on the motion and attaching a memorandum that stated that the motion was filed in the circuit court for Carroll County in error.
On January 4, 2007, Cave filed a motion to accept filing of motion for reconsideration in the circuit court for Carroll County, requesting the court to accept for filing a motion for reconsideration identical to the motion Cave filed on December 22, 2006, but with a corrected caption.

The circuit court granted Cave’s motion to accept filing of motion for reconsideration, however Cave’s motion for reconsideration was denied.

Cave appealed to the Court of Special Appeals, which affirmed.

LAW: Cave contended that the circuit court acted outside of its statutory authority under PS §3-105(a) when it awarded Elliott payment of back pay and benefits.

“The Maryland General Assembly enacted the LEOBR in 1974 for ‘the purpose of providing that all law enforcement officers have certain rights,’ 1974 Md. Laws, Chap. 722, and for ‘provid[ing] a law-enforcement officer…with substantial procedural safeguards during any inquiry into his conduct which could lead to the imposition of a disciplinary sanction.’” Md-Nat’l Capital Park & Planning Comm’n v. Anderson, 395 Md. 172, 183-84 (2006) (quoting Miner v. Novotny, 304 Md. 164, 173 (1985)).

One of the procedural protections provided by the LEOBR is the right of a law enforcement officer to a hearing before a hearing board prior to the taking of any disciplinary action resulting from an investigation or interrogation of the officer. Anderson, 395 Md. at 184. See also PS §3-107(a)(1).

Another procedural safeguard, under PS §3-105, guarantees a law enforcement officer the right, when a right under the LEOBR is denied, to apply to the circuit court for a show cause order directing the law enforcement agency to show cause why the officer should not be afforded that right. Section 3-105 is silent, however, as to whether the court, upon entering a show cause order, can (1) hold a show cause hearing in which the parties produce evidence and/or present argument regarding whether the officer has been denied a right under the LEOBR, (2) issue a ruling, stating whether the officer’s right has been denied, and (3) upon finding a denial of a right under the LEOBR, grant relief to the officer.

In two prior cases, the Court of Special Appeals construed the language of Article 27, §734, the predecessor to PS §3-105. See Mass Transit Admin. v. Hayden, 141 Md. App. 100 (2001) and Cochran v. Anderson, 73 Md. App. 604 (1988). In both instances, the plain language of §734 did not explicitly grant the circuit court the authority in question; nevertheless, the Court concluded that §734 necessarily encompassed such
authority.

In Cochran, the officer had the right to a prompt trial board hearing and resolution of the charges against him, which right the trial court found had been denied by the agency for over a year. Id. at 614. The trial court had the authority under the statute not only to grant that right by ordering the agency to act in conformance with the law, but, where the agency “simply [was] unwilling to comply with the law…to enforce the law by terminating the proceeding.” Id. at 613-14.

In Hayden, the officer had the right under the LEOBR to summon a witness to testify at his disciplinary proceeding before the trial board, which was denied by the trial board. Id. at 108. The trial board, however, proceeded to find the officer guilty of the charges against him before the circuit court rendered its decision. Id. at 107. The Court of Special Appeals held that the trial court had the authority to grant the right to summon a witness to a disciplinary proceeding by vacating the disciplinary decision and remanding for a new administrative hearing, because “[t]he denial of the right tainted the results of the administrative hearing” by excluding the witness’ testimony. Id. at 113.

Here, Elliott had the right under §3-107(a)(1) of the LEOBR to a hearing before a hearing board prior to the Sheriff’s Office taking any disciplinary action resulting from an investigation or interrogation. The court found that Elliott had been denied this right when the Sheriff’s Office terminated him without first affording him a hearing. To afford Elliott the right that he was denied, the court reinstated him to his former position as a Deputy Sheriff, including the payment of all back pay and benefits.

The only way for Elliott to have been granted the right that he was denied was to place him in the same position as he would have been prior to his termination, namely, a Deputy Sheriff having received full pay and benefits. Therefore, PS §3-105 authorizes the circuit court to order reinstatement with all back pay and benefits where a law enforcement officer is denied the right under PS §3-107(a)(1) to a hearing prior to the taking of disciplinary action by the law enforcement agency.

Alternatively, the court also retained the “Constitutionally-based and statutorily-recognized, equitable jurisdiction” to provide complete relief. See In re Heilig, 372 Md. 692, 712 (2003). Article IV, §20 of the Maryland Constitution provides Maryland’s circuit courts with “all the power, authority and jurisdiction, original and appellate, which the Circuit Courts of the counties exercised on [November 4, 1980], and the greater or lesser jurisdiction hereafter prescribed by law.” The General Assembly has implemented this constitutional provision in CJ §1-501. In re Heilig, 372 Md. at 712.

The court’s equity jurisdiction in this case is necessarily superimposed on PS §3-105. When the circuit court finds that an officer is denied a right under the LEOBR pursuant to a show cause order, the court’s authority includes those equitable powers necessary to grant or vindicate the right denied. It is inconsistent with the concept of equity jurisdiction to limit the circuit court’s authority in ruling on a show cause order such that the relief awarded will not make the officer whole.

In granting Elliott the right to an administrative hearing, without reinstatement and the payment of full back pay and benefits, the court would not have provided Elliott with complete relief, because Elliott was entitled under the LEOBR to a hearing while he was still a fully compensated Deputy Sheriff. The award, therefore, was proper. See, e.g., Montgomery County v. Broadcast Equities, Inc., 360 Md. 438, 444-45 (2000).
Accordingly, the judgment of the circuit court was affirmed.

COMMENTARY: Elliott moved to dismiss this appeal pursuant to Rule 8-602(a)(3), because Cave did not file his notice of appeal within 30 days after entry of the judgment or order from which the appeal is taken.

Cave properly filed his motion for reconsideration on December 22, 2006 in the circuit court for Carroll County. The fact that the caption of the motion incorrectly stated the name of the court and the docket number did not alter the effectiveness of its filing.

Trial courts are vested with the common law authority to correct certain errors nunc pro tunc. Sapero & Sapero v. Bel Air Plumbing & Heating Contractors, 41 Md. App. 251, 259 (1979), including “‘to correct a clerical error or omission as opposed to a judicial error or omission.’” In re Timothy C., 376 Md. 414, 430 n.10 (2003).

The court clerk erred by refusing to accept for filing Cave’s motion for reconsideration. Therefore, the court’s order accepting Cave’s motion for reconsideration for filing as of December 22, 2006 was an appropriate order nunc pro tunc.

Following the entry nunc pro tunc order, the record reflected Cave’s filing of the motion for reconsideration on December 22, 2006, which was within ten days after the entry of the court’s final judgment on December 13, 2006. Having been filed within that ten day period, Cave’s motion for reconsideration is treated as a Rule 2-534 motion, thereby “stay[ing] the time for appeal under [Rule 8-202(c)] and prevent[ing] the noting of an appeal until the motion is resolved.” Sieck v. Sieck, 66 Md. App. 37, 44-45 (1986).

Accordingly, Cave timely noted this appeal on March 15, 2007, which was within 30 days of the court’s disposition of his motion for reconsideration on February 15, 2007.

PRACTICE TIPS: Under the mitigation of damages doctrine, which requires a plaintiff, after an injury or breach of contract, to use ordinary care to alleviate the effects of the injury or breach, the burden is necessarily on the defendant to prove that the plaintiff failed to use “all reasonable efforts to minimize the loss he or she sustained.” Schlossberg v. Epstein, 73 Md. App. 415, 422 (1988).

Real Property
Equitable subrogation

BOTTOM LINE: Where debtor did not learn about her forged signature on loan until after foreclosure sale, debtor’s exceptions attacking the validity of a deed of trust was properly allowed because such exceptions were not limited to a motion to stay the foreclosure.

CASE: Bierman, et al. v. Hunter, et al., No. 1362, September Term 2008 (filed Feb. 1, 2010) (Judges Meredith, WOODWARD & Moylan (retired, specially assigned)). RecordFax No. 10-0201-00, 36 pages.

FACTS: Maria and Gary Hunter purchased a residential property in September 2002. Maria filed for divorce in January of 2006. While she continued to reside at the property, Gary moved out in February 2006. He currently lives in Brazil.

Gary refinanced the property in June of 2003 and again in January of 2004 by obtaining Maria’s signature on the refinance deeds of trusts. In January 2005, Gary took out a home equity line of credit on the property with Irwin Home Equity Corporation in both his and Maria’s names for $70,000. Although Maria’s signature appeared on the credit line deed of trust, Maria testified that the signature on that deed of trust was not hers.

On April 20, 2006, several months after Maria and Gary had separated, Gary executed an application for a cash-out debt consolidation loan on the property in the amount of $320,000, of which $170,284 was to be used to pay off the pre-existing deed of trust to BB&T Mortgage and $77,356 to pay off of the Irwin loan. On May 22, 2006, Gary’s son (by a previous marriage) completed the transaction, which included executing a deed of trust securing the consolidation loan under the authority of two Specific Powers of Attorney, one signed by Gary and the other purportedly signed by Maria. A joint check for $30,286 was issued to Maria and Gary upon closing on the consolidation loan.

In October 2006, Howard Bierman, Jacob Geesing, Carey Ward, and Ralph DiPietro, substitute trustees on behalf of Countrywide Mortgage (collectively, the Trustees), filed a complaint and an order to docket, initiating a foreclosure action the property.

After the foreclosure sale, Maria filed exceptions raising the defense of fraud. In June, 2007, the circuit court sustained the exceptions and set aside the sale. The Trustees then filed a motion to alter or amend and/or revise judgment, stating that the court failed to address the Trustees’ equitable subrogation argument at the June hearing.

A hearing on the issue of equitable subrogation was held in December 2007. The circuit court ordered that the property was subjected to an equitable lien in the amount of $170,284 in favor of the Trustees.

The Trustees appealed to the Court of Special Appeals, which affirmed.

LAW: Rule 14-202(a) authorizes a lender, under power of sale or assent to decree, to initiate foreclosure on real or personal property upon default without the necessity of a prior court order. Like the instant case, “[a]n action to foreclose a lien pursuant to a power of sale shall be commenced by filing an order to docket.” Rule 14-204(a). A foreclosure action under a power of sale does not begin with the filing of a complaint and the opportunity for the defendant to respond by answer.

The court becomes involved in a foreclosure action only after the sale is completed. Within this 30-day period, a party may file exceptions to the ratification of the sale. After the filing of exceptions, the court then determines if a hearing is necessary, but “it may not set aside a sale without a hearing,” and must hold a hearing if one is requested and the exceptions “clearly show a need to take evidence.” Rule 14-305(d)(2). A court will ratify the sale if the time for filing exceptions “has expired and exceptions to the report either were not filed or were filed but overruled, and…the court is satisfied that the sale was fairly and properly made.” Rule 14-305(e).
Here, the Trustees argument that Maria needed to file for a pre-sale injunction to raise the substantive challenge of fraud ignored the historical context of Maryland’s foreclosure rules and the cases interpreting those rules. Maria’s ability to attack the validity of the deed of trust securing the consolidation loan was not limited to a motion to stay the foreclosure sale under Rule 14-209(b). See Fisher v. Federal National Mortgage Association, 360 F. Supp. 207, 211 (D. Md. 1973).

She could, and did, raise this issue as an exception to the ratification of the foreclosure sale under Rule 14-305. Id. As an equity court, the trial court had full power to hear and determine all objections to the foreclosure sale, “which would naturally include an attack on the validity of the mortgage.” Wilson Brothers v. Cooey, 251 Md. 350, 360 (1968). Wilson Bros., 251 Md. at 360; see Albert, 76 Md. at 307-08. Thus, the trial court did not err in sustaining Maria’s exceptions to the foreclosure sale on the ground that the deed of trust securing the consolidation loan was invalid.

Accordingly, the judgment of the circuit court was affirmed.

COMMENTARY: The Trustees contended that the “circuit court’s failure to grant equitable subrogation with respect to the Irwin Home Equity deed of trust and the cash paid at closing was error.”

Maryland recognizes three categories of subrogation: legal, conventional, and statutory. Hill v. Cross Country Settlements, LLC, 402 Md. 281, 311 (2007). Legal subrogation, which was the category at issue here, “arises by operation of law when there is a debt or obligation owed by one person which another person, who is neither a volunteer nor an intermeddler, pays or discharges under such circumstances as in equity entitle him to reimbursement to prevent unjust enrichment.” Id. at 311-12.

Subrogation involves the “substitution of one person to the position of another, an obligee, whose claim he has satisfied.” Id. at 312. The substituted person, however, “can exercise no right not possessed by his predecessor, and can only exercise such right under the same conditions and limitations as were binding on his predecessor.” Id. at 313. Accordingly, subrogation “requires an underlying and independent legal basis upon which [a party] may assert its claims.” Id. at 314.

Here, Maria testified that the signature on the Irwin loan was not hers and that she did not find out about the loan until June 2006, a year after its execution. The Trustees did not offer any evidence to dispute Maria’s testimony. The circuit court thus correctly concluded that Trustees failed to sustain their burden of proving that the deed of trust was a valid lien because a “valid grant of an interest in real property, including a security interest, requires that the instrument be executed by the grantor.” Consequently, the Trustees were not entitled to an equitable lien on the property for the Irwin loan because such loan, as an invalid lien, could not be enforced against Maria by either Trustees or by the original mortgagee.

PRACTICE TIPS: Under equitable subrogation, in the context of priorities among lien holders, “one who pays the mortgage of another and takes a new mortgage as security will be subrogated to the rights of the first mortgagee as against any intervening lien holder.” G.E. Capital Mortgage Services v. Levenson, 338 Md. 227, 237-38 (1995).