McGann v. Wilson

• Decision Date: 01 September 1996
• Docket Number: No. 1439,1439
• Citation: 117 Md.App. 595,701 A.2d 873
• Parties: JOHN L. McGANN v. JAMES C. WILSON, et al. ,
• Court: Court of Special Appeals of Maryland

Page 595

117 Md.App. 595

701 A.2d 873

JOHN L. McGANN v. JAMES C. WILSON, et al.

No. 1439, Sept. Term, 1996..

Court of Special Appeals of Maryland.

Oct. 30, 1997.

Terrance J. McGann (Dugan & McGann, P.A., on the brief), College Park, for Appellant.

Susan Vogel Saladoff (Saladoff & Holtz, P.C., on the brief), Chevy Chase, for Appellees.

Argued before EYLER and THIEME, JJ., and JAMES S. GETTY, J. (Retired, Specially Assigned).

JAMES S. GETTY, Judge, Retired Specially Assigned.

This is an appeal by John L. McGann, appellant herein, a Virginia lawyer who claims he was not subject to a lawsuit in the Circuit Court for Prince George's County, Maryland, because the Maryland court lacked personal jurisdiction over him.

Both appellant herein and his co-counsel, a Maryland lawyer, became impaled on their own petards as a result of requesting that the trial judge, at the conclusion of a civil jury trial in Fairfax County, Virginia, allow the jury to disclose what its verdict would have been had the case not been settled minutes before the jury returned its verdict. Counsel settled the case for $200,000; the jury verdict would have been $750,000. Once those disparate figures hit the proverbial fan, the battle began in earnest. We explain.

James C. Wilson and Judy Wilson, his wife, appellees herein, are residents of Prince George's County, Maryland. On September 3, 1987, Mr. Wilson sustained serious injuries when he fell on a loading dock that collapsed while he was delivering packages for United Parcel Services to Hodges Gallery in Fairfax County, Virginia. Mrs. Wilson, at that time, was employed as a legal secretary for the law firm of Fishman and Jaklitsch, located in Prince George's County. Mr. Wilson retained Richard Jaklitsch to pursue a third party claim against Hodges Gallery for negligence in failing to maintain the loading dock in a safe condition.

The statute of limitations for personal injury claims was about to expire in Virginia, prompting Jaklitsch to retain appellant as local counsel in Virginia. Prior to retaining appellant, Jaklitsch had never met or dealt with him in any capacity. Jaklitsch forwarded his pleadings to appellant for revision and filing in Fairfax County, Virginia. Throughout the preparation and trial of the case, appellant never came to Maryland, and did all his preparation in Virginia. Jaklitsch remained as principal counsel. He testified as follows:

I'm always the man on the case. The Wilsons were my clients. In addition to my clients, they were my very close friends.... I was always the guy running the case. I was lead counsel at the trial. I did ninety percent of the trial.

At the time of trial against Hodges Gallery, there existed a Virginia Workers' Compensation claim amounting to approximately $129,000 for medical and wage benefits that appellees had received. Jaklitsch's pretrial efforts to negotiate a reduction of the compensation lien with the attorney for the compensation carrier were unsuccessful. On the final day of trial, immediately before the jury was poised to return its verdict, Wilson agreed to a settlement of his claim against Hodges Gallery for $200,000, payable $150,000 in cash and an annuity of $50,000, to be paid over ten years.

The terms of the settlement were put on the record by the trial judge, including Wilson's admission that he would accept the terms and conditions of the settlement. Immediately after the terms of the settlement were placed on the record, the parties agreed to hear the amount the jury would have awarded. The court permitted the jury foreman to announce that its verdict would have been in favor of Wilson for $750,000.

After settlement, a post-trial hearing was held before the trial judge on the worker's compensation lien. At that hearing, attended by Wilson, Jaklitsch and appellant McGann, Jaklitsch presented to the court his retainer agreement with Wilson for fifty percent of the amount of the recovery in the tort case. The trial judge then reduced the amount of the compensation lien by fifty percent. Whether the 50% fee induced the 50% compensation reduction is unclear.

After appellant received the settlement check, but before the hearing on the compensation lien was held, appellant McGann made his only trip to Maryland, for the express purpose of obtaining the signatures of Wilson and Jaklitsch on the check. This meeting took place at Jaklitsch's office in Prince George's County. Appellant deposited the check in his escrow account in Virginia. The date of appellant's visit to Jaklitsch's office was in the latter part of December 1991. Appellant disbursed the money from the settlement in accordance with the written fifty percent retainer agreement executed by Jaklitsch and Wilson.

In terms of dollars, the distribution of the settlement funds was as follows: the workers' compensation lien, as reduced by the trial judge, amounted to $55,000, which was returned to the workers' compensation insurer. A $50,000 annuity was purchased for Wilson in accordance with the settlement, leaving a balance of $95,000. McGann kept $47,500 and forwarded $47,500 to Jaklitsch in accordance with their fee agreement. ¹ Thereafter, appellees claimed that they were owed more money due to an alleged side agreement between Jaklitsch's firm and Wilson reducing the contingent fee from $50% to 25%. Appellant refused to believe Jaklitsch's assertion of the 25% fee arrangement which, appellant asserts, is a contradiction of the 50% fee arrangement asserted by Jaklitsch at the court hearing in Virginia relating to the lien of the workers' compensation commission.

Unable to secure additional money from their counsel, appellees filed suit in Prince George's County against appellant and Jaklitsch, alleging legal malpractice and breach of contract. With respect to the malpractice charges, appellees charged that Jaklitsch and appellant used undue influence and exerted pressure upon them to coerce their acceptance of the settlement offer.

These issues were tried in Prince George's County before Judge Joseph Casula and a jury. Before the case was submitted to the jury, appellees conceded that no contract existed between appellees and appellant, who did not meet them prior to trial. Accordingly, breach of contract and negligent misrepresentation charges against appellant were dismissed.

The jury found that Jaklitsch breached his contract ² with appellees and they were awarded $21,984.83 from Jaklitsch, representing the difference between the 50% fee charged by appellant and the 25% fee agreed to by the Wilsons and Jaklitsch.

Richard Jaklitsch and appellant McGann were found to have engaged in negligent conduct, including using undue pressure exhorting the Wilsons to settle their case against Hodges Gallery in Virginia. The jury awarded $130,000 to appellees with joint and severable liability against Jaklitsch and appellant. After appeals by both defendants, Jaklitsch reached a settlement with appellees. The breach of contract claim was settled for $24,549.73, and the malpractice claim was settled for $105,450.27.

The case sub judice is confined to John L. McGann's assertion that the Circuit Court for Prince George's County lacked personal jurisdiction over him and should have granted his repeated motions for dismissal of the legal malpractice action.

The Maryland long-arm statute is codified in Sec. 6-103 of the Courts and Judicial Proceedings Article of the Annotated Code. Pertinent to this case are sections (b)(1) and (b)(4), which provide as follows: ³

(b) In general.--A court may exercise personal jurisdiction over a person, who directly or by an agent:

(1) Transacts any business or performs any character of work or service in the State;

...

(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food, services, or manufactured products used or consumed in the State.

Discussion

The purpose of the Maryland long-arm statute was to extend the scope of jurisdiction over nonresident defendants to the limits of the Fourteenth Amendment's Due Process Clause as declared by the United States Supreme Court. Curtis v State, 284 Md. 132, 395 A.2d 464 (1978); Potomac Design, Inc. v. Eurocal Trading, Inc., 839 F.Supp. 364 (D.Md.1993). The reach of the statute, therefore, depends largely upon whether Maryland in personam jurisdiction may be asserted under the Fourteenth Amendment. Leather Masters, Ltd. v. Giampier, Ltd., 836 F.Supp. 328 (D.Md.1993).

Regarding issues of due process with respect to the long-arm statute, federal law is controlling. Snyder v. Hampton Indus., Inc., 521 F.Supp. 130 (D.Md.1981), aff'd, 758 F.2d 649 (4th Cir.1985); Craig v. General Fin. Corp., 504 F.Supp. 1033 (D.Md.1980); United Merchants and Mfrs., Inc. v. David and Dash, Inc., 439 F.Supp. 1078 (D.Md.1977).

When a Maryland court determines whether it may exercise personal jurisdiction over a nonresident defendant, it must engage in a two-prong analysis. First it must determine whether jurisdiction is established under Maryland's long-arm statute and, if so, then it must determine whether the exercise of jurisdiction comports with the Fourteenth Amendment Due Process Clause. Bahn v. Chicago Motor Club Ins. Co., 98 Md.App. 559, 634 A.2d 63 (1993).

In every case, it is essential that there be some act by which the defendant purposefully avails himself of the privilege of conducting activities within the forum state, thereby invoking the benefit and protection of the laws of the forum state. Harris v. Arlen Properties, Inc., 256 Md. 185, 260 A.2d 22 (1969). The unilateral activities of those claiming some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum state. Geelhoed v. Jensen, 277 Md. 220, 352 A.2d 818 (1976).

General jurisdiction...