United States District Court, D. Maryland
WELLS FARGO BANK, N. A., Plaintiff;
MARIO HERNANDEZ ALCALA, et al, Defendants.
Xinis United States District Judge
before the Court is Plaintiff Wells Fargo's motion for
default judgment against Defendants, husband and wife, Mario
Hernandez Alcala (Alcala) and Sara Moreno (Moreno), seeking a
declaration of equitable mortgage and claim to a superior
lien on real property. ECF No. 32. The issues are fully
briefed, and the Court now rules pursuant to Local Rule 105.6
as no hearing is necessary. For the reasons set forth below,
the Court grants Plaintiff's motion for default Judgment,
finding that the parties created an equitable mortgage and
that Plaintiff maintains a superior Hen.
December 12, 2010, Alcala designated his wife as power of
attorney to purchase real property, described as 4504
Greenwood Road, Beltsville. Md., 20705 (the
"Property"). ECF No. 32-5. Moreno then obtained a
loan from Wells Fargo"s predecessor-in-interest.
Prosperity Home Mortgage ("Prosperity"), by
executing a promissory note, deed, and deed of trust in both
her own name and her husband's name as attorney-in-fact.
ECF No. 32-1 at 5-6. The deed of trust conveyed a lien
against the Property to Prosperity. ECF No. 32-9. The
documents were recorded among the land records for Prince
George's County except for the written power of attorney.
ECF No. 32-1 at 3. The original power of attorney document
cannot be located, although a certified copy of the power of
attorney has been submitted for this Court's review. ECF
No. 32-5. After Moreno and Alcala purchased the Property, the
United States of America filed tax liens against the
Property. ECF No. 32-1 at 4.
Fargo now seeks a declaration that an equitable mortgage was
created between It and Defendants, and that the mortgage is
superior to the federal tax liens. ECF No. 32 at 1.
STANDARD OF REVIEW
Rule of Civil Procedure 55(b)(2) permits the Court to enter
default judgment, in actions for declaratory relief, among
others. Citi Morlgage. Inc. v. Holmes, Case No.
DKC-13-1641, 2015 WL 224944, at *2 (D. Md. Jan. 14, 2015);
Fed, R. Civ. P. 55(b)(2). The entry of default judgment rests
with the sound discretion of the Court. SEC v.
Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005) (citing
Dow v. Jones, 232 F.Supp.2d 491. 494 (D. Md. 2002)).
'"the Fourth Circuit has a 'strong policy that
cases be decided on the merits, "' Disney
Enters, v. Delane, 446 F.Supp.2d 402. 405 (D. Md. 2006)
(quoting United Stales v. Shaffer Equip. Co., 11
F.3d 450. 453 (4th Cir. 1993)). "default judgment is
available when the 'adversary process has been halted
because of an essentially unresponsive party.""
Id. (quoting Lawbaugh, 359 F.Supp. at 421):
see also Park Corp. v. Lexington Ins. Co.. 812 F, 2d
894, 896 (4th Cir. 1987) (upholding a default judgment
awarded where the defendant lost its summons and did not
respond within the proper period); Disney Enters.,
446 F.Supp.2d at 405-06 (finding appropriate the entry of
default judgment where the defendant had been properly served
with the complaint and did not respond, despite repeated
attempts to contact him).
determine whether a default judgment is appropriate, the
Court engages in a two-step inquiry. First, the Court must
decide "whether the unchallenged facts in
plaintiff['s] 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 states a legitimate cause of action, it
must then "make an independent determination" as to
appropriate relief. Id. Declarator) relief is
appropriate if the well-pleaded allegations of the complaint
establish the plaintiffs right to such relief."
CitiMorlgage, Inc.. 2015 WL 224944, at *2. The Court
takes as true all well-pleaded factual allegations in the
complaint. Fed.R.Civ.P. 8(b)(6); see also Ryan v.
Homecomings Fin. Network. 253 F.3d 778. 780 (4th Cir.
2001) (''The defendant, by his default. admits the
plaintiffs well-pleaded allegations of fact, is concluded on
those facts by the judgment, and is barred from contesting on
appeal the facts thus established.").
mortgages do not conform with statutory requirements due to a
defect or deficiency in the instrument's execution, the
law recognizes that an equitable mortgage may nonetheless
have been created. Bank of America NA v. Burgess,
'Uo. 02574, 2017 WL 1461879 (Md. Ct. Sp. App. Apr.
25, 2017). An equitable mortgage is created where there
exists sufficient evidence of an intent to enter into an
agreement to convey property; the court may permit the
defective instrument to be construed as valid, Id.
Thus, a statutorily deficient instrument may be enforced
against a party that intended to create a lien against real
property. Adams v. Avirett, 252 Md. 566 (1969). The
doctrine applies where the intent of the parties is obvious,
and does not turn on technical aspects such as recordation.
Taylor Elec. Co. v. First Mariner Bank, 191 Md.App.
482, 498 (2010). An equitable mortgage is not created,
however, where a party executes the instrument without proper
legal authority. Wilkinson v. Wilkinson, 186 B.R.
186, 189-90 (D. Md. 1995).
the defect exists not in the mortgage itself, but in the
failure to record the power of attorney document, ECF No.
32-1 at 3. Plaintiff has provided numerous documents
demonstrating Defendants" intent to convey a Hen against
the Property to Plaintiff including: (I) the Deed; (2) the
Deed of Trust; (3) a copy of the Note; (4) an Affidavit
attesting to the authenticity of the validity of the Note;
and (5) a certified copy of the Power of Attorney. Each of
these documents, excluding the Affidavit, bears
Defendants' signatures, with Moreno signing for her
husband as attorney-in-fact.
addition, the certified copy of the written power of attorney
reflects Alcala's granting Moreno legal authority to
execute the mortgage. The power of attorney is titled
'Tor the purchase of real estate." and appoints
Moreno to act as Alcala's "attorney-in-fact" in
all matters related to the purchase of the Property, ECF No.
32-5 at 1. The document specifically empowers Moreno to
"execute, acknowledge, accept and deliver any Deed,
Contract. Lease, Note, Deed of Trust, Affidavit ... and any
other document that may ... be necessary" to purchase
the Property, Id. The document is stamped as a
"certified true copy." Id. Despite the
loss of the original power of attorney document, the
certified copy bears all the hallmarks of reliability, and
reflects the parties" intent to purchase real property
secured by a mortgage. Accordingly, the Court declares that
the parties have created an equitable mortgage.
also seeks a declaration that its lien is superior to other
lien holders. ECF No. 32 at 1. The Court has already
determined that to the extent an equitable mortgage exists,
the federal tax liens are inferior to it. ECF No. 31.
Accordingly the Court declares that ...