Arthur v. District of Columbia

• Decision Date: 09 September 2004
• Docket Number: No. 00-CV-1413., No. 00-CV-1389
• Parties: Morris ARTHUR, Appellant, v. DISTRICT OF COLUMBIA, et al., Appellees.
• Court: D.C. Court of Appeals

857 A.2d 473

Morris ARTHUR, Appellant, v. DISTRICT OF COLUMBIA, et al., Appellees.

Nos. 00-CV-1389, 00-CV-1413.

District of Columbia Court of Appeals.

Argued May 26, 2004.

Decided September 9, 2004.

Barbara McDowell, Legal Aid Society, with whom Rochanda F. Hiligh, Neighborhood Legal Services Program, was on the brief, for appellant.

Donna M. Murasky, Assistant Attorney General and Senior Litigation Counsel and Marc B. Tucker, with whom Robert J. Spagnoletti, Attorney General, Edward E. Schwab, Deputy Attorney General, Appellate Division, and Jennifer Ancona Semko, were on the brief, for appellees.¹

Bernard A. Nigro, Jr. filed a brief in behalf of amici curiae: The Washington Council of Lawyers, AYUDA, Inc., Consortium of Legal Services Providers, Council of Latino Agencies, Partnership for Civil Justice, and Public Citizen Litigation Group.

Before SCHWELB, RUIZ and REID, Associate Judges.

REID, Associate J.

This case involves very contentious, labyrinthine litigation relating not only to marital property belonging to appellant Morris Arthur and his wife, Christine Arthur, but also to questions pertaining to interest on sums of money deposited initially in the court registry but later transferred to the District of Columbia Treasurer. Specifically, the issues presented in this appeal concern the trial court's decision to vacate the entry of default against Ms. Arthur in one aspect of the litigation, the relative equities of Mr. and Ms. Arthur in their marital property, and the interest earned, if any, on the principal sums paid into the court registry in this case. Because the trial court did not address or decide questions essential to appellate resolution, we vacate the trial court's judgment and remand the case to the trial court with instructions to address and resolve three matters consistently with this opinion: (1) the reason for its decision to vacate the entry of default against Ms. Arthur; (2) the question of ownership of the $14,500.00 principal paid into the court registry, and whether Mr. and Mrs. Arthur have consented to a partition of their marital property which they acquired as tenants by the entireties and if they have consented, their relative equities in the property; and (3) the determination of how much interest, if any, was earned on the $14,500.00 principal sum and the court-ordered $350.00 security deposited in the court registry and later transferred to the District's general fund; and whether the District had a fiduciary duty to see that interest was earned and computed. Furthermore, we hold that any interest earned or which should have been earned on the sums deposited in the court registry and later transferred to the District's general fund belonged to Mr. or Ms. Arthur, or both, and that the District's retention of such interest constituted a taking for public use under the Fifth Amendment to the Constitution of the United States; such taking may or may not require just compensation, depending on the net loss suffered by the owner(s) of the deposited funds.

FACTUAL SUMMARY

The record shows that this matter has been in the courts since 1980 and has had a complicated procedural history, including a period of dormancy from around 1982 to 1996, traceable in part to Mr. Arthur's incarceration from about 1985 to 1996. The case commenced on July 7, 1980, when Mr. Arthur filed a complaint for injunction against a foreclosure sale of the Arthurs' marital property (held under a tenancy by the entireties), located in the 2600 block of Tenth Street, in the Northeast quadrant of the District of Columbia. The complaint against Irving Kamins and others alleged that Ms. Arthur's "whereabouts is presently unknown," and that Mr. Kamins had served Mr. Arthur with a foreclosure notice due to failure to pay a promissory loan note of $14,500.00. Since he had not been informed of the loan and the signature on the loan documents was not his, Mr. Arthur sought a judgment declaring the note and the accompanying deed of trust null and void due to forgery.² He also requested a temporary restraining order, as well as a preliminary injunction, both of which were granted.³ However, the Honorable Paul R. Webber, III ordered him to "deposit additional security of $650 cash into the registry of the Court, in monthly installments of $65 each by the 10th day of each month commencing October 10, 1980."⁴

When Mr. Arthur was unable to meet monthly mortgage payments on the marital property, he and Mr. Kamins reached an agreement to avoid foreclosure. To reflect their agreement, they filed a stipulation in the trial court on February 9, 1981, designed "to permit the sale of the property...." "[T]he sum of $14,500.00 of the gross proceeds of [the] sale [of the marital property] [was] place[d] ... into the Registry of the Court, to be held pending final disposition of this suit." The stipulation required whatever sum remained after the "satisfaction of the note" to be "disburse[d] ... to [Mr. and Ms.] Arthur... in accordance with their equities in [the marital property]." Ms. Arthur was not a party to the stipulation.

In light of the stipulation and the deposited funds, however, Ms. Arthur was a necessary party. See Super. Ct. Civ. R. 19(b).⁵ Hence, on September 16, 1982, the trial court, the Honorable Joseph M. Hannon, "removed [the case of Morris Arthur v. Irving Kamins, et al.] from the trial calendar" and ordered Mr. Arthur's counsel to make Ms. Arthur a party to his lawsuit, and to serve her with a copy of the complaint within 30 days. In response to Mr. Arthur's motion, the time to serve Ms. Arthur was extended to November 15, 1982.⁶ At this point, the case became dormant since Ms. Arthur was not served and the case was not restored to the calendar.

On February 17, 1988, the civil finance office of the Superior Court of the District of Columbia sent a check to the D.C. Treasurer in the amount of $14,850.00.⁷ A praecipe noted, "Unclaimed deposits over 3 years old." Consequently no funds pertaining to this case remained in the court registry. There is no indication in the record that the parties were notified about the transfer of the deposit from the court registry to the D.C. Treasurer.

The case was lifted from its dormancy when Abraham Zaiderman, successor in interest to Mr. Kamins, duly moved on July 30, 1995, to restore the case to the active docket. He indicated that he would take steps to locate Mr. and Mrs. Arthur, and would "request that funds released from the court registry be restored...." The court granted the motion on August 29, 1995. Thereafter, in mid-October 1995, Mr. Zaiderman filed two motions, one to join the District of Columbia as a party or third party plaintiff, and the other to restore the $14,850.00 to the court registry. On December 22, 1995, the District responded, asserting that the funds should be deemed abandoned under the [District of Columbia] Disposition of Unclaimed Property Act, D.C.Code §§ 42-201 et seq. (1990). The Honorable Stephen Milliken denied Mr. Zaiderman's motion relating to the restoration of the $14,850.00 to the court registry and granted the sum to the District as abandoned property.

In addition to his effort to restore the funds to the court registry, Mr. Zaiderman filed a counterclaim against Mr. Arthur on August 31, 1996, seeking to have disbursed to him (that is, to Mr. Zaiderman) "$14,500.00 plus interest from March 10, 1980, to date of the entry of judgment at the rate provided for in the [promissory loan] Note." He also moved to add Ms. Arthur's name as a party plaintiff; this motion was granted on September 23, 1996.

New attorneys for Mr. Arthur entered their appearance on March 12, 1997, and filed motions designed to secure for Mr. Arthur all the funds originally placed in the court registry, and interest thereon. For example, on August 6, 1997, Mr. Arthur filed a motion for "summary judgment against the District of Columbia on any claim it may have as a third-party defendant to the $14,850.00 paid into the court registry in this matter and to the interest earned (approximately $8,000.00 to date) on that sum since February 17, 1988."⁸ The motions were intended to establish that neither Ms. Arthur, Mr. Zaiderman, nor the District had any right to those funds or the interest that Mr. Arthur alleged should have accumulated through the years, and that such interest properly belonged to him. In 1998, the Honorable Shellie Bowers entered a "default judgment" against Ms. Arthur, subject to review by the trial judge scheduled to take over the later stage of the case, the Honorable Gregory Mize. When Judge Mize assumed responsibility for the case, he scheduled a jury trial that took place from July 24-26, 2000. After hearing testimony from several individuals at the trial, including former counsel for Mr. Arthur, Ms. Arthur, and her mother, the court resolved all of the issues as a matter of law, and dismissed the jury. An order summarizing its oral rulings was signed on July 27, 2000, and docketed on August 10, 2000. The trial court concluded that Mr. Zaiderman "is entitled to nothing" "as a matter of law," and that Mr. Arthur and Ms. Arthur "are entitled to $14,500.00 as tenants by the entireties." The trial court also vacated the entry of default against Ms. Arthur "on [Mr.] Arthur's cross[-]claim against her ... because it is contrary to established D.C. statutes and case law," and hence the court denied Mr. Arthur's cross[-]claim "as [a] matter of law." Subsequently, on October 17, 2000, the court docketed an order denying prejudgment interest on both the $350.00 sum paid into the court registry by Mr. Arthur, and the $14,500.00, because "there is no legal basis for interest to accrue in [Mr. Arthur's] favor on [these sums]." Mr. Arthur filed timely notices of appeal.

ANALYSIS

This appeal requires us to focus on three matters: (1) the trial court's decision to vacate the default judgment against Ms. Arthur; (2) the ownership of the...