The judgment also contained a provision that allowed Thacker to accelerate the balance due on the monetary award if Hale missed any of the payments.  Paragraph 11(d) of the judgment provided:

“In the event of [Hale’s] default in making any of the above payments when due on account of this monetary award, at [Thacker’s] election, the entire balance outstanding on account of the aforesaid monetary award shall become immediately due and payable by [Hale] to [Thacker][.]”

Within 30 days after November 17, 1988, Hale moved to alter or amend the judgment, but Hale’s motion did not challenge the acceleration clause.  As a result of Hale’s motion, the monetary award was reduced by the court to $3,657,752, of which $2,725,000 was to be paid in annual installments of $136,250 for 20 years.  The court expressly ratified and confirmed all of the other provisions of its judgment,  including the acceleration clause. The amended judgment was entered on December 16, 1988. Neither party appealed the December 16, 1988 judgment.

Nearly twelve years after the judgment for divorce became final, on November 27, 2000, Thacker filed a motion to accelerate the unpaid balance of the monetary award, which she alleged to be $1,271,666.45.  Thacker alleged that Hale never paid the annual payments by the December 31 deadline as required by the judgment.  Rather, he made partial payments, sometimes spreading the partial payments out until the May following the December 31 due date.  She alleged that the payment due December 31, 1999, had not been paid in full, and that $45,416.66 remained due and owing. Thacker further alleged that Hale withheld payment in order to coerce her into accepting a cash settlement of all of Hale’s obligations for alimony and the monetary award.

Hale opposed Thacker’s motion and, for the first time since the judgment for divorce, argued that the court did not have the authority under the Maryland Marital Property Act to enter judgment for a monetary award which included an acceleration clause.  Hale argued that the acceleration clause was “if not a total nullity, at least an ‘irregularity’ within the meaning of Rule 2-535(b)”.

Hale then made all of the payments due through December 31, 2000, and on February 28, 2001, filed a motion to revise the judgment of divorce entered some 12 years earlier by deleting the acceleration clause.

The lower court agreed with Hale, and entered an order stating that because the acceleration clause was “not a device permitted by the Family Law Article, it ought not to have been included in the Judgment of Divorce.  Accordingly, the [c]ourt also finds it to be an irregularity and thus subject to attack by [Hale] under Rule 2-535, albeit more than 30 days after entry of the Judgment. . . . Even if this [c]ourt’s interpretation of Rule 2-535 is deemed erroneous, the acceleration clause is essentially a nullity. . . .”

Thacker filed an appeal to the Court of Special Appeals.

On appeal, Hale argued that the acceleration clause is an impermissible penalty and that acceleration would unjustly enrich Thacker by some $270,000.  Thacker, on the other hand, argued that the acceleration clause was an integral part of the payment plan ordered, and that Hale was the one who received a windfall when the court allowed him to spread out payment of the monetary award over 20 years without interest.  Thacker pointed out that the amount of the monetary award was based on the value of the marital property at the time of divorce in 1988.

The Court of Special Appeals of Maryland began its opinion by saying that it would not decide the validity of an acceleration clause, but would assume, without deciding, that it was error to include the acceleration clause in the divorce judgment.  The Court then held, for the several reasons set forth below, that the circuit court had no authority to revise the judgment twelve years after it was enrolled.

Maryland Rule 2-535 sets forth specific grounds upon which a court can revise a judgment after 30 days have expired.  On the motion of any party filed at any time, a court may exercise revisory power and control over a judgment “in case of fraud, mistake or irregularity.” 

The Maryland courts have generally refused to exercise revisory power over judgments “that have been called into question on their merits, rather than on the basis of questionable procedural provenance. The Court has refused to characterize challenges to the substance of judgments that were obtained through appropriate procedures as ‘irregularities.’” The Court defined “irregularity” as “a failure to follow required process or procedure.” Reviewing numerous cases interpreting Rule 2-535, the Court stated:

“The common teaching of these cases is that if the judgment under attack was entered in conformity with the practice and procedures commonly used by the court that entered it, there is no irregularity justifying the exercise of revisory powers under Rule 2-535(b).”

The Court concluded that the assumed erroneous inclusion of an acceleration clause in an enrolled judgment was not an “irregularity” within the meaning of Rule 2-535. The Court stated: “To the extent that McClayton [v. McClayton, 68 Md. App. 615 (1986),] may be construed to stand for the proposition that the erroneous inclusion of an impermissible term in the monetary award provisions of a divorce judgment is an ‘irregularity,’ we conclude that [McClayton] is wrong.”

The Court also rejected Hale’s argument that the acceleration clause was a “jurisdictional error.” Further, the Court ruled that Hale had not acted with “ordinary diligence” in waiting twelve years to challenge the acceleration clause. The judgment of the circuit court was reversed, and the case was remanded for further proceedings.

Sheila F. Thacker v. Edwin F. Hale, Sr., No. 0532, September Term 2001, in the Court of Special Appeals of Maryland, filed May 2, 2002.

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