JOHN B. PARSONS HOME, LLC
JOHN B. PARSONS FOUNDATION, ET AL.
Eyler, Deborah S., Berger, Rodowsky, Lawrence F. (Retired, Specially Assigned), JJ.
This case arises out of an order of the Circuit Court for Wicomico County granting summary judgment in favor of appellee, the John B. Parsons Foundation ("the Foundation"), against appellant, John B. Parsons Home, LLC ("JBPH"). This appeal requires us to determine the rightful beneficiary of a trust executed by Francis C. Baker in 1964 ("the Baker Trust"). The circuit court concluded that the Foundation is the rightful beneficiary to the Baker Trust and, therefore, granted the Foundation's request for declaratory judgment. Additionally, the circuit court dismissed the Foundation's trover and conversion claim, as well as its accounting claim.
Manufacturers and Traders Trust Company ("M&T") is the trustee of the Baker Trust. On appeal, M&T contends that the rightful beneficiary of the Baker Trust is neither the Foundation nor JBPH. Rather, M&T argues that the rightful beneficiary is Harrison Enterprises ("Harrison"), the corporate parent of JBPH. Prior to awarding summary judgment to the Foundation, the circuit court denied Harrison's motion to intervene. M&T asserts error in the circuit court's failure to allow Harrison to intervene and further argues that the circuit court erred in dismissing M&T's claim of constructive fraud against JBPH.
On appeal, JBPH presents two issues for our review, which we rephrase and consolidate as one issue:
1. Whether the circuit court erred in concluding that the Foundation is the rightful beneficiary of the trust.
Additionally, the Foundation cross-appeals and presents one issue for our review:
1. Whether the circuit court erred in dismissing the Foundation's claim for trover and conversion.
M&T also cross-appeals and presents four issues for our review, which we rephrase and consolidate as follows:
1. Whether the circuit court erred in failing to require Harrison's intervention as an indispensable party.
2. Whether the circuit court erred in granting the Foundation summary judgment.
3. Whether the circuit court erred in dismissing M&T's constructive fraud claim against JBPH.
For the reasons that follow, we affirm the judgment of the Circuit Court for Wicomico County.
FACTUAL AND PROCEDURAL BACKGROUND
The material facts of this case are not in dispute. On July 1, 1964, Francis C. Baker established a trust ("the Baker Trust"). The trust instrument ("the Deed") provides that, upon the death of certain named individuals ("the trigger event"), the trust will terminate, with the remaining proceeds distributed to three "named institutions, or [their] respective successor[s]." Each of the three named institutions are charitable organizations. One such institution is the "John B. Parsons – Salisbury Home for the Aged."
At the time the Baker Trust was executed, an entity known as the John B. Parsons – Salisbury Home for the Aged ("JBP Salisbury") owned and operated a residential and health care home for the elderly ("the Home"), located at 300 Lemmon Hill Lane, Salisbury, Maryland 21801. The Home and the entity that owned the Home shared the name the "John B. Parsons – Salisbury Home for the Aged" at the time the Baker Trust was established.
Due to economic considerations, JBP Salisbury subsequently solicited the financial and managerial support of J.P. Harrison, Incorporated ("J.P. Harrison"), a Pennsylvania corporation, to run the day-to-day operations of the Home. In 1983, J.P. Harrison and JBP Salisbury executed a lease agreement for J.P. Harrison to manage and operate the Home for a period of five years. Included in the lease agreement was an option agreement, which provided that, after five years, J.P. Harrison could purchase the Home from JBP Salisbury for a purchase price of $925, 000.
Specifically, the option agreement provided:
[JBP Salisbury] does hereby grant unto [J.P. Harrison Incorporated], its heirs or assigns, an option to purchase for the sum of Nine Hundred Twenty-Five Thousand Dollars ($925, 000) the real estate more particularly described in "Exhibit A" . . . [a]lso included with the real estate and covered by this Option are the inventory, equipment, furnishings, fixtures, accounts receivable, contract rights and any other personal or business assets located on the premises and/or regularly used by the John B. Parsons - Salisbury Home for the Aged.
On January 1, 1989, Harrison Enterprises ("Harrison"), on behalf of its corporate subsidiary, J.P. Harrison, exercised the option and JBP Salisbury, therefore, conveyed the Home to Harrison. The articles of sale to the conveyance provide that:
[JBP Salisbury] does hereby agree to sell, assign and transfer all or substantially all of its property and assets to [Harrison], its successors and assigns, as hereinafter set forth.
(Emphasis added). The confirmatory deed for the articles of sale provides that "the conveyance of the property described herein . . . constitutes all or substantially all of [JBP Salisbury's] remaining assets." (Emphasis added). The confirmatory deed further provides that JBP Salisbury conveyed "all those tracts or parcels of land situate[d] and lying in the Town of Wicomico County."
The January 1, 1989 bill of sale similarly provides that JBP Salisbury conveyed:
all tht certain personal property, tangible and intangible, which now or has been located on or about the premises of the John B. Parsons Home on Lemmon Hill Lane in Salisbury, Maryland including, but not limited to, all furniture, furnishings, fittings, fixtures, shrubbery, walks, fences, equipment, machinery, appliances, accessories, supplies, apparatus, inventory, equipment, accounts, records pertaining to the said John B. Parsons Home, contract rights, choses in action, good will and any other tangible or intangible property now or formerly located on or associated with the said John B. Parsons Home, or which was intended to be conveyed pursuant to a certain Option Agreement . . . .
In 1992, as part of a corporate restructuring, JBP Salisbury changed its corporate name from JBP Salisbury to the John B. Parsons Foundation ("the Foundation"). Despite its sale of the Home, the Foundation continues to exist as a philanthropic and charitable non-profit organization. Among the continued philanthropic endeavors of the Foundation is the care for the elderly.
In 1995, approximately six years after its acquisition of the Home, J.P. Harrison was reorganized and converted to Salisbury Retirement Center, Inc. ("SRC"), which took over responsibility of the day-to-day operations of the Home. In 2003, the Harrison entities again restructured and reorganized. Included in the restructuring was the management of the Home, which was transferred from SRC to appellant, John B. Parsons Home, LLC ("JBPH").
In 2003, the first trigger event occurred and, accordingly, the Baker Trust trusteebegan making distribution payments. Between July 2003 and 2012, M&T, and its corporate predecessor, made payments to JBPH in the amount of approximately $117, 190.84. No request or demand was made by JBPH for such payment and JBPH allegedly only learned of the Baker Trust's existence because of the distribution payments.
Upon learning of M&T's payments to JBPH, the Foundation demanded that M&T cease making payments to JBPH. The Foundation claimed that the Foundation, not JBPH, was the rightful beneficiary to the Baker Trust, and that M&T was erroneously making distribution payments to JBPH. M&T complied with the Foundation's request pending the outcome of the instant litigation.
On April 17, 2012, the Foundation filed a complaint in the Circuit Court for Wicomico County. In its complaint, the Foundation sought declaratory relief that it was the rightful beneficiary to the Baker Trust and demanded an accounting of all monies, gifts, or bequests received by JBPH on behalf of JBP Salisbury since 1984. In addition, the Foundation alleged trover and conversion claims against JBPH, as well as breach of trust against M&T due to M&T's allegedly improper distribution payments to JBPH.
During the course of litigation, Harrison moved for leave to intervene as a party defendant. In its motion, Harrison set forth the Harrison corporate structure and explained that Harrison, not J.P. Harrison, was the entity that acquired "all or substantially all" of JBP Salisbury's assets by virtue of the JBP Salisbury–J.P. Harrison conveyance. Harrison, however, only moved for permissive intervention, pursuant to Md. Rule 2-214(b) and (c).The Foundation opposed Harrison's motion to intervene and argued that Harrison's interests were fully and adequately represented by JBPH because JBPH is the corporate subsidiary of Harrison. The Foundation further argued that permitting Harrison to intervene would cause unnecessary delay. On October 1, 2012, the circuit court denied Harrison's motion to intervene.
Subsequently, the parties filed competing cross-motions for summary judgment. On December 14, 2012, the circuit court held a hearing on all outstanding motions, including the cross-motions for summary judgment. During the hearing, the Foundation argued that there could be no corporate "successor" to JBP Salisbury because the JBP Salisbury corporate entity still exists today, albeit under a different corporate name, i.e., the Foundation. The Foundation argued that it only transferred the real and personal property associated with the Home, not its unknown beneficiary rights to the Baker Trust. The Foundation urged the circuit court to undertake a careful reading of the applicable conveyance documents in assessing the rightful beneficiary of the Baker Trust.
On the other hand, JBPH asserted that it was the institutional "successor" to JBP Salisbury because of its ownership of the Home and because it acquired "all or substantially all" of JBP Salisbury's assets, including the beneficiary rights to the Baker Trust. JBPH argued it was the "institution" named in the Deed because the "institution" clearly referred to the Home itself, not whichever entity happened to own the Home. The circuit court held the matter sub curia in order to afford a careful reading of the applicable documents. In addition, at the conclusion of the hearing, the circuit court dismissed M&T's claim of constructive fraud against JBPH.
Subsequently, on February 25, 2013, the circuit court issued a memorandum opinion granting the Foundation summary judgment on the Foundation's declaratory judgment action. In reaching its decision, the circuit court noted that it primarily relied on four documents: (1) the Francis C. Baker Trust dated July 1, 1964; (2) the option agreement between JBP Salisbury and J.P. Harrison dated December 29, 1983; (3) the articles of sale dated January 1, 1989; and (4) the bill of sale dated January 1, 1989. After reviewing the relevant documents, the circuit court concluded, inter alia, that the Foundation is the rightful beneficiary of the Baker Trust. The circuit court concluded that "the Option Agreement clearly intended to convey the ...