Lowery v. Hoang, et al., No. 2085, September Term, 2016

Filed: February 27, 2019, Opinion by Friedman, J.

HEADNOTES:

CJ § 5-202 > BANKRUPTCY > DENIAL OF DISCHARGE

When a debtor enters bankruptcy, CJ § 5-202 tolls a creditor’s claim if the debtor either is 

denied a discharge pursuant to 11 U.S.C. § 727, or if the bankruptcy is dismissed.
Circuit Court for Montgomery County 

Case No. 223525-V

REPORTED

IN THE COURT OF SPECIAL APPEALS

OF MARYLAND

No. 2085

September Term, 2016

______________________________________

JEFFREY LOWERY

v.

MINH-VU HOANG, ET AL.

______________________________________

Meredith,

Friedman,

Wilner, Alan M.

 (Senior Judge, Specially Assigned),

JJ.

______________________________________

Opinion by Friedman, J.

______________________________________

Filed: February 27, 2019
The United States Constitution provides that:

The Congress shall have [p]ower [t]o ... establish ... uniform [l]aws on the 

subject of [b]ankruptcies throughout the United States.

U.S. Const., art. I § 8, cl. 4. Despite this seemingly clear grant of power, it took Congress 

a long while to establish federal bankruptcy law, and longer still for it to establish a 

permanent bankruptcy law that preempted existing state insolvency laws. Thus, there were 

long stretches during the 19th century in which Maryland had its own insolvency law that 

operated alongside, or even instead of, federal bankruptcy law. State insolvency laws were 

finally preempted in 18981 but Maryland’s version remained dormant, on the books, until 

1975 when it was deleted.2 One provision of the old state insolvency law, however, 

survived: a provision that tolls causes of action against a debtor during insolvency 

proceedings:

If a debtor files a petition in insolvency which is later 

dismissed, the time between the filing and the dismissal is not 

included in determining whether a claim against the debtor is 

barred by the statute of limitations.

Md. Code, Cts. & Jud. Proc. (“CJ”) § 5-202 (emphasis added).3 Despite the fact that CJ 

§ 5-202 was designed for application to the old state insolvency procedure (and still uses 

 

1 Nelson Act (Bankruptcy Act of 1898), ch. 541, 30 Stat. 544, (codified as amended 

in scattered sections of 11 U.S.C.).

2 Ch. 49, § 3 of the Acts of 1975. 

3 This version of CJ § 5-202 was adopted during code revision in 1973. 1973 Acts, 

1st Spec. Sess. Ch. 2. When first adopted in 1815, the provision read:

[T]he time intervening between the petitioning of any said 

debtors and the time that any of said petitions [for the benefit 
2

its terminology), the Court of Appeals has instructed us to apply it to current federal 

bankruptcy cases. Ali v. CIT Tech. Fin. Servs., 416 Md. 249 (2010). Thus, in Ali, the Court 

of Appeals held that a “petition in insolvency,” as that term is used in CJ § 5-202, must be 

read to include a modern bankruptcy petition, and held that state claims are preserved by 

operation of CJ § 5-202 while a debtor is engaged in the federal bankruptcy process.4Id. 

at 270-71.

This case follows Ali, but requires us to determine the meaning of the words 

“dismissed” and “dismissal” as they appear in CJ § 5-202. Lowery proposes a broad 

interpretation, which would include any termination of a bankruptcy proceeding, not just 

dismissals. And because every bankruptcy must end, he argues, this statute tolls every 

creditor claim when a debtor enters bankruptcy, until the bankruptcy ends. Hoang, by 

contrast, advocates for a narrower reading that would limit “dismissed” and “dismissal” in 

CJ § 5-202 to only cases that are “dismissed” in modern federal bankruptcy practice, 

 

of the insolvency law] may be dismissed, shall not be 

computed on any plea of limitation so as to defeat any claim of 

any person against such debtor.

1815 Acts, Ch. 122 § 3. See note 8 and the Appendix for a further discussion of this 

legislation. There were other intermediate formulations. Md. Code Pub. Gen. Laws, Art. 

57, § 9 (1904); Md. Code Pub. Gen. Laws, Art 47, § 8 (1880).

4 When a debtor files for bankruptcy, an automatic stay is immediately enacted 

which prohibits creditors from filing any claims against a debtor. 11 U.S.C. § 362. Federal 

bankruptcy law preserves creditors’ claims against a debtor’s estate for the duration of the 

automatic stay plus 30 days after it is lifted. 11 U.S.C. § 108(c)(2). Federal law also permits 

the states to adopt longer periods. 11 U.S.C. § 108(c)(1). Thus, in Ali, the Court of Appeals 

held that CJ § 5-202 serves as Maryland’s adoption of a longer period. 416 Md. at 259 

(“[T]he Maryland Legislature has made it its business to give plaintiffs additional time.”).
3

meaning dismissed under 11 U.S.C. § 707(a) (providing for dismissal of a Chapter 7 

bankruptcy), § 1112(b)(1) (providing for dismissal of a Chapter 11 bankruptcy), or 

§ 1307(b) (providing for dismissal of a Chapter 13 bankruptcy). We will select an 

intermediate course.

FACTS

There are three specific facts necessary to understand this case: (1) Hoang incurred 

a debt to Lowery in 2002; (2) Hoang filed for bankruptcy in 2005 and was denied a 

discharge; and (3) Hoang received $87,000 in 2016 out of which Lowery seeks to be paid 

for the 2002 debt. We explain the details of each below.

A. The 2002 Debt

On April 11, 2002, the Circuit Court for Montgomery County entered a default 

judgment in favor of Lowery against Hoang for $16,987. Lowery has yet to collect on that 

judgment. With interest, Lowery’s judgment totaled over $41,000 by July of 2016. A 

money judgment in Maryland expires after 12 years, unless it is renewed before it expires. 

CJ § 5-102(a)(3) (establishing the limitations period).5 All parties agree that Lowery did 

not renew that judgment within the 12-year period. Thus, the 2002 debt has been 

extinguished if it was not somehow extended. 

 

5 While CJ § 5-102(a)(3) establishes the 12-year statute of limitation, “Md. Rule 2-

625 implements the limitations period found in CJ § 5-102” by explaining when a judgment 

expires and can be renewed. State, Comptroller of Maryland v. Shipe, 221 Md. App. 425, 

435 (2015) (cleaned up).
4

B. Hoang’s Bankruptcy

Hoang petitioned for Chapter 11 bankruptcy protection on May 10, 2005 and the 

bankruptcy court issued an automatic stay. See 11 U.S.C. § 362(a) (authorizing an 

automatic stay). A bankruptcy trustee was appointed to administer Hoang’s bankruptcy 

estate. For reasons that don’t concern us, Hoang’s bankruptcy was converted into a Chapter 

7 bankruptcy on October 28, 2005. Hoang behaved badly and hid assets from the trustee.6

As a result, on March 22, 2006, the Bankruptcy Court issued an Order denying Hoang 

a discharge and lifting the automatic stay. See 11 U.S.C. § 727 (authorizing denial of 

discharge); In re Packer, 520 B.R. 520, 533 (“The denial of a debtor’s discharge is akin to 

financial capital punishment. It is reserved for the most egregious misconduct by a 

debtor.”) (Cleaned up). Thus, Hoang’s bankruptcy case remains open: the

bankruptcy trustee has not yet finished marshalling her assets and distributing the proceeds 

to her creditors. We are informed that this process may still take years.

 

6 Hoang’s bad behavior in bankruptcy is well-documented. As the federal court 

described, after Hoang filed for bankruptcy:

the Trustee commenced numerous adversary proceedings to 

recover property of the estate that [Hoang] had attempted to 

conceal through various business entities with which she was 

associated. She failed to report these entities on her bankruptcy 

schedules and her statement of financial affairs, and she was 

criminally indicted on charges related to bankruptcy and tax 

fraud. On October 13, 2010, [she] pled guilty to conspiracy to 

defraud an agency of the United States . . . [and] was sentenced 

to a term of imprisonment of sixty months.

In re Minh Vu Hoang, 2015 U.S. Dist. WL 2345588, at *1 (D. Md. May 15, 2015).
5

C. The 2016 Recovery

In April of 2016, Hoang recovered $87,000 in the settlement of an unrelated real 

estate dispute. Pursuant to a deal struck with her bankruptcy trustee, half of the settlement, 

$43,500, went to the trustee for the benefit of her creditors and half went to Hoang’s 

lawyer. Lowery learned of the settlement, however, and served a writ of garnishment in the 

amount of $41,294.31 (the amount of the original 2002 judgment plus interest).

D. Subsequent Procedural History

Hoang moved to quash the writ of garnishment arguing that, as described 

above, Lowery’s judgment was more than 12 years old and had expired pursuant to the 12-

year statute of limitations in CJ § 5-102(a)(3). Lowery responded that his time for 

collecting the judgment had been extended by operation of CJ § 5-202. The circuit court 

agreed with Hoang, finding that CJ § 5-202 did not toll the limitations period 

on Lowery’s judgment. Lowery appealed.

ANALYSIS

The question that we must consider then is what the legislature intended when it 

adopted (and repeatedly readopted) the precursor to what is now CJ § 5-202. If it meant 

the words “dismissed” and “dismissal” to mean what they mean in modern bankruptcy law, 

then Hoang’s bankruptcy has not been dismissed and may never be dismissed. If so, 

Lowery must watch and wait. If Hoang’s bankruptcy is ever dismissed, then he may 

resurrect his claim. Alternatively, if the legislature intended the words “dismissed” and 

“dismissal” to have a broader meaning, then perhaps “dismissal” also includes other 

resolutions of bankruptcy proceedings.
6

Our use of the traditional methods of statutory interpretation is inconclusive. 

Although the Court in Ali discussed the meaning of dismissal as used in CJ § 5-202, it did 

not settle on a conclusive meaning and did not reach a result that decides this case.7 We 

have reviewed the remaining legislative history8(of which there is little), as well as 

contemporaneous general dictionaries,9contemporaneous legal dictionaries,10 and 

 

7 When Ali argued that dismissal should be defined as the time at which the 

automatic stay is lifted, the Court disagreed because “[CJ] § 5-202 is clear that the 

limitation period is tolled until the dismissal of the bankruptcy petition.” Ali, 416 Md. at 

270 n.16. From this we know only that the lifting of the automatic stay is not a “dismissal” 

for purposes of CJ § 5-202. This does not tell us what is a dismissal.

8 The original bill, by which the predecessor to CJ § 5-202 was adopted, contained 

three separate sections, each of which pertained to insolvency. Ch. 122 of the Acts of 1815

(full text in Appendix). Section 3 was the predecessor to CJ § 5-202 and used the word 

“dismissal.” See supra note 3. Section 2 described the procedure that creditors should take 

when reviving a judgment against the debtor, but used three terms: “dismissal,” 

“withdrawing of any petition,” and “decisions thereon against the petitioner.” Thus, if the 

drafters of the bill were using the word “dismissal” in § 3 in a manner that is consistent 

with how they used it in § 2, we might infer that “dismissal” does not include a withdrawal 

or an adverse decision. While interesting, this insight doesn’t get us any closer to 

understanding what the drafters intended the scope of dismissal to be.

9 We looked at, for example, JOHN ASH, NEW AND COMPLETE DICTIONARY OF THE 

ENGLISH LANGUAGE (1795) (defining “dismiss” as “[t]o send away, to give leave to depart, 

to discard, to divest from office”); NOAH WEBSTER, A COMPENDIOUS DICTIONARY OF THE 

ENGLISH LANGUAGE (1806) (defining “dismiss” as “to send or put away, discard or 

dispose”). These definitions in contemporaneous general dictionaries are, unfortunately, 

not very helpful in understanding what the legislature intended “dismissal” to include. 

Because the definitions do not specify why a case would be disposed of, they could be read 

broadly enough to encompass every reason a case ends (whether by dismissal or closure) 

or narrowly enough to include only cases that end due to dismissal. 

10 We looked at, for example, JOHN BOUVIER, A LAW DICTIONARY ADAPTED TO 

THE CONSTITUTION AND LAWS OF THE UNITED STATES OF AMERICA (1839) (defining “to 

dismiss a cause” as “removing a cause out of court without a formal hearing”); BLACK’S 

LAW DICTIONARY (1st ed. 1891) (defining “dismissal” as “[t]o send away; to discharge; to 

cause to be removed”). These contemporaneous legal definitions are not helpful in 
7

contemporaneous legal practice manuals11—only to have emerged as uncertain as when we

began. Fortunately, however, we think a functional method of statutory interpretation 

provides a historically accurate and correct interpretation.

As we understand it, under traditional Maryland insolvency practice, the debtor’s 

nonexempt assets would be gathered and turned over to a trustee and eventually, the 

creditors. 1805 Acts, ch. 110, §§ 3-5. In exchange, the debtor would receive a discharge of 

debts and a fresh start. 1805 Acts, ch. 110, § 13. Of course, not all insolvencies reached 

this successful conclusion. See e.g. 1805 Acts, ch. 110, § 9 (precluding debtors who are 

convicted of deceiving their creditors from benefiting from the insolvency laws). The 

predecessor to CJ § 5-202 was adopted to ensure that creditors, whose debtors failed in 

obtaining a discharge, wouldn’t be worse off for cooperating in the process. Thus, if an 

 

understanding what the legislature intended “dismissal” to include. Although they tell us 

that a case is removed from the docket, the definitions don’t tell us why a case may be 

removed, allowing the possibility that the legislature meant dismissal to be defined broadly, 

like Lowery advocates, to include termination for any reason, or narrowly, like Hoang 

prefers, to limit dismissal to the modern bankruptcy definition.

11 We have found two contemporaneous (or reasonably contemporaneous) legal 

practice manuals that explain Maryland insolvency law. Unfortunately, neither helps us 

resolve this case. Poe’s Practice and Procedure, a Maryland civil procedure manual that 

includes insolvency practice, discusses the “term “dismissal” only in the context of 

involuntary insolvency petitions. POE’S PRACTICE AND PROCEDURE § 800 (1st ed. 1880).

That doesn’t help us because CJ § 5-202, by its terms, applies only to voluntary

insolvencies and, in fact, Maryland didn’t adopt an involuntary insolvency procedure until 

65 years later, in 1880. John Dorsey’s treatise on insolvency law described insolvency law 

in many states, but sometimes focused on Maryland’s insolvency law. JOHN L. DORSEY, A

TREATISE ON THE AMERICAN LAW OF INSOLVENCY 82 (1832). Dorsey’s treatise described 

instances when a creditor could move for “dismissal” if there was a defect in the petition 

such as insufficiency of notice. Id. at 82. Regrettably, although Dorsey tells us when 

“dismissal” was inappropriate, he neglects to tell us when it was appropriate. Id.
8

insolvency was successful, the creditors got the debtor’s available assets. 1805 Acts, ch. 

110, § 7. If the insolvency was unsuccessful, the creditors’ claims were preserved and 

everyone was restored to their prepetition status. Operationally, this was accomplished by 

CJ § 5-202 extending the statute of limitations for the period during which the debtor was 

pursuing insolvency up until the court determined that it was unsuccessful.

In modern bankruptcy, the vast majority of proceedings end in one of the same two 

ways that insolvency proceedings ended 200 years ago. A successful bankruptcy today 

results in a closure, by which the debtor’s estate is fully administered for the benefit of the 

creditors. 11 U.S.C. § 350(a) (“After an estate is fully administered and the court has 

discharged the trustee, the court shall close the case.”). The creditors recover what they can 

and the debtor receives a discharge and a fresh start. Alternatively, bankruptcy cases can 

end unsuccessfully, in a dismissal. 11 U.S.C. § 707(a) (providing for dismissal of a Chapter 

7 bankruptcy), § 1112(b)(1) (providing for dismissal of a Chapter 11 bankruptcy), or 

§ 1307(b) (providing for dismissal of a Chapter 13 bankruptcy). A bankruptcy can be 

dismissed for a host of reasons, including failure to pay certain fees and material default of 

the confirmed repayment plan. 11 U.S.C. § 1307(c) (listing what constitutes “cause” for 

dismissing or converting a case). If the bankruptcy case is dismissed, the debtor does not 

receive a discharge, but instead the automatic stay is dissolved and dismissal “restores the 

assets and parties to their prepetition status, as if the case had never been filed.” In re 

Woodhaven, Ltd., 139 B.R. 745, 748 (N.D. Ala. 1992).
9

Modern bankruptcy law, however, also permits a third possible outcome:12 a denial 

of discharge. This is a rare occurrence,13 reserved for the most misbehaving debtors. In re 

Packer, 520 B.R. at 533. The effect of a denial of discharge is really the worst of both 

worlds for the debtor: the debtor remains in bankruptcy and his or her assets continue to be 

administered for the benefit of the creditors. BANKRUPTCY CODE MANUAL, § 727:8 (“If a 

debtor is denied a discharge under § 727(a), the debtor remains liable for all unpaid 

obligations. Moreover, the assets that the nondischarged debtor may acquire in the future 

are also subject to the claims of creditors.”). But a debtor who is denied a discharge will 

never obtain a discharge in their case or a fresh start. In re Oliver, 819 F.2d 550, 552 (1987) 

(explaining that a violation of 11 U.S.C. § 727 “entirely bars discharge”). As we said 

before, however, the denial of discharge did not exist in Maryland insolvency law.

Lowery’s solution is that every outcome in bankruptcy—successful or 

unsuccessful—ought to receive the benefit of the tolling provided by CJ § 5-202. This 

theory is obviously wrong. The state legislature in 1815 only extended the benefit of tolling 

to creditors when the debtor’s insolvency was unsuccessful. We won’t extend the benefit 

to a situation that the legislature clearly intended to exclude: a successful bankruptcy. 

Hoang’s solution is that dismissal in 1815 meant exactly the same as what dismissal means 

 

12 There is a fourth option, conversion, in which a bankruptcy filed pursuant to one 

chapter of the bankruptcy code is converted to proceed under a different chapter. 11 U.S.C. 

§§ 707(b); 1112(a). That outcome is not relevant for our present purposes.

13 For example, in fiscal year 2016, there were 482,693 Chapter 7 Bankruptcy filings 

and only 1,004 denials of discharge, a rate of around 0.2%. UNITED STATES TRUSTEE 

PROGRAM, ANNUAL REPORT OF SIGNIFICANT ACCOMPLISHMENTS 4-5 (2016), 

https://perma.cc/R57X-9DRX. 
10

today. She argues that because her bankruptcy hasn’t been dismissed, her creditors are not 

entitled to the benefit of tolling. This seems wrong too. The legislature wouldn’t have 

intended for the worst debtors to be treated better than merely unsuccessful debtors, like 

those whose cases are dismissed for failing to pay the correct fees or failing to file correct 

information with the court within 15 days. 11 U.S.C. § 707(a).

We think that the solution is obvious. The legislature, in enacting CJ § 5-202, 

intended to hold creditors unharmed by preserving their otherwise time-barred claims while 

participating in an unsuccessful bankruptcy. That benefit was not necessary and therefore 

was not provided for creditors participating in a successful bankruptcy. We hold that that 

was the distinction that the legislature intended in 1815 and that we will enforce today by 

holding that creditors of debtors whose bankruptcies are dismissed, as defined by 11 U.S.C. 

§ 707(a), § 1112(b)(1), § 1307(b), or denied a discharge, pursuant to 11 U.S.C. § 727, are 

entitled to the tolling offered by CJ § 5-202.14 This outcome, while not compelled by Ali, 

is certainly consistent with the Court of Appeals’ statement that CJ § 5-202 was “enacted 

to address the public’s complaint that debtors manipulated the bankruptcy and insolvency 

process by entering bankruptcy, waiting for the statute of limitations to expire, and 

subsequently dismissing the bankruptcy proceeding.” Ali, 416 Md. at 268. As a result, we 

reverse the judgment of the circuit court and reinstate Lowery’s claim.15

 

14 Of course, if this is not what the current legislature thinks the 1815 legislature 

intended, or if they have a new idea about how to deal with state claims while a debtor is 

in bankruptcy, they are free to rewrite CJ § 5-202. We encourage it. 

15 Because of our resolution of this issue, we need not reach Lowery’s claim that 

Hoang is collaterally estopped from litigating this position. We note however, two 
11

JUDGMENT OF THE CIRCUIT COURT

FOR MONTGOMERY COUNTY

REVERSED; COSTS TO BE PAID BY

APPELLEE.

 

problems with Lowery’s theory of collateral estoppel. First, the issue of whether CJ 

§ 5-202 tolls claims during bankruptcy before a case is formally dismissed seems, to us, to 

be a legal issue and not a factual issue. And collateral estoppel is most commonly, if not 

exclusively, applied to the resolution of factual issues. See Shader v. Hampton 

Improvement Association, Inc., 217 Md. App. 581, 605 (2014) (stating, without elaborating 

upon what separates factual issues from legal, that “collateral estoppel precludes a party 

from re-litigating a factual issue”) (emphasis added). Second, although it is apparently an 

unresolved issue in Maryland law and throughout the United States, it appears that the most 

common view is that a default judgment should not be considered to have been “finally 

litigated” for purposes of collateral estoppel. John Crane, Inc. v. Puller, 169 Md. App. 1, 

36 (2006) (stating, in obiter dicta, that a “default judgment does not have preclusive effect 

where issues of fact were not actually litigated”) (cleaned up); RESTATEMENT (SECOND)

OF JUDGMENTS § 27 cmt. E (1982) (“[I]n the case of a judgment entered by . . . default, 

none of the issues is actually litigated.”); BANKRUPTCY EVIDENCE MANUAL, § 3:14 (“[T]he 

collateral estoppel effect of a prior default judgment under state law varies from state to 

state.”); Collateral Estoppel in Default Judgments: The Case for Abolition, 70 COLUM. L.

REV. 522 (1970) (arguing against the application of non-mutual collateral estoppel to a 

default judgment because choosing to default usually does not contemplate future inability 

to litigate the issue against a different plaintiff).
12

APPENDIX

CHAPTER 122.

An additional supplement to the act entitled, an act for the 

relief of sundry insolvent debtors.

Sec. 1. BE IT ENACTED by the General Assembly of 

Maryland, That no petition for the benefit of the original act 

for the benefit of sundry insolvent debtors, and the several 

supplements thereto, now depending in any of the county 

courts of this state shall be continued beyond the second 

session of such court next after the passage of this act; 

unless in cases where the court shall be satisfied a further 

continuance is necessary to procure testimony material and 

competent on the trial of any allegations made against the 

petitioner’s discharge, nor shall, any such petition hereafter

to be filed, be continued beyond the first court next after the 

filing thereof unless for the causes aforesaid.

2. AND BE IT ENACTED, That upon the dismissal or 

withdrawing of any petition for the benefit of said acts, or 

upon decisions thereon against the petitioner, it shall not be 

necessary to revive by scire facias any judgment which may 

have been suspended by such petition, and process of 

execution may be issued upon such judgments as if no such 

suspension had taken place.

3. AND BE IT ENACTED, That the time intervening 

between the petitioning of any of said debtors and the time 

that any of said petitions may be dismissed, shall not be 

computed on any plea of limitation so as to defeat any claim 

of any person against such debtor.