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Hess v. Kafka

United States District Court, D. Maryland

October 28, 2016

GLADYS C. HESS et al., Plaintiffs
GEORGE J. KAFKA, JR., Defendant


          James K. Bredar United States District Judge.

         I. Background

         This case is the second-filed case between these parties. In the first-filed case, Civ. No. JKB-16-1757 (D. Md.), filed in this Court on May 31, 2016, George J. Kafka, Jr., brought a declaratory judgment action against Gladys C. Hess, requesting the Court declare the rights of the parties in reference to a property located in Baltimore County, Maryland (the “Property”), for which Dorothy J. Smith, who was Kafka's mother and Hess's sister, executed two deeds, one in 2009 and the second in 2011. (16-1757 Compl., ECF No. 1.) In the 2009 deed, Smith reserved a life estate for herself in the Property and conveyed the remainder interest to Kafka. (Id. ¶ 9.) This deed was recorded on April 30, 2010. (Id.) Over two years after Smith executed this deed, Smith executed another deed on the same property; in this deed, she again reserved a life interest to herself but purportedly conveyed the remainder interest to Hess. (Id. ¶ 10.) This deed was recorded on August 31, 2011. (Id. Ex. 2.) In addition to determining ownership of the Property, Kafka requested the Court to declare he is not indebted to Hess for any expenses related to the Property. (Id. ¶¶ 19-20.)

         In the instant case, which Hess filed in the Circuit Court for Baltimore County on July 22, 2016-the same day that she filed a motion to dismiss in 16-1757-Hess (in both her individual capacity and her capacity as personal representative of Smith's estate) sued Kafka in four counts: I - Hess asked the Court to declare the 2009 deed (“Kafka Deed”) void and that she has right, title, and interest in the Property; II - Hess asked the Court to declare that Kafka abused his confidential relationship with his mother and to cancel and rescind the Kafka Deed; III - Hess asserted this count in the alternative, claiming she had spent more than $75, 000 in maintenance, services, and improvements to the Property and that, unless Count I is decided in Hess's favor, it would be inequitable for Kafka to retain these benefits; she requested judgment against Kafka in excess of $75, 000; and IV - Hess also asserted this claim in the alternative, requesting the Court enter judgment against Kafka in excess of $75, 000, to declare the rights and liabilities of the parties, and to declare Hess is entitled to the proceeds of the sale of the Property. (16-2789 Compl., ECF No. 2.)

         Kafka timely removed Hess's state court case to this Court. (Notice of Removal, ECF No. 1.) On September 7, 2016, Hess filed an amended complaint (ECF No. 15) and a jury trial demand (ECF No. 16).[1] Now pending are Hess's motion to remand (ECF No. 14) and Kafka's motions to dismiss (ECF No. 10, 17). The motions have been briefed (ECF Nos. 13, 18, 19, 22, 23, 24), and no hearing is required, Local Rule 105.6 (D. Md. 2016). Inasmuch as the motion to remand bears upon the Court's jurisdiction, the Court will address it first.

         II. Standard for Remand

         Because federal courts are courts of limited jurisdiction, a cause of action is presumed to lie outside of that limited jurisdiction, and the burden of establishing otherwise rests upon the party asserting jurisdiction. Barbour v. Int'l Union, 640 F.3d 599, 605 (4th Cir. 2011) (en banc), abrogated on other grounds by 28 U.S.C. § 1446(b)(2)(B). In particular, removal statutes are to be strictly construed, and doubts regarding the propriety of removal should be resolved in favor of remanding the case to state court. Id.

         III. Analysis of Motion to Remand

         Hess concedes the Court has subject-matter jurisdiction based upon diversity of citizenship and amount in controversy. (Pl.'s Mot. Remand Supp. Mem. 3, ECF No. 14-1.) She does not assert any procedural defects in the removal process. Consequently, she relies upon principles of abstention to support her request for remand.

         Hess argues the Court should exercise its discretion to decline jurisdiction because she says her retooled complaint eliminated her “at law” claims and only asserted equitable claims. With regard to Count III, which is premised upon unjust enrichment, Hess's amended complaint requests the Court to “enter judgment against defendant George Kafka, Jr. in an amount in excess of $75, 000 through a constructive trust or equitable lien on the Property . . . .” Similarly, in Count IV, Hess asks the Court, inter alia, to “[e]nter judgment against Defendant for an amount in excess of $75, 000.00 through a constructive trust or equitable lien on the Property as reimbursement for those monies used by Ms. Hess to maintain and improve the Property.”

         Hess relies upon the Supreme Court's opinion in Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996), for the proposition, “It has long been established that a federal court has the authority to decline to exercise its jurisdiction when it is asked to employ its historic powers as a court of equity.” Id. at 717. Utilizing abstention principles, federal courts may dismiss or remand cases only where the relief sought is equitable or otherwise discretionary. Id. at 731. However, where a complaint asserts legal claims, a court may only stay adjudication pending the outcome of a related state court action; the court may not dismiss or remand claims at law when the court's action is premised upon abstention principles. Id. at 719-20. Therefore, the question arises as to whether Hess's complaint contains any claims “at law.” After reviewing the applicable Maryland law, the Court concludes this case contained both equitable and legal claims in the original complaint-the basis for removal-and still contains both equitable and legal claims in the amended complaint despite Hess's attempt to recast all of her claims as equitable ones.

         Hess alleges in Count III that, unless Count I is decided in her favor such that the Kafka Deed is declared void and that Hess is declared the rightful owner of the Property, Kafka will be unjustly enriched because of the money that Hess has expended on maintenance, services, and improvements to the Property. In her original complaint, she asked for a money judgment in excess of $75, 000. In her amended complaint, she continues to ask for a money judgment in excess of $75, 000, but tries to qualify her request as an equitable one by asking for the money judgment “through a constructive trust or equitable lien on the Property.”

         In Maryland, the three elements of a sustainable claim premised upon unjust enrichment are (1) a benefit conferred upon the defendant by the plaintiff; (2) the defendant's appreciation or knowledge of the benefit; and (3) the defendant's acceptance or retention of the benefit under circumstances rendering his retention of the benefit inequitable in the absence of his payment to the plaintiff for the value of the benefit. County Comm'rs of Caroline Cty. v. J. Roland Dashiell & Sons, Inc., 747 A.2d 600, 607 n.7 (Md. 2000). “[U]njust enrichment is a unifying principle for all . . . cases” seeking restitutionary remedies. Alternatives Unlimited, Inc. v. New Baltimore City Bd. of Sch. Comm'rs, 843 A.2d 252, 278 (Md. Ct. Spec. App. 2004). “In equity, the principal restitutionary remedies are the constructive trust, the equitable lien, subrogation, and the accounting for profits. At law, the chief restitutionary remedy is quasi-contract.” Id. The remedies of constructive trust and equitable lien “give the plaintiff restitution by giving the plaintiff title to, or a security interest in particular property.” Id. at 279.

         A constructive trust may be imposed upon specific property “by a court of equity to convert the holder of the legal title to property into a trustee for one who in good conscience should reap the benefits of the possession of said property. The remedy is applied by operation of law where property has been acquired by fraud, misrepresentation, or other improper method, or where the circumstances render it inequitable for the party holding the title to retain it.” Wimmer v. Wimmer, 414 A.2d 1254, 1258 (Md. 1980). “‘Such a trust may arise because the property was acquired through duress, fraud, undue influence or mistake, or through a breach of fiduciary duty, or through wrongful disposition of another's property.'” City of Annapolis v. West Annapolis Fire and Improvement Co., 288 A.2d 151, 155 (Md. 1972) (quoting Siemiesz v. Amend, 206 A.2d 723, 726 (Md. 1965)). Thus, a constructive trust is imposed to remedy the wrongful or inequitable acquisition of legal title to property. ÔÇťOrdinarily, a constructive trust must be established from circumstances surrounding the ...

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