KYLE BLACKSTONE, ET AL.
DINESH SHARMA, ET AL. TERRANCE SHANAHAN, SUBSTITUTE.TRUSTEE, ET AL.
SEYED MARVASTIAN, ET AL.
Wright, Shaw Geter, Salmon, James P., (Senior Judge,
Specially Assigned) JJ.
consolidated appeal originates from two foreclosure cases
filed in the Circuit Court for Montgomery County. In both
cases, substitute trustees (collectively,
"appellants") acting on behalf of Ventures Trust
2013-I-H-R ("Ventures Trust"), a statutory trust
formed under the laws of the State of Delaware, filed orders
to docket foreclosure suits against homeowners in the State
of Maryland. The circuit court judges who considered the
cases dismissed the actions, determining that pursuant to the
Maryland Collection Agency Licensing Act ("MCALA"),
codified at Maryland Code (1992, 2015 Repl. Vol.), Business
Regulation Article ("B.R.") § 7-101, et
seq., Ventures Trust was required to be licensed as a
collection agency and, because Ventures Trust had not
obtained such a license, any judgment entered as a result of
the foreclosure actions would be void. The dismissal of these
foreclosure actions, without prejudice, presents us with two
1. Under the MCALA, does a party who authorizes a trustee to
initiate a foreclosure action need to be licensed as a
collection agency before filing suit?
2. If the answer to question one is in the affirmative, does
the licensing requirement apply to foreign statutory trusts
such as Ventures Trust?
shall answer "yes" to both questions and affirm the
judgments entered by the Circuit Court for Montgomery County.
August 4, 2006, Dinesh Sharma, Santosh Sharma, and Ruchi
Sharmas") executed a deed of trust that encumbered real
property in Potomac, Maryland, in order to secure a $1, 920,
000 loan. Washington Mutual Bank, FA was the lender. The
Sharmas, in December 2007, defaulted on the loan by failing
to make payments when due.
Trust, by its trustee MCM Capital Partners, LLC ("MCM
Capital"), acquired ownership and "all beneficial
interest" of the loan on October 9, 2013. The substitute
trustees appointed by Ventures Trust
filed an order to docket, initiating the foreclosure action,
on November 25, 2014. The Sharmas owed $3, 008, 536.23 on the
loan as of November 25, 2014.
Sharmas responded to the foreclosure action by filing a
counterclaim which was later severed by order of the circuit
court. They also filed a motion to dismiss or enjoin the
foreclosure sale pursuant to Md. Rule 14-211. The substitute trustees moved to strike
the Sharmas' motion, which the court granted on May 7,
2015. The Sharmas filed a motion to alter or amend the May
7th order. On June 22, 2015 the court vacated its
May 7th order, denied the substitute trustees' motion to
strike the Sharmas' motion to dismiss, and set a hearing
date for arguments concerning the motion to dismiss.
a hearing, the court, on August 28, 2015, issued an opinion
and order granting the motion to dismiss the foreclosure
action without prejudice. In its written opinion the circuit
court determined that, pursuant to the MCALA, Ventures Trust
was a collection agency and was therefore required to be
licensed before attempting to collect on the deed of trust.
The circuit court ruled that because Ventures Trust was not
licensed as a collection agency, it had no right to file a
foreclosure action. In its written opinion, the court also
rejected Ventures Trust's contention that it was a
"trust company" and was therefore exempt from
MCALA's licensure requirements. The substitute trustees
noted a timely appeal.
23, 2006, Seyed and Sima Marvastian executed a deed of trust
on property in Bethesda, Maryland in order to secure a $1,
396, 500 loan. Premier Mortgage Funding, Inc. was the lender.
The Marvastians defaulted on the loan by failing to make
payments when due in December 2012.
Trust by its trustee MCM Capital acquired the
Marvastians' loan in February 2014. On October 20, 2014,
the substitute trustees filed an order to docket, initiating
the foreclosure process. At the time of filing, the
substitute trustees alleged that the Marvastians owed $1,
632, 303.26 on the loan.
Marvastians responded by filing a counterclaim, which was
severed by order of the circuit court. They also filed a
motion to dismiss or stay the foreclosure sale pursuant to
Md. Rule 14-211. Following extensive briefing and a hearing,
the court granted the Marvastians' motion to dismiss,
albeit without prejudice. The judge's reasons for
dismissing the case were exactly the same as those given for
dismissing the foreclosure case that is the subject of Appeal
[B]efore a foreclosure sale takes place, the defaulting
borrower may file a motion to stay the sale of the property
and dismiss the foreclosure action. In other words, the
borrower, may petition the court for injunctive relief,
challenging the validity of the lien or . . . the right of
the [lender] to foreclose in the pending action. The grant or
denial of injunctive relief in a property foreclosure action
lies generally within the sound discretion of the trial
court. Accordingly, we review the circuit court's denial
of a foreclosure injunction for an abuse of discretion. We
review the trial court's legal conclusions de novo.
Hobby v. Burson, 222 Md.App. 1, 8 (2015) (internal
citations and quotation marks omitted). See also Svrcek
v. Rosenberg, 203 Md.App. 705, 720 (2012). In the two
cases that are the subject of this appeal, the trial judges
based their rulings on their legal conclusions. Thus we
review those conclusions de novo.
Finch v. LVNV Funding, LLC, 212 Md.App.
748, 758-64 (2013) we stated that without a license, a
collection agency has no authority to file suit against the
debtor. Accordingly, a "judgment entered in favor of an
unlicensed debt collector constitutes a void
judgment[.]" Id. at 764. See also Old
Republic Insurance v. Gordon, 228 Md.App. 1, 12-13
(2016) (footnote omitted).
Code B.R. § 7-101(c) defines a collection agency as
"Collection agency" means a person who engages
directly or indirectly in the business of:
(1)(i) collecting for, or soliciting from another, a consumer
claim; or (ii) collecting a consumer claim the person
owns, if the claim was in ...