Young v. Progressive Casualty Insurance

CATHELL, Judge. This is a factually and procedurally unusual garnishment case. The parties have not directed us to any prior Maryland cases of a similar factual and procedural nature. As Justice Holmes noted, however, “I long have said there is no such thing as a hard case.

I am frightened weekly, but always when you walk up to the lion and lay hold the hide comes off and the same old donkey of a question of law is underneath.” 1 Holmes-Pollock Letters 156, reprinted in M. Frances McNamara, Famous Legal Quotations 64 (1967). In the instant case, the old donkey is the issue of when and where jurisdictional challenges can be made. We explain. ²³⁶ As relevant to the issues before us, a default judgment in a motor vehicle tort suit was rendered in the District of Columbia against one Jeffrey Thomas. Thomas was insured by Progressive Casualty Insurance Company (Progressive), appellee.

That default judgment was subsequently certified to the Circuit Court for Prince George’s County by Torrence Young, appellant, the initially successful plaintiff in the District of Columbia action. Notices of that action and writs of garnishment were served both on appellee and its insured. Thereafter, the foreign District of Columbia judgment became enrolled in the Circuit Court for Prince George’s County. Apparently, either during the'period between certification and enrollment, or shortly thereafter, Progressive’s insured and appellant settled the matter between them.

The unusual issue here concerns the continued viability of the certification and enrollment of a foreign judgment in Maryland after the foreign judgment has been vacated upon a finding of -a lack of jurisdiction on the part of the court that initially rendered it. It is even more unusual in that the judgment debtor settled with the judgment creditor, appellant here, as to the Maryland proceeding, by assigning to appellant his rights to the insurance policy he held with Progressive. In return for this settlement, the judgment debtor was relieved of all obligations in Maryland under the foreign judgment enrolled here. Nevertheless, after the assignment, the insurance company, pursuant to the provisions of its policy, continued to represent the judgment debtor in the District of Columbia court, which ultimately vacated the default judgment.

Thereafter, on Motion for Summary Judgment, the circuit court entered judgment in favor of Progressive, the garnishee, because the underlying judgment and monetary award had been vacated on jurisdictional grounds by the District of Columbia court. Appellant now contests the entry of that summary judgment by the Prince George’s County Circuit Court and raises two issues in support thereof: I. Whether the circuit court erred when it granted Progressive’s Motion for Summary Judgment when there were material issues in dispute. ²³⁷ II. Whether the circuit court erred when it dismissed the Writ of Garnishment "with prejudice, even if the enrolled judgment was no longer enforceable under Maryland law. The arguments, as presented by appellant in reference to issue one, are: Progressive failed to timely defend against the D.C. judgment and was barred by the principles of res judicata and collateral estoppel.

Progressive failed to diligently defend Thomas against the entry of foreign judgment in the circuit court and the enrolled judgment may not be vacated by a non-final order from that foreign jurisdiction. The arguments presented in reference to issue two are: A post-judgment settlement may extinguish the judgement [sic] and create an enforceable contract. The assignment of judgment may be enforced against Progressive in the garnishment proceeding. Additional Procedural Facts In the case at bar, appellee, in its initial response to the writ of garnishment in the Circuit Court for Prince George’s County, questioned the jurisdiction of the District of Columbia court over its insured, alleging that Thomas “never received notice” as required under the act at issue there.

While that issue was pending in the Prince George’s County Circuit Court, appellee filed a motion in the District of Columbia court to vacate the underlying judgment. Appellant responded in the District of Columbia court, asserting that appellee’s motion “had no merit,” and, therefore, participated in a hearing on the merits in that court on the matter of jurisdiction. Appellee, in its opposition to appellant’s motion for summary judgment in the Maryland court, informed the Maryland court of the District of Columbia proceedings then in progress to vacate the judgment and of the absence of jurisdiction on the part of the District of Columbia court over appellee’s insured, Thomas. Progressive argued to the Maryland court, ²³⁸ “It is clear that both jurisdictions permit this remedy [motion to vacate] in order to ensure due process.” On April 19, 1994, the underlying judgment against Thomas was vacated by the rendering District of Columbia court.

The District of Columbia court found a lack of jurisdiction, based, at least in part, upon a finding that appellant, Young, had attempted to serve Thomas at the wrong address. That court, noting conflicting evidence, found: In light of this conflicting evidence, plaintiff has not borne her burden of proving actual notice by a preponderance, and thus has not satisfied the requirements of the [Motor Vehicle Safety Responsibility Act]. Thereafter, Progressive filed a supplemental opposition to appellant’s Motion for Summary Judgment in the Prince George’s County Circuit Court, advising that court that the underlying judgment had been vacated. A full hearing was held in the Maryland court on the parties’ motions relating to the foreign court’s finding in respect to jurisdiction.

In granting appellee’s Motion for Summary Judgment, the Prince George’s County court stated: [Y]ou can’t proceed on a garnishment of something that’s not there. And the underlying judgment right now is not there. You might get it back, and then, you can come again and redo it.... ... [A]t the moment there is no underlying judgment in the District of Columbia on which you may proceed ... many months ago [the default judgment was dismissed]. You appealed____ They, in turn, dismissed the appeal ... and then, you’ve asked for reconsideration.... ... [F]or whatever reason, it’s not there.

The reason the judgment was “not there” was a finding by .the District of Columbia court that it lacked jurisdiction in the first instance. That District of Columbia court, in a carefully considered opinion, stated, with respect to whether it had jurisdiction in the original case: ²³⁹ Plaintiff presents conflicting evidence. On one hand, the mailing to the wrong address and letters returned unclaimed infer that no actual notice was had. On the other, plaintiffs attorney submits affidavits from herself and office personnel that defendant stated he “knew about” the case....

An alternative analysis under the District’s long-arm statute results in the same conclusion. Proof of service by mail outside the District may be made by “including] a receipt signed by the addressee or other evidence of personal delivery to the addressee satisfactory to the court.” D.C.Code § 13-431 (1981). As stated above, the return receipt was neither signed by the addressee nor appended to the writ, nor did plaintiff prove service by a preponderance of the evidence through other means. In personam jurisdiction was not established under this long-arm statute, either.

Plaintiff argues that Judge Kessler’s decision on damages was made on grounds other than default of the defendant, and should therefore stand. This Court, however, had no jurisdiction over the defendant to make that decision. Since the underlying default judgment was invalid, the judgment of damages cannot stand. A default judgment is vacated under D.C. Superior Court Rule 60(b)(4).

When employing this rule, the Court must consider whether the party moving to vacate 1) received actual notice, 2) acted in good faith, and 3) acted promptly upon discovery of the judgment, as well as whether prejudice would result to the other party. Jones v. Health Resources Corp. of Am., 509 A.2d 1140, 1145 (D.C.1986) (Default judgment entered against alleged sublessees for possession and rent due reversed for entrance without evidence of liability or damages). Defendant never received actual notice, but acted promptly and in good faith upon discovery of the judgment against him. Although plaintiff characterizes his acts as “duplicitous” and “egregious,” the Court finds no evidence of bad faith or of undue prejudice to the other party. ²⁴⁰ It is clear, therefore, that the underlying judgment was vacated.

When the foreign court determined that it had lacked jurisdiction in the first instance, the judgment was vacated and thereafter ceased to exist. Moreover, the issue of lack of jurisdiction had thus been litigated. At the point that the judgment was vacated, that District of Columbia proceeding became a case for trial. The appeal of that decision was thus premature, because the tort case remained to be tried, after which all prior orders, including the order to vacate, would be subject to appellate review.

We earlier described the “old donkey” as the issue of jurisdiction. If a court of competent jurisdiction—and the court that rendered the underlying judgment can hardly be considered as not being jurisdietionally competent whether it was right or wrong in vacating the judgment—makes a finding of lack of jurisdiction at the time of the original proceeding, the original judgment and all that flows from it may well be nullities. 1 Thus, appellant’s many arguments about the finality of the District of Columbia order vacating the judgment, 2 in addition to being legally wrong, cannot affect the fatal defect contaminating the entire Maryland garnishment action—the original lack of jurisdiction. At that point in time, there was a finding by a court of competent jurisdiction that there had been a lack of jurisdiction. We explain.

The Law I This issue is primarily resolved by an examination of the law relating to how and when jurisdictional issues may be ²⁴¹ raised. The short answer is that jurisdictional issues may be raised in almost any manner and at virtually any stage in the proceedings. See Md. Rule 8—131(a) (“The issues of jurisdiction ... may be raised in and decided by the appellate court whether or not raised in and decided by the trial court.”); Heath v. State, 198 Md. 455, 466 , 85 A.2d 43 (1951) (reiterating that “matters of jurisdiction are always before the court”). The long answer is found in a line of cases dating from the 1700s to the present.

We trace that evolution by first discussing a case from the 1800s. Wernwag v. Pawling, 5 G. & J. 500, 507 (1833), involved an action in debt filed in Maryland, based upon a judgment obtained in Pennsylvania, in which the Maryland court was asked to examine the jurisdiction of the foreign court that had rendered the judgment. The Maryland Court stated: If a judgment is conclusive in the State where rendered, it is equally conclusive every where. If re-examinable there, it is likewise re-examinable here.

It is therefore put upon the same footing as a domestic judgment. In Mills vs. Duryee [ 11 U.S. (7 Cranch) 481 , 3 L.Ed. 411 (1813) ], it is said, the only inquiry, where the suit is upon the judgment of another State, is, what is the effect of the judgment in the State where rendered. The question of jurisdiction of the tribunal pronouncing the judgment, is however, also examinable; for if the tribunal had no jurisdiction, the judgment would be a nullity every where. The question then ... would be open for inquiry.... [W]e shall proceed to inquire, whether there was a defect of jurisdiction.... [Citations omitted, emphasis added.] The Court of Appeals discussed Wernwag in Weinberg v. Johns-Manville Sales Corp., 299 Md. 225, 234 , 473 A.2d 22 (1984), in a full faith and credit context.

The Weinberg Court emphasized that [t]he only inquiry, where the suit is upon the judgment of another State, is, what is the effect of the judgment in the State where rendered. ²⁴² 299 Md. at 234 , 473 A.2d 22 (quoting Wernwag, 5 G. & J. at 507). Similarly, in the garnishment case of Wever v. Baltzell, 6 G. & J. 335, 342 (1834), the Court held: There can be no recovery against a garnishee in a case in which, for the want of jurisdiction appearing upon the record, the goods of the defendant could not have been condemned. A Court that would be constrained to quash an attachment, for the want of jurisdiction being given by the proceedings on which it is founded, cannot entertain jurisdiction against a garnishee coming in under the same proceedings. In Bruce v. Cook, 6 G. & J. 345, 348 (1834), the attachment by garnishment upon a foreign judgment failed to set out the residence of the garnishee as then required.

After the issue was joined, the garnishee moved to quash, based upon a lack of jurisdiction as evident from the pleadings. The court opined: [T]o say that this Court must be confined ... in the reason assigned in the motion to quash, to the writ of attachment, and cannot look beyond it ... [where it appeared that] the Court below had not jurisdiction of the case, would be to sustain an objection rather too attenuated. The other objection, that the motion to quash was made after issues joined, rests, we think, on no better foundation. The garnishees need not have pleaded as they did, but might have availed themselves of the want of jurisdiction by demurrer.

It [lack of jurisdiction] would have been a fatal objection after verdict, on a motion in arrest of judgment. They might have taken advantage of it [lack of jurisdiction], if a jury had been sworn, by a prayer for the instruction of the Court; or after verdict and judgment against them, without raising the objection below, it [lack of jurisdiction] might on appeal or writ of error, have been assigned as error here [the Court of Appeals], and this Court would have taken notice of and sustained it. See also Boarman v. Patterson, 1 Gill 372, 378-79 (1843), wherein the Court, while acknowledging that jurisdictional ²⁴³ issues may