Stevenson v. Edgefield Holdings

Thomas H. Stevenson v. Edgefield Holdings, LLC, No. 914, September Term 2018. Opinion by Wells, J. CIVIL LAW – POST-JUDGMENT – GARNISHMENT – JOINT ACCOUNTS & UNIFORM ENFORCEMENT OF FOREIGN JUDGMENTS ACT Under Maryland Code, (1974, 2013 Repl. Vol.) Courts and Judicial Proceedings § 11- 603(a)(1), when executing a judgment, property held jointly by spouses in a bank, trust company, credit union, savings bank, or savings and loan association is not subject to garnishment. The General Assembly has provided one exception under Courts and Judicial Proceedings §11-603(a)(2): when executing a judgment, property held jointly by spouses in these accounts is subject to garnishment if the joint account was not established “prior to the date of entry of judgment giving rise to the garnishment.” To determine whether this exception applies to a foreign judgment recognized in Maryland under the Uniform Enforcement of Foreign Judgments Act, Courts and Judicial Proceedings §11-801 through 11-807, we hold that the date of entry of judgment giving rise to the garnishment is the date that a Maryland court recognizes the foreign judgment.

Only then may the judgment be enforced by garnishment. Circuit Court for Talbot County Case No. C-20-JG-17-442 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 914 September Term, 2018 _____________________________________ THOMAS H. STEVENSON v. EDGEFIELD HOLDINGS, LLC. _____________________________________ Arthur, Wells, Gould, JJ.* _____________________________________ Opinion by Wells, J. _____________________________________ Filed: February 28, 2020 *Kehoe, Christopher B., J., did not participate in the Court’s decision to designate this opinion for publication pursuant to Md. Rule 8- Pursuant to Maryland Uniform Electronic Legal 605.1 Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. 2020-03-02 12:56-05:00 Suzanne C. Johnson, Clerk On October 6, 2009, a court in Duval County, Florida, entered a judgment in the amount of $169,550.25, plus post-judgment interest, against appellant, Thomas Stevenson, a guarantor on a business loan held by Atlantic Coast Bank (“Atlantic Coast”). Atlantic Coast sued Mr. Stevenson after a default on the note. Mr. Stevenson’s wife, Leslie Stevenson, was not a party to the loan.

On November 22, 2017, Atlantic Coast’s successor in interest, appellee, Edgefield Holdings, L.L.C. (“Edgefield”), registered the Florida judgment in Maryland. Edgefield sought to satisfy the debt by garnishing the Stevensons’ joint bank accounts which they had opened in Maryland in 2013 and 2016. Before the Circuit Court for Talbot County, Mr. Stevenson challenged the garnishment, asserting that Maryland Code, Courts and Judicial Proceedings Article (“C&JP”) § 11-603 (1974, 2013 Repl.

Vol.) prohibits a judgment creditor from garnishing a joint account like the Stevensons’ if: (1) one of the joint account holders is not a judgment debtor, and (2) the account “was established as a joint account prior to the date of entry of judgment giving rise to the garnishment.” C&JP § 11-603(b). Mr. Stevenson argued that his wife is not a judgment debtor and their bank accounts were established before November 22, 2017, the date that Edgefield registered the judgment in Maryland. Edgefield argued that the “date of entry of judgment” is the date that its predecessor in interest, Atlantic Coast, obtained the original judgment in Florida: October 6, 2009. The circuit court found for Edgefield and enforced the garnishment.

Mr. Stevenson filed a timely appeal and asks two questions: 1. What is the proper entry date of a foreign judgment filed for recordation in Maryland? 2. Even if the judgment was entered in 2009, did Mrs. Stevenson’s exclusive use of the Shore United Bank Accounts render them exempt from garnishment? For the reasons that follow, we conclude that in interpreting C&JP § 11-603, “the date of entry of judgment giving rise to the garnishment” is the date that the judgment is registered in Maryland.

We, therefore, reverse the circuit court. We decline to answer question 2. FACTUAL AND PROCEDURAL BACKGROUND Thomas Stevenson was one of several guarantors of a business loan obtained by a third party with Atlantic Coast. When the third party defaulted on the note, Atlantic Coast sued in the Circuit Court for the Fourth Judicial Circuit of Florida to recover the unpaid balance.

Atlantic Coast also sued Mr. Stevenson as a guarantor of the note. On April 16, 2009, the Florida circuit court entered a default judgment against Mr. Stevenson. On October 6, 2009, the court entered a final judgment against Mr. Stevenson, jointly and severally with the original borrower and the other guarantors in the amount of $169,550.25, plus post-judgment interest at the rate of 8% (“the Florida judgment”). Four years later, on June 28, 2013, Mr. and Mrs. Stevenson opened a joint checking account at Shore United Bank (“Shore Bank”), located in Talbot County, Maryland.

The Stevensons later opened a money market account on June 9, 2016 at the same bank. -2- Between the opening of these two accounts, on July 7, 2015, Atlantic Coast assigned the Florida judgment to Edgefield. On November 20, 2017, Edgefield, with a certified copy of the Florida judgment in hand, requested registration of that judgment in the Circuit Court for Talbot County. On November 22, 2017, the circuit court recorded the Florida judgment and notified the parties. On January 12, 2018, Edgefield sought to satisfy the Florida judgment by requesting a writ of garnishment against the Stevensons’ joint accounts at Shore Bank.

Five days later, January 17, 2018, the circuit court issued the writ. Shore Bank filed an answer to the garnishment pursuant to Maryland Rule 2-645(e) stating that, both accounts are in the name of two (2) or more persons, one (1) or more of whom but fewer than all of whom, are judgment debtors .… pursuant to Md. Code Ann. Cts. & Jud. Proc. Art. § 11-603, Garnishee is holding in said accounts the amounts of $20,279,14 and $39,003.53, respectively, pending further order of the court. “Garnishee’s Confession of Assets of Property Other Than Wages,” 1/24/2018.

On January 26, 2018, Mr. Stevenson moved to dismiss, or, in the alternative, vacate the writ of garnishment. In his motion, Mr. Stevenson stated that he did not learn of the garnishment until his accounts at Shore Bank were frozen. Mr. Stevenson argued that C&JP § 11-603(a) prohibited Edgefield from garnishing the joint bank accounts he held with his wife. Accompanying the motion was an affidavit from Leslie Stevenson.

She testified that she was Mr. Stevenson’s wife. She was not a party or subject to the Florida judgment. She held the funds at Shore Bank jointly with her husband. They opened the -3- accounts before the entry date of the judgment.

And, her business and personal affairs would be prejudiced if the writ was not dismissed or vacated. Edgefield responded that, in fact, the Stevensons opened their joint accounts after judgment was entered in Florida. The Circuit Court for Talbot County held a hearing on the motion for final judgment on June 19, 2018.1 At the hearing, Mr. Stevenson argued that the court should consider the now-enrolled Florida judgment to be a second, or new judgment in Maryland enforceable from the date it was registered here. Mr. Stevenson also argued that the Florida judgment was not yet enforceable because a Maryland court must first establish personal jurisdiction over him prior to issuing a writ of garnishment.

In Mr. Stevenson’s opinion, Maryland did not acquire personal jurisdiction over him until after the Florida judgment was registered here. Edgefield argued that if the court found that the entry date of judgment was the date the judgment was registered in Maryland, such a decision would allow judgment debtors to evade creditors by moving from jurisdiction to jurisdiction. Edgefield asserted that giving full faith and credit to Florida’s judgment meant recognizing Florida’s date of entry of judgment as the operative date. 1 The court refers to the hearing as being on the motion to alter or amend the final judgment. However, by the time of the hearing, the previous order on the motion for final judgment had been vacated.

Thereafter, Mr. Stevenson filed an opposition to final judgment. Edgefield replied in support of final judgment. It follows, therefore, that the hearing was a hearing on the final judgment, rather than to alter or amend. -4- At the end of the hearing, in an oral ruling, the court concluded that the Full Faith and Credit Clause of the United States Constitution obligated it to find that the date Florida entered a final judgment, October 6, 2009, was the date on which the judgment became effective. Consequently, the court ruled in Edgefield’s favor and enforced the garnishment.

Mr. Stevenson appealed. DISCUSSION Mr. Stevenson appeals from the circuit court’s finding that the “date of entry of judgment giving rise to the garnishment” found in C&JP § 11-603(a) was the date that the judgment was established in Florida, rather than the date that the Florida judgment was registered in Maryland. As the decision here was rendered by a judge and not a jury, Maryland Rule 8-131(c) controls. That rule states: When an action has been tried without a jury, the 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. The rule permits us to set aside a trial court’s factual determinations if they are clearly erroneous. But the rule also requires us to exercise our independent appraisal of the court’s application of the law employing the least deferential standard of review. We have consistently held that “we review … legal conclusions de novo to determine if they were legally correct.” Lee v. Lee, 240 Md. App. 47, 70 (2019) aff’d, __ Md. __, No. 13 (filed Jan. 23, 2020)(citing Walter v. Gunter, 367 Md. 386, 392 (2002) (“[W]here the order involves an interpretation and application of Maryland statutory and case law, our Court -5- must determine whether the lower court’s conclusions are ‘legally correct’ under a de novo standard of review.”).

A. C&JP § 11-603 As has been noted, the relevant statute at issue is C&JP § 11-603(a) which states: (1) Except as provided in paragraph (2) of this subsection, a garnishment against property held jointly by husband and wife, in a bank, trust company, credit union, savings bank, or savings and loan association or any of their affiliates or subsidiaries is not valid unless both owners of the property are judgment debtors. (2) Paragraph (1) of this subsection does not apply unless the property is held in an account that was established as a joint account prior to the date of entry of judgment giving rise to the garnishment. When interpreting the meaning of a statute, the Court of Appeals has instructed that our paramount duty is “to discern and carry out the intent of the Legislature.” Blue v. Prince George’s County, 434 Md. 681, 689 (2013). “The cardinal rule of statutory interpretation is to ascertain and effectuate the intent of the Legislature.” Kushell v. Dep’t of Natural Resources, 385 Md. 563, 576 (2005) (citing Collins v. State, 383 Md. 684, 688 (2004)). “Statutory construction begins with the plain language of the statute, and ordinary, popular understanding of the English language dictates interpretation of its terminology.” Adventist Health Care v. Maryland Health Care Comm’n, 392 Md. 103 , 124 n. 13 (2006) (internal quotation marks and citations omitted). When a statute’s language is unambiguous, we need only to apply the statute as written, and our efforts to ascertain the legislature’s intent end there.

Id. at 125 ; Price v. State, 378 Md. 378, 387 (2003). As the Court of Appeals stated in Blue, supra, -6- Text is the plain language of the relevant provision, typically given its ordinary meaning, viewed in context, considered in light of the whole statute, and generally evaluated for ambiguity. Legislative purpose, either apparent from the text or gathered from external sources, often informs, if not controls, our reading of the statute. An examination of interpretive consequences, either as a comparison of the results of each proffered construction, or as a principle of avoidance of an absurd or unreasonable reading, grounds the court’s interpretation in reality. 434 Md. at 689 (quoting Town of Oxford v. Koste, 204 Md. App. 578, 585-86 (2012), aff’d, 431 Md. 14 (2013) (citations omitted)).

The parties agree that this is a case of first impression. The phrase “the date of entry of judgment giving rise to the garnishment” has not been interpreted by a Maryland court. Interpretation of C&JP § 11-603(b) will require us to examine Maryland’s version of the Uniform Enforcement of Foreign Judgments Act (“UEFJA”) found in C&JP §§ 11-801 through 807, both federal and state cases that discuss the two statutes, and the Maryland Rules. Based on this analysis, we conclude that “the entry date of judgment giving rise to the garnishment” found in C&JP § 11-603 is the date on which a clerk of court enters the foreign judgment into Maryland’s electronic case management or “MDEC” system under Rule 2-601.

B. The UEFJA The Full Faith and Credit Clause of the U.S. Constitution provides: Full Faith and Credit shall be given in each State to the public Acts, Records, and Judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof. -7- U.S. Const. Art. IV, § 1. “In order to facilitate the recognition and enforcement of judgments across state lines, in 1948 the National Conference of Commissioners on Uniform State Laws, and the American Bar Association, proposed the Uniform Enforcement of Foreign Judgments Act.” Mike Smith Pontiac, GMC, Inc. v. Mercedes-Benz of North America, Inc., 356 Md. 542, 553 (1999). The UEFJA was subsequently revised in 1964. 2 The purpose of the 2 REVISED UNIFORM ENFORCEMENT OF FOREIGN JUDGMENTS ACT Section 1. [ Definition.] In this Act “foreign judgment” means any judgment, decree, or order of a court of the United States or of any other court which is entitled to full faith and credit in this state.

Section 2. [Filing and Status of Foreign Judgments.] A copy of any foreign judgment authenticated in accordance with the act of Congress or the statutes of this state may be filed in the office of the Clerk of any [District Court of any city or county] of this state. The Clerk shall treat the foreign judgment in the same manner as a judgment of the [District Court of any city or county] of this state. A judgment so filed has the same effect and is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a judgment of a [District Court of any city or county] of this state and may be enforced or satisfied in like manner. Section 3. [Notice of Filing.] (a) At the time of the filing of the foreign judgment, the judgment creditor or his lawyer shall make and file with the Clerk of Court an affidavit setting forth the name and last known post office address of the judgment debtor, and the judgment creditor.

(b) Promptly upon the filing of the foreign judgment and the affidavit, the Clerk shall mail notice of the filing of the foreign judgment to the judgment debtor at the address given and shall make a note of the mailing in the docket. The notice shall include the name and post office address of the judgment creditor and the judgment creditor’s lawyer, if any, in this state. In addition, the judgment creditor may mail a notice of the filing of the judgment to the judgment debtor and may file proof of mailing with the Clerk. Lack of mailing notice of filing by the Clerk shall not affect the enforcement proceedings if proof of mailing by the judgment creditor has been filed. [(c) No execution or other process for enforcement of a foreign judgment filed hereunder shall issue until [ ] days after the date the judgment is filed.] Section 4. [Stay.] (a) If the judgment debtor shows the [District Court of any city or county] that an appeal from the foreign judgment is pending or will be taken, or that a stay of execution has been granted, the court shall stay enforcement of the foreign judgment until the appeal is -8- UEFJA was to streamline the registration process of judgments from state to state.

In the words of the prefatory note, the 1964 revision of the Uniform Enforcement of Foreign Judgments Act adopts the practice which, in substance, is used in Federal courts. It provides the enacting state with a speedy and economical method of doing that which it is required to do by the Constitution of the United States. It also relieves creditors and debtors of the additional cost and harassment of further litigation which would otherwise be incident to the enforcement of the foreign judgment. This act offers the states a chance to achieve uniformity in a field where uniformity is highly desirable.

Its enactment by the states should forestall Federal legislation in this field. National Conference of Commissioners on Uniform State Laws, Final Act 1 (1964). The UEFJA derives its authority from the Full Faith and Credit Clause of the U.S. Constitution which requires each state to recognize and potentially enforce the judgments and official acts of every other state. See Mike Smith Pontiac, 356 Md. at 550 (“Under the Full Faith and Credit clause, a foreign judgment cannot be enforced directly in a sister state but must concluded, the time for appeal expires, or the stay of execution expires or is vacated, upon proof that the judgment debtor has furnished the security for the satisfaction of the judgment required by the state in which it was rendered.

(b) If the judgment debtor shows the [District Court of any city or county] any ground upon which enforcement of a judgment of any [District Court of any city or county] of this state would be stayed, the court shall stay enforcement of the foreign judgment for an appropriate period, upon requiring the same security for satisfaction of the judgment which is required in this state. Section 5. [Fees.] Any person filing a foreign judgment shall pay to the Clerk of Court ____________ dollars. Fees for docketing, transcription or other enforcement proceedings shall be as provided for judgments of the [District Court of any city or county of this state]. Section 6. [Optional Procedure.] The right of a judgment creditor to bring an action to enforce his judgment instead of proceeding under this Act remains unimpaired.

Section 7. [Uniformity of Interpretation.] This Act shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it. Section 8. [Short Title.] This Act may be cited as the Uniform Enforcement of Foreign Judgments Act. -9- be made a separate and independent judgment in the enforcement state. The UEFJA simply provides an expedited procedure for doing this.”).3 Maryland adopted a version of the UEFJA in 1987 and it is codified at C&JP §§ 11- 801 through 11-807. Pertinent to this discussion are Section 11-802(a) and (b), which provide: (a)(1)(i) Except as provided in subparagraphs (ii) and (iii) of this paragraph, a copy of any foreign judgment authenticated in accordance with an act of Congress or statutes of this State may be filed in the office of the clerk of a circuit court.

(ii) If the face amount of the judgment is $2,500 or less, the copy shall be filed with the clerk of the District Court. (iii) If the face amount of the judgment is not more than a jurisdictional amount described in § 4-401 of this article, but more than $2,500, the copy may be filed either with the clerk of the District Court or in the office of the clerk of a circuit court. (2) The clerk shall treat the foreign judgment in the same manner as a judgment of the court in which the foreign judgment is filed. (b) A filed foreign judgment has the same effect and is subject to the same procedures, defenses, and proceedings for reopening, vacating, staying, enforcing, or satisfying as a judgment of the court in which it is filed.

Also relevant to this discussion is C&JP 11-805(b), which states: (b) The judgment creditor retains the right to bring an action to enforce a judgment instead of proceeding under this subtitle. 3 A point on nomenclature. A creditor’s act of registering a foreign judgment in a state in which the creditor seeks to satisfy the judgment is called “domestication.” - 10 - Section 11-802(b) of the Courts and Judicial Proceedings Article is a modified version of Section 2 of UEFJA. The General Assembly added “enforcing” and “satisfying” to the model language in the UEFJA in C&JP § 11-802(b). § 1, Chapter 497, Laws of Maryland 1987. This addition reveals the legislature’s intent that a foreign judgment should have the same effect, and be subject to the same procedures, defenses, and proceedings for enforcement as a judgment that originated in a Maryland court.

Additionally, the General Assembly enacted a slightly modified version of Section 6 of the UEFJA, codified as C&JP § 11-805(b), which gives a judgment creditor the “right” to bring a separate legal action to enforce a judgment rather than using C&JP § 11-803.4 Reading C&JP § 11-802(b)’s requirement that the enforcement of foreign judgments be subject to Maryland’s procedures, defenses, and proceedings together with C&JP § 11-805(b) permits litigants to bring a separate, independent cause of action to enforce a foreign judgment. This reveals the General Assembly’s intent that Maryland’s courts apply our statutes and rules of civil procedure to the enforcement of foreign judgments in Maryland. 4 The uniform act says, “The right of a judgment creditor to bring an action to enforce his judgment instead of proceeding under this Act remains unimpaired.” § 6 of Revised UEFJA. [https://bit.ly/33P42QT]. - 11 - C. Mr. Stevenson’s Contentions Mr. Stevenson argues first, that we should interpret C&JP § 11-603’s registration provision consistent with the UEFJA. As will be discussed, in the federal practice, registration of a judgment from one jurisdiction in another creates a separate judgment in the new jurisdiction once domesticated. And enforcement of a domesticated foreign judgment begins when the recognizing forum enters the judgment.

Were we to follow the federal practice, as Mr. Stevenson argues, the date of entry of a foreign judgment would be the day the judgment is entered and recognized in Maryland, rather than the date that the judgment was originally entered in the home state. For support, Mr. Stevenson relies on the holdings in Wells Fargo Equipment Finance, Inc. v. Nabil Asterbadi, 841 F.3d 237 (4th Cir. 2016) and St. Paul Mercury Ins. v. American Bank Holdings, 691 F.Supp.2d 626 (D. Md. 2010), as well as the Maryland Rules of Civil Procedure. Asterbadi concerned a $2.63 million judgment that CIT/Equipment Financing, Inc. (“CIT”) obtained against Dr. Nabil J. Asterbadi in the U.S. District Court for the Eastern District of Virginia in 1993. 841 F.3d at 240 . Under Virginia law, the judgment was viable for 20 years.

Id. Ten years later, in 2003, CIT registered the judgment in the U.S. District Court for the District of Maryland, where CIT believed Asterbadi had assets. Id. Under Maryland law, the judgment was only viable for 12 years from the date of entry.

Id. at 241 . CIT sold the judgment to Wells Fargo, which, in 2015, sought to collect on the judgment. Id. - 12 - Asterbadi moved for a protective order asserting that the judgment was unenforceable because Wells Fargo sought to collect