Roebuck v. Steuart

• Decision Date: 01 September 1987
• Docket Number: No. 1582,1582
• Citation: 544 A.2d 808,76 Md.App. 298
• Parties: Janice L. ROEBUCK v. R. Calvert STEUART. ,
• Court: Court of Special Appeals of Maryland

Page 298

76 Md.App. 298

544 A.2d 808

Janice L. ROEBUCK v. R. Calvert STEUART.

No. 1582, Sept. Term, 1987.

Court of Special Appeals of Maryland.

Aug. 3, 1988.

Steven M. Pavsner (Caren Z. Schindel and Joseph, Greenwald & Laake, P.A. on the brief), Greenbelt, for appellant.

Ronald G. Dawson (Smith, Somerville & Case on the brief), Annapolis, for appellee.

Argued before MOYLAN, BISHOP and POLLITT, JJ.

POLLITT, Judge.

This convoluted conglomeration of claims compels a certain circumlocution in its consideration. Our chore is complicated by counsel's non-compliance with Rules 8-501(h) and (i) (formerly Rule 1028 a) concerning the Table of Contents and Format of the Record Extract. ¹

Appellant and cross appellee, Janice L. Roebuck, and others, were sued in the Circuit Court for Prince George's County as guarantors of the debts of Express Liquors, Inc., a bankrupt corporation, by six liquor suppliers of that corporation. Alleging that any liability on her part to those creditors was caused by the conduct of her attorney, R Calvert Steuart, appellee and cross appellant, Ms. Roebuck filed a third party claim against Steuart, demanding indemnification from Steuart for any judgment entered against her in favor of those creditors. Rule 2-332(a). She added two other counts to her "Third Party Complaint," alleging "legal malpractice" and "breach of fiduciary duty" against Steuart. In those counts, she sought compensatory and exemplary damages from Steuart based on (1) a judgment for $60,238.85 entered against her in the Bankruptcy Court for the District of Maryland in favor of Suburban Bank, another creditor of Express Liquors, Inc., and (2) the loss of $22,379.36, the proceeds from the sale of her home, which she had paid toward the debts of Express Liquors. Both of these losses she attributed to improper action or inaction by Steuart as her attorney.

Prior to trial, judgment was entered against Roebuck in favor of the liquor suppliers. Those claims are no longer a part of the case. At the conclusion of Roebuck's case, the circuit court granted Steuart's motion for judgment as to Roebuck's indemnity claim on those judgments. The trial court also ruled that there was insufficient evidence to permit jury consideration of the issues of punitive damages, attorney's fees or mental anguish.

The jury found, on special issues submitted, that Steuart's malpractice caused Roebuck to lose the proceeds from the sale of her home and to suffer a judgment in favor of Suburban Bank in the amount of $60,000. The court entered judgment in favor of Roebuck against Steuart for $22,379.36, and further ordered that "Janice L. Roebuck may hereafter have judgment against R. Calvert Steuart for the amount (not to exceed Sixty Thousand Dollars ($60,000.00)) which she proves she has paid to Suburban Bank on its judgment against her, including interest on said judgment." Both sides appealed.

On her appeal, Roebuck raises the following issues:

I. Did the trial court err in deciding that the verdict of $60,000 in favor of Roebuck as damages for the adverse Suburban Bank judgment should be contingent upon her payment of that judgment?

II. Did the trial court err in deciding that Roebuck did not prove that she would have terminated her revocable liquor supplier guarantees if so advised, or what her liability would have been had she terminated the guarantees, and in therefore precluding the jury from considering the adverse liquor suppliers' judgments as an element of Roebuck's compensatory damage?

III. Did the trial court err in deciding that the facts showing attorney Steuart's reckless disregard for his client's legal rights were insufficient as a matter of law to support punitive damages, attorney's fees or recovery for mental anguish?

On his cross appeal, Steuart questions:

A. Whether Roebuck's claim for indemnity on the Suburban Bank judgment was barred by the doctrine of res judicata?

B. Whether Roebuck's claims as to the Suburban Bank judgment and the loss of the proceeds from the sale of her home were proper "Third Party" claims?

C. Whether the trial court should have granted Steuart's motion for judgment because:

1. There was no evidence that Roebuck's investment of the $22,379.36 was in reliance on Steuart's statements or omissions?

2. There was no evidence that Steuart's conduct was the proximate cause of the Suburban Bank judgment against Roebuck?

We shall reverse the trial court's order making the $60,000 judgment contingent upon Roebuck's payment of Suburban's judgment against her, and affirm the judgment as to the remaining issues.

Facts

From April of 1973 until May of 1983 appellant, Janice L. Roebuck, was married to John Oliverio. In May of 1976 Oliverio and Mr. and Mrs. Howard Harrison purchased Express Liquors, Inc., becoming its sole stockholders. Appellee, R. Calvert Steuart, attorney, represented Oliverio in the purchase of the business, and thereafter represented Express Liquors, Inc., Oliverio and Roebuck in various corporate and personal legal matters. Roebuck testified that Steuart prepared her will, advised her in a child custody matter, represented her when she was personally sued, and generally fulfilled the role of her "personal attorney." Although she was neither an officer nor a stockholder of Express, Roebuck joined with Oliverio and the Harrisons in the execution of guarantees to wholesale liquor suppliers to induce those suppliers to extend credit for inventory delivered to Express. Steuart was aware of the guarantees, which were revocable upon written notice.

While the specific chronology is not altogether clear, it appears that sometime in 1977 or 1978 the Harrisons' stock was redeemed by Express. Shortly thereafter, Steuart purchased 45% of the stock and later acquired the remaining 5%. Thus, by early 1979, Oliverio and Steuart each was the owner of 50% of Express. Sometime during this period, Suburban Bank made loans to Express totaling $60,000. These loans were personally guaranteed by Oliverio, Roebuck, and Mr. and Mrs. Steuart.

Sometime in late 1980, Oliverio began to "float" or "kite" checks between two Express Liquors bank accounts at First American Bank and Equitable Bank. There was evidence from which the jury could find that this scheme was with the knowledge and consent of Steuart, who at that time was an owner of Express and was performing bookkeeping functions for the company. Oliverio testified that checks were written by him based on Steuart's promises to "get the money" in time to cover them, which Steuart did not "get." Roebuck had no knowledge of the financial situation at that time.

On 30 July 1981, First American Bank notified Oliverio that it was aware of his check kiting scheme and that Express was overdrawn by $87,000. Oliverio discussed the matter with Steuart, who "explained" that the "kite" was actually only one-half that amount because it was between two banks. Oliverio then informed Roebuck of the situation.

Oliverio and Roebuck were to settle for the sale of their jointly owned home on the next day, and expected to receive $44,000 from that settlement. Oliverio asked Roebuck to agree to the application of the proceeds from that sale to save the business and to save him from going to prison. Roebuck tentatively agreed, with certain conditions, one of which was that her contribution of the proceeds of that sale would accomplish the intended result. Her subsequent discussions with Steuart, and his advice to her on that subject, are more fully set forth in the discussion of part C(1) of Steuart's cross appeal, infra. Suffice it to say at this point that Steuart told Roebuck he was aware of the check kiting, that he had suggested it, and that $35,000 would "take care of the problem."

On 7 August 1981, Equitable Bank, which had discovered overdrafts in the Express Liquors account in the amount of $167,958.60, filed suit and attached the assets of Express Liquors, causing the business to be closed. Under the local liquor laws, a closing for more than ten days would result in a forfeiture of the liquor license. The parties agreed to an extension and began negotiations toward settlement of the debt. Equitable agreed to consider releasing the attachment to permit a sale of Express and to consider financing part of the purchase by an acceptable owner. Steuart located a purchaser, Jin-Mar, Inc. et al., at a price of $256,537.12. A contract was signed on or about 3 September 1981 between the buyers and Steuart and Oliverio as sellers. Available proceeds of the sale were to be applied to selected debts. One of the creditors to be satisfied was Suburban Bank, which held outstanding notes of Express, guaranteed by Steuart, Oliverio and Roebuck, approximating $60,000. Suburban agreed to accept $20,000 cash and a note from the buyers for $40,238.85. This new note was guaranteed by Steuart but not by Roebuck.

In December of 1981, Express Liquors, Inc., was placed in involuntary bankruptcy. The trustee in the bankruptcy case instituted proceedings in the bankruptcy court to avoid the sale and to recover the proceeds paid to Equitable and Suburban. The bankruptcy court, among other things, held that the trustee could recover from Suburban the $20,000 cash and the note for $40,238.85 as avoidable preferences. That court held the note from Jin-Mar, Inc., guaranteed by Steuart, was void and, therefore, the original notes, guaranteed by Steuart, Oliverio and Roebuck, were reinstated. The court further found that Steuart's guarantee of the new note was a novation, releasing him from the original guaranty, but entered judgment in favor of Suburban against Roebuck in the amount of $60,238.85, based on her guaranty of the original notes. No part of this judgment has been paid.

Further facts will be supplied as necessary in the discussion of the various issues.

I

The trial court erred in making Roebuck's $60,000 judgment against Steuart contingent upon her payment of the...