United States District Court, D. Maryland
Xinis United States District Judge.
March 28, 2017, Plaintiff Pacific Union Financial, LLC
(“Pacific Union”) filed suit in Prince
George's County Circuit Court against Patrice Temukum,
Lemnue Valerie Fobi, the Secretary of the U.S. Department of
Housing and Urban Development (“HUD”), and
Waldorf Ford, Inc. (“Waldorf Ford”). ECF No. 2.
The case primarily concerns the reformation of a Deed of
Trust that conveyed a lien against real property located at
10109 Martin Avenue, Glenn Dale, Maryland 20769 (the
“Property”) to Pacific Union (the “Deed of
Trust”). See ECF No. 2 ¶¶ 1, 17. HUD
removed the action to this Court. ECF No. 1. Summonses were
served on Waldorf Ford on April 17, 2017. See ECF
Nos. 28, 35. On November 15, 2017, Pacific Union moved for
entry of default against Waldorf Ford pursuant to Federal
Rule of Civil Procedure 55(a). ECF No. 33. The Clerk entered
an order of default on November 17, 2017. ECF No. 35. On
March 28, 2018, Pacific Union moved for default judgment
against Waldorf Ford. ECF No. 39. Waldorf Ford has not filed
any response, and the time for doing so has passed.
See D. Md. Loc. R. 105.2.a. Pursuant to Local Rule
105.6, a hearing is not necessary. For the reasons stated
herein, Pacific Union's Motion for Default Judgment is
Court summarizes the facts as relevant to Pacific Union's
claim against Waldorf Ford. On September 3, 2009, Tamukum
obtained title to the Property. ECF No. 2 ¶ 10. On
February 22, 2013, Tamukum conveyed his interest in the
Property to himself and Fobi as tenants by the entireties.
ECF No. 2 ¶ 16. On June 6, 2014, Tamukum received a
refinance loan from Pacific Union in the amount of $382,
478.00 (the “Pacific Union Loan”), and executed a
deed of trust conveying a lien against the Property to
Pacific Union (the “Deed of Trust”), which was
duly recorded. ECF No. 2 ¶ 17. Although the Deed of
Trust identified both Tamukum and Fobi as grantors, and
although all parties intended that both Tamukum and Fobi
would execute the Deed of Trust, because of a mutual mistake
only Tamukum in fact executed the document. ECF No. 2 ¶
17. The proceeds of the Pacific Union Loan were used to
satisfy the balances of previous loans obtained by Tamukum in
relation to the Property. See ECF No. 2 ¶¶
11, 12, 13, 19. Then, on August 26, 2014, Waldorf Ford
recorded a Notice of Lien Judgment in the amount of $2, 000
against Tamukum and Fobi. ECF No. 2 ¶ 20.
Union brought suit against Tamukum, Fobi, HUD, and Waldorf
Ford, seeking (among other relief) to reform the Deed of
Trust to clarify that both Tamukum's and Fobi's
interests in the Property are subject to the Deed of Trust
and that both are bound by its terms; a declaration that the
reformed Deed of Trust is superior in priority to Waldorf
Ford's judgment; and a declaration that the previous
loans and associated deeds of trust obtained by Tamukum from
HUD had been satisfied and released. See ECF No. 2
at 5, 6.
November 15, 2017, Pacific Union moved for an entry of
default against Fobi and Waldorf Ford, which was granted. ECF
Nos. 33, 35. On November 17, 2017, Pacific Union dismissed
its claims against HUD. ECF No. 34. Subsequently, on March 8,
2018, Pacific Union, Tamukum, and Fobi filed a consent motion
for entry of a consent order, declaring that the Deed of
Trust is reformed as if both Tamukum and Fobi had executed
it, that the Deed of Trust is enforceable as to both
Tamukum's and Fobi's interests in the Property, and
that both Tamukum and Fobi are subject to the terms of the
Deed of Trust. ECF No. 37-1 at 1. The Court entered the
consent order on March 15, 2018. ECF No. 38. As such, the
only remaining defendant in the case is Waldorf Ford.
See ECF No. 38 at 2. In its Motion for Default
Judgment, Pacific Union seeks a declaration that the
now-reformed Deed of Trust is superior in priority to Waldorf
Ford's judgment lien. ECF No. 39 at 1. For the reasons
stated below, the Court will grant Pacific Union's
Rule of Civil Procedure 55(b) governs default judgments,
which may be entered by the Clerk “[i]f the
plaintiff's claim is for a sum certain or a sum that can
be made certain by computation, ” and the defendant is
in default for failing to appear. Fed.R.Civ.P. 55(b)(1). In
all other cases, Rule 55(b)(2) provides that “the party
must apply to the court for a default judgment.” The
Court may then “conduct hearings or make
referrals” if it is necessary to “(A) conduct an
accounting; (B) determine the amount of damages; (C)
establish the truth of any allegation by evidence; or (D)
investigate any other matter.” Fed.R.Civ.P. 55(b)(2).
Although “the Fourth Circuit has a strong policy that
cases be decided on the merits, ” default judgment
nevertheless “is available when the adversary process
has been halted because of an essentially unresponsive
party.” Disney Enters. v. Delane, 446
F.Supp.2d 402, 405 (D. Md. 2006) (internal quotation marks
and citations omitted). Whether to grant a default judgment
rests with the sound discretion of the Court. See SEC v.
Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005).
assessing the propriety of default judgment, the Court
engages in a two-step inquiry: First, the Court must decide
“whether the unchallenged facts” in the complaint
“constitute a legitimate cause of action.”
Agora Fin., LLC v. Samler, 725 F.Supp.2d 491, 494
(D. Md. 2010). Second, if the Court finds that the complaint
makes out a legitimate cause of action, the Court must then
“make an independent determination” as to
appropriate relief. See Id. In the case of a default
judgment that seeks declaratory relief, such relief is
appropriate “if the well-pleaded allegations of the
complaint establish the plaintiff's right to such
relief.” CitiMortgage, Inc. v. Holmes, No.
DKC-13-1641, 2015 WL 224944, at *2 (D. Md. Jan. 14, 2015).
Ford was served with a copy of the Complaint on April 17,
2017, and failed to respond. See ECF Nos. 28, 35.
Waldorf Ford also did not respond to Pacific Union's
motion for entry of default judgment, nor did it move to set
aside the Order of Default entered by the Clerk of the Court.
The Court will exercise its discretion to grant default
judgment in light of Defendants' failure to participate
in this case. See Educ. Credit Mgmt. Corp. v. Optimum
Welding, 285 F.R.D. 371, 373 (D. Md. 2012). Accordingly,
all of Pacific Union's factual allegations are deemed
admitted. Fed.R.Civ.P. 8(b)(6).
the well-pleaded facts of the Complaint as true, Pacific
Union has established that the Deed of Trust entered into on
June 6, 2014, and recorded on August 18, 2014, was intended
to be between Tamukum, Fobi, and Pacific Union, and to have
been executed by both Tamukum and Fobi. See ECF No.
2 ¶ 17. That Deed of Trust now has been reformed to
reflect this intention. ECF No. 38. The Complaint also sets
out that Waldorf Ford was a judgment creditor, and not a bona
fide purchaser for value. See ECF No. 2 ¶¶
facts suffice to show that the Deed of Trust is superior to
Waldorf Ford's judgment lien and, as such, that Pacific
Union is entitled to the declaratory judgment it requests.
The Deed of Trust was executed on June 6, 2014, and recorded
on August 18, 2014. See ECF No. 39-4 at 1, 8-10,
12-13. The reformation of the Deed of Trust relates back to
the date of the Deed of Trust itself. See In re
Madeoy, 551 B.R. 172, 176 (D. Md. 2016)
(“Normally, if a court reforms a contract, the
modification relates back to the date of the original
transaction.”). The reformation is effective as to all
persons except bona fide purchasers for value without notice.
See Hoffman v. Chapman, 182 Md. 208, 211 (1943);
In re Wilkinson, 186 B.R. 186, 190 (Bankr. D. Md.
1995). By contrast, a judgment creditor is not a
bona fide purchaser, and “a judgment creditor's
claim is subject to prior, undisclosed equities and must
stand or fall by the real, and not the apparent rights of the
defendant in the judgment.” In re Restivo Auto
Body, Inc., 772 F.3d 168, 178 (4th Cir. 2014) (internal
marks and citation omitted). Waldorf Ford obtained its
judgment lien on August 26, 2014, after the Deed of Trust was
executed and recorded. See ECF No. 39-5 at 1-2.
Thus, Waldorf Ford's interest is inferior in priority to
the Deed of Trust.