Kane v. Schulmeyer5/12/1998
Michael A. Kane, Trustee, et al. v. G. Stephen Schulmeyer, et al. No. 97, Sept. Term, 1997
Venue: In action against multiple defendants for breach of promise to pay money, in which there is no other single venue applicable to all defendants, action may be brought where cause of action arose; for venue purposes, cause of action arises where payment is to be made; if no place is specified in the contract, payment is to be made, and venue lies, where creditor lives, works, or has place of business.
In February, 1993, petitioners invested $400,000 in a limited partnership formed by respondents. As an inducement to petitioners to make that investment, respondents executed a guaranty agreement, in which they covenanted to return the $400,000 investment, on demand, if (1) the limited partnership sustained a "Net Cash Flow Shortfall" in any three periods, or (2) the gross sales of an affiliated limited partnership did not equal at least $3 million at the end of that entity's first fiscal year.
On December 27, 1994, petitioners demanded the return of their investment, alleging the failure of both conditions. When payment was not forthcoming, they filed suit against respondents in the Circuit Court for Montgomery County. Although a number of defenses were raised to the action, the one at issue here is venue - whether the suit was properly filed in Montgomery County. One of the respondents, Schulmeyer, lives in Baltimore County; another, Buchsbaum, lives in Howard County; the third, Garcia, lives in Anne Arundel County. None of them live or, so far as this record indicates, are employed, carry on any regular business, or engage in any habitual vocation in Montgomery County. Petitioners, however, live or have their businesses in Montgomery County.
In their complaint, petitioners alleged that the guaranty was executed in Montgomery County and, apparently on that basis, claimed venue in Montgomery County under Maryland Code (1995 Repl. Vol.), 6-201(b) of the Courts and Judicial Proceedings Article. In relevant part, that section provides that, if, in a multi-defendant case, there is no single venue applicable to all defendants, suit may be brought "in the county where the cause of action arose." Asserting that the guaranty was signed in Howard County, where he lived, Buchsbaum moved to transfer the case to the circuit court for that county. The other respondents, making no factual allegations, moved to dismiss the complaint for a variety of reasons, including want of proper venue in Montgomery County.
The court denied the various motions, and the case was tried, non-jury, on the merits. Finding for petitioners, the court entered judgment in their favor in the amount of $400,000. Respondents appealed, raising three issues, including venue. In an unreported opinion, the Court of Special Appeals reversed, holding that Montgomery County was not the proper venue. Relying largely on Bakas v. Marjec, Inc., 275 Md. 356, 339 A.2d 662 (1975), the appellate court concluded that the provision in 6-201(b) allowing suit to be brought "in the county where the action arose" did not apply to a cause of action based on breach of contract unless the contract specified a particular place for payment. As no such place was specified in the guaranty agreement, the court held that suit could be brought only in a county where one of the defendants lived or worked, and not in Montgomery County. In light of that holding, the court did not address the other two issues raised by respondents. We granted certiorari to consider the venue issue, and, as we disagree with the conclusion of the Court of Special Appeals, we shall vacate that court's judgment and remand for it to consider the other issue
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