Ali v. Cit
| Decision Date | 05 October 2009 |
| Docket Number | No. 1313, September Term, 2008.,1313, September Term, 2008. |
| Parties | Ahmed M. ALI v. CIT TECHNOLOGY FINANCING SERVICES, INC. |
| Court | Court of Special Appeals of Maryland |
This appeal is from a judgment entered by the Circuit Court for Prince George's County against Ahmed M. Ali, appellant, and in favor of CIT Technology Financing Services, Inc., appellee, in the amount of $190,725.85 in damages and $21,977.95 in prejudgment interest. Appellant contends that the trial court should have dismissed the suit because it was barred by the applicable statute of limitations; the trial court erred when it calculated the amount of damages; and the trial court erred when it calculated pre-judgment interest. We shall vacate the judgment, affirm as to liability, but remand to the circuit court for assessment of damages.
In June, 1997, appellee's predecessor/lessor entered into an equipment lease with appellant. The lease required appellant to pay $3,275.60 per month for 60 months. The total amount of rental payments due under the lease was $196,536.
In May, 1999, appellant defaulted. Appellee sent a letter dated August 10, 2000, demanding that appellant pay $158,760.86 by August 20, 2000. Presumably, appellee calculated this amount under the terms of the lease, which allowed appellee to "declare all Rental Payments due hereunder due and payable," and to take possession of the equipment. The amount claimed by appellee was for the accelerated rental payments, late charges, and the value of the unreturned equipment. Appellant failed to pay all or any portion of that amount by August 20, 2000.
On June 11, 2001, appellant filed a chapter 11 petition in bankruptcy in the United States Bankruptcy Court for the District of Maryland. Appellee could not pursue its claim outside of the bankruptcy proceeding because of the automatic stay provision in 11 U.S.C. § 362. In 2002, appellee filed a claim in the bankruptcy proceeding for unsecured debt in the amount of $158,760.86, and in 2003, a claim for administrative expenses in the amount of $85,165.70, which included the cost of appellant's post-petition use of the equipment.
In July, 2003, appellee moved to lift the stay. In September 2003, the bankruptcy court granted the motion and provided in its order
that the stay of § [ ]362 of the Bankruptcy Code is terminated and, with respect to the Lease Equipment, [appellee] is authorized to exercise all of its rights under the Lease and applicable non-bankruptcy law including, without limitation, foreclosure, sale and repossession; and it is further [ordered], that [appellant] shall surrender the Lease Equipment ... to appellee ... within 10 days of the date hereof [and] that [appellant] shall allow [appellee] ... access to the Lease Equipment to the extent necessary to carry out the rights granted to [appellee]....
Appellant continued to possess the equipment without making any monthly payments to appellee.
In August of 2004, the parties entered into a stipulation and proposed consent order that allowed appellee a general unsecured claim in the amount of $190,725.86, allowed appellee an administrative claim in the amount of $53,200, and authorized appellant to execute all documents necessary to consummate the transactions referred to in the stipulation. The bankruptcy court executed the consent order, thus allowing both claims.1
The transactions referred to in the stipulation related to the administrative claim. These transactions included a payment schedule, a confessed judgment note, a transfer of the equipment's title to appellant, and appellant's grant of a security interest in the equipment to appellee. Appellant paid appellee approximately $26,200 under the note but failed to pay the remainder of the money due. In accordance with a confession of judgment provision in the note, appellee obtained a confessed judgment for $30,400 against appellant in a separate action, which is not before us.
Appellee did not recover any portion of the unsecured claim by way of a distribution in the bankruptcy proceeding. On July 12, 2006, the bankruptcy court dismissed appellant's bankruptcy case without discharge of debts.
In January, 2007, appellee filed this suit against appellant for breach of the lease. In March, 2008, appellee filed an amended complaint, in which it added a count seeking to enforce the stipulation and consent order.
On April 16, 2008, the circuit court heard the case nonjury. Appellee argued that appellant had breached the lease and that appellee was entitled to the accelerated amount of unpaid rental payments, 18% interest, the value of the equipment, and reasonable attorney's fees. The claim tracked the language in the lease. In the alternative, appellee argued that the court should find liability and assess damages based on appellant's failure to fulfill the terms of the stipulation and order. Appellant acknowledged breach of the lease, but argued that the suit was barred by limitations, the stipulation and order could not be the basis for liability, and the dollar amount in the stipulation and order did not reflect credit for all payments.
Appellee introduced into evidence, inter alia, the lease, and presented testimony relating to the breach of lease, the consequences of its breach, and the amounts due under the lease, which included the remaining lease payments, taxes, late charges, the value of the equipment, and attorney's fees. Appellee also introduced evidence of the amount of attorney's fees incurred by appellee during the bankruptcy proceeding and thereafter, until the date of trial. Additionally, appellee introduced the stipulation and consent order.
In an order dated May 27, 2008, and docketed May 30, 2008, the circuit court found that appellant, in May 1999, had defaulted under the lease. The court held that the three year period of limitations contained in Maryland Code , § 5-101 of the Courts and Judicial Proceedings Article ("CJP") was tolled during the pendency of the bankruptcy proceeding, because federal bankruptcy law incorporated relevant State statutes, including the tolling provision in § 5-202 of the same Article.
Section 5-202 provides:
If a debtor files a petition in insolvency which is later dismissed, the time between the filing and the dismissal is not included in determining whether a claim against a debtor is barred by the statute of limitations.
The court, implicitly referring to the stipulation and consent order, also stated, in pertinent part,
This timely appeal followed.
Appellant presents the following questions, quoted from his brief:
I. Whether the [court] erred in granting judgment in favor of appellee because the applicable statute of limitations had expired?
II. Whether the [court] erred in granting judgment for an amount which exceeded the amount actually owing under the lease?
III. Whether the [court] erred in granting an award of prejudgment interest without any calculation of interest having been submitted and subjected to challenge?
Because the trial was nonjury,
we give deference to the factual findings of the trial judge and will reverse only for clear factual error. A factual finding is clearly erroneous if there is no competent and material evidence in the record to support it. The legal conclusions reached by the circuit court are not accorded deference on appeal, however, and instead are reviewed de novo.
Hoang v. Hewitt Ave. Ass., LLC, 177 Md. App. 562, 576, 936 A.2d 915 (2007) (citations omitted).
In this case, the applicable period of limitations is three years. CJP § 5-101.2 The parties agree that the statute of limitations began to run in May 1999 when appellant defaulted under the lease. In June 2001, when the petition in bankruptcy was filed, approximately 25 months had passed, leaving 11 months to file suit. The automatic stay was in effect from June 2001 until September 2003. See 11 U.S.C. § 362. Appellant argues that, while the period of limitations may have been tolled under federal law, by operation of 11 U.S.C. § 108(c),3 it was tolled only during the time the automatic stay was in effect. According to appellant, appellee was free to take action in September 2003, when the stay was lifted, but did not file suit until January 2007, almost five and one-half years after the default. Appellant, after observing that CJP § 5-202 was enacted in 1814 when there was no federal bankruptcy statute and state insolvency laws governed, argues that those insolvency laws have since been repealed and CJP § 5-202 is irrelevant and of no effect today. Appellant also argues that, by its plain language, the statute applies only to insolvency proceedings, which do not include bankruptcy proceedings.
Appellee contends that CJP § 5-202 is still good law, that the statute's effect was to toll the statute of limitations during the pendency of the bankruptcy proceeding, and that limitations resumed running when the bankruptcy court dismissed the bankruptcy petition, in July 2006. Thus, appellee concludes that the suit in January, 2007 was timely.
We pause to briefly review the history of state insolvency laws and federal bankruptcy law because it provides a context for understanding CJP § 5-202.
In England, prior to the birth of the United...
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Doe v. Roe
...A.2d at 388. Of course, “[i]f the General Assembly did not so intend, it can amend or repeal the statute.” Ali v. CIT Tech. Fin. Servs., 188 Md.App. 269, 287, 981 A.2d 759, 769 (2009), aff'd, 416 Md. 249, 6 A.3d 890 (2010). JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED. COSTS TO BE PAID......
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Doe v. Roe
...A.2d at 388. Of course, "[i]f the General Assembly did not so intend, it can amend or repeal the statute." Ali v. CIT Tech. Fin. Servs., 188 Md. App. 269, 287, 981 A.2d 759, 769 (2009), aff'd, 416 Md. 249, 6 A.3d 890 (2010). JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED. COSTS TO BE PAI......