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Roman v. Sage Title Group, LLC

Court of Special Appeals of Maryland

September 27, 2016


          Woodward, Berger, Friedman, JJ. [*]


          WOODWARD, J.

         This appeal arises from the Circuit Court for Baltimore County, where appellant, Robert Roman, filed claims for conversion and negligence against appellee, Sage Title Group, LLC ("Sage Title"). Roman is a bridge lender, providing "interest-only" loans to real estate developers to finance acquisition, construction, and renovation of properties that are to be sold or refinanced. Sage Title is a real estate title company that conducts residential and commercial closings. In his complaint, Roman alleged that Kevin Sniffen, Sage Title's branch manager for the Baltimore City office, converted $2, 420, 000 of Roman's funds that had been deposited into Sage Title's escrow account to facilitate financing for two real estate projects. Roman alleged that Sage Title was vicariously liable for Sniffen's conversion, and that Sage Title was directly negligent in allowing Sniffen to disburse Roman's funds, held in escrow, without Roman's permission.

         After a three-day jury trial, the circuit court granted Sage Title's motion for judgment on the negligence claim on the grounds that expert testimony was required to establish Sage Title's standard of care. The court allowed the conversion claim to go to the jury, which found in favor of Roman in the amount of $2, 420, 000. Following the jury verdict, Sage Title filed a motion for judgment notwithstanding the verdict ("JNOV"), which the court granted on the grounds that the allegedly converted funds were commingled with other funds in Sage Title's escrow account, and thus the conversion claim was barred as a matter of law.

         On appeal, Roman presents two questions for our review, which we have slightly rephrased:

1. Did the trial court err in granting Sage Title's motion for JNOV on Roman's conversion claim?
2. Did the trial court err in granting Sage Title's motion for judgment on Roman's negligence claim where the trial court determined that expert testimony was required to prove Sage Title's negligence?

         For the reasons set forth below, we answer the first question in the affirmative and the second question in the negative, thus reversing in part and affirming in part the judgment of the circuit court.


         The background for this case is set forth in the background section of the circuit court's Memorandum Opinion and Order:

On April 3, 2009, [Roman] testified that he met with Mr. Brian McCloskey, a builder, Mr. Kevin Sniffen, a branch manager at [Sage Title's] Baltimore City office, and Patrick Belzner, to discuss an alleged false escrow scheme. With respect to this scheme, [Roman] would place his money in [Sage Title's] escrow account for the purpose of showing liquidity in order for Mr. McCloskey to obtain construction loans on two properties. [Roman] was led to believe that the money he deposited into [Sage Title's] escrow account would remain his, and it was not at risk because he was the only individual who would have access to it. Mr. Sniffen, [Sage Title's] employee, was the approved person and lawyer to handle all of these transactions. [Roman] then deposited a total of two million four hundred and twenty thousand dollars ($2, 420, 000.00) into [Sage Title's] escrow account. A short time later, Mr. Sniffen disbursed the funds pursuant to Mr. McCloskey's instructions. Mr. Sniffen was later fired by [Sage Title] on May 26, 2009 when he accepted two personal checks, which was against [Sage Title's] policy. In February 2012, Mr. Sniffen pled guilty to wire fraud or conspiracy to commit wire fraud and he was also disbarred.
[Roman] filed his Complaint in this matter on January 26, 2012, alleging three claims: (1) Conversion and Theft; (2) Negligence; and (3) Accounting. [Sage Title] then filed its Answer on March 14, 2012. Subsequently, [Sage Title] filed a Motion for Summary Judgment on August 28, 2012, with [Roman] filing [his] Opposition on September 24, 2012. [Sage Title's] Motion was later denied by the Court on October 17, 2012. After the Court's ruling, [Sage Title] filed a Motion for Reconsideration regarding the Court's Summary Judgment ruling. [Roman] filed [his] Opposition on November 14, 2012. Similar to [Sage Title's] Motion for Summary Judgment, the Court denied [Sage Title's] Motion for Reconsideration on January 17, 2013.
[Roman's] case then proceeded to a jury trial on August 6, 2013. At the beginning of trial, Roman dismissed all his claims with prejudice against the other Defendant in this case, Covenant Title Corp. [Roman] also informed the Court that he would not be pursuing his Accounting claim. At the end of [Roman's] case on August 7, 2013, [Sage Title] made a Motion for Judgment, which the Court reserved on. Subsequently, on August 8, 2013, at the close of [Sage Title's] case, [Sage Title] renewed its Motion for Judgment. The Court granted [Sage Title's] Motion with respect to the Negligence claim, but denied the Motion with respect to the Conversion claim. The trial concluded on August 8, 2013, with the jury finding in favor of [Roman] in the amount of two million four-hundred and twenty thousand dollars ($2, 420, 000.00).
[Sage Title] next filed [a] Motion for JNOV and Conditional Motion for New Trial on August 19, 2013, with [Roman] filing [his] Opposition on August 30, 2013. [Sage Title] subsequently filed a Reply on September 10, 2013, and later, an Amended Memorandum of Grounds and Authorities in Support of its Motions on September 3, 2013 [sic]. [Roman] then filed an Amended Memorandum of Grounds and Authorities in Support of its Opposition on September 11, 2013. The Court then held a hearing on October 11, 2013 on the Motions.

(Footnotes omitted).

         The trial court entered its Memorandum Opinion and Order on February 28, 2014, granting Sage Title's JNOV motion on the grounds that Roman's money was commingled with other money in Sage Title's escrow account, and thus Roman "cannot bring a conversion claim." As a result, the court vacated the judgment in favor of Roman and ordered that judgment be entered in favor of Sage Title. Roman filed his notice of appeal on March 21, 2014. Additional facts will be set forth below as necessary to resolve the questions presented.


         Maryland Rules 2-519 and 2-532 govern motions for judgment and JNOV, respectively. The standard for reviewing the grant of a motion for judgment under Rule 2-519 is the same for reviewing the grant of a JNOV motion under Rule 2-532: we review the grant of both motions de novo. UBS Fin. Servs., Inc. v. Thompson, 217 Md.App. 500, 514 (2014), aff'd, 443 Md. 47 (2015). In doing so, we view the evidence and the reasonable inferences to be drawn from it in the light most favorable to the non-moving party, and, uphold the grant of the motion "only when the evidence and permissible inferences permit only one conclusion with regard to the ultimate legal issue." See Kleban v. Eghrari-Sabet, 174 Md.App. 60, 86 (2007).


         I. Conversion

         Roman argues that the trial court erred in granting Sage Title's JNOV motion on the conversion claim, because the jury was presented with sufficient evidence to support the verdict in Roman's favor. According to Roman, the monies at issue in this case were "sufficiently identifiable" to allow the conversion claim to proceed, because the monies were held in Sage Title's escrow account for a particular purpose, and Sage Title's detailed records kept track of the escrow account's deposits and disbursements. Roman claims that, because funds in escrow accounts "belong to the funds' original owners, " even if such accounts include other funds, that money is sufficiently segregated and identifiable to allow for a conversion claim, given escrow account rules. According to Roman, even though no Maryland decision "squarely addresses the conversion of money" held in escrow, this Court should look to the Court of Appeals's language referring to the "conversion" of clients' funds held in attorneys' escrow accounts in a variety of attorney grievance cases. Roman also urges this Court to look at cases in other jurisdictions where courts have allowed conversion claims for money that is used for a specific purpose.

         Roman next claims that, even if his funds were commingled with other funds, his conversion claim is valid, because his money should have been segregated in a separate escrow account, and thus the conversion occurred before the funds were commingled. Roman concludes that a defendant in a conversion claim should not be able to "skirt liability with a 'commingling' defense if that defendant was the cause of the money being wrongfully commingled in the first place."[1]

         Sage Title responds that the trial court correctly granted its JNOV motion on the conversion claim, because commingled funds cannot be the subject of conversion. Sage Title claims that, although there is an exception for "specific segregated or identifiable funds, " such exception is narrow and not applicable when the monies are commingled with other funds. According to Sage Title, the monies in question here were "doubly commingled, " because they were commingled with other funds from the same projects, as well as with the funds for all of Sage Title's Baltimore clients. Sage Title disputes Roman's reliance on the attorney grievance cases, because those cases, (1) "interpret Maryland Rules of Professional Conduct, not the common law of conversion, " and (2) concern attorney escrow accounts, which have particular rules that do not apply to Sage Title's escrow account. Sage Title concludes that the trial court's decision comports with the purpose of the rule against conversion claims for commingled funds, because given the number of transfers and loan agreements between Roman and McCloskey for this project, the money at issue here is difficult to track.

         "Conversion evolved from trover, which occurred where a defendant, a 'finder of lost goods[, ] . . . refused to return them' to the plaintiff, the owner of the goods." Thompson v. UBS Fin. Servs., 443 Md. 47, 56 (2015) (alterations in original) (quoting Lawson v. Commonwealth Land Title Ins. Co., 69 Md.App. 476, 480 (1986)). "[T]he action and the tort have expanded beyond the case of lost goods and cover now nearly any wrongful exercise of dominion by one person over the personal property of another . . . ." Lawson, 69 Md.App. at 480. Historically, the tort of conversion was limited to tangible property, but over the years has been broadened to include intangible property, so long as "the defendant converts a document that embodies the plaintiffs right to the plaintiffs intangible property, " such as a "stock certificate, a promissory note, or a document that embodies the right to a life insurance policy." Thompson, 443 Md. at 57 (citations omitted).

         With respect to money, the Court of Appeals has stated that "[t]he general rule is that monies are intangible and, therefore, not subject to a claim for conversion." Allied Investment Corp. v. Jasen 354 Md. 547, 560, 564 (1999). One reason for the rule is that money is often commingled: "if a defendant maintains possession of the proceeds in question, but commingles it with other monies, the cash loses its specific identity, " and thus would be considered intangible property. Id. at 566. Furthermore, a conversion action "is not maintainable for money unless there be an obligation on the part of the defendant to return the specific money entrusted to his care"; otherwise, there is "only a relationship of debtor or creditor, " and a conversion action "will not lie against the debtor." Law son, 69 Md.App. at 482 (citations and internal quotation marks omitted).

         In Jasen, the Court of Appeals also explained that there is an exception to the general rule that money is not subject to a conversion claim:

An exception exists, however, when a plaintiff can allege that the defendant converted specific segregated or identifiable funds. This rule is well-synthesized in 1 Fowler V. Harper et al., The Law of Torts, § 2.13, at 2:56 (3d ed. 1986), which notes that conversion claims generally are "recognized in connection with funds that have been or should have been segregated for a particular purpose or that have been wrongfully obtained or retained or diverted in an identifiable transaction."

354 Md. at 564-65 (emphasis added) (citations and internal quotation marks omitted). Thus, according to the Court, money can be subject to a claim for conversion if "a plaintiff can allege that the defendant converted specific segregated or identifiable funds." Id. at 564.

         Since Jasen, this Court has had occasion to consider a claim of conversion of money in a variety of contexts. In Lasater v. Guttman, Lasater brought suit against her husband, alleging that he had converted "specific, segregated, identifiable separate funds" from the couple's joint checking account, maintained for household expenses, and spent these funds "on personal adventures, exotic merchandise and ill-advised real estate projects." 194 Md.App. 431, 447 (2010). We held that the wife's claim was precluded, because the wife did not point to specific amounts that she deposited, nor did she assert that the husband spent specific funds on non-household expenses. Id. at 447-48. We held that "once these monies were commingled with the ...

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