Gonsalves v. Bingel

Decision Date17 September 2010
Docket NumberNo. 983,983
PartiesANNETTE GONSALVES v. THOMAS BINGEL, ET AL.
CourtCourt of Special Appeals of Maryland

Eyler, Deborah S., J.

Annette Gonsalves, the appellant, contracted at public auction to purchase real property owned by Thomas Bingel and Wei Chen, the appellees. Gonsalves was represented in the transaction by her daughter, Michelle Daley, a lawyer. The contract required among other things an immediate $25,000 deposit and a cash payment of the balance within 30 days. When Gonsalves failed to timely close on the contract, Bingel and Chen filed in the Circuit Court for Anne Arundel County a single count breach of contract action against her, claiming the $25,000 deposit as damages ("the Anne Arundel County Case"). Later, after Bingel and Chen sold the property to another buyer at a price less than the amount Gonsalves had agreed to pay, they sought to amend their complaint to recover, in addition to the deposit, damages for the difference in the sales price as contracted by Gonsalves and as sold to a third party ("actual damages"). The court denied their motion for leave to amend the complaint.

Thereafter, but while the Anne Arundel County Case was pending, Bingel and Chen filed a second breach of contract action, based on the same transaction, in the Circuit Court for Montgomery County ("the Montgomery County Case"). In their complaint in the Montgomery County Case, they sought to recover actual damages.

Bingel and Chen prevailed in the Anne Arundel County Case, recovering a judgment for $25,000 plus prejudgment interest and costs against Gonsalves and Daley. Gonsalves then moved to dismiss the Montgomery County Case on the grounds of improper venue and res judicata. The motion was denied. The Montgomery County Case proceeded to a jury trial and resulted in a verdict of $82,906 in favor of Bingel and Chen. That sum included actual damages.

This appeal is taken by Gonsalves from the judgment entered on the verdict in the Montgomery County Case. Gonsalves raises the following issues, which we have rephrased:

I. Did the circuit court err in denying her motion for summary judgment based on res judicata?

II. Did the circuit court err in denying her motion for partial summary judgment to limit Bingel and Chen's damages to only those that they sought to add by amendment to their Anne Arundel County complaint?

III. Did the circuit court err in partially granting Bingel and Chen's motion for summary judgment and ordering that she was collaterally estopped to contest the existence of the contract and its breach?

IV. Did the circuit court err in denying her renewed motion for summary judgment as untimely under the Maryland Rules?

V. Did the circuit court err in denying her motion to dismiss for improper venue?

As explained more fully below, we answer "yes" to Gonsalves's first question. Accordingly, we shall reverse the judgment and remand the case to the circuit court for Montgomery County for entry ofjudgment in favor of Gonsalves. Our disposition of the first question in favor of Gonsalves makes it unnecessary to address the remaining questions presented.

FACTS AND PROCEEDINGS

In mid-2006, Bingel and Chen decided to sell real property they owned in North Beach, Anne Arundel County ("the Property"). The Property, located at 1057 Walnut Avenue, included two adjacent lots improved by a "4-room cottage style" single-family dwelling. Bingel and Chen hired Harvey West Auctioneers, LLC ("West"), to sell the Property at public auction. The auction contract, dated October 4, 2006, specified that, upon sale of the Property, the buyer would pay West a "buyer's premium" equal to three percent of the "final hammer price (final sale price)."

The auction was scheduled for 2:00 p.m. on October 20, 2006. The advertisement for the auction, which West posted on its website and placed in the Washington Post, stated the terms of sale as follows:

A THREE PERCENT BUYER'S PREMIUM WILL BE ADDED TO THE HAMMER PRICE (FINAL SALE PRICE) OF THE SALE. A cash deposit, certified check or cashier's check in the amount of $25,000 at the time and place of sale; balance in cash in 30 days, interest to be paid on the unpaid purchase money at the rate of 8% per annum from date of sale to date of settlement. All settlement expenses including homeowners association dues, if any, to be adjusted to date of sale and assumed thereafter by the purchaser. Cost of all documentary stamps, transfer taxes and all other settlement costs shall be borne by the purchaser. Time is of the essence for the purchaser. If payment of the balance does not take place within the specified period, the deposit will be forfeited and the property will be resold at the risk and expense of the defaulting purchaser. PROPERTY TO BE SOLD IN "AS IS" CONDITION, Auctioneer and/or owner make no warranties or representation as to the condition of this property; subject to easements, agreements, leases, covenants and restrictions of record, if any.

(Emphasis added.)

Gonsalves attended the October 20, 2006 auction, inspected the Property, and made a bid of $400,000. Bingel and Chen accepted her bid, and on that day the parties executed a "Memorandum of Purchase at Public Auction" ("memorandum of purchase"). The memorandum of purchase specified that Gonsalves was buying the Property for $412,000 ($400,000 plus the three percent buyer's premium of $12,000) "subject to the conditions stated [in the advertisement]" and that Gonsalves had paid a $25,000 deposit to West. Michelle Daley was listed on the memorandum of purchase as a purchaser; she did not sign the document, however.

Bingel and Chen and Gonsalves also executed a second, undated, document entitled "Real Estate Contract Additional Terms of Sale."1 (We shall refer to this document and the memorandum of purchase collectively as the "sales contract.") The additional terms included the following:

CLOSING: Purchaser agrees to make full settlement in cash within thirty days from the date of the auction sale. If payment of the balance of the purchase price does not take place within the specified time period, the property will be resold and [sic] the risk and expense of the defaulting purchaser. All settlement costs are to be borne by the purchaser. All expenses, including real estate taxes and sanitary and/or metropolitan district charges are to be adjusted to day of sale and assumed thereafter by the purchaser. Cost of all documentary stamps, transfer taxes and settlement costs shall be borne by the purchaser. If the Seller(s) is/are unable to convey good and marketable title, the purchaser's sole remedy in law and equity shall be limited to a refund of the deposit.

* * *

All other terms stated in the attached advertisement shall become part of this contract.

(Emphasis added.)

In fact, Gonsalves did not have the cash available to go forward with the purchase. She applied for a home equity loan to obtain the cash necessary to complete the transaction; however, she was unable to complete the loan within 30 days of purchasing the Property (November 20, 2006). As a result, she failed to pay the remaining balance by the 30-day deadline, thereby breaching the sales contract.

On February 2, 2007, Bingel and Chen filed the Anne Arundel County Case. Their complaint named Gonsalves, Daley, and West as defendants and stated a single count for breach of contract. It sought as relief the $25,000 deposit, plus prejudgment interest at the 8% rate specified in the sales contract, and post-judgment interest.

On September 24, 2007, Bingel and Chen sold the Property to a third party for $325,000.

A little over a month later, on October 29, 2007, Bingel and Chen filed a motion for leave to amend their complaint "to correct some mistakes made by [prior counsel], who chose to withdraw his appearance in early July of2007, when [they] asked him to get serious and start working on this matter." Specifically, Bingel and Chen proposed to amend the complaint to add Ronald M. West, an auctioneer with West, as a defendant, to be held liable for the $25,000 deposit and "yet to be determined damages," and to add to their claim for relief actual damages of $75,000.2 Regarding the proposed actual damages amendment, Bingel and Chen pointed out that according to the terms of the sales contract the $325,000sale was "at the risk and expense of the defaulting purchaser." Thus, in their proposed amended complaint, Bingel and Chen sought to recover the $25,000 deposit, $75,000 in actual damages, the expenses and costs related to the sale, and pre-and post-judgment interest.

On November 13, 2007, Gonsalves and Daley filed an opposition to the motion for leave to amend. They argued that the proposed amended complaint was not timely, as it did not comply with the court's scheduling order or with Rule 2-341. They further asserted that "[t]he main issue in... dispute [was] whether [they had] defaulted in purchasing the Property... and until [the court decided that issue in favor of Bingel and Chen], [Bingel and Chen] [could not] add an additional claim of $75,000 against [them]."

By order dated December 17, 2007, the court denied Bingel and Chen's motion for leave to amend their complaint. The order stated that Bingel and Chen had provided "no good reason for adding this party [referring to Ronald M. West] this late." The order made no mention of Bingel and Chen's request to include actual damages in their prayer for relief.

Four days later, Bingel and Chen filed the Montgomery County Case, naming as defendants Gonsalves, Daley, and West.3 Their complaint set forth the same breach of contract claim on which the Anne Arundel County Case was based. The only difference between the Anne Arundel County Case and the Montgomery County Case was that, in Montgomery County, Bingel and Chen were seeking $250,000 in actual and consequential damages arising out of the ultimate sale of the Property for $325,000.4

The Anne Arundel County Case was tried to the court on February 27 and 28,...

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