Fink v. Pohlman

¹⁰⁹ ROSALYN B. BELL, Judge. This appeal arose from the dismissal by the Circuit Court for Baltimore County of an action for breach of contract, conversion and breach of trust. The action grew out of a Florida estate and was brought by Linda Fink against her brothers, John Pohlman, individually and as personal representative of the estate, and Bruce Pohlman, Individually. Linda has appealed the decision only as it relates to the brothers individually and argues the following: — An action for conversion may arise out of an alleged breach of contract to make payment. — A sister’s promise to forebear contesting a will in exchange for a promise of a fixed share of the estate may give rise to a fiduciary duty such that a breach of this duty allows the imposition of a constructive trust on the promised share of the estate. — A plaintiff is entitled to a jury trial on the factual issues in her complaint where equitable relief is requested.

We agree with Linda on the question of the breach of trust. We explain. FACTS Norma L. Pohlman, a resident of Florida, died on September 26, 1984. Four children survived her: appellant, Linda Lee Fink; appellees, John Pohlman and Bruce Pohlman; and Dawn Pohlman Forgrave, who is not a party to this litigation.

Shortly after their mother’s death, John and Bruce went to see their mother’s attorney. They were advised of the contents of Mrs. Pohlman’s last will and testament and codicil. Mrs. Pohlman’s December 14, 1978 will provided in paragraph IV that should her husband predecease her, her estate would be divided equally among the four children. The September 13, 1983 codicil modified paragraph IV of the will to the extent that the daughters, Linda and Dawn, would no longer receive one-quarter of the estate, but ¹¹⁰ would receive $10 each.

John was named personal representative under the will. John and Bruce admit that the children conferred and they agreed to share the estate with their sisters. John, as personal representative, received Letters of Administration. The will and codicil were admitted to Probate in Florida in December of 1984.

The parties agree, although it did not appear in the complaint, that the estate assets were located in Florida and consisted of a Cape Coral home, a White Sands Condominium, a mortgage and promissory note, a car, and household furnishings. The household furnishings were divided among the children. The car was sold and the proceeds were used to pay estate debts. Linda alleges in her complaint that, by the agreement of the siblings, she was to receive a. full one-quarter share of the estate which would amount to between $15,000 and $18,000. 1 A Petition for Discharge and Report of Distribution was filed in the Circuit Court for Lee County, Florida.

The petition indicated that Linda and Dawn received only $10 from the estate. An Order of Discharge was issued on October 28, 1985. This effectively closed the estate, releasing John as personal representative and we infer the real property devolved to the two brothers. According to Linda, some months after discharge, John indicated he was unable to sell the primary estate assets.

He offered both sisters $6,000 in lieu of any additional specific property. Linda rejected that offer, indicating she wanted what she was promised — $15,000 to $18,000. Linda alleged she did not contest the will in exchange for the brothers’ promise that both sisters would receive one-quarter of the estate. Linda brought suit against her brothers, John and Bruce, in a Maryland court.

Linda’s ¹¹¹ claim against John as personal representative included counts in breach of contract, conversion, and breach of trust. With regard to the latter two claims, John and Bruce also were sued individually. No breach of contract action was brought against the brothers individually. Linda sought a jury trial which the court struck on the breach of trust counts.

Linda alleged that she had a most confidential relationship with her brothers. She alleged that she “reposed the greatest confidence and trust in” them and believed they “would deal fairly and justly with [her] in all things.” She also alleged that she “would not have forebore [sic] from contesting the said will but for the trust and confidence she placed in” them. In November of 1989, the Circuit Court for Baltimore County granted appellees’ renewed motion to dismiss. The court found it had no jurisdiction over John as personal representative because the State of Florida had appointed him, and the claim against him as personal representative was based on a contract made in that capacity.

The court also found there could be no conversion where there was an alleged breach of contract. Finally, the court found that a familial relationship was insufficient to impose a fiduciary duty or relationship upon which an action for breach of trust could be based. While the court was less than specific, apparently it granted the motion to dismiss based on the failure to state a claim upon which relief could be granted. Rule 2-322(b).

PERSONAL REPRESENTATIVE The trial judge found that the court did not have “jurisdiction with respect to John Pohlman, Jr. in his capacity as personal representative, that capacity being one bestowed on him in the State of Florida, under Florida law, and in the Court’s opinion, any suit that would be maintained against him in that capacity could be maintained only in the State of Florida and not Maryland.” On this basis, the court dis ¹¹² missed all counts against John as personal representative. This dismissal is not at issue on appeal. This does not, however, resolve the issues pertaining to John and Bruce as individuals. STANDARD OF REVIEW Under Rule 2-322, a motion to dismiss for failure to state a claim serves the same function as our former demurrer.

Broadwater v. State, 303 Md. 461 , 462 n. 1, 494 A.2d 934 (1985). This Court set out that standard in Ungar v. State, 63 Md.App. 472, 479 , 492 A.2d 1336 (1985): “At the threshold, we acknowledge that Ungar has cited the appropriate test to be used to review the propriety of the grant or denial of a demurrer; well pleaded allegations of fact contained in the complaint are taken as true and the complaint should not be dismissed unless it appears that no set of facts can be proven in support of the claim set forth therein.” (Citations omitted.) (Emphasis added.) This statement guides our review of the first two issues appellant raises on appeal. 2 CONVERSION Appellant contends that the trial court erred in dismissing her counts for conversion. The trial court reasoned that “[t]here can be no conversion in a situation where there has been an alleged breach of this contractual undertaking.” Appellant argues that a conversion may arise out of a breach of contract to pay money when one of the parties to the contract fails to pay over the agreed sum. We disagree and explain.

Maryland and other jurisdictions have reviewed whether mere nonfeasance or neglect, or mere failure to perform under a contract will support an action in conversion, or ¹¹³ whether a positive tortious act is necessary to support an action in conversion arising under a contract. Western Maryland Dairy, Inc. v. Maryland Wrecking and Equipment Co., 146 Md. 318, 328 , 126 A. 135 (1924); Farmers’ State Bank of Knox v. Bowles, 52 N.D. 553 , 203 N.W. 903, 905 (1925); Williams v. International Harvester Co., 172 Or. 270 , 141 P.2d 837, 841 (1943), overruled on other grounds, Rogue Valley Memorial Hosp. v. Salem Ins. Agency, Inc., 265 Or. 603 , 510 P.2d 845, 851 (1973); Emmert v. United Bank & Trust Co. of California, 14 Cal. App.2d 1 , 57 P.2d 963, 964-65 (1936).

In Western Maryland Dairy (WMD), WMD sold a piece of real property to News Publishing Co. (NPC). WMD reserved the right to remove all the fixtures prior to the date of transfer. WMD, pursuant to another agreement, sold the fixtures on the property to Maryland Wrecking and Equipment Co. (MWEC). The time set for removal of the fixtures by MWEC was before the date projected for the transfer of the real property to NPC.

After the deed was delivered and after the time when MWEC was to have completed removing the fixtures, NPC ordered MWEC to stop removal. NPC also demanded that the keys to the property be given to it. MWEC complied with both these requests. MWEC sued WMD and NPC for conversion.

Since the fixtures were not timely removed, and WMD no longer controlled the real property or had actual or constructive possession of the chattels, the Court of Appeals concluded there was no conversion by WMD. Western Maryland Dairy, 146 Md. at 329-30 , 126 A. 135 . The Court of Appeals stated: “[I]f there be no unlawful taking or exercise of dominion over a chattel, a conversion cannot be based upon the mere failure of the defendant to perform with regard to the chattel some affirmative act which he has by contract assumed, or upon a non-feasance or neglect of a legal duty. It would seem that to maintain the action of trover some positive, tortious act is indispensable.” ¹¹⁴ Western Maryland Dairy, 146 Md. at 328 , 126 A. 135 (citations omitted) (emphasis added).

The clear import of this language is that a mere failure to perform under a contract is not enough. To establish a conversion under a contract, there must also be a positive, tortious act. Decisions of other jurisdictions support this conclusion. In Farmers’ State Bank, the alleged conversion arose from the failure of mortgagors to pay a note secured by a chattel mortgage on certain farm animals and machinery.

Farmers’ State Bank, 203 N.W. at 903 . In considering whether a conversion took place, the North Dakota Supreme Court turned to one of its earlier cases: “ ‘To constitute conversion, there must be a positive tortious act, a tortious detention of personal property from the owner, or its destruction, or an exclusion or defiance of the owner’s right, or the withholding of possession under a claim of title inconsistent with that of the owner.' ” Farmers’ State Bank, 203 N.W. at 905 , quoting Taugher v. Northern Pacific Railway Co., 21 N.D. 111 , 129 N.W. 747, 750 (1910). The Court in Farmers’ State Bank continued: “And ‘neither negligence, active or passive, nor a breach of contract, even though it result in the loss of specific property’ constitutes a conversion.” Farmers’ State Bank, 203 N.W. at 905 (citation omitted). The Court found that, in light of this standard, the evidence did not establish a conversion.

Farmers’ State Bank, 203 N.W. at 906 . The opinions of other jurisdictions agree with this cited language. See Williams, 141 P.2d at 841 ; Emmert, 57 P.2d at 964-65 . In light of our decision in Western Maryland Dairy and the decisions of other jurisdictions we have reviewed, we conclude that a positive, tortious act is required to establish a conversion under a contract and a mere breach of contract is not sufficient.

This conclusion is supported by the decision of the Court of Appeals in K & K Management v. Lee, 316 Md. 137 , 557 A.2d 965 (1989). K & K Management involved an action for breach of contract, tortious interference with busi ¹¹⁵ ness/economic relations, and conversion founded on the termination of a contract and barring access to a restaurant and the property therein. K & K Management, 316 Md. at 146-47 , 557 A.2d 965 . The Court held that a conversion may arise out of a contract.

K & K Management, 316 Md. at 174 , 557 A.2d 965 . The holding is consistent with the rule stated in Western Maryland Dairy, in that a positive tortious act, beyond a breach of contract, was committed. Specifically, in K & K Management, appellees were physically barred from entry to the restaurant that was the subject of the agreement and denied access to their property within the restaurant. K & K Management, 316 Md. at 171 , 557 A.2d 965 .

Therefore, to establish a conversion growing out of a contract, a positive tortious act beyond a mere breach of the contract is necessary. In K & K Management, the breach of contract was the termination of the agreement; the positive tortious act was barring access to the restaurant. In the instant case, the breach of contract was the failure to convey appellant’s interest; no positive tortious act beyond the breach was alleged. —Appellant’s Case Law— Appellant cites numerous cases in support of her position that a breach of contract alone can result in an action for conversion. These cases are inapposite.

For instance, appellant relies on Wedeman v. City Chevrolet Co., 278 Md. 524 , 366 A.2d 7 (1976). Wedeman turned on fraudulent inducement to contract. The tort was separate from and, in fact, induced the formation of the contract. Wedeman, 278 Md. at 529-30 , 366 A.2d 7 .

In the instant case, the breach of the contract was the alleged tort. Appellant also relies on Maryland Casualty Co. v. Wolff, 180 Md. 513 , 25 A.2d 665 (1942), and K & K Management, 316 Md. at 137 , 557 A.2d 965 . Neither of these cases states that a conversion may be brought solely on a breach of contract. We hold the trial court did not err in dismissing the counts of conversion. ¹¹⁶ BREACH OF TRUST The circuit court concluded that a “trust in the brother or the brothers, because of a family relationship, is not that kind of a trust that mounts [sic] up to a fiduciary relationship and allows for an action for breach of trust” and dismissed the counts based on breach of trust.

We disagree. 3 Appellant acknowledges that, without more, a mere brother-sister relationship is insufficient to establish the “confidential relationship” necessary to establish a fiduciary obligation that could give rise