Impac Mortgage Holdings v. Timm

Impac Mortgage Holdings, Inc. v. Curtis J. Timm, et al., No. 2119, September Term 2018. Opinion by Nazarian, J. BREACH OF CONTRACT – CONTRACT INTERPRETATION – OBJECTIVE VIEW – EFFECT GIVEN TO EACH CLAUSE Under objective view of contract interpretation, clause in Articles Supplementary governing the number of preferred shareholder votes required to amend the Articles was susceptible of only one meaning and was not ambiguous. Language requiring that the consent of at least two-thirds of one class of preferred shareholders—as opposed to two- thirds of both classes counted together—was required to amend the Articles. Other language in the same provision requiring that the class “vot[e] separately as a class with all series” of preferred shareholders did not create an ambiguity.

RULE 2-602(A)(3) MOTION TO MODIFY SUMMARY JUDGMENT – MOTION TO STRIKE AMENDED COMPLAINT – NO ABUSE OF DISCRETION Circuit court did not abuse its discretion in denying plaintiffs’ attempt to add a new count to complaint based on absence of evidence of shareholder consents. The plaintiffs had not alleged facts to support that theory of liability initially and plaintiffs’ attempt to obtain discovery on that theory was based on speculation. Circuit Court for Baltimore City Case No. 24-C-11-008391 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2119 September Term, 2018 ______________________________________ IMPAC MORTGAGE HOLDINGS, INC. v. CURTIS J. TIMM, ET AL. ______________________________________ Nazarian, Reed, Zarnoch, Robert A. (Senior Judge, Specially Assigned), JJ. ______________________________________ Opinion by Nazarian, J. ______________________________________ Filed: April 1, 2020 * Judge Steven Gould did not participate in the decision to report this opinion pursuant to Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document Maryland Rule 8-605.1. is authentic.

Suzanne Johnson 2020-07-20 15:04-04:00 Suzanne C. Johnson, Clerk Let’s not be overconfident, we still have to count the votes.1 This complex litigation turns on the meaning of one complex sentence. That sentence defines the voting rights of two classes of preferred shareholders of Impac Mortgage Holdings, Inc. (“Impac”), a publicly traded real estate investment trust incorporated under the laws of Maryland and headquartered in Irvine, California. In 2004, Impac amended its charter with Articles Supplementary (the “Articles”) that created “Series B” and “Series C” classes of preferred stock. Impac sold the shares for $25 per share in two public offerings that raised $161.7 million.

In 2009, after the real estate market tanked and the company hit hard times, Impac sought to buy back the Series B shares for approximately $0.29 per share and the Series C shares at approximately $0.28 per share. As a condition of buying back the stock, Impac also asked shareholders to agree to amend the Articles to, among other things, strip them of their right to collect dividends. The vote was held (although some dispute this) and just over two-thirds of the Series B and Series C stockholders, collectively, tendered their stock. But the two-thirds threshold wasn’t met for each class on its own—just under two-thirds of the Class B shareholders tendered their shares.

The question, then, is whether the amendments were approved. Impac says they were, and it filed them with the United States Securities and Exchange 1 Attributed to Harold Washington, Mayor of Chicago, 1983–87. Mayoral Race One For The History Books; Will Turnout Be Headline or Footnote? Chicago Sun-Times (Feb. 28, 2019), https://chicago.suntimes.com/2019/2/8/18368156/mayoral-race-one-for-history- books-will-turnout-be-headline-or-footnote.

Commission. But about two years later, Curtis Timm, a Series B and Series C preferred shareholder, says that the thresholds weren’t met because Impac needed two-thirds of the shares in each class measured separately. Mr. Timm filed a six-count class action complaint (the “Complaint”) against Impac and individual members of its board of directors in the Circuit Court for Baltimore City. Three years later, Camac Fund LP (“Camac”), also a Series B and Series C preferred shareholder, intervened as a plaintiff.

Over the course of several years and numerous sets of motions, the circuit court granted partial summary judgment in Mr. Timm’s and Camac’s favor on certain counts and in Impac’s favor on others. In the course of reaching its decisions, the circuit court found the voting rights language ambiguous and, based on the available extrinsic evidence, found that two-thirds of the shares from each separate class had to tender their shares for the buyback and amendments to be approved. In July 2018, the court declared that the 2009 amendments to the Series B Articles were not valid, and that the 2004 Series B Articles remained in full force and effect. Among other things, it ordered injunctive relief requiring Impac to hold a special election for the Series B shareholders to elect two new directors under a provision in the 2004 Articles.

The court rejected Mr. Timm and Camac’s challenges to the validity of the Series C Articles amendments. Finally, it issued an order stating that it certified the decisions it had made to that point for immediate appeal under Rule 2-602(b). Impac appealed, Mr. Timm cross- appealed, and all of the parties agree with the circuit court that the voting rights provision is ambiguous. We find it unambiguous, hold that the unambiguous meaning leads to the same result, and affirm the judgment in all other respects. 2 I. BACKGROUND To understand the issues in this case, we must first place them in context, which in turn requires us to walk through a lengthy procedural history.

A. The Claims Mr. Timm filed the initial class action Complaint on December 7, 2011. On March 5, 2014, Camac filed its own intervenor complaint. The complaints are almost identical except that Camac’s omits Mr. Timm’s claim for relief in the form of punitive damages (Mr. Timm’s Count V). In Count I, Mr. Timm and Camac alleged that Impac breached the Series B Articles by amending them without the consent of two-thirds of Series B shareholders.

They asserted that the voting rights provision in the Articles required a two-thirds vote of each class counted separately. That voting rights provision, section 6(d) of the Series B Articles,2 is the complex sentence that lies at the heart of this case: So long as any shares of Series B Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the Series B Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class with all series of Parity Preferred that the Corporation may issue upon which like voting rights have been conferred and are exercisable), . . . (ii) amend, alter or repeal any of the provisions of the Charter . . . . Impac never disputed that fewer than two-thirds of the Series B shareholders gave their consent to the amendments.

It argued, however, that the voting rights provision is 2 The counterpart provision in the Series C Articles is identical except that it substitutes Series C for Series B in each relevant spot. 3 ambiguous and, in context, means that the Articles may be amended if two-thirds of the Series B and Series C shareholders, tallied together, tender their shares. Count II also alleged a breach of the Articles, but a different breach. That count alleged that the Series B and Series C Articles hadn’t been amended because the language and terms of the 2009 offering documents made the transaction impossible—it required Impac to purchase the shares before the shareholders’ consents occurred or became effective. Count II went on to assert that because Maryland Code, § 2-509(b) of the Corporations and Associations Article prohibits corporations from voting shares of their own stock, there could have been no valid shareholder consent to the proposed amendments.

This theory seems to posit that any consent by a preferred shareholder would not have been effective because it would have occurred when the shareholder no longer owned the stock, and any consent to amend by Impac would not have been valid because Impac was prohibited from voting its own shares. Count III was titled “Breach of Fiduciary Duty/Violation of Good Faith and Fair Dealing” and contained several theories of liability, all grounded in the assertion that it was improper for Impac and the individual defendants to propose the Series B and Series C repurchase as they did—i.e., as an offer to repurchase the stock at $0.28 and $0.29 per share, and on the condition that the shareholders agreed to amendments to the Articles that were against the shareholders’ interests. The Complaint alleged at least four theories of impropriety: • it characterized the 2009 tender offer and consent solicitation as a breach of contract for violation of the covenant of good faith and fair dealing; 4 • it characterized the 2009 tender offer and consent solicitation as an “illegal ‘vote buying’ scheme”; • it asserted that the individual board member defendants who were owners of Impac common stock had engaged in self-dealing; and • it alleged that Impac and the individual defendants wrongfully coerced the shareholders into selling their stock and consenting to the amendments by “threat[ening]” them that if they did not do so, their stock would become worthless. Count IV, Mr. Timm’s Count V, and Mr. Timm’s Count VI (Camac’s Count V) do not allege separate causes of action, but instead seek remedies in the event the 2009 amendments to the Series B and/or Series C Articles are found invalid under any of the theories alleged in Counts I, II, or III.

Count IV alleged that Impac breached section 3(d) of the Articles by purchasing Series B and Series C stock without paying the dividends owed for at least two quarters in 2009 before repurchasing it.3 Count IV seeks an order requiring Impac to pay the dividends owed. Count V of Mr. Timm’s Complaint asserted that Impac and the individual defendants acted with “malice” and seeks punitive damages. Count VI (Count V in Camac’s complaint) seeks injunctive relief enforcing Section 3 Section 3(d) of the 2004 Articles provides that Impac was not permitted to repurchase its common or preferred stock unless “full cumulative dividends” have been paid: [U]nless full cumulative dividends on the Series B Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, . . . [no shares of] Common Stock, or any shares of preferred stock of the Corporation ranking junior to or on a parity with the Series B Preferred Stock . . . [shall] be redeemed, purchased or otherwise acquired for any consideration . . . by the Corporation. . . . 5 6(b) of the 2004 Series B and Series C Articles, which provides that if Impac fails to pay six or more quarterly dividends, a preferred shareholder may “immediately call for a special meeting to elect two directors to Impac’s Board” with the consent of 20% of the Series B and Series C shareholders.4 B. January 2013: The Circuit Court Grants Partial Summary Judgment In Favor Of Impac And The Individual Defendants. Impac filed a motion to dismiss Mr. Timm’s Complaint on February 27, 2012.

The circuit court held a hearing on June 28, 2012, and on January 29, 2013, entered a forty- page memorandum opinion and order deciding several of the claims in favor of Impac and the individual defendants. Because the parties relied on evidence outside of the Complaint, the circuit court treated the motion as a motion for summary judgment and granted judgment in favor of the individual defendants on all counts. As to Count I, the court denied Impac’s motion to dismiss, and specifically held that the voting rights language in the Articles was ambiguous because it could mean either that the consent of two-thirds of Series B shareholders was required to amend the respective Articles Supplementary or that the consent of two-thirds of the Series B and Series C shareholders collectively was 4 Section 6(b) of the 2004 Articles provides that, if Impac failed to pay dividends for six or more quarters (which here is undisputed), then the Series B shareholders may elect two board members: Whenever dividends on any shares of Series B Preferred stock . . . shall be in arrears for six or more quarterly periods . . . the holders of such shares . . . will be entitled to vote for the election of a total of two additional directors of the Corporation . . . at a special meeting called by the holders of record of at least 20% of the Series B Preferred Stock . . . . 6 required to amend either set of Articles. The court also found that the meaning of the language could not be determined without consideration of extrinsic evidence.

As for Count II, the court held that the underlying theory—i.e., that the transaction was made impossible by the structure of the offer—was not supported by the language of the offering documents, and it granted judgment for Impac on that count. The court also rejected the various theories of liability underlying Count III and granted judgment in Impac’s favor on that count. First, the court dismissed the claim for breach of contract based on violation of the duty of good faith and fair dealing. Second, it held that the breach of fiduciary duty claim applies only to the individual defendants, not to Impac itself.

Third, it also granted judgment in favor of the defendants on the breach of fiduciary duty claim because the allegations did not support “illegal vote buying” or impermissible coercion and because Mr. Timm had “abandoned any stand-alone self- dealing claim he may have alleged.” The court granted summary judgment in Impac’s favor on Count V, Mr. Timm’s claim for punitive damages, holding that the conclusory allegations that the defendants intended to injure Series B and Series C shareholders by stripping them of their economic rights were insufficient to state a claim and that they “simply seek, without a colorable basis in fact, to convert a garden variety breach of contract claim into a claim for punitive damages.” And finally, the court denied Impac’s motion to dismiss Counts IV and VI (Camac’s Count V), the merits of which, it found, were tied to Count I’s allegation that Impac did not amend the Articles validly. On February 27, 2013, Mr. Timm filed a motion for reconsideration of the January 7 2013 order, and the court denied that motion in a fourteen-page memorandum opinion on December 6, 2013. Mr. Timm argued that the court’s decisions on Count II and III improperly weighed facts, and the court rejected that argument. Mr. Timm argued that the circuit court erred in granting summary judgment for Impac on Count II because a genuine issue of material fact existed as to whether the depositary and transfer agent for the 2009 transaction (American Stock Transfer & Trust Co. (“AmStock” or the “Depositary”)) delivered the shareholder consents to Impac before Impac accepted the shares for repurchase.

The court rejected that argument too, noting that Mr. Timm had not alleged such a theory in his Complaint. Put another way, the court found that the Complaint’s allegations as to the breach of the Articles in Count II were based, not on a question of fact, but instead on the theory that the court had rejected in the January 2013 opinion, i.e., that the 2009 offering documents were flawed: [Mr. Timm] did not argue that the Depositary did not do something that was contemplated by the documents. It is apparent that [Mr. Timm’s] theory was that the Depositary could not do what was necessary for the transaction to be effective, because what the instruments contemplated was impossible. That theory is based on the contents of the transaction documents themselves, not on the fact of whether the Depositary did or did not deliver the consents before Impac accepted the shares for purchase.

The court also rejected Mr. Timm’s argument as to Count III that the court had weighed facts improperly in deciding to grant judgment for the individual defendants on the claim for breach of fiduciary duty based on impermissible coercion. 8 C. Camac Intervenes, Discovery Proceeds, And The Court Again Addresses The Merits. On June 10, 2013, Camac, a Series B and Series C stockholder that acquired the stock after the 2009 amendments, moved to intervene as a plaintiff. Camac’s motion to intervene was granted. On the same day, Impac moved for summary judgment on the remaining claims (Counts I, IV, and VI of Mr. Timm’s Complaint and Counts I, IV, and V of Camac’s Intervenor Complaint).

On May 5, 2014, Mr. Timm sought discovery from the Depositary, AmStock, by filing with the circuit court an “Application for Commission to the New York State Courts for the Issuance of a Subpoena Duces Tecum.” The proposed subpoena sought information concerning AmStock’s handling of shareholder consents.5 Impac opposed the application 5 The subpoena sought from AmStock deposition testimony on the following topics: • information regarding instructions received from Impac or any of its agents regarding whether [AmStock] was alerted to the acceptance for purchase before it gave consent as discussed in more detail in Plaintiff’s complaint . . . ; • information regarding how votes were to be tallied for the above-mentioned redemption; • information regarding what actions triggered consent for the above-mentioned redemption; and • information regarding the votes required to approve amendments to the preferred stock. • documents exchanged with Impac and any of its agents regarding the redemption sequence at issue in Plaintiff’s complaint; how votes were to be tallied, and what actions triggered consent; and • documents regarding the votes required to approve amendments to the preferred stock. 9 and moved for a protective order, arguing that the subpoena was aimed at collecting discovery on Count II, on which judgment had already been granted, and that the discovery was aimed at a theory not alleged in the Complaint and already rejected by the court. In other words, the circuit court already had precluded Mr. Timm from attempting to raise a dispute of fact about the sequence and timing of the shareholder consents and Impac’s repurchase of the shares. The court agreed with Impac and entered an order on August 4, 2014 denying Mr. Timm’s application for a subpoena and granting Impac’s motion for protective order. On February 27, 2015, Mr. Timm and Camac filed a motion for class certification.

The circuit court has not yet ruled on that motion. On March 9, 2015, Mr. Timm and Camac opposed Impac’s February 28, 2014 motion for summary judgment and filed their own cross-motion for summary judgment on Count I. They argued, among other things, that the voting rights provision was unambiguous. They argued in the alternative that if the court found the language ambiguous, the extrinsic evidence weighed in favor of their interpretation. And finally, they argued that any remaining ambiguity should be construed against Impac as the “ultimate drafter” of the Articles, since the evidence demonstrated that they had been drafted by underwriters.

On April 1, 2015, Mr. Timm and Camac filed a Rule 2-602(a)(3) motion for revision of summary judgment as to Count II. They raised a version of the theory that Mr. Timm had raised earlier in his motion to reconsider the court’s January 2013 ruling. Although Mr. Timm had been prevented from seeking discovery on that issue, some evidence 10 nevertheless had been produced during discovery that prompted him (and Camac) to attempt once again to revive the “no consents” theory: AmStock’s affidavit, in response to a subpoena, stating that AmStock “had no involvement with the shareholder votes.”6 Mr. Timm and Camac also relied on the absence of evidence of any physical papers indicating the shareholders’ consent and the deposition testimony of Impac’s general counsel that he did not know where the written consents were located. Mr. Timm and Camac seized on this new evidence to raise a number of overlapping—and at times difficult-to-follow—arguments in their Rule 2-602(a)(3) briefing.

They contended that the January 2013 ruling had assumed erroneously that the 2009 tender offer and purchase had followed the documents, that the shareholders had transmitted their written, paper consents to the Depositary, and that the Depositary had either consented on their behalf or transmitted their consents to Impac. They argued, based on AmStock’s affidavit, that its apparent lack of involvement in the consent transmittal process proved that the court had relied erroneously on the occurrence of a process that was not in fact followed.7 Essentially, they argued that Mr. Timm had been “right for the 6 Although the court had granted Impac’s motion for protective order as to Mr. Timm’s initial (broader) subpoena to AmStock, Mr. Timm and Camac later served a second (narrower) subpoena to which Impac did not object. As Impac represented in briefing before the circuit court, it did not object because the subpoena “was narrowly tailored in light of the Protective Order” and sought only communications between AmStock and Impac about the counting and processing of shareholder votes (a topic relevant to Count I). 7 They specifically highlighted this language from the court’s January 2013 memorandum opinion, which appeared to assume that the transaction took place in the manner described in the governing documents: The economic interest was necessarily delivered after the Depositary exercised the proxy because shareholder consent 11 wrong reasons” in alleging that there were “no” shareholder consents to authorize the amendments to the Series B and Series C Articles.8 They also appeared to introduce a new theory of liability: that because the consents “didn’t exist,” Impac never could have received them, and therefore Impac’s amendment of the Articles was improper. Impac responded with evidence that the preferred stock had been held electronically (as opposed to in paper form) and, likewise, the consents and sales of the preferred stock in 2009 had occurred electronically, as the “book-entry” procedures in the governing documents contemplated.

Impac did not produce evidence of electronic consents as such, but did submit AmStock’s daily reports to Impac memorializing the 2009 electronic tender transactions. Impac also submitted a supplemental affidavit from AmStock’s representative explaining that the phrase “had no involvement with the shareholder votes” in her initial affidavit meant that AmStock had not had direct communications with shareholders but that it nevertheless had fulfilled the role the 2009 offering documents required. Impac also pointed to the Maryland Uniform Electronic Transactions Act, Maryland Code (1975, 2013 Rep. Vol.), § 21-106 of the Commercial Law Article (“CL”).

In reply, Mr. Timm and Camac did not dispute that the tenders and sales had occurred electronically, but argued instead that the Articles required consent either at a and delivery thereof by the shareholders and Depositary were essentially conditions precedent to the transfer of the shares. 8 They also suggested that Impac’s statements in its SEC filings to the effect that it had received consents may constitute a “deliberate falsification” and indicated that, if the court were to grant its Rule 2-602(a)(3) motion, they would move to reinstate Count III and Mr. Timm’s Count V; they implied as well that they would assert a fraud claim, although no fraud was ever alleged explicitly. 12 meeting or in writing and that the electronic voting procedures could not satisfy that requirement. They reasserted the theory that the court had previously rejected, that the structure of the 2009 transaction made impossible any valid shareholder consent before Impac’s acquisition of the preferred shares. They continued to assert, at least implicitly, that the absence of evidence of shareholder consents in the record—either in paper or electronic form9—rendered Impac’s amendment of the Articles improper. And they argued essentially that the Depositary did not fulfill its obligations: Since the Depositary disavows undertaking any act as attorney- in-fact or proxy in respect of the consent needed to enact the amendments, and since Impac has never been able to produce any written consents from the Depositary on behalf of any shareholders, the Court cannot reasonably conclude that Impac’s tender offer and consent solicitation process resulted in the “vote or consent,” “in writing,” from the “Series B [Series C] Preferred Stock outstanding at the time,” that the Articles Supplementary required.” (brackets in original).

On July 12, 2015, the court held a hearing on the cross-motions for summary judgment and the Rule 2-602(a)(3) motion for revision. On March 28, 2016, Mr. Timm and Camac filed an Amendment of the Complaint by Interlineation that attempted to add a “Count VII” for breach of the Articles. That count asserted a claim based on the theories asserted in the Rule 2-602(a)(3) motion. Impac moved to strike the Amendment. 9 The electronic, book-entry procedures included a requirement that consent be transmitted by “Agent’s Messages.” The parties did not cite, and we did not find, evidence of any Agent’s Messages in the record. 13 On December 29, 2017, the circuit court entered a memorandum opinion and order that: (1) granted summary judgment in Mr. Timm and Camac’s favor on Count I; (2) denied Mr. Timm and Camac’s Rule 2-602(a)(3) motion for revision of summary judgment as to Count II; and (3) granted Impac’s Motion to Strike Amended Complaint.

In February 2018, Mr. Timm filed a motion for reconsideration of the December 29, 2017 order, which the circuit court ultimately denied. He argued, among other things, that the court should reconsider summary judgment for Impac on Counts II, III, and V of his Complaint.10 Mr. Timm also cited 18 U.S.C. § 100111 and argued that the court’s finding that there had been “no written consents” supported his theory that the individual defendants made fraudulent representations in SEC filings saying that they had received the requisite number of consents to amend the Series B and Series C Articles. In or about March 2018, at the court’s direction, the parties submitted a series of briefs concerning the remaining issues, including appropriate remedies and whether the court should certify the rulings for immediate appeal under Rule 2-602(b). On April 16, 2018, the court held a hearing, and on July 17, 2018, entered a memorandum opinion addressing the parties’ supplemental briefing and a separate 10 In their oppositions, Camac and Impac characterized Mr. Timm’s motions as: (1) challenging the court’s grant of summary judgment on Counts III and V; (2) challenging the court’s grant of summary judgment on Count II to the extent he attempted to recharacterize Count III; (3) requesting a jury trial on the issue of damages; and (4) making several arguments regarding the pending class certification motion. 11 18 U.S.C. § 1001 is a federal criminal statute that prohibits false statements to the government and does not provide the basis for a civil cause of action.

Federal Sav. and Loan Ins. Corp. v. Reeves, 816 F.2d 130, 138 (4th 1987). 14 “Judgment Order.” The Judgment Order contained the following decisions: • the court entered a declaratory judgment that “the purported amendments to the Series B Articles Supplementary filed in 2009 were not validly adopted because fewer than two-thirds of the series B shareholders consented” and that “the Series B Articles Supplementary adopted in 2004 remain in full force and effect” based on the court’s grant of summary judgment as to Count I; • the court entered judgment in favor of all of the individual defendants on all claims; • the court entered judgment in favor of Impac on Counts II, III, and V of Mr. Timm’s Complaint and on Counts II and III of Camac’s complaint; • the court entered a declaratory judgment that “Section 3(d) of the [2004] Articles Supplementary requires Impac to pay dividends on Series B shares for the first, second and third quarters of 2009”, which was the relief requested in Count IV;12 and • the court ordered injunctive relief that required Impac “to hold a special election in accordance with section 6(b) of the [2004] Articles Supplementary” to elect two directors by the Series B shareholders, which was the relief requested in Count VI (of Mr. Timm’s Complaint).13 The court explained that the “primary issue remaining for resolution is the identity of the persons entitled to dividends on Series B shares.” Also outstanding are the questions of whether to certify a class of shareholders entitled to relief under the declaratory judgments and attorneys’ fees. Finally, the court entered an order stating that it certified all of its decisions for immediate appeal under Rule 2-602(b). Impac filed a motion to stay the order to hold a special election pending appeal, which the court granted.

Impac and Mr. Timm timely appealed, and then both cross- 12 For the text of Section 3(d), see page 5, footnote 3, above. 13 For the text of Section 6(b), see page 6, footnote 4, above. 15 appealed. We supply additional facts as necessary below.

II

DISCUSSION Impac appeals the court’s grant of summary judgment against it on Count I. It identifies two questions: first, the circuit court’s consideration of extrinsic evidence in interpreting the language of the voting-rights provision, and second, the court’s application of the canon of contra proferentem.14 But we don’t reach either because we decide, as a threshold matter, that the circuit court erred as a matter of law in finding the language of the voting-rights provision ambiguous. We find it unambiguous, and that its unambiguous meaning compelled summary judgment in favor of Mr. Timm and Camac on Count I. 14 Impac identifies two Questions Presented in its appeal: 1. In granting summary judgment against Impac on interpretation of the voting-rights provision, did the circuit court err by weighing the extrinsic evidence, failing to accord Impac as the non-moving party the benefit of all inferences, and adopting an interpretation that does not give meaning to the “Parity Preferred” class voting language? 2. Did the circuit court err by applying contra proferentem against Impac as the drafter of the contract language, where a fact dispute existed as to whether Impac drafted the language?

Camac restates the Questions Presented in Impac’s appeal as follows: 1. Did Impac fail to introduce material and admissible extrinsic evidence to demonstrate that a reasonable investor would understand the Voting Rights Provision to provide for collective voting? 2. Did the circuit court correctly apply contra proferentem against Impac, who drafted the ambiguous language at issue? 16 As best we can discern,15 Mr. Timm appeals the circuit court’s (1) summary judgment in favor of Impac on Counts II, III, and V, (2) denial of his (and Camac’s) Rule 2- 15 In his appellate briefs, Mr. Timm states the Questions Presented in a prose form that appears to cover both the questions raised by Impac in its appeal and those raised by Mr. Timm in his cross-appeal. Mr. Timm’s statements of the Questions Presented violate Maryland Rule 8-504(a)(3), which requires a brief to include “[a] statement of the questions presented, separately numbered, indicating the legal propositions involved and the questions of fact at issue expressed in the terms and circumstances of the case without unnecessary detail.” Although we reach the merits of Mr. Timm’s appeal as best as we can, parties risk dismissal of their appeal if they failed to follow the rules.

Here are Mr. Timm’s “Questions Presented”: For the first five years, Impac paid their Preferred B Shareholders their quarterly dividends. After June 29, 2009, they changed the seven rights and provisions of the 2004 Form of Articles Supplementary for Series B. They stopped paying the dividends. They claimed the changes they made were legitimate and tried to deceive the shareholders into selling their shares for pennies while taking away their protective rights. We have proved that the illegal changes created are false and that there are no valid changes.

The Appellant brief is about voting but the main issue is that there are no votes. The judgment in favor of the Plaintiffs should remain intact and the required annual dividends and other provisions restored. He states these “Questions Presented” in his reply: Plaintiff [i.e., Mr. Timm] explained the reasons why [the circuit court] should reverse [its] July 16, 2018 final rulings on Preferred C which hasn’t changed since 2013. [It] granted Impac a summary judgment which eliminated Count II (Preferred C), Count III (Breach of Fiduciary Duty/Violation of Good Faith and Fair Dealing), and Count V (Punitive Damages) from the case. [] On January 28, 2013, [the circuit court] ordered that judgment in favor of Defendants on Tompkinson, Ashmore, Taylor, Morrison, Abrams, Walsh, Filipps and Peers on all claims asserted against them. In reversing these judgments, Impac should be accountable for their actions and the dividends in arrears should be paid immediately. 17 602(a)(3) motion concerning Count II, and (3) decision to grant Impac’s motion to strike.16 Mr. Timm’s appellate briefing focuses primarily on the fact that the court effectively denied him an opportunity to assert his alternate theory of liability that there were “no” consents to amend either the Series B or Series C Articles Supplementary.

We hold that the circuit court did not err in granting judgment in Impac’s favor on Counts II and III or any of the other rulings that Mr. Timm challenges. A. Appellate Jurisdiction. But before we reach the merits, we must first address whether we have jurisdiction to hear this interlocutory appeal. Ordinarily, a party’s “right to seek appellate review of a trial court’s ruling [] must await the entry of a final judgment that disposes of all claims against all parties . . . .” Maryland State Bd. of Educ. v. Bradford, 387 Md. 353, 382 (2005). “[T]here are only three exceptions to that rule: appeals from interlocutory orders specifically allowed by statute, predominantly those kinds of orders enumerated in Maryland Code, § 12-303 of the Cts. & Jud.

Proc. Article; immediate appeals permitted under Maryland Rule 2-602(b); and appeals from interlocutory rulings allowed under the common law collateral order doctrine.” Id. at 382–83. None of the parties questioned the circuit court’s Rule 2-602(b) certification decision in their briefs or at argument, and the unusual pre-class certification posture of that decision led us, in the course of preparing 16 Impac does not identify the circuit court’s grant of its motion to strike Mr. Timm’s complaint as being at issue on appeal. But we read Mr. Timm’s brief as raising that issue because the Rule 2-602(a)(3) motion to revise judgment as to Count II and the attempt to amend the Complaint to add Count VII were both based on the same substantive argument, namely that that there was “no” evidence of shareholder consent to the amendments. 18 this opinion, to order supplemental briefing on that issue.

In that briefing, Impac and Camac argue that this case falls under two exceptions: an appeal of an order granting or dissolving an injunction under Maryland Code (2013 Repl. Vol.) § 12-303(3)(i) of the Courts and Judicial Proceedings Article (“CJ”) and an intermediate appeal certified under Maryland Rule 2-602(b). We hold that the circuit court’s injunction compelling an election of new directors authorizes appellate jurisdiction under the second exception to the final judgment rule, i.e., the statutory exception for granting injunctions under CJ § 12-303(3)(i). The Judgment Order affirmatively requires Impac to hold a special meeting to allow the Series B shareholders to elect two additional directors to Impac’s Board of Directors, a right contained in Section 6(b) of the 2004 Articles and triggered by Impac’s failure to pay certain Series B dividends.

Not only does the injunctive relief fall within the statutory exception, the decision to order it depended on the circuit court determining that the 2009 Amendments to the Articles were valid, which in turn, required the resolution of questions of liability under Counts I, II, and III. In other words, the injunctive relief required the circuit court to interpret the voting rights provision (Count I), resolve the sequencing of the amendment transaction (Count II, original theory), resolve the “no consents” question (Count II, theory raised by Rule 2-602(b)(3) motion and Motion to Strike Amended Complaint); and resolve the other alleged grounds for invalidation of the 2009 amendments (Count III). And because those determinations were the basis for the injunctive relief, we have the authority to review them. Bradford, 387 Md. at 386–87; USA Cartage Leasing, LLC v. Baer, 202 Md. App. 138, 169 (2011), aff’d 429 Md. 199 (2012); County 19 Commn’rs for Carroll Cty. v. Forty West Builders, Inc., 178 Md. App. 328, 373 (2008).

The circuit court acknowledged that CJ § 12-303(3)(i) authorizes judicial review of orders granting injunctive relief, but seemed concerned that that provision may not be enough because it went on to state that it certified its ruling for immediate appeal under Rule 2-602(b). That Rule allows an interlocutory appeal of an order “as to one or more but fewer than all” of the claims or “as to one or more but fewer than all” of the parties in cases where the court determines that there is “no just reason for delay”: (b) If the court expressly determines in a written order that there is no just reason for delay, it may direct in the order the entry of a final judgment: (1) as to one or more but fewer than all of the claims or parties. For these purposes, a “claim” encompasses all legal theories and remedies that arise “from common operative facts,” and isn’t defined simply by the separate counts or legal theories listed in a complaint: A “claim” is defined as a “substantive cause of action” that encompasses all rights arising from common operative facts. Alternative legal theories and differing prayers for relief do not constitute separate “claims” so long as they arise from a single asserted legal right.

Waterkeeper Alliance, Inc. v. Md. Dept. of Agriculture, 439 Md. 262, 279 (2014) (cleaned up); County Comm’rs for St. Mary’s Cty. v. Lacer, 393 Md. 415, 426 (2006) (“Our cases have made it clear that the disposition of an entire count or the ruling on a particular legal theory does not mean, in and of itself, that an entire ‘claim’ has been disposed of.” (cleaned up)). In this case, uncertainty remains about whether one or more but fewer than all claims 20 or parties have been resolved. That said, we need not resolve that question definitively because the Series B claim is reviewable under CJ § 12-303(3)(i).17 B. Count I: The Voting Rights Provision is Unambiguous. The first and main substantive issue on appeal is the meaning of Section 6(d) of the Articles, the provision defining the preferred shareholders’ voting rights (we’ll call it the “voting rights provision”).

The circuit court granted summary judgment for Mr. Timm and Camac on Count I, in which they alleged that Impac breached the Series B Articles by 17 In support of the Rule 2-602(b) certification, the circuit court relied on Len Stoler, Inc. v. Wisner, 223 Md. App. 218 (2015), a case on which Impac relies as well in its supplemental brief. The procedural posture of that case was similar to that here: the circuit court decided all issues relating to liability and relief as to the named plaintiffs, leaving class certification as the primary remaining issue. Id. at 228 . Federal cases applying Fed. R. Civ.

P. 54(b)—upon which Maryland Rule 2-602(b) was modeled—have also reached that conclusion on similar procedural postures. See, e.g., Pichler v. UNITE, 542 F.3d 380 , 385 n.6 (2008). In Len Stoler, this Court held that the requirements of Rule 2-602(b) had been met. Even so, we recognize some tension between Len Stoler and Court of Appeals jurisprudence holding that class certification is not a “claim” under Rule 2-602(b).

Snowden v. Balt. Gas & Elec. Co., 300 Md. 555 (1984). In Snowden, in contrast to the situation here and in Len Stoler, a party appealed the denial of a class certification motion, an attempt that the Court of Appeals rejected because the denial “was not dispositive with respect to an entire claim or party.” Id. at 566 .

See also Royal Fin. Servs., Inc. v. Eason, 183 Md. App. 496, 499 (2008) (relying on Snowden and holding that grant of class certification motion, before resolution of any issues of liability, did not meet requirements of Rule 2-206(b)