Christian Book v. Great Christian

• Citation: 768 A.2d 719,137 Md. App. 367
• Decision Date: 08 March 2001
• Docket Number: No. 847,847
• Parties: CHRISTIAN BOOK DISTRIBUTORS, INC. v. GREAT CHRISTIAN BOOKS, INC., et al.
• Court: Court of Special Appeals of Maryland

768 A.2d 719

137 Md. App. 367

CHRISTIAN BOOK DISTRIBUTORS, INC. v. GREAT CHRISTIAN BOOKS, INC., et al.

No. 847, Sept. Term, 2000.

Court of Special Appeals of Maryland.

March 8, 2001.

Robert B. Carpenter (Schnader, Harrison, Goldstein & Manello, Boston, MA, John R. Wellschlager and Piper, Marbury, Rudnick & Wolfe, LLP, Baltimore, on the brief), for appellant.

William F. Riddle, Elkton, for appellees.

Argued before MURPHY, C.J., and EYLER and ADKINS, JJ.

EYLER, Judge.

The question presented by this appeal is whether the Circuit Court for Cecil County erred in vacating a judgment filed in that court pursuant to the Uniform Enforcement of Foreign Judgments Act, Md.Code (1998 Repl.Vol., 2000 Supp.), Cts. & Jud. Proc. § 11-801 et seq., on the ground that the Massachusetts court that entered the judgment lacked jurisdiction over the person of the defendant. We answer the question in the negative, and consequently, affirm the judgment of the circuit court. In doing so, we shall revisit what is commonly called the fiduciary shield doctrine¹ and overrule our holding in Umans v. PWP Serv., Inc. 50 Md.App. 414, 439 A.2d 21 (1982).

Factual Background

Christian Book Distributors, Inc., appellant, is in the business of selling religious books by mail. Great Christian Books, Inc. (GCB) was in the same business and was a competitor of appellant. In March, 1998,² appellant commenced negotiations with GCB, the latter acting through William Wallace, appellee, regarding the possible purchase by appellant of GCB's customer list. On July 10, 1998, GCB sold, and appellant purchased, GCB's customer list.

On December 2, 1998, appellant filed a complaint in Superior Court in Massachusetts against GCB, William Wallace, and other defendants whose identities are not relevant to this appeal. In addition to the information in the preceding paragraph, appellant alleged that GCB and William Wallace (hereinafter appellee) faxed the closing documents to appellant in Massachusetts, that the documents contained misrepresentations of fact on which appellant relied, and that appellant and GCB continued to use the list after settlement. The complaint contained four counts: (1) breach of agreement, (2) conversion, (3) misrepresentation, and (4) an action under the Massachusetts business regulation & consumer protection act. Mass. Ann. Laws ch. 93A, §§ 2 and 11 (1994 Repl. Vol.).

With respect to jurisdiction, appellant alleged in the complaint that (1) it was a Massachusetts corporation with a place of business in Massachusetts; (2) GCB was a Delaware corporation with a place of business in Maryland; and (3) appellee was a resident of Maryland. Appellant alleged that the court had personal jurisdiction over the defendants under Mass. Ann. Laws ch. 223A, § 3, the Massachusetts long-arm statute, because the defendants transacted business or caused tortious injury within Massachusetts.

The complaint contained exhibits consisting of an affidavit dated December 2, 1998, by Steven J. Henderson, President of appellant, and the closing documents. The latter consisted of (1) the asset purchase agreement, (2) the bill of sale, (3) a "certificate" by GCB with respect to the warranties and representations described in Paragraph 7 of the asset purchase agreement, and (4) a letter from GCB's secured lender, releasing its lien on the customer list. According to the documents, appellee executed the asset purchase agreement on behalf of GCB as a duly authorized agent and executed the bill of sale and certificate as president of GCB. The asset purchase agreement and the certificate contained representations and warranties by GCB that it had good and marketable title to the customer list, that the quantity and quality of the list was as specified, and that recent transactions with the customer list were as specified. Appellant sought damages and injunctive relief.

On December 2, 1998, the same day that the complaint was filed, the Superior Court issued a temporary restraining order directed to the defendants. According to a return of private process server, on December 9, 1998, appellee was served with the complaint, the temporary restraining order, and other pleadings, at his place of abode, 816 Hilltop Road, Elkton, Maryland. On December 10, 1998, the Superior Court held a hearing on appellant's request for a preliminary injunction and issued the injunction, ordering the defendants to deliver all copies of the customer list to appellant and to refrain from using the list. According to a return of private process server, on December 12, 1998, appellee was served with the preliminary injunction and other pleadings by leaving copies at his place of abode, 816 Hilltop Road, Elkton, Maryland.

After receiving no response from the defendants, appellant filed a motion for judgment by default on January 4, 1999. The court granted the motion and scheduled a hearing on damages for January 26, 1999. The defendants did not appear at that time, and the Superior Court advised appellant to communicate to the defendants that the hearing would be reset for February 2, 1999. According to a return of private process server, on January 27, 1999, appellee was served with the motion, the notice of hearing, and other information by leaving copies at his place of abode, 816 Hilltop Road, Elkton, Maryland. On the morning of February 2, 1999, appellee, pro se, faxed a motion to dismiss, based on lack of personal jurisdiction, to Justice Howard J. Whitehead, Superior Court. The record indicates that the motion was received at that time, although it was not docketed until February 22.

On February 13, 1999, the Superior Court ruled that (1) the defendants were in default, and (2) because appellee's motion was untimely, it required no action. That ruling was docketed on February 22. On February 17, 1999, the Superior Court assessed damages, and on February 22, 1999, entered judgment for damages against appellee and GCB, but it did not include final injunctive relief.

On March 4, 1999, appellant filed a motion to alter or amend the judgment, supported by an affidavit of the same date, seeking a final injunction prohibiting GCB from continued use of the customer list. Appellee appeared through counsel and opposed the motion. The motion was heard on March 11, and on March 30 (docketed on April 2), the court granted the requested relief. The Superior Court, by its opinion and order dated March 30, 1999, accepted the factual allegations in the complaint as true, based on the default, and ruled that the facts established the liability of GCB "at least" with respect to Counts 1 (breach of agreement) and 4 (violation of Consumer Protection Act), and the liability of appellee "at least" as to Count 4 (violation of the Consumer Protection Act). The court entered judgment for damages and injunctive relief on those counts. Because appellee is the only person or entity raising an issue before us, the pertinent judgment is the judgment against appellee with respect to the violation of the Consumer Protection Act.

On April 14, 1999, appellee filed a motion to vacate the judgment on the ground of lack of proper service, and in the alternative, on the ground of excusable neglect. The motion was supported by appellee's affidavit which, in pertinent part, stated (1) that he negotiated the sale of the customer list as a representative of GCB, (2) that he was an employee of GCB and a member of its board, but not an officer or a stockholder, (3) that negotiations occurred primarily by e-mail and faxes, and (4) that he received the suit papers on December 9, 1998, but did not respond then or at any time before February 2, 1999, because his Maryland counsel had advised him that he had not been served properly nor was he subject to the jurisdiction of the court.³ On May 19, 1999, the Superior Court, after a hearing, implicitly found that appellee had been served and expressly found that appellee had willfully and inexcusably failed to defend the action. The court denied appellee's motion to vacate the judgment.

On May 28, 1999 (docketed on June 1), appellee filed a motion for reconsideration supported by affidavits. On June 9, 1999, the court denied that motion. On June 16, 1999, appellee filed a notice of appeal to the Massachusetts Appeals Court. That appeal is presently pending. On August 6, 1999, appellant recorded the judgment against appellee in the Circuit Court for Cecil County. Appellee filed a motion to vacate that foreign judgment, and in the alternative, a motion to stay enforcement of the foreign judgment. On May 10, 2000, after a hearing, the circuit court granted the motion to vacate the judgment on the ground that appellee had insufficient contacts with Massachusetts to satisfy due process. On May 18, 2000, appellant filed a motion for reconsideration. On May 24, 2000, the court denied the motion. On June 5, 2000, appellant filed a notice of appeal to this Court.

Discussion

The question before us is whether the Massachusetts judgment is entitled to full faith and credit pursuant to the Uniform Enforcement of Foreign Judgment Act. In responding, we note that the merits of the controversy are not before us; the only issue is whether the Massachusetts court had jurisdiction.⁴ In making that determination, our review is limited to ascertaining whether Massachusetts complied with its own laws, and whether its proceedings were in accordance with due process. See Young v. Progressive Cas. Ins. Co., 108 Md.App. 233, 245, 671 A.2d 515 (1996)

(citing Renwick v. Renwick, 24 Md.App. 277, 287, 330 A.2d 488 (1975)); Imperial Hotel, Inc. v. Bell Atlantic Tri-Con Leasing Corp., 91 Md.App. 266, 273-74, 603 A.2d 1371 (1992). Due process requires sufficient minimum contacts with the forum state so as "`not [to] offend "traditional notions" of fair play and substantial justice.'" See Columbia Briargate Co. v. First Nat'l Bank, 713 F.2d 1052, 1057 (4th Cir.1983)(citing World-Wide Volkswagen Corp. v....