Pollokoff v. Maryland National Bank

Rodowsky, J., delivered the opinion of the Court. Phyllis Pollokoff and Robert Pollokoff, appellants, filed a declaration in the Superior Court of Baltimore City claiming "individually and on behalf of all others similarly situated” $3,000,000 in damages from the appellee, Maryland National Bank. The trial court granted the bank’s motion raising preliminary objections on the ground that the minimum monetary jurisdictional requirements had not been met in this non-jury law action. The Court of Special Appeals affirmed.

Pollokoff v. Maryland National Bank, 44 Md. App. 188 , 407 A.2d 799 (1979). At issue is whether, in this proposed class action, the named plaintiffs may aggregate with their claim the claims they seek to assert on behalf of all members of the proposed class. Because our conclusion is that the "amount in controversy” required by Maryland Code (1980 Repl. Vol.), § 4-402 (d) (1) of the Courts and ⁴⁸⁷ Judicial Proceedings Article of at least $2,500.01 is to be measured without aggregating separate and distinct claims of multiple plaintiffs, we affirm.

Appellants allege that they opened a "Premium Passbook” account with appellee having a deposit term of 5 years which matured on March 23,1978. The account provides that at the conclusion of the term all or any of the balance (including accrued interest) may be withdrawn. If the funds are neither withdrawn, nor instruction given to the bank as to disposition of the funds, the premium account terminates, a "Regular Passbook” account is opened by the bank in the names of the depositors and the balance is transferred to the latter account. Appellants were notified by the bank on May 18, 1978 that the premium account had matured and appellants withdrew the balance on May 19,1978.

The bank "ceased paying interest ... on March 23, 1978 and has refused to pay to the Plaintiffs any interest on funds deposited for the period from March 23, 1978 to May 19, 1978 ....” Described in the declaration as the plaintiff class are "those persons who have maintained a 'Premium Passbook account’ with the ... Bank for a period of time subsequent to the maturation date of the account and to whom ... Bank has refused to pay interest on the balances so maintained for said periods.” In addition to damages, the ad damnum seeks costs and a reasonable attorney’s fee. Appellee supported its motion raising preliminary objection with an affidavit by a bank officer accompanied by the rules and regulations relating to a regular account.

Appellants did not controvert any of the matters of fact set forth with this motion. It appears that on March 23,1978 the balance in appellants’ premium account, inclusive of interest, was $4,001.11, that the regular account carried 4Yz% interest, compounded and paid semi-annually on June 30 and December 31, that funds must be deposited by January 2 or July 2 to earn interest for a semi-annual period, and that funds withdrawn before the end of an interest period do not receive interest. By utilizing the 4Y%% rate on the regular account balance for the 56 days from March 23 to ⁴⁸⁸ May 19, 1978, the bank says that the claim of the named plaintiffs amounts to $27.62. 1 Appellants’ claim is a civil action in contract. For such actions the line of division between the subject matter jurisdiction of the trial courts of general jurisdiction and of the District Court of Maryland has been drawn by the General Assembly by reference to "the amount in controversy.” While § 4-401 (1) of the Courts Article provides that "the District Court has exclusive original civil jurisdiction” in an action in contract "if the debt or damages claimed do not exceed $5,000,” this general rule is subject to exceptions set forth in § 4-402.

Applicable here is § 4-402 (d) (1) under which a plaintiff has an election to file either in the District Court or in a trial court of general jurisdiction, such as the Superior Court of Baltimore City, "if the amount in controversy exceeds $2500.” Although the claim of the named plaintiffs is short of this mark, it is contended 2 that the trial court should have looked to the total of all of the claims of all of the persons who would be members of the class which the named plaintiffs seek to represent. 3 Maryland Rule 209 relates to class actions. 4 A rule of ⁴⁸⁹ procedure does not extend, limit or affect the jurisdiction of any court. Md. Rule li. Thus appellants’ invocation of Rule 209 cannot confer power on the trial court over the subject matter. Any conferral of power must be found in § 4-402 (d) (1) of the Courts Article.

Section 4-402 (d) (1) originated in Ch. 528 of the Acts of 1970 (Md. Code (1957, 1966 Repl. Vol., 1970 Cum. Supp.), Article 26, § 145 (c) (2)), which implemented the constitutional amendments by which the District Court of Maryland was created. This bill included provisions, now found in § 4-402 (e) (1) of the Courts Article, relating to demand for jury trial in a civil action in which "the amount in controversy exceeds” $500.

Underlying this provision was an amendment to the Maryland Constitution, also as part of the organic creation of the District Court of Maryland, proposed by Ch. 789 of the Acts of 1969 and ratified November 3, 1970. Maryland Constitution, Article XV, § 6 (now Md. Declaration of Rights, Art. 23) which had provided that the "right of trial by Jury ... in civil proceedings ... where the amount in controversy exceeds the sum of five dollars, shall be inviolably preserved,” was increased to $500. The 1970 District Court implementing legislation also provided for an appeal on the record from the District Court in a civil case "in which the amount in controversy exceeds $500 ....” Section 12-401 (d) of the Courts Article. This Court has addressed the meaning of "amount in ⁴⁹⁰ controversy” as used in the jury trial and appeal provisions of the District Court legislation.

In Bringe v. Collins, 274 Md. 338 , 335 A.2d 670 , application for stay denied, 421 U.S. 983 , 95 S. Ct. 1986 , 44 L. Ed. 2d 475 (1975) we held that Art. 23 of the Declaration of Rights guaranteed the right to a jury trial in a landlord’s action brought under Maryland Code (1974), § 8-402 of the Real Property Article to recover possession of premises. Relief to the landlord-plaintiff in that case was denied because, inter alia, there was no "claim for money damages over $500.00 or a claim that the value of the right to possession exceeds $500.00.” Id. at 347, 335 A.2d at 676 . The appeal provision was involved in Purvis v. Forrest Street Apartments, 286 Md. 398 , 408 A.2d 388 (1979). A landlord who had appealed from the District Court had failed to cause the record in the District Court to be transmitted as required if the amount in controversy exceeded $500.

We held $500 was exceeded because in the District Court the landlord had made two distinct demands, one for back rent of $487.05 and the other for possession of the premises, the value of which could be ascertained in that case clearly to exceed $12.95. In Purvis , for purposes of analyzing the "amount in controversy” test, we initially looked to federal cases. We quoted from Journal & Tribune Co. v. United States, 254 U.S. 581 , 41 S. Ct. 202 , 65 L. Ed. 415 (1921), a case dealing with appeals from the Court of Claims to the Supreme Court, and from Agnew v. Dorman, 1 F. Cas. 211 (Fed. Cas. No. 100) (C.C. Md. 1838) which involved the dollar amount of the matter in controversy on an appeal from a District Court of the United States to a Circuit Court of the United States for that district.

On the issue in Purvis of valuing and totaling the claims of the same plaintiff for back rent and for possession we said: Finally, where a plaintiff has several different claims, it is the aggregate of the value of all claims which determines the amount in controversy. Bullard v. Cisco, 290 U.S. 179 , 54 S. Ct. 177 , 78 L. Ed. 254 (1933); Frost v. Mighetto, 22 Cal. App. 2d ⁴⁹¹ 612, 71 P.2d 932 (1937); Brush v. Incorporated Town of Liscomb, 202 Iowa 1155 , 211 N.W. 856 (1927); Harris v. Specialties Distributing Co., 305 Mich. 373 , 9 N.W.2d 645 (1943). [ 286 Md. at 403 , 408 A.2d at 390-91 .] Bullard involved diversity jurisdiction which then required in excess of $3,000 in controversy. The plaintiffs there were members of a bondholders protective committee who took assignments of the bonds of many holders, almost all of whose individual claims were less than $3,000.

It was held that the assignments were pursuant to an agreement which created an express trust of which the plaintiffs were trustees and under which the plaintiffs obtained full legal title, so that jurisdiction was present. Had the assignments been merely for collection, so that each bondholder was the legal owner of his separate claim, there would have been no jurisdiction over those claims which were not in excess of $3,000. They would not have been aggregated. We also said in Purvis , in comparing the critical "amount in controversy” language of § 4-402 (e) (jury trial) with § 12-401 (d) (appeal on record) that "[n]othing in the statutory language, legislative history, or any principle of statutory construction of which we are aware, justifies giving this same wording two different meanings.” Id. at 404, 408 A.2d at 391 .

Obviously the interpretation of the critical language in § 4-402 (d) (1), involved here, should not be different. When we expand beyond our decisions in a search for guidance in the application of "amount in controversy” to the facts presented here, we look to the federal cases. Beginning with the Judiciary Act of 1789, Ch. 20, § 11, 1 Stat. 78 , diversity and general federal question jurisdiction has been qualified by a monetary minimum limitation, initially expressed in terms of the "matter in dispute” and, since the Act of March 3, 1911, Ch. 231, § 24, 36 Stat. 1091 , in terms of "matter in controversy.” A large body of decisional law has been developed in the federal courts interpreting the federal standard, which, while not binding, is a logical reference. ⁴⁹² In the federal system, the law relating to the aggregation of multiple claims in measuring the matter in controversy is substantially settled in principle. Multiple claims of the same plaintiff against the same defendant, which are less than the jurisdictional minimum, may be aggregated. 14 C. Wright and A. Miller, Federal Practice and Procedure § 3704, at 411 (1976).

We reached the same result in Purvis. And see Reese v. Hawks, 63 Md. 130 (1885). But, in the federal courts, where separate claims of different plaintiffs are involved, they may not be aggregated, even if a common question of fact or law is presented. While the joinder of such claims may be proper as a pleading matter, including joinder by way of a class action procedure, subject matter jurisdiction is not thereby expanded.

At least as early as 1832 the Supreme Court in Oliver v. Alexander, 31 U.S. (6 Pet.) 143 , 8 L. Ed. 349 held that distinct and several claims for wages of the plaintiff seamen, no one of which met the minimum amount required for an appeal to the Court, could not be consolidated into an aggregate to support the appeal. Each cause of action was several and not joint. So, claims of children that each has been omitted as a legatee from a parent’s will are' separate and distinct, and not to be aggregated. Pinel v. Pinel, 240 U.S. 594 , 36 S. Ct. 416 , 60 L. Ed. 817 (1916).

Nor may independent businesses affected by fees imposed under a challenged statute add together the amounts of their separate controversies for diversity jurisdiction. Clark v. Paul Gray, Inc., 306 U.S. 583 , 59 S. Ct. 744 , 83 L. Ed. 1001 (1939). But, "when several plaintiffs unite to enforce a single title or right, in which they have a common and undivided interest, it is enough if their interests collectively equal the jurisdictional amount.” Troy Bank v. G.A. Whitehead & Co., 222 U.S. 39, 40-41 , 32 S. Ct. 9 , 56 L. Ed. 81, 82 (1911) (Suit to enforce vendor’s lien held in common by plaintiffs. The matter in dispute is measured by the value of the common security and not by the claims of each plaintiff under their separate notes.).

Following the 1966 amendment to Fed. R. Civ. P. 23 (class actions) two "spurious” class action cases came before the ⁴⁹³ Supreme Court in Snyder v. Harris, 394 U.S. 332 , 89 S. Ct. 1053 , 22 L. Ed. 2d 319 (1969). One case was a claim against directors by a shareholder who sought on behalf of all the shareholders, but not on behalf of the corporation, the amounts in excess of market value received by the defendants for sale of their shares in the corporation. The other case claimed overcharges for service by a public utility.

Aggregation of the claims of proposed members of the classes to satisfy the amount in controversy was rejected. Justice Black for the Court explained as follows: The traditional judicial interpretation ... has been from the beginning that the separate and distinct claims of two or more plaintiffs cannot be aggregated in order to satisfy the jurisdictional amount requirement.... It is contended, however, that the adoption of a 1966 amendment to Rule 23 effectuated a change in this jurisdictional doctrine. Under old Rule 23, class actions were divided into three categories which came to be known as "true,” "hybrid,” and "spurious.” True class actions were those in which the rights of the different class members were common and undivided; in such cases aggregation was permitted.

Spurious class actions, on the other hand, were in essence merely a form of permissive joinder in which parties with separate and distinct claims were allowed to litigate those claims in a single suit simply because the different claims involved common questions of law or fact. In such cases aggregation was not permitted: each plaintiff had to show that his individual claim exceeded the jurisdictional amount. The 1966 amendment to Rule 23 replaced the old categories with a functional approach to class actions .... [T]he Court of Appeals for the Tenth Circuit held that these changes in Rule 23 changed the jurisdictional amount doctrine as well.... We disagree and conclude . .. that the adoption of amended Rule 23 did not and could not have brought about this change in the scope of the ⁴⁹⁴ congressionally enacted grant of jurisdiction to the district courts. [Id. at 335-36, 89 S. Ct. at 1056-57 , 22 L. Ed. 2d at 323-24 .] Zahn v. International Paper Co., 414 U.S. 291 , 94 S. Ct. 505 , 38 L. Ed. 2d 511 (1973) presented an attempted class action on behalf of some 200 owners and lessees of property fronting on Lake Champlain for damages to their respective properties from alleged water pollution.

It was again held that no action could be maintained on behalf of those plaintiffs whose separate and distinct claims could not satisfy the jurisdictional amount, and, because it was not feasible to define a class of those whose claims exceeded that amount, it was proper to deny class action certification. The Court refused to disturb its "unbroken line of decisions” and the "accepted view” of the lower federal courts. In the instant case the claims of the members of the proposed class are clearly separate and distinct. Each former depositor in a "premium” account had his own specific contract with the bank.

The common factor of a contract which automatically converted a given depositor’s premium account on maturity into a regular account and which is legally indistinguishable from the contract between the named plaintiffs and the bank is one of the criteria for determining membership in the proposed class. Essentially a claim is made for breach of each contract between each such depositor and the bank. Thus, the claims here asserted could not be aggregated to satisfy federal jurisdiction. Appellants, however, note that in Snyder v. Harris, supra, the Court recognized that "[i]t is linguistically possible ... to interpret the old congressional phrase 'matter in controversy’ as including all claims that can be joined or brought in a single suit through the class action device.” Id. at 338, 89 S. Ct. at 1058 , 22 L. Ed. 2d at 325 .

Appellants argue that Snyder rejected the aggregation approach which the statutory words could accommodate because of a congressional policy to check the rising caseload of the federal courts in diversity cases, and say that policy has no application in state courts. We do not read Snyder quite that ⁴⁹⁵ way. Snyder is unmistakably premised on the longstanding interpretation of the phrase "matter in controversy.” Reference was made to the policy reflected by congressional increases in the jurisdictional amount only in the context of rejecting the alternative of overruling the settled