Jackson v. 2109 Brandywine

• Decision Date: 02 July 2008
• Docket Number: No. 317, September Term, 2007.,317, September Term, 2007.
• Citation: 952 A.2d 304,180 Md. App. 535
• Parties: Calvin J. JACKSON, Personal Representative of the Estate of Edward H. Saunders, et. al. v. 2109 BRANDYWINE, LLC, et. al.
• Court: Court of Special Appeals of Maryland

952 A.2d 304

180 Md. App. 535

Calvin J. JACKSON, Personal Representative of the Estate of Edward H. Saunders, et. al. v. 2109 BRANDYWINE, LLC, et. al.

No. 317, September Term, 2007.

Court of Special Appeals of Maryland.

July 2, 2008.

Jonathan M. Wall (Christine E. Burke, Hyatt & Weber, PA, on the brief), Annapolis, for appellant.

Andrew J. Kline (Scott H. Rome, on the brief), Washington, DC, for appellee.

Panel: KRAUSER, C.J., HOLLANDER and WOODWARD, JJ.

HOLLANDER, J.

This appeal is rooted in a transaction that occurred on September 11, 1998, when Edward Saunders, M.D. (the "Decedent"), sold property located in Washington, D.C. to 2107 Brandywine, LLC and 2109 Brandywine, LLC (collectively, "Brandywine" or "Obligors"), appellees. In connection with the transaction, the Obligors executed a "Deferred Purchase Money Promissory Note" (the "Note"), secured by a Deed of Trust. After Dr. Saunders died on November 6, 2002, his girlfriend, Francina Mitchell, allegedly told Brandywine's principal, Frederic Harwood, that she was the personal representative of his Estate, and that the remaining payments due under the Note were to be delivered to her. Thereafter, Brandywine tendered twenty monthly payments on the Note to Mitchell, by checks payable to Saunders. Mitchell deposited them into an account at Provident Bank (the "Account" or "Provident Account"), which had been jointly held by Dr. Saunders and Mitchell.

Calvin Jackson was appointed personal representative of Dr. Saunders's Estate (the "Estate"), and is the appellant here. The Estate claimed it never received payments due under the Note. Eventually, in September 2004, the Estate entered into an Escrow Agreement with Brandywine by which it released the Deed of Trust in return for Brandywine's deposit of $135,000 in escrow — the total of all payments it claimed to have made to Mitchell, plus interest and late fees (the "Escrow Money").

On December 9, 2005, Brandywine filed a declaratory action against the Estate of Edward H. Saunders, Mitchell, and Provident Bank ("Provident").¹ It sought, inter alia, a declaration that it was entitled to the Escrow Money. It also pled an unjust enrichment count against the Estate, and various claims against Mitchell and Provident. The court dismissed all claims against Provident, and entered a default judgment against Mitchell. Following a trial on April 4, 2007, it ruled in favor of Brandywine, by Order entered on April 10, 2007.

Appellant poses three questions, which we quote but have reordered:

1. Did the Circuit Court err in holding that Brandywine's payments to a person posing as a Personal Representative were made in good faith, and that it was equitable therefore to charge the Estate with having received those payments without any evidence that those specific payments benefitted the Estate?

2. Did the Circuit Court err in holding that Mitchell was an agent of the Estate for the purpose of receiving Brandywine['s] payments, when the Estate never knew that Mitchell was receiving them, and never authorized, approved or permitted Mitchell to receive such payments?

3. Did the Circuit Court err in failing to require that Brandywine trace its funds with certainty through Mitchell's commingled Provident Account to specific items that Brandywine believed benefitted the Estate?

For the reasons set forth below, we shall reverse the judgment of the circuit court and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

Brandywine entered into a contract on March 11, 1998, to purchase from Dr. Saunders certain real property located at 2004, 2006, 2008, and 2014 8th Street NW, Washington, D.C. (collectively, the "Property"). In connection with this purchase, Brandywine signed the Note, dated September 11, 1998, by which it promised to pay $200,000 to Dr. Saunders, secured by a Deed of Trust on the Property. Brandywine timely made monthly payments on the Note. When Dr. Saunders died on November 6, 2002, all of the payments due on the Note had not yet been made.

The parties do not entirely agree on what transpired after Dr. Saunders's death. In the Complaint, Brandywine alleged that it continued to make payments on the Note through its agent, Frederic Harwood, "by and through checks payable to Saunders" (the "Note Checks").² Brandywine complained that Provident "permitted Mitchell to negotiate" the Note Checks, even though she was not the payee, and "not the personal representative or any other official representative of the Estate." According to Brandywine, "Mitchell cashed or deposited the checks that she had no authority to negotiate on behalf of the estate. Provident permitted Mitchell to divert the funds from Brandywine...." Further, Brandywine alleged that Mitchell "either deposited or cashed the Note Checks herself, and eventually used these funds for the benefit of the Estate."

The Estate had no appointed or designated representative for more than a year after Saunders's death. Walter S.B. Childs was appointed Special Administrator of the Estate on December 18, 2003. After learning of the Note, he asserted that the Estate had not received the payments due under the Note. By that point, the sum of $34,446.09 remained due, which Brandywine paid directly to the Estate. However, Childs also demanded from Brandywine the amount that it previously paid by way of the Note Checks.

In the meantime, Brandywine decided to sell the Property and, in connection with the sale, sought a release of the Deed of Trust. The Estate agreed to release the deed as part of an Escrow Agreement reached with Brandywine in September of 2004, by which Brandywine placed the amount allegedly due on the Note into an escrow account, until the rights of the parties could be determined.

As noted, Brandywine filed a declaratory action in December 2005. Brandywine also included claims for Conversion (against Mitchell and Provident); Unjust Enrichment (against Mitchell and the Estate); and Negligence (against Provident). It alleged that even though Mitchell diverted the funds paid by Brandywine, she used the money to pay debts of the Estate, and therefore the Estate received the benefit of the payments. The Complaint averred, in part:

23. On December 9, 2004, the Orphan's Court for Anne Arundel County entered a Decision holding that Mitchell is entitled to a reimbursement of $38,076.37 from the Estate, and that this amount will be offset by debts owed by Mitchell to the Estate.

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25. The Court has specifically ruled that the amount reimbursable to Mitchell "will be offset by any debts owed by Francina Mitchell to the Estate," therefore the monies at issue in this action (those that Mitchell attempted to convert from the Estate) may simply be retained by the Estate and withheld from Mitchell.

26. The Estate has received the benefit of the Note Checks paid by Brandywine, and pursuant to the December 9th Order, the amounts that the Estate now claims as due from Brandywine may be offset against the monies that the Estate has been ordered to reimburse Mitchell.

27. Either the Estate is owed the money converted by Mitchell and can simply withhold such money from the amount that it is ordered to pay Mitchell, or even if the Estate is not entitled to withhold the money, the Estate has received the benefit of the Note Checks in the form of payments made by Mitchell that benefitted the Estate.

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39. As demonstrated by the December 9th Order stating that Estate must reimburse Mitchell for the amounts that Mitchell has expended on behalf of the Estate, the Estate has received the benefit of the monies diverted by Mitchell from the Note Checks. If the Estate is entitled to retain the money paid by Mitchell, retain the benefit of the Note Checks, and the money held in Escrow is released to the Estate, then the Estate in unjustly enriched.

40. If the Estate is entitled to retain the money paid by Mitchell, retain the benefit of the Note Checks, and the money held in Escrow is released to the Estate, then the Estate is unjustly enriched.

Accordingly, Brandywine sought a declaratory judgment "that the Estate has received the benefit of monies paid by Brandywine and diverted by Mitchell" and that the Estate "is not entitled to any further money from Brandywine, and ... may withhold the monies at issue from the reimbursement requested by Mitchell, or the reimbursement ordered in the December 9th Order."³

On April 4, 2007, the circuit court conducted a bench trial as to Brandywine's remaining claims against the Estate. Mr. Childs testified that in December 2003, the clerk of the Orphan's Court advised him that the Orphan's Court judges had an estate for which they wanted him to serve as special administrator. Childs was told there was a danger the Estate would lose certain properties in foreclosure, as it had no funds available to pay the liens. Childs also learned of litigation between Mitchell and Dr. Marilyn Black-Jackson, a former girlfriend of the Decedent, each claiming to be the sole heir to the Estate. Childs accepted the appointment, and immediately sought to ascertain the Estate's assets.

Childs testified that he learned that payments on the Note were due to the Estate, and that the Estate had not received previous payments made by the Obligors. After informing Brandywine of the situation, he began receiving payments on the Note. Childs obtained checks written by Mitchell on the Provident Account, which had been a joint account of Ms. Mitchell and Dr. Saunders. Some of the checks had been paid to a funeral home, presumably for Dr. Saunders's funeral expenses. Childs also learned that the Estate owned properties subject to a mortgage held by Bank of America. Childs made payments on this mortgage on the Estate's behalf.

Brandywine's counsel referred to some of the checks Mitchell drew on the Provident Account. Childs stated that he "found one check to Bank of America," dated December 10, 2002. Childs also identified a check...