First Wholesale Cleaners Inc. v. Donegal Mutual Insurance

HOLLANDER, Judge. This case is an example of the proverbial “rush to judgment.” Here, judgment was granted in favor of the defendant because the plaintiff failed to file timely an amended complaint after the case was removed by the defendant from the District Court for Anne Arundel County to the Circuit Court for Anne Arundel County. In July 2000, First Wholesale Cleaners Inc., t/a Queens Cleaners (“Wholesale”), appellant, filed suit against Donegal Mutual Insurance Company (“Donegal”), appellee, in the District Court. Appellant alleged that Donegal breached its contract of insurance by failing to satisfy Wholesale with respect to a loss it had sustained in August 1997.

Pursuant to ²⁷ appellee’s request for a jury trial, the case was transferred to the circuit court in October 1997. Within a month, appellant’s lawyer withdrew from the case. Then, in January 2001, the circuit court granted appellee’s motion to strike and dismissed the suit, with prejudice, because appellant did not file its amended complaint in the time prescribed by the circuit court. On appeal, Wholesale presents two questions: I. Did the circuit court err as a matter of law in granting Appellee’s Motion to Sti'ike Complaint by default thereby striking Appellant’s Complaint and dismissing its case with prejudice?

II

Did the circuit court abused [sic] its discretion in granting Appellee’s Motion to Strike Complaint by default thereby striking Appellant’s Complaint and dismissing its case with prejudice? Among other things, appellee asks: Should the Appeal be dismissed because the owner of the corporation filed the Notice of Appeal on behalf of the Appellant corporation, making such filing a nullity? For the reasons that follow, we shall vacate the judgment and remand for further proceedings. FACTUAL SUMMARY On July 18, 2000, Wholesale, through counsel, instituted suit in the District Court against Donegal for breach of an insurance contract.

Wholesale sought to recover $25,000 in damages, claiming that Donegal failed to pay monies due and owing under an insurance policy issued to Wholesale, in regard to a loss that appellant incurred in August 1997. On or about September 27, 2000, Donegal prayed a jury trial. Accordingly, the case was transferred to the circuit court on October 6, 2000. By letter dated October 5, 2000, appellant’s counsel, Paul Bennett, sent a letter to Adebisi Anthony A’Denariwo, Wholesale’s sole owner, advising of his intent to withdraw as counsel for Wholesale.

The letter said, in part: ²⁸ [PJlease be advised that I will file my withdrawal as your attorney with the court in the above referenced matter in five days. My office has been advised that [Donegal] has requested a jury trial, and the case will be transferred to the Circuit Court.' You have the option of having another attorney enter an appearance in. the case or of notifying the court clerk in writing of your intention to proceed and represent yourself. (Emphasis added). On October 16, 2000, Bennett filed a motion to withdraw his appearance, and attached as an exhibit his letter to A’Denari-wo of October 5, 2000.

The motion was granted by order dated November 6, 2000. On November 8, 2000, when the order was docketed, the court sent notice to Wholesale, stating, in relevant part: It appears from the record in the ... case that you are not ... represented by counsel. You are hereby notified this day, that your failure to have new counsel enter his appearance in this case within fifteen (15) days after service upon you of this notice shall not be grounds for postponing any further proceedings, concerning the case. You are warned that without counsel to protect your interests in the case, you risk a nonsuit or judgment by default and all court costs being ordered against you by the court....

In the meantime, on November 6, 2000, appellee filed a Motion for More Definite Statement, pursuant to Maryland Rule 2-322(d), asserting that appellant’s District Court complaint was “so general, vague and ambiguous that movant cannot reasonably frame an answer.” Appellee sought such information as appellant’s policy number, date of loss, nature of the claim, and the reason that the claim was denied. By Order dated November 29, 2000, docketed on November 30, 2000, the court granted appellee’s motion, and ordered appellant to file an amended complaint within thirty days. On January 2, 2001, when appellant had not yet filed its amended complaint, appellee filed a “Motion to Strike Com ²⁹ plaint,” requesting dismissal of the case, with prejudice. 1 2Al-though the motion was filed on that date with the court, the certificate of service indicates that appellee chose to serve the motion on appellant by mailing it on that date. On January 23, 2001, A’Denariwo, as “owner” of Wholesale and its “only principal officer,” filed a response to the motion to strike, titled “Plaintiff First Wholesale Cleaners, Inc[.] Response Motion Not to Grant the Defendant’s Motion to Strike With Prejudice.” According to the certificate of service, the opposition to the motion to strike had already been mailed to appellee’s attorney on January 8, 2001.

A’Denariwo included a sworn affidavit in which he averred that he had not received a copy of the court’s order requiring Wholesale to file an amended complaint. Furthermore, he stated that he was the only person with sufficient personal knowledge to respond for Wholesale, and he had been away on vacation from November 22, 2000 to January 3, 2001 — his first vacation in nine years. Additionally, he asserted that he was “making progress for arrangement for a new counsel,” but told the court that, “because of statue [sic] of limitation, if this honorable court favorably grant the defendant’s Motion to Strike we would not be able to refile this case.... ” On behalf of Wholesale, A’Denariwo also filed a “Response To Order,” in answer to the Motion For More Definite Statement. The next day, January 24, 2001, the circuit court granted appellee’s motion to strike and dismissed appellant’s suit, with prejudice.

In doing so, the court signed appellee’s proposed order, but added that the motion was granted “by default.” Because the court did not mention the opposition to the motion to strike, filed the day before, we cannot determine with certainty whether the judge was aware of the opposition when he ruled on the motion to strike. In view of the “by default” language added by the judge, however, it is reason ³⁰ able to assume that the judge had no knowledge of the opposition. After the suit was dismissed, A’Denariwo filed a notice of appeal on behalf of Wholesale. The notice of appeal states in its entirety: “FIRST WHOLESALE CLEANERS, Inc[.], notices an appeal to the Court of Special Appeals in the above-captioned action.” Wholesale subsequently retained a lawyer to prepare its appellate brief and to present oral argument.

We shall include additional facts in our discussion. DISCUSSION L Preliminarily, appellee urges the Court to dismiss the appeal as a nullity, because Wholesale, the appellant, is a corporation, A’Denariwo is not a lawyer, and therefore A’Denariwo was not allowed to file the appeal on behalf of Wholesale. We decline appellee’s invitation. Maryland Rule 2-131 requires that, ordinarily, a lawyer must represent a corporation in court.

It states, in pertinent part: Rule 2-131. Appearance. (a) Except as otherwise provided by rule or statute:(l) an individual may enter an appearance by an attorney or in . proper person and (2) a person other than an individual may enter an appearance only by an attorney. A corporation is considered a “person” for purposes of the rule.

See Rule l-202(r)(stating that “Person” includes, inter alia, a corporation). Other rules and statutory provisions are also relevant. Maryland Rule l-311(a) states that “[ejvery pleading and paper of a party represented by an attorney shall be signed by at least one attorney who has been admitted to practice in this State....” Under Rule 1 — 311(c), “if a pleading or paper is not signed as required ... or is signed with intent to defeat the purpose of this Rule, it may be stricken and the action may ³¹ proceed as though the pleading had not been filed.” Similarly, Md. Rule 8-402(d) pertaining to the appellate courts, states: “A corporation may enter an appearance only by an attorney, except as otherwise provided by rule or statute.” Sections 10-206 and 10-601 of the Business Occupations and Professions Article (“B.O.P.”) of the Maryland Code (2000) are also relevant. B.O.P. § 10-206(a) provides, in relevant part: § 10-206.

Admission required; exceptions. (a) Admission required. — Except as otherwise provided by law, before an individual may practice law in the State, the individual shall: (1) be admitted to the Bar; and (2) meet any requirement that the Court of Appeals may set by rule. B.O.P. § 10-206(b) enumerates certain exceptions to the requirement that a corporation must be represented in court by an attorney. In part, § 10 — 206(b)(4)(i)(1) permits a corporate officer to appear on behalf of the corporation in a civil action in District Court, so long as the claim does not exceed the amount set forth for a small claim action under Md.Code (1974, 1998 Repl.Vol.), § 4-405 of the Courts & Judicial Proceedings Article (“C.J.”).

That sum is $2500. B.O.P. § 10-601(a) states, in pertinent part: § 10-601. Practicing without admission to Bar. (a) In general. — Except as otherwise provided by law, a person may not practice, attempt to practice, or offer to practice law in the State unless admitted to the Bar.

Turkey Point Property Owners’ Association, Inc. v. Anderson, 106 Md.App. 710, 715 , 666 A.2d 904 (1995), is also instructive. There, the Court recognized that “[t]he requirement of Rule 2-131(a)(2) that corporations be represented in the circuit court by attorneys reflects a long history of legislation prohibiting lay persons from practicing law except in those situations in which they are acting pro se. ” Moreover, we acknowledged that “ ‘[t]he goal of the prohibition against unauthorized practice is to protect the public from being ³² preyed upon by those not competent to practice law — from incompetent, unethical, or irresponsible representation.’ ” Id. at 717 , 666 A.2d 904 (quoting In re Application of R.G.S., 312 Md. 626, 638 , 541 A.2d 977 (1988)). Accordingly, the Court dismissed an appeal in which a lay person purported to represent a corporation in circuit court. The appellant, Turkey Point Property Owners’ Association, Inc. (“the Association”), a corporation, had petitioned the circuit court for review of a decision by a local zoning board.

Although the Association had been represented by counsel in the administrative proceedings, the petition for judicial review was signed by the Association’s president, who was not an attorney. The Association’s president also submitted a legal memorandum, and then appeared in court on behalf of the Association. The appellees objected, arguing that because the Association was not represented by an attorney, the petition for review was invalid. Although the Association’s president did not use coercion or trickery to persuade the Association to accept her services as to representation, and the trial court had expressly allowed the president to proceed, we nonetheless concluded that “the prohibition against the practice of law by nonlawyers applie[d] to this situation.” Turkey Point, 106 Md.App. at 717 , 666 A.2d 904 .

The Court explained, at 106 Md.App. at 715 , 666 A.2d 904 : “There is no dispute that, by filing the petition for judicial review, then representing the Association in the trial court, [the president] engaged in the practice of law.” (Emphasis added). In its analysis, the Court said: Although Rule 2-131 (a) (2) requires that a corporation such as the Association be represented by an attorney in the circuit court, it sets forth no sanction for noncompliance. Rule 2-201, 2 however, provides, that ‘if no consequences are prescribed, the court may compel compliance with the rule or may determine the consequences of the noncompliance in ³³ light of the totality of the circumstances.’ As a general rule in other jurisdictions, “[proceedings in a suit by a person not entitled to practice are a nullity, and if appropriate steps are timely taken the suit may be dismissed.... If the case has proceeded to judgment, the judgment is void and will be reversed.

Furthermore, the acts or steps of the unauthorized practitioner will be disregarded, and the papers and documents drafted should be stricken.” Id. at 718 , 666 A.2d 904 (quoting 7 C.J.S. Attorney & Client § 31 at 869 (1980))(footnotes omitted). Accordingly, we determined that the trial court “erred by accepting the petition for judicial review that [the president] prepared and signed, and by permitting her to represent the Association at the hearing on the petition.” Id. at 719, 666 A.2d 904 . Moreover, because the petition and the proceedings before the trial court were deemed “a nullity,” the Court vacated the judgment and dismissed the case. Turkey Point, 106 Md.App. at 720 , 666 A.2d 904 .

Turkey Point is factually distinguishable from the instant case, however. Here, Wholesale properly acted through counsel when it initially filed suit. Then, when the case was transferred to circuit court upon appellee’s request, Wholesale’s attorney, Bennett, withdrew from the case. In doing so, Bennett wrote to A’Denariwo, the corporate owner, and incorrectly advised A’Denariwo that he had the option of representing himself.

As A’Denariwo was not himself a party, but was the sole owner of the corporation, the party plaintiff, A’Denar-iwo may have been led to believe by Wholesale’s attorney that he could act on Wholesale’s behalf. In any event, A’Denariwo claimed below that he was attempting to arrange for another attorney, but had been on vacation for a month. Moreover, when A’Denariwo filed the notice of appeal on behalf of Wholesale, it was evidently a protective course of action, meant to preserve the corporation’s right to appeal, which had to be filed within thirty days from the entry of judgment. See Maryland Rule 8-202(a).

Its content was ³⁴ skeletal, without any legal substance, quite unlike the memorandum submitted in Turkey Point . Indeed, the filing itself was tantamount to a “ministerial act.... ” County Council of Prince George’s County v. Dutcher, 365 Md. 399, 416 , 780 A.2d 1137 (2001). It is also noteworthy that, after filing the notice of appeal, Wholesale obtained legal counsel for purposes of pursuing the appeal; A’Denariwo neither prepared the brief nor sought to argue the appeal. In stark contrast, Turkey Point involved the submission of a substantive legal memorandum by a lay person, and an actual attempt by that person to represent the corporation in court.

As the Turkey Point Court observed, Rule 2-131(a) does not mandate any particular sanction. Therefore, even if the filing of the notice of appeal by A’Denariwo constituted the unauthorized practice of law, dismissal of the appeal is not compelled by the rule. Moreover, Ginn v. Farley, 43 Md.App. 229 , 403 A.2d 858 (1979), suggests that an appellate court has some discretion when confronted with a case such as this one. In Ginn , a nonlawyer represented herself and other persons in a zoning case, although she was not personally an aggrieved individual under zoning law.

After the proceedings in the circuit court, she noted an appeal to this Court and prepared both the brief and record extract. Chief Judge Gilbert wrote for the Court that “ ‘what constitutes the practice of law is vested solely in the judicial branch of government....’” Id. at 232 , 403 A.2d 858 (citation omitted). He added that the judiciary alone has “ ‘[t]he power to regulate and define what constitutes the practice of law....’ ” Id. Accordingly, the Court dismissed the appeal of the nonlawyer, concluding that the conduct constituted the unauthorized practice of law.

Id. at 233 , 403 A.2d 858 . But, it declined to dismiss the appeals of the other individuals. Instead, one person argued for himself, and the Court treated the others as having submitted on brief. The Court said: It might be argued that we should dismiss the appeal as to all appellants because the brief was written in their behalf ³⁵ by Ms. Ginn.

We know of no rule or procedure that requires such