Keeler v. Academy of American Franciscan History, Inc.

KRAUSER, C.J. Cross motions for summary judgment filed in the Circuit Court for Montgomery County presented the question whether the charging order of appellee Academy of American ⁶⁵⁰ Franciscan History, Inc. (“AAFH”) against appellant Robert H. Keeler’s interest in the Gaither Road Partnership (“GRP”) remained enforceable even though the underlying money judgment had expired under Maryland Rule 2-625. The circuit court held that it did and granted summary judgment in favor of AAFH. We affirm. Background In 1989, Saratoga Development Corporation (“Saratoga”) purchased 14 acres of residential real estate in Montgomery County, Maryland from AAFH for approximately $7.75 million.

Saratoga paid $3.75 million in cash and executed, along with its President, appellant Robert H. Keeler, a confessed judgment note in the amount of $4 million. When Saratoga and Keeler failed to pay the interest due on the note, AAFH filed a complaint to confess judgment and assent to entry of judgment against both in the Circuit Court for Montgomery County. On October 17, 1989, the circuit court entered a money judgment against Saratoga and Keeler and in favor of the AAFH in the amount of $4 million plus attorneys’ fees, 1 interest, and costs. A month later, on December 20, 1989, an order enforcing the money judgment was obtained by AAFH charging Keeler’s partnership interest in GRP.

The charging order stated in pertinent part: ORDERED, that the Gaither Road Partnership shall sequester and pay over to the Judgment Creditor all distributions of any kind whatsoever otherwise payable to the Judgment Debtor, Robert H. Keeler, and to account for said payments to this Court and to the Judgment Creditor, until such time as the judgment entered against the Judgment Debtor has been paid in full and satisfied---- A decade later, on December 20, 1999, Keeler filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for ⁶⁵¹ the District of Maryland. On May 11, 2000, the bankruptcy court issued a discharge order. That order barred “the commencement or continuation of [ ] aetion[s] to recover or collect the debt [owed AAFH] as a personal liability of [Keel-er] and void[ed] any judgment to the extent that the judgment [wa]s a determination of personal liability of [Keeler].” Keeler v. Acad, of Am. Franciscan History, Inc., 257 B.R. 442, 445 (Bkrtcy.D.Md.2001).

The bankruptcy court entered a final decree on July 20, 2000, and the case was administratively closed. On August 17, 2000, Keeler filed a motion to re-open the bankruptcy case to determine whether a violation of the discharge order had occurred when AAFH attempted to collect income from Keeler’s interest in GRP. Keeler also filed a “Motion for Declaratory Relief and Summary Judgment” asserting, among other things, that the charging order that had been entered by the circuit court against his interest in GRP and in favor of AAFH had been terminated by the bankruptcy court’s order of discharge. After re-opening the bankruptcy case, the bankruptcy court held that “although any action to collect upon the lien was stayed during the bankruptcy case, the lien itself ‘rode through’ the bankruptcy case and remain|ed] viable upon property captured before the case commenced.” Keeler v. Acad. of Am.

Franciscan History, Inc., 257 B.R. 442, 448 (Bkrtcy.D.Md.2001). Consequently, the rights of AAFH remained unaffected after the bankruptcy case, including the right to collect income due Keeler from his interest in GRP. See id. The decision of the bankruptcy court was affirmed by the United States District Court for the District of Maryland.

See In re Keeler, 273 B.R. 416, 422 (D.Md.2002). Six years later, on September 29, 2006, Keeler filed a declaratory judgment action against AAFH and GRP in the Circuit Court for Montgomery County, claiming that AAFH’s charging order was extinguished when AAFH failed to renew its judgment pursuant to Maryland Rule 2-625 (“Rule 2-625”), and thus that GRP was no longer required to pay money to AAFH. The complaint precipitated cross-motions for summary ⁶⁵² judgment. On November 30, 2006, the circuit court denied Keeler’s summary judgment motion but granted AAFH’s motion, ruling that the charging order “did not expire with the money judgment” and was therefore “still in place.” This appeal followed.

Discussion Keeler contends that the circuit court erred in granting summary judgment in favor of AAFH. He reasons that the money judgment entered against him in 1989 expired twelve years later when AAFH failed to renew it under Rule 2-625 and, consequently, that the charging order enforcing that judgment also lapsed at that time. AAFH contends otherwise. Claiming that the charging order is itself an enforceable judgment that exists independently of the underlying money judgment, AAFH maintains that the charging order survived the expiration of the money judgment.

Because there are no genuine issues of material fact, our review of the decision below is confined to the question of “whether the trial court was legally correct.” Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591 , 578 A.2d 1202 (1990). We conclude that it was. The charging order against Keeler’s partnership interest in GRP constitutes, we hold, a separate final judgment that remains enforceable even after the underlying money judgment expired. “A judgment generally is considered ‘final’ if it determines or concludes the rights involved, or denies the appellant the means of further prosecuting his rights and interest in the subject matter of the proceeding.” Seat Pleasant Baptist Church Bd. of Trs. v. Long, 114 Md.App. 660, 669 , 691 A.2d 721 (1997); see also Smith v. Taylor, 285 Md. 143, 146-47 , 400 A.2d 1130 (1979). In short, “[t]he judgment must settle the rights of the parties, thereby concluding the cause of action.” Estep v. Georgetown Leather Design, 320 Md. 277, 282 , 577 A.2d 78 (1990).

A “money judgment” is such a judgment. Specifically, it is a “judgment determining that a specified amount of ⁶⁵³ money is immediately payable to [a] judgment creditor.” Maryland Rule l-202(p). “It does not,” however, “include a judgment mandating the payment of money.” Id. In other words, it is not an “injunctive type of judgment.” Paul V. Niemeyer & Linda M. Schuett, Maryland Rules Commentary 17 (3d ed.2003). Indeed, “[a]n order directing a party to pay is not a money judgment precisely because it is injunctive in character.” Id.

But, unlike other judgments, a money judgment is subject to Rule 2-625. That rule states that “[a] money judgment expires 12 years from the date of entry or most recent renewal.” To avoid that outcome, however, the rule further provides that “[a]t any time before expiration of the judgment, the judgment holder may file a notice of renewal and the clerk shall enter the judgment renewed.” Rule 2-625. On the other hand, a charging order is not a money judgment but “the statutory means by which a judgment creditor may reach the partnership interest of a judgment debtor.” 91st Street Joint Venture v. Goldstein, 114 Md.App. 561, 567 , 691 A.2d 272 (1997) (citing Bank of Bethesda v. Koch, 44 Md.App. 350, 354 , 408 A.2d 767 (1979)). The purpose of the charging order is “to protect the partnership business and prevent the disruption that would result if creditors of a partner executed directly on partnership assets.” 2 Lauer Constr., Inc. v. Schrift, 123 Md.App. 112, 115 , 716 A.2d 1096 (1998).

See also Bank of Bethesda, 44 Md.App. at 354 , 408 ⁶⁵⁴ A.2d 767 (“[A charging order] serves only the precise purpose statutorily indicated, ie., to ‘charge’ an interest with a debt.”). The scope and operation of a charging order is defined by Title 9A of the Corporations and Associations Article. “On application by a judgment creditor of a partner or of a partner’s transferee, a court having jurisdiction may charge the transferable interest of the judgment debtor to satisfy the judgment.” § 9A-504(a). “A charging order,” therefore, “constitutes a lien on the judgment debtor’s transferable interest in the partnership,” § 9A-504(b), and is “the exclusive remedy by which a judgment creditor of a partner or partner’s transferee may satisfy a judgment out of the judgment debt- or’s transferable interest in the partnership.” § 9A-504(e). The “transferable interest of a partner in [a] partnership is the partner’s share of the profits and losses of the partnership and the partner’s right to receive