Pomroy v. Indian Acres Club of Chspke. Bay

CourtListener 6444938MdctspecappFeb 23, 2022

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Catherine M. Pomroy, et al. v. Indian Acres Club of Chesapeake Bay, Inc., No. 386,
Sept. Term 2021. Opinion by Arthur, J.

CIVIL PROCEDURE – DEFAULT JUDGMENT

Where the circuit court issues an order of default at the plaintiff’s request and denies a
defendant’s motion to vacate the order of default, and the plaintiff subsequently files an
amended complaint that asserts a new or additional claim for relief, the court may not
enter a default judgment with respect to the amended complaint solely on account of the
defendant’s failure to file a timely response to the original complaint.

Under those circumstances, the court may enter a default judgment with respect to the
amended complaint only after: the plaintiff has sought and obtained an order of default as
to the amended complaint; the court has denied a motion to vacate the order of default as
to the amended complaint, or the defendant has failed to file a timely motion to vacate
that order of default; and the plaintiff has requested the entry of a default judgment as to
the amended complaint.
Circuit Court for Cecil County
Case No. C-07-CV-20-000222

REPORTED

IN THE COURT OF SPECIAL APPEALS

OF MARYLAND

No. 386

September Term, 2021

CATHERINE M. POMROY, ET AL.

v.

INDIAN ACRES CLUB OF CHESAPEAKE
BAY, INC.

Fader, C.J.,
Arthur,
Battaglia, Lynne A.
(Senior Judge, Specially Assigned),

JJ.

Opinion by Arthur, J.

Filed: February 23, 2022

Pursuant to Maryland Uniform Electronic Legal
Materials Act
(§§ 10-1601 et seq. of the State Government Article) this document is authentic.

2022-02-24
08:33-05:00

Suzanne C. Johnson, Clerk
Under Maryland law, a number of events must occur before a court may enter a

default judgment. First, the plaintiff must serve the defendant with the complaint and a

summons. If the defendant fails to file a timely response, the plaintiff must request an

“order of default.” Md. Rule 2-613(b). The clerk must send notice of the order of default

to the defendant (Md. Rule 2-613(c)), who has 30 days from the entry of the order to

move to vacate the order of default by explaining the reasons for the failure to plead and

the legal and factual bases for any defenses. Md. Rule 2-613(d). The court must grant a

motion to vacate an order of default if it “finds that there is a substantial and sufficient

basis for an actual controversy as to the merits of the action and that it is equitable to

excuse the failure to plead.” Md. Rule 2-613(e). If, however, the court is unpersuaded

that “there is a substantial and sufficient basis for an actual controversy as to the merits of

the action and that it is equitable to excuse the failure to plead,” it may deny the motion

to vacate. If the court denies the motion to vacate, or if the defendant fails to move to

vacate the order of default, the court may, upon request, enter a default judgment. Md.

Rule 2-613(f).

This case presents a novel question concerning the procedure for obtaining default

judgments. Here, a court denied the defendants’ motion to vacate an order of default as

to the original complaint, but the plaintiff had amended the complaint to add new

substantive allegations while the motion to vacate was pending. In these circumstances,

if the defendant fails to file a timely response to the amended complaint, may the court

proceed to enter a default judgment on the amended complaint? Or may the court enter a

default judgment on the amended complaint only after the defendants have failed to file a
timely response to the amended complaint, the plaintiff has obtained a second order of

default, and the court has declined to vacate the second order of default?

For the reasons stated herein, we shall hold that, where the plaintiff files an

amended complaint with new or additional substantive allegations, a court may not enter

a default judgment on account of the defendants’ failure to file a timely response to the

original complaint. Instead, the court, in those circumstances, may enter a default

judgment only after the plaintiff has sought and obtained an order of default as to the

amended complaint; the court has denied a motion to vacate the order of default as to the

amended complaint, or the defendant has failed to file a timely motion to vacate that

order of default; and the plaintiff has requested the entry of a default judgment as to the

amended complaint.

BACKGROUND

Plaintiff Indian Acres Club of Chesapeake Bay, Inc. (“IAC”), operates a

campground in Earleville, Maryland. Defendants Gerald and Catherine Pomroy allegedly

own one or more lots within the campground. IAC is responsible for collecting certain

dues and assessments associated with those lots.

On June 18, 2020, IAC filed a complaint against the Pomroys in the Circuit Court

for Cecil County. IAC alleged that the Pomroys had failed to pay $15,285.21 in charges

that had come due between September 30, 2017, and January 31, 2020.

On September 19, 2020, IAC served a writ of summons and copy of the complaint

on Gerald Pomroy at the Pomroys’ last-known address in Pennsylvania. IAC claims to

have served Catherine Pomroy by delivering the writ and summons to her husband.

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The Pomroys did not file a timely answer.

On November 17, 2020, IAC filed a request for an order of default in accordance

with Maryland Rule 2-613(b).1 On January 6, 2021, the circuit court granted IAC’s

request and issued an order of default. On that same day, the clerk sent a notice of

default order to the Pomroys’ last-known address in accordance with Maryland Rule 2-

613(c). Under Maryland Rule 2-613(d), the Pomroys had 30 days to move to vacate the

order of default by stating the reasons for their failure to plead and the legal and factual

bases for their defense.

On February 2, 2021, before the expiration of the 30-day period in which the

Pomroys could move to vacate the order of default, IAC filed an amended complaint. In

the amended complaint, IAC claimed that, in addition to failing to pay the fees for the

time period set forth in the original complaint, the Pomroys had also failed to pay

additional fees that were assessed on October 1, 2020, after the filing of the original

complaint. IAC amended the relief sought from $15,285.21 to $22,078.88 to reflect the

additional fees that the Pomroys had allegedly failed to pay after the filing of the original

complaint.

Under Rule 1-321(c)(1), “a pleading asserting a new or additional claim for relief

against the party shall be served in accordance with the rules for service of original

1
The motion for an order of default was technically premature. The Pomroys
were served (or in Ms. Pomroy’s case, allegedly served) in Pennsylvania on September
19, 2020. Consequently, they had 60 days from the date of service in which to respond to
the complaint. Md. Rule 2-321(b)(1). Because IAC claims to have served the Pomroys
on September 19, 2021, the 60 days did not run until November 18, 2021, the day after
IAC requested the order of default.

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process.” In the certificate of service for the amended complaint, IAC represented that it

had sent the pleading by first-class mail, postage prepaid, to the Pomroys at their

residence in Pennsylvania, but that it would also serve the amended complaint “in

accordance with the rules for service of original process.”

On February 5, 2021, the Pomroys filed a timely motion to set aside the order of

default. They argued, among other things, that the fees had been improperly assessed.

Ms. Pomroy also argued that she had not been properly served because she had separated

from her husband in December 2019 and had moved to New Jersey.

On March 1, 2021, the court denied the Pomroys’ motion. At the time when the

court denied the motion, IAC had not yet personally served the Pomroys with the

amended complaint.

IAC personally served Mr. Pomroy with a copy of the amended complaint and the

supporting documents on March 30, 2021. As before, IAC claims to have personally

served the amended complaint on Ms. Pomroy by serving her husband.

Mr. Pomroy had 15 days from service in which to respond to the amended

complaint. Md. Rule 2-341(a). If service on Mr. Pomroy was effective as service on his

wife, she too had 15 days in which to respond. Id.

On April 16, 2021, two days after a response to the amended complaint was due,

IAC filed a request for the entry of a default judgment. IAC claimed that the Pomroys

had failed to file a responsive pleading to either the original complaint or the amended

complaint. It asked the court to enter a judgment and to award damages in the amount set

forth in the amended complaint ($22,078.88), plus reasonable attorneys’ fees.

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On May 2, 2021, the Pomroys filed an “Answer” to “Plaintiff’s complaint.” In

that pleading, the Pomroys generally denied IAC’s allegations and set forth various

affirmative and negative defenses.

On that same day, the Pomroys filed a timely response to IAC’s request for a

default judgment. In the response, they argued, among other things, that IAC was not

entitled to a default judgment because the circuit court had yet to issue an order of default

on the amended complaint.

On May 18, 2021, the circuit court granted IAC’s request for a default judgment.

In so doing, the court entered a money judgment in favor of IAC and against the Pomroys

in the amount of $22,078.88, the sum requested in the amended complaint. The court

also awarded IAC attorneys’ fees and costs totaling $1,453.00. This timely appeal

followed.

QUESTIONS PRESENTED

In this appeal, the Pomroys present two questions:

1. Did the circuit court err in granting IAC’s request for a default judgment
where there had been no preceding order of default on the amended
complaint?

2. Did the circuit court err in refusing to set aside the default order as to
Catherine Pomroy on the grounds that Ms. Pomroy was not properly
served?

We shall hold that the circuit court erred in granting IAC’s request for a default

judgment without first issuing an order of default as to the amended complaint. For that

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reason, we shall reverse the court’s judgment and remand the case for further proceedings

consistent with this opinion.

In light of our disposition of the first issue, we need not reach the second.

DISCUSSION

Standard of Review

This case presents a pure question of law: whether a trial court has the power to

enter a default judgment on an amended complaint if the court has not issued an order of

default as to the amended complaint. We are as capable as the trial court to determine the

answer to that question. Consequently, we conduct a de novo review of the trial court’s

decision. See, e.g., Nesbit v. Gov’t Emps. Ins. Co., 382 Md. 65, 72 (2004) (citing Walter

v. Gunter, 367 Md. 386, 392 (2002)).2

2
IAC cites Scully v. Tauber, 138 Md. App. 423 (2001), for the proposition that we
should review the trial court’s decision for abuse of discretion. Scully is inapposite, as it
concerns a trial court’s discretion to enter a default judgment as a sanction for a discovery
violation, and not the entry of a default judgment under Rule 2-613. Id. at 430-31.
Although some decisions under Rule 2-613 do require the exercise of discretion – most
notably, the decision about whether to vacate an order of default in response to a
defendant’s explanation of the reasons for the failure to plead and the legal and factual
basis for the defense to the claim (see, e.g., Holly Hall Publications, Inc. v. County
Banking & Trust Co., 147 Md. App. 251, 263 (2002)) – this case does not involve any
such decision; it involves whether the court had the power to enter a default judgment as
to the amended complaint even though it had never issued an order of default as to that
complaint. A court does not have the discretion to take an action that it is not empowered
to take. See, e.g., Wilson-X v. Department of Human Resources, 403 Md. 667, 675
(2008) (“trial judges do not have discretion to apply inappropriate legal standards, even
when making decisions that are regarded as discretionary in nature”).

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Analysis

Maryland Rule 2-613(b) states that “[i]f the time for pleading has expired and a

defendant has failed to plead as provided by these rules, the court, on written request of

the plaintiff, shall enter an order of default.” “Promptly upon entry of an order of default,

the clerk shall issue a notice informing the defendant that the order of default has been

entered and that the defendant may move to vacate the order within 30 days after its

entry.” Md. Rule 2-613(c). If the defendant moves to vacate the order, the motion “shall

state the reasons for the failure to plead and the legal and factual basis for the defense to

the claim.” Md. Rule 2-613(d). If, upon the filing of such a motion, “the court finds that

there is a substantial and sufficient basis for an actual controversy as to the merits of the

action and that it is equitable to excuse the failure to plead, the court shall vacate the

order.” Md. Rule 2-613(e). If, on the other hand, the defendant filed no motion or the

court denied the defendant’s motion, “the court, upon request, may enter a judgment by

default that includes a determination as to the liability and all relief sought, if it is

satisfied (1) that it has jurisdiction to enter the judgment, and (2) that the notice required

by section (c) of this Rule was mailed.” Md. Rule 2-613(f).

Here, the Pomroys do not dispute that they failed to file a responsive pleading to

the original complaint (though Ms. Pomroy disputes whether she was properly served and

thus obligated to respond). Nor do the Pomroys dispute that the circuit court properly

issued an order of default, at least as to Mr. Pomroy, based on the failure to plead. They

claim, instead, that the filing of the amended complaint effectively nullified the order of

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default and prevented the court from issuing a default judgment without issuing a second

order of default on the amended complaint.

Rule 2-613 is silent as to the effect, if any, of an amended complaint on an order

of default, when that order was issued before the filing of the amended complaint and

was based on a party’s failure to file a responsive pleading to the original complaint.

Consequently, we must turn to other authority for guidance.

We begin with the principle that “[a]n amended complaint supersedes the initial

complaint, rendering the amended complaint the operative pleading.” Asphalt &

Concrete Services, Inc. v. Perry, 221 Md. App. 235, 267 (2015) (citing Gonzales v. Boas,

162 Md. App. 344, 355 (2005)); see also Mark Downs, Inc. v. McCormick Props., Inc.,

51 Md. App. 171, 181 n.3 (1982). “The amended complaint replaces the initial complaint

in its entirety, and the initial complaint is considered withdrawn.” Asphalt & Concrete

Services, Inc. v. Perry, 221 Md. App. at 267 (citing Shapiro v. Sherwood, 254 Md. 235,

238-39 (1969)); see also Abbott v. Forest Hill State Bank, 60 Md. App. 447, 453 (1984)

(filing of amended declaration had the effect of withdrawing previous declaration); Mark

Downs, Inc. v. McCormick Props., Inc., 51 Md. App. at 181 n.3 (“an amended complaint

replaces the earlier complaint in its entirety,” and “[t]he earlier complaint is regarded as

withdrawn or abandoned, and is no longer part of the complainant’s averments against

[the] adversary”).

A party must answer the original complaint within a specified period of time, see

Md. Rule 2-321, and the failure to do so is a “failure to plead” under Rule 2-613. See

Peay v. Barnett, 236 Md. App. 306, 317-18 (2018). The rule pertaining to amended

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complaints is, however, a bit different. If an amended complaint “introduces new facts or

varies the case in a material respect,” a defendant “who wishes to contest new facts or

allegations” must file a timely answer. Md. Rule 2-341(a). “If no new or additional

answer is filed within the time allowed, the answer,” if any, “previously filed shall be

treated as the answer to the amendment.” Id.

Maryland Rule 1-321, which governs the service of pleadings other than an

original pleading, echoes the distinction between an amendment that varies the case and

one that does not. In general, under Rule 1-321, the plaintiff need not serve an amended

complaint on a party who is in default for failure to appear. Md. Rule 1-321(c). If,

however, the amended complaint asserts “a new or additional claim for relief against the

party,” then the complaint “shall be served in accordance with the rules for service of

original process[.]” Md. Rule 1-321(c)(1).

The distinction between an amendment that asserts “a new or additional claim for

relief” and one that does not undoubtedly has its roots in basic principles of due process.

Due process dictates that a court cannot enter a judgment, by default or otherwise, unless

the defendant has notice of the allegations and a meaningful opportunity to contest them.

See, e.g., In re Easton, 214 Md. 176, 188 (1957) (citing Simon v. Craft, 182 U.S. 427,

436 (1901)); Superior Court v. Ricketts, 153 Md. App. 281, 336-37 (2003). By requiring

personal service of an amended complaint that asserts “a new or additional claim for

relief against the party,” even when the party is in default, Rule 1-321 ensures that the

party has notice of the new or additional claim and an opportunity to contest it.

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“‘[A] default judgment is not meant to be a punitive measure that penalizes a party

for breaching a procedural regulation.’” Holly Hall Publications, Inc. v. County Banking

and Trust Co., 147 Md. App. 251, 262 (2002) (quoting Royal Ins. Co. of America v. Miles

& Stockbridge, P.C., 133 F. Supp. 2d 747, 768 (D. Md. 2001)). Rather, “a default

judgment is considered more akin to an admission of liability than to a punitive

sanction.” Curry v. Hillcrest Clinic, Inc., 337 Md. 412, 434 (1995). A judgment of

default is permitted only if a motion to vacate an order of default is not filed or, if filed, is

denied. Admiral Mortg., Inc. v. Cooper, 357 Md. 533, 539 (2000); see Md. Rule 2-

613(f). It is “clear error” to enter a judgment of default unless the court has denied a

motion to vacate an order of default or the defendant has failed to move to vacate the

order of default in the first place. See Admiral Mortg., Inc. v. Cooper, 357 Md. at 539.

From that summary, we infer the following principles. First, when a party files an

amended complaint, the original complaint is considered withdrawn, and the amended

complaint becomes the operative pleading. Second, when the amended complaint

introduces new facts, asserts new or additional claims for relief, or materially varies the

case, the amended complaint is treated like an original complaint, particularly when the

adverse party is in default. Finally, a court cannot issue a default judgment pursuant to

Rule 2-613(f) without first issuing an order of default and giving the defaulting party an

opportunity to vacate that order. The failure to abide by the procedures set forth in Rule

2-613 is reversible error.

Applying these principles, we hold that the circuit court erred in granting IAC’s

request for a default judgment without issuing an order of default after the filing of IAC’s

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amended complaint. When IAC filed the amended complaint, it became the operative

complaint, and the original complaint was withdrawn. Consequently, the existing order

of default became a legal nullity, as the claims in the original complaint had been

abandoned in favor of the amended complaint. An order of default loses its legal

foundation when the plaintiff withdraws the complaint to which the defendant failed to

file a timely answer.

Moreover, because the amended complaint asserted a new and additional claim for

relief (namely, that the Pomroys had breached their obligation to pay an additional charge

that came due only after the original complaint), IAC was required to serve the Pomroys

in accordance with the rules for service of original process (Md. Rule 1-321(c)(1)), which

it did (at least as to Mr. Pomroy) on March 30, 2021. Once they were served, the

Pomroys were required to file a timely responsive pleading in the event that they

contested the new allegations. They failed to do so, and that failure was (at least for Mr.

Pomroy) a “failure to plead,” which triggered the strictures of Rule 2-613. At that point,

if IAC intended to pursue its remedies under Rule 2-613, it was required to request a new

order of default and to allow the Pomroys an opportunity to move to vacate the new order

of default. See Armiger Volunteer Fire Co., Inc. v. Woomer, 123 Md. App. 580, 590

(1998) (noting that one of the purposes of Rule 2-613 “is to afford a defendant in default

a second opportunity to respond and, if armed with sufficient facts to excuse the initial

failure to answer and to defend the merits of the claim against it, an opportunity to vacate

the order of default”). Instead, however, IAC skipped several steps by asking the court to

proceed directly to the entry of a default judgment on the amended complaint. The court

11
erred by absolving IAC of its obligation to request an order of default as to the amended

complaint and by entering a default judgment on the claims in the amended complaint,

including the claim that the Pomroys had breached an obligation to pay a charge that

came due only after IAC filed the original complaint.

IAC argues that the circuit court properly entered the judgment of default based on

the original order of default. IAC claims that the amended complaint had no effect on the

order of default because, it says, the amended complaint “did not contain any new or

additional claims for relief,” but simply “updated [the] amount owed by [the Pomroys].”

IAC also claims that, “while the verified amended complaint became the controlling

pleading for purposes of money damages sought by [IAC] in this action, the mere filing

of an amended pleading does not operate to undo or render meaningless the circuit

court’s prior orders.” IAC asserts that the Pomroys “attempted to use [the] filing of a

Verified Amended Complaint – which did not substantively alter a single allegation or

claim, other than to update the amounts owed by [the Pomroys] – as an opportunity to

‘resurrect’ their ability to participate in this case[.]”

We are unpersuaded. To begin with, it is untrue that the amended complaint

contains no new or additional claims for relief. Nor is it true that the amended complaint

“did not substantively alter a single allegation or claim.” In the original complaint, IAC

alleged that the Pomroys had failed to pay $15,285.21 in charges that came due between

September 30, 2017, and January 31, 2020. In the amended complaint, IAC claimed that

the Pomroys had failed to pay an additional $6,793.67 in charges that came due on

October 1, 2021, after the filing of the original complaint. Thus, in filing the amended

12
complaint, IAC was not simply “updat[ing]” the amount of relief in relation to the claims

raised in the original complaint. Instead, IAC was alleging that, in addition to breaching

their obligation to pay the fees and assessments that came due between September 30,

2017, and January 31, 2020 (as set forth in the original complaint), the Pomroys had

committed a new and additional breach by failing to pay the charges that came due on

October 1, 2020. The allegation of a new and additional breach was, without question, an

additional claim for relief, which the Pomroys had a right to contest. IAC itself seems to

have recognized as much when it undertook to personally serve the amended complaint

on the Pomroys in accordance with Rule 1-321(c)(1), which requires personal service of

an amended complaint that asserts “a new or additional claim for relief.”

We likewise disagree with IAC’s claim that the amended complaint had no effect

on the existing order of default. As previously discussed, an original complaint is

considered withdrawn when an amended complaint is filed. It follows that an order of

default based on the original complaint would also be withdrawn, particularly where, as

here, the amended complaint raises a new claim for relief.

IAC argues that because the Pomroys challenged the order of default as to the

original complaint, they cannot take “the inconsistent position that the Order of Default

was voided by the Verified Amended Complaint.” That argument, too, has no merit.

The Pomroys filed their timely motion to vacate the order of default on February 5, 2021,

just three days after IAC had filed its amended complaint and mailed it to their last-

known address. Thus, it is unclear whether either or both of the Pomroys even knew of

the amended complaint when they moved to vacate the order of default as to the original

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complaint. Moreover, IAC does not claim to have personally served the Pomroys with a

copy of the amended complaint until March 30, 2001, almost a month after the circuit

court denied their motion to vacate the order of default on March 1, 2001. The Pomroys

cannot be expected to make an argument about the effect of the amended complaint long

before they were served (or, in Ms. Pomroy’s case, allegedly served) with it.

IAC cites Gonzales v. Boas, 162 Md. App. 344 (2005), and Pharmaceia Eni

Diagnostics, Inc. v. Washington Suburban Sanitary Comm’n, 85 Md. App. 555 (1991),

for the proposition that “in other contexts” an amended pleading “should not operate to

resurrect a party’s previously-extinguished rights.” (Emphasis in original.) Those cases

do not alter our analysis.

In Pharmaceia Eni Diagnostics, Inc. v. Washington Suburban Sanitary Comm’n,

85 Md. App. 555 (1991), this Court considered a plaintiff’s right to voluntarily dismiss a

defendant without leave of court before the defendant has filed an answer. See Md. Rule

2-506(a)(1). In Pharmaceia the plaintiff claimed that it could voluntarily dismiss a

defendant without leave of court after it filed its amended complaint but before any

parties had responded. Id. at 563. In other words, the plaintiff claimed that “an amended

complaint can resurrect a plaintiff’s right unilaterally to dismiss an action until the

defendant responds to the amended complaint.” Id. This Court disagreed on the ground

that the plaintiff’s position “would defeat the purpose of the limitation on unilateral

dismissals in Rule 2-506(a) in that any time a plaintiff wanted to dismiss an action after

the defendant had filed an answer, he could simply file an amended complaint and a

Notice of Dismissal.” Id.

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In Gonzales v. Boas, 162 Md. App. 344 (2005), this Court considered the deadline

for responding to requests for admissions under Rule 2-424(b), which states that “[e]ach

matter of which an admission is requested shall be deemed admitted unless, within 30

days after service of the request or within 15 days after the date on which that party’s

initial pleading or motion is required, whichever is later, the party to whom the request is

directed serves a response signed by the party or the party’s attorney.” In Gonzales, 162

Md. App. at 355, the trial court had dismissed the plaintiff’s complaint, but had given her

leave to amend. Thus, she argued that she was not obligated to respond to the

defendant’s requests for admissions until 15 days after she had filed her amended

complaint. Id. This Court disagreed, reasoning that the filing of an amended complaint

“does not start the running of time anew for purposes of a response to a request for

admission.” Id. In support of the decision, we cited Pharmaceia for the proposition that

“allowing the filing of an amended complaint to resurrect certain rights which were

already lost would defeat the purpose of the limitations established in the rules.” Id.

Neither Gonzales nor Pharmaceia has any bearing on the analysis in this case.

Here, we are not concerned with whether a plaintiff can use an amended complaint as a

ploy to resurrect a right that has been extinguished. We are concerned with whether a

plaintiff can obtain a default judgment on an amended complaint before it has moved for

an order of default on the amended complaint and before the court has declined to vacate

that order of default. In the circumstances of this case, where the amended complaint

asserts a new or additional claim for relief, we hold that the court may not enter a default

15
judgment on the amended complaint before the plaintiff has moved for an order of default

on the amended complaint and the court has declined to vacate that order of default.

In sum, the circuit court erred in entering the default judgment without first issuing

an order of default on the amended complaint. We therefore reverse the court’s judgment

and remand for further proceedings. If, on remand, IAC wishes to pursue a default

judgment on the amended complaint, it must request an order of default pursuant to Rule

2-613(b). Upon the filing of such a request, the court should move forward in accordance

with the procedures set forth in Rule 2-613.

JUDGMENT OF THE CIRCUIT COURT
FOR CECIL COUNTY REVERSED; CASE
REMANDED TO THAT COURT FOR
FURTHER PROCEEDINGS CONSISTENT
WITH THIS OPINION; COSTS TO BE
PAID BY APPELLEE.

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