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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2023 September Term, 2005

TAXI, LLC v. MAYOR AND CITY COUNCIL OF BALTIMORE CITY, ET AL.

Hollander, Eyler, Deborah S., Barbera, JJ. Opinion by Eyler, Deborah S., J.

Filed: October 31,2006

In the Circuit Court for Baltimore City, Taxi, LLC ("Taxi"), the appellant, obtained a judgment of foreclosure of right of redemption for property known as 123 North Howard Street ("the Property"). More than 30 days after the judgment was entered, the

Mayor and City Council of Baltimore ("City"), the appellee, moved to vacate it for lack of subject matter jurisdiction. The court granted the City's motion and vacated the judgment. It also ordered the City to repay Taxi the principal sum it had paid for the tax certificate, without interest, costs, or fees. After the court denied a motion for reconsideration, Taxi noted this appeal, raising three questions for review, which we have rephrased and shortened: I. II. Was the circuit court's decision to vacate the judgment legally incorrect? Was the circuit court's decision to vacate the judgment an abuse of discretion?

III. Was the circuit court's decision ordering the repayment of principal only legally incorrect? For the following reasons, we answer "Yes" to Question I and find it unnecessary to address the remaining questions.

Accordingly, we shall vacate the order vacating the judgment of foreclosure of right of redemption.

FACTS AND PROCEEDINGS
On September 26, 2002, in the Circuit Court for Baltimore City, the City filed a petition to condemn three adjacent 123 North

properties:

123, 125, and 127 North Howard Street.

Howard Street, the Property at issue here, is a vacant lot.

The

City requested immediate possession and title to the properties, which it planned to use for the Market Center Urban Renewal project. On the same day, the City filed a petition for immediate possession and title, seeking possession of the leasehold,

reversionary, and sub-reversionary interests in the properties as of the retroactive date of August 16, 2002. In addition, the city

deposited into court the sum of $600,000, which it alleged was the estimated value of the property interests subject to the

condemnation petition.

The City further alleged that the offered

sum "is subject to the claims of mortgagees, judgment creditors, lienholders, and tenants, if any. . . ." The court issued an order granting the City immediate

possession of the properties retroactive to August 16, 2002, and directing that legal title would vest within ten days after

personal service was effected over all the defendants, with no answers being filed. On November 4, 2002, the defendants, having been served, filed a petition to withdraw the funds that had been deposited into court by the City. The petition alleged that "[t]here are no mortgages

or liens which have not been satisfied or which would have priority over [the defendants'] claim to the funds, with the exception of $312.61 due in Municipal liens." The defendants asked that the

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clerk of court be directed to pay to them, with accrued interest, the sum of $599,687.39 (i.e., the deposited amount minus the $312.61 owed). The petition was signed under oath by the

defendants' attorney-in-fact, who attested that the matters and facts set forth in it were "true and correct to the best of my knowledge, information and belief." There was no affirmation based on personal knowledge. By order of November 27, 2002, the court directed the clerk of the court to make the payments requested, together with a check in the amount of $312.61 to the Director of Finance, for municipal liens. Although it is not absolutely clear from the record, it appears that legal title vested in the City on December 2, 2002. (Legal title clearly vested in the City after November 27, 2002.) Approximately six months later, on May 12, 2003, the City held its 2003 Tax Sale. The Property was included in the 2003 Tax Sale. The

Taxi purchased the Property from the City for $11,354.88.

certificate of tax sale for the Property states that the $11,354.88 is the amount assessed against Wallace A. Mills "for taxes and other municipal liens due on the property at the time of sale," plus interest, penalties, and expenses. Mills was a record owner

of the Property prior to the condemnation action. On August 3, 2004, in the Circuit Court for Baltimore City, Taxi filed a complaint to foreclose the City's right of redemption in the Property. It named as defendants the City, the Director of

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the City Department of Taxes/Tax Collector, and the Property.1 Taxi alleged, inter alia, that a search of the Baltimore City Land Records had identified the City title as the record owner of the by

Property,

having

acquired

from

an

assessed

owner

condemnation.

The affidavit of title search was attached, which

showed that title had been conveyed by Wallace A. Mills to the City, effective August 16, 2002.2 Taxi properly served the complaint on the City on August 19, 2004. The City did not file a motion or answer or otherwise

respond to the suit. On February 15, 2005, counsel for Taxi filed an "Affidavit of Compliance for the Property Known as 123 N. Howard Street"

attesting to service on the City, as the record owner of the Property; notice of the suit to the Tax Collector; posting of the Property by the Sheriff's Office; and publication as required by law. He further attested that the deadline for redeeming the

Property, October 5, 2004, had passed, and no party had contacted him about the Property.

An action to foreclose right of redemption in property is in rem, or quasi in rem, and therefore the property at issue is named as a defendant in the complaint. Hauver v. Dorsey, 228 Md. 499, 503 (1962). That date is not fully correct. The City took equitable title to the Property on that date, but did not take legal title until sometime after November 27, 2002, most likely on December 2, 2002, as stated above. 4
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On March 7, 2005, the court issued a judgment foreclosing the City's right of redemption in the Property. The judgment ordered

the City's Director of Finance to execute a deed to the Property to Taxi. The judgment was entered on March 14, 2005.

On July 5, 2005, the City filed a motion to vacate the judgment, pursuant to Md. Code (1985, 2001 Repl. Vol.), section 14845 of the Tax-Property Article ("TP"). The City alleged that the

May 12, 2003 Tax Sale of the Property was "void ab initio since the taxes comprising the sale were already disposed of by

condemnation"; that the tax sale certificate therefore was not valid; and that, consequently, the court had been without subject matter jurisdiction to issue its judgment. The City further

alleged that, because there was not a proper tax sale to begin with, and therefore there was no right in the Property to redeem, Taxi was entitled only to the return of the money it paid at the sale, and not to interest, costs, or attorneys' fees. The City's motion was supported by an affidavit by attorney Andrew Bailey. He attested that he is an Assistant City Solicitor

for Baltimore City; that he is "familiar with the condemnation at 123 N. Howard Street"; that "[t]his condemnation occurred in August, 2002, at which time all taxes were disposed of and the City took title"; and "[o]nce title to property is vested in the City, said property is not subject to a Tax Sale." signed under the penalty of perjury and The affidavit was upon the affiant's

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knowledge, information, and belief. hearing.

There was no request for a

On July 27, 2005, Taxi filed an opposition to the motion to vacate. It asserted that taxes had been assessed against the

Property as of July 1, 2002, before the City filed its petition for condemnation, and that, in its petition, the City had alleged that "all taxes and other municipal liens and charges will be adjusted to the date that possession is granted to [the City]." Taxi argued

that that allegation was an admission that taxes were owed on the Property when the petition was filed; and further pointed out that the order granting the City title to the Property did not say that title was free and clear of all liens. Taxi further asserted that

the taxes owed on the Property had remained unpaid and an open lien until it paid them, in the tax sale, on May 12, 2003. Taxi went on to state that the City had not participated in the foreclosure suit, despite having been properly served, and only filed its motion to vacate judgment after Taxi's counsel contacted the City Solicitor's office to obtain a deed to the Property. Taxi

also complained that the City did not submit any documents or records to support its motion or Mr. Bailey's affidavit. filed a request for a hearing. Taxi

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On July 28, 2005, the court issued an order granting the City's motion.3 The order directed the City to repay Taxi the sum

it had paid at the tax sale, without interest, costs, or attorneys' fees. Within ten days of the entry of that order, Taxi filed a motion for reconsideration. It again asserted that the tax sale certificate for the Property was created as a result of unpaid taxes assessed as of July 1, 2002, and that those taxes had remained a lien against the Property until it was sold at the tax sale on May 12, 2003. It argued that the tax sale certificate,

which it had appended to its petition to foreclose right of redemption, was prima facie evidence that the taxes had remained unpaid, under TP section 14-823; and that Mr. Bailey's affidavit was legally insufficient to rebut that presumption. Taxi further argued that, under TP section 14-842, the

validity of a tax sale is conclusively established in an action to foreclose the right of redemption, unless the defendant by answer pleads, with particularity, a defense of invalidity of the taxes or the sale, and raises and proves any jurisdictional defect or invalidity. In this case, the City did not file an answer at all.

On August 9, 2005, the City filed a brief reply.

Taxi's opposition to the motion to vacate was not timely filed, and it is likely that the court did not see it before it ruled on the motion to vacate. 7

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On November 9, 2005, the court entered an order denying the motion for reconsideration. Taxi noted a timely appeal.

DISCUSSION
Taxi contends the circuit court's decision to vacate the judgment foreclosing the City's right of redemption in the Property was legally incorrect. It argues that, under the Tax Property

Article, its certificate of sale was presumptive evidence of the validity of the tax sale. Moreover, the validity of the procedure

to foreclose the right of redemption was "conclusively presumed," because the City failed to raise the invalidity of the taxes or proceedings as an affirmative defense. It further argues that the

City failed to show by clear and convincing evidence that the taxes were paid, as was required for the court to re-open the enrolled judgment. The judgment. and City responds that the court properly vacated the

It agrees that it bore the burden of showing, by clear evidence, that the court had been without

convincing

jurisdiction to foreclose its right of redemption in the Property. It argues that the affidavit of Mr. Bailey, attesting that he had "handled" the condemnation petition and that all taxes on the Property were "disposed of" at the time of the condemnation, was clear and convincing evidence that the taxes had been paid prior to the 2003 Tax Sale. Citing Heartwood 88, Inc. v. Montgomery County, 156 Md. App. 333 (2004), the City maintains that, because the taxes 8

had been paid, the tax sale certificate was invalid.

See Bugg v.

State Roads Comm., 250 Md. 459, 461 (1968) (stating that a tax sale of property on which taxes have been paid is invalid). In addition, the City asserts that the Property was placed in the 2003 Tax Sale because four miscellaneous unpaid bills were erroneously assessed against the Property by the City, sometime in November 2002, which (according to the City) was after it had acquired title.4 The City makes no reference to the record to

support this assertion, and indeed none can be made: there is nothing in the record to support it. The City also asserts, again

without any reference to or support in the record, that placing the Property in the 2003 Tax Sale was an obvious error on the part of City employees. The City relies upon these unsupported assertions

to conclude that the circuit court was without jurisdiction to enter the judgment foreclosing its right of redemption in the Property. Pursuant to TP section 14-823, in an action to foreclose right of redemption, the certificate of tax sale is "presumptive

evidence" of the truth of the statements in the certificate, of the purchaser's title as described in the certificate, and of the "regularity and validity of all proceedings had in reference to the taxes for the nonpayment of which the property was sold and the

Again, the City did not obtain legal title to the Property until after November 27, 2002, and most likely not until December 2, 2002. 9

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sale of the property."

These presumptions mean that the party

attacking the sale must offer evidence to controvert the presumed facts. Josenhans, Inc. v. Jenkins, 203 Md. 465, 474 (1954).

In addition, under TP section 14-842, in a proceeding to foreclose right of redemption, the validity of the procedure for the assessment and imposition of the taxes for which the property was sold is "conclusively presumed," unless a defendant "shall, by answer, set up as a defense the invalidity of the taxes or the invalidity of the proceedings to sell or the invalidity of the sale." Moreover,

[a] defendant alleging any jurisdictional defect or invalidity in the taxes or in the proceeding to sell, or in the sale, must particularly specify in the answer the jurisdictional defect or invalidity and must affirmatively establish the defense. TP

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