Advance Dental Care, Inc. v. SunTrust Bank

• Decision Date: 30 November 2012
• Docket Number: Civil Action No. 10–cv–01286–AW.
• Citation: 906 F.Supp.2d 442
• Parties: ADVANCE DENTAL CARE, INC., Plaintiff, v. SUNTRUST BANK, Defendant.
• Court: U.S. District Court — District of Maryland

906 F.Supp.2d 442

ADVANCE DENTAL CARE, INC., Plaintiff,

v.SUNTRUST BANK, Defendant.

Civil Action No. 10–cv–01286–AW.

United States District Court,

D. Maryland,

Southern Division.

Nov. 30, 2012.

Thomas F. Decaro, Jr. Decaro and Howell PC, Upper Marlboro, MD, for Plaintiff.

Bradford Scott Bernstein, Miles and Stockbridge PC, Rockville, MD, for Defendant.

MEMORANDUM OPINION

ALEXANDER WILLIAMS, JR., District Judge.

Pending before the Court is Defendant SunTrust Bank's Motion for Partial Summary Judgment. Doc. No. 49. The court has reviewed the motion papers and attached exhibits and concludes that no hearing is necessary. Loc. R. 105.6 (D. Md. 2011). For the reasons discussed below, the Court will GRANT SunTrust's Motion for Partial Summary Judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND

The following undisputed facts are taken from the Complaint and the motion papers and exhibits.¹ Prior to 2004, Michelle Mahese (later known as Michelle Rampersad) worked as a dental assistant and office manager for William Taylor, DDS. Early in 2004, Rampersad was terminated by Dr. Taylor for stealing money from his practice. Rampersad then applied for a job with Plaintiff Advance Dental Care, Inc. (Advance Dental) and was hired as the office administrator in early 2004. Advance Dental is a general dental practice in Greenbelt, Maryland, and Riccardo Jones, DDS is the only dentist in the practice. Dr. Jones admitted in his deposition that he did not conduct a background investigation of Ms. Rampersad prior to hiring her.

The majority of Advance Dental's patients are covered by insurance. As a result, Advance Dental regularly receives insurance reimbursement checks by mail for services rendered to its patients. One of Rampersad's responsibilities was to log the reimbursement checks into a software program utilized by Advance Dental to monitor patient accounts. Rampersad was employed by Advance Dental from early 2004 until her termination in October 2007. ² From April 2004 through August 2007, Rampersad took 192 insurance reimbursement checks totaling $408,272.64 that were delivered and made payable to Advance Dental and removed them from the premises of Advance Dental. Rampersad endorsed the checks to herself and delivered them to Defendant SunTrust Bank, which accepted the checks and deposited funds into Rampersad's personal accounts. Advance Dental claims that it first became aware of Rampersad's conduct in late summer or early fall of 2007.

Advance Dental filed this action in the Circuit Court for Prince George's County on April 21, 2010. The case was removed to this Court on May 21, 2010. On March 25, 2011, the Court dismissed Count II of the Complaint, holding that there was no action for negligence under the Uniform Commercial Code (UCC). Doc. No. 9. On October 7, 2011, the Court dismissed Advance Dental's common law negligence claim. See Doc. No. 27. The only cause of action remaining against SunTrust is for conversion under Maryland's version of the UCC.

II. STANDARD OF REVIEW

Summary judgment is only appropriate “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323–25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Court must “draw all justifiable inferences in favor of the nonmoving party, including questions of credibility and of the weight to be accorded to particular evidence.” Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 520, 111 S.Ct. 2419, 115 L.Ed.2d 447 (1991) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). In ruling on a motion for summary judgment, “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge....” Okoli v. City of Balt., 648 F.3d 216, 231 (4th Cir.2011) (quoting Anderson, 477 U.S. at 255, 106 S.Ct. 2505).

To defeat a motion for summary judgment, the nonmoving party must come forward with affidavits or other similar evidence to show that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A disputed fact presents a genuine issue “if, after reviewing the record as a whole ... a reasonable jury could return a verdict for [the non-moving party].” Evans v. Techs. Applications & Serv. Co., 80 F.3d 954, 959 (4th Cir.1996) (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505). Although the Court should believe the evidence of the nonmoving party and draw all justifiable inferences in his favor, a nonmoving party cannot create a genuine dispute of material fact “through mere speculation or the building of one inference upon another.” Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985).

III. ANALYSIS

SunTrust claims in its Motion for Partial Summary Judgment that the checks converted prior to April 21, 2007 should be precluded from this lawsuit based on the Maryland UCC's three-year statute of limitations for conversion claims. The 177 checks upon which SunTrust seeks judgment as a matter of law are valued at $344,311.64. See Doc. No. 49–3. Advance Dental claims that the three-year statute of limitations began running in or about September 14, 2007, when it first learned of the conversions. The central issue before the Court is whether the discovery rule applies to a claim for conversion under the Maryland UCC. Maryland courts have not addressed this question, and in the absence of a pertinent decision, the Court must apply the rule of decision it believes the Maryland Court of Appeals would apply. See Erie R.R. v. Tompkins, 304 U.S. 64, 78–79, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). After a thorough review of the pertinent legal authorities, the Court concludes that the Maryland Court of Appeals would not apply the discovery rule to UCC conversion claims.

As codified by the State of Maryland, the UCC provides that “[a]n instrument is ... converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment.” Md.Code Ann., Com. Law § 3–420(a). The Maryland Code further provides that “an action ... for conversion of an instrument, for money had and received, or like action based on conversion ... must be commenced within 3 years after the cause of action accrues.” Id.§ 3–118(g). The Maryland Code also contains a general statute of limitations provision which employs substantially similar language to the UCC provision: “A civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period of time within which an action shall be commenced.” Md.Code Ann., Cts. & Jud. Proc. § 5–101.

Historically, the general rule in Maryland was that all causes of action accrued on the date the wrong was committed. See Hecht v. Resolution Trust Corp., 333 Md. 324, 635 A.2d 394, 399 (1994). However, beginning with Hahn v. Claybrook, 130 Md. 179, 100 A. 83 (1917), the Maryland Court of Appeals began applying the discovery rule, which provides that a cause of action accrues when a plaintiff knows or reasonably should know of the wrong. In subsequent years the Court of Appeals applied the discovery rule to multiple causes of action, including negligent design and construction, Callahan v. Clemens, 184 Md. 520, 41 A.2d 473 (1945), medical malpractice, Waldman v. Rohrbaugh, 241 Md. 137, 215 A.2d 825 (1966), and other professional malpractice claims, e.g., Mumford v. Staton, Whaley, & Price, 254 Md. 697, 255 A.2d 359 (1969) (legal malpractice). In Harig v. Johns–Manville Products, 284 Md. 70, 394 A.2d 299 (1978), the Court of Appeals extended the discovery rule to claims involving latent diseases, holding that “the critical factor in all applicable cases to be the inherently unknowable character of the injury.” Hecht, 635 A.2d at 400 (internal quotations omitted).

In Poffenberger v. Risser, the Court of Appeals, in interpreting Maryland's general statute of limitations provision, § 5–101, held that the discovery rule applied to all civil causes of action:

Having already broken the barrier confining the discovery principle to professional malpractice, and sensing no valid reason why that rule's sweep should not be applied to prevent an injustice in other types of cases, we now hold the discovery rule to be applicable generally in all actions and the cause of action accrues when the claimant in fact knew or reasonably should have known of the wrong.

290 Md. 631, 431 A.2d 677, 680 (1981). Subsequent decisions from Maryland courts reaffirmed the general applicability of the discovery rule. See, e.g.,Pierce v. Johns–Manville Sales Corp., 296 Md. 656, 464 A.2d 1020, 1025 (1983); Hecht, 635 A.2d at 399–400;Bacon & Assocs., Inc. v. Rolly Tasker Sails (Thailand) Co., 154 Md.App. 617, 841 A.2d 53 (Md.Ct.Spec.App.2004) (applying discovery rule to breach of contract claims). In Murphy v. Merzbacher, the Court of Appeals stated that the discovery rule “is not so much an exception to the statute of limitations, as it is a recognition that the Legislature, in employing the word ‘accrues' in § 5–101 never intended to close our courts to plaintiffsinculpably unaware of their injuries.” 346 Md. 525, 697 A.2d 861, 865 (1997).

As mentioned above, whether the discovery rule applies to conversion claims brought under the Maryland UCC is a question of first impression. Plaintiff maintains that the Court of Appeals's holding evidences a strong public policy in support of the discovery rule such that it should also be applied to UCC conversion claims. However, the Court is charged with determining when accrual occurs under ...