Figgins v. Cochrane

BATTAGLIA, J. Diane Marie Figgins, Petitioner, asks this Court to review various decisions of Judge G. Edward Dwyer, Jr., of the Circuit Court for Frederick County, who imposed a constructive trust on the home of her deceased father, James Cochrane, Jr., appointed a constructive trustee, and also ordered the trustee to convey the home to Respondent, Mr. Cochrane’s Personal Representative, his son, William Andrew Cochrane. James Cochrane died on November 10, 2004, and his probate Estate was valued at $740,103.55, the largest portion, $630,000.00, representing the value of the home. At the time of his death, Mr. Cochrane had four adult children: Robert James Cochrane, III; William Andrew Cochrane, the Respondent; Donna Lynn Giarth; and Diane Marie Figgins, the Petitioner. Mr. Cochrane executed his Last Will and Testament on November 12, 2001, as well as a Power of Attorney which named Petitioner as his attorney-in-fact on May 26, 2004, and on September 16, 2004, just two months before his death, a codicil to his will that provided Ms. Figgins with the right to occupy the house for three years following his death and with the exclusive right to purchase the residence within 120 days thereafter.

After her father fell into a coma from which he would not recover, Ms. Figgins, on November 8, 2004, purportedly using the Power of Attorney, conveyed the property to herself, individually, for no consideration. Mr. Cochrane died on November 10, 2004. ³⁹⁶ On February 14, 2005, Respondent, in Ms capacity as Personal Representative of the Estate, filed a Complaint in which he requested that a constructive trust be imposed on the real property, a request with which Judge Dwyer agreed, after a three day trial. The Court of Special Appeals affirmed in a reported opinion, Figgins v. Cochrane, 174 Md.App. 1 , 920 A.2d 572 (2007), and we granted Ms. Figgins’ petition for writ of certiorari. Figgins v. Cochrane, 400 Md. 646 , 929 A.2d 889 (2007).

She raised three questions for our review, which we have renumbered: 1. Did the trial judge apply the correct rule of law that the Petitioner, to overcome the burden, arising out of a confidential relationship, of proving an absence of undue influence, had to prove the transaction was fair when the Decedent, her father, a Certified Public Accountant and retired mortgage banker, acted upon competent and independent advice of his self-selected estate counsel? 2. Did the trial judge correctly interpret the Durable General Power of Attorney as precluding Petitioner, under the circumstances of this case, from following Decedent’s estate counsels instructions to sign and record a deed conveying the family residence to herself? 3. Did the trial judge err in refusing to admit the state of mind testimony of Decedent’s estate counsel that he was instructed by Decedent to prepare a deed to convey the family home to the Petitioner because his loan to give the Petitioner the equity in the family home had been turned down?

Because the trial judge correctly imposed a constructive trust on the property, found that the Power of Attorney did not grant Petitioner the ability to gift herself the property under the circumstances presented, and refused to admit the proffered state of mind testimony, we affirm. Introduction Ms. Figgins lived with her parents for most of her life. Even after she married and had children, Ms. Figgins, along with her husband, her two daughters, and her granddaughter ³⁹⁷ lived with her parents. In 1998, Ms. Figgins, her family, and her parents moved into the home at issue in this case, located in Ijamsville, Maryland.

Ms. Figgins and her husband lived in a basement apartment, which they had renovated at their expense, while their daughters and granddaughter lived on the second floor of the house, and Mr. and Mrs. Cochrane lived on the ground floor. In 2000, Mr. Cochrane was operated on for lung cancer, with the result that he became wheelchair bound, and his wife became his primary caregiver. Ms. Figgins, however, assisted her mother around the house, taking her to purchase groceries, as well as taking her father to get haircuts and to doctors’ appointments. In November of 2001, Mr. Cochrane contacted Scott C. Borison, Esquire, in order to secure a will, and thereafter, a meeting occurred on November 12, 2001, among Mr. Cochrane, Mrs. Cochrane, Ms. Figgins and Mr. Borison at which time Mr. Cochrane executed a last will and testament.

In the Will, Mr. Cochrane bequeathed Ms. Figgins a 10% interest in Brighter Solutions, LLC, a painting and contracting business which he co-owned, 1 as well as a remainder interest in it. The Will also included a specific provision to recognize monetarily Ms. Figgins’ improvements to the family residence: I hereby direct that my personal representative hire a certified appraiser to determine the value added to my residence by the improvements made in the basement. An amount equal to the value added to my residence by the improvements made in the basement shall be paid to Diane Marie Figgins. The appraisal must be done with[in] 90 days from my death.

The residuary beneficiary was Mrs. Cochrane, unless she predeceased her husband whereupon it was to be divided among Ms. Figgins and her three siblings. ³⁹⁸ In early 2004, Mrs. Cochrane’s health began to deteriorate so much so that she became incapable of caring for her husband. In March of 2004, Ms. Figgins assumed the responsibility for the care of both of her parents. She took care of the house, and specifically, with respect to her father, fed him, took him to doctors’ appointments, church services, for lunches and rides, administered medicines, did laundry, and met with him on a daily basis to review the mail and pay incoming bills. On May 26, 2004, during another meeting with Mr. Borison, Mr. Cochrane executed a Durable General Power of Attorney, drafted by Mr. Borison, which appointed Ms. Figgins, who was present, as his attorney-in-fact.

The last paragraph of the Preamble of the Power of Attorney stated: All powers granted in this Power are granted with the understanding that they will be used for my benefit and on my behalf and will be exercised only in a fiduciary capacity. Section 1.1 gave Ms. Figgins the power to “[s]ell, exchange, convey ... or otherwise dispose of any estate or interest in real property,” while Section 1.13 empowered her to make gifts under certain conditions: Gifts. I give my attorney-in-fact the power to make gifts, grants, or other transfers without consideration, of cash, or other real or personal property (including but not limited to any property then constitution [sic] or included in any revocable trust established by me), either outright or in trust, including the forgiveness of indebtedness in accordance with the provisions in this paragraph. (a) Gifts To My Descendants.

Gifts may be made to any one or more of my children and/or other descendants (including my attorney-in-fact, if my attorney-in-fact is one of such persons), either outright or in trust, in such amounts and upon such terms and conditions as my attorney-in-fact, in my attomey-in-fact’s sole judgment, may deem to be reasonable. In determining the reasonableness of any proposed gift, my attorney-in-fact shall take into consideration the extent and nature of my assets; the federal transfer taxes that may result from a gift and/or from my death; the ³⁹⁹ natural objects of my bounty and the federal estate and/or income taxes to which they may be subjected; and my potential need for long-term care, the costs thereof and the possibility of my qualification for any program of public or private benefits to pay for such costs. The fact that I may not have established a gift giving program or pattern prior to the exercise of this power by my attorney-in-fact shall not be considered a manifestation of a purported desire by me not to undertake such a program at a subsequent time, (b) Payment of Gift Tax. My attorney-in-fact may pay any gift tax that may arise by reason of any gift made.

(alteration added). In August of 2004, Mrs. Cochrane died. Subsequently, on September 16th, Mr. Cochrane, accompanied by his daughter, again met with Mr. Borison to discuss making a codicil to his will, which, in fact, Mr. Cochrane executed. In addition to bequeathing to Ms. Figgins “any household furniture, including any dining room, living room or family room furniture,” the codicil included a bequest to her of the exclusive right to occupy and purchase the home for three years after his death, as well as the right to purchase the property for 120 days immediately thereafter: I hereby bequeath and give the exclusive right to occupy any real property owned by me at the time of my death to Diane Marie Figgins for a period of three (3) years.

I hereby bequeath and give Diane Marie Figgins the exclusive right to purchase any real property owned by me at the time of my death at any time until a period of not less than 120 days after any exclusive right to occupy expires for the fair market value of the property. The Brighter Solutions, LLC bequest also was altered to bequeath all of Mr. Cochrane’s interest in the business to Petitioner. At this meeting, according to Mr. Borison, Mr. Cochrane asked him about the tax implications of refinancing the house and also told him that he was going to get a loan to ⁴⁰⁰ take equity out of the house and give a gift to Ms. Figgins, although nothing else about the loan was discussed. On October 14, 2004, Mr. Cochrane began hospice care in his home.

Ms. Figgins, who continued to reside there, worked closely with the hospice care nurses. Thereafter, on October 26, 2004, Mr. Cochrane, accompanied by Ms. Figgins, met with Mr. Borison in the attorney’s office. The details of this meeting are scant, but according to Mr. Borison, Mr. Cochrane informed him that the loan that he was supposed to be getting did not go through. At some point in time after the meeting, Mr. Borison prepared a deed which would have by its terms conveyed the father’s residence to Ms. Figgins, solely.

The draft deed was never executed by Mr. Cochrane, however. On November 3, 2004, Mr. Cochrane lapsed into a coma from which he never recovered. On November 8, 2004, Ms. Figgins returned to Mr. Borison’s office, signed the deed, which conveyed the property to herself, purportedly under the Power of Attorney, 2 and immediately drove to the Land Records Office to record it. Mr. Cochrane died two days later on November 10, 2004.

Ms. Figgins did not disclose her actions to any of her siblings, until she mailed a copy of the recorded deed to Respondent in December. Thereafter, Respondent filed the present action in the Circuit Court for Frederick County seeking to have the home returned to his father’s Estate through the imposition of a constructive trust. During the trial, Mr. Borison attempted to testify regarding the October 26th meeting during which Mr. Cochrane allegedly informed him that the refinancing of the house did not go through and that he wanted to transfer the property directly ⁴⁰¹ to his daughter; objection to this testimony, however, was sustained on hearsay grounds: [COUNSEL FOR FIGGINS]: All right. What occurred after you met Mr. Cochrane at that point? [MR.

BORISON]: Basically he told me that the refinancing wasn’t going to happen, and that he would like to transfer— [COUNSEL FOR THE ESTATE]: Objection. [THE COURT]: All right now why isn’t this going to be hearsay? [COUNSEL FOR FIGGINS]: It’s hearsay, Your Honor, but again, based on that case it’s the intent of—it’s not offered to show that the loan didn’t go through. It’s offered to show what his intention was. He’s going to say that, that, I’ll proffer that he’s going to say that the loan didn’t go through— [COUNSEL FOR THE ESTATE]: Your Honor, I’ll object to these continuing— [COUNSEL FOR FIGGINS]: May I proffer, Your Honor. [COUNSEL FOR THE ESTATE]:—proffers at this time. [COURT]: Well if I sustain your objection. [COUNSEL FOR THE ESTATE]: In the presence of the witness. [COURT]: Well. [COUNSEL FOR THE ESTATE]: It’s—I know, Your Honor. For the record I object. [COUNSEL FOR FIGGINS]: Does Your Honor wish a proffer or not? [COUNSEL FOR THE ESTATE]: Go ahead. [COUNSEL FOR FIGGINS]: The proffer is that Mr. Borison will say that Mr. Cochrane indicated that the loan didn’t go through and that he wanted to transfer the property instead directly to his daughter. [COURT]: And you’re not offering that for the truth of it? [COUNSEL FOR FIGGINS]: I’m offering it to show his intention.

That his intention— [COURT]: But you’re not, you’re not— ⁴⁰² [COUNSEL FOR FIGGINS]:—as to why he, why he, why he wanted to do that. [COURT]: All right. Are you offering it for the truth that he intended that this to be a gift to his daughter? [COUNSEL FOR FIGGINS]: I’m offering it for the truth of his intentions, what his intentions were. [COURT]: So you are offering it for the truth of it? [COUNSEL FOR FIGGINS]: That he, that he intended it. That it was a state of mind to provide that to, to providing it to his daughter, yes. It’s a state of mind.

But it’s not, but I’m not offering it for, offering it for the truth the fact that he was, he didn’t get the loan. That’s just the, that’s, we’re offering that to establish why he wanted to do what he did. [COURT]: But you are offering it for the truth of the fact that he wanted to give the property to his daughter? [COUNSEL FOR FIGGINS]: I’m offering it to establish his intent to give a gift to his daughter yes. [COURT]: All right, [Counsel for the Estate]? [COUNSEL FOR THE ESTATE]: Continue to object on the basis of hearsay. It does not fall under one of these established exceptions, and it’s highly prejudicial. [COURT]: Well— [COUNSEL FOR THE ESTATE]: It should not be admitted. [COURT]:—let me say it this way. I’m assuming anything he’s trying to put into evidence is highly prejudicial to your case. [COUNSEL FOR FIGGINS]: Exactly. [COURT]: But objection’s sustained.

At the conclusion of the three-day bench trial, Judge G. Edward Dwyer, Jr. agreed with Respondent and imposed a constructive trust, appointed a constructive trustee, and ordered that the constructive trustee convey the property to the Estate. Specifically, Judge Dwyer found that Ms. Figgin’s conveyance of the real property to herself did not come within ⁴⁰³ the powers enumerated in Section 1-1 of the Power of Attorney because, “[njowhere does it give the power to gift real property.” He also found that Ms. Figgins did not act reasonably in executing the deed to the home to herself under the Gift Section, 1. 13, and that Mr. Cochrane’s intention was not to transfer the property to Ms. Figgins as a gift: 1.13 can or does in certain specific instances give the power to gift real property. But when you’re gifting to a descendent, which she is, then one has to look at the reasonableness of any proposed gift. Because 1.13(a) says in determining the reasonableness of any proposed gift, my attorney in fact, Ms. Figgins, shall take into consideration the extent and nature of my assets, the federal transfer taxes—I’m not reading each and every word—the natural objects of my bounty and the federal, state, and, and/or income taxes and other matters including potential for long-term care, possibility of my qualification for public or private benefits and things of that nature.

Obviously she did not take any of that into consideration because she didn’t even know they existed at the time of the transfer because she hadn’t read the power of attorney. If she had then she would have realized that with the nature and extent of his assets she would have been removing from his estate, because I’m not sure whether she knew that the codicil said at that time, so therefore I give her the benefit that she didn’t know what was in the codicil, that she was removing 85 percent of the assets of the estate and that is certainly to the detriment of the other natural objects of the bounty, the other three children. And we need also to look at the intent of Mr. Cochrane. And as Mr. Green points out, that is very expressly stated in the last, the codicil of the last will and testament exercised on September 16, 2004, less than two months before his death, which gives to first Ms. Figgins the value of the improvements of the residence have to be taken off of the top and it was interesting that the term residence was used rather than real property.

Because it was the real property, arguably at the time of his death he’d have no real property. He had a residence, but he had no ⁴⁰⁴ real property because of the deed. But they distinguish real property from residence because the one paragraph says residence and that was, Ms. Figgins even testified he died at home and from the residence you have to take off the value of the improvements, which I didn’t realize were in evidence but certainly are in evidence, to be $46,000, and then the exclusive right to remain in that real property, now we use the term real property as opposed to residence, is given to Ms. Figgins. Any real property owned by me at the time of my death.

She has the right to remain there for three years and then she also has the right to purchase. So, and that’s the exclusive right to purchase, after the 120 days after the exclusive right to occupy expires. So she gets three years and then 120 days to purchase. That certainly shows the intent of Mr. Cochrane.

I also look at 1.18, which basically says that when you make transactions they have to be given for at least fair and adequate consideration. Now I think you can give a gift without fair and adequate consideration. But certainly when you’re reducing the value of the estate to practically nothing, and I also look at the fact that if this is what Mr. Cochrane actually wanted to do when he went in to see Mr. Borison on October 26th, all he had to do was rather than doing a new deed, which Mr. Borison couldn’t do because he didn’t have the old deed there, was just do a new, just strike that codicil and give or bequeath to Ms. Figgins the real property. I find that first, the exercise of the power of attorney is not in accordance with the provisions of the power of attorney because under the gift provision, which is the only provision which authorizes a transfer of real property for a gift without consideration, that the attorney in fact had to take into consideration the nature and extent of [his] assets, federal taxes, natural objects of my bounty, and things of that nature.

None of that was done. If it had been done it would not have been a reasonable transaction. We have to look at the reasonableness of the proposed gift, taking into consideration all of that. That certainly was not done and there is no reasonableness to this gift. ⁴⁰⁵ Judge Dwyer also determined that because a confidential relationship existed between Ms. Figgins and her father, a presumption arose that the gift was unreasonable, which had not been rebutted: But I will also determine that there’s been conceded that there is a confidential relationship from, with Ms. Figgins and with Mr. Cochrane, and therefore the burden shifts to her to show the reasonableness of a transfer for basically, no value, a no value transfer.

And that burden shifts to her by clear and convincing evidence and she has to show the validity of that transfer and in no manner has she met that burden. So both, I find that it’s not authorized under the power of attorney because it didn’t comply with 1.13 of the power of attorney and because of the confidential relationship the burden is upon her to show validity of a no consideration transfer and that was by clear and convincing evidence. She hasn’t met that. The Plaintiff prevails and a constructive trust is granted and basically, with this, I guess it’s, what is it, ultimately go that we order a deed back to the estate is ultimately where you go or constructive, really constructive trust is placed on the real estate is what it actually does.

Ms. Figgins noted an appeal to the Court of Special Appeals, arguing that the deed transferring the property to herself was valid, and that the trial judge erred in refusing to admit Mr. Borison’s testimony regarding her father’s state of mind and intent to transfer the house to her. The intermediate appellate court affirmed in a reported opinion, Figgins v. Cochrane, 174 Md.App. 1 , 920 A.2d 572 (2007), first concluding that the “dispositive issue” was whether Ms. Figgins had rebutted the presumption that her confidential relationship with her father rendered the transfer invalid. Id. at 11 , 920 A.2d at 578 . Judge Charles E. Moylan, writing for the court, opined that Ms. Figgins had not met her burden and explicated that the “forbidden fruit of the confidential relationship” was that Mr. Cochrane changed his testamentary intent so drastically: ⁴⁰⁶ The appellant views much too narrowly the implications of a finding of a confidential relationship.

Even granting her factual predicate as to her Father’s wishes as of October 26, 2004, that would still have represented a dramatic change from his wishes as expressed in the Codicil of September 16, 2004. It is that change itself that may have been the forbidden fruit of the confidential relationship. The rest is only detail. The appellant protests that her conveyance of the real property to herself “was in accordance with the final wishes” of her Father.

She ignores the antecedent implication that her Father’s “final wishes” may themselves have been the forbidden fruit of the confidential relationship. The appellant protests that the conveyance of the property was simply the logical alternative when the Father’s effort to procure an equity loan failed. Again, she ignores the antecedent implication that the desire to obtain the equity loan in order to make a gift to her may itself have been the forbidden fruit of the confidential relationship. A lawyer’s advice as to how best to implement the Father’s wishes does not necessarily abrogate the presumptively improper provenance of those wishes.

The finding of Judge Dwyer that there was a confidential relationship is unassailable. That relationship created, as a matter of law, the presumption that any largesse exercised by the Father toward the appellant—be it by deed of property or by gift from an equity loan—was improperly induced by the relationship, whatever the modality of the transfer might turn out to be. The burden was cast upon the appellant to rebut that invalidating presumption. Judge Dwyer found that “in no manner has she met that burden.” Judge Dwyer was simply not persuaded, and there was evidence to support that non-persuasion.

That there might also have been some evidence in the case pointing in the other direction is beside the point. It was clearly a question of fact for the fact finder. Judge Dwyer’s conclusion in that regard cannot, therefore, be said to have been clearly erroneous. ⁴⁰⁷ Id. at 14-15 , 920 A.2d at 580 (emphasis added). Additionally, the court iterated that Ms. Figgins was not authorized by the Power of Attorney to “gift” the house to herself without taking into account the factors defined in the document, which she had not done.

Id. at 21-22 , 920 A.2d at 584 . In analyzing the state of mind exception, Judge Moylan articulated the “Tripartite Utility of the State of Mind Exception” in Maryland Rule 5—803(b) (3) , 3 by which he identified three temporal aspects of such evidence: the past, present and future states of mind. In identifying that the proffered evidence from Mr. Borison regarding Mr. Cochrane’s intention to deed the house to his daughter was future-oriented and offered to prove conduct by one other than the declarant, Judge Moylan stated that: In all of the forward-looking uses of a present intent to prove a future act or to interpret a future act, there is the identity of person between the hearsay declarant and the future actor. Although some states permit a declarant’s statement of intent to prove not only the declarant’s future action pursuant to that intent but the future action of another person as well, Maryland does not.

Id. at 40 , 920 A.2d at 595 . As a result, the intermediate appellate court concluded that Mr. Borison’s testimony regarding Mr. Cochrane’s intent was inadmissible because “whatever he may have intended to do, he never did it.” Id. at 43 , 920 A.2d at 597 . ⁴⁰⁸ Discussion Ms. Figgins argues that the Circuit Court erred in imposing a constructive trust on the property because the deed that she executed as attorney-in-fact, which transferred the property to her, was valid. With respect to the confidential relationship issue, she contends that she rebutted the presumption of undue influence because her father, a retired certified public accountant and comptroller of a bank, was represented by independent counsel of his choice. She also asserts that she only signed the deed at the direction of Mr. Borison, her father’s attorney, so that her father’s interests were protected.

As to the Power of Attorney, Ms. Figgins argues that she was empowered to sign the deed and convey the property to herself. She also contends that she was empowered to execute the deed under the Power of Attorney because she was told to do so by Mr. Borison. Additionally, Ms. Figgins asserts that the trial court erred in refusing to admit the state of mind testimony of Mr. Borison that he was instructed by Mr. Cochrane to prepare a deed in order to transfer the property to her, because the statements fall within the state of mind exception to the hearsay rule, Maryland Rule 5—803(b)(3). Conversely, Respondent contends that the Circuit Court was correct in imposing a constructive trust on the property because the deed transferring the property to Ms. Figgins was invalid.

Respondent argues that Ms. Figgins has not rebutted the presumption of undue influence created by her confidential relationship with her father and that the transfer of the home was the result of her undue influence. With respect to the Power of Attorney, Respondent asserts that the Power of Attorney did not expressly authorize the gift of the property to Ms. Figgins, but rather permitted a transfer by gift only upon consideration of the various delineated factors which Ms. Figgins did not do. Finally, Respondent argues that the “future” state of mind exception in Maryland Rule 5—803(b)(3) only applies when the ⁴⁰⁹ statement is offered to prove the occurrence of the intended act by the declarant; here, he asserts, because the hearsay statement was not offered to prove an action taken by Mr. Cochrane, but rather one of Mr. Borison, the statement is inadmissible. Standard of Review In the first two questions presented, Ms. Figgins challenges the trial court’s finding that she did not overcome the burden, arising out of the confidential relationship between her and her father, of proving an absence of undue influence and that she did not act reasonably within the exercise of the Power of Attorney when she transferred the property to herself for no consideration.

We review the factual findings of the Circuit Court for clear error, observing “due regard to the opportunity of the trial court to judge the credibility of the witnesses.” Maryland Rule 8-131(e). City of Bowie v. MIE Properties, Inc., 398 Md. 657, 676 , 922 A.2d 509, 521 (2007); Colandrea v. Wilde Lake Cmty. Ass’n, 361 Md. 371, 394 , 761 A.2d 899, 911 (2000); Murphy v. 24th St. Cadillac Corp., 353 Md. 480, 497 , 727 A.2d 915, 923 (1999). “If any competent material evidence exists in support of the trial court’s factual findings, those findings cannot be held to be clearly erroneous.” Schade v. Maryland State Bd. of Elections, 401 Md. 1, 33 , 930 A.2d 304, 323 (2007); YIVO Inst. for Jewish Research v. Zaleski, 386 Md. 654, 663 , 874 A.2d 411, 416 (2005); Solomon v. Solomon, 383 Md. 176, 202 , 857 A.2d 1109, 1123 (2004). The Confidential Relationship In this action, the trial court imposed a constructive trust on the home because Judge Dwyer found that a confidential relationship existed between Ms. Figgins and Mr. Cochrane and that she did not rebut the attendant presumption of undue influence.

A constructive trust is a “device used by [a court] to compel one who unfairly holds a property interest to convey that interest to another to whom it