United States District Court, D. Maryland, Southern Division
KYUNG H. KANG, et al., Plaintiffs,
CHARLES S. CHAS, et al. Defendants.
J. HAZEL UNITED STATES DISTRICT JUDGE.
Kyung H. Kang and KS Kang, Inc. have been involved in a
lengthy dispute with Defendants Charles S. Chas and In Sook
Chas over payments related to Plaintiffs' purchase of a
dry-cleaning business in 2006. In 2014, Defendants secured a
judgment of confession in Maryland state court stating that
Plaintiffs owed $79, 731.66 to Defendants. ECF No. 1 at 5. In
2017, Plaintiff brought a separate action for unjust
enrichment and fraud, alleging that judgment of confession
had been satisfied. See Kang v. Chas, No. PX-17-2332
(D. Md. Jan. 23, 2018). That action, after being removed to
this Court, was dismissed. Now, Plaintiffs seek a declaratory
judgment, alleging once more that the judgment of confession
has been satisfied. ECF No. 1-2. Defendants have filed a
Motion to Dismiss and for Sanctions. ECF No. 5. No. hearing
is necessary. See Loc. Rule 105.6. For the following
reasons, Defendants' Motion to Dismiss and for Sanctions
shall be granted in part and denied in part.
agreed to purchase Defendants' dry-cleaning business in
2006 for $410, 000, paying an initial $65, 000 and signing a
confessed judgment promissory note for the remaining $345,
000. ECF No. 1-2 ¶¶ 7-9. Plaintiffs also paid $85,
000 in certified checks in addition to the monthly payments
made on the note. Id. ¶¶ 10-11. In January
2014, a Maryland state court certified a notice of judgment
against Plaintiffs, stating that they owed $79, 731.66 on the
note. ECF No. 1 at 5. Plaintiffs, however, allege that the
notice of judgment did not take into account the $85, 000 in
lump sum payments, and that the debt is thus satisfied. ECF
No. 1-2 ¶¶ 12.
allegations mirror those made by Plaintiffs in a 2017 action
filed in Maryland state court and later removed to this Court
in which Plaintiffs alleged unjust enrichment and fraud.
See ECF No. 5-1 at 12-13. The Court dismissed both
claims for failure to state a claim. Id. at 18-19.
In the instant action, Plaintiffs seek only a declaratory
judgment that the debt has been paid. ECF No. 1-2 ¶ 17.
STANDARD OF REVIEW
motion to dismiss for failure to state a claim pursuant to
Fed.R.Civ.P. 12(b)(6), the Court “must accept the
factual allegations of the complaint as true and construe
them in the light most favorable to the nonmoving
party.” Rockville Cars, LLC v. City of Rockville,
Md., 891 F.3d 141, 145 (4th Cir. 2018). To overcome a
12(b)(6) motion, the “complaint must contain sufficient
factual matter, accepted as true, ‘to state a claim to
relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Plaintiffs must “provide sufficient
detail” to show “a more-than-conceivable chance
of success on the merits.” Upstate Forever v.
Kinder Morgan Energy Partners, 887 F.3d 637, 645 (4th
Cir. 2018) (citing Owens v. Balt. City State's
Attorneys Ofice, 767 F.3d 379, 396 (4th Cir. 2014)). The
mere recitation of “elements of a cause of action,
supported only by conclusory statements, is not sufficient to
survive a motion made pursuant to Rule 12(b)(6).”
Walters v. McMahen, 684 F.3d 435, 439 (4th Cir.
2012). Nor must the Court accept unsupported legal
allegations. Revene v. Charles Cnty. Commis., 882
F.2d 870, 873 (4th Cir. 1989). A plausibility determination
is a “context-specific inquiry” that relies on
the court's “experience and common sense.”
Iqbal, 556 U.S. at 679-80. Finally, a court
“may consider official public records, documents
central to plaintiff's claim, and documents sufficiently
referred to in the complaint so long as the authenticity of
these documents is not disputed.” Witthohn v. Fed.
Ins. Co., 164 Fed.Appx. 395, 396 (4th Cir. 2006).
initial matter, a motion to dismiss is “rarely
appropriate in a declaratory judgment action.” 120
W. Fayette St., LLLP v. Mayor & City Council of Baltimore
City, 413 Md. 309, 355 (Md. 2010). The Maryland Uniform
Declaratory Judgments Act provides that “a court of
record within its jurisdiction may declare rights, status,
and other legal relations whether or not further relief
is or could be claimed.” Md. Code Ann. Cts. &
Jud. Proc. § 3-403(a) (emphasis added). If a plaintiff
“states the existence of a controversy which should be
settled, he states a cause of suit for a declaratory
decree.” Shapiro v. Bd. of Cty. Comm'rs,
219 Md. 298, 302-03 (Md. 1959). Only when a complaint fails
to allege a justiciable controversy is a motion to dismiss
proper. See Christ by Christ v. Md. Dep't of Nat.
Res., 335 Md. 427, 435 (Md. 1994) (“It is proper
to dismiss a declaratory judgment action only where there is
a lack of jurisdiction or where a declaratory judgment is not
an available or appropriate type of remedy.”).
Defendant contends that Plaintiff's declaratory judgment
claim is barred by the doctrine of res judicata.
Res judicata precludes the “same parties from
litigating a second lawsuit on [1.] the same claim, or [2.]
any other claim arising from the same transaction or series
of transactions and that could have been-but was not-raised
in the first suit.” Lizzi v. Washington Metro. Area
Transit Auth., 384 Md. 199, 206 (Md. 2004).
law requires federal courts to “give the same
preclusive effect to a state-court judgment as another court
of that State would give.” Exxon Mobil Corp. v.
Saudi Basic Indus. Corp., 544 U.S. 280, 293 (2005);
see also 28 U.S.C. § 1738. To determine the
preclusive effect of a state-court judgment, a federal court
must “refer to the preclusion law of the State in which
judgment was rendered.” Marrese v. Am. Acad. of
Orthopaedic Surgeons, 470 U.S. 373, 380 (1985).
“If state law would afford the judgment preclusive
effect . . . then a federal court must engage in a second
step-it must determine if Congress created an exception to
§ 1738.” In re Genesys Data Techs., 204
F.3d 124, 128 (4th Cir. 2000).
Maryland, the elements of res judicata are:
(1) that the parties in the present litigation are the same
or in privity with the parties to the earlier dispute; (2)
that the claim presented in the current action is identical
to the one determined in the prior adjudication; and, (3)
that there has been a final judgment on the merits.
Anne Arundel Cty. Bd. of Educ., v. Norville, 390 Md.
93, 107 (Md. 2005). “The elements of resjudicata under federal law are analogous to those
under Maryland law.” Id. at 108. Here, the
first and third elements of res judicata are readily
met. The parties are the same as those in the case in which
the Maryland court entered judgment by confession on January
22, 2014. ECF No. 1 at 5. Furthermore, Maryland law considers
confessed judgments to be final judgments on the merits,