HARIRI v. Dahne

MURPHY, Judge. In the Circuit Court for Baltimore County, Dr. Rahim Hariri and Dr. Dennis Hatfield, Appellants, noted an appeal from the entry of an order that the Complaint filed against them by Edward G. Dahne and Marlene Z. Dahne, Appellees, “be DISMISSED WITHOUT PREJUDICE[,]” and presented the Court of Special Appeals with a single question: Whether the trial court has the authority and discretion, pursuant to Maryland Rule 2-507(b)[,] to dismiss a case with prejudice[?] Prior to argument before a panel of the Court of Special Appeals, 1 this Court issued a writ of certiorari on its own initiative. 406 Md. 743 , 962 A.2d 370 (2008). For the reasons that follow, we hold that dismissal “without prejudice” is the only dismissal that can be imposed for a violation of Md. Rule 2-507(b). We shall therefore affirm the judgment of the Circuit Court.

Procedural History On October 14, 2003, Appellees filed a “COMPLAINT” in which they asserted that Appellant “Dr. Rahim Hariri l.k.a.c/o Plaintiff Address” had breached a “covenant not to compete” provision in a “contract under seal” that was signed by the parties on October 3, 2000. Dr. Hariri was never served with a copy of that complaint. On February 7, 2005, Appellees filed a second “COMPLAINT” in which they asserted that Dr. Hariri and five other defendants—Dr. Thomas Blaik, Dr. Melton Belle, Dr. Clare Mutale, Dr. Dennis Hatfield, and Dr. ⁶⁷⁷ Robert McNeil—had breached contracts that were “signed, under seal[.]” In this second complaint, Appellees provided “l.k.a. c/o Plaintiff Address” as the address for each defendant. The record shows that the first issuance of original process of the second complaint occurred on February 9, 2005.

The record also shows that three defendants were served by certified mail with a copy of this complaint: (1) Dr. Hariri, on September 6, 2007, (2) Dr. Thomas Blaik, on September 6, 2007, and (3) Dr. Belle, on October 3, 2007. On September 14, 2007, the Clerk of the Circuit Court issued a “NOTIFICATION TO PARTIES OF CONTEMPLATED DISMISSAL,” that, in pertinent part, stated: Pursuant to Maryland rule 2-507 this proceeding will be “DISMISSED FOR LACK OF JURISDICTION OR PROSECUTION WITHOUT PREJUDICE,” 30 days after service of this notice, unless prior to that time a written motion showing good cause to defer the entry of an order of dismissal is filed. On September 19, 2007, counsel for Dr. Hariri filed an “ANSWER TO COMPLAINT.” On October 15, 2007, Appellees’ counsel filed a “MOTION TO DEFER DISMISSAL UNDER MARYLAND RULE 2-507” that included the following assertions: [Tjhree of the Defendants have been served and [ ] justice will be served by the case being permitted to go forward. There was no deliberate delay by Plaintiff in serving Defendants as his counsel was checking for addresses and recently obtained better search tools to carry out searches and thus located the correct addresses.

Defendant Hariri has answered and has not filed a Motion to dismiss for lack of prosecution and Defendant Blaik has further been in contact with counsel for Plaintiff. Defendant Belle is further served. On October 29, 2007, counsel to Dr. Blaik filed a “MOTION TO DISMISS COMPLAINT, WITH PREJUDICE, FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED AND REQUEST FOR SANCTIONS.” ⁶⁷⁸ On November 6, 2007, Dr. Belle filed a pro se “ANSWER TO COMPLAINT.” On November 13, 2007, Appellees filed a six count “AMENDED COMPLAINT” against the defendants named in the complaint filed on February 7, 2005. In this complaint, none of the defendants’ addresses was stated to be “l.k.a.c/o Plaintiffs Address,” and the claims against each defendant appeared in a separate count. 2 On November 15, 2007, Dr. Hariri and Dr. Hatfield filed a “Motion to Dismiss for Lack of Prosecution” that included the following “Conclusion In light of the provisions of Maryland Rule 2-507(c) as well as the holding of Reed v. Cagan [, 128 Md.App. 641 , 739 A.2d 932 (1999),] dismissal with prejudice of Plaintiffs’ claims against Defendants Hariri and Hatfield is warranted, justified and required.

On November 16, 2007, Dr. Blaik filed an “AMENDED MOTION TO DISMISS COMPLAINT, WITH PREJUDICE” that requested both dismissal of the complaint, “and that Plaintiffs be ORDERED to pay Defendant Blaik’s attorney’s fees and costs in defending this action.” On December 3, 2007, Appellees filed an “ANSWER AND OPPOSITION TO MOTION TO DISMISS BY DEFENDANTS HARIRI AND HATFIELD AND BLAIK’ that included the following arguments: The contracts of Doctors Blaik, Hariri and Hatfield are contracts under seal and as such the fact that witness memories may have faded and like defenses are simply irrelevant. By signing a contract under seal, they agreed that they can be sued for breach, (and can also sue if they ⁶⁷⁹ feel the practice breached its duties), for a period of 12 years as per Maryland Courts and Judicial Proceedings Code Annotated § 5-102. ... In this case, given the fact that no discovery has occurred to date, and there is no prejudice at all to Defendants by delay in service, the motions to dismiss should be denied. The only prejudice that may have occurred is the fact that it has been a long time since the events in question occurred.

However, by signing a contract under seal, each Defendant accepted that chance and indeed gained the right to enforce their contractual rights for twelve years just as their contractual liabilities extend for that time as well. For all these reasons, the case should not be dismissed at all and certainly cannot be dismissed with prejudice as there is no basis at all in law to do this. After considering additional written and oral arguments, on February 29, 2008, the Circuit Court filed a “MEMORANDUM RULING” that included the following findings and conclusions: The purpose of Maryland Rule 2-507 has been clearly stated in case law as a means to “clear the docket of dead cases.” Although this Court is extremely troubled by Plaintiffs counsel lack of diligence in pursuing this matter by properly serving the defendants in this case, this Court does not believe it has authority to dismiss this case with prejudice under Maryland Rule 2-507. The Rule is not meant to punish plaintiffs for the action or inaction of “lax” attorneys, but rather rid the docket of “stale” cases.

Since the disputed contract in this case was “under seal” the statute of limitations in this case is 12 years. This would mean that the plaintiff could have brought his lawsuit in 2008 and still have been within the applicable statute of limitations. It is therefore ORDERED that this case be DISMISSED WITHOUT PREJUDICE. Dr. Hariri, Dr. Hatfield and Dr. Blaik noted timely appeals to the Court of Special Appeals.

As stated above, this Court ⁶⁸⁰ issued a writ of certiorari to determine whether the Circuit Court erred or abused its discretion in denying Appellants’ motions for dismissal “with prejudice.” Discussion I. Just as a plaintiff whose complaint is “dismissed without prejudice” has the right to note an appeal, 3 a defendant who has argued for a “dismissal with prejudice” has the right to note an appeal from a “dismissal without prejudice.” In Ferrell v. Benson, 352 Md. 2 , 720 A.2d 583 (1998), this Court stated: This Court has repeatedly held that an order “having the effect of terminating the case in the circuit court, is a final judgment.” Montgomery County v. Revere National Corp., 341 Md. 366, 378 , 671 A.2d 1, 7 (1996). See, e.g., Moore v. Pomory, 329 Md. 428, 431 , 620 A.2d 323, 325 (1993) (circuit court’s order dismissing complaint without prejudice is a final judgment because it “puts the plaintiff out of court and terminates the particular action in [that] court”); Horsey v. Horsey, 329 Md. 392, 402 , 620 A.2d 305, 310 (1993) (circuit court order requiring the parties to arbitrate their entire dispute is a final judgment, as the “order effectively terminates that particular case before the trial court”); Wilde v. Swanson, 314 Md. 80, 83-87 , 548 A.2d 837, 838-840 (1988) (dismissal of action on the ground of improper venue, like a dismissal for lack of jurisdiction, is a final judgment because “the plaintiffs were deprived of the means of further prosecuting their claim against [the defendant] in that court”); ⁶⁸¹ Doehring v. Wagner, 311 Md. 272, 275 , 533 A.2d 1300, 1301-1302 (1987) (circuit court’s order granting the defendants’ motion for summary judgment was a final judgment, as the order “put the plaintiffs out of court” and “terminated the litigation in that court”); Houghton v. County Com’rs of Kent Co., 307 Md. 216, 221 , 513 A.2d 291, 293 (1986). The notion embraced by the defendants and the Court of Special Appeals in this case, that an order terminating the case in the circuit court is not final and appealable unless it settles the rights of the parties or concludes the cause of action, has consistently and expressly been rejected by this Court. Id. at 5-6, 720 A.2d at 585 .

It is of no consequence that Appellants were defendants rather than plaintiffs. The petitioner in Horsey v. Horsey, 329 Md. 392 , 620 A.2d 305 (1993), was Mrs. Horsey, who was the defendant in the Circuit Court. When the Circuit Court ordered arbitration, it was Mrs. Horsey who noted an appeal to the Court of Special Appeals. After the Court of Special Appeals dismissed that appeal, Mrs. Horsey filed a petition for writ of certiorari with this Court.

That petition was granted, and this Court ultimately held that “[t]he court’s order dismissing Mr. Horsey’s petition of contempt/counterclaim and directing arbitration was a final and appealable judgment.” Id. at 406 , 620 A.2d at 312. It is also of no consequence that Appellants “prevailed” in the Circuit Court in the sense that Appellees’ Amended Complaint was dismissed. The ruling about which Appellants complain is the functional equivalent of an order putting them “out of court” on the issue of whether they are entitled to a “dismissal with prejudice.” We therefore hold that the ruling at issue is an appealable “final adjudication.” II. Maryland Rule 2-507 provides: ⁶⁸² (a) Scope.

This Rule applies to all actions except actions involving the military docket and continuing trusts or guardianships. (b) For lack of jurisdiction. An action against any defendant who has not been served or over whom the court has not otherwise acquired jurisdiction is subject to dismissal as to that defendant at the expiration of 120 days from the issuance of original process directed to that defendant. (c) For lack of prosecution.

An action is subject to dismissal for lack of prosecution at the expiration of one year from the last docket entry, other than an entry made under this Rule, Rule 2-131, or Rule 2-132, except that an action for limited divorce or for permanent alimony is subject to dismissal under this section only after two years from the last such docket entry. (d) Notification of contemplated dismissal. When an action is subject to dismissal pursuant to this Rule, the clerk, upon written request of a party or upon the clerk’s own initiative, shall serve a notice on all parties pursuant to Rule 1-321 that an order of dismissal for lack of jurisdiction or prosecution will be entered after the expiration of 30 days unless a motion is filed under section (e) of this Rule. (e) Deferral of dismissal.

On motion filed at any time before 30 days after service of the notice, the court for good cause shown may defer entry of the order of dismissal for the period and on the terms it deems proper. (f) Entry of dismissal. If a motion has not been filed under section (e) of this Rule, the clerk shall enter on the docket “Dismissed for lack of jurisdiction or prosecution without prejudice” 30 days after service of the notice. If a motion is filed and denied, the clerk shall make the entry promptly after the denial.

Appellants argue that the Circuit Court committed an error of law when it concluded that it does not have the “authority to dismiss this case with prejudice under Md. Rule 2-507.” This argument, however, was waived by (1) Dr. Hariri on September 19, 2007, when he filed his “ANSWER ⁶⁸³ TO COMPLAINT,” (2) Dr. Blaik on October 29, 2007, when he filed his “MOTION TO DISMISS ..and (3) Dr. Belle on November 6, 2007, when he filed his “ANSWER TO COMPLAINT.” While Appellants were entitled to argue that they were entitled to a dismissal because Appellees had failed to comply with the requirements of Md. Rule 2-507(b), an argument for “dismissal for lack of jurisdiction” is waived unless it complies with Md. Rule 2-322(a), which requires that the defense of “lack of jurisdiction over the person” be asserted “by motion to dismiss filed before the answer,” and which provides that, “[i]f not so made and the answer is filed, [that defense is] waived.” As this Court stated in McCormick v. St. Francis de Sales Church, 219 Md. 422 , 149 A.2d 768 (1959), “[a] person who denies that a court has jurisdiction and asks relief on that ground cannot ask anything of the court which is inconsistent with the want of such jurisdiction.” Id. at 429 , 149 A.2d at 772 . Although Dr. Hatfield has not waived his right to argue that he is entitled to a dismissal with prejudice, 4 there is no