McKlveen v. Monika Courts Condominium

ZARNOCH, J. STATEMENT OF THE CASE Appellant, Sharon McKlveen (“McKlveen”), appeals from an order of the Circuit Court for Prince George’s County granting the motion of appellee, Monika Courts Condominium (“Monika Courts”), to strike her jury demand and transferring her case to the District Court for Prince George’s County. For the reasons set forth below, we affirm the circuit court’s ruling. FACTS AND LEGAL PROCEEDINGS I. Initiation of Legal Action In March 2011, Monika Courts filed a complaint in the District Court of Maryland for Prince George’s County against McKlveen, the owner of a Monika Courts condominium unit. Monika Courts alleged that McKlveen owed unpaid assessments and claimed damages of $3,219.17, plus interest of $127.00 and attorney’s fees of $724.79, for a total of $4,070.96.

McKlveen was served on May 12, 2011, and filed a Notice of Intention to Defend on May 27. McKlveen also filed a counterclaim against Monika Courts on June 6. She asserted that she had made the requisite payments to Monika Courts and that it had failed to credit her for those payments. She claimed that Monika Courts’ debt collection action amounted to violations of two Maryland statutes: the Maryland Consumer Protection Act, Md.Code (1975, 2005 RepLVol.), Commercial Law Article (“CL”), § 13-301 el seq., and the Maryland Consumer Debt Collection Act, CL § 14-201 el seq.

McKlveen alleged damages for each count of $11,000 and $15,000, respectively, for a total of $26,000. Finally, McKlveen also requested a jury trial. Following McKlveen’s jury trial request, the district court transferred the case to the circuit court. Subsequently, Monika Courts filed a Motion to Dismiss Counter-Plaintiffs Counterclaim, or in the Alternative to Strike Counter-Plaintiffs ³⁷² Jury Demand.

Monika Courts argued that Md.Code (1973, 2006 RepLVol.), Courts and Judicial Proceedings Article (“CJP”), § 4-405 gave the district court exclusive jurisdiction over its small claim action against McKlveen. It claimed that McKlveen “improperly attempted to divest the [district [cjourt of jurisdiction over the original small claims collection case” by filing a $26,000 counterclaim that “exceed[ed] the jurisdiction of the small claims court,” in violation of Md. Rule 3-331©. 1 McKlveen responded with an Opposition to Motion to Dismiss Counter Claim and/or to Strike Jury Demand in which she argued that her counterclaim was within the monetary jurisdiction of the district court, that “the amount in controversy at the time the case was transferred to the circuit court was $26,000,” and that her counterclaim should count towards the amount in controversy requirement for determining whether the parties are entitled to a jury trial.

II

Circuit Court Hearing and Opinion Pursuant to the request of both parties, the circuit court held a hearing on September 29, 2011. 2 The court subsequently denied Monika Courts’ Motion to Dismiss McKlveen’s counterclaim, but granted its Motion to Strike the Jury Demand. In a written opinion, Circuit Judge Sean D. Wallace observed that there was “little precedent in Maryland” on the issue of whether a counterclaim should count towards the amount in controversy requirement for a jury trial. The court first considered McDermott v. BB & T Bankcard Corp., 185 Md.App. 156, 158 , 968 A.2d 1096 (2009), which involved a $1,000,000 counterclaim filed in response to a district court collection action seeking $5,885.43 in unpaid ³⁷³ credit card debt, plus interest, attorney’s fees, and costs. The defendants demanded a jury trial and, after the case was transferred to the circuit court, filed a counterclaim seeking more than $1,000,000 in damages.

Id. at 161 , 968 A.2d 1096 . Judge Wallace found persuasive this Court’s statement in McDermott that “counterclaims should not be considered in determining whether the amount in controversy requirement is satisfied.” 3 Id. at 167 , 968 A.2d 1096 . The circuit court also noted that the Court of Appeals “has instructed lower courts to look at federal caselaw as a ‘logical reference’ in applying the amount in controversy requirement.” In its review of federal cases, the circuit court found that counterclaims, like defenses, are not typically considered when determining the amount in controversy for jurisdictional purposes. Finally, the circuit judge also pointed to three reasons for not considering damages asserted in a counterclaim when determining the amount in controversy.

First, relying only on the complaint for the amount in controversy provides a “quick rule of thumb” that allows for “simplicity, clarity and ease of administration in the Maryland courts.” Second, giving defendants the ability to determine the amount in controversy “would greatly expand the number of cases entitled to trial by jury,” which is “contrary to the due regard for the district court’s jurisdiction and authority.” Finally, as master of the complaint, a plaintiff should be permitted to set or even reduce the value of a claim so as to “take advantage of the time and money savings inherent in the district court’s expedited litigation.” The court ordered that the demand for a jury trial be stricken and remanded the case to the district court. McKlveen timely filed a Notice of Appeal on October 27, 2011. 4 ³⁷⁴ QUESTION PRESENTED McKlveen presents the following issue for resolution: Should a counterclaim be considered in determining whether the amount in controversy entitles a party to trial by jury? We answer this question in the negative and affirm the circuit court. DISCUSSION I. Standard of Review We review the trial court’s determination of legal questions or conclusions of law de novo.

Tribbitt v. State, 403 Md. 638, 644 , 943 A.2d 1260 (2008); see also Schisler v. State, 394 Md. 519, 535 , 907 A.2d 175 (2006) (noting that when an issue “involves an interpretation and application of Maryland constitutional, statutory or case law, our Court must determine whether the trial court’s conclusions are ‘legally correct’ under a de novo standard of review”).

II

Analysis We respond to McKlveen’s three primary arguments, which focus on the meaning of “amount in controversy,” the right to a jury trial, and the availability of a stay in the district court. A. Amount in Controversy McKlveen first argues that “there is currently no controlling precedent in Maryland establishing that counterclaims are not to be considered in determining whether the amount in controversy entitles a party to a jury trial.” She also argues that although Maryland courts look to federal caselaw for guidance on procedural matters, federal cases that ³⁷⁵ declined to consider the value of a counterclaim when computing the amount in controversy did so for reasons other than determining the mode of trial, such as removal and diversity jurisdiction. In response, Monika Courts relies on this Court’s decision in McDermott, 185 Md.App. at 167 , 968 A.2d 1096 , for the proposition that the complaint is the only source of information from which the amount in controversy can be drawn for jury trial purposes. It next argues that the “well-pleaded complaint rule” of the federal courts 5 provides a clear and persuasive reference for Maryland courts and that the rule’s general exclusion of counterclaims should apply in this State.

This Court has said in McDermott that “counterclaims should not be considered in determining whether the amount in controversy requirement is satisfied.” Id. Although both McKlveen and the circuit court interpret McDermott’s holding as dicta, we disagree and find it to be a sound reflection of the state of the law. “When a question of law is raised properly by the issues in a case and the [cjourt supplies a deliberate expression of its opinion upon that question, such opinion is not to be regarded as obiter dictum, although the final judgment in the case may be rooted in another point also raised by the record.” Schmidt v. Prince George’s Hosp., 366 Md. 535, 551 , 784 A.2d 1112 (2001). McDerm,ott required the Court to consider whether the value of a counterclaim counted towards the amount in controversy for jury trial purposes. In concluding that it did not, the Court made a decision about counterclaims generally, not just the specific counterclaim improperly filed by the defendants in McDermott .

The sole difference between the counterclaim in McDermott and this case is timing. The McDermott defendants filed their counterclaim after the case was transferred from the district court to the circuit court, while ³⁷⁶ McKlveen filed her counterclaim before the case was transferred. Even assuming that the holding in McDermott is mere dicta and does not control, there is ample support for the proposition that the value of the amount in controversy depends solely on the plaintiffs complaint. First, Maryland caselaw strongly indicates that the value of the amount in controversy is drawn only from “the demand in the pleading.” See Purvis v. Forrest Street Apartments, 286 Md. 398, 402 , 408 A.2d 388 (1979) (finding amount in controversy included plaintiff landlord’s demand for money damages as well as value of the possession of an apartment, but not any of defendant tenant’s claims); cf. Pollokoff v. Maryland Nat’l Bank, 288 Md. 485, 500-01 , 418 A.2d 1201 (1980) (rejecting attempted aggregation of individual plaintiffs’ claims in order to meet jurisdictional amount in controversy requirement for filing in circuit court).

Second, the Court of Appeals has determined that federal caselaw provides a “logical reference” on which to rely when interpreting the amount in controversy requirement. Pollokoff, 288 Md. at 491 , 418 A.2d 1201 . Although the federal courts have not spoken with a unified voice on whether a counterclaim counts towards the amount in controversy for jurisdictional purposes, the majority of federal courts have ruled that a counterclaim should not be considered. 6 E.g., Klepper v. First Am. Bank, 916 F.2d 337, 340 (6th Cir.1990) (“When determining whether the amount in controversy has been satisfied, we examine the complaint at the time it was filed.”); Conference Am., Inc. v. Q.E.D. Intern., Inc., 50 F.Supp.2d 1239, 1242 (M.D.Ala.1999) (“[T]he majority of courts in other circuits have held that the amount in controversy for removal purposes is to be determined solely by referring to the plaintiffs complaint and without regard to any subsequently filed counterclaims.”). ³⁷⁷ The amount in controversy therefore depends on what is alleged in the plaintiffs complaint.

In this case, the amount in controversy amounts to $4,070.96, or the damages, fees, and interest that Monika Courts pleaded in its complaint. Because this amount does not exceed $15,000, neither Monika Courts nor McKlveen meets the requirements for requesting a jury trial.

III

Common Law Jury Trial Right McKlveen argues that she “has a fundamental right as a citizen of Maryland to have the claims raised by her counterclaim determined by a jury.” She points to the Court of Appeals’ conclusion in Davis v. Slater, 383 Md. 599, 614 , 861 A.2d 78 (2004), that the legislature has not expressly abrogated the availability of jury trials, even in cases where the amount in controversy does not exceed $15,000. Absent such an express abrogation, McKlveen argues that jury trials should be available for cases in which the amount in controversy is less than $15,000. Monika Courts disputes McKlveen’s view of the right to a jury trial and argues that the right is not absolute, as evidenced by the $15,000 jurisdictional minimum for jury trials set out in Article 5 7 and Article 23 8 of the ³⁷⁸ Maryland Declaration of Rights. 9 Trial by jury is preserved in the Maryland constitution as a privilege of citizenship. Art. 5; see also Davis, 383 Md. at 608-20 , 861 A.2d 78 (tracing the history of the availability of jury trials in Maryland).

Although the “fundamental aspects of the jury trial are not subject to change by the General Assembly,” Davis, 383 Md. at 613 , 861 A.2d 78 , the right to a jury trial is not unlimited and is subject to modification by the legislature. See Art. 5. Indeed, “[i]t is well settled that the right to a jury trial may be subjected to reasonable regulation [and] it is generally acknowledged that it can, for all practical purposes, become meaningless to the individual and burdensome to the state unless the exercise of it is regulated to some extent.” Houston v. Lloyd’s Consumer Acceptance Corp., 241 Md. 10, 14 , 215 A.2d 192 (1965). One way in which the right has been modified is the establishment of a minimum amount in controversy for eligibility for a jury trial.

The required amount has increased over time, from $5 in 1850 to $15,000 today. See Art. 5; Art. 23; 2010 Md. Laws, Chap. 480 (raising amount in controversy ³⁷⁹ from $10,000 to $15,000); Davis, 383 Md. at 618 , 861 A.2d 78 . The right to a jury trial is “inviolably preserved” for all cases that exceed the threshold amount in controversy. Davis, 383 Md. at 618 , 861 A.2d 78 .

By contrast, the legislature has the power to abrogate the common law right to a jury trial for cases that do not meet the statutory minimum, though the Court of Appeals has determined that the legislature has not actually done so. See id. The failure to abrogate does not mean, however, that a party can plead less than the required amount in controversy and still request a jury trial. The legislature has clearly required that