E-Alert Case Updates

A Defendant Receiving a Notice of Default at its Last Known Address was Sufficient

Smith-Myers Corp. d/b/a Smith-Myers Mortgage Group v. Sherill, et al.
No.: 2034 (Md. App. Jan. 24, 2013)
by Kevin M. Cox, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Plaintiffs, Ada Sherill and James Mills (“Plaintiffs”), filed suit against Johnnie Beans, Smith-Myers Corporation d/b/a Smith-Myers Mortgage Group (“Smith-Myers”), and Beltway Title and Abstract, Inc. (collectively, “Defendants”) alleging that Defendants engaged in a fraudulent scheme to deprive them of the equity value of their home. For approximately one (1) year and a half, Smith-Myers was represented by counsel at the trial court level, but its counsel eventually withdrew its representation. Smith-Myers was aware that its counsel had withdrawn from the case. No attorney entered an appearance on behalf of Smith-Myers for approximately ten (10) months. During this time, the trial court held three (3) status conferences, all of which Smith-Myers failed to attend. The reason Smith-Myers failed to attend these conferences was because the notices were sent to an incorrect address.

Plaintiffs eventually filed a motion for default judgment, in which they incorrectly asserted Smith-Myers’ last known address. The Circuit Court issued an order of default against Smith-Myers, which was mailed to the incorrect address for Smith-Myers. The order was, however, also mailed to Smith-Myers’ former counsel who informed Smith-Myers of the order of default. Smith-Myers did not move to vacate the order of default on a timely basis. Therefore, the trial court entered a default judgment against Smith-Myers in the amount of $627,277.00 plus costs. Thereafter, Smith-Myers filed a motion to vacate the default judgment, which the trial court denied. Smith-Myers appealed to the Court of Special Appeals of Maryland.

MD. RULE 2-613(b) states that “if the time for pleading has expired and a defendant has failed to plead . . . , 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.” The Clerk must issue a notice informing the defendant that the order of default has been entered and that the defendant has thirty (30) days in which to move to vacate the order. The notice shall be mailed to the defendant’s address stated in the request and to the defendant’s attorney. MD. RULE 2-613(c).

MD. RULE 2-613(f) provides that if a motion to vacate is not filed or was filed and denied, the court may enter a judgment by default that includes a determination as to liability on 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) was mailed. Smith-Myers argued that MD. RULE 2-613(f) should be interpreted as imposing an additional requirement upon a circuit court; namely, to satisfy itself that the last known address designated in the request for an order of default is, in fact, the defaulting parties correct mailing address.

In interpreting MD. RULE 2-613, the court held that there is nothing in the rule that suggests that the trial court carries the burden of insuring that the order of default is sent to the defaulting party’s correct mailing address. The history of the rule underscores that interpretation. Thus, the Rule’s requirement that the court satisfy itself that the appropriate notice has been mailed to the defaulting party’s last known address is met when the record is clear that the notice was mailed to the address indicated in the request for an order of default. Then, it is incumbent upon the parties seeking the order of default to supply the trial court with the defaulting party’s last known mailing address.

Regarding whether the address to which the MD. RULE 2-613(c) notice was sent was Smith-Myers “last known address,” Smith-Myers had failed to inform the court that the address listed in the complaint was incorrect. A party has a continuing obligation to furnish the court with its most recent address. The court held that having filed no pleading or papers listing the correct address, Smith-Myers failed to fulfill its obligation to furnish its correct address to the Court. Accordingly, it could not be said that Smith-Myers’ current address was its “last known address” as opposed to the improperly identified address in the complaint. Thus, the trial court did not err in mailing the order of default to the only address of record for Smith-Myers, even though it was the incorrect address.

Furthermore, Smith-Myers conceded that it had actual notice through its former attorney of the order of default and the hearing on damages. Despite this actual notice, Smith-Myers did not move to vacate the order of default, and did not attend the hearing on damages.