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Bank of New York Mellon v. Ashley

United States District Court, D. Maryland

March 14, 2016

THE BANK OF NEW YORK MELLON
v.
HOLLY G. ASHLEY, et al.

MEMORANDUM OPINION AND ORDER

DEBORAH K. CHASANOW UNITED STATES DISTRICT JUDGE

Presently pending and ready for resolution in this priority of liens case are: (1) a motion for consent judgment as to Defendants Holly G. Ashley and Michael Ashley filed by Plaintiff Bank of New York Mellon (“Plaintiff”) (ECF No. 28); and (2) Plaintiff’s joint motion establishing priority of liens as to Defendant State of Maryland, Comptroller of Maryland (the “Maryland Comptroller”) (ECF No. 32). For the following reasons, Plaintiff’s motion for consent judgment as to Defendants Holly G. Ashley and Michael Ashley will be denied without prejudice to renewal. Plaintiff’s joint motion establishing priority of liens as to the Maryland Comptroller will be granted, except that the order of judgment will not be entered until the entire case is resolved.

I. Background

A. Factual Background

Pursuant to a deed (the “Coscan Deed”) dated October 5, 1999, the real property known as 2902 Matapeake Drive, Upper Marlboro, Maryland (the “Property”), was conveyed to Mrs. Ashley. The Coscan Deed was recorded. (ECF No. 43 ¶ 9). On or about December 18, 2000, Mrs. Ashley was granted a loan in the amount of $16, 989.19 from CitiFinancial, Inc. (“CitiFinancial”). She executed a deed of trust (the “CitiFinancial DOT”), which was recorded. (Id. ¶ 10). Pursuant to a deed dated November 24, 2003, Mrs. Ashley conveyed the Property to herself and Mr. Ashley as tenants by the entirety (the “Ashley Deed”). The Ashley Deed was recorded. (Id. ¶ 11).

On January 13, 2004, a certificate of satisfaction was executed and recorded concerning the CitiFinancial DOT (the “CitiFinancial Release”), but the CitiFinancial Release references the wrong liber and folio for the CitiFinancial DOT. (Id. ¶ 12). On or about December 22, 2004, Mr. and Mrs. Ashley were granted a refinance loan from WMC Mortgage in the amount of $400, 000.00. Both Mr. and Mrs. Ashley executed a deed of trust (the “WMC DOT”), which was recorded. This loan paid off an existing $337, 500.00 mortgage lien. (Id. ¶ 13). On or about July 13, 2005, Mr. and Mrs. Ashley were granted another refinance loan from WMC Mortgage in the amount of $475, 000.00 (the “Subject Loan”). The Subject Loan was funded and a closing was conducted in the ordinary course of the loan. Disbursement of the proceeds went to pay off the WMC DOT. (Id. ¶¶ 14-15).

Plaintiff alleges that both Mr. and Mrs. Ashley promised WMC Mortgage that the repayment of the Subject Loan would be secured by a first-priority lien on and against the Property. Mr. Ashley - but not Mrs. Ashley - executed the corresponding deed of trust (the “Subject DOT”), which was recorded. (Id. ¶¶ 16-17). Pursuant to a deed dated June 5, 2007, Mr. and Mrs. Ashley conveyed the Property to the Ashley Family Trust, and that deed was recorded. Finally, on December 21, 2012, the Ashley Family Trust conveyed the Property to Mr. Ashley, and that deed was also recorded. (Id. ¶¶ 19-20). Plaintiff is the successor in interest to WMC Mortgage and, accordingly, the current holder of the Subject Loan and beneficiary of the Subject DOT. (Id. ¶ 21).

B. Procedural History

On September 12, 2014, Plaintiff filed a complaint requesting that the court determine the priority of liens against the Property. (ECF No. 1). The Clerk of Court entered default against Defendants CitiFinancial, Trustee Nancy J. Liberto, and Trustee Betty Lou Crumrine for their failure to plead or otherwise defend as directed in the summonses and as provided by the Federal Rules of Civil Procedure. (ECF Nos. 12; 14; 16). In addition, the court dismissed Count IV of Plaintiff’s original complaint. (ECF No. 19).

Plaintiff filed a motion for consent judgment as to Mr. and Mrs. Ashley. (ECF No. 28). The United States filed a response in opposition, arguing that time should be given to conduct discovery or obtain information from the parties before it will concede or object to the relief sought by Plaintiff. (ECF No. 31, at 1). The court also issued correspondence proposing not to enter any judgment until the entire case can be resolved. (ECF No. 29). Shortly thereafter, Plaintiff filed a joint motion to establish the priority of liens as to the Maryland Comptroller, indicating that the Maryland Comptroller agrees that the Subject DOT is senior and superior to the state tax liens. (ECF No. 32 ¶¶ 9, 10).

On April 29, 2015, in light of the procedural posture of this case, the court extended the discovery period. (ECF No. 33). The parties subsequently filed three joint motions to extend discovery. (ECF Nos. 35; 37; 39). Plaintiff filed an amended complaint on October 29. (ECF No. 43). The United States answered on December 21. (ECF No. 47). Recent court orders extended discovery to February 19, 2016. (ECF Nos. 46; 49).

The six-count amended complaint asserts claims against four groups of interested parties: (1) Mr. and Mrs. Ashley (the owners of the Property); (2) CitiFinancial, and Ms. Crumrine and Ms. Liberto as trustees (concerning the now-discharged CitiFinancial DOT); (3) the United States Department of the Treasury and Internal Revenue Service (“IRS”) (collectively, the “United States”); and (4) the Maryland Comptroller. Plaintiff seeks: declaratory relief determining that it holds a first-priority lien on the Property (Count I); a determination that it holds a first-priority lien by reason of equitable subrogation (Count II); to use quiet title again to determine the owner of the Property and hold that the Subject DOT constitutes a valid first-priority lien (Count III); to obtain a decree reforming the Subject DOT to include the signature of Mrs. Ashley (Count IV);[1] to obtain a constructive trust in its favor (Count V); and to obtain an equitable mortgage against the Property as of July 13, 2005 (Count VI). (ECF No. 43).

II. Analysis

This case involves a dispute over the priority of liens concerning the Property. At bottom, Plaintiff maintains that it is the current holder of a loan that purportedly was to be secured by a first-priority lien on and against the Property. CitiFinancial and its trustees are in default (ECF Nos. 12; 14; 16), and thus do not contest that the CitiFinancial DOT has been paid and satisfied ...


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