Social security survivor benefits
BOTTOM LINE: City department of social services, which was appointed representative payee of child’s social security survivor benefits, did not abuse discretion by using paid benefits to cover cost of child’s foster care, because use of benefits by a representative payee to cover a beneficiary’s current maintenance costs is deemed to be a proper expenditure made in the interest of the beneficiary, and department was required only to exercise discretion to apply benefits among various current maintenance needs of the child and had no obligation to conserve or invest the benefits.
CASE: In re Ryan W., No. 1503, Sept. Term, 2011 (filed Nov. 21, 2012) (Judges EYLER, D., Woodward & Rodowsky (retired, specially assigned)). RecordFax No. 12-1121-01, 69 pages.
FACTS: This case concerned the right of a local department of social services acting as a representative payee for social security survivor benefits for a child committed to its care to use those benefits to reimburse itself for the cost of the child’s care. Ryan W. was born on February 26, 1993. In 2002, he was removed from his parents’ care, based upon allegations of neglect. Both of his parents were active drug addicts. On June 4, 2002, when he was 9 years old, Ryan was adjudicated a Child in Need of Assistance (“CINA”) by the circuit court acting as the Juvenile Court, and was committed to the care and custody of the Baltimore City Department of Social Services (“the Department”). Since that time, Ryan remained committed to the Department and lived in various out-of-home, non-relative placements.
Ryan’s mother died in August 2006. In November 2008, his father died. In April 2009, Nathan Exom became the Department caseworker assigned to Ryan. In June of 2009, Exom provided copies of Ryan’s parents’ death certificates to the Department’s Foster Care & SSI Reimbursement Unit. In November 2009, the Reimbursement Unit applied to the Social Security Administration (“SSA”) for Social Security Old Age, Survivor, and Disability Insurance (“OASDI”) benefits on Ryan’s behalf and asked to be appointed as his representative payee. Ryan’s application was approved by the SSA, which appointed the Department to serve as his representative payee.
From December 2009 until February 2011, when Ryan turned 18, the Department received monthly OASDI benefits on Ryan’s behalf. Over the entire time that the Department acted as Ryan’s representative payee, it received a total of $31,693.50 in OASDI benefits (lump sum and monthly) on his behalf. The Department applied all of those benefits to reimburse itself for a portion of the direct cost of foster care services it paid on Ryan’s behalf over a three-and-a-half-year period. By the end of that period, the direct costs of foster care services for Ryan totaled $233,305.
After the benefits were paid, Ryan filed a motion to control conduct in his Child In Need of Assistance (“CINA”) case, in the circuit court, challenging the Department’s application of his OASDI benefits. In the motion, Ryan asked the Juvenile Court to order the Department to “conserve” in a trust account the entire $31,693 in OASDI benefits it had received, to be used for his benefit when he left foster care. Following two hearings, the Juvenile Court ruled that the Department had violated Ryan’s due process and equal protection rights by applying the OASDI benefits it had received on his behalf as it did. The court granted the relief sought by Ryan, ordering the Department to place in a trust account, subject to court supervision, the full $31,693 in OASDI benefits it had received as Ryan’s representative payee.
The Department appealed to the Court of Special Appeals. In the proceedings below, counsel for the Department conceded that $8,075 in OASDI benefits that it received for Ryan should not have been used for the cost of Ryan’s care, and had to be reimbursed by the Department to Ryan’s Foster Care Trust Account. During the pendency of this appeal, in December 2011, the Department deposited $7,478 into Ryan’s Foster Care Trust Account, to make up for the sum the Department had conceded it should not have used to reimburse itself for the cost of Ryan’s care. Ryan moved to dismiss the appeal, arguing that the Department’s filing was untimely.
The Court of Special Appeals denied the motion to dismiss, reversed the order of the Juvenile Court, and directed the Juvenile Court to order the Department to deposit $660 in Ryan’s Foster Care Trust Account.
LAW: The primary question was whether the Department lawfully applied for and used Ryan’s OASDI benefits for the cost of his foster care. Title II of the Social Security Act, 42 U.S.C. 401 et seq., establishes the framework for OASDI, which is a cash benefit paid to elderly and disabled workers, and their survivors and dependents. This case concerned only OASDI survivor’s benefits. An unmarried child under the age of 18 who is a surviving dependent of a deceased parent is entitled to receive OASDI benefits if the deceased parent earned sufficient work credits during his or her lifetime. 42 U.S.C. §402(d). The amount of the child’s benefit is based on the earnings of the deceased parent. Id.
While OASDI benefits are ordinarily paid directly to the beneficiary, the SSA may pay the benefits to a representative payee if doing so will serve the interests of the beneficiary. 42 U.S.C. 405(j)(l)(A). Generally, when a beneficiary is under the age of 18, the SSA pays OASDI benefits to a representative payee. 20 C.F.R. 404.2010(b). SSA regulations provide that the SSA shall choose a representative payee who will best serve the interests of the beneficiary, and the regulations establish an order of priority for selection of a representative payee for a minor child, beginning with a natural or adoptive parent who has custody of the beneficiary, and ending with an authorized social agency or custodial institution. 20 C.F.R. 404-2021(c).
Once the SSA has selected a representative payee, it notifies the beneficiary in writing prior to issuance of the first benefit payment. 42 U.S.C. 405(j)(2)(E)(ii). When the beneficiary is a minor child, however, the notice is directed to the child’s legal guardian or legal representative. Id. The notice advises the beneficiary that he or she has a right to appeal the determination that representative payment is necessary and designation of the particular representative payee. Id.
The responsibilities of a representative payee are delineated by 20 C.F.R. 404.2035, which provides that a representative payee shall use the benefits received on behalf of a beneficiary only for the beneficiary’s use and benefit in a manner and for the purposes he or she determines to be in the beneficiary’s best interests. 20 C.F.R. 404.2035(a). Pursuant to 20 C.F.R. 404.2040(a), payments made by a representative payee are for the “use and benefit” of the beneficiary if the benefits are “used for the beneficiary’s current maintenance.” Current maintenance includes cost incurred in obtaining food, shelter, clothing, medical care, and personal comfort items. Id.
The regulation further provides that, when a beneficiary is institutionalized because of a mental or physical incapacity, the “customary charges” of the institution may constitute “current maintenance.” Id. at (b). Expenditures for costs falling outside of those customary charges also would be allowed, however, even if the benefits would not otherwise cover the cost of the institution’s charges. Finally, the regulation provides that a representative payee may not be required to use benefits to cover a debt of a beneficiary that arose prior to the date on which an OASDI payment was certified to the beneficiary. Id. at (d). For example, if a beneficiary receives a lump sum retroactive benefit payment certified in 2010, and that beneficiary had an outstanding bill for costs incurred in a nursing home in 2009, the representative payee must first ensure that the beneficiary’s current maintenance needs are met. If those needs are met and excess benefits remain, the representative payee can use the lump sum benefit or a part of it to pay the outstanding bill. After a representative payee has provided for the beneficiary’s current maintenance and other permissible uses, any remaining amount shall be conserved or invested on behalf of the beneficiary. 20 C.F.R. 404.2045(a).
Important to the analysis in the present case was the holding in Conaway v. Social Services Administration, 298 Md. 639 (1984). In that case, the Court of Appeals considered “whether the Baltimore City Department of Social Services may use federal benefits conserved for a foster child as reimbursement for the cost of past care.” Id. at 640. The Court answered the question in the negative. Also relevant was Ecolono v. Division of Reimbursement of DHMH, 137 Md. App. 639 (2001), in which the Court of Appeals considered whether the Department of Health and Mental Hygiene (“DHMH”) violated state or federal law when, as representative payee for a patient committed to a state hospital, it used the patient’s social security benefits to reimburse itself for the cost of the patient’s care.
In Ecolono, the patient, Ecolono, was committed to a state hospital for one year and three months. During his commitment, a financial agent supervisor for the DHMH Division of Reimbursements applied to SSA to have the Secretary of DHMH be appointed representative payee for Ecolono for purposes of receiving social security disability benefits on his behalf. The application was approved and, in February 1996, less than two months before Ecolono’s release, the DHMH received a lump sum back-payment of $17,155.40. The Division of Reimbursement calculated the eligible amount expended or to be expended for Ecolono’s care for the months of February and March of 1996 and applied the benefits to the cost of care. Ecolono received $2,580 in excess above that amount.
Subsequently, Ecolono challenged the application of his benefits to the cost of his care. The administrative law judge (“ALJ”) concluded that, under state law, Ecolono was primarily responsible for the cost of his care and that DHMH did not violate state or federal law by using his benefits to reimburse itself for those costs. The circuit court affirmed that decision on judicial review. On appeal to the Court of Special Appeals, Ecolono argued that DHMH had a fiduciary duty to use social security benefits received on behalf of patients in their best interests and that it had breached that duty to him by failing to consider his discharge needs.
With regard to the argument that the DHMH had a fiduciary duty to use Ecolono’s benefits in his best interests, and had breached that duty, the Ecolono Court concluded that the application of social security benefits to current maintenance is regarded by the SSA as being in the best interest of the beneficiary, and that the services rendered by the hospital qualified as current maintenance expenses. Id. at 655. The Court noted that the ALJ concluded that the representative payee fulfilled its duty by applying the benefits to appellant’s charges for current maintenance, a federally approved expenditure. The Court found, however, that the Secretary of DHMH failed to satisfy its duty to exercise discretion, and for this reason, the lower court’s decision was reversed and remanded.
Here, it was plain that the Department acted in compliance with the Social Security Act and the regulations thereto when it applied with the SSA to be representative payee for Ryan and, upon its application being granted, used the benefits received on Ryan’s behalf to cover the cost of his current maintenance in foster care. When Ryan’s parents died, he was under age 18 and did not meet the necessary criteria to receive OASDI benefits directly. 20 C.F.R §404.2010(b). Therefore, he could receive OASDI benefits only through a representative payee. The federal regulations permit a local department of social services to act as a representative payee when, as here, no other alternative is available. 20 C.F.R. §404.2021(c).
As Ryan’s representative payee, the Department, like any other representative payee, was obligated to apply the OASDI benefits received for Ryan first to cover the cost of his current maintenance. 20 C.F.R. §404.2040. Those costs include food, shelter, clothing, medical care, and personal comfort items. Id. During the time the Department was acting as Ryan’s representative payee, it was receiving $771 per month in OASDI benefits on his behalf. Exom testified that the Department reimbursed the group homes that were providing food, clothing, and shelter to Ryan between $5,000 and $6,000 a month, a sum that far exceeded the monthly OASDI benefit amount. After paying the $771 monthly OASDI benefit for Ryan’s current maintenance, no excess remained. Accordingly, the Department was not under an obligation to “conserve or invest” any of Ryan’s monthly OASDI benefits. See 20 C.F.R. §404.2045(a). This conclusion was supported by the holdings in Keffeler II, 537 U.S. 371, 375 (2003), and Conaway, supra.
As Ryan pointed out, the Ecolono Court held that the State’s failure to exercise any discretion before it applied a portion of his social security benefits to the cost of his care was impermissible, and remanded for discretion to be exercised. However, the Ecolono Court emphasized that had the State exercised discretion to do precisely what it did (use the funds to cover the cost of care), no abuse would have been found. In the present case, the Juvenile Court did not find that the Department failed to apply the benefits to meet Ryan’s needs; rather, the Juvenile Court concluded that it would have been in Ryan’s best interests to instead conserve those funds for his future use. However, as discussed, use of benefits by a representative payee to cover a beneficiary’s current maintenance costs is deemed to be a proper expenditure made in the interest of the beneficiary. See 20 C.F.R. 404.2040(a). Thus, the discretion that must be exercised is the discretion to apply benefits among the various current maintenance needs of the child, not the discretion to use or conserve the benefits.
Moreover, unlike in Ecolono, where the beneficiary patient’s release from State custody was imminent at the time the State received a lump sum benefit payment on his behalf and applied the payment toward the cost of care, in the present case the Department began receiving OASDI benefits on Ryan’s behalf when he was 16 years old, a full five years before he would age out of the system, and ceased receiving them on his behalf when he turned 18. During that time, the Department expended between $5,000 and $6,000 per month on Ryan’s care – an amount far exceeding the monthly OASDI benefit – and constantly exercised discretion with respect to the appropriate placements and services for him. There was ample evidence that the Department provided intensive services for Ryan during his commitment, including 24-hour therapeutic and non-therapeutic supervision and care in group homes, drug treatment, food, clothing, summer school, and tutoring. As Ryan’s benefits never exceeded the cost of his current maintenance expenses, the benefits were properly expended under federal and state law.
Ryan’s equal protection argument was likewise unpersuasive. Ryan’s argument, accepted by the Juvenile Court, was that the Department’s practice of applying to become representative payee of last resort for foster children and then using their social security benefits to reimburse itself for the cost of the children’s care violated his equal protection rights because this practice had the effect of creating two distinct classes of foster children receiving social security benefits: those with a private representative payee and those with a Department representative payee. Given the Department’s acknowledgment that it did not seek reimbursement from private representative payees for the cost of foster children’s care, the Juvenile Court concluded that a foster child with a private representative payee would be able to conserve his or her social security benefits, rather than having those benefits applied to the cost of the child’s foster care services. According to the Juvenile Court, this constituted discriminatory treatment in violation of the equal protection clause of the 14th Amendment of the Federal constitution and Article 24 of the Maryland Declaration of Rights.
However, this identical argument was presented to and rejected by the Washington Supreme Court in Keffeler III, 88 P.3d 949 (Wash. 2004), and the reasoning employed there was persuasive. The Keffeler III court concluded that the identity of the representative payee for a foster child who is receiving social security benefits does not have the effect of creating two distinct classes of foster children beneficiaries, because “there are not two groups of foster children but one group: all foster children receiving social security benefits with appointed representative payees,” and because “all representative payees must use the benefits according to state and federal laws and regulations.” Keffeler III, 88 P.3d at 953.
Moreover, even if the Department’s practice of reimbursement effectively created two classes of foster children (which it did not), the practice would nonetheless be constitutional because the Department’s practice plainly had a rational basis in that it comported with federal regulations governing the use of social security benefits by a representative payee and with state regulations that require that all of a foster child’s resources are to be used, first and foremost, to cover his or her cost of care. These practices serve the legitimate governmental purpose of decreasing a state’s costs associated with foster care. Therefore, the Department’s practice of using the OASDI funds to reimburse itself for the cost of Ryan’s current maintenance did not run afoul of the Equal Protection Clause.
The Juvenile Court also concluded that the Department’s failure to notify Ryan’s CINA attorney of its appointment as Ryan’s representative payee and/or of its receipt of benefits on Ryan’s behalf deprived Ryan of due process of law. The Juvenile Court acknowledged that Ryan, an unemancipated minor when the payments started, appeared to fall into one of the notice exceptions under the statute, but nevertheless concluded that the Department had an independent obligation to give notice of its appointment as Ryan’s representative payee to his CINA counsel. However, the SSA statute and regulations require notice either to a minor’s “legal guardian” or to a “legal representative.” The Commissioner provided notice to the Department, which was Ryan’s legal guardian, thereby fulfilling the applicable requirement. As such, there was no due process violation.
For these reasons, the judgment of the Juvenile Court was reversed, and the case remanded to the circuit court, sitting as the Juvenile Court, with directions to enter an order directing the Department to deposit in Ryan’s foster care trust account $660 in reimbursement of OASDI benefits received by the Department as representative payee.
COMMENTARY: The Department advanced an alternative contention that the Juvenile Court lacked the authority to supervise the Department’s actions as Ryan’s representative payee and to fashion an equitable remedy to address the assertedly improper use of Ryan’s benefits.
The Juvenile Court is not, as Ryan argued, vested with broad equitable powers to supervise the Department when it is acting in its role as representative payee for foster children committed to its care. The juvenile courts are statutorily created courts of limited jurisdiction that may exercise only those powers expressly designated by statute. Smith v. State, 399 Md. 565, 574 (2007). The vehicle for relief that was used in this case – a motion to control conduct – is not a means by which a Juvenile Court may expand its statutorily enumerated powers. See CJP §3-821.
Therefore, even if it had not already been determined that such a remedy was not warranted under the facts of this case, it would nonetheless be concluded that the Juvenile Court exceeded its authority by imposing a constructive trust.
BOTTOM LINE: Where defense moved for mistrial based on prosecutor’s prejudicial remarks during closing arguments, circuit court did not err in denying defendants’ motion because the remarks were isolated and brief and did not warrant such drastic remedial action as mistrial.
CASE: Francis v. State, Nos. 908, 913, Sept. Term 2011 (filed Nov. 21, 2012) (Judges Zarnoch, MATRICCIANI & Moylan). RecordFax No. 12-1121-00, 28 pages.
FACTS: Tyrone Francis and Milton Smith, Appellants, were detectives in the Baltimore City Police Department, assigned to the “Violent Crimes Impact Division.” On May 4, 2009, they were on patrol with a third detective, Gregory Hellen, near Gilmore Homes public housing development. The detectives were wearing plain clothes and riding together in an unmarked blue van as an “overtime crime suppression detail” when they encountered Shawnquin Woodland and, after parting ways with him, encountered Michael Johnson, both of them fifteen-year-old area residents.
The details of these encounters were hotly contested, but it was undisputed that after driving around for some time with each of the young men, the detectives deposited Woodland in east Baltimore, approximately three miles from the Gilmore Homes, and deposited Johnson in Howard County, approximately ten miles west of the Gilmore Homes. Woodland walked the three miles back to his residence. In Howard County, Johnson called 911 from a gas station nearby, and at approximately 8:00 p.m., Officer Terrence Benn of the Howard County Police found Johnson where he had been left, wearing damp clothes without shoes or socks and appearing frightened.
Appellants were indicted on May 4, 2010, and charged with kidnapping, false imprisonment, assault, conspiracy, and misconduct in office. They and Hellen moved to sever all charges and all co-defendants, but the circuit court denied their motion and ruled that the evidence in all cases and all counts was mutually admissible. Appellants elected to be tried by jury while Hellen chose a bench trial, and the joint proceedings commenced on April 19, 2011.
Appellants objected to the court’s proposed misconduct instruction on the grounds that the crime of malfeasance includes only “unlawful” acts. The court denied Appellants’ objection and instructed the jury that the State had to prove that each appellant “corruptly did the unlawful or wrongful act” of transporting each victim against his will to a location not of his choosing.
In closing, the State called into question the defense’s theory that if a juvenile is a “confidential source,” an officer could take the juvenile to a remote location for questioning without parental permission. The State argued that a confidential source is someone who comes forward with information, and not “a person that you pick up off of the street and take wherever you want without their parent’s permission.” The State attempted to round out its argument with a rhetorical question: “Yet in their arrogance these Defendants suggest that because these kids live in — can you imagine this argument being made in Howard County or Baltimore County?” The court sustained the defense’s objection to this comment, without explanation.
The State immediately launched into another rhetorical question and asked, “Do you think if there was any legitimacy to [the defendants'] taking these 15-year-olds and dropping them off miles from their homes that [the defendants] would have been suspended without even.” Again, the defense interrupted with an objection and the court ordered the statement struck.
When the State concluded its argument, the defense moved for a mistrial and argued that the State’s first rhetorical question was an appeal to racism and bias. The defense also argued that the State’s second rhetorical question improperly suggested that the detectives’ suspension from work was a determination of wrongdoing. The court denied the motion for mistrial, holding that the State’s attorney was interrupted during its first question and thus “didn’t even make” the argument that the defense attributed to her. The court also held that having struck the State’s second question was a sufficient remedy and that it required no further action.
The jury acquitted Appellants of all counts except misconduct. The court sentenced each appellant to eighteen months of confinement, all suspended, and to eighteen months of probation.
Appellants appealed to the Court of Special Appeals, which affirmed.
LAW: Appellants argued that the circuit court erred when it denied their motions for mistrial on the grounds of improper and prejudicial remarks in the State’s closing argument.
As a general matter, counsel are afforded “great leeway” when presenting that portion of their case. Donaldson v. State, 416 Md. 467, 488 (2010). It is “within the range of legitimate argument for counsel to state and discuss the evidence and all reasonable and legitimate inferences which may be drawn from the facts in evidence; and such comment or argument is afforded a wide range. Counsel is free to use the testimony most favorable to his side of the argument to the jury, and the evidence may be examined, collated, sifted and treated in his own way. Moreover, if counsel does not make any statement of fact not fairly deducible from the evidence his argument is not improper, although the inferences discussed are illogical and erroneous. Generally, counsel has the right to make any comment or argument that is warranted by the evidence proved or inferences therefrom; the prosecuting attorney is as free to comment legitimately and to speak fully, although harshly, on the accused’s action and conduct if the evidence supports his comments, as is accused’s counsel to comment on the nature of the evidence and the character of witnesses which the [prosecution] produces.” Wilhelm v. State, 272 Md. 404, 412-13 (1974).
Despite this latitude, counsel may not comment upon facts not in evidence or appeal to the prejudices or passions of the jurors. Id. at 489. The Court will not reverse a conviction due to a ruling on a prosecutor’s improper remarks unless there has been an abuse of discretion by the trial judge of a character likely to have injured the complaining party; this is so if it appears that the remarks actually misled the jury or were likely to have misled or influenced the jury to the defendant’s prejudice. Id. at 496-97.
Therefore, the Court considers whether each remark was independently proper, then takes them together in light of the circumstances at trial to determine whether they justified a mistrial. Id. at 496-97.
Here, the State’s argument was a fair comment on the evidence. The defense, in closing, urged the jury to recall that Appellants had no adverse disciplinary history and, from that fact, infer that they had not actually committed any bad acts in the past. The State, in turn, asked the jury to consider that the dearth of evidence could also be explained by imperfections in the disciplinary process, and the State urged the jury to infer the opposite of appellant’s suggested fact.
Of course, neither side had any evidence of how “accurate” the disputed disciplinary process is, but to hold that these remarks were unfair would prevent an attorney from either critiquing or defending any disciplinary system without evidence of that system’s accuracy. There are, of course, practical limits to such inquiries, parties cannot be expected in every case to investigate these matters. It would thus be folly to prohibit attorneys from remarking that all evidence leaves some uncertainty as to the ultimate fact to be proved or disproved (hence the universal legal burden of “reasonable doubt”). Thus, it was held that the defense’s inference and the State’s inference were fair comments on the evidence — or lack thereof.
A court commits no error when it sustains objections to impermissible comments or gives a proper curative instruction, if that is all that is requested. There is a risk, however, when the prosecutor persistently ignores those rulings and continues in an improper course of conduct, that the jury may come to regard the court’s rulings as rote window dressing and thus pay less attention to them.
Here, it was noted that the State’s comments were not persistent. The court immediately sustained the defense’s objections to both improper comments, and it ordered that the second be struck from the record. The State did not undermine the trial court’s instructions by returning to either issue. If the trial court had granted a mistrial it would have been for two clipped statements; but these remarks were not so severe as to have misled the jury.
The State’s remarks did not result in the amount of prejudice held sufficient for reversal in past cases. See Hill v. State, 355 Md. 206, 225 (1999) (“appeals to jurors to convict a defendant in order to preserve the safety or quality of their communities are improper and prejudicial.”). In light of the several days’ worth of evidence presented to the jury and the court’s swift action stopping the arguments before their completion, it was concluded beyond a reasonable doubt that the State’s closing arguments were not likely to have misled the jury or influenced its verdict against Appellants.
Accordingly, the judgment of the circuit court was affirmed.
COMMENTARY: Appellants also argued that the circuit court erred when it instructed the jury that a misconduct conviction in this case could rest on “wrongful” acts, rather than “unlawful” acts.
Appellants were charged with “misconduct,” which comes in three varieties: “(1) the doing of an act which is wrongful in itself — malfeasance, or, (2) the doing of an act otherwise lawful in a wrongful manner — misfeasance; or, (3) the omitting to do an act which is required by the duties of the office — nonfeasance.” Duncan v. State, 282 Md. 385, 387 (1978).
It is difficult to discern any difference between misfeasance and malfeasance if both are satisfied by “wrongful” conduct; and according to our research, the majority of states restrict malfeasance to “unlawful” conduct, whereas misfeasance is “lawful” conduct done “wrongfully.” Appellants stressed that the Maryland Pattern Jury Instruction Committee was aware of Duncan, supra, and yet drafted the pattern instruction on malfeasance using only the word “unlawful” because the Committee recognized that as the distinction between malfeasance and misfeasance. See Maryland Criminal Pattern Jury Instructions 4:23.
Nevertheless, it is the Court of Appeals who must decide whether the Committee’s wisdom trumps the language it employed in Duncan. Under the definition of misconduct set forth in Duncan, the trial court’s instructions were not improper and there was no error in denying appellants’ objections to them.
PRACTICE TIPS: In the context of remedying violations of discovery rules, the declaration of a mistrial is an extraordinary act which should only be granted if necessary to serve the ends of justice. The most accepted view of discovery sanctions is that in fashioning a sanction, the court should impose the least severe sanction that is consistent with the purpose of the discovery rules. We have said that the purpose of the discovery rules is to give a defendant the necessary time to prepare a full and adequate defense. And the Court of Appeals has warned that, if a defendant declines a limited remedy that would serve the purpose of the discovery rules and instead seeks the greater windfall of an excessive sanction, the “double or nothing” gamble almost always yields “nothing.” Raynor v. State, 201 Md. App. 209, 227-28(2011).
BOTTOM LINE: In defendant’s criminal trial for assault and robbery, testimony of defense witness that “some guys” had broken his jaw and “it was wired shut” was not irrelevant or unfairly prejudicial to defendant, because explanation served to explain witness’s strange manner of speaking and, given that witness testified that he did not know who had broken his jaw, it could be just as reasonably inferred that neither defendant nor his colleagues were responsible for the beating.
CASE: Mines v. State, No. 2681, Sept. Term, 2010 (filed Nov. 27, 2012) (Judges Meredith, Woodwardy & SHARER (retired, specially assigned)). RecordFax No. 12-1127-02, 31 pages.
FACTS: David Mines was charged with multiple offenses involving a delivery driver for Domino’s Pizza, Jesus Pinones. On the evening of March 17, 2010, Pinones went to an address in Maryland City and delivered a pizza. As he was returning to his car, he heard someone call to him to stop. Pinones entered his car on the passenger side because he had problems with the driver’s side door. As he was getting ready to lock the passenger side door, a black male with dreadlocks carrying a knife approached and opened the passenger side door.
Pinones was able to get the door closed and locked, but then the man started scraping the glass with his knife. The man ordered Pinones to get out of his car and give him the money, threatening to stab him if he refused. Pinones reached for his cell phone, located under his seat. Once he obtained it, he noticed that the man had started to run away.
Across the street, Pinones saw a white male wearing a baseball cap and a gray hoodie, and a black male, both of whom started running away with the man who had tried to rob him. Pinones drove after the men for about a block before he was intercepted by Anne Arundel County Police. Pinones told the police the direction in which the men had run.
Several Anne Arundel County police officers responded to the call for the attempted robbery of Pinones. Ultimately, the police detained and arrested Mines and two other males. A search of the three disclosed a folding pocket knife in the possession of Xavier Howell. No knife was found on Mines. Mines was subsequently charged with attempted armed robbery, attempted robbery, second degree assault, and openly wearing and carrying a deadly and dangerous weapon with intent to injure another.
At his criminal trial, Mines testified in his own defense. He told the jury that on the evening of the attempted robbery of Pinones, he was playing basketball with several others and, thereafter, he drove his girlfriend, their child, and others home. Mines and some friends then drove to another location to visit with other friends, including Tony Ash and David McCowski. While at that location, Corporal Rayburn Smallwood approached and requested identification. All present complied with his request. Subsequently, another officer arrived, presumably with Pinones in his police car, and Mines and others were placed in front of the headlights of the cruiser. Thereafter, Mines was taken into custody.
Mines called several defense witnesses, including Deontre Lyons. Lyons testified that in the days following the attempted robbery, he told police that he had approached a pizza delivery driver with the intent to rob him, but that he abandoned that plan when the driver jumped into his car and drove away. The police told him he could get into trouble if he was lying, and Lyons recanted. Lyons testified that he went to the police initially only because Mines told him that if he turned himself in, he would probably receive a lesser punishment like probation because he was still a minor. In addition, Laura, a friend of Mines’ girlfriend, Brittney, told him that if he did not turn himself in, they would put out a hit out on him. Lyons testified that he did not know anything about the robbery.
The jury convicted Mines of attempted armed robbery, attempted robbery, second degree assault, and openly wearing and carrying a deadly and dangerous weapon with intent to injure another.
Mines appealed to the Court of Special Appeals, which affirmed the convictions.
LAW: Mines first contended that the circuit court erred in permitting irrelevant and highly prejudicial testimony by Deontre Lyons that “some guys” had broken his jaw and “it was wired shut.” Mines argued that there was no testimony to connect the broken jaw to Mines or the attempted robbery of Pinones. Thus, he argued, Lyons’ testimony left the clear impression in the jurors’ minds that the broken jaw was related to this case and was done at the direction of Mines or for his benefit. In support of this argument, Mines points to the fact that Lyons testified that he did not know who broke his jaw and did not know why he was hit.
During the trial, however, although Mines specifically objected to Lyons’ testimony on the ground that it was irrelevant, at no time did he argue that the testimony was prejudicial. As a result, the argument that Lyons’ testimony was prejudicial was not preserved for our consideration. Md. Rule 8-131. Even if the issue had been preserved, however, reversal would not be required.
The admissibility of evidence is left to the sound discretion of the trial court. Md. Rule 5-104(a). Maryland Rule 5-401 defines relevant evidence as “evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” As a general rule, relevant evidence is admissible while irrelevant evidence is not admissible. Md. Rule 5-402.
Here, Lyons’ testimony about why his jaw was wired shut was relevant. The jury was instructed that one of the factors to be considered in evaluating a witness’s credibility is the witness’s behavior on the stand and manner of testifying. Before Lyons testified, the prosecutor advised the judge that his jaw was wired shut, and if he was speaking strangely, it was because his jaw was wired shut. Thus, Lyons’s testimony about having his jaw wired shut provided the jurors with an explanation for his manner of speaking.
Moreover, as his own testimony revealed, Lyons did not know who had beaten him or why he had had his jaw broken. As a result, it could be just as reasonably inferred that neither Mines nor his colleagues were responsible for the beating, and Lyons’s testimony would not be prejudicial. And, even if Lyons’ testimony was erroneously admitted, it was harmless beyond a reasonable doubt.
Lyons gave other testimony that was not objected to, about specific threats that were attributed to or linked to Mines. For example, Lyons told a police detective that Brittney’s friend, Laura, told him that if he did not turn himself in, they would have someone put out a hit on him. He also testified, without objection, that Mines told him to turn himself in because he was still a minor and would probably receive a lesser punishment. Finally, Lyons testified, without objection, that he was still a little afraid of Mines and his girlfriend. In light of this unobjected-to testimony, any error in admitting Lyons’ testimony that his jaw had been broken was harmless beyond a reasonable doubt.
Thus, there was no error in the trial court’s ruling, and the judgment of the circuit court was accordingly affirmed.
COMMENTARY: Mines also contended that the trial court erred in permitting the prosecutor to improperly shift the burden of proof during cross-examination of Mines, by asking Mines about what he was doing in the two hours between when he stopped playing basketball and when he was stopped by the police. Specifically, Mines argued that in asking those questions, the prosecutor conveyed to the jury that it was Mines’ responsibility to secure the presence of witnesses at trial, and thereby improperly shifted the burden of proof from the State to Mines. Mines further contended that in the State’s closing arguments, the prosecutor’s reference to Mines’ failure to call certain witnesses amounted to a trespass upon his Constitutional rights.
In fact, neither the prosecutor’s cross-examination of Mines, nor the comments in closing arguments, impaired Mines’ Fifth Amendment rights or could be construed as an improper shifting of the burden of proof. In support of his argument, Mines relied upon the rulings in Robinson v. State, 20 Md. App. 450 (1974); Woodland v. State, 62 Md. App. 503 (1985); and, Wise v. State, 132 Md. App. 127 (2000). However, those cases did not directly address the issue presented here, as none of these cases involved the scenario presented in the instant case, where the prosecutor’s questions were directed to Mines after he took the stand, and involved whether there was support for factual claims raised by Mines’ testimony.
While it is axiomatic that the prosecutor cannot comment on a defendant’s failure to testify, once a defendant has taken the stand in her own defense, the prosecutor is not precluded from impugning the defendant’s credibility by commenting on his failure to produce any corroborating evidence. See Griffin v. California, 380 U.S. 609, 615 (1965). The rule forbidding any reference to a defendant’s failure to take the stand in his or her defense does not extend to comments on the state of the evidence or on the failure of the defense to introduce material evidence or to call logical witnesses. Id. Consequently, a prosecutor may properly comment on the defendant’s failure to present exculpatory evidence which would substantiate the defendant’s story as long as it does not constitute a comment on the defendant’s silence. See United States v. Williams, 990 F.2d 507, 510 (9th Cir. 1993).
Here, Mines maintained that he did not attempt to rob Pinones, but was playing basketball and later talking with friends when the police approached him. The questions the prosecutor asked of Mines on cross-examination related to potential fact witnesses who had been specifically referred to by Mines in his own testimony. The issue of the fact witnesses in the instant case was raised by the prosecutor on cross-examination of Mines, so that Mines had the opportunity to respond. Moreover, the witnesses who might have corroborated Mines’ testimony were persons with whom he had a close relationship. For all of these reasons, the trial court did not abuse its discretion in permitting the State to cross-examine Mines about the potential fact witnesses. In the circumstances, where Mines testified in his own defense and, in his own testimony identified potential exculpatory witnesses, but called none of them to the stand, questions as to their absence did not violate Mines’ Fifth Amendment rights, and did not constitute improper burden shifting.
PRACTICE TIPS: Under the “missing witness” rule, the failure to call a material witness raises a presumption or inference that the testimony of such person would be unfavorable to the party failing to call the witness. However, there is no such presumption or inference when the witness is not available, the witness’ testimony is unimportant or cumulative, or the witness is equally available to both sides.
Search & seizure
BOTTOM LINE: Circuit court properly denied defendant’s motion to suppress evidence obtained via use of GPS tracking device which police attached to defendant’s vehicle because prevailing legal standard at time of search was expectation of privacy and defendant did not have expectation of privacy in movement on public highway; therefore, good faith exception to exclusionary rule applied.
CASE: Kelly v. State, No. 2479, Sept. Term, 2010 (filed Nov. 27, 2012) (Judges Woodward, Watts & EYLER, J. (retired, specially assigned)). RecordFax No. 12-1127-01, 35 pages.
FACTS: Wesley Kelly’s appealed his convictions of burglary in the second degree, committed on April 12, 2010, and theft, committed on April 5, 2010. A series of commercial burglaries occurred in Howard County in February and March of 2010, and in Anne Arundel County on April 12, 2010. Howard County police officers began investigating the incidents on February 22, 2010.
The first burglary was of a dental office from which a signed blank bank check was taken. On February 27, 2010, the check was cashed, with the name of a payee, Nicole Cromwell, and an amount having been added. After reviewing surveillance tape at the bank where the check was cashed, police officers identified Cromwell through a computer check. Police officers also learned from the tape that Cromwell had been dropped off at the bank by a green Chevrolet Trailblazer. On March 5, 2010, officers obtained an arrest warrant for Cromwell, and they arrested her on March 9, 2010.
Cromwell cooperated with the police and identified a person named “Tony” as the person who gave her the check. She also provided a residence address for Tony, an apartment at 3706 W. Saratoga Street. Police officers conducted surveillance of that residence, noted the presence of the Trailblazer, conducted a computer check of the Trailblazer, and determined that it was owned by Kelly. Police officers obtained a photograph of Wesley Kelly and showed it to Cromwell, who identified Kelly as Tony, the person who gave her the check.
On April 2, 2010, police officers placed a GPS tracking device on the exterior of Kelly’s Trailblazer. The device was on the vehicle from April 2 through April 12. The device tracked and recorded movement of the vehicle. Police officers did not monitor the device at all times but used it to locate Kelly on at least three occasions. Based on the information obtained prior to placement of the device and additional information obtained after placement of the device, police officers, on April 12, 2010, obtained search warrants for Kelly’s Trailblazer, two residences, and three pawn shops. A search of those locations produced incriminating evidence.
Kelly was subsequently charged with burglary in the Howard County circuit court. Kelly moved to suppress evidence allegedly obtained as a result of the GPS device placed on his vehicle on April 2, 2010, by police officers without a warrant. The court denied the motion to suppress, and Kelly was ultimately convicted of second degree burglary. In the Anne Arundel County circuit court, Kelly was charged with theft. He likewise filed a motion to suppress all evidence obtained via the tracking device, and the court denied the motion. Kelly was convicted in the Anne Arundel County circuit court of theft.
Kelly appealed the convictions to the Court of Special Appeals, and the cases were consolidated. In both cases, Kelly argued that the circuit court erred in denying his motion to suppress evidence. The Court of Special Appeals affirmed the judgments of the circuit courts.
LAW: Kelly contended that the courts erred in denying his motions to suppress evidence allegedly obtained as a result of the GPS device placed on his vehicle on April 2, 2010, by police officers without a warrant. In making this argument, Kelly relied primarily on the Supreme Court’s holding in Davis v. United States, 131 S. Ct. 2419 (2011). In Davis, police officers conducted a traffic stop of a vehicle in which the defendant was a passenger. The officers arrested the defendant for providing a false name and placed him in their vehicle. The officers then conducted a search incident to arrest of the vehicle, including the defendant’s jacket, where they found a firearm. After the defendant’s motion to suppress the firearm was denied, the defendant was convicted of unlawful possession of a firearm.
The search occurred in Alabama, located in the Eleventh Circuit. It was conducted in accordance with binding precedent in that circuit, which had held that a search of a passenger compartment in a motor vehicle incident to arrest of an occupant is lawful, even if the occupant is no longer in the vehicle at the time of the search. While the defendant’s appeal was pending, the Supreme Court decided Arizona v. Gant, 556 U.S. 332 (2009), which limited the scope of a search of an unoccupied vehicle. The Davis Court applied the Gant decision retroactively, thus rendering the Davis search unlawful. Nevertheless, the Supreme Court held that the exclusionary rule did not apply because the search was conducted in good faith reliance on binding precedent. Davis, 131 S. Ct. at 2429.
The principle that emerged from Davis is that operation of the exclusionary rule is suspended only when the evidence seized was the result of a search that, when conducted, was a “police practice” specifically authorized by the jurisdiction’s binding precedent in which the officer operates. See Gee v. State, 291 Md. 663 (1981). Thus, to decide whether the particular search at issue in the present case (the search of the locked glove compartment) comes within the Davis rule, it was necessary to examine what Maryland law dictated at the time of that search. The question then arises what is meant by “binding precedent.”
In denying Kelly’s motion to suppress, the circuit court of Anne Arundel County relied heavily on the holding in Stone v. State, 178 Md. App. 428 (2008). In Stone, the defendant was convicted of burglary and theft. The defendant was arrested after the vehicle in which he was riding as a passenger was stopped by police officers. The officers performed the stop because they had probable cause to believe, based on their prior investigation, that the defendant was involved in a burglary. The officers obtained the information on October 14, 2005.
On the same day, after obtaining the information, the officers obtained the defendant’s cell phone number, and by enlisting his cell phone carrier to “ping” his phone, located the defendant’s vehicle. At that time, they placed a GPS device on his vehicle. On October 17, 2005, using the signal from the GPS device to locate the defendant’s vehicle, the officers performed the stop and arrest of the defendant. Between October 14 and October 17, the officers did not obtain information implicating the defendant in the crimes in question in addition to that which they already had.
Stone argued that the trial court abused its discretion in limiting the defendant’s cross-examination of a police officer with respect to locating the defendant’s vehicle through the use of the “ping” and, later, through the GPS device. The Court ultimately held that the suppression court did not abuse its discretion because it was unlikely that cross-examination on those points would have produced any relevant evidence. The Court stated that Stone did not have a reasonable expectation of privacy in his location in the public, and, more specifically, in a vehicle riding on public roads; therefore, evidence about the use of the GPS device and the cell phone “ping” information merely to locate him in public, which just as well could have been done by human visualization – though less efficiently – was not relevant to the defendant’s Fourth Amendment-based suppression motion. Stone, 178 Md. App. at 446-50.
In Briscoe v. State, 422 Md. 384 (2010), the Court of Appeals had before it a challenge to a search incident to arrest of a locked glove compartment in a vehicle. While the case was pending on appeal, the Supreme Court decided Gant. The State conceded the search violated Gant but argued that the good faith exception to the exclusionary rule applied. Id., at 389. The Court of Appeals applied the Davis good faith exception because the search was lawful at the time under New York v. Belton, 453 U.S. 454 (1981).
The decision in Briscoe means that binding precedent does not require that there be a prior appellate case directly on point – i.e., factually the same as the police conduct in question. And in fact, the present case was similar to the situation before the Court in Briscoe. Just as in Briscoe, Maryland had generally recognized Belton as permitting a search incident to arrest of an unoccupied vehicle, at the time of the search in question here, Maryland had recognized and applied the rationale of United States v. Knotts, 460 U.S. 276 (1983).
In Knotts, police officers had information that the defendant was purchasing chloroform to use in an illicit drug operation. With the consent of the seller, the officers placed a beeper in a drum of chloroform which was then sold to the defendant. After the drum was placed in the defendant’s vehicle, the officers followed the vehicle through a combination of tracking the beeper signal and visual surveillance. They tracked the defendant to a cabin in a secluded area. After three days of visual surveillance, the officers obtained a search warrant for the cabin and found a drug laboratory. Id., at 277. The Knotts Court held that the owners of vehicles did not have a reasonable expectation of privacy in their movement on a public highway.
Based on these holdings, at the time relevant in the present case, the expectation of privacy test was the prevailing legal standard. As in Stone, Kelly did not have an expectation of privacy in the movement of his vehicle on a public highway. Therefore, the good faith exception to the exclusionary rule applied, and the court did not err in denying the motion to suppress evidence.
Accordingly, the judgments of the circuit courts were affirmed.
COMMENTARY: The parties agreed that the decision in United States v. Jones, 132 S. Ct. 945 (2012), holding that placement of a GPS device on a vehicle located on a public thoroughfare constitutes a search, applied to the present case. However, as discussed above, the good faith exception to the exclusionary rule applied. Therefore, although the placing of the GPS device on Kelly’s car constituted a search, the courts did not rule in denying Kelly’s motions to suppress.
PRACTICE TIPS: Where the “independent source doctrine” applies, “tainted” information in an application for a warrant is excised, and the untainted information assessed to determine if it constituted probable cause. If so, evidence obtained through the execution of the warrant may be admissible despite the “tainted” information in the search warrant.
BOTTOM LINE: Where husband and wife were married over the phone, with husband’s cousin standing in for husband at wedding ceremony, husband’s argument that the circuit court should not recognize such a marriage by proxy was properly rejected because husband and wife lived as married couple, owned property together, had children, and held themselves out to the community as a married couple.
CASE: Tshiani v. Tshiani, No. 2655, Sept. Term 2010 (filed Nov. 21, 2012) (Judges Krauser, ZARNOCH & Berger). RecordFax No. 12-1121-04, 20 pages.
FACTS: Marie-Louise Tshiani and Noel Tshiani were natives of Kinshasa, Democratic Republic of Congo. Marie-Louise and Noel met in the Congo in 1993, when Marie-Louise was 18 years old and Noel was 35. According to Marie-Louise, after five months of dating, the two were married on December 23, 1993 in Kinshasa. She testified that Noel was not physically present at the wedding because he was abroad. Noel designated his cousin to represent him. One of the families gave the other $200 cash, clothes, and a live goat. Noel participated in the ceremony over the phone.
According to Marie-Louise, her family asked Noel and his family members three questions regarding whether Noel knew the bride, whether he liked her, and whether he wanted a dowry to be exchanged. Noel responded in the affirmative. According to Marie-Louise, tradition requires that the wife leave with the husband’s family and then go to live with the husband. After the ceremony, Marie-Louise spent the night at Noel’s cousin’s house. The next day she traveled to live with Noel in Arlington, Virginia.
Since the marriage, the couple have been living together and representing themselves as husband and wife. They first lived in an apartment in Virginia, then purchased a home in Bethesda, Maryland in January 1994. The parties bought another piece of property in Potomac, Maryland. They had three children together.
On April 16, 1994, the parties participated in a “renewal of vows” ceremony at the Church of the Cathedral of Saint Thomas Moore in Arlington. The couple obtained a “Proof of Marriage” from the Congolese Embassy and brought it to the Virginia ceremony. The church provided them with a certificate stating that they were “united in matrimony…in conformity with the laws of the State of Virginia and the Republic of Zaire.” The certificate also attested that there were witnesses present at the ceremony, including one member of Noel’s family.
Noel applied for a “dependency allowance” for Marie-Louise with his employer, the World Bank, and attached a “Certificate of Customary Marriage from the Embassy of Zaire” or “Attestation de Mariage Coutomier” dated January 25, 1994. He requested and received health insurance coverage for Marie-Louise and asked the World Bank to add Marie-Louise as beneficiary of his life insurance policy. Noel also went to the United States Immigration Service to obtain permanent resident alien status (Green Card) for Marie-Louise, asserting that she was his wife. Since 1994, Noel has filed joint federal and state tax returns, listing Marie-Louise as his spouse. Further, during a protective order hearing, Noel referred to Marie-Louise as his wife. Although he filed an Amended Answer, when Marie-Louise first filed for absolute divorce Noel’s Answer admitted that he and Marie-Louise were married. Finally, Noel wrote in his motion to dismiss Marie-Louise’s complaint for absolute divorce, “the parties were joined in a union based on the Congolese practices.”
At the circuit court hearing, Noel equivocated when asked about almost all of the above facts. He testified did not participate in the Congolese marriage. Noel argued that the marriage ceremony in the Congo was something that is not recognized outside the Congo, but failed to provide support legal or otherwise for this assertion. He also said of the Virginia marriage: it is “customary for there to be a Catholic service for people not necessarily married to live in Virginia.”
The court entered a Judgment of Absolute Divorce. As to the validity of the marriage, finding that Noel’s actions subsequent to the ceremony in the Congo demonstrated his recognition of a lawful marriage to Marie-Louise. The court noted Noel’s prevarication, stating that he “is a liar and a manipulator.”
Noel appealed to the Court of Special Appeals, which affirmed.
LAW: This was a mixed question of law and fact. On the one hand, on the question of whether there was a valid marriage based on the evidence presented, deference was given to the factual findings of the trial judge. As such, reversal is warranted only if a factual finding is clearly erroneous. Hoang v. Hewitt Ave. Ass., LLC, 177 Md. App. 562, 576 (2007). “A factual finding is clearly erroneous if there is no competent material evidence in the record to support it.” Id. On the other hand, whether Maryland will recognize a valid foreign marriage is a purely legal determination. A circuit court’s legal determinations are reviewed de novo. Id.
Noel argued that Maryland should not recognize the Congolese marriage. To determine this issue, the first question is whether the marriage was valid in the Congo. If yes, then the next question is whether a Maryland court should recognize the marriage.
Noel attested that the record contained no proof of Congolese law, and as such, the trial court could not have concluded that the marriage was valid under the law of the Congo. Instead, he contended, the absence of Congolese law demanded that the court decide the validity of the marriage under Maryland law.
Here, Noel requested and was provided with a certificate of marriage from the Congolese Embassy, entitled Certificate of Customary Marriage. The couple provided this certificate to Noel’s employer and to a church in Virginia, which augmented the certificate with yet another certificate of marriage. According to Marie-Louise, a wedding took place in the Congo. The couple lived together, purchased property together, and had children. As further evidence of marriage, the couple also have held themselves out to the community as husband and wife when Noel applied for a dependency allowance for Marie-Louise with his employer, when he made her the beneficiary of his health and life insurance, and when he applied for her Green Card based on her status as his wife. Furthermore, Noel proclaimed several times, under oath, that he and Marie-Louise were married, including during a protective order hearing.
In light of these facts, there was much evidence to raise a presumption that the Congolese marriage was a valid marriage according to the law of the Congo. It was incumbent on Noel to rebut the presumption, and he presented no evidence to do so.
In deciding whether a valid foreign marriage will be acknowledged in Maryland, courts employ the doctrine of comity. Henderson v. Henderson, 199 Md. 449, 457-58 (1952). Under this doctrine, Maryland “will give effect to laws and judicial decisions of another state or jurisdiction, not as a matter of obligation but out of deference and respect.” Wash. Suburban Sanitary Comm’n v. CAE-Link Corp., 330 Md. 115, 140 (1993). In other words, Maryland courts will honor foreign marriages that were valid where performed, even if the marriage would not have been valid if performed in Maryland. Henderson, 199 Md. at 458.
There are two exceptions to this general rule. First, the marriage must not be expressly prohibited by the General Assembly. Second, the marriage must not be repugnant to Maryland public policy. Port v. Cowan, 426 Md. 435, 444-45 (2012).
Regarding the statutory prohibition exception, FL §2-406 describes who can perform a marriage ceremony and when the ceremony must be performed. Neither this law, nor any other statute, precludes Maryland from recognizing a ceremony where one party participates by proxy — or in the manner that occurred here — and the ceremony is valid in another jurisdiction. To preclude validity, the statute must unequivocally void such marriages. Port, 426 Md. at 447. The General Assembly has not prohibited recognition of a foreign marriage such as the one that occurred here.
It was also found that neither proxy nor phone marriages are repugnant to Maryland public policy. Maryland’s attitude is that marriage should not be set aside lightly. Picarella v. Picarella, 20 Md. App. 499, 504 (1974). As such, several types of marriages that would not have been valid if performed in Maryland have been recognized in Maryland. Notably, a Maryland court has never found a valid foreign marriage repugnant to public policy
A proxy marriage performed in Maryland carries no criminal penalty for the couple or the celebrant. Although Maryland has not adopted it, the Unif. Marriage & Divorce Act, 9A U.L.A. 182 (1998), permits proxy marriage. Specifically, the Act declares “[i]f a party to a marriage is unable to be present at the solemnization, he may authorize in writing a third person to act as his proxy. If the person solemnizing the marriage is satisfied that the absent party is unable to be present and has consented to the marriage, he may solemnize the marriage by proxy. If he is not satisfied, the parties may petition the…court for an order permitting the marriage to be solemnized by proxy.” Id. at § 206(b).
Distant marriages are becoming more and more common. See Bob Kuszynski, Do Couples Need to Be in the Same Place to Get Married? Two Michigan Professors Say ‘No’, Scripps TV Station Group (Oct. 6, 2011). The mounting recognition and research on distant marriages suggest that sometimes it may be a couple’s only option. For example, the men and women who serve in our armed forces sacrifice a great deal of control over their daily lives for this country and they often are married by proxy. See Andrea B. Carroll, Reviving Proxy Marriage, 76 Brook. L. Rev. 455, 492 (2011).
For these reasons, Noel’s marriage by proxy or by phone did not rise to the level of being repugnant to public policy. The marriage was valid in the Congo and Maryland courts would find it valid in this State under the doctrine of comity. Recognizing that the parties’ marriage was valid, the circuit court did not err in granting a divorce, awarding alimony, dividing property, calculating child support, or awarding attorney’s fees.
Accordingly, the judgment of the circuit court was affirmed.
COMMENTARY: One secondary source, a family law treatise, hypothesizes, “it is doubtful that Maryland would ever recognize proxy marriages, marriage by telephone, or marriage by mail.” 1-3 Bender’s Maryland Family Law §3-4(c). But this hypothesis originated with a dated Maryland Law Review article written in 1938. At that time in Maryland, a religious ceremony was a mandatory part of a legal marriage. The article doubted that a proxy or phone marriage would be valid “under the policy of the religious ceremony.” John S. Strahorn, Jr., Void and Voidable Marriages in Maryland and Their Annulment, 2 Md. L. Rev. 211, 222 (1938). According to the article, these types of marriage may not evidence that an “actual contract” had been made and “a solemn act” had been performed. Id.
This theory is outdated for two reasons. One, Maryland no longer requires a religious ceremony as part of a marriage. See FL §2-406. Two, modern communication technology reduces the likelihood that the absent individual can claim he or she did not enter into an actual contract or commit a solemn act. Indeed, the power of modern communication to eliminate the suspicions of proxy marriage is not a new idea. In 1964, the Supreme Court of Oregon expressed, “[t]he most often voiced objection to proxy marriages is that unbeknownst to the celebrants the power of attorney may have been revoked prior to the celebration of the marriage. With the many accurate and prompt modern methods of communication available, the possibility of a failure to communicate revocation is extremely slight.” State v. Anderson, 239 Ore. 200, 206 (1964).
PRACTICE TIPS: Recently, the Court of Appeals found that valid out-of-state same sex marriages are not repugnant to Maryland public policy, despite the existence of a Maryland statute limiting marriage to a man and a woman. Port, 426 Md. at 450-51.
Labor & Employment
Fair Labor Standards Act
BOTTOM LINE: Even though father of construction company’s owner supervised employees and manifested some ability to pay them, father could not be liable to employees for unpaid wages under the Fair Labor Standards Act because, under the “economic reality test,” father was not the workers’ “employer.”
CASE: Campusano v. Lusitano, No. 1529, Sept. Term 2011 (filed Nov. 21, 2012) (Judges Krauser, Wright & MATRICCIANI). RecordFax No. 12-1121-03, 14 pages.
FACTS: Geoffrey de Oliveria was the sole owner of Lusitano Construction, LLC, which in 2007 and 2008 was under contract to complete two interior renovation projects: the Oro Pomodoro Restaurant in Rockville, MD, and the Valley Terrace Apartments in Baltimore, MD. Roberto Campusano, Justo Portocarrero, Ivan Mello, and David Rosales (“Appellants”) worked on both projects at various times as construction laborers.
Geoffrey supervised the Oro Pomodoro project while his father, Francisco de Oliveria, supervised the Valley Terrace project. In that capacity, Francisco set Appellants’ work schedule, assigned their tasks, managed supplies, maintained work logs, and occasionally distributed paychecks drafted by Geoffrey or Lusitano Construction.
Francisco testified that he did not hire Appellants or set their wages. Rosales testified that he merely “communicated” with Francisco about employment and salary. Campusano testified that Geoffrey hired him and that he thought Francisco may have had some influence on his wages because Francisco was his supervisor.
At some point in 2007, Geoffrey stopped issuing payment to Appellants. Francisco told the workers that Geoffrey would pay them with money from other projects once those projects finished.
Francisco testified that he purchased supplies for the Valley Terrace project with personal funds, and the evidence showed that Geoffrey had an unspecified $50,000 line of credit with his father discharged in bankruptcy in 2009. Campusano testified that Francisco paid some of his wages from personal funds, but Francisco denied this.
Appellants brought suit against Lusitano Construction and Geoffrey for violations of the Fair Labor Standards Act and the Payment and Collection Law. They sought unpaid wages and overtime and attorney’s fees and costs.
The trial court found Geoffrey liable under both statutes and found that Francisco was not an “employer” under either law. Accordingly, the court entered judgment against Geoffrey and Lusitano Construction for treble damages of $57,400.
The judgment did not address Appellants’ claims for attorney’s fees or their claims against Francisco. Thus, Appellants moved to amend the judgment to award fees and costs and to enter judgment in favor of Francisco. The court denied Appellants’ motion.
LAW: Appellants argued that Francisco was an “employer” under the Fair Labor Standards Act (“FLSA”) and the Payment and Collection Law according to the four-factor “economic reality” test of “control” developed by federal courts for the FLSA and applied in Newell v. Runnels, 407 Md. 578, 649-54 (2009), to the Maryland Wage and Hour Law, §§3-401 et seq.
The Third Circuit succinctly summarized the history of the general “economic reality” test in Haybarger v. Lawrence County Adult Prob. & Parole, 667 F.3d 408, 418 n.8 (3d Cir. Pa. 2012): The “economic reality” test is a broad test for determining whether an employment relationship exists, and is not limited to evaluating whether a supervisor is an employer for purposes of individual liability. In 1944, The Supreme Court first looked to the “underlying economic facts” to distinguish between employees and independent contractors under the National Labor Relations Act. NLRB v. Hearst Publ’ns, Inc., 322 U.S. 111, 129 (1944). Seventeen years later, the Supreme Court looked to the “economic reality” of the employment relationship to hold that members of a work cooperative qualified as employees under the FLSA. Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33 (1961). The Fourth Circuit has not applied the economic reality test to the Payment and Collection law, but it has applied the test to the Wage and Hour Law because the latter is the State parallel of the FLSA. Newell v. Runnels, 407 Md. 578, 649 (2009).
Appellants assumed that the test should be applied in their case, but as the U.S. District Court for the District of Maryland rightly noted in Watkins v. C. Earl Brown, Inc., 173 F. Supp. 2d 409, 416 (D. Md. 2001), the Maryland Wage and Hour Law, not the Payment and Collection Law, is the state’s equivalent of the FLSA. First, the Wage and Hour Law defines “employer” identically to the FLSA. Second, the FLSA governs primarily minimum wages and maximum hours, whereas the Payment and Collection Law sets specific terms for payment mandated elsewhere in the Wage and Hour Law.
Despite its differences from the Wage and Hour Law, the Payment and Collection Law is sufficiently similar for the economic reality test to apply. Payment and Collection Law §501(b) defines an employer to include “any person who employs an individual in the State or a successor of the person.” The word “employ” is defined broadly by LE §3-101(c) as “to engage an individual to work,” and the term includes “(i) allowing an individual to work; and (ii) instructing an individual to be present at a work site.” Because of this expansive definition and the Payment and Collection Law’s remedial purposes, see Friolo v. Frankel, 373 Md. 501, 517-18 (2003), the reasoning in Newell led to the conclusion that the economic reality test governs the definition of “employer” in Payment and Collection Law §501(b).
There is, however, more than one incarnation of the “economic reality” test. Newell, 407 Md. at 651. There was insufficient evidence that Francisco personally benefited from Appellants’ labor, and so there was no issue with the four-factor economic reality test for “control” that the Court of Appeals (coincidentally) applied in Newell, 407 Md. at 653, 653 n.39. The economic reality test for “control” examines “whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.” Id. at 651.
The four enunciated factors of “control” are not to be applied mechanistically, and their general purpose must be understood as ultimately assigning responsibility under the law. The Second Circuit has explained that the analysis of control focuses “on the role played by the corporate officers in causing the corporation to undercompensate employees and to prefer the payment of other obligations and/or the retention of profits.” Baystate Alternative Staffing v. Herman, 163 F.3d 668, 678 (1st Cir. Mass. 1998). “In addition to direct evidence of such a role, other relevant indicia may exist as well — for example, an individual’s operational control over significant aspects of the business and an individual’s ownership interest in the business. Baystate, 163 F.3d at 676.
The legislative intent to incentivize payment by responsible parties would not be served by holding that a supervisor such as Francisco was an “employer” under either the FLSA or the Payment and Collection Law. Although Francisco supervised and controlled Appellants’ work schedules and conditions of employment, and although he maintained their work logs, these supervisory tasks were not sufficient to make him personally liable for Appellants’ wages, particularly where he had no ownership, control, or investment in the LLC that was appellants’ formal employer.
First, the trial court found that Geoffrey, not Francisco, had the power to hire and fire employees and to determine their rate and method of payment. There was scant evidence to the contrary, and certainly not enough to reverse the trial court’s factual finding as clearly erroneous. Second, there was no evidence that Geoffrey’s $50,000 line of credit with Francisco was even related to Lusitano Construction. Third, the trial court was free to credit Francisco’s testimony that he never paid wages personally, rather than Campusano’s uncorroborated testimony that Francisco stressed that he was paying Appellants’ wages from his own pocket. Fourth, Francisco merely distributed Appellants’ paychecks, all of which indisputably originated from Geoffrey. Fifth, Francisco admitted to purchasing some supplies to help advance the construction project, but mere payment of minor, reimbursable expenses does not even approach an “investment” in a firm such that one should be considered responsible for employee wages. Finally, while Appellants claimed that Francisco “induced” them to work without pay, Francisco merely stated an apparent — if contingent — fact: if Geoffrey received funds from other projects, then he would pay Appellants. Nothing in the record indicated that Francisco personally guaranteed Appellants’ pay or intended to give them false hope of payment.
Taking these facts as a whole, it was held that Francisco was not an “employer” within the meaning of either FLSA or the Payment and Collection Law. Simply stated, managers with no equity interest in the fruits of employee labor should not have to act as insurers of last resort, either to their employers or to the employees that they supervise. Because the trial court failed to do so, final judgment was entered in favor of Francisco under Maryland Rule 8-604(e) as to all claims.
COMMENTARY: Appellants also argued that the trial court erred when it failed to award reasonable attorney’s fees and costs under FLSA §216(b) and Payment and Collection Law §507.2. Attorney’s fees and costs must be awarded under FLSA §216(b), but the “award” may be zero in certain circumstances. Sahyers v. Prugh, Holliday & Karatinos, P.L., 560 F.3d 1241, 1245-46 (11th Cir. Fla. 2009).
The Payment and Collection Law, however, leaves the matter of attorney’s fees and costs to the judge’s discretion. LE §3-507.2(b). “[S]uch discretion…is to be exercised liberally in favor of awarding fees, at least in appropriate cases.” Friolo v. Frankel, 403 Md. 443, 456-57 (2008).
The trial court failed to consider Appellants’ requests for fees and costs under the Payment and Collection Law, and review of the record revealed no indication whether the trial court was inclined to grant or deny the request. While the circumstances here may dictate a different result, Appellants’ request for attorney’s fees was remanded to the trial court for consideration.
PRACTICE TIPS: Fees may be awarded to a pro bono organization under the attorney’s fee provision of Maryland Code (1984, 2006 Repl. Vol.), §12-103. Henriquez v. Henriquez, 413 Md. 287 (2010).
BOTTOM LINE: In county’s condemnation case against landowners, County was not entitled to judgment as matter of law because even though landowners did not put forth any affirmative evidence of value of the property to raise genuine dispute of material fact to contradict County’s appraisal, Maryland Constitution requires that just compensation be awarded by a jury, not by a court.
CASE: Soleimanzadeh v. Montgomery County, No. 1433, Sept. Term, 2010 (filed Nov. 26, 2012) (Judges WOODWARD, Watts & Sharer (retired, specially assigned)). RecordFax No. 12-1126-02, 31 pages.
FACTS: This case involved a condemnation action brought by Montgomery County to take a portion of the real property owned by Khana and Joseph Soleimanzadeh. On April 10, 2009, the County filed a complaint for condemnation in the circuit court, seeking to acquire certain real property owned by the Soleimanzadehs in Rockville, Maryland, in furtherance of the County’s Travilah Road improvement project. The County served the Soleimanzadehs on October 5, 2009, with interrogatories and requests for production of documents, and the Soleimanzadehs’ responses were due on November 7, 2009.
On November 6, 2009, counsel for the Soleimanzadehs sent a letter to the County notifying the County that the interrogatories and requests for production of documents had been misplaced and were discovered on November 5, 2009. The Soleimanzadehs’ counsel asked for a 45-day extension within which to comply with discovery, and the County had no objection to the request. On December 14, 2009, however, counsel for the Soleimanzadehs advised the County that they would not file any responses to the discovery requests served by the County.
On December 23, 2009, after the expiration of the 45-day extension, the County filed a motion to compel and/or for sanctions. The Soleimanzadehs filed no opposition to this motion. On January 19, 2010, the circuit court granted the County’s motion and entered an order on January 21, 2010, directing the Soleimanzadehs to provide the requested discovery to the County within ten days of the entry of the order. The order also provided that, if the Soleimanzadehs failed to produce the requested discovery within said ten days, the Soleimanzadehs would be precluded from introducing “any evidence in support of their claims for just compensation and damages.” The Soleimanzadehs did not produce any interrogatory responses or documents within 10 days of the entry of the order, and the afore-described sanctions were imposed.
On January 15, 2010, while the County’s motion to compel and/or for sanctions was pending, the County filed a motion for partial summary judgment. In its motion, the County sought summary judgment with respect to the following issues: (1) the public purpose and necessity of the taking of the property, (2) the amount of area taken by the County, and (3) the County’s right to condemn the Soleimanzadehs’ property and the legality of the condemnation proceeding. The County did not move for summary judgment on the issue of just compensation, requesting instead that the Court submit the issue of just compensation to be awarded to the Soleimanzadehs for the property rights taken to the jury. On February 25, 2010, the trial court granted the County’s motion for partial summary judgment.
As a result of the imposition of sanctions on the Soleimanzadehs, the County filed on May 3, 2010, a motion for summary judgment or in the alternative judgment by default, seeking judgment on the issue of just compensation. The circuit court granted the County’s motion for summary judgment and on July 21, 2010, entered a judgment and inquisition that vested title to the subject property in the County and ordered the disbursement to the Soleimanzadehs as just compensation the sum of $35,000, which was based exclusively on the County’s appraisal of the subject property.
The Soleimanzadehs appealed to the Court of Special Appeals, which reversed the judgment of the circuit court and remanded the case.
LAW: The issue was whether the trial court erred in denying the Soleimanzadehs a jury trial on the issue of just compensation in a condemnation proceeding. The County asserted that summary judgment was appropriate because as a result of the imposition of discovery sanctions, the Soleimanzadehs failed to raise a genuine issue of material fact in dispute with specificity regarding the only evidence that was before the Court: the County’s appraisal. However, summary judgment is appropriate only where there is no genuine dispute as to any material fact and the party in whose favor judgment is entered is entitled to judgment as a matter of law. Warsham v. Muscatello, Inc., 189 Md. App. 620 (2009). The record here indicated that the trial court did not err in ruling that there was no genuine dispute as to a material fact raised by the Soleimanzadehs regarding the valuation of the property subject to condemnation. Thus, the instant case turned on whether the County was entitled to judgment as a matter of law.
The history of condemnation law and the development of the right to a jury trial indicates that condemnation proceedings were not ordinary suits at law. Bouton v. Potomac Edison Co., 288 Md. 305 (1980). Rather, they were special proceedings, lacking the characteristics of ordinary trials, brought pursuant to the power of eminent domain, a power derived from the sovereignty of the state. Id. It was often the practice to refer questions of damages to a commission of viewers or appraisers. Even where it was the customary practice to submit the issue to the jury, that jury was not the common law jury of 12 presided over by a judge, but was a jury of varying number, and was presided over by the sheriff. Id. at 309.
Article III §40 of the Maryland Constitution is the specific constitutional provision that mandates a jury trial on the issue of just compensation in condemnation cases. In Baltimore Belt R.R. Co. v. Baltzell, a landowner challenged a condemnation proceeding brought by a railroad company pursuant to §167 of Article 23 of the Maryland Code. Baltimore Belt R.R. Co. v. Baltzell, 75 Md. 94 (1891). By §167, the Legislature accorded the railroad company the power to condemn any land that may be needed for the proper construction of its road. Id. Section 167 provided that compensation to be paid to the owner of the property condemned shall be assessed by a special jury summoned on a sheriff’s warrant. Id.
One of the issues raised by the landowner in Baltzell was whether, under Article III, §40 of the Constitution, the Legislature had the power to provide that the compensation to be paid to the owner be assessed by a special jury summoned upon warrant, as opposed to a common law jury in a regular trial in court. Id. at 106. The Baltzell Court ultimately held that although ordinarily the term “jury” will be understood as meaning a common law jury, in this context the term meant that “the owner should have the right or privilege of a jury of 12 men in determining what compensation was to be paid, and that he should not be deprived of his property till such compensation had been paid.” Id. at 107-08. The Court concluded that, while the Constitution declares that the compensation shall be assessed by a jury, it at the same time leaves to the Legislature to provide whether such assessment shall be made by a common law jury or by a jury summoned by warrant, as may be most expedient and proper. Id. at 108.
A jury trial in a condemnation case is guaranteed by Article III, §40 of the Maryland Constitution, presumably for the purpose of ensuring that the “just compensation” contemplated by that section is in fact awarded to owners of condemned property. John J. Ghingher, Jr. and John J. Ghingher, III, A Contemporary Appraisal of Condemnation in Maryland, 30 Md. L. Rev. 301 (1970). As a result, a condemnation case is always tried before a jury unless all parties to the suit agree in writing to submit the case for determination without a jury – a practice which is exactly the opposite of that in the usual case at law, where a jury trial is awarded only if one of the parties so elects. The upshot of this procedure for selecting the trier of fact is that the property owner, who is the constitutionally protected party, must have his property valued by a jury unless he can persuade the condemnor, the party from whom he is constitutionally protected, to agree to dispense with a jury. Id. at 322-23.
Thus, Article 23 preserves the right to a jury trial on all issues of fact. The purpose of the summary judgment rule is not to impair this constitutional right of trial by jury, but to determine what, if any, issues are to be tried by jury. Frush v. Brooks, 204 Md. 315, 323-24 (1954). Consequently, when a trial court determines, in a summary judgment proceeding, that there is no genuine dispute of a material fact, there is no “issue of fact” for a jury to decide.
On the other hand, Article III, §40 of the Constitution provides that a jury shall award “just compensation” in condemnation actions, and Rule 12-207(a) mandates a jury trial unless all parties elect a court trial. In other words, the jury is the tribunal, and the sole tribunal, by whom the amount of compensation is to be determined, regardless of whether the landowner raises a genuine issue of material fact during the pre-trial process. Baltzell, 75 Md. at 105. For this reason, even though the Soleimanzadehs did not put forth any affirmative evidence of the value of the property to raise a genuine dispute of material fact to contradict the County’s appraisal, the County was not entitled to judgment as a matter of law, because the Constitution requires that just compensation be awarded by a jury, not by a court.
As such, the trial court erred in granting the County judgment as a matter of law. The judgment of the trial court was accordingly reversed and the case remanded for a jury trial to determine the just compensation to be awarded the Soleimanzadehs.
COMMENTARY: The County also contended that, because condemnation proceedings are governed by the rules of civil procedure, the summary judgment rule, Rule 2-501, may be applied in the appropriate circumstances to preclude the award of just compensation by a jury. It is true that under Rule 1-101(b), the rules of civil procedure contained in Title 2 apply in general to condemnation proceedings. See Hammond v. State Rds. Comm’n, 241 Md. 514, 517 (1966). However, there is a special exception clause to Rule 1-101(b), which provides that “Title 2 applies to civil matters in the circuit courts, except…as otherwise specifically provided or necessarily implied.” See Hammond, 241 Md. at 517. Article III §40 and Rule 12-207(a) do specifically provide for an exception to the summary judgment rule on the issue of a jury trial in condemnation proceedings, as the Constitution requires that just compensation be awarded by a jury, not by a court. Therefore, the rules of civil procedure apply to condemnation proceedings, except for the summary judgment rule, Rule 2-501, where the application of such rule would preclude the award of just compensation by a jury.
PRACTICE TIPS: Where only a portion of the property owned by a landowner is taken via condemnation, the owner is entitled to an award of just compensation for what is actually taken plus the value of any consequential damages to the remaining property.
BOTTOM LINE: Restrictive covenant on lots in subdivision limiting use of lots to “single family residences” but which does not define term “family” does not prohibit owner of lot in subdivision from renting lot to persons not related by blood, marriage, or adoption, because such use of term “family” is ambiguous, and any ambiguity in restrictive covenant must be resolved in favor of free enjoyment of the property.
CASE: South Kaywood Community Association v. Long, No. 00691, Sept. Term, 2010 (filed Nov. 26, 2012) (Judges Woodward, Kehoe & SALMON (retired, specially assigned)). RecordFax No. 12-1126-01, 32 pages.
FACTS: This case concerned a restrictive covenant placed in the land records in 1961 that governed lots in the South Kaywood subdivision, located in Salisbury, Maryland. The plaintiffs, Rodney Long and his wife, Melinda, purchased two homes in the South Kaywood subdivision in 2006. As a consequence of purchasing these houses, the Longs became members of the South Kaywood Community Association. One of the properties, located at 1704 South Kaywood Drive, was leased to a married couple with two children. However, the second property, located at 1602 South Kaywood Drive was leased to three female undergraduate students from Salisbury University, who were not related to one another by blood, marriage, or adoption.
Upon learning of the familial status of the three students, the South Kaywood Community Association sent letters to the Longs, asserting that rental to unrelated occupants constituted a violation of the covenants that governed all lot owners in the South Kaywood subdivision. The Association cited a portion of a covenant that was filed in the Land Records of Wicomico County on February 24, 1961, which stated, “That not more than one private dwelling house or residence and a garage solely for the use of the owner or occupier thereof shall be erected or placed upon any one of the lots conveyed herein, and such house or residence shall never be used or occupied for any purpose except for that of a private residence exclusively, nor shall any part or portion thereof ever be used or occupied except solely as a single family residence; nor shall any lot or any part thereof ever be used or occupied for trade, business or professional purposes of any kind whatsoever, nor shall any signs or other displays of any commercial nature be erected.”
The Longs disagreed with the Association’s interpretation of the covenant, and they filed a declaratory judgment action in the circuit court for Wicomico County asking the court to declare that this provision in the covenant did not require all individuals residing on their property within the Kaywood subdivision to be related. The trial judge concluded that the language of the covenant did not require residents of property within the Kaywood subdivision to be related by blood, marriage, or adoption.
The Association appealed to the Court of Special Appeals, which affirmed.
LAW: The principal issue was whether a restrictive covenant that governs the subdivision and limits the use of lots to “single family residences” but does not define the word “family” prohibits an owner of a lot in that subdivision from renting the property to persons who are not related by blood, marriage, or adoption. Although no Maryland appellate court has considered that issue, courts in Maryland’s sister jurisdictions that decided cases near the time the covenant at issue was drafted, or earlier, have reached divergent results. See, e.g., Marino v. Mayor & Council, 187 A.2d 217, 220-21 (Law Div. N.J. Sup. 1963). Here, the circuit court ruled that the term “single family” as used in a restrictive covenant, did not restrict use of the property to persons related by blood, marriage, or adoption.
Where the language of an instrument containing a restrictive covenant is clear with regard to the controversy before the court, there is no occasion to consider extrinsic evidence concerning the intent reflected in the restriction. Miller v. Bay City Property Owners Ass’n, 393 Md. 620 (2006). Moreover, a lack of ambiguity in the application of the restrictive covenant may be gleaned or reinforced by other language in the instrument. Id. at 638. Only where the restrictive covenant is ambiguous do courts venture beyond the text of the instrument and consider extrinsic evidence. Id. at 634-637.
In construing ambiguous restrictive covenants, Maryland courts no longer apply a pure strict interpretation or construction, but instead apply a reasonably strict construction when construing covenants. County Commissioners v. St. Charles, 366 Md. 426, 447 (2001). If the meaning of the instrument is not clear from its terms, the circumstances surrounding the execution of the instrument should be considered in arriving at the intention of the parties, and the apparent meaning and object of their stipulations should be gathered from all possible sources. Belleview v. Rugby Hall, 321 Md. 152, 157 (1990). If an ambiguity is present, and if that ambiguity is not clearly resolved by resort to extrinsic evidence, the general rule in favor of the unrestricted use of property will prevail and the ambiguity in a restriction will be resolved against the party seeking its enforcement. Id. at 165-67.
The covenant here at issue was filed in the land records in February, 1961 and, presumably, was written shortly before that date. No witness testified as to what the drafter of the covenant meant by the term “single family.” Moreover, the extrinsic evidence introduced by the Association concerning the meaning of the term was not useful in determining what the drafter intended; in every instance, witnesses called by the Association simply gave their own subjective interpretation as to what the phrase meant. There was no language in other paragraphs of the restrictive covenants that provides guidance as to what the drafter of the covenant intended.
The term “family” is a deceptively simple one; indeed, Webster’s Third New International Dictionary gives more than a quarter of a column of definitional material, grouped under seven major headings. See Anno. 71 ALR 3rd. 693, 699-700 “What Constitutes a ‘Family’ Within Meaning of Zoning Regulations or Restrictive Covenant” by James L. Rigelhaupt, Jr., (1976). In its most common connotation, the term implies a biological relationship or some other relationship, such as marriage or adoption, sanctioned by law and given the same or similar legal consequences as the biological relationship. The sense of the term “family” has, however, often been extended to include others, such as servants, living with a biologically or legally related group, and the term may also be used in a sense equivalent to “household,” as including any group which lives together under a common head and uses common facilities. Id.
Some cases, in determining whether the term “single family” is ambiguous when used in a restrictive covenant, have looked to the definition of that term as used in zoning ordinances as some indication of what the term logically might mean. Hill v. The Community of Damien of Molokai, 911 P. 2d 861, 867 (New Mexico, 1996). In Hill, the New Mexico Supreme Court was called upon to interpret a covenant that read: “No lot shall ever be used for any purpose other than single family residence purposes.” The issue arose in Hill because a lot owner was using his property for a group home for four unrelated individuals who suffered from AIDS and needed some degree of home nursing care. Id. In Hill, the trial court ruled that the use of the property for the care of the AIDS patients violated the “single family” use restriction set forth in the covenant. Id. The New Mexico Supreme Court reversed, holding that, given that the word “family” was not defined in the restrictive covenant and nothing in the covenant suggested that it was the intent of the framers to limit the term to a discrete family unit made up only of individuals related by blood or by law, the use of the term “family” in the covenant was ambiguous, and any ambiguity in the restrictive covenant must be resolved in favor of the free enjoyment of the property. Id.
The Hill Court’s analysis was persuasive, and applicable here. While the term “single family” could mean that the property is restricted to use by persons related by blood, marriage, or adoption, the term could logically also have a broader meaning. And because public policy favors the free and unrestricted use of property, restrictions contained in deeds and in zoning ordinances must be strictly construed to favor unencumbered and free use of property. McKinnon v. Benedict, 38 Wis.2d 607, 619 (1968).
Thus, because the phrase in the covenant was ambiguous, and because no evidence was presented to the trial court that showed what the drafters of the covenant intended, it was necessary to construe the ambiguity against Association, the party seeking its enforcement. Therefore, the trial judge did not err when he ruled that the restrictive covenant did not prevent the Longs from renting their property to persons not related by blood, marriage or adoption. Accordingly, this portion of the declaratory judgment issued by the circuit court was affirmed.
COMMENTARY: In their motion for a declaratory judgment, the Longs requested that the court issue a judgment stating that the covenant in question did not restrict the use of the property to persons related by blood, marriage, or adoption. Obviously, the reason the request for relief was so limited was that the Association had, prior to suit, claimed a violation only because the three university students were not related by blood, marriage, or adoption. Thus, that issue was the justiciable controversy presented to the trial court, and the court did resolve that controversy.
The circuit court went further, however, and declared that: 1) three unrelated college students living together in the subdivision did not violate the covenant; and 2) use of the premises by the students did not violate the zoning ordinance. In the complaint for declaratory judgment, the court was not asked to make a declaration as to those issues. The court erred in entering a declaratory judgment that was not requested in the plaintiffs’ complaint. As such, this latter portion of the trial judge’s declaration was vacated, because the Longs simply did not call upon the court to make a declaration as to those uses.
PRACTICE TIPS: For almost the past century, promotion of the single family home has been deemed good public policy in America, and the legitimacy of exclusive single-family districts is well settled. With regard to what constitutes a “family,” zoning ordinances cannot relieve private property from valid restrictive covenants if the ordinances are less restrictive. However, while a zoning statute has no direct applicability to private covenants, it is some indication of the type of groups that might logically, as a matter of public policy, be included within the concept of a “single family.”
Negligent hiring or supervision
BOTTOM LINE: Evidence was sufficient to prove that employer, a mortgage broker, negligently hired and/or retained employee who perpetrated fraudulent foreclosure scheme that caused plaintiff to lose title to her home where record showed that employee’s role as loan officer brought him into contact with public, employer caught employee forging documents on multiple occasions, and employer was aware that employee engaged in “contract for deed” transactions with distressed homeowners.
CASE: Fidelity First Home Mortgage Company v. Williams, No. 726, Sept. Term, 2011 (filed Nov. 27, 2012) (Judges EYLER, D., Mattricciani & Thieme (retired, specially assigned)). RecordFax No. 12-1127-04, 44 pages.
FACTS: Charlene Williams sued Fidelity First Home Mortgage Company, Inc., a mortgage broker; and two former Fidelity First employees, James Fox and James Dan. In her complaint, Williams alleged that Fox and Dan engaged in a fraudulent foreclosure rescue scheme that caused her to lose title to and be deprived of the equity in her home. She further alleged that, as Fox’s employer, Fidelity First was vicariously liable for fraud, breach of fiduciary duty, and violations of the Protection of Homeowners in Foreclosure Act (“PHIFA”), Md. Code (2003 Repl. Vol., 2006 Supp.), sections 7-301-7-321 of the Real Property Article (“RP”). She also alleged that Fidelity First negligently supervised and/or retained Fox.
Williams filed her eight-count complaint naming Fox, Dan, and Fidelity First as defendants in circuit court in August 2009. In December 2009, Fox and Dan were indicted in federal court for wire fraud and conspiracy to commit wire fraud. The following month, Williams filed an amended complaint, alleging that Fidelity First was vicariously liable for fraud, breach of fiduciary duty, violations of PHIFA, promissory estoppel, unjust enrichment, and intentional infliction of emotional distress. She alleged that Fidelity First was directly liable for negligently hiring, supervising, and/or retaining Fox. She sought $500,000 in compensatory damages; $500,000 in punitive damages; and attorneys’s fees and treble damages under PHIFA.
In June 2010, Dan pleaded guilty in his federal criminal case on an agreed statement of facts. In October 2010, Fox did the same. The statements of facts, which was admitted into evidence in the trial in this case, set forth the details of eight foreclosure rescue transactions. Fox was a participant in all eight, while Dan participated as the purchaser in three of the transactions, including the Williams transaction.
The case was tried to a jury for three days. On the first day of trial, Williams voluntarily dismissed her claims against Fox and Dan, proceeding solely against Fidelity First. The court denied Fidelity First’s motions for judgment at the close of Williams’s case and at the close of all the evidence. The jury returned a verdict in favor of Williams on all counts, awarding her $70,000 in compensatory damages and $ 150,000 in punitive damages. Fidelity First moved for judgment notwithstanding the verdict (“JNOV”), and Williams moved for treble damages and attorneys’ fees and costs. The court denied the JNOV motion and the motion for treble damages, but awarded Williams fees and costs.
Fidelity First appealed to the Court of Special Appeals, which affirmed the judgments of the circuit court.
LAW: Fidelity First argued that the evidence was not legally sufficient to prove by a preponderance of the evidence that Fidelity First negligently hired and/or retained Fox. An employer may owe a duty to members of the general public arising from its role in hiring, supervising, and retaining its employees. Evans v. Morsell, 284 Md. 160, 166 (1978). One dealing with the public is bound to use reasonable care to select employees competent and fit for the work assigned to them and to refrain from retaining the services of an unfit employee. When an employer neglects this duty and as a result injury is occasioned to a third person, the employer may be liable even though the injury was brought about by the willful act of the employee beyond the scope of his employment. Id.
Where an employee is expected to come into contact with the public, the employer must make some reasonable inquiry before hiring or retaining the employee to ascertain his fitness, or the employer must otherwise have some basis for believing that he can rely on the employee. Id. at 166-67. The nature and extent of the employer’s duty of reasonable inquiry varies based upon the facts of each case. Id. at 167. As in any action for negligence, a plaintiff asserting a cause of action for negligent supervision or retention must prove duty, breach, causation, and damages. Cramer v. Hous. Opportunities Comm’n, 304 Md. 705, 712-14 (1985). In the instant case, only the breach of the duty of reasonable inquiry was in dispute. Fidelity First contended that the evidence at trial was legally insufficient to prove a breach because Williams failed to elicit evidence that Fidelity First knew, or should have known, of the Fox-Dan partnership, or that it knew or should have known that Fox engaged in a foreclosure rescue scam.
Eubanks hired Fox in January of 2004. At that time, Fox had some investment experience, but no formal training per se as far as to loan applications or anything of that nature. There was evidence from which reasonable jurors could infer that Eubanks tolerated and even encouraged forgery in the pursuit of closing more loans. Fox routinely engaged in forgeries, and described this as a “learned behavior.” He testified that he often would create false asset statements for loan applicants by using his own financial records and “cutting and pasting” a loan applicant’s name and other identifying information onto the document.
Fox was caught forging documents on three occasions, including a complete fabrication of a CPA letter. The first two instances occurred prior to his initial contact with Williams and the third occurred after his first contact with her, but before he submitted the Dan loan application. He was reprimanded for the first two transgressions and was suspended for a week for the third. Fox also testified that, on one occasion, Eubanks asked him to fix a pay stub so as to “enhance” the loan applicant’s income in order to close a loan. Eubanks made this request on the same day that he reprimanded Fox for creating the forged CPA letter. Eubanks also was aware that Fox was engaging in “contract for deed” transactions with distressed homeowners because Fox repeatedly asked Eubanks to “invest” and told him he could guarantee him 20 percent equity. Eubanks declined to participate.
Williams received the Fidelity First solicitation letter in February 2006, shortly before Fox was reprimanded for forgery for a third time. She called Fidelity First in response to that letter, provided some information, and later received a return call from Fox. Fox was the loan officer on Dan’s loan in the Williams transaction. That loan application contained material misstatements with regard to Dan’s income and assets. Fox also fraudulently misrepresented to Williams the nature of the transaction, leading her to believe she was refinancing her mortgage, rather than selling her home to Dan.
Fox, in his role as loan officer, was in regular contact with the general public. Fidelity First was on notice that Fox was willing to forge documents in order to close loans and earn commissions. Despite this knowledge and even though, pursuant to its own internal policies, forgery was a termination event, Fox was retained as an employee after three known instances of forgery. His job duties were not restricted in any way to limit his contact with the public. There was no evidence that Fox’s loan applications were the subject of greater scrutiny after he was caught forging documents, as evident from the fact that the loan application Fox submitted on behalf of Dan, which contained numerous material alterations, was approved by the processing department and by Eubanks.
Based on the totality of this evidence, a reasonable juror could find by a preponderance of the evidence that Fidelity First was negligent in supervising and retaining Fox as an employee.
Accordingly, the award of compensatory damages in favor of Williams was affirmed.
COMMENTARY: Fidelity First additionally argued that the evidence at trial was legally insufficient to sustain the verdict in favor of Williams on her claims for fraud, breach of fiduciary duty, and violations of PHIFA. Fidelity First did not dispute that the evidence was legally sufficient to prove that Fox and Dan engaged in fraud, breached fiduciary duties owing to Williams, and violated PHIFA, but it maintained that this evidence did not support a reasonable inference that Fox was acting within the “scope of his employment” at the time.
Under the well-established rule of respondeat superior, an employer ordinarily is liable for the torts committed by its employees while acting within the scope of employment. Sawyer v. Humphries, 322 Md. 247, 255 (1991). The general test set forth in numerous Maryland cases for determining if an employee’s tortious acts were within the scope of his employment is whether they were in furtherance of the employer’s business and were “authorized” by the employer. Id. By “authorized” is not meant authority expressly conferred, but whether the act was such as was incident to the performance of the duties entrusted to him by the master, even though in opposition to his express and positive orders. Hopkins C. Co. v. Read Drug & C. Co., 124 Md. 210, 214 (1914).
The application of this test is fact-dependent. Id. However, among the pertinent considerations are that to be within the scope of the employment, the conduct must be of the kind the servant is employed to perform and must occur during a period not unreasonably disconnected from the authorized period of employment in a locality not unreasonably distant from the authorized area, and must be actuated at least in part by a purpose to serve the master. East Coast Freight Lines, Inc. v. Mayor & City Council of Balto., 190 Md. 256, 285 (1948). When the employee’s conduct is not expressly authorized by his employer, it must be of the same general nature as that authorized, or incidental to the conduct authorized to fall within the scope of employment. A. & P. Co. v. Noppenberger, 171 Md. 378, 390 (1937).
Here, a reasonable juror could find that Fox was acting within the scope of his employment when he perpetrated the fraudulent scheme against Williams. Williams came into contact with Fox because Fidelity First solicited her. The loan to Dan was central to the fraud on Williams. After the loan closed, Fidelity First received $5,128.11 in fees, which it split evenly with Fox. This evidence was legally sufficient to prove that Fox’s involvement in the origination of Dan’s mortgage loan to purchase Williams’s house was incident to the performance of the duties entrusted to him by Fidelity First and in furtherance of Fidelity First’s business. Thus, the foreclosure rescue scheme perpetrated by Fox while employed by Fidelity First was within the scope of his employment. Accordingly, there was no error in the denial of the motions for judgment or for JNOV on this basis.
PRACTICE TIPS: With regard to vicarious liability for punitive damages, Maryland follows the majority rule, which holds that punitive damages can be vicariously imposed on the master for acts of the servant committed during the course of his employment without regard to whether the master authorized, participated in, or ratified the employee’s conduct. Where an employee commits a tort within the scope of his employment and there is clear and convincing evidence supporting a finding that he acted with actual malice, that conduct may support an award of punitive damages against an employer premised on respondeat superior.