• Personal Suit May Be Brought in Maryland Under Loan Secured by Real Property in Washington, D.C.
  • February 15, 2016 | Author: Edward J. Levin
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • In National Institutes of Health Federal Credit Union v. Butler, No. 2100, Sept. Term, 2014, unreported (Md.Ct.Spec.App. Dec. 3, 2015), the Court of Special Appeals held that the noteholder could bring an in personam action in Maryland on a promissory note which is secured by residential property in the District of Columbia.

    On November 21, 2008 the National Institutes of Health Federal Credit Union made a loan in the amount of $338,632 to Gerald and Catherine Butler. The loan was secured by a deed of trust on their residence in the District of Columbia. Rather than filing a foreclosure action in the District of Columbia after the Butlers defaulted on the loan, the Credit Union filed an action against the Butlers in the Circuit Court for Montgomery County on the promissory note that the Butlers had signed. The circuit court dismissed the action on the grounds that it lacked subject matter jurisdiction. On appeal, the Court of Special Appeals reversed.

    The Court of Special Appeals’ analysis was based on two points. First, the Court of Special Appeals determined that Maryland courts have jurisdiction over the promissory note because its owner, the Credit Union, is domiciled in Maryland. The Court of Special Appeals determined that such jurisdiction is not undermined by the fact that the note is secured by a deed of trust encumbering real property in the District of Columbia. Second, under neither Maryland law nor District of Columbia law are noteholders prohibited from suing their obligors to recover monetary damages. Therefore, the Court of Special Appeals held that the circuit court erred in granting the Butlers’ second motion to dismiss the Credit Union’s action for lack of subject matter jurisdiction.