Paralegal Consultants, LLC v. Edward J. Brown, LLC

PARALEGAL CONSULTANTS, LLC, ET AL. v. EDWARD J. BROWN, LLC, ET AL.

No. 2057

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2018

November 13, 2019

Circuit Court for Howard County

Case No. 13-C-18-114549

UNREPORTED

Fader, C.J., Wright, Beachley, JJ.

Opinion by Fader, C.J.

*Wright, J., now retired, participated in the hearing and conference of this case while an active member of the Court; after being recalled pursuant to Maryland Constitution, Article IV, Section 3A, he also participated in the decision and adoption of this Opinion.

* This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

This appeal requires us to explore when pursuing a legal theory without substantial justification may result in an award of sanctions pursuant to Rule 1-341 against (1) an attorney and (2) a party. Paralegal Consultants, LLC and its sole member, Valerie M. Nowottnick, the plaintiffs below, sued Edward J. Brown and Edward J. Brown, LLC (collectively, "Mr. Brown") for defamation and related causes of action based on statements Mr. Brown made in a court filing in a different case. Roger R. Munn, Jr. and Law Offices of Roger R. Munn, Jr. (collectively, "Mr. Munn") represented Ms. Nowottnick and Paralegal Consultants in their lawsuit.¹ The Circuit Court for Howard County granted Mr. Brown's motion to dismiss on the ground that the allegedly defamatory statements were protected by the judicial proceedings privilege. That ruling is no longer at issue.²

The circuit court also granted Mr. Brown's motion for sanctions under Rule 1-341 on the basis that Paralegal Consultants and Ms. Nowottnick "lacked substantial justification in maintaining this action." The court imposed $10,000 in sanctions on Paralegal Consultants, Ms. Nowottnick, and Mr. Munn, jointly and severally. Ms. Nowottnick (now self-represented) and Mr. Munn (separately represented by counsel) contend that the circuit court (1) erred as a matter of law in finding that the defamationclaims "lacked substantial justification" and (2) abused its discretion by imposing a $10,000 sanction. Mr. Brown cross-appeals, challenging (1) the court's failure to find that Ms. Nowottnick acted in bad faith and (2) the amount of the monetary sanction.³ We conclude that:

1. The court did not abuse its discretion in determining that Mr. Munn was subject to a potential sanctions award because he lacked substantial justification for maintaining this action due to the deficient legal theory underlying the complaint;

2. In the absence of factual findings to support Ms. Nowottnick's responsibility for her attorney's deficient legal theory, the court abused its discretion in sanctioning Ms. Nowottnick;

3. The circuit court did not abuse its discretion in declining to find that Paralegal Consultants and Ms. Nowottnick acted in bad faith; and

4. We must vacate the monetary sanctions and remand this case to the circuit court for determination of an appropriate sanctions award against Mr. Munn in accordance with the requirements of Christian v. Maternal-Fetal Medical Associates of Maryland, LLC, 459 Md. 1 (2018).⁴

BACKGROUND

Raver v. Beckman

This case arose collaterally from Raver v. Beckman, No. CSA-REG-2014-2016, 2017 WL 6493251 (Md. Ct. Spec. App. Dec. 19, 2017),⁵ an appeal in a protracted and acrimonious dispute in which (1) Mr. Brown served as counsel to the appellee, Christian Beckman, and (2) Ms. Nowottnick, through Paralegal Consultants, worked as a contract paralegal for Margaret Mead, who served as counsel to the appellant, Shawn Raver. The circuit court had dismissed Mr. Beckman's defamation suit but denied Mr. Raver's motion for sanctions under Rule 1-341. Unsatisfied, Mr. Raver appealed to this Court from the denial of sanctions.

On the day that the appellant's brief was due, a two-page motion was filed on behalf of Mr. Raver that requested a two-business-day extension of time to file, allegedly due to delays in printing copies of the brief. The motion bore Ms. Mead's signature line with her name handwritten in cursive above it.

On behalf of Mr. Beckman, Mr. Brown responded with a 27-page motion to dismiss the appeal in which he accused Mr. Raver "and/or his counsel" (Ms. Mead) of as many as21 separate violations of the Maryland Rules, and asked that Mr. Raver's "spite-based appeal" be dismissed. Among his many accusations, Mr. Brown alleged that Ms. Mead had violated the Maryland Rules⁶ by "ha[ving] a contract paralegal prepare, sign and submit the motion" for extension of time. Mr. Brown based that allegation on a comparison between Ms. Mead's signature on the document and her signature on other filings, and apparently assumed that a contract paralegal had signed it instead based on a telephone conversation he had with Ms. Nowottnick on the day the motion was filed. Although Mr. Brown's motion was directed primarily at Ms. Mead, it repeatedly referred to the "contract paralegal" who had assisted her. For example, Mr. Brown wrote that "[i]f the Motion was prepared signed and submitted by a contract paralegal, with no supervision by counsel of record, then the Motion should be stricken on that ground alone"; that "the only inference is that Ms. Mead did not even supervise or review the work of this contract consultant paralegal" (emphasis removed); and that "in a desperate attempt to avoid the excusable neglect standard [Ms. Mead] had a likely unwitting contract paralegal prepare and sign a pathetically non-compliant Motion in the Court of Special Appeals of Maryland."

Mr. Brown's motion to dismiss did not identify Ms. Nowottnick by name, but it did (mis)identify her firm as "Paralegal Consulting." An affidavit that Mr. Brown attached to the motion included the correct name and telephone number of Paralegal Consultants, but again did not name Ms. Nowottnick individually. After receiving the motion, Ms. Mead emailed Mr. Brown to explain that "no paralegal . . . signed [her] name," but that her "law partner, who is also [her] son, was granted the [ ] authority to sign [her] name."⁷

Paralegal Consultants and Ms. Nowottnick Sue Mr. Brown

Ms. Nowottnick and Paralegal Consultants, both initially represented by Mr. Munn, sued Mr. Brown. The complaint alleged that Mr. Brown's statements in the Raver motion to dismiss had defamed Ms. Nowottnick and Paralegal Consultants, and cast them in a false light, by accusing them falsely of committing or abetting a violation of Rule 1-311. Ms. Nowottnick and Paralegal Consultants sought $1.5 million in damages.

Mr. Brown moved to dismiss, asserting that the complaint was "patently frivolous" because "attorneys . . . are absolutely privileged to publish defamatory matters during the course of a judicial proceeding." Mr. Brown also moved for sanctions against both plaintiffs and Mr. Munn under Rule 1-341, arguing that the complaint "was filed in bad faith and/or without substantial justifications." Mr. Brown professed to find it "shocking" and "incredible" that both Mr. Munn—an attorney "licensed to practice law in the State ofMaryland since 1996"—and Ms. Nowottnick—a paralegal with a "vast and lengthy wealth of experience . . . including researching and drafting appellate briefs"—"would be unaware that attorneys have absolute privilege regarding statements made in court or pleadings or other documents related to or in connection with the case."

Ms. Nowottnick and Paralegal Consultants opposed both motions. In doing so, they argued that the judicial proceedings privilege applied only where the "party being defamed or slandered" was involved in the judicial proceedings in which the offending statement was made. Because Ms. Nowottnick and Paralegal Consultants were "neither parties nor witnesses to the Raver v. Beckman matter," they contended, the judicial proceedings privilege did not immunize Mr. Brown's statements.

Before the circuit court ruled on either of Mr. Brown's motions, Ms. Nowottnick and Paralegal Consultants filed an amended complaint, which differed from the original only in ways that are immaterial to this appeal. Two days later, the court signed an order granting the motion to dismiss the original complaint, without identifying the reason for the ruling. Thirteen days after that, the court denied the motion for sanctions.

Mr. Brown moved to dismiss the amended complaint on the same grounds upon which he had moved to dismiss the first complaint. Paralegal Consultants and Ms. Nowottnick opposed the motion, also on the same grounds they had raised previously.The motion was assigned to a different judge, who held a hearing that centered mostly on an examination of Ms. Mead.⁸

At the close of the hearing, the circuit court granted the motion to dismiss. The court acknowledged Ms. Nowottnick's and Paralegal Consultants' "argu[ment] that judicial immunity doesn't apply because they weren't parties," but "d[id] not find that argument persuasive." Ms. Nowottnick, the court observed, "was an agent of the attorney for . . . [o]ne of the parties in the appeal." The court noted that "[t]he alleged defamatory statements were made during the course of the proceeding before the Court of Special Appeals," and that the statements "ha[d] a rational articulable relevance and responsiveness to the proceedings" because they "alleg[ed] a procedural defect that [a] pleading . . . wasn't signed by [an] attorney." Accordingly, the court concluded that the alleged defamatory statements were privileged and that the complaint ought to be dismissed. A written order of dismissal followed.

The day after the circuit court issued its written order, (1) Mr. Munn filed a motion to withdraw as counsel, and (2) Mr. Brown renewed his motion for sanctions. The renewed motion again argued that the complaint "was filed in bad faith and/or without substantial justification." Relying in part on statements...