In re Freeland, Bankruptcy No. 05-36349-JS.

• Decision Date: 21 December 2006
• Docket Number: Adversary No. 05-9134-JS.,Bankruptcy No. 05-36349-JS.
• Parties: In re Wilbert H. FREELAND, Sr. and Christine E. Freeland, Debtors. Taryn Drummond, Individually and as Personal Representative of the Estate of Beatrice M. Drummond, Deceased, Plaintiff v. Wilbert H. Freeland, Sr., and Christine E. Freeland, Defendants.
• Court: U.S. Bankruptcy Court — District of Maryland

360 B.R. 108

In re Wilbert H. FREELAND, Sr. and Christine E. Freeland, Debtors Taryn Drummond, Individually and as Personal Representative of the Estate of Beatrice M. Drummond, Deceased, Plaintiff v. Wilbert H. Freeland, Sr., and Christine E. Freeland, Defendants.

Bankruptcy No. 05-36349-JS.

Adversary No. 05-9134-JS.

United States Bankruptcy Court, D. Maryland.

December 21, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Adam M. Freiman, Sirody, Freiman and Feldman, P.C., Baltimore, MD, for Debtors.

MEMORANDUM OPINION DETERMINING DEBT TO BE NONDISCHARGEABLE AND ASSESSING PUNITIVE DAMAGES

JAMES F. SCHNEIDER, Bankruptcy Judge.

This opinion stands for the following propositions: (1) that certain debts that arose as a result of undue influence are nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A), where the plaintiff proves by a preponderance of evidence that undue influence was exerted fraudulently; and (2) that in an adversary proceeding brought in the bankruptcy court to determine a debt to be nondischargeable, where no prior judgment has been awarded in a nonbankruptcy forum, the bankruptcy court may liquidate the damages, enter a nondischargeable judgment, and may also, where appropriate, award punitive damages as part of the nondischargeable judgment, where the plaintiff also proves actual malice in the commission of fraud by clear and convincing evidence. For the reasons stated, the instant complaint will be granted and a nondischargeable judgment in the amount of $200,000, will be entered jointly against both defendants, and the Court will enter an additional nondischargeable judgment for punitive damages against one of the defendants in the amount of $500,000.

FINDINGS OF FACT

In May 2001, Mrs. Beatrice Marion Drummond ("Mrs.Drummond"), an 86 year-old retired nurse and widow, was admitted to the psychiatric unit at Bon Secours Hospital in Baltimore, Maryland, where she was diagnosed with Alzheimer's disease, dementia, delusional thoughts and paranoia. A final diagnosis at her discharge from the hospital indicated that she was manic depressive and psychotic. On May 24, 2001, the date of discharge, an After Care Plan (the "Plan") was prepared for Mrs. Drummond by a team comprised of a social worker, an occupational therapist and a registered nurse acting under the supervision of a physician. Plaintiffs Exhibit No. 6.

The Plan of treatment for Mrs. Drummond began while she was in the hospital and included "medication, group therapy, individual daily assessment by psychiatrist, therapeutic program and primary nursing," and provided for a follow-up appointment for her on Friday, June 8, 2001, at a psychiatric facility at Bon Secours Hospital known as "Brighter Vision," which Mrs. Drummond agreed to attend.

Because Mrs. Drummond was "unable to perform activities of daily living and was paranoid and suspicious," the Plan indicated that it was "appropriate to place [her] in SNF [senior nursing facility] secondary to safety concerns and diminished cognition." Plan, ¶ B 1. Accordingly, the Plan provided that Mrs. Drummond be referred to an agency known as "Water Towers," a high-rise senior residential facility located at 1400 East Madison Street, in Baltimore City, the director of which was the defendant, Christine Freeland ("Mrs.Freeland"). The Plan disclosed that Mrs. Drummond received a $2300 a month pension from Social Security and that she was a Medicare patient. Plan, ¶¶ B3 and 4, Plaintiffs Exhibit No. 6.

On the same day, May 24, 2001, Mrs. Freeland interviewed Mrs. Drummond at the hospital, in the presence of Delores Claybourne, ("Mrs.Claybourne"), Mrs. Drummond's goddaughter. Until that date, Mrs. Drummond had never met Mrs. Freeland. In addition to her employment at Water Towers, Mrs. Freeland owned and operated an unlicensed assisted living facility for the elderly known as "Angel's Paradise," then located in Baltimore County, Maryland, at 3514 Old Mill Road. Her husband, Wilbert H. Freeland, Sr., was employed at the facility. Mrs. Freeland represented to Mrs. Drummond and Mrs. Claybourne that Angel's Paradise was a licensed facility for elder care and told Mrs. Drummond that she would provide all care and services to Mrs. Drummond without expecting to be compensated. As a result, Mrs. Drummond agreed to go with Mrs. Freeland and was released to her care.

Mrs. Drummond was the owner of a residence located at 4610 Springdale Avenue, in the city of Baltimore, and several bank accounts of which her granddaughter, the plaintiff, Taryn Drummond, was either the joint owner or the death beneficiary. The funds in the accounts included proceeds of life insurance policies Mrs Drummond received after the death of her only son, the plaintiffs father, who was murdered in 1996.

From May 24, 2001, until Mrs. Drummond died on October 20, 2001, a period of 149 days, the Freelands prevented Taryn Drummond and others from visiting or otherwise communicating with Mrs. Drummond.¹ The Court finds from all of the evidence that during that time, that Mrs. Freeland "poisoned the mind" of Mrs. Drummond against the plaintiff by misrepresenting to her that her granddaughter had not called or attempted to visit Mrs. Drummond, which was false.

At trial, Taryn Drummond, the plaintiff, testified to having had a close and loving relationship with her grandmother, Mrs. Drummond, and that she was the joint owner or death beneficiary on her grandmother's accounts at First Union Bank from 1996 until Mrs. Freeland had the accounts altered two weeks before Mrs. Drummond's death. The plaintiff last saw Mrs. Drummond alive shortly before she was taken to St. Agnes Hospital by Mrs. Claybourne. After a week, Mrs. Drummond was transferred to the psychiatric unit at Bon Secours Hospital. The plaintiff testified that she learned from Mrs. Claybourne that Mrs. Drummond was at Bon Secours, but when the plaintiff went to the hospital to visit her, she discovered that Mrs. Drummond had been discharged after only two days into the care of Mrs. Freeland. She found out from officials at Bon Secours that Mrs. Freeland operated a nursing facility at 3514 Old Mill Road. The plaintiff went to the address and when she could not communicate with a non-English-speaking attendant, she called the police, who advised her to contact the Maryland Department of Health and Mental Hygiene. She did so and discovered that Mrs. Freeland was not licensed by the State to manage a care facility for the elderly. She then returned to Bon Secours to find out how her grandmother could have been released into the care of someone without a license. When she confronted Mrs. Freeland at the 3514 Old Mill Road location, the plaintiff told her, "I've been looking for you and my grandmother." She was not permitted to see Mrs. Drummond.

After two months, Mrs. Freeland called the plaintiff to advise her that the telephone number at Angel's Paradise had been changed. The plaintiff testified that she did not realize that Mr. and Mrs. Freeland had taken Mrs. Drummond into their home at 7752 Glen Avenue in Pasadena, Anne Arundel County, Maryland, and that she did not know where her grandmother was or where the Freelands lived. On October 20, 2001, Mrs. Freeland called the plaintiff from North Arundel Hospital to tell her that Mrs. Drummond had died that day, the same day she was brought there. The death certificate listed the cause of Mrs. Drummond's death as "ventricular tachycardia," "Congestive heart failure" and "Sepsis," and it identified Mrs. Freeland as the "informant" and the decedent's "foster daughter." The death certificate indicated that no autopsy was performed. The only time Taryn Drummond saw her grandmother from before her admission to Bon Secours and during her confinement by the debtors, was after Mrs. Drummond's death.

At trial, the plaintiff presented a 14-page report prepared by Mrs. Freeland and/or employees under her supervision, identified as "Care Notes," that purported to record Mrs. Drummond's statements, activities and treatment during her stay at Angel's Paradise, between the dates May 24 through September 3, 2001.²

PAGE CONTAINED FOOTNOTES

The plaintiff stated that she discovered that she was no longer the beneficiary on her grandmother's bank accounts after Mrs. Drummond died. She was alerted that something was amiss when she obtained the death certificate and discovered that Mrs. Freeland had designated herself as Mrs. Drummond's "foster daughter." She then went to First Union Bank, where she spoke to the branch manager, Mrs. Brenda G. Towe ("Mrs.Towe"), who told her that Mrs. Drummond's accounts had been altered to make Mrs. Freeland the beneficiary. She also learned later that Mrs. Freeland had filed a will for Mrs. Drummond in the Orphans Court for Anne Arundel County on October 21, 2001, one day after Mrs. Drummond's death.

The will, dated September 8, 2001, was prepared by Mrs. Freeland for Mrs. Drummond, and purported to appoint Christine Freeland as Mrs. Drummond's personal representative and sole beneficiary of all her property, including her former residence.

Mrs. Freeland also executed a general power of attorney from Mrs. Drummond to herself, dated August 22, 2001, upon which Mrs. Freeland signed Mrs. Drummond's name as "Beatrice Drummond/Christine Freeland," at an address in Severn, Maryland.³ Plaintiffs Exhibit No. 2. The power of attorney gave. Mrs. Freeland total and complete authority to act on Mrs. Drummond's behalf to take control of all of her assets, including the authority to open and close bank accounts and take possession of any safe deposit boxes and their contents. Power of Attorney, dated August 22, 2001, ¶¶ 1-10.

On October 5, 2001, Mrs. Freeland took Mrs. Drummond, who was in a wheelchair, to the branch of First Union Bank where her accounts were deposited and had Mrs. Drummond remove Taryn Drummond's name from the accounts and substitute that of Mrs. Freeland as death beneficiary. Using...