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Opinions – Court of Special Appeals: 5/23/11
BOTTOM LINE: Under the mailbox rule, a lapsed life insurance policy was reinstated where the insured directed his bank to electronically pay the premiums three days prior to his death, even though at the time of the insured’s death, the insurer had not yet received the funds.
CASE: United States Life Insurance Company in City of New York v. Wilson, No. 2544, Sept. Term, 2009 (filed April 28, 2011) (Judges EYLER, Kehoe & Sharer (Retired, Specially Assigned)). RecordFax No. 11-0428-00, 37 pages.
FACTS: Effective Nov. 15, 1998, John Griffith purchased a 10-year life insurance policy, underwritten by United States Life Insurance Company. Griffith was the owner of the policy and was the named insured, and his wife, Elizabeth Wilson, was the primary beneficiary. Griffith purchased the Policy through AMAIA, a subsidiary of the American Medical Association, located in Chicago, Illinois. AMAIA acted as the third-party administrator for U.S. Life, meaning that, with respect to U.S. Life policies, including this Policy, it was responsible for, among other things, billing and collecting premiums. AMAIA was authorized to receive premium payments on the Policy.
Griffith made his semi-annual premium payments from 1998 through 2006. Before his May 15, 2007, premium came due, AMAIA sent him an undated “BILL NOTICE” reminding him of the upcoming payment due date. During that period of time, Griffith was obtaining quotes from other life insurance companies for similar coverage, with the apparent purpose of changing insurers. Griffith failed to pay the May 15, 2007 policy premium. After he missed the payment, AMAIA sent him an undated “REMINDER NOTICE,” stating, “To assure active coverage, full payment of the premium must be received no later than 60 days from the due date.” The due date was again listed as May 15, 2007.
AMAIA subsequently sent Dr. Griffith an undated “LAPSE NOTICE” providing, “This coverage remained in effect during the 31 day Grace Period. Since the premium was not paid by the end of the grace period, your coverage has now lapsed. If you wish to reinstate simply complete and sign the enclosed Reinstatement Form and mail it along with the remittance portion of this notice. A pre-addressed envelope is enclosed for your convenience. Please note that your forms must be received within the next 30 days.” The form accompanying the “LAPSE NOTICE” was titled “APPLICATION FOR REINSTATEMENT OF COVERAGE,” and subtitled, “STATEMENT OF GOOD HEALTH AND INSURABILITY.”
As of Monday, July 23, 2007, Griffith still had not paid the overdue premium. That day, he accessed his on-line bank account with Bank of America and electronically directed that a premium payment of $369.46 be made to AMAIA. A check for that amount was sent to AMA Insurance Agency on Wednesday, July 25, 2007, and delivered on Monday, July 30, 2007. The check, bearing Griffith’s electronically-created authorized signature, was drawn on JP Morgan Chase Bank, N.A., and was dated July 30, 2007. Dr. Griffith did not send U.S. Life the “APPLICATION FOR REINSTATEMENT OF COVERAGE” or any other evidence of insurability. On Saturday, July 28, 2007, Griffith was struck by a car and killed.
AMAIA received Griffith’s premium check on July 30, 2007. On Aug. 2, 2007, AMAIA rejected the payment and returned the check enclosed in a letter advising that, because Griffith’s payment was received after the closing of the 30-day grace period, he no longer could renew his insurance coverage simply by making the premium payment. Instead, he could apply for reinstatement of coverage by completing and returning an “APPLICATION FOR REINSTATEMENT OF COVERAGE,” although approval was not guaranteed. When the Aug. 2, 2007 letter was sent, AMAIA had no information that Dr. Griffith had died.
On Sept. 28, 2007, Wilson, through counsel, submitted a claim to AMAIA for the death benefit and accidental death benefit under Griffith’s policy. AMAIA denied her claim by letter of April 14, 2008, stating that the policy had lapsed on May 15, 2007, and therefore was not in force when Griffith died. On May 30, 2008, Wilson filed suit in circuit court against U.S. Life and AMAIA for breach of contract. U.S. Life and AMAIA jointly filed motions for summary judgment, and Wilson filed her own motion for summary judgment.
The circuit court denied the defendants’ summary judgment motion and granted Wilson’s summary judgment motion, directing that judgment be entered in Wilson’s favor for $650,000, plus costs. The defendants subsequently filed a motion for reconsideration, and Wilson filed a motion to alter or amend, seeking pre-judgment interest. On Dec. 22, 2009, the court entered an order denying the motion for reconsideration and granting the motion to alter or amend. It issued a new judgment that included an award of pre-judgment interest at the rate of 6% from the date of Griffith’s death to the date of the judgment.
US Life and AMAIA appealed to the Court of Special Appeals, which affirmed the circuit court judgment against U.S. Life and reversed the judgment against AMAIA.
LAW: The law of contract interpretation controls the meaning of an insurance policy. Outboard Marine Corp. v. Liberty Mutual Ins., 154 Ill.2d 90, 108 (Ill.1992). Under Illinois law, when construing the terms of an insurance policy, the court seeks to ascertain the parties’ intentions. Id. The court must construe the policy as a whole, with due regard to the risk undertaken, the subject matter that is insured and the purposes of the entire contract. Outboard Marine Corp., 154 Ill.2d at 108.
Here, Griffith’s first premium payment for 2007 was due on May 15 of that year, and that he failed to timely make payment. The “GRACE PERIOD” provision in Griffith’s life insurance policy stated, “United States Life may extend the grace period by written notice. Such notice will state the date insurance will end if the premium remains unpaid.” This contract language gave U.S. Life discretionary authority to extend the 31-day grace period, and specified that such an extension could be granted by a written notice of an extension stating when the insurance coverage would end if the overdue premium were not paid within the extended grace period.
Written notice was given in the form of the “REMINDER NOTICE,” which stated, “To assure active coverage, full payment of the premium must be received no later than 60 days from the due date.” The “REMINDER NOTICE” identified the “due date” as May 15, 2007. Thus, the “REMINDER NOTICE” made evident that, if the premium were not paid, the insurance coverage would end on July 14, 2007, which was 60 days after May 15, 2007. Because the “REMINDER NOTICE” issued by U.S. Life satisfied the requirements of a grace period extension under the plain language of the policy, it operated to extend the grace period until July 14, 2007. Payment was not made by then, and the policy therefore lapsed on July 15, 2007. At that point, there could be coverage under the policy only if the policy was reinstated, in accordance with the Policy’s “REINSTATEMENT” clause.
The “REINSTATEMENT” provided that reinstatement was subject to payment of all overdue premiums. Thus, regardless of what the “LAPSE NOTICE” directed, whether reinstatement was accomplished was controlled by the language of the policy itself. As such, in accordance with the policy language, reinstatement merely required payment of all overdue premiums. In this case, the “payment” was the check issued at Dr. Griffith’s direction, and the payment was made either when Dr. Griffith first directed Bank of America to issue the check (on July 23) or at the latest when the check was sent to AMAIA (on July 25).
The majority of American jurisdictions hold that reinstatement of a life insurance policy does not involve the creation of a new contract but, instead, reinstates the original contract, under which the insured has the right to reinstatement on compliance with its requirements. APPLEMAN §179.03, at 275. Thus, under the majority rule, once the requirements for reinstatement are fulfilled, the original life insurance contract is “revived.” In that circumstance, there is no need for acceptance by the insurer. See Roman v. American Nat’l Ins. Co., 5 Cal.3d 620 (1971). The Illinois appellate courts have not addressed this issue, nor have the Maryland appellate courts. However, if presented with the issue in this case, the Illinois courts would most likely follow the majority rule. Moreover, the circumstances under which Griffith was acting to reinstate the policy militated strongly in favor of application of the majority rule.
Illinois, like Maryland, recognizes the “mailbox rule,” by which the mailed acceptance of an offer is effective when mailed, not when received or acknowledged. for coverage. Martin v. Government Employees Ins. Co., 206 Ill.App.3d 1031, 1042 (Ill.App.Ct.1990). On July 23, 2007, Griffith electronically instructed Bank of America, as his agent, to make payment to AMAIA. Therefore, as of July 23, 2007, Griffith had set in motion the means to accept the offer of reinstatement but still had the power to reverse course. On July 25, 2007, Bank of America remitted payment to AMAIA by sending it a check, drawn on the J.P. Morgan Chase Bank, N.A. account, for $369.46. At that point, the permissible means for acceptance was in motion. As such, the policy was reinstated effective July 25, 2007, three days before Griffith’s death, and therefore was in force when he died.
The circuit court therefore properly entered judgment in favor of Wilson against U.S. Life for $650,000, plus pre-judgment interest. Accordingly, this judgment was affirmed.
COMMENTARY: AMAIA was not a party to the life insurance policy between U.S. Life and Griffith; rather, AMAIA was the third-party administrator for U.S. Life. In that role, it was acting as the agent of U.S. Life, a disclosed principal. Illinois law is clear that an agent acting on behalf of a disclosed principle is not liable for the contractual obligations of the principal unless there is an express agreement to the contrary. Therefore, AMAIA was acting as the agent of U.S. Life as the disclosed principal, and there was no evidence that AMAIA independently agreed to be liable on the policy. As such, AMAIA had no contractual obligation to Wilson as the beneficiary under the policy, and the circuit court’s ruling that AMAIA was liable jointly and severally with U.S. Life for breach of the policy was incorrect. Accordingly, the Court of Special Appeals reversed the circuit court judgment against AMAIA.
PRACTICE TIPS: There are three statutes which have a significant potential impact on electronic contracting: the federal Electronic Signature in Global and National Commerce Act (“E-SIGN”); the Uniform Electronic Transactions Act (“UETA”); and the Uniform Computer Information Transactions Act (“UCITA). UETA has been adopted in all but four states. UCITA has been enacted in only two jurisdictions, including Maryland. Neither UETA nor E-SIGN is intended to provide substantive rules of law; rather, each is essentially designed principally to validate electronic transactions, records and signatures.
Traffic control devices
BOTTOM LINE: Lane-designation marks on a roadway are “markings” and therefore “traffic control devices” as defined for purposes of the Maryland statute requiring a driver to obey the instructions of any traffic control device.
CASE: Stephens v. State, No. 2982, Sept. Term, 2009 (filed April 28, 2011) (Judges WOODWARD, Matricciani & Thieme (Retired, Specially Assigned)). RecordFax No. 11-0428-03, 17 pages.
FACTS: In March, 2009, a deputy of the county sheriff’s office observed a car swerving in and out of its lane on Route 26, which was at that location a three-lane highway. The car was driven by James Stephens. At one point, Stephens swerved into another lane that was then occupied by another vehicle, and the deputy stopped Stephens’ vehicle.
After approaching the vehicle, the deputy detected alcohol on Stephens’ breath and noticed that his eyes were bloodshot and glassy, and that his movements were sluggish and clumsy. Stephens admitted that he had consumed four beers earlier that evening, and his speech was slurred. The deputy ordered Stephens out of the vehicle, and the deputy administered several field sobriety tests, including the horizontal gaze nystagmus test, the walk-and-turn test, and the one-leg-stand test.
Stephens exhibited six out of the six possible clues from the nystagmus test. Stephens exhibited five clues out of a possible eight during the walk-and-turn test, and two clues out of four in the one-leg-stand test. Believing that Stephens was under the influence of alcohol, the deputy arrested Stephens and read him the DR-15 advice of rights form regarding an intoximeter test.
Stephens agreed to submit to a breath test, and the deputy transported him to police headquarters. At the police station, another police deputy who was a certified intoximeter operator administered the intoximeter test. The result of Stephens’ breath test was .15 grams of alcohol for 210 meters of breath.
Stephens was charged with failure to obey a traffic control device and DWI. After a bench trial in circuit court, Stephens was convicted on both counts. Stephens appeals to the Court of Special Appeals, which affirmed.
LAW: On appeal, Stephens argued that the evidence was insufficient to sustain his conviction for failure to obey a traffic control device under Maryland Code (1977, 2009 Repl. Vol), §21-201(a) of the Transportation Article (T.A.), on the grounds that the marks on the road designating the lanes of traffic were not “traffic control devices” as defined by T.A. §11-167.
T.A. §21-201(a) provides that “the driver of any vehicle…shall obey the instructions of any traffic control device applicable to the vehicle.” A “traffic control device” is defined under T.A. §11-167 as any sign, signal, marking, or device that: (1) is not inconsistent with the Maryland Vehicle Law; and (2) is placed by authority of an authorized public body or official to regulate, warn, or guide traffic. At issue in this case was the meaning of the term “marking.” Stephens contended that the term “marking” did not include the marks on the road that designated the lanes themselves; the State contended that these marks, which were placed on the roadway to regulate and guide traffic, did fall within the statutory definition of a “marking.”
In Maryland, a court’s predominant mission in interpreting a statute or rule is to ascertain and implement the legislative intent, which is to be derived, if possible, from the language of the statute or Rule itself. If the language is clear and unambiguous, the court applies the language as written and in a common-sense manner. If there is any ambiguity, the court may then seek to fathom the legislative intent by looking at legislative history and applying the most relevant of the various canons that courts have created. Downes v. Downes, 388 Md. 561, 571 (2005).
Ordinary understanding of the English language dictates interpretation of terminology within legislation. Deville v. State, 383 Md. 217, 223 (2004). Consequently, in order to determine the plain meaning of “marking,” a dictionary may be consulted in order to discern the generally understood meaning of the word. Hackley v. State, 161 Md.App. 1, 14 aff’d, 389 Md. 387 (2005). A dictionary definition of “marking” includes, “the act, process, or an instance of making, placing, or assigning a mark,” and “a mark made …” Webster’s New International Dictionary of the English Language Unabridged 1383 (3d ed. 1986). The same dictionary defines the noun “mark” in a myriad of ways, including as “something placed or set up to serve as a guide or to indicate position…as a conspicuous object of known position serving as a guide for travelers …” Id. at 1382. In addition, the verb “mark” can mean “to fix or trace the bounds or limits of …” Id. at 1383.
Given these standard definitions, a “marking” under T.A. §11-167 is a making or placing of “marks.” “Marks” can be symbols, objects, or lines placed in a manner to designate boundaries and to serve as guides for, among others, travelers and drivers on roadways. Accordingly, the lane designation marks on a roadway, such as Route 26 on which Stephen was traveling, were “markings,” and therefore, “traffic control devices” under T.A. §11-167. Stephens’ failure to obey these markings (i.e., traffic control devices) constituted a violation of T.A. §21-201(a). And, even though the statute was unambiguous, this conclusion was supported by a consideration of the legislative intent behind the rule.
According to T.A. §25-104, the State Highway Administration (“SHA”) is required to adopt a manual for a uniform system of traffic control devices that “shall correlate with and, as far as possible, conform to the system set forth in the most recent edition of the Manual on Uniform Traffic Control Devices for Streets and Highways.” The Federal Highway Administration of the U.S. Department of Transportation publishes that uniform manual, known as the Manual on Uniform Traffic Control Devices for Streets and Highways (2009) (“MUTCD”) The Introduction to the federal MUTCD provides, “Traffic control devices shall be defined as all signs, signals, markings, and other devices used to regulate, warn, or guide traffic, placed on, over, or adjacent to a street, highway, pedestrian facility, bikeway, or private road open to public travel (see definition in Section 1A.13) by authority of a public agency or official having jurisdiction, or, in the case of a private road, by authority of the private owner or private official having jurisdiction.” Id. at I-1.
The website for the federal MUTCD also provides, “Pavement markings are a very important part of the communication system for road users along our Nation’s highways and roads … Pavement markings help you correctly position your vehicle, guide you through the many different situations you encounter, indicate where passing is allowed, and warn you of upcoming conditions.” Based on all these considerations, pavement markings designating the lanes on roadways are “markings” and thus “traffic control devices.”
Attempting to avoid this interpretation, Stephens suggested that the fact that T.A. §21-309 prohibits unsafe lane changes, or swerving, indicated that the legislature intended T.A. §21-201(a) to apply to some other type of vehicular behavior. Nevertheless, although there are references throughout T.A. §21-309 to traffic control devices and Stephens could arguably have additionally been charged with violating T.A. §21-309(b) or T.A. §21-309(d), two statutory provisions concerning the same subject matter are considered to be in pari materia and must be interpreted accordingly. Chen v. State, 370 Md. 99, 106 (2002). Thus, when two statutes appear to apply to the same situation, the court will attempt to give effect to both statutes to the extent that they are reconcilable. State v. Ghajari, 346 Md. 101, 115 (1997). Here, while T.A. §21-309 specifically proscribes the behavior of unsafe lane changes, it was completely consistent with T.A. §21-201(a)(1), which requires drivers to obey any traffic control devices.
Given that Stephens was seen swerving from lane to lane several times, the evidence was more than sufficient to sustain his conviction for failure to obey a traffic control device pursuant to T.A. §21-201(a).
Accordingly, the circuit court judgment was affirmed.
COMMENTARY: Stephens additionally argued that interpreting T.A. §11-167 (Traffic control device) depended on a reading of T.A. §11-168 (Traffic control signal). T.A. §11-168 provides that a “traffic control signal” is any traffic control device, whether manually, electrically, or mechanically operated, by which traffic alternately is directed to stop and permitted to proceed. Clearly, however, the meaning of traffic control devices is not limited to that of traffic control signals; traffic control signals are simply a subset of traffic control devices. As previously stated, pavement markings designating lanes of travel constitute “traffic control devices.” As such, Stephens’s argument that his conviction should be overturned due to lack of sufficient evidence that he failed to obey a traffic control signal was without merit.
PRACTICE TIPS: Defense counsel in a criminal matter need not raise the issue of insufficient evidence by moving for a judgment of acquittal at the end of the State’s case-in-chief or at the close of all the evidence. In a criminal action in which the court is the trier of fact, the appellate court must entertain the issue of the sufficiency of the evidence when presented on appeal, even in the absence of a motion for judgment of acquittal in the lower court.
Criminal Procedure
Destruction of evidence
BOTTOM LINE: Where potentially exculpatory evidence was destroyed prior to defendant’s trial, defendant’s due process rights were not violated because there was insufficient evidence to support a finding of bad faith on the part of law enforcement.
CASE: Gimble v. State, No. 133, Sept. Term, 2010 (filed April 29, 2011) (Judges EYLER, D., Meredith & Moylan (retired, specially assigned)). RecordFax No. 11-0429-00, 26 pages.
FACTS: On March 26, 2008, Wicomico County Sheriff’s Office Deputy Joel Arnold engaged in a high-speed chase with a car driven by Justin Gimble. Gimble lost control of his car and overturned. Deputy Arnold saw items coming out of the sedan as it overturned. A dashboard camera on Arnold’s car recorded the entire event.
Items found in close proximity to the overturned vehicle included a camouflage backpack inside of which was marijuana, cocaine, clear baggies, and a scale with narcotics residue. Gimble was taken to the hospital, where Deputy Dennis Taylor confiscated a cell phone and $1,311 from Gimble’s pockets after his pants had been removed by hospital personnel.
Defense counsel made discovery requests of the State. He received documents detailing the items found near the car, and stating that there was a DVD recording of the event and 11 photographs taken at the crash scene by an EMT responder. Defense counsel asked for the DVD and the photographs. He was provided with the DVD but was told that there were no photographs.
On Jan. 19, the prosecutor called defense counsel and told him she had learned that the only items of evidence the Sheriff’s Office still had for the case were the drugs and the money; everything else had been either returned to Gimble’s girlfriend or destroyed.
Defense counsel moved to dismiss all charges on the ground that Gimble’s due process rights had been violated by the State’s destruction of evidence. The prosecutor responded that some of the items of evidence had been destroyed mistakenly by the Sheriff’s Office in the course of routine purging of its evidence room.
Corporal Brian Donohoe, the property and evidence supervisor for the Sheriff’s Office, was called by the State to testify as to the destruction of the evidence. Donohoe stated that, in April 2008, Gimble’s personal items were released to Gimble’s girlfriend. Donohoe also testified that the Sheriff’s Office follows a routine annual purging procedure for evidence collected the previous year, and that pursuant to the procedure on Nov. 5, 2009, the backpack and its contents, Gimble’s cell phone and the scale were destroyed.
The court found as a fact that the destruction of items of evidence was part of the annual purge and the destruction of this evidence was not done in bad faith or with the intent to cause any injustice to Gimble. The court also found that the prosecutor did not know that the evidence had been destroyed until Jan. 15, 2009. The court denied Gimble’s motion to dismiss.
Gimble was convicted of various drug charges and was sentenced to a total of 15 years’ imprisonment with all but 6 years suspended.
Gimble appealed to the Court of Special Appeals, which affirmed.
LAW: In California v. Trombetta, 467 U.S. 479 (1984), two defendants were convicted of driving while intoxicated. During their initial traffic stops, each defendant had submitted to a breath test to determine his blood-alcohol concentration (BAC). The State did not preserve the breath samples. The California Court of Appeals found that the State had violated the defendants’ due process rights by not preserving the breath samples and reversed the convictions.
The Court looked for guidance in Killian v. United States, 368 U.S. 321 (1961), in which F.B.I. agents had taken notes while interviewing witnesses. They prepared an investigatory report from the notes, and then threw the notes away. The Court ruled that the defendant’s due process rights had not been violated because the notes only were made for the purpose of later transferring the information they contained, and because the notes were destroyed in good faith and in accordance with the F.B.I’s standard practice.
In Trombetta, the Court analogized to Killian and concluded that the officers had acted in good faith and in accordance with standard departmental practices when they failed to preserve the breath samples. “Whatever duty the Constitution imposes on the State to preserve evidence, that duty must be limited to evidence that might be expected to play a significant role in the suspect’s defense. To meet this standard of constitutional materiality … evidence must both possess an exculpatory value that was apparent before the evidence was destroyed, and be of such a nature that the defendant would be unable to obtain comparable evidence by other reasonably available means.” Trombetta, 467 U.S. at 488-89.
In Arizona v. Youngblood, 488 U.S. 51 (1988), the Court was asked to determine to what extent due process requires the State to preserve evidence that does not satisfy the Trombetta constitutional materiality test, but still is potentially exculpatory. The defendant was convicted of child molestation, sexual assault, and kidnapping. After the assault occurred, the victim had been taken to the hospital where a physician used a “sexual assault kit” to collect various samples resulting from the attack. The samples were collected but not tested. Police officers also collected the boy’s clothing, but failed either to refrigerate or freeze it. Youngblood, 488 U.S. at 54.
The Arizona Court of Appeals reversed the conviction, holding that because identity was an issue at trial, and the sample evidence could have established the perpetrator’s identity, the evidence was material to the defense and the failure to preserve it was a denial of the defendant’s due process rights.
The Supreme Court reversed. It distinguished the case from Trombetta in two ways: First, the evidence in Trombetta had “apparent” exculpatory value, and therefore was constitutionally material, whereas, in Youngblood’s case it was a mere “possibility” that the semen samples would have exculpated him if they had been preserved or tested.
Second, under Trombetta, the exculpatory value of evidence must have been apparent “before the evidence was destroyed.” Youngblood, 488 U.S. at 57 n. *. The semen samples were “simply an avenue of investigation that might have led in any number of directions,” and therefore did not have apparent exculpatory value. Id.
Thus, when evidence is only “potentially useful,” not constitutionally material, the State’s failure to preserve it is not a denial of due process “unless a criminal defendant can show bad faith on the part of the police.” Id. The Court found that there was no bad faith on the part of the police in Youngblood.
Here, the trial court found that the police officers did not act in bad faith in destroying the evidence. The Court must also consider whether the police knew of the evidence’s potential exculpatory value before it was destroyed. Youngblood, 488 U.S. at 56-57 n. *.
The evidence at issue was seized on March 26, 2008, and then was housed in the Sheriff’s Office’s evidence room. Because Gimble was so seriously injured in the crash, there was a long delay in charging him, and the evidence remained in the evidence room for well over a year.
In September 2009, as part of the annual purge process for evidence seized the year before, Corporal Donohoe mistakenly issued a property disposal form for the backpack, digital scale, and Cingular cell phone. The officer who received the property disposal form did not recall either the case name or the case number. He knew, however, that he did not have any upcoming cases relating to the evidence. For that reason, he indicated on the property form that the items should be destroyed. There was no evidence that anyone was aware of the mistake that resulted in the property disposal form being sent until after the items already had been destroyed.
Thus, the evidence did not support a finding of bad faith on the part of the law enforcement officers. Therefore, Gimble’s due process rights were not denied, and the trial court did not err in denying his motion to dismiss.
Accordingly, the judgment of the circuit court was affirmed.
COMMENTARY: Defense counsel requested a jury instruction telling the jurors that they could infer from a finding on their part that the State destroyed evidence that the evidence destroyed was unfavorable to the prosecution case. The court declined to give the instruction.
Rule 4-325 requires that the trial court instruct the jury as to the applicable law in a case. The rule does not apply, however, to “factual matters or inferences of fact.” See Patterson v. State, 356 Md. 677 (1999). In Patterson, the defendant was arrested during a traffic stop when police determined that his driver’s license had been suspended. During an inventory search of his vehicle, the arresting officer found in the trunk a dirty jacket with a plastic baggie in one of the pockets. Inside the baggie were a number of individually wrapped rocks of crack cocaine. The police did not collect the jacket as evidence. The defendant was charged with possession of cocaine with intent to distribute.
At trial, the defendant asked the court to give the jury a missing evidence instruction, telling them that they could infer from the fact that the jacket was not collected by the State that its admission into evidence would have been adverse to the State’s case. The trial court declined to give the requested instruction. The defendant was convicted.
The Court of Appeals affirmed the conviction. The Court held that, although an adverse inference may be drawn from the destruction of evidence, against the party who destroyed the evidence, an instruction on such a factual inference is not required to be given. Counsel is permitted to argue the adverse inference to the jury, but a jury instruction about the inference need not be given.
In Cost v. State, 417 Md. 360 (2010), the defendant was charged with crimes stemming from the stabbing of a fellow prisoner at the Maryland Correctional Adjustment Center (MCAC). The stabbing took place in a prison cell. After the attack, the investigative officer did not collect any evidence from inside the prison cell. Five days after the attack, a detective from the Internal Investigations Unit went to MCAC to investigate the matter, but could not examine the cell because it already had been cleaned and no physical evidence from it had been preserved. Id. at 367.
At trial, the court denied the defendant’s request for a missing evidence instruction, reasoning that there was nothing to show that the State deliberately had destroyed the evidence. The defendant was convicted of reckless endangerment.
The Court of Appeals reversed, holding that the trial court had abused its discretion by not granting the requested instruction. Remarking that Patterson held that trial courts ordinarily need not instruct the jurors on most evidentiary matters, the Court reasoned that Patterson did not establish an absolute rule, and that exceptions could be found. Whereas the jacket in Patterson was never collected as evidence, and was not likely to have been used as evidence had it been collected, the crime scene in Cost had been sealed off from use pending investigation and the items held in the cell were of a type that ordinarily would be collected and analyzed.
The Cost Court held that the evidence that was destroyed went to the heart of the defendant’s case, and that merely allowing counsel to argue the adverse inference from the destruction of evidence would be insufficient to ensure that the interest of justice was protected. Under those exceptional circumstances, the trial court was required to instruct the jury that it could infer that the evidence that was destroyed was unfavorable to the State. However, [w]hen destroyed evidence was not central to the defense case, was “not the type of evidence usually collected by the state, or [was] not already in the state’s custody … a trial court may well be within its discretion to refuse” to give a missing evidence instruction. Id.
Unlike the evidence that was destroyed in Cost, the evidence that was destroyed in this case was not critical to the defense and was not of a sort that usually would be subjected to forensic testing. If the backpack, phone charger, or comb had been fingerprinted, and the results were as favorable as possible to Gimble, that evidence would not have negated the evidence against Gimble. Just as Gimble was driving a car that belonged to someone else, he could have been using a backpack that belonged to someone else and contained items belonging to that person. Or, he could have been using a backpack that had been touched by someone else. Gimble need not have owned the CDS and paraphernalia to have been guilty of possessing those items and possessing with intent to distribute the CDS.
Also, given that there was evidence presented at trial regarding the backpack’s location and condition, any further photographic evidence, while relevant, was neither necessary nor central to the defense.
Accordingly, the trial court did not abuse its discretion in declining to give the requested instruction on destruction of evidence.
PRACTICE TIPS: The status of a person in a vehicle who is the driver, whether that person actually owns, is merely the driver, or is the lessee of the vehicle, permits an inference, by a fact-finder, of knowledge by that person of contraband found in that vehicle. State v. Smith, 374 Md. 527, 550 (2003).
Evidence
Admissibility of other crimes
BOTTOM LINE: Evidence that defendant defecated into the mouth of alleged victim of a prior sexual assault was admissible under the absence of mistake exception of Rule 5-404(b), where the current victim testified that defendant did the same to her.
CASE: Cousar v. State, No. 2683, Sept. Term, 2009 (filed April 28, 2011) (Judges Meredith, WATTS & Moylan (retired, specially assigned)). RecordFax No. 11-0428-01, 37 pages.
FACTS: On April 12, 2009, Ms. Stahl met Kelvin Cousar at a hotel after Cousar answered Stahl’s advertisement on Craigslist for erotic services. According to Stahl’s testimony, once inside, she completed the agreed-upon activity in exchange for payment of $200. Cousar then produced a gun and forced Stahl to undress and lay on the bed while he straddled her and defecated in her mouth. Cousar also forced Stahl to engage in oral and anal sex while holding the gun to her head.
Upon his arrest, Cousar told the officer that the sexual activity with Stahl was consensual, and Cousar acknowledged defecating on Stahl, but the defecating was “accidental.”
Prior to trial, Cousar moved in limine to exclude the testimony of Ms. Swanson, the alleged victim in an unrelated case that was pending against Cousar. Swanson testified that she met Cousar at her apartment two months prior to Cousar’s encounter with Stahl. Her meeting was also generated by Craigslist, where she advertised erotic services. Swanson testified that Cousar also defecated in her mouth and that Cousar forced her to perform oral sex.
The circuit court determined Swanson’s testimony to be admissible to show intent or under the absence of mistake exception of Rule 5-404(b).
At the conclusion of all of the evidence, and prior to closing argument, the court instructed the jury as to reckless endangerment: “A person may not recklessly engage in conduct that creates a substantial risk of death or serious physical injury to another.” Neither attorney made any exception or objection to the court’s instruction as to reckless endangerment.
Cousar was convicted of unnatural or perverted sexual practices, CL §3-322, third degree sexual offense, CL §3-307(a)(1), reckless endangerment, CL §3-204(a)(1), and wearing, carrying, or transporting a handgun. CL §4-203. The court sentenced Cousar to three years of imprisonment for the weapons charge, a consecutive five years for reckless endangerment, and a consecutive ten years for third-degree sex offense, for a total of eighteen years of imprisonment.
Cousar appealed to the Court of Special Appeals, which affirmed.
LAW: Rule 5-404(b) generally renders inadmissible evidence of other crimes, wrongs, or bad acts. Thompson v. State, 412 Md. 497, 521-22 (2010). As Rule 5-404 explicitly recognizes, however, there are circumstances under which prior criminal or wrongful acts are admissible.
“When a trial court is faced with the need to decide whether to admit evidence of another crime — that is, evidence that relates to an offense separate from that for which the defendant is presently on trial — it first determines whether the evidence fits within one or more of the [Cross] exceptions. That is a legal determination and does not involve any exercise of discretion. If one or more of the exceptions applies, the next step is to decide whether the accused’s involvement in the other crimes is established by clear and convincing evidence. We will review this decision to determine whether the evidence was sufficient to support the trial judge’s finding. [Finally], the necessity for and probative value of the ‘other crimes’ evidence is to be carefully weighed against any undue prejudice likely to result from its admission. This segment of the analysis implicates the exercise of the trial court’s discretion.” State v. Faulkner, 314 Md. 630, 634-35 (1989).
“[Rule 5-404(b)] means that evidence that the defendant committed other crimes or bad acts is not admissible unless it has special relevance — that it ‘is substantially relevant to some contested issue and is not offered simply to prove criminal character.’” Wynn v. State, 351 Md. 307, 316 (1998).
For the “absence of mistake” exception in Rule 5-404(b) to apply, a defendant generally must make some assertion or put on a defense that he or she committed the act for which he or she is on trial, but did so by mistake. Id. at 326-31. Additionally, in order for the exception to apply, the crime or bad act allegedly committed by mistake must be the same crime or bad act for which the defendant is on trial. Id. at 332.
Here, the State sought to prove Cousar’s act of defecating into his victim’s mouth constituted an unnatural or perverted sexual practice in violation of CL §3-322. When arrested, Cousar described the incident as an encounter with a prostitute and told the detective that the defecation was accidental. Moreover, Cousar asserted pretrial that the act of defecation was accidental and, at trial, testified that the defecation was not for sexual gratification.
Given that Cousar made an assertion and put on a defense that he committed the act for which he was on trial, but did so by mistake or accident, and the crime or bad act evidence introduced at trial involved the same crime or bad act for which the defendant was on trial, there was no error in the circuit court’s determination that the evidence was admissible under the absence of mistake exception of Rule 5-404(b).
The State introduced Swanson’s testimony to prove that Cousar’s defecation on Stahl had not been accidental or a mistake. To demonstrate the non-accidental nature of the act, it was necessary for the State to introduce evidence surrounding the act itself. See Streater v. State, 352 Md. 800 (1999). That Cousar contacted Swanson for sex, produced a gun, and demanded oral sex of Swanson with the results of the defecation in her mouth, were details related to the non-accidental nature of the act. It would have been impossible to describe the act of defecation in a vacuum with no supporting circumstances. Thus, the circuit court committed no error in admitting Swanson’s testimony under the accident or “absence of mistake” exception to Rule 404(b).
The next step, under the Faulkner three step analysis, was to determine whether Cousar’s involvement in the other crimes was established by clear and convincing evidence. “Clear and convincing evidence means that the witness to a fact must be found to be credible, and that the facts to which [she] ha[s] testified are distinctly remembered and the details thereof narrated exactly and in due order, so as to enable the trier of the facts to come to a clear conviction, without hesitance, of the truth of the precise facts in issue.” Goroum v. Rynarzewski, 89 Md.App. 676, 684-85 (1991).
Swanson testified in court about conduct which was not remote in time but rather occurred two months before Cousar’s interaction with Stahl. Swanson reported the incident to police immediately after the occurrence, and testified at trial approximately eight months later.
The similarities between the two events led to the determination that the other crimes evidence, as testified to by Stahl, was established by clear and convincing evidence. There was no evidence that the two women were in any manner previously acquainted with each other. Thus, Cousar’s involvement in the other crime was established by clear and convincing evidence.
As for the third Faulkner prong, Rule 5-403 provides, “[a]lthough relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.”
To some degree, all evidence admitted under Rule 5-404(b) is prejudicial. Therefore, the third Faulkner prong requires the trial court to engage in a Rule 5-403 balancing. The Court must balance “1) the need for the evidence against 2) the tendency of the evidence to prejudice the defendant unfairly.” Hyman v. State, 158 Md.App. 618, 628 (2004).
Swanson’s testimony was highly probative. At the conclusion of evidence in the case, the court gave the jury a specific instruction explaining the purpose for admission of the other crimes evidence. Thus, since the circuit court balanced the probative value of the evidence along with the danger of unfair prejudice, there was no abuse of discretion.
Accordingly, the judgment of the circuit court was affirmed.
COMMENTARY: The court gave the following instruction on reckless endangerment: “A person may not recklessly engage in conduct that creates a substantial risk of death or serious physical injury to another.” Neither the State nor defense counsel objected to this instruction. Nevertheless, Cousar argued the trial court’s instruction to the jury, as to reckless endangerment, constituted plain error.
Plain error should be used in instances where the error is “compelling, extraordinary, exceptional or fundamental to assure the defendant a fair trial.” State v. Hutchinson, 287 Md. 198, 203 (1980). “When the evidence generates an issue that is not covered by a pattern instruction, we must count on the court to incorporate relevant and valid legal principles gleaned from the case law.” Green v. State, 119 Md.App. 547, 562 (1998).
The instruction here was a direct and complete quote of the relevant Maryland criminal law statute under which Cousar was charged for reckless endangerment. See CL §3-204(a)(1). The trial judge gave the jury the statutory definition of the reckless endangerment offense and provided no misinformation. The circuit court’s instruction was not lacking in vital detail and did not convey prejudicial or confusing information. As such, the circuit court’s instruction on reckless endangerment did not rise to the level of plain error.
PRACTICE TIPS: The defense of consent is based on the conduct of the victim, whereas mistake or accident is based on the repetitive nature of the defendant’s conduct and, therefore, where the only contested issue is consent, evidence of prior rapes committed by the defendant was not admissible because the fact that one woman was raped does not tend to prove that another woman did not consent. See Brown v. State, 459 N.E.2d 376, 379 (Ind.1984); State v. McArthur, 719 So.2d 1037, 1041 (La.1998).
Waiver of sovereign immunity
BOTTOM LINE: Plaintiff’s breach of contract claim against the Maryland Automobile Insurance Fund, an agency or instrumentality of the State when acting in its capacity as an insurer, was barred by sovereign immunity because Plaintiff had not filed suit within the one-year period during which immunity was waived under SG §12-202.
CASE: Daughton v. Maryland Automobile Insurance Fund, No. 2770, Sept. Term, 2009 (filed April 28, 2011) (Judges Krauser, EYLER, D. & Salmon (retired, specially assigned)). RecordFax No. 11-0429-02, 29 pages.
FACTS: From Feb. 17, 2005, until Feb. 17, 2006, Mary Daughton was the named insured under a Maryland Automobile Insurance Fund (MAIF) automobile insurance policy. On June 2, 2005, she was involved in an automobile accident. Shortly thereafter, she submitted a Personal Injury Protection (PIP) claim to MAIF for medical expenses allegedly arising from the accident. In November 2005, more than thirty days after Daughton submitted her claim, MAIF paid it. It did not pay interest on the late PIP payment, however.
Two-and-one-half years later, Daughton sued MAIF for breach of contract and declaratory judgment, alleging 1) that it failed to pay her PIP benefit claim within 30 days, in violation of IN §19-505; and 2) that it then failed to pay interest on the late payment, in violation of IN §19-508..
MAIF moved for summary judgment, arguing that Daughton’s breach of contract claim was barred by sovereign immunity because Daughton had not filed suit within the one-year period in which immunity was waived under SG §12-202. The circuit court denied the motion for summary judgment.
The circuit court then held an evidentiary hearing on the issue of whether MAIF is a State agency or instrumentality and therefore enjoys sovereign immunity. The court concluded that MAIF is an agency or instrumentality of the State that is entitled to sovereign immunity when acting in its capacity as an insurer; that the legislature waived MAIF’s immunity to suit in contract only to the extent set forth in SG §12-202; and that, having failed to file suit within the period prescribed by SG §12-202, Daughton’s claims were barred. The court granted judgment in favor of MAIF on both counts.
Daughton appealed to the Court of Special Appeals, which affirmed.
LAW: MAIF was established in 1972 to serve two roles: (1) to act as the insurance carrier of last resort for drivers unable to obtain motor vehicle liability insurance in the private market; and (2) to act as a successor to the Unsatisfied Claim and Judgment Fund (UCJF).
Pursuant to IN §19-505, “each insurer that issues, sells or delivers a motor vehicle liability insurance policy in the State shall provide coverage for the medical, hospital, and disability benefits described in this section.” These benefits are known as PIP benefits. See also Huntt v. State Farm Mut. Auto. Ins. Co., 72 Md.App. 189, 192 (1987).
IN §19-508(a)(1) requires a motor vehicle liability insurer to pay PIP benefits “within 30 days after the insurer receives satisfactory proof of claim.” If the insurer fails to pay PIP benefits within 30 days, overdue payments “shall bear simple interest at the rate of 1.5% per month.” IN §9-508(c).
The doctrine of sovereign immunity “protects the State from burdensome interference with its governmental functions and preserves its control over State agencies and funds.” Katz v. Washington Suburban Sanitary Comm’n, 284 Md. 503, 507 (1979). The doctrine applies not only to the State but also to its “agencies and instrumentalities, unless the General Assembly has waived the immunity either directly or by necessary implication.” Id. at 507-08.
In 1976, the General Assembly enacted a conditional waiver of sovereign immunity in contract actions against the State. See SG §12-201. SG §12-202 conditions the waiver of sovereign immunity as follows: “A claim under this subtitle is barred unless the claimant files suit within 1 year after the later of: (1) the date on which the claim arose; or (2) the completion of the contract that gives rise to the claim.” At the end of the one-year period, “[t]he waiver of the State’s immunity vanishes” and any action is barred. State v. Sharafeldin, 382 Md. 129, 148 (2004).
In A.S. Abell Publishing Co. v. Mezzanote, 297 Md. 26, 35 (1983), the issue was whether the Maryland Insurance Guaranty Association (MIGA), was an agency or instrumentality of the State. The circuit court granted summary judgment for MIGA on the ground that it was “not sufficiently controlled by the State to be characterized as an agency or instrumentality of the State.” Id. at 30.
The Court of Appeals reversed the judgment of the circuit court, holding: “MIGA’s existence depends upon the General Assembly; it serves a public purpose, its management is selected by the Commissioner, and is not self-perpetuating; it does not independently manage its affairs or enforce its regulations; its decisions may be reversed by the Commissioner; and it enjoys a special tax and liability status. After examining all aspects of the interrelationship between the State and MIGA, including the degree of control exercised by the State over MIGA’s operation, we are persuaded that MIGA is an agency or instrumentality of the State within the scope of the Public Information Act.” Id. at 37-39. See also Central Collection Unit v. DLD Associates Limited Partnership, 112 Md.App. 502 (1996).
There is one reported case bearing on MAIF’s status as an agency or instrumentality of the State. In Harrison v. Motor Vehicle Administration, 302 Md. 634 (1985), the Court of Appeals considered consolidated appeals involving two plaintiffs whose driving privileges had been suspended by the MVA.
More than 12 years later, the plaintiffs sought to have their driving privileges reinstated by the MVA. When each was denied, they filed separate suits against the MVA for injunctive relief, arguing that the judgment against him was unenforceable because, pursuant to CJ §5-102, more than 12 years had passed without any action by the UCJF, or its successor, MAIF, to renew it. MAIF intervened in both cases. In one case, the circuit court granted the relief and denied it in the other case.
The Court of Appeals granted certiorari on its own initiative. It held that MAIF was an agency or instrumentality of the State when operating in its role as the successor to the UCJF and, as such, could not be bound by the 12-year limitations period: “Providing for the welfare of the public and for the correction or rectification of offenders against the health and security of the public are fundamental elements of governmental action. The Legislature committed to UCJF and by later amendment to MAIF an essential role in the enforcement of that governmental function. We hold that in the exercise of that essential role UCJF and its successor MAIF are State agencies which have inherited the sovereign attributes of the State and are performing a governmental function.” Id. at 647-48.
In its role as an insurance provider, MAIF protects the public by ensuring that the vast majority of drivers on Maryland roads have automobile liability insurance in place. Without an insurance-providing entity such as MAIF, the compulsory insurance laws would not fully protect the public. Moreover, MAIF is an agency or instrumentality of the State not only in its role as successor to the UCJF but also in its role as an issuer of insurance policies. MAIF owes its existence to an act of the legislature. The majority of the members of its Board of Trustees are appointed by the Governor and serve at his pleasure. See IN §20-202. MAIF’s Executive Director also must be approved by the Governor. Thus, the Executive Branch maintains a significant degree of control over MAIF’s governance even while allowing it to operate as an independent entity. The legislature also asserts control by conducting annual or semi-annual fiscal audits and by approving MAIF’s budget on an annual basis. See IN §20-301 and 302. See also DLD, 112 Md. App. at 512.
MAIF is subject to the Public Information Act and the Open Meetings Act. It also must comply with the more elaborate bid procedures set forth in the State Finance and Procurement Article with respect to leases, construction, and other real estate matters. MAIF’s personnel are State employees and enjoy the protections of the Maryland Tort Claims Act. See SG §12-101(a)(2)(ix). Thus, MAIF is treated like other State agencies in its operations and procedures.
That MAIF functions in many ways like a traditional, private liability insurance carrier is not determinative of its status as an agency or instrumentality of the State. It was formed by the State for the express purpose of operating in that capacity, and it advances an important public interest when it does so. It is subject to a degree of State control and regulation that readily distinguishes it from private insurers. Thus, MAIF is an agency or instrumentality of the State for purposes of sovereign immunity when it acts in its role as an insurance-providing entity.
Furthermore, IN §19-508(c), which allows for interest on overdue PIP payments, does not create by implication a private right of action independent of SG §12-201. In determining whether a private cause of action arises under a statute, a court must look to whether there is indicia of legislative intent to create such a cause of action, whether “the plaintiff is one of the class for whose special benefit the statute was enacted, and whether it is consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff.” Erie Ins. Co. v. Chops, 322 Md. 79, 91 (citing Cort v. Ash, 422 U.S. 66, 78 (1975)).
A reading of the plain language of IN §19-508(c) simply bears no indicia of any legislative intent to create a private cause of action.
The MAIF policy incorporates the statutory requirements for timely payment of PIP benefits and interest on late PIP payments. To the extent these requirements were violated, Daughton could pursue a breach of contract action; and indeed she did so. She did not do so in a timely manner under SG §12-202, however, and therefore her claim was barred.
COMMENTARY: Daughton contended the contract on which her claim was based — her automobile insurance policy with MAIF — had not yet been “completed” because MAIF failed to pay the statutory interest owed pursuant to IN §19-508(c), and, therefore, pursuant to SG §12-202, the one-year period for filing suit had not begun to run.
In the circuit court, Daughton did not challenge MAIF’s assertion that she failed to file her claim within the one-year period designated in SG §12-202. Indeed, her lawyer conceded during the hearing that, if MAIF were an agency or instrumentality of the State, her claims were barred by the one-year filing condition in SG §12-202. Daughton was bound by the concession made by her counsel. See Prescoe v. State, 231 Md. 486, 494 (1963).
Accordingly, she waived the issue whether the contract ever was completed within the meaning of SG §12-202.
On the merits, MAIF paid Daughton $2,500 in PIP benefits by a check dated Sept. 20, 2005. On Nov. 21, 2005, MAIF sent Daughton’s counsel an additional check for $2,427 for PIP benefits, and denied any further payment. The checks did not include payment of interest.
Further, Daughton’s MAIF automobile policy was canceled effective June 25, 2005, for non-payment of an increased premium amount.
Given that the insurance policy no longer was in force as of June 25, 2005, and as of Nov. 21, 2005, MAIF had denied any further payment to Daughton on her claim, the canceled insurance policy had to have been a completed contract as of the latter of those two dates.
Negligence
Employer’s liability
BOTTOM LINE: Employer of overworked, fatigued driver who collided with plaintiff was not liable for plaintiff’s injuries because the doctrine of respondeat superior did not apply and the employer’s actions were not the proximate cause of plaintiff’s injuries.
CASE: Barclay v. Ports America Baltimore, Inc., No. 2501, Sept. Term 2009 (filed April 29, 2011) (Judges Meredith, MATRICCIANI & Rubin (specially assigned)). RecordFax No. 11-0429-04, 23 pages.
FACTS: Christopher Richardson was a stevedore who worked loading and unloading ships arriving in Baltimore. Ports America Baltimore, Inc. (Ports) manages and operates marine cargo facilities in Baltimore. On Jan. 13, 2006, Ports was notified that an arriving ship was delayed and would be arriving during the night. Ports determined what labor it required to unload the ship.
Ports issued a “work order” to the Steamship Trade Association of Baltimore, Inc. (STA) to dispatch longshoremen. The STA used a computer program to assign longshoremen according to seniority, based upon information provided by the International Longshoremen’s Association and the Local No. 333 International Longshoremen’s Association (collectively, the ILA).
Richardson reported to work at 8 a.m. on Jan. 15, 2006. He remained on the job for twenty-two hours, ending his shift at 6 a.m. the following day. On his way home, approximately forty-five miles from where he worked, Richardson’s vehicle crossed the center line and collided with a vehicle driven by Anne Arundel County Police Sergeant Michael Barclay. Sergeant Barclay suffered grievous injuries that required over $1.5 million in medical expenses to treat, and his injuries left him unable to work as a police officer. Richardson did not survive the accident.
Barclay, individually and jointly with his wife, sued Lena Briscoe, personal representative of the estate of Richardson, Ports, the STA, and the ILA. Briscoe filed cross-claims against Ports, the STA, and the ILA, claiming that Barclay’s injuries and damages were solely caused by their negligence. Barclay voluntarily dismissed the ILA claim.
Ports filed a motion for summary judgment on Barclay’s direct claims and Briscoe’s cross-claims, on the grounds that it was not vicariously liable because Richardson was driving his personal vehicle outside the scope of his employment. Ports further argued that it did not owe the direct duty to the general public alleged in Barclay’s complaint. The court granted the motion. The court stayed proceedings between Barclay and Briscoe and, pursuant to Rule 2-602, entered final judgments against them and in favor of Ports.
Barclay appealed to the Court of Special Appeals, which affirmed.
LAW: Richardson’s terms of employment were governed by a collective bargaining agreement (CBA) between the ILA and maritime employers, including Ports. Under the relevant CBA, a longshoreman who accepted an offer to work could stay on for as many consecutive shifts as he desired, or he could “check up” and go home, at which point the ILA would send the next most senior qualified longshoreman to take over his work. Shift lengths varied according to the time of day they would begin, and the CBA provided for a one-hour meal break every six hours. According to the CBA, no employees could demand to work through a meal hour.
The CBA had previously imposed a limit of 16 hours on the working day, but neither the national nor local version of the CBA in place at the time of these facts included any limit on the working day.
Under the CBA, hourly wages did not necessarily increase with the duration of a worker’s time on the job. Overtime pay would go into effect at 5 p.m. on workdays, but shifts starting as late as 3 p.m. would be entitled to overtime beginning at 5 p.m. Additionally, any workers on the midnight shift who worked past 7 a.m. received extra pay, and all workers received overtime pay for work in excess of 40 hours in a given week.
Barclay first argued that the trial court erred when it ruled that Ports was not vicariously liable for Richardson’s alleged negligence.
The doctrine of respondeat superior holds an employer vicariously — and jointly and severally — liable for the tortious conduct of an employee, where it has been shown that the employee was acting within the scope of the employment relationship at that time. S. Mgmt. Corp. v. Taha, 378 Md. 461, 480-81 (2003). “For an employee’s tortious acts to be considered within the scope of employment, the acts must have been in furtherance of the employer’s business and authorized by the employer.” Id.
There is a general principle, known as the “going and coming” rule, holding that “absent special circumstances, an employer will not be vicariously liable for the negligent conduct of his employee occurring while the employee is traveling to or from work.” Dhanraj v. Potomac Electric Power Co., 305 Md. 623 (1986).
There are two possible interpretations of the “special circumstances” exception in Dhanraj. The first is that it includes the “special mission,” from cases applying what is now the Workers’ Compensation Act, such as Reisinger-Siehler Co. v. Perry, 165 Md. 191 (1933), and Director of Finance v. Alford, 270 Md. 355 412 (1973). See LE §9-101. That exception holds an employer liable if an employee is injured while commuting to or from “an extra, after-hours duty.” See Alford, 270 Md. at 362.
However, the Court in Dhanraj expressly refused to apply a “special mission” exception to respondeat superior. Instead, the Dharaj Court rested its analysis on certain factors that indicate “special circumstances,” thus attaching vicarious liability even though an employee is merely “coming and going” from work: some express or implied control over the vehicle or consent to its use in performing work duties. Dharaj, 305 Md. at 631.
“The ‘right to control’ concept is key to a respondeat superior analysis in the motor vehicle context. The doctrine may only be successfully invoked when an employer has either expressly or impliedly, authorized the servant to use his personal vehicle in the execution of his duties, and the employee is in fact engaged in such endeavors at the time of the accident.” Oaks v. Connors, 339 Md. 24, 31 (1995).
As in Oaks, Richardson was not furthering Ports’ business purposes because he was not “performing designated job responsibilities at the time of the accident.” See id. at 32-33. Ports did not require Richardson to have a vehicle available for use in the execution of his duties. Id. Ports did not exercise control over the method or means by which Richardson operated his vehicle Id. Finally, Ports did not reimburse Richardson for his transportation expenses. Id.
Thus, the “special mission” exception does not apply to respondeat superior; nor did the record facts establish “special circumstances” that override the “coming and going” rule.
Therefore, there was no error in the trial court’s ruling that Ports was not vicariously liable for Richardson’s tortious conduct as a matter of law.
Barclay argued that, regardless of whether Ports was liable under the doctrine of respondeat superior, Ports breached its direct duty to the public “not to allow and/or encourage their employees to work in excess of a reasonable number of hours beyond the normal human tolerance.”
The decision here, however, did not turn on “duty;” nor on the narrow issue of whether Ports had some “special relationship” with either Richardson or the public that could give rise to a duty. Instead, the alleged facts did not demonstrate the requisite proximity of cause and effect.
Ports’ actions must be a “proximate cause” of the injuries, which is to say that the actions are both “1) a cause in fact, and 2) a legally cognizable cause.” Hartford Ins. Co. v. Manor Inn, 335 Md. 135, 156-57 (1994).
“The negligent acts … must be the natural and probable consequence of the negligent act, unbroken by any intervening agency, and where the negligence of any one person is merely passive, and potential, while the negligence of another is the moving and effective cause of the injury, the latter is the proximate cause and fixes the liability.” Bloom v. Good Humor Ice Cream Co., 179 Md. 384, 387 (1941):
In this case, however, the casual connection between Ports’ conduct and the alleged harm was not “unbroken by any intervening agency.” Richardson had exercised his right to seek gainful employment of his choosing — i.e., as a longshoreman — and he made an independent decision to live at a considerable distance, knowing that he could be called on to work long shifts at any given time, and, finally, decided to drive home at the conclusion of one such assignment. Because of Richardson’s intervening agency, the injury did not follow as a “natural and probable consequence” of Ports employing him and compensating him for working long hours.
Thus, Ports’ actions were not the proximate cause of Barclay’s injuries. Consequently, Ports was not liable to Briscoe for indemnity or contribution.
Accordingly, Ports was entitled to judgment as a matter of law on both Barclay’s direct claims and Briscoe’s cross-claims.
COMMENTARY: Barclay asserted that the trial court erred as a matter of law because Barclay asserted a new duty in tort and the trial court’s opinion did not explicitly address the factors set forth in Grimes v. Kennedy Krieger Inst., Inc., 366 Md. 29 (2001).
The Grimes Court stated that there is “no set formula” for inventing a duty. The Court recited several factors for consideration when determining whether a defendant owed a — previously unarticulated — duty to the plaintiff: “the foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered the injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost and prevalence of insurance for the risk involved.” Grimes, 366 Md. at 86.
Nothing in Grimes or any other case indicates that a court must weigh every factor to determine whether a tort duty exists. Moreover, this could not be the case when certain of the factors enunciated in Grimes, such as “foreseeability,” are necessary conditions of tort liability. In that case, it would be unnecessary to force the court to scrutinize every other factor that could give rise to duty or liability.
Therefore, the trial court did not err as a matter of law by failing to consider all factors announced in Grimes to determine whether to impose a duty not expressed in precedent.
PRACTICE TIPS: There are cases in which an employer does have a duty to protect the public from risks that its employees pose, other than that imposed by respondeat superior, such as where the employers unexpectedly caused their employees to endanger others, thereby placing the employee in a position where he or she could not reasonably mitigate the attendant risks See, e.g., Bussard v. Minimed, Inc., 105 Cal.App.4th 798, 801 (Cal.App.2003).
Real Property
Equitable conversion
BOTTOM LINE: Financing contingency contained in home purchase contract did not prevent occurrence of equitable conversion at time of execution of contract and thus purchaser’s claim of equitable title was superior to that of creditors who had obtained confessed judgment against vendor after execution of contract but before closing of sale.
CASE: Grant v. Kahn, No. 886, Sept. Term, 2008 (filed April 27, 2011) (Judges Meredith, WOODWARD & Rodowsky (Retired, Specially Assigned)). RecordFax No. 11-0427-00, 16 pages.
FACTS: In May 2007, Kareem Grant entered into a contract to purchase from Jeffrey Ganz a residential property located in Wheaton, Maryland. The contract included a financing contingency provision which provided, in part, that the contract was contingent upon the buyer’s obtaining approval for loan(s) to purchase the property. While the contract was pending, Stacy Kahn and Steven Kahn filed a Complaint for Confessed Judgment against Ganz, and the circuit court entered a Judgment by Confession against Ganz.
Without any knowledge of the confessed judgment, Grant completed the purchase of the property from Ganz several days later. Thereafter, the Kahns filed a Request for Writ of Execution by Levy on the property, which Grant then owned. Grant responded by filing a Motion to Release Property from Levy. After a hearing, the circuit court denied Grant’s motion.
Grant appealed to the Court of Special Appeals, which reversed.
LAW: Grant argued that the doctrine of equitable conversion prevented the judgment against Ganz from attaching to the property. Specifically, Grant contended that, under the doctrine of equitable conversion, on May 29, 2007, when Grant and Ganz entered into the contract of sale, Grant became the equitable owner of the property and Ganz held only bare legal title. According to Grant, because a judgment creditor’s lien cannot attach to bare legal title, the judgment against Ganz could not attach to the property after the execution of the contract of sale.
Equitable conversion is a theoretical change of property from realty to personalty, or vice versa, in order that the intention of the parties, in the case of a contract of sale, or the directions of the testator, in the case of directions in a will, may be given effect. Coe v. Hays, 328 Md. 350, 358 (1992). The basis of the theory of equitable conversion is the legal maxim that equity treats that as being done which should be done, is the basis of the theory of equitable conversion. Watson v. Watson, 304 Md. 48, 61 (1985). Hence, when the vendee contracts to buy and the vendor to sell, though legal title has not yet passed, in equity the vendee becomes owner of the land, the vendor of the purchase money. The doctrine of equitable conversion and, more particularly, by contract, is well-established in Maryland. DeShields v. Broadwater, 338 Md. 422, 437 (1995).
Because the doctrine of equitable conversion by contract rests on the maxim that equity considers as done that which ought to be done, an equitable conversion will place equitable title in the purchaser only if the contract is one under which the vendor would be subject to a decree for specific performance. Thus, a contract for land, bona fide made for a valuable consideration, vests the equitable interest in the vendee from the time of the execution of the contract, although the money is not paid at that time. When the money is paid according to the terms of the contract, the vendee is entitled to a conveyance, and to a decree in Chancery for a specific execution of the contract, if such conveyance is refused. Hampson v. Edelen, 2 H. & J. 64, 66 (1807).
One result of the doctrine is that a judgment entered against the vendor after the contract has been made does not become a lien on the realty. A vendor’s judgment creditor may not execute on the realty because the vendor, sometimes described as trustee for the purchaser, has a right to the balance of the purchase money but has no beneficial interest in the property. Equitable title is superior to a later judgment lien. Watson, 304 Md. at 60.
It is a general rule that the holder of an equitable title or interest in property, by virtue of an unrecorded contract of sale, has a claim superior to that of a creditor obtaining judgment subsequent to the execution of the contract. The effect of such a contract is to vest the equitable ownership of the property in the vendee, subject to the vendor’s lien for unpaid purchase money, and to leave only the legal title in the vendor pending the fulfillment of the contract and the formal conveyance of the estate. The right of the vendee to have the title conveyed upon full compliance with the contract of purchase is not impaired by the fact that the vendor, subsequently to the execution of the contract, incurred a debt upon which judgment was recovered. A judgment creditor stands in the place of his debtor, and he can only take the property of his debtor subject to the equitable charges to which it is liable in the hands of the debtor at the time of the rendition of the judgment.
Either party to a contract may certainly waive any of the provisions made for his benefit. Twining v. Nat’l Mortg. Corp., 268 Md. 549, 555 (1973). However, while a party may waive a provision included in a contract for that party’s sole benefit, a party cannot waive a contractual requirement that benefits both sides to the transaction. Cattail Assoc., Inc. v. Sass, 170 Md.App. 474, 500 (2006). Accordingly, the application of the doctrine of waiver when one party seeks to enforce a contract ordinarily requires a determination whether the condition was inserted in the contract solely for the benefit of the party seeking to enforce the contract despite its nonoccurrence. Id.
Here, there was no question that the parties entered into a valid contract for Grant to purchase the property from Ganz and that the judgment lien against Ganz was entered after the execution of the contract but before settlement thereon. The central issue was whether the financing contingency in the contract of sale prevented equitable conversion from occurring at the time that the contract was made. Specifically, it was necessary for the Court to determine whether the financing contingency prevented specific enforcement of the contract by Grant, which thereby would have precluded equitable conversion. See Watson, 304 Md. at 61.
The financing contingency in the contract unquestionably benefitted Grant by making the contract contingent on his ability to secure the necessary financing. On the other hand, the financing contingency gave Ganz only the power, after the initial 45-day period, to impose a time limit for Grant to either remove the contingency or let the contract terminate, without liability. Therefore, the financing contingency benefitted only Grant, and because Grant could waive the contingency at any time, the contract was specifically enforceable by Grant.
In addition, according to the financing contingency, from May 29, 2007 to July 13, 2007 (the 45-day period following the date of the contract ratification), the contract was contingent upon Grant’s obtaining approval for a loan to purchase the property. Grant did not exercise that option, and the contract was not terminated by him. After 9 p.m. on July 13, 2007 (the “deadline” for providing Ganz notice of removing the financing contingency), the contingency, by its express terms, continued unless it was satisfied. After passage of the deadline, Ganz had the option to give notice to Grant that the contract would become void if Grant failed to deliver Form # 100 within three days. Ganz did not exercise this option, and the contract continued to be in effect.
Instead, on July 31, 2007, Grant and Ganz met for settlement on the property, and Grant tendered the full amount of the purchase price. At that time Ganz had no option or discretion under the contract not to convey the property to Grant. Thus, if Ganz had refused such conveyance, specific performance of the contract would have been available to Grant. See Watson, 304 Md. at 61. Thus, the financing contingency consisted of conditions subsequent.
Since neither party took advantage of the conditions permitting termination of the contract, the contract continued in effect. Therefore, the financing contingency did not prevent the occurrence of equitable conversion at the time of the execution of the contract. Accordingly, on July 24, 2007, when the circuit court entered a confessed judgment against Ganz, equitable title to the property was held by Grant, and the judgment could not attach as a lien on the property. Grant’s claim of equitable title was superior to that of the Kahns as judgment creditors, and the circuit court erred in coming to a contrary conclusion.
Accordingly, the circuit court judgment was reversed.
COMMENTARY: Grant also claimed that “sound public policy” dictated that the decision of the circuit court be reversed. Grant reasoned that the trial court’s decision endangered the free transferability of residential real property by exposing buyers to significant risks associated with sellers who have “poor credit histories or financial difficulties. The Kahns countered that a reversal of the circuit court’s decision would implicitly allow judgment debtors to remove their real estate assets from the grasp of their judgment creditors by entering into non-binding contracts of sale which can be unilaterally nullified by their putative purchasers simply by giving notice.
The Court of Special Appeals agreed with Grant on the issue. Under the Kahns’ theory, a buyer entering into a contract of sale with a financing contingency would be exposed to the risk of judgment liens entered against the seller after the execution of the contract. These liens could affect the sale itself where, for example, the total of all liens or encumbrances on the property exceed the purchase price, and the judgment creditor challenges the sufficiency of the purchase price. Such uncertainty, in the Court’s view, would adversely affect the free transferability of real property. The Kahns’ concern over a debtor using a pretextual sale to avoid the anticipated lien of a judgment creditor was addressed by the doctrine of equitable conversion. Therefore, sound public policy supported the application of the doctrine of equitable conversion to the case.
PRACTICE TIPS: The right of a purchaser of real property to have the title conveyed upon full compliance with the contract of purchase is not impaired by the fact that the seller, subsequently to the execution of the contract, incurred a debt upon which judgment was recovered. A judgment creditor stands in the place of his debtor, and can only take the property of his debtor subject to the equitable charges to which it is liable in the hands of the debtor at the time of the rendition of the judgment.
Workers’ Compensation
Jurisdiction
BOTTOM LINE: Issue of whether Workers’ Compensation Commission had jurisdiction to award claimant temporary total disability benefits during pendency of appeal of claimant’s permanent partial disability award became moot, warranting dismissal of appeal.
CASE: Sanchez v. Potomac Abatement, Inc., No 569, Sept. Term, 2010 (filed April 27, 2011) (Judges ZARNOCH, Graeff & Rodowsky (Retired, Specially Assigned)). RecordFax No. 11-0427-01, 18 pages.
FACTS: On Sept. 22, 1998, Edy Sanchez suffered a job-related injury. Seeking compensation from his employer, Potomac Abatement, Inc., Sanchez filed a claim with the Workers’ Compensation Commission. In August 2006, the Commission issued an award that included compensation for a 25% permanent partial disability (PPD) and a 5% psychiatric impairment to be paid beginning on Jan. 14, 2000.
Contending that the computation of the award was incorrectly capped, Sanchez filed suit in circuit court for Baltimore County. A jury eventually determined that Sanchez had sustained a 37% PPD, with no award for psychiatric impairment. Sanchez appealed the issue of whether the award had been improperly capped and this contention was rejected by the Court of Special Appeals in 2009 in Sanchez v. Potomac Abatement, Inc., 184 Md.App. 755 (2009). The Court of Appeals likewise rejected Sanchez’s argument in November 2010 in Sanchez v. Potomac Abatement, Inc., 417 Md. 76 (2010).
On Jan. 28, 2008, while the PPD appeal was pending, Sanchez sought and obtained a Commission award of a closed period of temporary total disability (TTD) benefits for the period of Nov. 30, 2007, to Jan. 8, 2008. On July 31, 2008, he filed for a second closed period of TTD benefits for the period of Jan. 9, 2008, to June 11, 2008. Potomac opposed this claim, arguing that the Commission had no jurisdiction to order TTD benefits during the pendency of the appeal of the PPD case. In an order dated Oct. 21, 2008, the Commissioner held that the Commission lacked jurisdiction during the pendency of the appeal pursuant to LE §9-742. The Commissioner rejected Sanchez’s reliance on case law recognizing the Commission’s continuing jurisdiction under what is now LE §9-736.2.
Sanchez sought judicial review of the Commission’s order in circuit court, which affirmed the Commission’s decision. On May 26, Sanchez appealed this decision. While the TTD case and the PPD appeal were in the courts, Sanchez, on Aug. 19, 2009, again revisited the Commission, this time seeking vocational rehabilitation benefits. After a hearing on Oct. 27, 2009, the Commissioner ruled that the Commission did not have jurisdiction during pendency of appeal. Sanchez sought judicial review of this order in circuit court, once again without success.
Sanchez appealed to the Court of Special Appeals, which consolidated the vocational rehabilitation appeal with the TTD appeal. The Court of Special Appeals ultimately dismissed Sanchez’s appeal as moot.
LAW: The test for mootness is whether, when it is before the court, a case presents a controversy between the parties for which, by way of resolution, the court can fashion an effective remedy. Adkins v. State, 324 Md. 641, 646 (1991). One exception to the mootness doctrine is where a controversy that becomes non-existent at the moment of judicial review is capable of repetition but evading review. State v. Parker, 334 Md. 576, 584 (1994). In addition, a court may express its views on the merits of a moot case to prevent harm to the public interest. In this case, absent an appropriate exception, Sanchez’s case was moot. The only effective remedy that the Court could fashion — ordering the Commission to consider Sanchez’s post-PPD claims — was one that Sanchez had an unfettered right to pursue. As such, the “capable of repetition but evading review” exception to the mootness doctrine was not clearly applicable. Although the “pending appeal” was decided before the two subsequent Commission jurisdictional cases could be resolved, those issues would not invariably escape review.
Furthermore, there was no clear expectation that Sanchez, “the same complaining party,” would be requesting additional compensation beyond that already claimed, seeking judicial review and facing harm from the Commission’s interpretation of LE §9-742. Parker, 334 Md. at 584. For these reasons, the “capable of repetition but evading review” exception did not save the controversy from becoming moot. However, in the view of the Court of Special Appeals, this case implicated the “public interest” offshoot to the mootness doctrine, in that Sanchez raised significant issues involving the proper interpretation of important social legislation bearing not only on the rights of future claimants to prompt compensation for their injuries, but also on the efficient operation of both the Commission and the courts. Therefore, the Court of Special Appeals found that the public interest would be served by an expression of its views for the guidance of courts, litigants, and the Commission.
The question of the Commission’s jurisdiction over additional compensation issues while the primary claim was on judicial review was an issue of statutory construction, which Sanchez contended was controlled by LE §9-736(b). Potomac, conversely, argued that the matter was governed by LE §9-742(a). Both the Commission and the circuit courts viewed §9-742(a) as a self-contained agency jurisdictional statute and presumably applied the maxim expressio unius est exclusio alterius. Hence, they arrived at a negative implication that the Legislature, by expressly setting forth the instances in §9-742(a) where the Commission retained jurisdiction while a claim was on appeal, intended no other exception.
Although under appropriate circumstances, the expressio unius est exclusio alterius maxim can be a powerful tool in statutory construction, the canon is not a rule of law but merely an “auxiliary” rule of statutory construction to assist in determining legislative intent in an ambiguous statute. Walzer v. Osborne, 395 Md. 563, 579 (2006) (citations and quotations omitted). The maxim should be used with caution and should never be applied to override the manifest intention of the Legislature. Id. The case for reading §9-742 as an exclusive jurisdiction statute, implicitly barring the retention of Commission jurisdiction in cases not specifically listed, relied on: 1) the structure of the provision; 2) the caption of the section; 3) subsequent amendments to the original 1966 statute suggesting that agency jurisdiction was retained only in the listed cases; 4) comments in two Fiscal Notes to that effect.
Upon consideration of the legislative history of the statute, none of these factors indicated an intent to make the 1966 statute (or transform it into) an exclusive jurisdiction statute. First, the mere isolation or rearrangement of words in a statute, particularly as a result of a non-substantive code revision, cannot substantively alter its meaning. Second, a caption to a section of the law, particularly one inserted by the Legislature during a non-substantive code revision, should never be the determining factor in deciphering legislative intent. See Md.Code (1957, 2008 Repl.Vol.), Article 1, §18. Third, while examining subsequent amendments to a statute can be helpful in determining legislative intent, they are not controlling as to the meaning of the prior law. Chesek v. Jones, 406 Md. 446, 462 (2008). The same is true with respect to post-enactment “assumptions” by the Legislature of the meaning of an earlier statute. See Riemer v. Columbia Med. Plan, Inc., 358 Md. 222, 254 (2000). And fourth, a fleeting reference to the state of existing law in a fiscal note would not be entitled to greater weight than the assumptions of the Legislature in subsequent amendments.
In summary, the 1966 source law for §9-742 was never truly an exclusive jurisdiction statute. Nothing in its code revision or subsequent amendments changed this fact, and the meaning of §9-736(b) was neither modified nor controlled by §9-742. The latter provision’s express retention of Commission jurisdiction in the face of an appeal to the courts did not mean that such authority is absent under §9-736(b). Thus, §9-742 did not deprive the Commission of jurisdiction while a previous award is on appeal, and the agency would retain jurisdiction if the new claim was properly authorized under §9-736(b).
Accordingly the Court of Special Appeals dismissed Sanchez’s appeal as moot.
COMMENTARY: Because the Court of Special Appeals disposed of the question of exclusive jurisdiction under §9-742, which was the sole basis for the lower courts’ decisions, and because the Commission now clearly had jurisdiction of the new issues, it was unnecessary for the Court to determine whether it would have been proper for the Commission to retain jurisdiction over these specific claims under §9-736(b).
PRACTICE TIPS: When a workers’ compensation claimant seeks judicial review, the Workers’ Compensation Commission may lose jurisdiction to hear other issues of greater importance to the appellant. For this reason, the Commission is often reluctant to retain jurisdiction when a case is on appeal, except for the matters discussed in LE §9-742. However, the forgiving nature of Maryland’s Workers’ Compensation statute will often allow another opportunity to claim the same or similar type of benefit by: 1) requesting modification pursuant to the discretionary revisory powers granted the Commission in LE §9-736; 2) requesting a rehearing based on LE §9-726 due to error of law or newly discovered evidence; 3) changing the benefits claimed (e.g., vocational benefits instead of temporary total disability or one form of medical treatment instead of the denied form); or 4) a change in circumstances (e.g., deteriorating medical condition requiring treatment previously denied).
