Darren A. Dickerson

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
In Re: 	*
Darren A. Dickerson, 	* 	Case No. 	05-25671PM
* 	Chapter 	13
*
Debtor. 	*
************************************* 	*
William M. Savage, Substitute Trustee, 	*
*
Movant/Cross-Respondent, 	*
vs. 	*
Darren A. Dickerson, 	*
*
Respondent/Cross-Movant, 	*
MEMORANDUM OF DECISION
This matter came before the court for hearing on August 24, 2005, on two motions and
the responses thereto. Darren A. Dickerson (the “Debtor”) filed a “Motion for Contempt for
Violations of the Automatic Stay” and William M. Savage (the “Substitute Trustee”) filed a
“Motion for Order Stating that Automatic Stay Does Not Apply to Stay Foreclosure of Real
Property Known as 4014 22 nd Avenue, Temple Hills, MD 20748.” Although these motions raise
issues more appropriately addressed in an adversary proceeding, the court has thoroughly
reviewed the record, without the benefit of the supplemental memoranda that the parties failed to
file, and finds that the real property at issue is property of the bankruptcy estate and, therefore,
protected by the automatic stay of 11 U.S.C. § 362(a).
Date signed September 12, 2005
Entered: September 13, 2005 Case 05-25671 Doc 21 Filed 09/13/05 Page 1 of 5

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Factual Background
The Debtor acquired real property located at 4014 22 nd Avenue, Temple Hills, Maryland
(the “Property”), at a sheriff’s sale on September 6, 2002. The sale was ratified on January 13,
2003. The deed in favor of the Debtor was recorded on March 7, 2003. The Property was
encumbered by a deed of trust in favor of Washington Mutual Bank, N.A. dated March 31, 1998.
On August 10, 2004, the Property was sold at public auction by the Substitute Trustee to
third-party purchasers. On August 16, 2004, the Debtor filed a chapter 13 case. Relief from the
automatic stay was obtained in order to ratify the foreclosure sale. The bankruptcy case was
later dismissed on the Debtor’s motion. Over the Debtor’s exceptions, the foreclosure sale was
ratified by the state court by order dated March 4, 2005. 	The third-party purchasers failed to
settle necessitating the filing of a motion for resale. The state court directed a resale of the
Property by order dated May 12, 2005. On July 12, 2005, the Debtor filed this second chapter 13
case. Two days later, on July 14, 2005, the Property was resold by the Substitute Trustee at
auction.
Discussion
The issue before the court is whether the Debtor retained an interest in the Property after
the state court entered an order directing a resale. If he did, the Property is property of the
bankruptcy estate and protected from sale by the automatic stay. If the Debtor retained no
interest, the Substitute Trustee was free to resell the Property.
Section 541 of the Bankruptcy Code defines “property of the estate” as “all legal or
equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C.
§ 541(a). Whether the Debtor retained legal or equitable title to the Property is a question of
state law and has been addressed by the Court of Appeals of Maryland in the case of Simard v.
White, 859 A.2d 168 (Md. 2004).
The issue before the Simard court was whether a defaulting purchaser of auctioned
property is entitled to excess proceeds arising from resale. The court broadened its scope and
provided an exhaustive analysis of various Maryland decisions on the issue. In concluding that a
defaulting purchaser does not have a common law right to excess proceeds from a resale, the
Simard court, albeit in dicta, plainly stated that until the terms of a sale have been met or waived,
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1 The Substitute Trustee argued that there exists no privity of contract between the
mortgagee and the Debtor. According to Maryland common law, “[t]he purchaser under a valid
execution sale takes just what right, title, or interest the execution defendant has, no more and no
less.” 13 M.L.E. Judgments § 206 (2005); Hammer v. Westphal, 87 A. 488, 489 (Md. App.
1913).
The Court of Appeals has held that a purchaser at a foreclosure sale does not have
personal liability for repayment of a prior mortgage to which the sale is subject to. ALEXANDER
GORDON , IV, GORDON ON M ARYLAND FORECLOSURES § 25.7 (4th ed. 2004). The Court of
Appeals stated:
[T]he mere purchase of property subject to an existing mortgage does not create a
personal obligation on the part of the purchaser to pay it, Chilton v. Brooks, 72 Md. 554,
20 A. 125; but, if the purchaser assumes the payment of the mortgage as a part of the
purchase price of the property, then it does become his duty to pay it, and to protect the
vendor against any demands that may be made against him for the debt which it secures,
39 Cyc. 1632; Lowrey v. Downey, 150 Ind. 364, 50 N. E. 79; 41 C. J. “Mortgages” §§
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a purchaser is not entitled to legal title to property; accordingly, title remains in the mortgagor.
Simard v. White, 859 A.2d at 208.
According to the Simard court, in discussing Maryland common law, upon ratification of
a foreclosure sale, equitable title passes to the purchaser. Id. at 201 (citing Merryman v.
Bremmer, 241 A.2d 558 (Md. 1968)); 205 (citing Union Trust Co. v. Biggs, 137 A. 509, 512
(Md. 1927)). Although the sale cuts off the mortgagor’s equitable right of redemption, legal title
remains with the mortgagor until the purchaser has met the terms of the sale and paid the
purchase price. Id. at 195 (citing Mizen v. Thomas, 144 A. 479, 483-84 (Md. 1929)); 200; 205
(citing Union Trust Co. v. Biggs, 137 A. at 512); 208-9. If the purchaser defaults and a resale
becomes necessary, the order of resale divests the purchaser of equitable title and revokes
ratification of the first sale. Id. at 202 (citing McCann v. McGinnis, 263 A.2d 536 (1970) and
Dalrymple v. Taneyhill, 4 Md. Ch. 171 (1853)); 205; 208 (citing Merryman v. Bremmer, 241
A.2d at 564). A defaulting purchaser remains liable for shortages of a resale (Id. at 203) in the
case of a deficiency but, in the case of a surplus after full payment to creditors, remaining funds
go to the mortgagor. Id. at 204.
In applying Simard to the subject facts, the court finds that the Substitute Trustee violated
the automatic stay by proceeding with the resale without court approval. The Debtor obtained
legal title to the Property, subject to Washington Mutual Bank, N.A.’s lien, when he purchased
same at the 2002 sheriff’s sale.1 In 2004, when the Property was sold to third-party purchasers,
Case 05-25671 Doc 21 Filed 09/13/05 Page 3 of 5

745, 757, 763. Whether he did or did not assume it, is a matter of agreement, which may
be express or implied, Id. § 766, which may be written or rest in parol, Id. § 769, and
which may be separate from the deed, and such an agreement may be shown so long as it
does not tend to vary or contradict the material terms of the deed. In the absence of any
express agreement to the contrary, by the decided weight of authority such an assumption
will be implied where the amount of the mortgage has been deducted from the purchase
money, 41 C. J. “Mortgages” § 770, under such circumstances as will fairly and
reasonably indicate that the vendee intended to assume the payment of the mortgage, and
parol evidence is admissible to show the existence vel non of such an intention. 19 R. C.
L. 381.
Rosenthal v. Heft et ux., 142 A. 598, 602 (Md. 1928). No evidence with respect assumption of
the debt has been presented to this court.
2 It is clear under Maryland law that a purchaser at an execution sale may exercise the
right of redemption. Kent Bldg. & Loan Co. v. Middleton, 75 A. 967 (Md. 1910).
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those purchasers obtained equitable title to the Property. Legal title, however, remained with the
Debtor and the lienholder properly sought relief from the automatic stay to pursue ratification of
the sale as the Debtor’s legal interest constituted property of the bankruptcy estate. When the
third-party purchasers failed to settle and an order authorizing the resale was entered in May
2005, ratification of the first sale was revoked. 	At this point, equitable title re-vested in the
Debtor.2 The Debtor was never divested of legal title. Accordingly, upon the Debtor’s filing of
the second bankruptcy petition, the Property was estate property as the Debtor held both legal
and equitable title. The Substitute Trustee violated the automatic stay be conducting the auction
on July 14, 2005.
In defense of his actions, the Substitute Trustee argues that emergency legislation enacted
by the State of Maryland in May 2005, makes clear that the Debtor was divested of his interests
in the Property upon ratification of the first sale. 2005 Md. Laws Ch. 509 (S.B. 761). Section 7-
105 of the Real Property Article of this legislation provides:
(h) 	The entry of an order for resale on default by a purchaser at a sale under this
section and Title 14 of the Maryland Rules:
(1) 	Does not affect the prior ratification of the sale and does not restore to the
mortgagor or former record owner any right or remedy that was
extinguished by the prior sale and its ratification; and
(2) 	Extinguishes all interest of the defaulting purchaser in the real property
being foreclosed and in the proceeds of the resale.
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3 As pointed out by this court in In re Bennett, 317 B.R. 313, 316 (BC D. Md. 2004), the
Fourth Circuit declined to address this issue of whether an action taken in violation of the stay is
void or merely voidable. See Winters By and Through McMahon v. George Mason Bank, 94
F.3d 130, 136 (CA 4 1996). This court follows the general rule in In re Lampkin, 116 B.R. 450,
451-52 (BC D. Md. 1990), finding that actions taken in violation of the automatic stay of 11
U.S.C. § 362(a) are void.
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This legislation was effective on May 26, 2005, several days after the resale order was entered
by the state court in this matter. Accordingly, it is inapplicable to the subject case.
Conclusion
The court emphasizes that this case does not turn on the Debtor’s equitable interest and
the effect of ratification of the first sale or the entry of the order directing resale. As expressed
by the Simard court, the Debtor never lost legal title to the Property because the first sale was
never consummated. The Property was and remains estate property and, therefore, as of the
petition date, was protected by the automatic stay. The resale conducted by the Substitute
Trustee in violation of the automatic stay is void. 3
An appropriate order will be entered.
cc: 	Darren A. Dickerson
17253 Wood Hollow Terrace
Ft. Washington, MD 20744
Walter Thompson Evans
966 Hungerford Drive, Suite 12A
Rockville, MD 20850
Kristine D. Brown
Shapiro & Burson, LLP
13135 Lee Jackson Highway, #201
Fairfax, VA 22033
End of Memorandum Decision
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