Sergeant Co. v. Pickett

• Decision Date: 25 May 1979
• Docket Number: No. 122,122
• Citation: 285 Md. 186,401 A.2d 651
• Parties: The SERGEANT COMPANY et al. v. Ronald W. PICKETT et al.
• Court: Maryland Court of Appeals

Page 186

285 Md. 186

401 A.2d 651

The SERGEANT COMPANY et al. v. Ronald W. PICKETT et al.

No. 122.

Court of Appeals of Maryland.

May 25, 1979.

James R. Eyler, Baltimore, for appellants.

Thomas B. Yewell, Upper Marlboro, for appellees.

Argued before SMITH, DIGGES, ELDRIDGE, ORTH, COLE and DAVIDSON, JJ.

ORTH, Judge.

This appeal stems from an action for breach of contract brought in the Circuit Court for Charles County by Ronald W. Pickett against The Sergeant Company and Fidelity Federal Savings & Loan Association, formerly Waldorf Federal Savings & Loan Association (Sergeant). The background of the case was set out in Sergeant Co. v. Pickett, 283 Md. 284, 388 A.2d 543 (1978).

In his declaration, Pickett, a builder of residential dwellings, alleged that on payment of a valid consideration, Sergeant, acting on its own behalf and as agent for Fidelity, had procured for him a commitment for a permanent mortgage loan which he had accepted. Pickett further alleged that despite this binding obligation, Fidelity and Sergeant had breached the agreement by utilizing the funds earmarked for the Pickett account to make a loan to another borrower. As a consequence, Pickett allegedly incurred various items of damage, consisting primarily of profits lost from expected house sales.

Sergeant responded with a counterclaim, seeking payment for the unpaid portion of the monies which it claimed to be owed for obtaining the loan commitment. The counterclaim alleged that Sergeant had fully performed its bargain by obtaining the commitment, thus entitling it to fees and commissions upon Pickett's acceptance of the loan. Ultimately a jury awarded Pickett a judgment of.$53,450 against appellees and also found in his favor on the counterclaim.

At the conclusion of the trial, appellants submitted an assortment of jury prayers to the court, among them their requested instruction No. 10:

"Where one party to a contract commits a breach of contract, the other party is required by the 'avoidable consequences' rule of damages to make all reasonable efforts to minimize the loss he sustains as a result of the breach, and he can charge the party in default with such damages only as, with reasonable endeavors and expense and without risk of additional substantial loss or injury, he could not prevent. M & R Contractors & Builders, Inc. v. Michael, 1958, 138 A.2d 350, 215 Md. 340."

This was not read by the trial court during the course of its ensuing charge to the jury, nor was the principle of law adverted to in the prayer otherwise included in its instructions.

Without reaching the contention that the trial court had erred in failing to grant the disputed prayer, the Court of Special Appeals held that the point had not been properly preserved for appellate review under sections d and e of Rule 554, "because appellants (had) not distinctly state(d) the grounds of their objection, designating the particular portion of the instructions given, or omitted, or objected to before the jury retired." (Id. at 285-287, 388 A.2d at 544-545.)

The Court of Special Appeals affirmed the judgment of the trial court. Sergeant Co. v. Pickett, No. 452, September Term, 1977, decided 27 December 1977, unreported. We granted Sergeant's petition for the issuance of a writ of certiorari. We did not agree with the intermediate appellate court and reversed its judgment. We believed, for the reasons stated in the opinion, that there had been "(a)t a minimum . . . substantial compliance with Rule 554 d and e," which "was therefore sufficient to preserve the issue for appellate review." Sergeant Co. v. Pickett, 283 Md. at 290, 388 A.2d at 547. We concluded our opinion by stating:

Because our grant of certiorari in this case was limited to the question whether failure to give the requested instruction was properly preserved for appellate review, and since the substantive issue arising from the trial court's refusal was fully presented to the Court of Special Appeals, we shall remand the case to that court for appropriate resolution. Id.

On remand, in an unreported opinion filed 8 November 1978, the Court of Special Appeals once more affirmed the judgment of the trial court. It still declined to resolve the substantive issue, observing that "(a)lthough our inclination not to address the merits of the complaint has not changed, our reason therefor has." It thought that an " 'appropriate resolution' of the revitilized issue" was properly to be attained under Maryland Rule 1031 c 5 which requires that the brief of the appellant contain "(a)rgument in support of the position of the appellant." It believed that Sergeant's brief did not contain the argument called for by the Rule and, accordingly, it held that the issue had been waived. Sergeant sought review of this judgment by way of certiorari, and we granted its petition. We again reverse.

The Court of Special Appeals set the case down for reargument on remand. When counsel for the parties were informed by the clerk of the court of the date the appeal was to be reheard, they were told:

Counsel will be permitted to use briefs hereinbefore filed in the original cause for this presentation. The issue in this matter will be relegated to questions 2 and 3 in the appellants' brief.

Pickett's counsel sought clarification from the court; he did not believe that the matter was "presently in a proper posture in the Court of Special Appeals":

As the Court of Appeals pointed out in its Opinion, the only question raised on certiorari was the adequacy of an exception to the trial judge's refusal to grant a requested instruction concerning mitigation of damages.

Then, as I read the concluding paragraph of the Court of Appeals' Opinion, the matter has been sent back to the Court of Special Appeals to decide, even though the instruction was not given, whether the failure to give the instruction caused any damage to the appellant which would justify a remand to the trial court.

He expressed his fears:

This case has gone on for quite some time now and I'm concerned that if the Court of Special Appeals doesn't do exactly what the Court of Appeals says it should do, we're going to wind up back in the Court of Appeals.

The Court of Special Appeals confessed that the problem as to what the Court of Appeals expected it to decide on remand had been caused by the Court of Special Appeals "having advised the Clerk's Office to limit reargument to 'questions 2 and 3 as they appear in the brief of appellant.' " It informed all counsel that "(t)he correct instruction should have been to limit argument to question 3 as it appears in the brief of the appellants. . . . The other issues have all been decided by our adoption of the trial court's opinion."

The second question presented by Sergeant in its brief was: "Is there legally sufficient evidence to sustain the award of damages?" The third question was: "Did the court err in its instructions to the jury with respect to the law of damages?" Sergeant dealt with these two questions together. It argued that the evidence did not "measure up to the doctrine of reasonable forseeability" as set out in our decisions. It then asserted:

A primary reason for the unforseeable character of Pickett's alleged damages is that the losses could easily have been avoided. As noted above, the nonavailability of the special forward money did not prevent Pickett from proceeding with his plans. Instead, Pickett chose to make his profit through legal action against Sergeant Company and Fidelity Federal. The failure to mitigate damages bars recovery by Pickett.

Sergeant then quoted what we said in M & R Builders v. Michael, 215 Md. 340, 138 A.2d 350 (1958), was the ordinary rule with respect to minimization of damages, namely that

"damages are not recoverable if the consequences (of a breach are avoidable. In other words, a plaintiff) is not entitled to a judgment for damages for a loss that he could have avoided by a reasonable effort without risk of additional loss or injury. 215 Md. 340, 354-355, 138 A.2d at 358." ¹

Sergeant noted: "This doctrine applies with full force to the instant case. See Furstenburg v. Fawsett, 61 Md. 184 (1884)." Sergeant summed up its argument on both questions 2 and 3 thus:

For all of the reasons stated above, there is legally insufficient evidence to support this jury award of damages and the Court erred in its failure to instruct the jury that it could not award any damages for lost profits. Additionally, the Court erred in its failure to instruct the jury that Pickett had a duty to mitigate damages. These instructions were requested, refused, and exception was taken.

The Court of Special Appeals deemed that the last two sentences comprised the "entire reference to the instructional error argument." It dismissed the prior discussion regarding mitigation of damages as "directed at bolstering (Sergeant's) contention that the case should never have been submitted to a jury," and as not helping the court "to decide whether the trial judge was justified in denying (Sergeant's) requested instruction on mitigation when it was submitted." We do not agree with that narrow view. In the circumstances, we see no such violation of Rule 1031 c 5 as would justify a conclusion that the substantive issue had been waived and should not be considered. Our assertion, whether right or wrong, that the issue had been fully presented to the Court of Special Appeals, stood as the law of the case and called for resolution of the issue on the merits. The setting of the case for reargument, the specific authorization by the Court of Special Appeals to use the briefs previously filed in the court in the original case, the concern of Pickett's counsel regarding the posture of the case on remand and the clarification by the court sent to all counsel, not only gave no indication that the court thought there was a violation of Rule 1031 c 5, but, on the contrary, led to the reasonable assumption, shared, as was...