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Burnett v. Spencer

Court of Special Appeals of Maryland

September 28, 2016

STEVEN BURNETT
v.
CERETA SPENCER

          Eyler, Deborah S., Arthur, Wilner, Alan M. (Senior Judge, Specially Assigned), JJ.

          OPINION

          Arthur, J.

         This case concerns Md. Rule 2-651, the so-called "wild card"[1] provision for collecting judgments. A judgment-creditor asked the Circuit Court for Baltimore County to employ Rule 2-651 to enter a charging order against the corporate interest of a recalcitrant judgment-debtor. The court entered the charging order, and the debtor appealed. We affirm.

         I. Background

         Cereta Spencer and Steven Burnett were divorced in the Circuit Court for Baltimore County in 2010. In connection with the divorce, the court granted Spencer a monetary award of $3.7 million. This Court affirmed the judgment in an unreported opinion. Burnett v. Burnett, No. 2855, Sept. Term 2010 (Ct. Spec. App. Apr. 19, 2012).

         On July 3, 2012, the clerk docketed two money judgments in favor of Spencer and against Burnett. The judgments, in the amounts of $912, 500.00 and $1, 612, 500.00, appear to represent unpaid portions of the monetary award.

         Spencer alleges that Burnett resisted payment, apparently preferring to have interest accrue at the post-judgment rate of 10 percent per annum than to satisfy his obligations to his ex-wife. Spencer claims that, in his efforts to resist payment, Burnett filed a bankruptcy petition, which was dismissed as a bad-faith filing.

         On November 3, 2014, Spencer obtained writs of garnishment of wages on Burnett's employer, CAEI Inc., and on Burnett's bank. Three days later, on November 6, 2014, Spencer filed a motion for ancillary relief under Rule 2-651.

         The motion for ancillary relief was directed to CAEI, a Subchapter S corporation in which Burnett is the majority owner. In the motion Spencer asked the court to "charg[e]" Burnett's "equity interest" "with the payment of all amounts due and owing" on the judgments.

         In response, CAEI and Burnett filed a number of dilatory papers - a motion for a more definite statement from CAEI; from Burnett, a motion to quash, alleging defects in service.

         On December 9, 2014, apparently unaware of the motion for a more definite statement and the motion to quash, the circuit court granted the motion for ancillary relief. Its orders "charged" Burnett's "equity interests" in CAEI "with the payment of all amounts due" on the two judgments against him. In addition, the orders "enjoined" Burnett and CAEI from "transferring any assets by way of dividend, loan or otherwise" to Burnett. Instead, the orders required that "any distributions payable or any other money that is or becomes due to" Burnett "by reason of his corporate stock shares in CAEI" "be directed" to Spencer.

         Burnett and CAEI moved for reconsideration. After some motions practice and communications among the court and counsel, Burnett and Spencer reached an agreement on February 9, 2015, which was embodied in a consent order that was signed by the court on March 16, 2015, and docketed on March 25, 2015. Under the consent order, Burnett could join in CAEI's motion for reconsideration, which was to be heard on February 10, 2015, but he withdrew his objections to service and his motion for reconsideration of the court's original charging orders of December 9, 2014. The consent order gave Burnett until February 26, 2015, to elect his exemptions, if any, from Spencer's action to collect on her judgment, but the order made no other provision for registering substantive challenges to the relief that the court had ordered.

         On February 10, 2015, the day after Burnett and Spencer reached the agreement that became the consent order, the circuit court conducted a hearing on CAEI's motion for reconsideration. At the hearing, Mr. Burnett's counsel joined the company in arguing for the amendment of some aspects of the December 9, 2014, orders. In an order signed by the court on February 19, 2015, and docketed on March 9, 2015, the court amended its earlier order in two respects: (1) it permitted CAEI to reimburse Burnett for legitimate business expenses incurred on CAEI's behalf; and (2) it permitted CAEI both to make and to forgive loans to Burnett, provided that the company gave advance notice to Spencer's attorneys.

         In accordance with the agreement that became the consent order between Burnett and CAEI, Burnett claimed several exemptions on February 26, 2015. At the same time, Burnett filed what he called "a motion to release property from levy" under Md. Rule 2-643(c). In that motion Burnett asked the court to release the "levy" on his corporate interest. He contended that a charging order could reach only partnership, and not corporate, interests.[2]

         In an order dated April 21, 2015, the circuit court denied Burnett's motion to release property from levy. The clerk made a ...


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