Opinion ID: 2299356
Heading Depth: 2
Heading Rank: 2

Heading: Dismissal of Declaratory Judgment Actions

Text: Section 3-406 of the Courts & Judicial Proceedings Article provides: Any person interested under a ... written contract, or other writing constituting a contract, or whose rights, status, or other legal relations are affected by a ... contract ... may have determined any question of construction or validity arising under the ... contract... and obtain a declaration of rights, status, or other legal relations under it. Section 3-407 allows a contract to be construed before or after a breach of the contract. Granting a motion to dismiss a declaratory judgment action without declaring the rights of the parties rarely is appropriate. Post v. Bregman, 349 Md. 142, 160, 707 A.2d 806, 814 (1998); Broadwater v. State, 303 Md. 461, 465, 494 A.2d 934, 936 (1985); State v. Burning Tree Club, Inc., 301 Md. 9, 17-18, 481 A.2d 785, 789 (1984); Borders v. Board of Educ., 259 Md. 256, 258-59, 269 A.2d 570, 571 (1970); Woodland Beach Property Owners' Ass'n v. Worley, 253 Md. 442, 447-48, 252 A.2d 827, 830 (1969); Hunt v. Montgomery County, 248 Md. 403, 408-10, 237 A.2d 35, 37-39 (1968). Ordinarily the only place a [dismissal] has in the declaratory process is to challenge the legal availability of the remedy sought to be used. Hunt, 248 Md. at 408, 237 A.2d at 37. This Court has said that [t]he test of the sufficiency of the [complaint for declaratory judgment] is not whether it shows that the plaintiff is entitled to the declaration of rights or interest in accordance with his theory, but whether he is entitled to a declaration at all; so, even though the plaintiff may be on the losing side of the dispute, if he states the existence of a controversy which should be settled, he states a cause of suit for a declaratory decree. Shapiro v. Board of County Comm'rs, 219 Md. 298, 302-03, 149 A.2d 396, 399 (1959). As an example of when a claim for declaratory judgment would not be available, we have said that as a general rule, courts will not entertain a declaratory judgment action if there is pending, at the time of the commencement of the action for declaratory relief, another action or proceeding involving the same parties and in which the identical issues that are involved in the declaratory action may be adjudicated. Post, 349 Md. at 160, 707 A.2d at 814 (quoting Waicker v. Colbert, 347 Md. 108, 113, 699 A.2d 426, 428 (1997)); see also Turnpike Farm Ltd. Partnership v. Curran, 316 Md. 47, 49, 557 A.2d 225, 226 (1989); Northern Assurance Co. v. EDP Floors, Inc., 311 Md. 217, 223, 533 A.2d 682, 685 (1987). That a separate claim exists upon which suit could be brought, however, ordinarily does not defeat a party's right to seek and obtain a declaratory judgment prior to filing the other claim. See § 3-409(c) of the Courts & Judicial Proceedings Article (A party may obtain a declaratory judgment or decree notwithstanding a concurrent common-law, equitable, or extraordinary legal remedy....); Post, 349 Md. at 160, 707 A.2d at 814-15 (The existence of another remedy, at law or in equity, does not ordinarily defeat a party's right to seek and obtain a declaratory judgment.) (citing Turner v. Manufacturers' Cas. Ins. Co., 206 Md. 601, 112 A.2d 670 (1955); Glorius v. Watkins, 203 Md. 546, 102 A.2d 274 (1954)); Gloyd v. Talbott, 221 Md. 179, 183, 156 A.2d 665, 666 (1959) (The existence of a remedy at law or in equity is not a bar to declaratory relief.). [2] The Court of Special Appeals held below that the trial court properly dismissed Allied's declaratory judgment action because... it is not an available or appropriate type of remedy. Although couched in terms of declaring the validity and priority of Allied's interest in the Ashmere Partnership and Corporation, Allied's complaint is, in effect, one for conversion.... Allied apparently did not merely want the court to construe the validity and priority of its claim, but instead wanted its property back. Allied wanted the court to order Jasen to disgorge the distributions, dividends, and other payments he may have received over the past six years, all of which assertedly were Allied's property upon Miller's default. Such goals are inconsistent with the purpose of the Declaratory Judgment Act, but entirely consistent with a claim for conversion. Allied Inv. Corp., 123 Md.App. at 99-100, 716 A.2d at 1090 (footnote omitted) (quotation omitted). We disagree. Counts one and two of the complaint seek a declaration that petitioners have a valid security interest in the Ashmere Interests and their proceeds. Count one, in its request for relief, seeks a declaratory judgment: a. Declaring that William H. Miller's execution of the Collateral Assignment of Ashmere Manor Interests in his capacity as president of Ashmere Chesapeake Corporation was effective to confer the consent of Ashmere Chesapeake Corporation, the general partner of Ashmere Chesapeake Limited Partnership, to William H. Miller's pledge of his partnership interest in Ashmere Chesapeake Limited Partnership, and the proceeds thereof, in favor of Allied Investment Corporation, Allied Venture Partnership and DC Bancorp Venture Capital Company; b. Declaring that pursuant to the May 30, 1989 Collateral Assignment of Ashmere Manor Interests, William H. Miller's obligations to Allied Investment Corporation and Allied Venture Partnership under the Modification of Loans Agreement of February 20, 1991, and the accompanying Guaranty and Promissory Note from William H. Miller, are secured by a security interest in William H. Miller's partnership interest in Ashmere Chesapeake Limited Partnership, together with all rights of William H. Miller to distributions, dividends, or other payments arising from William H. Miller's partnership interest in Ashmere Chesapeake Limited Partnership; and c. Granting such other and further relief as this Court deems just and appropriate. Count two seeks a declaratory judgment: a. Declaring that William H. Miller's obligations to Allied Investment Corporation and Allied Venture Partnership pursuant to the Modification of Loans Agreement of February 20, 1991, and the accompanying Guaranty and Promissory Note from William H. Miller, are secured by a security interest in William H. Miller's stock in Ashmere Chesapeake Corporation, together with all rights of William H. Miller to distributions, dividends or other payments arising from William H. Miller's stock in Ashmere Chesapeake Corporation; and b. Granting such other and further relief as this Court deems just and appropriate. Nowhere in the language of these two claims do petitioners seek reimbursement for any property rights or proceeds that respondent may have received after his purported purchase of the Ashmere Interests. Nor do the two claims allege a conversion of those interests. Thus, petitioners' complaint cannot be dismissed for stating a time-barred conversion claim because, quite simply, their complaint does not state a claim for conversion. Petitioners' legal relations are affected by a ... contract and section 3-406 of the Courts & Judicial Proceedings Article authorizes them to have determined any question of construction or validity arising under the... contract ... and obtain a declaration of rights, status, or other legal relations under it by the circuit court. Thus, claims one and two are strictly requests for declaratory judgment. We note further that even if petitioners could allege a conversion, the potential existence of a conversion claim does not bar them from filing an action for declaratory judgment. As section 3-409(c) of the Courts & Judicial Proceedings Article and Post, 349 Md. at 160, 707 A.2d at 814-15, make clear, the availability of a concurrent legal or equitable remedy ordinarily does not prevent a party from seeking and obtaining a declaratory judgment. Regardless of whether the circumstances in this case could constitute a conversion claim, time-barred or not, petitioners have never made a claim and their complaint does not set forth such a claim now. Thus, they may seek a declaratory judgment pertaining to whether they have a secured interest in the Ashmere Interests. The lower courts incorrectly viewed petitioners' claims for declaratory judgment as solely a tort claim for conversion.