United States District Court, D. Maryland
DEBORAH K. CHASANOW, United States District Judge
pending and ready for resolution in this priority of liens
case are: (1) a motion for partial summary judgment filed by
Defendants United States Department of the Treasury and
Internal Revenue Service (collectively, the “United
States”) (ECF No. 54); and (2) a cross motion for
partial summary judgment filed by Plaintiff Bank of New York
Mellon, f/k/a the Bank of New York, as Trustee for the
Holders of GE-WMC Asset-Backed Pass-Through Certificates,
Series 2005-1 (“BONY”) (ECF No. 57). The issues
have been briefed and the court now rules, no hearing being
deemed necessary. Local Rule 105.6. For the following
reasons, both motions will be granted in part and denied in
case involves the question of the priority of liens in the
real property known as 2902 Matapeake Drive, Upper Marlboro,
Maryland (the “Property”). Pursuant to a deed
dated October 5, 1999, the Property was conveyed by recorded
deed to Defendant Holly G. Smith, n/k/a Holly G. Ashley. (ECF
No. 57-3). Pursuant to a recorded deed dated November 24,
2003, Mrs. Ashley conveyed the Property to herself and
Defendant Michael Ashley, her husband, as tenants by the
entirety. (ECF No. 57-4).
December 22, 2004, Mr. and Mrs. Ashley refinanced their
mortgage on the Property using proceeds obtained from a loan
granted by WMC Mortgage in the amount of $400, 000 (the
“Prior Loan”) in exchange for a deed of trust to
the Property (the “Prior DOT”). (See ECF
No. 63-2). Both Mr. and Mrs. Ashley were signatories to the
Prior Loan, which paid off an existing $337, 500.00 mortgage
lien; both Mr. and Mrs. Ashley were identified as grantors on
the Prior DOT; and both Mr. and Mrs. Ashley executed the
Prior DOT. The Prior DOT was recorded in the land records of
Prince George's County on July 7, 2005. (Id.).
On July 5, 2005, Mr. Ashley applied for and was granted a
refinance loan from WMC Mortgage in the amount of $475, 000
(the “Subject Loan”). (ECF No. 63-4). 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 Prior DOT, in the amount of $405, 450.06. (ECF No.
57-6). Mr. Ashley - but not Mrs. Ashley - was identified as a
grantor on the corresponding deed of trust (the
“Subject DOT”), which Mr. Ashley executed on July
14. (ECF No. 63-3). The Subject DOT was recorded on December
21, 2005. (Id. at 1). BONY is the successor in
interest to WMC Mortgage and, accordingly, the current holder
of the Subject Loan and beneficiary of the Subject
(ECF No. 43 ¶ 21).
5, 2007, Mr. and Mrs. Ashley together conveyed the Property
to the Ashley Family Trust by recorded deed (the “Trust
DOT”). (ECF No. 57-10). Under the terms of the Ashley
Family Trust, both Mr. Ashley and Mrs. Ashley held an
undivided 50% interest in the Property. (ECF No. 57-11 at
8-9). On November 5, 2012, the United States filed Notices of
Federal Tax Liens in the amount of $428, 227.50, noticed on
October 11, 2012 and assessed on December 12, 2011, as to Mr.
and Mrs. Ashley. (ECF No. 54-5). Finally, on December 21,
2012, the Ashley Family Trust conveyed the Property to Mr.
Ashley by recorded quitclaim deed. (ECF No. 57-12).
filed this action requesting that the court determine the
priority of liens against the Property on September 12, 2014.
(ECF No. 1). The operative amended complaint was filed on
October 29, 2015. (ECF No. 43). The six-count amended
complaint asserts claims against four groups of interested
parties: (1) Mr. and Mrs. Ashley; (2) CitiFinancial, Trustee
Nancy J. Liberto, and Trustee Betty Lou Crumrine (concerning
a now-discharged CitiFinancial deed of trust dated December
18, 2000 (the “CitiFinancial DOT”)); (3) the
United States; and (4) the State of Maryland, Comptroller of
Maryland (“Maryland Comptroller”). BONY 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 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); 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).
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). Accordingly,
CitiFinancial and its trustees do not contest that the
CitiFinancial DOT has been paid and satisfied and that any
error in its release does not affect BONY's interest.
(See ECF Nos. 43 ¶ 4; 53, at 6). The court also
previously granted a joint motion establishing the priority
of liens as to the Maryland Comptroller, but ordered that the
order of judgment would not be entered until the entire case
was resolved. (ECF No. 53).
previously filed a motion for consent judgment as to Mr. and
Mrs. Ashley (ECF No. 28), which the United States opposed
(ECF No. 31). The consent motion, inter alia, would
have provided that the Subject DOT is equitably subrogated to
the position and priority of the Prior DOT and the
CitiFinancial DOT, and that Mr. and Mrs. Ashley intended for
the Subject DOT to be a first-priority deed of trust against
the Property. (ECF No. 28-1, at 2). On March 14, 2016, the
court denied the consent motion without prejudice to its
renewal because its resolution would have affected the
priority of the United States' tax liens. Mr. and Mrs.
Ashley answered the amended complaint on June 23. (ECF No.
72). In their answer, they request that the court enter
judgment in favor of BONY establishing that the Subject DOT
is the first-priority lien on the property. (Id.).
United States answered the amended complaint on December 21,
2015 (ECF No. 47), and filed the instant motion for partial
summary judgment on March 21, 2016 (ECF No. 54). Plaintiff
filed its cross motion for partial summary judgment on April
20. (ECF No. 57). The United States filed a response in
opposition and reply in support of its motion (ECF No. 63),
and Plaintiff replied (ECF No. 68).
Standard of Review
motion for summary judgment will be granted only if there
exists no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law.
See Fed.R.Civ.P. 56(a); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986); Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986);
Emmett v. Johnson, 532 F.3d 291, 297 (4th
Cir. 2008). Summary judgment is inappropriate if any material
factual issue “may reasonably be resolved in favor of
either party.” Liberty Lobby, 477 U.S. at 250;
JKC Holding Co. v. Wash. Sports Ventures, Inc., 264
F.3d 459, 465 (4th Cir. 2001).
moving party bears the burden of showing that there is no
genuine dispute as to any material fact. If the nonmoving
party fails to make a sufficient showing on an essential
element of its case as to which it would have the burden of
proof, however, then there is no genuine dispute of material
fact. Celotex, 477 U.S. at 322-23. Therefore, on
those issues on which the nonmoving party has the burden of
proof, it is that party's responsibility to confront the
summary judgment motion with an “affidavit or other
evidentiary showing” demonstrating that there is a
genuine issue for trial. See Ross v. Early, 899
F.Supp.2d 415, 420 (D.Md. 2012), aff'd, 746 F.3d
546 (4th Cir. 2014). “A mere scintilla of
proof . . . will not suffice to prevent summary
judgment.” Peters v. Jenney, 327 F.3d 307, 314
(4th Cir. 2003). “If the evidence is merely
colorable, or is not significantly probative, summary
judgment may be granted.” Liberty Lobby, 477
U.S. at 249-50 (citations omitted). In other words, a
“party cannot create a genuine dispute of material fact
through mere speculation or compilation of inferences.”
Shin v. Shalala, 166 F.Supp.2d 373, 375 (D.Md. 2001)
(citation omitted); see Bouchat v. Balt. Ravens Football
Club, Inc., 346 F.3d 514, 522 (4th Cir.
2003). Indeed, this court has an affirmative obligation to
prevent factually unsupported claims and defenses from going
to trial. See Drewitt v. Pratt, 999 F.2d 774, 778-79
(4th Cir. 1993). At the same time, the court must
construe the facts that are presented in the light most
favorable to the party opposing the motion. Scott v.
Harris, 550 U.S. 372, 378 (2007); Emmett, 532
F.3d at 297.
cross-motions for summary judgment are before a court, the
court examines each motion separately, employing the familiar
standard under Rule 56 of the Federal Rules of Civil
Procedure.” Desmond v. PNGI Charles Town Gaming,
LLC, 630 F.3d 351, 354 (4th Cir. 2011). The
court must deny both motions if it finds there is a genuine
dispute of material fact, “[b]ut if there is no genuine
issue and one or the other party is entitled to prevail as a
matter of law, the court will render judgment.” 10A
Charles A. Wright, et al., Federal Practice &
Procedure § 2720 (3d ed. 1998).
United States moves for summary judgment against BONY on the
ground that it has a first-priority lien senior to the
Subject DOT against 50% of the Property. (ECF No. 54). BONY
opposes the United States' motion and cross moves for
summary judgment on Count II (Equitable Subrogation), Count V
(Constructive Trust), and Count VI (Equitable Mortgage) of
the amended complaint. (ECF No. 57). BONY argues that it
enjoys a first-priority lien against 50% of the Property
pursuant to the after-acquired property doctrine, and in
addition, that it should enjoy a first-priority lien as the
remaining 50% of the Property under equitable doctrines.
law governs the priority of federal tax liens, which are
created pursuant to 26 U.S.C. § 6321 et seq.
Aquilinov. United States, 363 U.S. 509, 512
(1960); Collier v. United States, 432 F.3d 300, 304
(4th Cir. 2005). “The threshold question . .
. is whether and to what extent the taxpayer had
‘property' or ‘rights to property' to
which the tax lien could attach, ” and “both
federal and state courts must look to state law” to
answer this question. Aquilino, 363 U.S. at 512-513.
If the taxpayer had property or property rights to which the
tax lien could attach, then priority must be determined under
federal law. “Federal tax liens do not automatically
have priority over all other liens. Absent provision to the
contrary, priority for purposes of federal law is ...