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Kafka v. Hess

United States District Court, D. Maryland

June 6, 2017

GEORGE J. KAFKA, JR., Plaintiff
GLADYS C. HESS, Defendant


          James K. Bredar United States District Judge

         I. Background

         This case began as a one-count complaint filed on May 31, 2016, by Plaintiff George J. Kafka, Jr., for declaratory judgment against his aunt, Defendant Gladys C. Hess. (ECF No. 1.) Nearly two months later, Hess filed suit for both declaratory relief and damages against Kafka in Maryland state court, and that case was removed to this Court. (16-2789, ECF Nos. 1, 2.) After dismissing all of Hess's complaint in 16-2789 except for the unjust-enrichment count and denying her motion to remand, and after denying Hess's motion to dismiss Kafka's complaint in 16-1757, the Court consolidated the two cases. (16-2789, ECF Nos. 25, 26, 29; 16-1757, ECF Nos. 7, 8.) Pending before the Court in this consolidated case are a motion for summary judgment filed by Kafka (16-1757, ECF No. 10[1]), and a motion by Hess and her children, Gail A. Kroedel, Roland Stader, and Linda Zuck, to dismiss Kafka's counterclaim and third-party claim against them (ECF No. 18). For ease of reference in this memorandum opinion, Hess and her children will be referred to, collectively, as Hess Defendants, even though Hess is actually a plaintiff in 16-2789, the case that, strictly speaking, contains Kafka's counterclaim against Hess and third-party claim against Kroedel, Stader, and Zuck.

         The two motions have been briefed (ECF Nos. 16, 17, 21, and 22), and no hearing is required, Local Rule 105.6 (D. Md. 2016). Kafka's motion for summary judgment will be granted as to both Kafka's complaint in 16-1757 and as to the remaining count of Hess's complaint in 16-2789; the Hess Defendants' motion to dismiss the counterclaim and third-party claim in 16-2789 will be granted in part and denied in part. The Court will first consider Kafka's motion for summary judgment and the evidence upon which it is based. Following that, the Court will address the Hess Defendants' motion to dismiss Kafka's counterclaim and third-party claim (hereinafter referred to, collectively, as the counterclaim).

         II. Standard for Summary Judgment

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing predecessor to current Rule 56(a)). The burden is on the moving party to demonstrate the absence of any genuine dispute of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). If sufficient evidence exists for a reasonable jury to render a verdict in favor of the party opposing the motion, then a genuine dispute of material fact is presented and summary judgment should be denied. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). However, the “mere existence of a scintilla of evidence in support of the [opposing party's] position” is insufficient to defeat a motion for summary judgment. Id. at 252. The facts themselves, and the inferences to be drawn from the underlying facts, must be viewed in the light most favorable to the opposing party, Scott v. Harris, 550 U.S. 372, 378 (2007); Iko v. Shreve, 535 F.3d 225, 230 (4th Cir. 2008), who may not rest upon the mere allegations or denials of his pleading but instead must, by affidavit or other evidentiary showing, set out specific facts showing a genuine dispute for trial, Fed.R.Civ.P. 56(c)(1). Supporting and opposing affidavits are to be made on personal knowledge, contain such facts as would be admissible in evidence, and show affirmatively the competence of the affiant to testify to the matters stated in the affidavit. Fed.R.Civ.P. 56(c)(4).

         III. Evidence Pertaining to the Motion for Summary Judgment

         In his affidavit, Kafka avers he is retired and living in North Carolina. (Mot. Summ. J. Ex. 1, Kafka Aff. ¶ 2 (undated; filed Nov. 26, 2016), ECF No. 10-1.) Kafka is the only son of Dorothy J. Smith (“Smith”), who passed away March 31, 2015. (Id. ¶ 3.) Smith executed a durable power of attorney on September 17, 1999, appointing Kafka as her agent. (Id. ¶ 4.) Over a period of many years, Kafka knew that Smith and her husband, Emory H. Smith, Jr., who was Kafka's stepfather, planned for Kafka to become sole owner of all their property upon their deaths. (Id. ¶¶ 4, 5.) In 2003, the Smiths made Kafka a joint owner of their bank account at Bay Vanguard Federal Savings Bank, and in 2008, they made him a joint owner of their money market account, also at Bay Vanguard. (Id. ¶ 4.) Kafka was also made a beneficiary of an Individual Retirement Account (“IRA”) at Bay Vanguard and a beneficiary of the Smiths' insurance policies. (Id.)

         Emory Smith, Kafka's stepfather, passed away on June 2, 2009, making Dorothy Smith the sole owner of their residential property at 7313 Geis Avenue, Baltimore, Maryland (the “Property”). (Id. ¶¶ 3, 5.) During the preceding two-month period in which the stepfather's health was failing, Kafka traveled back and forth between North Carolina and Maryland. (Id. ¶ 5.) Kafka attended the funeral. (Id.) On June 9, 2009, Smith executed a deed, which had been drafted by her attorney, Raymond Rudacille, granting herself a life estate in the Property with the remainder to Kafka. (Id. ¶ 6; Ex. 2, Deed June 9, 2009, ECF No. 10-2.) That deed was recorded by the attorney on April 30, 2010. (Kafka Aff. ¶ 7; Deed June 9, 2009.)

         On April 23, 2009, prior to the stepfather's death, and upon Rudacille's recommendation and that of Kelly Bowman, who was an employee of Bay Vanguard, Kafka and Smith withdrew $209, 051.08 from the jointly held money market account at Bay Vanguard. (Id. ¶ 8.) Kafka deposited the money in his bank account in North Carolina. (Id.) But after the stepfather died, Smith asked her son to bring the funds back to Maryland; Kafka traveled from North Carolina and on July 21, 2009, wrote a check to Smith and helped her to deposit it back into their joint account at Bay Vanguard. (Id.) “The amount of the check was $198, 000, slightly less than the amount previously withdrawn (at [Kafka's] mother's request).” (Id.) On or about January 25, 2010, Kafka received a letter from a Maryland attorney, Rob Goldman, indicating that Kafka's durable power of attorney for Smith had been revoked. (Id. ¶ 9.) In addition, Goldman wrote, “'I have been instructed to put you on notice that if you attempt again to convert any of [Smith's] funds or continue to call her after she has asked you not to, appropriate legal action will be taken.'” (Id.) Kafka states he had never converted any of his mother's funds or called her after she had asked him not to do so. (Id.) From that point forward, Kafka states he was restricted from seeing or communicating with Smith “in every way” by his mother's sister, Gladys C. Hess. (Id. ¶ 10.)

         Hess notified Kafka of Smith's death and indicated there was no need for Kafka to come to the funeral, but Kafka did come, driving all night to get there. (Id. ¶ 11.) While in Maryland, he saw that most of the valuable personal property in Smith's home was missing. (Id.) In addition, after Smith's funeral, Kafka and his wife went to Smith's home, but Hess demanded they leave. (Id.) Kafka states, “I was unsure of my rights and, given the circumstances, I elected to stay away from Maryland and Gladys Hess.” (Id. ¶ 12.)

         In early 2016, Kafka learned Hess was trying to sell the Property. (Id. ¶ 13.) Hess contacted Kafka and indicated a title search revealed the 2009 deed in Kafka's favor. (Id. ¶ 14.) Kafka contacted the same prospective buyers in an effort to sell the Property to them, but a 2011 deed for the Property made title underwriters unwilling to insure the title, leaving Kafka unable to sell it. (Id. ¶¶ 15, 16; Ex. 3, Deed Aug. 4, 2011, ECF No. 10-3.) The 2011 deed by Smith purported to convey a life estate to Smith and the remainder to Hess, contingent upon Smith's not having exercised her reserved power of disposition during her lifetime.[2] (Deed Aug. 4, 2011.) Attorney Tara K. Frame authored a letter dated May 19, 2016, on Hess's behalf to Kafka; Frame wrote,

[P]rior to Ms. Hess learning of the previously executed deed, she had spent a substantial sum of money getting the property ready for sale. . . . [Hess] has had to deal with maintaining the property and expending monies to repair and renovate the property for sale out of her own funds. She has had to deal with hiring and working with the real estate agent to list the property. In light of the time and effort that Ms. Hess has invested in this property, she believes she should receive 50% of the net proceeds from the sale of the property, in addition to reimbursement for the monies she has spent on the property since Ms. Smith's death in March of 2015.

(Ex. 4, Frame Letter, ECF No. 10-4.) Attached to the letter was a list of each expenditure Hess had made, totaling $71, 336.30. (Id.) Frame requested Kafka contact her to discuss the matter. (Id.)

         Hess's opposition to Kafka's motion “concedes that the Hess Deed was filed in the land records after the Kafka Deed.” (Def.'s Opp'n 5, ECF No. 16.) In her affidavit, she states that she believed Smith's home belonged to her after Smith's death and, based on that belief, she spent money “maintaining the Property, as well as getting the Property ready to be placed on the market for sale.” (Id. Ex. 1, Hess Aff. ¶¶ 5, 8, Dec. 12, 2016, ECF No. 16-1.) Hess authorized Frame to send the letter to Kafka “in order to resolve any dispute between Mr. Kafka and [Hess].” (Id. ¶ 7.)

         IV. Analysis of Motion for Summary Judgment

         The two matters at issue in this motion are, first, the priority of the 2009 Deed in which Smith reserved a life estate for herself and granted the remainder to Kafka upon Smith's death and, second, whether Kafka is liable to Hess for the amounts she spent, she says, in getting the Property ready for sale. Since Hess has conceded the priority of the 2009 Deed to Kafka, and since she has presented no argument otherwise on this issue, the Court, accordingly, will enter a judgment so declaring its priority. That is consistent with long-established Maryland law that a grantor can only convey the property interest she possesses. When Smith granted the remainder interest in the Property to Kafka in 2009, she could not later convey the same interest to Hess in 2011. See In re Bauernschmidt's Estate, 54 A. 637, 645 (Md. 1903) (“A deed may be good in part. When it purports to convey that which the grantor had no authority to convey as well as to transfer that which he could transfer, it will be good as to the latter though inoperative as to the former.”). See also Hofsass v. Mann, 22 A. 65, 67 (Md. 1891); Johnson v. Hines, 61 Md. 122, 131-32 (Md. 1883).

         As to Hess's claim of unjust enrichment, her counsel has filed an affidavit, presumably pursuant to Federal Rule of Civil Procedure 56(d), [3] indicating discovery is needed to resolve the claim. (Def.'s Opp'n, Ex. 2, Farmer Aff. ¶¶ 6, 7, Dec. 12, 2016, ECF No. 16-2.) Specifically, he states, “At this time, it is unknown, without the aid of discovery, the extent and nature of the relationship that existed between Dorothy J. Smith and George J. Kafka, Jr., the reason, if any, for Mr. Kafka's one year delay in asserting his rights, and the value of the benefit conferred on Mr. Kafka. These factors require expert review and will better facilitate the Court's analysis of the balance of equities. Discovery is likely to benefit the just resolution of the above captioned action.” (Id.)

         The Court disagrees that the unjust enrichment claim cannot be resolved now without discovery. Hess has failed to explain satisfactorily why Smith's and Kafka's relationship matters to a determination as to whether Kafka was unjustly enriched by Hess's expenditures on the Property. She also provides no logical reason that Kafka's filing suit in 2016 rather than in 2015, when his mother died, bears upon Hess's claim of unjust enrichment. The only available evidence indicates Kafka was first informed of Hess's expenditures when he received the Frame Letter. His declaratory judgment suit was filed within two weeks of the letter's date, so no delay can be perceived. Finally, Hess has offered no reason she cannot provide evidence relating to the value of any benefit she claims was conferred upon Kafka. She obviously knows what was done to the Property, as set forth in the inventory attached to the Frame Letter, so she is not prevented from providing evidence on value. No good reason exists to delay determination of the unjust enrichment claim.

         After reviewing the evidence, the Court concludes Kafka was not unjustly enriched by Hess's making repairs and improvements to the Property. The three elements of an unjust-enrichment claim are as stated in Hill v. Cross Country Settlements, LLC, 936 A.2d 343, 351 (Md. 2007):

1. A benefit conferred upon the defendant by the plaintiff;
2. An appreciation or knowledge by the defendant of the benefit; and
3. The acceptance or retention by the defendant of the benefit under such circumstances as to make it inequitable for the defendant to retain the benefit without the payment of its value.

         “A defendant, however, 'is not unjustly enriched, and therefore not required to make restitution where the benefit was conferred by a volunteer or intermeddler.'” Id. at 352 (citing Daniel B. Dobbs, Handbook on the Law of Remedies § 4.9 (1973)). This qualifying principle to the doctrine of unjust enrichment “is based on the notion that 'one who confers a benefit upon another without affording that other the opportunity to reject the benefit, has no equitable claim for relief against the recipient of the benefit in the absence of some special policy . . . .'” Id. (citing Dobbs, § 4.9). A distinction is drawn between voluntary payment by a plaintiff of a defendant's debt, which ordinarily may be readily rejected or accepted by the defendant, and the voluntary rendering of services or the addition of value to the defendant. Id. at 352, 354-55. An “apt example” of the latter is given in Hill:

While the homeowner is away, a house painter paints the entire house, without the owner's consent, thereby adding value to the homeowner's property. The added value of the home cannot be separated easily and returned to the house painter. Therefore, a court should not permit the house painter to recover. Dobbs notes that, although the homeowner is enriched, this result “is preferable to payment of the intermeddler, who should not thus be encouraged to invade another's freedom of choice about his own affairs.” DOBBS, supra, § 4.9. If, however, the benefit is something that can be easily returned, such as money or personal property, “the fact that it is retained and used is a choice. When this choice is available, the choice principle is satisfied and restitution ... ought to be required.” DOBBS, supra, § 4.9.

Id. at 355 n.12.

         The present case is one step removed from Dobbs's hypothetical about the house painter. Here, it is not the house painter, or other type of contractor, who is seeking payment for services rendered. According to Hess, the contractors who made repairs or improvements to the Property have all been paid by her, and it is Hess who is seeking reimbursement from Kafka. Even so, assuming arguendo that the contractors' actions added some value to the Property, Kafka has no option to decline it. As is true with Dobbs's example of the house painter, Hess has not presented any evidence that the repairs and improvements can be separated easily and returned to the contractors. Kafka has been given no opportunity to decline whatever benefit to the Property was derived from the contractors' services. As noted earlier, the Frame Letter clearly indicates that Kafka first learned about the various repairs and improvements to the Property after they had been completed. No evidence indicates he was aware of them beforehand, that he requested the services be ...

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