Source: http://marylandcourts.blogspot.com/2007_05_01_archive.html
Timestamp: 2013-12-10 09:30:13
Document Index: 666218362

Matched Legal Cases: ['§ 1396', '§ 413', '§ 2', '§ 1001', '§ 14', '§ 6672', '§ 6672', '§ 6672', '§ 6672', '§ 6672', '§ 1325', '§ 1325', '§ 1325']

Maryland Courts Watcher: May 2007
Filed May 3, 2007--Opinion by Judge Lawrence F. Rodowsky.This is a judicial review of an administrative decision involving the disallowance by Maryland Department of Health and Mental Hygiene ("DHMH") of claims by two federally qualified health clinics ("FQHCs" or collectively, "Clinics") for reimbursement of costs under the Maryland Medical Assistance Program ("Medicaid" or the "Program"). The disallowance was based upon DHMH's application of its regulation establishing a monetary cap on a class of costs included in the Clinics' requests for reimbursement. The Clinics contend that the Maryland regulation does not comply with governing federal law. States that elect to participate in Medicaid are required to submit to the U.S. Department of Health and Human Services a plan detailing how the State will expend federal funds. Entitled "State plans for medical assistance," 42 U.S.C. § 1396a (1994), provides in relevant part, . . . for payment for services . . . under the plan 100 percent of costs which are reasonable and related to the cost of furnishing such services or based on such other tests of reasonableness, as the Secretary prescribes in regulations . . . or, in the case of services to which those regulations do not apply, on the same methodology used under section 13951(a)(e)."Reasonable, and necessary and proper, costs were defined in 42 CFR § 413.9 (1996), as follows:(1) Reasonable cost of any service must be determined in accordance with regulations establishing the method or methods to be used, and the items to be included. The regulations in this part take into account both direct and indirect costs of providers of services. The objective is that under the methods of determining costs, the costs with respect to individuals covered by the program will not be borne by individuals not so covered, and the costs with respect to individuals not so covered will not be borne by the program. These regulations also provide for the making of suitable retroactive adjustments after the provider has submitted fiscal and statistical reports. The retroactive adjustment will represent the difference between the amount received by the provider during the year for covered services from both Medicare and the beneficiaries and the amount determined in accordance with an accepted method of cost apportionment to be the actual cost of services furnished to beneficiaries during the year.(2) Necessary and proper costs are costs that are appropriate and helpful in developing and maintaining the operation of patient care facilities and activities. They are usually costs that are common and accepted occurrences in the field of the provider's activity.As part of its program, Maryland adopted regulations for FQHCs, entitled "Reimbursement Principles for FQHC Services Rendered Before and Including June 30, 1999," currently codified in COMAR 10.09.08.05.C. As relevant to the issue, the regulation provides that "federally qualified health centers shall be paid 100 percent of their reasonable allowable costs, subject to the limitations contained in § C(4)-(7) of this regulation, that are related to the provisions of covered services." Reimbursement of FQHCs is on a per visit basis. Reimbursement during a fiscal year is based on an interim per visit rate, with a final per visit rate determined for the entire year. The regulation further requires that an FQHC's cost be divided into four categories, called "centers." These are general service costs, primary care services cost, dental services costs and non-reimbursable costs. The instant matter concerns the general service cost center, for which the parties have adopted the term "administrative costs" as a shorthand reference. The Administrative Law Judge ("ALJ") made findings of fact in each case, placing considerable emphasis on the discussion of reasonable costs in the Medicare Provider Reimbursement Manual, Part I, specifically:It is the intent of the program that providers will be reimbursed for the actual costs if providing high quality care, regardless of how widely they may vary from provider to provider except where a particular institution's costs are found to be substantially out of line with other institutions in the same area which are similar in size, scope of services, utilization and other relevant factors. Reasonable costs do not exceed what a prudent and cost-conscious buyer pays for a given item or serviceApplying the above-quoted standards, the ALJ found that the Clinics had shown the costs were reasonable because the Clinics were subject to both internal and external checks on its fiscal practices, and there was no evidence of self-dealing or of any incentive to pay excessive salaries or rent.DHMH excepted to the ALJ's recommended order that the disputed claim for reimbursement be paid. The Secretary of DHMH rejected the ALJ's conclusion , expressly adopting the findings of fact that the ALJ had made on the cross motions for summary decision but declining to adopt the ALJ's reasoning and legal conclusions. With respect to the DHMH exception that assumed the ALJ had concluded the cap was not reasonable on its face, the Secretary ruled that there was ample evidence supporting the reasonableness of the cap, pointing as evidence to the public process in the adoption of the cap, federal approval of the program, and the utilization of relatively comparable caps in five other states. In addition, the Secretary pointed to a cap, utilized in the program, on the reimbursable costs of managed care organizations.The Clinics appealed from the Secretary to the Board of Review of DHMH (the "Board"). After review and oral argument, the Board affirmed the Secretary without further explanation. The Board's action constituted the final agency decision for purposes of judicial review under the Administrative Procedures Act. HG § 2-207(f)(2).On petition for judicial review in the Circuit Court for Montgomery County, the Clinics advance the following arguments: I. The circuit court erred in applying a substantial evidence test.II. The Secretary erred in not accepting the ALJ's conclusions of law after accepting the ALJ's findings of fact.III. DHMH never examined the limits at issue to determine whether they unlawfully curtailed the health centers' reasonable costs.Is the cap invalid under all circumstances? The Clinics contended that Maryland could not cap administrative expenses at a fixed percentage of total allowable costs unless it first had undertaken a study demonstrating that administrative costs above the chosen percentage are always unreasonable. The Court found that the cap was adopted in accordance with the Maryland Administrative Procedure Act and that it was approved by HCFA as complying with federal law. Consequently, the cap is presumed valid, and the burden rests with the Clinics to demonstrate its invalidity. In Maryland, the test for determining the validity of the adoption of a regulation is whether it contradicts the language or purpose of the statute authorizing the regulation. The Court held that the federal requirement for state reimbursement of 100% of an FQHC’s reasonable cost is satisfied by the state system that affords the FQHC the opportunity to demonstrate that its costs, albeit in excess of a cap, are reasonable. To answer the Clinics’ second question, whether the cap was validly applied in the instant matter, the Court found that the Secretary was not restrained by the recommended conclusion drawn by the ALJ; rather, the Secretary was free to make the determinative inference that the excess costs were unreasonable if that inference was supported by substantial evidence.In addressing the Clinics’ first argument, the Court relied on the issue of whether the Secretary’s decision was supported by substantial evidence. Consequently, Argument 1 missed the mark. The Secretary did not act arbitrarily or capriciously in declining to draw the inference that the Clinics’ costs were reasonable. Nor did the Secretary act arbitrarily in concluding that the Clinics’ primary evidence, due to the absence of specific comparisons to administrative costs of other FQHCs, did not persuade him that the Clinics’ administrative costs, in excess of the cap, were reasonable.Based on the foregoing reasoning, the Court found it unnecessary to decide if the cap is a valid conclusive presumption.Judgment was affirmed.The full opinion is available in PDF
Judge Rodowsky Lawrence,
Signed May 2, 2007--Memorandum Opinion by Judge Andre M. Davis.Ronald Williams ("Williams") brought this action against defendants pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 USC § 1001, et seq., to challenege the denial of pension benefits.The fund's existence predates the enactment of ERISA. Administration and management of the fund is by contract with specialists, with the Board of Trustees setting policies and procedures. The outcome of this case hinges on the proper interpretation and application of one of the Trustees' amendments to the plan. Defendants argue that although contributions were made on behalf of Williams over many years, he failed to vest or otherwise accrue entitlement to those benefits. Williams argues that he is eligible for a pension, albeit a reduced pension, under a 1972 pre-ERISA version of the pension plan. Under the 1972 version, a participant's entitlement to a pension would vest after he or she earned seven years of credit and at least a partial benefit was payable when he or she reached retirement age. If a participant failed to work sufficient hours over a specified period to earn the requisite vesting credit, the participant would not vest and all potential benefits would be subject to forfeiture based on the relevant "break-in-service" rules.Consequent to an amendment in the vesting schedule, the graduated vesting schedule maintained by the fund in 1972 was rescinded; instead, vesting occurred only after ten years of service. The issue then is whether when the trustees changed the vesting schedule to ten years, they did so before Williams had accrued sufficient vesting credit to gain an entitlement to benefits even under the pre-ERISA pension plan and whether Williams received proper notice of that amendment.The gravamen of this dispute, therefore, is two-fold: (1) whether the amendment to the vesting schedule became effective on January 1, 1976 or only later, in November 1977, when the amendment to the vesting schedule was embodied in a formal printed restatement of the plan; and (2) whether Williams received notice of the fund's amendment to the vesting schedule in time for him to adjust his work plans so as to secure a pension benefit.The Court rejected Williams' arguments relating to any potential benefits accrued before the amendment and found the defendants provided proper and sufficient notice of the amendment. Held that the Williams' motion for summary judgment denied and defendant's motion granted.The full opinion is available in PDF.
Filed May 11, 2007--Opinion by Judge Irma Raker, Dissent by Chief Judge Robert M. Bell.Stewart was indicted in a multi-count indictment alleging child abuse, second degree sexual offense, third degree sexual offense, and fourth degree sexual offense. The court sentenced him to a term of incarceration of twenty years on the child abuse offense and merged the sexual offenses into the child abuse conviction for sentencing purposes. The single issue in this appeal involves the failure of the circuit court to ask certain questions to the venire panel during voir dire that were requested by defense counsel.Defense counsel submitted two voir dire documents -- "Defendant's Requested Voir Dire," containing eighteen questions, and "Amended Defendant's Requested Voir Dire," containing fifty-two questions. Defense counsel withdrew the initial voir dire request and substituted the amended version. It is the failure of the trial court to ask the questions on the amended voir dire request that is the subject of this appeal.In Maryland, the sole purpose of voir dire is to ensure a fair and impartial jury by determining the existence of cause for disqualification and not, as in many other states, to include the intelligent exercise of preemptory challenges. The scope of voir dire and the form of questions propounded rests firmly within the discretion of the trial judge, as it is the responsibility of the trial judge to conduct an adequate voir dire to eliminate from the venire panel prospective jurors who will be unable to perform their duty fairly and impartially and to uncover bias and prejudice. In reviewing the court's exercise of discretion during voir dire, the standard is whether the questions posed and the procedures employed created a reasonable assurance that prejudice would be discovered if present. Further, on review of voir dire, the appellate court looks at the record as a whole to determine whether the matter has been fairly covered. As to the scope of inquiry and the decision as to whether to permit a particular question, the trial judge is not required, with some limited exceptions, to ask specific questions requested by trial counsel. Questions which are not directed at a specific ground for disqualification, which are merely fishing for information to assist in the exercise of preemptory challegnes, which probe the prospective juror's knowledge of the law, ask a juror to make a specific commitment, or address sentencing considerations are not proper in voir dire.Here, the record is replete with indications that the court fulfilled its duty to empanel an impartial jury. Therefore, the Court held the trial court did not abuse its discretion in declining to propount appellant's requested voir dire.The full opinion is available in PDF.
Opinion Issued May 17, 2007--Opinion by Judge Roger W. Titus. (Approved for publication.)The first paragraph of the Court's opinion establishes its theme:This case exemplifies the old adage that "you can lead a horse to water, but you can't make him drink." The Plaintiff is the horse of this story, and the water that she was led to, but would not drink, was effective service of process. In spite of repeated opportunities provided to the Plaintiff to effect valid service of process, she simply would not drink the water. However, valid service of process is essential to the concept of due process, and when it has not been effected, the due processes of the law cannot even begin. The details of this sad story follow.The plaintiff first attempted to serve process on the corporation by serving an individual who was not an officer of the corporation. The name of the defendant as set forth in the complaint was also incorrect. Furthermore, the plaintiff used certified mail to make this first attempt, but failed to check the box on the return receipt requesting restricted delivery.The defendant responded with a motion to dismiss under Fed.R.Civ.Proc. 12(b)(5) for failure to effect proper service. Attached to the motion was a printout from the Maryland State Department of Assessments and Taxation showing the correct name of the defendant and the name and address of the resident agent.After the initial motion to dismiss was filed, the plaintiff made two additional attempts to effect service, one by certified mail to the same individual that the first attempt was made to, but at a different address, and another via private process server to the residence of a vice-president of the defendant. This time, the certified mail was signed for by an individual who was not authorized to accept service and the delivery by private process server was made only to the residence of the vice-president, not upon her personally. Oddly, the plaintiff's counsel again asserted that, after checking with appropriate authorities in Maryland and the District of Columbia, he could not identify a resident agent for the defendant even though this information had been provided in the motion to dismiss previously filed by the defendant.After reviewing both the federal rules and the pertinent Maryland rules regarding service of process, the Court granted the defendant's motion. It allowed the plaintiff until May 30, 2007, to properly effect service and, sua sponte, amended the complaint to reflect the correct name of the defendant. In its opinion, the Court quoted at length the late Chief Judge of the Court of Special Appeals of Maryland from the opinion in Colonial Carpets, Inc. v. Carpet Fair, Inc., 36 Md. App. 583, 374 A.2d 419, 420-21 (1977):[P]rocedural rules are "the lawyer's compass and serve to help him steer through the narrows of pleading, pass the rocks of default, around the shoals of limitation, and safely into the harbor of judgment. It is a reckless sailor, indeed, who puts to sea without a compass, and it is a reckless lawyer who fails to familiarize himself with" the applicable procedural rules before filing and trying a case. [Chief Judge Gilbert] went on to lament that notwithstanding the importuning of appellate courts that the "rules of procedure are not to be considered as mere guides or Heloise's helpful hints to the practice of law, but rather precise rubrics that are to be read and followed, admonitions go unheeded by some practitioners. When that occurs, we are left to wonder whether we are engaged in an endless struggle, just as waves beat upon the shore, fall back and then repeat over and over ad infinitum."Id. at 584-85, 374 A.2d at 421.A copy of the opinion is available in PDF, as is a copy of the order.
Judge Titus Roger W.,
maryland civil procedure,
Filed May 11, 2007--Opinion by Judge Lynne Battaglia.The Baltimore Teachers Union ("the Union") and the Baltimore City Board of School Commissioners ("City Board") sought review of the Circuit Court for Baltimore City's decision that the Maryland State Board of Education was able to grant waivers to the provisions of Section 9-108(a) of the Education Article dealing with public charter schools, and that the State Board had original jurisdiction over Section 9-106(b) waiver applications. Conversely, Patterson Park Public Charter School, Inc. and the Midtown Academy, Inc. sought review of the Circuit Court's decision to reverse the grant of Section 9-108(b) waivers by the State Board on grounds that the Unions were denied the opportunity to participate in the waiver application process, and also of the Circuit Court's decision that the State Board appropriately denied Midtown Academy's application for waivers of Section 4-103(a) and 6-201. Before any proceedings in the intermediate appellate court, the Court of Appeals, on its own initiative, issued a writ of certiorari. The Court determined that, based upon the clear language of Section 9-106 of the Education Article, the State Board may only grant waivers of provisions applying to all public schools, and not those specific to just public charter schools, and therefore Title 9's provisions were not subject to waiver under Section 9-106(b). The Court further concluded that, because local boards of education have no authority to waive State laws and regulations, they had no jurisdiction over Section 9-106(b) waiver applications implicating State laws or regulations over which the State Board has original jurisdiction.The Court also held that the Unions, as the exclusive representative of Baltimore City school employees, had a statutory and fiduciary duty to represent the Baltimore City public school employees in the waiver proceedings, and thus the State Board erred by not giving the Unions proper notice or opportunity to be heard in the waiver proceedings. The Court further concluded that the State Board's decision denying waivers requested by Midtown Academy under Sections 4-103(a) and 6-201 was within its authority and was not inconsistent with law. The Court, therefore, vacated the Circuit Court's ruling and remanded the case for further proceedings before the State Board of Education consistent with its holding.The full opinion is available in PDF.
Filed May 8, 2007. Opinion by Judge Richard D. Bennett.This case was an appeal from the Order of United States Bankruptcy Judge Robert A. Gordon denying a Motion to Reconsider filed by Appellant-Debtors John S. Breen and Theresa J. Breen ("Appellants").The Appellants filed a chapter 7 bankruptcy on May 17, 2002. On August 28, 2002, an Order of Discharge was entered and the case was closed on September 15, 2005. In 2003, before the bankruptcy case was closed, Appellant John Breen filed a complaint against his former employer in the Circuit Court for Baltimore County (the "State Court Litigation") alleging numerous causes of action based in large part from the allegation that Mr. Breen was not paid the full value of commissions earned while working as a finance manager for a car dealership.In response to a motion to dismiss by the defendants in the State Court Litigation, Appellants filed a motion to reopen their bankruptcy case, which was granted "for the limited purpose of permitting the Debtor(s) to determine the estate’s interest in the state court action..." The Bankruptcy Court also ordered that a trustee be appointed in the reopened case (the "Trustee").On May 31, 2006, the Trustee sought the Bankruptcy Court's approval of a settlement that he reached with the defendants in the State Court Litigation. The Appellants objected to the proposed settlement on the grounds that "'[t]he Debtor, John Breen, has an individual interest, separate and distinct from the estate, in the State Litigation, to which the Trustee’s authority does not extend.'"The Bankruptcy Court found "'[T]hat (a) but for the amount of $500, the causes of action set forth in the Complaint and Amended Complaint pending in the Circuit Court of Baltimore County, ... are property of the bankruptcy estate, (b) the Trustee has good and sufficient cause for settling the State Litigation ... and (c) John Breen (the "Debtor") is entitled to an exemption in the amount of $5,028.51.'"The Appellants appealed two issues: "(a) Whether the Bankruptcy Court erred in exercising jurisdiction over debtor’s post-petition wages and other state law claims and by extending the Trustee's authority to administer non-estate property?;" and "(b) Whether the Bankruptcy court erred in concluding that claims based upon post-petition events, during debtor's post-petition employment, and giving rise to post-petition damages, are property of the Chapter 7 bankruptcy estate?"In rejecting the Appellants' arguments, the Court found that (1) "the Bankruptcy Court possessed 'related to' jurisdiction over the State Court Litigation;" (2) "the Trustee possessed authority to pursue the settlement of the" State Court Litigation; (3) "the Bankruptcy Court provided the Appellants with a full and fair opportunity to present evidence establishing the existence and value of post-petition claims before approving the proposed settlement;" and (4) the Bankruptcy Court's factual findings were not clearly erroneous.Orders of the United States Bankruptcy Judge Robert A. Gordon are AFFIRMED.The full opinion is available in PDF format.
Filed: May 10, 2007—Opinion by Judge Irma RakerHildebrant sued Educational Service ("ETS") for malicious defamation and breach of contract after ETS concluded that Hildebrant had not followed mandatory testing procedures and canceled her test scores. According to Hildebrant, ETS breached its contract with her by failing to “"fairly and accurately report her leadership assessment scores" to the Montgomery County Board of Education. The Court of Special Appeals had earlier reversed summary judgment on the breach of contract claim and remanded for further proceedings based on an affidavit by Hildebrant denying that she failed to follow testing procedures.The Court of Appeals disagreed on the ground that an affidavit that presents a general, conclusory denial of misconduct is not sufficient to establish a genuine dispute of material fact as to whether a testing proctor acted in bad faith. The Court ruled that the trial judge was correct in granting summary judgment for ETS where Hildebrant acknowledged her acceptance of the contract with ETS and did not create a genuine issue of material fact as to whether Baker had acted in bad faith. The decision by the CSA was reversed with instructions to remand.The full opinion is available in PDF.
Layton v. Howard County Board of Appeals (Ct. of Appeals)
Filed May 9, 2007. Opinion by Judge Dale R. Cathell. Dissenting opinion by Judge Alan M. Wilner (retired, specially assigned).From the official headnote:Reaffirming the Yorkdale Corporation v. Powell, 237 Md. 121, 205 A.2d 269 (1964) rule that a change in statutory law that takes place during the course of the litigation of a land use or zoning issue shall be retrospectively applied by appellate courts whether it operates to deny, i.e., moot an application (provided that it does not affect the vested rights of a party), or applies in an opposite context.The owners and operators of a wildlife and primate sanctuary ("Layton") had sought a special exception from the Howard County Board of Appeals (the "Board") to bring their operation into compliance with that county's zoning ordinances, but were denied permission to operate as a primate sanctuary. Prior to the Circuit Court's hearing of Layton's appeal of the Board's decision, the pertinent part of the Howard County Code was amended, changing the definition upon which the Board had relied in denying the special exception. Nonetheless, the Circuit Court affirmed the Board's decision, ruling in part that the change was not to be given retroactive effect. The Court of Special Appeals, in a reported decision, affirmed.On appeal, the Court noted that the general rule is that statutes, and substantive statutory changes, are to be given only prospective, and not retrospective, effect, unless otherwise indicated by the legislature. One relevant exception to the general rule was stated in the Yorkdale case, where retrospective application is given to changes to statutes that impact land use issues made during the course of litigation in land use and zoning cases, unless vested or accrued substantive rights would be disturbed or the legislature had shown a contrary intent. Reviewing the cases since Yorkdale, the Court concluded that the rule set forth in Yorkdale was still good law, and had not been overturned, in the Riverdale case, the CSA's Holland case, or otherwise.In dissent, Judge Wilner argued that, though the Court had treated zoning cases differently in the past, there was "no practical or jurisprudential basis for such a distinction, and the Court offers none." Absent legislative expression that a law is to be applied retrospectively, Judge Wilner argued for a consistent rule that prospective application would be given to substantive changes, and retrospective application only for procedural changes, and overruling the exception created in Yorkdale and its progeny. The majority and dissenting opinions are available in PDF format.
Judge Cathell Dale,
Attorney Grievance Commission v. Goff (Ct. of Appeals)
Filed May 8, 2007. Opinion by Chief Judge Robert M. Bell.Respondent ("Goff") was charged with violating Rules 1.1, Competence, 1.3, Diligence, 1.15, Safekeeping Property, 5.3, Responsibilities Regarding Non-lawyer Assistants, 8.1, Bar Admission and Disciplinary Matters, and 8.4, Misconduct, and the petitioner (the "AGC") recommended an indefinite suspension, while Goff suggested no sanction was needed, or at the most a reprimand or 30 day suspension. After considering the report of the hearings judge, the Court agreed with the AGC, and ordered the indefinite suspension of Goff, with the right to apply for readmission after 60 days.As an adjunct to a client's request to handle the sale of certain parcels of land owned by various members of the client's family, Goff agreed to open three estates for deceased family members who held record title to several parcels. After the sale, most of the proceeds were distributed without controversy, but the portion of proceeds held on behalf of one estate were not timely distributed, and Goff was not responsive to inquiries by family members and their counsel. Some time after a complaint had been filed with bar counsel, Goff distributed the remaining proceeds.Goff was incompletely and less than timely responsive to bar counsel's repeated requests, and the subsequent investigation revealed many shortcomings in Goff's records and escrow account administration. When several overdraft notices were subsequently received by bar counsel, the investigation was widened to include several of Goff's other escrow accounts, and more errors and inappropriate practices were revealed. Computer crashes, and the failure to make timely and adequate backups, had added to the problem by destroying blocks of escrow account records. Throughout, Goff exhibited behavior that the hearing judge characterized as "lackadasical" and "unreliable", leading to the conclusion that Goff's representation was "incompetent".The Court had little trouble finding no merit in Goff's multiple exceptions, including his claim that, because most of his professional activities were as a title insurance agent, he was exempt from liability under the Code of Professional Conduct. On that point, the Court found the conduct here was clearly legal representation, easily distinguishable from prior cases where the conduct in question was solely as a title agent.By contrast, the Court upheld the AGC's exceptions, correcting a "technical" error in referring to the current rather than the then-existing statute, and finding an additional violation not confirmed by the hearing judge below. The opinion is available in PDF format.
Lorraine v. Markel American Ins. Co. (U.S.D.C. MD)
Filed May 4, 2007--Opinion by Judge Paul GrimmIn an action brought to enforce a private arbitrator’s award for damage to a yacht, the court determined that the motion by the boat owners was properly considered as a motion to modify the award under the Federal Arbitration Act, while the motion by the insurance company sought to enforce the award rather than have it increased as requested by the boat owners. The court denied both motions without prejudice because counsel for both sides had failed to establish the authenticity of their exhibits, to resolve potential hearsay issues, to comply with the original writing rule, and to demonstrate the absence of unfair prejudice to the extent that their exhibits were inadmissible.In its 101 page opinion, the court dedicated at least 90 pages to providing extensive and detailed analysis and guidance on the interrelated evidentiary issues governing the admissibility of electronically stored evidence (ESI), including: analysis under Rule 104, relevance under Rule 401, authentication as required by Rule 901(a), effect of hearsay as defined by Rule 801 and any applicable exceptions, consideration of the form of the ESI being offered under the original writing rule and the admissibility of any secondary evidence to prove its content, and the probative value of the ESI considering potential unfair prejudice or one of the other factors identified by Rule 403.The full opinion is available in PDF.
Johns Hopkins Hospital v. Correia (Ct. of Special Appeals)
Filed April 30, 2007. Opinion by Judge James P. Salmon.Issue: Does the owner-operator of an elevator owe its passengers the same "highest degree of care" owed by common carrier to passengers?Held: Yes. The jury's verdict is affirmed. The 1906 precedent set in Belvedere Building Co. v. Bryan still stands: the owner-operator of an elevator owes its passengers the same duty as a common carrier - the highest degree of care practicable under the circumstances. Facts: The plaintiff was injured on an elevator owned and operated by Johns Hopkins when it came to a sudden stop because of a mechanical defect. At trial, the plaintiff introduced evidence that showed that, in the six months prior to the accident, Johns Hopkins had received thirty-two complaints about the elevator. At the conclusion of the case, the trial court instructed the jury that the owner of elevators "is bound to exercise the highest degree of care and skill and diligence . . . practicable under the circumstances to guard against injury toindividuals riding on those elevators." The trial court based its instruction upon case law that was decided over 100 years before, affirmed in the 1930's, and not addressed since.The jury returned a verdict for the plaintiff, and Johns Hopkins appealed. Johns Hopkins contended that the trial court's instruction was erroneous. Johns Hopkins argued that the owner of an elevator owes a passenger the same duty that a property owner owes an invitee, i.e., the duty to use reasonable care to see that the portion of the property that the invitee is expected to use is safe. Not the heightened duty of a common carrier. The full opinion is available in PDF.
Filed April 27, 2007--Opinion by Judge Deborah S. Eyler.In its murder prosecution against Rush, the State has appealed a pre-trial ruling suppressing from evidence inculpatory statements Rush gave to the police.The issues before the court at the suppression hearing were whether Rush's statements were obtained in violation of Miranda and whether her statements had been obtained voluntarily. The circuit court ruled that Rush's statements had been obtained in violation of Miranda and would be suppressed on that ground. Further, the court made plain that it was granting the suppression motion on the Miranda violation ground only and was not granting it on the alternative involuntariness ground.The issue stems from a murder investigation for which Rush was brought in to the police station and questioned. Subsequent to some light background conversation on the investigation, the detective proceeded to advise Rush of her rights using a standard Advice of Rights Form ("Form"), to which he made a handwritten alteration. The form with the alteration stated, in relevant part:If you want a lawyer, but cannot afford one, a lawyer will be provided to you @ some time at no cost.The bolded portion is the handwritten addition made by the detective. Rush read the form and, when the detective asked Rush whether it all made sense, she replied in the affirmative. He then asked several questions to verify that she understood the stated advisements and had her initial next to the four answers on the form, confirming:that she understood the rights that had been read to her;that she wanted to make a statement at that time without a lawyer;that she had not been offered any kind of reward or benefit nor had she been threatened in any way in order to get her to make a statement; andthat she was not under the influence of alcohol or drugs.Prior to Rush signing the form, she asked " . . . do I need a lawyer or somethin' or is it, am I just in here for . . . questioning?" The detective responded, ". . . if you decide at that, any point in time during our questioning that you feel that that'd be the best for you, then you let me know that. Okay?" Ultimately, Rush signed and noted her level of education below her signature.At the suppression hearing, the detective explained that handwriting the words "@ some time" is his usual practice because "[a lawyer] is not going to magically appear. It's going to take a little time for a lawyer to be provided to her for a representation. . ." Rush testified that she did not remember being advised of her rights but did remember being told that a lawyer would be appointed for her "after [she] would go to jail." She then acknowledged, however, that that was said to her only after the interrogation had concluded.On review, the Court assessed the advisements given to Rush in their totality. By means of Advisement 2, "You have the right to talk to a lawyer before you are asked any questions and to have a lawyer with you while you are being questioned," Rush was told orally and in writing that she had the right to talk to a lawyer. She was then informed, by means of Advisement 3, also orally and in writing, that if she could not afford a lawyer, one would be provided for her at some time, at no cost. Under Eagan and Prysock, the added language did not violate Miranda because the warnings, as given, told Rush in straightforward language that she had a right to talk to a lawyer before being questioned and to have a lawyer present during questioning. Advisement 3, as altered by the words "at some time," was not inconsistent with the rights communicated in Advisement 2. Its message, stated separately from Advisement 2 because its topic was not the same, was that, if Rush decided that she wanted a lawyer, i.e., to exercise the right to a lawyer communicated in Advisement 2, but she did not have the resources to pay for a lawyer, she would be given a lawyer at no cost and at some time. Read objectively, this message did not tell Rush that, if she indeed asked for a lawyer right then, she nevertheless would have to undergo questioning without a lawyer until her lawyer arrived "at some time."Rush argues that the detective actually asked her a few questions before advising her of her rights and, by doing so, created the impression that the interrogation had begun and the advice-of-rights had no bearing on Rush's ability to stop the interrogation. The Court reasoned that the questions posed prior to advising Rush of her rights were meant to orient her and to determine whether she had any first-hand familiarity with the Miranda warnings before he gave them to her. Further, the remarks made by Rush while the Miranda warnings were being given, and subsequently during the interview, evidence no confusion about her right to counsel and show that she was willing to speak to the police at the outset of the interview and as it progressed. Rush affirmatively stated she was willing to speak with police without a lawyer; and in doing so, she said nothing to suggest that she thought she had no choice in the matter. Rush even inquired whether she "needed" a lawyer, which prompted the detective to advise her that it was her decision and that she could make that decision at any time and questioning would cease.Based on the stated reasoning, this Court held the circuit court erred in holding that Rush was not advised of her rights in accordance with Miranda and in granting her motion to suppress her statements from evidence on that ground.With this holding, ordinarily the Court's inquiry would end. However, Rush asked they address the alternative voluntariness and argues that her statements were induced by improper promises and threats and, therefore, were involuntary and subject to suppression even if Miranda were complied with. As opposed to the State, a criminal defendant has no right to immediately appeal a circuit court's decision not to suppress evidence and has no right to pursue a cross-appeal in a State's appeal under CJ section 12-302(c)(3). The criminal defendant, unlike the State, is not without remedy if inculpatory evidence is erroneously admitted at trial, as he may raise the error on appeal after a final judgment of conviction. The legislature created the right of immediate appeal for the State in order to equalize the opportunities the parties have in criminal cases for meaningful correction of erroneous pretrial evidentiary rulings, made on constitutional grounds. The objective was to provide a vehicle to challenge a pre-trial ruling excluding critical evidence so that, if the ruling were erroneous, the error could be corrected before jeopardy would attach. Without such a right of immediate appeal, the State has no meaningful opportunity for error correction, because under double jeopardy principles and the developed case law on verdicts of acquittal, the State cannot appeal from a final judgment in favor of the defendant. The Court reasoned, however, that as the fields have been leveled, it would amount to an enourmous waste of judicial time and resources, and contrary to policies favoring judicial economy, to delay fully ruling on the correctness of a pre-trial suppression ruling when an immediate appeal has been taken.To be voluntary, a confession must be "freely and voluntarily made at a time when [the defendant] knew and understood what he was saying." Similarly, in order to pass federal and Maryland constitutional muster, a confession must be voluntary, knowing and intelligent. The burden falls on the State to show "affirmatively that the inculpatory statement was freely and voluntarily made." Ordinarily, voluntariness is determined based on a totality of the circumstances test. When a confession is preceded or accompanied by threats or a promise of advantage, however, those factors are transcendant and decisive, and the confession will be deemed involuntary unless the State can establish that such threats or promises in no way induced the statement (the "Hillard" test). The first prong of Hillard is objective -- whether the police or State agent made a threat, promise or inducement, i.e., that is not, as a matter of routine, done for all suspects. Mere exhortations to tell the truth and appeals to a suspect's inner conscience has been held not to be improper. Further, the suspect's subjective belief that he will be advantaged in some way by confessing is irrelevant. The second prong of Hillard triggers a causation analysis to determine whether there was a nexus between the promise or inducement and the accused's confession.Rush maintains the detective made improper promises during her interrogation that caused her will to be overborne, resulting in her making incriminating statements -- he promised "to help her if she told him the truth." The essential questions to answer are: (1) whether, to a reasonable person in Rush's circumstances, any of the detective's statements urging her to tell the truth were coupled with a promise, express or implied, that there would be a special benefit in doing so; and (2) if so, whether any such improper promise caused her to make an incriminating statement. The Court found that, because the interrogation was recorded, there was no factual dispute about what was said.The Court agreed with Rush that several of the detective's comments were implied inducements in which he suggested that it would be advantageous to Rush, in terms of the charges she was facing, to speak out and reveal all she knew about the events leading up to the murder. He made two references that strongly implied a special benefit from speaking: 1) that there could be "salvation" for Rush if she told the truth, but, if not, she would remain in "major trouble"; and 2) that if Rush were to tell him "exactly what happened and why it happened," "we can resolve this and get it over with. . . ." These comments went beyond mere pleas to honesty and good conscience. Rather, they conveyed the message that a full statement would get the detective's assistance in making the first degree murder warrant go away so she would not have to "take the ride, take the charge," because the charge would be "resolved." A reasonable person in Rush's circumstances -- age 20 and having a 9th grade education - was an improper inducement. Accordingly, the Court affirms the order of the circuit court suppressing Rush's statements from evidence, in part, and vacates in part.The full opinion is available in PDF.
criminal appellate procedure,
Hillard Test,
improper examination questions,
Judge Eyler Deborah,
Cornfeld v. State Board of Physicians (Ct. of Special Appeals)
Filed May 2, 2007--Opinion by Judge Sally Adkins.The State Board of Physicians ("Board") found Cornfeld (1) violated the standard of care in his treatment of a surgical patient by leaving her under anesthesia and unattended in the operating room, and (2) engaged in unprofessional conduct in the practice of medicine by misrepresenting to both a hospital peer review investigator and the Board that improper settings on the surgical instrument he used were not made to his specifications. The Board suspended Cornfeld's license to practice medicine until he satisfied certain conditions and imposed a three year probationary period thereafter. The Circuit Court for Baltimore City affirmed the Board's order. Cornfeld appeals, raising five issues for review:Did the Board err in concluding that Dr. Cornfeld engaged in unprofessional conduct "in the practice of medicine" by making misrepresentations during hospital peer review and Board investigations?Did the Board violate section 14-401(i) of the Medical Practice Act by failing to complete its investigation within 18 months, or to explain its delay, requiring dismissal of the complaint against Cornfeld?Is the Board's conclusion that Dr. Cornfeld violated the standard of care by leaving an anesthetized patient unattended in the operating room supported by substantial evidence?Is the sanction imposed by the Board "so disproportionate as to constitute arbitrary and capricious agency action?Did the administrative law judge abuse her discretion by excluding certain evidence offered by Dr. Cornfeld?The Court held that Dr. Cornfeld's false statements to hospital peer reviewers and Board investigators constituted "professional misconduct in the practice of medicine." Finding substantial evidence to support the Board's decision, no abuse of discretion, and no error of law, the judgment was affirmed.The Medical Practice Act ("Act") identifies 40 specific bases for disciplinary action, two of which explicitly pertain to conduct committed "in the practice of medicine." Section 14-404(a)(3) permits the board to disclipline a licensee who is guilty of immoral or unprofessional conduct in the practice of medicine. Section 14-404(a)(11) authorizes discipline of a physician who "wilfully makes or files a false report or record in the practice of medicine." In addition, Section 14-404(a)(22) allows disciplinary action against a licensee who "fails to meet appropriate standards as determined by appropriate peer review for the delivery of quality medical and surgical care performed in a hospital."Prior to a gynecological procedure in October 1999, Cornfeld instructed the overseeing nurse ("Dickey") to change the settings of the surgical machine ("Bovie") to his preferred settings indicated on a card he had on file. During the procedure, he burned the patient twice and repaired the lacerations with two large Vicryl stitches. Proper notifications of the incident by Dickey ultimately led to another surgeon's ("Vincent") review and correction of Cornfeld's stitching. Upon Dickey's notification to Cornfeld that another surgeon would be conducting such review and that the patient was to remain unconscious until the review, Cornfeld replied "Do what you need to do," and then left the operating room. No other surgeon was in the operating room at that time, and it was at least two to three minutes before the reviewing surgeon arrived. MGH suspended Cornfeld's hospital privileges shortly thereafter. In a subsequent statement through his attorney in February 2000 to the investigating Board and a peer review investigation in July 2000, Cornfeld made statements in direct opposition to the stated preference of the card he had on file and alleged Dickey was negligent. The Board filed charges against Cornfeld in November 2003, alleging both violations of the standard of care and unprofessional conduct in the practice of medicine. After an evidentiary hearing, an administrative law judge ("ALJ") initially found Cornfeld breached the standards of care applicable to the charges. However, after hearing and exceptions, the Board concluded that "the clear and convincing evidence demonstrates only that Dr. Cornfeld left an anesthetized patient unattended in the operating room and thus violated Section 14-404(a)(22)."The Board's separate charge of unprofessional conduct was based on Cornfeld's statements regarding his instructions for the Bovie machine settings. The ALJ concluded that the misrepresentations Cornfeld made about the settings were made during the hospital peer review and Board investigation and, therefore, did not fall within the "practice of medicine." The Board sustained the State's exception to that conclusion and, in support, cited its own precedents that making a false application or submitting a false testimony for a Board proceeding are "clearly within the practice of medicine."The Board sanctioned Cornfeld by revoking his license until he satisfied certain enumerated conditions and, once the suspension was lifted, continued Cornfeld on probation for three years, during which his practice would be subject to "Board review and peer review" at the Board's discretion.The standards governing judicial review of the Board's decision are limited to determining whether there was substantial evidence in the record as a whole to support the agency's findings and conclusions, and to determining whether the decision was premised upon an erroneous conclusion of law. In applying the substantial evidence test, a reviewing court decides whether a reasoning mind reasonably could have reached the factual conclusion the agency reached; should defer to the agency's fact-finding and drawing of inferences if they are supported by the record; must review the agency's decision in the light most favorable to it; the agency's decision is prima facie correct and presumed valid; and it is the agency's province to resolve conflicting evidence and to draw inferences from that evidence.Unprofessional Conduct in the Practice of Medicine: The practice of medicine is statutorily defined asto engage, with or without compensation, in medical (i) diagnosis, (ii) healing, (iii) treatment, or (iv) surgery; "practice medicine" includes doing, undertaking, professing to do, and attempting any of the following: diagnosing, healing, treating, preventing, prescribing for, or removing any phsyical, mental or emotional ailment or supposed ailment of an individual: by physical, mental, emotional or other process that is exercised or invoked by the practitioner, the patient, or both, or by appliance, test, drug, operation, or treatment.Cornfeld contends that his misconduct did not occur in the practice of medicine because it took place in the context of judicial proceedings and was unrelated to the manner in which he treated a patient such that it was directly tied to the effective delivery of patient care. The Court reasoned that this case involved misconduct that occurred during proceedings that arguably adjudicated the medical propriety of Cornfeld's care. However, the Court did not agree that the definition of the pratice of medicine was so narrowly defined so as to exclude professional misconduct during hospital peer reviews and Board disciplinary proceedings. The issue of whether a treating physician's dishonesty in a peer review or state discplinary proceeding falls within the "practice of medicine" is one of first impression, and the Court was persuaded that Cornfeld made the false statements in order to influence decisions concerning the quality of his medical care to a patient and his fitness to practice medicine at MGH specifically, and in Maryland generally. Further, Cornfeld's false statements concerned his instructions for settings on a surgical instrument he used to operate, a matter that required his medical judgment in a specific surgical procedure. These misrepresentations were made to persons responsible for evaluating Cornfeld's medical care to patients. Held: Such misrepresentations were directly tied to medical treatment and surgery within the statutory definition of "practice medicine." Delay in Board Investigation: The relevant section, 14-404(j)(2), states "If the Board is unable to complete the disposition of a complaint within 1 year, the Board shall include in the record of that complaint a detailed explanation of the reason for the delay." Although the investigation was opened in January 2000, charges were not issued for more than three years. Cornfeld contends that, despite repeatedly raising the issue of untimeliness of the investigation, the Board failed to comply with either the statutory time frame or the statutory requirement that any extension beyond one year will be explained in detail on the record and posits the proper remedy is dismissal of the charges for failure to comply with the statute. The Court found that the legislature's failure to include a penalty for failure to act within a prescribed time indicates the provision is directory rather than mandatory. In accordance with HO § 14-405(g), "hearing of charges may not be . . . challegend by any procedural defects alleged to have occurred prior to the filing of charges" including complaints that the Board failed to comply with Section 14-404(j). Violation of Standard of Care: The Court held the cited evidence provided a substantial factual basis for the Board's finding that Cornfeld violated the applicable standard of care in leaving an anesthetized patient.Sanctions: The Board has statutory authority to "place any license on probation or suspend . . . a license" for violations of the Act. The Court could not find that suspension and long term probation for the breach of the standard of care in this case was so extreme and egregious as to warrant judicial intervention.Evidentiary Rulings: The Administrative Procedure Act protects a party's right to call witnesses, offer evidence (including rebuttal evidence), cross-examine any witness, and present summation and argument. An ALJ may exclude evidence that is incompetent, irrelevant, immaterial or unduly repetitious, Cornfeld contends the ALJ went too far when she denied him his right to pursue any theories of the case. After reviewing the relevant portions of the record in support of Cornfeld's complaints, the Court did not find that Cornfeld was denied his rights to defend himself.The full opinion is available in PDF.
Judge Adkins Sally,
Medical Practice Act,
Filed May 2, 2007--Opinion by Judge James Kenney.During a traffic stop, the trunk of a vehicle driven by Wilson was found to contain a suitcase packed with six and one-half pounds of marijuana. Wilson was found guilty in a bench trial of possession of marijuana with intent to distribute and sentenced to two years imprisonment.Prior to trial, Wilson moved to suppress evidence of the marijuana recovered from the trunk, and the denial of that motion is the subject of this appeal. The Court rewrote the presented question as follows: Does the odor of burnt marijuana emanating from the passenger compartment of a vehicle, by itself, establish probable cause to search the vehicle's trunk under the automobile exception to the warrant requirement of the Fourth Amendment?In considering a denial of a motion to suppress, the Court is limited to the record of the suppression hearing. Further, the appellate court will accept the version of the evidence most favorable to the prevailing party. As a question of law, the Court reviews de novo whether appellant's motion to suppress was properly denied.The Fourth Amendment ordinarily requires that a warrant be secured prior to conducting a search. An exception to the warrant requirement is the "automobile exception," known as the "Carroll Doctrine." If a car is readily mobile and probable cause exists to believe it contains contraband, the Fourth Amendment . . . permits police to search the vehicle without more. This Court has held that the odor of burnt marijuana, alone, affords probable cause to search the passenger compartment of a vehicle under the automobile exception. Further, many of the cases applying the Carroll doctrine have found probable cause to search the trunk of a motor vehicle based on evidence apparent to a police officer after a lawful search of the passenger compartment of the vehicle. However, in this case, the search of the passenger compartment produced no additional evidence of the presence of marijuana in the vehicle. Wilson contends that, under the circumstances, any probable cause to search the passenger compartment of a vehicle based solely on the odor of burnt marijuana would not extend to the vehicle's trunk.The Court reasoned that marijuana and other illegal drugs, by their very nature, can be stored almost anywhere within a vehicle. The location-specific principle that "probable cause must be tailored to specific compartments and containers within an automobile" does not apply when officers have only probable cause to believe that contraband is located somewhere within the vehicle, rather than in a specific compartment or container within the vehicle. The odor of burnt marijuana emanating from a vehicle provides probable cause to believe that additional marijuana is present elsewhere in the vehicle. To adopt Wilson's argument, the trunk or any other area outside of the passenger compartment would become a safe harbor for the transportation of drugs for both users and traffickers. Judgment Affirmed.The full opinion is available in PDF.
automobile exception,
Carroll Doctrine,
Judge Kenney James,
Filed May 3, 2007--Opinion by Judge Arrie Davis.Martin was convicted by a jury of robbery and sentenced to eight years imprisonment, all but eighteen months suspended, accompanied by three years of supervised probation. His appeal presented the following questions for review:Was the evidence legally sufficient to sustain a conviction for robbery where the prosecution failed to show that [Martin] used threat of force to obtain property?Did the trial court err when it refused to clarify and supplement a jury instruction upon a critical issue?Did the trial court err in its jury instructions that excluded a defense at issue?Did the trial court err when it substituted an erroneous statement of the law in the jury instructions?The alleged victim ("Turner") testified that he stopped to speak with a neighbor while walking his dog when Martin accosted him with a baseball bat demanding that Turner return $150 to him from a botched drug buy. Demanding more than the $100 in Turner's pocket, Martin followed Turner home where he recovered the remaining $50. The encounter at Martin's home was accompanied by a 911 call for police assistance by Turner's wife. Conversely, Martin testified that Turner had stolen $150 from him in a sham drug transaction. He encountered Turner walking his pit bull and, afraid of the dog, broke off a branch from a nearby tree, approached Martin, and requested his money back. Turner gave him $100 from his pocket, and Martin accompanied him home to recover the remaining $50.Martin's counsel contemplated raising as a defense that Martin lacked the intent to steal from Turner because he was recovering his own money, i.e., the claim of right defense. Defense counsel's proposed jury instructions to support this claim were summarily rejected by the court.During deliberations, one of the notes sent by the jury asked, "Does it matter whether the victim felt threatened for there to be a threat of force?" Upon declining to answer the question, the court instructed the jury to rely on prior instructions. Martin contends that the State failed to prove beyond a reasonable doubt that he intended to intimidate or intimidated Turner, which is a prerequisite of a robbery conviction. Further, in his brief, he attempted to rationalize the jury verdict and any implications arising therefrom by commenting on what testimony the jury found more credible. This Court disagreed.Robbery has been defined as "the felonious taking and carrying away of the personal property of another, from his person or in his presence, by violence or putting in fear . . . or, more succinctly, as larceny from the person, accompanied by violence or putting in fear . . .." The "putting in fear" aspect of that definition is of particular relevance to the instant case. The requisite level of fear, utilizing the objective standard, is "any attempt to apply the least force to the person of another constitutes an assault. The attempt is made whenever there is any action or conduct reasonably tending to create the apprehension in another that the person engaged therein is about to apply such force to him. It is sufficient that there is an apparent intention to inflict a battery and an apparent ability to carry out such intention." Martin admitted possessing an object -- whether a bat or a tree branch -- and also admitted that he threatened to hit Turner with the object if he did not produce the money. In the instant case, context is given to the incident in light of Turner's testimony, which indicated he was "scared." The Court found no need to address Martin's position that the jury rejected Turner's testimony and only Martin's testimony informed the jury what had transpired. In performing a fact-finding role, the jury has authority to decide which evidence to accept and which to reject. Because the trial record demonstrated the applicable objective standard of fear was met, there was sufficient evidence to convince the jury of Martin's guilt beyond a reasonable doubt.Next, Martin contended that the trial court erred by failing to answer the jury's question. Subsequent to the trial court's response to the jury note, the State filed a motion to reconsider. Martin's counsel did not object to the instruction. Maryland Rule 4-325(e), which sets forth:No party may assign as error the giving or the failure to give an instruction unless the party objects on the record promptly after the court instructs the jury, stating distinctly the matter to which the party objects and the grounds of the objection. Upon request of any party, the court shall receive objections out of the hearing of the jury. An appellate court, on its own initiative, may however take cognizance of any plain error in the instructions, material to the rights of the defendant, despite a failure to object.Pursuant to this rule, the Court has consistently held that a party waives his rights when he fails to request an instruction or object to an instruction. Here, Martin did not object to the instruction given nor did he request that an amended instruction be given when the note was sent to the court. The State objected; however, the appellant must object himself to preserve the issue for appellate review. Accordingly, Martin is precluded from raising this issue.Martin next argues that the claim of right defense has not been abrogated in Maryland and, accordingly, his request to propound a jury instruction should have been granted and that the instruction regarding possession versus title to the property misled the jury. The Court's analysis required determination of whether the requested instruction constituted a correct statement of the law: whether it was applicable under the facts and circumstances of the particular case; and whether it was fairly covered in the instructions given. In general, a party is entitled to have his theory of the case presented to the jury through a requested instruction provided that theory is a correct exposition of the law and it is supported by the evidence. Regardless of any testimony to the contrary, if the Court were to find merit in Martin's contentions and overturn his conviction, the decision would have the practical effect of condoning an otherwise illicit activity. Consequently, the trial court did not err by denying Martin's request for a claim of right jury instruction.Finally, Martin argues that the final portion of the instruction misled the jury into believing that [Turner's] theft was immaterial and to ascribe it no weight, contending that such instruction was not a proper statement of the law in light of the circumstances. The Court held the disputed portion of the instruction is a correct statement of the law, is applicable based on the facts of the instant case, and was not covered by other instructions.The full opinion is available in PDF.
defense exclusion,
Hagen v. U.S. (Maryland U.S.D.C.) (Approved for Publication)
Signed April 30, 2007--Memorandum Opinion by Judge Andre M. Davis.Hagen filed this tax refund action after paying a portion of the amount allegedly due under a trust fund recovery penalty for unpaid payroll withholding taxes. The government counterclaimed for a total of $274,918 in unpaid assessments, penalties and interest for the fourth quarter of 1999 and the third quarter of 2000. Pending are the parties' cross-motions for summary judgment.Subsequent to Hagen becoming CEO/Board Chairman in 1998 of American Quantum Cycles ("Quantum"), he was alerted that the company had not paid payroll withholding taxes. After achieving compliance, Quantum again lapsed into delinquency. This time, however, Hagen was unable to raise sufficient capital to pay the obligation and was forced to seek a merger with another motorcycle company, which merger ultimately failed. Hagen then left the company in October 2000.Hagen asserts that certain portions of his former partner's ("Irving") testimony are inadmissible for lack of personal knowledge and, thus, cannot be used as a basis for determining whether summary judgment is warranted. Irving admitted that he had no personal knowledge of whether Hagen signed signature cards for bank accounts and that he lacked personal knowledge that Condon, Quantum's Financial Director, was instructed not to pay employment taxes. As such, the Court found Irving's testimony on these issues could not be considered in any examination of the pending motions. The remaining portions of Irving's testimony were clearly admissible. Irving did have personal knowledge that Hagen was CEO and the duties Hagen's position entailed, including his power to "periodically dive anywhere and say do it this way." Further, Irving testified that Hagen was regularly briefed on all aspects of Quantum, including the finances, e.g., raising money, banking relationships and "tax things." In short, the testimony that related to the corporate structure or everyday governance of the company was clearly admissible.Condon's testimony regarding whether Hagen ever signed any Quantum checks was inadmissible because it was related to written instruments not produced by either party. Pursuant to Fed. R. Evid. 1002, to prove the content of a writing, recording, or photograph (i.e., Hagen's signature on checks) required the original writing, recording or photograph. Nevertheless, Condon's testimony regarding Hagen's authority to sign Quantum checks was admissible. The relevant statute, 26 U.S.C. § 6672(a) provides: Any person required to collect, truthfully account for, and pay over any tax imposed by this title who wilfully fails to collect such tax, or truthfully account for and pay over such tax, or wilfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.Courts have uniformly interpreted this provision to mean that a person can be liable under Section 6672(a) only if (1) he is a "responsible person" under a duty to collect, account for, and pay over trust fund taxes, and (2) he wilfully fails to discharge his duties as a responsible person. A party is not presumed to be a responsible person merely because of his title. The Fourth Circuit has stated that, in determining responsibility under § 6672, the "crucial inquiry [is] whether the person had the effective power to pay taxes -- that is, whether he had the actual authority or ability, in view of his status within the corporation, to pay the taxes owed." Further, § 6672 applies to all responsible persons and not just the most responsible person.Hagen was Quantum's CEO and Board Chairman and directed what bills to pay and how to pay them. Hagen, himself, admitted that he gave instructions as to how payroll and other expenses should be handled after the taxes for the first quarter of 1999 were not paid. "[A] person has significant control if he has the final or significant word over which bills or creditors get paid." Quattrone Accounts, Inc., v. U.S. Although Hagen never physically signed the checks, he had the power, as Quantum's CEO, to order which checks to issue.In further consideration, liability arises only from a "wilfull" violation. The Fourth Circuit has stated that "wilfullness," as defined by § 6672, means actual or constructive knowledge that taxes were unpaid. Specifically, the "failure to pay trust fund taxes cannot be wilfull unless there is either 'knowledge of nonpayment or reckless disregard of whether the payments were being made.'" One way in which wilfullness may be established is to show that the responsible person made a "voluntary, conscious and intentional decision to prefer other creditors over the government." Even assuming Hagen may not have known about the second wave of tax deficiencies until late July/early August, his own testimony disclosed that he learned of the tax deficiencies prior to instructing Condon as to which bills were to be paid and in what order -- none of which included the United States.Because Hagen is a responsible person under § 6672 and he wilfully failed to pay withheld taxes to the IRS, the motion of the United States for summary judgment was granted and Hagen's motion denied.The Full Opinion is Available in PDF.
Filed May 2, 2007--Opinion by Judge Timothy Meredith.Maddox, individually and as parent of her minor children, presents the following questions:(1) Because the plaintiffs' expert witness died, leaving them with no expert to testify, should the plaintiffs have been permitted to substitute an expert?(2) Because the plaintiffs complied with the scheduling order, did the circuit court abuse its discretion in striking their original expert witness?The Court held that the circuit court abused its discretion in striking one of Maddox's other expert witnesses ("Wald") because of a lack of strict compliance with the scheduling order. Accordingly, there was no need to reach the question of whether, upon learning of the death of Maddox's other expert witness ("Hauf"), the circuit court abused its discretion in not allowing Maddox to substitute the earlier stricken expert for the deceased expert.The Court reasoned that, while it is true that the Maryland Rules of Procedure are to be strictly followed, the discovery rules in particular are to be liberally construed in order to effectuate their purpose. Maddox maintained that they had met the "substantial compliance" or "good faith and earnest effort" test because Wald was named two weeks before the scheduling order deadline and his report was provided to opposing counsel immediately as soon as it was available; 34 days after the deadline but well in advance of trial and prior to the closing of discovery. Further, Wald was made available for deposition and was, in fact, deposed over two full months prior to trial and prior to the date established in the scheduling order for completion of all discovery. Maddox argued that, because Wald was deposed well in advance of trial, Stone was not deprived of the ability to prepare a proper defense.The governing principle is that the appropriate sanction for a discovery or scheduling order violation is largely discretionary with the trial court. The more draconian sanctions of dismissing a claim or precluding the evidence necessary to support a claim are normally reserved for persistent and deliberate violations that actually cause some prejudice. The scheduling order is not meant to function as a statute of limitations, and good faith substantial compliance with the scheduling order is ordinarily sufficient to forestay a case-ending sanction. Accordingly, although the decision of whether to exclude a key witness because of a party's failure to meet the deadlines in a scheduling order is generally committed to the discretion of the trial court, the imposition of such a draconian sanction must be supported by circumstances that warrant the exercise of the court's discretion in such a manner -- the trial record must contain an analysis of the relevant facts and circumstances that resulted in the exercise of the judge's discretion and not simply some applied predetermined position.This opinion is not to say that trial counsel and litigants are free to treat scheduling orders as mere suggestions or imprecise guidelines for trial preparation. Scheduling orders must be given respect as orders of the circuit court, and the court may, under appropriate circumstances, impose sanctions upon parties who fail to comply with the deadlines in scheduling orders.The full Opinion Available in PDF.
expert witness designation,
In re: Melvin and Aretha Watson (Maryland U.S. Bankr. Ct.)
Signed April 11, 2007--Opinion by Chief Judge Duncan W. Keir.Melvin and Aretha Watson ("Debtors") filed their Second Amended Chapter 13 Plan. Debtors' original Chapter 13 plan was met with objection by the agent for five different unsecured creditors, which together represented an alleged 21% of the unsecured claims. Debtors' Second Amended Plan proposed the same payment to the Trustee for the first four months with a slight monthly increase for the remaining 56 months. At a September 2006 hearing ("September Hearing") held upon the Second Amended Plan, the Trustee informed the court that Debtors had agreed to further amend their plan, this time increasing significantly monthly payments for the final 55 months of the plan. At the September Hearing, the parties stipulated that Debtors' income exceeded that of the median family income and that Debtors owned two vehicles, neither of which was collateral for a secured debt requiring monthly installment payments. Further, Debtors listed as an allowable expense both an operating allowance and ownership allowance for each vehicle. Various interested parties disputed Debtors' entitlement to the ownership allowance because Debtors did not have secured payments due as payment for the vehicles. All the parties agreed at the initial hearing that if Debtors were not entitled to claim such expense as part of the analysis required by 11 U.S.C. 707(b), Debtors would be unable to confirm a plan unless the court found that projected disposable income for the purposes of Section 1325(b)(1) was not required to be the disposable income calculated pursuant to Section 707(b). The Debtors' actual expenses on Schedule J differed significantly from those set forth under Section 707(b).The first issue raised was whether, when applying the means test of Section 707(b), Debtors are entitled to deduct as allowable expenses both ownership and operational vehicle expenses where the subject vehicles are not subject to liens. The second question was whether the court must restrict its confirmation analysis to the final number shown on Form B22C, or whether the court may also take into account other evidence regarding income and expense of Debtors at the time confirmation is considered.The Bankruptcy Abuse Prevention And Consumer Protection Act of 2005 ("BAPCPA") amended Section 707(b) to include, inter alia, new subparagraph (b)(2). Under this new provision, in certain cases, the court shall presume abuse exists if the debtor's CMI, reduced by amounts determined under clauses (ii), (iii), and (iv) and multiplied by 60, is not less than the lesser of: (A) $10,000.00, or (B) the greater of 25% of the debtor's non-priority unsecured claims in the case, or $6,000.00. This calculation of expenses becomes relevant and applicable to the issue of confirmation of a debtor's plan in a Chapter 13 case by virtue of Section 1325(b), which provides in substance that if the Trustee or holder of an allowed unsecured claim objects to confirmation, the court may approve the plan only if, as of the effective date of the plan, the value of property to be distrubted under the plan on account of such claims is not less than the amount of such claims, or the plan provides that all of the debtor's projected disposable income to be received during the applicable commitment period of the plan will be applied to make payments to unsecured creditors under the plan. The term "disposable income" is defined as CMI received by the debtor (other than child support, foster care payments or disability payments for a dependent child to the extent reasonably necessary to be expended for such child) ("Adjusted CMI"), less amounts reasonably necessary to be expended for the maintenance and support of the debtor or dependent of the debtor, charitable contributions to a qualified religious or charitable entity up to 15% of debtor's gross income, and expenditures necessary for the continuation, preservation, and operation of a debtor's business.BAPCPA added new subsection 1325(b)(3) as to the determination of amounts reasonably necessary to be expended. Where the debtor's Adjusted CMI when multiplied by 12 is greater than the applicable median family income for the State, then amounts reasonably necessary to be expended shall be determined in accordance with subparagraphs (A) and (B) of Section 707(b)(2). In other words, in a Chapter 13 case in which a party-in-interest has objected to confirmation, a plan can only be confirmed if the plan pays 100% of the allowed claims provided for in the plan, or the plan provides that all of the debtor's projected disposable income would be applied to make payments to unsecured creditors for the period of the plan. Projected disposable income is the Adjusted CMI of the debtor minus amounts reasonably necessary to be expended for certain support and maintenance. If the debtor's CMI multiplied by 12 exceeds the median family income applicable to the debtor's household, amounts reasonably necessary to be expended are determined under Section 707(b)(2)(A)(ii). This provision further adds to such expenses the enumerated items set forth in Section 707(b)(2)(A)(ii)(II, III, IV and V), (iii) and (iv). This calculation of expenses is the Allowable Expenses. Although perhaps not clearly stated in the statute, courts (including this Court) have held that a debtor is not entitled to include the aggregate of the Local Ownership Allowance plus the average monthly loan payment for a vehicle in calculating the Allowable Expense.The remaining issue is the relationship between "disposable income" and the "projected disposable income" that may be required to be applied to payments under the plan pursuant to Section 1325(b)(1)(B). The Court reasoned that § 1325(b)(1)(B)'s requirement that a plan propose to pay projected disposable income means that the number resulting from Form B22C is a starting point for the Court's inquiry only. Section 1325(b)(2) defines Disposable Income but § 1325(b)(1)(B) requires that a debtor propose a plan paying Projected Disposable Income. The word "projected" means to calculate, estimate, or predict [something in the future] based on present data or trends. By placing the word "projected" next to "disposable income," Congress modified the import of "disposable income." The significance of "projected" is that it requires the Court to consider both future and historical finances of a debtor in determining compliance with § 1325(b)(1)(B). Consequently, the Court held that the Local Ownership Allowance is properly included by the debtor in the calculation of "disposable income" on Form B22C. The Court further held that "disposable income" as calculated on Form B22C is the presumptive "projected disposable income" for application of Section 1325(b)(1)(B). However, by evidence a party may demonstrate "a substantial change in circumstances such that the numbers contained in Form B22C are not commensurate with a fair projection of the debtor's budget in the future. If the presumption is rebutted, a projected budget based upon the evidence, reflecting projected earnings and projected reasonable necessary expenses, will govern the determination of "projected disposable income" for purposes of confirmation of the plan.The full opinion is available in PDF.
Bankruptcy Abuse Prevention - Consumer Protection Act,
Judge Keir Duncan,