Opinion ID: 2054340
Heading Depth: 1
Heading Rank: 3

Heading: Facts Leading Up to Our Case

Text: On September 25, 1991, petitioner filed in the Circuit Court for Montgomery County a breach of contract action against Crough, Inc. to recover the $211,742.42 owed as the retainage amount for the masonry contract for the North Village Residence Project, which had been finished in 1990. The sum sued for was completely unrelated to the Old Gymnasium Project. On December 12, 1991, the Circuit Court granted summary judgment in favor of petitioner and entered judgment against Crough, Inc. for $211,742.42 plus $5,000 in attorney's fees. On July 31, 1992, in an effort to enforce this judgment, petitioner's lawyer spoke with Mr. Johnson of Crough, Inc., and it was during that conversation that petitioner learned of Mr. Crough's gift-in-kind, through the company, of the Crough Center for Architecture (the Old Gymnasium Project). Additionally, petitioner then learned of the Final Release of Claims and Lien Waiver that was executed in February of 1990. Because of Crough, Inc.'s inability to pay petitioner's judgment, and having learned of the apparent uncollected account receivable that Crough, Inc. maintained as a part of its financial records from the Old Gymnasium Project, petitioner sought to have respondent pay the sums due it on the North Village Residence Project. Respondent refused. On November 29, 1994, in the Circuit Court for Frederick County, petitioner filed a Request for Writ of Garnishment against respondent based upon the judgment it had obtained against Crough, Inc. in 1991. Petitioner alleged that respondent owed funds to Crough, Inc. sufficient to satisfy the sums due to petitioner as a result of its 1991 judgment against Crough, Inc. Petitioner's request made reference to Maryland Rule 2-645 and Maryland Code (1975, 2000 Repl.Vol.), section 15-209 of the Commercial Law Article, both concerning garnishments. Petitioner's theory in the garnishment proceeding against respondent, essentially, was that the CMA between Crough, Inc. and respondent was a contract that obligated respondent to pay Crough, Inc. the full $3,149,000 amount stated in the contract as the payment amount, not the lesser $1,257,000 loan amount leading to the release. In other words, petitioner maintained that respondent remained indebted to Crough, Inc. for the full amount, which could, in turn, be used, via the garnishment action, to satisfy petitioner's judgment against Crough, Inc. Petitioner further added that the Final Release of Claims and Lien Waiver by which Crough, Inc. purported to release the full amount of debt, amounted to a fraudulent conveyance under Maryland Code (1975, 2000 Repl.Vol.), section 15-209 of the Commercial Law Article because Crough, Inc. was insolvent when the release was given. As a result, according to petitioner, under section 15-209 the debt forgiveness could be disregarded for purposes of garnishment and the balance due from the $3,149,000 amount, for garnishment purposes, remained the property of Crough, Inc. in possession of respondent and ultimately subject to attachment. Prior to filing an answer to petitioner's request for writ of garnishment, respondent moved to dismiss for lack of personal jurisdiction and improper venue. Jurisdiction and venue issues were eventually resolved, with the case proceeding in the Circuit Court for Montgomery County. Accordingly, it was roughly two years after petitioner had filed a request for writ of garnishment against respondent that respondent filed an answer. On May 15, 1996, respondent answered claiming that it was not in possession of any property of Crough, Inc. Respondent also asserted several defenses. Ultimately, two years after the date respondent filed its initial answer, respondent filed an amended answer to the request for writ of garnishment. In this amended answer, respondent asserted the defense of limitations. Thereafter, respondent filed a Motion for Summary Judgment on the ground of limitations. On October 13, 1999, argument was heard in the Circuit Court on the Motion for Summary Judgment and that motion was denied. The case was tried before the Circuit Court for two days, continued, and later resumed on February 24, 2000, and completed on February 25, 2000. On June 1, 2000, the trial court issued a Memorandum Opinion and Order setting forth its factual findings and conclusions of law. The trial court found that the garnishment proceeding was not time barred, as petitioner's request for writ of garnishment was filed within three years of the date that petitioner, via its attorney, learned from Mr. Johnson of the alleged fraudulent conveyance (the Final Release of Claims and Lien Waiver forgiving a debt obligation while Crough, Inc. was insolvent and unable to pay its creditors), and that respondent had funds petitioner could attach via garnishment to satisfy its judgment against Crough, Inc. The Circuit Court awarded petitioner $381,136.53 in damages, consisting of the $211,742.42 original judgment amount in its breach of contract action against Crough, Inc. and $169,393.93 in post-judgment interest. Respondent noted a timely appeal to the Court of Special Appeals, presenting to that court several questions for review. The Court of Special Appeals reversed the ruling of the Circuit Court for Montgomery County and held that the garnishment proceeding was time-barred, and that respondent had properly raised the limitations defense to petitioner's garnishment action. Furthermore, the intermediate appellate court held that the discovery rule did not apply to toll the start of the running of the general three-year limitation period until the time petitioner's attorney first learned of the alleged fraudulent conveyance. The Catholic University of America v. Bragunier Masonry Contractors, Inc., 139 Md.App. 277, 775 A.2d 458 (2001). Petitioner filed a Petition for Writ of Certiorari to this Court; respondent then filed a Cross Petition for Writ of Certiorari. We granted both petitions. Bragunier v. Catholic University, 366 Md. 246, 783 A.2d 221 (2001).