United States District Court, D. Maryland
REPORT AND RECOMMENDATION
MARK COULSON UNITED STATES MAGISTRATE JUDGE
Report and Recommendation addresses the Motion for Default
Judgment filed by Plaintiff, Federal National Mortgage
Association (“Fannie Mae”), against Defendants
Jana C. Small Holmes, Kristine Small, Rikki Drykerman, and
the Unknown Heirs at Law of Etherine Small. (ECF No. 22)
Defendants have not filed a response, and the time for doing
so has passed. See Loc. R. 105.2.a. On September 5,
2018, in accordance with 28 U.S.C. § 636 and Local Rules
301 and 302, Judge Chuang referred this case to me for a
report and recommendation on Plaintiff's Motion. I find a
hearing unnecessary. See Fed. R. Civ. P. 55(b)(2);
Loc. R. 105.6 (D. Md. 2014). I respectfully recommend that
the Court GRANT the Plaintiff's Motion for Default
FACTUAL AND PROCEDURAL HISTORY
1999, Dennis Small and Etherine Small purchased 1906 Linden
Avenue, Baltimore, Maryland 21217 (the
“property”) as joint tenants. (ECF No. 1). Less
than two years later, Dennis Small filed for Chapter 7
bankruptcy. Unbeknownst to Dennis and Etherine Small, this
bankruptcy severed the joint tenancy, leaving the two holding
the property as tenants in common.
September 25, 2003, Dennis and Etherine Small, as tenants in
common, granted a deed of trust on the property to secure a
loan of $124, 800 (the “First Deed of Trust”). On
August 23, 2006, Etherine Small died, causing her interest in
the property to pass to her heirs. Erroneously believing that
he acquired her interest through rights of survivorship and
therefore had full rights to the property, Dennis Small, on
November 16, 2006, granted a deed of trust to secure a $195,
000 refinance loan from BNC Mortgage, Inc. (the “Second
Deed of Trust”). BNC Mortgage paid off the holder of
the First Deed of Trust to obtain first lien priority. The
parties to the Second Deed of Trust never discovered Dennis
Small's bankruptcy and, as a result, did not realize that
he was unable to grant full interest in the property as
contemplated by the Second Deed of Trust.
January 8, 2008, Dennis Small granted yet another deed of
trust on the property to secure a $224, 600 refinance loan
from Countrywide Bank (the “Third Deed of Trust”)
that was used to pay off the Second Deed of Trust and ensure
first lien priority was maintained. As with the Second Deed
of Trust however, Dennis Small was the sole grantor such that
the Third Deed of Trust is also infirm. In the interim,
Countrywide Bank's interest in the Third Deed of Trust is
now with Plaintiff, and Dennis Small has died, with his
interest in the property in the hands of his estate's
personal representative, Defendant Rikki Drykerman. Etherine
Small's interest is held by the remaining Defendants.
9, 2017, Fannie Mae filed suit to clarify its rights under
the Third Deed of Trust. (ECF No. 1). Defendant Drykerman, on
behalf of Mr. Small's estate, was served on July 20,
2017. (ECF Nos. 1, 12). The Court permitted alternative
methods of service on the Defendant Unknown Heirs of Etherine
Small. (ECF No. 3). Service by posting on the property,
mailing process to the property, and by publication was
completed by May, 2, 2018. (ECF No. 13). In its endeavor to
identify and locate the heirs of Etherine Small, Plaintiff
identified two grandchildren: Kristine Small and Jana C.
Small Holmes. (ECF No. 3). The Court permitted alternative
service by first-class mail on Kristine Small and Jana C.
Small which was on completed on April 12, 2018. (ECF Nos. 10,
answer or responsive pleadings were filed within the
requisite time period. Upon the Plaintiff's Motion, the
Clerk entered an order of default against the Defendants on
May 24, 2018. (ECF Nos. 14-17). On June 11, 2018, Plaintiff
filed the pending Motion for Default Judgment. (ECF No. 22).
Plaintiff seeks an order declaring that the Third Deed of
Trust is equitably subrogated to the rights of the First Deed
of Trust to the extent it was satisfied - $120, 583.97. (ECF
Standard for Entry of Default Judgment
determining whether to award a default judgment, the Court
accepts as true the well-pleaded factual allegations in the
Complaint as to liability. Entrepreneur Media, Inc. v.
JMD Entm't Grp., LLC, 958 F.Supp.2d 588, 593 (D. Md.
2013) (citing Ryan v. Homecomings Fin. Network, 253
F.3d 778, 780 (4th Cir. 2001)). Nonetheless, the Court must
consider whether the unchallenged facts constitute a
legitimate cause of action because a party in default does
not admit mere conclusions of law. United States v.
Redden, No. 09-cv-2688-WDQ, 2010 WL 2651607, at *2 (D.
Md. June 30, 2012) (citing Ryan, 253 F.3d at 790).
Although the Fourth Circuit has a “strong policy that
cases be decided on the merits, ” United States v.
Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993),
default judgment “is appropriate when the adversary
process has been halted because of an essentially
unresponsive party.” S.E.C. v. Lawbaugh, 359
F.Supp.2d 418, 421 (D. Md. 2005). If the Court determines
that liability is established, the Court must then determine
the appropriate amount of damages or other relief. CGI
Fin., Inc., v. Johnson, No. 12-cv-1985-ELH, 2013 WL
1192353, at *1 (D. Md. Mar. 21, 2013). The Court does not
accept factual allegations regarding damages as true, but
rather must make an independent determination regarding such
allegations. Entrepreneur Media, Inc., 958 F.Supp.2d
Rule of Civil Procedure 55 establishes the Court's legal
framework for resolving this matter. “If, after entry
of default, the plaintiff's complaint does not specify a
‘sum certain' amount of damages, the court may
enter a default judgment against the defendant pursuant to
Fed.R.Civ.P. 55(b)(2).” Entrepreneur Media,
Inc., 958 F.Supp.2d at 593. A plaintiff's assertion
of a sum in a complaint does not make the sum
“certain” unless the plaintiff claims liquidated
damages; otherwise, the complaint must be supported by
affidavit or documentary evidence. Redden, 2010 WL
2651607, at *2. Rule 55(b)(2) provides that “the court
may conduct hearings or make referrals . . . when, to enter
or effectuate judgment, it needs to . . . determine the
amount of damages.” The Court is not required to
conduct an evidentiary hearing to determine damages; it may
rely on affidavits or documentary evidence in the record to
determine the appropriate sum. See, e.g., Mongue
v. Portofino Ristorante, 751 F.Supp.2d 789, 795 (D. Md.
doctrine of equitable subrogation provides “that one
who pays the mortgage of another and takes a new mortgage as
security will be subrogated to the rights of the first
mortgagee as against any intervening lienholder.”
G.E. Capital Mortg. Services, Inc. v. Levenson, 338
Md. 227, 237-38 (1995). Volunteers or intermeddlers are not
entitled to equitable subrogation, but if one “pays the
debtor's claim due to mistake or fraud, subrogation is
available.” Fishman v. Murphy ex rel. Estate of
Urban, 433 Md. 534, 552 (2013), citing Hill v. Cross
Country Settlements, LLC,402 Md. 281, 313 (2007).
Equitable subrogation “may apply even in the absence of
an express or implied agreement.” Id. at 553.
Importantly, this Court (in accordance with other
jurisdictions) has recently recognized that the doctrine may
be applied to a series of refinancing loans. See Wells
Fargo Bank, N.A. for Soundview Home Loan Tr. 2007-OPT1,
Asset-Backed Certificates, Series 2007-OPT1 v. First Am.
Title Ins. Co., CV WMN-15-2882, 2017 WL 3868693, at *6
(D. Md. ...