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United Book Press12/3/2001
522. Similarly, not every confessed judgment represents actual litigation of damages for purposes of collateral estoppel. In determining whether an issue has been actually litigated, courts may look beyond the judgment to examine the pleadings and evidence presented in the prior case. See Colandrea, 361 Md. at 391-92 (" or the doctrine of collateral estoppel to apply, the probable fact-finding that undergirds the judgment used to estop must be scrutinized to determine if the issues raised in that proceeding were actually litigated, or facts necessary to resolve the pertinent issues were adjudicated in that action.") (emphasis added). For example, the U.S. Bankruptcy Court for the Southern District of New York gave a confessed judgment preclusive effect where the evidence indicated the issue had been extensively litigated. In re Weiss, 235 B.R. 349, 357 (Bankr. S.D.N.Y. 1999) (citing cases that discuss whether an issue was actually litigated). See also MPC, Inc. v. Kenny, 279 Md. 29, 36 (1977) (remanding case to determine what facts and issues were actually litigated in prior proceeding where consent judgment was entered into during post-trial settlement). If the pleadings and other materials are unclear, extrinsic evidence can be used to determine what issues were actually litigated and whether the record adequately reflects those issues. Restatement (Second) of Judgments, ยง 27 cmt. f (1980).
In the case before us, there is extrinsic evidence indicating that not only was the prior action not litigated, it was settled before the time elapsed for Strathmore to file a motion to open, vacate, or modify the confessed judgment. Presumably, the parties could have agreed that Strathmore would file a motion to vacate the judgment and that appellant would consent to it, thus extinguishing the prior judgment. That was not done but, under the circumstances, the judgment should not have preclusive effect.
Our interpretation of the circuit court opinion in this case is that the court ruled that no damages were recoverable against appellee, even if it breached its contract, because of the preclusive effect of the confessed judgment. Consequently, we vacate the judgment and remand for further proceedings consistent with this opinion.
JUDGMENT VACATED; CASE REMANDED TO THE CIRCUIT COURT FOR BALTIMORE COUNTY FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION. COSTS TO BE PAID BY APPELLEE.
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