Case Title: Franklin Credit Mgmt. Corp. v. Nefflen

Citation: 

Docket Number: 32/13

State: maryland

Court: Maryland Supreme Court

Date: 2013-12-20T00:00:00Z

Document:
CIVIL PROCEDURE - DEFAULT JUDGMENTS - RULE 2-534 POST-JUDGMENT
CHALLENGE TO LIABILITY
A defendant against whom an order of default is entered and who fails to make a motion to
vacate the order of default pursuant to Rule 2-613(d), may not make a Rule 2-534 motion to
alter or amend a judgment to challenge liability after a default judgment is entered. 
CIVIL PROCEDURE - APPEALABILITY-  DEFAULT JUDGMENTS - LIABILITY
DETERMINATION
A defendant against whom an order of default is entered and who fails to make a motion to
vacate the order of default pursuant to Rule 2-613(d), is precluded from challenging its
liability on appeal from a default judgment.  
Circuit Court for Frederick County
Case No. 10-C-10-001379
Argued 11/5/13
IN THE COURT OF APPEALS OF
MARYLAND
No.  32
September Term, 2013
FRANKLIN CREDIT MANAGEMENT
CORPORATION
v.
FRED NEFFLEN
Barbera, C.J.
Harrell
Battaglia
Greene
Adkins
McDonald
Cathell, Dale R.  (Retired,
Specially Assigned),
         
JJ.
Opinion by Battaglia, J.
Filed: December 20, 2013
In this case we initially are asked to consider whether a defendant who fails to respond
to a complaint and against whom an order of default is entered and fails to move to vacate
the order of default, after which judgment of default is entered may, thereafter, contest
liability either by moving, under Maryland Rule 2-534 to alter or amend a judgment or
directly on appeal.  
1
The dispute before the Court arises out of a suit alleging the breach of a settlement
agreement terminating litigation in the Circuit Court for Frederick County that earlier ensued
between the Petitioner, Franklin Credit Management Corporation (Franklin), and the
Respondent,  Fred Nefflen.  The original litigation arose when Franklin was assigned the
servicing rights to Mr. Nefflen’s mortgage on a piece of property located in Frederick,
Maryland.  According to Mr. Nefflen’s Complaint, Franklin attempted to collect more than
was due on the loan as well as notified credit reporting agencies that Mr. Nefflen’s payments
were past due.  Mr. Nefflen, thereafter, sued Franklin, and the settlement terms, as reflected
  All references to the Maryland Rules are to the Maryland Rules (2010), which were
1
in effect at the time the default judgment was entered. Rule 2-534, entitled “Motion to alter
or amend a judgment – Court decision,” provided and continues to provide, in relevant part:
In an action decided by the court, on motion of any party filed within ten days
after entry of judgment, the court may open the judgment to receive additional
evidence, may amend its findings or its statement of reasons for the decision,
may set forth additional findings or reasons, may enter new findings or new
reasons, may amend the judgment, or may enter a new judgment. A motion to
alter or amend a judgment may be joined with a motion for new trial. A motion
to alter or amend a judgment filed after the announcement or signing by the
trial court of a judgment but before entry of the judgment on the docket shall
be treated as filed on the same day as, but after, the entry on the docket.
in an agreement signed between Franklin and Mr. Nefflen, provided in relevant part: 
7.
The parties agree that there shall be no demand or requirement for flood
insurance of any kind in connection with the Nefflen Loan. 
8.
The parties agree that there shall be no escrow requirement for the
Nefflen Loan.  Nefflen, upon request made through counsel, shall
promptly provide [Franklin] with proof of payment of taxes and
insurance.
* * * 
11.
[Franklin] will delete all derogatory information from any Credit
Reports and report the Nefflen Loan as current and paid as agreed. 
According to the Complaint, Franklin violated those provisions;  Mr. Nefflen alleged breach
of contract, defamation, as well as violations of the Maryland Consumer Debt Collection
Act  and the Maryland Consumer Protection Act :
2
3
COUNT I
Violation of the Maryland Consumer Debt Collection Act (“MCDCA”)
 The Maryland Consumer Debt Collection Act, at the time Mr. Nefflen’s claim was
2
filed, appeared in Sections 14-201et seq. of the Commercial Law Article, Maryland Code
(1975, 2005 Repl. Vol., 2009 Supp.), and in relevant part, prohibited a collector from
“[c]laim[ing], attempt[ing], or threaten[ing] to enforce a right with knowledge that the right
does not exist.”  Md. Code (1975, 2005 Repl. Vol., 2009 Supp.), § 14-202 of the Commercial
Law Article. The Maryland Consumer Debt Collection Act continues to be found at Sections
14-201 et seq. of the Commercial Law Article and remains unchanged. 
 The Maryland Consumer Protection Act, at the time Mr. Nefflen’s claim was filed,
3
appeared in Sections 13-101 et seq. of the Commercial Law Article, Maryland Code (1975,
2005 Repl. Vol., 2008 Supp.).  Specifically, Mr. Nefflen asserted a violation of Section 13-
301(14)(iii) of the Commercial Law Article, which provided that a violation of the Consumer
Debt Collection Act was a violation of the Consumer Protection Act.  The Maryland
Consumer Protection Act continues to be found at Sections 13-101 et seq., and Section 13-
301(14)(iii) remains unchanged.
2
* * * 
40.
Defendant has repeatedly made claims that Plaintiff owes amounts due
to Defendant.  The claims have no legal or factual basis.
41.
Defendant has engaged in acts that violate the MCDCA. . . . 
42.
The Defendant’s repeated and wrongful acts have caused the [P]laintiff
emotional distress.
 COUNT II
Defamation
* * * 
44.
The [D]efendant has defamed the [P]laintiff by knowingly,
intentionally and repeatedly publishing false and inaccurate information
about the [P]laintiff to third parties who reasonably recognize the
information is defamatory with the intent to injure the [P]laintiff.
45.
The Defendant acted with malice against the Plaintiff.
46.
Plaintiff has been damaged by the defendant[’]s actions.
COUNT III
Violation of the Maryland Consumer Protection Act (“MCPA”)
* * * 
48.
The Defendant’s violations of the MCDCA constitutes a violation of
the Maryland Consumer Protection Act pursuant to  § 13-301 (14)(iii)
of the Commercial Law Article.[4] 
 Section 13-301 provided:
4
Unfair or deceptive trade practices include any:
* * * 
(14) Violations of a provision of:
* * * 
(iii) Title 14, Subtitle 2 of [the Commercial Law] article, the
Maryland Consumer Debt Collection Act[.]
Md. Code (1975, 2005 Repl. Vol., 2008 Supp.), § 13-301 (14)(iii) of the Commercial Law
(continued...)
3
 
COUNT IV
Breach of Settlement Agreement
* * * 
50.
Defendant has materially breached the terms of the settlement
agreement that it entered into with the Plaintiff.
51.
Plaintiff has suffered damages as a result of the Defendant’s breach of
contract.
Approximately five months after the Complaint was served on Franklin, Mr. Nefflen
moved for an entry of an order of default, pursuant to Rule 2-613(b),  asserting that Franklin 
5
(...continued)
Article.   The language remains the same.
 Rule 2-613, pertaining to default judgments, provided, at the time the judgment was
5
entered, and also today, that:
(a) Parties to whom applicable. In this Rule, the term
“plaintiff” includes counter-plaintiffs, cross-plaintiffs, and
third-party plaintiffs, and the term “defendant” includes
counter-defendants, 
cross-defendants, 
and 
third-party
defendants.
(b) Order of default. If the time for pleading has expired and a
defendant has failed to plead as provided by these rules, the
court, on written request of the plaintiff, shall enter an order of
default. The request shall state the last known address of the
defendant.
(c) Notice. Promptly upon entry of an order of default, the clerk
shall issue a notice informing the defendant that the order of
default has been entered and that the defendant may move to
vacate the order within 30 days after its entry. The notice shall
be mailed to the defendant at the address stated in the request
and to the defendant’s attorney of record, if any. The court may
provide for additional notice to the defendant.
(d) Motion by defendant. The defendant may move to vacate
the order of default within 30 days after its entry. The motion
(continued...)
4
had failed to respond to the complaint in any way.  An order of default was entered against
Franklin:
ORDER OF DEFAULT
The Motion for Entry of an Order of Default in the above captioned
matter having been read and considered, it is thereupon this 5th day of
October, 2010 by the Circuit Court for Frederick County, Maryland,
ORDERED, that an Order of Default be and it is hereby entered in
favor of the Plaintiff and against the Defendant. 
Franklin was notified by the clerk of the court of its default, more specifically that: 
You are hereby notified that an Order of Default has been entered
against you in the above entitled case on 10/06/10.
(...continued)
shall state the reasons for the failure to plead and the legal and
factual basis for the defense to the claim.
(e) Disposition of motion. If the court finds that there is a
substantial and sufficient basis for an actual controversy as to
the merits of the action and that it is equitable to excuse the
failure to plead, the court shall vacate the order.
(f) Entry of judgment. If a motion was not filed under section
(d) of this Rule or was filed and denied, the court, upon request,
may enter a judgment by default that includes a determination as
to liability and all relief sought, if it is satisfied (1) that it has
jurisdiction to enter the judgment and (2) that the notice required
by section (c) of this Rule was mailed. If, in order to enable the
court to enter judgment, it is necessary to take an account or to
determine the amount of damages or to establish the truth of any
averment by evidence or to make an investigation of any matter,
the court may rely on affidavits, conduct hearings, or order
references as appropriate, and, if requested, shall preserve to the
plaintiff the right of trial by jury.
(g) Finality. A default judgment entered in compliance with this
Rule is not subject to the revisory power under Rule 2-535(a)
except as to the relief granted.
5
 
You may move to vacate the Order of Default within (30) Days of the
date of entry.  The motion shall state the reasons for the failure to plead and the
legal and factual basis for the defense to the claim.
Despite the notice, Franklin never responded in any way.   The clerk, thereafter, sent a
6
“Notice of Hearing / Trial” to Franklin, notifying it that a default hearing was scheduled for
March 8, 2011, which was postponed upon motion by Mr. Nefflen; the hearing was
rescheduled for April 7, 2011, and a notice of the change of date also was sent to Franklin. 
On April 7, 2011, Judge Julie S. Solt of the Frederick County Circuit Court held a
hearing on the issue of Mr. Nefflen’s damages.  Franklin failed to appear.  Mr. Nefflen
presented copies of his credit reports obtained from Equifax  and Transunion,  which
7
8
reflected that the adverse credit information with respect to the Franklin loan continued to
appear on the report six months after the parties entered into the settlement agreement; 
  
 In the proceedings below, Franklin never asserted any basis for failing to plead or
6
to respond to the notice of the order of default.  In its brief presented to this Court, however,
Franklin’s counsel asserted that, “[a]lthough [Franklin’s attorney in the trial court] was aware
that the lawsuit had been filed, he mistakenly believed that Franklin had not been properly
served with the complaint and never entered an appearance in the matter or filed an answer
on behalf of Franklin.” No motion to dismiss for insufficient service of process under Rule
2-322(a) was filed, however.
  
 Equifax is a global credit reporting corporation that provides a number of services,
7
including 
providing 
credit 
reports 
to 
individual 
consumers. 
 
Equifax,
http://www.equifax.com/home/en_us (last visited Dec. 19, 2013). 
 
 Transunion is a global corporation that provides “credit information and information
8
management services.”  Among its services, it provides credit reports to consumers.  Who We
Are, http://www.transunion.com/corporate/about-transunion/whoweare.page  (last visited
Dec. 19, 2013).  
6
mortgage statements reflecting escrow payments; and letters from Franklin to Mr. Nefflen
demanding that he obtain flood insurance.  Mr. Nefflen also testified at the hearing and
expounded on the damages he suffered, including his inability to purchase a car because of
the negative credit reporting and the emotional and physical effects of Franklin’s actions on
him and his family, such as “a lot of sleepless nights,” stomach problems, and that his
“nerves [were] practically shot.”  
At the conclusion of the hearing, Judge Solt made findings of fact and ruled that
Franklin was in breach of the settlement agreement:
I find the following facts.  I find obviously by default that there has been a
breach by Franklin Credit of the settlement agreement that was attached as, to
the complaint that specifically in that settlement agreement that Franklin Credit
indicated that they would remove any requirement for the Plaintiff to have
flood insurance on his property.  That within weeks of signing the settlement
agreement that Franklin Credit breached that settlement contract by requiring
and requesting that the Plaintiff obtain flood insurance on the property despite
their agreement only weeks earlier not to require that and that they ultimately
have taxed his account with $1,650.92 on two different occasions representing
flood insurance, which by their agreement they indicated that the Plaintiff did
not owe.  They also have added, and that comes to $3301.84.  They also
breached the settlement agreement which indicated there was to be no escrow
to be attached to the Plaintiff’s account.  That despite their settlement
agreement they began requesting $700, 700 plus dollars per month.
Judge Solt also awarded Mr. Nefflen damages on his claims for defamation and violations
of the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection
Act:
I also find that it is a clear violation of the Maryland Consumer Credit
Reporting Act and that the Plaintiff has suffered damage in mental anguish,
sleepless nights, anxiety, and the ability, inability to get appropriate credit
7
merely because of the negative credit reporting by Franklin, which they agreed
to remove from his credit reports, and that the Plaintiff is entitled to damages
under that count in the amount of $100,000.  I also find that he has slandered
Mr. Nefflen’s good name.  In looking at these reports, again, the only
information to a negative account is Franklin Credit and that is quite frankly
because of them not providing the necessary assurances to the credit reporting
agencies which they agreed to do, and by putting negative references on for
non-payment I’m assuming of the obligations that they agreed he didn’t owe
in the first place, and quite frankly that’s outrageous and I find that the
Plaintiff is entitled to damages in that instance to $100,000. . . . [O]n count
three, which is the Consumer Protection, that’s really covered for the damages
in count one and with respect to attorneys’ fees those were authorized under
count four pursuant to the settlement agreement.  So total damages are . . .
$203,301.84 plus attorneys’ fees to be submitted, plus costs of this suit. 
Judge Solt, thereafter, issued a default judgment in the amount of $203,301.84, a copy of
which was sent to Franklin.
Franklin, then, filed a “Motion for a New Trial or to Alter or Amend Judgment,”
pursuant to Rule 2-534,  requesting that the default judgments be set aside because,
9
according to Franklin, the claims were legally deficient,  and, in its view, “[w]hile the facts
10
 
 In its motion, Franklin initially stated it was filed pursuant to Maryland Rules 3-534
9
and 3-535.  These Rules, however, were cited in error as Title 3 of the Maryland Rules is
applicable to actions filed in the district court.  The motion later, however, cited appropriately
to Rules 2-534 and 2-535.
 Specifically, with respect to the Maryland Consumer Debt Collection Act claim,
10
Franklin alleged that “claiming amounts due which have no legal or factual basis,” is not
prohibited by the Act.  Likewise, because the Maryland Consumer Protection Act claim was
predicated solely on a violation of the Maryland Consumer Debt Collect Act claim, Franklin
asserted that it too must fail.  Concerning the defamation claim, Franklin argued that, “a
defamation cause of action does not accrue when wrongful statements are made to a credit
reporting agency, but instead accrues when the Plaintiff is denied a credit account on the
basis of those statements,” and that, because there was no allegation that Mr. Nefflen was
denied credit, the defamation claim was also legally insufficient.  
8
in the complaint may be deemed admitted due to default, the Court must still make a
determination as to liability and there must be satisfactory proof of damages.”  Mr. Nefflen
filed an opposition to the motion to alter or amend the judgment, refuting the contention that
his claims were legally deficient.  Judge Solt denied the motion for a new trial or to alter or
amend the judgment, and Franklin filed a timely notice of appeal to the Court of Special
Appeals.11
 
 The questions presented to the Court of Special Appeals were:
11
1. Did the Circuit Court err as a matter of law or abuse its
discretion in granting Nefflen a default judgment for his
defamation claim because the failure to correct a negative credit
report does not constitute a viable claim for defamation or,
alternatively, because the defamation claim was not viable in the
absence of factual allegations to support that Franklin acted with
malice or intent to harm Nefflen?
2. Did the Circuit Court err as a matter of law or abuse its
discretion in granting Nefflen a default judgment for violations
of the Maryland Consumer Debt Collection Act and the
Maryland Consumer Protection Act because Franklin’s request
for verification that Nefflen had flood insurance in accordance
with federal requirements was not an attempt to collect a debt
owed to Franklin or, alternatively, because Franklin’s request
constituted a breach of a Settlement Agreement, not a tort under
the Maryland Consumer Debt Collection Act?
3. Did the trial court abuse its discretion in denying Franklin’s
Motion to Alter or Amend the Judgment where Franklin’s
Motion established that Nefflen did not plead viable claims and
that the judgment was erroneous as a matter of law?
4. Did the trial court abuse its discretion in denying Franklin’s
Motion to Alter or Amend the Judgment where Franklin’s
(continued...)
9
In a reported opinion, the Court of Special Appeals affirmed the trial court’s decision, 
concluding that the judge did not abuse her discretion when she entered the default
judgments, reasoning that, in Maryland there is no “prerequisite to the entry of a default
judgment, in the absence of any pleadings from the defaulting party, . . . that the trial court
make a determination as to liability.”   Franklin Credit Mgmt. Corp. v. Nefflen, 208 Md. App.
712, 728, 57 A.3d 1015, 1024 (2012).  With respect to the decision to deny the Rule 2-534
motion to alter or amend the judgment, the intermediate appellate court opined that “[i]t is
clear that Franklin cannot revisit the issue of liability”, reasoning that Rule 2-613(g), which
limits the court’s “revisory power under Rule 2-535(a)
. . . to the relief granted,” was
[12]   
equally applicable to Rule 2-534 based on the intermediate appellate court’s prior decisions
in Wells v. Wells, 168 Md. App. 382, 896 A.2d 1082 (2006) and Das v. Das, 133 Md. App.
(...continued)
failure to defend was the result of a misunderstanding regarding
the timing of the default judgment hearing and where Franklin’s
Motion raised meritorious defenses?
  Rule 2-535(a) provided, at the time that the default judgment was entered, and
12
continues to provide, that:
(a) Generally. On motion of any party filed within 30 days after
entry of judgment, the court may exercise revisory power and
control over the judgment and, if the action was tried before the
court, may take any action that it could have taken under Rule
2-534. A motion filed after the announcement or signing by the
trial court of a judgment or the return of a verdict but before
entry of the judgment on the docket shall be treated as filed on
the same day as, but after, the entry on the docket. 
10
1, 754 A.2d 441 (2000), and its interpretation of Rule 2-613(g)’s purpose, which, it opined,
is to prevent a defaulting defendant from having two opportunities to set aside the order of
default.  Frankin Credit Mgmt. Corp., 208 Md. App. at 732-33, 57 A.3d at 1027-28.  Because
Rule 2-534 did not permit a revisiting of liability once a default judgment was entered, the
Court of Special Appeals reasoned the trial court properly denied the motion.  Id. at 733-34,
57 A.3d at 1028.
Franklin, then, petitioned this Court for certiorari, which we granted, to consider the
following questions, which we have renumbered:
1.
Does Rule 2-613(g) permit a circuit court to revisit a
defendant’s liability through a Rule 2-534 motion to alter or
amend a default judgment? 
2.
Is it error or an abuse of discretion for a circuit court to enter a
default judgment under Rule 2-613(f) where the complaint or
the evidence the court considers at a default judgment hearing
establishes that a plaintiff’s claims are legally invalid?[13]
   
Franklin Credit Mgmt. Corp. v. Nefflen, 431 Md. 219, 64 A.3d 496 (2013). 
 Rule 2-613 defines the process for entry of a default judgment, which involves the
entry of an order of default followed by notice to the defendant and an opportunity to vacate
the default order, in the absence of which the court can enter a default judgment:
(a) Parties to whom applicable. In this Rule, the term “plaintiff” includes
counter-plaintiffs, cross-plaintiffs, and third-party plaintiffs, and the term
 
 We do not reach the second question posed by Petitioner because of our holding
13
herein that a failure to move to vacate the order of default vitiates any appeal from a default
judgment in which liability is questioned.
11
“defendant” includes counter-defendants, cross-defendants, and third-party
defendants.
(b) Order of default. If the time for pleading has expired and a defendant has
failed to plead as provided by these rules, the court, on written request of the
plaintiff, shall enter an order of default. The request shall state the last known
address of the defendant.
(c) Notice. Promptly upon entry of an order of default, the clerk shall issue a
notice informing the defendant that the order of default has been entered and
that the defendant may move to vacate the order within 30 days after its entry.
The notice shall be mailed to the defendant at the address stated in the request
and to the defendant’s attorney of record, if any.  The court may provide for
additional notice to the defendant.
(d) Motion by defendant. The defendant may move to vacate the order of
default within 30 days after its entry.  The motion shall state the reasons for the
failure to plead and the legal and factual basis for the defense to the claim.
(e) Disposition of motion. If the court finds that there is a substantial and
sufficient basis for an actual controversy as to the merits of the action and that
it is equitable to excuse the failure to plead, the court shall vacate the order.
(f) Entry of judgment. If a motion was not filed under section (d) of this Rule
or was filed and denied, the court, upon request, may enter a judgment by
default that includes a determination as to liability and all relief sought, if it is
satisfied (1) that it has jurisdiction to enter the judgment and (2) that the notice
required by section (c) of this Rule was mailed. If, in order to enable the court
to enter judgment, it is necessary to take an account or to determine the amount
of damages or to establish the truth of any averment by evidence or to make
an investigation of any matter, the court may rely on affidavits, conduct
hearings, or order references as appropriate, and, if requested, shall preserve
to the plaintiff the right of trial by jury.
(g) Finality. A default judgment entered in compliance with this Rule is not
subject to the revisory power under Rule 2-535(a) except as to the relief
granted.
Prior to 1984 when the present rule was enacted, a judge could enter a default
judgment when a defendant failed to “comply with the requirements as to time allowed for
12
pleading,” Rule 310 b (1983),  after which notice was sent to the defendant.  Rule 611
14
(1983).   The default judgment was a determination of liability and also was a final
15
judgment from which an appeal could have been taken, pursuant to Section 12-301 of the
Courts and Judicial Proceedings Article, Maryland Code (1974, 1980 Repl. Vol.), even if
damages had not been determined. See Himes v. Day, 254 Md. 197, 254 A.2d 181 (1969). 
 A defaulting defendant also could have moved to set aside the judgment of default under
  Former Rule 310 b (1983) provided:
14
By Party Against Whom Claim is Asserted. 
If a party against whom a claim is asserted is in default for
failure to comply with the requirements as to time allowed for
pleading, unless the time be enlarged by the court for good cause
shown, judgment may be entered against him in an action at law
or the bill may be taken pro confesso in a proceeding in equity,
on motion of the adverse party, and thereupon the case shall
proceed ex parte as against such party.
  Former Rule 611(1983)  provided:
15
Judgment by Default – Notice
Upon the entry of judgment by default or decree pro confesso,
pursuant to Rule 310 b or Rule 610 c 3, for failure to plead in
response to original process, the clerk shall mail fortwith, notice
thereof to the defendant at his address, if any, specified in the
pleadings and shall note such fact on the docket or case file.  If
no address is specified and the address is otherwise unknown,
this Rule shall not apply.  The notice sent by the clerk shall
follow the form set forth in the Appendix of Forms. 
13
former Rule 625 (1983),  which permitted the court to exercise its revisory power over the
16
judgment for a period of thirty days.   See Eshelman Motors Corp. v. Scheftel, 231 Md. 300,
189 A.2d 818 (1963).  After a default judgment was entered, the court, upon motion by the
plaintiff, could have conducted an “inquisition” to determine damages.  Rule 648 (1983).  
17
  Former Rule 625 (1983) provided in pertinent part:
16
Revisory Power of Court Over Judgment.
a. Generally.
For a period of thirty days after the entry of a judgment, or
thereafter pursuant to motion filed within such period, the court
shall have revisory power and control over such judgment. 
After the expiration of such period the court shall have revisory
power and control over such judgment, only in case of fraud,
mistake or irregularity.  
 Rule 625 was replaced by current Rule 2-535. 
  Former Rule 648 (1983) provided:
17
Inquisition – After Interlocutory or Default Judgment
Where an interlocutory judgment or judgment by default has
been entered, the court shall on motion of the plaintiff, make an
order in the nature of a writ of inquiry, to charge the jury to
inquire of the damages and costs sustained by the plaintiff,
which inquiry shall be made and the evidence given in open
court as in other jury trials; and after the jury shall have
considered thereof, they shall return their inquisition and the
court shall order such judgment to be extended in accordance
with the terms of such finding of the jury; or, on motion by the
plaintiff, the court where such judgment is, shall without the
jury, inquire of the damages and costs sustained by the plaintiff
in such action, and shall assess the damages and costs and order
the judgment to be extended for the amount so found to be due,
and interest.
14
A defaulting defendant could have taken a separate appeal from the assessment of damages,
but it was only permitted to appeal issues of remedy, and not of liability.  See, e.g.,  Millison
v. Ades of Lexington, Inc., 262 Md. 319, 328, 277 A.2d 579 (1971). 
In Millison, we had occasion to discuss the effect of having a two judgment process
under the old rules.  Ades of Lexington (Ades), a corporate tenant of Patuxent Development
Company (Patuxent), sued Patuxent and its President, Millison, for, inter alia, failing to
make necessary repairs, and after Millison and Patuxent failed to file a timely answer, Ades
obtained a judgment by default, pursuant to former Rule 310 b.  Millison and Patuxent
moved to set aside the default judgment, but their motion was denied by the court, and
ultimately, a jury awarded Ades damages in the amount of $33,416.59.  On appeal, Millison
and Patuxent attempted to attack liability on the basis of an exculpatory clause, which
allegedly defeated Ades’s claims.  We, however, refrained from addressing liability, opining
that, “[a] judgment by default, while it may require extension by way of proof of damages,
Rule 648, is still final in respect of the question of the liability of the party against whom it
is obtained,” and accordingly we could not “go behind the judgment by default to examine
into and determine upon the validity of the cause of action upon which suit is instituted[.]”
Id. at 328, 277 A.2d at 584 (citations omitted). 
 In 1981, however, the Standing Committee on Rules of Practice and Procedure (Rules
Committee) recommended a retooling of the dual default judgment process under a single
Rule, Rule 2-613.  The recommendation was for a process under which an “order of default,”
15
rather than a “default judgment,” first would be entered against a defendant who failed to
timely plead, after which notice to the defendant of the entry of the order would be provided,
along with an opportunity to vacate, which if denied, would lead to an assessment of
damages and then the entry of the default judgment by the court.  An explanatory note
accompanying the proposed Rule explained:
This Rule provides a two-stage process for default judgments.  The first
stage involves a determination evidenced by an order, that the defendant is in
fact in default.  The defendant is given notice of this determination and an
opportunity to have the order of default vacated.  When seeking to vacate the
order the defendant must convince the court that the defendant has a
meritorious defense and that there is good cause to excuse the defendant’s
failure to plead.
The second stage, the actual entry of the judgment, takes place only
after the order of default may no longer be vacated by the trial court.  This will
avoid the necessity for courts to undertake fact finding processes to produce
an amount for the default judgment only to have the judgment vacated upon
a showing that the defendant had good cause for failing to plead.
Minutes of the Standing Committee on Rules of Practice and Procedure, November 21, 1981,
at 14-15.   According to a letter written by Albert D. Brault, a member of the Rules 
18
  
 The two-step default judgment recommendation from the Rules Committee
18
followed rejection of a proposed rule similar to Federal Rule of Civil Procedure 55, which
provided in relevant part:
(a) ENTRY. When a party against whom a judgment for affirmative relief is
sought has failed to plead or otherwise defend as provided by these rules and
that fact is made to appear by affidavit or otherwise, the clerk shall enter his
default.
(b) JUDGMENT. Judgment by default may be entered as follows:
(1) By the Clerk. When the plaintiff’s claim against a defendant
is for a sum certain or for a sum which can by computation be
(continued...)
16
Committee, at that time, an “order” of default was to replace a “judgment” by default to
reflect a change in appealability:
(...continued)
made certain, the clerk upon request of the plaintiff and upon
affidavit of the amount due shall enter judgment for that amount
and costs against the defendant, if he has been defaulted for
failure to appear and if he is not an infant or incompetent
person.
(2) By the Court. In all other cases the party entitled to a
judgment by default shall apply to the court therefor; but no
judgment by default shall be entered against an infant or
incompetent person unless represented in the action by a general
guardian, committee, conservator, or other such representative
who has appeared therein. If the party against whom judgment
by default is sought has appeared in the action, he (or, if
appearing by representative, his representative) shall be served
with written notice of the application for judgment at least 3
days prior to the hearing on such application. If, in order to
enable the court to enter judgment or to carry it into effect, it is
necessary to take an account or to determine the amount of
damages or to establish the truth of any averment by evidence or
to make an investigation of any other matter, the court may
conduct such hearings or order such references as it deems
necessary and proper and shall accord a right of trial by jury to
the parties when and as required by any statute of the United
States.
(c) SETTING ASIDE DEFAULT. For good cause shown the court may set
aside an entry of default and, if a judgment by default has been entered, may
likewise set it aside in accordance with Rule 60(b).
Fed. R. Civ. P. 55 (1984).  Under this Rule, there was no notice and an opportunity to vacate
the initial entry of default; rather, a defaulting defendant could set aside the entire judgment
after the court entered it.  The Rules Committee, however, believed that it would be “a waste
of the court’s time to require an inquisition if the judgment will be vacated at a later date  
. . . .”  Minutes of the Standing Committee on Rules of Practice and Procedure, Oct. 17, 1981,
at 36. 
17
Neither litigants nor the Court want to go through the difficulties
associated with inquisition, only to find the judgment set aside after
inquisition. . . .  This is what we accomplish with proposed Rule 2-613.  The
difficulty in doing it this way was that the first default judgment, under 310(b),
could not be called a judgment, since it would not fit with the definition of
judgment under the proposed rules.  We have therefore referred to the first
phase as an “order of default”.  
Letter from Albert D. Brault to the Hon. Perry G. Bowen (May 23, 1983) (emphasis added)
(on file with Rules Committee).  
Rule 1-201, which was adopted by the Court,  defined a judgment as “any order of
court final in its nature”, Eighty-second Report of the Standing Committee on Rules of
Practice and Procedure, 10 Md. Reg. 10, 5-7 (May 13, 1983); because damages remained
undetermined at the time an order of default was entered, it was not “final.”  Rule 2-613 then
was intended to avoid the “piecemeal appeal” issue that arose under the former rules by
which the defaulting defendant could take an appeal from both the determination of liability
and damages, because “no appeal may be taken from the entry of an order of default.”
Banegura v. Taylor, 312 Md. 609, 618, 541 A.2d 969, 973 (1988).
We ultimately adopted the two-step framework  whereby under Rule 2-613(b), “the
19
entry of an order of default [is] the initial step towards entry of default judgment.” O’Connor
v. Moten, 307 Md. 644, 647 n.2, 516 A.2d 593, 594 n.2 (1986), abrogated by Bienkowski v.
Brooks on other grounds, 386 Md. 516, 873 A.2d 1122 (2005).  “This order [of default] is
a determination of liability . . . .”  Id.; see also  Montgomery Cnty. v. Post, 166 Md. App.
   Court of Appeals of Maryland, Rules Order, 11 Md. Reg. 9 (Apr. 27, 1984).
19
18
381, 389, 888 A.2d 1224, 1229 (2005) (“If an order of default is entered, pursuant to Rule
2-613(b), the defaulting party has the right to move to vacate pursuant to subsection (d), and
if the order of default remains, it is dispositive only as to liability.”);  Wells, 168 Md. App.
at 393, 896 A.2d at 1089 (“[T]he order of default [is], in effect, . . . an adverse finding on
liability.”).  The determination of liability in the order, however, may be vacated upon motion
of a defendant who has been provided notice  and files such within the thirty-day window,
20
if the defendant can demonstrate an equitable reason for failure to plead and that there is an
actual controversy on the merits.  Rule 2-613(d)-(e).  If the defendant fails to vacate the order
of default or if the motion to vacate is denied, a court may proceed with the assessment of
  The amendments to the pre-1984 default judgment framework enhanced the
20
notice required to be sent to a defendant of its default and its opportunity to vacate that
order:
Section (b) [of Rule 2-613] alters prior practice regarding
notice given to the defendant upon entry of an order of default. 
While the notice provisions of Former Rule 611 were
mandatory, the clerk was not obligated to issue notice if the
defendant’s address  was not specified in the pleadings and was
otherwise unknown.  Rule 2-613 seeks to insure that the
defendant receives adequate notice of the order of default . . . 
[by] requir[ing] that the plaintiff’s request [for an entry of an
order of default to] include the defendant’s last known
address[;] [that] the clerk . . . issue notice to both the defendant
and to the defendant’s attorney of record, if any[; and] that the
court can require that additional notice be given to the defendant
if necessary.
Commentary on the New Maryland Rules of Civil Procedure, 43 Md. L. Rev. 669, 830-31
(1984) (footnotes omitted).
19
damages and the entry of a default judgment under Rule 2-613(f), which “includes a
determination as to liability and all relief sought”.  The latter language was proposed by the
Rules Committee and adopted by the Court in 1990 because litigants were attempting to
appeal the order of default establishing liability prior to an assessment of damages: 
[S]ince the revised Rules of Procedure have been in effect, there has been a
problem with the bar and the courts understanding the default procedure.  In
many cases, the two-step process requiring an order of default establishing
liability and a determination of damages before a judgment is entered is not
being followed.  Appeals are being taken too early, the appellants assuming
that the order determining liability is a judgment.
Minutes of the Standing Committee on Rules of Practice and Procedure, June 16/17, 1989,
at 47.  The amendment to Rule 2-613(f), thus, makes clear “that a ‘judgment’ by default
cannot be entered on the issue of liability only . . . .”  Paul V. Niemeyer & Linda M. Schuett,
Maryland Rules Commentary (3d ed. 2003).
Rule 2-613(g), originally enacted as Rule 2-613(f) in 1984,  also provides that “[a]
21
default judgment entered in compliance with this Rule is not subject to the revisory power
under Rule 2-535(a) except as to the relief granted”, thereby limiting any potential post-
judgment challenge under Rule 2-535 to issues of remedy, but not liability.  Rule 2-535, in
relevant part, provided in (f), and later in (g), that:
(a) Generally. On motion of any party filed within 30 days after entry of
  Rule 2-613(f) became Rule 2-613(g) in 1997 when section (a) was added “to
21
clarify that the rule applies when a counter-defendant, cross-defendant, or third-party
defendant fails to plead within the time allowed by Rule 2-321.”  See Niemeyer &
Schuett, supra, at 517.
20
judgment, the court may exercise revisory power and control over the
judgment and, if the action was tried before the court, may take any action that
it could have taken under Rule 2-534. A motion filed after the announcement
or signing by the trial court of a judgment or the return of a verdict but before
entry of the judgment on the docket shall be treated as filed on the same day
as, but after, the entry on the docket.   
The limitation on post-judgment motions is consistent with what the Rules Committee sought
to achieve by recommending a two-step default judgment process to ensure that the court’s
time will not be wasted by  “requir[ing] an inquisition [into damages] if the judgment will
be vacated at a later date on the ground of excusable neglect.” Minutes of the Standing
Committee on Rules of Practice and Procedure, Oct. 17, 1981, at 36-37.  Oft-quoted
commentators about the Maryland Rules have opined that the use of a Rule 2-535 motion to
contest liability goes against the purpose of Rule 2-613: 
The defendant had one opportunity, for a period of 30 days following entry of
the order, to file a motion to vacate the order of default.  To give the defendant
an opportunity to set aside the default under the revisory power of the court as
well would give the defendant a second crack.  With respect to the damage
aspect of the judgment, however, the defendant had no prior opportunity to
argue that [the] portion of that judgment should be modified or revised.
Niemeyer & Schuett, supra, at 520.  Clearly, then, under Rule 2-613(g), Rule 2-535 motions
are prohibited to challenge the order of default, i.e., liability.   
The issue herein, however, is whether under Rule 2-534 a party can contest liability
after a default judgment has been entered.  Rule 2-534, entitled, “Motion to alter or amend
a judgment – Court decision”, provides:
In an action decided by the court, on motion of any party filed
21
within ten days after entry of judgment, the court may open the
judgment to receive additional evidence, may amend its findings
or its statement of reasons for the decision, may set forth
additional findings or reasons, may enter new findings or new
reasons, may amend the judgment, or may enter a new
judgment. A motion to alter or amend a judgment may be joined
with a motion for new trial. A motion to alter or amend a
judgment filed after the announcement or signing by the trial
court of a judgment but before entry of the judgment on the
docket shall be treated as filed on the same day as, but after, the
entry on the docket.
Mr. Nefflen asserts, and the Court of Special Appeals held, that Rule 2-613(g) limits the
court’s revisory power over a default judgment  under Rule 2-534 solely to the relief granted. 
Franklin argues, however, that such an interpretation is inconsistent with the plain meaning
of Rule 2-613(g),  which expressly limits a court’s authority to revise the judgment to the
relief granted pursuant to Rule 2-535, but contains no such limitation under Rule 2-534.  
Although we agree that Rule 2-613(g) does not expressly refer to Rule 2-534, we
disagree with Franklin as to the ability of a defendant to file a Rule 2-534 motion to alter or
amend an order of default in order to contest liability.  By its plain terms, Rule 2-534 is
applicable to a “judgment,” which has been defined as  “any order of court final in its nature
entered pursuant to [the Maryland Rules].”  Rule 1-202(o).  An order is not final in nature
unless “the court intends for it to be ‘an unqualified, final disposition of the matter in
controversy,’”  Frase v. Barnhart, 379 Md. 100, 115, 840 A.2d 114, 122 (2003), quoting
Rohrbeck v. Rohrbeck, 318 Md. 28, 41, 566 A.2d 767, 773 (1989), which we have interpreted
to mean that the order “must be so final as to determine and conclude the rights involved, or
22
deny the appellant the means of further prosecuting or defending his rights and interests in
the subject matter of the proceeding.”  Schuele v. Case Handyman & Remodeling Servs.,
LLC, 412 Md. 555, 571, 989 A.2d 210, 219 (2010) (citations and quotations omitted); see
also Niemeyer & Schuett, supra, at 486 (“A judgment must dispose of the case at the trial
level in a way that resolves in a final way the rights and claims of the parties in that court.”). 
An “order of default” is not “final in its nature,” as it is not an “unqualified, final
disposition of the matter,”  because an assessment of damages is required.  Indeed, the very
purpose of replacing default judgment under former Rule 310 b with an “order of default”
was to ensure that no appeal can be taken at that time, as we recognized in Curry v. Hillcrest
Clinic, Inc., 337 Md. 412, 653 A.2d 934 (1995). 
 In Curry, the Plaintiff, Lydia T. Curry, filed a complaint with the Health Claims
Arbitration Office (Arbitration Office) against Dr. Sheo P. Sharma and his employer,
Hillcrest Clinic, Inc. (Hillcrest).  Hillcrest failed to respond to the Complaint, and
accordingly, pursuant to Rule 2-613,  an order of default was entered against it, which
22
Hillcrest failed to move to vacate.  The Arbitration Office purported to enter an “Order
Entering Award by Default,” but did not assess damages; it later determined that Dr. Sharma,
was not liable for negligence, and accordingly, that Hillcrest was not liable under the doctrine
 
 Section 3-2A-02(d) of the Courts and Judicial Proceedings Article, Maryland Code
22
(1974, 2013 Repl. Vol.), provides that“[e]xcept as otherwise provided, the Maryland Rules
shall apply to all practice and procedure issues arising under [the Health Care Malpractice
Claims] subtitle.” 
23
of respondeat superior.  Curry brought an action to vitiate the act of the Arbitration Office
in nullifying the order entering the default.  We, agreeing with the act of the Arbitration
Office and the Circuit Court’s affirmance, opined that the default “award” was not a
judgment until damages had been assessed, citing Rule 2-613(e):  
Consequently, Curry’s “award of default” had no legal effect beyond
reiterating that an order of default had been entered and that a motion to vacate
the order of default had been denied. . . .
Banegura v. Taylor, 312 Md. 609, 541 A.2d 969 (1988), is dispositive.
The defendant in that case had been served with a civil complaint alleging rape
of the plaintiff. An order of default was entered in November 1984, and the
notice of default sent by the clerk, but there was no response by the defendant.
On January 4, 1985, at the request of the plaintiff, the court entered a
“judgment” of default. Thereafter on February 4, 1985 the defendant moved
to strike the default “judgment,” but the motion was denied. A judgment for
substantial damages was entered against the defendant, who appealed to the
Court of Special Appeals. In an unreported opinion that court “dismissed the
appeal as to the judgment by default, finding it untimely, and affirmed the
judgment as to damages.”  This Court granted certiorari. Before us, the
plaintiff argued “that the order of January 4, 1985, was a final judgment on the
issue of liability, and that the time for appeal expired thirty days after its
entry.”
Judge McAuliffe, writing for the Court, could not have made the correct
procedure more plain.
“If [plaintiff] were correct concerning the nature of the
January 4 order, her analysis of the effect of the later motion to
strike would be sound. She is wrong, however, in treating the
order of January 4 as a judgment. It was not a judgment–indeed
it served no function at all and must be considered a nullity.
[Plaintiff] in seeking that order, and the court in granting it,
were adhering to a default procedure that existed under former
Maryland Rule 310, but which was changed by the adoption of
Rule 2-613, effective July 1, 1984. Under the former procedure,
24
a default judgment could be entered for failure of a defendant to
plead, and when entered, became a final and appealable
judgment as to liability.
“Under the current procedure, which was in effect when
[defendant] defaulted, the order of default was correctly entered,
but a judgment should not have been entered until there had
been satisfactory proof of damages. Rule 2-613(e). The
amendment to the rule was specifically designed to avoid
piecemeal appeals, and no appeal may be taken from the entry
of an order of default. Likewise, an immediate appeal could not
have been taken from the denial of [Defendant’s] motion to
strike the default order. That order was interlocutory, because it
did not dispose of the entire claim. Rule 2-602. As an
interlocutory order, it was subject to revision within the general
discretion of the trial court until a final judgment was entered on
the claim.
 
“[defendant’s] motion to strike, filed more than thirty
days after the entry of the order of default, must be viewed as a
request that the trial court invoke its authority to revise an order
intended to be final in nature, but which was, in fact,
interlocutory. A trial judge possesses very broad discretion to
modify an interlocutory order where that action is in the interest
of justice.”
Id. at 425-27, 653 A.2d at 941 (citations omitted) (alterations in original).  As Curry and
Banegura make clear, then, the order of default is not a judgment.23
  Citing to both Banegura and Curry, Franklin argues that an order of default does
23
not establish liability because a judge has significant discretion to set aside the order of
default prior to the entry of a final judgment.  The exercise of discretion, however, does not
vitiate the establishment of liability.  
Franklin, citing the Court of Special Appeals’s opinion in Wells v. Wells, 168 Md.
App. 382, 896 A.2d 1082 (2006), also argues that an order of default does not establish
liability because default judgments are not intended to be punitive and because the Rules
contain a preference for a determination of claims on the merits.  We find this argument
(continued...)
25
Finally, we would note that to adopt Franklin’s reasoning that a Rule 2-534 motion
to alter or amend a judgment could be used to contest issues of liability after a default order,
never challenged or vacated, was converted to judgment once damages were assessed, would
be to undermine the foundation of Rule 2-613 by “giving the defendant in default two
opportunities to set . . . aside” the order of default.  Curry, 337 Md. at 427, 653 A.2d at 942
(citation and quotation omitted).  We conclude, therefore, that a defaulting defendant may
not revisit issues of liability established by an unvacated order of default pursuant to a Rule
2-534 motion.
Franklin asserts, however, that even if it were not permitted to contest issues of
liability in a post-judgment motion, after it had failed to move to vacate the order of default,
(...continued)
unavailing; the preference for a determination on the merits is built into the procedure itself,
which unlike its federal and various state counterparts, provides all defendants in default with
notice and an opportunity to vacate, prior to the entry of a judgment.  Compare Rule 2-613,
with, e.g.,  Fed R. Civ. P. 55; Ala. R. Civ. P.  55 (Alabama); Ariz. R. Civ. P. 55 (Arizona);
Ark. R. Civ. P. 55 (Arkansas); Colo. R. Civ. P. 55 (Colorado); Idaho R. Civ. P. 55; Ind. R.
Trial P. 55 (Indiana); Ky. R. Civ. P. 55.01 (Kentucky);   La. Code Civ. Proc. Ann. art. 1702 
(Louisiana); Me. R. Civ. P. 55(b)(2) (Maine);  Minn. R. Civ. P. 55.01(b) (Minnesota); Mont.
R. Civ. P. 55 (Montana); Nev. R. Civ. P. 55 (Nevada); N.M. Dist. Ct. R. Civ. P. 1-055 (New
Mexico); N.Y. C.P.L.R. 3215 (McKinney) (New York); N.C. R. Civ. P. 1A-1, 1A-155 (North
Carolina); N.D. R. Civ. P. 55 (North Dakota); Ohio R. Civ. P. 55 (Ohio); Or. R. Civ. P. 69
(Oregon);  R.I. Dist. Ct. Civ. R. 55 (Rhode Island); S.C. R. Civ. P. 55 (South Carolina); S.D.
R. Civ. P. 55 (South Dakota); Vt. R. Civ. P. 55 (Vermont); Va. Sup. Ct. R. 3:19 (Virginia);
Wash. R. Sup. Ct. Civ. R. 55 (Washington); W. Va. R. Civ. P. 55 (West Virginia); Wis. Stat.
Ann. § 806.02 (Wisconsin); Wyo. R. Civ. P. 55 (Wyoming). 
26
it may still assert its arguments with respect to liability on appeal.   Ultimately, a defaulting
24
defendant, under Rule 2-613 has the opportunity to move to vacate the order of default,
which, if granted, would leave liability in play.  Were the motion to vacate to be denied and
damages assessed, after which a final judgment is entered, a party may contest the failure to
vacate the default order to challenge liability on appeal. 
In Holly Hall Publications, Inc. v. County Banking & Trust Co., 147 Md. App. 251,
807 A.2d 1201 (2002), County Banking and Trust Company (County Banking) filed a
complaint against Holly Hall Publications (Holly Hall), alleging that one of County
Banking’s debtors fraudulently conveyed assets to Holly Hall; County Banking requested an
order setting aside the conveyance, or alternatively, a judgment for the value of the property
conveyed.  Id. at 254-55, 807 A.2d at 1203.  Holly Hall failed to timely respond to the
complaint, and accordingly, the court entered an order of default at County Bank’s request;
eight days later, Holy Hall moved to vacate the order of default asserting its reasons for
failing to plead and contesting its liability, alleging that the debtor never made a fraudulent
transfer, because the transfer was for adequate consideration.  Id. at 255-56, 807 A.2d at
1203-04.   The trial judge denied the motion to vacate after a hearing, and thereafter, entered
a final judgment after having assessed damages.  Id. at 257-58, 807 A.2d at 1205.  
 The only authority Franklin cites in contending that the entry of the default
24
judgment itself is an appealable decision in which liability can be contested directly on
appeal, in addition to its appeal from the order denying its Rule 2-534 motion, is Green v.
Brooks, 125 Md. App. 349, 363, 725 A.2d 596 (1999), which has no relevance to default
judgments.
27
  On appeal, our intermediate appellate court considered whether the trial judge abused
his discretion in refusing to vacate the order of default. Id. at 260, 807 A.2d at 1206-07.  
Ultimately, the court determined that the defendant met its burden of proving an equitable
reason for failing to plead and that there was an actual controversy on the merits, and
therefore, reversed.  Id. at 267, 807 A.2d at 1211.  By moving to vacate the order of default,
Holly Hall, the defendant, retained the ability to contest liability by appealing a denial of the
motion to vacate, once a default judgment was entered. 
In the instant case, however, Franklin never moved to vacate the order of default so
as to preserve any issues regarding liability on appeal.  Were a defaulting party to be able to
appeal the liability determination after not having filed a motion to vacate, the two-step
default judgment process under Rule 2-613 would be obviated.  Permitting a defaulting party
to lie in wait, after having failed to timely respond to a complaint and also to move to vacate
a default order would permit the default procedure under Rule 2-613 to be nullified.  As a
result, we need not reach the merits of the dispute herein.
 A defaulting party who does not file a motion to vacate which is denied cannot file
a Rule 2-534 motion to alter or amend a judgment to contest liability under an order of
default after a default judgment has been entered and cannot appeal that judgment in order
to contest liability.
JUDGMENT OF THE COURT OF SPECIAL
APPEALS AFFIRMED.  COSTS TO BE PAID BY
PETITIONER.
28