Recent Developments in the Law
Vol. No. XVIII July 6, 1998
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Lead Paint: In Johnson v. Rowhouses, Inc., filed on April 3, 1998, the Maryland Special Court of Special Appeals affirmed the ruling that granted summary judgment to a landlord in relation to a lead-paint complaint. Tyese Green, the mother of Jacqueline Johnson, filed a complaint against Rowhouses, Inc. on behalf of her daughter when she was found to have lead levels in her blood that were three times the normal level. Rowhouses, Inc. owned the property at 2523 Emerson Avenue where Jacqueline lived for approximately nine months. Rowhouses, Inc. received a notice from the Baltimore City Health Department concerning lead paint on their properties and removal of all deteriorated lead paint was ordered by the City. Rowhouses, Inc. failed to remove the deteriorated lead paint from 2523 Emerson Avenue from the time of the notice to the time that Jacqueline Johnson and her mother moved. This time frame was about five months. The Plaintiff needed to show the Court that this five-month span of time was a substantial factor in the levels of lead paint in JacquelineĠs blood. The Defendants motion for summary judgment stated that Jacqueline did not suffer any injury due to lead paint exposure for the period of the five months that notice of the deteriorating paint was known. The Plaintiff called the only expert witness who stated that it was fair to say the Plaintiffs exposure to lead paint within the five-month period was probably insignificant in respect to the levels of lead in her blood. The Circuit Court for Baltimore City granted Rowhouses, Inc. summary judgment because the Plaintiff could not demonstrate that the lead paint was a substantial contributing factor to Jacquelines injuries. The Maryland Court of Special Appeals affirmed the lower courts ruling.
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Insurance: In Eagan (Guardian) v. Nationwide, filed on April 8, 1998, the Maryland Court of Special Appeals affirmed the Howard Circuit Court decision that a
homeownerıs insurance policy
did not cover payments to
³resident relatives². In 1992,
John C. Calhoun killed his
wife by kicking the ladder out
from under her that she was
using to clean out their gutter.
In 1993, Calhoun was
sentenced to five years in
prison for his plea of guilty to
voluntary manslaughter. The
guardian of his two children
filed a wrongful death suit on
their behalf. They were
awarded 2.36 million dollars.
They will be unable to collect
such funds from their father,
Calhoun, who filed for
bankruptcy. The Circuit Court
ruled that the Nationwide
Golden Blanket Homeownerı
Insurance Policy was not
liable to pay the awarded
amount to the children. In
the policy there was a specific
clause that excluded
payments to ³resident
relatives² (any person living
with the policy holder). The
children were living with both
parents at the time of their
motherıs death which made
them a resident relative of
their father. Therefore, the
plain language of the policy
excluded Nationwide from
any payments awarded to the
children. The Court noted
that Maryland was not a state
that practiced interpreting
insurance policies most
stringently against the
insurance companies.
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Civil Procedure: In Deitz v.
Palaigos, filed on April 2,
1998, the Maryland Court of
Special Appeals affirmed the
decision of the Circuit Court
to dismiss a complaint
following the doctrine of
collateral estoppel. August S.
Deitz Jr. had a suit filed
against him by his own
siblings concerning the
reimbursement of attorneys
fees. The orphansı court ruled
in favor of the siblings and
ordered Deitz to pay $4,500
for the fees. August Deitz
appealed to the Circuit Court
and later to the Court of
Special Appeals both of
which affirmed the orphansı
court ruling. August Deitz
filed for a chapter 7
bankruptcy after the siblings
had his wages garnished for
collection of the $4,500.
However, the Court allowed
the collection of the $4,500
debt. Deitz filed a complaint
with the Circuit Court
regarding the writ of
garnishment stating a
misrepresentation of his status
as a judgment debtor. The
Circuit Court dismissed his
complaint under the doctrine
of collateral estoppel. The
doctrine of collateral estoppel
was applicable because (1)
the bankruptcy court had
already decided that Deitz
was able to pay the orphansı
court award to his siblings (2)
the bankruptcy court ruled
that Deitz was individually
liable to pay the award (3)
Deitz was indisputably a party
to the bankruptcy proceedings
(4) the bankruptcy issue was
essential to the other issue
previously litigated, and (5)
Deitz was given fair
opportunity concerning
appeals in the initial suit filed
against him and within the
bankruptcy proceedings. With
all of the requirements being
met for the doctrine of
collateral estoppel to be
applicable, the Court was
correct in dismissing Deitzıs
claim.
Insurance: In Chicago Title
Insurance Company v.
Lumbermenıs Mutual Casualty
Company, filed on April 2,
1998, the Maryland Court of
Special Appeals affirmed a
ruling that released a surety
company from liability due to
a settlement of the principle
even thought the surety did
not take part in the settlement.
Chicago Title Insurance filed
suit against Academy Title
Group, Inc., Academyıs
principal David Therrien, and
Lumbermenıs Mutual Casualty
Company. Academy Title
Group was an escrow agent for
Chicago Title and
Lumbermenıs Mutual provided
the agentıs surety bond to
Academy and its principals.
Chicago Title claimed that
funds had been
misappropriated by Academy.
Academy and its principal,
Therrien, settled with Chicago
Title without participation
from Lumbermanıs Mutual.
Lumbermanıs Mutual stated
that the release of their
principal, Academy, released
them from liability as the
surety and filed a motion for
summary judgment. The
Court granted the motion for
summary judgment relying on
several Maryland cases which
demonstrated that unless a
reservation of rights clause
was included in the settlement
release, the release of the
principal discharges the
surety. (Noma Electric Corp.
V. Fidelity & Deposit Co. 201
Md. 407,412; Fidelity Deposit
Co. V. Olney Associates, Inc.
72 Md. App. 367; Federal
Land Bank of Baltimore, Inc.
V. Esham 43 Md. App. 446)
Chicago Title did not include
a reservation of rights clause
to pursue other parties in the
complaint, therefore, the court
correctly granted
Lumbermanıs Mutualıs motion
for summary judgment.
Torts: In MQIL v. Lyon and
Lyon v. Campbell, filed on
April 1, 1998, the Maryland
Court of Special Appeals
reversed a lower court
decision that held John Lyon
liable for tortious interference
with business relationships and
breaching his fiduciary
obligations as principal of a
company. John Lyon formed
a company in 1980 and
leased a limestone quarry for
nine years with the option to
buy. The quarry would be
sold to Lyonıs company,
Millville Quarry, Inc., for the
1980 purchase price if bought
before August 31, 1989. A
subsidiary of MQI filed a
complaint against Lyon for
tortious interference and
breach of fiduciary
obligations when he refused
to give a personal guarantee
on a loan for almost
$941,000. A jury found Lyon
guilty of the charges, but
upon appeal the Maryland
Court of Special Appeals
reversed the decision. The
tort of wrongful interference
was defined as a volitional act
that damages a lawful
business done with malice
which causes damage and
loss. Maryland law stated that
one cannot be liable for
damage to a business by
refusing to continue a
terminable business
relationship. Lyonıs fiduciary
duty required him to step
away from acquisitions or
interferences with company
properties. Therefore, he did
not breach his duty by
refusing to risk his personal
financial matters. The
decision of the lower court
was reversed.
Insurance: In Lerner
Corporation v. Assurance
Company of America, filed
April 2, 1998, the Maryland
Court of Special Appeals
affirmed a Circuit Court
holding that granted summary
judgment to insurers regarding
coverage under their
commercial general liability
policy. In 1984, a building
was sold to the General
Services Administration of the
federal government. In 1991,
problems arose with the
facade panels attributable to
defects in the attachment of
marble to the panels. The
builder repaired the problems
and then proceeded to file a
claim against their insurance
policy alleging that the costs
of the repairs were covered
under their commercial
general liability policy. The
court found Maryland law to
imply that an insurance
company was not responsible
for reimbursing their policy
holders for defective
workmanship that did not
cause bodily injury or damage
items outside of the work
product. The degree of the
quality of work is not the issue
in a tortious liability claim;
the issue is physical damage
to others. The Maryland Court
of Special Appeals affirmed
the holding that granted
summary judgment in favor of
the insurance company.
Duty of Care: In Coleman, et
al. v. District of Columbia, et
al., filed on February 27,
1998, the District of Columbia
Superior Court denied the
motion for summary judgment
that was filed by the District of
Columbia. Robin Coleman
burned her leg on an
exposed, uninsulated hot
water heating pipe in her
public housing apartment.
The Plaintiff claimed that the
District of Columbia Housing
Authority (DCHA) had a duty
to care that arose from several
different sources including
common law, the lease
agreement, and Municipal
Regulations. The DCHA
asked for summary judgment
on the grounds that the
insulation of hot water pipes
in public housing was a
discretionary decision;
therefore, the DCHA warranted
governmental immunity. After
a review of similar cases in
the District of Columbia and
parallel cases throughout the
United States, the Court held
that the duty to insulate the
pipes was a ministerial act.
The insulation related to the
execution of public policy
and did not require judgment,
only compliance making the
act ministerial in nature.
There was also dispute as to
the material facts of the duty
to insulate the pipes. Experts
from both sides were called
and argued the BOCA code
exceptions. Because
ministerial acts were not
barred from suit by
governmental immunity and
material facts were in
question, summary judgment
was denied.
Damages: In Hall v. Lovell
Regency Homes Limited
Partnership, filed on April 20,
1998, the Maryland Court of
Special Appeals affirmed the
jury verdict of the lower court.
Lovell Regency Homes
Limited Partnership
constructed a new
development in which four
couples purchased new
homes. These couples found
problems with water and
drainage which did not allow
them to finish their basements
as planned. They filed suit
against Lovell Regency. A
jury found in favor of Lovell
Regency on the grounds of
negligence, fraud, and breach
of an implied warranty. They
found against Lovell Regency
for the other claims that
included breach of contract,
breach of express warranty,
and negligent
misrepresentation. They
awarded nominal damages to
the homeowners. The court
instructed the jury that they
could award nominal
damages to the homeowners,
but could not award damages
for loss of use and enjoyment
or loss in fair market value of
the homes. For an award to
be given for loss of use and
enjoyment, evidence must be
submitted that shows proof of
loss. An award for loss of fair
market value must be based
upon two value figures at one
point in time that
demonstrates the cost to
repair damages. The
homeowners did not present
any evidence of loss or out of
pocket costs; therefore, the
court correctly instructed the
jury to award only nominal
damages. The holding of the
lower court was affirmed.
Contracts: In Mass Transit
Administration v. CSX
Transportation, Inc., filed on
April 15, 1998, the Maryland
Court of Appeals ruled to
enforce an indemnification
clause in a Commuter Rail
Passenger Service Agreement
in the same manner as a
liability insurance policy.
CSXT and MTA entered into
a contract which provided
that CSXT would operate
contract services in a ³safe
and efficient manner with the
use of appropriate facilities
and staff for management,
train operations, and
maintenance....² MTA agreed
to indemnify and defend
CSXT from any and all
varieties of liability arising out
of the service contract
including losses, damages,
claims, and law suits. CSXT
later contracted Melvin
Benhoff Sons, Inc. for the
services of paving four road
crossings. MTA was not
notified of the arrangement.
On the date that services were
being performed at the
Hanover Road crossing, a
morning MARC train was en
route in that direction. The
train hit and destroyed a
backhoe. No injuries were
incurred. Benhoff sued CSXT
and settled out of court for the
sum of $23,350. CSXT turned
to MTA for indemnification.
The Court found that the
damage to the backhoe arose
out of the Contract Service.
Due to the phrasing of the
contract agreement, MTA was
liable to indemnify CSXT for
any circumstance arising out
of the Contract Service. For
this reason, the Court of
Appeals held that MTA was
liable to indemnify CSXT for
the cost of the settlement
although they were without
fault in the incident.
Labor and Employment: In
Department of Labor,
Licensing and Regulation v.
Muddiman, the Maryland
Court of Special Appeals
ruled that repeated violations
of employment policies
constituted gross misconduct.
Tammy Muddiman was
employed by American
Studios, Inc. who had warned
her repeatedly to reshape her
handling of company funds
and scheduling procedures or
face termination. After the
continual violation of policy,
Ms. Muddiman was
terminated. She applied for
unemployment benefits which
was initially granted due to
insufficient evidence of
misconduct. Her case went to
a hearing examiner, the Board
of Appeals, the Circuit Court,
and finally the Court of
Special Appeals. The Court
of Special Appeals noted that
there are two definitions for
³gross misconduct² under LE
section 8-1002. One cited
intentional and willful
disregard; the other definition
cited repeated violations.
The Court found Ms.
Muddiman acted with gross
misconduct according to the
second definition which
disqualified her for
unemployment benefits.
Lending/Imposter Rule: In
Bank of Glen Burnie v.
Elkridge Bank, the Maryland
Court of Special Appeals held
that enforcement of the
³imposter rule² required the
forging party to not only
misrepresent but also
impersonate the named party.
Oceanic Ltd., Inc. made a
loan from Elkridge Bank for
almost $343,000 for the
purchase of new trucks from
Beal GMC. The loan was
issued in the form of two
checks made to both Oceanic
and Beal with Beal named as
the lienholder. Oceanic took
the checks to the Bank of Glen
Burnie with a forged signature
from Beal. The Bank of Glen
Burnie cashed the checks and
deposited the money into
Oceanicıs account. When
Oceanic declared bankruptcy,
Elkridge Bank learned that the
money was not used for the
purchase of trucks from Beal
GMC; therefore, there was no
lien. Elkridge sued the Bank
of Glen Burnie for breaching
UCC warranties. The Circuit
Court granted summary
judgment for Elkridge Bank.
The Court of Special Appeals
affirmed the lower courtıs
decision when the Bank of
Glen Burnie appealed the
holding claiming the imposter
rule precluded recovery.
³Imposter² according to
Blackıs Law Dictionary is one
who poses as another for gain.
The Court of Special Appeals
stated that Oceanicıs forged
signature misrepresented but
did not impersonate Beal;
therefore, the imposter rule
did not apply.
Insurance: In Driggs Corp. v.
PMA Ins. Co. et al., filed on
May 4, 1998, the United
States District Court of
Maryland determined that an
insurance company which has
agreed to provide defense is
not obligated to pay for
counsel of the assuredıs
choosing. In 1993, a pipeline
rupture polluted the Potomac
River with 400,000 gallons of
diesel fuel. Colonial Pipeline
Company claimed that Driggs
corporation was responsible
for the pollution. Driggsı
insurer, PMA Insurance
Company, hired a small firm
in Rockville to defend Driggs
in the lawsuit. However,
Driggs retained the megafirm
of Kirkpatrick & Lockhart as
counsel while insisting that
the insurerıs law firm remain
active in the case. The
Defendant, Driggs
Corporation, received a
directed verdict in their favor.
PMA refused to pay the bill for
Kirkpatrick & Lockhart which
totaled 2.8 million dollars.
Driggs claimed that they had
a right to choose their own
counsel because the insurerıs
counsel represented the
insurance company in
multiple matters. Judge
Frederic Smalkin wrote that
insurers can choose any
counsel that is ³admitted to
the bar and competent to try a
case.² He noted that small
firms have consistently won in
large volume cases.
Maryland law stated that an
insured may only choose its
own counsel if there is an
actual conflict of interest
between the insurer and the
insured. Driggs attempted to
show a conflict, but the Court
disagreed. The attorney hired
to represent the insured was
fully competent to try the
case, and no conflict of
interest was shown; therefore,
the insurer was not responsible
for paying for the defense
counsel independently
obtained by the insured.
Evidence: In Wrobleski v. de
Lara, filed on April 30, 1998,
the Maryland Court of Special
Appeals ruled that a trial
judge did not abuse his
discretion by allowing an
expert witness to reveal his
earning in previous years from
his participation as an expert
witness. Linda Wrobleski was
diagnosed with peritonitis
from a small perforation of the
bowel due to gynecological
surgery performed by Nora de
Lara, M.D. Subsequently,
Wrobleski sued Nora de Lara
for malpractice. Wrobleskiıs
expert witness, Dr. Max Lilling,
was asked by the Defendant
how much money he had
made by acting as a medical
expert in 1995. The Plaintiffıs
counsel objected, and the
judge overruled. The Court
reasoned that this information
may be pertinent in assessing
the witnessı credibility and
objectivity. There was reason
to believe that Dr. Lillingıs
income accrued through his
expert testimony was
substantial given Wrobleskiıs
counsel had paid him
$27,0000 alone. The jury
found for Dr. de Nova in the
lower court. The Maryland
Court of Special Appeals
agreed with the trial court
judge relying on Collins v.
Wayne Corp., 621 F.2d 777
and Trower v. Jones, 520
N.E.2d 297 which allowed
opposing counsel to inquire
specifically as to the previous
earnings of an expert witness
upon cross-examination.
Real Property: In The Milton
Company v. Council of Unit
Owners of Bentley Place
Condominium, filed on April
29, 1998, the Maryland Court
of Special Appeals ruled that
the developer and general
contractor of a condominium
were responsible for common
element and individual unit
defects also awarding the
Plainitffs the cost of attorney
fees. The Milton Company
was the general contractor
responsible for hiring
subcontractors in relation to
Bentley Place Condominium.
The Council of Unit Owners
found defects and filed suit
against Milton and the
subcontractor Tuckerman
Lane Development Company.
A jury found for the Plaintiff,
and the Defendants appealed
on the grounds that the court
erred in issuing their jury
instructions. Milton argued
that there was no viable claim
under Title 11 of the Real
Property Article, the Maryland
Condominium Act. In Starfish
Condominium Association v.
Yorkridge Service Corp., 295
Md. 693, the Maryland Court
of Appeals found that Title 10
warranties for the general sale
of real property was
applicable to new
condominiums. The trial
court did not err in describing
two different standards for
implied warranties (one under
Title 10 and the other under
Title 11). Additionally, Milton
complained that the awarded
attorneys fees were not
documented with explicit
time records. The appellate
court again did not agree with
the defendants, stating that
trial courts have a large
measure of discretion when
assigning monetary values to
legal services. Unless the
amount is clearly
unconscionable, it will not be
disturbed.
Workers Compensation: In
Frederick County Board of
County Commissioners v.
Vache, filed on
.May 14, 1998, the Maryland
Court of Appeals held that
injury occurring on a public
sidewalk did not constitute
grounds for an award of
workers compensation
benefits. Bridget Vache
parked her car in a private
church lot across the street
from her workplace. There
had been a snow storm the
day before, and most of the
city had shut down. Ms.
Vache was required to go to
work. When returning from her
lunch break, she slipped on
the sidewalk that ran between
the private parking lot and her
workplace. She was close
enough to touch her place of
employment when she fell.
The Circuit Court awarded Ms.
Vache workmanıs
compensation, and the
Maryland Court of Appeals
reversed their decision. The
Court stated that the sidewalk
was not peculiarly related to
her employer. Any person
who was to walk this public
sidewalk would encounter the
same situation as Ms. Vache.
She parked in the destination
of her choosing, and was not
exposed to any higher level of
danger than the rest of the
general public. The sidewalk
was not on her employerıs
premises and did not pose a
danger peculiar to her
workplace; therefore, Ms.
Vache was not awarded
workers compensation
benefits.
Damages: In Le Marcıs
Management Corporation v.
Valentin, filed on May 19,
1998, the Maryland Court of
Appeals tightened the
standard by which a punitive
damage award could be
given in a defamation suit.
Francisco Valentin worked as
a stock room clerk for Le
Marc. Ten years ago,
Valentin and his co-workers
were given lie detector tests
concerning the stealing of
company products. Valentin
and his co-workers were
Hispanic, and the examiner
noted difficulty with the test
because of language barriers.
Later, when Valentin was
training to become a bank
teller, Le Marc sent a
reference that stated he had
been ³terminated due to
pilferage². The bank fired
Valentin with the
understanding that he was
unable to reapply with them.
He sued Le Marc for
defamation. In the lower
court, a jury found for
Valentin and awarded him
both compensatory and
punitive damages. The
Maryland Court of Special
Appeals reprimanded the
punitive damage award back
to the court stating that the
jury was not properly informed
that the standard of proof for
punitive damage awards was
clear and convincing
evidence. Another jury
awarded a higher value of
punitive damages. The
Maryland Court of Appeals
sent the case back to the
lower court again for a retrial
with instruction for the
standard of an award of
punitive damages being
actual knowledge of the falsity
of a defamatory statement.
This was a more stringent
interpretation than the
previous definition of acting
with reckless disregard for the
truth. The interpretation was
traced back to the 1992
decision in Owens- Illinois v.
Zenobia.
Evidence: In N.B.S., Inc. v.
Harvey, filed on May 5, 1998,
the Maryland Court of Special
Appeals affirmed the trial
courtıs decision that led to
jury awards of $300,000 and
$325,000. Rodney Harvey
and Shawnteir White, two
small children, resided with
their mother in a home rented
from N.B.S., Inc. Both
children were found to have
high blood lead levels. They
filed suit against N.B.S.
claiming negligence and
violation of the Maryland
Consumer Protection Act.
The trial court excluded an
expert witness for N.B.S. on
the grounds that the expert
had a long extended absence
from the subject matter. The
trial court also denied N.B.S.ıs
Motion for Judgment and
refused to allow them to
supplement their answer. The
result of the trial was the jury
award in favor of Harvey and
White. On appeal, the
Maryland Court of Special
Appeals reviewed and
affirmed all actions taken by
the lower court.
Civil Procedure: In Porter
Hayden Company, et al. v.
Barbara Bullinger, et al., filed
on May 15, 1998, the
Maryland Court of Appeals
held that confidential
settlement agreements
between plaintiffs and
defendants were considered
discoverable materials after a
verdict for defendants that
went to trial. The case was
initially brought before the
Circuit Court of Baltimore City
concerning asbestos and
related injuries. A jury found
for the plaintiffs in four
instances. Two of the
defendant companies
requested the settlement
information of the other
plaintiffs and defendants that
were initially involved in the
case. The lower court denied
the request. The Maryland
Court of Special Appeals
affirmed the lower courtıs
decision. However, the
highest court in Maryland
reversed this holding. They
stated that discovery in
Maryland is very broad and
includes all information that is
relevant and not privileged.
The Court stated that
settlement material may be
irrelevant in pre-trial stages,
but after a verdict is rendered,
the material becomes
relevant in determining the
amount of damages.
Punitive Damages: In Robert
Scott v. Terry Napoleon
Jenkins 345 Md. 21, 690 A.2d
1000, filed on March 14,
1997, the Maryland Court of
Appeals reversed the
Maryland Court of Special
Appeals and provided a more
stringent standard to recover
punitive damages in Maryland
tort actions. The complaint
must demand specifically the
amount sought for recovery
and detail facts indicating a
wrongful intent. A punitive
damage award received from
an insufficient complaint may
tender a constitutionally
infirm judgment. This case
demonstrated a return to the
actual malice standard
concerning tort actions.
Actual malice must be shown
by clear and convincing
evidence as established in
Owens-Illinois v. Zenobia, 325
Md. 420, 601 A.2d 633
(1992). The tort may be
shown by a preponderance of
the evidence, but the factual
information supporting the
damages must be shown by
clear and convincing
evidence. Punitive damages
must be based on a sense of
deliberate wrongdoing, evil
motive, or the intent to injure
or fraud. Several cases have
shown this basis for punitive
damages including:
Montgomery Ward v. Wilson
339 Md. 701, Ellerin v. Fairfax
Savings 337 Md.216,
Alexander & Alexander Inc. v
B. Dixon Evander & Assocs.
336 Md. 635, Komornik v.
Sparks 331 Md. 720, and
Adams v. Coates 331 Md. 1.
This same standard is adhered
to by Marylandıs sister state,
Virginia.
Premises Liability: In
Gellerman v. Shawan Road
Hotel Limited Partnership, et
al., filed on May 13, 1998, the
United States District Court
ruled that an owner of land
has no duty to warn an invitee
of an obvious danger.
Florence Gellerman tripped
and fell near a gap in the
sidewalk of approximately one
inch in front of the Marriottıs
Hunt Valley Inn. She sued for
$1 million in damages and for
$100,000 for loss. The Court
granted summary judgment in
favor of the hotel. The judge
stated that had the Plaintiff
taken reasonable care for her
own safety, she would have
openly observed the crack in
the sidewalk. The holding
borrowed the logic of the
1986 case Scott v. Sears,
Roebuck and Co..
Civil Procedure: In Kane v.
Schulmeyer, filed on May 12,
1998, the Maryland Court of
Appeals held that an action
against multiple defendants
may be brought in the
location where the cause of
action arouse when there is
no other single venue
applicable to all of the
defendants involved. Michael
Kane, among other
individuals, invested in a
partnership formed by Mr.
Schulmeyer who agreed to
return invested funds if certain
conditions arose. The
conditions did indeed arise,
and the various investors
demanded repayment. They
filed suit in Montgomery
County when the agreement
was not honored. The court
entered a judgment in the
investorsı favor, but the Court
of Special Appeals reversed
due to the venue. Marylandıs
highest court vacated the
appellate judgment stating
that when there is no single
common venue an action
may be brought in the
location where the contract
arose.
Health Care: In Roberts v.
Total Health Care, Inc., filed
on May 14, 1998, the
Maryland Court of Appeals
decided that withholding
funds from a settlement for a
Medicaid recipient to repay
the third party in the Medicaid
program did not violate the
procedural due process.
Georgette Robertsı children
received medical assistance
through an HMO run by Total
Health Care for lead
poisoning. Total Health Care
spent almost $60,000 for the
treatment of the children.
When Mrs. Roberts sued her
landlord on behalf of the
children, Total Health Care
asserted a statutory
subrogation lien. The Circuit
Court granted summary
judgment in favor of Total
Health Care when they sued
Mrs. Roberts with regard to
their portion of the settlement
monies. The Special Court of
Appeals affirmed this ruling.
The Maryland Court of
Appeals stated that the
medical expenses Mrs.
Roberts won actually
belonged to the Medicaid
program. The court affirmed
the judgments made on
behalf of Total Health Care.
Insurance/Duty to Defend: In
Interstate Fire & Casualty
Company, Inc. v. 1218
Wisconsin, Inc. t/a The Third
Edition, filed on March 13,
1998, the United States Court
of Appeals for the D.C. Circuit
affirmed the lower courtıs
judgment that an insurance
company was not entitled to
indemnification and reversed
the counterclaim holding that
the insurance company had
no duty to defend in relation
to policy exclusions. Teresa
Williams was assaulted
outside of The Third Edition,
a D.C. bar, where both she
and the attacker had been
patrons that night. Ms.
Williams sued The Third
Edition for charges including
negligent provision of
alcohol, failure to protect a
patron, and negligent
hiring/training of employees.
The Third Edition was insured
by Interstate Fire & Casualty
Company. Their policy
included the exclusions of
³assault and battery² and
³liquor liability².
.Interstate denied coverage
and refused to defend The
Third Edition on the basis of
these exclusions. The Third
Edition reached a settlement
with Ms. Williams that
stipulated a $1 million
judgment equal to their entire
interest in the insurance
policy. The court decided
that Interstate did not have
the duty to defend Ms.
Williams. Interstate sued the
bar for indemnification of
court costs. The court stated
that they were not entitled to
indemnification of costs
involved in litigation. In the
District of Columbia, the case
law shows that the duty to
defend is broader than the
duty to indemnify. After the
appellate court reviewed Ms.
Williamsı charges, they found
that the policy exclusions did
not apply to the case reading
the insurance contract
narrowly against the interests
of the insurer. This discovery
led them to reverse the lower
court decision, and they held
Interstate liable regarding the
duty to defend. Because
Interstate could have
reasonably anticipated
activity in litigation, The
Third Edition was not held
responsible for indemnifying
the insurance company for
their court costs.
Class Actions: In Thomas, et
al. v. Albright, filed on March
27, 1998, the United States
Court of Appeals for the D.C.
Circuit affirmed a consent
decree fair and reasonable
and reversed the decision for
individual members to opt-out
in a class action
discrimination suit. The
Plaintiffs in this case initiated
a class action suit against the
United States Department of
State for discrimination
concerning African-American
Foreign Service Officers. The
District Court found for the
Plaintiffs and awarded them a
settlement. The Plaintiffs
contested the settlement
stating that it was not fair and
reasonable. The appellate
court reviewed the evidence
and found the settlement fair
and reasonable to the class as
a whole. The United States
Department appealed the
District Courtıs ruling
concerning individual
Plaintiffs to opt-out of the
settlement class. The
appellate court found that the
trial court had misread
previous holdings and abused
its discretion by allowing
individuals to opt-out of the
class claim. In the recent
decision of Eubanks v.
Billington, the D.C. appellate
court held that in certain
limited circumstances the trial
courts may authorize opt-outs.
However, the situation at hand
did not fit into the designated
circumstances. The final
ruling of the appellate court
upheld the consent decree
and demanded the decree
binding on all involved class
members.
Damages: In Maxwell, et al.
v. Gallagher, et al., filed on
April 2, 1998, the District of
Columbia Court of Appeals
held that punitive damages
could not be awarded if no
basis for actual damages was
established. The law firm of
Maxwell & Bear was sued for
breach of fiduciary duty for
placing their personal
financial gain ahead of the
interest of their clients to
whom they provided legal
representation. The law firm
played the dual role of
business associate and legal
counsel concerning stock
exchanges. The trial court
judge ordered a recession of
stock, awarded $1 in nominal
damages, and awarded
$75,000 in punitive damages.
The trial judge claimed that
there was no evidence to
indicate the dollar value or
equity of the stock; therefore,
there were no actual
damages. The law firm
appealed the case on the
basis that with the absence of
actual damages, the award of
punitive damages was in error.
The D.C. Court of Appeals
reversed the punitive damage
award stating that the trial
judge expressly found that
there was no evidence of
actual damages. Case law
directed the court that without
actual damages, punitive
damages cannot be awarded.
Discrimination: In Coward v.
ADT Security Systems, Inc.,
filed on April 10, 1998, the
United States Court of Appeals
for the D.C. Circuit affirmed
one summary judgment in
favor of ADT and reversed and
remanded another summary
judgment for further inquiry.
Boling and Coward were two
ADT employees who filed suit
claiming wage discrimination.
In a wage discrimination case,
the Plaintiff must first show a
prima facie case. A prima
facie case for discrimination is
established by preponderance
of the evidence, membership
of a protected class, and work
performance equal in labor to
majority members who were
compensated at a higher
salary. The Plaintiffs provided
a regression analysis which
was rejected as evidence by
the court for its failure to
account for the major
variables of education and
prior work experience. Boling
was titled as a Data Supervisor
and earned more than all
other Data Supervisors. She
claimed that she was similar
to the higher scaled Project
Manager, but the court did not
find her evidence of this claim
adequate. The appellate
court affirmed the summary
judgment against Boling due
to lack of evidence for a prima
facie case. On the other
hand, Coward provided a
genuine factual issue as to his
status and pay scale. The
appellate court found that the
trial court inappropriately
granted summary judgment in
Coward's case by rejecting an
inference of wage
discrimination that a
reasonable jury could have
questioned. They found that
he established a prima facie
case and remanded it back to
the court for further
inspection.
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