Evading the Requirements of Rule 2-602(B) By Dismissals Without Prejudice Or Severance

• Jurisdiction: Maryland

J. [§ 42] Evading the Requirements of Rule 2-602(b) by Dismissals Without Prejudice or Severance

If the circuit court dismisses one count of a multi-count complaint, can the parties obtain an immediate appeal by stipulating to the dismissal of some or all the remaining counts without prejudice? Under the facts of Miller and Smith at Quercus, LLC v. Casey PMN, LLC, 412 Md. 230 (2011), the Court of Appeals held that they could not.

In Miller and Smith at Quercus, a creditor brought a four-count complaint for breach of a note and a guaranty. The debtor counterclaimed. Id. at 233-36. The circuit court dismissed Count II of the complaint, which appears to have been a linchpin of the case. Thereafter, the parties entered into a kind of conditional stipulation of dismissal. Under the stipulation, Counts I and III of the complaint were dismissed with prejudice; however, Count IV of the complaint as well as the counterclaim were dismissed without prejudice so that they could be litigated in case the appellate court reversed the dismissal of Count II. Id. at 236-38. The plaintiff then took an appeal, asserting that the dismissal of Count II became a final judgment by means of the stipulation of dismissal of the other counts. Id. at 238. The defendant questioned whether a party could transform an interlocutory order into a final judgment through a voluntary dismissal without prejudice. Id. at 239. While the Court of Special Appeals allowed the appeal to proceed (id. at 238-39), the Court of Appeals concluded that it lacked jurisdiction. Id. at 248.

The Court began with the principle that parties cannot agree to confer appellate jurisdiction upon it: either it has jurisdiction under the Constitution, applicable statutes, and Rules, or it does not. Miller and Smith at Quercus, 412 Md. at 240. After a lengthy reiteration of its steadfast adherence to the final judgment rule as the basis for its appellate jurisdiction (id. at 241-43), the Court recognized that a final judgment can result from the voluntary dismissal of all remaining claims in a case. Id. at 243-44 (citing Houghton v. Cty. Comm'rs of Kent Cty. (Houghton I), 305 Md. 407 (1986)). The Court, however, then diverged into a discussion of Rule 2-602(b), which permits a circuit court to certify an interlocutory ruling for immediate appeal if it resolves one or more, but fewer than all, of the "claims" in a case.

Citing its decisions in the Rule 2-602(b) cases of Smith v. Lead Industries Ass'n, 386 Md. 12 (2005)...