Columbia Ass'n v. Poteet

WOODWARD, J. On August 14, 1969, appellees, Joseph Poteet and Shirley Clarke-Poteet (the “Poteets”), acquired title to real property that, pursuant to a declaration executed by the Poteets’ predecessor in title, was subject to certain covenants, easements, charges, and liens. Article II of the declaration provided for a charge to be levied in each year against the property subject to the declaration, which included the property owned by the Poteets. The Poteets failed to pay the annual charges for which they were billed between July 1, 1973 and June 30, 2006. On December 19, 2008, appellant, Columbia Association, Inc. (“Columbia”), filed a complaint against the Poteets in the Circuit Court for Howard County, seeking recovery of all of the annual charges, in the total amount of $45,716.87.

After both parties filed motions for summary judgment, the circuit court granted summary judgment in favor of the Poteets as to Columbia’s complaint and denied Columbia’s motion for partial summary judgment as to the Poteets’ liability for the annual charges. 1 Columbia appeals from the judgment of the circuit court and presents three questions for our review, which we have rephrased: I. Did the circuit court err in ruling that the three-year limitations period for simple contracts, instead of the twelve-year period for specialties, applied because the declaration was not an instrument under seal?

II

Did the circuit court err in ruling that the Poteets did not acknowledge the debt? ⁵⁴² III. Did the circuit court err in denying Columbia’s motion for partial summary judgment as to the Poteets’ liability for the annual charges? For the reasons set forth herein, we shall affirm in part and reverse in part the judgment of the circuit court. BACKGROUND On December 13, 1966, Howard Research and Development Corporation (“HRD”), the developer of the Town of Columbia, conveyed to Columbia approximately 13,690,118 acres of land (the “Property”) 2 in order “to cause [certain] covenants, easements, charges and liens to run with, burden and bind the Property.” On the same day, Columbia and C. Aileen Ames executed a Deed, Agreement and Declaration of Covenants, Easements, Charges and Liens (the “Declaration”), whereby Columbia conveyed the Property to Ames, subject to the covenants, easements, charges and liens set forth in the Declaration, and Ames agreed to the provisions of the Declaration.

Ames, in turn, reconveyed the Property to HRD, “subject to, and burdened and bound by, all covenants, easements, charges and liens imposed hereby.” In the Declaration, Columbia conveyed the Property to Ames subject, however, to the following covenants, easements, charges and hens, which it is hereby covenanted and agreed shall be binding upon ... [Ames], her heirs, executors, administrators and assigns ... and for the remainder of the unexpired terms of the leasehold estates assigned and conveyed hereby. And the parties hereto further covenant, agree and declare as follows: ⁵⁴³ ARTICLE II Assessment of Annual Charge Section 2.01. For the purpose of providing funds for use as specified in Article IV hereof, the Board [of Columbia] shall in each year, commencing with the year 1966, assess against the Assessable Property, a charge (which shall be uniform with respect to all Assessable Property) equal to a specified number of cents (not in excess of seventy-five cents) for each One Hundred Dollars ($100) of the then current “Assessed Valuation”, as hereinafter defined,[ 3 ] of the Assessable Property. In making each such assessment, the Board shall separately assess each Lot based upon its Assessed Valuation, and each such Lot shall be charged with and subject to a lien for the amount of such separate assessment which shall be deemed the “Annual Charge” with respect to such Lot.

Section 2.03. As soon as may be practical in each year, [Columbia] shall send a written bill to each Owner stating (i) the Assessed Valuation of each Lot owned by such Owner as the same appears on the appropriate public record; (ii) the number of cents per One Hundred Dollars ($100) of such Assessed Valuation assessed by the Board as the Annual Charge for the year in question, (iii) the amount of the Annual Charge assessed against each such Lot, stated in terms of the total sum due and owing as the Annual Charge, and (iv) that unless the Owner shall pay the Annual Charge within thirty (30) days following the date of receipt of the bill the same shall be deemed delinquent and will bear interest at the rate of six percent (6%) per annum until paid. Section 2.04. If the Owner of any Lot shall fail to pay the Annual Charge within ninety (90) days following receipt of the bill referred to in Section 2.03 hereof, in addition to the right to sue the Owner for a personal judgment, [Colum ⁵⁴⁴ bia] shall have the right to enforce the lien hereinafter imposed to the same extent, including a foreclosure sale and deficiency decree, and (to the extent the appropriate court will accept jurisdiction) subject to the same procedures, as in the case of mortgages under applicable law, and the amount due by such Owner shall include the Annual Charge, as well as the cost of such proceedings, including a reasonable attorney’s fee, and the aforesaid interest....

ARTICLE III Imposition of Charge and Lien Upon Property Section 3.02.... [E]ach Owner of each Lot by the acceptance of a Deed therefore, whether or not it shall be so expressed in such Deed, shall be deemed to have agreed to be personally liable for the payment of each Annual Charge assessed by [Columbia] against such Lot in each year during any part of which such Owner holds title to such Lot or to a leasehold interest therein. At the end of the Declaration, the following clause appears: “IN WITNESS WHEREOF the parties hereto have set their hands and respective seals as of the day and year first above written.” Immediately below that clause are the signatures of the president and secretary of Columbia, and Ames. “[SEAL]” is printed after the signature of Ames. The seal of Columbia is affixed to the page containing said signatures. On August 14, 1969, HRD executed a deed (the “Deed”) conveying the real property, with improvements, located at 5904 Waterloo Road in Columbia, Maryland (the “property”) to the Poteets, in fee simple.

A clause in the Deed stated that the property was [s]ubject ... to those certain covenants, easements, charges, liens, restrictions and other encumbrances imposed upon the lots conveyed hereby by th[e] ... Declaration dated December 13, 1966, by and between [Columbia], as Grantor, and [] Ames, as Grantee, and recorded among the Land ⁵⁴⁵ Records of Howard Comity in Liber W.H.H. 463 folio 158, etc., and the Grantees, their heirs and assigns, hereby covenant that the said covenants, easements, charges, liens, restrictions and other encumbrances shall be binding upon the Grantees, their heirs and assigns during such time as the Grantees, their heirs and assigns, or any of them, hold title to or be in possession of the lots conveyed hereby; and, further, that the said covenants, easements, charges, liens, restrictions and other encumbrances shall, in all events and regardless of ownership or possession be binding upon the lot conveyed hereby to the end that the same shall run with, bind and burden the said lot for the period specified in said ... Declaration. Columbia first sent a bill to the Poteets in 1973 stating the amount of the Annual Charge assessed against the property for that year.

In response, the Poteets filed a petition for declaratory judgment and a restraining order against Columbia. The Poteets asserted that the property was exempt from the covenants, easements, charges, and liens set forth in the Declaration because, at the time they acquired title, the Poteets were unaware that the property was subject to those restrictions. In a Memorandum and Decree, dated November 15, 1973, the Circuit Court for Howard County dismissed the Poteets’ petition and held that the property was, in fact, subject to the restrictions contained in the Declaration. The Poteets did not appeal the circuit court’s ruling.

Thereafter, Columbia periodically sent collection letters and billing statements to the Poteets regarding due and unpaid Annual Charges assessed against the property. The Poteets, however, did not pay any of the Annual Charges for the period of July 1, 1973 to June 30, 2006. The Poteets conveyed the property to Waterloo Land No. 1, LLC by deed dated April 12, 2006. On December 19, 2008, Columbia filed a complaint in the Circuit Court for Howard County, alleging that the Poteets “breached their obligations under the Declaration” by “failing to pay the Annual Charges.” Columbia sought damages ⁵⁴⁶ against the Poteets in the amount of $45,716.87, which Columbia claimed was the total amount of the Annual Charges for the years 1973 to 2006.

The Poteets filed an amended answer, together with a counterclaim for breach of contract. On July 29, 2009, the parties filed cross-motions for summary judgment. Columbia moved for partial summary judgment as to liability on its claim against the Poteets and for summary judgment as to the Poteets’ counterclaim. The Poteets moved for summary judgment on Columbia’s complaint, arguing, inter alia, that Columbia’s claim was time-barred as a matter of law.

The parties then filed oppositions to the respective motions for summary judgment, as well as reply memoranda. Notably, in its opposition to the Poteets’ motion for summary judgment, Columbia contended that the Declaration was an instrument under seal to which a twelve-year limitations period applied. Columbia also argued that the statute of limitations did not bar its claim against the Poteets “due to [the Poteets’] legal ‘acknowledgment’ of the debt.” The circuit court held a hearing on October 9, 2009. At the conclusion of the hearing, the court denied Columbia’s motion for partial summary judgment as to liability, granted Columbia’s motion for summary judgment as to the Poteets’ counterclaim, and granted the Poteets’ motion for summary judgment as to Columbia’s complaint.

This appeal by Columbia followed. STANDARD OF REVIEW A trial court shall grant a motion for summary judgment “if the motion and response show that there is no genuine dispute as to any material fact and that the [moving] party ... is entitled to judgment as a matter of law.” Md. Rule 2 — 501(f). We review an order granting summary judgment de novo. Walk v. Hartford Cas.

Ins. Co., 382 Md. 1, 14 , 852 A.2d 98 (2004). In our review, we construe the record, including all inferences, in the light most favorable to the non- ⁵⁴⁷ moving party. Bednar v. Provident Bank of Md., Inc., 402 Md. 532, 542 , 937 A.2d 210 (2007).

DISCUSSION I. Instrument Under Seal and the Applicable Limitations Period On appeal, Columbia first contends that the circuit court erred in ruling that Columbia’s claim was barred by the three-year limitations period applicable to simple contracts under Maryland Code (1974, 2006 Repl.Vol.), § 5-101 of the Courts and Judicial Proceedings Article (“C.J.”). 4 Columbia asserts that “[t]he contract at issue here — the one that the Poteets breached and the basis for [ColumbiaJ’s claim — is the Declaration, not the[ ] [D]eed” by which the Poteets acquired title to the property. According to Columbia, the Declaration is a sealed instrument, and, therefore, “qualifies as a ‘specialty’ to which a twelve-year limitations period applies, as provided in [C.J.J § 5-102(a)(5).” Columbia contends that, because it filed its complaint against the Poteets on December 19, 2008, “that action was timely, at a minimum, as to all amounts due for the prior twelve years.” Columbia concludes that the circuit court erred in entering summary judgment for the Poteets, because “there [wajs no question that at least a substantial part of [ColumbiaJ’s claim was not barred by limitations.” In response, the Poteets argue that the Declaration is not a specialty, and, therefore, Columbia’s action on the Declaration is barred by the three-year statute of limitations applicable to simple contracts. According to the Poteets, the Court of Appeals in Tipton v. Partner’s Management Co., 364 Md. 419 , ⁵⁴⁸ 773 A.2d 488 (2001) considered a lease agreement containing “virtually i[den]tical language” to that found in the Declaration, and “held that such language did not create a specialty.” Moreover, the Poteets assert that, because they were not parties to the Declaration, did not sign the Declaration, and held no interest in the property when the Declaration was established in 1966, the Declaration was not an instrument under seal as it applied to them. Consequently, the Poteets contend that the three-year limitations period set forth in C.J. § 5-101 governs Columbia’s claim on the Declaration against the Poteets.

The Poteets also argue that “[t]he Declaration provide[d] that the assessment for each year is a separate debt, with its own date on which limitations begin to run.” Thus the Poteets conclude that, because Columbia filed the action in the present case in the circuit court on December 19, 2008, Columbia is time-barred from recovering any of the yearly debts that accrued before December 19, 2005. Columbia’s first contention on appeal raises two distinct issues. They are: (1) whether the Declaration was under seal so as to create a specialty instrument and thus make the applicable period of limitations twelve years under C.J. § 5-102(a), rather than the three-year period under C.J. § 5-101; and (2) if the Declaration was under seal, whether the limitations period for specialty instruments applied to the Poteets, who were not signatories to the Declaration. C.J. § 5-102, entitled “Specialties,” provides, in relevant part: (a) Twelve-year limitation. — An action on one of the following specialties shall be filed within 12 years after the cause of action accrues, or within 12 years from the date of the death of the last to die of the principal debtor or creditor, whichever is sooner: (1) Promissory note or other instrument under seal; (2) Bond except a public officer’s bond; (3) Judgment; ⁵⁴⁹ (4) Recognizance; (5) Contract under seal; or (6) Any other specialty.

(Emphasis in bold added). C.J. § 5-102 does not itself define what constitutes a “specialty.” Wellington Co., Inc. Profit Sharing Plan & Trust v. Shakiba, 180 Md.App. 576, 601 , 952 A.2d 328 (2008). In General Petroleum Corp. v. Seaboard Terminals Corp., 19 F.Supp. 882, 883-84 (D.Md.1937), the United States District Court for the District of Maryland opined that a specialty is “a well-known term of the common law which in Maryland and elsewhere by judicial decision denotes a legal instrument under seal.” In addition, Black’s Law Dictionary 1398 (6th ed.1990) defines the term “specialty” as follows: “A contract under seal. A writing sealed and delivered, containing some agreement.

A special contract. A writing sealed and delivered, which is given as a security for the payment of a debt, in which such debt is particularly specified.” 5 (Citation omitted). In Warfield v. Baltimore Gas & Electric Co., 307 Md. 142, 143 , 512 A.2d 1044 (1986), the Court of Appeals held that “the inclusion of the word ‘seal’ in a pre-printed form executed by an individual [wa]s sufficient to make the instrument one under seal.” (Emphasis added). The Court described the form at issue in that case as follows: In 1979 appellant, Barbara L. Warfield, executed a guaranty to appellee, Baltimore Gas & Electric Company (BG & ⁵⁵⁰ E).

It was on a regular form of the company. “(SEAL)” was printed at the end of each of the prepared lines on the form and appears after the signature of Warfield. The instrument does not recite that it is under seal. Id. In holding that the guaranty was a contract under seal, the Court rejected Warfield’s contention that “there must be some recognition in the instrument that it is under seal.” Id. at 147-48 , 512 A.2d 1044 .

The Court quoted with approval the following language from General Petroleum Corp. v. Seaboard Terminals Corp., 23 F.Supp. 137, 140 (D.Md.1938): If the contract is signed by an individual opposite and in obvious relation to a legally sufficient seal, the instrument will be taken as a sealed document, where there is nothing on the face of the paper to indicate the contrary.... A recital of the sealing or of the delivery of a written promise is not essential to its validity as a sealed contract. Id. at 143-44 (quotations omitted). Accordingly, the Court held that the twelve-year statute of limitations under C.J. § 5-102 was applicable.

Id. at 143,148. In Gildenhorn v. Columbia Real Estate Title Insurance Co., 271 Md. 387, 389 , 317 A.2d 836 (1974), the Court of Appeals considered, inter alia, whether two title insurance policies were specialties. The insurance policies had the following testimonium clause: “IN WITNESS WHEREOF, Columbia Real Estate Title Insurance Company has caused its corporate name and seal to be hereunto affixed by its duly authorized officers.” Id. at 390 , 317 A.2d 836 (quotations omitted). Underneath that clause was printed the name of Columbia Real Estate Title Insurance Company, with the signatures of the president and secretary below that.

Id. The corporate seal was printed over those signatures. Id. The Court examined the role that sealed instruments play in corporate transactions, stating: In the early law it was held that a corporation could not contract except under its corporate seal.

This rule persisted, but was increasingly relaxed during the 19th century. Today, in the absence of charter or statute to the contrary, ⁵⁵¹ a corporation may bind itself by a writing not under seal to the same extent as an individual. As a result, the main purpose of the corporate seal now is as a prima facie authentication that the document is the act of the corporation and that the officers who have executed it have been thereunto duly authorized. This function of the corporate seal, however, must be distinguished from its use as a general seal.

The mere fact that the corporate seal appears on the instrument other than in the usual place of the private seal would not make the instrument a specialty in the absence of a recital affixing the seal or of extrinsic evidence showing an intention to have it serve the function of a general seal. In other words, it is a question of fact in any specific case as to whether the corporation has employed its corporate seal as a general seal or whether it has adopted any other permissible form of seal as convenient for the [purpose of authentication]. Id. at 398 , 317 A.2d 836 (emphasis added) (citations omitted). The Gildenhorn Court concluded that the aforesaid testimonium clause in the insurance policies indicated an intention to establish an instrument under seal.

Id. at 403, 406 , 317 A.2d 836 . Thus the Court held that the policies were specialities and, as a result, the twelve-year statute of limitations was applicable. Id. at 406 , 317 A.2d 836 . Turning to the instrument at issue in the present case, Ames, in her individual capacity, signed the Declaration next to the word “seal.” According to the Court of Appeals’ holding in War field, the inclusion of the word “seal” in the Declaration next to Ames’s signature was, in itself, sufficient to make the Declaration an instrument under seal as to Ames.

See 307 Md. at 143 , 512 A.2d 1044 . The Declaration is also an instrument under seal as to Columbia. Pursuant to the Court of Appeals’ opinion in Gildenhorn , the mere affixation of Columbia’s corporate seal on the Declaration did not necessarily make the Declaration a specialty. See 271 Md. at 401-02 , 317 A.2d 836 .

Nonetheless, the recital in the Declaration directly above the signatories’ names, stating “IN WITNESS WHEREOF the parties hereto have set their hands and ⁵⁵² respective seals as of the day and year first above written,” is conclusive evidence of an intent to create a sealed instrument. See id. at 403 , 317 A.2d 836 (formal recitals such as “signed and sealed” and “witness my hand and seal” in the body of an instrument make the instrument a sealed one for statute of limitations purposes). Accordingly, a claim based upon either Ames’s or Columbia’s obligations under the Declaration is subject to the twelve-year statute of limitations applicable to specialties. The Poteets rely on the Court of Appeals’ opinion in Tipton in arguing that the Declaration is not a document under seal.

That reliance is misplaced. In Tipton , the Court considered whether the three-year limitations period under C.J. § 5-101 governed a residential lease agreement. 364 Md. at 422 , 773 A.2d 488 . The Court described the lease as follows: The lease was for a period of one year and was to commence on January 1, 1992 and end on December 31, 1992. Just above the signatures of the parties on the pre-printed form lease, it stated that: “IN WITNESS WHEREOF the parties hereto have set their hands and seals the day and year first above written.” Adjacent to the signatures at the end of the signature line was the word “SEAL” in parenthesis.

There was no language in the lease in respect to statutes of limitation. Id. at 422-23 , 773 A.2d 488 . The Court looked for the legislature’s intent in enacting C.J. § 5-101, and found that since the 18th century, a three-year limitations period had applied to actions on residential leases. Id. at 434-42, 773 A.2d 488 .

In light of that legislative intent, the Court held that claims for arrearages of rent under a residential lease, even a lease to which a seal is affixed, must be filed within the three-year limitation period unless the parties to the lease agree, in the body of the lease, that the lease is subject to the twelve-year limitation period of [C.J. §] 5-102. Id. at 445, 773 A.2d 488 . The holding in Tipton is inapplicable in the instant case. In Tipton , the Court said that it was immaterial whether the ⁵⁵³ residential lease was a sealed instrument.

Id. at 422 , 773 A.2d 488 . Instead, the Court determined that actions for rent arrearages under residential lease agreements had always been governed by a three-year limitations period. Id. at 445 , 773 A.2d 488 . In other words, the Court’s holding was based on an interpretation of the limitations statute, not on whether the lease was a sealed instrument.

Additionally, the Tipton Court, in dicta, observed: The use of the word seal on documents involving the conveyance of interests in real property ... has historically had a separate purpose from that involving contracts of a different nature. While the use of the word seal, in an appropriate context,