By Tim Faith, Esq.

Holding

The court held that a trial court that compels arbitration retains jurisdiction after an arbitrator has entered an award over the case, even if a party voluntarily dismisses the case pending before the trial court.

Opinion By: J. Beachley

Facts

Appellants, Gwendolyn and Leeroy Nesbitt, filed a class action lawsuit against Appellee Mid-Atlantic Builders of Davenport, Inc., in the circuit court for Prince George’s County, alleging violations of certain statutory disclosure requirements related to water and sewer assessments in the sale of residential real property. The circuit court stayed the case pending arbitration based on the terms of the sales agreement that contained an arbitration provision, and after an adverse ruling against the Nesbitts by the arbitrator, Appellants filed a Notice of Dismissal with the circuit court. However, the circuit court struck the Notice, confirmed the arbitration award, and awarded attorney’s fees to the Respondents, resulting in an appeal by the Appellants.

Analysis

The Court found that while a plaintiff retains the absolute right to voluntarily dismiss a case at any time before the adverse party files an answer under Md. Rule 2-506(a), there was no Maryland case on point as to how to proceed where a trial court has compelled arbitration, and the Notice is filed after an award was made by the arbitrator. The Court found the reasoning of the 11^th Circuit persuasive that while a plaintiff could dismiss its own claims in the stayed proceeding that ordered arbitration, the trial court retains jurisdiction over the case to confirm or vacate the resulting arbitration award. PTA-FLA, Inc. v. ZTE USA, Inc., 844 F.3d 1299 (11^th Cir. 2016). In the event the defendant had filed a motion to confirm the arbitration, the trial court retained jurisdiction over this collateral claim, even when the plaintiff filed a Notice of Dismissal. Id. at 1308.

In the present case, the Court found that Maryland Rule 2-506(a) was substantively similar to its federal claim dismissal rule in Federal Rule 41(a)(1). In addition, the Court found that the Maryland Uniform Arbitration Act provides post-arbitration award procedures for the trial court that originally stayed to compel arbitration, including jurisdiction to modify, correct, vacate, or confirm the arbitration award. Md. Courts & Jud. Proc. Code Ann. § 3-201, et seq. (2020). The Court interpreted the Maryland dismissal and post-arbitration award procedures to conclude that the circuit court retained jurisdiction over a collateral claim, such as the defendant’s motion to confirm the arbitrator’s award, based on the 11^th Circuit’s interpretation of similar federal statutes, thereby affirming the trial court’s order.

Full opinion HERE | MSBA Business Law Section Blog HERE

Tim Faith is a practicing business law and estates planning attorney, and also an associate professor at The Community College of Baltimore County, where he teaches business law, legal writing, and torts. Tim also serves as the chair of the Maryland Business Law Developments blog, a service of the Business Law Section of the Maryland State Bar Association.