Argued: June 1, 2017
Court for Baltimore County Case No. 03C12000890
Barbera, C.J. Greene, Adkins, McDonald, Watts, Hotten, Getty,
January 26, 2012, Respondent and Cross-Petitioner Robert
Roman ("Mr. Roman") sued Petitioner and
Cross-Respondent, Sage Title, LLC ("Sage Title" or
"Petitioner"),  in the Circuit Court for Baltimore
County. Respondent alleged in his Complaint that Sage Title
committed conversion/theft and negligence. He sought to hold
Sage Title liable under a theory of respondeat
superior for the actions of Sage Title's employee
Kevin Sniffen, who, along with Patrick Belzner and Brian
McCloskey, according to Mr. Roman, were part of a fraud
scheme to which he fell victim. Respondent also sought to
hold Sage Title liable under a theory of direct negligence.
The parties proceeded to trial, and at the close of Mr.
Roman's evidence, Sage Title moved for a judgment with
respect to the negligence count, a motion on which the trial
court reserved and ultimately granted at the close of Sage
Title's case. The jury returned a verdict in favor of Mr.
Roman on the conversion count and awarded him $2, 420, 000 in
damages. Sage Title moved for judgment notwithstanding the
verdict ("JNOV") on the conversion count, and the
trial court granted the motion. Mr. Roman appealed to the
Court of Special Appeals, which affirmed the trial
court's judgment on the negligence count but reversed the
trial court's grant of JNOV with respect to the
conversion count. Both parties petitioned this Court for
AND PROCEDURAL BACKGROUND
Roman's Transactions with Mr. McCloskey, Mr. Sniffen, and
Roman's business interests involved making private loans
to individuals who buy and renovate homes but do not use bank
financing. At trial, Mr. Roman described his loan business as
a "bridge" for contractors who cannot qualify for
traditional financing from a bank; his "bridge
loan" allows a contractor to buy property then either
refinance with a traditional bank loan or sell the property
after completing renovations. In the late 1990s, Mr. Roman
met Brian McCloskey, a superintendent for a local builder.
Beginning in the early 2000s, Mr. Roman lent Mr. McCloskey
money to buy "old dilapidated house[s]" which
"he would gut  and fix  up and resell[.]" As of
April 2009, Mr. McCloskey owed Mr. Roman over one million
dollars in principal and interest.
April 3, 2009, Mr. McCloskey asked Mr. Roman to come to Sage
Title's office because he needed to borrow money to
complete a real estate transaction for a property located in
York, Pennsylvania ("Columbia York"). There, at
Sage Title's office, Mr. McCloskey introduced Mr. Roman
to Mr. Sniffen, an attorney and employee of Sage Title, and
Patrick Belzner, an associate of Mr. McCloskey. During the
meeting, which lasted approximately three and a half hours,
the men explained that they would soon need an infusion of
cash to establish an escrow account showing liquidity to
either the United States Department of Housing and Urban
Development or institutional investors for development of the
Columbia York project and a marina property in Baltimore City
("Claires Lane"). Mr. McCloskey told Mr. Roman that
he would likely be asking for more money in the near future.
Mr. Roman testified that Mr. Belzner and Mr. McCloskey
explained that the money in escrow was "to show
liquidity to [lenders]." In other words, the money would
demonstrate to the lender that there was money to pay
interest on the construction loan. Mr. Roman's
understanding was that his money would not be used as a
bridge loan to Mr. McCloskey, as the two men had arranged in
the past, but instead would only be used for purposes of
showing liquidity in the escrow account. According to Mr.
Roman, Mr. McCloskey told him that once Mr. McCloskey
received the United States Department of Housing and Urban
Development construction loan, Mr. Roman's money
deposited at Sage Title would be returned to him. Mr. Roman
testified that Mr. Sniffen was present during this
conversation and that he nodded affirmatively, saying
"yes" during the discussions. Mr. Sniffen, in
contrast, testified that he could not remember the details of
the April 3 meeting.
Roman testified that at the April 3 meeting Mr. McCloskey,
Mr. Sniffen, and Mr. Belzner had with them a grocery bag
containing $230, 000 cash, which they claimed they could not
use for the settlement of the Columbia York property.
According to Mr. Roman, Mr. McCloskey, Mr. Sniffen, and Mr.
Belzner "didn't have any checks and they wanted to
give [Mr. Roman] the cash for checks[.]" Mr. Roman
testified that "naturally, when you see a lot of cash
like that, there's, something is
April 13, 2009, Mr. Roman delivered to Mr. McCloskey or Mr.
Belzner a $1.5 million cashier's check made payable to
"Sage Title Group[, ]" with the notation
"Robert Roman" on the check's memo line. Mr.
Roman did not request a promissory note for the $1.5 million
because, as he explained, "it was not a loan" and
"not at risk[.]" Later that month, he delivered two
more cashier's checks to Mr. McCloskey or Mr. Belzner:
one issued on April 20 in the amount of $220, 000, and the
other issued on April 29 in the amount of $700, 000. As with
the April 13 check for $1.5 million, both of these checks
were made payable to "Sage Title Group" and
contained the name "Robert Roman" on the memo
lines. Mr. Roman never requested nor received any written
explanation of how the funds would be handled. He also did
not charge interest on the funds he deposited into the escrow
account. Mr. Roman explained at trial his understanding that
"it wasn't a loan, it was money going into an escrow
account at Sage and it would be mine and I was the only one
to have access to it." Mr. Sniffen, on the other hand,
indicated that his understanding was that there were no
restrictions on the use of the funds other than how Mr.
Title's Baltimore Escrow/Trust Account
Title's Baltimore escrow/trust account is a single
account containing funds for all of Sage Title's
Baltimore clients. In a recorded deposition, which was played
at trial, Michael Maddox ("Maddox"), Sage
Title's president at the time of the proceedings,
explained that funds are withdrawn from that account when
they are ready to be disbursed per client instructions.
According to Mr. Maddox, the money in Sage Title's
escrow/trust account belongs to the clients and Sage Title is
not free to do what it wants with the funds; further, the
money in the account may only be disbursed upon the
client's written instruction.
trial, Sage Title's executive vice president, Susan
Holler also testified. Ms. Holler explained that Sage
Title's use of a single ledger allowed the company to
track each specific transaction. According to Ms. Holler, you
"couldn't tell if it was your dollar that was put in
or someone else's dollar that was put in but by using the
single ledger balance report, we know how much was deposited
for that case and how much needs to be disbursed for that
respect to Mr. Roman's deposits, the Columbia York ledger
reflected that a check in the amount of $1.5 million was
deposited and "Robert Roman" was listed in the
Payee Name Memo line of the ledger. The Claires Lane ledger
reflected that checks in the amount of $700, 000 and $220,
000 were deposited and, again, "Robert Roman" was
listed in the Payee Name Memo line of the ledger. Both
ledgers identified the "Trust Account" as
"BALTIMORE." Mr. Sniffen later testified that by
May 25, 2009, he had disbursed funds for the Columbia York
and Claires Lane transactions from the trust account at Mr.
Title's Termination of Mr. Sniffen
end of February, March, and April 2009, Sage Title's
accounting department audited the single-ledger balance
reports for the escrow account containing the money at issue.
The reports show that a series of personal checks from Mr.
McCloskey were deposited into the account by Mr. Sniffen in
both March and April, and some of the checks had bounced. Mr.
Maddox claims that the accounting department never notified
him of this. Instead, the accounting department had contacted
Mr. Sniffen to get him to remedy the problem. Ms. Holler
testified that she was notified by the accounting department
in late March 2009 that at least three of the four personal
checks from Mr. McCloskey accepted by Mr. Sniffen had
bounced. Ms. Holler testified that she called Mr. Sniffen and
warned him to no longer accept personal checks. Ms. Holler
also testified that she is "almost positive" that
she discussed this issue with Mr. Maddox.
between late March and early April 2009, after having been
warned by Ms. Holler of the company policy, Mr. Sniffen
accepted two more personal checks from Mr. McCloskey. Both of
these checks bounced and caused an overdraft on the escrow
account. Mr. Maddox testified that upon learning that Mr.
Sniffen had accepted these two checks, Mr. Maddox immediately
placed Mr. Sniffen on leave pending investigation then
ultimately terminated him on May 26 for violating company
Roman's Continued Transactions with Mr. Sniffen and Mr.
Roman continued to have dealings with Mr. McCloskey, Mr.
Belzner, and Mr. Sniffen, even after Mr. Sniffen's
termination in May 2009. In June 2010, upon needing to
demonstrate his own assets to potential lenders, Mr. Roman
sought return of the escrowed funds. Despite execution of a
formal agreement in 2011 between Mr. Roman and Mr. McCloskey,
Mr. Roman never received the funds. He filed two lawsuits on
July 14, 2011: a claim for a confessed judgment against Mr.
McCloskey and a four-count complaint against Mr. Sniffen.
Thereafter, Mr. Roman filed the present suit.
January 26, 2012, Mr. Roman sued Sage Title, LLC for Count I,
"Conversion/Theft, " Count II, "Negligence,
" and Count III, "Accounting." He sought to
hold Sage Title liable vicariously for the actions of Mr.
Sniffen during his employment with Sage Title. Mr. Roman
alleged that Mr. Sniffen, along with Mr. Belzner and Mr.
McCloskey, were part of a fraud scheme to which Mr. Roman
fell victim. He also sought to hold Sage Title liable for
direct negligence for allowing the unauthorized withdrawal of
funds and failing to have in place procedures and safeguards
to prevent the unauthorized disbursement of Mr. Roman's
funds. The Circuit Court for Baltimore County held a
three-day trial starting on August 6, 2013.
close of Mr. Roman's case, Sage Title moved for judgment,
pursuant to Maryland Rule 2-519. In its motion for judgment,
Sage Title argued, inter alia, that Mr. Roman's
monies were commingled and could not, therefore, be
converted, that Mr. Roman failed to establish Sage
Title's duty to him for purposes of his negligence claim,
that Sage Title is not responsible for the acts of Mr.
Sniffen, and that Mr. Roman's own negligence bars his
claims. The trial court reserved ruling on the motion. Mr.
Roman voluntarily dismissed Count III, his claim for an
accounting. At the close of all the evidence, Sage Title
renewed its motion for judgment. The trial judge granted the
motion on the negligence count but denied it on the
conversion count. The jury returned a verdict in favor of Mr.
Roman on the conversion count, awarding him $2, 420, 000 in
damages. The court entered the judgment on August 16, 2013.
Following the verdict, Sage Title moved, pursuant to Md. Rule
2-532, for JNOV. The trial judge granted Sage Title's
JNOV on February 28, 2014, finding that the commingling of
funds precluded any claim for conversion. The trial judge
ruled, in pertinent part:
[T]here was a variety of evidence that explained how [Sage
Title] operates its trust account. First, during Michael
Maddox's deposition . . . he testified that the trust
account is different from [Sage Title's] operating
account . . . [which] pays [Sage Title's] rent, mortgage,
employees, and other company expenses. Mr. Maddox further
testified that [Sage Title] is not free to do what it wants
with the funds in the account. Trial counsel then posed the
following scenario: "[a]nd so that if, for instance, I
had a file with Sage Title and Ms. Whelihan had a file with
Sage Title, you couldn't use the money in Ms.
Whelihan's account to pay expenses that happened in my
file, could you?" Mr. Maddox then responded with:
However, there was also testimony that [Mr. Roman's]
money was commingled with other funds in [Sage Title's]
trust account, which leads this [c]ourt to conclude that [Mr.
Roman's] Conversion claim should not have been submitted
to the jury. First, during Mr. Sniffen's testimony, he
testified that [Sage Title's] trust account was "one
large escrow account, " where funds were deposited and
identified by file so "they would be applied to a
certain file" in order to reconcile the file. Mr.
Sniffen further provided that all of the money from
transactions pertaining to [Sage Title's] Baltimore City
office was located in the same escrow account, and with
respect to Mr. McCloskey's specific files, other
individuals, besides [Mr. Roman], contributed money to these
properties. Ledger sheets relating to the two properties at
issue further confirm the fact that other individuals
contributed money to Mr. McCloskey's properties. In
addition to Mr. Sniffen's testimony, Mr. Maddox also
provided testimony that [Mr. Roman]'s money was
commingled with other funds. Specifically, Mr. Maddox
testified that [Sage Title] had one escrow account for each
office, further indicating that "all of the funds from
every transaction that goes through that office are
commingled into that one escrow account." However, Mr.
Maddox did testify that [Sage Title] accounts separately for
each individual file.
Finally, Ms. Holler also provided testimony that [Mr.
Roman]'s funds were commingled with other funds.
Specifically, Ms. Holler testified that there were other
sources of funds in [Sage Title's] escrow account besides
[Mr. Roman's]. Ms. Holler also confirmed that [Mr.
Roman's] deposit went in with all of the other deposits
in [Sage Title's] Baltimore City escrow account.
Furthermore, with respect to the funds in the trust account,
[Sage Title] cannot identify the exact dollar that is being
withdrawn or disbursed. Instead, [Sage Title] can only
identify the exact amounts that are deposited and how much
needs to be disbursed.
In sum, Mr. Sniffen, Mr. Maddox, and Ms. Holler's
testimony all support the conclusion that [Mr. Roman's]
money was commingled with other funds in [Sage Title's]
Baltimore City escrow account and also with funds contributed
towards Mr. McCloskey's properties. Although [Sage Title]
accounts separately for each file, it does not solve the
problem that [Mr. Roman's] money was commingled with
other funds. [Sage Title] can only track the exact amounts
that were deposited and required to be disbursed, but it
cannot tell whose dollar is actually being disbursed. Because
[Mr. Roman's] money was commingled with other money in
[Sage Title's] Baltimore City escrow account and with
other money contributed towards Mr. McCloskey's
properties, [Mr. Roman] cannot bring a Conversion claim.
Title raised two alternative arguments to support its motion
for JNOV. It argued that because Mr. Sniffen's acts were
outside the scope of employment, Sage Title cannot be held
responsible under respondeat superior and that Mr.
Roman's claim was precluded by the unclean hands, or
in pari delicto, doctrine. The court rejected both
arguments and concluded that not only did Sage Title waive
any argument regarding foreseeability of Mr. Sniffen's
misconduct under respondeat superior as well as
waive the unclean hands, or in pari delicto,
argument, both arguments substantively failed on the merits.
Mr. Roman noted an appeal to the Court of Special Appeals.
The intermediate appellate court reversed the judgment in
part, holding that the money was identifiable for purposes of
a conversion claim because it was in an escrow account.
Roman v. Sage Title Grp., LLC, 229 Md.App. 601,
612-18, 146 A.3d 479, 485-88 (2016). The Court of Special
Appeals held that Sage Title's defense to vicarious
liability, although preserved, failed on the merits and that
its defense of unclean hands had not been preserved.
Roman, 229 Md.App. at 618-23, 146 A.3d at 488-92.
Title subsequently filed a petition for certiorari and Mr.
Roman filed an answer and conditional cross-petition. This
Court granted certiorari on both the petition and
Title poses the following questions in its petition for
(1) Was the Court of Special Appeals correct to create an
"escrow account" exception to the rule against
conversion claims involving commingled funds?
(2) If an employee violates company policy without breaking
the law, is a later serious crime foreseeable to the
(3) Must the doctrine of unclean hands/in pari
delicto, which is a question for the court, be invoked
in a Rule 2-519 motion before submission to the jury?
Mr. Roman poses the following questions:
(1) Can a defendant in a conversion claim for money avoid
liability with a "commingling" defense if that
defendant was entrusted with specific, identifiable funds and
agreed with the plaintiff to place those funds in an escrow