Opinion ID: 1899179
Heading Depth: 1
Heading Rank: 2

Heading: Water and Sewer Bill

Text: We first address appellants' challenge to the trial court's determination that the amount of the unpaid water and sewer bill, some $42,083.95, could not be deducted from the foreclosure sale proceeds. In doing so, the trial court relied upon D.C.Code § 45-717, which provides that where the foreclosing creditor is the purchaser at the foreclosure sale, the creditor is liable to pay to the trustee only the excess of the purchase money over his debt, together with such additional amount as may be necessary to defray the expenses of the sale. We think that the trial court erred in too narrowly reading the concept of debt in § 45-717 in concluding that the only proper deductions from the proceeds of the sale are any losses from managing the property during the period the `Estate'/'Concord' was `lender in possession,' plus actual foreclosure costs. Section 45-717 is a provision intended to allow a creditor who becomes the purchaser at a foreclosure sale to apply against the bid price the amount of the total indebtedness secured by the deed of trust, so that the creditor shall be obligated to turn over to the trustee only the amount of the bid price in excess of that indebtedness and the expenses of the foreclosure sale itself. However, the amount secured by the deed of trust may include not only the original loan but also any additional amounts secured pursuant to the terms of the deed of trust or other applicable instrument. Furthermore, § 45-717 deals only with the relationship between the creditor and the trustees and does not necessarily determine the amount that the trustees in turn may be obligated to release to the borrower or other claimants of any net surplus arising from the foreclosure sale. In this regard, the trial court's order, in its conclusions of law, appears to give no consideration to the effect of provisions of the deed of trust and the foreclosure agreement on the deductibility of the accrued water and sewer charges from the sale proceeds. Since there are numerous factual determinations that must be made relative to the interpretation of both contracts, [6] and because many of these determinations require the weighing of witness credibility, remand is appropriate. See Lenkin v. Beckman, 575 A.2d 273, 278 (D.C.1990) (ordering remand where resolution of disputed issues turns on the credibility of evidence and where additional legal questions would likely arise from new factual findings). As we read the record, there are three authorities that, depending on their construction, may affect the deductibility of the water and sewer charges from the sale proceeds. The first authority is the deed of trust itself. The trustee must follow the dictates of the deed of trust and other contracts regarding disbursement of foreclosure sale proceeds. Stuart v. American Sec. Bank, 494 A.2d 1333, 1339 (D.C.1985); Paroni v. Quick, 211 A.2d 765, 768 (D.C.1965); National Life Ins. Co. v. Silverman, 147 U.S.App. D.C. 56, 72, 454 F.2d 899, 915 (1971). Here, the deed of trust stipulates that upon sale of the property the proceeds are to be applied, first, to pay all proper costs, charges and expenses and, second, to pay whatever may remain unpaid of the note. Whether charges encompasses the water and sewer bill is a matter of contract interpretation initially within the province of the trial court. Urban Masonry Corp. v. N & N Contractors, Inc., 676 A.2d 26, 31 (D.C. 1996). Such a determination also would appear basic to the resolution of the water and sewer bill controversy. Second, the foreclosure agreement allocates to Concord responsibility and liability for all outstanding water and sewer bills and charges ... without recourse against Mr. Binder or the limited partners involved in the Minnesota Ave. Limited Partnership. The agreement further states that Concord will pay all outstanding water and sewer bills. Concord argues, and it elicited testimony to the effect, that the agreement was intended to insulate Binder and the limited partners from personal liability but not to deprive it of recourse against the Minnesota Avenue Partnership as a separate entity, at least to the extent that the water and sewer bill could be deducted from the sale proceeds. [7] Binder contends, however, also with testimonial support, that the foreclosure agreement fully modified the deed of trust in that Concord lost the right to set off the water and sewer charges from the foreclosure sale proceeds. To resolve the water and sewer bill issue on remand, the trial court must reconcile these conflicting accounts of the parties' intent in entering the foreclosure agreement and determine whether the agreement supersedes any commitment under the deed of trust to deduct the charges. [8] See Lenkin, supra, 575 A.2d at 277 (when a creditor pursues a partnership debt where the partners, by contract with the creditor, have insulated themselves from personal liability, the creditor will not necessarily be precluded from reaching partnership property in the partners' hands. Such preclusion will occur only if the contract, when properly interpreted, prevents a claim against both `personal' and `partnership' property.). Finally, D.C.Code § 43-1529 (1997 Supp.) provides that the District of Columbia, upon filing a certificate of delinquency, obtains a continuing lien against real property with accrued water and sewer charges. We have stated that where there is a senior encumbrance or lien on the property ... the trustee must satisfy that lien before applying the sale proceeds to the obligation secured by the deed of trust. Jefferson Fed. Sav. & Loan Ass'n v. Berks Title Ins. Co., 472 A.2d 893, 894 (D.C.1984). [9] Also, in the event of a surplus the trustee must satisfy subordinate mortgages, judgments, or liens against the property before turning it over to the mortgagor. Paroni, supra, 211 A.2d at 768. In the instant case, the trial court made no finding, and there is scant reference in the record, as to whether the District of Columbia filed the requisite certificate to trigger the continuing lien. If a lien were filed, the $42,083.95 water and sewer charges may have been properly deducted on that basis alone. This question may, if relevant, be further explored on remand. [10] Superior Court Civil Rule 52(a) requires that the trial court, in every case tried without a jury, state sufficient findings of fact and conclusions of law to permit meaningful appellate review. United States Fidelity & Guar. Co. v. Kaftarian, 520 A.2d 297, 299 (D.C.1987); Tauber v. District of Columbia, 511 A.2d 23, 28 (D.C.1986). This means there must be findings on material issues. Tauber, supra, 511 A.2d at 28; accord District of Columbia v. Group Ins. Admin., 633 A.2d 2, 22 (D.C.1993) (observing that part of appellate court's role is to assure that trial court resolves all relevant issues). Insufficient findings requires remand, Tauber, supra, 511 A.2d at 28, because [w]ithout them, any ruling on our part as to the trial court's decision would be an exercise in speculation. Don't Tear it Down, Inc. v. District of Columbia, 395 A.2d 388, 391 (D.C.1978). Where the trial court provides only conclusory findings, unsupported by subsidiary findings, or by an explication of the court's reasoning with respect to the relevant facts, a reviewing court simply is unable to determine whether or not those findings are clearly erroneous. Kaftarian, supra, 520 A.2d at 299-300 (internal quotations omitted). Here, the trial court's analysis of the water and sewer bill was insufficient because it did not address the interplay between § 45-717, the deed of trust, the foreclosure agreement, and § 43-1529. We must remand for that purpose, including appropriate further findings as required.