Gwendolyn and Leeroy Nesbitt contracted with Mid-Atlantic Builders for residential property, later alleging disclosure violations under Md. Code (1974, 2015 Repl. Vol. 14-117(a)(3). Mid-Atlantic sought dismissal or arbitration, along with attorneys’ fees as per the contract. The circuit court compelled arbitration and stayed the case, leaving the fees issue unresolved. In arbitration, Mid-Atlantic counterclaimed for fees and the arbitrator found no violation of RP. 14-117, deferring the fees decision to the court. Following the arbitration, the Nesbitts filed a notice of dismissal in circuit court. Mid-Atlantic moved to strike this notice, confirm the arbitration award, and obtain fees. The court granted Mid-Atlantic's motions, prompting the Nesbitts to appeal. The appellate court affirmed, noting the lack of a directly relevant Maryland case but citing that Maryland Rule 2-506(a) is similar to Fed. Rule 41(a)(1) and that federal interpretations are persuasive. It also highlighted that both the Maryland and Federal Arbitration Acts allow for confirmation of an arbitration award unless contested. The Eleventh Circuit's PTA-FLA, Inc. ruling, which involved a similar situation, supported the position that a dismissal does not negate the court's jurisdiction to confirm the arbitration award. Although the circuit court may have erred in striking the dismissal, it held jurisdiction over the confirmation and the attorneys' fees counterclaim. The Nesbitts' appeal raises the question of the circuit court's authority to vacate their Notice of Dismissal.
The circuit court's authority to award attorneys' fees under Maryland Rule 2-704 for a breach of contract claim was questioned, particularly as the claim was not included in the initial or amended pleadings. Despite potential errors in striking the appellants' Notice of Dismissal, the court maintained jurisdiction to confirm the arbitration award and address the appellee's attorneys' fees claim. The Notice of Dismissal specifically pertained to Gwendolyn Nesbitt, but the court proceeded as if it applied to all plaintiffs, as this detail was not contested by either party.
Factual background indicates that on November 10, 2016, appellants entered a contract with appellee to purchase residential property subject to a Declaration of Deferred Water and Sewer Charges, imposing an annual charge of $1,020 for thirty years, with a prepayment option. On August 5, 2019, appellants filed a class action complaint claiming that appellee misrepresented the deferred charges and prepayment option, violating disclosure requirements under Maryland law. The class included individuals who purchased residential property with deferred assessments since January 1, 2015.
In response, appellee filed a Motion to Dismiss or to Compel Arbitration, arguing that the Purchase Agreement mandated arbitration for claims and sought attorneys' fees for enforcing this provision. The arbitration clause allowed the non-violating party to recover fees if legal action was improperly initiated in court. Appellants contested the motion, asserting that appellee breached the contract and forfeited its right to arbitration and to attorneys' fees. Following a hearing on December 11, 2019, the court compelled arbitration and stayed the case, without addressing the attorneys' fees issue in its order.
In December 2019, a court ordered the case to proceed to arbitration. During arbitration, the appellee filed a counterclaim seeking costs related to the appellants' complaint, claimed to violate the arbitration provision. An arbitrator held a hearing on October 28, 2020, where testimony was provided by appellant Gwendolyn Nesbitt and appellee's representative, Roger Lebbin. Following the hearing, both parties submitted briefs. On January 26, 2021, the arbitrator determined that the appellee did not violate RP. 14-117 and expressed concerns about the attorneys’ fees provision in the contract not being triggered, stating the Circuit Court could condition dismissal on the determination of costs and fees. The arbitrator deferred to the Circuit Court regarding the request for attorneys’ fees, believing it was better positioned to assess their reasonableness and to decide on remanding the counterclaim if necessary.
On February 9, 2021, fourteen days post-arbitration decision, the appellants filed a Notice of Dismissal with Prejudice, which was entered by the clerk on February 11, 2021. Subsequently, on February 12, 2021, the appellee moved to strike this notice, confirm the arbitration award, and seek attorneys’ fees. The appellants opposed this motion, arguing the court lacked authority to strike the notice since the appellee had not filed an answer and contended that they were not entitled to attorneys’ fees as the dismissal was voluntary. After a hearing, the Circuit Court granted the appellee's motion, striking the notice, lifting the stay, confirming the arbitration award, and awarding $8,644.43 in attorneys' fees and costs. The Circuit Court justified its decision by stating that the clerk lacked authority to dismiss the case due to the existing stay, and allowing dismissal would undermine the court’s prior orders and principles of judicial economy.
On June 16, 2021, appellants filed a Motion to Alter Judgment, asserting for the first time that appellee was not entitled to attorneys' fees because it failed to include a claim for such fees in its initial pleading, as required by Rule 2-704(b). Appellants also contested the circuit court's authority to strike their Notice of Dismissal. In response, appellee argued that appellants waived their Rule 2-704 argument by not raising it earlier. The circuit court denied the Motion to Alter Judgment on July 28, 2021, without a hearing, prompting appellants to appeal. They contended that the circuit court erred by striking their Notice of Dismissal and awarding attorneys' fees to appellee. The court concluded that even if it erred in striking the Notice, it retained jurisdiction to confirm the arbitration award and adjudicate the claim for attorneys' fees per the arbitrator's decision. The decision to strike the Notice was reviewed for legal error, while the award of attorneys' fees was typically reviewed de novo, though the denial of the motion to alter was reviewed for abuse of discretion. Appellants maintained that they had an absolute right to dismiss the case under Maryland Rule 2-506(a) prior to appellee filing an answer, which they argued should preclude the court from considering the Motion to Strike. The excerpt references a relevant case from the Eleventh Circuit, PTA-FLA, Inc. v. ZTE USA, Inc., which involved similar issues of arbitration and voluntary dismissal, providing a persuasive analysis for the case at hand.
The district court ruled that PTA-FLA could voluntarily dismiss its claims against ZTE-USA under Federal Rule of Civil Procedure 41(a)(1), but this dismissal did not nullify ZTE USA's motion to confirm the arbitration award. The district court reopened the case, added PTA-FLA’s three affiliated companies as parties, and confirmed the arbitration award for all parties involved. The Eleventh Circuit Court of Appeals confirmed that a federal district court retains jurisdiction to confirm or vacate arbitration awards under the Federal Arbitration Act (FAA) and noted that Section 9 of the FAA mandates confirmation of an award unless there is a valid reason to vacate, modify, or correct it.
The court clarified that PTA-FLA's voluntary dismissal did not strip the court of its jurisdiction to confirm the award, as ZTE USA's motion to confirm was deemed a "collateral claim." It emphasized that the motion arose from the same transaction as the main proceeding and was not a request for a merits judgment or modification of the arbitrator’s decision. The court concluded that ZTE USA's confirmation request was merely to finalize the award against potential challenges.
The Eleventh Circuit’s ruling aligned with the policy of Rule 41(a)(1) to limit a plaintiff's dismissal powers. Additionally, the court highlighted that Maryland Rule 2-506(a) is similar to Federal Rule 41(a)(1), allowing a party to dismiss claims without court approval before an answer is filed. The court agreed with the Eleventh Circuit's interpretation that, since ZTE USA had not yet answered, the appellants could dismiss their complaint without needing a court order under Rule 2-506(a).
Appellants can voluntarily dismiss their complaint under Rule 2-506(a), but this does not affect the court’s jurisdiction to confirm an arbitration award. The case proceeded under the Maryland Uniform Arbitration Act, with the appellee initially seeking arbitration. The court confirmed the existence of an arbitration agreement and ordered arbitration, staying the case as mandated by CJP. 3-209. After the arbitration process, an arbitrator issued an award, and the Maryland Uniform Arbitration Act outlines specific timeframes for parties to challenge or confirm the award. A party must confirm the award if no challenge is made within these constraints. The court maintains jurisdiction to confirm the award regardless of a voluntary dismissal of the complaint. Furthermore, appellants contended that the circuit court lacked authority to award attorneys’ fees since the appellee did not plead a breach of contract claim as per Rule 2-704. However, this argument was only raised in a Motion to Alter Judgment, which is subject to a deferential standard of review. The trial judge possesses broad discretion in such matters, and the Court of Appeals has established that post-trial motions cannot reintroduce arguments that were previously available but not presented.
A circuit court does not abuse its discretion when it rejects a legal argument presented for the first time in a motion for reconsideration, especially if the argument could have been raised earlier and is therefore considered waived. The court did not err in denying the appellants' Motion to Alter Judgment based on this unpresented argument. While the circuit court may have incorrectly struck the appellants’ Notice of Dismissal, the court maintained jurisdiction under the Maryland Uniform Arbitration Act to confirm the arbitration award and address the appellee’s counterclaim for attorneys’ fees. This interpretation aligns with the intention of the rules to be applied logically and sensibly. The judgment of the Circuit Court for Prince George’s County is affirmed, with costs to be borne by the appellants. Additionally, Rule 2-506(c) supports that a plaintiff's voluntary dismissal is permissible as long as any counterclaim can remain pending for independent adjudication.
