O'Hara v. Kovens

• Decision Date: 01 September 1991
• Docket Number: No. 1305,1305
• Citation: 92 Md.App. 9,606 A.2d 286
• Parties: James Francis O'HARA, III, et al. v. Jacqueline KOVENS, Personal Representative of the Estate of Irvin Kovens, et al. ,
• Court: Court of Special Appeals of Maryland

Page 9

92 Md.App. 9

606 A.2d 286

James Francis O'HARA, III, et al. v. Jacqueline KOVENS, Personal Representative of the Estate of

Irvin Kovens, et al.

No. 1305, Sept. Term, 1991.

Court of Special Appeals of Maryland.

May 8, 1992.

Angus R. Everton (Roy L. Mason and Mason, Ketterman & Morgan, P.C., on the brief), Baltimore, for appellants.

Joseph M. McManus (Charles H. Fleischer, Clifton M. Mount, Ross Marsh Foster and Myers & Quiggle on the brief), Washington, D.C., for appellee, Casey.

Stuart R. Berger (M. Albert Figinski and Weinberg and Green on the brief), Baltimore, for appellees, Hess, Harry and William Rodgers.

H. Thomas Howell, William F. Gately and Semmes, Bowen & Semmes, on the brief, Baltimore, for appellee, Kovens.

Argued before MOYLAN, CATHELL and MOTZ, JJ.

MOTZ, Judge.

This appeal is the latest, and perhaps the final, chapter of the litigation arising out of the alleged impropriety involved in former Governor Marvin Mandel's 1971 veto of legislation to provide additional racing dates for a Maryland race track. Critical to determination of this case is resolution of the question of whether the former governor's motives for that veto can be examined by a court in a tort action against his alleged co-conspirators based on the veto. Because the separation of powers doctrine bars judicial inquiry into the former governor's motives for his veto, we affirm the order of the Circuit Court for Baltimore City (Friedman, J.) granting summary judgment to the alleged co-conspirators.

(i)

On November 22, 1978, appellants, James Francis O'Hara, III, and Michael Patrick O'Hara, individually and as guardians of the property of their mother, Josephine M. O'Hara (collectively "the O'Haras") filed a declaration against Marvin Mandel, a former governor of the State of Maryland, W. Dale Hess, Harry W. Rodgers, III, William A. Rodgers, Ernest N. Cory, Jr., Irving T. Schwartz, Eugene B. Casey, and Irvin Kovens (collectively "the defendants"). ¹

In that declaration the O'Haras alleged a claim for "common law fraud and deceit." ² They asserted that they were stockholders of Southern Maryland Agriculture Fair Association, Inc. ("Marlboro Race Track"), and that following indictments detailed in United States v. Mandel, 591 F.2d 1347, vacated, 602 F.2d 653 (4th Cir.1979), cert. denied, 445 U.S. 961, 100 S.Ct. 1647, 64 L.Ed.2d 236 (1988), they discovered that "at some point between January 7, 1969 and May 28, 1971" the defendants had made representations and failed to disclose material facts in order to induce the O'Haras "to sell stock in the Marlboro Race Track at a lower price than if defendants had not made such representations or omissions." The O'Haras further allege that the defendants knowingly and intentionally, but secretly, conspired to do this and that the O'Haras relied upon the defendants' representations and omissions in determining to sell their stock.

In March 1971, House Bill 1128 was introduced in the House of Delegates for the purpose of obtaining the approval of the General Assembly for the permanent transfer of eighteen (18) racing days from Hagerstown Race Track to Marlboro Race Track. On May 28, 1971, former Governor Mandel vetoed House Bill 1128, allegedly "with the intent and the knowledge that his veto would depress the value of the stock of Marlboro Race Track and would deceive and defraud Plaintiffs and other owners of the stock of Marlboro Race Track about the value of their stock and the price that they could expect to obtain for the stock for sale on the open market."

Shortly thereafter, on June 1, 1971, defendant Schwartz "purported to buy fifteen thousand (15,000) shares of the Marlboro Race Track, at $7.00 per share" and on two subsequent occasions, purchased additional stock, buying a total of 2,000 additional shares. The O'Haras allege that on these occasions, Schwartz "acted to conceal the fact that he had no beneficial interest in the stock ... and that the true beneficial owner was" defendant Kovens. It was further alleged that by use of the name of defendant Cory, individually and as attorney, defendants "concealed the fact that they were, during 1971, seeking to acquire" the O'Haras' interest in the race track. In December 1971, the defendants "arranged for the purchase of the controlling interest in Marlboro Race Track [from the O'Haras] in such a way as to conceal their true identities as purchasers of the stock." During 1971 and thereafter, defendants used the name of defendant Schwartz to conceal the fact that "defendant Kovens was the true beneficial owner of the additional financial interests purchased in Marlboro Race Track acquired on December 31, 1971." ³ On and after January 1, 1972, the defendants assertedly arranged for defendant Casey to represent himself falsely as the new owner of Marlboro Race Track, in order to conceal the financial interest of the other defendants in the race track. On January 7, 1992, Casey wrote a letter to all members of the General Assembly of Maryland to induce them to override then Governor Mandel's veto of House Bill 1128. Override of the veto, by providing the race track with eighteen (18) additional racing days, would markedly increase the value of the Marlboro Race Track stock.

Moreover, the defendants allegedly conspired with former Governor Mandel so that he would "by virtue of his office as Governor of the State of Maryland ... act with the intent to induce the legislature to override the veto of May 28, 1971." On January 12, 1972, the General Assembly did, in fact, override the veto, thereby permanently transferring to Marlboro Race Track the eighteen (18) racing days which formerly had been run at Hagerstown Race Track.

Finally, the O'Haras alleged that during 1972 and thereafter, defendants used defendant Cory and "the names of approximately seven (7) of their friends and family members in such a way to conceal the identity of the true beneficial owners of financial interest in Marlboro Race Track." Former Governor Mandel and the other defendants assertedly "used their efforts to induce the General Assembly of Maryland to pass the Race Track Consolidation Bill (Senate Bill 928 of 1972) the effect of which, as the defendants well knew, would be to further increase the value of Marlboro Race Track, theretofore, fraudulently acquired from Plaintiffs." In December 1972, the defendants caused the merger of the Marlboro Race Track with the Bowie Race Track, thereby further increasing the value of Marlboro Race Track stock, which they had assertedly acquired by fraud from the O'Haras.

On December 2, 1983, the Circuit Court for Baltimore City granted summary judgment to all defendants on the ground that this action was time-barred. On appeal, this court affirmed this order as to James and Michael O'Hara in their individual capacities, but reversed as to their claim on behalf of their mother's estate. O'Hara v. Kovens, 60 Md.App. 619, 484 A.2d 275 (1984). The Court of Appeals granted certiorari, vacated the grant of summary judgment, and remanded for further proceedings. O'Hara v. Kovens, 305 Md. 280, 503 A.2d 1313 (1986). ⁴

Following remand, the Estate of Josephine O'Hara voluntarily dismissed with prejudice its claim against former Governor Marvin Mandel, and settled with the remaining defendants. In September of 1989, there was a jury trial solely on the issue of whether limitations barred the still-pending claims of James and Michael O'Hara in their individual capacities. During the trial, all defendants moved for judgment at the end of the plaintiffs' case and at the close of all evidence; those motions were denied. By special verdict, the jury found that limitations did not bar the claims because James and Michael O'Hara were not aware, and should not have been aware, before November 22, 1975, of any alleged wrong. Trial on the merits of the underlying claim was scheduled to begin on June 4, 1990.

On May 15, 1990, former Governor Mandel filed a motion to dismiss or for summary judgment on the ground that he was absolutely immune from liability. This motion was denied. Mandel then filed a notice of appeal and simultaneously filed a motion for stay of proceedings pending the appeal, accompanied by a petition for writ of certiorari to the Court of Appeals. On June 1, 1990, this court entered an order staying all proceedings in the circuit court pending final disposition of the appeal and the Court of Appeals entered an order issuing a writ of certiorari. On July 27, 1990, the Court of Appeals, in a comprehensive opinion, reversed the order denying Mandel's motion for summary judgment and remanded the case for judgment in his favor. Mandel v. O'Hara, 320 Md. 103, 576 A.2d 766 (1990). The court held that "as a matter of Maryland common law ... a Governor of Maryland enjoys an absolute immunity from liability for damages for nonconstitutional torts based on the approval or veto of legislative enactments." 320 Md. at 134, 576 A.2d 766. The mandate of the Court of Appeals was issued on September 5, 1990. As part of the mandate, the stay issued on June 1, 1990, by this court, was lifted.

On March 14, 1991, the remaining defendants filed a motion to dismiss or for summary judgment on the grounds that:

(1) As a matter of law, the common law fraud claim was legally insufficient because it necessarily requires judicial inquiry into motives for a valid legislative act, which inquiry is forbidden by the separation of powers doctrine embodied in Article 8 of the Maryland Declaration of Rights.

(2) As a matter of law, the common law fraud claim was legally insufficient because the allegations and undisputed facts failed to show any fraudulent misrepresentation or concealment of any material fact on which plaintiffs relied.

(3) As a matter of law, punitive damages cannot be recovered from the estate of a deceased person and, to that extent, the claim against the personal representative of the late Irvin Kovens must be...