Pinner v. Pinner

Eyler, James R., J. This appeal is from a default judgment in favor of Randy R. Pinner, appellee/cross-appellant, a North Carolina resident, against his step-mother, Mona Pinner, appellant, also a North Carolina resident, in the amount of nearly $ 100,000. 1 Randy noted a cross-appeal from the order dismissing his claims against Mona's former attorneys: Mary H. Keyes, Esq., and the Keyes Law Firms, LLC (collectively "the Keyes Defendants"); and against Napoli Bern Ripka Shkolnik, LLP ("the Napoli Firm"), various related entities, and lawyers employed by those entities, including Jason Weiner, Esq. (collectively "the Napoli Defendants"), 2 cross-appellees. Prior to this suit, Edwin Pinner, Mona's late husband and Randy's father, and Mona, filed suit in the Circuit Court for Baltimore City, seeking damages for personal injuries caused by asbestos exposure ("the Asbestos Case"). Following Edwin's death from mesothelioma, the Asbestos Case was converted to a wrongful death and survival action on behalf of Mona, individually and as personal representative of the Estate of Edwin F. Pinner ("the Estate").

Ms. Keyes represented Mona (and Edwin) in the Asbestos Case for nearly two years until, by agreement with Ms. Keyes, the Napoli Firm took over the case. After Mona added a wrongful death claim to the Asbestos Case, she did not timely serve notice on Randy, pursuant to Rule 15-1001, or name him as a use plaintiff. As a result, Randy did not learn of the wrongful death claim until more than three years after Edwin died and his motion to intervene in the Asbestos Case was denied as time-barred. After Mona settled with certain of the defendants in the Asbestos Case, she received settlement proceeds, but did not deposit those funds into the Estate in North Carolina.

Randy filed the instant action in the Circuit Court for Baltimore City asserting claims for negligence and breach of fiduciary duty against Mona, the Keyes Defendants, and the Napoli Defendants, as well as claims for aiding and abetting, negligent retention and supervision, and respondeat superior against certain of the Keyes Defendants and the Napoli Defendants. The circuit court granted motions to dismiss for failure to state a claim upon which relief may be granted as to all of the claims against the Keyes Defendants and the Napoli Defendants. Mona failed to plead and Randy's request for an order of default was granted. After she unsuccessfully moved to vacate the order of default, the court held a damages inquisition hearing over two days, ruled that it had personal jurisdiction over Mona, 3 and entered a default judgment in favor of Randy for $ 99,856.84.

Mona appeals from the default judgment, presenting three questions, which we have rephrased: I. Did the circuit court err by exercising personal jurisdiction over Mona?

II

Did the circuit court err by applying North Carolina law to calculate Randy's damages?

III

Did the circuit court abuse its discretion by denying Mona's motion to vacate the order of default? In his cross-appeal, Randy presents four questions, which we have condensed and rephrased as three: IV. Did the circuit court err by dismissing the claims against the Keyes Defendants and the Napoli Defendants for negligence, negligent retention and supervision, and respondeat superior premised upon a breach of Rule 15-1001? V. Did the circuit court err by dismissing the claims against the Keyes Defendants and the Napoli Defendants for aiding and abetting Mona's alleged breach of Rule 15-1001?

VI

Did the circuit court err by dismissing the claims against the Keyes Defendants and the Napoli Defendants for aiding and abetting a breach of fiduciary duty under North Carolina law? For the following reasons, we answer the first question in the affirmative and shall remand with direction that the court vacate the default judgment and enter an order dismissing the claims against Mona for lack of personal jurisdiction. The resolution of the first question obviates the need for us to address Mona's other contentions of error. In the cross-appeal, we answer all three questions in the negative and shall affirm the dismissal of the claims against the Keyes Defendants and the Napoli Defendants.

FACTS AND PROCEEDINGS a. The Asbestos Case In August 2009, Edwin was diagnosed with mesothelioma. He lived with his wife, Mona, in North Carolina. Edwin has one biological son, Randy, from a prior marriage who also lives in North Carolina.

In September 2009, Edwin and Mona retained the services of the Keyes Defendants. On February 23, 2010, Ms. Keyes, on behalf of Edwin and Mona, filed suit in the Circuit Court for Baltimore City, Case No. 24-X-10-000032, against numerous defendants, including two of Edwin's former employers headquartered in Baltimore City - Continental Wire and Inland Steel - alleging that he had been directly exposed to asbestos dust while working for those companies. During discovery, Edwin and Mona identified Randy as Edwin's only biological son in their answers to interrogatories. Eight months after suit was filed, on October 30, 2010, Edwin died from mesothelioma.

In December 2010, Mona was appointed personal representative of the Estate in the General Court of Justice, Superior Court Division, Buncombe County, North Carolina. She listed the Asbestos Case as property of the Estate. In March 2012, Ms. Keyes entered into an "Association Agreement" with the Napoli Firm whereby they agreed to take over all aspects of the Asbestos Case. Two and one-half years after Edwin died, on April 24, 2013, Jason Weiner, Esq., an employee of the Napoli Firm and a lawyer admitted to practice in Maryland, filed an amended complaint on behalf of Mona that added a claim for wrongful death.

In Maryland, "only one action" shall lie for the wrongful death of a person and it "shall be for the benefit of the wife, husband, parent, and child of the deceased person." Md. Code (1974, 2006 Repl. Vol.), section 3-904(a) & (f) of the Courts and Judicial Proceedings Article ("CJP"). Pursuant to Rule 15-1001(b), "[a]ll persons who are or may be entitled by law to claim damages by reason of the wrongful death shall be named as plaintiffs whether or not they join in the action." If a potential wrongful death beneficiary is not joined in the action, the words "to the use of" should precede their name. Id.

The party bringing the wrongful death action is required to serve a copy of the complaint on each use plaintiff, along with a notice explaining their right to join the action. 4 Id . at (d). Randy was not named as a use plaintiff in the amended complaint and was not served with a copy of the amended complaint or a Rule 15-1001(d) notice. Over a year later, in June 2014, two of the defendants in the Asbestos Case moved to dismiss the wrongful death count of the amended complaint on the ground that Mona had failed to name Randy as a use plaintiff. In response to that motion, on July 8, 2014, Mona, through the Napoli Firm and Mr. Weiner, filed by consent a second amended complaint.

The second amended complaint substituted Mona, individually and as personal representative of the Estate, as the only plaintiff, and, added Randy as a use plaintiff in the wrongful death count. On July 10, 2014, three years and eight months after Edwin's death, Mona, through counsel, served Randy with a copy of the complaint and the Rule 15-1001(d) notice. Within sixty days, on September 4, 2014, Randy moved to intervene in the Asbestos Case. The defendants opposed his intervention on the ground that his claim was time-barred.

By order entered October 27, 2014, the circuit court permitted Randy to intervene for the limited purpose of conducting discovery relative to the limitations issue and, by order of June 23, 2015, denied his motion to intervene as time-barred. b. The Instant Case On January 19, 2016, Randy filed a sixteen-count complaint against Mona, the Keyes Defendants, Mr. Weiner, and the remainder of the Napoli Defendants arising from their "failure, among other things, to timely name Randy ... as a use plaintiff in a wrongful death action and provide him with the notice required by Maryland Rule 15-1001." He alleged that Mona was a resident of North Carolina and that the Napoli Firm (and related entities) all were organized under the laws of New York State or Delaware. He further alleged that the court had personal jurisdiction over the non-resident defendants pursuant to the Maryland long-arm statute, codified at CJP section 6-103, "in that each [defendant] either directly and/or by an agent, regularly solicited or conducted business, engaged in a persistent course of conduct, and derived substantial revenues from services within [Maryland] ...[,]" and had caused tortious injury by acts or omissions within or outside the state. Counts I, II, and IV pertained to Mona, individually and as personal representative of the Estate.

Count I asserted that Mona negligently failed to name Randy as a use plaintiff in violation of Maryland Rule 15-1001. Count II alleged that she breached her fiduciary duties as personal representative of the Estate under North Carolina law by failing to provide notice under Rule 15-1001 and failing to distribute a share of the settlement monies from the Asbestos Case to Randy, a statutory beneficiary of the Estate. Count IV alleged that Mona was vicariously liable for the tortious acts and omissions of the Napoli Defendants. Counts III, V, VI, VII, VIII, IX, X, XI, and XII all pertained to various of the Napoli Defendants, including Mr. Weiner.

Count III asserted a claim for negligence against the Napoli Defendants for failure to name Randy as a use plaintiff. Count V alleged that the Napoli Defendants were vicariously liable for the tortious acts and omissions of Mr. Weiner in his conduct of the Asbestos Case. Counts VI, VII, X, and XI asserted that certain of the Napoli Defendants aided and abetted Mona's breach of Rule 15-1001 and her breaches of fiduciary duty. Counts VIII and IX asserted that certain of the Napoli Defendants negligently retained and/or supervised Mr. Weiner.

Count XII asserted that the successor entities to certain of the Napoli Defendants were liable for the tortious conduct of their predecessors in interest. Counts XIII, XIV, XV, and XVI all pertained to the Keyes Defendants, asserting claims for negligence (Count XIII); aiding and abetting negligence by Mona (Count XIV); aiding and abetting breach of fiduciary duty by Mona (Count XV); and vicarious liability as to the Keyes Law Firm for the tortious acts and omissions of Ms. Keyes (Count XVI). The Keyes Defendants and the Napoli Defendants moved to dismiss the complaint. The court held a hearing and, by amended order entered October 19, 2016, granted the motions to dismiss with prejudice.

We shall discuss the arguments made and the court's ruling, infra . Mona was served by private process in North Carolina on March 14, 2016, but failed to plead. Consequently, on November 28, 2016, Randy filed a request for an order of default. On January 4, 2017, the court entered an order of default.

A "Notice of Default Order" was sent to Mona in North Carolina, advising that she could move to vacate the order within thirty days ( i.e., by February 3, 2017) explaining "reasons for the failure to plead and the legal and factual basis for the defense to the claim." As we shall discuss, infra , Mona, through a third party, filed a motion to vacate the order of default on February 22, 2017. Her motion was denied, and the matter was set in for a damages inquisition on May 3, 2017. On that date, Randy appeared with counsel (as did representatives of the Napoli Defendants and the Keyes Defendants), but Mona did not appear. The court sua sponte raised the issue of personal jurisdiction, received evidence on damages incurred by Randy, and then granted a continuance to permit Randy's counsel to brief the personal jurisdiction issue.

The hearing resumed on July 26, 2017. Mona again did not appear. At the outset, the court ruled that it had jurisdiction over Mona and heard argument on damages. At the end of the hearing, the court ordered Mona to pay Randy $ 99,856.84, which comprised one-half of the total settlement proceeds on the wrongful death claim, less a $ 60,000 spousal deduction under North Carolina law.

An order to that effect was entered on July 28, 2017. This timely appeal and cross-appeal followed. We shall include additional facts in our discussion of the issues. DISCUSSION APPEAL I. Personal Jurisdiction "The existence of personal jurisdiction is a question of law." Cappel v. Riaso , LLC , 197 Md. App. 347 , 13 A.3d 823 (2011).

The burden is on the plaintiff "to establish the propriety of [the exercise] of personal jurisdiction." CSR v. Taylor , 411 Md. 457 , 467 n.2, 983 A.2d 492 (2009). Before a court may exercise personal jurisdiction over a foreign defendant, such as Mona, the court must be satisfied that "the exercise of jurisdiction is authorized under Maryland's long arm statute ... [and that] the exercise of jurisdiction comports with due process requirements of the Fourteenth Amendment." Beyond Sys., Inc. v. Realtime Gaming Holding Co., LLC , 388 Md. 1 , 14-15, 878 A.2d 567 (2005) (citations omitted). The "statutory inquiry merges with [the] constitutional examination" because "the reach of the long arm statute is coextensive with the limits of personal jurisdiction." Id. at 22 , 878 A.2d 567 . "A court's exercise of personal jurisdiction over a nonresident defendant satisfies due process requirements if the defendant has 'minimum contacts' with the forum, so that to require the defendant to defend its interests in the forum state 'does not offend traditional notions of fair play and substantial justice.' " Id.

(quoting Int'l Shoe Co. v. Washington , 326 U.S. 310 , 316, 66 S.Ct. 154 , 90 L.Ed. 95 (1945) ). With those principles in mind, we return to the case at bar. As mentioned, the issue of the circuit court's personal jurisdiction over Mona arose during the May 3, 2017 damages inquisition when the court, sua sponte , raised the issue. Randy's attorney was unprepared to address the issue at that time and, after presenting evidence on damages, was granted a continuance.

On July 25, 2017, Randy filed a supplemental memorandum addressing personal jurisdiction. He argued that Mona waived the defense of lack of personal jurisdiction when she filed her motion to vacate the order of default but did not move to dismiss for lack of personal jurisdiction. Alternatively, he maintained that the long arm statute conferred specific personal jurisdiction over Mona because she had "caused ... tortious injury" to him "outside of the State by an act or omission outside the State," i.e. , her breach of fiduciary duty as personal representative, and the injury arose from her "persistent course of conduct in the State," i.e. , her prosecution of the Asbestos Case. CJP § 6-103(b)(4).

He emphasized that Mona's contacts with Maryland, through her agents - the Napoli Defendants and the Keyes Defendants - in their conduct of the Asbestos Case were extensive and persisted over a five-year period, culminating in the payment of settlement proceeds to her. At the continued damages inquisition, Randy introduced into evidence an affidavit made by his attorney and attached exhibits, which included the certified docket entries from the Asbestos Case, as well as copies of numerous documents and pleadings filed in that case. The circuit court determined that it could exercise personal jurisdiction over Mona, without stating specific findings or reasons. On appeal, Mona contends the court erred in so ruling because personal jurisdiction is not authorized under CJP section 6-103(b)(4) of the long-arm statute, and the exercise of jurisdiction would violate due process.

She emphasizes that by the time of the damages inquisition, only two counts against Mona remained: Count I, asserting that Mona negligently failed to name Randy as a use plaintiff in the Asbestos Case, in violation of Md. Rule 15-1001, and Count II, alleging that, under North Carolina law, she breached her fiduciary duties as personal representative by failing to give notice pursuant to Md. Rule 15-1001 and failing to distribute to Randy the settlement proceeds from the Asbestos Case. 5 Mona asserts that Randy abandoned Count I at the damages inquisition hearing, arguing both in a May 3, 2017 damages memorandum and in open court that only the breach of fiduciary duty count was before the court. Thus, she maintains that the only issue properly before us is whether the court had personal jurisdiction over Mona vis-à-vis her allegedly wrongful administration of the Estate. In any event, she argues that the court lacked personal jurisdiction over her with respect to Counts I and II because her only contact with Maryland was the filing and prosecution of the Asbestos Case and that that was insufficient to confer jurisdiction. Randy responds that Mona waived this issue by her failure to assert lack of personal jurisdiction as a defense in the circuit court pursuant to Rule 2-322(a).

Even if not waived, he asserts that the circuit court did not err by exercising personal jurisdiction over Mona because by filing complex asbestos litigation in the Circuit Court for Baltimore City, Mona, through her agents, "purposely availed ... herself of the privilege of conducting activities in the State." (Quoting Bond v. Messerman , 391 Md. 706 , 721-23, 895 A.2d 990 (2006) ). Because Randy's claims arise from her acts and omissions relative to the settlement of that suit, he urges that it would be constitutionally reasonable to require her to litigate the instant action in the same forum. He asserts, moreover, that he did not abandon Count I, but merely elected to pursue a theory of damages based on Count II. We begin by disposing of the issue of waiver under Rule 2-322.

That rule states, in relevant part, that "[t]he following defenses shall be made by motion to dismiss filed before the answer , if an answer is required: (1) lack of jurisdiction over the person .... If not so made and the answer is filed , these defenses are waived." Md. Rule 2-322(a) (emphasis added). In the case at bar, Mona did not file an answer to the complaint. Rather, she sent her former attorney, Paul Napoli, a handwritten note claiming that her daughter had filed an answer to the complaint on her behalf and advising that she wanted to vacate the default order.

Mr. Napoli asked another attorney - Joseph Smith, Esq. - to forward Mona's note to the circuit court, which he did. As discussed, the court denied the motion to vacate. There is no answer in the record. Having never filed an answer, Mona did not waive her right to assert the defense of lack of personal jurisdiction by her failure to assert it below.

See Smith v. Cylus , 147 Md. App. 78 , 81, 807 A.2d 777 (2002) (explaining that a plaintiff does not waive the mandatory defenses set forth in Rule 2-322 unless he or she files an answer without having asserted the defense). With respect to the abandonment of Count I, for reasons explained infra, a decision is immaterial to the result we reach. Count I was based on common law negligence which was based on a violation of a Md. Rule. Count II was based on breach of fiduciary duty which was based on the same alleged violation and additional acts.

Regardless of count, appellant relied on section 6-103(b)(4) and argued that the alleged tortious acts occurred out of State, causing tortious injury out of State. We now turn to the thornier issue of whether the exercise of personal jurisdiction is authorized. Personal jurisdiction takes two forms: general jurisdiction and specific jurisdiction. For either type, a defendant "must maintain sufficient minimum contacts with the forum such that the exercise of jurisdiction meets the 'general test of essential fairness.' " Republic Props.

Corp. v. Mission West Props., LP , 391 Md. 732 , 760, 895 A.2d 1006 (2006) (quoting Presbyterian Univ. Hosp. v. Wilson , 337 Md. 541 , 551-52, 654 A.2d 1324 (1995) ). Specific jurisdiction may be established if "the defendant's contacts with the forum state form the basis for the suit[.]" Beyond Systems , 388 Md. at 26 , 878 A.2d 567 . "If the defendant's contacts with the State are not the basis for the suit, then jurisdiction over the defendant must arise from the defendant's general, more persistent contacts with the State." Id. at 22 , 878 A.2d 567 .

Randy does not suggest that Mona's contacts with Maryland were of the type sufficient to confer general jurisdiction over her. Rather, he argues that specific jurisdiction may be exercised because Mona's contacts with Maryland "form the basis for the suit[.]" Beyond Systems , 388 Md. at 26 , 878 A.2d 567 . The only contact Mona is alleged to have had with Maryland is the filing and prosecution of the Asbestos Case. In assessing whether Mona's conduct of the Asbestos Case gives rise to specific personal jurisdiction, we keep the language of the statute in mind, as we consider three prongs: "(1) the extent to which the defendant has purposefully availed [herself] of the privilege of conducting activities in the State; (2) whether the plaintiffs' claims arise out of those activities directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable." Id. at 26 , 878 A.2d 567 ( Carefirst of Md., Inc. v. Carefirst Pregnancy Centers, Inc. , 334 F.3d 390 , 397 (4th Cir.2003) ).

Under the first prong, Randy maintains that Mona purposely availed herself of the privilege of filing suit here and, as a result, has impliedly consented to being sued here on claims arising from that lawsuit. See Neuralstem, Inc. v. Stemcells, Inc. , 573 F.Supp.2d 888 (D. Md. 2008). In Neuralstem, a Delaware corporation headquartered in Maryland (Neuralstem), filed suit in the United States District Court for the District of Maryland against a Delaware corporation headquartered in California (Stemcells), seeking a declaratory judgment that a patent licensed by Stemcells was unenforceable, invalid and not infringed. Almost two years earlier, Stemcells had sued Neuralstem for patent infringement in the same court.

The earlier case was stayed pending a reexamination of the patents by the United States Patent and Trademark Office ("USPTO") and remained stayed when Neuralstem filed its suit. While the stay was pending, the USPTO issued two new patents to Stemcells, one of which was the subject of Neuralstem lawsuit. Stemcells moved to dismiss for lack of personal jurisdiction. The district court denied the motion.

It explained that many courts had "concluded that personal jurisdiction may be based upon implied consent or waiver when a non-resident files a claim in the forum state that involves the same transaction." Id. at 897 . It reasoned that Stemcells had waived its right to contest personal jurisdiction, or had impliedly consented to being sued in Maryland, by "purpose[ly] avail[ing] itself of the privileges and benefits of [the Maryland forum] by filing the [prior] Maryland action, which involve[d] the same parties and [was] related to the same transaction or occurrence as the [matter before the court]." Id. at 898 . The court noted, moreover, that the prior lawsuit and the current lawsuit were "significantly intertwined" and, concededly, involved "common operative facts." Id. Glassman, Edwards, Wade & Wyatt, P.C. v. Wolf Haldenstein Adler Freeman & Herz, LLP , 601 F.Supp.2d 991 (W.D. Tenn. 2009) (" Glassman "), also is instructive.

Three law firms - one based in New York, one based in California, and one based in Tennessee - entered into a joint venture to serve as co-counsel for plaintiffs in an anti-trust lawsuit filed in the United States District Court for the Western District of Tennessee. Another firm, based in Maine, later was appointed co-lead counsel along with the three other firms. The antitrust litigation ultimately was settled. Subsequently, the California and Tennessee based firms filed suit against the New York and Maine based firms, along with a third firm, alleging breaches of fiduciary duty and the covenant of good faith and fair dealing relative to the joint venture agreement, seeking the imposition of a constructive trust, and seeking declaratory relief.

The out-of-state law firm defendants all moved to dismiss for lack of personal jurisdiction.