Moshyedi v. Council of Unit Owners of Annapolis Road Medical Center Condominium

DAVIS, Judge. This appeal arises from the denial of compensatory damages to appellant Ata O. Moshyedi by the Circuit Court for Prince George’s County. Appellant sued appellee 1 Council of Unit ¹⁸⁸ Owners of Annapolis Road Medical Center Condominium (Council) for failure to repair his condominium unit. His initial complaint, filed in the circuit court on January 12, 1995, requested a declaratory judgment.

In May 1995, appellee filed suit against appellant in the District Court for Prince George’s County for payment of past due condominium fees. Appellant prayed a jury trial and the case was removed to the Circuit Court for Prince George’s County, where the case was consolidated with appellant’s original action for declaratory relief. Appellant then separately filed suit against Ashgar Shaigany, president of the Council, and Richard Johnson, doing business as Richard Johnson Improvements, the contractor hired by the Council to repair the damage. That suit was also consolidated with the two prior actions.

On April 8, 1997, appellant filed an amended complaint, which restated his claim for declaratory relief and added a second count requesting both compensatory and punitive damages. The case was tried before a jury on December 8, 1998 and, 'at the end of appellant’s case, the trial court dismissed the action against Johnson, his company, and Shaigany. It also granted appellee’s motion for judgment, declaring appellant’s claim for declaratory relief moot and denying him punitive damages. Appellee proceeded with its case and, at the close of all of the evidence, the court granted appellee’s motion to withdraw the second count of appellant’s amended complaint for monetary damages from consideration by the jury, stating it would reserve ruling on the issue following submission of post-trial memoranda by both parties.

The jury proceeded to consider appellee’s claim for the past due condominium fees and, on December 10, 1998, issued a verdict awarding $18,365 to appellee. On January 20, 1999, the trial court entered judgment in favor of appellee on appellant’s second count for compensatory damages. Appellant then filed this appeal and presents the following question, which we rephrase as follows: ¹⁸⁹ Did the trial court err in withdrawing appellant’s breach of fiduciary duty claim from consideration by the jury? Appellee asks: Should this appeal be dismissed for failure of appellant to order the transcript of the trial below by the deadline pursuant to Md. Rule 8 — 411(b)(1) (2000) and under the criteria for dismissal as set forth in 8442(d)(2000)?

We answer appellant’s question in the negative; however, we vacate the judgment of the trial court and remand for further proceedings consistent with the discussion, infra. Additionally, we shall deny appellee’s motion to dismiss. FACTUAL BACKGROUND Appellant owns Unit 7 in a two-story, fourteen unit condominium complex located at 5632 Annapolis Road in Prince George’s County. The complex is governed by the Council.

On January 23, 1994, appellant’s unit, along with three other units within the complex, sustained flood damage. Appellee’s insurance claim was processed and it received payment from the insurance company to repair the damaged units and common areas. A contractor was hired to repair the units, and a check for $29,540.21 was issued jointly payable to appellee and the contractor for appellant’s unit. The contractor proceeded to repair appellant’s unit until February 1994, when he was informed by appellee to make only those repairs necessary to prevent further damage.

The order to the contractor came from the president of the Council following an emergency meeting of appellee’s Board of Directors (Board). Appellant eventually filed suit on January 12, 1995, in the Circuit Court for Prince George’s County against appellee, requesting declaratory relief. In May 1995, appellee sued appellant in the District Court for Prince George’s County for nonpayment of condominium fees. Appellant requested a jury trial and the action was transferred to the circuit court, where it was consolidated with the first action.

Appellant then separately filed suit against the contractor hired by the Council and the president of the Council. The suit was also ¹⁹⁰ consolidated with the prior two actions and a jury trial commenced on all three actions on December 8, 1998. At the close of appellant’s evidence, the trial court dismissed the action against the Council president and the contractor and granted appellee’s motion for judgment, stating appellant’s claim for declaratory relief was moot and appellant was not entitled to punitive damages. At the close of all of the evidence, on appellee’s motion, the court withdrew the remaining claim for compensatory damages in appellant’s second count of his amended complaint from consideration by the jury.

The only issue submitted to the jury was appellee’s claim for condominium fees owed by appellant. The jury returned a verdict in favor of appellee in the amount of $18,365. After trial, both parties submitted memoranda, pursuant to the trial judge’s request and, on January 20, 1999, the trial court entered judgment in favor of appellee on appellant’s claim for compensatory damages. On February 15, 1999, appellant timely filed this appeal.

DISCUSSION I Preliminarily, we shall address appellee’s motion to dismiss. Appellee requests that we dismiss the present appeal because of appellant’s noncompliance with Rules 8-411 and 8-412(d) to file .timely transcripts of the proceedings in the trial court necessary for review upon appeal. In a previous order, we granted appellant’s motion to file the transcript after reviewing appellant’s response to a Show Cause Order. Subsequently, the transcript was filed with this Court.

We do not perceive any prejudice to appellee, or violation as egregious as that set out in Laukenmann v. Laukenmann, 17 Md.App. 107 , 299 A.2d 466 (1973), to warrant dismissal of this appeal based on appellant’s initial failure to file the transcript on time. Accordingly, appellee’s motion to dismiss is denied. II Appellant asserts that the trial court committed error when it refused to allow his complaint for compensatory damages to ¹⁹¹ be submitted to the jury. Appellant contends that a fiduciary relationship existed between appellee and appellant by virtue of the Maryland Condominium Act, Md.Code (1996 Repl.Vol.), Real Prop.

(R.P.) § 11-101, et seq., and the Council’s ByLaws. He argues that the jury should have been allowed to decide, based on the evidence presented at trial, if appellee breached that duty and what damages, if any, he is entitled to in light of that breach. In essence, appellant posits that his claim of breach of fiduciary duty and any damages due from that breach are not purely equitable in nature and, therefore, he is entitled to a jury determination on that issue. The merger of law and equity in Maryland in 1984 was in no way meant to affect a party’s right to a jury trial.

Mattingly v. Mattingly, 92 Md.App. 248, 255 , 607 A.2d 575 (1992). “Article 23 of the Maryland Declaration of Rights, like the Seventh Amendment of the United States Constitution, guarantees a right to a jury trial in actions at law.” Id. at 254-55 , 607 A.2d 575 (citing Bringe v. Collins, 274 Md. 338, 346 , 335 A.2d 670 (1975)). Equity actions, on the other hand, carry no right to a jury trial. Id. at 255, 607 A.2d 575 . Since the 1984 merger of law and equity, the courts have regularly addressed questions of legal and equitable issues in the same proceedings.

Maryland courts have stated that, “when ‘the existence of both legal and equitable issues within the same case requires the selection between the jury and the court as the determiner of common issues, the discretion of the trial court “is very narrowly limited and must, wherever possible, be exercised to preserve jury trial.” ’ ” Id. (citing Higgins v. Barnes, 310 Md. 532, 544 , 530 A.2d 724 (1987) (quoting Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 510 , 79 S.Ct. 948 , 3 L.Ed.2d 988 (1959))). “Accordingly, if a case presents any legal issues, even if those issues are outweighed by equitable issues, the case is to be tried to a jury unless ‘the use of the jury trial itself will in some way obstruct a satisfactory disposition of the equitable claim.’ ” Id. at 256, 607 A.2d 575 (citations omitted). However, in Fink v. Pohlman, 85 Md.App. 106, 122 , 582 A.2d ¹⁹² 539 (1990), we explained that, when a claim for legal remedy is “inexorably intertwined with the equitable nature of the claim made and the relief sought,” it is proper for the trial court to decide the issues sitting as a court of equity. Additionally, an action that is equitable in nature will not be transformed into an action at law by a party’s request for a legal remedy.

Id. at 121 , 582 A.2d 539 . Likewise, a legal claim will not turn into an equitable action just because a party requests an equitable remedy. Mattingly, 92 Md.App. at 259-60 , 607 A.2d 575 (citing Dairy Queen, Inc. v. Wood, 369 U.S. 469 , 82 S.Ct. 894 , 8 L.Ed.2d 44 (1962)). The threshold determination, therefore, in deciding if the trial court erroneously withdrew an issue from consideration by the jury, is whether the claim before the court was legal or equitable.

This is often difficult to ascertain, but the Supreme Court has established three factors to consider in determining whether a claim gives rise to a jury trial. Merritt v. Craig, 130 Md.App. 350, 362-63 , 746 A.2d 923 (2000) (citing Mattingly, 92 Md.App. at 256 , 607 A.2d 575 ). They are: 1) the customary manner of trying such a cause before the merger of law and equity, 2) the kind of remedy sought by the plaintiff, and 3) the abilities and limitations of a jury in deciding the issues. Id. at 362 , 746 A.2d 923 (citing Ross v. Bernhard, 396 U.S. 531 , 538 n. 10, 90 S.Ct. 733 , 24 L.Ed.2d 729 (1970)).

The second prong is the most important factor to be considered. Id. Accordingly, a determination must be made based on the above-stated factors, in addition to an historical evaluation of whether the claim is one traditionally sounding in equity or law. Kann v. Kann, 344 Md. 689, 713 , 690 A.2d 509 (1997).

Appellee argues that appellant’s claim of breach of fiduciary duty is not a recognized action in Maryland, and alternatively, that, even if it is a valid cause of action, appellant did not provide sufficient evidence at trial to prove: 1) the fiduciary relationship and 2) the damages appellant incurred. In Kann , the Court of Appeals refused to accept breach of ¹⁹³ fiduciary duty as a new cause of action at law. It stated that § 874 of the Restatement (Second) of Torts in effect recognizes the universal proposition that a breach of fiduciary duty is a civil wrong, but the remedy is not the same for any breach by every type of fiduciary. For some breaches the remedy may be at law, for others it may be exclusively in equity, and for still others there may be concurrent remedies.

Id. at 710, 690 A.2d 509 . As we articulated, supra, the remedy sought does not define the type of action. In Kann , the Court held “that there is no universal or omnibus tort for the redress of breach of fiduciary duty by any and all fiduciaries.” Id. at 713 , 690 A.2d 509 . Appellee points to this holding for the proposition that no cause of action exists for breach of fiduciary duty.

However, the Court went on to say: This does not mean that there is no claim or cause of action available for breach of fiduciary duty. Our holding means that identifying a breach of fiduciary duty will be the beginning of the analysis, and not its conclusion. Counsel are required to identify the particular fiduciary relationship involved, identify how it was breached, consider the remedies available, and select those remedies appropriate to the client’s problem. Id. at 713 , 690 A.2d 509 .

In its reliance on the Restatement (Second) of Torts’s section entitled “Violation of Fiduciary Duty,” the Court noted: The local rules of procedure, the type of relation between the parties and the intricacy of the transaction involved, determine whether the beneficiary is entitled to redress at law or in equity. The remedy of a beneficiary against a defaulting or negligent trustee is ordinarily in equity; the remedy of a principal against an agent is ordinarily at law. Id. at 707 , 690 A.2d 509 (quoting Restatement (Second) of Torts § 874 cmt. b (1977)). Appellant sought a legal remedy in his claim for compensatory damages, but the court did not err in treating the claim ¹⁹⁴ for breach of fiduciary duty as one in equity.

Additionally, we recognize that the Court of Appeals is reluctant to order reversal based on a trial court’s error in its decision to choose law or equity. Mattingly, 92 Md.App. at 262 , 607 A.2d 575 . We noted, in Mattingly , that the three instances where the Court did reverse and remand a case alleging error for the court’s choice of law or equity contained other grounds for reversal. Id.

In the case sub judice, the court’s decision to withdraw the issue from the jury is the only claim the parties have properly argued before us. In cases where the Court has held the trial court committed error in its choice of law or equity, the court has proceeded to resolve the case on the merits. Id. (citing Mayor and Town Council of Landover Hills v. Brandt, 199 Md. 105, 107-08 , 85 A.2d 449 (1952); Burns v. Bines, 189 Md. 157, 164 , 55 A.2d 487 (1947)).

Appellant states that his claim for breach of fiduciary duty rests in the statute governing condominiums and the Council’s By-Laws. Section 11-114 of the Maryland Condominium Act, contained in the Real Property Article, discusses mandatory insurance coverage. R.P. § 11-114. It states: (3) If the damaged or destroyed portion of the condominium is not repaired or replaced: (i) The insurance proceeds attributable to the damaged common elements shall be used to restore the damaged area to a condition compatible with the remainder of the condominium; (ii) The insurance proceeds attributable to units and limited common elements which are not rebuilt shall be distributed to the owners of those units and the owners of the units to which those limited common elements were assigned; and (iii) The remainder of the proceeds shall be distributed to all the unit owners in proportion to their percentage interest in the common elements.

R.P. § 11-114(g)(3). Section 11-114, however, is inapplicable to appellant’s claim because, pursuant to Section 12(e) of the By-Laws of the condominium, “[n]o Unit (or any part thereof) ¹⁹⁵ may be used for residential purposes.” Real Property § 11— 114(i) states: “The provisions of this section do not apply to a condominium all of whose units are intended for nonresidential use.” Accordingly, the condominium By-Laws are the governing agreement and we presume from the court’s decision that it correctly considered the By-Laws and not the statute. The By-Laws provide, under Article V, Operation Of the Property, in relevant part: Section 10. Repair or Reconstruction After Fire or Other Casualty.

Except as hereinafter provided, in the event of damage to or destruction of the Property as a result of fire or other casualty, the Board of Directors shall arrange for the prompt repair and restoration thereof ..., and the Board of Directors or the Insurance Trustee, as the case may be, shall disburse the proceeds of all insurance policies to the contractors engaged in such repair and restoration, as provided below. In the event of reconstruction or repair ... which shall exceed Twenty-Five Thousand Dollars ($25,000), and if the Lead Mortgagee shall so require, all proceeds of insurance shall be paid over to a trust company ... and shall be paid out from time to time as the reconstruction or repair progresses in accordance with the provisions of an Insurance Trust Agreement ..., which contains, inter alia, the following provisions: (f) Upon completion of the reconstruction or repair and payment in full of all amounts due on account thereof, any proceeds of insurance then in the hands of the Insurance Trustee shall be paid to the Board of Directors, shall be considered as one fund and shall be divided among the owners of all the Units in the same proportion as that previously established for ownership of appurtenant undivided interests in the common elements, after first paying out of the share of the owner of any Unit (to the extent such payment is required by any lienor and to the extent ¹⁹⁶ the same is sufficient for such purpose), all liens upon said Unit. It was, therefore, within the province of the court to decide, and not a jury, if the By-Laws created a fiduciary relationship. Although we recognize that Kann addressed an express trust relating to a decedent’s estate, which clearly is equitable in nature, the issues the court was required to resolve in the instant case are equally equitable in nature.

The trial judge was required to determine, as a matter of law, if the By-Laws created a fiduciary duty and, if so, whether appellant’s claim created a valid cause of action. Both of these questions address issues of law and not of fact. “Ordinarily, the judge determines matters of law.” Fairfax Savings, F.S.B. v. Ellerin, 94 Md.App. 685, 704 , 619 A.2d 141 (1993), aff'd in part, rev’d in part, Ellerin v. Fairfax Sav., F.S.B., 337 Md. 216 , 652 A.2d 1117 (1995) (citations omitted). Appellant’s claim was essentially that the Council held the insurance money in trust for the proper and prompt repair of his unit and, through its actions, the Council breached its duty as trustee of the insurance proceeds. Appellant, the supposed beneficiary of that trust, instituted the present action for the court to determine if that duty was indeed breached.

The law is settled that “ ‘modern courts have not permitted the beneficiary of a trust to maintain an action at law for tort against the trustee for breach of trust.’ ” Kann, 344 Md. at 703 , 690 A.2d 509 (quoting 3 A.W. Scott & W.F. Fratcher, The Law of Trusts § 197.1, at 189 (4th ed.1988)). “[Supervision of trusts is the province of a court of equity....” Id. at 701, 690 A.2d 509 (quoting Woods v. Fuller, 61 Md. 457, 459 (1884)). The trust in the case sub judice is not a matter involving an express trust, as in Kann , but rather an implied trust as established by the condominium’s By-Laws. Nevertheless, the determination regarding the rights of appellant as the beneficiary of the money held in trust by appellee is a matter for the court to resolve in equity. We, therefore, perceive no error and hold that the judge appropriately withdrew appellant’s Count Two from consideration by the jury. ¹⁹⁷ Ill A Appellant asserts that, by reason of appellee’s breach of its fiduciary duty to effectuate repairs on his unit, the statute and By-Laws entitle him to the amount of the insurance proceeds remaining in the possession of the Board after it ordered repairs on his unit to cease.

As explained, supra, the fact that appellant’s unit is commercial renders the statute inapplicable. Because the statute is inapplicable, our review of the lower court’s decision not to award appellant the relief he seeks must be guided by the pertinent provisions in the By-Laws. Although the overwhelming body of law explicating the nature of condominium estates addresses residential condominiums, the concept is succinctly summarized in Agassiz West Condominium Association v. Solum, 527 N.W.2d 244, 246 (N.D.1995): The condominium form of ownership is thus based upon the principle of shared ownership and shared responsibility. See Hyatt, Condominium and Homeowner Association Practice: Community Association Law § 1.05(b)(1) (2d ed.1988).

Because of the manner in which ownership in a condominium is structured, each unit owner, in choosing to purchase a unit, must give up certain rights and privileges which normally accompany fee ownership of property and agree to subordinate those rights and privileges to the group’s interest. See Breene v. Plaza Tower Ass’n, 310 N.W.2d 730, 733 (N.D.1981). A condominium project functions as a quasi-government, and ... its unit owners are responsible for its administration. [The] Section ... authorizes the unit owners, or the administrative body established by