Kumar v. Dhanda

• Decision Date: 02 May 2012
• Docket Number: No. 47,Sept. Term, 2011.,47
• Parties: SHAILENDRA KUMAR, P.A. v. Anand M. DHANDA.
• Court: Maryland Court of Appeals

426 Md. 185

43 A.3d 1029

SHAILENDRA KUMAR, P.A.

v.Anand M. DHANDA.

No. 47, Sept. Term, 2011.

Court of Appeals of Maryland.

May 2, 2012.

Michael J. McAuliffe (Ethridge, Quinn, Kemp, McAuliffe, Rowan & Hartinger, Rockville, MD), on brief, for petitioner.

Angus R. Everton (Robert C. Morgan of Morgan Carlo Downs & Everton P.A., Hunt Valley, MD), on brief, for respondent.

Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, ADKINS, BARBERA, DALE R. CATHELL (Retired, Specially Assigned), JJ.

Opinion by GREENE, J.

Shailendra Kumar, M.D., P.A. (“Dr. Kumar” or “Petitioner”) sued Anand M. Dhanda, M.D. (“Dr. Dhanda” or “Respondent”) in the Circuit Court for Montgomery County alleging breach of contract and the breach of a covenant not to compete. The contract at issue provided for disputes to be initially addressed through mandatory, non-binding arbitration. Respondent filed a motion to dismiss the action, asserting that the suit was barred by the applicable statute of limitations. Petitioner opposed dismissal, arguing that the complaint was timely because his cause of action had either not “accrued” or that limitations was tolled until the completion of arbitration. The trial court dismissed the action as time-barred and the Court of Special Appeals affirmed. Based on the record before us, we shall affirm the judgment of the Court of Special Appeals and hold that while non-binding arbitration may have been a condition precedent to litigation, it neither affected the accrual of the underlying breach of contract claims, nor otherwise tolled the statute of limitations applicable to maintaining an action in court.

FACTS AND PROCEDURAL HISTORY

The complex procedural history essential to our resolution of this case stems from a single contract, prepared without the assistance of counsel. Petitioner and Respondent entered into an employment agreement (“the contract” or “the agreement”) on August 28, 2001, whereby Respondent agreed to work as a doctor in Petitioner's urology practice through August 31, 2002. The contract contained, inter alia, a non-compete clause which prohibited Respondent from practicing within a specified radius of Petitioner's multiple offices or soliciting or accepting Petitioner's patients for three years following the expiration of the contract, or through August of 2005. An addendum to the contract prohibited Dr. Dhanda, during the term of the agreement, from practicing medicine or engaging in other professional activities outside of Dr. Kumar's practice, unless he obtained the consent of the association. The contractalso included the following mandatory, non-binding arbitration clause:

D. Arbitration: All disputes arising out of this Agreement [excluding one paragraph], shall be resolved pursuant to arbitration conducted in accordance with the Maryland Uniform Arbitration Act, in Baltimore, Maryland. Both parties can go to Court if not satisfied by the decision of the Maryland Uniform Arbitration Act [sic].

As a result of discord between the parties, the employment relationship was not renewed upon termination of the Agreement on August 31, 2002. Soon thereafter, Respondent filed an initial suit for breach of contract against Petitioner in the Circuit Court for Anne Arundel County. He sought damages for an alleged breach of contract based on Petitioner's refusal to grant Respondent partner status in the business and the withholding of certain monies.

Petitioner filed an Answer and Demand for Jury Trial on October 18, 2002, which noted that “disputes are to be submitted to arbitration pursuant to agreement between the parties.” Four months later, on February 26, 2003, Petitioner filed a motion to compel arbitration and to dismiss the action. The judge presiding in Anne Arundel County dismissed the action without prejudice on April 24, 2003, stating that the “claims are subject to mandatory arbitration,”but noting that “[t]he case may be reopened to enforce the arbitration award, if necessary.” ¹

The record is silent with regard to any activity between the parties for over two years following this dismissal. On April 29, 2005, however, Petitioner filed, in the Circuit Court for Baltimore City, a petition to compel arbitration and to appoint an arbitrator. The petition also included separate counts concerning the substantive claims for breach of contract and breach of the non-compete provision. Following an apparent delay in service, on March 9, 2006, Respondent filed both a response to Petitioner's petition to compel arbitration and his own motion to dismiss the substantive counts for improper venue and as claims subject to mandatory arbitration. Petitioner then filed a response to the motion to dismiss, offering to withdraw the substantive counts if the Circuit Court would compel arbitration in order to resolve the issues. The court dismissed the substantive counts on April 28, 2006, but did not order arbitration. Four months later, on August 25, 2006, Petitioner filed a motion for summary judgment, urging the Circuit Court for Baltimore City to grant the earlier petition to compel arbitration. Following a brief bench trial, on November 20, 2006, the presiding judge granted the petition to compel arbitration and appointed J. Snowden Stanley, Jr. as the arbitrator the underlying dispute between the parties.²

After this apparent victory in securing an order compelling arbitration, Petitioner allowed nearly two more years to pass before actually submitting the matter to the arbitrator in March of 2008. Mr. Stanley issued his award on June 20, 2008. The award denied all relief to Petitioner and also denied relief to Respondent, save for an award of $868.00 as reimbursement for certain disability insurance premiums.

Finally, on March 16, 2009, almost a year after the arbitration award was issued, Petitioner filed the instant action in the Circuit Court for Montgomery County. The complaint stated that “[t]he Agreement requires arbitration as a requirement before Plaintiff can pursue a remedy in court ... [t]he matter went to Arbitration, and a decision in favor of the Defendant was rendered in June of 2008. This matter is brought de novo.” Respondent filed a motion to dismiss, arguing that the applicable three-year statute of limitations barred the action because the alleged breaches of contract occurred between 2002 and 2005. Petitioner filed in opposition, contending that, because completion of arbitration was a condition precedent to filing a claim, the statute of limitations had not begun to run until the arbitration decision of June 20, 2008. After a hearing and supplemental briefing by the parties, Judge McGann, of the Circuit Court for Montgomery County dismissed the action with prejudice.

Petitioner noted a timely ³ appeal to the Court of Special Appeals, and the intermediate appellate court affirmed the trial court's judgment of dismissal. Kumar v. Dhanda, 198 Md.App. 337, 17 A.3d 744 (2011). We granted certiorari in the instant case, Kumar v. Dhanda, 420 Md. 463, 23 A.3d 895 (2011), to address the following questions presented:

1. Where a contract specifically requires that the parties submit to non-binding arbitration, and states that the parties may “go to court if not satisfied by the decision of the Maryland Uniform Arbitration Act, [sic]” does the cause of action accrue at the time of the breach or at the time of the non-binding arbitration?

2. When the parties agree not to “go to court” until after a non-binding arbitration, does the statute of limitations begin to run at the time of the breach or at the time a party can “go to court?”

We shall affirm the judgment of the Court of Special Appeals and hold that while non-binding arbitration, mandated by the contract, may have constituted a condition precedent to litigation, pursuing arbitration neither postponed the accrual of the underlying breach of contract claims, nor otherwise tolled the statute of limitations applicable to maintaining an action in court.

STANDARD OF REVIEW

We recently reiterated the standard of review applicable to motions to dismiss in Parks v. Alpharma, Inc., 421 Md. 59, 25 A.3d 200 (2011), stating:

On appeal from a dismissal for failure to state a claim, we must assume the truth of, and view in a light most favorable to the non-moving party, all well-pleaded facts and allegations contained in the complaint, as well as all inferences that may reasonably be drawn from them, and order dismissal only if the allegations and permissible inferences, if true, would not afford relief to the plaintiff, i.e., the allegations do not state a cause of action for which relief may be granted. We must confine our review of the universe of facts pertinent to the court's analysis of the motion to the four corners of the complaint and its incorporated supporting exhibits, if any.

Parks, 421 Md. at 72, 25 A.3d at 207 (internal quotations omitted). In the instant case, Respondent moved to dismiss based on the affirmative defense of limitations, asserting that Petitioner's claims regarding the underlying contractual disputes were time barred, as a matter of law. We have held consistently that “the question of accrual in § 5–101 is left to judicial determination.” Frederick Rd. Ltd. P'ship v. Brown & Sturm, 360 Md. 76, 95, 756 A.2d 963, 973 (2000). We review the grant of Respondent's motion in order to “determine whether the court was legally correct.” Parks, 421 Md. at 72, 25 A.3d at 207 (quotation omitted), accord Doe v. Roe, 419 Md. 687, 693, 20 A.3d 787, 791 (2011) (“In reviewing the Circuit Court's grant of a motion to dismiss, our task is confined to determining whether the trial court was legally correct in its decision to dismiss.” (quotations omitted)).

DISCUSSION

The applicable statute of limitations is encompassed in Maryland Code (1973, 2006 Repl.Vol.) § 5–101 of the Courts and Judicial Proceedings Article, which states that: “[a] civil action at law shall be filed within three years from the date it accrues...