Court Opinion

ID: 9747412
Source: CourtListenerOpinion
Date Created: 2023-08-27 15:13:57.473918+00
Date Added: 2024-06-11T07:25:23.570574
License: Public Domain

CATHELL, Judge,
dissenting.
I respectfully disagree with and dissent to the majority’s creation of a new tortious cause of action for breach of fiduciary duty. The Court of Appeals has had, on two recent occasions, Adams and Alleco, opportunities in which it could have recognized breach of fiduciary duty as a distinct cause of action, had it so chosen. Both times, it declined. When a higher court with opportunity to do so, though not rejecting it outright, nevertheless declines to adopt such a new cause of action, I believe it is generally unwise for this Court to do so. It is one thing to lead from below when the Court above has had no opportunity to lead. It is another thing to lead from below when the Court above has chosen not to.
The majority reasons that because the Court of Appeals did not reject the tort “we should not do so either.” The majority fails to distinguish that in Alleco and Adams the Court of Appeals maintained the status quo; the majority in the case sub judice changes it. Such changes, in my view, are, as we said in our Alleco, infra, for “the Legislature ... or the Court of Appeals.”
Unlike the situation in which a breach of fiduciary duty is an element of a fraud or deceit or similar cause of action, when constituted as a separate, independent cause of action, the entire burden of production will, under traditional breach of fiduciary duty standards, almost immediately shift to the defendant in most instances. See Hale v. Hale, 74 Md.App. 555, 567, 539 A.2d 247, cert. denied, 313 Md. 30, 542 A.2d 857 (1988). As the trial judge below instructed, if a fiduciary duty exists a defendant must produce evidence that he has not breached it. He must establish non-breach by clear and convincing evidence. “Once ... shown, a presumption arises ... that the transaction complained of resulted from fraud.... This presumption shifts the burden to the defen*355dant to show the fairness and reasonableness of the transaction. The defendant’s evidence must be clear ... and convincing to overcome the presumption.” Wimmer v. Wimmer, 287 Md. 663, 669, 414 A.2d 1254 (1980) (citations omitted).
In a traditional fraud or deceit case, while a defendant may be required to produce evidence of proper conduct in the performance of his duty, the overall burden to produce evidence of fraud or deceit ultimately rests upon the plaintiff, ie., she or he must establish fraud or deceit by clear and convincing evidence. The majority is silent on the ultimate burden of proof in the instant case. Who has it? What is it? 1 The Court of Appeals in Adams (an action for an accounting between partners) is quoted by the majority in the case sub judice as saying, “[B]ut we [the Court of Appeals] have not opined on the existence of the tort or torts, or on its or their elements or rules of damages .... We need not so opine in this case.”2 Yet, the majority in the case sub judice, unlike the Court of Appeals in Adams creates the tort and, thus, should address those matters. The majority, however, fails to make any mention of the elements, burden of production, burden of proof, or on any rule of damages. In effect, the majority says, “It’s here,” but leaves to the trial courts the problems of figuring out what “it” is.
Furthermore, the majority, by adopting such a cause of action as an independent tort, may well open a broad range of *356applicability. While the majority writes only in this case, it nevertheless opens the door to a separate cause of action for every factual situation in which a fiduciary, i.e., confidential, relationship exists. This is not a small concern.
Confidential relationships are generally included in the compass of fiduciary relationships. These relationships exist between client and attorney (as in Alleco), principal and agent, principal and surety, sometimes in landlord-tenant relationships, parent and child, guardian and ward, ancestor and heir, husband and wife, trustee and cestui que trust, personal representatives and creditors, legatees, and distributees, appointor and appointee under powers, accountants or other financial managers and their clients and partners (as in Adams) and part owners—every case in which there is a confidence reposed by one in another and in which the dominion and influence resulting from that confidence is exercised by one person over the other. See Black’s Law Dictionary 298 (6th ed.1990). Black’s defines “Fiduciary relation” as follows:
Fiduciary or confidential relation. A very broad term embracing both technical fiduciary relations and those informal relations which exist wherever one person trusts in or relies upon another.... [T]he relation can be ... domestic....
Id. at 626; see also 37 Am.Jur.2d Fraud and Deceit § 16 (1968).
In respect to marital situations, it is often argued and established that a particular marriage relationship is a confidential relationship. See, e.g., Hale v. Hale, 74 Md.App. at 564, 539 A.2d 247; Jorgensen v. Jorgensen, 32 Cal.2d 13, 193 P.2d 728 (1948). It is not unusual for a husband (or wife) who brings property into a marriage to create tenancy by the entireties in it or to convey it outright to the other spouse. Upon a divorce, or even before or after, that husband (or wife), because of the majority’s opinion, can now file a separate cause of action for breach of fiduciary duty, ask for a jury trial, establish the marriage, and thus the confidential relation*357ship, and the burden of production would then shift to the wife (or husband) to prove that she (or he) did not abuse the confidential relationship. Thus, wives (or husbands) receiving property as gifts from the other spouse during marriage, after the termination of the divorce and marital property proceedings, could still be required to produce evidence that they did not take advantage of the other. They will be forever defending. See, e.g., Jorgensen, 193 P.2d at 733 (“The concealment of community property assets by the husband from the wife in connection with such [a property settlement] agreement is therefore a breach of fiduciary duty[3] of the husband that deprives the wife of an opportunity to protect her rights in the concealed assets and thus warrants equitable relief from a judgment approving such agreement.”); In re Marriage of Modnick, 33 Cal.3d 897, 191 Cal.Rptr. 629, 633, 663 P.2d 187, 191 (1983) (following Jorgensen and finding that the fiduciary relationship between spouses does not terminate with their separation; rather, it continues until the marriage has been dissolved and the property divided).
I perceive that the creation of this tort as a separate cause of action might occasion an interesting interaction with the Marital Property Act. If one spouse makes a gift of property (other than realty as tenants by the entirety) to the other spouse, the property so given is not marital property. No adjustments would be made as to it under the Marital Property Act during the divorce. After the divorce, however, the donor spouse could institute an action based on this new tort and use the former marriage itself to prove the existence of the confidential relationship at the time of the gift. The recipient would then have the burden of production to establish to a jury that he or she did not abuse the marital *358relationship in obtaining the gift—the car, the business, the fur, the diamond, the stock, etc.
The majority states that to require persons to fit a claim for breach of fiduciary duty into recognized causes of action would result in a “form over substance rule.” The plaintiffs complaint in the case sub judice is extensive. It contains in its 62 pages, 12 separate counts (including the one at issue). It contains 84 separate allegation paragraphs and 168 separate claims for damages or other relief (6 allegation paragraphs and 14 claim paragraphs were contained in the count at issue). When a litigant cannot fit the alleged wrong into such an extensive pleading, to say that “form over substance” results goes far beyond my understanding of the phrase. In essence, what the trial court did, and the majority here does, is to give to appellee a victory it could not win under theretofore extant causes of action.
The majority notes that because the appellee lost on all of the eleven other counts the fact that the breach of fiduciary count “was the only claim on which it prevailed” somehow rebuts the proposition that “adequate remedies already exist.” In my view that is a pure sophism. Under that view the majority could create new causes of action for every plaintiff that loses under traditional causes of action—ad infinitum. I would suggest that our adversarial system contemplates that on occasion litigants lose.
The function of an appellate court, in my view, should not, considering the nature of our adversarial system, include creating a new cause of action in order to help one side in a legal dispute that is unable to establish that it is otherwise entitled to an existing remedy. As I perceive our role, it does not extend to creating remedies when fully adequate remedies already exist. The trial court, and the majority, have tried appellee’s case better than did appellee.
In the long history of the utilization of breaches of fiduciary duty within other causes of action, no such “form over substance” rule has resulted. Instead, it is first created by the majority in this case, and then utilized by it to justify, in part, *359the creation of a new cause of action. Moreover, there is no indication anywhere in the Maryland cases, of which I am aware, that litigants have had any difficulty whatsoever in having their breach of fiduciary concerns fully addressed within the applicable traditional causes of action.
I perceive that breach of fiduciary duty is particularly unsuited to be an independent tortious cause of action. Including such breaches as relevant elements in the broader scope of fraud and deceit actions or in actions for accountings, etc., has, over time, sufficed. In the instant case, the traditional causes of action, such as fraud, conversion, and unjust enrichment, etc., were pled. The breach of fiduciary duty that served as the foundation for the count that went to the jury was also included in one or more, if not all, of those other counts. What the majority does is to reward the plaintiffs below, who failed to prevail in the traditional causes of action, by recognizing this new tort that was alleged in a separate count. No particular difficulty has been espoused (in the instant case or any other that I am aware of) in having a breach of fiduciary duty as a constituent part of these traditional torts. In other words, the current practice is not broken; it works and does not need to be fixed by this Court, gratuitously.
Moreover, the instant case involved only one alleged course of conduct involving the breach or breaches of fiduciary relationships. There were, in addition to the breach of fiduciary duty counts (Counts I, II), counts for actual Fraud (Counts VII, VIII), Conversion (Counts III, IV), Negligent Misrepresentation (Count IX), Unjust Enrichment (Count X), Undue Influence (Count XI), Professional Malpractice (Count XII), Breach of Contract (Count V), and Negligence (Count VI). In Count VII, a specific assertion was made that the defendant “concealed his breaches of his fiduciary duties.” In Count XI, a specific assertion was alleged that the defendant committed “breaches of confidential and fiduciary duties.” More important, all of the counts incorporated allegations of breaches of fiduciary or confidential relationships.
*360The trial court granted judgment for the defendant at the close of the plaintiffs case on Counts I, V, VI, VII, VIII, IX, XI, and XII, all of which alleged a breach of fiduciary duty to varying extents. As to the question of whether a breach had in fact occurred, the court stated: “The question of whether or not, as a matter of law or as a matter of equity, a confidential relationship exists or a fiduciary relationship exists, I suppose should await the conclusion of all of the testimony.” In other words, the court found that the plaintiff had put forward some evidence that a fiduciary relationship existed and that perhaps a relationship had been breached, and yet the court, at that point, incongruously, dismissed many of the causes of action in which a breach of fiduciary duty can be a determinative element. Under the shifting burden of production, if the court found that the plaintiff had put forward sufficient evidence to make out a prima facie case of the existence of a fiduciary duty, then the court should have shifted the burden to the defendant to show that he did not abuse his relationship with the deceased by exerting, for example, undue influence. A fiduciary relationship existed or it did not. A duty was breached, or it was not. The court was wrong either when it directed judgments for the defendant4 or when it thereafter submitted the same issue to the jury. The result is even more incongruous when it is noted that the jury found for the defendant on the other issues except as to the new independent cause of action then being created (whether he had breached his fiduciary duty in his capacity of personal representative). In other words, the court and the jury found no conversions, no breach of contract, no negligence, no fraud, no negligent misrepresentation, no unjust enrichment, no undue influence, and no professional malpractice, all of which had been alleged and all of which alleged a breach of fiduciary duty. Thus, although the alleged breach of fiduciary duty was not sufficiently proven to support the general or specific allegations of a breach of fiduciary duty as alleged in the other *361counts, it becomes, by reason of the majority’s decision, a new general wrong for which the majority fashions a remedy. Even if a relationship does not exist or a breach does not constitute a fraud, a misrepresentation, undue influence, a conversion, or a misrepresentation, and even if you are not unjustly enriched by it, you can be sued for it and have damages assessed against you. The majority creates a cornucopian supply of fuel for future litigation—in my view, needlessly.
Interestingly, in our Alleco, Inc. v. Harry & Jeanette Weinberg Found., Inc., 99 Md.App. 696, 639 A.2d 173 (1994), aff'd 340 Md. 176, 665 A.2d 1038 (1995), we declined to recognize a separate tort of aiding and abetting someone else in the commission of a tort. In that opinion, we stated what I believe to be the correct position for us to take in the instant case: “If that [aiding and abetting another tort] is to be recognized as a new, independent tort, either the Legislature by statute or the Court of Appeals by extending the common law will have to do it. We shall not do it.” Id. at 701, 639 A.2d 173. That philosophy, which appeared to me to be so admirable in our Alleco opinion, is conspicuously absent in the change in appellate posture the majority makes in the case at bar. Moreover, in Alleco, we, drawing, in my opinion, upon far more pertinent authority than the majority does here, recognized the tort of civil conspiracy. Reviewing that portion of this Court’s position, the Court of Appeals specifically held that our recognition of an independent tort of civil conspiracy was wrong. “The statement by the Court of Special Appeals, that civil conspiracy is recognized in Maryland as an independent tort, is simply incorrect.” Alleco, 340 Md. at 189, 665 A.2d 1038.
As to this issue, I would reverse and hold that no such independent cause of action for breach of fiduciary duty exists, or ought to exist, in Maryland.
Finally, I do not necessarily agree with portions of the majority’s characterization of our opinion in Hosain v. Malik, 108 Md.App. 284, 671 A.2d 988 (1996), and its applicability to *362the issues here present. However, as any such disagreement would have no bearing on any of the issues raised, I do not expound further.

. While, in some fraud and deceit cases, the issue of fiduciary duty may be the only basis for the suit, in others it is but one of several allegedly causative factors. If breach of fiduciary duty is a separate cause of action, may it still be pled as an element of fraud or deceit or must it be stated as a separate cause of action? For example, in the instant case, it was pled both as a separate cause of action and also as an element of several other causes of action—all based on the same conduct. If pled as an element of fraud in one action and a judgment is rendered, may it later be pled as a separate cause of action or would res judicata, issue preclusion, or similar defenses be available?

. The Adams Court later stated, "To the extent that Adams’s argument is that a breach of fiduciary duty in and of itself permits the award of punitive damages, we reject his contention under the policy guidelines for punitive damages in general.” Adams v. Coates, 331 Md. 1, 13, 626 A.2d 36 (1993).

. The duty in Jorgensen arose by virtue of the husband's status "[a]s the manager of the community [—i.e., marital—] property.” 193 P.2d at 733. Not surprisingly, today, that duty extends to both parties, and "stems in part from the confidential nature of the marital relationship ... [and] from the fiduciary relationship that exists between spouses.” In re Marriage of Modnick, 33 Cal.3d 897, 191 Cal.Rptr. 629, 633, 663 P.2d 187, 191 (1983).

. It appears that appellee did not appeal the trial court’s granting of these judgments. The school’s cross appeal related to instructions.