Title: Goldstein v. Chesley

State: maryland

Issuer: Maryland Supreme Court

Document:

Goldstein & Baron Chartered, et al. v. William Chesley
No. 94, Sept. Term, 2002
Party who demands jury trial in timely filed counterclaim is entitled to jury trial on all issues
in the case triable to a jury.
Circuit Court for Prince George’s County
Case No. CAL95-15260
IN THE COURT OF APPEALS OF MARYLAND
No. 94
September Term, 2002
______________________________________
GOLDSTEIN & BARON CHARTERED, et al.
v.
WILLIAM CHESLEY
______________________________________
Bell, C.J.
Eldridge
Raker
Wilner
Cathell
Harrell
Battaglia,
   JJ.
______________________________________
Opinion by Wilner, J.
______________________________________
Filed:   June 11, 2003
The dispute that spawned this litigation arose from the sale of a parcel of land by the
Estate of Dr. Erwin Rose to William Chesley.  That sale produced a claim by a broker,
Coldwell Banker, for a commission on the sale, an agreement by Chesley to indemnify the
Estate against any liability for such a commission, and a further agreement by Chesley to
allow the attorneys for the Estate, Goldstein & Baron, Chartered (G&B), to defend the claim
by Coldwell Banker and to pay the fees of G&B incurred in that defense.  The claim for a
commission was litigated and eventually settled.  What linger with us are some procedural
issues arising from separate litigation between Chesley and G&B over the indemnity
agreement.
BACKGROUND
Prior to his death in July, 1987, Dr. Rose had listed the property with Coldwell
Banker, agreeing to pay a 10% commission on any sale, but that agreement lapsed in March,
1987.  During the period of the listing, Coldwell Banker distributed literature about the
property to a number of people, one of whom was Chesley.  Upon Dr. Rose’s death, his
sister, Rosalind Marsh, was appointed as personal representative of the Estate.  Although she
did not renew the listing with Coldwell Banker, that firm continued to market the property
to prospective buyers in the belief that the listing remained effective.  Two offers were sent
to Ms. Marsh, but she did not respond to them.
At some point, Ms. Marsh retained G&B as attorneys for the Estate.  In the course of
that representation,  Leonard Goldstein, a principal of G&B, began negotiating with Chesley
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and, on April 11, 1988, they concluded a written agreement for the sale of the property for
$1,000,000.  Although he did not believe that any commission was due to Coldwell Banker,
Goldstein was aware that it might make a claim for one.  To protect the Estate against such
a claim, he inserted into the contract of sale the following provision:
“Seller and Purchaser hereby acknowledge and agree that no
real estate commission shall be paid by Seller, and that any
brokerage fee or commission resulting from this transaction
shall be the sole responsibility of the Purchaser.  If any claim or
action is brought by any agent or broker for a commission with
respect to this transaction, the Purchaser shall pay and hold
harmless, defend and indemnify the Seller against all claims,
costs, expenses, liability, damage or actions, including Seller’s
attorneys’ fees, in connection with such claim or action.”
Goldstein promptly informed Coldwell Banker that the property had been sold.  The
sale was ratified by the Orphans’ Court, and closing occurred on July 8, 1988.  On September
1, Coldwell Banker filed suit in the Circuit Court for Prince George’s County for a
commission on the sale.  The complaint was partially based on an allegation that, before he
died, Dr. Rose had extended the listing agreement to May 30, 1988, and that the listing was
therefore in existence when the property was sold.  Goldstein notified Chesley of the lawsuit,
reminded him of his obligation under the indemnity clause, and offered him the choice of
obtaining his own attorney or allowing G&B to conduct the defense.  Chesley agreed to allow
G&B to defend the action.
The case proceeded to trial in October, 1991.  At the end of the plaintiff’s case, the
court entered judgment in favor of the Estate.  Evidence had been presented that the
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extension agreement relied upon by Coldwell Banker was, in fact, a forgery.  Aggrieved,
Coldwell Banker appealed.  In October, 1992, the Court of Special Appeals, in an unreported
Opinion, reversed, concluding that there were certain triable issues for the jury to determine.
Before the commencement of a  second trial, Chesley entered into negotiations with Coldwell
Banker and settled the case.
In June, 1989, while the case against Coldwell Banker was first pending in the Circuit
Court, Ms. Marsh and G&B petitioned the Orphans’ Court for allowance of a fee in the
amount of $175,252 for the legal services G&B had rendered.  They noted that the maximum
fee permitted under Maryland Code, Estates and Trust Article, § 7-601 was $125,353, based
on a 10% commission on the real estate sold ($100,000 for the property sold to Chesley and
$8,750 for the sale of other real estate), 10% of the first $20,000 of personalty, and 4% of the
remaining personalty ($14,603), but they sought an additional $49,899 for extra and special
services that G&B had rendered.  In July, 1989, the court allowed the entire requested fee.
G&B began billing Chesley for its services in connection with the Coldwell Banker
litigation in December, 1989.  By April, 1994, G&B had billed a total of $65,811, of which
Chesley paid $23,381.  In August, 1995, after it became clear that Chesley did not intend to
pay anything more, G&B filed suit in the Circuit Court for Prince George’s County, seeking
a total of $52,675, including pre-judgment interest.  G&B did not ask for a jury trial.
On November 2, Chesley filed an answer to the complaint, in which he raised a
number of defenses, including an allegation that he was induced to enter into the indemnity
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agreement by fraudulent or negligent misrepresentations on Goldstein’s part.  Chesley
claimed that Goldstein had not only misrepresented Coldwell Banker’s participation in the
sale but had also stated that no real estate commission would be paid by the Estate on the sale
of the property, a statement that, in light of G&B’s acceptance of what Chesley regarded as
a 10% commission on the sale, was false.  Chesley did not pray a jury trial in his answer.  A
month later, however, on December 5, 1995, Chesley filed a counterclaim against G&B and
a third party claim against Goldstein, based on the same allegation that Goldstein had
fraudulently or negligently misrepresented that no commission would be paid by the Estate.
Because Goldstein and G&B stand essentially in the same position, we shall, for
convenience, refer to that pleading as a counterclaim against G&B.  Chesley charged G&B
with fraud, negligent misrepresentation, and legal malpractice and sought compensatory
damages of $150,000, principally to cover the costs incurred in defending claims by the
Estate and G&B.  Attached to the counterclaim was a demand for jury trial – “Defendant,
Counter Plaintiff and Third Party Plaintiff, William Chesley, [by counsel], hereby demands
a trial by jury.”
In September, 1996, the court determined that Chesley’s counterclaim was barred by
limitations and granted summary judgment to G&B on that claim.  The basis for the court’s
ruling was that Chesley became aware of the facts underlying the claim, which was filed in
December, 1995, when the Court of Special Appeals filed its opinion in the Coldwell Banker
appeal in October, 1992.  Although it does not appear that the court ever formally struck
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Chesley’s demand for a jury trial, when the G&B claim was called for trial and Chesley
asserted a right to a jury, the court determined that the jury trial demand, having been made
more than 15 days after the answer was filed, was untimely.  The court relied on Maryland
Rule 2-325(b), which is part of the Rule on electing a jury trial in civil cases, and provides
that “[t]he failure of a party to file the demand [for jury trial] within 15 days after service of
the last pleading filed by any party directed to the issue constitutes a waiver of trial by jury.”
The court then tried the G&B action non-jury and, at the close of evidence, found that
there was no fraud in the inducement of the indemnity agreement and that the amounts billed
by G&B were fair and reasonable.  After giving Chesley credit for the amounts he had paid,
the court entered judgment for G&B in the amount of $41,731 plus $15,023 in pre-judgment
interest.  Chesley appealed, complaining both about the judgment for the attorneys’ fees and
the summary judgment entered on his counterclaim.  With respect to the fees, Chesley argued
that G&B had acted as attorneys for both him and the Estate, that the firm was in a conflict
situation, and that Goldstein had failed in his duty of loyalty to him to disclose certain
important information, such as his receipt of a commission on the sale of the property.  As
to the counterclaim, he averred that, although he had received a copy of the Court of Special
Appeals Opinion in the Coldwell Banker case, he did not immediately understand the
significance of it and did not become aware of the relevant facts until March, 1993, in the
course of negotiating the settlement with Coldwell Banker.
The Court of Special Appeals found no merit in Chesley’s complaint about the fees
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and affirmed that part of the judgment.  In an unreported Opinion, it concluded that, although
G&B did represent Chesley in the Coldwell Banker litigation, there was no conflict of
interest between Chesley and the Estate with respect to that litigation, that G&B had made
adequate disclosure to Chesley, and that it had not defrauded him.  In that regard, the court
determined that Goldstein had not received a commission on the sale of the property but
rather a fee for legal services rendered to the Estate, part of which was merely stated as a
commission, and that, even if the fee could be regarded as including a commission, there was
still no error, as the Estate had never claimed reimbursement from Chesley for that expense.
The appellate court reversed the summary judgment entered on the counterclaim, however,
concluding that, on the facts presented, the question of whether a reasonable person in
Chesley’s position would have realized that he had a cause of action based on the Opinion
filed in the Coldwell Banker case was for a jury to determine.
Having resolved the merits of the appeal, the Court of Special Appeals, in response
to a motion for reconsideration filed by Chesley, addressed one additional matter – the jury
trial issue.  There were two prongs to that issue.  Chesley had asserted in his brief that, in the
event of a reversal of the summary judgment entered on the counterclaim, he would be
entitled to a jury trial on that claim, and, in its revised Opinion, filed in response to the
motion for reconsideration, the appellate court agreed with him.  Citing Hawes v. Liberty
Homes, 100 Md. App. 222, 640 A.2d 743 (1994), cert. denied, 336 Md. 300, 648 A.2d 203
(1994), the court noted that, under Maryland Rule 2-325(e), when a trial by jury has been
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elected by any party, “the action, including all claims whether asserted by way of
counterclaim, cross-claim or third-party claim, as to all parties, and as to all issues triable of
right by a jury, shall be designated upon the docket as a jury trial.”  On that premise, the court
concluded that, with the reversal of the summary judgment on the counterclaim, Chesley was
entitled, on remand, to a jury trial on all issues triable by a jury.
The court also noted that, in his motion for reconsideration, Chesley had sought
reversal of the judgment entered for the attorneys’ fees because of the denial of his request
for a jury trial.  Inconsistently with its ruling on the first prong of the argument, the court
declined to address that point because it was not raised in Chesley’s brief and was presented
for the first time in his motion for reconsideration.  The court expressed no opinion as to any
preclusive effect the judgment entered for attorneys’ fees, affirmed by the appellate court,
might have on the counterclaim.
The court’s disinclination to address either of those issues effectively generated the
current dispute now before us.  On remand, G&B again moved for summary judgment on the
counterclaim, this time on the twin grounds of res judicata – that the counterclaim was based
on the same allegations that were adjudicated in the G&B claim for attorneys’ fees – and
“law of the case.”  The court granted that motion and entered judgment for G&B.  It
concluded that the issues presented in the counterclaim were the same as those raised in
defense of the G&B action – whether G&B had a conflict of interest with respect to the
Coldwell Banker litigation and whether adequate disclosure had been made to Chesley before
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he agreed to the indemnity provision – that they were expressly decided in that action, and
that the bar of both issue preclusion (collateral estoppel) and claim preclusion (res judicata)
thus applied.
Chesley again appealed.  The Court of Special Appeals held that, because the
counterclaim was filed in the same action as G&B’s claim, neither issue preclusion nor claim
preclusion applied.  Chesley v. Goldstein, 145 Md. App. 605, 806 A.2d 296 (2002).  The
court noted that claim preclusion (res judicata) applies “when the parties to a subsequent suit
are the same or in privity with the parties to a prior suit; the first and second suits present the
same claim or cause of action; and there was a final judgment rendered on the merits in the
first suit, by a court of competent jurisdiction” (id. at 622, 806 A.2d at 306) and that, under
issue preclusion (collateral estoppel), “[w]hen an issue of fact or law is actually litigated and
determined by a valid and final judgment, and the determination is essential to the judgment,
the determination is conclusive in a subsequent action between the parties.”  Id. at 623, 806
A.2d at 306 (quoting prior Court of Appeals cases).  Both doctrines, the court observed,
require sequential litigation and do not apply to a decision on one claim in a single multi-
claim action.
Recognizing that a reversal and remand on the counterclaim alone raised the prospect
of a verdict on the counterclaim that might be inconsistent with the decision reached on the
G&B claim, the court examined further the relationship between the two actions in light of
its previous affirmance of the decision entered on the G&B claim.  Citing one of its earlier
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decisions, the court concluded that a remand for a partial new trial was not appropriate
unless the issue to be retried  “is so distinct and separable from the others that a trial of it
alone may be had without injustice.”  Chesley, supra, 145 Md. App. at 628, 806 A.2d at 310
(quoting Stickley v. Chisholm, 136 Md. App. 305, 315, 765 A.2d 662, 668 (2001), quoting,
in turn, Gasoline Products Co., Inc. v. Champlin Refining Co., 283 U.S. 494, 500, 51 S. Ct.
513, 515, 75 L. Ed. 1188, 1191 (1931)).
It was apparent to the court that the relevant operative facts underlying the G&B claim
were so interwoven with those on which the counterclaim was based that they could not be
determined independently.  Accordingly, the court concluded that “Chesley’s right to have
a jury determine the issues triable of right by jury in this case cannot be enforced in the
absence of a retrial on all of the claims.”  Chesley, supra, 145 Md. App. at 629, 806 A.2d at
310.  That conclusion, of course, raised the question of how to treat the court’s earlier
affirmance of the judgment entered on the G&B claim for attorneys’ fees: did the “law of the
case” doctrine preclude the court from vacating a judgment that, in a previous appeal, it had
affirmed?
In responding negatively, the court relied on Hawes v. Liberty Homes, supra, 100 Md.
App. 222, 640 A.2d 743, which explained that the “law of the case” doctrine is one of
appellate procedure and convenience rather than an inflexible rule of law, such as claim or
issue preclusion, and that, although an appellate decision certainly binds lower courts, the
appellate court that rendered the decision is not precluded from reconsidering an issue it
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previously decided, even in the same case, when exceptional circumstances so warrant.  The
thrust of Hawes was that decisions rendered by a prior appellate panel of the Court of Special
Appeals will generally govern in a second appeal “unless (1) the previous decision is patently
inconsistent with controlling principles announced by a higher court and is therefore clearly
incorrect, and (2) following the previous decision would create manifest injustice.”  Hawes,
supra, 100 Md. App. at 231, 640 A.2d at 747.
The court found both of those criteria to be met.  It held that, under Maryland Rule
2-325(e), Chesley, having demanded a jury trial in his counterclaim, was entitled to a jury
trial on all claims in the action, and that the earlier remand for retrial only on the
counterclaim was therefore clear error: “the only proper disposition [in the earlier appeal]
given our holding was to vacate the judgments on all the claims and remand the case for a
new trial, on all the claims.”  Chesley, supra, 145 Md. App. at 634, 806 A.2d at 313.  Not to
do so, the court added, would continue to create a manifest injustice:
“For Chesley to have a fair trial, the original, counterclaim, and
third party claims must be tried together; and to effectuate
Chesley’s jury trial right, the trial on all the issues in those
claims, being factual issues, must be to a jury.  The only way to
accomplish that is to vacate the judgment in the original claim,
which we shall do.”
Id.
Obviously distraught at losing not only its victory on the counterclaim but also the
judgment for attorneys’ fees, G&B sought certiorari, raising essentially three issues:
whether, apart from any question of claim or issue preclusion, summary judgment on the
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counterclaim was appropriate because there were no material facts in dispute and G&B was
entitled to judgment as a matter of law; whether the second panel of the Court of Special
Appeals misapplied the “law of the case” doctrine; and whether that panel erred as well in
failing to find that the counterclaim was barred by claim preclusion (res judicata).  We
granted the petition and shall affirm the judgment of the Court of Special Appeals, although
not entirely for the reasons cited by that court.
DISCUSSION
The answer to all three complaints made by G&B lies in the fact that, when Chesley
filed a demand for jury trial with his counterclaim, he was entitled to a jury trial on all issues
in the action, including those raised in G&B’s complaint.  That right, which was denied to
him, can be enforced only by a remand of the entire case.  It is regrettable that the case has
to go back to Square One at this point, but it was at G&B’s urgings that the problem was
created.
The right to a jury trial in civil actions at law is provided for in Articles 5 and 23 of
the Maryland Declaration of Rights and is therefore of Constitutional dimension.  Article 23
– the more specific provision – states that the right of trial by jury “of all issues of fact in
civil proceedings in the several Courts of Law in this State, where the amount in controversy
exceeds the sum of $10,000, shall be inviolably preserved.”  Maryland Rule 2-325(a)
implements that right.  It provides that “[a]ny party may elect a trial by jury of any issue
1 Chesley characterized his action against Goldstein as a third party complaint.  More
appropriately, he was simply adding Goldstein as a party to his counterclaim, as permitted
by Rule 2-331(c).  Third party complaints are dealt with in Rule 2-332 and are for the
purpose of suing a person who is not already a party to the action and “who is or may be
liable to the defendant for all or part of a plaintiff’s claim against the defendant.”  It does not
appear that Chesley was asserting that Goldstein was liable for any part of the claim asserted
against Chesley by G&B but rather was liable, along with G&B, for wrongs committed
independently by them.  That nuance is not important at this point.
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triable of right by a jury by filing a demand therefor in writing either as a separate paper or
separately titled at the conclusion of a pleading . . . .”
Chesley filed a demand for a jury trial with his counterclaim which, as we noted, was
labeled as a counterclaim against G&B and a third party claim against Goldstein individually.
A counterclaim is a pleading, as is a third party complaint.  See Maryland Rule 1-202(s).
Maryland Rule 2-331(a) permits a party to assert as a counterclaim “any claim that party has
against any opposing party, whether or not arising out of the transaction or occurrence that
is the subject matter of the opposing party’s claim.”  Section (c) of that Rule also allows the
counterclaimant to make a person not previously a party to the action a party to the
counterclaim.1
The Court of Special Appeals was correct in its ultimate conclusion that, having filed
a demand for jury trial with his counterclaim, Chesley was entitled to a jury trial on all issues
2 Although the record before us is not entirely clear whether the counterclaim was, in
fact, timely filed, there is no indication that it was not.  Maryland Rule 2-331(d) provides
that, if a counterclaim is filed more than 30 days after the time for filing that party’s answer,
any other party may object to the late filing by a motion to strike the counterclaim.  If such
a motion is filed and the court finds that the counterclaim was, in fact, untimely, the Rule
requires the court to grant the motion unless there is a showing that the delay has not
prejudiced any other party.  Under Maryland Rule 2-321, an answer to an original complaint
served in Maryland must be filed within 30 days after service of the complaint.  G&B’s
complaint was filed August 4, 1995.  Chesley’s answer was filed November 2, 1995, but,
because the record before us does not show when the complaint was served on Chesley, we
cannot tell whether the answer was filed before the expiration of the 30 day period, and thus
we cannot tell whether the counterclaim, filed December 5, 1995, was within 30 days after
the answer was due.  This is all irrelevant, however, as neither G&B nor Goldstein ever filed
a motion to strike the counterclaim, and so it must be taken as though it was filed timely.
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in the action.  The demand was timely, in that it was made contemporaneously with “the last
pleading filed by any party directed to the issue.”  Maryland Rule 2-331(d) permits a party
to file a counterclaim within 30 days after the time for the filing of that party’s answer, and
there is no indication in this case that Chesley’s counterclaim was not filed within that
period.2
It is clear that a demand for jury trial filed with a counterclaim subjects all issues in
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the action, otherwise triable by a jury, to that mode of trial.  The very text of Rule 2-325(e)
so provides: “When trial by jury has been elected by any party, the action, including all
claims whether asserted by way of counterclaim, cross-claim or third-party claim, as to all
parties, and as to all issues triable of right by a jury, shall be designated upon the docket as
a jury trial.”  It is also apparent from our holding in Higgins v. Barnes, 310 Md. 532, 530
A.2d 724 (1987) and is implicit from the holding of the Court of Special Appeals in Hawes
v. Liberty Homes, supra, 100 Md. App. 222, 640 A.2d 743.
Like the case before us, Higgins involved a contract dispute.  Barnes sued for specific
performance of the contract or, in the alternative, for damages.  It was an equitable action,
triable by the court without a jury.  Higgins answered the complaint and filed a counterclaim
for damages for breach of contract.  That was a law action subject to jury trial, and along
with the answer and counterclaim, Higgins filed a demand for a jury trial.  The Circuit Court
struck the demand, however, and tried the case non-jury, on the ground that it was an
equitable action.  We reversed and concluded that, because the claim and counterclaim
involved common issues and because Higgins was entitled to a jury trial on his breach of
contract claim, the demand for jury trial “should have been granted as to the issues raised by
her answer and counterclaim.”  Higgins v. Barnes, supra, 310 Md. at 552, 530 A.2d at 734.
Hawes is to the same effect.  That case also involved a contract dispute, centered on
whether a financing contingency in a contract for the construction of a home was either
satisfied or waived.  The builder, Liberty, concluded that the contingency had not been
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satisfied and declared the contract void, whereupon the buyers (collectively Hawes) sued for
specific performance, declaratory and injunctive relief, and damages.  In their initial and first
amended complaints, Hawes alleged breach of contract and civil conspiracy; neither they nor
Liberty sought a jury trial.  In a second amended complaint, Hawes added two additional
counts – for deceptive trade practices and negligent misrepresentation – and in its answer to
that complaint, Liberty demanded a jury trial on all issues.  
The court tried the specific performance and declaratory judgment counts non-jury but
allowed the other counts to be tried to a jury.  The jury found for Hawes and awarded
damages.  In reaching that verdict, the jury necessarily determined that the financing
contingency had either been satisfied or waived, as that was really the only issue in dispute,
other than damages.  In ruling on post-trial motions, the court held that there was sufficient
evidence to support the jury’s verdict but that the damages were excessive, and, in default
of agreement to a remittitur, ordered a new trial.  It later denied the request for specific
performance on the ground that Hawes had failed to satisfy the financing contingency and
that such failure terminated the contract sought to be specifically enforced.  That
determination was flatly inconsistent with the verdict of the jury.
The Court of Special Appeals affirmed those rulings, concluding that (1) the issue of
the new trial was not properly before it, (2) it had no merit in any event, and (3) in ruling on
the request for specific performance, the judge was not bound by the jury’s determination
that the contract had been breached by Liberty and was free to make a ruling inconsistent
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with that determination.  Hawes v. Liberty Homes, Inc., No. 78, Sept. Term, 1992, 93 Md.
App. 829 (1992) (unreported opinion).  When the case returned to the Circuit Court,
supposedly for the new trial, Liberty filed a motion for summary judgment grounded on the
premise that Hawes was bound by the court’s determination, affirmed on appeal, that there
had been no breach.  The court granted that motion, which produced a second appeal.  Hawes
v. Liberty Homes, supra, 100 Md. App. 222, 640 A.2d 743.  
In that second appeal, the court determined that, in light of Higgins v. Barnes, supra,
310 Md. 532, 530 A.2d 724, the earlier appellate determination that the Circuit Court judge
was free to rule inconsistently with the jury’s determination that there had been a breach of
the contract was clear error and that, to give it binding effect under the “law of the case”
doctrine would be manifestly unjust.  The prior affirmance of the judge’s determination that
the contract had not been breached could not, therefore, serve to preclude the new trial that
both the Circuit Court and the appellate court had expected would occur.
More significantly to our purpose here, the Court of Special Appeals, in that second
appeal, also addressed, and rejected, the argument by Liberty that, by not demanding a jury
trial within 15 days after the filing of the initial or first amended complaints, Hawes had
waived their right to such a trial.  Liberty’s own demand for jury trial, it averred, went only
to the deceptive trade practice count added in the second amended complaint, and that, as that
count was no longer in the case, Hawes had no right to a jury trial at all.  Relying, as we do,
on Maryland Rule 2-325(e), the court concluded that, when the demand for jury trial was
3 In that regard, the court quoted with approval from the treatise on the Maryland
Rules, P AUL NIEMEYER AND LINDA SCHUETT, MARYLAND RULES COMMENTARY, 160-61:
 “Once a jury trial is properly elected by any party, it becomes the right of any
party thereafter to have the case tried before a jury.  All parties may rely on the
properly filed demand of any other party, and need not file an additional
demand on their own behalf.  
A demand properly made by any party on any claim in the action has the effect
of submitting to the jury all issues triable of right by a jury.  Section (e) of this
rule does not permit submitting some ‘legal’ claims to the jury and reserving
others for trial by the court.  The rule evidences an intent to preserve and favor
the jury trial even if, to preserve it, a technical expansion might occur.”
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made in response to the second amended complaint, “all issues triable of right before a jury
were subjected to that mode of trial . . . .”  Hawes, supra, 100 Md. App. at 235, 640 A.2d at
749. Moreover, by virtue of Rule 2-325(f), even though the demand had been made by
Liberty, it could not be withdrawn without the consent of Hawes and Hawes had a right to
its benefit.3
With that principle in place, the response to G&B’s arguments becomes rather simple.
G&B’s first argument has two disparate parts.  It looks at its complaint for breach of contract
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and the counterclaim, sounding entirely in tort, as raising completely separate issues and thus
contends that the counterclaim was not directed to the issue raised in its complaint.
Accordingly, the demand for jury trial attached to the counterclaim was not filed within 15
days after the last pleading directed to the issue raised in the G&B complaint and, for that
reason, was untimely.  In making that argument, G&B conveniently ignores the defense
asserted to its claim, which raised the same issues that were raised in the counterclaim.  As
the counterclaim was a pleading, and as it was directed to the same issue that was raised with
respect to the initial complaint, the demand for jury trial filed contemporaneously with that
counterclaim was, indeed, timely.  It was the last pleading directed to the issue.
As the second part of its first argument, G&B urges that, apart from any notion of
claim or issue preclusion, summary judgment was properly granted because there were no
material facts in dispute and it was entitled to judgment as a matter of law on the merits.  The
reason no material facts were in dispute is because the judge had already decided those facts
in his non-jury trial of the G&B action.  Therein, of course, lies the fallacy in the argument.
The judge had no right to decide those facts; they were, indeed, in dispute, and that dispute
was for a jury to resolve.
The Circuit Court granted the summary judgment, on remand, because it concluded
that Chesley’s counterclaim was barred by claim and issue preclusion.  That, in turn, was
based on the fact that the court had already adjudicated the facts underlying the counterclaim.
The Court of Special Appeals went to some effort in addressing that question, ultimately
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concluding that, because G&B’s complaint and Chesley’s counterclaim were all part of the
same single action, neither doctrine applied.  There is a much simpler, and less problematic,
answer – the same one that resolves all of the issues.  The basis for the argument of both
claim and issue preclusion is the judgment entered by the court on G&B’s claim for
attorneys’ fees.  But as both the Court of Special Appeals and we have recognized, that claim
should not have been resolved by the court.  As we have concluded that rigid adherence to
the “law of the case” doctrine was inappropriate and that affirmance of the judgment for
G&B could not stand, the entire basis for both claim and issue preclusion evaporates.
This brings us to the final argument posited by G&B – that the Court of Special
Appeals erred in not applying the “law of the case” doctrine with respect to its prior
affirmance of the judgment entered in the G&B action.  We find no error.  The court applied
the principles it had announced in Hawes, which accurately describe the nature and
limitations of the “law of the case” doctrine.  The decision of the first panel not to address
Chesley’s argument that he was entitled to a jury trial on the G&B action and to remand only
the counterclaim for new trial was not only wrong but inconsistent with its own conclusion
that, once the demand for jury trial was made in Chesley’s counterclaim, he was entitled to
a jury trial on all issues in the case, as all were otherwise triable to a jury.  For the second
panel to ignore that error and permit it, under the “law of the case” doctrine, to preclude
Chesley from having the jury trial to which he was entitled, would, indeed, have been
manifestly unjust.
-20-
JUDGMENT 
OF 
COURT 
OF 
SPECIAL
APPEALS AFFIRMED, WITH COSTS.