Gonsalves v. Bingel

EYLER, DEBORAH S., J. Annette Gonsalves, the appellant, contracted at public auction to purchase real property owned by Thomas Bingel and Wei Chen, the appellees. Gonsalves was represented in the transaction by her daughter, Michelle Daley, a lawyer. The contract required among other things an immediate $25,000 deposit and a cash payment of the balance within 30 days. When Gonsalves failed to timely close on the contract, Bingel and Chen filed in the Circuit Court for Anne Arundel County a single count breach of contract action against her, claiming the $25,000 deposit as damages (“the Anne Arundel County Case”).

Later, after Bingel and Chen sold the property to another buyer at a price less than the amount Gonsalves had agreed to pay, they sought to amend their complaint to recover, in addition to the deposit, damages for the difference in the sales price as contracted by Gonsalves and as sold to a third party (“actual damages”). The court denied their motion for leave to amend the complaint. Thereafter, but while the Anne Arundel County Case was pending, Bingel and Chen filed a second breach of contract action, based on the same transaction, in the Circuit Court for Montgomery County (“the Montgomery County Case”). In their complaint in the Montgomery County Case, they sought to recover actual damages.

Bingel and Chen prevailed in the Anne Arundel County Case, recovering a judgment for $25,000 plus prejudgment interest and costs against Gonsalves and Daley. Gonsalves then moved to dismiss the Montgomery County Case on the grounds of improper venue and res judicata. The motion was ⁶⁹⁸ denied. The Montgomery County Case proceeded to a jury trial and resulted in a verdict of $82,906 in favor of Bingel and Chen.

That sum included actual damages. This appeal is taken by Gonsalves from the judgment entered on the verdict in the Montgomery County Case. Gonsalves raises the following issues, which we have rephrased: I. Did the circuit court err in denying her motion for summary judgment based on res judicata?

II

Did the circuit court err in denying her motion for partial summary judgment to limit Bingel and Chen’s damages to only those that they sought to add by amendment to their Anne Arundel County complaint?

III

Did the circuit court err in partially granting Bingel and Chen’s motion for summary judgment and ordering that she was collaterally estopped to contest the existence of the contract and its breach?

IV

Did the circuit court err in denying her renewed motion for summary judgment as untimely under the Maryland Rules? V. Did the circuit court err in denying her motion to dismiss for improper venue? As explained more fully below, we answer “yes” to Gon-salves’s first question. Accordingly, we shall reverse the judgment and remand the case to the circuit court for Montgomery County for entry of judgment in favor of Gonsalves.

Our disposition of the first question in favor of Gonsalves makes it unnecessary to address the remaining questions presented. FACTS AND PROCEEDINGS In mid-2006, Bingel and Chen decided to sell real property they owned in North Beach, Anne Arundel County (“the Property”). The Property, located at 1057 Walnut Avenue, included two adjacent lots improved by a “4-room cottage style” single-family dwelling. Bingel and Chen hired Harvey ⁶⁹⁹ West Auctioneers, LLC (“West”), to sell the Property at public auction.

The auction contract, dated October 4, 2006, specified that, upon sale of the Property, the buyer would pay West a “buyer’s premium” equal to three percent of the “final hammer price (final sale price).” The auction was scheduled for 2:00 p.m. on October 20, 2006. The advertisement for the auction, which West posted on its website and placed in the Washington Post, stated the terms of sale as follows: A THREE PERCENT BUYER’S PREMIUM WILL BE ADDED TO THE HAMMER PRICE (FINAL SALE PRICE) OF THE SALE. A cash deposit, certified check or cashier’s check in the amount of $25,000 at the time and place of sale; balance in cash in 30 days, interest to be paid on the unpaid purchase money at the rate of 8% per annum from date of sale to date of settlement. All settlement expenses including homeowners association dues, if any, to be adjusted to date of sale and assumed thereafter by the purchaser.

Cost of all documentary stamps, transfer taxes and all other settlement costs shall be borne by the purchaser. Time is of the essence for the purchaser. If payment of the balance does not take place within the specified period, the deposit will be forfeited and the property will be resold at the risk and expense of the defaulting purchaser. PROPERTY TO BE SOLD IN “AS IS” CONDITION, Auctioneer and/or owner make no warranties or representation as to the condition of this property; subject to easements, agreements, leases, covenants and restrictions of record, if any.

(Emphasis added.) Gonsalves attended the October 20, 2006 auction, inspected the Property, and made a bid of $400,000. Bingel and Chen accepted her bid, and on that day the parties executed a “Memorandum of Purchase at Public Auction” (“memorandum of purchase”). The memorandum of purchase specified that Gonsalves was buying the Property for $412,000 ($400,000 plus the three percent buyer’s premium of $12,000) “subject to the ⁷⁰⁰ conditions stated [in the advertisement]” and that Gonsalves had paid a $25,000 deposit to West. Michelle Daley was listed on the memorandum of purchase as a purchaser; she did not sign the document, however.

Bingel and Chen and Gonsalves also executed a second, undated, document entitled “Real Estate Contract Additional Terms of Sale.” 1 (We shall refer to this document and the memorandum of purchase collectively as the “sales contract.”) The additional terms included the following: CLOSING: Purchaser agrees to make full settlement in cash within thirty days from the date of the auction sale. If payment of the balance of the purchase price does not take place within the specified time period, the property will be resold and [sic] the risk and expense of the defaulting purchaser. All settlement costs are to be borne by the purchaser. All expenses, including real estate taxes and sanitary and/or metropolitan district charges are to be adjusted to day of sale and assumed thereafter by the purchaser.

Cost of all documentary stamps, transfer taxes and settlement costs shall be borne by the purchaser. If the Seller(s) is/are unable to convey good and marketable title, the purchaser’s sole remedy in law and equity shall be limited to a refund of the deposit. All other terms stated in the attached advertisement shall become part of this contract. (Emphasis added.) In fact, Gonsalves did not have the cash available to go forward with the purchase.

She applied for a home equity loan to obtain the cash necessary to complete the transaction; however, she was unable to complete the loan within 30 days of purchasing the Property (November 20, 2006). As a result, she failed to pay the remaining balance by the 30-day deadline, thereby breaching the sales contract. ⁷⁰¹ On February 2, 2007, Bingel and Chen filed the Anne Arundel County Case. Their complaint named Gonsalves, Daley, and West as defendants and stated a single count for breach of contract. It sought as relief the $25,000 deposit, plus prejudgment interest at the 8% rate specified in the sales contract, and post-judgment interest.

On September 24, 2007, Bingel and Chen sold the Property to a third party for $325,000. A little over a month later, on October 29, 2007, Bingel and Chen filed a motion for leave to amend their complaint “to correct some mistakes made by [prior counsel], who chose to withdraw his appearance in early July of 2007, when [they] asked him to get serious and start working on this matter.” Specifically, Bingel and Chen proposed to amend the complaint to add Ronald M. West, an auctioneer with West, as a defendant, to be held liable for the $25,000 deposit and “yet to be determined damages,” and to add to their claim for relief actual damages of $75,000. 2 Regarding the proposed actual damages amendment, Bingel and Chen pointed out that according to the terms of the sales contract the $325,000 sale was “at the risk and expense of the defaulting purchaser.” Thus, in their proposed amended complaint, Bingel and Chen sought to recover the $25,000 deposit, $75,000 in actual damages, the expenses and costs related to the sale, and pre- and post-judgment interest. On November 13, 2007, Gonsalves and Daley filed an opposition to the motion for leave to amend. They argued that the proposed amended complaint was not timely, as it did not comply with the court’s scheduling order or with Rule 2-341. ⁷⁰² They further asserted that “[t]he main issue in ... dispute [was] whether [they had] defaulted in purchasing the Property ... and until [the court decided that issue in favor of Bingel and Chen], [Bingel and Chen] [could not] add an additional claim of $75,000 against [them].” By order dated December 17, 2007, the court denied Bingel and Chen’s motion for leave to amend their complaint.

The order stated that Bingel and Chen had provided “no good reason for adding this party [referring to Ronald M. West] this late.” The order made no mention of Bingel and Chen’s request to include actual damages in their prayer for relief. Four days later, Bingel and Chen filed the Montgomery County Case, naming as defendants Gonsalves, Daley, and West. 3 Their complaint set forth the same breach of contract claim on which the Anne Arundel County Case was based. The only difference between the Anne Arundel County Case and the Montgomery County Case was that, in Montgomery County, Bingel and Chen were seeking $250,000 in actual and consequential damages arising out of the ultimate sale of the Property for $325,000. 4 The Anne Arundel County Case was tried to the court on February 27 and 28, 2008. After closing arguments, the judge ruled from the bench, finding in favor of Bingel and Chen and against Gonsalves and Daley. 5 Judgment was entered against Gonsalves and Daley on February 29, 2008.

The court memorialized its ruling in a memorandum opinion issued on March 3, 2008. Finding the terms of the sales contract “clear and unambiguous,” the court determined that Gonsalves had breached the contract by failing to close on the sale by the ⁷⁰³ 30th day, November 20, 2006. The court found that, although Daley was not “the principal player in this event,” she was a “co-beneficiary of the contract and by accommodation [had] ratified the behaviors ... of Gonsalves.” Thus, it ruled that Gonsalves and Daley were jointly and severally liable for the $25,000 deposit, plus prejudgment interest running from November 20, 2006, and costs. No appeal was taken from the judgment in the Anne Arundel County Case by any party.

In the meantime, on February 27, 2008, Gonsalves and Daley filed a motion to dismiss or to transfer the Montgomery County Case. They argued that venue was improper and that, by filing suit in Montgomery County, Bingel and Chen were attempting to “forum shop[ ]” and “circumvent the ruling by the Anne Arundel County Circuit Court ... den[ying] the[m] leave to amend their complaint in [the Anne Arundel County Case] based on the same issues and claim.” 6 West also filed a motion to dismiss the Montgomery County Case on essentially the same grounds. A hearing on the motions to dismiss was held on June 9, 2008. The court granted the motion to dismiss West on the ground of res judicata.

It ruled, however, that neither collateral estoppel nor res judicata applied to Bingel and Chen’s breach of contract claim against Gonsalves and Daley because, in an apparent reference to their effort to amend their complaint to add actual damages, “[Bingel and Chen] did attempt to bring [the claim] in Anne Arundel County and [were] precluded from doing so.” The court also ruled that venue was proper in Montgomery County. On August 8, 2008, Bingel and Chen moved for partial summary judgment in the Montgomery County Case. They argued that the court in the Anne Arundel County Case already had determined that Gonsalves and Daley had breached the sales contract; therefore, “the only remaining issue before the [Montgomery County court] consisted] of the ⁷⁰⁴ measure of damages to which the [they] [were] entitled.” Bingel and Chen further argued that the damages they were seeking in the Montgomery County Case were “entirely separate and distinct from the damages sought in the Anne Arundel County matter, and were never addressed in that case.” They argued that res judicata did not preclude them from recovering actual damages because they had attempted to add those damages to their complaint in the Anne Arundel Case but had been denied leave to do so. On August 28, 2008, Gonsalves and Daley filed a cross-motion for summary judgment, arguing that the Montgomery County Case was barred by res judicata because “the parties, subject matter and cause[] of action in the [Anne Arundel County Case] [were] identical” to those in the Montgomery County Case.

The court ruled on the cross-motions at a hearing on October 3, 2008. After summarizing the procedural posture of the case, the court discussed the application of “[t]he merger doctrine aspect of res judicata,” which, it explained, “deals with the issue of [whether] a plaintiff [who] is successful in getting a judgment against a defendant in a prior litigation [can] fil[e] a second suit against the same defendant seeking additional damages.” The court cited Dill v. Avery, 305 Md. 206 , 502 A.2d 1051 (1986), as an example of a case in which the merger doctrine had operated to preclude the prevailing plaintiffs from bringing a second suit for additional damages based on the same cause of action previously litigated in their favor. (In the first suit, the plaintiffs had obtained property damages in an automobile tort action. In their second suit, they were seeking damages for personal injuries allegedly sustained in the same automobile accident, against the same tortfeasor.) The court also quoted this explanation of the doctrine of res judicata from State v. Brown, 64 Md. 199 , 1 A. 54 (1885): “ ‘[W]here a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to bring forward their whole case, and will not, except under special circumstances per ⁷⁰⁵ mit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as a part of the subject in contest, but which was not brought forward only because they have from negligence, inadvertence, or even accident, omitted a part of their case.

The plea of res judicata applies, except in special cases, not only to the points upon which the Court was required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence might have brought forward at the time.’ ” Id. at 204 , 1 A. 54 (quoting Beloit v. Morgan, 74 U.S. 619, 622-23 , 7 Wall. 619 , 19 L.Ed. 205 (1868)). The judge stated that he understood this to mean that res judicata “deal[s not only] with the issues that were adjudicated], but except in special circumstances, [those that] should have been.” The court turned to the case sub judice and reasoned that, because Bingel and Chen had moved, without success, to amend their complaint in the Anne Arundel County Case to include actual damages, those damages “were not ruled upon on the merits”; therefore actual damages could be sought and recovered in the Montgomery County Case. The court noted that, under the merger doctrine, a party who has a cause of action with several types of damages only can split the cause of action into different lawsuits with the consent of the adverse party. The court recognized that Gonsalves and Daley had not consented to Bingel and Chen’s splitting their cause of action.

It postulated nevertheless that, because Gonsalves and Daley had opposed Bingel and Chen’s attempt to recover all of their various damages in one action, they could not object to a second action in which Bingel and Chen were seeking to recover the damages not litigated in the first action: Well, in this case, [Gonsalves and Daley] didn’t consent to [Bingel and Chen’s splitting the cause of action] but they objected to the filing of those damages together and the court in Anne Arundel County didn’t permit that. And although it wasn’t consent, it seems that a reasonable ⁷⁰⁶ estoppel argument would apply now where if they objected to [Bingel and Chen] bringing] [all the claims] in one action it doesn’t seem, why they should be heard now to, to object to [Bingel and Chen] bringing [the claims] in two different actions?” The court concluded that Bingel and Chen had used “reasonable diligence” in attempting to recover all their claimed damages in one action; that the court in the Anne Arundel County Case had prevented them from doing so without “any good reason”; and that these “unique facts and circumstances” brought the case outside the merger doctrine. On that basis, the court denied Gonsalves and Daley’s motion for summary judgment based on res judicata. As to Bingel and Chen’s motion for partial summary judgment on the issue of Gonsalves and Daley’s liability for breach of contract, the court commented that it “[didn’t] even know what the ruling on liability was in Anne Arundel County ... [b]eeause [Bingel and Chen] were seeking ... damages based on a deposit, and now [they were] seeking damages based upon the sale of a home.” Thus, the court elected to “look at [the issue]” and decide it at a later date.

The court subsequently denied the motion by order entered October 7, 2009, which stated: There is a clear and convincing need for a new determination of the issue of liability because the parties sought to be precluded, [Gonsalves and Daley], as a result of the conduct of [their] adversaries, [Bingel and Chen], and other special circumstances, did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the initial action[.] On October 17, 2008, Bingel and Chen filed a motion for reconsideration. Thereafter, on January 30, 2009, Gonsalves and Daley filed a renewed motion for summary judgment seeking the same relief they had sought before or, in the alternative, to limit the amount of damages Bingel and Chen could obtain to $75,000, on the theory that Bingel and Chen could not obtain an amount of damages in the Montgomery ⁷⁰⁷ County Case beyond the amount they could have obtained in the Anne Arundel County Case if the Anne Arundel County court had allowed them to amend their complaint. 7 The court heard both motions on February 27, 2009. It elected to treat Gonsalves and Daley’s motion as an untimely request for reconsideration of the order denying their original motion for summary judgment, and declined to address the motion on that basis. As to Bingel and Chen’s motion, the court concluded that, although the court in the Anne Arundel County Case may have decided, as a factual matter, that the contract had been breached, there was an outstanding question whether the damages sought by Bingel and Chen in the Montgomery County Case had resulted from that breach.

On that basis, the court ruled that Bingel and Chen needed to prove causation, ie., “that the damages they[ ] [were] seeking were caused by the breach.” Thus, the court granted summary judgment on the issue of breach only. The court reserved ruling on Gonsalves and Daley’s request to limit the amount of damages sought by Bingel and Chen to $75,000. The Montgomery County Case was tried to a jury. The court granted a motion for judgment in favor of Daley.

On June 9, 2009, the jury rendered a verdict in favor of Bingel and Chen and against Gonsalves for $82,906. Judgment was entered in that amount, and this appeal followed. 8 ⁷⁰⁸ We shall include additional facts as necessary to our discussion. DISCUSSION Rule 2-501 (f) provides that a trial court “shall enter [summary] judgment in favor of or against the moving party if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law.” We review a trial court’s grant or denial of summary judgment de novo by conducting our own independent review of the record and deciding the same legal issue(s) as the trial court. Haas v. Lockheed Martin Corp., 396 Md. 469, 478-79 , 914 A.2d 735 (2007).

When, as in this case, there are no disputed facts related to the trial court’s grant or denial of summary judgment, our only task is to determine whether the trial court’s decision was legally correct. Id. at 479 , 914 A.2d 735 . Gonsalves contends the breach of contract claim in the Montgomery County Case was barred by the doctrine of res judicata, as a matter of law, and therefore the circuit court erred in denying her motion for summary judgment based on that doctrine. She maintains that the Montgomery County Case met all the elements of res judicata, i.e., it involved the same parties to the Anne Arundel County Case, it presented a claim identical to the claim presented in the Anne Arundel County Case, and a final judgment had been entered in the Anne Arundel County Case.

She further argues that the doctrine of res judicata as applied in Maryland plainly bars ⁷⁰⁹ separate claims for damages arising from a single cause of action. Finally, Gonsalves asserts that the ruling by the Anne Arundel County court denying Bingel and Chen’s motion for leave to amend their complaint, and her opposition to that motion, does not alter the fact that the Montgomery County Case was barred by res judicata. Bingel and Chen respond that the Anne Arundel County court’s ruling denying their motion for leave to amend their complaint was a “procedural determination” based upon their attempt to add a new defendant, and that that court did not address their request to amend their complaint to include actual damages. Therefore, they argue, the denial of their motion for leave to amend was without prejudice to the claim they sought to add, and there never was a judgment on the merits of that claim. 9 As a result, this case falls within an exception to the doctrine of res judicata made for parties not given the opportunity to present all their claims in a single cause of action.

Res judicata (“a thing adjudicated”) is “ ‘an affirmative defense [that] bar[s] the same parties from litigating a second lawsuit on the same claim, or any other claim arising from the same transaction or series of transactions and that could have been — but was not — raised in the first suit.’ ” Anne Arundel County Bd. of Educ. v. Norville, 390 Md. 93, 106 , 887 A.2d 1029 (2005) (quoting Black’s Law Dictionary 1336-37 (8th ed. 2004)). See also Anne Arundel County Ethics Comm’n v. Dvorak, 189 Md.App. 46, 88 , 983 A.2d 557 (2009) (same). By preventing parties from relitigating matters that “have been or could have been decided fully and fairly,” the doctrine of res judicata “ ‘avoids the expense and vexation attending multiple lawsuits, conserves the judicial resources, and fosters reliance on judicial action by minimizing the possibilities of inconsistent decisions.’ ” Norville , 390 Md. at ⁷¹⁰ 107, 887 A.2d 1029 (quoting Murray Int’l Freight Corp. v. Graham, 315 Md. 543, 547 , 555 A.2d 502 (1989)) (emphasis in original). The elements of res judicata are: (1) that the parties in the present litigation are the same or in privity with the parties to the earlier dispute; (2) that the claim presented in the current action is identical to the one determined in the prior adjudication; and, (3) that there has been a final judgment on the merits.

Id. at 107, 887 A.2d 1029 (citations omitted). There is no dispute that the parties in the present litigation are the same as those in the Anne Arundel County Case. Moreover, there is no question that the Anne Arundel County court entered a final judgment on Bingel and Chen’s breach of contract claim. Thus, the outstanding issue is whether, for purposes of res judicata, Bingel and Chen’s claim for actual damages, which they pursued (successfully) in the Montgomery County Case, is the “same claim” they were not permitted to pursue in the Anne Arundel County Case.

To answer this question, we must apply the transactional approach of the Restatement (Second) of Judgments § 24: (1) When a valid and final judgment rendered in an action extinguishes the plaintiffs claim pursuant to the rules of merger or bar (see §§ 18, 19), the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. (2) What factual grouping constitutes a “transaction”, and what groupings constitute a “series”, are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage. See Norville, 390 Md. at 108-09 , 887 A.2d 1029 ; Dill v. Avery, supra, 305 Md. at 209-10 , 502 A.2d 1051 ;