James B. Nutter & Co. v. Black
| Decision Date | 30 September 2015 |
| Docket Number | No. 1563, Sept. Term, 2013.,1563, Sept. Term, 2013. |
| Citation | 123 A.3d 535,225 Md.App. 1 |
| Parties | JAMES B. NUTTER & CO. v. Edwina E. BLACK et al. |
| Court | Court of Special Appeals of Maryland |
Stephen A. Metz (Morton A. Faller, Shulman, Rogers, Gandal, Pordy & Ecker, PA, on the brief), Potomac, MD, for appellant.
Michele R. Harris, La Plata, MD, for appellee.
Panel: KEHOE, BERGER, and NAZARIAN, JJ.
This opinion is about the scope of legal protections afforded to individuals who are unable to handle their financial affairs in a responsible manner because of a physical or mental condition. We will use the terms “disabled,” “under a disability,” and “subject to guardianship proceedings” to refer to persons who have been adjudicated by a court to be unable to manage their property and for whom a guardian of the property has been appointed.1 We will employ the descriptors “incompetent” and “non compos mentis” for individuals who may be unable to manage their property, but who are not subject to guardianship proceedings. As we will explain, the distinction between an incompetent person and a disabled person is critical to the outcome of this appeal.
James B. Nutter & Co. (“Nutter”) appeals from a judgment of the Circuit Court for Baltimore County in favor of Edwina E. Black and David L. Moore, Esquire. Nutter describes itself as “one of the leading reverse mortgage lenders[ [2 ] in the [United States].” Ms. Black is a disabled person. Moore has been the court-appointed guardian of her property since 1994. In 2009, Nutter entered into a reverse mortgage loan with Ms. Black. This took place without Moore's knowledge or consent. When Moore learned of the transaction, he refused to ratify it.
Nutter filed suit seeking a judgment requiring Moore to ratify the transaction or, alternatively, granting various forms of restitutionary relief. The circuit court concluded that there was no legal or factual basis for any of Nutter's claims and entered judgment accordingly. Nutter presents five issues, which we have consolidated and reworded:
We will affirm the circuit court's judgment.
This case came to the circuit court on cross-motions for summary judgment. Both parties relied upon a joint stipulation of relevant facts, which we summarize and supplement as necessary.
More than 25 years ago, Ms. Black sustained permanent and significant neurological injuries
after she was deprived of oxygen during a surgical procedure. In 1989, the Circuit Court for Baltimore City determined that Ms. Black was disabled, and appointed guardians of her person and her property.3 In 1994, the Circuit Court for Baltimore City appointed Moore as the substitute guardian of Ms. Black's property.
In 1995, Moore, acting in his capacity as guardian of the property, purchased a home (the “Stuart Mills property”) located in Baltimore County for Ms. Black's use. To pay for the purchase, Moore, again in his capacity as guardian, borrowed $119,200 and signed a deed of trust note and a purchase money deed of trust. The note was eventually acquired by Bank of America. The deed of conveyance and the deed of trust were recorded in the land records of Baltimore County.
The deed of conveyance identified the grantee as “Edwina E. Black” and stated in pertinent part:
See Order in the Matter of Edwina Black for the appointment of a Guardian as filed in the Circuit Court for Baltimore City, Case No. 89200059/CE100323. Said Order having appointed David L. Moore, Attorney at Law, as Substitute Guardian.
The deed of trust was executed as follows: “Edwina E. Black by David L. Moore, Guardian of the Property of Edwina E. Black.” In 2007, Ms. Black's guardianship action was transferred from the Circuit Court for Baltimore City to the Circuit Court for Baltimore County.
In April 2009, Ms. Black, acting on her own and without the knowledge or consent of Moore, entered into a reverse mortgage transaction with Nutter regarding the Stuart Mills property. Before closing, Nutter engaged a title agent to examine the title to the residence, and to perform the typical closing services. The joint stipulation states that “[Nutter] and the title agent that handled the closing failed to properly identify the guardianship action in the Court record.” The stipulation does not address whether Nutter or the title agent realized that Ms. Black was a disabled person based upon the information contained in the deed and deed of trust.
Most of the documents that Ms. Black signed as part of the reverse mortgage transaction are not in the record. What is clear is that Ms. Black executed two deeds of trust4 encumbering the Stuart Mills property to secure repayment of the loan. At closing, Nutter paid $154,317.13 as follows: $80,651.96 to Bank of America to satisfy the existing loan and to extinguish the existing deed of trust; $57,132.01 directly to Ms. Black; and $16,533.16 for settlement expenses. Moore knew nothing about any of this. Ms. Black deposited the proceeds into her personal account.5
Moore first became aware that something was amiss when he received a notice from Bank of America stating that its loan had been satisfied and its deed of trust released. He made inquiries and learned of the reverse mortgage transaction. Moore then withdrew from Ms. Black's account $34,106, that is, what was left of the money that had been paid to Ms. Black at closing. Moore deposited this money into a separate guardianship account.
On July 17, 2009, Moore notified Nutter of Ms. Black's disability and requested that Nutter provide him with the documents relating to the transaction. Nutter complied with this request. Thereafter, Nutter, and its agents, attempted to contact Moore over a period of several months, but received no response.
Finally, in November 2009, Nutter sent Moore a letter asking him (1) to ratify the reverse mortgage transaction or (2) to disaffirm it and reimburse Nutter in the amount of $137,738.97, that is, the sum of the Bank of America pay-off and the money paid to Ms. Black at closing. Approximately eight months later, Moore, through counsel, took the position that the reverse mortgage transaction was void as a matter of law and that he was under no duty to return any portion of the loan proceeds.6
Nutter initiated this action on June 17, 2011, when it filed a complaint for a declaratory judgment and related relief against Ms. Black and Moore. Nutter asserted that it had entered into the reverse mortgage transaction with Ms. Black “without actual knowledge that [she had been] declared disabled and that [Moore] had been appointed Guardian of the Property of Ms. Black.” Nutter presented three theories of relief relevant to this appeal. First, Nutter sought a judgment ratifying the reverse mortgage agreement between Ms. Black and Nutter. Second, Nutter asserted that Ms. Black and Moore had been unjustly enriched in the amount of $137,783.97, that is, its disbursements at closing less settlement expenses, and requested a judgment against Ms. Black and Moore in that amount. Third, Nutter sought to subrogate its interests to those enjoyed by Bank of America under the prior lien.7
Moore and Ms. Black filed an answer which sought, as additional relief, a judgment that the reverse mortgage was void, a declaration of title to the property in favor of Moore, as guardian of Ms. Black's property, attorney's fees, and any other relief necessary.
After the completion of discovery, the parties filed cross-motions for summary judgment. After oral argument on the motions, the circuit court, in a thorough and well-considered memorandum opinion and order, denied Nutter's motion for summary judgment and granted Ms. Black and Moore's cross-motion.
In summary, the court concluded that the reverse mortgage transaction was void, rather than voidable, and that Nutter was on constructive notice of Ms. Black's disability. The court denied Nutter's claim for restitution because it was premised solely upon its contention that the reverse mortgage transaction was voidable.
As to Nutter's claim for subrogation, the court noted that subrogation in this context is available “when there is a debt or obligation owed by one person which another person, who is neither a volunteer nor an intermeddler, pays or discharges under such circumstances as in equity entitle him to reimbursement to prevent unjust enrichment[.]” The court explained that “[a] volunteer is a party who has paid the debt of another without any assignment or agreement and is not under legal obligation, or compulsion to do so for the preservation of his own rights[.]” The court reasoned that, because the reverse mortgage transaction was void, Nutter had no rights in the Stuart Mills property and “thus was not compelled to pay the mortgage in order to preserve any rights.”
After the court's memorandum order and opinion was issued, both parties filed motions to alter or amend the judgment on essentially the same grounds, i.e., that both parties had requested declaratory relief but that the court had failed to issue a declaratory judgment. The court denied Nutter's motion but entered a supplemental order declaring null and void “the Second Deed of Trust (to Secure a Reverse Mortgage Loan) ... in favor of the Secretary of Housing and Urban Development,” as well as “the Deed of Trust in favor of [Nutter].”
We review the circuit court's grant of summary judgment de novo, Harford County v. Saks Fifth Ave. Distrib. Co., 399 Md. 73, 82, 923 A.2d 1 (2007), determining, first, whether there exists a dispute as to any material fact and, second, whether the circuit court was legally correct in granting judgment in favor of the prevailing par...
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