Molovinsky v. Fair Employment Council of Greater Washington, Inc.

BARBERA, Judge. Appellants, Gale S. and Arlene M. Molovinsky, appeal from an order of the Circuit Court for Montgomery County awarding appellees, The Fair Employment Council of Greater Washington, Inc., et al., (“the Council”), $152,628.78 in attorneys’ fees and costs. The Molovinskys present nine questions for our review which, with the exception of minor stylistic changes, we set forth as they appear in the Molovinskys’ brief: I. Whether the transfer of assets from the testamentary trust established under the last will and testament of Ruth Irene Molovinsky and pursuant to a trust termination agreement dated December 17, 1998, to Arlene Molovinsky, a contingent beneficiary of the trust, constituted a “conveyance” from Gale Molovinsky to Arlene Molovinsky, his wife, within the meaning of Sections 15-201, 15-204, 15-206 and 15-207 of the Maryland Fraudulent Conveyance Act.

II

If the transfer was a conveyance to Arlene Molovin-sky, whether under Sections 15-204 and 15-206 of the Act, Arlene Molovinsky gave consideration, fair or otherwise, as defined in Section 15-203 of the Act, for the conveyance of the trust assets to her. ²⁶⁶ III. If Arlene Molovinsky did not give consideration, fair or otherwise, for the conveyance of the trust assets to her, was consideration required under the circumstances of the transaction complained of by the Molovinskys.

IV

Whether Gale Molovinsky was insolvent at the time he renounced his interest in the trust. V. Whether the Council was barred from the relief sought by equitable reasons, inter alia, by the failure to bring a petition for attorneys’ fees for nearly six (6) years after the underlying case was decided, and by the failure to serve Gale Molovinsky with the petition for attorneys’ fees in the underlying action.

VI

Whether the Council was barred from the relief sought by the doctrine of accord and satisfaction.

VII

Whether the Council was barred from the relief sought by perpetrating a fraud upon Gale Molovin-sky, to wit, by procuring a settlement of the underlying judgment without disclosing the claim for attorneys’ fees.

VIII

Whether the trial court erred in awarding a money judgment in favor of the Council when the relief sought was an order setting aside the alleged “conveyance.” IX. Whether the trial court erred in permitting, over objection, the testimony of Donald LaBarre, through the reading of his deposition taken in a prior action, thereby denying the Molovinskys’ counsel the opportunity to cross-examine said witness. ' For the reasons that follow, we affirm the judgment of the circuit court. FACTS AND LEGAL PROCEEDINGS The litigation underlying this appeal commenced in 1991, when the Council sued Gale Molovinsky for violations of the District of Columbia Human Rights Act (“the Act”), relating ²⁶⁷ to Molovinsky 1 s operation of his employment counseling business. A 1993 jury trial resulted in a verdict for the Council against Molovinsky in the amount of $79,000.00 (“the original judgment”).

Molovinsky appealed the original judgment to the District of Columbia Court of Appeals. While the appeal was pending, the Council filed, on April 1, 1994, a fee petition pursuant to the Act, seeking an award of fees and expenses of $72,000.00. This amount represented services rendered up to and including the jury trial. The superior court stayed action on the petition pending resolution of the appeal.

On October 3, 1996, the District of Columbia Court of Appeals affirmed the jury’s verdict. Molovinsky v. Fair Employment Council of Greater Washington, Inc., 683 A.2d 142 (D.C.1996). One week later, on October 10,1996, Molovin-sky directed Lafayette Federal Credit Union to remove his name from savings account No. 2822005, which he held jointly with his wife, Arlene. In 1997, the Council commenced discovery in aid of execution of the original judgment.

In the course of discovery, the Council issued interrogatories, a document request, and deposed Molovinsky about his assets. The Trust Gale Molovinsky was a beneficiary of a testamentary trust established under the will of his mother, Ruth Irene Molovin-sky. By its terms, the trust’s income was to be paid to Melvin Molovinsky, Gale’s father, for the balance of his life, then to Gale, until he reached age sixty. At that time, the trust was to terminate and the corpus distributed to Gale.

The trust further provided that if Gale died before reaching age sixty, the income would go to his wife, Arlene, for the balance of her life and, upon her death, the entire proceeds were to be distributed per stirpes to their children. The trustee was Donald LaBarre, a Pennsylvania lawyer who had represented Ruth and Melvin Molovinsky. ²⁶⁸ Melvin Molovinsky died in 1994, at which time Gale became the sole income beneficiary of the trust. The trust contained about $500,000.00 in municipal bonds, and the trust income distributed to Gale amounted to approximately $35,000.00 annually. 1 Events Leading to the Termination of the Trust In May 1997, LaBarre produced, at Gale’s behest, a first draft of the trust termination agreement. Under this draft, the trust was to be terminated and the entire proceeds placed in a new Merrill Lynch account in the joint names of Gale and Arlene Molovinsky.

According to the deposition testimony of LaBarre offered at trial in this case, Gale was concerned that his creditors could reach the Merrill Lynch account if it was registered under the joint names of his wife and himself. Gale sought LaBarre’s opinion as to whether the assets would be immune from his creditors if the account was in the Molovin-skys’ joint names. Sometime in 1997, Gale informed LaBarre that the District of Columbia Court of Appeals had affirmed the 1993 jury verdict. In light of the now-final unpaid judgment, LaBarre declined to proceed with the trust termination agreement.

In February 1998, the Council took Gale’s deposition in aid of execution of the judgment. At the deposition, the Council learned that Melvin Molovinsky had died four years earlier, that Gale had become the sole income beneficiary of the trust, and that he was entitled to receive the monthly income from it. Three months later, the Council instituted garnishment proceedings against LaBarre, as trustee of the trust. In response, LaBarre notified Gale that, “until this matter gets resolved,” LaBarre would have to cease sending him payments of trust income. ²⁶⁹ By October 1998, Gale and LaBarre had agreed that La-Barre would invade the corpus of the trust to pay the judgment, and the interest thereon, so that Gale could resume receiving the monthly trust income payments.

Gale told LaBarre, however, that, in connection with paying the judgment, he wanted (1) a release of any claim by the Council for attorneys’ fees; and (2) an agreement that the Council would not file any objection to his pending petition to get reinstated to the bar of the District of Columbia. 2 LaBarre duly wrote to the Council’s Pennsylvania attorney, Catherine Nelson. He advised her of Gale’s offer to pay the entire amount of the judgment, plus accrued interest, in return for a “complete release” from any further claim of legal fees and assurance that the Council would not oppose Gale’s reinstatement as a member of the District of Columbia bar. After conferring with her co-counsel in Washington, D.C., Nelson told LaBarre that the issue of the attorneys’ fees was being handled not by the Philadelphia law firm, but by the “civil rights attorneys” (Washington Lawyers Committee for Civil Rights, co-counsel for the Council in these proceedings) in Washington, D.C. Nelson further advised LaBarre that she was explicitly directed not to offer any release of the claim for fees. Instead, Gale would receive only a receipt reflecting the payment, and a praecipe marking the judgment as paid.

In addition, there would be no promise not to oppose Gale’s reinstatement to the bar. Nelson followed this conversation with a letter to LaBarre confirming the conversation. That letter read, in part: “Upon full satisfaction of the judgments, Plaintiffs will issue a receipt of payment and arrange for the Court to mark the judgment satisfied and paid in full.” ²⁷⁰ LaBarre gave this information to Gale. He nonetheless elected to go forward with the payment of the judgment, so he could resume obtaining income from the trust assets.

LaBarre returned to work on a revised trust termination agreement that would transfer all assets of the trust to Arlene. LaBarre completed the agreement and sent it to Gale on December 15, 1998. LaBarre later testified that he agreed to the premature termination of the trust in an effort to protect those trust assets that remained after the payment of the original judgment, from any of Gale’s creditors or potential creditors. LaBarre testified that, based on his conversations with Gale, he understood Gale to be acting for the same reason.

LaBarre also testified that both he and Gale were aware at the time the agreement was being prepared that the Council’s claim for attorneys’ fees had not been acted upon by the District of Columbia Superior Court. LaBarre testified that he also was aware that, given the Council’s pending fee claim, transferring the trust assets to Arlene could be viewed as a fraudulent conveyance. On December 7, 1998, the trust termination agreement was executed. It provided that, after payment of the original judgment, the remaining assets, approximately $400,000.00, would be transferred to a new Merrill Lynch account that had been opened in the sole name of Arlene Molovinsky.

Both before and after the transfer to Arlene, the $35,000.00 in annual income from the trust was used to pay the household expenses of the Molovinsky family. Events Following Termination of the Trust In February 1999, LaBarre used the trust assets to pay the original judgment, plus accrued interest, for a total payment of $106,570.75. Shortly thereafter, the Council filed a praecipe marking the judgment satisfied. One month later, the Council filed in the District of Columbia Superior Court a renewed and amended petition for attorneys’ fees.

The Council sought fees and expenses for the ²⁷¹ entire case, including both the pre-judgment phase covered by the original fee petition filed in 1994, and the post-judgment phase covering the appeal and collection efforts. On May 9, 1999, the court (Bartnoff, J.) entered judgment against Gale on the fee petition in the amount of $152,628.78. Gale filed a motion to vacate that judgment. He claimed that he had never been served with a copy of the amended fee petition, and argued, inter alia, that there should be no fee award because the Council had agreed (through LaBarre) to forego any request for fees in consideration of being paid the original judgment.

The Council filed an opposition to Gale’s motion to vacate, and included an affidavit from Catherine Nelson. Nelson swore in her affidavit that she never made any such agreement with LaBarre; to the contrary, she had always told LaBarre that the attorneys’ fees claim was not waived, and would be dealt with separately by her Washington, D.C. co-counsel. Gale did not file any counter-affidavit by LaBarre, nor did he reply to the Nelson affidavit in any way. On June 30, 1999, the superior court (Bartnoff, J.) entered an order denying the motion to vacate.

The court found that the amended fee petition had in fact been served on Gale, and found no merit to his additional arguments for vacation of the judgment. In May 1998, not knowing that the trust had been dissolved, the Council once again initiated garnishment proceedings against the trustee, LaBarre. This time, LaBarre responded by saying that the trust had been terminated and the assets transferred to Arlene Molovinsky. After learning of the circumstances surrounding the trust termination, the Council filed a fraudulent conveyance action in Pennsylvania, where the trust termination had taken place.

The Molovinskys filed a motion to dismiss for lack of jurisdiction, in response to which the Council voluntarily dismissed the action. ²⁷² On January 7, 2000, the Council re-filed the action in the Circuit Court for Montgomery County, where the Molovinskys reside. The three-count complaint alleged that the transfer of the trust funds constituted a fraudulent conveyance under Maryland’s Uniform Fraudulent Conveyance Act. On April 17, 2000, the Council filed a motion for summary judgment. The Molovinskys opposed the motion, and also filed a cross-motion for summary judgment.

The motions came on for a hearing on July 12, 2000. At its close, the court stated: [I]t is the Court’s determination that with respect to the issue of whether [there] was a transfer and/or a conveyance, that the [the Council’s] motion for summary judgment at tab 14 shall be granted. The Court determines based upon the undisputed facts before it that there is no material dispute of fact as to whether or not there was a transfer or a conveyance. The only dispute as we have debated is what is the legal significance of that which occurred.

It appears from the undisputed evidence that under the existence of the trust agreement which was under the will of [Gale’s] mother, that the monies were held in trust, that the trustee had the right to invade — and that [Gale] was the income beneficiary, but that the trustee had the right in his sole discretion to invade the trust — the language was extremely broad — the trustee shall have full power and ability to the exercise in his sole and uncontrolled discretion to pay over to my said son, Gale Molovinsky, whatever part or parts or all of the principal the trustee shall deem wise and safely consistent with the future needs of my said son. As well, he had other permissions and authorities to invade the trust. What is evident from the undisputed facts here is that up to and culminating in December of 1998, December 17th, the trust terminating agreement I believe it is entitled, that there were discussions between the trustee and [Gale] about terminating the trust and it appears from that document ²⁷³ and from the other evidence presented that precisely what occurred was that at the request of [Gale] that the monies that were previously held in trust were transferred, not through the trust agreement but basically were transferred outside of the trust directly to the defendant’s wife [, Arlene]. As I discussed in my discussions with Mr. Protas [counsel for the Molovinskys], if [Gale] had simply renounced any interest he had, then under the terms of the trust it would have continued with the wife being entitled to income for her life and, upon her death the trust would have terminated and the principal would have been to the children.

That is not what has occurred her[e] and I recognize that the trustee could not have been compelled to take this action, but I think that notwithstanding it is clear from the undisputed facts that the trustee took the action he took in this case — as a matter of fact, in his deposition said he consented to the action, that he took it at the request of [Gale] and therefore that it was a transfer or conveyance within the meaning of Sections 204, 206 and 207. Further, the Court finds having had a chance to read Pierce [sic] [3] and considering arguments of counsel that the transfer that did occur of the principal of the trust to the wife was without consideration. There is no evidence before the Court from which the Court could find or any reasonable fact-finder could find that the monies were transferred to cover any [ ]necessaries such as are described in Pierce [sic], so to that extent [the Council’s] motion for summary judgment is granted. With respect to all remaining matters, I believe that there are material disputes of fact so the motion for summary judgment as to the remaining matters is denied.

A written order embodying the court’s grant of partial summary judgment was thereafter entered on the docket. ²⁷⁴ That order stated, in pertinent part: “[T]he transfer of assets from [Gale to Arlene] constituted a ‘conveyance’ ” and “Arlene Molovinsky gave no consideration, fair or otherwise ... for the conveyance of the Trust assets to her.” In July 2001, the remaining counts of the Council’s complaint came on for a bench trial. Nearly one year later, the court issued a seventeen-page memorandum opinion, resolving the remaining issues in favor of the Council. From entry of that judgment, this appeal followed. We shall include additional facts in our discussion as necessary.

DISCUSSION I. The Molovinskys argue that the court erred in concluding that Gale conveyed the trust assets to Arlene without her giving fair consideration for the transfer, and thus erred in granting summary judgment in the Council’s favor on that issue. They mount three arguments in support of this contention: (1) the transfer of trust assets did not constitute a conveyance because Gale had renounced his interest in the trust prior to the transfer; (2) Arlene gave fair consideration in exchange for the conveyance of the trust assets to her, either “in the form of past services performed by a spouse” or by virtue of the “obligation to provide necessaries”; and (3) the transfer of trust assets from the trustee to Arlene was in accordance with the trust instrument, and therefore she was not required to provide fair consideration. We reject all of these arguments. This Court reviews an order granting summary judgment de novo.

Beyer v. Morgan State Univ., 369 Md. 335, 359 , 800 A.2d 707 (2002). We are required to determine whether a dispute of material fact exists. Id. at 359-60 , 800 A.2d 707 . “ ‘A material fact is a fact the resolution of which will somehow affect the outcome of the case.’ ” Matthews v. ²⁷⁵ Howell, 359 Md. 152, 161 , 753 A.2d 69 (2000) (quoting King v. Bankerd, 303 Md. 98, 111 , 492 A.2d 608 (1985)). Summary judgment is only appropriate when, upon review of the facts and inferences therefrom in the light most favorable to the non-moving party, there is no genuine issue of material fact and the party in whose favor judgment is entered is entitled to judgment as a matter of law.

Md. Rule 2-501(e); Frederick Road Ltd. P’ship v. Brown & Sturm, 360 Md. 76, 93-94 , 756 A.2d 963 (2000). If the record reveals that a material fact is in dispute, summary judgment is inappropriate. Okwa v. Harper, 360 Md. 161, 178 , 757 A.2d 118 (2000). Once we have concluded that there is no genuine issue of material fact, we review the trial court’s grant of summary judgment to ascertain if it was legally correct.

Jahnigen v. Smith, 143 Md.App. 547, 555 , 795 A.2d 234 , cert. denied, 369 Md. 660 , 802 A.2d 439 (2002). A. The Molovinskys contend that the court erred in concluding that the transfer of trust assets from Gale to Arlene constituted a conveyance, as that term is defined in the Maryland Uniform Fraudulent Conveyance Act (“MUFCA”). See Md.Code (1975, 2000 Repl.Vol), § 15-201 et seq. of the Commercial Law Article. 4 They argue that Gale renounced his interest in the trust, and therefore Arlene, the second contingent beneficiary of the trust, lawfully received the trust’s assets. We disagree.

MUFCA § 15-201(c) defines a conveyance as “every payment of money, assignment, release, transfer, lease, mortgage, or pledge of tangible or intangible property, and also the creation of any lien or incumbrance.” The record leaves no doubt that moving the trust’s corpus from the Merrill Lynch account of Donald LaBarre, trustee, to a newly created ac ²⁷⁶ count in the name of Arlene Molovinsky, was a “transfer,” as contemplated by MUFCA § 15-201(c). The Molovinskys attempt to circumvent the plain language of MUFCA § 15-201 (c) by arguing that Gale renounced his interest in the trust, resulting in the trust lawfully passing by its terms to Arlene. In support of this argument, the Molovinskys rely on a sixty-eight year old case, Bouse v. Hull, 168 Md. 1 , 176 A. 645 (1935). Bouse does not assist them.

We note at the outset that the facts of the instant case are distinguishable from those in Bouse . In Bouse , the Court of Appeals was asked to decide whether a group of corporate legatees under a will were