Merchants Mortg. Co. v. Lubow, 193

• Citation: 339 A.2d 664,275 Md. 208
• Decision Date: 16 June 1975
• Docket Number: No. 193,193
• Parties: MERCHANTS MORTGAGE COMPANY et al. v. Ralph LUBOW.
• Court: Court of Appeals of Maryland

Page 208

275 Md. 208

339 A.2d 664

MERCHANTS MORTGAGE COMPANY et al. v. Ralph LUBOW.

No. 193.

Court of Appeals of Maryland.

June 16, 1975.

Lawrence F. Rodowsky and M. Peter Moser, Baltimore (Eleanor M. Carey and Frank, Bernstein, Conaway & Goldman, Baltimore, on the brief), for appellants

David Freishtat, Baltimore, for appellee.

Argued before MURPHY, C.J., and SINGLEY, SMITH, DIGGES, LEVINE, ELDRIDGE and O'DONNELL, JJ.

SINGLEY, Judge.

On 25 November 1968, Merchants Mortgage Company (Merchants) filed in the Circuit Court of Baltimore City a Only Lubow, of all the defendants, filed a motion for partial summary judgment, grounded on the contention that claims based on wrongs which were alleged to have occurred prior to 25 November 1965 were barred by limitations; that certain of the claims were not supported by sufficient evidence, and that others were barred by preclusion. ¹

bill of complaint against Ralph Lubow, at one time an employee and later an officer and director of Merchants, alleging a breach of Lubow's duty of loyalty, and seeking discovery, an accounting and other relief. As filed, the complaint joined Sol M. Bank as a co-defendant. By a second amended bill of complaint, filed in March, 1970, Eugene J. Silverman, J. Elmer Weisheit, Jr., Title Company of Maryland, Inc. (now Columbia Title Company), and Pacy Oletsky were added as defendants, and additional claims were asserted. LeRoy E. Hoffberger and Morton J. Hollander, partners in the law firm of Hoffberger and Hollander, which had been Silverman's employer, were added as plaintiffs.

Merchants countered the motion for partial summary judgment with an answer, and a motion for the production of documents by Lubow, which had as its purpose the examination of his financial records.

The matter was referred to Harry M. Sachs, Jr., the General Equity Master of the Supreme Bench of Baltimore City, for hearing on the motions. He recommended that summary judgment be granted for Lubow on those claims which were barred by limitations, by preclusion, or were not supported by sufficient evidence, and that limited discovery It should be noted that Merchants at this stage of the proceeding could appeal only by virtue of an order entered by the chancellor.

be granted. Merchants filed exceptions to the recommendations of the Master; Lubow did not. From orders of the circuit court entering partial summary judgment for Lubow, and limiting discovery by Mechants, both Merchants [339 A.2d 667] and Lubow appealed to the Court of Special Appeals. We granted certiorari in order that we might consider the matter.

Maryland Rule 605 a provides:

'Where more than one claim for relief is presented in an action, whether as an original claim, counterclaim, cross-claim, or third-party claim, the court may direct the entry of a final judgment upon one or more but less than all of the claims only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates less than all the claims shall not terminate the action as to any of the claims, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims.'

In the order granting Lubow's motion for summary judgment on 'some but less than all of the claims of the plaintiff (Merchants) against the defendant Lubow' the court specified, in pursuance of the Rule, that this was a final judgment and that there was no just reason for delay.

The thrust of Lubow's cross-appeal is that the lower court erred (i) in adopting the Master's recommendation that estoppel was not available as a defense to four of the claims asserted by Merchants against Lubow; (ii) in rejecting the Master's conclusion that the doctrine of preclusion was available to Lubow as a defense to those claims, and (iii) in Merchants has moved to dismiss Lubow's cross-appeal, a motion which we shall grant. The point is that a denial of Lubow's motion for summary judgment is an interlocutory order, which is not appealable and cannot be made so, Lawrence v. Department of Health, 247 Md. 367, 371-72, 231 A.2d 46, 48-49 (1967). It is not a final adjudication of Merchants' claims, which can still be defended on any grounds available to Lubow. Indeed, if the claims should ultimately be adjudicated against him by entry of a final judgment, he can raise then, in an appeal, the applicability of the legal principles which he seeks to raise now.

failing to hold that 10 other claims were barred by the doctrine of equitable estoppel.

While the parties, in their briefs and in argument before us, devoted much time to an extensive consideration of the facts, a brief resume will suffice for an understanding of the questions of law presented by this appeal.

Merchants is a Delaware corporation, which since 1925, has been engaged in the interim financing of real estate transactions, primarily by making construction loans and more recently by making loans secured by mortgages on unimproved real estate.

In 1960, Merchants employed Lubow as a salesman, at a salary of $100.00 per week. Later, he became a loan officer, and as Lubow's responsibilities increased, so did the importance of his position and the amount of his compensation. In 1963, he was elected a vice president of Merchants. In 1965, he became a director of the company. From 1964 to his resignation, his salary, bonuses and commissions on an annualized basis were in the $63,000 range. Lubow resigned in September, 1967, to enter business on his own account.

A matter of days after Lubow's resignation, suit was instituted in Prince George's County against Merchants, its officers and directors (including Lubow) and Sol M. Bank, an associate of Merchants, by Suitland Development Corporation, R & S Development Corporation, Warbling Meadows, Inc., and Beltway-Penn Construction Company The trial of the Suitland Development case in the lower court was concluded in May of 1968, and during the summer of 1968, Merchants embarked on an investigation of the activities of Lubow and others in connection with the operations of Merchants. This investigation gave rise to the filing of the bill of complaint in Baltimore against Lubow and Sol M. Bank, a mortgage broker associated with, but not employed by, Merchants, later amended to include LeRoy E. Hoffberger and Morton J. Hollander (the partners of the law firm of Hoffberger and Hollander) as additional plaintiffs, and Eugene J. Silverman, an employee of Hoffberger and Hollander; Title Company of Maryland, and J. Elmer Weisheit, Jr., its president, and Pacy Oletsky, a former employee of Merchants, as additional defendants.

Inc. through Reuben Schwartz and Beulah Schwartz, stockholders in the corporations. ² The suit sought to enjoin the foreclosure of mortgages held by Merchants on the properties of the four corporations, and to set aside the mortgages because of fraud allegedly practiced upon the borrowers. Merchants undertook the defense of the suit in behalf of itself, its officers and directors and Lubow, and was ultimately successful. See Suitland Development Corp. v. Merchants Mortgage Co., 254 Md. 43, 254 A.2d 359 (1969). ³

Merchants' second amended bill of complaint in 34 numbered paragraphs (24 through 57, both inclusive) sets forth separate instances where Merchants and the individual plaintiffs were alleged to have been defrauded by Lubow and the other defendants. Both the Master, in his Report and Recommendation, and the circuit court, in its decree, dealt with the claims by paragraph number, as shall we. ⁴

(i) Limitations

After a careful discussion of the defense of limitations; its Both the circuit court and the Master relied heavily upon Leonhart v. Atkinson, 265 Md. 219, 226-27, 289 A.2d 1, 5-6 (1972) for the proposition that a plaintiff must allege and prove four essentials in an action grounded on fraud ⁶ if he is to avoid his actions being barred by the statute of limitations. We do not find Leonhart apposite, however, as that case dealt with a situation where the plaintiff was allegedly kept in ignorance of the fact that he had a cause of action by the defendant's fraud, see Maryland Code (1974), Courts and Judicial Proceedings Article § 5-203, while the instant case involves plaintiffs who claim not to be chargeable with discovery of the fraud alleged to have been perpetrated by the defendants because of the existence of a confidential relationship.

availability as a defense in actions at law and its applicability to actions in equity, either by equating the defense with laches, or by applying it directly if there is a concurrent remedy at law, Desser v. Woods, 266 Md. 696, 704, 296 A.2d 586, 591 (1972); Niner v. Hanson, 217 Md. 298, 307, 142 A.2d 798, 802 (1958), the Master concluded that the defense was available, and that motion for summary judgment should be granted as to those claims which related to transactions which occurred more than three years before Merchants instituted suit. Accordingly, he recommended that summary judgment be entered in Lubow's favor as to the claims set forth in the following paragraphs of the amended bill of complaint: 27, 29, 30, 31, 32, 34, 35, 36, 38, 39, 41, 42, 43, 44, 45, 47, 48, and 56. The circuit court adopted the Master's recommendation and granted partial summary judgment. ⁵

Merchants challenges the invocation of limitations, arguing that the defense of limitations is not available to a Lubow, an officer and director of Merchants, as a matter of law, occupied a confidential relationship as regards his company, Coffman v. Maryland Publishing Co., 167 Md. 275, 288-89, 173 A. 248, 253-54 (1934); Acker, Merrall & Condit Co. v. McGaw, 106 Md. 536, 556, 68 A. 17, 21 (1907); Booth v. Robinson, 55 Md. 419, 436 (1881); Cumberland Coal & Iron Co. v. Parish, 42 Md. 598,...