BOTTOM LINE: Petition for judicial review was properly dismissed as untimely, where the mailbox rule did not afford petitioner three days beyond the thirty-day period imposed by Rule 7-203(a) to file his petition.
CASE: Bush v. Public Service Commission of Maryland, No. 0032, Sept. Term, 2012 (filed May 29, 2013) (Judge WRIGHT, Kehoe & Alpert. (retired, specially assigned)). RecordFax No. 13-0529-04, 16 pages.
FACTS: After Hurricane Irene in 2011, the Public Service Commission of Maryland launched a consolidated inquiry into Maryland Investor-Owned Utility Companies, Southern Maryland Electric Cooperative, and Choptank Electric Cooperative.
Chris Bush was a landlord in Catonsville, Maryland, whose tenants were customers of Baltimore Gas & Electric (BGE), a public utility subject to the Commission’s inquiry. During the public hearing phase of the consolidated inquiry, Bush appeared before the Commission to request that BGE be assessed a $50 million fine for “failure to provide reliable electric service” and for the utility’s “dysfunctional restoration efforts” in the aftermath of Hurricane Irene.
On October 31, 2011, the Commission issued Order No. 84445 which directed the Utility Companies to take specific actions designed to improve storm preparedness and response. Fines were not levied against the Utility Companies.
Bush conceded that he received and downloaded the Commission’s Order on October 31, 2011, the date it was posted online. As a dissatisfied, interested party, Bush was permitted to file a petition for judicial review within thirty days of the Commission’s Order pursuant to Rule 7-203(a). Bush submitted his Petition by certified mail to the Clerk of the circuit court for Baltimore City on November 30, 2011. The Clerk’s Office stamped as received and docketed the petition on December 2, 2011, thirty-two days after the Commission issued the Order. The Commission filed a motion to dismiss Bush’s Petition as untimely. The circuit court granted the Commission’s motion to dismiss.
Bush appealed to the Court of Special Appeals, which affirmed.
LAW: Rule 1-203(c) provides: “Whenever a party has the right…to do some act…within a prescribed period after service upon the party of a notice or other paper and service is made by mail, three days shall be added to the prescribed period.” In order to trigger Rule 1-203(c), two conditions must be present. First, a party must have received service of process by mail. Second, the party served must have a right or obligation to perform an action after being served by mail within a specified period of time. Only when both conditions are satisfied, is a party exercising such right, or performing an obligation, afforded three days beyond the applicable period to avail such right or perform the obligation. See Kamara v. Edison Bros. Apparel Stores, Inc., 136 Md. App. 333, 338 (2001).
Further, “when the prescribed time period under a rule or statute is commenced by an event other than service by mail, such as entry of an order or the filing of a pleading, ‘an extra three-day period [under Rule 1-203(c)] is not allowed.”‘ Chance v. Wash. Metro. Area Transit Auth., 173 Md. App. 645, 656 (2007) (quoting Niemeyer & Schuett, Maryland Rules Commentary 22 (3d ed. 2003)).
Here, Bush never received notice of the Commission’s decision by mail. Thus, the absence of the first condition precedent necessary to trigger Rule 1-203(c) precluded the rule’s application to Bush’s Petition.
Alternatively, Bush averred that the Commission’s online posting of its Order constituted “notice” or “deemed notice” under Rule 1-203(c) and, therefore, three days must be added to the thirty-day filing period.
The rule requires that “notice” be provided by mail in order for a party to be eligible to receive additional time to exercise a right or perform an obligation. Further, it was not possible to discern from the language of the rule, or the broader rule scheme, that the Court of Appeals intended the clause, “service is made by mail,” to encompass online postings. Words are to be “construed according to their ordinary and natural import.” Lanzaron v. Anne Arundel Cnty., 402 Md. 140, 149 (2007) (quoting Rose v. Fox Pool Corp., 335 Md. 351, 359 (1994)). Thus, only pleadings processed through the postal system are of the type envisioned by Rule 1-203(c).
Under Rule 7-203, a petition for judicial review shall be filed within 30 days after the latest of: “(1) the date of the order or action of which review is sought; (2) the date the administrative agency sent notice of the order or action to the petitioner, if notice was required by law to be sent to the petitioner; or (3) the date the petitioner received notice of the agency’s order or action, if notice was required by law to be received by the petitioner.”
In Renehan v. Pub. Serv. Comm’n, 231 Md. 59, 62 (1963), the Court of Appeals addressed Rule 1101, the predecessor to Rule 7-203(a). Rule 1101(d) provided: “An order for appeal shall be filed within thirty days from the date of the action appealed from, except that where the agency is by law required to send notice of its action to any person, such order for appeal shall be filed within thirty days from the date such notice is sent, or where by law notice of the action of such agency is required to be received by any person, such order for appeal shall be filed within thirty days from the date of the receipt of such notice.” Id.
Renehan involved a dispute over the imposition of a new tariff affecting telephone utility companies. The Commission issued an order on October 11, 1961. Appellants mailed their Petition opposing the new tariff on November 10, 1961. It was received by the court on November 14, 1961. The circuit court dismissed the Petition as untimely.
The Court of Appeals held that “[t]he mailing of the appeal to the Clerk is not made the equivalent of filing it with him.” Id. at 63. Pursuant to the computation of time rules, the Court of Appeals determined that the final date for filing was November 10, 1961, and therefore, the circuit court properly dismissed the Petition as untimely.
Notwithstanding the evolution of Rule 1101 into its present form, the Court of Appeals has not stricken or amended the language “shall be filed within thirty days.” Further, Renehan has not been overruled or abrogated by rule and thereby “continues to represent the [Court of Appeals’s] interpretation of the statutory law.” Ctr. Ins. Co v. J.T.W, 397 Md. 71, 83 (2007).
Unless otherwise provided by rule or statute, to be considered timely, a Petition must actually be received by the circuit court clerk no later than the thirtieth day after the occurrence of the action or order desired to be appealed.
The circuit court did not err in granting the Commission’s motion to dismiss Bush’s Petition as untimely. The Commission issued its Order on October 31, 2011. Pursuant to the computation of time rules provided in Code, Art. 1, §36, the clock began to run on November 1, 2011. Therefore, Bush had until November 30, 2011 — thirty days after the clock was triggered-to file his Petition.
It was undisputed that Bush mailed his Petition to the Clerk’s Office on November 30, 2011. Because the Clerk did not receive Bush’s Petition by the close of business on November 30, 2011, the Petition was untimely when received on December 2, 2011, two days past the prescribed filing period.
COMMENTARY: Bush argued that, even if the circuit court properly applied Rule 7-203(a), failure to consider the Commission’s online posting as “notice” within the meaning of Rule 1-203(c) constituted a Fourteenth Amendment due process violation.
In Samuels v. Tschechtelin, 135 Md. App. 483, 523 (2000), the Court of Special Appeals identified four categories of due process claims: a procedural due process claim premised on the deprivation of a property interest; a procedural due process claim premised on the deprivation of a liberty interest; a substantive due process claim premised on the deprivation of a property interest; and a substantive due process claim premised on the deprivation of a liberty interest. We can only presume that Bush seeks to avail a procedural due process right premised on the deprivation of a property interest.
Actual notice has been held to negate a due process violation. United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S. Ct. 1367, 1378 (2010). In Espinosa, although respondent violated procedural rules by failing to serve petitioner with a summons and complaint, no constitutional due process violation occurred because petitioner received actual notice. Id. See also Brown v. Handgun Permit Review Bd., 188 Md. App. 455, 469-70 (2009).
Bush received actual notice of the Commission’s Order on October 31, 2011. When questioned by the circuit court judge, Bush acknowledged that he was closely following the proceedings and downloaded the Order from the Commission’s website on the date of its issue. Bush received constitutionally sufficient procedural protections to air his grievance. Procedural due process “merely assures reasonable procedural protections, appropriate to the fair determination of the particular issues presented in a given case.” In re Maria P., 393 Md. 661, 674-75 (2006). Notice is designed to apprise a party of particular occurrences during the course of proceedings, to avoid surprise and permit a party to mount an appropriate response if so warranted.
Bush was duly apprised of the Commission’s Order upon its issuance and the rules establish a procedure to mount a response. Even if a procedural violation is presumed, actual notice cured the deficiency.
PRACTICE TIPS: “[J]ust as ‘mailing’ is not synonymous with ‘filing’ for purposes of court pleadings, ‘mail’ is not synonymous with ‘renew’ for purposes of [Envir. §6-812].” Jackson v. Dackman Co., 181 Md. App. 546, 579 n.13 (2008).
BOTTOM LINE: Where circuit court failed to instruct jury that jury could not find defendant guilty of more than one count of conspiracy unless it was convinced beyond a reasonable doubt that defendant entered into two separate agreements to violate the law, it was necessary to vacate one of defendant’s two conspiracy convictions in order to avoid violation of double jeopardy principles, because without such instruction, jury might have believed that one agreement could support more than one conspiracy count.
CASE: Savage v. State, No. 1741, Sept. Term, 2011 (filed May 29, 2013) (Judges Meredith, Woodward & KENNEY (retired, specially assigned)). RecordFax No. 13-0529-00, 44 pages.
FACTS: Deangelo Savage was tried in and convicted by the circuit court for various offenses arising out of his involvement in the burglary of the residence of Reginald Greene and his sister, Barbara Greene, on December 17, 2010. When Reginald Greene returned home at approximately midnight on December 17, 2010, he noticed that the back door had been “busted open.” Entering the living room, he saw clothes strewn across the hallway, and some blood. He left the house and called the police, who responded and searched the Greene home.
Sergeant Scott Cook was the first police officer to respond to Reginald’s call. According to Sergeant Cook, the first two suspects to develop were Demarics Banks and Shawn Franklin. Later, Savage became a suspect as well. On December 23, 2010, Detective Chris Taylor and Detective Tingle (whose first name was not reflected in the record) interrogated Savage at the Wicomico County’s Sheriff’s Office. During that interrogation, according to Detective Taylor, Savage indicated that he had had no involvement whatsoever in the burglary.
Sergeant Steve Hall testified that he observed the interrogation from another room. Afterward, he and Sergeant Chastity Blades had an impromptu conversation with Savage, during which Savage said that he had talked to Demarics Banks and Shawn Franklin about committing a burglary at the Greene home. Officer Hall further stated that Savage told the officers that Banks and Franklin had pushed him to take them to the Greene home, and that he had assisted them in planning the burglary. According to Hall, Savage further acknowledged that he, Banks, and Franklin rode by the Greene home, which Savage identified for the other two men.
At Savage’s trial, his only witness, Franklin, testified that he had received his information about the burglary from Banks, that he never discussed the burglary with Savage, and that Savage did not play any role in this burglary. On cross-examination, the prosecutor questioned Franklin about contradictions between this testimony and statements he had made during a December 23, 2010 interview with Detective Taylor. In that interview, the transcript of which was entered into evidence, Franklin stated, in part, that Savage was not going to participate in the robbery attempt and that although he probably knew that the burglary was going to take place at some point, Savage did not know exactly when it would occur.
The circuit court instructed the jury regarding the elements of conspiracy, but did not issue an instruction that the jury could not find Savage guilty of more than one count of conspiracy unless it was convinced beyond a reasonable doubt that he entered into two separate agreements to violate the law. Savage was subsequently convicted of multiple offenses relating to the Greene burglary, including two counts of conspiracy.
Savage appealed to the Court of Special Appeals, which affirmed in part and remanded in part the judgment of the circuit court.
LAW: Savage argued that his two convictions for conspiracy to commit first-degree burglary offended double jeopardy principles. Specifically, Savage contended that any agreements he made with Banks and Franklin were part of one overall conspiracy to burglarize the Greene home, and that he was thus being punished twice for the same crime in violation of the prohibition against double jeopardy.
A criminal conspiracy is the combination of two or more persons, who by some concerted action seek to accomplish some unlawful purpose, or some lawful purpose by unlawful means. Mason v. State, 302 Md. 434, 444 (1985). Conspiracy, a common law crime, is complete without any overt act to advance its goal, and is a crime at the moment the agreement is formed. Id. A single agreement constitutes one conspiracy,” and multiple agreements constitute multiple conspiracies. United States v. Broce, 488 U.S. 563, 570-71 (1989). In other words, the conviction of a defendant for more than one conspiracy turns on whether there exists more than one unlawful agreement. United States v. Nyhuis, 8 F.3d 731, 734 (11th Cir. 1993).
As Savage contended, multiple agreements can be part of a single conspiracy. State v. Choppy, 141 N.C. App. 32, 40 (2000). The State has the burden to prove the agreement or agreements underlying a conspiracy prosecution. See Albert J. Harno, Intent in Criminal Conspiracy, 89 U. Pa. L. Rev 624, 632 (1941). If the prosecution seeks to establish a single conspiracy, it has the burden to prove the existence of one overall conspiracy as opposed to separate and independent conspiracies. United States v. Trainor, 477 F.3d 24, 35 (1st Cir. 2007). If it seeks to establish multiple conspiracies, it has the burden of proving a separate agreement for each conspiracy. 16 Am Jur 2d Conspiracy §40 (emphasis added).
Determining the number of conspiracies and distinguishing one agreement from another is a challenge with which courts have long wrestled. Anne Bowen Poulin, Double Jeopardy Protection from Successive Prosecution: a Proposed Approach, 92 Geo. L.J. 1183, 1274 n.507 (2004). This is, in part, because the Supreme Court has not established in the double jeopardy context how to determine whether there was one agreement or more than one agreement,” William H. Theis, The Double Jeopardy Defense and Multiple Prosecutions For Conspiracy, 49 SMU L. Rev. 269, 286 (1996). To address the single as opposed to multiple conspiracies question, it is necessary to analyze the nature of the agreement or agreements, and to ask, when there are agreements among several parties, whether there was one overall agreement to perform various functions to achieve the objectives of the conspiracy, or separate conspiracies. United States v. Arbelaez, 719 F.2d 1453, 1457 (9th Cir. 1983).
In the multiple conspiracy context, the agreements are distinct and independent from one another. Timney v. State, 80 Md. App. 356, 368 (1989). Thus, each agreement must have its own end, and each must constitute an end in itself. United States v. Sababu, 891 F.2d 1308, 1322 (7th Cir. 1989). If the prosecution fails to present “proof sufficient to establish a second conspiracy, it follows that there is merely one continuous conspiratorial relationship. Vandegrift v. State, 82 Md. App. 617, 646 (1990). It has been said that the question of whether one or more than one conspiracy has been established is a question of fact for a properly instructed jury. United States v. Maldonado-Rivera, 922 F.2d 934, 962 (2d Cir. 1990). If a defendant is convicted of and sentenced for multiple conspiracies when, in fact, only one conspiracy was proven, the Double Jeopardy Clause has been violated.
Under the facts of the present case, it was not clear that there was only one agreement to commit a burglary. There was testimony that, if credited by the jury, might have established two separate conspiracies involving two separate agreements, one between Savage and Banks and one between Savage and Franklin. However, the jury instruction was inadequate to convict and sentence Savage of multiple conspiracies. While the jury was instructed generally regarding the elements of conspiracy, without an instruction that the jury could not find Savage guilty of more than one count of conspiracy unless it was convinced beyond a reasonable doubt that he entered into two separate agreements to violate the law, the State was not put to the test of proving separate conspiracies. Therefore, the State could not be allowed to obtain a sentencing advantage from having failed at trial to do so. United States v. Cerro, 775 F.2d 908, 913 (7th Cir. 1985).
Without a proper instruction, the jury might very well have been left with the impression that one agreement could support more than one conspiracy count. Turnley v. State, 725 N.E.2d 87 (Ind. 2000). In other words, without a clear instruction, there was no way to be certain that one or more jurors voting guilty did not see the Savage-Banks agreement and the Savage-Franklin agreement as one overall conspiracy among Savage, Banks, and Franklin to burglarize the Greene home. United States v. Echeverry, 698 F.2d 375, 377 (9th Cir. 1983). Thus, under the facts of this case, it was required that one of Savage’s two conspiracy convictions be vacated, in order to avoid a double jeopardy violation.
Accordingly, the judgment of the circuit court was remanded in part for further proceedings to vacate one of Savage’s conspiracy sentences; the remainder of the judgment was affirmed.
COMMENTARY: Savage additionally argued that the trial court erred in not merging his conviction for accessory to first-degree burglary with his conviction(s) for conspiracy to commit first-degree burglary.
Accessory before the fact to first-degree burglary requires proof that the defendant aided, counseled, commanded, or encouraged another to commit a burglary, without having been present either actually or constructively at the moment of perpetration. State v. Williams, 397 Md. 172, 193 (2005). Because “accessoryship” is a mechanism by which culpability for the substantive crime is incurred, a completed crime is a necessary element. Grandison v. State, 305 Md. 685, 759 (1986). Conspiracy to commit first-degree burglary requires an agreement to commit the burglary, but it does not require proof that an actual or attempted burglary occurred. Thus, because each crime contains an element that the other does not, Savage’s accessory conviction did not, under the required evidence test, merge with his one remaining conspiracy conviction. See State v. Lancaster, 332 Md. 385, 391 (1993).
Savage also asserted that it would be fundamentally unfair to sentence him for both crimes. In this assertion, Savage cited Monoker v. State, 321 Md. 214 (1990). However, merger was not required under the fundamental fairness doctrine. See Pair v. State, 202 Md. App. 617, 649 (2011). Savage’s conspiracy and accessory convictions addressed two different aspects of the burglary: the agreement to burglarize the Greene home with one or more persons, and the specific acts taken prior to and towards its commission. Regarding the latter, Savage personally took Banks and/or Franklin to show them the Greene home before the burglary. See Coleman v. State, 209 Md. 379, 384-85 (1956).
These actions were important to success of the burglary and exceeded mere planning. In so doing, Savage clearly aided, counseled and encouraged the burglary. As such, Savage’s “fundamental fairness” argument was without merit.
Estates & Trusts
BOTTOM LINE: Where decedent’s surviving spouse had been named beneficiary of record of decedent’s pension through his employ with public school system and was receiving pension benefits, circuit court did not err in ordering equitable remedy in form of constructive trust in favor of decedent’s ex-wife, because decedent and ex-wife had entered into separation agreement providing that judgment of divorce would serve as a qualified domestic relations order in husband’s pension benefits and, even though decedent had remarried and designated his surviving spouse as sole beneficiary of his pension, separation agreement reflected parties’ mutual intent that ex-wife was to be alternate payee of decedent’s pension plan and was to receive a 50% interest in marital share of pension.
CASE: Robinette v. Hunsecker, No. 2444, Sept. Term, 2011 (filed May 29, 2013) (Judges Meredith, Kehoe & HOTTEN). RecordFax No. 13-0529-02, 57 pages.
FACTS: On June 6, 1981, Luan Hunsecker married Roger Robinette. Roger was employed by Montgomery County Public Schools (“MCPS”) and a participant in its pension plan. After nearly 17 years of marriage, Luan and Roger executed a voluntary separation agreement on April 16, 1998. Pursuant to that agreement, Luan transferred and assigned all her rights, title, and interest in the marital home, with the proviso that the proceeds of any sale would be the Roger’s sole and exclusive property. Following their agreement, a judgment of divorce was entered by the circuit court for Frederick County, Maryland, providing that the terms of the voluntary separation agreement would be incorporated, but not merged, into the judgment of absolute divorce.
Most notably, paragraph eight of the separation agreement provided that the judgment of divorce, issued on August 3, 1998, would serve as a qualified domestic relations order (“QDRO”) in the pension benefits and death (“surviving spouse”) benefits provided to Roger Robinette through his employ with MCSS. Specifically, this provision stated that the parties agree that Luan would be the alternate payee of Roger’s pension and that the parties’ judgment of divorce would be a QDRO. The provision further stated that Luan’s equitable interest in Roger’s pension was declared to be 50% of the marital share of the pension benefit. The provision also stated that Luan would receive 50% of the aforesaid marital share of any benefits made from the pension to Roger, including any death benefits if, as and when such payments were made. This provision, however, was never enrolled in a QDRO.
After their divorce, Mr. Robinette continued working for MCPS. In June 2000, he married Lori Robinette. Throughout their nine years of marriage, Roger continued working for MCPS until his death on October 2, 2009. Lori Robinette was named as the personal representative of Roger’s small estate, which she administered without publication.
Upon learning of Roger’s passing, Luan attempted to obtain a portion of the pension benefits from MCPS on May 12, 2010, pursuant to the separation agreement that she had entered into eleven years earlier. Her efforts proved unsuccessful because MCPS had never received a QDRO to indicate Luan as the partial beneficiary of Roger’s pension benefits. Roger had named Lori Robinette the beneficiary of record with MCPS. As a consequence, Luan was denied any portion of the pension benefits and was apprised that Roger’s pension was being paid to Lori.
Thereafter, Luan filed suit in the district court against Lori Robinette, seeking the establishment of a constructive trust on grounds of Lori’s unjust enrichment. The parties filed a joint stipulation of facts on October 14, 2011. Luan and Lori then each filed a motion for summary judgment. The circuit court entered summary judgment in favor of Luan, granting her a constructive trust in a portion of Roger Robinette’s pension and death benefits and also ordered the issuance of a posthumous QDRO, consistent with the separation agreement.
Lori Robinnette appealed to the Court of Special Appeals, which affirmed.
LAW: Lori Robinette, argued that the circuit erred by imposing a constructive trust on the benefits already issued by the pension plan. However, it is well-established that a constructive trust is the formula through which the conscience of equity finds expression.
When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him or her into a trustee. Beatty v. Guggenheim Exploration Co., 122 N.E. 378, 380 (N.Y. 1919). Maryland appellate courts have long recognized that a constructive trust is the remedy employed by a court of equity to convert the holder of the legal title to property into a trustee for one who in good conscience should reap the benefits of the possession of said property. Wimmer v. Wimmer, 287 Md. 663, 668 (1980).
In the present case, the voluntary separation agreement of Luan and Roger reflected their mutual intent that Luan was to be the alternate payee of Roger Robinette’s pension plan, that she was conveyed a 50% interest in the marital share of that plan, and that she would receive 50% of the marital benefits from the pension (including any death benefits) when payments began. Luan and Roger reached this agreement only after she transferred and assigned all her rights, title, and interest in the marital home, as well as her rights and interest in other property owned by the couple. Therefore, the evidence was sufficient for the trial court to conclude that a constructive trust arose out of Roger Robinette’s failure to designate Luan as his alternate payee, irrespective of the parties’ failure to obtain a QDRO prior to Roger’s death.
Accordingly, the judgment of the district court was affirmed.
COMMENTARY: Lori Robinette additionally contended that the circuit court erred by entering an order for the alienation of pension benefits after the death of the plan participant. In considering the merits of this assertion, it was necessary to consider the applicability of the Employee Retirement Income Security Act, 29 U.S.C. § 1001et seq. (1999) (“ERISA”), to pension plans. See, e.g., Potts v. Potts, 142 Md. App. 448, 454-55 (2002). ERISA expressly preempts state law (outside the exceptions provided by a QDRO) by making the regulation of pension plans falling under ERISA’s governance a matter of exclusive federal interest. 29 U.S.C. §1144(a).
Almost every United States Court of Appeals has determined that a state law governing the designation of an ERISA beneficiary to the pension plan “relates to” the ERISA plan, and is therefore preempted. See Carmona v. Carmona, 603 F.3d 1041, 1061-62 (9th Cir. 2008). However, Congress ultimately decided to exempt “public” or “governmental” benefit plans from compliance with most of ERISA’s requirements. See H.R. Rep. No. 533, 1974 U.S. Code Cong. & Ad. News at 4647. As a consequence, the circuit court committed no error in granting Luan a posthumous Domestic Relations Order to be qualified by Roger Robinette’s government pension plan through MCPS on the basis of her voluntary separation agreement with Roger. See generally Eller v. Bolton, 168 Md. App. 96, 116 (2006).
PRACTICE TIPS: A qualified domestic relations order, or QDRO, is a subset of domestic relations orders that recognizes the right of an alternate payee to receive all or a portion of the benefits payable with respect to a pension plan’s participant under the respective pension plan.
Relevance of medical payments
BOTTOM LINE: Defendant’s proffered evidence of payments made on plaintiff’s medical bills by his worker’s compensation carrier that were accepted as full payment by his health care providers were properly excluded as irrelevant.
CASE: Brethren Mutual Insurance Co. v. Suchoza, No. 1787, Sept. Term, 2011 (filed May 29, 2013) (Judges Meredith, WOODWARD & Matricciani). RecordFax No. 13-0529-03, 36 pages.
FACTS: Kenneth Suchoza was driving a commercial cargo van within the scope of his employment as a Service Technician with Matrix Mechanical, Inc. when it was struck in the rear by a Dodge Dakota pickup truck. The pickup truck was propelled into the back of Suchoza’s van when the driver of a third vehicle, a Dodge Caravan, failed to control his vehicle and struck the rear end of the pickup truck. At the time of the accident, the driver of the Dodge Caravan was an uninsured motorist.
As a result of the accident, Suchoza sustained injuries to his neck and left shoulder, causing him to undergo a cervical discectomy and fusion surgery. Suchoza filed a workers’ compensation claim. As of the date of trial, Suchoza had received workers’ compensation benefits of $179,206. In addition, Suchoza’s workers’ compensation claim was not fully resolved, and he was entitled to future workers’ compensation benefits.
Matrix maintained an uninsured motorist (UM) policy with Brethren Mutual Insurance Company. The insurance policy contained a provision limiting Brethren’s liability in the event that an employee recovered workers’ compensation benefits stemming from the same accident for which UM benefits were sought.
Suchoza filed a claim with Brethren under its UM policy, which Brethren denied. Suchoza filed a complaint in circuit court, asserting that Brethren’s denial of UM benefits pursuant to Brethren’s UM insurance policy with Matrix constituted a breach of contract.
At trial, Suchoza introduced into evidence the medical bills, totaling $129,876, that he incurred as a result of the accident, along with the testimony of his treating physician that such bills were fair, reasonable, and necessary. Brethren sought to introduce evidence of the reasonable value of the medical services rendered to Suchoza by proffering evidence of the actual payments made by Suchoza’s workers’ compensation carrier and accepted as full payment by the health care providers. The trial court did not allow the admission of the evidence of such payments.
The jury returned a verdict in favor of Suchoza for a total of $535,876, comprised of: $156,000 in lost wages, $129,876 in medical expenses, and $250,000 in non-economic damages.
Brethren filed a motion for new trial and to alter or amend judgment. The circuit court denied Brethren’s motion for a new trial but reduced the amount of the judgment from $535,876 to $356,669 to reflect the amount of workers’ compensation benefits received by Suchoza as of the date of trial.
Brethren appealed to the Court of Special Appeals, which affirmed.
LAW: Rule 5-402 provides: “Except as otherwise provided by constitutions, statutes, or these rules, or by decisional law not inconsistent with these rules, all relevant evidence is admissible. Evidence that is not relevant is not admissible.” See Washington Metropolitan Area Transit Authority v. Washington, ___ Md. App. ___, No. 769-11 (Mar. 21, 2013). Evidence is relevant if it has “any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Rule 5-401.
In Kujawa v. Baltimore Transit Co., 224 Md. 195 (1961), a mother, father, and son brought claims for damages arising out of a collision between a transit bus and a car in which the mother and son were passengers. At trial, the mother testified that she and her son had seen a number of doctors for treatment of their injuries. Id. at 208. The doctors’ unauthenticated bills were proffered as evidence. The trial court excluded these medical bills because the mother did not have evidence showing that the charges she sought to introduce into evidence were reasonable. Id. The Court of Appeals affirmed, explaining that “[e]vidence of the amount or payment of medical bills does not establish the reasonable value of the services for which the bills were rendered or justify recovery therefor.” Id.
In Shpigel v. White, 357 Md. 117 (1999), the appellants sustained injuries and medical bills resulting from their car being hit in the rear by a vehicle driven by the appellee. Id. at 120-21. Following the accident, the appellants incurred expenses from their initial hospital visit, follow up visits to physicians, and psychotherapy sessions. Id. at 121-22. At trial, the appellants attempted to introduce the medical bills into evidence without expert testimony, submitting the bills instead with accompanying affidavits of the custodians of those records, which affidavits stated that the expenses were fair and reasonable. Id. at 123-24. The trial court excluded the medical bills, reasoning that, because the defense challenged the reasonableness of the bills, wanted an opportunity to cross-examine, and wanted to see if some expert could say that the bills were reasonable, the admission of the medical bills required expert testimony. Id. at 124-25.
The Court of Appeals affirmed. “[T]he fact to be proved is the reasonableness of the bill, but the witness to that fact is not present and subject to cross-examination. Accordingly, the circuit court did not err in excluding from its consideration on summary judgment the medical bills proffered by [appellants].” Id. at 129. See also Desua v. Yokim, 137 Md. App. 138 (2001).
Here, Brethren’s purpose in offering proof of payment of the medical bills was an attempt to show the jury that the fair and reasonable value of the medical services rendered to Suchoza was the amounts paid and accepted by the health care providers, and not the amounts charged as stated on the medical bills. Under Kujawa, Shpigel, and Desua, evidence of the payment of Suchoza’s medical bills does not establish the reasonable value of the services for which the bills were rendered, and thus was irrelevant to the issue of reasonableness. See Rule 5-401.
For the evidence of payment of Suchoza’s medical bills to be admissible, Brethren had to adduce expert testimony or other competent evidence that the amount of such payment was the fair and reasonable value of the medical services rendered to Suchoza. Brethren did not proffer to the trial court any expert testimony or other competent evidence of reasonableness.
In addition, the mere acceptance by a medical provider of the payment of a lesser amount on a bill is not probative of the reasonable value of the medical services reflected in that bill. Thus, the admission of evidence of a medical provider’s acceptance of a lesser amount as full payment for medical services rendered does little to assist the trier of fact in determining the reasonable value of such services. See Rule 5-401.
Therefore, the trial court did not err in excluding Brethren’s proffered evidence of payments made on Suchoza’s medical bills that were accepted as full payment by his health care providers. Without expert testimony or other competent evidence to establish the fairness and reasonableness of such payments, Brethren’s evidence was inadmissible.
COMMENTARY: In Gable v. Colonial Insurance Co. of California, 313 Md. 701 (1988), the appellant was injured in an automobile accident during the course of her employment. Although the appellant filed a workers’ compensation claim, she never pursued the claim and never received any workers’ compensation benefits. Id. at 702. The appellant later filed a claim for personal injury protection (PIP) benefits with her automobile insurer, which the insurer refused to pay because the PIP policy excluded benefits for injuries “occurring during the course of employment if benefits are payable or must be provided under a workers’ compensation law or similar law.” Id. The appellant filed suit against the insurer, seeking to recover $978.55 in PIP benefits. Id. at 703. The court entered judgment in favor of the insurer based on the PIP policy exclusion. The circuit court then granted the insurer’s motion for summary judgment on the same ground. Id.
The Court of Appeals reversed the judgment of the circuit court. Id. at 710. The Court construed the language of 48A §543(d), the statutory predecessor provision to IN §19-513(e), which provided: “‘Benefits payable under the coverages required in [the PIP provision]…shall be reduced to the extent that the recipient has recovered benefits under workmen’s compensation laws of any state or the federal government.”‘ Id. The Court of Appeals reasoned that section 543(d) “shows a legislative intent to provide offsets only for workmen’s compensation benefits actually received and not for future benefits. The subsection provides for a deduction only for workmen’s compensation benefits that the claimant ‘has recovered.’ As a matter of statutory construction, where the Legislature has required specified coverages in a particular category of insurance, and has provided for certain exceptions or exclusions to the required coverages, additional exclusions are generally not permitted.” Id.
The Court of Appeals held that only workers’ compensation actually received may be deducted from PIP benefits and that, “[t]o the extent that the insurance policy exclusion in the case at bar is inconsistent with this holding, it is void.” Id. at 710.
Section 543(d) was recodified in IN §19-513(e), without substantive change. See also TravCo Insurance Co. v. Williams, 430 Md. 396 (2013). Therefore, an insurer may reduce the benefits due under an uninsured motorist policy by the workers’ compensation benefits actually received by the insured, and not by the amounts that the insured may be entitled to recover in the future under the workers’ compensation laws.
Accordingly, Brethren was not entitled to have the judgment entered against it under its UM policy reduced by any future workers’ compensation benefits that will be received by Suchoza. To the extent that the language of Brethren’s UM policy is inconsistent with this holding, it is void.
PRACTICE TIPS: Because an insurance carrier under a UM policy steps into the shoes of the tortfeasor and a plaintiff must prove his or her negligence claim against the tortfeasor in order to recover under such policy, it follows that the “third party who is liable for the injury or death of the covered employee” under LE §§9-902(a), (c) & 9-903 includes both the tortfeasor and the insurance carrier under a UM policy. See Kritsings v. State Farm Mut. Auto. Ins. Co., 189 Md. App. 367, 376 (2009).
Labor & Employment
Police Labor Relations Act
BOTTOM LINE: The Montgomery County Council did not violate the Police Labor Relations Act when it passed an operating budget that rejected a proposed amendment to the police union’s collective bargaining agreement and did not fund three categories of employee benefits.
CASE: Fraternal Order of Police, Montgomery County Lodge 35 v. Montgomery County, Maryland, No. 107, Sept. Term, 2012 (filed May 30, 2013) (Judges Krauser, MATRICCIANI & Watts). RecordFax No. 13-0530-02, 8 pages.
FACTS: In November 2010, the Fraternal Order of Police (FOP) and the Montgomery County Executive entered negotiations over an amendment to officers’ cash compensation, which the FOP proposed to increase by 3.5%. When the two sides failed to agree, an impasse neutral decided to submit the FOP’s proposed increase to the Montgomery County Council. The Council declared its intent to reject funding for that proposed amendment, as well as to reject funding for three existing contractual benefits: retirement benefits, health insurance, and life or disability insurance.
On May 26, 2011, the Council passed a resolution which adopted the Council’s previously announced position not to fund the wage increase or employment benefits. The resolution also reduced the County’s contributions to the officers’ retirement plans and to the officers’ life, accidental death and dismemberment, medical, vision, dental, and drug insurance premiums.
The FOP, Montgomery County Lodge 35 and ten of its members sued the County Council and the County in the circuit court. The circuit held that the Council’s actions were permissible under both the Montgomery County Police Labor Relations Act (PLRA) and the existing bargaining agreement. The circuit court denied the FOP’s motion for reconsideration.
The FOP appealed to the Court of Special Appeals, which affirmed.
LAW: The Montgomery County PRLA governs negotiations between the County and the members of its police force over collective bargaining agreements and amendments, and it designates their respective bargaining agents: the County Executive and the FOP. PRLA §§33-75, 33-76, 33-80. If these two parties cannot reach an agreement, they are bound to submit to an “impasse procedure” in which an arbiter chooses one side’s proposed contract to be conveyed to the Council for consideration. PRLA §§33-81(b); 33-80(g). The Council then must “indicate by resolution its intention to appropriate funds for or otherwise implement the agreement or its intention not to do so, and…state its reasons for any intent to reject any part of the agreement.” PRLA §33-80(h).
The PRLA gives the Council unilateral discretion to refuse to fund “conditional wage or benefits adjustments” in whole or in part: “(i) Adjustments. Any agreement shall provide either for automatic reduction or elimination of conditional wage or benefits adjustments if: (1) the Council does not take action necessary to implement the agreement, or (2) sufficient funds are not appropriated for any fiscal year when the agreement is in effect.” PRLA §33-80(i).
Accordingly, the collective bargaining agreement in place at the time of the present dispute contained the following language: “Pursuant to § 33-80(g)…, any wage and/or benefit adjustment set forth in this Agreement which requires the Montgomery County Council to take action necessary to implement the Agreement, or to appropriate funds, shall be automatically reduced or eliminated if the County Council fails to take the necessary action to implement the Agreement, or if funds are not appropriated or if a lesser amount is appropriated.”
The PLRA is designed to — and does — produce proposed employment contracts and their amendments. Ultimately, however, the Act does not state that the Council must adopt a proposed agreement, or that it must fund its existing obligation to provide employee benefits. The former is left to the Council’s discretion, and the latter is a matter of the County Council’s discretion under both PLRA §33-80(i) and the FOP’s existing collective bargaining agreement.
The FOP contended that the PLRA does not give the County Council any authority or power to change the terms of the FOP collective bargaining agreement or any amendment thereto. But a strict prohibition of “changes” appears nowhere in the PLRA.
The “plain language” of PLRA §33-80(h) authorizes the Council to refuse any proposed amendment and to refuse to fund any employee benefit in whole or in part, and the County Council’s resolution was consistent with this authority. To the extent that this decision constitutes a “change” to the amended or original agreement, it is explicitly permitted by the plain language of PLRA §33-80(h) and the existing collective bargaining agreement. To hold otherwise would nullify those explicit provisions.
The County Council thus had the express authority and unilateral discretion to reject the proposed wage increase and to fund partially the disputed employee benefits. The circuit court did not err when it so held.
COMMENTARY: The FOP’s argument that the County Council violated its State and Federal due process rights depended on its argument under the text of the PLRA. Because the Courted reject the latter, it did not need to address the former.
PRACTICE TIPS: The PRLA reflects the parties’ quid pro quo in §33-84(a), which prohibits strikes and lockouts: “No employee or employee organization shall either directly or indirectly cause, instigate, encourage, condone or engage in any strike, nor the employer in any lockout. No employee or employee organization shall obstruct, impede or restrict, either directly or indirectly, any attempt to terminate a strike.”
BOTTOM LINE: While a plaintiff in a lead paint case may rely solely on circumstantial evidence, circuit court properly granted defendants summary judgment in plaintiff’s lawsuit against defendants alleging injury from ingestion of lead paint at residence owned by defendants where plaintiff presented no direct evidence that residence in question ever contained lead paint and evidence showed that plaintiff resided at several different addresses during relevant time period, because based on circumstantial evidence presented, plaintiff could not show by process of elimination that residence in question was the only possible cause for his lead poisoning.
CASE: West v. Rochkind, No. 0041, Sept. Term, 2012 (filed May 30, 2013) (Judges Kehoe, Watts & MOYLAN (retired, specially assigned). RecordFax No. 13-0530-03, 15 pages.
FACTS: The defendants, NBS, Inc., and Stanley Rochkind, owned and operated a residential property, 1814 Lorman Street, from May 4, 1990, through June of 2001. Dominique West filed suit against the defendants in the circuit court, alleging that he sustained injury from having ingested lead paint while living with his grandparents at 1814 Lorman Street from his birth in 1989 through February 10, 1992. The case was necessarily based on circumstantial evidence because no lead paint tests were ever conducted on 1814 Lorman Street and the property had since been razed.
Dominique was born prematurely, at 29 weeks, on June 28, 1989. The evidence as to precisely where Dominique lived for the first six years of his life was extremely ambiguous. Dominique exhibited elevated blood lead levels in capillector screening tests performed in 1990 and 1991. Those test results all listed Dominique’s address as 1814 Lorman Street. Dominique also exhibited elevated blood lead levels in capillector screening tests and a confirmatory venipuncture test performed in 1992. Those test results all listed Dominique’s address as 428 Cummings Court.
Answers to interrogatories and deposition testimony by Dominique’s mother, Yarrell
Duppins, revealed that Dominique either resided or spent substantial amounts of time at a number of different residences during the first six years of his life, including 1814 Lorman Street, 428 Cummings Court, 1311 Ballard Way, and 2696 Aisquith Street. Dominique’s mother testified that she resided at 1627 Appleton Street at the time that Dominique was born. Duppins further testified that Dominique went to stay with Dominique’s grandparents, Ethel and Calvin Duppins, at 1814 Lorman Street immediately after birth. However, for the first eleven months of Dominique’s life, the defendants were not yet the owners of 1814 Lorman Street.
Yarrell Duppins also testified that Dominique’s grandparents were awarded legal custody of Dominique in 1993 or 1994, when he was four years old. However, that assumption of legal custody occurred only after the Duppinses had moved away from 1814 Lorman Street. Ethel Duppins leased 1814 Lorman Street from some time before Dominique was born until she moved out on February 10, 1992. In an earlier deposition, moreover, Yarrell Duppins testified that generally, when she was living at various other addresses, she would provide her parents’ address (1814 Lorman Street) instead of her own when seeking medical treatment.
Dominique was evaluated at the Kennedy Krieger Institute for behavioral problems in August 1998, when he was nine years old. By that point, Dominique’s legal guardian was his grandmother, Ethel Duppins. The Kennedy Krieger report stated that Dominique had been living with his grandparents since the age of five, and that prior to that period, he had lived with his mother. That report effectively excluded 1814 Lorman Street as a place of residence, for by the time that Dominique was five his grandparents had moved away from Lorman Street.
On December 9, 2011, Rochkind and NBS filed a motion for summary judgment. In opposing summary judgment, Dominique acknowledged that no test for lead paint had ever been done at 1814 Lorman Street and that, therefore, no direct evidence existed to identify that address as a source of his lead paint exposure. Dominique argued, however, that circumstantial evidence sufficed to establish the site of the exposure. The circuit court judge ultimately granted the defendants’ motion, ruling that Dominique had not made out a prima facie case of negligence against the defendants. The judge reasoned that, given his uncertain residential history and the lack of any direct evidence that 1814 Lorman Street ever contained lead paint, Dominique could not point to 1814 Lorman Street as the source of his lead poisoning.
Dominique appealed to the Court of Special Appeals, which affirmed.
LAW: A negligence case may be proven using only circumstantial evidence, so long as it creates a reasonable likelihood or probability rather than a possibility supporting a rational inference of causation, and is not wholly speculative. See Lyon v. Campbell, 120 Md. App. 412, 437 (1998). The fulcrum of this appeal was Dow v. L & R Properties, Inc., 144 Md. App. 67, 796 A.2d 139 (2002). In Dow, the Court of Special Appeals held, on the specific facts of that case, that the plaintiff had produced sufficient circumstantial evidence to create a genuine dispute of material fact as to whether the subject property contained lead and, thus, to defeat the defendant’s motion for summary judgment, even without direct proof of lead in the form of lead tests conducted on the property.
In Dow, as in the present case, there was no direct evidence that lead paint had been present at the suspect residence. The indispensable circumstantial evidence in Dow, however, was that the process of elimination showed ineluctably that the residence in question could only have been a place containing lead paint. The young plaintiff’s medical diagnosis showed indisputably that she had been exposed to lead paint. The evidence also showed indisputably that the only place where she could have been exposed to lead paint was at the residence in question. There was only one possible cause for the undisputed effect. By process of elimination, there was no other possible source of exposure. That, the Court held, constituted solid circumstantial evidence that the house contained lead paint. Id. at 76.
In Dow, two analytic steps were conflated into one. The plaintiff had first to show that there was lead in the paint at the residence in question. The plaintiff had then to show that his exposure at this residence was an effective cause of his lead poisoning. The same exclusivity answered both questions. The proof of ultimate causation does not demand exclusivity. To infer the existence of an antecedent cause from its subsequent effect, on the other hand, does demand exclusivity, and Dominique failed to show such exclusivity in the case at bar.
In Taylor v. Fishkind, the plaintiff alleged that she had been exposed to lead paint while living at 2320 Riggs Avenue between 1990 and 1993 and, subsequently, at 1025 North Carrollton Avenue between 1993 and 1994. Taylor v. Fishkind, 207 Md. App. 121 (2012), cert. denied.___ Md. ___, ___ A.3d ___ (2013). In affirming the grant of summary judgment against the plaintiff, the Court of Special Appeals held that her attempt to build a circumstantial case for lead paint at Carrollton Avenue did not have the benefit of the process of elimination because of her inability to eliminate Riggs Avenue as a possible alternate source of exposure. Id. at 145. In its ruling, the Court emphasized the plaintiff’s failure to eliminate all alternate sources of exposure. Id. at 146.
In sum, a lead paint plaintiff may establish a prima facie case of negligence based solely on circumstantial evidence. In a case such as the present case, however, where there was no direct evidence that 1814 Lorman Street even contained lead paint, Dominique could rely on that critical fact, as a necessary part of his circumstantial evidence, only if he could show by the process of elimination that 1814 Lorman Street was the only possible cause for the critical effect of lead poisoning. Because the circumstantial evidence presented did not prove this critical fact, the circuit court correctly granted summary judgment in favor of the defendants.
Accordingly, the judgment of the circuit court was affirmed.
COMMENTARY: The distinction that Dominique failed to grasp was a subtle, but critical, one. A necessary premise in this case was that there was, indeed, lead paint at 1814 Lorman Street. Under Dow, even in the absence of direct proof, the presence of lead paint at a particular site can be inferred by the process of elimination, but only if it is shown that the plaintiff suffered from lead poisoning and that the site in question was the exclusive possible source of the plaintiff’s lead paint exposure. The essential underpinning of Dow was that the plaintiff spent virtually all of the relevant time at the site in question and could not have been exposed to lead anyplace else. Dow v. L & R Properties, Inc., 144 Md. App. at 75. Thus, Dow established that lead paint was present at that site.
Here, by contrast, at best, Dominique could show he might have been exposed to lead at any or all of the three or four residences where he spent substantial time as a child. By definition, that did not trigger the process of elimination, and he thereby failed to establish the threshold premise that lead was even present in the paint at Lorman Street. Under those circumstances, whether he spent a significant amount of time or only a negligible amount of time or no time at all at Lorman Street was immaterial, because he failed to establish the necessary premise on which the ultimate conclusion of probable causation logically depended.
BOTTOM LINE: The business judgment rule precluded judicial review of homeowners’ association’s legitimate business decision to deny homeowner’s request to install a new roof on home using materials not authorized by the bylaws of the association.
CASE: Reiner v. Ehrlich, No. 33, Sept. Term, 2012 (filed May 29, 2013) (Judges Matricciani, BERGER & Moylan (retired, specially assigned)). RecordFax No. 13-0529-01, 25 pages.
FACTS: Randall and Orna Reiner owned a house located in the Avenel community, which is comprised of over 900 homes in thirteen villages and is governed by a homeowners association (the Association). In 2010, the Reiners submitted a request to the Association for approval to install an asphalt roof. The Association denied the Reiners’ request on the basis that asphalt roofs were not permitted in their village.
The Reiners filed a complaint for declaratory judgment in the circuit court. The complaint named as defendants several individual homeowners and “Avenel Community Association…a homeowners association formed under Title 11B of the Maryland Real Property Code.” The Reiners sought a declaratory judgment “with respect to use of roofing materials in the homes at Avenel,” as well as declaratory relief regarding “any rules and standards” imposed and applied “throughout the Avenel community.”
The individual homeowners filed a motion to dismiss as well as a motion for sanctions. The Association also filed a motion to dismiss the Reiners’ complaint, or alternatively, a motion for summary judgment.
The circuit court dismissed the complaint as to the individual homeowners on the basis that they were not proper parties under the Maryland Rules. Additionally, the trial court granted the motion for sanctions.
The trial court treated the Association’s motion as a motion for summary judgment. The trial court determined that there was no dispute of material fact. In particular, the trial judge observed that the parties both recognized the existence of the Avenel Community Association, Inc., and that the bylaws of the association expressly prohibited asphalt roofs. Accordingly, the trial court entered summary judgment in favor of the Association. The Reiners filed a motion to alter or amend the judgment, which was denied.
The Reiners appealed to the Court of Special Appeals, which affirmed.
LAW: The Reiners argued that the trial court erred in granting summary judgment in favor of the Association because the governing Association is a trust relationship between the homeowners and the fiduciaries, and, therefore, the business judgment rule did not apply and the 2006 Roof Specifications violate the Montgomery County Fire Safety Code.
On October 21, 1985, Maryland’s State Department of Assessments and Taxation recorded Articles of Incorporation of “Avenel Community Association, Inc.” The State of Maryland on October 21, 1985 granted a “corporate charter” for an entity named “Avenel Community Association, Inc.” On April 23, 1986, Land Records of Montgomery County, Maryland recorded the filing of “Declaration of Covenants, Conditions and Restrictions for Avenel Community Association.” The bylaws define the term “Association” as “Avenel Community Association, a Maryland…corporation.”
There was no dispute of material fact on the record presented before the trial court. The Reiners acknowledged the existence of the Avenel Community Association, Inc., and the bylaws, urging the court to “forever” disregard the incorporated association as an alter ego for individual homeowners acting independently, does not change this analysis.
The general rule under Maryland law is that decisions made by a homeowners association’s board of directors will not be disturbed unless there is a showing of fraud or bad faith. See Black v. Fox Hills North Cmty. Ass’n, 90 Md. App. 75, 82 (1992). In Black, members of a homeowners association challenged the association’s approval of a fence installed by other members of the community. Id. at 77. The plaintiffs claimed that the fence was approved and installed in violation of the association’s covenants and restrictions. Id. The Court of Special Appeals held that it did not matter whether the fence actually violated the association’s declaration of covenants, because the enforcement of those rules was within the exclusive purview of the association. Id. at 83.
“Absent fraud or bad faith, the decision…was a business judgment with which a court will not interfere.” Id. “The ‘business judgment’ rule, therefore, precludes judicial review of a legitimate business decision of an organization, absent fraud or bad faith.” Id. at 82. Further, under the business judgment rule, “there is a presumption that directors of a corporation acted in good faith and in the best interest of the corporation.” Danielewicz v. Arnold, 137 Md. App. 601, 638 (2001).
Here, the Association rendered a decision denying the Reiners’ roof request. The Reiners sued because they disagreed with the Association’s decision. The Reiners did not allege any fraud or bad faith on the part of the Association. Under Black, “[t]he ‘business judgment’ rule, therefore, precludes judicial review” of that decision. Accordingly, the Association was entitled to summary judgment as a matter of law.
The Montgomery County Code §22-98 provides that a homeowners association may not require a homeowner to install a roof that lacks a Class A fire rating or its equivalent.
The Reiners’ complaint alleged that asphalt shingles have a Class A fire rating and that cedar shake shingles do not. However, the Reiners presented no evidence to the trial court demonstrating that any of the roofing materials contained in the 2006 Roof Specifications lacked the requisite Class A fire rating. Rather, the Reiners submitted evidence indicating that the 2006 Roof Specifications did, in fact, comply with the Fire Code.
The Reiners did, however, submit an affidavit at the hearing which represented that all of the roofing materials listed in the 2006 Roof Specifications complied with the County Code. The affidavit contained the sworn statements of the Association’s general manager, who attested to the fact that all of the materials contained in the 2006 Roof Specifications complied with the Fire Code. Thus, the only evidence on the record established below indicated that the 2006 Roof Specifications complied with the Fire Code. No evidence was presented to the contrary. The trial court did not err in determining that there was no dispute of material fact, and that the 2006 Roof Specifications complied with the Fire Code.
Accordingly, the trial court did not err in granting summary judgment in favor of the Association.
COMMENTARY: CJ §5-422(d) provides: “Except as provided in paragraph (2) of this subsection, a claimant shall name only the governing body as a party defendant. (2) An officer or director of a governing body may be named individually only when the governing body for which the officer or director was acting cannot be determined at the time an action is instituted under this section.” “‘Governing body’ has the same meaning stated in [RP] § 14-118.” CJ §5-422(a). The Real Property Article definition includes “homeowners association[s], as defined under the Maryland Homeowners Association Act.” RP §14-118(a)(2)(i).
Additionally, where an officer or director of a homeowners association commits a tort while acting within the scope of his or her duties, the person who sustains injury as a result “may recover only in an action brought against the governing body for the actual damages sustained.” CJ §5-422(b).
The Reiners conceded in their complaint that the Association is a homeowners association formed under RP §11B-102(h). The Association, therefore is the “governing body” under CJ §5-422(a). Accordingly, pursuant to CJ §5-422(d), since the Association was identified as the governing body, no individual officers or directors were permitted to be named individually. Absent any allegations that any individual homeowners committed a tort, acted outside the scope of their duties, acted in bad faith, or acted in a reckless, wanton, or grossly negligent manner, no exceptions to the general rule apply. See CJ §5-422(c).
Accordingly, the trial court properly dismissed the complaint as to the individual homeowners as a matter of law.
PRACTICE TIPS: A developer’s refusal to approve building plans — under a covenant that reserved approval power to the developer but contained “no specific standards nor any general plan or scheme of development to guide the developer in the approval process” — “would have to be based upon a reason that bears some relation to the other buildings or the general plan of development; and this refusal would have to be a reasonable determination made in good faith, and not high-handed, whimsical or captious [sic] in manner.” Kirkley v. Seipelt, 212. Md. 127, 133 (1957).