Chaplick v. Mao et al

Filing 90

MEMORANDUM OPINION. Signed by Judge Theodore D. Chuang on 8/25/2016. (aos, Deputy Clerk)

UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND

TREVOR CHAPLICK,
Trustee for Canal Vista Trust,
Plaintiff,

v.
Civil Action No. TDC-13-2070
JENG FEN MAO and
CHIA YEE CHEW MAO,
Defendants.

MEMORANDUM OPINION
On February 26,2016, the Court issued a Memorandum Opinion and Order granting the
Motion for Partial Summary Judgment filed by Plaintiff Trevor Chaplick and denying the CrossMotion for Summary Judgment filed by Defendants Jeng Fen Mao and Chiayee Chew Mao ("the
Maos"). Pending before the Court is the Maos' Motion to Reconsider Grant of Partial Summary
Judgment.
The relevant facts are set forth in the Court's February 26, 2016 Memorandum Opinion.
See Mem. Op. at 2-9, ECF No. 82.
favor of reconsideration:

In their Motion, the Maos offer two primary arguments in

(l) the Court improperly granted summary judgment after finding that

the contract was ambiguous; and (2) the Court's ruling was inconsistent with the March 5, 2014
ruling by the Court (Grimm, J.) denying the parties'
judgment, in violation of the law of the case doctrine.
Motion is DENIED.

earlier cross-motions

for summary

For the reasons set forth below, the

DISCUSSION
I.

Legal Standard
Because the Court's rulings on the motions for summary judgment did not result in final

judgment, the Court construes the motion to reconsider as brought pursuant to Federal Rule of
Civil Procedure 54(b). Under Rule 54(b), "any order or other decision, however designated, that
adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does
. not end the action as to any of the claims or parties and may be revised at any time before the
entry of a judgment adjudicating all the claims and all the parties' rights and liabilities."

Fed. R.

Civ. P. 54(b). Reconsideration under Rule 54(b) is at the sound discretion of the district court.
See Am. Canoe Ass'n, Inc. v. Murphy Farms, Inc., 326 F.3d 505,515 (4th Cir. 2003). Although
the Rule 54(b) standard is not as exacting as the Rule 59 and 60 standard, see Fayetteville Inv'rs
v. Commercial Builders, Inc., 936 F.2d 1462, 1472 (4th Cir. 1991), revisiting earlier rulings is
still "subject to the caveat that 'where litigants have once battled for the court's decision, they
should neither be required, nor without good reason permitted, to battle for it again, '" Official
Comm. of the Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d
147, 167 (2d Cir. 2003) (quoting Zdanok v. Glidden Co., Durkee Famous Foods Div., 327 F.2d
944,953 (2d Cir. 1964)).
II.

Ambiguous Contract
The Maos first argue that the Court erred in granting summary judgment to Chaplick

because, they assert, the Court found that the residential contract of sale relating to 13728 Canal
Vista Court in Potomac, Maryland ("the Contract") was ambiguous.
three reasons.

2

This argument fails for

First, the Maos misread the Court's ruling that Paragraph 13 of the Montgomery County
Addendum ("Paragraph 13") did not eliminate the handwritten financing contingency terms in
Paragraphs 9 and 10 of the Contract. The Court did not premise its ruling on a finding that the
Contract was ambiguous. Rather, the Court's primary analysis "considered together" the various
provisions within the four comers of the Contract and, without resorting to extrinsic evidence,
determined that its conclusion was "the most reasonable interpretation that gives effect to all of
these provisions" and that the Maos' interpretation that the financing contingency terms had been
eliminated was "not plausible" and "cannot be reconciled" with other provisions within the
Contract.

Mem. Op. at 15-16.

Thus, the Court implicitly concluded that the Contract was

unambiguous and could be interpreted without consideration of extrinsic evidence.

Id.

The

Court then proceeded to analyze an alternative basis for reaching the same conclusion: ~hat if the
Contract were viewed as ambiguous, the extrinsic evidence would lead to the same result.

See

Mem. Op. at 16 ("At a minimum, these provisions could reasonably be read two different ways,
such that the Contract's financing contingency terms would be ambiguous.") (emphasis added)).
Because the Court's ruling was not dependent on a finding of ambiguity, and the Court made no
such finding, the Maos have not offered a basis to reconsider it.
Second, although the Maos argue that a court may not grant summary judgment when a
contract is ambiguous, the Court's only ruling resulting from its analysis of extrinsic evidence
was the denial of the Maos' Cross Motion for Partial Summary Judgment.

Only the Maos

sought summary judgment on this issue, arguing that Paragraph 13 unambiguously eliminated
the financing contingency provisions of Paragraphs 9-11. Thus, the Court's ruling relating to
Paragraph 13 was that the plain language of the Contract, even when combined with extrinsic

3

evidence, did not warrant judgment in the Maos' favor. It did not grant judgment in favor of
Chaplick based on its interpretation ofthis provision. See Mem. Op. at 18.
Third, even to the extent that it would be appropriate to conclude that the Court's grant of
summary judgment

in favor of Chaplick is implicitly based on its conclusions relating to

Paragraph 13, and even if the Court's ruling were dependent on a finding of ambiguity, the Maos
are incorrect in their claim that summary judgment can never be granted where the Court finds a
contract to be ambiguous.

The Maos rely for this proposition on Morrison v. Nissan Motor Co.,

601 F.2d 139, 141 (4th Cir. 1979) ("[F]or the intent of the parties to an ambiguous contract is a
question of fact which cannot properly be resolved on motions for summary judgment." (quoting
Cram v. Sun Ins. Office, Ltd., 375 F.2d 670,674 (4th Cir. 1967))). In both Morrison and Cram,
however, the court did not stand on such a bright-line rule, but instead went on to analyze the
extrinsic

evidence

interpretation.

carefully

to assess whether

it indisputably

could lead to only one

See Morrison, 601 F.2d at 144-47;.Cram v. Sun Ins. Office, Ltd., 375 F.2d 670,

674 (4th Cir. 1967). In more recent guidance, the Fourth Circuit has made clear that there is no
absolute bar on granting summary judgment where a contract is ambiguous:
Even where a court, however, determines as a matter of law that the contract is
ambiguous, it may yet examine evidence extrinsic to the contract that is included in
the summary judgment materials, and, if that evidence is, as a matter of law,
dispositive of the interpretive issue, grant summary judgment on that basis.
World-Wide Rights Ltd. v. Combe, Inc., 955 F.2d 242, 245 (4th Cir. 1992). In another case that
post-dates Morrison and Cram, the Fourth Circuit affirmed a grant of summary judgment when it
found that although a contract provision was ambiguous, extrinsic evidence "clearly revealed the
intent of the parties," and the nonmoving party had "presented nothing that refuted" that
conclusion. Jaftex Corp. v. Aetna Cas. & Surety Co., 617 F.2d 1062, 1063 (4th Cir. 1980).

4

Here, in its alternative analysis, the Court examined the record and concluded that the
extrinsic evidence definitively supported its interpretation of the Contract itself that the parties
intended for the typed and handwritten terms in Paragraphs 9 and 10 of the Contract to apply.
To the extent there was any extrinsic evidence showing that the Maos had a different
understanding of. the Contract from Chaplick, it related only to whether a conditional loan
commitment could satisfy the financing contingency terms in Paragraphs 9 and 10; there was no
evidence that the Maos ever believed during their course of dealing with Chaplick that
Paragraphs 9 and 10 had been entirely superseded. Notably, the Maos did not even assert this
interpretation of the Contract during the first round of motions for summary judgment and only
offered it during the second round "upon further study of the contract" by their attorneys. Defs.'
Opp'n Pl.'s Mot. Partial Summ. J. and Defs.' Cross-Mot. Summ. J. at 3, ECF No. 70.
Because there was no extrinsic evidence to indicate that the Maos did not intend for the
financing contingency terms in Paragraphs 9 and 10 to be in effect, or that they intended for
those terms to be superseded, the Court concluded, consistent with the principle in World-Wide
Rights, that summary judgment was warranted even if the Contract were analyzed as ambiguous.

The Court is permitted to reach such a conclusion, and it sees no reason to reconsider that
determination. For these reasons, the Court finds no clear error or manifest injustice that would
warrant reconsideration.
III.

Law of the Case

The Maos also argue that the Court erred by not applying the law of the case doctrine to
conclude that Judge Grimm's earlier ruling on the first round of summary judgment motions
precluded the Court from issuing its ruling. The law of the case doctrine provides that "when a
court decides upon a rule of law, that decision should continue to govern the same issues in

5

subsequent stages in the same case." Christianson v. Colt Indus. Operating Corp., 486 U.S. 800,
816 (1988) (quoting Arizona v. California, 460 U.S. 605, 618 (1983)).

6

The doctrine is a

•

Second, Judge Grimm made no definitive ruling on a point of law. He did not interpret
the Contract, in whole or in part. Judge Grimm's main conclusion was that "[a] genuine dispute
of material fact exists as to whether the financial contingency of the Agreement was satisfied,
such that the Defendants'

obligation to perform was triggered" and that "it is unclear whether

circumstances beyond Defendants'
commitment."

control caused their failure to obtain an unconditional loan

Grimm Mem. Op. at 7, ECF No. 48.

Judge Grimm also identified factual

disputes on whether the Maos applied for financing in accordance with the Contract, whether
they acted in good faith to resolve all loan conditions, whether they mispresented their financial
ability, and whether Chaplick assumed certain risks. But he asserted no discernible "rule of law"
that governed the remainder of the case. See Christianson, 486 U.S. at 816. Indeed, rather than
reach any conclusions of law, Judge Grimm noted that "the state law is unclear," effectively
deferring such rulings. Grimm Mem. Op. at 7.
The parties agreed with this conclusion.

In light of the general nature of Judge Grimm's

opinion, this Court inquired at oral argument whether the prior opinion bound it in any way.
Chaplick's counsel took the position that Judge Grimm had not made any legal or factual ruling
on whether the financing contingency could be satisfied by a conditional loan commitment, and
whether there were conditions that were outside of the Maos' control.

Although the Maos'

counsel was not explicitly asked whether this Court is bound by any aspect of Judge Grimm's
ruling, she did not express any disagreement

with this view.

She neither articulated any

definitive ruling or contractual interpretation by Judge Grimm nor asserted that the law of the
case doctrine mandated that the Court follow any particular aspect of Judge Grimm's ruling.
Where Judge Grimm made no ruling relating to the interpretation of the Contract, but
instead deferred such issues until a later point in the case, the law of the case doctrine would not

7

bind the Court. See Dessar v. Bank of America Nat'l Trust & Sav. Ass 'n, 353 F.2d 468,470 (9th
Cir. 1965) (rejecting the applicability of the law of the case doctrine to the denial of a motion for
summary judgment because "[t]he order does not purport to decide the question" but instead
"postpones decision of any question" because of the presence of "issuable facts"); see also
Dillon v. BMO Harris Bank, NA., 787 F.3d 707, 715 (4th Cir. 2015) (holding that the law of the
case doctrine did not apply because the initial order "contained no rule of law that dictated the
resolution" of the later motion); Sejman v. Warner-Lambert Co., Inc. 845 F.2d 66, 69 (4th Cir.
1988) (rejecting application

of the law of the case doctrine where the court found "scant

indication that any determination

on the scope of ERISA was ever made" in the earlier

litigation).
Third, even if Judge Grimm's ruling could be construed as subject to the law of the case
doctrine, this Court's ruling was consistent with any such prior ruling. To the extent that Judge
Grimm's ruling could be read to have implicitly adopted a rule oflaw, it arguably concluded that
Chaplick was not entitled to summary judgment because the financing contingency term would
not, as a matter of law, require performance regardless of the existence of conditions.1

The

ruling arguably recognized that certain conditions may exist that could provide a basis for the
Maos to be released from the Contract if fulfilling them presented circumstances
beyond their control.

In its Memorandum

that were

Opinion, this Court agreed with this principle,

referencing cases in which a loan commitment conditioned on the sale of the buyer's prior home
at a certain price did not satisfy the financing contingency because meeting that condition was
not within the buyer's control. See Mem. Gp. at 21 (citing Farrell v. Janick, 542 A,2d 59, 61-62

1 Notably, such a broad approach to the law of the case doctrine would likely have precluded
the Maos from arguing that Paragraph 13. superseded Paragraphs 9 and 10 of the Contract,
because Judge Grimm's opinion could be read to have implicitly found Paragraphs 9 and 10 to
be valid parts of the contract. See Grimm Mem. Gp. at 2.

8

(N.J. Super. Ct. Law Div. 1988), and McKenna v. Rosen, 570 A.2d 1277, 1278-80 (N.J. Super.
Ct. App. Div. 1990)). This Court's grant of summary judgment was not based on a conclusion
that a buyer is always responsible for the failure to comply with conditions in a loan commitment
letter.

Rather, it was based on consideration of the specific conditions at issue and whether

compliance should be deemed beyond the Maos' control. Thus, the Court did not contradict any
legal principle implicitly adopted by Judge Grimm.
Fourth, the Court's ruling was permissible because it followed the introduction

of

additional evidence into the record, obtained through discovery after Judge Grimm's ruling,
including the depositions of Mr. Mao, Mrs. Mao, and loan officer Michelle Chang relating to the
circumstances leading to the delivery of the loan commitment letter, the course of dealing with
EverBank,

in which EverBank

imposed additional underwriting

conditions

and the Maos

requested higher loan amounts, and the Maos' efforts to meet the tax transcript and other
remaining conditions.

The law of the case doctrine does not preclude a change in ruling based

on the introduction of additional evidence. See Everett v. Pitt Cty. Bd. of Educ., 788 F.3d 132,
142 (4th Cir. 2015) ("Once the district court took evidence on the question, it was no longer
bound by the law of the case ....

"); Peralta, 744 F.3d at 1088 (finding the law of the case

doctrine inapplicable to the denial of a summary judgment motion because "factual development
is still ongoing" and any factual dispute "may disappear as the record develops").
With the benefit of this additional evidence, this Court determined that the condition that
a tax transcript had to be provided was not comparable to the type of conditions that have been
deemed outside of a borrower's control, such as a condition that the borrower's existing home be
sold at a particular price.

Moreover, with the additional evidence, the Court concluded that

several other conditions were left unfulfilled as of the date of closing, including requirements to

9

provide documentation relating to a large deposit to a BB&T bank account, asset statements for
two other bank accounts, and additional documentation relating to the ownership interest in the
Essential Realty Group, and that they were not the type of conditions beyond the control of the
Maos.

See Mem. Op. at 8, 22.

introduction

Because this Court's ruling followed and relied upon the

of additional evidence into the record, the law of the case doctrine would not

provide a basis to reconsider it.
CONCLUSION
For the foregoing reasons, the Maos' Motion to Reconsider Grant of Partial Summary
Judgment is DENIED. A separate Order shall issue.

Date: August 25,2016

-:~
THEODORED.:;ii=a
~

United States District Judge

10