Impac Mortgage Holdings v. Timm
226 A.3d 323
Md. Ct. Spec. App.2020Background
- Impac issued Series B and Series C preferred stock in 2004 via Articles Supplementary with a voting clause governing amendments.
- In 2009 Impac solicited a tender/consent offer to repurchase Series B and C, conditioned on amendments that would strip dividend rights; the offer produced ≈66.7% combined tender but only ≈66.2% of Series B alone.
- Timm (and later Camac) sued, alleging the Articles required two-thirds of each series (Class B separately) to consent and that the 2009 amendments therefore were invalid; plaintiffs sought declaratory and injunctive relief (including a special election under the 2004 Articles).
- The circuit court found the voting clause ambiguous, considered extrinsic evidence, applied contra proferentem, held the Series B amendments invalid, awarded declaratory/injunctive relief, and certified for interlocutory appeal.
- On appeal the Court of Special Appeals held the voting provision unambiguous (requiring two-thirds of each class counted separately), affirmed the circuit court’s substantive outcomes, and upheld the trial court’s denial of attempts to pursue a late “no consents” theory and to amend pleadings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Meaning of voting clause (does amendment require two-thirds of each series separately, or two-thirds of parity preferred combined?) | Timm/Camac: clause requires two-thirds of each class counted separately (Series B separately). | Impac: clause ambiguous; reasonable reading is two-thirds of all parity preferred combined. | Court: provision is unambiguous—requires two-thirds of each class counted separately; summary judgment for plaintiffs on Count I affirmed. |
| 2. Whether extrinsic evidence or contra proferentem should determine interpretation | Plaintiffs: if any ambiguity remains, extrinsic evidence and construction against drafter support plaintiffs. | Impac: court erred by weighing extrinsic evidence and applying contra proferentem because the clause is not ambiguous (and drafter status disputed). | Court: clause unambiguous—no need for extrinsic evidence or contra proferentem; result for plaintiffs stands. |
| 3. Denial of Rule 2-602(a)(3) motion / motion to amend to add "no consents" theory | Plaintiffs: AmStock affidavit and absence of paper/electronic consents show no valid consents; newly discovered evidence justifies revision and an amendment. | Impac: plaintiffs never pleaded that theory; discovery on it would have been speculative/fishing; granting amendment would be futile/prejudicial. | Court: no abuse of discretion—denial of revision and strike of late amendment affirmed. |
| 4. Summary judgment on Counts II, III, and punitive damages (structural impossibility, fiduciary duty, coercion, punitive relief) | Plaintiffs: transaction flawed or coercive; wrongdoing warrants reversal and remedies. | Impac: theories lack legal and factual support; many arguments were waived or insufficiently developed. | Court: affirmed grant of summary judgment for Impac on Counts II, III, and punitive damages; many appellate arguments waived for inadequate briefing. |
Key Cases Cited
- Maryland Cas. Co. v. Blackstone Int'l Ltd., 442 Md. 685 (Md. 2015) (rules on contract interpretation and summary judgment review)
- Spacesaver Sys., Inc. v. Adam, 440 Md. 1 (Md. 2014) (contract ambiguity is a question of law reviewed de novo)
- Calomiris v. Woods, 353 Md. 425 (Md. 1999) (objective test for contract ambiguity: susceptible to more than one meaning to a reasonable person)
- Dumbarton Improvement Ass'n v. Druid Ridge Cemetery Co., 434 Md. 37 (Md. 2013) (each clause should be given effect; avoid readings that render provisions meaningless)
- Maryland State Bd. of Educ. v. Bradford, 387 Md. 353 (Md. 2005) (exceptions to final-judgment rule; interlocutory appeals and injunction review)
- Matulich v. Aegis Commc'ns Grp., Inc., 942 A.2d 596 (Del. 2008) (corporate preferred-shareholder rights are primarily contractual)