Blitz v. Beth Isaac Adas Israel Congregation

• Decision Date: 01 September 1996
• Docket Number: No. 1361,1361
• Parties: Marcel BLITZ v. BETH ISAAC ADAS ISRAEL CONGREGATION. ,
• Court: Court of Special Appeals of Maryland

Page 460

115 Md.App. 460

694 A.2d 107

Marcel BLITZ v. BETH ISAAC ADAS ISRAEL CONGREGATION.

No. 1361, Sept. Term, 1996.

Court of Special Appeals of Maryland.

May 6, 1997.

Reconsideration Denied June 25, 1997.

Aaron I. Lubling, Baltimore, for appellant.

Brian H. Silver, Towson, for appellee.

Argued before CATHELL and HOLLANDER, JJ., and ROBERT SWEENEY, Judge (Retired) Specially Assigned.

HOLLANDER, Judge.

We must decide whether the Maryland Uniform Arbitration Act permits recovery of attorney's fees incurred in connection with a suit instituted to confirm and enforce an arbitration award, necessitated by a refusal to comply with binding arbitration. We must also determine whether the circuit court abused its discretion in declining to impose sanctions, pursuant to Maryland Rule 1-341.

Rabbi Marcel Blitz, appellant, and the Beth Isaac Adas Israel Congregation ("Beth Isaac" or "the Synagogue"), appellee, negotiated a binding arbitration agreement to resolve a dispute based on appellant's service as the Synagogue's rabbi. At the conclusion of the arbitration proceeding, the panel awarded Rabbi Blitz the sum of $5,000. When the Synagogue failed to pay, Rabbi Blitz resorted to litigation in the Circuit Court for Baltimore County to confirm and enforce the arbitration award. Although the court confirmed the award, it denied Rabbi Blitz's requests for attorney's fees and sanctions. He now presents the following questions for our review:

I. Did the Circuit Court err when it denied Blitz's request under Section 3-228 of the Courts and Judicial Proceedings Code that he be awarded the attorney's fees he incurred in connection with confirming and enforcing the arbitration award against [Beth Isaac], in light of the clear, unambiguous and broad language in Section 3-228 which authorizes the Circuit Court to award the "costs of the petition, the subsequent proceedings, and disbursements" when the Circuit Court confirms an arbitration award?

II. Did the Circuit Court err when it denied Blitz's Motion for Sanctions under Maryland Rule 1-341 because of the Court's personal distaste for Court intervention in a dispute between a Rabbi and a Congregation, in light of the fact that the undisputed evidence before the Court demonstrated that the conduct of [Beth Isaac] and its attorney was without substantial justification and/or in bad faith and that conduct merited the imposition of sanctions?

III. Did the Circuit Court err when it denied Blitz's Motion to Alter or Amend Judgment, which requested, among other things, that the Court review certain documents, in camera, which would have proven that the conduct of [Beth Isaac] and its attorney was without substantial justification and/or in bad faith and that conduct merited the imposition of sanctions?

We conclude that the Maryland Uniform Arbitration Act ("the Maryland Act"), Maryland Code (1957, 1995 Repl.Vol.), § 3-228(b) of the Courts and Judicial Proceedings Article ("C.J."), does not authorize the award of attorney's fees. We are, however, of the view that the circuit court abused its discretion when it summarily denied appellant's alternative motion for sanctions. As we shall affirm in part and reverse in part, and remand the case for further proceedings, we need not address appellant's remaining question.

Factual Background ¹

A unanimous arbitration decision issued by a Beth Din, ² a religious tribunal that arbitrated the parties' underlying dispute, is the central event underpinning the present controversy. The Beth Din, convened pursuant to an agreement between the parties dated February 27, 1994, was composed of a panel of three rabbis; each party selected one rabbi and the two rabbis then chose the third rabbi. In accordance with the terms of the contract, the decision of the Beth Din was to be "binding on both parties," as well as "final and with no appeal." On June 14, 1994, the Beth Din awarded Rabbi Blitz $5,000 in damages, payable in two installments; a $3,000 payment was due before July 9, 1994, and a $2,000 payment was due before July 28, 1995. Although the Synagogue did not contest the validity of the judgment in the period immediately subsequent to the Beth Din's decision, it failed to make either payment.

In January 1995, Rabbi Blitz filed suit in the District Court for Baltimore County, seeking to recover the money owed by the Synagogue. ³ After the Synagogue filed a Notice of Intention to Defend, Rabbi Blitz appeared for trial with two of the three rabbis who presided at the Beth Din. The Synagogue moved to dismiss for lack of subject matter jurisdiction, claiming the District Court lacked jurisdiction to confirm and enforce an arbitration award. That motion was granted, without prejudice.

Thereafter, in mid March, Rabbi Blitz's attorney notified the Synagogue that he would seek to enforce the arbitrators' award in court if the money was not paid. On March 28, 1996, Rabbi Blitz filed in the circuit court a Petition to Confirm and Enforce Arbitration Award and Complaint for Damages, as well as a motion for summary judgment, supported by the arbitration agreement, an affidavit from the rabbis who served on the Beth Din, and Rabbi Blitz's affidavit. He asked, inter alia, for costs and attorneys' fees, premised on C.J. § 3-228. The Synagogue was served on April 8, 1996, but it did not timely file its answer to the Petition. As a result, on May 14, 1996, the court signed an Order entering judgment in favor of Rabbi Blitz in the amount of $5,000, which was docketed on May 16, 1996. In the Order, the court said that Rabbi Blitz's attorney's fees would "be determined by the court upon submission of sufficient evidence in support thereof." As directed by the court, appellant promptly submitted an affidavit seeking attorney's fees and costs in the amount of $1,615.

By order dated May 22, 1996, docketed May 28, 1996, the circuit court entered judgment in favor of appellant in the amount of $415 for costs, but denied appellant's request for attorney's fees under C.J. § 3-228. Appellant then filed a "Motion for Reconsideration" on June 25, 1996, seeking to invoke the court's revisory power under Rule 2-535. After the court denied the motion on July 10, 1996, appellant noted his appeal on July 12, 1996. ⁴

In the interim, on May 15, 1996, the Synagogue filed its answer, along with a Petition to Modify or Vacate the arbitration award and a Response to Motion for Summary Judgment. It contended that "the arbitrators exceeded their authority;" it claimed that the parties had limited the arbitrators to a maximum award of $3,000. Because the order had already been signed when these papers were filed, it is unclear whether the judge revisited the order of May 14 before it was docketed on May 16.

Counsel for Rabbi Blitz contacted appellee's counsel to advise him that the Synagogue's challenges were untimely, based on C.J. § 3-223 (requiring filing of a petition to modify within 90 days after receipt of the arbitration decision) and C.J. § 3-224 (requiring filing of a petition to vacate within 30 days from receipt of the award). Although appellee's counsel was aware of the time limitations, he felt that the case of C.W. Jackson & Assocs., Inc. v. Brooks, 289 Md. 658, 426 A.2d 378 (1981), supported his contention that an arbitration can be vacated or modified after the statutory time limitations. ⁵ The record also includes a detailed and lengthy letter from Rabbi Blitz's attorney, confirming the conversation of counsel and containing legal authority to support Rabbi Blitz's position that the Synagogue's action lacked merit.

On May 17, 1996, Rabbi Blitz's attorney faxed to the Synagogue's counsel a copy of a sworn affidavit from the three rabbis who served on the Beth Din, attesting that the Synagogue's Petition violated the terms of the arbitration agreement. Further, the rabbis averred that the parties never agreed to limit the arbitrators' authority to an award of $3,000. Counsel for Rabbi Blitz also filed an Opposition to Defendant's Petition to Modify or Vacate, a Motion to Strike Defendant's Petition to Modify or Vacate, a Supplemental Memorandum in Support of Motion for Summary Judgment, and a Motion for Sanctions against the Synagogue and its lawyer, predicated upon Md. Rule 1-341. By letter dated May 29, 1996, however, appellant agreed to withdraw his motion for sanctions if the Synagogue would agree to abandon its position.

Meanwhile, on June 5, 1996, Rabbi Blitz served a writ of garnishment on First Union National Bank ("First Union") to satisfy the judgment from the Synagogue's cemetery fund. The Synagogue filed an Answer to and Motion to Dismiss Garnishment, asserting that the garnished account "is a trust account as defined in Md. C & J Code Ann., Sec. 11-603(b)," and supported by a copy of a bank statement and an affidavit. It was supplemented by a memorandum in which appellee asserted that the garnished account "is a trust fund that is required by [Maryland Code, Business Regulation Art. ("B.R.") (1957, 1992 Repl.Vol.), § 5-303], and is specifically regulated as a trust fund." (Emphasis supplied.)

Thereafter, appellant filed an opposition to the Synagogue's motion to dismiss the garnishment, and a supplemental legal memorandum, in which he averred that the account was not a "trust account," but a regular bank account, and that the applicable statutory law and the documentation submitted in support of appellee's motion did not support the Synagogue's contention that the account was a trust account. Nonetheless, appellee's counsel sent a letter to appellant requesting voluntary dismissal of the garnishment.

During a telephone conversation on July 1, 1996, confirmed by a letter of the same date, counsel for appellant advised appellee that B.R. § 5-302(a)(2)(iv), which immediately precedes one of the statutory provisions upon which the Synagogue relied, unequivocally provides that the subtitle does not apply to a cemetery that "is owned and...