Justia Maryland Supreme Court Opinion Summaries

The Supreme Court affirmed in part and reversed in part the decision of the appellate court reversing the judgment of the circuit court granting Defendants' motion to dismiss this case for failure to state a claim upon which relief may be granted, holding that the appellate court erred in finding that Plaintiff's complaint alleged sufficient facts to state a cause of each for counts two and three.Plaintiff, a minority stockholder in a family-owned corporation, brought this action alleging one count of stockholder oppression seeking equitable relief short of dissolution (count one) and compensatory damages for claims of breach of fiduciary duty (count two) and unjust enrichment (count three). The circuit court granted Defendants' motion to dismiss, thereby denying Plaintiff's request for leave to amend the complaint. The appellate court reversed the judgment in its entirety. The Supreme Court affirmed as to count one and reversed as to the remaining counts, holding that Plaintiff's proposed amended complaint set forth sufficient facts to state a claim for stockholder oppression but did not allege sufficient facts to support Plaintiff's direct causes of action for breach of fiduciary duty and unjust enrichment. View "Eastland Food Corp. v. Mekhaya" on Justia Law

The Court of Appeals reversed the judgments of the circuit courts against Petitioners on counts of unjust enrichment and violation of the Maryland Wage Payment and Collection Law that were entered upon remand and reinstated the original judgments in favor of Petitioners, holding that the circuit court erred.Petitioners and Harry Kortki (Harry) came before the Court of Appeals twice in this case concerning whether a partnership was created. The circuit court found that Harry intended to form a general partnership and was entitled to an award of damages. The Supreme Court reversed, holding that the circuit court erroneously found that the parties intended to form a partnership. On remand, the circuit court reopened two counts - for unjust enrichment and violation of the Maryland Wage Payment and Collection Law - that Harry had brought in the original complaint and entered judgments in favor of Harry on the two counts. The Court of Appeals reversed, holding that the circuit court erred on remand in reopening the unjust enrichment and wage payment counts and in awarding Harry damages against Petitioners on the claims. View "MAS Associates, LLC v. Korotki" on Justia Law

In this case concerning the interpretation of an ambiguous voting provision in a corporation's charter the Court of Appeals affirmed the circuit court's grant of summary judgment in favor of Respondents, shareholders of Petitioner's Series B shares, holding that the circuit court did not err.Petitioner raised issued a series of preferred stock known as Series B and a nearly identical series of preferred stock known as Series C. Petitioner later sought to buy back the shares of both series. Owners of two-thirds of the shares of both series approved the measure, but owners of less than two-thirds of Series B did so. Petitioner argued that the approval of two-thirds of shares of both series, counted together, provided the necessary approval required by the charter provision relating to Series B shares. Respondents filed this action seeking to restore and rights and preferences of Series B shares. The circuit court found that the charter language was ambiguous and that the failure to obtain the approval of owners of two-thirds of the Series B shares doomed Petitioner's proposal to buy back those shares. The Court of Appeals affirmed, holding (1) the voting provision was ambiguous; and (2) the extrinsic evidence relating to the voting provision resolved the ambiguity in favor of separate voting by Series B shareholders. View "Impac Mortgage Holdings, Inc. v. Timm" on Justia Law

The Court of Appeals held that a change in life insurance beneficiary constitutes a conveyance under the Maryland Uniform Fraudulent Conveyance Act (MUFCA), Md. Code Comm. Law 15-201(c), and that a guardian of property is not granted the authority to change a life insurance beneficiary on a policy of the ward under section 15-102(t) of the Estates and Trusts Article (ET).In a case arising from a decade-long dispute between the adult children of the Buckingham family and United Bank, the United States District Court for the District of Maryland certified two questions of law to the Court of Appeals regarding whether the children intentionally defrauded the Bank when they successfully diverted significant amounts of life insurance proceeds away from the declining family business and to their personal use. The Court of Appeals answered the questions as follows: (1) a change of the beneficiary designation of a life insurance policy constitutes a conveyance under MUFCA; and (2) the guardian of property does not have the authority to change the beneficiary on a life insurance policy of a ward under ET 15-102(t). View "United Bank v. Buckingham" on Justia Law

The Court of Appeals answered certified questions asking whether Maryland recognizes an independent cause of action for breach of fiduciary duty, holding that this Court recognizes an independent cause of action for breach of fiduciary duty and outlining its scope and parameters.The Court of Special appeals filed a certification pursuant to Maryland Rule 8-304 requesting that the Court of Appeals provide guidance concerning whether an independent cause of action exists for breach of fiduciary duty. The Court of Appeals answered (1) Maryland does recognize such a cause of action, and to establish a breach of fiduciary duty a plaintiff must demonstrate the existence of a fiduciary relationship, breach of the duty owed by the fiduciary to the beneficiary, and harm to the beneficiary; and (2) a court should consider the nature of the fiduciary relationship and possible remedies afforded for a breach on a case by case basis, and the remedy will depend upon the specific law applicable to the specific fiduciary relationship at issue. View "Plank v. Cherneski" on Justia Law

The Court of Appeals dismissed this appeal concerning compliance with the law governing Maryland LLCs, holding that this appeal was not properly before the Court.Petitioner 7222 Ambassador Road, LLC initiated this action against Respondent National Center for Institutions and Alternatives, Inc. Respondent prevailed in the circuit court and the court of special appeals. Before Petitioner filed a petition for certiorari with the Court of Appeals it forfeited its right to do business in Maryland and failed to reverse that forfeiture. Respondent filed a motion to dismiss the appeal based on the forfeiture. The Court of Appeals granted the motion to dismiss, holding that, as a result of Petitioner's forfeiture of its right to do business in Maryland, it lost the ability to prosecute this action during the period of forfeiture, including the filing of a timely petition for a writ of certiorari. View "7222 Ambassador Road, LLC v. National Center on Institutions & Alternatives, Inc." on Justia Law

The Court of Appeals held that an independent cause of action exists for breach of fiduciary duty and that, to establish a breach of fiduciary duty, a plaintiff must demonstrate the existence of a fiduciary relationship, breach of the duty owed by the fiduciary to the beneficiary, and harm to the beneficiary.William Plank and Sanford Fisher, both minority members of Trusox, LLC, filed an action alleging direct and derivative claims against James Cherneski, Trusox's president and majority member. Among other relief, Plank and Fischer (together, Minority Members), sought an order dissolving the LLC or appointing a receiver to take over its management. The circuit court entered judgment in favor of Cherneski on most of the Minority Members' claims and in favor of the Minority Members on certain other claims and awarded attorneys' fees in favor of Cherneski and Trusox. The Court of Appeals affirmed, holding that the circuit court (1) did not err in entering judgment in favor of Cherneski on the breach of fiduciary duty count; (2) did not err in interpreting the contractual language of the fee-shifting provision and concluding that Cherneski and Trusox were the substantially prevailing parties; and (3) did not abuse its discretion by awarding Cherneski and Trusox all of their attorneys' fees. View "Plank v. Cherneski" on Justia Law

The Supreme Judicial Court reversed the determination of the trial court that the parties in this case intended to form a general partnership, holding that the evidence could not sustain the simultaneous intent to form both an LLC and a partnership and that Respondent failed to provide competent material evidence demonstrating intent to form a partnership.Respondent brought this action claiming breach of contract and requesting a declaratory judgment asking for a determination of "the buyout price of his partnership interest." The trial court concluded that there was no enforceable written agreement but that that a partnership existed between the parties. The court then awarded Respondent more than $1 million. The Court of Special Appeals affirmed. The Court of Appeals reversed, holding that where the parties were also actively engaged in the process of negotiating to become members of an LLC, there was insufficient evidence of the parties' intent to form a partnership. View "MAS Associates, LLC v. Korotki" on Justia Law

When P. Thomas Hoff, the founder of One Call Concepts, Inc. and Hanover Investments, Inc. (Hanover), terminated the employment of Susan Volkman and redeemed her shares of Hanover, Hoff and others brought this declaratory judgment action against Volkman in the circuit court to defend the procedures it followed to redeem her stock. At the time the declaratory judgment action was filed, Volkman had already filed, in a Minnesota state court, a breach of contract action against Hanover concerning the same issue. The circuit court refused to dismiss or stay the action in deference to the pending Minnesota action. The court then issued a declaratory judgment in favor of Hanover. The court of special appeals ruled that there were not unusual and compelling circumstances justifying the circuit court’s issuance of a declaratory judgment to resolve the same question at issue in the pending Minnesota litigation. The Court of Appeals affirmed, holding that this action did not create unusual and compelling circumstances that would justify an exception to the principle that a court should not entertain a declaratory judgment action when there was a pending lawsuit involving the same issues. View "Hanover Investments, Inc. v. Volkman" on Justia Law

This suit arose from the actions of iStar’s Board of Directors in modifying performance-based executive compensation awards, which were granted in the form of stock. Petitioners filed suit against current and former members of iStar’s Board and senior management, alleging breach of fiduciary duty, unjust enrichment, waste of corporate assets, breach of contract, and promissory estoppel. The circuit court dismissed all of Petitioners’ claims for failure to state a claim upon which relief can be granted. The Court of Special Appeals affirmed. The Court of Appeals affirmed, holding (1) Petitioners’ claims were properly dismissed by the circuit court for failure to overcome the business judgment rule presumption; and (2) furthermore, Petitioners’ claims for breach of contract and promissory estoppel are derivative claims that are subject to the business judgment rule. View "Oliveira v. Sugarman" on Justia Law