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McLaughlin v. Ward

Court of Special Appeals of Maryland

January 30, 2019

JAMES MCLAUGHLIN, ET AL.
v.
CARRIE WARD, ET AL., SUBSTITUTE TRUSTEES

          Circuit Court for Baltimore County Case No. 03-C-17-003847

          Graeff, Arthur, Harrell, Glenn T., Jr. (Senior Judge, Specially Assigned), JJ.

          OPINION [*]

          ARTHUR, J.

         On January 21, 2015, a property was sold at a foreclosure sale, but the Circuit Court for Baltimore County declined to ratify the sale because of deficiencies in the affidavit of service. The trustees decided that they could not remedy the defects, so they dismissed the foreclosure case. Before the case was dismissed, however, the thwarted purchaser, appellant Dominion Rental Holdings, LLC ("Dominion"), made improvements to the property. Dominion took no action to challenge the dismissal or to assert a claim for reimbursement or for a credit for the improvements.

         In a new foreclosure action, Dominion acquired rights in the property at a foreclosure sale on September 7, 2017, but it paid a higher price, allegedly because of the enhanced value attributable to the improvements that it had made. It filed exceptions to the sale and a motion to abate the purchase price, arguing that it should not be required to pay the increased cost.

         In an order docketed on October 27, 2017, the court denied the exceptions and the motion to abate. Dominion promptly noted an appeal, without waiting for the ratification of the sale. It did not note another appeal after the ratification of the sale.

         We must dismiss the appeal, because it is premature. Dominion noted the appeal before the entry of a final judgment, and no exceptions to the final judgment rule apply. Consequently, we lack appellate jurisdiction.

         Generally, parties may appeal only upon the entry of a final judgment. See Md. Code (1974, 2013 Repl. Vol.), § 12-301 of the Courts and Judicial Proceedings Article. One of the necessary elements of a final judgment is that the order must adjudicate or complete the adjudication of all claims against all parties. See, e.g., Waterkeeper Alliance, Inc. v. Maryland Dep't of Agric., 439 Md. 262, 278 (2014) (citing Rohrbeck v. Rohrbeck, 318 Md. 28, 41 (1989)); Zilichikhis v. Montgomery County, 223 Md.App. 158, 171-72 (2015). In other words, the judgment "must leave nothing more to be done in order to effectuate the court's disposition of the matter." Rohrbeck v. Rohrbeck, 318 Md. at 41.

         "[A] ruling must ordinarily have the following three attributes to be a final judgment: (1) it must be intended by the court as an unqualified, final disposition of the matter in controversy[;] (2) unless the court acts pursuant to Maryland Rule 2-602(b) to direct the entry of a final judgment as to less than all of the claims or all of the parties, it must adjudicate or complete the adjudication of all claims against all parties; [and] (3) it must be set forth and recorded in accordance with Rule 2-601." Metro Maint. Sys. South, Inc. v. Milburn, 442 Md. 289, 298 (2015) (citing Rohrbeck v. Rohrbeck, 318 Md. at 41); Maryland Bd. of Physicians v. Geier, 225 Md.App. 114, 129-30 (2015).

         "This Court has jurisdiction over an appeal when the appeal is taken from a final judgment or is otherwise permitted by law, and a timely notice of appeal was filed." Doe v. Sovereign Grace Ministries, Inc., 217 Md.App. 650, 661 (2014). If we lack appellate jurisdiction, however, we must dismiss an appeal. See Md. Rule 8-602(b) (2019); Zilichikhis v. Montgomery County, 223 Md.App. at 172. "[W]e can raise the issue of finality on our own motion." Zilichikhis v. Montgomery County, 223 Md.App. at 172.

         In a foreclosure case, a court does not enter a final judgment at least until it has ratified the foreclosure sale. See Balt. Home Alliance, LLC v. Geesing, 218 Md.App. 375, 383 & n.5 (2014); Md. Rule 14-305(e); see also Hughes v. Beltway Homes, Inc., 276 Md. 382, 384 (1975) (stating that an order ratifying a foreclosure sale is a judgment because it is an order of the court final in its nature). Moreover, if the court refers the matter to an auditor to state an account, as it may under Rule 14-305(f), it may not enter a final judgment until it has adjudicated any exceptions to the auditor's report. See Balt. Home Alliance, LLC v. Geesing, 218 Md.App. at 383 n.5.

         This case illustrates why the final judgment in a foreclosure proceeding does not occur at least until the court ratifies the sale. Here, Dominion acquired an inchoate equitable interest in the property in the first foreclosure sale, and there were either no exceptions or no successful exceptions to that sale. Yet the court declined to ratify the first sale because of defects unrelated to the sale itself - problems with service at the outset of the case, which the trustees determined to be incurable. Had the court declined to ratify the second sale after Dominion appealed from the denial of its exceptions, the appeal would have become completely superfluous: it would make no difference whether the court erred or abused its discretion in denying Dominion's exceptions if the court ultimately declined to ratify the sale on other, different grounds.

         Furthermore, if the final judgment in a foreclosure proceeding could occur before the court ratifies the sale, there could be more than one final judgment in a single proceeding. It is conceivable that more than one party could file exceptions to the foreclosure sale: for example, both a homeowner and a junior lienholder might file exceptions. Yet, if the court ruled separately on each exception, and if the denial of each of the exceptions were considered to be a final, appealable judgment, then both of the exceptants could take their own, separate appeal. That result would obviously be in some tension with "Maryland's long-established policy against piecemeal appeals." Waterkeeper Alliance, Inc. v. Md. Dep't of Agric., 439 Md. at 278.

         As of the date of Dominion's appeal in this case, the circuit court had neither ratified the foreclosure sale, nor referred the matter to an auditor, nor adjudicated any exceptions to an auditor's report. Dominion, therefore, has taken a premature appeal, before the entry of a final judgment. Because we acquire no appellate jurisdiction over a premature appeal (see Doe v. Sovereign Grace Ministries, ...


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