Minh-Vu Hoang v. Hewitt Avenue Associates, LLC

⁵⁶⁷ EYLER, DEBORAH S., Judge. The genesis of this appeal is a failed real estate transaction in the Silver Spring area of Montgomery County. Hewitt Avenue Associates, LLC (“HAA”), the appellee, entered into a contract to purchase two contiguous parcels of raw land from Minh-Vu Hoang, the appellant, and others. The multiple listing for the property advertised it as suitable for building 15 town houses.

HAA purchased the property to develop into a town house community. When Hoang and the other sellers failed to close on the sale, HAA sued them, in the Circuit Court for Montgomery County, for specific performance and breach of contract. In the ad damnum clause of its breach of contract count HAA sought damages “in excess of $100,000.” Orders of default were entered against the served defendants when they did not file timely answers or responsive pleadings. The appellant moved, unsuccessfully, to vacate the default order against her.

The court then held an evidentiary hearing on relief. The appellant attended, with counsel. (The other defendants did not appear.) At the hearing, HAA elected to pursue damages instead of specific performance. It proceeded to present evidence of the profits it would have realized from developing the town house community, but for the defendants’ breach.

The court ruled in HAA’s favor and awarded it $1,889,755.98 in damages. From the judgment entered against her in that amount, the appellant noted this appeal, presenting the following questions, which we have reordered and restated: I. Did the trial court err in awarding damages in excess of $100,000?

II

Did the trial court err in awarding damages for collateral lost profits?

III

Did the trial court err in entering monetary judgments individually against the partners in a partnership of which the appellant is a member?

IV

Did the trial court err by not reducing the judgment to present value? ⁵⁶⁸ V. Did the trial court err by entering judgment against the appellant for attorney’s fees and expert witness fees when she did not sign the contract of sale? For the following reasons, we answer “Yes” to Question I and “No” to Questions II and III. On that basis, we shall modify the amount of the judgment against the appellant to conform to the sum stated in the ad damnum clause of HAA’s complaint, which, for the reasons we shall explain, is $100,000, and shall vacate the judgment awarding damages in excess of that sum. Given our disposition of Question I, it is not necessary to address Question IV.

Finally, Question V is not preserved for review. FACTS AND PROCEEDINGS On May 7, 2004, “Thinh Q. Vu et al” and Fred A. Ezra entered into a “Regional Sales Contract” (“Sales Contract”) by which Ezra or his assigns agreed to purchase two contiguous parcels of raw land for $760,000: 3401 Hewitt Avenue (“Parcel One”) and 3405 Hewitt Avenue (“Parcel Two”). Settlement was to take place in 60 days, on July 6, 2004. Ezra later formed HAA and assigned his rights under the Sales Contract to it.

(In this opinion, we shall refer to HAA, Ezra, and his business, The Ezra Company, interchangeably.) The parcels were listed for sale by defendant Thanh Hoang, the appellant’s husband, who is a real estate agent. As noted above, the multiple list offer stated that the land was suitable for building 15 town houses. Ezra is the Chairman and CEO of The Ezra Company, a real estate construction and development business. After the Sales Contract was signed, Ezra obtained a title search that revealed that Parcel One is owned by Thinh Q. Vu, the appellant’s brother, and Hong Ngoc Nguyen, Thinh Q. Vu’s wife, as tenants by the entireties, and Parcel Two is owned by Alta Vista General Partnership (“AVGP”).

The general partners in AVGP are the appellant, Thanh Hoang, Hao Vu, Van Vu, and Ruby J. Jacobs. ⁵⁶⁹ On June 28, 2004, Ezra’s lawyer wrote to Craig Parker, counsel for the sellers, attaching a copy of the title commitment Ezra had received and advising of the results of the title search: As you can see, all of the titled owners have not executed the sales contract. Also you will note from this title report, we must have a copy of the partnership papers for [AVGP]. I have prepared a Ratification of Regional Sales Contract to address the above and request that your clients promptly execute and return the document to me with the requisite exhibit. The title commitment also reports that the unpaid taxes for [Parcel Two] has resulted in a tax sale and the subsequent filing of a Foreclosure of the Rights of Redemption which must be dismissed in order to convey title.

The title issues were not resolved before the July 6 settlement date. That day, Ezra’s lawyer informed Parker, in writing, that HAA had tendered to a title company the funds necessary for settlement and was prepared to go forward with closing. The letter warned, “Please be advised that if your clients fail to settle today pursuant to the contract, they shall be in default of the agreement and we shall pursue all remedies available to us.” Nevertheless, settlement did not happen on July 6. Between July 6 and July 15, HAA’s lawyer wrote several letters to Parker, including one demanding that settlement go forward at 1:00 p.m. on July 16.

When the sellers did not appear for settlement that day, HAA filed suit. The complaint named eight defendants: the appellant, Thanh Hoang, Thinh Q. Vu, Hong Ngoc Nguyen, AVGP, Hao Vu, Van Vu, and Ruby J. Jacobs. The appellant was sued individually and as a partner in AVGP. Hong Ngoc Nguyen, who lives in China, was not served.

Affidavits of service were filed for the other seven defendants, including the appellant. As explained, orders of default were entered against the seven served defendants, and the appellant moved to vacate the order against her. She argued that she had not been ⁵⁷⁰ served; that “the Defendants” “acknowledged that they agreed to sell [Parcel One and Parcel Two]”; that she had received a $ 10,000 deposit from Ezra; that the defendants were ready to convey the parcels to HAA; that the defendants had never been asked to attend a settlement; and that she had delivered a deed to HAA that same day. 1 HAA opposed the motion to vacate, asserting that the appellant properly had been served and knew about the lawsuit; that she had not explained her failure to plead; and that the deeds she had delivered with her motion to vacate were defective and could not effect conveyances of the parcels. In a supplemental opposition, HAA recounted the appellant’s extensive history as a civil litigant in real property cases in Montgomery County. 2 The court held a hearing on the appellant’s motion to vacate and denied it.

One month later, the court held an evidentiary hearing on relief. The appellant appeared with Parker as her counsel. During the hearing, HAA’s lawyer informed the court that his client had elected not to pursue specific performance, and instead to pursue damages. It is undisputed that the election first was made and communicated to the appellant at that time.

HAA called three witnesses: Mark Ezra, a managing member of HAA and senior vice president of The Ezra Companies (and Fred A. Ezra’s son); Paul Goodsite, an expert in the residential building business; and James Donnelly, an expert appraiser in the residential development and construction field. The appellant did not call any witnesses but testified on her own behalf. Mark Ezra explained that The Ezra Company, which is located in Bethesda, is “a 50-person Maryland based real estate company that does development, construction, and sales ⁵⁷¹ of real estate.” The company has been in operation for about 25 years; for 15 years, he has been its senior vice president. The company decided to buy the parcels in question because they were listed as being suitable for building a town house development.

It was the company’s typical practice to form a separate legal entity for each construction project; hence the formation of HAA. Thanh Hoang, the realtor, knew that Ezra/HAA was purchasing the parcels in order to build town houses, just as the parcels had been marketed for sale. HAA had drawn up plans to construct 14 town houses on the parcels. (The zoning for the land allowed town houses to be built.) The town house project the company had in mind was a “very straightforward project for [them].” In the five years preceding the Sales Contract, the company had developed about 4 million square feet of real estate.

Its planned project for the two parcels was to be about 30,000 square feet. The company had adequate resources to develop the property, build the town houses, and resell them. It had worked with experts to calculate the income the project would generate and the cost of the project. The project was slated to commence in July or August of 2004, and to take three years to complete.

The 14 town houses would be expected to sell for $440,000 each, which is a conservative number in Montgomery County. Given the projected revenue from sales of the town houses and the projected expenses for building the town house community, Mark Ezra anticipated that the project would generate a profit of “just under $1.9 million,” by a conservative estimate. He acknowledged that he decided to seek money damages in this case instead of specific performance because there were “issues” with the title to the parcels. Mark Ezra also testified that HAA had incurred $16,760.98 in legal fees in this case and $2,000 apiece for expert witness fees for the two experts.

Paul Goodsite works with Chase Homes, Inc., in residential real estate development. He testified as an expert in that field. HAA had furnished him with the projected revenues ⁵⁷² and expenses for the town house project: $6,160,000 in revenues and $4,291,000 in expenses, which would produce a profit of slightly over $1,868,000. Goodsite opined that the revenue and expense figures were reasonable, if not conservative, and likely to be achieved; and that the projected profit was “very reasonable” and also “likely to be achieved.” James Donnelly is a real estate appraiser for residential properties and projects such as the town house development HAA planned to undertake in this case.

He too opined that the projected revenue and expense figures for the project were reasonable and “likely to be achieved.” In his view, the projected profit for the project was conservative. He prepared an appraisal report, which was admitted into evidence, that disclosed that the fair market value of like-kind town houses in the same area ranged from $417,000 to $456,000. The appellant testified that Parcel One is owned by her brother and sister-in-law (Thinh Q. Vu and Hong Ngoc Nguyen), who live in China. She and her husband once owned Parcel Two, but it was sold at foreclosure to AVGP.

The appellant represented that she was “prepared to sell the property” and that she had obtained the necessary documents for settlement “on the property.” As she put it, she had “prepare[d] the deed and deliver the original to the Court to be held in escrow by the Court, so it, I deliver the deed to the Court, and then I send a copy to the settlement attorney, about three, four, months ago, I think.” That was the sum and substance of her testimony. In closing argument, counsel for HAA asked for an award of more than $1.8 million dollars for the lost profits the town house project would have generated, but for the defendants’ breach. The appellant’s lawyer argued that the court should order specific performance and that, in any event, the lost profits sought were not recoverable because they were speculative and not reasonably certain. He further argued that lost profits of the sort sought by HAA are not the proper measure of damages for breach of an executory contract to sell land.

Rather, the proper measure of damages was the fair market ⁵⁷³ value of the land at the time of the breach less the unpaid sales price (minus any deposit) under the Sales Contract. HAA had not introduced any evidence of the value of the parcels on July 6, 2004, however. Ruling from the bench, the trial judge explained that a contract purchaser under an executory contract to convey land can recover lost profits upon proving: 1) that the defendant/seller breached the contract; 2) that, when the contract was entered into, the defendant/seller reasonably could have foreseen that a loss of profits would be a probable result of the breach; and 3) that the amount of lost profits claimed was proven with reasonable certainty. The trial judge then evaluated the proof against that standard.

He found that the default orders established liability for breach of contract. He further found that because the appellant “has extensive experience in the real estate market,” the parcels were marketed for purposes of development into 15 town houses, and the contract purchaser was a developer, “it was clear to all parties at the time the contract was entered into that the force driving this agreement between them was anticipated profits by the purchaser in purchasing the property offered by the seller, so clearly a loss of profits was foreseen, if in fact there was a breach.” The trial judge went on to find that HAA’s projected revenue and expense figures for the town house project were straightforward and, as the two expert witnesses had testified, the figures were reasonable and indeed conservative. The court factored in that the real estate market was “well-established” and that the evidence presented by HAA assumed a flat market, not one that would increase. The court found that the real estate market “will almost certainly continue to appreciate at some rate.” It noted, in addition, that town houses, being on the lower end of the housing market, enjoy greater protection from downward fluctuations in the real estate market than do other, more expensive, houses.

The court placed weight on the evidence that The Ezra ⁵⁷⁴ Company is an established real estate development firm that has been doing business for many years. The trial judge observed that “courts and juries” make projections of future losses over relatively short periods of time, here 3 years, “day in and day out”: There’s no question that a party is entitled to recover, for instance, in a negligence case, the cost of future surgeries if the doctors opine that such surgeries may be necessary. In determining the costs of those surgeries, the doctors try and figure in, and the experts figure in, what is the projected cost of the surgery to be at that future point in time. Business, banks, everybody in this day and age, has to make assumptions upon which billions of dollars are loaned, as to what is the real estate market likely to do a year from now, two years from now, even further out.

So certainly it appears to the Court that beyond any question, we are at a point in time, if we weren’t previously, where reasonable assumptions can be made as to whether or not and to the amount of profits that might be lost from a developer’s inability to sell its product, that is, completed homes, certainly two years down the road. On that basis, and because HAA had presented conservative figures, the court found that “the amount of profits in this case can be determined with reasonable certainty.” Finally, the court rejected the appellant’s argument that it should order specific performance, ruling that it was HAA’s choice as to which remedy to pursue. The court found that the amount of attorneys’ fees and expert witness fees incurred by HAA was fair and reasonable, and entered judgment against all of the defaulting defendants for the lost profits, attorneys’ fees, and expert expenses: $1,889,755.98. 3 ⁵⁷⁵ STANDARD OF REVIEW When a case has been tried to the court, our standard of review is governed by Rule 8-131(c), which provides: ⁵⁷⁶ [T]he appellate court will review the case on both the law and the evidence. It will not set aside the judgment of the trial court on the evidence unless clearly erroneous, and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses.

Thus, we give deference to the factual findings of the trial judge and will reverse only for clear factual error. Mercy Med. Ctr., Inc. v. United Healthcare of the Mid-Atlantic, Inc., 149 Md.App. 336, 354-55 , 815 A.2d 886 (2003); Knapp v. Smethurst, 139 Md.App. 676, 695 , 779 A.2d 970 (2001). A factual finding is clearly erroneous if there is no competent and material evidence in the record to support it.

YIVO Inst. for Jewish Research v. Zaleski, 386 Md. 654, 663 , 874 A.2d 411 (2005). The legal conclusions reached by the circuit court are not accorded deference on appeal, however, and instead are reviewed de novo. L.W. Wolfe Enters., Inc. v. Maryland Nat’l Golf, L.P., 165 Md.App. 339, 344 , 885 A.2d 826 (2005). DISCUSSION I. Award of Damages in Excess of Ad Damnum Request In its complaint, HAA identified the parties, explaining their relationships to the transaction; stated the basis for jurisdiction and venue; alleged “Facts Common To All Counts”; and stated claims for “Specific Performance” and “Breach of Contract,” in Counts I and II, respectively.

In essence, HAA’s common facts alleged that “[t]he Defendants have failed and refused to settle in accordance with Sales Contract and have not replied to the Second Demand Letter.” In Count I, HAA averred that it was “ready, will [sic] and able to perform under the Sales Contract, ... has tendered sufficient funds to the settlement agent for settlement, ... has made demand to Defendants for settlement, and Defendants ⁵⁷⁷ have failed to settle and perform under the Sales Contract.” In its prayer for relief, it asked the court to order the defendants to perform “each and every one of the terms of the Sales Contract” and to award it costs, expenses, reasonable attorneys’ fees, and “such other and further relief as the cause of justice may require.” In Count II, HAA alleged that the “Defendants have breached the [Sales Contract]----by virtue of Defendants’ failure to settle under the terms of the Sales Contract” and that “Plaintiff has been damaged by the foregoing breach of contract b y the Defendants.” Its prayer for relief then stated: WHEREFORE, Plaintiff prays for a judgment in damages against the Defendants, jointly and severally, for breach of contract in an amount to be determined at trial which Plaintiff estimates to be in excess of $100,000, for Plaintiffs costs herein, for Plaintiffs reasonable attorney’s fees and expenses, and for such other and further relief as the cause of justice may require. In his closing argument, HAA’s lawyer asked the court to award $1,889,755.98. When closing arguments were over, the trial judge asked HAA’s lawyer, “Have you sought damages, though, only in an amount of $100,000 in your complaint?” HAA’s lawyer responded: Pardon me? The amount, the complaint said that damages were believed to be in excess of $100,000.

It was not specified in the complaint other than that. The judge responded, “Okay.” (a) The appellant contends the trial court erred by awarding HAA more than $100,000 in damages. She argues that HAA’s prayer for damages “in excess of $100,000” in Count II of the complaint was, in effect, a prayer for $100,000 in damages; that Maryland case law treats the ad damnum clause of a complaint as a limitation on the amount of damages a plaintiff may recover; and therefore HAA was limited to recovering ⁵⁷⁸ $100,000 in damages for breach of contract. She also argues that lost profits are special damages that must be pleaded specially, under Maryland common law.

The complaint did not allege that HAA had sustained lost profits and did not pray for recovery of damages for lost profits; indeed, it did not mention lost profits. The appellant maintains that the judgment must be reversed or, at the very least, reduced to $100,000. HAA initially responds that this issue is not preserved for appellate review because it was not raised by the appellant below. On the merits, HAA argues that its prayer for damages “in excess of $100,000” and for “such other relief as the cause of justice may require” put the appellant on notice that it was seeking more than $100,000, “since at the time of the filing of the complaint, a complete damages calculation had not been made.” Therefore, it was entitled to recover damages in an amount over $100,000.

It further argues that the allegations in the complaint and the general request for damages were sufficient to meet the requirements of notice pleading, and that there was no need to plead damages specially. It asserts that, [b]ased on [the prayer for damages in excess of $100,000 and such other relief as justice may require], the fact that the properties were marketed in the MLS system as suitable for the construction of 15 townhomes, and the fact that the purchaser was a real estate developer with extensive experience in developing, constructing and selling properties, the natural, necessary and logical consequences of the breach of the contract by the defendants, including Appellant, were that Appellee would suffer a loss of profits. (b) For almost 200 years, Maryland has followed the common law rule that the amount of compensatory damages a plaintiff may recover in a civil action is limited to the amount of damages requested in his operative pleading. In Harris v. ⁵⁷⁹ Jaffray, 3 H. & J. 543 (1811), a jury awarded the plaintiff a sum in excess of what he had sought in the ad damnum clause of his complaint.

After the defendant noted an appeal, the plaintiff asked the Court of Appeals to order the defendant to show cause why he (the plaintiff) should not be permitted to release that part of the damages award in excess of the ad damnum amount, so the Court could “amend the record by entering judgment” for the amount sought in the complaint. The Court declined, holding that, without statutory authority to accept such an amendment to the judgment, it only could reverse the judgment for error. Id. at 548 . In holding that the plaintiff could not recover damages in excess of the amount claimed, the Harris Court relied on English common law cases that are the progeny of Persival v. Spencer, Yelv. 46, 80 Eng.

Rep. 33 (K.B.1605), a seminal case. In Persival, the King’s Bench reversed a judgment for the plaintiff for a sum in excess of the amount demanded in his prayer for relief. The court reasoned that the plaintiff “is in law taken to have the. best knowledge of his own damage[.]” Id. at 33. Unlike the Court of Appeals in Harris , however, the King’s Bench held that it had the power to affirm such a judgment if, after the verdict, the plaintiff released the excess damages and took only the amount prayed for.

See also Vale v. Egles, Yelv. 70, 80 Eng. Rep. 49 (K.B.1606) (stating the same rule but holding that costs are not part of damages for purposes of limiting recovery to the amount prayed). In prompt response to the Court of Appeals’ decision in Harris , the General Assembly enacted a law providing that, when a judgment is entered for a sum greater than the amount of damages demanded in the operative pleading, the judgment shall not be reversed, but the plaintiff may, on appeal, be permitted to put in the record a release of the excess damages amount; and in that situation the appellate court is to proceed on the amended record, as if the release had been given by the plaintiff in the trial court. Chapt. 161, Acts of 1811, enacted January 4, 1812.

This statute is the original predecessor to present Rule 8-604(c)(2), which we shall discuss infra. See also Finch v. Mishler, 100 Md. 458 , ⁵⁸⁰ 462, 59 A. 1009 (1905) (on appeal, plaintiff who had been awarded a judgment of $82 more than the ad damnum, clause amount released that sum in the Court of Appeals, pursuant to statute); cf. Attrill v. Patterson, 58 Md. 226, 260-61 (1882) (observing, in reversing judgment on unrelated grounds, that a remittitur granted by the trial court in an amount equal to the excess of the damages awarded over the damages sought was “in entire conformity with the law, practice and decisions of the State.”) Thereafter, at least until the 1990’s, the Maryland appellate opinions commenting upon the common law rule that a plaintiff may not recover damages in excess of the amount demanded in his complaint have stated only that the rule is firmly established. See Scher v. Altomare, 278 Md. 440, 442 , 365 A.2d 41 (1976) (stating, in dicta, “[o]f course, the recovery, if any, by the plaintiff cannot exceed in nature or amount either the damage proved or the sum claimed in the ad damnum, whichever is the lesser”); Dick v. Biddle Bros., 105 Md. 308, 316 , 66 A. 21 (1907) (holding that in action for balance due on contract, jury verdict in excess of amount sought by plaintiff in bill of particulars required reversal of judgment); Baltimore City Lodge No. 3 of the Fraternal Order of Police, Inc. v. Mantegna, 61 Md.App. 694, 697 , 487 A.2d 1252 (1985) (“Baltimore City Lodge No. 3”) (commenting in dicta that “a plaintiff may not recover damages in an amount greater than that claimed”); Carl M. Freeman Assocs., Inc. v. Murray, 18 Md.App. 419 , 420 n. 3, 306 A.2d 548 (1973) (commenting in dicta that “[i]t has long been the law of this State that if a plaintiff recovers a verdict in excess of the damages laid in the declaration a remittitur by the trial court is proper”). See also Travel Comm., Inc. v. Pan Am., 91 Md.App. 123, 154-55 , 603 A.2d 1301 (1992) (recognizing the rule but holding that it did not apply because the total amount of damages awarded did not exceed the amount of damages prayed in several counts of the operative pleading, added together).

Also until recently, it was established Maryland statutory law that, after a jury trial, a circuit court did not have authority to grant leave to amend the operative pleading. Md. ⁵⁸¹ Rule 320(c)(2) (repealed 1984); Robertson v. Davis, 271 Md. 708 , 319 A.2d 816 (1974) (holding that trial judge could permit amendment of damages claim up to date of trial). Thus, if a jury awarded damages in excess of the amount requested in the ad damnum clause of the complaint, the complaint could not then be amended so as to conform the ad damnum request to the damages actually awarded. This established law changed, or at least became murky, in 1984, with the revision of the Maryland Rules of Civil Procedure.

Before revision, Rule 320, governing amendments of pleadings, did not permit any amendment after “the jury retires to make up its verdict.” Rule 320(c)(2) (repealed 1984). After the revision, however, new Rule 2-341, “Amendment of pleadings,” provided, at subsection (b): Within 15 days of trial date and thereafter. Within 15 days of a scheduled trial date or after trial has commenced, a party may file an amendment to a pleading only by written consent of the adverse party or by leave of court. If the amendment introduces new facts or varies the case in a material respect, the new facts or allegations shall be treated as having been denied by the adverse party.

The court shall not grant a continuance or mistrial unless the ends of justice so require. (Emphasis added.) This new language suggested that a plaintiff, upon obtaining a jury verdict for damages in excess of the amount demanded in his complaint, could seek leave to amend the ad damnum clause to conform to the amount actually awarded; and that the trial court had the authority to grant leave to so amend. Such was the state of Maryland law of pleading and damages when the Court of Appeals decided Falcinelli v. Cardascia, 339 Md. 414 , 663 A.2d 1256 (1995), and Scott v. Jenkins, 345 Md. 21 , 690 A.2d 1000 (1997). Those cases prompted amendments to the Maryland Rules that are important to the issue before us.

In Falcinelli , due to the unusual procedural posture of the case on appeal, the Court was called upon to examine, indi ⁵⁸² rectly, what authority (if any) a circuit court has to allow a plaintiff to amend his complaint, post jury verdict, to conform the amount of damages sought in the ad damnum clause to the amount awarded by the jury. In that automobile tort action, the jury awarded the plaintiff $205,187.08 in damages, more than twice the amount requested in the ad damnum clause of the complaint. Within 10 days after entry of the judgment, the defendant moved for a new trial or remittitur on the ground that the damages awarded exceeded the amount prayed for in the complaint. The plaintiff countered by moving for leave to amend her complaint to raise the ad damnum amount to conform to the verdict.

In response, the defendant argued that Rule 2-341 did not authorize the amendment of a pleading after trial. The trial court granted the plaintiffs motion, allowing her to amend the ad damnum clause of her complaint, which she did. Instead of noting an appeal within 30 days of the entry of judgment, or the entry of that order, however, the defendant filed a second post-judgment motion, for reconsideration, within ten days of the entry of the court’s order permitting the amendment. The court denied that motion.

The defendant noted an appeal within 30 days after entry of the order denying the motion for reconsideration. The Court of Appeals was faced with the threshold question whether it had jurisdiction to review the order granting leave to amend. The defendant argued that the original judgment was not appealable, because the trial court had been without jurisdiction to enter a judgment for damages above the ad damnum amount. The Court held that, notwithstanding that Maryland common law long has held that a plaintiffs damages recovery is limited by the amount sought in his complaint, the ad damnum clause of a complaint “does not inherently limit the power of the jury to render a verdict an d does no t inherently limit the power of the court to enter a judgment.” Falcinelli, supra, 339 Md. at 427 , 663 A.2d 1256 .

Therefore, the Court concluded, the trial court had had jurisdiction to ⁵⁸³ enter judgment for $205,187.08, and that judgment was final and appealable when entered. Because the defendant did not note an appeal within 30 days of entry of that judgment, he could not challenge the legality of the court’s decision to grant leave to amend the complaint. Rather, he only could challenge the denial of his motion for reconsideration. That decision was subject to narrow review for abuse of discretion only.

For that reason, the Court did not answer the legal question whether an ad damnum clause of a complaint may be amended after a jury verdict has been returned. The same day its Falcinelli opinion was filed, the Court of Appeals sent a letter to the Rules Committee, asking it to “look at this problem and recommend clarification of the amendment rule [2-341], one way or the other.” Letter from the Hon. Lawrence F. Rodowsky, Judge, Maryland Court of Appeals, to the Hon. Alan M. Wilner, Chairman, Court of Appeals Standing Comm, on Rules and Practice (Aug. 24, 1995) (in minutes of Court of Appeals Standing Comm, on Rules of Practice and Procedure, Sept. 6, 1996, Appendix 3).

On March 14, 1997, while the Rules Committee was studying the issue, the Court of Appeals filed its opinion in Scott v. Jenkins, supra, 345 Md. 21, 690 A.2d 1000 . In that case, the Court held that, for a plaintiff to recover punitive damages in a tort action, his complaint must include a specific claim for punitive damages and must specifically allege the facts that would entitle him to recover punitive damages. The Court emphasized the importance of pleading, explaining that it serves four distinct roles: “(1) providing] notice to the parties as to the nature of the claim or defense; (2) staffing] the facts upon which the claim or defense allegedly exists; (3) definfing] the boundaries or [the] litigation; and (4) providfing] for the speedy resolution of frivolous claims and defenses.” Id. at 27-28 , 690 A.2d 1000 . The Court observed that “[o]f these four, notice is paramount.” Id. at 28 , 690 A.2d 1000 .

In analyzing the questions presented, the Scott Court discussed the requirements of Rule 2-305 (1997) (amended 2003), ⁵⁸⁴ entitled “Claims for relief.” As then worded, the rule directed that, a pleading that sets forth a claim for relief ... shall contain a clear statement of the facts necessary to constitute a cause of action and a demand, for judgment for relief sought. Relief in the alternative or of several different types may be demanded. (Emphasis supplied.) The Court concluded that because punitive damages “serve different ends than do general damage awards, and are therefore properly classified as different in nature, a specific claim for their recovery must be made.” Scott, supra, 345 Md. at 37 , 690 A.2d 1000 . In support, it cited its observation in Falcinelli supra, 339 Md. at 423 , 663 A.2d 1256 , based upon the language of Scher v. Altomare, supra, 278 Md. at 442 , 365 A.2d 41 , that a plaintiff may recover the lesser of the damages proved or the damages demanded in the ad damnum clause of the operative complaint.

The Rules Committee studied and debated several possible amendments to Rule 2-305: one that would eliminate ad damnum clauses altogether, requiring only a statement that the jurisdictional amount was met and a demand for a money judgment; one stating expressly that a specific amount sought must be included in the ad damnum clause; one prohibiting amendment of the ad damnum clause after trial; and one allowing amendment of the ad damnum clause after trial. Ultimately, it recommended amending Rule 2-305 by adding: “Unless otherwise required by law, a demand for a money judgment shall include the amount sought.” The Rules Committee also recommended that subsection (b) of Rule 2-341, “Amendment of pleadings,” be changed to prohibit a circuit court from granting leave to amend the ad damnum clause in the operative pleading after a jury has returned a verdict. The proposed change would have added, at the end of the first sentence, the phrase, “except that the court may not grant leave to amend the amount sought in a ⁵⁸⁵ demand for a money judgment after a jury verdict is returned.” These recommendations were transmitted to the Court of Appeals by letter of October 2,1997. The Court of Appeals adopted the first recommendation by order of February 10, 1998, effective July 1, 1998.

Accordingly, at the time of the events in the case at bar, Rule 2-305 directed that [a] pleading that sets forth a claim for relief ... shall contain a clear statement of the facts necessary to constitute a cause of action and a demand for judgment for relief sought. Unless otherwise required by law, a demand for a money judyment shall include the amount souykt. Relief in the alternative or of several different types may be demanded. (Emphasis supplied.) The Court rejected, however, the recommended amendment to Rule 2-341(b), to prohibit leave to amend the ad damnum, clause post jury verdict.

Instead, it adopted a “Committee note” to the contrary. The note reads: “By leave of court, the court may grant leave to amend the amount sought in a demand for a money judgment after a jury verdict is returned.” The note clarifies that a circuit court has discretion to grant leave to amend the ad damnum clause in the operative complaint after a jury verdict has been returned. Cf. James v. Butler, 378 Md. 683, 700-02 , 838 A.2d 1180 (2003) (recognizing authority of circuit court to grant leave to amend ad damnum clause of complaint to conform to amount awarded by jury, but holding that the court did not have discretion to do so in that case, because the plaintiff had used the evidentiary short cut in Md.Code (1974, 2002 Repl.Vol.), section 10-104 of the Courts and Judicial Proceedings Article (“CJ”), which applies only when the damages sought are in the jurisdictional amount allowed in District Court).

The Rules Committee also had discussed, but decided against, recommending the deletion of Rule 8-604(c), which, as stated previously, is the successor rule to the statute enacted ⁵⁸⁶ in response to the Hards decision in 1812. That rule of appellate procedure allows, in pertinent part, for the following disposition on appeal: (c) Correctible error. (1) Matters of form. A judgment will not be reversed on grounds of form if the Court concludes that there is sufficient substance to enable the Court to proceed.

For that purpose, the appellate court shall permit any entry to be made by either party during the pendency of the appeal that might have been made by that party in the lower court after verdict by the jury or decision by the court. (2) Excessive amount of judgment. A judgment will not be reversed because it is for a larger amount than claimed in the complaint if the plaintiff files in the appellate court a release of the excess. (3) Modified judgment.

For the purposes of implementing subsections (1) and (2), the Court may modify the judgment. (Emphasis added.) The Rules Committee Reporter’s Note explained the committee’s decision against recommending deletion of Rule 8-604(c): The Committee recommends retention of [subsection (c)(2)] because the subsection, together with subsection (c)(3) of Rule 8-604, gives the appellate court discretion to enter the appropriate judgment in the situation where no motion was made at the trial court level and the error of a judgment in excess of the ad damnum is alleged on appeal. Md. Reg., Vol. 24, Issue 22, at 1539, Friday, Oct. 24,1997. (c) Against that legal backdrop, we first must decide whether an ad damnum clause seeking damages for breach of contract, “which Plaintiff estimates to be in excess of $100,000,” permits an award of any amount of damages above $100,000, absent an amendment to the complaint.

Preliminary to that decision, we must address HAA’s assertion that that issue is not preserved for our review. ⁵⁸⁷ HAA argues that the issue is not preserved because it was not raised by the appellant below. Under Rule 8-131(a), ordinarily, this Court will not review on appeal any non-jurisdictional issue that was not raised or decided below. Here, the court sua sponte raised the issue whether it properly could award damages above $100,000, so the issue indeed was raised. HAA’s lawyer asserted that, because the ad damnum request was for an amount “in excess of $100,000,” there was no limitation on awarding any amount over $100,000, including the more than $1.8 million dollars he had requested in closing.

Apparently, the court accepted this argument, as it responded, “Okay,” and proceeded to award the amount requested by HAA’s lawyer. Thus, the issue also was decided below. Accordingly, the preservation requirement of Rule 8-131 (a) was satisfied. The 1998 amendment to Rule 2-305 makes plain that a complaint for damages must set forth the amount of money being sought, unless to do so is not permitted by law.

See, e.g., CJ § 3-2A-02(b) (directing that a claim filed under the Health Care Malpractice Claims Act and any “initial pleading filed in any subsequent action may not contain a statement of the amount of damages sought other than that they are more than a required jurisdictional amount.”). It was implicit in the Maryland common law rule limiting recovery of damages to the amount sought in the operative pleading that the ad damnum clause of that pleading set forth the amount of damages being sought; otherwise, it would be impossible to determine whether the amount awarded exceeded the amount requested. The 1998 amendment to Rule 2-305 thus added language stating expressly what already was required implicitly- As explained above, by adopting that amendment, the Court of Appeals rejected competing amendments that would have eliminated ad damnum clauses entirely or required only a statement that the amount being claimed meets the jurisdictional amount or an even more general statement that money damages are being sought, without an amount specified. Instead, and consistent with its observation in Scott v. Jenkins, ⁵⁸⁸ supra, 345 Md. at 28 , 690 A.2d 1000 , that notice is the primary purpose of pleading, the Court required that a party seeking money damages tell the opposing party, from whom the damages are sought, the amount of damages he is seeking.

Whether HAA’s ad damnum prayer for damages “in excess of $100,000” would permit a trier of fact to award an amount of damages above $100,000 is a matter of interpretation of the language of Rule 2-305, and therefore is a question of law. Davis v. Slater, 383 Md. 599, 604 , 861 A.2d 78 (2004) (“Because our interpretation^] of ... the Maryland Rules are appropriately classified as questions of law, we review the issues de novo to determine if the trial court was legally correct----”). The same fundamental principles of statutory construction apply to the interpretation of a rule. Zetty v. Piatt, 365 Md. 141, 152 , 776 A.2d 631 (2001).

As the Court of Appeals has noted, “First, we must examine the ‘words of the rule, giving them ordinary and natural meaning.’ Where the language of the rule is clear and unambiguous, our analysis ends.” Id. (quoting State v. Harrell, 348 Md. 69, 79-80 , 702 A.2d 723 (1997)). However, the goal of such analysis is always “to discern the legislative purpose____ To that end we must consider the context in which ... the rule appears including related statutes or rules and relevant legislative history.” Davis, supra, 383 Md. at 605 , 861 A.2d 78 . Applying these general principles, we conclude that an ad damnum clause that seeks damages “in excess of’ a stated amount cannot satisfy the plain language directive of Rule 2-305, that “a demand for a money judgment shall include the amount sought.” A demand for a money judgment “in excess of’ a given number is not a demand for “the amount sought” in damages.

It is a request for damages in an unstated amount that is not less than the stated amount, i.e., for a money judgment, of whatever unlimited sum, higher than the amount specified. A demand for “the amount sought” puts the opposing party on notice of the sum of money being sought in damages. A demand for damages “in excess of’ a stated amount does not; it only informs the defendant that the ⁵⁸⁹ plaintiff will not be satisfied with an award lower than the amount stated, without giving notice of the maximum sum the plaintiff is seeking. Indeed, a demand for damages “in excess of’ a stated amount is similar to a statement that the sum requested satisfies the jurisdictional amount of the court, in that it informs of a floor, but not a ceiling.

The trial court in the case at bar ruled that, on the state of the complaint at trial, the law would permit HAA to recover damages for breach of contract above the $100,000 stated in the ad damnum clause. That ruling was legally incorrect. Either HAA’s complaint did not plead any amount of damages, in which case the entire claim was defective, see Baltimore City Lodge No. 3, supra, 61 Md.App. 694, 697 , 487 A.2d 1252 (citing Treusch v. Kamke, 63 Md. 274, 276-77 (1885)), or its request for an award “in excess of $100,000” must be read as a request for $100,000. Given that the ad damnum clause properly stated a specific sum, but then improperly modified it, by the phrase “in excess of,” to make it non-specific, we conclude that the offending words should be read out of the ad damnum clause, and therefore the clause must be read as one seeking $100,000 in damages.

Having concluded that the trial court erred in ruling that HAA could recover more than $100,000 on the state of its complaint, we next must determine whether that error was prejudicial. See Flores v. Bell, 398 Md. 27, 33 , 919 A.2d 716 (2007) (holding that, in a civil action, a judgment only will be reversed if the lower court committed an error and the error prejudiced the party challenging the judgment). If the error was prejudicial to the appellant, we then must determine the proper disposition of this appeal, given the error. As discussed above, the Committee note approved by the Court of Appeals for Rule 2-341(b) telegraphs that a circuit court has the power to grant leave to amend the operative pleading, including the ad damnum clause, after a jury has returned its verdict in the case; and that the decision whether to do so is discretionary.

See also James v. Butler, supra, 378 Md. at 700-01 , 838 A.2d 1180 . In the case at bar, which was tried on damages to the court, HAA did not move to amend its ⁵⁹⁰ complaint before trial, during trial, or post-trial, to conform the ad damnum clause for Count II to the amount of damages it was seeking and ultimately was awarded. Indeed, HAA’s stated position, that the words “in excess of’ $100,000 in the ad damnum clause permitted the court to award any amount above that sum as damages, obviated the issue of amendment. There would be no need to seek leave to amend an ad damnum clause to permit recovery of a greater sum than that stated in the clause if the words “in excess of’ accomplished that very purpose.

Moreover, the trial court’s legal error in ruling that the “in excess of’ language of the complaint allowed an award above $100,000 further obviated the issue of amendment. If, however, the trial court could have and necessarily would have been required to grant leave to HAA to amend the ad damnum clause of its complaint to conform to the $1.8 million dollars in damages it was seeking to recover, the court’s error would be harmless, as the outcome of the proceedings would not have been affected. Cf. Cole v. Gales, 47 Md.App. 506, 509 , 423 A.2d 972 (1981) (holding that default judgment establishes liability only and that, when, in the course of a contested trial on damages, plaintiff learns of an item of damage he did not know about previously, court had discretion to allow him to amend the ad damnum clause of his complaint to include the newly discovered amount).

There was no such requirement, as decisions about amendments are discretionary; moreover, in the circumstances of this case, it would have been an abuse of the court’s discretion to grant HAA leave, during the damages inquisition, to amend the ad damnum clause of its complaint to increase the amount sought from $100,000 to $1,889,755.98. Liability in the case at bar was established by default. The conduct alleged in the complaint, ie., that the appellant failed to convey the parcels of land as required by the Sales Contract, was taken as proven. The complaint did not allege that HAA had sustained lost profits as a result of the failure to convey.

We agree with HAA that it was not required to specially plead lost profits, for the reasons we shall explain in ⁵⁹¹ our discussion of Issue II. Nevertheless, the absence of any allegation of lost profits in the complaint is a factor to consider in determining whether granting leave to amend the ad damnum clause during the damages hearing would have so prejudiced the appellant as to have been an abuse of discretion. There was evidence introduced at the hearing that could support a reasonable inference that the defendants — or at least some of them — contemplated when the Sales Contract was entered into that HAA intended to develop the property into a town house community and earn a profit by selling the town houses to buyers. The complaint did not suggest, however, that HAA was suing to recover the profit it had anticipated earning from those collateral sales.

As noted, the complaint did not allege any facts having to do with lost profits from resales after development. Moreover, the “estimated” $100,000 in damages requested in the ad damnum clause of the contract claim was not consistent with HAA’s advancing a claim for lost profits from collateral sales. As the evidence adduced at the hearing made plain, the profit a developer would expect to realize from purchasing land and developing it into a town house community would far exceed $100,000. To the extent that the defendants were knowledgeable about the real estate market, and indeed were marketing the parcels for development, they would be knowledgeable enough to know that any such development would generate more than $100,000 in total profit for the developer.

The estimate of $100,000 in damages would be far more consistent with recovery of money damages equal to an increase in the fair market value of the property from the time of contracting to the time of settlement, plus out-of-pocket expenses, than with recovery of lost profits from collateral sales. And HAA never amended its complaint to include allegations of fact pertaining to lost profits upon resale or to increase the amount of money damages demanded. The case proceeded by way of default, without discovery or any pretrial proceedings other than a hearing on the appellant’s motion to vacate; HAA’s choice to pursue damages instead of specific performance first was made known to the ⁵⁹² appellant (and the court) at the hearing on relief; and the amount of damages sought by HAA at the hearing was more than 18 times the amount stated in the complaint. Under these circumstances, it would have offended principles of fair notice and therefore been an abuse of discretion for the court to have allowed HAA to amend its complaint to increase the ad damnum clause during the evidentiary hearing on relief.

Cf. Park Avenue Lumber & Supply Co. v. Nils A. Hofverberg, Inc., 76 Ill.App.2d 334, 345 , 222 N.E.2d 49 (1966) (“One has a right to assume that the relief granted on default will not exceed or substantially differ from that described in the complaint, and he may safely allow a default to be taken in reliance upon this assumption.”). 4 HAA advocated to the court, erroneously, that its ad damnum clause was worded so as to permit it to recover any sum of money greater than $100,000; the court erred in ruling that that indeed was the case; the court was not required to grant leave to HAA to amend its complaint to increase the ad damnum clause; and, indeed, in the circumstances of this case, had HAA sought to amend its ad damnum clause at the relief hearing, the court would have abused its discretion by allowing it. HAA did not offer any proof of direct lost profits, ie., the difference between the value of the Property on the date of the contract and on the date that settlement would have taken place. Rather, its evidence was probative of collateral lost profits, ie., the sums it would have realized as profit from the