Canterbury Riding Condominium v. Chesapeake Investors, Inc.

MOYLAN, Judge. The appellant, Canterbury Riding Condominium Council of Unit Owners, appeals from a judgment entered against it by the Circuit Court for Prince George’s County, following the granting of a motion for summary judgment, in favor of the appellees — Chesapeake Investors, Inc.; Riley S. Merson; and Harry D. Barney — as to count two of the appellant’s ⁶³⁸ amended declaration, alleging a breach of fiduciary duty. The circuit court ruled that suit was not filed within the applicable three-year statute of limitations and that the appellees, therefore, were entitled to judgment as a matter of law. Canterbury Riding Condominium is a residential condominium development in Laurel, Howard County, Maryland.

The appellant, the Council of Unit Owners of Canterbury Riding Condominium, consists of the individual unit owners, each of whom also owns a percentage of the common elements of the condominium. The appellee Chesapeake Investors, Inc. is the final successor by merger to MCD Holdings, Inc.; MCD Enterprises, Inc.; and Residential Developers, Inc. In 1975, Residential Developers and MCD Enterprises developed, designed, planned, and constructed all of the buildings and common elements appertaining to the condominium units at Canterbury Riding Condominium, including but not limited to all foundations, bearing walls, perimeter walls, main walls, footings, roofs, walls, columns, girders, beams, supports, yards, streets, recreational facilities, and gardens; central services, such as power, light, gas, sewer, hot and cold water, and central heating; and all pipes, ducts, flues, chutes, conduits, cables, wires, and other utility lines. The developer also undertook to organize a board of directors for the condominium. The by-laws of the condominium provided that the board of directors shall be composed of five persons and that “all directors shall be Unit Owners or persons having a Unit ownership interest ‘in good standing’, and any person designated as a representative of any interest held by a corporation, partnership, as tenants in common, joint tenants, or tenants by the entirety, ‘in good standing’ shall for this purpose be deemed to have a unit ownership interest.” The developer appointed Blake B. Harrison and Riley S. Merson, vice presidents of Residential Developers, and Harry D. Barney, the comptroller of MCD Enterprises, as board members.

Harrison served as ⁶³⁹ president of the board of directors, Merson served as vice president, and Barney served as treasurer and acting secretary. Between August, 1975, and October, 1978, Residential Developers sold all of the condominium units and all interest in the common elements to the appellant or the class it represents. Meanwhile, the three developer-appointed directors served on the board of directors from March, 1976, to October, 1978, when the developer sold the last of its units. In 1977, the unit-owner directors began informing the developer-appointed directors of unit owners’ complaints regarding construction and maintenance of the common elements.

The developer-appointed directors assured them that the problems would be looked into and any defects would be remedied. After the last of the units was sold, the developer, on October 13, 1978, relinquished the files of Canterbury Riding Condominium to the Council of Unit Owners. The developer-appointed directors resigned on October 24, 1978. On October 13, 1981, the appellant, Council of Unit Owners of Canterbury Riding Condominium, which is responsible for the maintenance and repair of the common elements, filed suit against the appellee Chesapeake Investors, Inc., as successor by merger to the developer, and against the three developer-appointed former directors.

In count one of its declaration, as amended on January 22, 1982, the Council alleged negligent construction of the condominium. In count two, the Council alleged that the three developer-appointed directors and, through them, Residential Developers and MCD Enterprises, breached their fiduciary duty to the Council of Unit Owners 1) by allowing the improper construction practices alleged in count one, 2) by reimbursing the developer for assessments, 3) by failing to take adequate steps to effect certain repairs, and 4) by concealing this conduct from August, 1975, to October, 1978. The Council subsequently dismissed its suit against Blake Harrison. The remaining defendants — the appellees here ⁶⁴⁰ in — filed a motion for summary judgment as to count two, contending that the Council had knowledge of the acts constituting the alleged breach of fiduciary duty more than three years before suit was filed and that suit, therefore, is barred by the statute of limitations.

Following a hearing, the circuit court agreed and granted the motion for summary judgment as to count two. An order to that effect was subsequently signed. Thereafter, in consideration of the Council’s motion for entry of a final judgment, the circuit court “found no just reason for delay” and ordered “that a Final Judgment be entered as to the Defendants’ Motion for Summary Judgment as granted to Count II of the Amended Complaint____” The next day, the Council filed its appeal to this Court as to count two. Count one is still pending before the circuit court.

On this appeal, the Council of Unit Onwers concedes that “the trial court was correct in finding that appellees were entitled to judgment as a matter of law on the sole issue of whether the statute of limitations had run for the assessment reimbursement claim.” The Council contends, however, that the trial court erred in granting summary judgment as to count two on the issue of whether the statute of limitations barred the Council’s claim that the appellees breached their fiduciary duty to the Council by allowing the condominium common elements both to be designed and to be constructed improperly and by concealing their knowledge of the construction defects. We cannot reach the merits of the appellant’s contention. Although neither side has questioned or discussed the jurisdiction of this Court to hear this appeal, we hold that this appeal is not properly before us and dismiss it. The circuit court found that there was no just reason for the delay and directed that final judgment be entered as to count two pursuant to Md.Rule 2-602 (formerly Md.Rule 605 a).

This rule was modeled after Fed.R.Civ.P. 54(b). The Maryland rule uses substantially the same language as the federal rule and the interpretations of the federal rule ⁶⁴¹ have been held to be especially persuasive in determining the meaning of its Maryland counterpart. Diener Enterprises v. Miller, 266 Md. 551 , 295 A.2d 470 (1972); Biro v. Schombert, 285 Md. 290 , 402 A.2d 71 (1979); Tidewater Ins. Assocs. v. Dryden Oil Co., 42 Md.App. 415 , 401 A.2d 178 (1979).

Because of the increasingly liberal joinder of claims and joinder of parties permitted under the rules in recent years, this rule, in both its federal and state manifestations, became necessary to alleviate occasional hardship. Available to deal with the infrequent harsh case, it was intended to facilitate the entry of a judgment upon one or more claims or as to one or more parties, in a multiple-claim or multiple-party action, before the final adjudication of the entire case. It makes available, where appropriate, an immediate appeal. It seeks to avoid the possible injustice that might sometimes result from a delay in entering judgment until the final resolution of all claims.

Rule 2-602 (as worded at the time of the trial court’s action in this case) provided: “When more than one claim for relief is presented in an action, including a consolidated action, whether by original claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, or when partial judgment is sought pursuant to Rule 2-501(e), the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only if the court expressly determines that there is no just reason for delay and expressly directs the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties and is subject to revision at any time ⁶⁴² before the entry of judgment that adjudicates all the claims and the rights and liabilities of all the parties.” (Emphasis added). 1 Maryland Rule 2-602 is not a grant of unlimited discretion to the trial judge. By definition, it only applies' 1) “[w]hen more than one claim for relief is presented in an ⁶⁴³ action” and the judgment disposes of at least one of those claims; 2) “when multiple parties are involved” 2 and the judgment disposes of at least one of those parties; or 3) when a summary judgment, pursuant to Rule 2-501(e)(3), disposes of “some but less than all of the amount requested in a claim seeking money relief only.” 3 Unless at least one ⁶⁴⁴ of the claims has been totally decided or unless all the rights and liabilities of at least one of the parties have been adjudicated or unless there has been a partial summary judgment for some but less than all of the amount requested in a claim seeking money relief only, Md.Rule 2-602 is not applicable. Until one of these conditions precedent has been satisfied, the trial judge has no authority to make “an express determination that there is no just reason for delay” and to direct that judgment be entered.

The rule simply does not come into play. The question of what.constitutes “multiple parties” for purposes of the rule has not been a subject of significant dispute. By contrast, the question of what constitutes “multiple claims” for purposes of the rule has been the subject of extensive litigation. It is not always clear whether a case involves multiple claims (where the rule would apply) or only a single claim supported by multiple grounds (where the rule would not apply).

The Court of Appeals opinion in East v. Gilchrist, 293 Md. 453, 459 , 445 A.2d 343, 346 (1982), is instructive in this regard: “A claim for purposes of Rule 605 a must at least be a complete cause of action; if two purportedly separate ‘claims’ are actually the same cause of action, then only one claim is presented. Biro v. Schombert, supra, 285 Md. [290] at 295 [ 402 A.2d 71 ]; Suitland Dev. v. Merchants Mort., 254 Md. 43, 54 , 254 A.2d 359 (1969). Different legal theories for the same recovery, based on the same facts or transaction, do not create separate ‘claims’ for purposes of the rule. Biro , [285 Md.] at 295 [ 402 A.2d 71 ]; Diener Enterprises v. Miller, supra, 266 Md. [551] at 556-557 [ 295 A.2d 470 ].

Moreover, where different items of damages or different remedies are sought for the same cause of action, multiple claims are not present ⁶⁴⁵ ed. Biro , [285 Md.] at 295-297 [ 402 A.2d 71 ]; Harford Sands, Inc. v. Levitt & Sons, supra. As the Supreme Court stated in Liberty Mut. Ins.

Co. v. Wetzel, 424 U.S. 737, 743, n. 4 , 96 S.Ct. 1202, 1206 , [n. 4] 47 L.Ed.2d 435 (1976), with regard to Federal Rule 54(b): ‘It is sufficient to recognize that a complaint asserting only one legal right, even if seeking multiple remedies for the alleged violation of that right, states a single claim for relief.’ ” Similarly, the Court said in Diener Enterprises v. Miller, supra, at 266 Md. 556 , 295 A.2d 71 : “ ‘A single claimant presents multiple claims for relief when his possible recoveries are more than one in number and not mutually exclusive____ But where a claimant presents a number of legal theories, but will be permitted to recover on at most one of them, his possible recoveries are mutually exclusive, and he has but a single claim for relief.’ ... The existence of multiple claims ultimately depends upon whether the ‘aggregate of the operative facts’ presented states more than one claim which can be separately enforced.” (Citations omitted). With respect to one of the appellees, the developer (Chesapeake Investors, Inc.), the condition precedent for the applicability of the rule was not satisfied. There was, therefore, no occasion for the trial judge even to consider the entry of a final judgment as to this appellee.

As to the developer (Chesapeake Investors, Inc.), the two counts of the appellant’s amended declaration state different legal theories for the same recovery, based on the same facts. Essentially, it is the appellant’s position that the developer negligently constructed the condominium. In count one, the appellant alleges such negligent construction and seeks damages to remedy the defects. In count two, the appellant alleges that the appellees — the developer and the developer-appointed directors — breached their fiduciary duty by allowing and concealing improper construction practices and by failing to take adequate steps to effect repairs.

In count ⁶⁴⁶ two, the appellant again seeks damages to remedy the defects and additionally seeks punitive damages. As to the developer, however, count two is not really a separate claim, but only an alternative legal theory for the same recovery. As with count one, it is based on the charge that the developer did not construct the building properly and that the uncorrected defects caused damage to the plaintiffs. The summary judgment as to count two, therefore, did not dispose of a distinct “claim for relief” but only of one issue within a single claim.

Thus, the condition precedent to the invocation of Md.Rule 2-602 as to Chesapeake Investors, Inc. was not satisfied and the circuit court had no authority to direct that final judgment be entered as to the developer. Biro v. Schombert, supra, Lewis v. Lewis, 290 Md. 175 , 428 A.2d 454 (1981); Robert v. Robert, 56 Md.App. 317 , 467 A.2d 798 (1983). We hold that the decision of the circuit court with respect to the appellee Chesapeake Investors, Inc. is in error, as a matter of law, and is hereby reversed. With respect to the other appellees, the developer-appointed former directors, however, a very different legal situation is presented.

As to them, the summary judgment on the second count did, indeed, finally adjudicate all of their liabilities. They were not named in and were not parties to the still-pending first count. Since multiple parties were involved, the circuit court had the authority under the rule to determine, in its discretion, that there was no just reason for delay and to direct the entry of final judgment as to the former directors. The fact that the circuit court had such discretionary authority, however, does not preclude us, as an appellate court, from reviewing the trial court’s decision.

After pointing out that interpretations of the federal rule are especially persuasive as to the meaning of the Maryland rule, the Court of Appeals in Diener Enterprises v. Miller, supra, made this very clear: ⁶⁴⁷ “An examination of pertinent federal decisions demonstrates that even in those cases where the trial judge has discretionary authority under the rule, his exercise of discretion does not preclude review by an appellate court. Sears Roebuck & Co. v. Mackey, 351 U.S. 427 , 76 S.Ct. 895 , 100 L.Ed. 1297 (1956); RePass v. Vreeland, 357 F.2d 801 (3d Cir.1966); Columbia Broadcasting System, Inc. v. Amana Refrigeration, 271 F.2d 257 (7th Cir.1959), cert. denied, 362 U.S. 928 , 80 S.Ct. 756 , 4 L.Ed.2d 747 (1960); Gass v. National Container Corporation, 271 F.2d 231 (7th Cir.1959); Flynn & Emrich Company v. Greenwood, 242 F.2d 737 (4th Cir.1957), cert. denied, 353 U.S. 976 , 77 S.Ct. 1060 , 1 L.Ed.2d 1137 . This permits the appellate court to determine if there is anything in the record which establishes the existence of any hardship or unfairness which would justify discretionary departure from the usual rule establishing the time for appeal.” 266 Md. at 555 , 295 A.2d 71 . (Emphasis supplied).

Although the Court of Appeals questioned whether there existed any compelling reason to permit a piecemeal appeal in the Diener case, it did not have to decide whether there had been an abuse of discretion. The Court held that the trial court lacked authority, as a matter of law, to enter an appealable judgment in that case, since there was no more than one claim in the action. Even though not dealing with an exercise of discretion in that case, the Court, by way of strong dicta, did offer a set of guidelines to trial judges as to how their discretionary authority should be exercised under the rule: “As a guide to trial judges, we suggest that when they contemplate utilizing the provisions of Rule 605 a to enter an appealable judgment they exercise considered discretion. In doing so, they should balance the exigencies of the case before them with the policy against piecemeal appeals and then only allow a separate appeal in the very infrequent harsh case.

Panichella v. Pennsylvania Railroad Company, 252 F.2d 452 (3d Cir.1958), cert. ⁶⁴⁸ denied, 361 U.S. 932 , 80 S.Ct. 370 , 4 L.Ed.2d 353 (1960).” 266 Md. at 555-556 , 295 A.2d 71 . (Emphasis supplied). As we proceed to review this particular exercise of discretion, a preliminary word is in order on the subject of the exercise of discretion generally. Whenever that term of art is used, it connotes, by definition, some range within which discretion may be legitimately exercised one way or the other without constituting an abuse.

The notion of a range of discretion, however, is not an immutable and invariable criterion in all of its myriad applications. The range of discretion frequently changes with the subject matter calling for the exercise of discretion. In handling the progress of a trial, for instance, as where the judge rules on a leading question, permits a continuance, or assesses the need for a mistrial, the range of discretion is very broad and the exercise of discretion will rarely be reversed. On the issue now before us, by way of contrast, the discretionary range is far more narrow.

It is circumscribed by strong policy considerations and well-articulated guidelines. 4 In dealing with the federal counterpart to the Maryland rule, the federal courts have frequently considered the question of whether a trial court has abused its discretion under Rule 54(b). In doing so, they have suggested certain factors that should be considered in determining that no just reason for delay exists. The courts have sometimes failed, however, to distinguish cleanly between the authority to direct a judgment under the rule — that is, whether or ⁶⁴⁹ not the condition precedent to the invocation of the rule has been satisfied — and the propriety of the