Pizza di Joey, LLC and Madame BBQ, LLC v. Mayor and City Council of Baltimore, 470 Md. 308 (Ct. of Appeals)

Filed: August 17, 2020

Holding: The City 300-foot rule that prohibits food trucks from operating within three hundred feet of a brick and mortar restaurant that serves food similar to the food truck is not unconstitutional under Article 24 of the Maryland Constitution, and is not void for vagueness because, though there was a lack of guiding standards for enforcement, there are circumstances where the ordinance would be constitutional.

Opinion by: Judge Jonathan Biran

Summary: Two food truck operators (the “Food Trucks”) filed suit against the Mayor and City Council of Baltimore (the “City”) in the Circuit Court for Baltimore City, seeking a declaration that a provision of the City’s vending ordinance restricting food trucks from parking within 300 feet of a brick-and-mortar restaurant that primarily sells the same type of food (the “300-foot rule” or the “Rule”), deprives them of equal protection and substantive due process of law in violation of Article 24 of the Maryland Declaration of Rights.  After taking evidence, the Circuit Court held that the 300-foot rule does not violate Article 24’s equal protection and substantive due process requirements.  However, the Circuit Court sua sponte enjoined the City from enforcing the 300-foot rule, concluding that the Rule is impermissibly vague, notwithstanding that the Food Trucks had affirmatively waived the vagueness claim.  On appeal, the Court of Special Appeals ruled in favor of the City, finding that (i) the 300-foot rule does not violate Article 24’s equal protection and substantive due process requirements, (ii) the Food Trucks had not preserved a vagueness claim for appellate review, and (iii) any claim for vagueness failed on the merits.  On appeal, the Court of Appeals affirmed the Court of Special Appeals.

Analysis: The Court of Appeals began its analysis by determining whether the Food Trucks had standing to assert their substantive due process and equal protection claims, noting that “[u]nder Maryland common law, standing to bring a judicial action generally depends on whether one is aggrieved, which means whether a plaintiff has an interest such that he or she is personally and specifically affected in a way different from the public generally.”  The Court held that the Food Trucks had standing to challenge the Rule’s constitutionality because the record established, among other things, that (i) they paid for and received mobile vendor licenses; (ii) they would have operated in various commercial districts in the City of Baltimore but for the Rule and would have received substantial benefit from operating in those districts; and (iii) they altered their business plans as a result of the Rule.

Next, the Court of Appeals addressed the appropriate level of review for the constitutionality of the Rule and found that the deferential “rational basis” test was appropriate because it did not involve a “clearly suspect” criteria or infringe on a “fundamental” or “important personal” right.  The Court of Appeals then held that the Rule satisfied the rational basis review because “the restriction on the locations where the Food Trucks may operate are not arbitrary, oppressive, or unreasonable. To the contrary, the Rule directly furthers the City’s conception of what is necessary for its general welfare.”  The Court further held that the Rule would satisfy the more demanding “heightened rational basis” standard of review because the Rule “bears a ‘real and substantial relation’ to the legitimate interest the City has in ensuring the vibrancy of its commercial districts and, thereby, promoting the general welfare.  Among other things, the Court noted that the Rule avoided the “‘free rider’ problem posed by food trucks siphoning business from brick-and-mortar restaurants after those restaurants have invested their resources and become semi-permanent members of the neighborhoods in which they are based.”

Finally, the Court of Appeals addressed the claim that the Rule is void for vagueness.  The Court noted that the Circuit Court erred by invalidating the 300-foot rule based on a vagueness claim because the Food Trucks had affirmatively waived the claim.  However, because of that error, the Court concluded that it had authority to address the merits of the question.  First, the Court of Appeals held that the Rule was subject to a facial vagueness challenge because there was a lack of guiding standards regarding enforcement, such that “there is a high risk that authorities necessarily will enforce the law arbitrarily.”  Next, the Court noted that, “in order to prevail on a facial vagueness claim, the person challenging the statute must show that there is no set of circumstances under which the statute would be constitutional.”  Applying this standard, the Court held that the Rule was not unconstitutionally vague because there were obvious circumstances under which the statute would be constitutional (e.g., Pizza di Joey parking its food truck within 300 feet of a brick-and-mortar pizzeria).  The Court further held that the phrases used in the Rule, such as “primarily engaged in” and “same type”, are not vague because while not defined in the ordinance, they are common and have generally accepted meanings.

The full opinion is available in PDF.

Muffoletto v. Towers (Ct. of Special Appeals)

Muffoletto v. Towers (Ct. of Special Appeals)

Filed: January 30, 2020

Opinion by: James A. Kenney, III

Holdings: (1) An action seeking a declaration concerning the location of a common boundary line between adjacent boat slips was barred by the applicable statute of limitations. (2) Substantive and substantial discovery violations warranted the imposition of sanctions.

Facts: In the early 1980’s, a residential condominium was established in Dorchester County, Maryland.  Appurtenant to each condominium unit was a license to use a boat slip.  According to the 1982 site plan for the condominium, two adjacent boat slips were to be established as fourteen-feet-seven-inches wide each, separated by mooring piles.  However, according to an aerial photograph of the subject boat slips, taken in 1984, one slip was nineteen feet wide, and the adjacent slip was thirteen feet wide.

In 2004, the plaintiff purchased the condominium unit and corresponding slip license related to the thirteen-foot-wide boat slip.  Shortly thereafter, the plaintiff noticed the disparate sizes of the adjacent boat slips when he attempted to berth his boat.  In 2010, the plaintiff became a member of the condominium’s council of unit owners (the “council”), at which time he allegedly learned of a policy enacted by the council in 1999 requiring a unit owner who had made changes to the location of any mooring piles to return the piles to their original location when the appurtenant condominium unit is sold.  Title to each of the condominium units corresponding to the subject boat slips (and the related boat slip licenses) had been transferred multiple times before being transferred to the parties to this lawsuit.

In 2016, the plaintiff filed suit in the Circuit Court for Dorchester County, seeking (i) a declaration that the adjacent boat slips were intended and initially constructed to be of equal width and (ii) specific performance and injunctive relief, requiring that the mooring piles be moved to establish the adjacent boat slips as being equal in width.  During discovery, the defendants served the plaintiff with interrogatories.  Despite multiple court orders directing the plaintiff to respond to the interrogatories, the plaintiff failed to properly respond.

The Circuit Court entered sanctions against the plaintiff for failing to provide discovery responses as ordered, finding that the defendants had been prejudiced as a result.  Thereafter, the Circuit Court entered summary judgment in favor of the defendants, finding that the possible movement of the mooring piles was not a disputed material fact because they were placed in their current location no later than 1984 (when the aerial photograph was taken), and any legal action related to their present location was thus barred by the applicable three-year limitations period.  The plaintiff timely appealed the rulings to the Court of Special Appeals.

Analysis:  The Court of Special Appeals first addressed the Circuit Court’s holding that the plaintiff’s claims were barred by the statute of limitations.  The plaintiff argued that the statute of limitations had been tolled by virtue of the “continuing harm” doctrine, which provides that claims in the nature of a continuous tort may toll the running of limitations based on new occurrences over time.  The court discussed Maryland case law applying the doctrine, and found that “courts have consistently held that the continuing harm doctrine rests on a new affirmative act” and does not apply to a “continuing ill effect” of a prior act.  The court then concluded that the continuing harm doctrine did not apply under the circumstances of this case because the act causing the harm was the alleged moving of the mooring piles, which occurred sometime before the photograph taken in 1984, and that “leaving them in place is a continuing effect of that act.”  Ultimately, the court held that the plaintiff’s claims were barred by the statute of limitations, noting that the action was filed six years after the plaintiff allegedly became aware that the piles may have been moved, twelve years after the plaintiff attempted to berth his boat in the slip, and more than twelve years after he bought the condominium unit (and corresponding boat slip license).

The Court of Special Appeals next addressed the Circuit Court’s holding that the plaintiff’s claims were barred by the doctrine of laches.  The court noted that laches is an equitable doctrine intended to ensure fairness, and that it is “based upon grounds of sound public policy by discouraging fusty demands for the peace of society.”  The court also noted that, generally, “an action for declaratory judgment will be barred to the same extent that the applicable statute of limitations bars an underlying action in law or equity.”  The court concluded that the plaintiff’s claims were barred by the doctrine of laches because the mooring piles had been in place for thirty-five years and the only people who would have had definitive knowledge regarding when and if the piles had been moved (the developer and the person who initially bought the nineteen-foot-wide slip in 1983) had died before the suit was filed.

The Court of Special Appeals also addressed the Circuit Court’s holding that the plaintiff’s claims were barred by the doctrine of adverse possession or prescription.  The court noted that whether or not the doctrine applies to riparian rights is unsettled in Maryland.  Ultimately, the court, without concluding that the doctrine applied to the boat slip licenses at issue, held that the requisite period of adverse possession (i.e., twenty years) had not run.

Finally, the Court of Special Appeals addressed the Circuit Court’s imposition of sanctions against the plaintiff for discovery violations.  The court first noted that circuit courts have very broad discretion to determine whether sanctions should be imposed.  The court then outlined the factors that circuit courts should consider when deciding whether to impose sanctions (noting that the factors need not be analyzed on a compartmentalized basis), which factors include (1) whether the sanctioned violations were “persistent and deliberate”; (2) whether the discovery violation was technical or substantial; (3) the timing of disclosures made; (4) any reason for the violation; (5) the degree of evidentiary prejudice resulting from the violation; and (6) whether the resulting prejudice might be cured by postponement and the desirability of a continuance.  Applying these factors, the court affirmed the Circuit Court’s imposition of sanctions.

The full opinion is available in PDF.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

Under Armour, Inc. v. Battle Fashions, Inc. (Maryland U.S.D.C.)

Filed: July 18, 2019

Opinion by: Richard D. Bennett

Summary: Under Armour, Inc. (“Under Armour”) filed a lawsuit seeking, among other things, a declaration that its use of certain phrases in connection with its products does not infringe upon a registered trademark owned by defendant Kelsey Battle (“Battle”).  Battle, a resident of North Carolina, moved to dismiss the action for lack of personal jurisdiction.  After holding an evidentiary hearing, the court dismissed the action for lack of personal jurisdiction and transferred the matter to the Eastern District of North Carolina.

Analysis:  The court initially denied Battle’s motion to dismiss, holding that the requisite preliminary prima facie showing of personal jurisdiction had been made.  However, after holding a pre-trial evidentiary hearing, the court found that personal jurisdiction over Battle had not been established by the requisite preponderance of the evidence.  The court began its analysis of personal jurisdiction by noting that two conditions must be satisfied in order to exercise personal jurisdiction over a non-resident: (1) the exercise of jurisdiction must be authorized under Maryland’s long-arm statute [Md. Code Ann., Cts. & Jud. Procs. § 6-103(b)]; and (2) the exercise of jurisdiction must comport with the due process requirements of the Fourteenth Amendment of the Constitution.  As to that two-pronged analysis, the court noted that Maryland courts “have consistently held that the state’s long-arm statute is coextensive with the limits of personal jurisdiction set out by the Due Process Clause of the Constitution,” but that courts must address both prongs of the analyses.

As to the first prong of the analysis, the court noted that “a plaintiff must specifically identify a provision in the Maryland long-arm statute that authorizes jurisdiction”.  Here, Under Armour argued the existence of personal jurisdiction over Battle based on his transacting business in Maryland [Md. Code Ann., Cts. & Jud. Procs. § 6-103(b)(1)].  Noting that “Maryland courts have construed the phrase ‘transacting business’ narrowly, requiring, for example, significant negotiations or intentional advertising and selling in the forum state”, the court found that a small number of sales by Battle to Maryland consumers, two cease and desist letters sent by Battle to Under Armour in Maryland, and three letters sent by Battle to parties outside of Maryland in order to “put pressure” on Under Armour were insufficient to establish personal jurisdiction under Maryland’s long-arm statute.

As to the second prong of the personal jurisdiction analysis, the court noted that the Fourteenth Amendment requires that a defendant have certain minimum contacts with the jurisdiction “such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.”  Acknowledging that there was no basis to assert “general” or “all-purpose” jurisdiction over Battle, the court focused its analysis on “specific” jurisdiction, which requires that the action “arise out of or relate to the defendant’s contracts with the forum.”  Here, the controversy did not relate to marketing or selling infringing products in the forum but instead related to the activities of Battle in enforcing his trademark.  Accordingly, the court’s analysis focused on whether the two cease and desist letters sent to Maryland and the three letters sent to parties outside of Maryland were sufficient to establish specific jurisdiction over Battle in Maryland.  As to the letters sent to Under Armour in Maryland, the court held that “cease-and-desist letters alone are insufficient to confer specific personal jurisdiction.”  The court then noted that “enforcement activities taking place outside the forum state do not give rise to personal jurisdiction in the forum.”  Based on that premise, the court held that the three letters sent to parties outside of Maryland did not give rise to personal jurisdiction over Battle because those letters “did not threaten litigation, had no effect on Under Armour’s business, and did not result in any damage to Under Armour’s business relationships.”

The full opinion is available in PDF.

Payments IP Pty Ltd. v. B52 Media LLC (Maryland U.S.D.C.)

Filed: February 23, 2018

Opinion by: Ellen Lipton Hollander

Facts: Payments IP Pty Ltd. (“Payments IP”), an Australian company, allegedly contracted with B52 Media, LLC (“B52”), a Maryland limited liability company, and Maryland resident Lonnie Borck (“Borck”), B52’s owner (Borck and B52 being referred to collectively, as the “B52 Parties”), to purchase a web domain (the “Domain”).  Later that year, Payments IP allegedly discovered that the Domain had been placed on an “administrative freeze” by the domain registrar because the Domain was the subject of a lawsuit pending in California state court. In the California state case, an individual resident of California, Suraj Kumar Rajwani (“Rajwani”), asserted ownership of the Domain (the “California Case”).  Payments IP successfully intervened in the California Case.  Shortly after Payments IP moved to intervene in the California Case, Payments IP filed suit in the United States District Court for the District of Maryland (the “Maryland Case”), asserting claims similar to those asserted by Payments IP in the California Case, including a claim for declaratory judgment regarding ownership of the Domain.  Motions were filed by the defendants in the Maryland Case seeking to dismiss the declaratory judgment claim against Rajwani for lack of jurisdiction and to stay the Maryland Case for so long as the California court retained jurisdiction over the California Case. 

Analysis/Holding:  The Maryland Court first addressed Rajwani’s motion to dismiss for lack of jurisdiction, pursuant to which Rajwani argued that the Court lacked both personal jurisdiction over him and in rem jurisdiction over the Domain.  As to personal jurisdiction, the Court noted that “to assert personal jurisdiction over a nonresident defendant, two conditions must be satisfied: (1) the exercise of jurisdiction must be authorized under the state’s long-arm statute [Md. Code Ann., Cts. & Jud. Procs. § 6-103(b)]; and (2) the exercise of jurisdiction must comport with the due process requirements of the Fourteenth Amendment.”  Regarding the interaction between those two conditions, the Court noted that “the reach of the long arm statute is coextensive with the limits of personal jurisdiction delineated under the due process clause of the Federal Constitution, [and thus] our statutory inquiry merges with our constitutional examination.”  The Court ultimately denied Rajwani’s motion to dismiss for lack of personal jurisdiction, holding that, based on the pleadings and papers filed in the Maryland Case, Payments IP made a prima facie showing of personal jurisdiction because:

 (i) over the course of seven years, Rajwani engaged in extensive negotiations with the B52 Parties (who were domiciled in Maryland) with respect to the Domain;

(ii) Rajwani transferred money to B52 on four occasions, totaling approximately $600,000;

(iii) Rajwani visited Maryland on one occasion in 2015 to meet with Borck in connection with the negotiations over the Domain dispute; and

(iv) Rajwani filed a claim with the Register of Wills in Maryland against the estate of Borck predicated on the underlying transaction involving the Domain. 

However, in light of the procedural posture of the Maryland Case (i.e., early in the proceedings, without having conducted any discovery or any evidentiary hearing on the issue of personal jurisdiction), the Court held that Payments IP must ultimately prove the existence of personal jurisdiction by a preponderance of the evidence.

The Court then addressed Rajwani’s request that the Court abstain from jurisdiction under the so-called “Brillhart/Wilton” doctrine, which allows federal district courts to decline jurisdiction over declaratory judgment actions in certain circumstances; namely, if abstention would save judicial resources.  The Court denied Rajwani’s request because Rajwani sought non-declaratory relief that was so closely related to his declaratory judgment claim that abstaining from jurisdiction as to that claim would not save any judicial resources.

Next, the Court addressed Rajwani’s request for dismissal based on the so-called “Princess Lida” doctrine, which provides that “a federal court may not exercise jurisdiction when granting the relief sought would require the court to control a particular property or res over which another court already has jurisdiction.”  According to Rajwani, the Maryland Case was subject to dismissal because the declaratory judgment claim was an in rem proceeding vis-à-vis the Domain, which was already subject to the in rem or quasi in rem jurisdiction of the California court in the quiet title action.  In the Maryland Case, Payments IP sought declaratory relief against, not only Rajwani and the B52 Parties but also, “all other claimants, known and unknown”; the Court reasoned that, because it did not possess personal jurisdiction over “all other” possible claimants, it must, therefore, obtain in rem jurisdiction over the Domain in order to grant the relief sought by Payments IP.  Based on the fact that the California court had exercised jurisdiction over the Domain prior to the filing of the Maryland Case, and the fact that no one disputed the California court’s jurisdiction, the Court held that, pursuant to the Princess Lida doctrine, the Court did not have in rem jurisdiction over the Domain.  However, rather than dismissing the claim as requested by Rajwani, the Court stayed the claim, because, according to the Court, “the Princess Lida doctrine is one of abstention, rather than subject matter jurisdiction….  Thus, if the Princess Lida doctrine is implicated, this Court should dismiss or stay the declaratory judgment claim, but it does not lack subject matter jurisdiction.”

Lastly, the Court addressed the motions of Rajwani and the B52 Parties to stay the Maryland Case, pending resolution of the California Case, on the basis of so-called “Colorado River” abstention, which provides that a federal district court may, in “exceptional circumstances,” stay federal litigation that is parallel to a state suit.  Specifically, if there exists parallel litigation involving substantially the same parties and substantially the same issues (such that the state action will resolve every claim at issue in the federal action), then a stay of the federal case may be appropriate based upon a balancing of the following six factors:

“(1) whether the subject matter of the litigation involves property where the first court may assume in rem jurisdiction to the exclusion of others;

(2) whether the federal forum is an inconvenient one;

(3) the desirability of avoiding piecemeal litigation;

(4) the relevant order in which the courts obtained jurisdiction and the progress achieved in each action;

(5) whether state law or federal law provides the rule of decision on the merits; and

(6) the adequacy of the state proceeding to protect the parties’ rights.” 

Applying that analysis, the Court first held that the Maryland Case and the California Case were parallel actions because:

(a) the parties were the same in both actions;

(b) both actions concerned the same basic issue (ownership of the Domain) and transactions (the contract to buy the Domain); and

(c) the relief sought by Payments IP in the Maryland Case was “virtually identical to the relief Payments IP seeks as an intervenor in the California case.” 

The Court then held that a stay of the Maryland Case was appropriate based on a balancing of the aforesaid factors because:

(1) the California court had assumed in rem jurisdiction over the Domain (weighing in favor of abstention);

(2) the California and Maryland courts were equally convenient to Payments IP  and any minimal convenience difference as between the other parties was mitigated by the fact that, if the Maryland Case were not stayed, the parties would likely be required to litigate in both forums (either neutral or weighing in favor of abstention);

(3) it was desirable to avoid piecemeal litigation (weighing in favor of abstention);

(4) the California court obtained jurisdiction before the Maryland Court and significantly more progress had been made in the California Case than in the Maryland Case (weighing in favor of abstention);

(5) jurisdiction of the Maryland Case was based on diversity of the parties and there were no federal questions at issue (either neutral or weighing in favor of abstention); and

(6) the California Case was adequate to protect the rights of Payments IP, as evidenced by Payments IP’s decision to intervene in that action before filing the Maryland Case, as well as the progress made in that action (either neutral or weighing in favor of abstention).

The full opinion is available in PDF.

Hanover Investments, Inc. v. Volkman (Ct. of Appeals)

Filed: July 31, 2017

Opinion: Judge McDonald

Holding: A declaratory judgment action should be stayed or dismissed while a separate action is pending in another state that involves the same parties and that raises essentially the same issues presented in the declaratory judgment action in Maryland. The fact that the Maryland court had previously dismissed an earlier related action did not create “unusual and compelling circumstances” that would justify an exception to the principle that a court should not entertain a declaratory judgment action when there is a pending lawsuit in another state involving the same issues.

Facts: Volkman was subject to two agreements with Hanover, a Maryland corporation [or related companies], an employment agreement dated January 1, 1993, and a separate shareholder agreement entered into in 2007. The genesis of the lawsuit was Ms. Volkman’s termination in 2010. The legal proceedings related to the matter can be divided into four actions: (i) an employment agreement action; (ii) an arbitration proceeding; (iii) a shareholders' agreement action; and (iv) a declaratory judgment action (which is the subject of this opinion).

The employment agreement action - More than two years after her termination, on April 17, 2012, Volkman filed a lawsuit based on the employment agreement. On March 22, 2013, after the court dismissed several of her tort claims, Volkman voluntarily dismissed the employment agreement action with prejudice by stipulation of counsel pursuant to Maryland Rule 2- 506(a).

The arbitration proceeding - On October 10, 2012, while the employment agreement action was pending, Hanover invoked the arbitration provision in the shareholders’ agreement to determine what it was required to pay Volkman when it redeemed her stock. On August 1, 2014, Hanover successfully obtained a default judgment in Montgomery County Circut Court confirming the award. Ms. Volkman did not appeal that judgment.

The shareholders' agreement action - On December 17, 2012, Volkman served Hanover with a complaint that she filed in a state trial court in Minnesota which named Hanover as the lone defendant, alleging that it had violated its contract with her and sought  specific performance – the return of her Hanover stock – a remedy explicitly provided for in the shareholders’ agreement. Hanover moved to dismiss the complaint, asserting that the Minnesota court lacked
in personam jurisdiction of Hanover, but the Minnesota Court of Appeals affirmed the trial court decision. Contemporaneously with its defense in the shareholders' agreement action, Hanover filed a declaratory judgment action in Maryland (discussed below) involving the same issues and Hanover prevailed in the Circuit Court with Volkman appealing that decision. As a result, on January 19, 2015, the Minnesota trial court dismissed Volkman's shareholders’ agreement action, but explicitly reserved
jurisdiction to reopen the case depending on the resolution of the Maryland appeal.

The declaratory judgment action - On June 26, 2013 – two months after the Minnesota trial court denied Hanover’s motion to dismiss, and while that decision was on appeal – Hanover filed a declaratory judgment action against Volkman in the Circuit Court for Montgomery County.  Volkman noted the pendency of the shareholders’ agreement action in Minnesota and asked the Circuit Court to either decline jurisdiction or stay the proceedings in the declaratory judgment action pending a final judgment in the shareholders' agreement action. The Circuit Court declined to do so, citing Marriott Corp. v. Village Realty & Inv. Corp., 58 Md. App. 145 (1984), for the proposition that a declaratory judgment action could be filed “defensively” even if there was similar litigation “pending or impending” in another court and rendered a decision in favor of Hanover. Volkman appealed to the Court of Special Appeals arguing that the Circuit Court should not have heard the case while the shareholders’ agreement action involving the same issues was pending and the Court of Special Appeals held that the Circuit Court erred in issuing a declaratory judgment while the shareholders’ agreement action was pending. 225 Md. App. 602 (2015). Hanover petitioned the Court of Appeals for a writ of certiorari, which it granted.

Analysis: Pertinent to this case, a court should not entertain a declaratory judgment action when there is already a pending action “involving the same parties and in which the identical issues that are involved in the declaratory action may be adjudicated.” Sprenger v. Public Service Comm’n, 400 Md. 1, at 27-28 (2007). The court reasoned that in this case, the shareholders’ agreement action qualifies as an earlier-filed, pending action that would, under customary analysis, operate as a bar to the later-filed declaratory judgment action. The court further reasoned that the two actions involve essentially the same parties and both actions concern the identical issue – the propriety of Hanover’s redemption of Volkman’s Hanover stock under the shareholders’ agreement.

Accordingly, the Court of Appeals affirmed the Court of Special Appeals' decision.

The full opinion is available in pdf.

Murray v. Midland Funding, LLC (Ct. Spec. Appeals)

Filed: April 26, 2017

Opinion By: Friedman

Holding: The applicable statute of limitations limits the timeliness of legal claims, and the doctrine of laches limits the timeliness of equitable claims, but either or both sets of principles may limit the timeliness of declaratory relief from a court.

Facts: The Plaintiff had been sued by the Defendant on a debt, resulting in a judgment in favor of the Defendant.  Subsequently, in 2010, the Maryland State Collection Agency Licensing Board held that companies like Defendant are debt collectors and must be licensed to operate in Maryland.  The Court of Appeals held in Finch v. LVNV Funding, 212 Md. App. 748 (2013), that judgments obtained by such unlicensed debt collectors are void.  The Plaintiff brought a purported class action on behalf of herself and other debtors seeking various relief against Defendant for judgments obtained by the Defendant while it was unlicensed.

Analysis: The Court discussed the rules that bar stale claims.  For legal claims, the time limitations are determined by the applicable statute of limitations.  Under Maryland law, Courts & Judicial Proceedings Article § 5-101 may apply the three year limitation period for monetary claims against debt collectors that attempt to enforce void judgments against a debtor.  However, the Court held that this was not a bar to Plaintiff's equitable claims advanced and dismissed by the trial court.

For equitable relief, such as injunctive relief, the doctrine of laches determines whether a plaintiff's claim is time barred.  "There is no firm time limit for laches: rather a judge sitting in equity considers plaintiff's delay in asserting the claim and its causes and weighs that against the prejudice to the defendant caused by the late assertion of the equitable claim."  As to the Plaintiff's count for injunctive relief against the Defendant, the Court held that the trial court's dismissal of this count had to be reversed, and the above laches doctrine would need to be applied to her demand.

However, declaratory judgments sit in a hybrid category when analyzing whether such a claim is time-barred.  The Court notes that when a plaintiff merely seeks a court declaration that a judgment obtained by an unlicensed debt collector is void, there is no time limit on when such an action may be filed.  But, when the declaratory judgment count includes other relief, the applicable time limit on each of those claims must be calculated based on whether the relief is legal or equitable in nature.  As a result, the Court reversed the trial court's dismissal of her declaratory judgment claim so that the trial court could determine what relief, if any, was sought by the Plaintiff ancillary to a declaration that Defendant's judgment was void.

The full opinion is available in PDF.