American Bank Holdings, Inc. v. Kavanagh
436 Md. 457
| Md. | 2013Background
- American Bank Holdings hired Kavanagh and Weber as co-branch managers; their employment agreements required a loss-reserve funded from loan transactions and promised post-termination distributions from that reserve.
- Agreements contained an arbitration clause requiring arbitration in Maryland for claims "arising out of or relating to" the agreements.
- After Respondents left employment, they sued in circuit court for an accounting, alleging American failed to pay reserves due; American answered and filed a petition to compel arbitration in the pending action.
- The circuit court denied American’s petition to compel arbitration without a hearing; American appealed to the Court of Special Appeals, which dismissed the appeal as non-final.
- The Court of Appeals granted certiorari to decide whether a denial of a motion/petition to compel arbitration filed in an existing action is a final, immediately appealable judgment under Md. Code, Cts. & Jud. Proc. § 12-301, or instead must be brought as a separate petition under § 3-207 to be immediately appealable.
- The Court of Appeals affirmed the intermediate court: a denial of a petition to compel arbitration filed in an extant action is not a final judgment and is not immediately appealable (unless the petition was a separate, independent action whose denial would terminate the action).
Issues
| Issue | Plaintiff's Argument (Respondents) | Defendant's Argument (American) | Held |
|---|---|---|---|
| Whether denial of a motion/petition to compel arbitration filed in an existing action is a final, immediately appealable judgment under § 12-301 | Denial is not appealable because accounting claim is equitable and the circuit court retains jurisdiction; prior decisions (Addison, Schuele) support non-appealability | Denial is a final judgment under the Arbitration Act’s historic appeal provision and should be immediately appealable regardless of whether filed in existing action or separate petition | Held: Not final. Denial in an existing action is not immediately appealable under § 12-301 because it does not terminate the litigation or put a party out of court |
| Whether filing the petition to compel arbitration as a separate, independent action (under § 3-207) changes appealability | N/A (Respondents relied on existing-action posture) | If the petition is a separate and independent action and is denied, that denial is appealable as final because it would terminate that independent proceeding | Held: Yes — a denial of a petition to compel arbitration brought as a separate, independent action can be appealable as a final judgment; but here the petition was filed within the existing action, so no immediate appeal |
Key Cases Cited
- Brewster v. Woodhaven Bldg. & Dev., Inc., 360 Md. 602 (Court of Appeals 2000) (final-judgment rule requires an order to terminate litigation or deprive party of means to further prosecute)
- Peat, Marwick, Mitchell & Co. v. Los Angeles Rams Football Co., 284 Md. 86 (Court of Appeals 1978) (order not final when it does not determine and conclude rights or deny means of further prosecution)
- Nnoli v. Nnoli, 389 Md. 315 (Court of Appeals 2005) (final judgment must decide rights or deny means of further prosecuting or defending)
- Town of Chesapeake Beach v. Pessoa Constr. Co., Inc., 330 Md. 744 (Court of Appeals 1993) (interlocutory appeals and Rule 2-602/8-602 certification framework discussed)
- Addison v. Lochearn Nursing Home, LLC, 411 Md. 251 (Court of Appeals 2009) (denial of motion to compel arbitration in existing action not appealable as interlocutory under § 12-303 or collateral-order doctrine)
- Schuele v. Case Handyman & Remodeling Servs., LLC, 412 Md. 555 (Court of Appeals 2010) (denial of motion to compel arbitration in existing action is not certifiable as final under Rule 8-602 because it is not "final in the traditional sense")
- Litton Bionetics, Inc. v. Glen Constr. Co., 292 Md. 34 (Court of Appeals 1981) (dicta recognizing appealability of denial when petition is an independent action)
- Regina Constr. Corp. v. Envirmech Contracting Corp., 80 Md. App. 662 (Ct. Spec. App. 1989) (intermediate appellate decision holding denial of petition to compel arbitration may be immediately appealable under § 12-301 when treated as a final order)
- Joseph F. Trionfo & Sons, Inc. v. Ernest B. LaRosa & Sons, Inc., 38 Md. App. 598 (Ct. Spec. App. 1978) (denial of preliminary motion in existing action was interlocutory; proper procedure was separate petition in equity to obtain immediate appeal)