Fry v. Coyote Portfolio, LLC

DAVIS, Judge. On November 1, 1985, appellant E. Mitchell Fry executed a Promissory Note (Note) to pay $1,500,000 to The State of Maryland Deposit Insurance Fund Corporation (MDIF). Appellant defaulted on the Note leaving a balance due of $500,-000. In November 1995, MDIF filed suit in the Circuit Court for Baltimore City against appellant to procure payment.

In December 1995, MDIF and appellant reached an agreement on a payment schedule for the balance due under the Note. MDIF filed a Motion for Approval of Settlement Agreement, and the trial court (Kaplan, J.) approved the order. On August 12, 1998, appellee Coyote Portfolio LLC purchased all of MDIF’s rights, title, and interest in the MDIF-appellant Settlement Agreement. On November 18, 1998, appellee sent appellant a ten-day notice to cure payments that were past due for the months of June and November 1998.

Soon thereafter, appellee filed a petition for the entry of consent judgments in the Circuit Court for Baltimore City. In response, appellant filed an Opposition to Petition for the Entry of Consent Judgments, stating that appellee had no legal right to file the consent judgments. Appellee filed a Reply Memorandum in Support of Petition to Enter Consent Judgments. Appellant filed a further response to Reply Memorandum in Support of Petition to Enter Consent Judgments. ⁶¹² On December 22, 1998, the lower court ordered two consent judgments for $100,000 and two consent judgments for $50,000 against appellant.

Appellant filed a motion to alter or amend consent judgments. Appellee filed a response to appellant’s motion to alter or amend consent judgments. The circuit court denied appellant’s motion to alter or amend consent judgments, and appellant timely noted this appeal. Appellant presents for our review three questions that we restate as follows: I. Did the circuit court err when it entered the consent judgments?

II

Did the circuit court err when it failed to treat the consent judgments as confessed judgments thereby violating appellant’s procedural due process rights?

III

Did the circuit court abuse its discretion in denying appellant’s motion to alter or amend judgments? Appellee has filed a motion to dismiss this appeal, contending that, when, as in this case, a party receives the benefits of the negotiated agreement to consent to entry of judgment, he or she waives any errors in the judgment and an appeal from the judgment will not thereafter lie. We agree with the position espoused by appellee and, consequently, dismiss this appeal. FACTUAL BACKGROUND Appellant was the owner and a board member of the Friendship Savings and Loan Association.

On October 21, 1985, appellant and appellee’s predecessor-in-interest, MDIF, entered into an agreement wherein Friendship Savings and Loan Association paid one million dollars to MDIF. Pursuant to this agreement, appellant signed a promissory note agreeing to pay MDIF an additional 1.5 million dollars over ten years. Appellant paid one million dollars, but disputed the remaining payment of $500,000 on the Note to MDIF. On January 22, 1996, MDIF filed a lawsuit against appellant in the Circuit Court for Baltimore County to collect the remaining balance due on the Note.

On March 3, 1997, appellant and ⁶¹³ MDIF reached a Settlement Agreement (1997 Settlement Agreement) providing for a payment schedule for the $500,000 still owing from the original 1985 Agreement. Pursuant to the 1997 Settlement Agreement, appellant agreed to make a series of payments, without interest, starting in March 1997 and concluding in June 1999. The terms of the 1997 Settlement Agreement required appellant to consent to seven judgments in the respective amounts of $50,000, $50,000, $100,000, $50,000, $50,000, and $100,000 in the event that appellant defaulted on any of his payments. As payments were made in accordance with the new schedule, counsel for MDIF would return to counsel for appellant the corresponding consent judgment.

Appellant and MDIF both obtained legal advice from their respective attorneys in connection with the 1997 Settlement Agreement prior to signing. On March 7, 1997, the lower court approved the 1997 Settlement Agreement. On August 12, 1998, appellee purchased all of MDIF’s rights, title, and interest in the 1997 Settlement Agreement. On November 18,1998, appellee’s counsel sent appellant a ten-day notice to cure since he was then in default on the June 1, 1998 $100,000 payment and the November 1, 1998 $50,000 payment.

The notice advised appellant that all of the remaining consent judgments will be entered against him unless he cured within ten days. Because appellant failed to cure, appellee, as successor-in-interest to MDIF, filed a Petition For the Entry of Consent Judgments in the Circuit Court for Baltimore City. Appellant, in response, filed an opposition to the petition, claiming that appellee, as MDIF’s successor-in-interest, had no standing to file the petition seeking entry of the 1997 Settlement Agreement consent judgments. Soon thereafter, appellee filed a reply and an affidavit, confirming that it had purchased all of MDIF’s rights and interest in the 1997 Settlement Agreement.

Subsequently, appellant filed an additional response to appellee’s reply. On December 22, 1998, the lower court entered two consent judgments for $100,000 and two consent judgments for $50,- ⁶¹⁴ 000. Appellant then filed a motion to alter or amend the consent judgments. On January 11, 1999, the court denied appellant’s motion to alter or amend the consent judgments.

Appellant timely noted this appeal. DISCUSSION Anticipating appellee’s motion to dismiss, appellant initially concedes, “Because under Maryland law, consent judgments are intended to reflect a mutually negotiated agreement to settle a dispute, there is normally no right to appeal based on the merits of a consent judgment.” He characterizes a consent judgment as “an enforcement mechanism to be wielded by the creditor, MDIF, if and when it decides, unilaterally and in its sole discretion, that the debtor, [appellant], is late in making payment.” He ultimately submits that “[t]he traditional judicial acquiescence towards consent judgments is inappropriate in this case.” In an effort to overcome established legal precedent that an appeal will not lie from entry of a consent judgment reflecting a negotiated settlement and, in an attempt to persuade us to reach the merits of his substantive arguments, appellant contends: 1. There was lack of consent to the entry of the consent judgments because appellant had withdrawn his consent prior to the entry of the consent judgments and MDIF had, at the time of entry of the consent judgments, assigned its rights to appellee; 2. A consent judgment can only be filed by the filing parties and cannot be assigned prior to filing; 3.

Consent judgments “should be treated as confessions of judgment” because they were not the simultaneous product of negotiations and, as employed here, are a unilateral enforcement mechanism and deny appellant the “opportunity to prove that there were substantial and real grounds for an actual controversy as to the merits of the defense”; ⁶¹⁵ 4. Enforcement of consent judgments pursuant to Maryland Rule 2-612 (1999), which does not provide for notice or an opportunity to be heard, violates due process guarantees of both the United States and Maryland Constitutions; 5. The language of the Settlement Agreement did not indicate a knowing waiver of procedural due process rights and the unequal bargaining power between MDIF and appellant precluded a finding that any waiver was voluntary; 6. The consent judgments should be vacated because counsel for appellant “did not receive a copy of the order until almost three months after the judgments were recorded.” The short answer to all of the contentions raised by appellant is that any challenge to the consent by the parties, the effectiveness of the waiver of procedural due process, or the voluntariness of the Settlement Agreement are matters that should have been addressed at a point in time before he accepted the benefits of the Agreement, preferably during the course of the negotiations.

In Franzen v. Dubinok, 290 Md. 65, 68-69 , 427 A.2d 1002 (1981), the Court of Appeals, speaking to the legal effect of a voluntary act inconsistent with a claim of error, explained: The law of this State is clear that the “right to an appeal may be lost by acquiescence in, or recognition of, the validity of the decision below from which the appeal is taken or by otherwise taking a position which is inconsistent with the right of appeal.” In conformity to this principle, we have heretofore held that the filing of a remittitur by the beneficiary, combined with the acceptance of the tendered payment of the award and causing the court record to be marked as satisfied, brings the litigation to a complete conclusion, thus barring an appeal by the judgment creditor; that no appeal lies from a consent decree; and that after an invocation of the benefits accruing under an order of court, a party will not be heard to assail its validity. This ⁶¹⁶ general rule of preclusion enunciated in the [Rocks u] Brosius [ 241 Md. 612 , 217 A.2d 531 (1966) ] case has been variously characterized as an “estoppel,” a “waiver” of the right to appeal; an “acceptance of benefits” of the court determination, creating “mootness,” and an “acquiescence” in the judgment. We think the label applied to the rule is less important than its essence — that a voluntary act of a party which is inconsistent with the assignment of errors on appeal normally precludes that party from obtaining appellate review. (Emphasis added; citations and footnote omitted.) It is well settled in Maryland, and the law generally is to the effect, that, if a party, knowing the facts, voluntarily accepts the benefits accruing to him under a judgment, order, or decree, such acceptance operates as a waiver of any errors in the judgment, order, or decree and estops that party from maintaining an appeal therefrom.

Silverberg v. Silverberg, 148 Md. 682 , 130 A. 325 (1925); Stewart v. McCaddin, 107 Md. 314 , 68 A. 571 (1908). See 4 C.J.S. Appeal and Error § 215, p. 644. If, however, the portion of the decree adjudicates a separate and distinct claim that benefits the appellants, unrelated to, or independent of, the unfavorable portion of the decree, then the acceptance of the benefit under the unrelated or independent portion of the decree will not result in a waiver of the right to appeal from the other unfavorable independent portion of the decree. See In re Silverman, 305 N.Y. 13 , 110 N.E.2d 402 (1953); Mudd v. Perry, 25 F.2d 85 (8th Cir.1928), cert. denied, 278 U.S. 601 , 49 S.Ct. 9 , 73 L.Ed. 529 (1928).

See also 4 C.J.S. Appeal and Error § 215, p. 645. More recently, we said in Royal Insurance Company v. Austin, 79 Md.App. 741, 743-44 , 558 A.2d 1247 (1988): It is a well-settled proposition in Maryland that consent decrees are not appealable. Perceiving no pertinent difference between consent decrees in equity and consent judgments at law, this [Cjourt has applied the same rule to the latter. The reasoning behind this jurisdictional bar is that an appeal from consensual rulings is patently inconsistent ⁶¹⁷ with the [ 558 A.2d at 1249 ] intent of such voluntary rulings expeditiously to resolve legal disputes.

(Citations omitted.) In our opinion, the consent judgments of December 22, 1998, constitute an adjudication of the entire dispute in regard to the rights to foreclose the mortgage under the facts established in the lower court and the various obligations and rights attendant upon that determination. The provisions of the one [decree] were dependent upon each other and no provision of the [decree] adjudicated any separate distinct or independent claim. The knowledgeable acceptance, therefore, of the benefit of any portion of the [decree] waived any alleged error in the entire [decree] and estopped the accepting party from challenging the [decree] on appeal. Accordingly, we shall grant appellee’s motion to dismiss.

LACK OF CONSENT Appellant argues that the consent judgments were invalid and may not be executed by appellee, as successor in interest, because he only consented to having judgments entered against him by MDIF, and had withdrawn his consent prior to the entry of the judgments. Appellant also urges that, because he had notified the trial court of his opposition prior to the actual entry of the judgment, the court had no power to enter the consent judgment. We disagree. In the case subjudice, appellant and MDIF intended for the Settlement Agreement to be binding and to terminate the pending litigation.

We held, in Chernick v. Chernick, 327 Md. 470, 484 , 610 A.2d 770 (1992), that, when the parties have agreed to the terms of the consent judgment and reduced it to writing, the court may sign the consent order. “The fact that one of the parties may have changed his or her mind shortly before or shortly after the submitted consent order was signed by the court does not invalidate the signed consent judgment.” Id. Additionally, when a settlement provides for the entry of consent judgments, the parties’ consent to contract is measured at the time of negotiation. Id. Moreover, “a litigant ⁶¹⁸ ‘cannot knowing the facts, both voluntarily accept the benefits of a judgment or decree and then later be heard to question its validity on appeal.’ ” See Osztreicher v. Juanteguy, 338 Md. 528, 534 , 659 A.2d 1278 (1995) (citations omitted).

Therefore, appellee is entitled to enforce the consent judgments against appellant since he, in legal contemplation, consented to MDIF assigning its rights to another party. Because there was a binding contract, appellant may not withdraw his consent to entry of these judgments. Accordingly, because appellant consented to the consent judgments and accepted the benefits under the Settlement Agreement, he may not maintain this appeal. ASSIGNMENT Without benefit of authority, 1 appellant next argues that a consent judgment can only be filed by the filing parties and cannot be assigned prior to filing.

In response, appellee contends that there was no stipulation anywhere in the Settlement Agreement that would preclude the assignment of the consent judgments. Appellant’s contention that the consent judgments were not assignable is belied by the language of the 1997 Settlement Agreement, in which all interests, rights, and conditions under the Agreement were transferred to appellee. Paragraphs 6(A) and (B) of the Agreement state: 6. (A) Subject to the provisions of section (B) of this paragraph six, and in consideration of the terms and