Monday, February 7, 2011

Cappel v. Riaso (Ct. of Special Appeals)

Filed: February 7, 2011
Opinion by Judge Timothy E. Meredith

Held: Defendants' ownership of unimproved land in Maryland, unrelated to the cause of action, did not support the exercise of personal jurisdiction over the defendant in an action to enforce a confession of judgment clause in a guaranty.

Facts: The Defendants signed a guaranty containing a confession of judgment clause. In the guaranty, the defendants agreed to appear "in any court of competent jurisdiction in the State of Virginia or any other State or Territory of the United States" to confess judgment.

Upon a default, the plaintiff filed a complaint and affidavit for confessed judgment in the Circuit Court for Montgomery County. The clerk entered judgment against the defendants. The defendants filed a motion to vacate on grounds that the court lacked personal jurisdiction because of their minimal contacts with Maryland. The plaintiff opposed the motion on grounds that the defendants owned land in Maryland, thus availing themselves of the benefits and protections of the forum state. The trial court held that owning the property was a sufficient contact to justify the exercise of personal jurisdiction under International Shoe, and it denied the motion.

First, the Court held that lack of personal jurisdiction is an appropriate basis under Rule 2-611(d) upon which to move to vacate a confessed judgment, though it is not specified in the rule.

Regarding the merits, the Court held that an out-of-state resident's ownership of real property unrelated to the cause of action, absent other ties, is insufficient to establish jurisdiction under either the long-arm statute or the Due Process Clause. Accordingly, the Court vacated the judgment.

The full opinion is available in pdf.

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