Forward v. McNeily

SALMON, Judge. This is an appeal from an interlocutory order entered on November 16, 2001, by the Circuit Court for Montgomery County. The order reads, in pertinent part, as follows: ²⁹⁵ 1. Plaintiffs’ Motion for Ancillary Relief in Aid of Enforcement is granted. 2.

Defendant Forward shall issue stock certificates to the Plaintiff Curtían R. McNeily for 44 percent of the stock of Business Information Network, Inc. and to Mark Burnett for 5 percent of the stock of Business Information Network, Inc. in accordance with their stock interests as determined by the judgment recorded in this court and entered in Business Information Network, Inc. et al. v. David R. Forward, Case No. CAL 94-25360, in the Circuit Court for Prince George’s County, Maryland. 3. Defendant Forward shall bring the stock register of BIN into conformity with the judgment entered in Business Information Network, Inc. et al. v. David R. Forward, Case No. CAL 94-25360, in the Circuit Court for Prince George’s County, Maryland. 4. Defendant Forward is enjoined from any disposition of the property subject to the judgment or from any disposition of the documents representing an interest in such property. Under the provisions of section 12-303(1), 3(i) and (v) of the Courts and Judicial Proceedings Article of the Maryland Code (1998 RepLVoL), the above interlocutory order was immediately appealable, even though no final judgment was entered. 1 The parties against whom the order was direct ²⁹⁶ ed, Catalyst Equity Corporation and David R. Forward, filed an appeal from the foregoing order and raise the following question: 2 viz: Did the circuit court for Montgomery County err in granting appellees’ motion for ancillary relief in aid of enforcement of a Prince George’s County judgment, where no judgment was entered in Prince George’s County?

I. The resolution of the sole issue raised in this appeal concerns procedural matters that took place in three cases, one in Prince George’s County and two in Montgomery County. A. The Prince George’s County Case In December 1994, a lawsuit was filed in the Circuit Court for Prince George’s County by Business Information Network, Inc. (“BIN”); Mark Burnett; Curtían McNeily; Curtían McNeily as a receiver for P.C. Consultants, Inc. (“PCI”); Curtían McNeily and Mark Burnett as shareholders of BIN; and BIN as a nominal plaintiff. The individual plaintiffs were all shareholders — or former shareholders — of BIN. The defendants in that lawsuit were David Forward; his wife, Maryann; and the law firm of Ginsberg, Feldman and Press, Chartered ²⁹⁷ (“GFB”).

The Prince George’s County complaint contained seven counts, including one alleging legal malpractice against GFB. Prior to trial, the claim against GFB was dismissed. On November 2, 1995, plaintiffs filed a “First Amended Complaint for Injunctive and Declaratory Relief and Damages.” In Counts I, II, and III, the plaintiffs asked the court to [djeclare that McNeily is the lawful owner of at least forty-four percent (44%) of BIN stock and that Burnett is the lawful owner of at least five percent (5%) of BIN stock .... The parties filed multiple pretrial motions in the period between 1994 and 1998.

Resolution of those motions delayed the start of the jury trial until November 30, 1998. The jury thereafter found for the plaintiffs on some, but not all, issues by answering a number of questions set forth on a special verdict sheet. The jury found that David Forward had breached the fiduciary duty he owed to certain of the plaintiffs in several ways. The jury also found that Mr. Forward had breached a contract with Messrs.

Burnett and McNeily and had converted to his own use certain shares of their stock. The jury awarded damages to the various plaintiffs that cumulatively totaled over four million dollars. On the special verdict sheet, the jury was asked to name the current shareholders of BIN and their percentage interest. Evidently, that question was posed so that the court could declare the rights of the parties as requested in Counts I — III.

The jury answered that question as follows: David R. Forward % 51 Curtían R. McNeily % 44 Mark Burnett % _5 On January 19, 1999, the trial judge, Honorable Darlene Perry, pursuant to the answers to other questions set forth on the special verdict sheet, entered judgment against David Forward: (1) in favor of Mark Burnett in the amount of $324,888; (2) in favor of Curtían McNeily in the amount of ²⁹⁸ $1,000,000; (3) in favor of BIN in the amount of $812,888; and (4) in favor of PCI Receiver in the amount of $2,630,480. Punitive damages of $5,000 and $10,000 were awarded to Mark Burnett and Curtían McNeily, respectively — also against David Forward. Three days after the jury’s monetary awards were reduced to separate judgments, plaintiffs filed a motion for an accounting and declaratory judgment. In regard to their request for declaratory judgment, the motion read: Plaintiffs have moved the court for ... a judgment declaring that: 1.

The books and records of [BIN] reflect that Curtían R. McNeily is the rightful owner of 44 percent, and Mark C. Burnett is the rightful owner of 5 percent of the stock of [BIN] and that certificates of stock be issued to reflect the ownership percentages; 2. The June 20, 1997 transfer of at least 49 percent of [BIN] stock to Catalyst Equity Corporation of New Mexico is null and void; 3. Since December 4, 1989, two lawful members of the [BIN] Board of Directors are and have been Mark Burnett and Brian Boland. 4. Curtían R. McNeily and Mark C. Burnett are entitled to elect two of the Directors to [BIN]. 5.

David R. Forward, because of his malicious tortious conduct, is forever barred from acting as an officer, director or employee of [BIN][o]r benefitting in any manner from the judgment in favor of [BIN]. Declaratory Judgment by the Court is necessary to effect complete and equitable implementation of the jury verdict and to prevent defendant David R. Forward from profiting from his own wrongdoing. * * * For the reasons set forth above, the Court should enter a judgment declaring the rights of the plaintiffs under the Agreement to Associate in the form attached. ²⁹⁹ On the same day that the motion for an accounting and a declaratory judgment was filed, January 22, 1999, David Forward filed a motion for judgment notwithstanding the verdict (JNOV), for a new trial, or (alternatively) for a “Revision of the Verdict.” A hearing on Forward’s post-trial motions was held on January 26, 1999. At the beginning of that hearing, counsel for plaintiffs reminded Judge Perry that plaintiffs’ motion for a declaratory judgment and an accounting was pending. Nevertheless, in the lengthy hearing that followed, neither the declaratory judgment motion nor the motion for an accounting was again mentioned.

No one reminded Judge Perry that three counts of the first amended complaint had asked for a declaratory judgment in favor of certain of the plaintiffs. Judge Perry’s written order disposing of Forward’s post-trial motions was filed on February 3, 1999. The order, in part, read: This court had an opportunity to view the reactions of the jurors and to read their facial expressions, reactions and mannerisms during the course of this trial. Their ill-will toward the defendant, Forward, was apparent.

It was more than obvious to this court that the verdicts they returned were the product of bias and in total disregard of the evidence and the court’s instructions. Even if the verdicts were legally proper, justice alone would require that a new trial be granted. All matters reserved for ruling at the end of the evidence in this trial are granted in favor of the defendants for the reasons raised by the defendants during the trial and as set forth in this opinion. Accordingly, the Clerk of the court will enter a docket entry that the motion notwithstanding the verdict is granted, and that any and all verdicts are stricken and reduced to zero.

The jury found for the defendant [David Forward] in that he did not expend BIN resources for personal gain and that he did not unlawfully and intentionally and wrongfully destroy BIN business opportunities, causing BIN to lose ³⁰⁰ revenues. The jury also found for the defendant, Mary Ann Forward. On the issue of damages for breach of contract, the jury awarded no damages to PCI/McNeily. Those verdicts are in accord with the evidence and instructions, and will not be disputed.

The jury found that Forward was a 51% shareholder of BIN, Burnett a 5% shareholder, and McNeily a 44% shareholder. While leaving the parties in a doomed marriage the finding is at least based upon evidence and will not be set aside. The Clerk of the Court will enter a docket entry setting forth the preceding paragraph. (Emphasis added.) On February 16, 1999, plaintiffs filed a motion for reconsideration of, or to alter or amend, the order entered on February 3, 1999.

Two days later, plaintiffs filed a line with the court pointing out that their motion for accounting and declaratory judgment was still pending. On March 4,1999, a hearing was held on “pending motions.” All motions were taken under advisement. Judge Perry filed, on March 16, 1999, an “Amended Order Granting Partial Judgment Notwithstanding [the] Verdict.” The text of the order filed March 16, 1999, is the same as the order filed February 3, 1999, except: (1) the insertion, at page 3 of the amended order, of the word, “conclusion”; 3 (2) deletion of the ³⁰¹ sentence, “Even if the verdicts were legally proper, justice alone would require that a new trial be granted”; (3) addition of a sentence reading, “The Motion for New Trial is denied”; (4) deletion of the sentence, “Accordingly, the [cjlerk of the court will enter a docket entry that the motion notwithstanding the verdict is granted, and that any and all verdicts are stricken and reduced to zero” and replacing that sentence with one reading: “Accordingly, the [cjlerk of the court will enter docket entries as follows: All rulings on motions to dismiss for the defendants which were reserved during the trial are granted in favor of the defendants”; (5) deletion of the clause “[wjhile leaving the parties in a doomed marriage.” Judge Perry’s amended order did not mention plaintiffs’ prayer for declaratory judgment set forth in their amended complaint, nor the motion for declaratory judgment and an accounting. Nevertheless, an appeal to this Court was filed by the plaintiffs.

Thereafter, Mr. Forward filed a cross-appeal in which he contended that the jury’s finding that David Forward, McNeily, and Burnett owned, respectively, 51 percent, 44 percent, and 5 percent of BIN should be reversed as a matter of law. When the case was before a panel of this Court on appeal, none of the parties pointed out the fact that there were still unresolved matters pending in the trial court. 4 Moreover, ³⁰² the panel did not discover the problem on its own. On September 20, 2000, this Court filed an unreported opinion in which it affirmed the judgment of the circuit court in all respects. B. The First Montgomery Court Case On March 24, 1999 — which was slightly more than one week after Judge Perry filed her amended order granting a partial motion for JNOV, Curtían R. McNeily and Mark D. Burnett filed a complaint for declaratory judgment in the Circuit Court for Montgomery County against David Forward.

Attached to the complaint was the portion of the verdict sheet in the Prince George’s County action that reflected the jury’s finding that Burnett and McNeily owned 49 percent of BIN and Forward owned the remainder. The Montgomery County complaint alleged that votes were cast for the BIN board of directors at a meeting of BIN stockholders held on February 18, 1999. According to the complaint, David Forward voted his shares for himself, Joanna Pineda, and Cynthia Hayes; Burnett and McNeily voted for themselves and Forward for the board; Forward then declared that his slate — himself, Pineda, and Hayes — had won. Messrs.

Burnett and McNeily alleged that Forward’s failure to vote for them violated a November 30, 1989, voting trust agreement that incorporated an agreement to associate— which the parties had previously executed. Plaintiffs asked for the following declaratory relief: ³⁰³ A. A declaration ... that Curtían R. McNeily owns forty-four percent of Business Information Network, Inc.; B. A declaration ... that Mark D. Burnett owns five percent of Business Information Network, Inc.; C. A declaration ... that Mark D. Burnett and Curtían R. McNeily are directors of [BIN] and have been such since at least February 18, 1999 as a result of the voting trust agreement contained in the Agreement to Associates; .... On September 16, 1999, the circuit court granted the defendants partial summary judgment as to the portion of plaintiffs’ complaint requesting the court to declare that Burnett and McNeily “are and have been” directors of BIN since February 18,1999. The ground for the court’s ruling was that the claim was barred by the statute of limitations.

Plaintiffs filed a first amended complaint for declaratory (and other) relief on January 25, 2001. The first amended complaint deleted plaintiffs’ request for a declaratory judgment as to their ownership of 49 percent of BIN’s stock but reiterated their request for a declaratory judgment that they had the right to elect two of BIN’s directors. Among other things, the amended complaint also added Catalyst Equity Corporation as an additional defendant and asserted that in June 1997 Forward “purported to transfer” 100 percent of the outstanding shares in BIN to Catalyst Equity. The first amended complaint also alleged that plaintiffs had theretofore been adjudged (in the Prince George’s County litigation) to be 49 percent stockholders of BIN.

Count II alleged breach of fiduciary duty (by Forward) to the plaintiffs; Count III requested BIN’s dissolution; Count IV prayed for an accounting from Forward of BIN’s assets; Count V asked that a constructive trust be placed upon BIN’s assets; Count VI alleged a conspiracy to divert BIN’s assets; and Count VII requested that Forward disgorge monies he received from BIN as a result of unauthorized expenditures. Plaintiffs filed a second amended complaint on February 26, 2001, naming David Forward as a defendant individually and ³⁰⁴ doing business as NetStrategies2000 and NewHomesAmerica.com. Defendants filed a motion to dismiss the first and second amended complaints. The motion was denied on May 2, 2001.

Thereafter, the defendants filed an answer to the second amended complaint, in which they raised various defenses, including res judicata and the statute of limitations. On July 27, 2001, plaintiffs filed a motion for ancillary relief in aid of enforcement of Judge Perry’s March 1999 order. That motion, as previously stated, was granted on November 16, 2001. The major terms of that ancillary order are set forth supra at Page 1.

C. The Second Montgomery County Case On July 25, 2001, the same plaintiffs who filed the first Montgomery County case, filed Case No. 223416. That case was opened for the purpose of filing the docket entries from the Prince George’s case. On November 16, 2001 — the same date as the Montgomery County interlocutory order was filed — a Montgomery County circuit court judge signed an order consolidating the two Montgomery County cases. David Forward and Catalyst Equity filed an appeal in the consolidated case from the interlocutory order dated November 16, 2001.

II

Mr. Forward and Catalyst Equity contend in this appeal that the Montgomery County court erred in granting the motion for ancillary relief in aid of enforcement of the Prince George’s County judgment because “no declaratory judgment was entered in the Prince George’s County case and therefore there was no judgment to enforce.” 5 Although we ³⁰⁵ agree with the core of appellants’ argument, we do not agree with some of the appellants’ reasons that they contend support their arguments. Those arguments deserve comment, however, because, upon remand, they are likely to resurface. Appellants argue that the Prince George’s County jury’s answer to the question relating to stock ownership in BIN was not a final judgment because the requirements of Maryland Rule 2-601 (a) were not met. That rule provides: Prompt entry — Separate document.

Each judgment shall be set forth on a separate document. Upon a verdict of a jury or a decision by the court allowing recovery only of costs or a specified amount of money or denying all relief, the clerk shall forthwith prepare, sign, and enter the judgment, unless the court orders otherwise. Upon a verdict of a jury or a decision by the court granting other relief, the court shall promptly review the form of the judgment presented and, if approved, sign it, and the clerk shall forthivith enter the judgment as approved and signed. A judgment is effective only when so set forth and when entered as provided in section (b) of this Rule.

Unless the court orders otherwise, entry of the judgment shall not be delayed pending determination of the amount of costs. (Emphasis supplied by appellants.) The requirements for a separate document set forth in 2-601 (a) can be waived under certain circumstances by failure to object on appeal. See Suburban Hospital v. Kirson, 362 Md. 140, 156 , 763 A.2d 185 (2000). In the first appeal concerning the Prince George’s County judgment, neither party complained that the separate document rule had not been met.

But, as the Court of Appeals made clear in Kirson, 362 Md. at 156 , 763 A.2d 185 , and later in Taha v. Southern Management Corp., 367 Md. 564, 569 , 790 A.2d 11 (2002), for preservation purposes the waiver doctrine only applies “where ³⁰⁶ final judgment was entered on the docket.” Taha, 367 Md. at 569 , 790 A.2d 11 . Here, a final judgment was not entered on the docket at any time prior to appeal of Judge Perry’s March 1999 order because, as discussed more fully infra, all claims against all parties were not resolved by that order and the Prince George’s docket entries accurately reflected what issues were resolved. Thus, appellants are correct when they argue that the March 1999 order was not final for failure to comply with Rule 2-601(a). Later in their brief, appellants argue: Plaintiffs are barred from litigating again in this case their claim to ownership of 49% of BIN’s stock.

Their failure to obtain a declaratory judgment on the jury’s verdict no. 1 in the Prince George’s County case, or to preserve