Bank of America Corp. v. Gibbons

• Decision Date: 13 March 2007
• Docket Number: No. 0033, Sept. Term, 2006.,0033, Sept. Term, 2006.
• Citation: 918 A.2d 565,173 Md. App. 261
• Parties: BANK OF AMERICA CORPORATION v. Lynne Margaret GIBBONS.
• Court: Court of Special Appeals of Maryland

918 A.2d 565

173 Md. App. 261

BANK OF AMERICA CORPORATION v. Lynne Margaret GIBBONS.

No. 0033, Sept. Term, 2006.

Court of Special Appeals of Maryland.

March 13, 2007.

William M. Rudow (Brett R. Myerson, on brief), Baltimore, for appellant.

Katherine B. Eller (Thomas M. DiBiagio, on brief), Baltimore, for appellee.

Panel DAVIS, HOLLANDER, ADKINS, JJ.

Opinion by ADKINS, J.

Over a six year period, Thomas Patrick Gibbons, the husband of appellee Lynne Margaret Gibbons (Mrs. Gibbons), pocketed proceeds from unauthorized sales of securities owned by several customers of his employer, appellant Bank of America Corporation (the Bank). The value of these misappropriated stocks allegedly exceeds $1.5 million.

Thomas Gibbons deposited ill-gotten funds into an account at Provident Bank of Maryland, held in the name of L & S Computer Consultants (LSSC). From this account, Mr. Gibbons regularly withdrew funds that he then deposited into a different Provident account he held jointly with Mrs. Gibbons, and thereafter into jointly held Bank of America accounts.¹ The misappropriated monies were commingled with $502,331 in salary and bonus earnings that Mr. Gibbons also deposited into that joint Bank account over this period. Mrs. Gibbons wrote most of the checks drawn on this account, primarily for household and family purposes.

In an effort to recover some of the stolen funds allegedly deposited into and spent to fund a lavish lifestyle for Mrs. Gibbons and the Gibbons children, Bank of America filed suit against Mrs. Gibbons. During the litigation, it became clear that Mrs. Gibbons had no knowledge of her husband's theft, her belief being that the source of funds he deposited into the joint household account was her husband's legitimate earnings. The Bank pursued conversion and unjust enrichment claims against Mrs. Gibbons.

On cross-motions for summary judgment, the Circuit Court for Harford County held that Mrs. Gibbons is entitled to judgment on the Bank's conversion and unjust enrichment claims. The court explained its ruling in a written opinion that analyzed each element of unjust enrichment and concluded that the Bank "failed to meet [its] burden on all three prongs of the cause of action." The Bank argues that the motion court committed legal error by applying the wrong legal principles to each element. We agree.

DISCUSSION

Review Of Summary Judgment

Although "[s]ummary judgment unquestionably is an important device . . . for streamlining litigation[,]" in that it "saves the parties expense and the delays of protracted and non-meritorious litigation[,]" the "dismissal of [a] case deprives the parties of a trial and the opportunity to develop their claims and present them to a jury." Sadler v. Dimensions Healthcare Corp., 378 Md. 509, 534, 836 A.2d 655 (2003). The Court of Appeals "has therefore been careful to restrict application of summary judgment to cases that present no material facts that may reasonably be said to be disputed." Id. "The purpose of the summary judgment procedure is not to try the case or to decide the factual disputes, but to decide whether there is an issue of fact, which is sufficiently material to be tried[.]" Jones v. Mid-Atl. Funding Co., 362 Md. 661, 675, 766 A.2d 617 (2001). "The standard of review for a grant of summary judgment is whether the trial court was legally correct." Goodwich v. Sinai Hosp. of Baltimore, Inc., 343 Md. 185, 204, 680 A.2d 1067 (1996). But before "determining whether the trial court was legally correct, an appellate court must first determine whether there is any genuine dispute of material facts." Dashiell v. Meeks, 396 Md. 149, 913 A.2d 10, 18 (2006).

Appellate review is based on the same record presented to the motion court. See Rockwood Cas. Ins. Co. v. Uninsured Employers' Fund, 385 Md. 99, 106, 867 A.2d 1026 (2005). We "must consider the facts reflected in the pleadings, depositions, answers to interrogatories and affidavits in the light most favorable to the non-moving parties, the plaintiffs. Even if it appears that the relevant facts are undisputed, `if those facts are susceptible to inferences supporting the position of the party opposing summary judgment, then a grant of summary judgment is improper.'" Ashton v. Brown, 339 Md. 70, 79, 660 A.2d 447 (1995) (citation omitted).

Unjust Enrichment

"One whose money or property is taken by fraud or embezzlement, or by conversion, is entitled to restitution[.]" 1 Dan B. Dobbs, Law of Remedies § 4.1(1), at 553 (2d ed.1993)(hereinafter cited as "Dobbs"). Under the restitutionary remedies of quasi-contract and constructive trust, "[t]he idea is that the plaintiff's property has been found in the hands of the defendant and must be restored to the plaintiff, even if legal title has passed, and even if the property has undergone a change in form by reason of an exchange or otherwise." 2 Dobbs § 6.1(3), at 11. "A person who receives a benefit by reason of an infringement of another person's interest, or of loss suffered by the other, owes restitution to him in the manner and amount necessary to prevent unjust enrichment." Berry & Gould v. Berry, 360 Md. 142, 151, 757 A.2d 108 (2000) (quoting Restatement (Second) of Restitution § 1 (Tentative Draft No. 1, 1983)).

"The restitutionary remedies and unjust enrichment are simply flip sides of the same coin." Alternatives Unlimited, Inc. v. New Baltimore City Bd. of School Comm'rs, 155 Md.App. 415, 454, 843 A.2d 252 (2004). Thus, "[r]estitution involves the disgorgement of unjust enrichment." Consumer Protection Div. v. Morgan, 387 Md. 125, 168, 874 A.2d 919 (2005). "In explaining the law's reluctance to permit instances of unjust enrichment, John P. Dawson, `The Self-Serving Intermeddler,' 87 Harv. L.Rev. 1409, 1411 (1974), traces back to the Book of Matthew the belief that men `should not reap where they have not sown.'" Alternatives Unltd., 155 Md. App. at 455, 843 A.2d 252. "The doctrine of unjust enrichment is applicable where `the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money,' and gives rise to the policy of restitution as a remedy." Hill v. Cross Country Settlements, LLC, 172 Md.App. 350, 914 A.2d 231 (2007) (citations omitted). The purpose of restitution, therefore, "is to prevent the defendant's unjust enrichment by recapturing the gains the defendant secured in a transaction." 1 Dobbs § 4.1(1), at 552.

"Restitution measures the remedy by the defendant's gain and seeks to force disgorgement of that gain." 1 Dobbs § 4.1(1), at 555. "`[A] constructive trust [may] be imposed to avoid unjust enrichment arising out of . . . the violation of any fiduciary duty or any other wrongdoing.'" Bailiff v. Woolman, 169 Md.App. 646, 654, 906 A.2d 409 (quoting Md. Nat. Bank v. Tower, 374 F.2d 381, 383-84 (4th Cir. 1967)), cert. denied, 396 Md. 12, 912 A.2d 648 (2006).

"In an action for unjust enrichment the burden is on the plaintiff to establish that the defendant holds plaintiff's money and that it would be unconscionable for him to retain it." Plitt v. Greenberg, 242 Md. 359, 364, 219 A.2d 237 (1966). Under Maryland law,

[a] claim of unjust enrichment is established when: (1) the plaintiff confers a benefit upon the defendant; (2) the defendant knows or appreciates the benefit; and (3) the defendant's acceptance or retention of the benefit under the circumstances is such that it would be inequitable to allow the defendant to retain the benefit without the paying of value in return.

Benson v. State, 389 Md. 615, 651-52, 887 A.2d 525 (2005). As we discuss below, the motion court erred in concluding as a matter of law that Bank of America could not establish any of these three elements.

I. First Element: Benefit Conferred

"A person confers a benefit upon another if he gives to the other possession of or some other interest in money[.]" Restatement of Restitution § 1 cmt. a (1937, updated through 2006). The Bank challenges the motion court's ruling that the Bank did not confer a benefit on Mrs. Gibbons. The court reasoned as follows:

A. Benefit conferred on the Defendant by the Plaintiff. At the heart of the concept of unjust enrichment is the willingness of the court under appropriate facts to say that there was an implied or constructive contract between the plaintiff and the defendant.... [T]here is absolutely no allegation that the Plaintiff and this particular Defendant had any dealings with one another either directly or indirectly. This court can find no reported appellate case in this state in which there was a claim for unjust enrichment where the claim did not arise out of dealings directly between the parties. With an implied or constructive contract, as with any other contract, there must be found to be some "meeting of the minds" that creates the obligation from one party to the other and that is absent in this particular case. Under the Plaintiff's theory, they could pursue an unjust enrichment claim against anyone to whom Mr. Gibbons had given any of the money that he misappropriated from the Plaintiff's clients. This court cannot see how the Defendant in this particular case stands in any different position from a car dealership where Mr. Gibbons may have purchased a car, a casino where he may have gambled away a portion of the money or a restaurant where he may have bought expensive dinners for his various female companions. To satisfy the first element of this cause of action, the Plaintiff must have conferred some sort of benefit directly on the Defendant from whom the restitution is sought. The only individual in this case with whom the bank had any direct dealings was Mr. Gibbons and there is not one scintilla of evidence that has been produced that any direct benefit was conferred on Mrs. Gibbons. (Emphasis added.)

The Bank argues that the motion court committed several legal errors in concluding that the Bank cannot establish the threshold "benefit conferred"...