Hawes v. Liberty Homes, Inc.

²²⁴ WILNER, Chief Judge. Procedural History This is appellants’ second appeal in this matter. The case arises from a contract entered into in February, 1988, under which appellees agreed to construct a home for appellants on a certain lot of land. The contract was subject to a financing contingency—the ability of appellants to obtain a commitment for conventional financing within 45 days.

That period was later extended for an additional 60 days. There is a dispute as to whether appellants complied with that condition and whether it was eventually waived by appellees. Believing that the condition was neither waived nor satisfied, appellees, in June, 1988, declared the contract null and void. They offered a new contract, which appellants rejected.

Appellants then filed suit in the Circuit Court for Montgomery County for specific performance, injunctive and declaratory relief in equity, and damages. In their initial and first amended complaints, they charged appellees with breach of contract and civil conspiracy. They did not request a jury trial; nor did appellees make such a request in their answers to those complaints. In a second amended complaint, appellants added two additional counts—for deceptive trade practices and negligent misrepresentation.

In their answer to that complaint, appellees incorporated their earlier answer to the amended complaint, denied the new allegations, and requested a jury trial “on all issues.” At some point, appellees filed a separate action against appellants for defamation, which action eventually was consolidated for trial with appellants’ action. Trial was held in both cases in June, 1991. Counts I and III of appellants’ action, seeking specific performance and a declaratory judgment in equity, were tried before the court; appellees’ claim for defamation and the other five counts in appellants’ case—including Count II seeking injunctive relief in equity—were, according to the docket entries, tried before a jury. At the end of appellants’ case, the court entered judgment for appellees with respect to Counts II (Injunctive Relief), V (Civil Conspiracy), VI (Deceptive Trade Practices), ²²⁵ and VII (Negligent Misrepresentation).

A motion for judgment was denied as to Counts I (Specific Performance), III (Declaratory Judgment), and IV (Breach of Contract). The breach of contract action and appellees’ action for defamation were submitted to the jury, which returned a verdict in favor of appellants. On the breach of contract claim, it assessed damages of $200,000. The court reserved ruling on Count I, for specific performance.

It is evident from the closing arguments of counsel that the only issues really before the jury in the breach of contract action, other than damages, were whether appellants had effectively satisfied the financing condition by obtaining an oral commitment from B.F. Saul or, if not, whether appellees were aware that such a commitment had been obtained and, by continuing to deal with appellants thereafter, effectively waived any claim that a written commitment was not forthcoming within the time allowed in the contract. Within 10 days after entry of the verdicts, appellees filed a motion for judgment NOV and, in the alternative, for new trial. Three principal claims were made in the motion—that judgment NOV was required because the evidence showed as a matter of law that appellees had not waived the financing contingency, that a new trial was required because the damages were excessive in light of the evidence, and that the verdict on the defamation claim was against the weight of the evidence. On July 30, 1991, at the end of a hearing on the motion, the court announced from the bench its conclusions that (1) there was sufficient evidence to sustain a finding by the jury that appellees had waived the financing contingency, and, for that reason, the motion for judgment NOV would be denied, but (2) the damages were excessive, and unless appellants were willing to remit $150,000 and accept a judgment of $50,000, a new trial would be ordered.

In its remarks, the court noted the pendency of the specific performance claim and questioned whether it could, in ruling on that count, reach a conclusion contrary to that reached by the jury. Not surprisingly, counsel had different views on that, and no ²²⁶ decision was reached. The court essentially allowed appellants time to consider whether to file a remittitur. Two weeks later, on August 14, 1991, the court filed an opinion and order denying the claim for specific performance.

In the opinion, the court concluded that appellants had failed to satisfy the financing contingency and that such failure “effectively terminated the contract pursuant to its' terms.” Thus, said the court, as a matter of law, appellants “had no existing contract which could be made the subject of specific performance.” There was no mention in the opinion, or the order, about the question of whether appellees had waived the financing contingency, which was the whole point of the motion for judgment NOV, but it is certainly implicit that the court found no such waiver. Upon the entry of that order, appellants responded to the motion for judgment NOV and new trial, arguing that the damages were not excessive and urging that the court deny that motion. Presumably regarding this response as a rejection of the proposed remittitur, the court, on August 30, 1991, entered an order granting a new trial on the breach of contract claim and denying a new trial on the defamation claim. Although nothing expressly was said in the order about the motion for judgment NOV, by granting the new trial the court implicitly, and necessarily, denied that aspect of the motion.

Also missing from the August orders was any ruling on Count III of the Second Amended Complaint, seeking a declaratory judgment in equity. That count seems to have gotten lost, except to the extent that the rights of the parties were declared in the opinion accompanying the order of August 14, 1991. Aggrieved by the court’s decision, appellants appealed, presenting three issues to this Court: whether the trial court erred in granting a new trial, whether it erred “ ‘in not permitting the [Haweses] to have the jury decide the factual predicate’ for the specific performance claim,” and whether it erred in asking appellants to remit to $50,000 without a request for such relief from appellees. In an unreported per ²²⁷ curiam, Opinion, a panel of this Court concluded that the issue of the new trial was not properly before the Court, that “in resolving the specific performance claim, the court was not bound by the jury’s verdict on the breach of contract claim,” and that, although the court should have ruled on the specific performance claim before requiring appellants to accept or reject a remittitur, any error in that regard was harmless in light of their ultimate rejection of the remittitur.

Hawes v. Liberty Homes, Inc., 93 Md.App. 829 , 832 (1992). Because the panel found no reversible error in the rulings that it regarded as properly before it, the panel affirmed the judgment of the circuit court, fully expecting that the case would then proceed to a retrial as directed by the circuit court. When the case returned to the circuit court, appellees sprung a neat surprise, in the form of a motion for summary judgment. In that motion, they posited that appellants were not entitled to a new trial because, under principles of election of remedies and collateral estoppel, appellants were bound by the court’s ruling, in connection with the specific performance claim, that they had failed to satisfy the financing contingency and that, accordingly, there was no contract to breach.

Appellees treated the holding of the appellate panel that the trial court was entitled to make that finding, notwithstanding the contrary conclusion reached by the jury, as support for their argument. As an alternative, appellees urged in addition that, if appellants were entitled to a new trial, it would have to be a non-jury trial, as they had waived their right to a jury. The trial court agreed with all three arguments and entered summary judgment in appellees’ favor. Hence, this second appeal, in which appellants challenge the granting of summary judgment and the court’s alternative conclusion that, if a retrial were to take place, it would be a non-jury one.

In a cross-appeal, appellees complain about the denial of their motion for judgment NOV. We believe that the trial court erred in granting summary judgment. We conclude that appellants are entitled to a new trial on the breach of contract claim and that they are entitled ²²⁸ to a jury trial on that claim. We find no error in the earlier implicit denial of the motion for judgment NOV.

Discussion The thrust of appellees’ argument in support of their motion for summary judgment was that (1) the principal claim made by appellants was for specific performance, (2) the court, as the panel of this Court confirmed, had the right to draw its own conclusion, in ruling on that claim, whether appellees had breached the contract, (3) by rejecting the remittitur after the court had ruled on the specific performance claim, appellants effectively abandoned the jury verdict, and (4) they had therefore elected the specific performance remedy as opposed to their claim for damages and, accordingly, were bound by the court’s findings and were collaterally estopped from relitigating them. In considering these arguments, we need first to deal with the holding by the earlier panel of this Court. In Higgins v. Barnes, 310 Md. 532 , 530 A.2d 724 (1987), the Court of Appeals laid out the ground rules for resolving common issues raised in law and equity claims in cases tried after the 1984 merger of law and equity procedure. That case, like this, involved a claim, based on breach of contract, for both specific performance and damages.

A counterclaim for damages was also filed, and in that counterclaim, the defendant-counter plaintiff demanded a jury trial. The court, believing that the claim was primarily an equitable one for specific performance, struck the demand for jury trial, tried the case without a jury, concluded that the plaintiff was entitled to specific performance with a credit for certain construction deficiencies, and entered judgment accordingly. The Court of Appeals vacated the judgment, concluding from an analysis of Federal law that the defendant had a right to jury trial on the counterclaim. At 552, 530 A.2d 724 , the Court held: “Higgins’ demand for a jury trial should have been granted as to the issues raised by her answer and counterclaim, and those issues should have been tried first.

After a jury had determined Higgins’ entitlement, if any, to damages result ²²⁹ ing from deficiencies in construction, the trial judge should have determined whether specific performance was appropriate. The judgment entered by the court would reflect an adjustment in accordance 'with the finding of the jury, thereby giving full effect to Higgins’ right to a jury trial.” (Footnote omitted; emphasis added.)- In Edwards v. Gramling Engineering Corp., 322 Md. 535 , 588 A.2d 793 , cert. denied, — U.S.-, 112 S.Ct. 317 , 116 L.Ed.2d 259 (1991), the Court confirmed this view that, where issues presented in an action at law are triable before a jury, those issues must be presented to a jury notwithstanding that they are also raised in an additional or alternative equitable action, and that, in ruling upon the equitable claim, the court is bound by the jury’s determination of the common issues. Quoting from Gutzwiller v. Fenik, 860 F.2d 1317, 1333 (6th Cir.1988), the Court noted the Federal rule that, where equitable claims are to be resolved by the court and legal claims are to be resolved by the jury, the judge is “ ‘without power’ to reach a conclusion inconsistent with that of the jury.” There can be no doubt that this is exactly what the trial court did in ruling on the specific performance claim. From the manner in which the breach of contract