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Allstate Mortgage & Co. v. Mayor & City Council of Baltimore City

Court of Special Appeals of Maryland

September 25, 2013

ALLSTATE MORTGAGE & COMPANY
v.
MAYOR & CITY COUNCIL OF BALTIMORE CITY

Zarnoch, Berger, Moylan, Charles E., Jr. (Retired, Specially Assigned), JJ.

OPINION

Berger, J.

This case arises from a tax sale foreclosure in the Circuit Court for Baltimore City. On October 7, 2011, appellant, Barbara Frank, t/a Allstate Mortgage & Company ("appellant"), filed a "Petition for Proper Payment of Surplus Proceeds and Statement of Claim" regarding real property known as 2335-2355 West Franklin Street ("the Property"). On March 5, 2012, the trial court held a hearing on appellant's petition. Following an initial hearing, the court ordered several witnesses subpoenaed for a later hearing on the matter. The second hearing was held on May 2, 2012. Thereafter, the court denied appellant's petition.

Appellant filed a timely appeal and presents one issue for our review, which we rephrase as follows:

Whether the circuit court erred in denying appellant's petition for proper payment of surplus proceeds and statement of claim.[1]

For reasons discussed below, we affirm the judgment of the Circuit Court for Baltimore City.

FACTS AND PROCEEDINGS

By a deed dated July 25, 1997, Opportunity Plus Investment Company, LLLP ("Opportunity Plus")[2] acquired the Property in Baltimore City for the purchase price of $150, 000.00. The purchase of the Property was financed, in part, by a loan from the sellers in the amount of $123, 490.58 secured by a mortgage on the Property that was executed by "Opportunity Plus Investment Company, LLLP / By: Darryl M. Coleman, General Partner." By an assignment of mortgage dated November 27, 2007, the mortgage on the Property was purchased by Allstate Mortgage & Company ("Allstate Mortgage") -- a proprietorship solely owned by Barbara Frank ("Frank").

On or about May 18, 2009, following a tax sale of the Property, Baltimore City issued a tax sale certificate to ETS Maryland, LLC ("ETS Maryland"). On February 16, 2010, ETS Maryland filed a complaint to foreclose rights of redemption on the Property, naming Opportunity Plus, the Property's record title owner, as the defendant. Appellant was named a co-defendant, which at the time, held a mortgage secured by the Property. Thereafter, the tax sale certificate was purchased by 2335 Franklin, LLC ("2335 Franklin") -- the sole member of which was Frank. On September 2, 2010, 2335 Franklin was substituted as the plaintiff in the action.

On February 2, 2011, the circuit court issued a judgment foreclosing the right of redemption in favor of 2335 Franklin. As a result, Baltimore City conveyed the Property to 2335 Franklin by deed dated April 15, 2011, which was recorded on June 1, 2011. On June 6, 2011, Asset Recovery Advisors, LLC ("Asset Recovery"), [3] acting on behalf of Coleman, filed a claim with Baltimore City's Finance Department for payment as the "person entitled" under Md. Code (2011), § 14-818(a)(4) of the Tax-Property Article ("TP") to the "balance over the amount required for the payment of taxes, interest, penalties, and costs of sale." On June 13, 2011, the Baltimore City Finance Department paid the surplus amount of $72, 112.80 by check payable to "Darryl Coleman/Asset Recovery."

On October 7, 2011, appellant filed a petition for proper payment of surplus proceeds and statement of claim. In denying appellant's petition, the court explained:

We have a mortgag[ee] who says they should have gotten some money from the surplus of the tax sale. We have the City that already paid out the money to whom they believed based upon information given to them was the proper person.
* * *
Mr. Coleman, for all the City knew in the information they had, especially since he's the only person -- I looked at that State tax thing, he's the only person listed. He's the resident agent. There are no other people listed for this Opportunity Plus Investment Company. So that's who the City knew, based on a document that the State, was an authorized person for Opportunity Plus Investment Company, LLLP, which was in forfeit status for not just 60 days, 90 days or a year, but for like almost eight years when this happened. So no one is supposed to guess, and that shouldn't be what any clerk should have to do, "Oh, maybe this company has a new president" or "Maybe somebody is there, " that's just too much guesswork. They're forfeited. He's listed a resident agent. He's come in. They're entitled. Asset Recovery is the company that has found this, and the City cut the check.
Whether or not Mr. Coleman acted in good faith, and that's why fraud was mentioned, or gave misinformation is not the determining factor here, but what the City had in front of it, whether or not -- it's like other administrative ...

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