Bethesda Title & Escrow, LLC v. Gochnour

ZARNOCH, J. In this case, appellant, Bethesda Title & Escrow, LLC (“Bethesda Title”), seeks to appeal a decision of the Circuit Court for Montgomery County refusing to vacate a default judgment that had been entered in favor of appellee, Robert Gochnour (“Gochnour”). Subsequently, Bethesda Title also unsuccessfully sought in banc review of the circuit court’s denial of a motion for reconsideration of appellant’s motion to vacate the default judgment 1 , an action tantamount to a direct appeal of the circuit judge’s rejection of the motion to vacate. Appellant was not entitled to both in banc review and a direct appeal to this Court on the same issue. For this reason and those set forth below, we conclude that this appeal must be dismissed.

FACTS AND PROCEEDINGS On October 19, 2007, Gochnour filed a four-count complaint in the circuit court alleging that under the guise of co-signing for the refinancing of a loan on property of “a long time friend,” he was fraudulently misled to incur loans of $510,000 and to purchase the property. Named as defendants were: ⁴⁵² Douglas Skibicki, the prior owner; First Horizon Home Loan Corporation (“First Horizon”), a mortgage lender; Kenneth J. MacFadyen, a trustee on behalf of First Horizon; Global Mortgage, Inc., a mortgage broker alleged to have brokered Gochnour’s loan to First Horizon; Bethesda Title, alleged, in Gochnour’s absence, to have conducted the closing for the claimed fraudulent transaction; and Tracy Y. Gray, a settlement agent for Bethesda Title and an attorney. The four counts consisted of: 1) negligence; 2) fraud and misrepresentation; 3) conspiracy; and 4) a declaratory judgment declaring the invalidity of the deed and the indebtedness. 2 The first three counts sought $750,000 in compensatory damages. Count II also prayed for $750,000 in punitive damages, while Count III sought punitive damages in an amount “to be determined by the jury.” During the course , of this litigation, parties moved in and out of the complaint faster than Harry Potter’s broomstick in a Quidditch match.

MacFadyen and First Horizon were dropped from the case. However, First Horizon was then added as a plaintiff and later replaced with First Tennessee Bank National Association (FTBNA) of Memphis, Tennessee. Appraisal Experts, Inc. was joined as a defendant and later dismissed as a party. Global Mortgage was also dismissed from the case.

Gochnour obtained orders of default against the remaining parties: Skibicki, Gray and Bethesda Title. 3 Upon appellee’s motion, two orders were issued assessing damages in his favor against the defendants. 4 In the meantime, Gochnour’s co-plaintiff, FTBNA moved for and obtained orders of default ⁴⁵³ against the same three parties. However, before FTBNA could lock in its judgment for damages, an apparently slumbering Bethesda Title finally awoke. The stimulus was a writ of garnishment issued in Gochnour’s favor against Eagle Bank, which maintained an operating and escrow account for Bethesda Title. As a result, on May 29, 2009, Bethesda Title moved to vacate the default judgment obtained by Gochnour. 5 It excused its belated filing by noting that FTBNA had yet to establish damages against the three defendants and thus, Gochnour’s judgment was still interlocutory. “Accordingly, the Court’s broad discretionary powers are in full effect and the relief requested by [Bethesda Title] may be granted.” In its motion, Bethesda Title contended that Gochnour’s service on the title company was ineffective.

It argued that its resident agent, Max Etheart had not been properly served by Gochnour’s process server, Robert Thompson. Thompson’s Affidavit of Service certified that service was made at 9400 Key West Avenue, Rockville, Maryland 20814 on “Heather Timko/OK to sign for Max Etheart.” However, Bethesda Title asserted that the address of its resident agent was 7920 Norfolk Avenue, Bethesda, Maryland 20814 and that Heather Timko was not employed by Bethesda Title or authorized to accept service on behalf of the title company or Etheart. Attached to Bethesda Title’s motion were affidavits of Etheart and Timko. 6 Etheart stated that he never maintained a “resident agent address” on behalf of the title company on Key West Avenue. Timko’s affidavit stated that she “never ⁴⁵⁴ informed any individual I was authorized to accept service” on behalf of Etheart or the title company.

Goehnour and FTBNA filed a memorandum in opposition to the motion to vacate. In affidavits and documents accompanying their memoranda, Goehnour and FTBNA asserted: that Max Etheart was Bethesda Title’s resident agent, as reflected in the records of the State Department of Assessment and Taxation (SDAT); that on November 1, 2007 Gochnour’s process server, Thompson served Gray at the 7920 Norfolk Avenue address; that Gray indicated that the principals at Bethesda Title were aware of Gochnour’s case and that she attempted to negotiate a settlement on behalf of the title firm; that after serving Gray, Thompson was advised that Etheart, who had an ownership interest in Bethesda Title, was not at the Norfolk Avenue address, but could be found at another one of his companies, located at 9400 Key West Avenue; that when Thompson arrived at the Key West Avenue address, Timko informed him that Etheart was not available to accept service but that as his secretary, she had the authority to accept on his behalf; that at that time, Timko signed a document furnished by Thompson. On August 26, 2009, Judge David A. Boynton presided over a hearing on Bethesda Title’s motion. Plaintiffs counsel indicated that she had subpoenaed Gray: “I am prepared to put Ms. Gray on the stand and take her testimony as to the connection she had with Mr. [Etheart].” Etheart was not present for the hearing. 7 Bethesda Title’s counsel said that Timko was present: “[W]e can hear testimony from Ms. Timko if the Court would find it useful.

I would say that I don’t believe any testimony is necessary based upon the very straight forward case law that we’re dealing with.” 8 ⁴⁵⁵ At the conclusion of the hearing, the circuit judge issued his ruling: The facts in this case show that the plaintiff attempted to serve the resident agent at the address listed with SDAT on Norfolk Avenue. The process server was directed to a different address to find the resident agent personally, and when the process server went to personally serve the resident agent, the process server was told that the resident agent was unavailable to accept service but that she was allowed and authorized to accept service for that person. So under the Rules, based upon the affidavit filed by the process server, I find no reason to doubt the accuracy of the information in that process server’s notes. There’s no reason whatsoever why the process server would fabricate that or make that up.

And I think it’s a general business practice that receptionists that work in an office are authorized to accept service for people within that office. It’s a generally] accepted practice that resident agents allow their receptionists to receive service for them. So there doesn’t seem to be anything unusual or untoward about, or violative of the statute, of what happened in this case. So, based upon that, I don’t find that there’s been any showing that the process was improper in this case.

So I’ll deny the motion to vacate the default judgment based upon improper service. In reaction to the circuit court’s decision, Bethesda Title broadened its attack to multiple fronts. On September 14, 2009, it noted an appeal to this Court, 9 moved to stay execution of the judgment against the title company, 10 and moved for reconsideration of the denial of the motion to vacate. In its motion for reconsideration, Bethesda Title described the course of the proceedings.

It noted that “[t]he Court ⁴⁵⁶ elected to not permit any witnesses” at the August 26, 2009 hearing and asserted various facts regarding the attempted service to which its witnesses would have testified “[h]ad the Court permitted witnesses to take the stand.” Bethesda Title also contended that a September 1, 2009 decision by Judge McCormick granting the title company’s motion to vacate a default judgment in a “nearly identical” case (Altomare et al. v. Global Mortgage, Inc., et al., Case No. 292265-V) warranted reconsideration and vacating of the default judgment here. The motion for reconsideration expressly incorporated the motion to vacate. After Gochnour filed in opposition, Judge Boynton on October 6, 2009 denied the motion with prejudice. On October 15, 2009, the title company filed a Notice of In Banc Review.

This notice sought review of Judge Boynton’s denial of the motion for reconsideration and noted: “Defendant Bethesda Title expressly retains its right to appeal Judge Boynton’s August 26, 2009 order denying this Defendant’s Motion to Vacate Default Judgment, said appeal having already been noticed.” In a memorandum in support of in banc review, Bethesda Title reiterated its argument from its motion for reconsideration, including its complaint that Judge Boyn-ton “elect[ed] to not permit witnesses” at the August 26, 2009 hearing. The title company also asserted that the circuit court abused its discretion in denying the motion for reconsideration without “explanation and/or analysis” and in failing to reconsider in light of Judge McCormick’s ruling in Altomare. The memorandum expressly incorporated Bethesda Title’s motion to vacate and related memoranda. On April 6, 2010 a three-judge panel was appointed to conduct the in bane review.

A hearing was held on May 7, 2010 and the panel rejected the title company’s contentions, a result which appears from docket entries to be reflected in a June 4, 2010 order. As all this bustle was occurring in the circuit court, Gochn-our and FTBNA launched a counterattack in this Court. In November, 2009, they filed a Motion to Dismiss Appeal under Rule 8-502(a) or in the alternative, Motion for Transfer of ⁴⁵⁷ Appeal Improperly Taken Under Rule 8-132. 11 In their motion, Gochnour and FTBNA asserted that Bethesda Title was entitled to a direct appeal of a final decision in the circuit court or in banc review by three judges, not both. They said that the title company was seeking to “expand” or obtain “additional” appellate rights: “Bethesda Title’s attempt to secure both an in banc review and an appellate review in the Court of Special Appeals regarding the same questions of law and fact is a manipulation of the Maryland Rules of Court in an effort to obtain a result not provided for under the Constitution of the State of Maryland.” As a result, they contended that the appeal should be dismissed or in the alternative, the case transferred to the in banc panel for resolution. 12 In opposition to the motion, Bethesda Title asserted that the “narrow legal questions” to be considered by the in banc panel were different than those it would raise in this Court: “The legal questions to be identified in Appellant’s Brief will pertain only to the trial court’s denial of Bethesda Title’s Motion to Vacate and address the law of service of process, and how under the facts of this case, the trial court abused its discretion in not vacating the default judgment entered against Appellant.” It argued that it had to file its notice of appeal prior to the adjudication of its motion for reconsideration or it would have been time-barred from appealing: “Appellant has properly noticed both its appeal and in banc review to address distinct legal issues, which was necessitated by the timing of the lower court’s ruling, as well as the strict timing requirements of the Maryland Rules.” On February 2, 2010, Acting Chief Judge Arrie W. Davis denied the motion “without prejudice to Appellees’ right to seek that relief in their briefs.” In a footnote in his brief, ⁴⁵⁸ Gochnour resurrected his objections and urged that this appeal be dismissed with prejudice.

QUESTION PRESENTED Bethesda Title describes the question before the Court in the following terms: Did the Circuit Court abuse its discretion in denying Bethesda Title’s Motion to Vacate Default Judgment, where there was a showing that Appellant was not properly served or provided the requisite notice of the underlying litigation? In our view, the dispositive question is: Does this Court have jurisdiction to hear this