Reported Maryland Court of Special Appeals Case on Personal Jurisdiction: Owning Unimproved Real Estate is not Sufficient Minimum Contacts

An issue that often is litigated is personal jurisdiction, or “can we sue the defendant here?” Last week, the Maryland Court of Special Appeals rendered a published opinion on the issue in the case of Cappel v. RIASO, LLC. A copy of the opinion is here. In this case, the court was asked to determine whether, in an action to enforce a confession of judgment clause in a guarantee of a promissory note that was signed outside of the State of Maryland, the Circuit Court for Montgomery County, Maryland had personal jurisdiction over the guarantors (Mr. & Mrs. Cappel) by virtue of their owning unimproved real estate in Maryland that was unrelated to the issues in the case. The Circuit Court had found that it did have jurisdiction over the Cappels because by owning the land the Cappels were “transacting business” in Maryland and they had sufficient “minimum contacts” with the State of Maryland to allow personal jurisdiction.

The Court of Special Appeals reversed and vacated judgments against the Cappels for $2,938,312.51. The Court found that owning unimproved real estate in the State of Maryland was not sufficient to allow for personal jurisdiction in Maryland where the real estate in question had nothing to do with the dispute between the parties.

This means that the Plaintiff will now need to start over and sue the Cappels in either D.C. or Virginia, and that the lien on the Cappel’s Maryland real estate that was created by the judgment will be vacated. One wonders whether the Cappels will be able to sell the property before the creditor is able to obtain a new judgment in D.C. or Virginia and then record it as a lien against the Cappels’ Maryland property.