MLT Enterprises, Inc. v. Miller

DAVIS, Judge. MLT Enterprises, Inc. (MLT) appeals from a judgment of the Circuit Court for Montgomery County (Chapin, J.) in favor of Arnold Miller (Miller) and Glenrock Joint Venture (Glenrock). Miller cross-appeals from a judgment in favor of MLT. The procedural history and facts of this case are set forth infra.

FACTS Under Md. Rule 8-501(g) (1997), the parties have filed an Agreed Statement of Facts. All parties, however, have filed additional Statements of Facts in their respective briefs, purporting to supplement the Agreed Statement of Facts. We think it unhelpful to attempt a supplemental exposition of facts after reproducing the Agreed Statement of Facts. For clarity, we set forth below our own Statement of Facts, juxtaposing those facts to which all parties have agreed with other facts helpful to the proper resolution of the case.

On September 7, 1994, Miller filed suit against MLT for payments allegedly due under an installment note. At the same time, Miller filed a Request for Writs of Attachment before Judgment and affidavits in support of the writs. On the same day, Miller filed an Amended Ex Parte Request for Writs of Attachment before Judgment. The Request was granted on September 7, 1994, on condition that Miller post a bond in the amount of $52,000 for the satisfaction of all costs and damages that may be awarded to MLT or a claimant of the property attached by reason of the attachment.

The bond ⁶⁶⁵ was filed on September 9, 1994, and the attachments on the original process were issued. On September 14, 1994, MLT filed Motions to Vacate the Attachment before Judgment and release the property, as well as a Motion to Dismiss the Complaint. These Motions were denied on October 26, 1994, so the Attachment remained in place. On October 25, 1994, MLT filed a Counter-Complaint against Miller for abuse of process and civil conspiracy stemming from Miller’s attempt to collect on what MLT claimed was a worthless note.

MLT also filed various Third-Party Complaints, all of which were ultimately dismissed. The property attached by Miller can be divided into two groups. The first group consisted of all equipment and personal property of MLT located at MLT’s place of business, 10026 Darnestown Road, Rockville, Maryland 20850. MLT operated a pizza restaurant; the equipment can generally be classified as restaurant equipment.

The second asset attached was a note owed to MLT by Behzad Safavieh. Safavieh owed MLT $22,000, payable at the rate of $1,000 per month. By Order of the Circuit Court for Montgomery County, issued on January 26, 1995, Safavieh’s payments were made into the Court registry. At the time of trial, the payments made by Safavieh on the note totalled $17,000.

On March 7, 1995, the circuit court issued an Order to sell the attached property located at 10026 Darnestown Road, Rockville, Maryland 20850. All parties consented to the sale, provided that the proceeds were placed into the Court registry. The proceeds of the sale came to $23,500, and the money, as agreed, was deposited in the Court registry. 1 On July 13, 1995, Glenrock Joint Venture (Glenrock) filed a Motion to Intervene as a Plaintiff. On November 7, 1995, Glenrock was permitted to intervene, and it filed a Complaint ⁶⁶⁶ in Intervention against MLT and Miller, which it amended.

The Amended Complaint in Intervention alleged that the restaurant equipment had belonged to Glenrock, and demanded judgment against MLT and Miller, jointly and severally, for $23,500, the proceeds from the sale of the property. It also requested that the money be paid out of the Court Escrow Account (the registry) into which the proceeds were deposited after the sale of the equipment. The Amended Complaint also alleged that MLT owed Glenrock, the owner of the subject property, unpaid rent under a lease. Glenrock demanded judgment for $57,226.32, plus fees and costs.

On December 6, 1995, the circuit court granted MLT’s Motion for Summary Judgment with respect to Miller’s original Complaint. Therefore, the Counter-Complaint filed by MLT against Miller and the Amended Complaint in Intervention filed by Glenrock were the matters set for trial. The matter came for trial before the circuit court (Chapin, J.) on February 13 and 14,1996. At trial, Glenrock and MLT informed the court that they had settled Glenrock’s rent claim for $11,000.

The agreement called for Glenrock to be paid from the proceeds being held in the court registry. MLT presented its case in chief for the Counter-Complaint against Miller, and Glenrock then presented evidence in support of its Amended Complaint in Intervention against Miller and MLT. Counter-Defendant (and Defendant in Intervention) Miller moved for judgment. The court granted him judgment on MLT’s Counter-Complaint.

The court then issued rulings dispositive of all remaining issues. Glenrock had presented evidence during trial that it had rented the premises to previous tenants who had defaulted on their leases. Glenrock claimed that, under the terms of those leases, it took ownership of all equipment on the premises before MLT ever signed a lease. The court agreed and ruled that Glenrock owned the equipment.

The circuit court next determined the account from which Glenrock’s ownership interest in the restaurant equipment would be paid. Although Glenrock, in its Amended Com ⁶⁶⁷ plaint, had originally asked that the court withdraw the funds from the court registry, in its opening statement Glenrock added the possibility that the court might consider charging the $28,500 to the bond filed by Miller. In a colloquy with the court following its case-in-chief, Glenrock specifically requested that the money be charged against the bond as damages rather than withdrawn from the registry. Miller contested this request.

MLT did not. Characterizing the money due Glenrock as damages incurred as a result of the improper Attachment before Judgment, the court ruled that the $23,500 was to be levied against the bond posted by Miller. The court also issued an oral ruling that Glenrock was entitled to $822.50 in damages against the bond. This represented interest on the proceeds from the sale of the restaurant equipment that Glenrock was prevented from obtaining for the duration of the Attachment.

To MLT, the court said it would award $722.50 against the bond, representing interest for the $17,000 of periodic payments on the notes made into the registry, the use of which MLT was deprived while the Attachment was in place. The court also awarded MLT $8,250 against the bond. This represented three-fourths of the rent settlement of $11,000 with Glenrock, damages that the Attachment caused MLT when Glenrock was unable to mitigate its loss of rental income for the premises during the Attachment period. Finally, the court stated that it would award $1,071 against the bond to MLT for court reporter’s costs incurred by the need for depositions concerning the Attachment.

The court instructed counsel for Glenrock to prepare an appropriate Order. Counsel did prepare such an Order, but the court held the Order pending the hearing on the Motion to Alter or Amend the Judgment that Glenrock subsequently filed. On February 20, 1996, Glenrock filed a Motion to Alter or Amend Judgment. MLT, as a Defendant in Intervention, opposed the Motion.

On March 18, 1996, the court conducted a hearing on Glenrock’s Motion. On March 20,1996, the court ⁶⁶⁸ issued a written Order granting the Motion in part. Subsequent post-trial Motions were denied. The Amended Judgment changed the original Judgment in two respects.

It changed the proceeds from the sale of the attached restaurant equipment from $23,500 to $23,217.50. It also ordered that the proceeds, to be distributed to Glenrock, not be charged against the bond, as originally ordered, but withdrawn from the court registry into which the proceeds had been deposited after the sale. By its action, therefore, the court impliedly concluded in its Amended Judgment that the money did not represent damages incurred by the improper Attachment (and thus properly levied against the bond); the money was merely the proceeds from the sale of the restaurant equipment, to be returned to the equipment’s rightful owner, Glenrock. The court left intact its ruling that $822.50, representing damage incurred by Glenrock because Glenrock could not use the $23,500 during the Attachment, be charged against the bond. 2 MLT appealed, and Miller cross-appealed.

We discuss MLT’s appeal first. MLT’s Appeal In this appeal, MLT seeks a review of the circuit court’s Order issued on March 20, 1996, granting Glenrock’s Motion to Alter or Amend the Judgment. Because no additional relief is sought against Miller, he takes no active part in this appeal. For the same reason, Selective Insurance Company of America (which issued the bond for the Attachment before Judgment) takes no active role in this appeal.

MLT is not seeking any additional relief against either Miller or the Surety. Miller does not appeal the grant of summary judgment with respect to his underlying complaint. MLT does not appeal the judgment granted by the circuit court against it with respect to its Counter-Complaint against Miller. The only issues on this appeal involve the circuit court’s determina ⁶⁶⁹ tion that Glenrock owned the equipment located at 10026 Darnestown Road, Rockville, Maryland 20850, and the court’s award, taken from the court registry, to Glenrock of the proceeds of the sale of the equipment.

MLT contends that it owned the restaurant equipment, and that it should have received the proceeds from the court registry. Specifically, MLT presents two questions for our review which, in light of our resolution of the issues, we rephrase and consolidate as follows: Did the circuit court err in finding that Glenrock owned the restaurant equipment without soliciting a rebuttal argument by MLT, and in later denying MLT the opportunity to prove that it owned the equipment? We answer in the negative and affirm the circuit court on this issue. ANALYSIS A prospective intervenor files and serves a motion to intervene and a copy of the proposed pleading.

If the motion is granted, the intervenor files the pleading and serves it upon all parties. Md. Rule 2-214(c) (1997). If a person intervenes as a plaintiff, the pleading filed is a complaint. See Rule 2-301 (a civil pleading must be a complaint, a counterclaim, a cross-claim, a third-party complaint, or an answer or reply to an answer); Rule l-202(r) (same).

Every defense of fact to a claim for relief in a complaint must be asserted in an answer, with certain exceptions not relevant here. Rule 2-323(a). Averments in a pleading to which a responsive pleading is required are admitted unless denied in the responsive pleading. Rule 2-323(e).

The exceptions to this rule do not apply here. Glenrock’s Amended Complaint in Intervention asserted Glenrock’s ownership interest in the restaurant property, and explicitly laid claim to “that portion of money in [the court’s registry] representing the proceeds of the sale of the [restaurant equipment].” MLT filed no answer when served with the Amended Complaint. Miller, the other Defendant in ⁶⁷⁰ Intervention, filed an answer, but did not appeal from the court’s eventual decision regarding the ownership of the restaurant equipment. On these facts alone, we conclude that MLT admitted that Glenrock owned the restaurant equipment and was estopped from denying it later in the trial.

The court erred neither in making its factual finding at the close of Glenrock’s evidence nor in refusing MLT the opportunity to present rebuttal evidence at the hearing on the Motion to Alter or Amend the Judgment. The matter was closed. Even if the court could have allowed MLT to attempt a rebuttal of Glenrock’s claim of ownership at the end of Glenrock’s case-in-chief, MLT failed to object to the court’s factual finding at the time the court made it. MLT thus failed to preserve any objection to the court’s finding that MLT may have had.

In addition, during Glenrock’s case-in-chief and while making its closing argument, MLT never contested ownership of the restaurant property. Even when MLT presented testimony at the end of Glenrock’s case-in-chief regarding the ownership of personal property (as opposed to equipment) at the premises, it did not contest Glenrock’s claim of ownership of the restaurant equipment. We cannot allow MLT to contest this claim of ownership now. In an attempt to win another bite at the apple, MLT argued in the circuit court that Glenrock, in filing a Motion to Alter or Amend the Judgment, was reneging on their settlement agreement.

By requesting that its ownership interest be drawn from the court registry rather than charged against the bond, MLT argues, Glenrock was violating an agreement that all claims between MLT and Glenrock would be settled with $11,000 from the proceeds in the court registry. MLT argues that, at trial, it failed to challenge Glenrock’s claim to ownership of the equipment in reliance on the settlement; because Glenrock had asked the court to charge the $23,500 to the bond, argues MLT, MLT had no interest at stake vi-sa-vis the restaurant equipment. Assuming arguendo that MLT was justified in believing that Glenrock was seeking the proceeds of the equipment sale ⁶⁷¹ from the bond instead of the court registry, MLT's argument is still unpersuasive. Fundamentally, it assumes that two parties in multiparty litigation have the power to decide between themselves the fate of all parties.

If the proceeds of the sale were charged against the bond, as MLT claims the parties agreed, then Miller would effectively pay the $23,500. It requires no lengthy discussion to conclude that bestowing this power upon MLT and Glenroek is certainly the wrong result. Moreover, the nature and purpose of the bond, in a very real sense, determines the outcome of any allocation of funds as between the bond and the court registry. Rule 2-115(c) states that a plaintiffs bond is posted in order to satisfy “all costs and damages that may be awarded the defendant or a claimant of the property by reason of the attachment.” To be awarded money from a bond posted in return for an Attachment before Judgment, therefore, two requirements must be met: money from the bond must be to reimburse costs or remedy damages only, and the costs or damages must have been caused by the attachment itself.

Id. Unless those two conditions are met, then the court may not award money to a party against the bond. The circuit court clearly had those requirements in mind when it altered its judgment and ordered the proceeds of the sale to be drawn from the court registry rather than charged against the bond. Given the limits upon the court's discretion imposed by Rule 2 — 115(c), we fail to see how two litigants may decide between themselves that a settlement amount will be charged against a bond filed in return for an Attachment before Judgment.

Finally, we disagree with MLT’s assertion that it justifiably relied on Glenrock’s position that the proceeds from the sale of the restaurant equipment should be charged against the bond. It is true that, at the close of its case-in-chief, Glenroek requested that the money come from the bond rather than from the court registry. In its Amended Complaint, however, Glenroek specifically requested that the funds from the proceeds of the sale be withdrawn from the court ⁶⁷² registry, where they had been deposited. In a proposed settlement agreement between Glenrock and MLT submitted for signature before trial, Glenrock asserted its ownership interest in the proceeds of the sale of the restaurant equipment, “which proceeds are currently being held in the [court registry].” 3 In its opening statement, Glenrock reminded the court that the Amended Complaint asked that the judgment be paid from the court registry. 4 In short, not until closing arguments did Glenrock specifically request that the judgment be charged against the bond only, rather than deducted from the money deposited in the court registry.

By this time, Glenrock had asserted its ownership of the restaurant equipment, it had put on evidence that it