Zdravkovich v. Bell Atlantic-Tricon Leasing, Corp.

CHASANOW, Judge. Dushko S. Zdravkovich (Zdravkovich) was before the District Court of Maryland as both a plaintiff and a defendant in two consolidated actions. He was present at the 8:30 a.m. docket call, but later that morning at approximately 11:00 a.m. when his cases were recalled for trial, neither he nor his attorney were present in the courtroom. The cases ²⁰² proceeded in his absence.

A default judgment was entered against Zdravkovich for $2,959.50 in the case in which he was a defendant, and judgment for the defendant was entered in the case in which he was a plaintiff. To further compound Zdravkovich’s losses, in the case in which he was a defendant the District Court also assessed $2,000.00 attorney’s fees against him because “he has not shown good faith.” Later that morning, when Zdravkovich arrived back in the courtroom, he was told by the judge what had transpired and that he could appeal the judgments to the circuit court—which he did. On appeal, the circuit court not only affirmed the District Court’s judgments and assessment of attorney’s fees, but the circuit court also assessed additional attorneys’ fees against Zdravkovich for taking the appeal. Zdravkovich, who also happens to be a member of the bar of Maryland, petitioned this Court for a writ of certiorari, which we granted.

The petition seeks review of the manner of entry of the judgments in the District Court, as well as the assessments of attorneys’ fees. Since these cases were never tried on the merits, the facts underlying the controversy between the parties have never been determined. Some facts, however, are not in dispute. It is clear that Zdravkovich entered into a lease purchase agreement (the agreement) for a telex machine with Integrity Credit Corporation (Integrity) as the lessor.

The agreement recites that American Communication Terminals, Inc. (Terminals) is the vendor of the telex machine. That agreement was never admitted into evidence, but it is included in the record as part of the pleadings. The agreement was the result of negotiations between Zdravkovich, Haldun Eren, and Patrick T. O’Connor (O’Connor). O’Connor is the president of Terminals.

An unresolved area of dispute is whether there was an oral agreement that Zdravkovich had the right to terminate the agreement at any time. Zdravkovich’s claim that he had the right to terminate the agreement at any time is not part of, and may be inconsistent with, the written agreement. ²⁰³ Apparently, Zdravkovich became dissatisfied with the machine and wrote to Integrity and Terminals that he wanted to terminate the agreement. He also stopped making payments. Sometime later, a suit was filed in the District Court by Bell Atlantic Tricon Leasing Corporation, Inc. (Tricon) against Zdravkovich (the Tricon case) seeking damages for breach of the agreement.

Zdravkovich filed several pleadings claiming that he had a right to terminate the agreement and that the Tricon case should be dismissed because 1) there was no allegation of, or evidence of, any assignment from Integrity to Tricon, and 2) Tricon could not maintain the action, pursuant to Maryland Code (1975, 1985 Repl.Vol), Corporations and Associations Article, § 7-301, since Integrity’s right to do business in Maryland had been revoked. Zdravkovich also filed a separate action for fraud and breach of contract against Integrity, Terminals, and O’Connor (the O’Connor case) alleging that Integrity, Terminals, and O’Connor represented that he could terminate the agreement at any time. Integrity could not be served, but Terminals and O’Connor filed notices of intention to defend. On Zdravkovich’s motion, the Tricon case and the O’Connor case were consolidated for trial in the District Court.

Several other preliminary motions were filed, and there was at least one continuance obtained by Zdravkovich. Three weeks before the scheduled trial date, Zdravkovich filed another motion for continuance alleging, among other reasons, that his attorney “would be out of the area on the scheduled trial date, as a result of a long standing commitment.” Three days before trial, Zdravkovich’s motion for continuance was denied. On the day set for trial of the consolidated cases, Zdravkovich and the attorneys representing Tricon, Terminals, and O’Connor all answered the 8:30 a.m. docket call. Following the docket call, Zdravkovich left the courtroom and went upstairs to represent a client in a domestic relations hearing in a circuit court case before Judge Casula.

Zdravkovich apparently told the district court clerk that he would be in a hearing before Judge Casula. When the ²⁰⁴ cases were recalled in the District Court at approximately 11:00 a.m., the following is an excerpt of what occurred: Judge: Is Mr. Zdravkovich’s presence required here today? O’Connor’s Counsel: Yes, it is, Your Honor, he is the plaintiff in the case against my clients. Tricon’s Counsel: And he is the defendant in my client’s case against him.

Judge: And he’s trying a case in circuit court? Clerk: Yes, he’s still with Judge Casula. Judge: Anyone have any requests to make? O’Connor’s Counsel: I’m going to request, Your Honor, that the case against my clients be dismissed.

He had moved for a continuance which was denied in this case. He had plenty of opportunity to make arrangements to be present. * * * * * * O’Connor’s Counsel: May I request as to the defendants [Terminals] and [O’Connor] that a judgment be entered in their favor for failure of the plaintiff to appear? Hi # * £ He * Judge: Judgment in favor of the defendant. * # * * * * Judge: Terminals and [O’Connor] only—judgment. Judgment by default is that in favor of the defendant in this case.

Now where are we? * * * * * * Tricon’s Counsel: Again in my case, which is 21228, since Zdravkovich is not here, I’m asking that the court enter a default judgment in favor of [Tricon]. Judge: In what amount? Tricon’s Counsel: In the amount of— Judge: Do you have a worksheet? $ $ % ♦ ♦ ♦ Tricon’s Counsel: In the amount of $2,959.50. Judge: And you’re entitled to costs in this as well. ²⁰⁵ Tricon’s Counsel: My costs uh-and in this case, Your Honor, I may be out of line, but I really feel compelled to ask for attorney’s fees above and beyond the amount of the $705.00 that we originally ask for in our first filing of— ****** Judge: And you’re asking for how much?

Tricon’s Counsel: Well I’m asking for $2,000.00. Here’s why I think I should get it because I refer you to the independent action that Mr. Zdravkovich himself filed. In Count I paragraph 8, it says, as a result of this breach-no, no, no-paragraph 7, plaintiff had to employ an attorney to defend him in this action notwithstanding the fact that plaintiff has never entered into a contract with [Tricon]. Apparently the work Mr. Zdravkovich performed up until this point, which was a motion to dismiss, which was denied, a motion for continuance, which was granted, and this complaint, apparently he feels that’s worth two thousand dollars.

Now considering the fact that this is the third time that I have been involved in this case, that I have had a witness come down from New Jersey twice, and that he has pulled other people down from Baltimore. If he feels what he has done up until this point is worth two thousand dollars, I feel I should get two thousand dollars. Judge: I think in this case the uh plaintiff [sic], Mr. Zdravkovich, has not shown good faith with the court, has not appeared, has not requested a continuance, although this member of the court routinely grants them. I was a practicing attorney for many years.

I understand the problems of scheduling, particularly in a jurisdiction this crowded. I find that Mr. Zdravkovich has not shown good faith in this matter. I am going to award attorney fees in the amount that he thought was reasonable, two thousand dollars. Tricon’s Counsel: Thank you, Your Honor. ²⁰⁶ Judge: Judgment will be entered in favor of the plaintiff against the defendant in that amount.

Sometime later that morning, when Zdravkovich appeared in the District Court, he was told by the judge what had transpired in his absence and that he had thirty days to note an appeal. Zdravkovich did so. On appeal to the circuit court, Zdravkovich fared no better than he had in District Court. The circuit court affirmed the judgment in favor of Tricon for $2,959.50, as well as the award of $2,000.00 attorney’s fees.

The court also affirmed the judgment in favor of O’Connor and Terminals in the O’Connor case. Immediately after the circuit court decision, counsel in the Tricon case and counsel in the O’Connor case both filed motions for attorney’s fees. Counsel for Tricon alleged that the appeal was frivolous and that an award of attorney’s fees was “further justified as a sanction against defendant Zdravkovich for bringing this appeal in the first place and, hopefully, as a deterrent to continuing his efforts further.” Both attorneys filed affidavits of counsel fees. Counsel for O’Connor sought $1,050.00 attorney’s fees and counsel for Tricon sought $1,425.00.

Zdravkovich filed oppositions to the motions for attorney’s fees, as well as an extensive memorandum in opposition to the motions for attorney’s fees. Without a hearing, the circuit court judge signed orders assessing $1,300.00 attorney’s fees against Zdravkovich for the Tricon case appeal and $1,050.00 attorney’s fees for the O’Connor case appeal. Those orders contain no findings of fact or reasons for the imposition of sanctions other than one statement in the O’Connor case order that it was entered “[u]pon consideration of the Motion for Order for Attorneys ■Fees filed herein ... and for the reasons stated therein....” THE DEFAULT JUDGMENTS Maryland Rule 3-509 sets out procedures for entry of a default judgment when a defendant fails to appear in court. Rule 3-306 also provides for judgment on affidavit, ²⁰⁷ but the judgments in the instant case were not based on affidavit.

The only affidavit in the Tricon case was signed by Tricon’s attorney. Counsel acknowledged that the affidavit was deficient and judgment on affidavit was not sought. Tricon sought and obtained a judgment by default. Rule 3-509(a) provides for trial on default when a defendant “has failed to appear in court at the time set for trial.” We will assume arguendo that Zdravkovich failed to appear at the time set for trial.

The rule does not authorize the court to simply enter judgment for the plaintiff in the amount requested by plaintiffs attorney. Rule 3-509(a) still requires a hearing prior to entering a judgment by default when there was no request for judgment on affidavit filed and a defendant fails to appear for trial. That rule provides: “(1) if the defendant did not file a timely notice of intention to defend, the plaintiff shall not be required to prove the liability of the defendant, but shall be required to prove damages; (2) if the defendant filed a timely notice of intention to defend, the plaintiff shall be required to introduce prima facie evidence of the defendant’s liability and to prove damages.” The District Court docket