Franklin Credit Management Corp. v. Nefflen
436 Md. 300
| Md. | 2013Background
- Nefflen sued Franklin for breach of a settlement agreement and related claims; a settlement included no flood insurance, no escrow, and deletion of derogatory credit information.
- Nefflen moved for an order of default after Franklin failed to respond; the court entered an Order of Default on October 5, 2010, with 30 days to vacate the default.
- Franklin did not move to vacate; a damages hearing was held on April 7, 2011, at which Franklin again appeared to default; Nefflen presented evidence of damages and ongoing negative credit reporting.
- Judge Solt awarded damages totaling $203,301.84 plus attorneys’ fees and costs for breach, defamation, and MCDCA/MCPA violations; Franklin did not defend the merits.
- Franklin moved to alter or amend under Rule 2-534; the circuit court denied; Franklin appealed to the Court of Special Appeals, which affirmed, holding liability could not be revisited after a default judgment without vacating the default.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May Rule 2-534 be used to challenge liability after a default judgment? | Franklin argues 2-534 can alter liability. | Nefflen argues 2-613(g) bars revisiting liability via 2-534. | No; liability cannot be revisited under 2-534 after an unvacated default order. |
| Is a failure to vacate the default order dispositive of liability on appeal? | Franklin contends liability may be challenged on appeal after damages decision. | Nefflen contends no appeal on liability is possible without vacating the default order. | A defaulting party cannot challenge liability on appeal if the order of default was not vacated. |
| Is an order of default itself final for purposes of post-default relief rules? | Franklin treats the default order as transitional to a default judgment on liability. | Nefflen treats the order as non-final until damages are set; liability is determined by the order. | An order of default is not final in itself; liability is determined after vacatur is denied and damages are assessed. |
Key Cases Cited
- Curry v. Hillcrest Clinic, Inc., 337 Md. 412 (1995) (default order not a final judgment; damages and liability issues must be resolved within two-step process)
- Banegura v. Taylor, 312 Md. 609 (1988) (default judgment procedure; order of default not a judgment)
- Wells v. Wells, 168 Md.App. 382 (2006) (two-step default judgment framework; role of Rule 2-613)
- O’Connor v. Moten, 307 Md. 644 (1986) (recognized two-step default regime under Rule 2-613)
- Frase v. Barnhart, 379 Md. 100 (2003) (definition of finality of orders and when a judgment is final)