Court Opinion

ID: 4363243
Source: CourtListenerOpinion
Date Created: 2019-01-30 21:09:14.002582+00
Date Added: 2024-06-11T14:21:19.166380
License: Public Domain

James McLaughlin, et al. v. Carrie M. Ward, et al., No. 1827, September Term 2017.
Opinion by Arthur, J.

APPELLATE JURISDICTION – FINAL JUDGMENT RULE – EXCEPTIONS TO
FINAL JUDGMENT RULE – APPEAL FROM ORDER DENYING
EXCEPTIONS TO FORECLOSURE SALE

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. “[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). An appellate court can raise the issue of finality on
its own motion.

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). 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. It follows that an order denying exceptions to a
foreclosure sale is not a final judgment.

There are only three exceptions to the final judgment requirement: appeals from
interlocutory orders specifically allowed by statute; immediate appeals permitted under
Maryland Rule 2-602; and appeals from interlocutory rulings allowed under the common
law collateral order doctrine. Salvagno v. Frew, 388 Md. 605, 615 (2005). None of the
exceptions apply to an order denying exceptions to a foreclosure sale.

The statutory exception in § 12-303(3)(v) of the Courts and Judicial Proceedings Article
does not apply, because an order denying exceptions to a foreclosure sale is not an order
“[f]or the sale, conveyance, or delivery of real . . . property . . . or the refusal to rescind or
discharge such an order.” When a court denies exceptions to a foreclosure sale, it does
not order that a sale or conveyance occur. To the contrary, the foreclosure sale will
already have occurred before any exceptions are filed. The ruling on exceptions is part of
the post-sale procedures in the Maryland Rules.

Rule 2-602(b) does not apply, because the circuit court did not expressly certify in a
written order that there was no just reason to delay the entry of final judgment.
Furthermore, even if the court had made the required certification, it would have been an
abuse of discretion to find no just reason to delay, because the conclusion of the
foreclosure case for all parties was close at hand.

The collateral order doctrine does not apply for two reasons. First, an order denying
exceptions to a foreclosure sale is not completely separate from the merits of a
foreclosure action. Second, such an order is effectively reviewable on appeal from a final
judgment in the foreclosure proceeding.

In this case, the appellant appealed before the entry of final judgment. An appellate court
acquires no jurisdiction over a premature appeal. Consequently, the appeal must be
dismissed.
Circuit Court for Baltimore County
Case No. 03-C-17-003847
                                                      REPORTED

                                       IN THE COURT OF SPECIAL APPEALS

                                                    OF MARYLAND

                                                        No. 1827

                                               September Term, 2017
                                     ______________________________________

                                            JAMES MCLAUGHLIN, ET AL.

                                                            V.

                                       CARRIE WARD, ET AL., SUBSTITUTE
                                                   TRUSTEES
                                     ______________________________________

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

                                                       JJ.
                                     ______________________________________

                                               Opinion by Arthur, J.
                                     ______________________________________

                                            Filed: January 30, 2019

                                     * Judge Timothy E. Meredith did not participate
                                     in the Court’s decision to designate this opinion
                                     for publication pursuant to Md. Rule 8-605.1.
       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

                                                2
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

                                               3
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, Inc., 217 Md. App. at 662), we

must dismiss the appeal unless some exception to the final judgment rule applies.1

       “[T]here are only three exceptions to that final judgment requirement: appeals

from interlocutory orders specifically allowed by statute; immediate appeals permitted

under Maryland Rule 2-602; and appeals from interlocutory rulings allowed under the

common law collateral order doctrine.” Salvagno v. Frew, 388 Md. 605, 615 (2005).

None of the exceptions apply.

       The statutory exceptions are found in § 12-303 of the Courts and Proceedings

Article, which authorizes an appeal from an array of interlocutory orders in cases in

which an appellant’s rights might be lost or irreparably damaged if he or she is unable to

challenge an erroneous ruling until after the entry of a final judgment. See Frase v.

       1
         Dominion cannot invoke Rule 8-602(d), which can save a premature appeal if the
appellant notes an appeal after the court announces a ruling that would terminate the
action, but before the ruling is entered on the docket. Rule 8-602(d) might save the
appeal in this case if Dominion had noted its appeal after the court announced that it
intended to ratify the sale or to approve an auditor’s report, but before that ruling was
entered on the docket. Dominion noted its appeal, however, well before the court
announced its ruling on any such issue.

                                              4
Barnhart, 379 Md. 100, 117 (2003). Among other things, § 12-303 authorizes

interlocutory appeals from orders granting, dissolving, or denying certain injunctions;

from certain orders appointing a receiver; from orders depriving a parent, grandparent, or

guardian of the care and custody of a child; from orders granting a petition to stay an

arbitration proceeding; and from orders denying certain claims of statutory immunity. At

oral argument, Dominion asserted that its appeal fell within § 12-303(3)(v), which

authorizes an appeal from an interlocutory order “[f]or the sale, conveyance, or delivery

of real . . . property . . . or the refusal to rescind or discharge such an order[.]”

       A court enters an order for “[f]or the sale, conveyance, or delivery of real . . .

property” when, for example, it establishes a mechanic’s lien, orders the property to be

sold if the lien is not paid by a date certain, and appoints a trustee to conduct the sale.

Winkler Construction Co. v. Jerome, 355 Md. 231, 245 (1999). A court also enters an

order for “[f]or the sale, conveyance, or delivery of real . . . property” when it appoints a

trustee to conduct a sale in lieu of partition of property owned by tenants in common.

Morgan v. Morgan, 68 Md. App. 85, 92 (1986); see also Standish Corp. v. Keane, 220

Md. 1, 6 (1959) (stating that an order that rescinds the ratification of a trustee’s sale,

directs a return of a deposit, and requires the trustee to resell the property “is in the nature

of a final decree”); Pollekoff v. Blumenthal, 83 Md. App. 85, 92 (1990) (same).

       These cases demonstrate that an order “[f]or the sale, conveyance, or delivery of

real . . . property” necessarily entails an order requiring that property be sold. A court,

however, does not order that property be sold when it denies exceptions to a foreclosure

sale. To the contrary, under our current procedures, the foreclosure sale will already have

                                                5
occurred when a party files exceptions. See Md. Rule 14-215(a) (stating that “[t]he

procedure following a [foreclosure] sale . . . shall be as provided in Rules 14-305 and 14-

306”); Md. Rule 14-305(d) (listing exceptions to the sale among the procedures following

a sale). Because a court does not consider exceptions to a sale until after the sale has

actually occurred, an order denying exceptions to a foreclosure sale cannot possibly be an

order “[f]or the sale, conveyance, or delivery of real . . . property” under § 12-303(3)(v).

       The second possible basis for an appeal, Rule 2-602(b), is an exception to the

general rule that an order that adjudicates less than an entire claim, or that adjudicates the

rights and liabilities of fewer than all the parties to the action, is not a final judgment;

does not terminate the action as to any of the claims or any of the parties; and is subject

to revision at any time before the entry of a judgment that adjudicates all of the claims by

and against all of the parties. See Md. Rule 2-602(a). Under Rule 2-602(b):

               If the court expressly determines in a written order that there is no
       just reason for delay, it may direct in the order the entry of a final
       judgment:

              (1) as to one or more but fewer than all of the claims or parties; or

            (2) pursuant to Rule 2-501 (f)(3), for some but less than all of the
       amount requested in a claim seeking money relief only.

       We assume for the sake of argument that, in denying Dominion’s exceptions to the

foreclosure sale and its motion to abate the purchase price, the court disposed of all

matters pertaining to one of the several parties to the proceeding – Dominion. Thus we

assume for the sake of argument that the order denying the exceptions and the motion to

abate might fall within the scope of Rule 2-602(b), because it pertains to “one or more

                                               6
but fewer than all of the . . . parties.” Even so, Rule 2-602(b) would not authorize an

immediate appeal in this case, because the court did not expressly determine in a written

order that there was no just reason to delay the entry of a final judgment as to Dominion.

See Miller Metal Fabrication, Inc. v. Wall, 415 Md. 210, 221 (2010) (quoting Md. Rule

2-602(b)) (“[a]bsent an ‘express determination that there is no just reason for delay,’ an

order directing the entry of a final judgment pursuant to Rule 2-602(b) is invalid”).

       Furthermore, even if the court had made the required certification, it would

probably have abused its discretion, because a court could not find the absence of any

“just reason” to delay the entry of a final judgment as to one party when the ratification

of the sale, and thus the end of the case for all parties, was close at hand. It would be

completely inconsistent with Maryland’s strong policy against piecemeal appeals to delay

the imminent conclusion of this foreclosure proceeding to allow Dominion to pursue an

immediate appeal of the order denying its exceptions and its motion to abate the purchase

price. It would also be inconsistent with the policy against piecemeal appeals to allow

Dominion to take an appeal that might become moot if the court, for some other reason,

ultimately declined to ratify the sale. See Canterbury Riding Condo. v. Chesapeake

Investors, Inc., 66 Md. App. 635, 653 (1986) (in reviewing the propriety of certification

under Rule 2-602(b), “[a] factor to be considered is that the determination of the

remaining count before the trial court might utterly moot the need for the review now

                                              7
being sought”). Dominion, therefore, cannot rely on Rule 2-602(b) as a basis for its

interlocutory appeal.2

       The third and final possible basis for an interlocutory appeal is the collateral order

doctrine, a “very narrow exception” to the final judgment rule. See, e.g., Dawkins v.

Baltimore City Police Dep’t, 376 Md. 53, 58 (2003). “To qualify as a collateral order, a

ruling must satisfy four criteria: ‘(1) it must conclusively determine the disputed

question; (2) it must resolve an important issue; (3) it must be completely separate from

the merits of the action; and (4) it must be effectively unreviewable on appeal from a

final judgment.’” Maryland Bd. of Physicians v. Geier, 225 Md. App. at 131 (quoting

Addison v. Lochearn Nursing Home, LLC, 411 Md. 251, 285 (2009)). The ruling in

question in this case fails to satisfy at least two of these criteria.

       First, the denial of the exceptions to the foreclosure sale and the motion to abate

the purchase price is not completely separate from the merits – i.e., it is not “collateral.”

To the contrary, the exceptions and the motion to abate go to the very heart of the

foreclosure proceeding: how much Dominion should have to pay for the property that it

bought at the foreclosure sale.3

       2
         Because the circuit court could not properly exercise its discretion to certify its
ruling as final under Rule 2-602(b), we too are foreclosed from exercising our discretion
under Rule 8-602(g) to save the premature appeal.
       3
        Compare Abney v. United States, 431 U.S. 651, 659-62 (1977) (order denying
motion to dismiss criminal charges on the ground that defendant had previously been
placed in jeopardy for same offense was completely separate from merits of criminal
case); Md. Bd. of Physicians v. Geier, 451 Md. 526, 550-51 (2017) (order imposing
sanctions against agency for asserting deliberative privilege was completely separate
from merits of action against agency); Ehrlich v. Grove, 396 Md. 550, 571-72 (2007)
                                                8
       Second, the denial of the exceptions to the foreclosure sale and the motion to abate

the purchase price was effectively reviewable on appeal from a final judgment, as

evidenced by the cases in which parties have successfully sought and obtained appellate

review of a ruling on exceptions after the ratification of the sale. See, e.g., Thomas v.

Nadel, 427 Md. 441, 449 (2012); Bates v. Cohn, 417 Md. 309, 318 (2010); Hobby v.

Burson, 222 Md. App. 1, 3, 7-8 (2015); Jones v. Rosenberg, 178 Md. App. 54, 59 (2008).

       In general, a decision is effectively unreviewable on appeal only if a party’s rights

would be lost or seriously impaired if it were required to wait for the entry of a final

judgment before obtaining appellate review. See generally Bunting v. State, 312 Md.

472, 478-80 (1988). In this case, however, the final judgment was nigh at the time when

Dominion took its premature appeal. An appellate court would have been no less able to

grant full relief in an appeal after the ratification of the foreclosure sale than it would

have been after the denial of Dominion’s exceptions and its motion to abate.

       In summary, Dominion appealed before the entry of the final judgment, which

would not occur at least until the ratification of the foreclosure sale. Hence Dominion’s

appeal is premature. It could have preserved its appeal by filing a second, protective

notice of appeal after the entry of the final judgment, but it did not. None of the

exceptions to the final judgment rule operate to save the premature appeal. Therefore we

lack jurisdiction and must dismiss the appeal.

(order rejecting Governor’s claim of executive privilege was completely separate from
merits of action against Governor); Mandel v. O’Hara, 320 Md. 103, 134 (1990) (order
rejecting Governor’s absolute immunity from suit that challenges exercise of veto power
was completely separate from merits from action against Governor).
                                               9
APPEAL DISMISSED. APPELLANT TO
PAY ALL COSTS.

10