Legal opinions – Court of Special Appeals

Criminal Procedure

Expungement of record

BOTTOM LINE: The fact that Appellant was on probation for a prior conviction at the time he filed his petition for expungement of record did not make him “a defendant in a pending criminal proceeding” and, therefore, the circuit court erred in denying the petition.

CASE: Robert B. v. State, No. 266, September Term 2009 (filed July 8, 2010) (Judges Eyler, D., Meredith & HACKNER). RecordFax No. 10-0708-00, 20 pages.

FACTS: Robert B. was charged with possession with intent to distribute and simple possession of a controlled dangerous substance in the district court. The State entered a nolle prosequi on the possession with intent to distribute charge, leaving only the simple possession count for trial. The case was transferred to the circuit court for a jury trial. There, a nolle prosequi was entered on the remaining possession charge.

Robert B. filed a petition for expungement of both charges in accordance with CP §10-105(a). At the time he filed the petition, Robert B. was on probation for a prior armed robbery conviction that resulted from a guilty plea.

The circuit court denied the petition for expungement, concluding that Robert B. was “a defendant in a pending criminal proceeding” because of his probationary status, and that he was therefore ineligible to obtain an expungement under CP §10-105 (e)(4)(ii)(2).

Robert B. appealed to the Court of Special Appeals, which reversed.

LAW: A criminal charge concluded by the entry of a nolle prosequi is generally subject to expungement. See CP §10-105. However, a person is ineligible for expungement if he “has been convicted of a crime other than a minor traffic violation” since the entry of a nolle prosequi, see CP §10-105(e)(4)(ii)(1), or if he is “a defendant in a pending criminal proceeding.” See CP §10-105(e)(4)(ii)(2). The issue here was whether the fact that Robert B. was on probation made him “a defendant in a pending criminal proceeding” as contemplated by CP §10-105(e)(4)(ii)(2).

The expungement provisions do not define the term “pending” as it is used in §10-105(e)(4)(ii)(2). The term “pending,” as it is commonly understood and used in its basic legal sense, means the period of time beginning with the inception of an action and ending at the entry of a final judgment. Black’s Law Dictionary defines the term “pending” to mean “[r]emaining undecided; awaiting decision <a pending case>.” Black’s Law Dictionary 1169 (8th ed. 2004).

A criminal case begins upon a “formal charge, preliminary hearing, indictment, information, or arraignment.” Webster v. State, 299 Md. 581 (1984). A criminal proceeding is completed when a “sentence is imposed on a verdict of guilty. That is when judgment is entered.” Chmurny v. State, 392 Md. 159 (2006).

For purposes of appeal, judgment in a criminal case is final and appealable once a guilty verdict has been returned and a sentence imposed. A guilty verdict alone may not be appealed. Jones v. State, 298 Md. 634, 637 (1984).

Thus, a criminal proceeding is “pending” for purposes of CP §10-105(e)(4)(ii)(2) beginning with the formal charges, and ending upon entry of a judgment in the form of a sentence.

In Blythe v. State, 161 Md. App. 492, 561 (2005), the Court of Special Appeals held that a defendant still serving a sentence was not a defendant in a “pending criminal proceeding in the context of the Maryland Public Information Act (MPIA).” In that case, Blythe made an MPIA request to obtain records from the State Attorney’s Office relating to his murder convictions in 1997. Blythe was still serving his sentence when the request was made.

The State’s Attorney denied Blythe’s MPIA request on the ground that because his sentence was not complete, he was a defendant in a “pending criminal case” and that “disclosure would interfere with a valid and proper law enforcement proceeding.”

The Court of Special Appeals rejected that argument, stating: “If the County were correct that the mere possibility that a post-conviction petition might be filed compelled the conclusion that the criminal case was still pending, no criminal case would ever be final. As long as a convicted defendant is still serving a sentence or is on parole or probation, the possibility of filing a post-conviction petition or a writ of federal habeas corpus or a writ of coram nobis is always present.” Id. at 561.

In Whack v. State, 338 Md. 665 (1995), the Court of Appeals considered whether the defendant had been “convicted” of a predicate offense so as to subject him to an enhanced sentence under former Article 27, §286(c)(1). At the time the subsequent offense was tried, a petition for writ of certiorari with respect to the prior conviction was still pending in the Court of Appeals. Nevertheless, the trial court ruled that Whack’s conviction for the predicate offense qualified him for an enhanced sentence.

The Court of Appeals agreed and defined the term “convicted” in its “legal and technical sense, to mean following judgment or sentence.” The Court held that once a judgment has been entered, it remains conclusive and final until set aside on appeal. Id. at 675. The possibility that the judgment, or any portion of it, may be set aside in a pending appeal does not affect the finality of the judgment.

Since a criminal judgment is conclusive despite the possibility of being set aside on appeal, it stands to reason that Robert B.’s conviction is conclusive even though his probation may later be revoked. An appeal from a criminal conviction addresses the merits of the underlying judgment and can result in the judgment being overturned. By contrast, a violation of probation arises independently from the underlying case. It does not alter the original judgment, even though the court can order execution of a previously suspended jail term. Williams v. State, 72 Md. App. 233, 235-36 (1987).

A reading of the expungement statute as a whole supports the conclusion that a criminal proceeding is not “pending” under CP §10-105(e)(4)(ii)(2) merely because a defendant is on probation in that proceeding when he applies for expungement of a record of another proceeding that was nol prossed.

CP §10-105(c) describes the time requirements for filing a petition for expungement. Certain provisions of this section specifically mention completion of probation as a condition precedent to obtaining an expungement.

For example, CP §10-105(c)(6) reads: “[A] petition for expungement based on the conviction of a crime under subsection (a)(9) of this section may not be filed within 3 years after the conviction or satisfactory completion of the sentence, including probation, that was imposed for the conviction, whichever is later.” This language expresses the legislature’s intention that for the enumerated offenses, the waiting period for expungement extends beyond conviction and the entry of a judgment. The use of the word “or” in (c)(6), indicates that a “conviction” means something different than the “completion of the sentence, including probation.” Otherwise, this language would be surplusage.

Subsection (c)(2)(i) states that a petition for expungement based on a probation before judgment may not be filed before “the date the petitioner was discharged from probation.” If the legislature had intended for subsection (e)(4)(ii)(2) to preclude an expungement while a defendant was on probation, there would be no need for that language in (c)(2)(i).

By contrast, subsection (c)(1), which provides for expungement based on an acquittal, nolle prosequi, or dismissal, begins the time line from “the disposition.” The only time constraints for expungements under these circumstances are the expiration of the tort limitations period or the filing of a written general release of tort claims by the petitioner.

Additionally, a revocation of probation hearing is a civil proceeding and many of the constitutional rights inherent in criminal proceedings are not available in revocation of probation proceedings. See Chase v. State, 309 Md. 224 (1987). Since a violation of probation hearing is considered a civil matter, it would make little sense to view the probationary period that precedes it as a pending criminal proceeding.

Robert B.’s prior criminal proceeding was concluded when he was sentenced. That event constituted the final judgment in the case, despite the possibility that Robert B.’s probation might subsequently be revoked upon a violation. Therefore, there was no criminal proceeding pending as contemplated by CP §10-105(e)(4)(ii)(2) at the time the petition for expungement was filed. The trial court committed error by denying the petition for expungement.

Accordingly, the judgment of the circuit court was reversed.

COMMENTARY: The term “criminal charge” appears multiple times throughout the expungement statute but is not specifically defined. For example, in CP §10-105(a)(2), a person may receive an expungement if “the charge is otherwise dismissed[.]” Subsection (a)(5) permits expungement if “the court indefinitely postpones trial of a criminal charge by marking the criminal charge ‘stet’ or stet with the requirement of drug or alcohol abuse treatment on the docket[.]” Subsection (a)(7) permits expungement if “the charge was transferred to the juvenile court under § 4-202 of this article[.]” Subsection (e)(2) states that if a person is entitled to expungement, “the court shall order the expungement of all police records and court records about the charge.”

The State argued that the legislature intended “criminal charge” to have a different meaning than “criminal proceeding” and that the latter expression has a broader meaning than the former.

If the language of a statute is unambiguous and expresses a plain meaning, we will give effect to the statute as written. Stoddard v. State, 395 Md. 653, 661 (222006). As it is well established that a violation of probation hearing is a civil proceeding, it cannot be concluded that the legislature meant for a period of probation to be a “criminal proceeding” absent clear statutory language to the contrary.

PRACTICE TIPS: While the federal repeat offender statute requires a “final judgment,” which means complete exhaustion of appellate review, none of the applicable Maryland statutes contains the qualification that convictions must be final. See Whack v. State, 338 Md. 665, 676-77 (1995).

Evidence

Admissibility of expert testimony

BOTTOM LINE: In light of the overwhelming evidence linking the defendant to the murder, any error in admitting expert testimony on firearm toolmark identification or limiting cross examination of the experts was harmless beyond a reasonable doubt.

CASE: Fleming v. State, No. 899, September Term, 2008 (filed Aug. 4, 2010) (Judges Woodward, Eyler, D. & RAKER (retired, specially assigned)). RecordFax No. 10-0804-00, 36 pages.

FACTS: Monti Fleming was involved in an altercation with Shawn Powell. Several people witnessed Fleming hitting Powell in the head with a glass bottle, and then drawing a gun and shooting between four and six shots in the direction of the retreating Powell. Powell was found dead in a nearby yard the following day, having died from a single gunshot wound to his back.

In discovery, the State indicated that it intended to call expert witnesses in the field of firearm toolmark examination to establish that a gun which Fleming gave to his stepgrandfather shortly after the murder was the same weapon that fired the fatal shots.

Fleming filed a motion in limine to challenge the admissibility of that testimony, arguing that the method of firearms toolmark analysis the State’s expert witnesses used, “side-by-side, or split-screen comparative microscopic matching,” was unreliable and that the examiners should have used an alternative methodology, “consecutive matching striae” (CMS).

The trial court denied the motion, concluding that the expert testimony using the traditional comparative microscopic matching technique was admissible under Frye-Reed and that CMS is not generally accepted within the scientific community.

At trial, the State called as witnesses Shade and Starlette Webb, both of whom testified that they saw Fleming hit Powell with a bottle and that Fleming fired approximately five shots towards. The State also called Kanise Lewis who was just a few feet from Fleming when she saw him pull out the gun and shoot towards Powell. Lewis positively identified Fleming from a photo array. Howard County police evidence technician James Roeder testified to finding a trail of blood linking the general area in which Powell was seen running away from Fleming with the yard where he was found dead.

Defense counsel proposed to cross-examine the expert witnesses in connection with the “alternative” CMS firearms toolmark analysis technique. The court did not permit this line of cross-examination.

In closing argument, defense counsel made clear to the jury that the defense was not contesting whether Fleming was the shooter, but instead, asked the jury to consider whether Fleming really intended to harm the victim. Accordingly, counsel conceded explicitly that Fleming was criminally liable for Powell’s death, in some degree.

Fleming was convicted of first-degree murder and sentenced to life imprisonment.

Fleming appealed to the Court of Special Appeals, which affirmed.

LAW: The toolmark identification evidence is relevant, ordinarily, to connect a weapon, bullets and shell casings to a particular individual. The probative value of that evidence in this case was to establish that Fleming was the person who fired the gun from which the fatal bullets were shot. However, criminal agency was not a significant issue in the case.

Where a trial court errs by admitting inadmissible evidence, the error may, but will not necessarily, result in a reversal of a resulting conviction. See Moore v. State, 413 Md. __ (2010). “[W]hen an appellant, in a criminal case, establishes error, unless a reviewing court, upon its own independent review of the record, is able to declare a belief, beyond a reasonable doubt, that the error in no way influenced the verdict, such error cannot be deemed ‘harmless’ and a reversal is mandated. Such reviewing court must thus be satisfied that there is no reasonable possibility that the evidence complained of — whether erroneously admitted or excluded — may have contributed to the rendition of the guilty verdict.” Dorsey v. State, 276 Md. 638, 659 (1976).

Although providing a full opportunity for cross-examination is the principal means of implementing a criminal defendant’s constitutional right of confrontation, errors in defining the scope of cross-examination are subject to harmless error review. See Delaware v. Van Arsdall, 475 U.S. 673, 684 (1986); Owens v. State, 161 Md. App. 91, 111-12 (2005).

Here, three eyewitnesses positively identified Fleming and testified to seeing him hit Powell with a bottle and shoot towards Powell, who was retreating. Their descriptions of this event were consistent with Powell’s fatal injury, which was a gunshot wound to the back. Also, Fleming’s step-grandfather testified that Fleming brought him a .380 caliber handgun for him to store or sell within three days after the shooting. Casings for .380 caliber rounds were found at the scene.

As to the limitation on cross examination of the experts, the best Fleming could have achieved by cross-examining the State’s witnesses about the CMS method was to show that there are valid concerns about the subjectivity of traditional firearms identification evidence, and that there is an emerging, but not generally accepted branch of the discipline that aspires to greater objectivity.

Accordingly, even assuming error in admitting the firearm testimony or limiting the cross examination, any error was harmless beyond a reasonable doubt. Moreover, even if the admission of the State’s firearm expert testimony was not harmless, the trial court did not err.

The admissibility of expert testimony concerning scientific or forensic evidence is governed by the Frye-Reed standard, which provides that scientific techniques can be admissible if they are “generally accepted” in the scientific community. See Frye v. United States, 293 F. 1013, 1014 (D.C. Cir. 1923); Reed v. State, 283 Md. 374, 389 (1978).

Although courts have consistently found the traditional method of firearms toolmark analysis the State’s expert witnesses used, comparative microscopic matching, to be generally accepted within the scientific community, the alternative method proposed by Fleming, CMS, is not truly an alternative, but rather an emerging refinement of the same technique. Moreover, the advent of CMS has not undermined the “generally accepted” nature of traditional comparative microscopy.

Accordingly, the judgment of the circuit court was affirmed.

COMMENTARY: Defense counsel probed the detective about her reason for showing a single photograph, instead of a photographic array, to the Webb sisters. The reason was that the detective believed the witnesses knew Fleming prior to the shooting incident. Counsel then asked her whether, just because they say that they knew Fleming, she assumed that they did, to which the detective responded that she found them to be “credible.” Defense counsel objected and moved for a mistrial, arguing that the detective’s statement “bolstered” the credibility of the witnesses. The trial court denied the motion.

A trial court may grant a mistrial where such a measure is “necessary to serve the ends of justice.” Jones v. State, 310 Md. 569, 587 (1987). The defendant bears the burden of showing that the prejudice arising from the trial court’s error demands the declaration of a mistrial. Hunt v. State, 312 Md. 494, 503 (1988).

Here, the detective’s response was an appropriate answer to the question propounded by defense counsel, and it was not said with the intent to bolster the testimony of the Webb sisters. The detective explained why she showed the sisters only a single photo — because the sisters told her that they knew Fleming and the sisters’ statements that they knew him were “credible” to her. Counsel asked her a question, and he received her answer.

Accordingly, the trial court did not abuse its discretion in refusing to grant a mistrial.

PRACTICE TIPS: The admissibility in federal courts of scientific evidence is determined under a different standard than that applied in Maryland courts, derived from Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Nonetheless, the Court of Appeals has considered federal Daubert inquiries to be instructive, although certainly not dispositive, for purposes of admissibility in Maryland courts. See, e.g., Blackwell v. Wyeth, 408 Md. 575, 605 n.19 (2009).

Insurance Law

Coverage

BOTTOM LINE: Driver was not insured under omnibus clause in policy applicable to the vehicle he was operating at time of the accident because there was no allegation of an insured passenger’s negligent use of the vehicle for which the driver would be legally responsible.

CASE: Agency Insurance Co. v. State Farm, et. al., No. 595, September Term 2009 (filed July 8, 2010) (Judges Davis, WOODWARD & Raker (retired, specially assigned)). RecordFax No. 10-0708-02, 22 pages.

FACTS: In December 2005, Barbara Brooks owned a 1999 Ford Escort that was insured by State Farm. On December 30, 2005, Aaron Zufall was driving the Escort with Brooks’ minor daughter, Emily Pugh, and Tom Mullinex as passengers. The Escort struck a vehicle driven by Lauren DeLodovico. Both Pugh and DeLodovico were killed as a result of the accident.

Under State Farm’s policy covering the Escort, Brooks was listed as a named insured and Pugh was covered as a resident relative. Zufall was an insured under an Allstate policy that was issued to his parents, and DeLodovico was an insured under a policy with Agency Insurance Co., which contained a $50,000 uninsured motorist provision.

Agency filed a Complaint for Declaratory Judgment, which requested that the court “[d]etermine and adjudicate the rights and liability of the parties with respect to the policies involved.” A one-day trial was held, where Brooks was the only witness.

Brooks testified that she permitted Pugh to drive to Zufall’s house on the date of the accident, and spend the night there. Brooks understood that Zufall and Pugh planned to pick up some other friends on the way. She instructed Pugh that Pugh was only allowed to drive the Escort to Zufall’s house and back. The car was to remain parked at the Zufall residence once Pugh was there, and she was not to do any additional driving that evening. Brooks never told Zufall of these restrictions. Brooks also provided a statement to State Farm that she never gave Zufall permission to drive the Escort that evening.

The depositions of Zufall and Mullinex were also introduced into evidence. Zufall testified that Pugh volunteered the use of the Escort and gave the keys to him. Mullinex claimed that Pugh handed over the keys after Zufall stated his desire to drive the car. Zufall maintained that he was unaware that Pugh was only permitted to drive the Escort to his home that evening and asserted that Pugh never communicated any restrictions that Brooks placed on the car’s use. Zufall stated that he had driven the Escort on a number of previous occasions and that Pugh had given him permission to drive the car.

The trial court ruled that neither State Farm nor Allstate was required to defend or indemnify Zufall, because he did not have permission to drive the Escort.

Agency appealed to the Court of Special Appeals, which affirmed.

LAW: Because an insurance policy is a contract, the usual principles of contract interpretation apply, “which require that a contract be interpreted as a whole, in accordance with the objective law of contracts, to determine its character and purpose.” Anderson v. Gen. Cas. Ins. Co., 402 Md. 236, 246 (2007). “Maryland does not follow the rule that insurance policies should, as a matter of course, be construed against the insurer.” Dutta v. State Farm Ins. Co., 363 Md. 540, 556 (2001). The instant case requires the interpretation of the “omnibus clause” of State Farm’s policy. An omnibus clause extends coverage under an automobile insurance policy to individuals other than the named insured. See Salamon v. Progressive Classic Ins. Co., 379 Md. 301, 315 (2004).

Here, State Farm’s insurance policy contained an omnibus clause that provided insurance coverage, in pertinent part, to “any other person or organization liable for the use of such a car by one of the above insureds.”

Agency argued that Brooks was a named insured on the policy, and Pugh was insured as a resident relative. According to Agency, Pugh was in actual use of the Escort at the time of the accident, even though Zufall was driving the car, because Zufall was operating the Escort in furtherance of Pugh’s purposes.

In support, Agency relied on Melvin v. American Automobile Insurance Company, 232 Md. 476 (1963), in which Barry Brontman obtained permission from his father to use his car. Barry asked his friend, Alan Melvin, to drive. Thereafter, Melvin lost control of the car and struck a tree, killing Barry and injuring another passenger. The controversy in Melvin was whether the omnibus clause in Barry’s father’s automobile insurance policy covered Melvin. Specifically, the parties contested whether Barry, who was a passenger at the time of the accident, actually “used” the car. The Court of Appeals determined that the meaning of the words “actual use” in the omnibus clause should not be limited “to the operation of a vehicle, where the operator is the agent or servant of another and subject to his immediate and present direction and control.” Id. at 478-79. The Court held that the “actual use” of Barry’s father’s car was by Barry, and therefore Melvin was an insured under the omnibus clause. Id. at 480.

In Melvin, the pertinent section of the omnibus clause provided coverage to “[a]ny other person…legally responsible for the use of (1) an automobile…not owned or hired by such person…provided the actual use thereof is by a person who is an insured under (a) or (b) above with respect to such automobile.” Id. at 478.

Here, however, the relevant section of the omnibus clause in State Farm’s policy covers “any other person or organization liable for the use of such a car by” one of the insureds. Thus, insurance coverage under that section exists only for any other person or organization when that person or organization is responsible for an insured’s negligent use of a covered vehicle. Accordingly, Zufall could be covered under that section only if his liability arose from Pugh’s negligent use of the Escort.

Beasley v. Allstate Insurance Company, 246 S.C. 153 (S.C.1965) is even more on point. In Beasley, a car owned by L.G. Tolson and driven by Raymond Wilkes was involved in an automobile accident. Id. at 873. Tolson’s son, Darrell, was a passenger in the vehicle operated by Wilkes and sustained fatal injuries. Darrell’s Allstate insurance policy read in relevant part, “With respect to the insurance for Bodily Injury Liability and for Property Damage Liability the unqualified word ‘insured’ includes…any other person or organization legally responsible for the use by such named insured or spouse of an automobile not owned or hired by such other person or organization.” The trial court found in favor of Allstate, ruling that Wilkes was not an insured under the policy and, on appeal, the Court affirmed, concluding, “There is a complete absence of any fact in the record tending to show that Wilkes was legally responsible for any use of the automobile by either Darrell [ ] or, perchance, his spouse.” Id.

The relevant language of the insurance policy in Beasley was virtually identical to the language of the relevant section of the omnibus clause here. Because there was no allegation of Pugh’s negligent use of the Escort for which Zufall would be legally responsible, Zufall was not covered under that section of the omnibus clause.

Accordingly, the judgment of the circuit court was affirmed.

COMMENTARY: At the time of the accident, a personal automobile policy had been issued by Allstate to Zufall’s parents. The Allstate policy provided coverage for “insured persons” using “insured autos.” Therefore, in order for the Allstate policy to cover Zufall as the driver of the Escort at the time of the accident, Zufall had to be an “insured person,” and the Escort had to be an “insured auto.” Because Allstate never took the position that Zufall was not an “insured person” at the time of the accident, the only issue for the Court to resolve was whether the Escort was an “insured auto” under Allstate’s policy.

Agency’s contention that Pugh was an “owner” by virtue of her lawful possession of the Escort was rejected because Pugh did not in fact lawfully possess the car at the time of the accident. Brooks provided uncontradicted testimony at trial that neither Pugh nor Zufall was permitted to drive the Escort once Pugh arrived at Zufall’s home.

Moreover, the facts cited by Agency to rebut the presumption that Brooks was the owner of the Escort were inadequate. Pugh’s name was not on the title to the car, nor its registration. Pugh did not pay any money toward the purchase of the Escort, toward its maintenance and repair, or toward the insurance on it. Other than driving the car to school, work, or volunteering, Pugh was required to ask Brooks for permission to use the car and “let [her] know where she was going and call[ ][her] when she got there.” Indeed, at trial Agency stipulated that Brooks was the owner of the Escort.

Finally, Zufall’s reasonable belief that Pugh could grant permission to use the Escort was irrelevant to resolution of the coverage issue. By the plain terms of the Allstate policy, a non-owned automobile is an “insured auto” only when it is operated with the owner’s permission. There is no language in the policy that provides insurance coverage when a named insured has only a reasonable belief that he or she has permission from the owner to drive the vehicle.

PRACTICE TIPS: In the context of automobile liability insurance, it is well settled that “title registration merely raises a presumption of ownership, which, not being conclusive, is rebuttable by evidence to the contrary if such is produced.” Liberty Mut. Ins. Co. v. Am. Auto. Ins. Co., 220 Md. 497, 500 (1959); accord Keystone Ins. Co. v. Fid. & Cas. Co. of N.Y., 256 Md. 423, 426-27 (1970).

Real Property

Conveyance

BOTTOM LINE: Where father failed to present any evidence to rebut the presumption that his conveyance of partial interests in real property to his children were gifts, the circuit court erred in ordering the children to contribute a portion of their shares of the proceeds of sale to reimburse their father for mortgage payments, taxes and expenses incurred in connection with their jointly owned property.

CASE: Meyer v. Meyer, No.00375, September Term, 2009 (filed July 8, 2010) (Judges Woodward, KEHOE, & Salmon (retired, specially assigned)). RecordFax No. 10-0807-01, 27 pages.

FACTS: William Meyer and Kimberly O’Neil purchased a house as tenants by the entireties for $113,000. In 1989, the couple mutually and voluntarily separated and executed a Separation Agreement. Section 8 of the Separation Agreement provided that all of their right title and interest in the marital home was transferred to William who assumed all of the obligations of the mortgage. In consideration for relinquishing all of her right, title and interest in the home, Kimberly would receive one half of the net proceeds from the sale of the home, up to a maximum of $10,000.

In 1992, William and Kimberly conveyed the Property to their son and daughter as joint tenants with right of survivorship. Son and daughter were, respectively, six and three years old at the time of the conveyance and resided with William in the Property. The deed provided that there was no consideration for the transfer of the Property.

In July, 1998, the children moved from the Property to reside with Kimberly. In 2003, William refinanced the mortgage on the Property for the second time. He was listed as the sole borrower and neither of his children signed the deed of trust.

In August, 2004, William and his current wife obtained a home equity line of credit, using the Property as security. William’s children both signed the deed of trust as grantors.

In 2007, William and his wife moved from the Property and purchased another home. William filed a complaint against his children for sale in lieu of partition of the Property, requesting that the court adjust the shares of his son and daughter to the proceeds to reimburse him for a portion of his mortgage, tax and insurance payments for the Property from July, 1998 (the date the children moved to Kimberly’s house). The children filed their own complaint for sale in lieu of partition of the Property and the cases were consolidated.

The circuit court determined that the children were obligated to contribute to William’s mortgage payments, taxes and insurance reimbursements and other “expenditures that preserve the property.” The circuit court also denied Kimberly’s request for her share of the proceeds of the sale.

The Court of Appeals reversed in part and vacated in part.

LAW: In Maas v. Lucas, 29 Md. App. 521 (1975), at the time of the dissolution of the marriage in 1943, Maas and his soon-to-be-divorced wife conveyed the property by straw deeds to a straw party who reconveyed it to appellant and his children as tenants in common. Both straw conveyances warranted the property specially and contained covenants that the grantors (parents) had done: “no act, matter or thing whatsoever to encumber the property hereby conveyed.”

There was in existence at that time, however, a mortgage on the property executed by the real grantors, appellant and his wife, (as opposed to the straw party to whom they had represented that warranty). Less than one year later, appellant discharged the mortgage by full payment of the $4,770 balance due. The children did not assume any obligation under the mortgage, nor was the mortgage assigned to appellant upon discharge for subrogation or otherwise. Id. at 532-33. Twenty-five years later, Maas filed an action for sale in lieu of partition and claimed that the portion of the proceeds to be paid to his children should be reduced by their proportionate shares of the mortgage pay-off. The circuit court agreed.” Id. at 534.

The Court of Special Appeals reversed. First, the transfer to the children was presumptively a gift and there was no evidence to overcome that inference. Id. Second, the property was expressly conveyed without encumbrances and the mortgage was released by Maas without any attempt to reserve a right of contribution by subrogation. Id. Finally, the Court distinguished Maryland cases holding that one co-tenant is liable for contribution for a mortgage payment made by another because, in all of those cases, both co-tenants were parties to the obligation, whereas Maas’ children were not. Id. at 535-36.

Relying on Maas, William’s children argued that William’s transfer of interests in the Property to them, as well as his subsequent payments for mortgage, property tax, insurance, etc., were gifts and that William had no right to seek contribution for gifts.

“When a person transfers property to another without consideration, there is a presumption that the transferor intended to retain the beneficial interest in the property. When this occurs, the property is said to be subject to a ‘resulting trust’ in favor of the transferor.” Restatement (Second) of Trusts (1959). Furthermore, “where a person attempts to establish a resulting trust, the burden is on him to prove such trust, and it must be made out by plain and unequivocal evidence.” WSSC v. Utilities, 365 Md. 1, 38 (2001) (quoting Fitch v. Double “U” Sales Corp., 212 Md. 324, 330 (1957)). Resulting trusts do not occur when the transfer is intended as a gift. Restatement §405

Restatement §442 provides: “Where a transfer of property is made to one person and the purchase price is paid by another and the transferee is a wife, child or other natural object of bounty of the person by whom the purchase price is paid, a resulting trust does not arise unless the latter manifests an intention that the transferee should not have the beneficial interest in the property.” See also The American Law Institute’s commentary to §442. See Brandenburg v. Harshman, 193 Md. 104 (1949).

The presumptions established by §442 may be rebutted if the transferor or payor “manifests an intention that the transferee should not have the beneficial interest in the property.” Restatement §443. “It is the intention of the payor at the time of the transfer and not at some subsequent time which determines whether a resulting trust arises.” Commentary to Restatement §443

The 1992 conveyance, which was without consideration, was presumptively a gift by William to his children. William can rebut that presumption by demonstrating that, at the time of the transfer, he intended to retain a beneficial interest (namely, the right to contribution) in the property interests conveyed to his children by clear and convincing evidence.

There was no written expression of William’s intent to subject the interests conveyed to his children to a right of contribution. While the Property was subject to a mortgage at the time of transfer, the deed to the children conveyed their interest to them without any conditions, reservations or restrictions.

In addition, the deed contained a specific covenant that the grantors had not encumbered the Property. The covenant against encumbrances is indicative of William’s intention to convey interest to his children free of the existing mortgage. Maas, 29 Md. App. at 534.

There was nothing in the testimony of William and Kimberly that supported the conclusion that the transfer was not intended as a gift or that William made manifest, at the time of the transfer or thereafter, that he was intending to reserve a right to seek contribution.

Kimberly testified that she and William discussed their intentions regarding the transfer of the Property to the children and that they both intended it as a gift. William testified that he transferred his interest in the Property to the kids as an insurance policy, stating that it was his intention, at the time of the transfer, to die in the Property and that he never intended to ask the children for any contribution. He also testified that when he asked his daughter, then 16 years old, to sign the home equity deed of trust in 2004, he did not tell her that, by signing the home equity deed of trust as a property owner, she placed her interest in the Property at risk if the loan was not paid back.

William’s son testified that William told him that he and his sister would not be financially obligated by the line of credit taken out in 2004. William’s mortgage, tax and insurance payments were not, in and of themselves, sufficient evidence to rebut the presumption that the conveyance was a gift. Restatement §457.

There was no evidence that William ever requested that the children contribute to the payments and, indeed, William testified that it had not been his intent on to seek contribution from them. William failed to present any evidence, much less clear and convincing evidence, to rebut the presumption that the conveyance of partial interests in the Property, and the subsequent payments, were gifts to his children. Thus, the circuit court erred in imposing an obligation of contribution upon William’s son and daughter.

Accordingly, the judgment of the circuit court was reversed.

COMMENTARY: Kimberly argued that the circuit court erred in holding that she was not entitled to receive up to $10,000 from William’s share of the proceeds of the sale.

Kimberly would have been entitled to a portion of William’s share of the proceeds had she performed her obligations under the Separation Agreement. However, she was also entitled to payment if she tendered “substitute performance” acceptable to William. See Restatement (Second) of Contracts §278(1) (1981).

The evidence strongly supported the theory of substituted performance. However, the evidence also suggested that William and Kimberly may have negotiated a modification of the Separation Agreement to the effect that Kimberly would waive her right to a share of the proceeds of sale of the Property in return for William’s decision to convey the Property to himself and their children. In light of the sparse record and the absence of any pertinent findings by the circuit court, this portion of the case was remanded for the court to make appropriate findings of fact and conclusions of law.

While the Separation Agreement and the deed, read together, clearly reflected the decision to transfer interests in the Property to the children, they did not address whether William and Kimberly intended that such a transfer would relieve William of his obligation to pay Kimberly a portion of the proceeds if the Property were sold. Therefore, parol evidence was admissible to determine the parties’ intentions. Canaras v. Lift Truck Services, Inc., 272 Md. 337, 351 (1974). However, a waiver by Kimberly of her right to receive a share of the proceeds of the sale “must be clearly established and will not be inferred from equivocal acts or language.” Myers v. Kayhoe, 391 Md. 188, 206 (2006).

PRACTICE TIPS: Parol evidence of events occurring after the transaction is admissible only to prove the intent of the parties at the time of the transaction, such as where evidence of a decedent’s exercise of dominion and control over property titled by him in the name of another (without informing the owner of record) was sufficient to show that, at the time the property was purchased, the decedent purchased the property with his own funds intending, eventually, to title it in his own name. See, e.g., Taylor v. Merc-Safe Deposit and Trust, 269 Md. 531 (1973).