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Ochse v. Henry

Court of Special Appeals of Maryland

February 25, 2014

STEVEN J. OCHSE, ET UX.
v.
WILLIAM O. HENRY, ET UX.

Matricciani, Graeff, Moylan, Charles E., Jr. (Retired, Specially Assigned), JJ.[*]

OPINION

Moylan, J.

This appeal is the latest chapter in a long running battle between the appellants, Steven J. Ochse and Shari Ochse ("the Ochses"), and their neighbors, the appellees, William O. Henry and Jessie Henry ("the Henrys"), over title to residential real property the Ochses purchased from the Henrys on December 14, 2001. The dispute concerned a 30-foot wide strip of land traversing the property that, unbeknownst to the parties at the time of the Ochses' purchase, had been conveyed to Dorchester County by a previous owner in 1919 for a county road that was never built. The Ochses filed a four-count complaint against the Henrys in the Circuit Court for Dorchester County on December 11, 2007, later adding Dorchester County as a defendant, seeking reformation of the deed, declaratory relief, injunctive relief, and damages for breach of contract, breach of special warranties, and fraud in the inducement. The Henrys filed a counterclaim seeking an award of attorney's fees pursuant to a provision of the contract of sale that specifically survived merger with the deed.

On August 4, 2008, the circuit court ruled on cross-motions for summary judgment, declaring that Dorchester County owned the 30-foot wide strip of land in fee simple. After a bench trial, the court also found that the contract of sale merged into the deed and that there was no breach of special warranties of title. Pursuant to the fee-shifting provision that survived merger with the deed, the court entered an award in favor of the Henrys and against the Ochses in the amount of $100, 020.00. The court denied all other relief.

The Ochses appealed to this Court. As a result of Court-ordered mediation, Dorchester County executed a quitclaim deed granting its interest in the 30-foot wide strip of land to the Ochses and was dismissed from the case. On December 21, 2011, this Court issued a reported opinion, Ochse v. Henry, 202 Md.App. 521, 33 A.3d 480 (2011), cert. denied, 425 Md. 396, 41 A.3d 571 (2012), reversing the circuit court's grant of summary judgment and vacating the award of attorney's fees in favor of the Henrys. We remanded for the circuit court to reconsider its award of attorney's fees because, as a result of our holding that the Henrys had breached their contractual duty to convey marketable title to the Ochses, the Ochses became the prevailing party entitled to a fee award.

On remand, without a hearing, the circuit court awarded $215, 710.60 in fees against the Henrys and in favor of the Ochses. This was substantially less than the $333, 354.00 the Ochses had initially requested and the $355, 731.78 the Ochses requested in a supplemental motion. The Ochses have now appealed from the court's fee award in their favor. We find no abuse of discretion in the court's approach, but we shall vacate the award and remand for reconsideration in light of the Ochses' April 27, 2012 supplemental motion for fees, which the circuit court appears to have overlooked.

Facts and Proceedings

Before we address the circuit court's decision on remand, we must first examine our reported opinion that ordered the remand.[1] The Ochses did not achieve a landslide victory. On the contrary, we affirmed the circuit court on all but one legal issue. We held that the Henrys did not breach a special covenant against encumbrances, 202 Md.App. at 532, 33 A.3d at 487, and that the Henrys did not breach a covenant of special warranty of title, id. at 535, 33 A.3d at 489. In order to sue on the contract of sale, which would ordinarily merge with the deed, the Ochses had to show either fraud or mistake. Although the Ochses claimed that evidence of the Henrys' material misrepresentations was "overwhelming and consistent, " we affirmed as not clearly erroneous the circuit court's factual finding

that the Henrys did not fraudulently induce the Ochses to purchase the property because, though Mr. Henry knew that the area had been used as a road, he honestly believed that it was merely an old dirt road and had no reason to suspect that Dorchester County owned a segment of the property.

Id. at 541, 33 A.3d at 492. We also rejected the Ochses' claim that the Henrys had been willfully blind to the possibility of a county road over the property. Id. at 542, 33 A.3d at 492.

We reversed only on the issue of mutual mistake of fact, an issue that had been so peripheral at trial that we felt it necessary to first address whether it had been preserved for our review. Id. at 542, 33 A.3d at 492-93. Although we decided this issue in favor of the Ochses, we also explained that it was, for purposes of resolving title to the property, moot.

The factual scenario in this case could not have occurred in the absence of fraud or mutual mistake. If the Henrys knew that there was a road across the property and did not disclose this to the Ochses, there was fraud. If neither party was aware of the road across the property, there was mutual mistake of material fact. Because the circuit court found the absence of fraud, there must have been mutual mistake. Accordingly, the contract of sale did not merge into the deed, and the Ochses should have been able to sue on the contract. Nevertheless, as a result of the mediation this Court ordered, the Ochses received Dorchester County's interest in the 30-foot wide strip across the Ochses' parcel. The issue of title is thus resolved because the Ochses now own the entirety of the 4.791 acre parcel in fee simple absolute.

Id. at 543, 33 A.3d at 493 (emphasis supplied).

For all practical purposes, the Ochses had been made whole and no longer had any claim of injury as of the time Dorchester County conveyed to them its interest in the driveway. From that point on, the Ochses possessed un-clouded fee simple title to the entire property. Success on the breach of contract claim against the Henrys – indeed, success on any aspect of the post-mediation appeal – was purely academic in all respects but one: it meant that the Ochses would qualify as the "prevailing party" and be entitled to an award of attorney's fees pursuant to the fee-shifting provision in the contract of sale.

As the circuit court had determined that the Henrys were the prevailing party and entered a fee award in their favor, we vacated that award and remanded for reconsideration. We explained:

In light of our holdings above, we conclude that the circuit court was acting within the terms of the contract and deed by awarding attorney's fees. Regardless of whether the contract merged with the deed, the attorney's fees provision of the contract survived. The apportionment of attorney's fees, however, was in error. While the Henrys did not breach the special covenants because the defect in title was created by their predecessors in title, the Henrys had a duty to convey marketable title to the 4.791 acres in the contract, which survives merger with the deed on the basis of mutual mistake. The Ochses now own the 4.791 acre parcel in fee simple, but at the time of the conveyance, the Henrys did not convey marketable title to the Ochses, breaching the contract. As such, we shall vacate the circuit court's determination of attorney's fees and remand for that court to reconsider its award of attorney's fees in light of this opinion.

Id. at 544, 33 A.3d at 494. In response to a motion for reconsideration, we further explained:

[O]ur previously filed opinion in this matter has been clarified to indicate that the Ochses are able to sue on the underlying contract based on mutual mistake or misrepresentation, avoiding merger of the contract with the deed. Because the contract contained an attorney's fees provision, the Ochses are entitled to attorney's fees. While title issues have been resolved, the circuit court must view the case as it appeared when initiated.

Id. at 526 n.2, 33 A.3d at 483 n.2.

On remand, the Ochses filed a motion requesting a fee award on January 24, 2012. They sought a total of $333, 354.00 and provided itemized billing records. They specified that, of that total, $176, 525.37 was incurred "up to the time of trial." This was similar to the fees incurred by both of the defendants through the trial, $174, 143.20.

On April 23, 2012, the Court of Appeals denied the Henrys' petition for a writ of certiorari to review our decision in the first appeal, as well as the Ochses' conditional cross-petition. On April 27, 2012, the Ochses filed a supplemental motion for fees that reflected the additional costs incurred in relation to the certiorari petition. The supplemental motion requested a revised total of $355, 731.78.

On July 12, 2012, the circuit court ruled without a hearing[2] and explained its $215, 710.60 award in a six-page opinion. Although the court confused our holding regarding breach of a special warranty against encumbrances with our holding regarding breach of contract and mutual mistake of fact, the court correctly noted that we "upheld [its] findings as to all counts except Count III."[3] The court recognized the Ochses' new status as the prevailing party and acknowledged our direction "to 'view the case as it appeared when initiated' and to disregard the subsequent resolution of title issues resulting from the court-ordered mediation."

The court followed our direction in Congressional Hotel Corp. v. Mervis Diamond Corp., 200 Md.App. 489, 499-500, 28 A.3d 75, 81-82 (2011) (citing Monmouth Meadows Homeowners Ass'n v. Hamilton, 416 Md. 325, 336-37, 7 A.3d 1, 7-8 (2010)), to consider the eight factors specified in Maryland Lawyers' Rule of Professional Conduct 1.5. The court also noted that it could consider "any other factor reasonably related to a fair award of attorneys' fees." Congressional Hotel, 200 Md.App. at 500, 28 A.3d at 82 (quoting Monmouth Meadows, 416 Md. at 337-38, 7 A.3d at 8). In the court's estimation, a critical "other factor" was the limited nature of the Ochses' appellate victory on the merits, as well as the limited relationship between this victory and the thrust of the Ochses' efforts at trial. The court explained:

The Court, unlike an appointed arbitrator, has been involved in the dispute between the Ochses and the Henrys throughout the pendency of this litigation. The substantial majority of the time and effort put forth by the Ochses' counsel during the pendency of the litigation in [the] trial court addressed Count IV, the claim against the Henrys for Fraud in the Inducement. In spite of the length of time spent litigating the fraud issue, this Court ultimately determined that there was a lack of any substantial evidence that the Henrys made fraudulent misrepresentations to the Ochses. It is a significant factor for this Court that the substantial majority of the time in trial and litigation effort put forth by Plaintiffs addressed the issue of willful fraud. After a careful review of the record of hearings, trial, and ...

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