Serio v. Baystate Props., LLC

• Decision Date: 08 March 2012
• Docket Number: 2009.,Sept. Term,No. 1441,1441
• Citation: 39 A.3d 131,203 Md.App. 581
• Parties: Vincent Salvatore SERIO v. BAYSTATE PROPERTIES, LLC.
• Court: Court of Special Appeals of Maryland

203 Md.App. 581

39 A.3d 131

Vincent Salvatore SERIO

v.BAYSTATE PROPERTIES, LLC.

No. 1441

Sept. Term

2009.

Court of Special Appeals of Maryland.

March 8, 2012.

Robert Schulte (Schulte Booth, on the brief) Baltimore, MD, for appellant.

Leonard C. Redmond, III, Baltimore, MD, for appellee.

Panel: MATRICCIANI, GRAEFF, JAMES A. KENNEY, III (Retired, Specially Assigned), JJ.

KENNEY, J.

On October 29, 2007, Baystate Properties, LLC (“Baystate”), appellee, filed a complaint in the Circuit Court for Baltimore County against Vincent Serio, appellant, who is the sole member of Serio Investments, LLC (“Serio Investments”). Baystate sought to hold Serio personally liable for amounts due to Baystate under a contract with Serio Investments. Serio engaged Shanell Harleston as counsel for the litigation, but about eight weeks before the trial date, Harleston notified him of her intent to withdraw as his attorney, which Serio opposed. On July 22, 2009, prior to beginning a bench trial, the circuit court granted Harleston's motion to withdraw as Serio's counsel and denied Serio's subsequent request for a brief continuance. At the end of the trial, the circuit court entered judgment in favor of Baystate against Serio personally in the amounts of $131,438.34 and $10,380.00.

Serio presents the following questions for our review, which we have slightly reworded:

1. Did the circuit court abuse its discretion by granting appellant's trial counsel's motion to withdraw as counsel on the day of trial and then denying appellant's request for a brief continuance to secure new trial counsel?

2. Did the circuit court err by finding Serio personally liable for the debts of Serio Investments, a limited liability company solely owned by Serio, absent a finding of fraud?

3. Did the circuit court err by not enforcing an express waiver of personal liability, executed by and between Baystate and Serio Investments?

For the following reasons, we shall reverse the judgment of the circuit court.

FACTS AND PROCEEDINGS

On December 14, 2006, Timothy Wenzel, Managing Member of Baystate, entered into a contract (the “Agreement”) with Serio, as Managing Member of Serio Investments, to build houses to certain specifications on two lots identified as 1901 and 1903 Hillside Drive (the “Hillside Drive Lots”), which were owned by Serio individually. Serio Investments, identified in the Agreement as “Lender,” was to “provide an escrow account ... from which [Baystate] will receive payments according to the agreed upon draw schedule” for its work. Upon the sale of the improved lots to a third party, Baystate would be paid an additional $25,000 for each house.

As work progressed, Wenzel drafted multiple addenda to the Agreement representing changes to the work requested that, in aggregate, obligated Serio Investments to pay Baystate an additional $43,638.33. Each addendum, when first presented by Wenzel, referenced Serio personally, but Serio revised those references and both parties signed the addenda, with Serio signing as the Managing Member of Serio Investments. In June of 2007, Serio presented Wenzel with a handwritten waiver by Baystate and Serio Investments of any claims for personal liability under the Agreement. Wenzel typed that document and both Wenzel and Serio, on behalf of Baystate and Serio Investments respectively, executed the document.

Shortly thereafter, payments to Baystate began to slow. When Wenzel contacted Serio regarding the payments, he was assured that the properties would soon be sold. In fact, the 1901 Hillside Drive Lot had sold on June 29, 2007 for $380,000.00. The 1903 Hillside Drive Lot was sold on October 11, 2007, but, because the buyers subsequently defaulted on a mortgage, Serio received only approximately $20,000.00 on the sale. According to Baystate, none of the proceeds from the sale of the Hillside Drive Lots were deposited into the Serio Investments account.

On October 29, 2007, Baystate filed a complaint against Serio and Serio Investments in the Circuit Court for Baltimore County (Case No.: 03–C–07–012440) (the “Finished Houses case”) for money owed on the Hillside Drive Lots, and an action in the District Court for Baltimore County (Case No.: 03–C–08–3835) (the “Empty Lot case”) to recover for work done on an unimproved lot adjacent to the Hillside Drive Lots. Incidentally, two of Baystate's subcontractors filed actions against Baystate in the District Court to recover for work done on the finished houses. Baystate moved to have Builder Services, Inc. v. Baystate Properties, LLC (Case No.: 080400420382007) and Harford Insulation v. Baystate Properties, LLC (Case No.: 080400372032007) (the “Subcontractor cases”) removed to the circuit court and consolidated with the Finished Houses case. On March 4, 2009, the court granted a Joint Motion to Consolidate the Finished Houses and Empty Lot Cases and set the Finished Houses case along with Empty Lot case and Subcontractors Cases in for trial on July 22, 2009. On July 21, 2009, Serio Investments, LLC filed for bankruptcy under Chapter 7, staying all creditor actions against the LLC.

Serio engaged Shanell Harleston and the Harleston Law Firm, LLC, to represent both Serio and Serio Investments in the litigation. On May 12, 2009, Harleston contacted Serio by letter to inform him that her recent employment with the federal government necessitated the closing of her private practice, and of her intent to withdraw as his attorney in the Baystate litigation. Subsequently, Harleston filed, under Maryland Rule 2–132, a Motion to Withdraw Appearance as Counsel in the Circuit Court for Baltimore County. Because the clerk's office did not correctly docket that motion, it was not ruled on until the day of the trial.

Prior to the beginning of the trial, the circuit court considered Harleston's motion to withdraw and Serio's opposition to that motion. The court concluded that Harleston had fulfilled her obligations to Serio and granted her request to withdraw as counsel. Serio then asked the court for a brief continuance, but the court, finding that Serio was long aware of his need to secure substitute counsel, denied the request. In the court's view, Serio's failure to act until the week of trial was unreasonable, and he would have to proceed pro se. Both parties waived their right to a jury trial, and at the conclusion of the bench trial, the court did not find fraud but, to enforce a paramount equity, held Serio personally liable for the obligations of Serio Investments. The court entered judgment on July 29, 2009, in favor of Baystate and against Serio individually in the amounts of $131,438.34 for the Finished Houses case and $10,380.00 for the Empty Lot case, exclusive of costs. This timely appeal followed.

DISCUSSION

In this case, we are asked to consider: (1) whether the circuit court abused its discretion in permitting Serio's counsel to withdraw on the day of the trial without allowing Serio a brief continuance to secure new counsel and, if not, (2) whether the personal liability shield accorded to limit liability companies should have been disregarded and Serio held personally liable for the monies owed to Baystate by Serio Investments' obligations. Recognizing the deference we owe to the circuit court's factual determinations, we will discuss these issues in turn.

Counsel's Withdrawal

Serio contends (1) that Harleston's withdrawal violated her ethical duties under the Maryland Rules of Professional Conduct; (2) that the circuit court's denial of his request for a continuance effectively denied him “a meaningful opportunity to secure new counsel after the Court grants an attorney's request to withdraw” as his counsel; and (3) the clerk's subsequent notification under Rule 2–132, six days after judgment was entered, rendered the Rule “meaningless.”

Rule 2–132 governs the striking of an attorney's appearance and imposes notification obligations on the moving attorney and clerk of the court. It states, in pertinent part:

(b) By motion. When the client has no other attorney of record, an attorney wishing to withdraw an appearance shall file a motion to withdraw. Except when the motion is made in open court, the motion shall be accompanied by the client's written consent to the withdrawal or the moving attorney's certificate that notice has been mailed to the client at least five days prior to the filing of the motion, informing the client of the attorney's intention to move for withdrawal and advising the client to have another attorney enter an appearance or to notify the clerk in writing of the client's intent to proceed in proper person.... The court may deny the motion if withdrawal of the appearance would cause undue delay, prejudice, or injustice.

(c) Notice to employ new attorney. When the appearance of the moving attorney is stricken and the client has no attorney of record and has not mailed written notification to the clerk of an intention to proceed in proper person, the clerk shall mail a notice to the client's last known address warning that if new counsel has not entered an appearance within 15 days after service of the notice, the absence of counsel will not be grounds for a continuance. The notice shall also warn the client of the risks of dismissal, judgment by default, and assessment of court costs.

(Emphasis added). Rule 2–508(a), which addresses the court's ability generally to continue a trial or proceeding, states:

[O]n motion of any party or on its own initiative, the court may continue a trial or other proceeding as justice may require.

(Emphasis added).

The Maryland Rules of Professional Conduct (“MRPC”) establish the ethical duties and obligations of a Maryland attorney. See e.g., Atty. Griev. Comm'n v. Bleecker, 414 Md. 147, 994 A.2d 928 (2010). MRPC Rule 1.16 governs an attorney's termination of representation and states, in relevant part:

(c) A lawyer must comply with applicable law requiring notice to or permission of a tribunal when...