Gregory Smith v. Wakefield, LP
No. 28, September Term 2018
IN THE COURT OF APPEALS OF MARYLAND
February 27, 2019
Opinion by McDonald, J. Getty and Adkins, JJ., dissent.
Circuit Court for Baltimore City, Case No. 24-C-18-000566. Argument: November 5, 2018
Landlord-Tenant Law – Residential Leases – Statute of Limitations. The statute of limitations applicable to actions for back rent under residential leases is three years pursuant to
Limitations – Modifying Statutes of Limitation by Agreement. The three-year period of limitations applicable to actions for back rent under residential leases is not subject to modification by agreement, in light of
Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic.
Suzanne C. Johnson, Clerk
In 2007, Petitioner Gregory Smith entered into a month-to-month lease for an apartment in Baltimore City. It is undisputed that he remained in the apartment only a few months before vacating it and ceasing to pay rent. The circumstances under which he left are in dispute. According to the landlord, Respondent Wakefield, LP (“Wakefield“), Mr. Smith was evicted for failure to pay rent in 2008; according to Mr. Smith, he gave appropriate notice for terminating the lease and left voluntarily.
Seven years later, in 2015, Wakefield brought suit against Mr. Smith seeking to recover unpaid rent that it claimed Mr. Smith owed from 2008. When the case finally came to trial in 2018, Mr. Smith asserted that Wakefield had not filed suit within the three-year period of limitations in
The District Court sitting in Baltimore City agreed with Wakefield‘s argument and entered a judgment in its favor. On appeal, the Circuit Court for Baltimore City reached the same conclusion.
We reverse. We hold that actions for back rent under residential leases are subject to a three-year period of limitations – as they have been for the past three centuries in Maryland – regardless of whether the lease includes provisions that purport to convert it into a contract under seal. To the extent that such provisions might be considered an agreement to modify the otherwise applicable period of limitations, such an agreement would be contrary to the State‘s landlord-tenant law and unreasonable under the particular circumstances of this case.
I
Background
A. Statutes of Limitation for Civil Actions
1. CJ §5-101 and CJ §5-102
Two statutes that set forth limitations periods are relevant to this case. First, the general statute of limitations for civil actions prescribes a three-year limitations period. It states:
A civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period of time within which an action shall be commenced.
(a) An action on one of the following specialties shall be filed within 12 years after the cause of action accrues, or within 12 years from the date of the death of the last to die of the principal debtor or creditor, whichever is sooner:
...
(5) Contract under seal ...
2. The Tipton Case
This Court considered the possible application of these two statutes of limitations
The tenant was evicted from the property in November 1992 for failure to pay rent. The landlord sent the tenant a letter requesting payment, but did not take any legal action to collect the back rent for approximately seven years. In 1999, an agent of the landlord filed a complaint in the District Court. The tenant raised a defense that the suit had been filed well after the three-year period of limitations provided in
This Court granted a writ of certiorari to consider whether the lease in question was a contract under seal – i.e., a specialty – and, if so, whether application of the period of limitations under
In reaching its disposition of the case, the Court observed that documents and instruments concerning the conveyancing of real property, such as leases, had long been executed “under seal” without any intention of creating a specialty action. 364 Md. at 425-34. The Court also recounted, in elaborate detail, the legislative history of
The Court reiterated the results of its analysis in three separate sentences beginning “We hold ....” A difference in the language of one of those sentences may have significance for this case. First, at the outset of the opinion, the Court previewed what was to come:
We hold that a residential lease agreement, even if the lease agreement has
the word seal affixed, is subject to the three-year limitation period enunciated in [CJ §5-101].
364 Md. at 422. In a footnote appended to that sentence, the Court observed that parties could agree to waive an otherwise applicable statute of limitations, but that a seal alone would not effect such a waiver. Id. at 422 n.3.
Second, at the beginning of the “Discussion” section of the opinion, the Court again summarized its holding in similar language:
We hold that actions for rent arrears under any kind of residential lease must be filed in compliance with [CJ §5-101].
364 Md. at 425. A footnote appended to that sentence cross-referenced the footnote concerning waiver that appeared with the prior statement of the holding. Id. at 425 n.9.2
Thus, the first two iterations of the holding in Tipton simply state that actions for back rent are subject to the three-year period of limitations in
Finally, in the concluding paragraph of the Tipton opinion, the Court reprised its holding in a passage that sets the stage for this case. The Court stated:
We hold that claims for arrearages of rent under a residential lease, even a lease to which a seal is affixed, must be filed within the three-year limitation period unless the parties to the lease agree, in the body of the lease, that the lease is subject to the twelve-year limitation period of section 5-102.
364 Md. at 445. As is evident, the first clause of that sentence restated the Court‘s conclusion concerning the lease that was before it. Unlike the previous two instances, however, the Court did not qualify its holding with a reference to the possibility of waiver of limitations. Instead, the second clause of the sentence following the word “unless” addressed a somewhat distinct question: whether a lease could be converted into a contract under seal and thus be made subject to the 12-year period of limitations in
The dicta in Tipton generates several questions. It is not clear how that dicta related to the Court‘s reasoning in the case before it. The dicta seems at odds with the Court‘s indication that it would require evidence of legislative intent to extend the statute of limitations applicable to actions for back rent. It may be that the Court intended the dicta to illustrate a situation in which the parties waived the otherwise applicable period of limitations of
This case presents the hypothetical future lease imagined in the Tipton dicta. We are now called upon to answer those questions.
B. Wakefield‘s Action Against Mr. Smith for Back Rent
The Lease
On March 6, 2007, Mr. Smith entered into a lease agreement with Wakefield3 to rent an apartment in Baltimore City.4 A one-page cover sheet identified the address of the property and the tenant, specified the term (month-to-month) and the monthly rent, and set forth the basic lease agreement, incorporating an attached preprinted form entitled “Lease Covenants.” The cover page included signature lines for the tenant and landlord‘s agent
followed by “(Seal).” The attached Lease Covenants form consisted of seven pages of 90 numbered sections of varying lengths that stated various conditions of the lease and obligations of the tenant. Among those provisions was a paragraph, which stated (in a font considerably smaller than what appears below):
STATUTE OF LIMITATIONS: This lease is under seal and is subject to the twelve-year limitation period of Section 5-102 of the Courts and Judicial Proceedings Article of the Annotated Code of Maryland.
This provision of the lease appeared to echo the dicta in the Tipton decision quoted earlier.5
Complaint, Motion to Dismiss, and Trial in District Court
On September 22, 2015, Wakefield filed a complaint in the District Court sitting in Baltimore City. In an attachment to the complaint, Wakefield alleged that Mr. Smith had failed to pay rent on December 1, 2007, and had been evicted as of the end of January 2008 – more than seven and a half years before the filing of the complaint. Wakefield sought to recover $4,035.42 (for unpaid rent and related costs) from Mr. Smith plus interest, attorney‘s fees, and court costs.
Nearly two more years passed before Wakefield served Mr. Smith with the complaint on August 14, 2017. Mr. Smith filed a notice of intent to defend (later amended), in which he stated, among other things, that he had given the landlord 90 days advance notice of his intent to vacate the property and that he owed no rent as of that time. In a written submission to the District Court, Mr. Smith also argued that Wakefield had failed to file its action within the three-year period of limitations applicable to an action for back rent. In response, Wakefield asserted that the lease was a contract under seal and that the applicable period of limitations was therefore 12 years pursuant to
De Novo Appeal in Circuit Court
Mr. Smith pursued a de novo appeal in the Circuit Court for Baltimore City. In that court, he moved to dismiss the complaint on the basis of the statute of limitations. On April 20, 2018, the Circuit Court heard argument on the motion and denied it. After conducting a de novo trial that same day, the Circuit Court entered judgment in favor of Wakefield.6
Mr. Smith then filed a petition for a writ of certiorari, which we granted on July 12, 2018.
II
Discussion
A. Standard of Review
In this appeal, Mr. Smith challenges only the Circuit Court‘s denial of his motion to dismiss the complaint on limitations grounds. The relevant facts are undisputed and the Circuit Court based that ruling on its understanding of the limitations period applicable to an action for back rent under Mr. Smith‘s lease with Wakefield. Thus, the issue before us is a question of law. We review a circuit court‘s ruling on a question of law applied to undisputed facts without deference under what is sometimes called a ”de novo standard of review.” See, e.g., Walter v. Gunter, 367 Md. 386, 392 (2002).
B. The Period of Limitations Applicable to Actions for Back Rent
Before us and before the Circuit Court, Wakefield has relied on the dicta in Tipton that an action for back rent must be filed within three years “unless the parties to the lease agree, in the body of the lease, that the lease is subject to the twelve-year limitation period of section 5-102.” 364 Md. at 445. Wakefield argues that this statement provided a “road map” for extending the period of limitations for a back rent action to 12 years. In denying Mr. Smith‘s motion to dismiss on the basis of the three-year period of limitations, the Circuit Court accepted that argument. We begin by analyzing whether such a “road map” would be consistent with the reasoning and actual holding in Tipton.
1. The Landscape Before 1970
The legislative policy judgment inherent in the designation of an appropriate period of limitations for a particular cause of action has long been recognized by this Court. See, e.g., Georgia-Pacific Corp. v. Benjamin, 394 Md. 59, 84-85 (2006); Pennwalt Corp. v. Nasios, 314 Md. 433, 437-38 (1988); Pierce v. Johns-Manville Sales Corp., 296 Md. 656, 665 (1983). In particular, “[a] statutory period of limitations represents a policy judgment by the Legislature that serves the interest of a plaintiff in having adequate time to investigate a cause of action and file suit, the interest of a defendant in having certainty that there will not be a need to respond to a potential claim that has been unreasonably delayed, and the general interest of society in judicial economy.” Ceccone v. Carroll Home Services, LLC, 454 Md. 680, 691 (2017).
In 1715, the Maryland colonial government passed a law stating that “all Actions of Debt for Arrearages of Rent” were subject to a three-year limitations period. Chapter 23, §2, Laws of Maryland 1715. The specification that an action for back rent be subject to a three-year period of limitations remained an explicit part of
During that same time period, it was customary, if not required, that leases of real property were executed “under seal.” See, e.g., Maryland Code, former Article 21 (1966 Repl. Vol.), §6 (providing that “[e]very deed conveying real estate” – which, by definition, included many leases – “shall be signed and sealed...“), §79 (statutory lease form with the word “SEAL” alongside spaces for signatures). One can spend a pleasant afternoon in an obscure corner of a law library with some dusty treatises that recount the history of the use of seals in conveyances, leases, and contracts. See, e.g., 1 American Law of Property (1952) §3.11; 3 American Law of Property, §12.58; 1 Farnsworth on Contracts (4th ed. 2019), §2.19; 1 Williston on Contracts (4th ed. 2007), §§2:2, 2:5. Again, this Court‘s opinion in Tipton provides some useful references as to the historical use of seals under Maryland law and we need not repeat that discussion in its entirety here. See 364 Md. at 425-34.
Thus, historically, a residential lease typically was made under seal. Yet an action to collect back rent under that lease was subject to a three-year period of limitations. That remained true if the lease was entered into and the action was brought when the State adopted its first constitution in 1776, when Abraham Lincoln was president in the mid-1800s, when Babe Ruth was born in Baltimore at the turn of the next century, or when humankind first stepped onto the moon 50 years ago. In 1972, this Court observed that “[t]here is ... authority for the proposition that since recovery of arrearages of rent is specifically mentioned in [the predecessor of CJ §5-101] and not in [the predecessor of CJ §5-102], a lease cannot be regarded as a specialty to which [CJ §5-102] applies.” Henry‘s Drive-In, Inc. v. Pappas, 264 Md. 422, 430 (1972); see also Tipton, 364 Md. at 438 (“prior to 1973, the Legislature treated the recovery of accrued rent under all lease agreements as being within the confines of [the predecessor of CJ §5-101]“) (emphasis in original).8
Wakefield essentially argues that the landscape is different now. Has anything changed during the last 50 years that would override the longstanding legislative
2. The Landscape After Code Revision
Code revision is a periodic process by which statutory law is re-organized and restated with the goal of making it more accessible and understandable to those who must abide by it. See generally Alan M. Wilner, Blame it all on Nero: Code Creation and Revision in Maryland (1994) (recounting the history of code revision in Maryland). Changes made in code revision are presumed to make clear the existing meaning of the statutory law rather than to change its meaning. This Court has long emphasized that “a change in a statute as part of a general recodification will ordinarily not be deemed to modify the law unless the change is such that the intention of the Legislature to modify the law is unmistakable.” Blevins v. Baltimore County, 352 Md. 620, 642 (1999) (citations, internal quotation marks, and emphasis omitted).
The most recent code revision project began in the early 1970s. Two concurrent parts of that project are relevant to this case: (1) the consolidation of many laws relating to periods of limitations in Title 5 of a new Courts & Judicial Proceedings Article; and (2) the revision of statutes relating to real property in Article 21 of the Maryland Code and its recodification in the new Real Property Article.
The Courts and Judicial Proceedings Article
In 1973, the General Assembly enacted the new Courts & Judicial Proceedings Article, which became effective on January 1, 1974. Chapter 2, §§18, 21, First Special Session, Laws of Maryland 1973. As with code revision generally, the revisors who drafted the new article had “[t]he onerous task of clarifying the logical relationship among code provisions related to the judicial system, while avoiding any substantive change in these provisions....” William H. Adkins II, Code Revision in Maryland: The Courts and Judicial Proceedings Article, 34 Md. L. Rev. 7, 9 (1974).
Title 5 of the new article, entitled “Limitations and Prohibited Actions,” consolidated various statutes of limitations.
The Revisor‘s Note to
“Apparently the legislature intended to cover all causes of action existing in 1729 when this section was enacted, subject to certain exceptions. It is believed that this section effectuates this intention in an updated fashion.” Id. at 205-6.
The Revisor‘s Note to
In a law review article about the new code article, the director of the code revision commission highlighted that Subtitle 1, covering both §§5-101 and 5-102, “contain[ed] a few minor substantive changes.” William H. Adkins II, Code Revision in Maryland: The Courts and Judicial Proceedings Article, 34 Md. L. Rev. 7, 33 (1974).10 But these minor substantive changes had nothing to do with arrearages for rent.11 Thus, code revision left the statute of limitations for that cause of action unchanged.
Article 21 and the Real Property Article
Contemporaneously with the recodification of limitations statutes in the new Courts & Judicial Proceedings Article, a project was also afoot to revise the statutes relating to real property, including those concerning leases. In 1972, the General Assembly enacted a comprehensive revision of Article 21 of the Maryland Code, entitled “Conveyancing,” in the same format adopted for code revision and with a new title – “Real Property.” Chapter 349, Laws of Maryland 1972. Two years later, the revised Article 21 was adopted with minor changes (together with a few provisions transferred from other articles) as the new Real Property Article (“RP“). Chapter 12, Laws of Maryland 1974. As part of the 1972 revision, the Legislature eliminated the requirement of a seal for conveyances of real property and leases. See Maryland Code, Article 21, §4-101 (1972). Consistent with that decision, the statutory form for a lease no longer indicated that it was under seal. See Maryland Code, Article 21, §4-202 (1972). The commentary provided by the drafters of the 1972 revision of Article 21 confirmed that the revision intended to eliminate the custom of executing leases and other instruments under seal. See Maryland Code, Article 21, Title IV (1973 Repl. Vol.) at pp. 225-26.12
3. Revision of the Landlord-Tenant Law
Coincident with the early years of code revision that produced the Courts and Judicial Proceedings Article and the Real Property Article, the General Assembly also revised the landlord-tenant law applicable to residential leases. In particular, it enacted
(d) A landlord may not use a lease or form of lease containing any provision that:
***
(2) Has the tenant agree to waive or to forego any right or remedy provided by applicable law;
Any provision in a lease prohibited by this section is unenforceable.
Like similar statutes in other states,
An anti-waiver provision like
4. The Tipton Dicta
As indicated above, the third iteration of the holding in Tipton suggested that a 12-year period of limitations could apply to an action for back rent under a residential lease if “the parties to the lease agree, in the body of the lease, that the lease is subject to the twelve-
year limitation period of section 5-102.”14 Of course, that statement did not apply to the case before the Court and therefore was dicta. Although the purpose of this dicta is not clear, it is evident that the Court could not have been conclusively deciding the question of whetherThe reasoning that underlies the actual holding in Tipton points to a conclusion contrary to that which Wakefield wishes us to draw – at least in the absence of legislative action. The Tipton Court reviewed the case law and legislative history and determined that
5. Summary
Prior to the early 1970s, residential leases were commonly executed under seal, and an action for back rent owed under such a lease had to be filed within a three-year statute of limitations. The largely non-substantive revision of the statutes governing limitations periods retained that three-year period of limitations for such actions. The concurrent revision of the statutes governing real property eliminated the need for a seal in residential leases. As the Court noted in Tipton, there is no indication in the code revision of the early 1970s that the Legislature intended to provide for an extension of the longstanding three-year period of limitations for back rent actions. Indeed, it would seem odd to conclude that a landlord‘s decision to add an unnecessary seal to a residential lease form – or an additional sentence that invoked the concept of a “contract under seal” – would quadruple that period of limitations when the previous use of the seal in such leases did not signify a longer period of limitations. Moreover, such a conclusion is at odds with legislative enactments contemporaneous with the code revision of the early 1970s that expanded protections for residential tenants and precluded waiver of those protections in a lease. In the absence of legislative action, the reasoning of the Court in Tipton does not counsel otherwise.15
C. Whether There Was an Enforceable Agreement to Alter the Statute of Limitations
As noted earlier, the Court in Tipton observed, in the first two statements of its holding, that parties to a contract may agree to waive a statute of limitations. 364 Md. at 422 n.3, 425 n.9. Other than stating that “[g]enerally, affixation of a seal, alone, will not constitute such a waiver,” the Court did not explicitly discuss the concept of waiver with respect to the facts of the case before it. However, the dicta at the conclusion of the opinion might be understood as the Court‘s speculation as to how parties might waive the three-year period of limitations in
The Ceccone case concerned an action brought with respect to a service contract for a residential heating system. Although the question in that case was whether the relevant period of limitations could be shortened from three years (as provided in statute) to one year (as provided in the contract), the Court discussed the criteria for recognizing any private agreement to alter a statutory period of limitations. Endorsing a formula offered in a prior opinion of the Court of Special Appeals, this Court held that parties may agree to a provision that modifies the period of limitations that would otherwise apply to a cause of action, provided (1) there is no controlling statute to the contrary, (2) the modification is reasonable, and (3) the modification is not subject to other defenses such as fraud, duress, or misrepresentation. 454 Md. at 693-94.
With respect to the first issue – whether there is a controlling statute that precludes waiver of the three-year statute of limitations – Mr. Smith points to
The longstanding three-year period of limitations for a back rent action based on a residential lease is clearly “provided by applicable law” –
Even if
Here the modification would quadruple the period of time within which an action for back rent could be brought – from three years to 12 years. Notably, in this case, the matter did not come to trial until nearly a decade after the termination of the lease. Many businesses or government agencies would not have retained records relating to a contractual relationship that ended so long ago. It seems even more unlikely that an individual tenant like Mr. Smith would have retained the necessary records to defend against such a claim.
With respect to the relative bargaining power of the parties, this Court has acknowledged that residential leases are less likely to be the product of arms-length negotiation than commercial leases. See Lockett v. Blue Ocean Bristol, LLC, 446 Md. 397, 419 (2016). In this case, the lease provision lengthening the period of limitations appears in a preprinted form addendum to the lease. There is no apparent option for the tenant to opt out of it when entering into the lease. While the modification is not one-sided on its face, we have not been pointed to any potential action that a tenant would likely bring under the lease a decade after its termination. In our view, the effect of this provision is to quadruple the period of time for the landlord to pursue a collection action for back rent, without providing any similar benefit to the other party to the contract.
Finally, the subject matter of the contract – rental of a housing unit – is unlikely to generate causes of action for which an extended period of limitations would be necessary. For example, the basis for an action for back rent – failure to pay rent – will be known immediately to the injured party and is unlikely to require extensive investigation. In our view, a nine-year extension of the period for bringing a back rent action is not a reasonable modification of the applicable period of limitations chosen by the Legislature.18
In sum, even if the preprinted paragraph of the lease addendum in this case were considered an agreement to modify the period of limitations, it is not enforceable.
III Conclusion
Sometimes, when a court says more than is necessary to decide a case, what is unnecessary is also unexamined and not always a good predictor of future decisions. Perhaps that is why courts tend to discount dicta and eschew advisory opinions. The Court in Tipton thoroughly analyzed the issue before it and we adhere to its holding in that case; however, we do not
For the reasons explained above, we hold:
- The three-year period of limitations set forth in
CJ §5-101 governs actions for back rent under residential leases, regardless of whether the lease includes provisions that purport to convert it into a contract under seal. - The three-year period of limitations that applies to a back rent action under a residential lease is not subject to waiver, in light of
RP §8-208(d)(2) .
JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY REVERSED AND CASE REMANDED TO THAT COURT WITH DIRECTION TO DISMISS THE COMPLAINT. COSTS TO BE PAID BY RESPONDENT.
Dissenting Opinion by Getty, J., which Adkins, J., joins
Filed: February 27, 2019
I respectfully dissent from the Majority‘s conclusion that the lease entered into between Gregory Smith and Wakefield, LP is not a contract under seal and therefore not a specialty contract subject to a twelve-year statute of limitations pursuant to
Under the facts of this case, I agree with the decisions reached by the District Court of Maryland for Baltimore City and the Circuit Court for Baltimore City that squarely applied the precedent that this Court set forth in Tipton. Moreover, the policy decision to except residential leases from specialty status is properly within the authority of the General Assembly and not this Court. I also find unpersuasive the Majority‘s conclusion that, although
To explain my dissent, I begin with the precedent on specialty contracts that has been clearly articulated by this Court.
A. What is a Contract Under Seal?
The term “specialty” is not defined within the controlling statute,
Previously, this Court has held that including the word “seal” within a preprinted form that acted as a guaranty to a public utility company was sufficient to transform the agreement into a contract under seal. Warfield v. Baltimore Gas and Electric Company, 307 Md. 142, 147-48 (1986). Although the body of the instrument did not demonstrate an intent to form a contract under seal, the Warfield Court indicated that there was no contrary intention manifested within the instrument. Warfield, 307 Md. at 1. The Court commented,
[i]f the contract is signed by an individual opposite and in obvious relation to a legally sufficient seal, the instrument will be taken as a sealed document, where there is nothing on the face of the paper to indicate the contrary even though there be no reference to the seal in the wording of the paper.
Consistently, this Court (and others interpreting Maryland law) has concluded
However, this Court has recognized a distinction for corporations that simply affixing a corporate seal is not enough to render an agreement into a contract under seal and therefore a specialty contract. Mayor of Federalsburg v. Allied Contractors, 275 Md. 151, cert. denied, 423 U.S. 1017 (1975). In that case, this Court indicated that for corporations the presence of a corporate seal within an instrument is not dispositive as to whether that instrument is a contract under seal and thereby a specialty contract. Id. at 154-56.
The Allied Contractors Court held that a contract under seal may be established by: (1) an instrument with a seal impressed or printed onto it; and either (2) language in its body that evinces the parties’ intent to form a contract under seal; or (3) the parties submit sufficient extrinsic evidence from which a court can establish that they intended the instrument to be a contract under seal. Id. at 155-56. This interpretation follows the precedent established by earlier decisions of this Court. See Gildenhorn, 271 Md. at 399-404; Smith v. Woman’s Med. Coll. of Balt. City, 110 Md. 441, 445-446 (1909). Thus, for over one hundred years, this Court has held that instruments which contain a seal and demonstrate an intent to form a contract under seal by text within the body of the instrument or by extrinsic evidence are contracts under seal and therefore specialties subject to the twelve-year limitations period.
More recently, in Tipton v. Partner’s Mgmt. Co., we reiterated that a residential lease containing seals adjacent to the parties’ signatures, combined with a demonstrable intention to create a contract under seal indicated within the body of the instrument, establishes an instrument as a contract under seal and therefore a specialty. 364 Md. 419, 445 (2001). Mr. Smith argued and the Majority found persuasive the proposition that this language in Tipton is merely dicta and should not influence the legal analysis of this case. However, the Tipton Court clearly stated the following:
We hold that claims for arrearages of rent under a residential lease, even a lease to which a seal is affixed, must be filed within the three-year limitation period unless the parties agree, in the body of the lease, that the lease is subject to the twelve-year limitation period of section 5-102.
Id. While the status of this language as dicta is ultimately debatable, it is undisputable that this language clearly set forth guidance from this Court for those that wished to establish a residential lease under seal. Now, in their opinion, the Majority concludes that any reliance upon this language is ultimately unjustified. Majority Slip Op. at 19-20. The Majority relies on Tipton for the proposition that the statutory framework surrounding leases and the associated statutes
In consideration of the common-law definition of a contract under seal, it becomes evident that all the hallmarks of a contract under seal are present within the lease at issue in the instant appeal. First, the lease contained the word “Seal” adjacent to the signatures of the parties. Second, the body of the lease indicated that “[t]his [l]ease is under seal and is subject to the twelve-year limitations period of Section 5-102 of the Courts & Judicial proceedings Article of the Annotated Code of Maryland.”
Therefore, Wakefield in crafting their residential leases abided by the construct established by this Court as set forth in Tipton. Specifically, the lease‘s direct references to
In addition, the clause contained within the lease aligns directly with this Court’s earlier holdings that a contract under seal requires the affixation or impression of a seal to an instrument and language within the body of an instrument which evinces an intent to create a contract under seal. Allied Contractors, 275 Md. at 155-56; Levin v. Friedman, 271 Md. 438, 443 (1974); Gildenhorn, 271 Md. at 399-404; Woman’s Medical Coll. of Balt. City, 110 Md. at 445-446. Clearly, the lease in question contained seals and a provision that referenced
B. While the General Assembly Has Enacted Exceptions to the Specialty Contract Statute of Limitations, It Has Failed to Include Residential Leases Within Those Exceptions.
While this Court has the authority to interpret statutes enacted by the state legislature, the ultimate power to enact and amend such statutes rests with the General Assembly. Consolidated Eng’g Co., Inc. v. Cooper, 246 Md. 610, 615 (1967); Lickel v. Boone, 187 Md. 579, 585 (1947) (“This Court cannot enact legislation, but can only administer justice according to existing law.”). In contrast to statutory interpretation, the Majority‘s opinion attempts to modify a statutory provision (e.g.
Previously, this Court has considered the policy underlying statutes of limitations generally and commented:
Statutes of limitations are designed to balance the competing interest of plaintiffs, defendants, and the public. A statutory period of limitations represents a policy judgment by the Legislature that
serves the interest of a plaintiff in having adequate time to investigate a cause of action and file suit, the interest of a defendant in having certainty that there will not be a need to respond to a potential claim that has been unreasonably delayed, and the general interest of society in judicial economy.
Ceccone v. Carroll Home Servs., LLC, 454 Md. 680, 691 (2017) (emphasis added).
Accordingly, this Court has found that a determination of the applicable statute of limitations as to a particular cause of action is one which is rightfully left to the General Assembly and is not within the purview of this Court to determine. Moreover, courts do not have the authority to fashion exceptions to statute of limitations as this is also within the purview of the General Assembly. Swam v. Upper Chesapeake Med. Ctr., Inc., 397 Md. 528, 555 (2007).
On this issue, this Court has consistently stated “[w]here the legislature has not made an exception in express words in the Statute of Limitations, the Court cannot allow any implied and equitable exception to be engrafted upon the statute merely on the ground that such exception would be within the spirit or reason of the statute.” McMahan v. Dorchester Fertilizer Co., 184 Md. 155, 160 (1944). See also Hecht v. Resolution Trust Corp., 333 Md. 324, 333 (1994); Booth Glass Co. v. Huntingfield Corp., 304 Md. 615, 623 (1985); Walko Corp. v. Burger Chef Sys., Inc., 281 Md. 207, 215 (1977). Clearly, excepting residential leases from specialty status is an appropriate task for the General Assembly and not this Court.
It is true that the General Assembly has wrestled with this very issue. In 2014, it passed legislation to except certain agreements from the twelve-year limitations period of
Essentially, the Majority’s opinion engrafts upon
In Tipton v. Partner’s Management Co., 364 Md. 419 (2001), the Maryland Court of Appeals held that even though a residential lease agreement had the word “seal” printed on it, the agreement was subject to the three-year statute of limitations for simple contracts under § 5-101 of the Courts and Judicial Proceedings Article, not the 12-year statute of limitations for specialty instruments under § 5-102 of the Courts and Judicial Proceedings [sic]. However, the court also noted that the 12-year statute of limitations under § 5-102 would apply if the parties agreed to that statute of limitations in the body of the lease.
Dep’t Fiscal Servs., Fiscal and Policy Note, House Bill 971, at 2 (2016 Session).
Clearly the fiscal note indicates that the twelve-year statute of limitations applies for the specialty of a residential lease under seal with language in its body that evinces an intent to create a contract under seal. Further, this legislation’s failure, as a direct response to this Court’s decision in Tipton, strengthens the generally “weak reed” of statutory interpretation. NVR Mortg. Finance, Inc., 439 Md. at 438. Only by passing such legislation would the General Assembly be demonstrating its intent that the three-year statute of limitations applies to any kind of residential lease.
The Majority takes the position that since residential leases were specifically included under
The resolution of the problems posed by this case would have been infinitely more difficult were it not for a concessum made by the Lessor‘s counsel at oral argument. The 1959 lease was under seal, and it could be argued that the Lessor‘s right to demand excess rent from Maryland Henry‘s, and Maryland Henry‘s right to claim a credit for interest on the security deposit, might be governed by the 12 year period of limitations made applicable to specialties by Code, Art. 57, s 3 and not by the three year period provided for by Art. 57, s 1. There is, however, authority for the proposition that since recovery of arrearages of rent is specifically mentioned in s 1 and not in s 3, a lease cannot be regarded as a specialty to which s 3 applies, Towson Gardens, Inc. v. Small et ux., Law No. 6984-11-16 (Cir.Ct. Harford County, decided 18 March 1968) (Daily Record, Baltimore, 25 May 1968); see also 1 Wood, Limitation of Actions s 32, at 126 (4th ed. 1916). However, as we have noted, no appeal was taken by Maryland Henry‘s.
Id. at 430-31 (emphasis added).
As evident, the Court‘s comment about whether the 12-year statute of limitations applied was not before the Court because this language did not concern arguments brought by either party but instead were speculative and referenced a party not even involved in that appeal. Accordingly, the Majority ultimately relies on dicta far more removed from the underlying action than the dicta in Tipton. Overall, the Majority‘s rejection of the dicta in Tipton, while relying on dicta from Henry‘s Drive-In, Inc. for the proposition that undergirds much of their argument is inconsistent.
C. RP § 8-208 Does Not Prohibit Lengthening the Limitations Period in a Residential Lease.
As noted by the Majority,
In certain other situations, it is quite evident that a contractual modification of the statute of limitations may limit an individual‘s potential remedies. To that end, this Court has noted that “[a] statute of limitations is a procedural device that operates as a defense to limit the remedy available from an existing cause of action.” SVF Riva Annapolis LLC v. Gilroy, 459 Md. 632, 637 n.1 (2018) (quoting First United Methodist Church of Hyattsville v. U.S. Gypsum Co., 882 F.2d 862, 865 (4th Cir. 1989)). Furthermore, the Majority‘s conclusion that “[t]he statute of limitations may be considered a ‘right,’ however, in the sense that it confers on a potential defendant the right to be free of litigation based on the particular cause of action[,]” is inapposite given the uncontroverted precedent above. Majority Slip Op. at 23. In sum, statutes of limitations are procedural mechanisms that may limit an individual‘s rights, but statutes of limitations do not constitute rights in and of themselves as the majority concludes. Id. Furthermore, the case sub judice is distinct in that it involves a clause which attempts to lengthen the statute of limitations.
It is simply untenable to conclude that the provision extending the statute of limitations to twelve years found within the lease in the present case is tantamount to an impermissible provision that waives a right or remedy pursuant to
In conclusion, the Majority‘s decision represents a departure from the precedent established by this Court in interpreting the statutes governing specialty contracts. The residential lease in this case fell squarely within the requirements of the statute as interpreted by this Court in Tipton. Any exception for the specialty of a residential lease under seal and with language within the body that evinces an intent to create a contract under seal from the twelve-year statute of limitations is a policy decision within the authority of the General Assembly and not this Court. For these reasons, I respectfully dissent from the Majority‘s decision.
Judge Adkins has authorized me to state that she joins in this opinion.
