Court Opinion

ID: 1033419
Source: CourtListenerOpinion
Date Created: 2013-07-10 19:08:26.522727+00
Date Added: 2024-06-11T09:18:22.426646
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                              No. 12-2359

SOUTHERN MANAGEMENT CORPORATION RETIREMENT TRUST,

                 Plaintiff - Appellee,

          v.

ROBERT FULTON ROOD, IV,

                 Defendant – Appellant,

          and

CHARLES TIMOTHY JEWELL,

                 Defendant,

          and

GARY A. ROSEN,

                 Trustee.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt.    Deborah K. Chasanow, Chief District
Judge. (8:11-cv-03059-DKC; 08-17199-PM; 09-00188-PM)

Submitted:   June 24, 2013                  Decided:   July 10, 2013

Before DUNCAN, KEENAN, and FLOYD, Circuit Judges.

Affirmed by unpublished per curiam opinion.
John O. Iweanoge, II, IWEANOGE LAW CENTER, Washington, D.C., for
Appellant.    Paul Sweeney, YUMKAS, VIDMAR & SWEENEY, LLC,
Annapolis, Maryland, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

            Robert F. Rood, IV, appeals from the district court’s

order affirming the judgment of the bankruptcy court finding him

liable for fraud and civil conspiracy and fraudulent conveyance

of corporate assets under Maryland law.                  Rood challenges the

sufficiency    of   the   evidence   to       support   the    judgment   and    he

contends that the bankruptcy court erred by proceeding with the

trial when a prior judgment had been entered against him based

on the same conduct, and that the bankruptcy court abused its

discretion    by    prohibiting    him       from   introducing   evidence      and

testifying at the trial.

            Fraud, under Maryland law, requires evidence that the

defendant made a false representation to the plaintiff, that the

defendant knew the statement was false or made the statement

with reckless indifference to the truth of the statement, that

the misrepresentation was made with the purpose of defrauding

the plaintiff, and that the plaintiff reasonably relied on the

statement     and    suffered     damages       from    that    representation.

Gourdine v. Crews, 955 A.2d 769, 791 (Md. 2008); VP Corp. v.

Wrexham Aviation Corp., 715 A.2d 188, 193 (Md. 1998).                      Civil

conspiracy requires a showing that one or more other persons

agreed “to accomplish an unlawful act or to use unlawful means

to accomplish an act not itself illegal” and that the act or

means employed resulted in loss or damage to the plaintiffs.

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Mackey v. Compass Mktg., Inc., 892 A.2d 479, 485 (Md. 2006).

For   fraudulent       conveyance,         the     plaintiff          must     show    that     a

transfer was made while the transferor was insolvent or that the

transfer     rendered         the    transferor          insolvent           and      no     fair

consideration was given for the transfer.                          Lacey v. Van Royen,

267 A.2d 91, 93-95 (Md. 1970).                  With these standards in mind, we

have reviewed the evidence in this case and we find that the

bankruptcy      court’s       judgment     as      to   each    cause        of    action     was

supported by sufficient evidence.

           Rood also contends that the bankruptcy court erred by

proceeding      with    the    trial      in    light    of     his     assertion       of    the

defense    of    res     judicata.             Southern        Management          Corporation

Retirement      Trust     (“SMCRT”)        had        filed    a    previous          adversary

proceeding against Rood.             The bankruptcy court entered a default

judgment     against      Rood       in        that     case       in    the       amount      of

$13,876,353.47.

           Prior to resolution of SMCRT’s adversary proceeding,

the bankruptcy trustee for Rood’s bankruptcy estate and for the

numerous entities controlled by Rood which were also in Chapter

7   bankruptcy,    filed       the   adversary          proceeding       underlying          this

appeal.    Although Rood asserted res judicata as an affirmative

defense, he did not move to dismiss the complaint or move for

summary judgment on that basis.

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               The case proceeded to trial without an objection by

Rood    on     the     basis   of    res    judicata.           In     the    Memorandum      of

Decision entering judgment against Rood, the bankruptcy court

acknowledged           SMCRT’s      judgment         against      Rood       in    the      prior

proceeding and ruled that “the Plaintiffs’ recovery from Rood in

the prior case [] should be credited and thus damages in this

case are not an additional recovery but rather are co-extensive

with that judgment.              The plaintiff is not entitled to double

recovery for the same injury.”

               Generally, res judicata is asserted as a basis for

dismissing a complaint or entering summary judgment for a party.

The doctrine of res judicata was “‘designed to protect litigants

from the burden of relitigating an identical issue with the same

party     or     his    privy       and    [to       promote]     judicial         economy    by

preventing needless litigation.’”                     Laurel Sand & Gravel, Inc. v.

Wilson,        519     F.3d    156,       161-62       (4th     Cir.       2008)     (internal

quotations       omitted)).           Where,         as   here,      the     issue    was    not

presented to the court for a ruling until after a trial on the

issues, the defense is waived.                        Because the bankruptcy court

limited SMCRT’s recovery under the single recovery rule, Rood

cannot show that he was harmed by the entry of judgment in this

action.        We find no abuse of discretion by the district court by

declining to address this issue, which was raised for the first

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time on appeal.             See Levy v. Kindred, 854 F.2d 682, 685 (4th

Cir. 1988).

            Rood also asserts that the district court erred by

prohibiting him from presenting any evidence and calling any

witnesses as a sanction for his repeated discovery violations.

Rule    37(d)     of    the     Federal       Rules    of     Civil     Procedure,        made

applicable to bankruptcy cases by Fed. R. Bankr. P. 7037(a),

affords the trial court wide discretion to sanction a party for

failing to comply with discovery requests and orders.                                  Fed. R.

Civ. P. 37(d).          This court reviews the decision to sanction a

party    for      discovery        violations         for     abuse      of     discretion.

National Hockey League v. Metro. Hockey Club, Inc., 427 U.S.

639, 642 (1976);            Mutual Fed. Sav. and Loan Ass’n v. Richards &

Assocs., Inc., 872 F.2d 88, 92 (4th Cir. 1989).                                  Factors to

consider    in    reviewing        a    discovery       sanction        are   whether      the

violations       were    done      in   bad    faith,       any   prejudice       to     other

parties,    the      need    for    deterrence,       and     whether     a     less    severe

sanction would be effective.                  Southern States Rack & Fixtures,

Inc. v. Sherwin-Williams Co., 318 F.3d 592, 597 (4th Cir. 2003);

Mutual Fed. Sav. & Loan, 872 F.2d at 92.

            We       have     reviewed        the   record        in    light     of     these

standards      and     conclude     that,      in     light    of      Rood’s    continuing

violations of discovery orders and failure to comply with the

bankruptcy court’s prior sanctions order, the bankruptcy court

                                               6
did not abuse its discretion by prohibiting Rood from testifying

or    presenting   evidence     in   this       case.     See     Fed.    R.   Civ.    P.

37(b)(2)(A)    (made   applicable         to    bankruptcy      cases    by    Fed.    R.

Bankr. P. 7037(a)); Chambers v. NASCO, Inc., 501 U.S. 32, 44-45

(1991) (“A primary aspect of th[eir] discretion is the ability

to fashion an appropriate sanction for conduct which abuses the

judicial process.”); see also Mut. Fed. Sav. & Loan, 872 F.2d at

94 (upholding default judgment entered as a sanction stating,

the      “judicial     system            will      not       tolerate          repeated

misconduct . . .”).

            Accordingly,      we     affirm      the    district     court’s     order

upholding the judgment of the bankruptcy court.                          We dispense

with oral argument because the facts and legal contentions are

adequately    presented    in      the    materials      before    this    court      and

argument would not aid the decisional process.

                                                                               AFFIRMED

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