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Out-of-love lawyers fight over finance management

As a husband, lawyer John S. Guttmann Jr. may have been every bit as bad as his ex-wife — also a lawyer — says he was. But that doesn’t mean she can sue him for fraud, conversion and intentional infliction of emotional distress.

In a divorce case that sounds more like a shareholder lawsuit, Nancy E. Lasater claims Guttmann breached a fiduciary duty to the marriage and committed fraudulent misrepresentation by misspending family funds and then covering it up.

But the Court of Special Appeals said such corporate-sounding allegations generally do not apply to family law and marital finances.

“The parties to a marriage bring with them differing views of necessary and discretionary expenditures,” the intermediate court said in its 3-0 decision affirming a judge’s dismissal of Lasater’s claims.

“And despite those differences, both parties bear the responsibility for managing joint finances and bear the risk that the other spouse will spend marital funds in a manner not to their liking,” the court added. “We decline to open the door to tort suits arising from disagreements over allocation of marital resources when these grievances properly can be remedied in the divorce setting.”

For example, a judge can consider evidence of “wasteful or imprudent” financial conduct by one spouse in awarding most, if not all, marital property to the other spouse, Judge Deborah S. Eyler wrote for the court.

Lasater’s attorney said he plans to appeal the decision to Maryland’s top court and is confident the Court of Appeals will agree with his argument that spouses owe each other the fiduciary duty of treating joint finances in a manner that benefits the marriage.

“I think that the Court of Appeals has been taking a lot of cases dealing with unresolved issues in family law,” said John J. Condliffe of Shub-Condliffe, Condliffe & Silverstein P.A. in Towson.

But Guttmann’s lawyer said the Court of Special Appeals was correct in not extending fiduciary duties to husbands and wives.

The decision is “an effort by the Court of Special Appeals to address the relationship between spouses and whether or not such relationship is fiduciary or confidential in nature and under what circumstances,” said Joseph P. Suntum of Miller, Miller & Canby Chtd. in Rockville. “The court’s opinion makes it clear that a breach of fiduciary duty claim can only be considered on a case-by-case basis under very limited and extraordinary circumstances.”

Lasater’s claim of conversion did not survive because the monies allegedly converted were in the couple’s joint account, nor was Guttmann’s behavior so “extreme and outrageous” as to meet the standard for an intentional infliction of emotional distress tort.

Monday’s decision came as the ugly denouement to the couple’s more than 25-year marriage, which ended in 2007.

Lasater claims Guttmann — without her knowledge — spent beyond the couple’s means on real-estate investments and a compact-disc collection. Guttmann, a partner at Beveridge & Diamond P.C. in Washington, D.C., then blamed the family’s financial woes on her decision to quit her law practice to care for their two daughters, who were born in 1995 and 2000, Lasater alleges.

Lasater claims she was unaware of the troubled finances because she believed her husband and never read a bank statement for about the first 23 years of their marriage. She also claims she did not know her husband’s annual income, which exceeded $350,000.

Lasater discovered the truth in the fall of 2002 after she tried unsuccessfully to withdraw $40 from the couple’s joint checking account, she says.

In December 2002, she told Guttmann she would take “stewardship” of the finances. She began opening the bank statements and discovered Guttmann had opened a home equity line of credit and that their joint checking account had an overdraft balance, she claims.

“As a fellow attorney with at least 20 years of experience in the legal world, Lasater could not have reasonably relied upon her husband’s statements” of financial health, the court wrote in its opinion. “Moreover, she was not free to rely on these statements when their falsity was obvious and she was able to discover the truth simply by opening one of the hundreds of bank statements sent to their home over the years or from a cursory review of their joint tax returns.”

But Lasater’s lawyer disagreed, saying Guttmann was very much in charge of the family’s finances.

“There are many professional women who find themselves in a controlled relationship,” Condliffe said. “The fact you have an education, even a law degree, does not make you immune.”

The couple refinanced their home mortgage to eliminate their debt, but this effort could not save the marriage. Guttmann moved out in April 2005.

Lasater sued for breach of fiduciary duty and fraudulent misrepresentation in Montgomery County Circuit Court in August 2005. Three months later, Guttmann, who denies his ex-wife’s allegations, filed for divorce and received a stay of Lasater’s claims during the divorce proceedings.

The divorce was granted on Nov. 15, 2007, and the stay was lifted. Montgomery County Circuit Judge Paul A. McGuckian granted Guttmann’s request for summary judgment on Lasater’s claims.

Joining Eyler’s opinion were Judges Timothy E. Meredith and Paul A. Hackner. Hackner, an Anne Arundel County Circuit Court judge, was sitting by special assignment.

WHAT THE COURT HELD

Case:

Lasater v. Guttmann, CSA No. 2364 , Sept. Term 2008. Reported. Opinion by Eyler, D., J. Filed Sept. 13, 2010.

Issue:

Did the trial judge err in dismissing a woman’s claim that her ex-husband breached a fiduciary duty and committed fraud by misspending family finances and covering it up?

Holding:

No; claims by spouses of breach of fiduciary duty and fraudulent misrepresentation are generally unavailable.

itute.

Counsel:

John J. Condliffe for appellant; Joseph P. Suntum for appellee.

RecordFax # 10-0913-01 (48 pages).