Court Opinion

ID: 1014826
Source: CourtListenerOpinion
Date Created: 2013-07-04 21:23:15.462635+00
Date Added: 2024-06-11T09:17:10.390034
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 04-1356

CHARLES LURIA,

                                              Plaintiff - Appellant,

           versus

STANDARD FEDERAL SAVINGS AND LOAN ASSOCIATION;
RESOLUTION TRUST CORPORATION,

                                            Defendants - Appellees.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Jillyn K. Schulze, Magistrate Judge. (CA-
02-3656-8-JKS)

Argued:   October 28, 2004              Decided:     November 23, 2004

Before WILKINSON and WILLIAMS, Circuit Judges, and Glen E. CONRAD,
United States District Judge for the Western District of Virginia,
sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: Aaron Robert Caruso, ABOD & CARUSO, L.L.C., Rockville,
Maryland, for Appellant.    Jaclyn Chait Taner, FEDERAL DEPOSIT
INSURANCE CORPORATION, Washington, D.C., for Appellees. ON BRIEF:
Ann S. DuRoss, Assistant General Counsel, Colleen J. Boles, Senior
Counsel, FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, D.C.,
for Appellees.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:

          The appellant, Charles Luria (“Luria”), was the general

partner      of    C.    L.      Marsh/Inglewood        Limited     Partnership

(“Marsh/Inglewood”).         Marsh/Inglewood planned to construct a hotel

in Landover, Maryland.         In October 1988, the partnership obtained

construction      financing      from    Standard   Federal       Savings   Bank

(“Standard Federal”) in the form of two notes, one for $9,800,000

and the other for $1,700,000.           Both notes were secured by deeds of

trust that granted Standard Federal a lien on the property as well

as on the proceeds of the business.           After Marsh/Inglewood missed

several payments, Standard Federal exercised its right to receive

all operating revenues attributable to the hotel’s operation.

          On June 20, 1991, Luria and a representative of Standard

Federal entered into a letter agreement whereby all proceeds

generated by the hotel would be deposited in an account maintained

and operated by Standard Federal.            Under the terms of the letter

agreement, Marsh/Inglewood would continue to operate the hotel and

would submit requests to Standard Federal for the payment of

operating expenses with priority for the mortgage, payroll and

suppliers.        Standard    Federal    would   wire   the   requested     funds

directly to Marsh/Inglewood’s account.

          Beginning on June 24, 1991, Marsh/Inglewood commenced

depositing the hotel proceeds into the Standard Federal account.

The letter agreement remained in effect until October 1992, when

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Marsh/Inglewood filed for Chapter 11 bankruptcy protection. During

the term of the letter agreement, a variety of federal, state and

local taxes went unpaid.

              Luria himself filed for personal bankruptcy protection in

May 1994 because of issues related to the hotel and the unpaid

taxes.   At some point in the bankruptcy case, Luria asserted that

Standard   Federal    was    responsible    for   the   unpaid   taxes.   The

bankruptcy trustee declined to pursue a claim for the unpaid taxes

against Standard Federal. After the trustee filed a notice that he

was abandoning any such claim, the bankruptcy court permitted Luria

to   pursue    the   claim   himself.       Ultimately,    Luria’s   personal

bankruptcy estate paid $550,000 to satisfy the various obligations

to federal, state and local taxing authorities.

              In November 2002, Luria filed a complaint in the United

States District Court for the District of Maryland against Standard

Federal and the Resolution Trust Corporation, the receiver for

Standard Federal.      Luria claimed that Standard Federal had a duty

to pay federal, state and local taxes during the period covered by

the letter agreement and asserted claims against Standard Federal

for breach of fiduciary duty, indemnification, negligence and

fraud.   In March 2004, the United States Magistrate Judge* granted

the motion for summary judgment filed by the FDIC, the Resolution

     * This case was decided by the Magistrate Judge upon consent
of the parties under 28 U.S.C. § 636(c)(1).

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Trust Corporations’s successor.              The Magistrate Judge held that

Luria had failed to demonstrate that Standard Federal had any legal

duty to pay the taxes related to the hotel’s operation.

              On appeal, Luria contends that the Magistrate Judge erred

in granting summary judgment to the defendants because Standard

Federal did have contractual, legal, and statutory duties to ensure

the payment of all taxes during the term of the letter agreement.

We affirm.

              We    review    the   Magistrate    Judge’s      grant   of    summary

judgment de novo.        Hooven-Lewis v. Caldera, 249 F.3d 259, 265 (4th

Cir. 2001).        A party is entitled to summary judgment if there is no

genuine issue of material fact and the moving party is entitled to

judgment as a matter of law.          Fed. R. Civ. P. 56(c).         We review the

record   in    the    light   most   favorable     to    the   non-moving     party.

Hooven-Lewis, 249 F.3d at 265.

              Under Maryland law, the interpretation of a written

agreement is initially a question of law for the court.                     Suburban

Hosp., Inc. v. Dwiggins, 596 A.2d 1069, 1075 (Md. 1991).                    When the

language of an agreement is unambiguous, however, a court will not

construe      the    agreement.      General     Motors    Acceptance       Corp.   v.

Daniels, 492 A.2d 1306, 1309 (Md. 1985).                Instead, the parties are

presumed to have meant what a reasonable person in their positions

would have thought the plain language stated.                  Id.

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             The letter agreement between Luria and Standard Federal

provided as follows:

        1.   All proceeds from the hotel are to be deposited in the
             Standard Federal account on a daily basis.
        2.   Funds will be wired or transferred into your account upon
             submission of the bills you are requesting to be paid.
             We will pay bill [sic] on a daily or weekly basis, or
             whenever they need to be paid. Chris Long, Rick Morrison
             and myself are authorized to permit a transfer of funds.
        3.   All funds from the property are to be used for the
             property. The priority of payment will be for the
             mortgage, payroll and suppliers.
        4.   There is no reason for any changes in management.

             The Magistrate Judge examined the language of the letter

agreement and concluded that the language was clear, unambiguous

and complete, and did not indicate any intention for Standard

Federal to assume Marsh/Inglewood’s tax obligations or to act in

Marsh/Inglewood’s best interests.        Although Standard Federal did

pay the hotel’s real estate taxes on one occasion, the Magistrate

Judge concluded that this isolated payment did not support a

conclusion that Standard Federal had assumed all of the hotel’s tax

obligations.    We agree with the Magistrate Judge’s well considered

analysis of the letter agreement and the circumstances at issue

here.    The record does not support the existence of a contractual

duty    on   Standard   Federal’s   behalf   to   pay   the   hotel’s   tax

obligations.

             Luria contends that Standard Federal had a legal duty

under the common law to pay the hotel’s taxes because a portion of

the hotel proceeds represented funds that were held in trust for

                                     5
the taxing authorities.     As the Magistrate Judge noted, however,

there is no basis in the evidence or law upon which to find that

Standard Federal held the hotel’s proceeds in trust for taxing

authorities.   Control of the hotel’s proceeds, alone, does not

provide a basis for a legal duty, particularly when Marsh/Inglewood

retained the capacity to request funds for the payment of all its

operating expenses.

           On appeal, Luria references several provisions of the

Internal Revenue Code and Maryland’s general tax law claiming that

these sections provide a statutory basis for Standard Federal’s

duty to pay the hotel’s tax obligations.           His reliance on these

statutes, however, is unavailing.

           A person having control of the payment of wages may be

deemed an employer responsible for withholding taxes.          26 U.S.C. §

3401(d).   In this case, however, Standard Federal did not pay

Marsh/Inglewood employees and did not make any determination as to

which employees should be paid.     Standard Federal simply forwarded

funds to Marsh/Inglewood.      Marsh/Inglewood retained control and

discretion in the payment of wages to its employees.

           A “responsible person” may have a duty to ensure payment

of withholding taxes if that person had the actual authority or

ability to pay the taxes owed.           26 U.S.C. § 6671(b); Plett v.

United States, 185 F.3d 216, 219 (4th Cir. 1999). Also see Md. Code

Ann.,   Tax-Gen.   §   10-905(d).       Here,   however,   Marsh/Inglewood

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retained the authority for day-to-day management of the hotel,

controlled the company’s payroll, had the power to write checks

after receiving funds from Standard Federal, and had the sole

ability to hire and fire employees.    Thus, Marsh/Inglewood, not

Standard Federal, was the “responsible person” liable for the

payment of withholding taxes.

          A lender may be liable for payroll taxes if that lender

“supplies funds to or for the account of an employer for the

specific purpose of paying wages of the employees of such employer,

with actual notice or knowledge . . . that such employer does not

intend to or will not be able to make timely payment or deposit” of

the required amounts of payroll taxes.        26 U.S.C. § 3505(b).

Liability under this section “presupposes advances for the specific

purpose of paying wages with actual notice or knowledge that the

trust funds will not or cannot be paid by the employer.”   Abrams v.

United States, 333 F. Supp. 1134, 1147 (D.C. W. Va. 1971).    Here,

however, there is no evidence in the record that Standard Federal

had actual notice or knowledge that Marsh/Inglewood or Luria were

not paying the proper amount of withholding taxes.

          We agree with the Magistrate Judge that Standard Federal

was under no duty, legal, contractual or statutory, to pay the tax

obligations of Marsh/Inglewood. As a result, we also agree that it

is unnecessary to consider Standard Federal’s argument that Luria’s

claims are barred by Maryland’s three year limitations period. The

decision of the district court is therefore
    AFFIRMED.

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