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Challenge to statute-of-limitations suspension appears doomed at Md. high court

Then-Court of Appeals Chief Judge Mary Ellen Barbera’s administrative order that suspended from March 16, 2020, to July 20, 2020, the three-year-time limit for filing claims was constitutionally void, a civil defense attorney is asserting. (The Daily Record/File Photo)

Maryland’s top court appears poised to uphold the constitutionality of its then-chief judge’s order suspending the deadline for filing civil claims when she closed the clerks’ offices last year to stanch the spread of the COVID-19 virus.

Several Court of Appeals judges on Friday pointedly questioned an attorney who argued that the constitutional authority to alter the statute of limitations rests solely with the General Assembly under the Constitution’s separation of powers among the legislative, judicial and executive branches.

Judge Robert N. McDonald asked whether the chief judge could suspend the time limit for filing claims if a severe snowstorm – rather than a global pandemic – had necessitating the closing of clerks’ offices. Judge Shirley M. Watts noted that then-Chief Judge Mary Ellen Barbera’s order followed and was in keeping with Gov. Larry Hogan’s directive that state agencies suspend the expiration of state-issued licenses due to the COVID-19 emergency.

In response, attorney Joseph L. Katz said the chief judge’s administrative authority is limited to “procedural” matters, such as closing courtrooms in an emergency, but not to “substantive” matters of law, such as suspending the statutory time limit for filing claims. Barbera’s constitutional recourse was not to issue an order but to go to the General Assembly and seek a statutory suspension, said Katz, who illustrated his point by giving voice to the legislature.

“We (the General Assembly) gave you the limitation and we can change it,” said Katz, a Bethesda solo practitioner. “You have the privilege of litigating but there is an end to it.”

By contrast, Katz’s opposing counsel was seldom interrupted by the judges as she defended the constitutionality of Barbera’s suspension of the filing deadline.

Barbera’s order during  a “global emergency” was a “valid exercise” of her administrative authority, which the General Assembly took no action to oppose, Shannon J. Briglia told the high court.

The legislature’s silence indicated either its “agreement with or acquiescence” to Barbera’s order, added Briglia, of Smith, Currie & Hancock LLP in Tysons, Virginia.

Katz and Briglia made their opposing arguments in a dispute pitting J.M. Murphy Enterprises Inc. and the construction company’s president, Jesse J. Murphy, against Liberty Mutual Insurance Co. in federal court over their alleged obligation to indemnify the underwriter for financial losses it sustained because of them.

Katz, who represents Murphy, has argued in court papers that the U.S. District Court in Baltimore lacks jurisdiction because Liberty Mutual’s alleged losses would not have crossed the jurisdictional threshold of $75,000 if the three-year statute of limitations was not suspended, or tolled. That argument has placed in question the constitutionality of Barbera’s administrative order, which suspended from March 16, 2020, to July 20, 2020, the three-year-time limit for filing claims.

To help resolve the issue, the judge presiding over the federal case has asked the Court of Appeals to decide whether the order was constitutional as contended by Liberty Mutual, which Briglia represents.

In certifying the question to the high court, U.S. District Judge Stephanie A. Gallagher explained why she is unwilling to supply the answer herself.

“(T)here are overwhelming federalism concerns implicated by a federal district court potentially concluding, on entirely state law grounds, that Chief Judge Barbera did not have the authority to toll the statute of limitations in the fashion she did,” Gallagher wrote in July.

“Such a decision would dramatically alter Maryland’s legal landscape, possibly upending myriad cases in Maryland state court that have up to this point been allowed to proceed due to the tolled limitations period,” Gallagher added. “The Court of Appeals is indisputably better positioned to interpret Maryland’s Constitution on this question and is better equipped to analyze the interplay between the state’s laws and the state court’s administrative and procedural authority given the far-reaching consequences for the Maryland court system.”

Barbera reached Maryland’s mandatory retirement age of 70 in September. She has been succeeded by Chief Judge Joseph M. Getty.

In the underlying lawsuit, Liberty Mutual provided surety bonds to Murphy for its installation of concrete at the Maryland State Police Flight Training Facility at Martin State Airport in Middle River. As a condition of receiving the bonds, Murphy agreed to indemnify Liberty Mutual against any claims that would arise, according to the underwriter’s complaint.

Liberty Mutual said equipment suppliers brought claims against it for Murphy’s allegedly unpaid bills.

Liberty Mutual said it paid out more than $75,000 in compensation and then sued Murphy in U.S. District Court on July 2, 2020, seeking indemnification as provided under the bond agreement.

Massachusetts-based Liberty Mutual asserted federal court jurisdiction based on its diversity of citizenship with Maryland-based Murphy and an amount in controversy exceeding $75,000.

Murphy subsequently challenged the federal court’s jurisdiction, saying Liberty Mutual’s payments did not exceed $75,000 during the three-year span that began on July 2, 2017, and ended on the filing date of July 2, 2020.

Liberty Mutual has countered that the three-year span’s end date was not July 2, 2020, but three and half months earlier, on March 16, 2020, when Barbera suspended the statute of limitations – an action Murphy has alleged was unconstitutional.

Katz, arguing on Murphy’s behalf, told the Court of Appeals that the case presents “a completely novel question” regarding “the limits of judicial power by administrative order.”

Judge Steven B. Gould interjected that the answer to that question might be rooted in Hogan’s order that the heads of state agencies – including, presumably, the Maryland Judiciary – suspend expiration dates due to governmental closures that were necessitated by the pandemic.

Briglia, pressing Liberty Mutual’s argument, said striking down Barbera’s order as unconstitutional “would wreak havoc on an untold number of pending cases” filed beyond the three-year statute of limitations due to the litigants’ reliance on the ordered suspension.

The Court of Appeals is expected to render its answer to the constitutionality question by Aug. 31 in the case Jesse J. Murphy et al. v. Liberty Mutual Insurance Co., Misc. No. 5, September Term 2021.