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Ward v. Wells Fargo Bank, N.A.

Court of Appeals of Columbia District

April 17, 2014

APRIL J. WARD and JAMES L. SCALES, APPELLANTS,
v.
WELLS FARGO BANK, N.A., APPELLEE, JAMES L. SCALES and APRIL J. WARD, APPELLANTS,
v.
WACHOVIA MORTGAGE PRENTICE HALL CORPORATION SYSTEM, ET AL., APPELLEES

Argued September 11, 2013.

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Appeals from the Superior Court of the District of Columbia. (LTB-11922-10 and CAB-5029-10). (Hon. Robert I. Richter, Hon. Anita Josey-Herring, Hon. Anthony Epstein, Hon. Natalia M. Combs Greene, Hon. A. Franklin Burgess, Jr., and Hon. Stephanie Duncan-Peters, Trial Judges).

Ian Stumpf for appellants.

Azer Akhtar for appellee Wells Fargo Bank, N.A. in No. 12-CV-749.

Michael S. Barranco, with whom Sarah E. Meyer was on the brief, for appellee Wells Fargo Bank, N.A., in No. 12-CV-1626.

Azer Akhtar for appellee Rosenberg & Associates, LLC in No. 12-CV-1626.

Before EASTERLY and MCLEESE, Associate Judges, and PRYOR, Senior Judge.

OPINION

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McLeese, Associate Judge:

Appellants James L. Scales and April J. Ward, who are married, purchased a residence together. After they defaulted on two loans, appellee Wells Fargo Bank, N.A. foreclosed on the residence. Wells Fargo also filed an action for possession of the residence. Mr. Scales and Ms. Ward filed a separate action challenging the foreclosure in Superior Court, alleging numerous claims against Wells Fargo and appellee Rosenberg & Associates, LLC (" R& A" ), a law firm that participated in the foreclosure. The trial court denied relief to Mr. Scales and Ms. Ward and entered a non-redeemable judgment of possession to Wells Fargo. We affirm.

I.

Except as noted, the following facts are undisputed. In April 2004, Mr. Scales and Ms. Ward purchased as tenants by the entirety a property located at 400 Orange Street, S.E., Washington, D.C. By 2006, they had two outstanding loans on the property: a $216,000 mortgage relating to the purchase of the property and an equity line of credit (" ELOC" ) with a limit of $27,000. Mr. Scales and Ms. Ward obtained both loans from World Savings Bank, F.S.B. -- a predecessor in interest to Wells Fargo.[1]

Mr. Scales and Ms. Ward subsequently moved to 5907 Herring Court, Waldorf, Maryland. Mr. Scales and Ms. Ward notified Wells Fargo of their new address with respect to the mortgage, but the parties dispute whether Mr. Scales and Ms. Ward properly notified Wells Fargo of their new address with respect to the ELOC. From 2006 to 2012, Mr. Scales and Ms. Ward rented the Orange Street property to a tenant who paid them approximately $1700 per month.

In 2009, Mr. Scales and Ms. Ward defaulted on both loans. As a result, Wells Fargo took steps to foreclose on the property, relying solely on the default with respect to the ELOC. Wells Fargo hired R& A to initiate foreclosure proceedings. On December 8, 2009, R& A sent a notice of intent to foreclose to Mr. Scales and Ms. Ward at the Orange Street address. The 2009 notice stated that the foreclosure sale would occur on January 12, 2010.

In January 2010, Mr. Scales filed a complaint in Superior Court and moved for a temporary restraining order (" TRO" ) and preliminary injunction to prevent foreclosure, alleging that Wells Fargo was not the proper holder of the ELOC note. Mr. Scales's TRO motion listed Orange Street as Mr. Scales's home address.

The trial court granted a TRO and cancelled the foreclosure sale, based on Mr. Scales's promise to cure the default within two days. The trial court gave Mr. Scales's case priority because the court understood from Mr. Scales that the foreclosure action involved Mr. Scales's home.

Mr. Scales failed to cure the default. As a result, the trial court granted Wells Fargo's motion to dismiss the TRO action and re-scheduled the foreclosure sale for March 23, 2010. R& A again sent notice of intent to foreclose to the Orange Street address.

On March 23, 2010, Wells Fargo purchased the property at the foreclosure sale. On March 30, 2010, Wells Fargo served a thirty-day notice to quit on Mr. Scales and Ms. Ward at the Orange Street address. The deed of sale reflecting Wells

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Fargo's purchase was executed on May 7, 2010, and recorded on June 30, 2010.

In May 2010, Wells Fargo filed a complaint against Mr. Scales and Ms. Ward in the Landlord-Tenant Branch of the Superior Court for possession of the Orange Street property. In July 2010, Mr. Scales and Ms. Ward filed suit against R& A and Wells Fargo in the Civil Division of the Superior Court, alleging among other things wrongful foreclosure and breach of contract.[2] Mr. Scales and Ms. Ward sought damages as well as equitable relief including set-aside of the foreclosure sale and an injunction preventing the eviction proceedings. The trial court initially consolidated the two cases.

The trial court subsequently determined that Mr. Scales and Ms. Ward had effectively asserted a plea-of-title defense in the possession action, by challenging the foreclosure in the wrongful-foreclosure action. Under the Landlord & Tenant Rules, a defendant who asserts a plea-of-title defense to an action for possession must do so in writing and must make appropriate arrangements for an " undertaking," S.Ct. L& T R. 5 (c) (2014), which " is a form of bond used . . . to assure compensation of the plaintiff not only for lost rent during the period of litigation while the defendant occupies the premises but also for the cloud on the title and related damages and cost." Lindsey v. Prillman, 921 A.2d 782, 785 (D.C. 2007) (internal quotation marks omitted). The trial court ordered Mr. Ward and Ms. Scales to comply with Rule 5, but ...


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