Am. Bank Holdings, Inc. v. Kavanagh

• Decision Date: 30 December 2013
• Docket Number: Sept. Term, 2013.,No. 21,21
• Parties: AMERICAN BANK HOLDINGS, INC. v. Brian KAVANAGH and Jeffrey Weber.
• Court: Maryland Court of Appeals

436 Md. 457

82 A.3d 867

AMERICAN BANK HOLDINGS, INC.

v.Brian KAVANAGH and Jeffrey Weber.

No. 21, Sept. Term, 2013.

Court of Appeals of Maryland.

Dec. 30, 2013.

David S. Panzer (Greenberg, Traurig, LLP, Washington, DC), on brief, for Petitioner.

Martin E. Wolf (Benjamin H. Carney, Richard S. Gordon, Gordon, Gordon & Wolf, Chtd. of Towson, MD, John W. Nowicki, Tyler Nowicki, Law Offices of John W. Nowicki, P.A., Bel Air, MD), on brief, for Respondents.

Argued before BARBERA, C.J., HARRELL, BATTAGLIA, GREENE, ADKINS, McDONALD and WATTS, JJ.

BATTAGLIA, J.

American Bank Holdings, Inc., Petitioner, is engaged in the business of originating, making, and selling residential mortgage loans. Brian Kavanagh and Jeffrey Weber (collectively “Respondents”) were employed by American as co-branch managers operating an office located at 9500 Harford Road, Baltimore, as well as originating residential mortgage loans. Respondents executed similar “Co–Branch Manager Employment Agreement[s]” with American, which, in relevant part, provided that American was to establish a “ loss reserve” ¹ account “funded with funds earned by the Employee.” The amount to be deposited into this account was one-tenth of one percent “on all loan transactions” ², and would “be used by [American] to pay any losses incurred by [American] with respect to the Branch Office” managed by Respondents. The agreements further provided that six months after termination of the agreements, Respondents were to be paid, “as a bonus,” twenty-five percent of what remained in the loss reserve and on the one-year anniversary of the termination, fifty-percent of what remained.

Respondents' employment agreements each contained an arbitration clause, which, in relevant part, provided: “Any controversy or claim, other than petitions for equitable relief, arising out of or relating to this Agreement, or breach hereof (including arbitrability of any controversy or claim), shall be settled by arbitration, in Bethesda, Maryland and in accordance with the laws of the State of Maryland....”

Respondents terminated their employment agreements with American, but American allegedly failed to pay Respondents the funds due them from the loss reserve in accordance with the terms of their employment agreements. Respondents filed a “Complaint for Accounting” ³ in the Circuit Court for Baltimore County against American, after allegedly having “made numerous proper requests for statements and supporting documentation for the expenses, losses and/or any other monetary transaction that has contributed to the Loss Reserve Account for the period of [Respondents'] employment”, believing that the amount due them was approximately $250,000. Respondents, accordingly, demanded that “American be ordered by a decree of this Court to fully and completely account for all sums due [Respondents] in accordance with each [Respondent's] Co–Branch Manager Agreement, specifically the Loss Reserve Account” and requested such “further relief as this Court finds just and equitable.”

American filed an Answer to Respondents' Complaint, generally denying many of Respondents' averments, specifically denying others, and asserting the affirmative defenses of accord and satisfaction and payment, as well as the “Preliminary Defense” that “this Court lacks jurisdiction to hear the case because [Respondents'] claims are subject to mandatory arbitration agreements set forth in the ... Employment Agreements.” The circuit court set deadlines that included one in which to file motions to dismiss within two weeks; it was within that deadline that American filed a “Petition to Compel Arbitration and Stay All Proceedings and Request for Hearing,” asserting that, because Respondents' claims arose out of their employment agreements, the court was required to compel arbitration.⁴ Respondents, in response, filed an Answer to American's “Petition to Compel Arbitration and Stay All Proceedings and Request for Hearing,” arguing that their request for accounting was “a matter reserved for equity jurisdiction” and, therefore, their claim was not subject to arbitration under the terms of the arbitration clause.

Judge John Turnbull, II denied American's “Petition to Compel Arbitration and Stay All Proceedings and Request for Hearing,” without a hearing, by Order that, in its entirety, provided:

Upon consideration of Plaintiff's Answer to Defendant's Petition to Compel Arbitration and Stay All Proceedings and Request for Hearing in the above referenced matter, it is on this 27th day of May, 2011, hereby:

ORDERED that Defendant's Petition to Compel Arbitration and Stay All Proceedings and Request for Hearing is hereby DENIED.

American, then, filed a Notice of Appeal, which stated that “American Bank Holdings, Inc. hereby notes an appeal ... to the Court of Special Appeals including but not limited to an appeal of the Court's May 27,2011 Order denying Defendant's Petition to Compel Arbitration and Stay All Proceedings ... in the action.” ⁵

The intermediate appellate court dismissed American's appeal, in an unreported opinion, concluding, inter alia, “[t]he denial of appellant's motion to compel arbitration is not final for the purposes of § 12–301[⁶] [of the Courts and Judicial Proceedings Article, Maryland Code (1974, 2006 Repl. Vol.) ].... In fact, the order was meant to keep the parties in court, not put them out of court.” (emphasis in original). we granted American's Petition for Certiorari, American Bank Holdings v. Kavanagh, 430 Md. 644, 62 A.3d 730 (2013), to consider whether, “the denial of a motion to compel arbitration constitutes a final judgment under § 12–301 if a substantively equivalent petition could have been filed as a separate and independent action under § 3–207[ ⁷] [of the Courts and Judicial Proceedings Article, Maryland Code (1974, 2006 Repl. Vol.) ]?” To explore this question we turn to the principles of appellate jurisdiction.

Under Section 12–301 of the Courts and Judicial Proceedings Article, Maryland Code (1974, 2006 Repl. Vol.),⁸ a party may appeal from a final judgment entered in a civil case by a circuit court:

Except as provided in § 12–302[ ⁹] of this subtitle, a party may appeal from a final judgment entered in a civil or criminal case by a circuit court. The right of appeal exists from a final judgment entered by a court in the exercise of original, special, limited, statutory jurisdiction, unless in a particular case the right of appeal is expressly denied by law. In a criminal case, the defendant may appeal even though imposition or execution of sentence has been suspended. In a civil case, a plaintiff who has accepted a remittitur may cross-appeal from the final judgment.

A “final judgment” is defined as “a judgment, decree, sentence, order, determination, decision, or other action by a court ... from which an appeal, application for leave to appeal, or petition for certiorari may be taken.” Section 12–101(f) of the Courts and Judicial Proceedings Article. We have taken on the task to further refine just what constitutes a “final judgment.” See Brewster v. Woodhaven Bldg. & Dev., Inc., 360 Md. 602, 609–10 n. 1, 759 A.2d 738, 742 n. 1 (2000); Peat, Marwick, Mitchell & Co. v. Los Angeles Rams Football Co., 284 Md. 86, 91, 394 A.2d 801, 804 (1978). In so doing, we have determined that a ruling of the circuit court, to constitute a final judgment, must be an “unqualified, final disposition of the matter in controversy,” Gruber v. Gruber, 369 Md. 540, 546, 801 A.2d 1013, 1016 (2002) (quotation omitted), which decides and concludes the rights of the parties involved or denies a party the means of further prosecuting or defending rights and interests in the subject matter of the proceeding.

Nnoli v. Nnoli, 389 Md. 315, 324, 884 A.2d 1215, 1219–20 (2005). An order that has the effect of putting a party out of court is a final judgment, while an order that does not prevent a party from further prosecuting or defending rights is not a final judgment. Brewster, 360 Md. at 611–13, 759 A.2d at 742–43; Town of Chesapeake Beach v. Pessoa Constr. Co., Inc., 330 Md. 744, 750–51, 625 A.2d 1014, 1017 (1993); Horsey v. Horsey, 329 Md. 392, 401–02, 620 A.2d 305, 310 (1993).

The requirement that an order, to be a final judgment, must put a party out of court or otherwise terminate the proceedings has deep historical roots in Maryland, as Judge Irma Raker explained in Brewster:

Our cases pertaining to this question show that an order is final if it terminates the litigation in a particular court. The cases stating the general rule that a judgment terminating litigation is a final judgment date from an early period. As early as 1835, we were already referring to the “well established rule” that

no appeal can be prosecuted in this Court, until a decision has been had in the Court below, which is so far final, as to settle, and conclude the rights of the party involved in the action, or denying to the party the means of further prosecuting or defending the suit.

Boteler & Belt v. State ex rel. Chew & Co., 7 G. & J. 109, 112–13 (Md.1835). Thus, it is well settled that an order denying a party the ability to pursue claims anywhere is an immediately appealable final order. We have often reiterated this point, applying it over an extraordinarily long historical period and an impressively wide range of subject matter.... Peat & Co. v. Los Angeles Rams, 284 Md. 86, 91, 394 A.2d 801, 804 (1978) (a trial court's order denying a party's motion to disqualify opposing counsel was not an immediately appealable final judgment because it did not “determine and conclude the rights involved” or “deny the appellant ... means of further prosecuting or defending his rights in the subject matter of the proceeding”); McCormick v. St. Francis de Sales Church, 219 Md. 422, 426–27, 149 A.2d 768, 771 (1959) (a trial court's order granting defendant's motion to strike plaintiff's initial pleading is an immediately appealable final...