Allied Inv. Corp. v. Jasen

• Decision Date: 01 September 1997
• Docket Number: No. 1873,1873
• Citation: 716 A.2d 1085,123 Md.App. 88
• Parties: ALLIED INVESTMENT CORPORATION, et al. v. Peter O. JASEN. ,
• Court: Court of Special Appeals of Maryland

Page 88

123 Md.App. 88

716 A.2d 1085

ALLIED INVESTMENT CORPORATION, et al. v. Peter O. JASEN.

No. 1873, Sept. Term, 1997.

Court of Special Appeals of Maryland.

Sept. 2, 1998.

John F. Kaufman (Richard M. Kremen and Piper & Marbury, L.L.P., on the brief) Baltimore, for appellants

Daniel S. Koch (Glenn M. Cooper, David M. Rothenstein, James R. Hammerschmidt and Paley, Rothman, Goldstein, Rosenberg & Cooper, Chartered, on the brief) Bethesda, for appellee.

Argued before HARRELL, THIEME and BYRNES, JJ.

HARRELL, Judge.

On 28 January 1997, appellants, Allied Investment Corporation and Allied Venture Partnership (collectively "Allied") filed a Complaint for Declaratory Judgment and Accounting in the Circuit Court for Montgomery County. In Counts I and II of its complaint, Allied sought a declaratory judgment regarding the validity and priority of William H. Miller's pledge in Allied's favor of his partnership interest in Ashmere Chesapeake Limited Partnership ("Ashmere Partnership") and his stock in Ashmere Chesapeake Corporation ("Ashmere Corporation"). Allied also sought, in Count III of its complaint, an accounting of any distributions and dividends regarding Miller's interests as may have been received by Peter O. Jasen, appellee. On or about 12 September 1997, Jasen moved to dismiss the complaint as time-barred by the statute of limitations. On 9 October 1997, the Circuit Court issued an order granting Jasen's motion and dismissing Allied's complaint. Allied presents two issues for our consideration, which we have rephrased:

I. Whether the circuit court erred in dismissing Counts I and II, for declaratory judgment, as barred by the statute of limitations.

II. Whether the circuit court erred in dismissing Count II, for an accounting.

FACTS AND PROCEDURAL HISTORY

Allied alleged that on 30 May 1989 Allied and DC Bancorp Venture Capital Company ("DC Bancorp") lent to NNS Corporation ("NNS") an aggregate principal balance of $1,000,000.00. Pursuant to a guaranty also executed on 30 May 1989, in connection with this loan, William H. Miller guaranteed to Allied and DC Bancorp also purchased other NNS indebtedness owed to Maryland National Bank, Lewis E. Rehberg, and Rehberg Enterprises, Inc. (the "aggregate NNS indebtedness"), payment of which had been guaranteed by Miller. When NNS later sold its assets to Atlis Health Services, Inc., Allied and DC Bancorp entered into a Modification of Loans Agreement with Miller. The agreement, dated 20 February 1991, provided, among other things, to reduce the balance of the aggregate NNS indebtedness remaining due to Allied and DC Bancorp (the "shortfall amount"). Miller executed a guaranty in conjunction with the Modification of Loans Agreement, guaranteeing payment of the reduced aggregate NNS indebtedness. To secure the guaranty, Miller assigned and granted to Allied and DC Bancorp an additional security interest in all the collateral securing the notes and other obligations held by Allied and DC Bancorp under the Maryland National Bank, Rehberg, Allied, and DC Bancorp loans. Miller also executed a promissory note in favor of Allied and DC Bancorp for a principal amount equal to the shortfall amount. To secure his performance, the promissory note also granted to Allied and DC Bancorp ¹ a security interest in all the assets, funds, property, and other rights owned by Miller.

Allied and DC Bancorp prompt and punctual payment of all balances owed. Miller's guaranty was secured by a Collateral Assignment of Ashmere Manor Interests, also dated 30 May 1989, pursuant to which Miller pledged to Allied and DC Bancorp, among other things, his partnership interest and proceeds thereof in Ashmere Partnership, as well as his stock in Ashmere Corporation.

In March 1991, Miller and appellee Jasen executed an agreement whereby Miller assigned his partnership interest in Ashmere Partnership and his stock in Ashmere Corporation to Jasen. Allied alleged that this agreement was executed "at a On 25 March 1991, Jasen sent Allied a letter "confirming" his understanding that Miller's assignment of partnership interest and stock to Allied was "null and void." ² On 27 March 1991, Allied wrote back, stating that Miller's interests in the Partnership and Corporation stock were properly assigned to it, and that upon the declaration of default under Miller's guaranty, those assets became Allied's property. Several more letters were exchanged, ³ but the parties did not reach any meeting of the minds.

                time when Jasen had knowledge of Miller's prior execution of the Collateral Assignment of Ashmere Manor Interests in favor of Allied and DC Bancorp."   Jasen, who is a limited partner in Ashmere Partnership and a shareholder in Ashmere Corporation, notified Allied of his position that the Collateral Assignment of Ashmere Manor Interests in favor of Allied and DC Bancorp was ineffective to pledge Miller's interests in the Partnership and Corporation, and that Miller's partnership interest and stock were effectively assigned to Jasen by the March 1991 agreement
                

In January 1997, Allied filed a complaint for declaratory judgment and accounting. In its appellate brief, Allied asserted that Jasen's "antagonistic" claim to Miller's partnership interest in the Ashmere Partnership and his stock in the Ashmere Corporation "clouded title to these assets, thereby impairing the value of Allied's property interests in Miller's partnership interest ... and ... stock." Allied filed suit "in order to terminate the uncertainty and controversy regarding Allied's and Jasen's respective claims to these assets." Jasen responded by moving to dismiss Allied's complaint, arguing that Allied's claims for declaratory relief were, in truth, claims The trial court concluded that, notwithstanding the fact that the principal counts were titled as declaratory judgment claims, they were actually claims for conversion and thus time barred by the statute of limitations. As to the action for accounting, the court found "no basis" for the claim "based on the dismissal of the first two counts."

for conversion. Jasen asserted that because Allied filed suit more than three years after March 1991, when the cause of action purportedly arose, Allied's claims for declaratory relief and accounting were barred by the general three-year statute of limitations for tort actions.

DISCUSSION

I.

Maryland Rule 2-322(b)(2) allows a defendant to seek a dismissal on the ground that the complaint fails to state a claim upon which relief can be granted. A complaint fails to state a claim when, even if the allegations of the complaint are true, the plaintiff nevertheless is not entitled to relief as a matter of law. Lubore v. RPM Associates, Inc., 109 Md.App. 312, 322, 674 A.2d 547, cert. denied, 343 Md. 565, 683 A.2d 177 (1996). When considering a motion to dismiss for failure to state a claim, the circuit court only examines the sufficiency of a pleading. Id. " 'The grant of a motion to dismiss is proper if the complaint does not disclose, on its face, a legally sufficient cause of action.' " Id. (citing Hrehorovich v. Harbor Hosp. Ctr., 93 Md.App. 772, 784, 614 A.2d 1021 (1992)). On appeal, this Court "must assume the truth of all well-pleaded facts ... as well as inferences which may reasonably be drawn from those well-pleaded facts." Lee v. Denro, Inc., 91 Md.App. 822, 828, 605 A.2d 1017 (1992). If the complaint contains any material facts that support the plaintiff's right to recover, this Court must reverse the order of dismissal. Id.

In the case at bar, appellant's flagship claims were for declaratory relief, authorized by the Maryland Uniform Declaratory Judgments Act, codified at Md.Code (1974, 1995 Repl.Vol., 1997 Supp.), §§ 3-401 to 3-415 of the Courts and Judicial Proceedings Article (CJ). The purpose of the Maryland Uniform Declaratory Judgments Act is "to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations." CJ § 3-402. The court may grant a declaratory judgment if it will settle the controversy or uncertainty and if:

(1) An actual controversy exists between contending parties;

(2) Antagonistic claims are present between the parties involved which indicate imminent and inevitable litigation; or

(3) A party asserts a legal relation, status, right, or privilege and this is challenged or denied by an adversary party, who also has or asserts a concrete interest in it.

CJ § 3-409.

Declaratory judgments have been held appropriate when a party wanted his rights under a will construed, Ryan v. Herbert, 186 Md. 453, 458, 47 A.2d 360 (1946); when a property owner requested a decision as to the validity of a zoning ordinance, Kracke v. Weinberg, 197 Md. 339, 344, 79 A.2d 387 (1951); when an insurance company wanted an insurance policy construed to determine its rights and obligations, Aetna Cas. & Sur. Co. v. Brethren Mut. Ins. Co., 38 Md.App. 197, 206, 379 A.2d 1234 (1977); when insurance carriers questioned which insurer bore the duty to defend a tort action, Northern Assurance Co. of Am. v. EDP Floors, Inc., 311 Md. 217, 223, 533 A.2d 682 (1987); and, most recently, when an attorney sought a declaration as to whether a fee splitting arrangement violated the Maryland Lawyers' Rules of Professional Conduct, Post v. Bregman, 349 Md. 142, 146, 707 A.2d 806 (1998).

The Act casts the granting of a declaratory judgment as "an authorization, not a mandate." Society of American Foresters v. Renewable Natural Resources Found., 114 Md.App. 224, 238, 689 A.2d 662 (1997). "Thus, a court has discretion 'to refuse a declaratory judgment when it does not serve a useful purpose or terminate a controversy.' " Id. (quoting Staley v. Safe Deposit & Trust Co., 189 Md. 447, 456-57, 56 A.2d 144 (1947)); see also CJ § 3-409(a) ("a court may grant a declaratory judgment ... if it will serve to terminate the uncertainty or controversy giving rise to the proceeding" (emphasis added)).

The...