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PNC Bank, National Association v. Braddock Properties

Court of Special Appeals of Maryland

December 18, 2013


Kehoe, Berger, Rubin, Ronald B. (Specially Assigned) JJ.


Kehoe, J.

This is an appeal from a judgment of the Circuit Court for Frederick County foreclosing the equity of redemption in a tax sale proceeding. The appellants are PNC Bank, N.A. ("PNC") and Sidney S. Friedman, Jeffrey M. Lippman, and William H. Thrush, Jr. (the "Substitute Trustees"). PNC was the beneficiary of a deed of trust encumbering the property in question and the Substitute Trustees, acting on behalf of PNC, were plaintiffs in an action to foreclose the deed of trust. The appellee is Braddock Properties, LLC ("Braddock"), the purchaser of the property at tax sale and the plaintiff in the redemption foreclosure action.

Appellants raise six questions for our review, which we have consolidated and reworded:

I. Did the circuit court have jurisdiction over PNC when it issued the decree foreclosing the equity of redemption on the property?
II. Was PNC a mortgagee of the tax sale property and thus entitled to be identified as a named defendant pursuant to Md. Code (1985, 2012 Repl. Vol.) § 14-836(b) of the Tax - Property Article ("TP")?
III. Did the circuit court err in denying the appellants' post-judgment motions?

We conclude that the circuit court had jurisdiction over PNC. PNC was not a mortgagee as that term is used in the tax sale statute. The post-judgment motions at issue are (1) appellants' motion to stay enforcement of the judgment pending appeal; (2) their motion to require Braddock to permit them to redeem the property; and (3) their motion for what in effect would have been a declaratory judgment as to their rights in the property. The circuit court did not err when it denied these motions. We will affirm the judgment of the circuit court.


The property at issue is a 14.3 acre tract located in Frederick County. In 2006, BBR Properties, L.L.C. ("BBR Properties") borrowed $395, 000 from Farmers and Merchants Bank ("F&M Bank") to purchase the property. Repayment of the loan was secured by a deed of trust on the property recorded in the land records of Frederick County. The deed of trust recited that F&M Bank was the beneficiary of the instrument.

In 2007, PNC acquired F&M Bank by merger, thereby succeeding to F&M's status as beneficiary. Subsequently, BBR Properties went into default on the loan and stopped paying taxes on the property. From this point, the record establishes the following sequence of events:

• May 10, 2010: Frederick County sold the property to appellee Braddock Properties L.L.C. ("Braddock") at a tax sale, subject to the equity of redemption.
• August 16, 2010: PNC filed in the Land Records of Frederick County a deed of appointment appointing the Substitute Trustees for the purpose of foreclosing the deed of trust.
• October 25, 2010: the Substitute Trustees filed a foreclosure action on behalf of PNC against the property.
• At some point (the exact date cannot be determined by the material in the Record Extract), PNC filed a collection action against BBR Properties and obtained a judgment. This judgment was a lien against the property.

On June 3, 2011, Braddock filed an action to foreclose the equity of redemption. The complaint named as defendants BBR Properties, Frederick County, and "all persons or entities that have or claim to have any interest in the property . . . ." but did not name either PNC or the Substitute Trustees. The complaint did, however, mention both PNC and F&M Bank, stating, in pertinent part, that:

A complete search of the Land Records of Frederick County, and the records of the Register of Wills for Frederick County, and of the Circuit Court for Frederick County . . . discloses the following: title is vested in BBR Properties LLC . . . by Deed dated June 6, 2006 . . . Deed of Trust among BBR Properties, LLC and Farmer's and Mechanic's Bank recorded in the Land Records of Frederick County . . .; Judgment Lien in favor of PNC Bank (Formerly Farmer's and Mechanic's Bank) as reflected in Frederick County, Maryland Circuit Court Case Number 10-C-10-002364 CJ . . . .

The complaint made no reference to the pending foreclosure proceedings or to the Substitute Trustees. No summons was issued to PNC, although it did receive a copy of the complaint by certified mail. The Substitute Trustees were not named as defendants in the complaint, nor was a summons or a copy of the complaint served on them.

On August 30, 2011, the circuit court entered a judgment foreclosing the equity of redemption on the property and instructing the Treasurer of Frederick County to convey the property to Braddock in fee simple.

On September 6, 2011, PNC and the Substitute Trustees filed a joint motion to vacate, alter, or amend judgment, arguing that (formatting altered):

[Appellants] were deprived of their interest in the subject property without due process of law; the Court never obtained jurisdiction over the [Appellants]; defects in the Decree and Complaint are fraud in these proceedings; pursuant to Maryland statute, [Appellants'] rights should not be affected by these proceedings; if the decree, as entered, is allowed to stand, then the rights of the [Appellants] will be irreparably prejudiced; [Appellants] are ready, able and willing to pay the amounts due to redeem the property from tax sale.

A hearing on the motion was held on October 20, 2011. The circuit court then issued a memorandum opinion and order on November 8, 2011 denying the motion as to PNC but granting it as to the Substitute Trustees. In denying relief to PNC, the circuit court stated (citations to the record omitted):

PNC Bank ("PNC") was not specifically named in the Complaint. BBR Properties and Frederick County were identified as specific defendants; all other persons and entities were identified as "all persons or entities that have or claim to have any interest..." On its face, this fails to comply with [Tax Property Article ("TP")] Section 14-836(b)(iii).
PNC was served with the Complaint pursuant to [TP] § 14-839(a)(4). PNC Bank is specifically listed as a party in interest ... despite not being named a defendant. An attorney representing PNC called Plaintiff regard[ing] redeeming the property in July 2011, requesting the amount of money necessary for redemption. The parties also exchanged at least one email about the right of redemption.
Proper service of process provided actual notice to PNC of the ongoing proceedings. Plaintiff provided a return receipt from the certified mail that was sent to PNC as well as an affidavit of service .... However, PNC admits that it did have actual notice of the proceedings and w[as] fully aware of its interest in the matter.
The notice's purpose is to assure that all parties with an interest in or right to property are given the opportunity to redeem the property before that right is foreclosed. In this case, although PNC was not named as a defendant as required by the Rules, it was provided with actual notice. To place form over ...

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