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Consolid ated Con struction Se rvices et al. v. R obert C. Sim pson et al. No. 35, September Term, 2002 Headnote: The judgment debtor had no attachable/garnishable interest in contingent funds deposited into a settlement fund created by an agreement. The interests being settled were "contingent" interests. The statute only provides that matured and unmatured interests are subject to attachment. A matured interest is a known and due sum. An unmatured interest is a sum that has been ascertained but that is not yet due. A contingent interest is the possibility that at some time an interest might a rise. Attachments, including garnishments are creatures of statute. The statute here applic able provided that only matured and unmatured interests were attac hable. It did n ot provide that contingent interests were attachable. Thus, this Court lacked the authority to, by rule, provide to the contrary with respect to substantive matters. Under the unam biguous la nguage of Section 10-501 of the Business Occupations and Professions Article of the Maryland Code in effect at the time of this case, a statutory attorney's lien did not apply to settlement funds, thus petitioner McCartney did not have a lien on the settlement funds.

Circuit Co urt for How ard Cou nty Case #13-C-96-31926

IN THE COURT OF APPEALS OF MARYLAND No. 35 September Term, 2002

Consolidated Construction Services, Inc. et al.

v.

Robert C . Simpson et al.

Bell, C. J. Eldridge Raker Wilner Cathell Harrell Battaglia, JJ.

Opinion by Cathell, J.

Filed:

December 23, 2002

This case arises out of several case s involving the develo pment of a How ard Cou nty residential commu nity, "Pleasant Chase." On January 5, 1996, New Panorama

Development Corporation ("New Panorama"), a developer, filed suit against Consolidated Construction Services, Inc. (CCS), a contractor, for various claims, including a claim for damages, involving CCS's installation of sewers and water lines in the Pleasant Chase developm ent. Soon thereafter, New Panorama also filed suit for damages against several sub-contractors, including Atlas Plumbing and Mechanical, Inc. (Atlas), Maryland Paving and Sealant, Inc. (MPS ) and Professional Se rvice Industries, Inc. (PSI). All of these claims were consolidated into one case, hereinafter " New Panorama v. CCS." The parties involved filed numerous cross-claims, counter-claims and third party claims. In August 1996, Robert C. Simpson, et. al., respondents, filed suit against New Panorama1 for d efau lting on a mortgag e for the p urch ase o f the Plea sant Cha se pr operty. On February 20, 1997, respondents obtained a judgment against New Panorama. Respon dents then served writs of ga rnishmen t on several c ompanie s and indiv iduals, including CCS, Atlas, MPS, PSI, Donald J. McCartney and Jeffrey M. Kotz.2 These entities and persons, together with New Panorama, are petitioners in the case sub judice. On January 7, 1999, petitioners entered the terms of a settlement agreement into the

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This litigation will hereinafter be referred to as "Simpson v. New Panorama."

Writs of garn ishm ent w ere n ot im med iately filed agai nst M PS, K otz a nd M cCa rtney; these writs were not filed until after a settlement agreement in the New Panorama v. CCS litigation was created, discussed infra. McCartney was New Panorama's attorney in the New Panorama v. CCS litigation and Kotz is the escrow agent for the settlement fund created by the settlement agreement in the New Panorama v. CCS litigation.

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record of the New Panorama v. CCS litigation and later executed that agreement between June and September of 1999. On May 12, 1999, respondents filed a Motion to Intervene and a Motio n to Enforce Garnishments in the New Panorama v. CCS litigation; both motions were d enied b y order on Septem ber 21, 1 999. An appeal of that order was stayed pending the outcom e of the ga rnishmen t issues in the Simpson v. New Panorama litigation. On January 13, 2000, Atlas, CCS, MPS, PSI and Kotz filed a Mo tion to Term inate Garnishments in the Simpson v. New Panorama litigation. McCartney subsequently filed a Motion to Termin ate Garnish ment on M arch 24, 20 00. The C ircuit Court held a hearing on April 14, 2 000 and entered on order termin ating the ga rnishmen ts on May 1, 2000. Respon dents filed a timely appeal. The Court of Special Appeals then consolidated this appeal with respondents' appeal in the New Panorama v. CCS litigation. On February 6, 2002, the Court of Special Appeals affirmed the trial court's denial of responde nts' Motio n to Intervene in the New Panorama v. CCS litigation . Simpson v. Consol. Cons tr. Serv., Inc., 143 Md. App. 606, 795 A.2d 754 (2002). That court affirmed in part and reversed in part in reference to the trial court's dismissal of respondents' garnishments, and then remanded the case for further proceedings.3 On May 1, 2002,

The Court of Special Appeals determined that the writs served on CCS, PSI, Atlas and Kotz were valid, thus reversing the trial court on that issue. That court affirmed the trial court's dismissal of the writ served upon McCartney and remanded the matter concerning the writ served upon MPS, directing the trial court to make a factual determination concerning the exact time in which M PS paid m onies into the settlement fund. Ad ditionally, that court found that McCartney did not have an attorney's lien on the settlement fund. -2-

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petitioners filed a Petition for Writ of C ertiorari with this Court. On May 20, 2002, responde nts filed an Opposition to Petition for Writ of Certiorari. On June 20, 2002, we granted the petitio n. Cons ol. Con str. Serv ., Inc. v. Simpson, 369 Md. 570, 801 A.2d 1031 (2002). Petitioners present two questions for our review: "1. Whether funds generated by a settlement agreement between multiple parties are subject to garnishment by a judgment creditor of one of the parties, where that judgmen t debtor doe s not contrib ute to or receive any funds under the s ettlement ag reement? "2. Whether Sec tion 10-501 of M aryland's Business Occupations and Professions Article provides an attorney's lien on funds generated by a pretrial settlement agreement?" We answer in the neg ative to petitioners' questions. We h old that respondents' w rits of garnishment are not valid and that McCartney did not have a statutory attorney's lien on the settlement funds. I. Facts New Panorama is a developer of land for residential homes. New Panoram a generally purchases a parcel of land, prepares a site plan, obtains the necessary development permits, installs lines for water, sewer and storm drainage, builds roads and later sells the finished lots to builders. In 1992, New Panorama purchased land in Howard County from

responde nts 4 with plans to develop it into a residential community to be known as Pleasant

New Panorama signed a mortgage agreement for the purchase of Pleasant Chase with Mr. Robert Simpson, who owned an interest in the land and was the personal representative of the estates of Julia V . Simpson and Willis E. Simpson. A s Robert Simpson (contin ued...) -3-

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Chase. New Panorama signed a mortgage with respondents, which required an initial down payment and subsequen t monthly payments to responde nts until the entire balance was paid. After New Panorama failed to make those payments, respondents filed suit in Howard County Circuit Co urt against N ew Pan orama alleg ing that N ew Panorama had defaulted under the mortgage used to purchase Pleasant Chase. Before its default on its mortgage with respondents, New Panorama entered into a contract with CCS for CCS to dig trenches for water, sewer and storm drainage lin es, install the lines and co mplete oth er utility work in th e Pleasant C hase com munity. PSI w as the engineering firm hir ed by N ew Pa noram a to test th e soil, i.e., to monitor and test the areas surrounding the community's utilities to ensure the proper compaction of the backfill prior to the construction of the community's roads. MPA was hired to pave th e roads . Atlas, a sub-contractor hired by Lovell Regency, a residential builder, was hired to connect the individual homes to the water and sewer lines and otherwise complete the plumbing work. Within a few months, the paved roads within Pleasant Chase began to settle and rupture, thus causing considera ble damage rend ering the roads in need o f extensive repair. New Panoram a retained M cCartney in re ference to possible claims arising out of the damage to the roads. In 1996, after a dispute over who was responsible for the road damage, New Panorama filed separate suits claiming damages against CCS and the sub-

(...continued) is now deceased, the trustees of his estate and the new personal representatives of the other Simpson estates are collectively respondents. -4-

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contractors.5 There was a third party claim,6 along with several counter-claims and crossclaims,7 filed, which led to the suits being consolidated in early 1997.8 As indicated supra , subsequent to the initiation of the New Panorama v. CCS litigation, respondents obtained a judgment, arising out of a default under the terms of the original mo rtgage on th e property, aga inst New Panoram a in the Circ uit Court of Ho ward County in the amount of $791,897.80. Seeking enforcem ent of that jud gment, resp ondents subseque ntly served writs of garnishment on CCS, PSI and Atlas to garnish any money that they owed to New Panorama. In 1999, after three years of litigation and after the writs of garnishment had been

On January 5, 1996, New Panorama filed suit aga inst CCS for breach of contrac t, breach of warra nty and attorne y's fees. The n ext day it filed suit against PSI for breaches of contract and warranty, malpractice and negligence, as well as filing a negligence suit against Atlas. A suit was also filed against MPS, but the details of that suit were omitted from the record extra ct. CCS filed this third party claim, and PSI filed a cross-claim, against International Fidelity Insurance Company (IFIC). IFIC had issued payment and performance bonds on behalf of New Panorama for Pleasant Chase. CCS and PSI filed counter-claims against New Panorama alleging a failure to pay those contractors for services rendered. MPS filed a similar counter-claim alleging a fa ilure by New Panorama to provide MPS with a suitably prepared site, thus precluding MPS from completing its work on Pleasant Chase. All of the contra ctors excep t CCS f iled cross-claim s against the o ther contractors alleging negligence and breach of contract. PSI also filed a cross-claim against MPS and Atlas seeking indemnification and contribution in the even t that PSI w as found to be liable to New Panorama.
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Again, we will refer to these consolidated suits as "New Panorama v. CCS ." -5-

served, McCartney and Kotz 9 and the parties to the New Panorama v. CCS litigation, including New Pan orama, PSI, CCS, IFIC, MPS and Atlas, devised a settlement agreeme nt, entitled "Settlement Agreement, Mutual Release and Escrow Agreement," to dispose of all current cross and counter-claims, as well as any future claims arising out of the Pleasant Chase project. The agreeme nt was rea d into the record on January 7, 1999, but was not executed by the parties until between June and September of 1999. The Court of Special Appeals discussed the terms of the settlement agreement as follows: "In the agreement, the parties stated that it was their `intention and desire' to `resolve any disputes' among them relating to the Pleasant Chase development `by paying CCS $77,500 plus interest in s atisfaction o f its counter-claim, third party claim, and indemnity claim,' although CCS had not yet brought an indemnity claim. They further stated that `[f]or pu rposes of th is Settlement Agreement . . . PSI, MPS, and Atlas concede that CCS would have the right to institute a claim against them for indemnity, contribution, and/or negligence . . . with respect to damag es that could conceiva bly be award ed in favor of New Panorama against CCS and paid by CCS as a result of the Litigatio n.' The agreeme nt also prov ided that M cCartney w ould be pa id `$95,000 plus interest in satisfaction of his attorney's lien,' stating that McCartney had served `written notice of his lien . . . established pursuant to

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