Hashem v. Taheri

KARWACKI, Judge. This appeal requires us to assess the impact of Maryland’s 1984 merger of law and equity 1 on the constitutional right to a jury trial, 2 where a plaintiff asserts both legal and equitable claims involving a common question. We begin by describing the context in which the question is presented. Mohammad Ali Taheri, the appellee, brought suit against the appellants, Afsana Enterprises, Inc. (Afsana), D & A Enterprises, Inc. (D & A), and Mohammed and Marial Hashem in the Circuit Court for Montgomery County.

Appellee’s ten count complaint pleaded seven stockholder de ²⁷¹ rivative claims 3 on behalf of Afsana and three direct claims against the other appellants. Appellee elected a jury trial of these claims. In their answer to the complaint, appellants asserted that appellee was not a stockholder in Afsana and, consequently, was precluded from bringing a stockholder derivative suit or any direct claims based on his status as stockholder. Recognizing that (a) each party has a constitutional right to a jury trial on legal claims, (b) the complaint contained counts seeking both legal and equitable relief and (c) the issue of the appellee’s status as a stockholder was common to both the legal and equitable claims, the court (Ruben, J„) granted the appellee’s motion to bifurcate the issues in the case, so that “the issue of whether the plaintiff is a stockholder shall be determined at the first trial as now scheduled and the issue of damages, if necessary, shall be determined at a subsequent trial.” But on the scheduled date of that first trial, the court (Beard, J.) proposed a different arrangement: the issues of the appellee’s status as a stockholder as well as his equitable derivative claims would simultaneously be heard by the court, sitting without a jury; if the court ruled that the appellee was indeed a stockholder, then a jury would be impaneled to hear the appellee’s remaining claims.

At the conclusion of the non-jury trial, the court ruled that the appellee was a 50% stockholder in Afsana and enjoined appellants from disbursing any of Afsana or D & A’s funds other than in the ordinary course of business. Appellants filed this appeal from that order. I. Preliminarily, appellee asserts that Judge Beard’s order was not a final appealable judgment. While appeals, for the most part, are permitted only from final judgments, there are a number of statutorily permitted appeals from ²⁷² interlocutory orders.

Pulley v. State, 287 Md. 406, 414 , 412 A.2d 1244 (1980). The instant appeal is from an order granting an injunction and is permitted by § 12 — 303(3)(i) of the Cts. and Jud.Proc.Code Ann. II. Prior to 1984, “the historical separation of law and equity had been scrupulously maintained in this State.” Higgins v. Barnes, 310 Md. 532, 540 , 530 A.2d 724 (1987). The constitutional right to a jury trial of all issues of fact in civil proceedings applied only to those actions filed on the law side of the circuit courts.

No such right existed in a court of equity. Impala Platinum Ltd. v. Impala Sales, 283 Md. 296, 320 , 389 A.2d 887 (1978). “It was as if one entered Maryland’s courts of general jurisdiction through two doors, one marked ‘law,’ the other ‘equity,’ and once inside, the jury trial question was resolved on the basis of which door one had used for entry.” R. Bourne and J. Lynch, Merger of Law and Equity Under the Revised Maryland Rules: Does it Threaten Trial by Jury? 14 U.Balt.L.Rev. 1, 44-45 (1984). Where cases brought in equity also sought legal remedies, a chancellor in equity would use his “clean-up” power to address the legal claims. Higgins, 310 Md. at 540-41 , 530 A.2d 724 . “This situation gave rise to concern that expansion of equity jurisdiction and the concomitant increase in the exercise of ‘clean-up’ powers not only threatened, but in fact had eroded” the constitutional right to a jury trial.

Higgins, 310 Md. at 541 , 530 A.2d 724 . See also C. Brown, The Law/Equity Dichotomy in Maryland, 39 Md.L.Rev. 427 (1980). In response to these concerns, the Court of Appeals adopted Rule 2-301, abolishing the law/equity distinction, effective July 1, 1984, so that now the “circuit courts sit simultaneously in law and equity to handle all civil matters over which they have jurisdiction.”