Carpenter Realty Corp. v. Imbesi

BATTAGLIA, J. This case has had a long and circuitous history in the Maryland judicial system. At the conclusion of the motions hearing in the Circuit Court for Baltimore County, on the last leg of the case’s journey, the trial judge aptly mused, “Why do I think regardless [ofj how I decide this, Rowe Boulevard [has] not seen the last of [the] Imbesi case?” In this appeal, we must put to rest the question of whether the respondent, the Estate of Thomas L. Imbesi (hereinafter “the Estate”) is entitled to post-judgment interest on a judgment entered against petitioners, Carpenter Realty Corporation (hereinafter “Carpenter Realty”) and 7UP Bottling Company of Baltimore, Inc. (hereinafter “7UP/Baltimore”), on a claim brought by the Personal Representative of the Estate against the corporations for the unpaid balance of money owed on a stock transaction between Mr. Imbesi and the petitioners. I. Facts On June 1, 1982, Thomas L. Imbesi entered into a Stock Redemption Agreement with Carpenter Realty and 7UP/Balti-more, as well as several other 7UP entities (7UP Bottling Company of Philadelphia, Inc., 7UP Bottling Company of Bridgeton, Inc., 7UP Bottling Co. of Camden, Inc., 7UP Bottling Company of Salisbury, Inc., and 7UP Wilmington Company). Pursuant to this agreement, the corporations redeemed Imbesi’s shares of stock in the corporations for ⁵⁵² $500,000.00 plus 5 1/4% interest over a 120 month period and forgiveness of a $137,158.00 debt owed by Imbesi to the corporations.

The payments to Imbesi were made according to the Stock Redemption Agreement through April of 1991, at which time, a corporate officer of 7UP/Baltimore requested an extension of the time for payment because of financial difficulties. After a payment in July, 1991, the corporation failed to make any additional payments under the Stock Redemption Agreement. Thomas. L. Imbesi died on March 10, 1992.

On March 7, 1994, Dennis Michael Imbesi, who had been appointed as the Personal Representative of the Estate of Thomas L. Imbesi, filed a lawsuit in the Circuit Court for Baltimore County on behalf of the Estate against Carpenter Realty and 7UP/Balti-more seeking recovery of the outstanding debt owed to the Estate under the Stock Redemption Agreement. On the same day, the Circuit Court issued a Writ of Attachment Before Judgment upon the real property of Carpenter Realty at 6159 Edmondson Avenue, Baltimore County, Maryland 21228. The Circuit Court also orderéd Carpenter Realty to set aside $78,263.23 in an escrow account with the Clerk of the Circuit Court as security to satisfy any potential judgment in favor of the Estate. 1 Thereafter, Carpenter Realty and 7UP/Baltimore filed a Counterclaim against the Estate asserting that they had been assigned a Note under seal from the 7UP Bottling Company of Philadelphia, Inc. The Counterclaim alleged that the Note evidenced the indebtedness of Thomas L. Imbesi to the companies, the assignees of the Note, in the amount of $80,000.00 plus 6% interest. 2 The Note had become due and payable on ⁵⁵³ October 23, 1989, although the Counterclaim alleged that neither Imbesi nor his Estate had made any payments under the Note. A bench trial commenced on March 22, 1995.

On April 10, 1995, the Circuit Court issued its Opinion and Order entering a judgment for the Estate in the amount of $57,447.67, the amount the parties had stipulated was the appropriate amount should the court enter a judgment in the Estate’s favor. The judgment did not include an award of pre-judgment interest. The Circuit Court also concluded that Carpenter Realty had not met its burden of proof to establish a right to set-off 3 its liability to the Estate through its Counterclaim concerning the Estate’s failure to make payments on the Note because the corporations did not file a timely claim for payment against the Estate pursuant to Maryland Code (1974, 1991 Repl.Vol.) Section 8-103 of the Estates and Trusts Article. 4 Carpenter Realty and 7UP/Baltimore appealed the Circuit Court’s decision on the Counterclaim to the Court of Special Appeals, asserting that the court erred in finding that they had not met their burden of proof on the counterclaim. In an unreported decision, the Court of Special Appeals held that Carpenter Realty and 7UP/Baltimore established a prima facie case for entitlement to set-off their liability to the Estate with the ⁵⁵⁴ claim against the Estate on the Note by producing the instrument to the trial court.

The court declined to determine whether the statute of limitations period set forth in Section 8-103 of the Estates and Trusts Article barred the petitioner’s claim for set-off. Thus, the Court of Special Appeals reversed the Circuit Court’s judgment in favor of the Estate and remanded the case to the Circuit Court for a rehearing on whether the $80,000 Note could be used to set-off the amount owed to the Estate under the Stock Redemption Agreement. In providing guidance to the Circuit Court on remand, the Court of Special Appeals stated in dicta: By its terms, the nonclaim statute, ET § 8-103, would prevent appellants from recovering any monies from the Estate, because they failed to assert the Note as a claim against the Estate within the statutory period. However, whether appellants can utilize the Note to recover monies from the Estate at this juncture is a far different issue than whether they can now assert the Note to prevent the Estate from recovering from them under the Agreement.

We note, in passing, that allowing a debt to be used as a setoff will not thwart the chief purpose behind the nonclaim statute — the prompt administration and closing of estates-in that a setoff will only be asserted, as here, as a defense or in response to a claim made by an estate, and not in a separate proceeding. On November 18, 1996 the Circuit Court held a hearing on the merits of Carpenter Realty and 7UP/Baltimore’s claim for set-off. On January 14, 1998, the court entered an order, stating: This matter comes before the Court on remand from the Court of Special Appeals pursuant to Maryland Rule 8-604(d)(1). The Court of Special Appeals has asked this Court to determine whether the indebtedness to the Defendant evidenced by the existence of an Eighty Thousand Dollar ($80,000) Note may be allowed to be used as a defensive set-off to the amount owed to the Estate by the Defendants under a Stock Redemption Agreement, thereby extinguishing the Plaintiffs Complaint for Fifty-Seven ⁵⁵⁵ Thousand, Four Hundred and Seventy-Seven Dollars and Sixty Seven Cents ($57,477.67).

Noting the issue to be one of first impression in Maryland, the Court of Special Appeals makes clear that under Maryland’s Non-claim Statute (Estates and Trusts § 8-103), the Appellant would be precluded from recovering monies from the Estate because they failed to assert the claim within the statute of limitations. If the Note in question may not be utilized as a “sword,” may it be utilized as a “shield” despite the running of limitations? This Court believes that it may indeed. The Court of Special Appeals made it a point to specifically mention that using the Note as a set-off does not offend the chief purpose behind the Non-claim Statute — the prompt administration and closing of estates.

Additionally, the Defendants refer to numerous cases from other jurisdictions that deem it proper and equitable to allow the defensive set-off. This Court is persuaded by the reasoning contained in those cases and the direction provided by the Court of Special Appeals that the set-off should be permitted. Therefore, the court ordered the entry of judgment in favor of Carpenter Realty and 7UP/Baltimore, with costs to be paid by the Estate. The Estate appealed the Circuit Court’s decision to the Court of Special Appeals, emphasizing that the set-off against Carpenter’s $57,447.67 obligation was invalid because the Note was stale when assigned.

On April 2, 1999, however, the Court of Special Appeals affirmed the Circuit Court’s judgment permitting the set-off. See Imbesi v. Carpenter Realty Carp., 125 Md.App. 676, 682 , 726 A.2d 854, 857 (1999) (stating that, “[t]he operative language of the nonclaim statute does not expressly prevent a defendant from using an unpresented claim as a defensive set-off to a claim asserted affirmatively by an estate”)(emphasis in original). On January 19, 2000, this Court reversed the judgment of the Court of Special Appeals. See Imbesi v. Carpenter Realty Corp. et al., 357 Md. 375, 391 , 744 A.2d 549, 558 (2000)(construing Section 8-108(a) of the Estates and Trusts Article as ⁵⁵⁶ barring “a claim that has not been timely presented and that arises out of a transaction separate from that on which the estate claims”).

We remanded the case to the Court of Special Appeals with instructions to reverse the decision of the Circuit Court and remand the matter for further proceedings consistent with our opinion. On March 1, 2000, the Estate petitioned the Circuit Court for entry of judgment in the Estate’s favor in the amount of $57,447.67, seeking pre-judgment interest in the amount of $3,588.51, at the rate of 6% from the date of the filing of the original Complaint through the original trial on March 22, 1995, and post-judgment interest at the rate of 10% in the amount of $30,518.09 for the period of March 22,1995 through March 22, 2000. 5 Carpenter Realty and 7UP/Baltimore responded to the Estate’s Petition for Costs and filed a Cross Petition for Release of Funds, wherein they conceded that the Estate was entitled to entry of judgment in the amount of $57,477.67 plus the costs of the second appeal to the Court of ⁵⁵⁷ Special Appeals reduced by the costs owed by the Estate for the first appeal for a judgment totaling $57,971.27. The corporations asserted, however, that the Estate was not entitled to any pre-judgment or post-judgment interest and that the balance of the amount of money held in the interest bearing account by the Clerk of the Circuit Court after satisfaction of the $57,971.27 judgment for the Estate should be returned to them. The Circuit Court held a motions hearing on September 5, 2000, to consider the parties’ contentions.

On September 13, 2000, the court issued an opinion which stated, in part: The interest on the judgment in this case is interesting. The Plaintiffs averments are intellectually stimulating but must fail on the basis of legal logic. This Court notes that the Defendants originally deposited a stipulated amount of $57,477.67 with the Registry of the Clerk’s Office. These funds were deposited in a non-interest bearing account....

Several years later, upon the request of counsel as the appeal in this case progressed, the funds were transferred to an interest bearing account paying a meager 2% interest per annum. This Court does not feel, in light of the litigation track of this controversy, that the Plaintiff should receive pre-judgment interest in excess of the interest accumulated by the Clerk’s Office on the original $57,477.67. Although the issue had been raised and argued by both parties, the opinion made no mention of an award of post-judgment interest. The court noted that as of August 30, 2000, the money held in the escrow account, which had accrued interest, totaled $84,238.92.

Thus, the Circuit Court awarded costs to the Estate in the amount of $523.60, 6 damages in the amount of $57,477.67 plus accrued interest of $4,356.16, and ordered that a judgment in keeping therewith be entered. The balance of the escrow account funds plus the ⁵⁵⁸ interest accrued on the account through August 30, 2000 was ordered to be paid to the corporations. The remaining balance of interest earned on the account from August 30, 2000 through October 19, 2000 was to be paid 73.4% to the Estate and 26.6% to the corporations. The Estate appealed to the Court of Special Appeals asserting that the Circuit Court erred in concluding that the Estate was not entitled to pre-judgment or post-judgment interest.

In an unreported decision, the Court of Special Appeals concluded that the Circuit Court did not abuse its discretion by not awarding pre-judgment interest to the Estate. The Court of Special Appeals concluded that the Estate was entitled to receive 10% post-judgment interest on the damages award of $57,447.67 commencing on April 4, 1995, which was the date of the judgment entered in favor of the Estate after the first trial. Carpenter Realty filed a Petition for Writ of Certiorari, which we granted, Carpenter Realty Corp. v. Imbesi, 367 Md. 722 , 790 A.2d 673 (2002), to consider the following question: After a judgment in favor of a plaintiff is reversed and the action remanded for rehearing, is that plaintiff entitled to post-judgment interest on a subsequent judgment in his favor, dating from the original judgment? For the reasons set forth below, we answer that question in the negative.

II

Discussion As a preliminary matter, we consider the statutory provisions governing post-judgment interest. Maryland Code (1974, 1999 Repl.Vol.) Section ll-107(a) of the Courts and Judicial Proceedings Article provides as follows: (a) Legal rate of interest on judgments.— Except as provided in § 11-106 of this article, the legal rate of interest on a judgment shall be at the rate of 10 percent per annum on the amount of judgment. Maryland Rule 2-604(b), further provides that “[a] money judgment shall bear interest at the rate prescribed by law ⁵⁵⁹ from the date of entry.” Pursuant to Maryland Rule 2-601 (b), the effective date of entry of a judgment is the date on which the clerk of the court prepares a written record of the judgment. See Medical Mut.

Liab. Ins. Soc’y. of Maryland v. Davis, 865 Md. 477 , 481, 781 A.2d 781, 783 (2001); Maxima Corp. v. 6933 Arlington Dev. Ltd. Partnership, 100 Md.App. 441, 464 , 641 A.2d 977, 988 (1994)(stating that “a judgment is not entered until the ministerial act of entering judgment on a file jacket, a docket, or docket sheet, according to the court’s practice, is complete”); see also Md. Rule 8-202(f)(For actions appealed to the Court of Special Appeals, entry of the judgment “occurs on the day when the clerk of the lower court first makes a record in writing of the judgment, notice, or order on the file jacket, on a docket within the file, or in a docket book, according to the practice of that court, and records the actual date of the entry.”); Md. Rule 8-302(d)(For actions before the Court of Appeals, entry of the judgment “occurs on the day when the clerk of the lower court first makes a record in writing of the judgment, notice, or order on the file jacket, on a docket within the file, or in a docket book, according to the practice of that court, and records the actual date of the entry.”) We have explained the purpose of post-judgment interest as follows: The purpose of post-judgment interest is obviously to compensate the successful suitor for the same loss of the use of the monies represented by the judgment in its favor, and the loss of income thereon, between the time of the entry of the judgment ... —when there is a judicial determination of the monies owed it — and the satisfaction of the judgment by payment.

I.W. Berman Prop. v. Porter Bros., Inc., 276 Md. 1, 24 , 344 A.2d 65, 79 (1975); see King v. State Roads Comm’n of the State Highway Admin., 298 Md. 80, 85 , 467 A.2d 1032, 1034 (1983)(explaining that in a condemnation action, the property owner “is entitled to receive post-judgment interest on the award at the legal rate from the date of entry of the judgment ⁵⁶⁰ ... [until] the date the award is actually paid”). Just when was there a judicial determination of monies owed to the Estate in this circuitous legal scenario? In the present matter, we must discern what constitutes the date of entry of a judgment where the first judgment in the action was reversed and remanded by the Court of Special Appeals, and subsequent judgments were entered on the record. Petitioners argue that the' Court of Special Appeals’s reversal of the Circuit Court judgment in its first unreported decision in this case vitiated the original judgment in favor of the Estate.

The Estate asserts, however, that the Court of Special Appeals correctly held that it should receive post-judgment interest retroactive to April 4, 1995, which was the date of the first judgment in favor of the Estate. Thus, we must determine when a legal liability attached against Carpenter Realty and 7UP/Baltimore in the form of a judgment which would trigger the' accrual of post-judgment interest. Both this Court and the Court of Special Appeals have the ability to dispose of an appeal by dismissing the action, affirming the judgment, vacating or reversing the judgment, modifying the judgment, remanding the action to a lower court for further consideration, or any combination thereof. See Md. Rule 8-604(a).

Furthermore, Maryland Rule 8-604(e) states, “[i]n reversing or modifying a judgment in whole or in part, the Court may enter an appropriate judgment directly or may order the lower court to do so.” 7 We have held that where our mandate specifically directs the entry of a judgment after remand, post-judgment interest on the award runs ⁵⁶¹ from the date of the issuance of the mandate. See Andrulis v. Levin Construction Corp., 331 Md. 354, 378 , 628 A.2d 197, 209 (1993)(increasing the circuit court’s judgment by $27,812 and specifying that post-judgment interest on this additional amount would run only from the date the mandate issued). In the absence of a specific instruction from this Court to the trial court that the court must award post-judgment interest dating back to the entiy of the original judgment, such an award should rest with the sound discretion of the trial court. Thus, we must trace the path of this case from the entry of the original judgment through the subsequent mandates issued on appeal to ascertain when a judgment was entered against the corporations from which post-judgment interest would accrue.

The Circuit Court’s order dated April 10, 1995 entering judgment in favor of the Estate was a final judgment for purposes of appellate review. See Montgomery County v. Revere Nat'l Corp., 341 Md. 366, 378 , 671 A.2d 1, 7 (1996)(ex-plaining that “an order entered on the docket pursuant to [Maryland] Rule 2-601, and having the effect of terminating the case in the circuit court, is a final judgment”). In the first appeal, the Court of Special Appeals reversed the judgment of the Circuit Court and remanded the matter. The mandate expressly did not limit the reversal solely to the issue of the corporations’ claim for set-off against the Estate.

We have explained that “[w]here a mandate is ambiguous, one must look to the opinion and other surrounding ⁵⁶² circumstances to determine the intent of the court.” Balducci v. Eberly, 304 Md. 664, 670 , 500 A.2d 1042, 1045 (1985). A reversal is defined as “the annulling or setting aside by an appellate court of a decision of a lower court,” Litman v. Massachusetts Mut. Life Ins. Co., 825 F.2d 1506 , 1514 n. 11 (11th Cir.1987), while the provision governing the remand of civil cases from an appellate court states: If the Court concludes that the substantial merits of a case will not be determined by affirming, reversing or modifying the judgment, or that justice will be served by permitting further proceedings, the Court may remand the case to a lower court.

In the order remanding a case, the appellate court shall state the purpose for the remand. The order of remand and the opinion upon which the order is based are conclusive as to the points decided. Upon remand, the lower court shall conduct any further proceedings necessary to determine the action in accordance with the opinion and order of the