McLaughlin Opinion Provides Valuable Guidance After Final Judgment Rule Sinks Another Maryland Appeal

By: Derek M. Stikeleather | 2.15.19 | Media

A recent foreclosure action in the Court of Special Appeals presented Judge Arthur with the opportunity to cleanly explain one of the more maddening—and anxiety-producing—rules of appellate practice, the Final Judgment Rule. See McLaughlin v. Ward, No. 1827, September Term 2017 (Jan. 30, 2019). The rule begins with a simple premise: one cannot appeal a trial court’s ruling until the court has entered a final judgment that resolves every claim in the case. See Md. Code Ann., Cts. & Jud. Proc. § 12-301. Yet, the rule has exceptions. And it is those exceptions that bedevil practitioners (and courts) as they grapple with proper application of the rule and try to avoid noting an appeal too early or—even worse—too late.

The rule is crucial to appellate practice because the Court of Special Appeals obtains jurisdiction only when a party files a timely notice of appeal after a final judgment or as otherwise provided by law. As a court of limited jurisdiction, it must dismiss appeals where jurisdiction is lacking.

First, Judge Arthur recited the three attributes that ordinarily comprise a final judgment. It must:
  1. Be intended by the court as an unqualified, final disposition of the matter in controversy;
  2. Adjudicate all claims against all parties—unless the court directs the entry of final judgment, under Rule 2-602(b), for less than all of the claims or all of the parties; and
  3. Be recorded in accordance with Rule 2-601.
Second, Judge Arthur identified the three exceptions to the final-judgment requirement:
  1. Appeals from interlocutory orders specifically allowed by statute;
  2. Immediate appeals permitted under Maryland Rule 2-602; and
  3. Appeals from interlocutory rulings allowed under the common-law collateral-order doctrine.

The statutory exceptions provide for appeals from certain interlocutory orders that would likely foreclose or irreparably damage an appellant’s rights if the appeal had to wait until the court entered a final judgment. See Md. Code Ann., Cts. & Jud. Proc. § 12-301. Examples include certain orders involving injunctions, child-custody and guardianship rulings, arbitrations, and statutory immunity. See id.

And the collateral-order doctrine remains a “very narrow exception” to the final-judgment rule. A collateral order under Maryland law must (1) conclusively determine the disputed question; (2) resolve an important issue; (3) be completely separate from the merits of the action; and (4) be effectively unreviewable on appeal from a final judgment.

The appellant in McLaughlin , Dominion Rental Holdings, LLC (“Dominion”), fell victim to the final-judgment rule. Dominion acquired a property at a foreclosure sale. It filed exceptions to the sale, hoping to recover money that it had spent to improve the property before the sale. The court denied Dominion’s exceptions, and Dominion noted its appeal without waiting for the trial court to ratify the sale and enter its final judgment. Dominion did not note another appeal after the final judgment. Because the appeal was premature, the Court of Special Appeals had to dismiss the case for lack of appellate jurisdiction.

Faced with the nightmare realization that it had potentially blown its appeal by failing to timely note its appeal, Dominion scrambled to find safe harbor in any exception to the final-judgment rule. But no exceptions applied. Although an order for “the sale, conveyance, or delivery of real . . . property” under Section 12-303(3)(v) of the Courts and Judicial Proceedings article is an appealable interlocutory order, the order denying exceptions to the sale was not an appealable order to sell real property because the denial of exceptions necessarily follows the sale. The trial court did not certify the order for interlocutory appeal under Rule 2-602(b). And the order was not an appealable collateral order for two reasons; it was closely tied to the merits of the foreclosure proceeding and it was effectively reviewable on appeal.

Although the final-judgment rule claimed another victim in McLaughlin, one hopes that Judge Arthur’s concise nine-page opinion will help others avoid a similar fate.

This article is republished with permission from Maryland Appellate Blog, the blog of the MSBA Litigation Section.