North American v. Boston Medical

906 A.2d 1042

170 Md. App. 128

NORTH AMERICAN SPECIALTY INSURANCE COMPANY v. BOSTON MEDICAL GROUP.

No. 2689, September Term, 2004.

Court of Special Appeals of Maryland.

September 8, 2006.

James R. Anderson (Steven R. Freeman, on brief), Towson, for appellant.

Howard G. Goldberg (Robin G. Banks, on brief), Baltimore, for appellee.

Panel HOLLANDER, EYLER, DEBORAH S., WOODWARD, JJ.

WOODWARD, J.

This appeal arises from a decision of the Circuit Court for Anne Arundel County granting the motion of appellee, Boston Medical Group ("Boston Medical"), to dismiss the complaint of appellant, North American Specialty Insurance Company ("North American"), on the grounds that the dismissal of a previously filed action between the parties on statute of limitations grounds operated as a bar to the current action under the doctrine of res judicata. On appeal, North American presents one issue for our review, which we have rephrased, as follows:

Does a dismissal by the circuit court of a complaint because it is barred by the applicable statute of limitations constitute a final judgment on the merits, such that a later filed action between the same parties on the same claim is barred under the doctrine of res judicata?

Finding no error, we affirm the circuit court's judgment.

BACKGROUND

The First Case

On May 20, 2004, North American filed a complaint against Boston Medical in the Circuit Court for Anne Arundel County, seeking to recover unpaid deductibles allegedly owed by Boston Medical pursuant to a general liability insurance policy. Boston Medical is a corporation that imports and distributes medical gloves. North American is the claims administrator for Commercial Underwriters Insurance, which issued a products liability policy to Boston Medical to protect Boston Medical from claims arising out of any adverse effect from the use of latex gloves. The policy contained a $25,000.00 deductible per claim for any settlement or judgment, as well as all legal and investigative fees and costs.

During the effective period of the policy, five claims were made against Boston Medical, commencing in 1997. All five claims were eventually settled or otherwise resolved, and by letter dated June 27, 2003, North American requested reimbursement from Boston Medical for the deductible portion of each claim.¹ The total amount of the deductibles sought by North American was $56,103.74.

In its complaint, North American alleged, inter alia:

11. That the debt owed to [North American] by [Boston Medical] became due on December 25, 1997. Therefore, [North American] is claiming pre-[j]udgment interest at the legal rate of 6% from the date due of December 25, 1997 thru [the] date of filing, March 30, 2004[,][sic] pursuant to Art[.] 3 § 57 of Constitution of Maryland Annotated Code of Maryland 1981 Replacement Volume and Supplements for a total of 2,287 days at $9.60 per diem for a total of $21,955.20.

North American also included in its complaint a Motion for Summary Judgment and attached an affidavit in support thereof. The affidavit, executed by a representative of North American with "personal knowledge of the facts stated herein," verified the allegations in the complaint, and expressly swore that $56,103.74 was "justly due and owing," "plus pre-[j]udgment int[erest] at the rate of 6% per annum per M[aryland] Const[itution] or $21,955.20."

On June 16, 2004, Boston Medical filed a Motion to Dismiss the complaint. Boston Medical asserted that, because "[North American] claims that the debt to [North American] from [Boston Medical] became due in 1997[,]" and "the statute of limitations for th[e] claim ran in 2000[,]" "[Boston Medical] has no current liability to [North American]." North American did not file an opposition to the motion or an amended complaint.

On July 13, 2004, the circuit court issued an order granting Boston Medical's Motion to Dismiss, but without granting North American leave to amend. The court stated in the order that its ruling was based upon consideration of Boston Medical's motion and a "lack of any opposition thereto." Thereafter, North American filed a Motion for Reconsideration, wherein it argued that the case should not have been dismissed because the statute of limitations had not run.² North American did not request that the court, in the alternative, grant it leave to amend its complaint. On July 29, 2004, the circuit court denied North American's Motion for Reconsideration. North American did not appeal the dismissal of its complaint or the denial of its Motion for Reconsideration.

The Instant Case

On September 10, 2004, North American filed the instant case against Boston Medical in the Circuit Court for Anne Arundel County. In its complaint, North American alleged the same cause of action, based on the same insurance policy, the same five claims, and the same amount of money due and owing ($56,103.74), as it asserted in the first case. However, in the instant case, North American alleged that it "continued to pay claims on behalf of [Boston Medical] and paid its employees who suffered a loss in December, 1997[,] as late as August 30, 2002[.]" North American further averred that the "[d]eductibles that [North American] seeks to recover arise from payments made as late as August 30, 2002."³ North American alleged, however, as it did in the first complaint, "[t]hat the debt owed to [North American] by [Boston Medical] became due on December 25, 1997," and that it was entitled to pre-judgment interest from "the date due of December 25, 1997" until the date of filing of the instant case, in the amount of $23,443.20.

Thereafter, on October 6, 2004, Boston Medical filed a Motion to Dismiss the complaint. In its motion, Boston Medical asserted that the dismissal of the first case on statute of limitations grounds precluded North American's claim in the instant case under the doctrine of res judicata. North American opposed the motion, arguing (1) that res judicata did not bar the instant action, because a dismissal based on statute of limitations was not an adjudication on the merits, and (2) that dismissal of the first case was "without prejudice."

On January 6, 2005, the circuit court held a hearing on Boston Medical's Motion to Dismiss. After listening to arguments from both sides, the circuit court ruled from the bench that North American's claim in the instant case was barred by the doctrine of res judicata. The court stated:

It's an interesting issue. I am going to grant the motion to dismiss. I believe there was a final determination on the merits. The Court of Appeals may tell me I'm wrong, since it doesn't look like we have a case right on point here. But I believe that otherwise we could continue to have suit after suit after suit filed. And it is the same cause of action. The parties are identical. The same figures are in the complaint. And it's for a breach of contract.

And so I am going to grant the motion.

Thereafter, North American noted a timely appeal.

DISCUSSION

I. Standard of Review

The Court of Appeals has explained that, pursuant to Maryland Rule 2-322(b)(2),

a defendant may, in a civil suit in a circuit court, seek dismissal of a case through preliminary motion when the complaint fails "to state a claim upon which relief can be granted." A defendant asserts in such a motion that, despite the truth of the allegations, the plaintiff is barred from recovery as a matter of law. In ruling on such a motion, the court must assume the truth of all well-pled facts in the complaint as well as the reasonable inferences that may be drawn from those relevant and material facts.

Porterfield v. Mascari II, Inc., 374 Md. 402, 413-14, 823 A.2d 590 (2003) (citations omitted). "When moving to dismiss, a defendant is arguing that even if the pleaded facts are true, the plaintiff is not entitled to recover under the law. There should be no need to refer to matters that are not in the complaint." Hrehorovich v. Harbor Hosp. Ctr., Inc., 93 Md.App. 772, 784, 614 A.2d 1021 (1992).

The final sentence of Maryland Rule 2-322(c) provides, however:

If, on a motion to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 2-501, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 2-501.

In other words, when the court considers matters outside the complaint in ruling on a motion to dismiss, the motion to dismiss shall be treated as one for summary judgment. See Hrehorovich, 93 Md. App. at 782, 614 A.2d 1021 (explaining that when the moving party refers to matters outside the complaint, Rule 2-322(c) gives the circuit court the discretion to consider such matters and dispose of the motion to dismiss as one for summary judgment). This result occurs even though (1) the motion is styled as a "motion to dismiss," as opposed to a "motion to dismiss, or in the alternative, for summary judgment," see id. at 784, 614 A.2d 1021, or (2) the court's ruling is designated as granting a motion to dismiss, see Haselrig v. Public Storage, Inc., 86 Md.App. 116, 118 n. 1, 585 A.2d 294 (1991) (stating that, despite the language of the court's order dismissing plaintiff's complaint, the ruling was on the motion for summary judgment, not the motion to dismiss).

In the case sub judice, Boston Medical filed a motion to dismiss based on res judicata. Boston Medical attached to its motion certain exhibits from the first case. The circuit court considered those exhibits in granting Boston Medical's motion. Therefore, by considering matters outside the complaint, the court converted Boston Medical's motion to dismiss into a motion for summary judgment. See Hrehorovich, 93 Md.App. at 782, 614 A.2d 1021. Accordingly, we will review the instant case to determine if...