Shipley v. Perlberg

ADKINS, Judge. This case is about whether a corporate officer and director is individually liable for lead paint injuries to the resident of a corporately owned property. Steven Shipley, appellant, sued Marvin Perlberg (“Perlberg”), appellee, for injuries caused by lead paint poisoning while Shipley was residing at 1641 West Lafayette Avenue, in Baltimore City (the “subject property”). Perlberg denied any involvement with the renting of the subject property to Shipley’s family, and moved for summary judgment.

On August 21, 2000, the Circuit Court for Baltimore City granted Perlberg’s motion. On appeal, Shipley contends that the circuit court erred in granting Perlberg’s motion and presents several questions for our review. First, he contends that there are sufficient facts in the record to create an inference that Perlberg “personally participated, inspired, cooperated and acquiesced in the tortious negligence of the corporate body.” Second, he argues that the circuit court erred in refusing to admit a deposition taken in an unrelated civil action involving different parties, which he asserted would “create a material dispute of fact for the purpose of summary judgment.” Finally, he contends that Perlberg is liable under the Baltimore City Housing Code and Maryland partnership law. Finding no evidentiary basis for imposing personal liability on Perlberg, we shall affirm the judgment of the circuit court.

FACTS AND LEGAL PROCEEDINGS The subject property was owned by Barbara Realty Corporation and managed by North Services Corporation. Shipley ²⁶² resided at the property from April 1971 through October 4, 1973, while he was a young child. 1 While residing at the property, Shipley suffered elevated blood levels and was diagnosed with lead poisoning. On August 23, 1973, a lead violation notice was issued to Northern Brokerage Company, as the “owner or agent for” the subject property. Shipley and his family moved out of the residence in October 1973 and never returned.

In his complaint, Shipley alleged, inter alia, that Perlberg was personally liable because he directly controlled and made decisions concerning the management of the subject property. Perlberg moved for summary judgment contending, inter alia, that “he had no direct involvement in the subject premises, of any type.” In support of his motion, Perlberg attached his deposition taken in the instant action. During his deposition, Perlberg testified about his involve-: ment with Barbara Realty and other real estate ventures undertaken by himself and his brother, Daniel Perlberg (“Daniel”). Perlberg said that he was in the real estate business in Baltimore from 1950 until his retirement in the early 1980’s.

He acknowledged that during this time period, Perlberg and Daniel were involved as officers and directors in a number of corporations that owned and sold property in Baltimore City, including Barbara Realty, Curley Realty, and Northern Brokerage Company. Perlberg asserted that Daniel handled the rental side of their businesses and that his activities were limited to the buying and selling of properties. He denied any involvement in the leasing or management of the subject property. Perlberg stated that he had never visited or inspected the subject property, had no knowledge of any violation notices, and never had any communication with Shipley or any other tenant of the property.

He acknowledged that the telephone number for both his buying and selling business, and his brother’s rental business was listed under the name Northern Brokerage Company. When calls ²⁶³ would come in to Northern Brokerage, they would be routed upstairs to his separate line if they involved purchases or sales, or to his brother’s line if they involved rentals. When asked whether Northern Brokerage “was actually ... on file with Maryland Department of Assessments and Taxation as a corporation,” he replied, “I think so. I’m really not sure.” Shipley offered the deposition testimony of Daniel.

This testimony was not taken in the instant action, but rather, in an unrelated 1991 case styled as Alisha Holloway, et al. v. Wendy Perlberg, et al., No. 89026031/CL92259 in the Circuit Court for Baltimore City (the “Holloway case”). Neither Shipley nor Perlberg was a party to that case, which did not involve the subject property. In his deposition, Daniel testified that both he and Perlberg were personally involved in the rental and management of properties owned by a different corporation known as Curley Realty, which was formed in approximately 1955, and was still in operation at the time of the deposition in 1991. Daniel asserted that both he and Perlberg made decisions concerning rental properties for Curley Realty, and jointly made decisions concerning the maintenance of these properties.

Daniel explained that both he and Perlberg would handle complaints about the Curley rental properties and would decide on an appropriate course of action. He acknowledged that Northern Brokerage was the name listed in the phone book for the telephone number used by Curley Realty. If a tenant of Curley Realty had a complaint, he or she would call the Northern Brokerage number, and either Daniel or Perlberg would take care of it. After a hearing, the court granted Perlberg’s motion for summary judgment.

The court held that Daniel’s deposition testimony was inadmissible because it involved “a different case, a different property, a different corporation and a different time period [and] because ... [Perlberg] would not have the opportunity to cross examine that testimony.” The court further ruled that because the deposition testimony was inadmissible, Shipley failed to submit “any evidence that would be admissible that would reflect the fact that ... [Perlberg] did participate in the actions alleged in the Complaint.” Accord ²⁶⁴ ingly, the court granted Perlberg’s motion for summary judgment. This appeal followed. DISCUSSION Shipley contends that the trial court erred in granting Perlberg’s motion for summary judgment. As a threshold matter, he argues that the court erred when it refused to consider the deposition testimony of Daniel taken in an unrelated case.

He asserts that the court erred in determining there were no material facts that would support an inference that Perlberg is personally liable for his injuries. His contention is two-fold. First, he contends that the court erred in ruling that Perlberg had to have knowledge and participate in the actions alleged in the complaint. Second, he contends that a reasonable inference could be drawn from the evidence that Perlberg did, in fact, have knowledge and control over the actions that caused the damages alleged in the complaint.

Shipley further contends, invoking the provisions of the Baltimore City Code and partnership law, that Perlberg is liable even if he did not participate in the alleged wrongful acts. We shall address Shipley’s contentions in turn. I. Standard Of Review Summary judgment is appropriate where there is no dispute as to any material fact and the moving party is entitled to judgment as a matter of law. See Md. Rule 2-501.

In reviewing a trial court’s grant of summary judgment, we must determine whether the trial court’s ruling was legally correct. See Heat & Power Corp. v. Air Prod. & Chems., Inc., 320 Md. 584, 591 , 578 A.2d 1202 (1990). “The purpose of the summary judgment procedure is to decide whether there is an issue of fact sufficiently material to be tried, not to try the case or to resolve factual disputes.” Hartford Ins. Co. v. Manor Inn of Bethesda, Inc., 335 Md. 135, 144 , 642 A.2d 219 (1994). Nevertheless, “when the pleadings, depositions, admissions on file, and any affidavits show that there is no genuine dispute as to ²⁶⁵ any material fact and that the moving party is entitled to judgment as a matter of law, then the judgment shall be rendered forthwith.” King v. Bankerd, 303 Md. 98, 111 , 492 A.2d 608 (1985).

II

Perlberg’s Tort Liability As Corporate Director Shipley asserts that Perlberg is personally liable for his injuries based on Perlberg’s status as a director of the corporation that leased the subject property. In making this general assertion, Shipley paints with a broad brush, and draws no distinction between Perlberg’s status as a director and officer of Barbara Realty Corporation, the owner of the subject property, and his status as a director and officer of Northern Realty Company, the company that managed the subject property. A. “Participation” Standard For Holding Corporate Director Personally Liable Shipley relies on several Maryland cases to support his claim that Perlberg may be held individually liable because he is a corporate officer and director. See Metromedia Co. v. WCBM Maryland, Inc., 327 Md. 514 , 610 A.2d 791 (1992); Tedrow v. Deskin, 265 Md. 546 , 290 A.2d 799 (1972); Levi v. Schwartz, 201 Md. 575 , 95 A.2d 322 (1953); St. James Constr.

Co. v. Morlock, 89 Md.App. 217, 223 , 597 A.2d 1042 (1991), cert. denied, 325 Md. 526 , 601 A.2d 1100 (1992). None of these cases supports a holding that Perlberg was liable for the negligence of Barbara Realty simply because he was a corporate officer. In Levi v. Schwartz, the Court of Appeals articulated the rule concerning the liability of a corporate officer for a tort committed by the corporation. It is a generally accepted rule that an officer of a corporation who takes part in the commission of a tort by the ²⁶⁶ corporation is personally liable therefor, but an officer of a corporation who takes no part in the commission of a tort committed by the corporation is not personally liable unless he specifically directed the particular act to be done or participated or co-operated therein.

Levi, 201 Md. at 583 , 95 A.2d 322 . In Levi , the officer purchased land and transferred it to a corporation. The corporation hired a third party to excavate the land. Evidence offered at trial indicated that the officer visited the site daily and gave orders.

An adjoining landowner filed suit against the corporation and the officer individually to recover damages caused by the removal of soil supporting its lot. The Court affirmed the jury’s verdict that the officer was personally liable because “[t]he evidence supports the theory that [the officer] participated in the alleged negligent and wrongful acts of the excavator.” Id. at 584 , 95 A.2d 322 . A similar result was reached in Metromedia Co. v. WCBM Maryland, Inc. Metromedia ordered a radio station, WCBM, to vacate premises that it sub-leased. WCBM’s chief executive officer made the decision to refuse to vacate the premises.

Metromedia filed an ejectment action in the circuit court against WCBM and its officer. Reversing the trial court’s motion for judgment in favor of the officer, the Court held that “the evidence [Metromedia] offered was sufficient to establish that [the officer] ... decided that WCBM would not vacate the premises notwithstanding its lack of any right to occupy it.” Metromedia Co., 327 Md. at 522 , 610 A.2d 791 . Nevertheless, an officer or director is not liable for torts of which the officer has no knowledge or to which the officer has not consented. See Tedrow, 265 Md. at 551 , 290 A.2d 799 .

Rather, there must have been “upon [the officer’s] part such a breach of duty as contributed to, or helped to bring about, the injury; he must have been a participant in the wrongful act.” Id. This rule was applied in Fletcher v. Havre de Grace Fireworks Co., 229 Md. 196 , 177 A.2d 908 (1962). In Fletcher , a fireworks plant exploded. The explosion and resulting fire injured the plaintiff and damaged her ²⁶⁷ home.

She sued the fireworks plant, as well as its officers and directors individually. The plaintiffs theory against the individual directors was that they were liable because they controlled the conduct of the business. The lower court sustained demurrers by the individual officers on the grounds that the plaintiffs allegations were “too general to charge [the directors] with liability.” Id. at 199 , 177 A.2d 908 . The Court of Appeals affirmed this judgment, explaining: It is manifest, we think, that the allegation in the trespass q.c.f. count that the officer-director defendants had and exercised “complete direction and control over all phases of the conduct of the business of the defendant company,” and the more comprehensive allegation of similar import in the negligence, extra-hazardous and nuisance counts, fall far short of alleging that the individual defendants had personally directed or actively participated or cooperated in the tort committed by the corporation.

Id. at 201 , 177 A.2d 908 . In St. James Construction, the plaintiff homeowners sued the corporate builder of their home, and its president, individually, for the cost to repair a brick veneer wall that developed severe cracks and holes. The plaintiffs urged that the president was individually liable because a corporate officer may be held personally liable for torts committed by the corporation if that officer “ ‘either specifically directed, or actively participated or cooperated in’, the corporation’s negligent conduct.” St. James Constr., 89 Md.App. at 223 , 597 A.2d 1042 (quoting Fletcher, 229 Md. at 201 , 177 A.2d 908 ). Relying on Tedrow , the court held the officer liable because he chose the wood materials used in constructing the wall, and the use of wood to support a masonry wall caused the wall to fail.

In this case, we must apply these “participation” standards to determine whether Perlberg was entitled to summary judgment on the grounds that he did not participate in the corporate torts alleged in the complaint. For the reasons set forth below, we hold that the trial court correctly decided that (1) Perlberg offered sufficient evidence to show his lack of ²⁶⁸ participation in the management of Barbara Realty, and (2) Shipley failed to offer sufficient evidence to raise a dispute regarding Perlberg’s lack of participation. B. Perlberg’s Deposition Testimony Establishing His Lack Of Participation To establish his lack of participation in corporate affairs, Perlberg offered his deposition testimony in support of summary judgment. In his deposition, Perlberg stated that, although he was involved in a variety of corporations that rented properties, he was not personally involved in the rental aspects of the businesses, and that he had no personal knowledge concerning the status of the rentals.

He testified that he did not know Shipley and that he had never visited the subject property. This testimony, standing alone, would satisfy Perlberg’s initial burden of “presenting] the material facts necessary to obtain judgment and demonstrate that there is no dispute as to any of those facts.” Fearnow v. Chesapeake & Potomac Tel. Co., 104 Md.App. 1, 48-49 , 655 A.2d 1 (1995), rev’d on other grounds, 342 Md. 363 , 676 A.2d 65 (1996). Therefore, because Perlberg set forth grounds sufficient for summary judgment, Shipley was required “to show with ‘some precision’ that there is a genuine dispute as to a material fact.” Bond v. Nibco, Inc., 96 Md.App. 127, 135 , 623 A.2d 731 (1993) (quoting Seaboard Surety Co. v. Richard F. Kline, Inc., 91 Md.App. 236, 243 , 603 A.2d 1357 (1992)).

C. Shipley’s Effort To Rebut Perlberg’s Deposition Testimony We turn to Shipley’s attempt to rely on Daniel’s deposition testimony in an unrelated case, in order to raise a disputed issue of material fact. The circuit court ruled that this deposition was inadmissible because it involved testimony ²⁶⁹ taken “(1) in another case; (2) dealing with a different property; (3) addressing a different corporation; and (4) a different time period.” We interpret the trial court’s ruling on the admissibility of Daniel’s deposition to embrace two subparts. First, the trial court held that the deposition was not admissible because it was taken in an unrelated case involving different parties, and, as the trial court said, “[Perlberg] would not have the opportunity to cross examine that testimony.” Second, the deposition testimony did not meet the general requirement of relevance because it related to Curley Realty Corporation, which had no involvement with the subject property. We will examine each of these rulings in turn. 1.

Admissibility Of Deposition Testimony In A Case Involving Different Parties Maryland Rule 2-501(b) provides: When a motion for summary judgment is supported by an affidavit or other statement under oath, an opposing party who desires to controvert any fact contained in it may not rest solely upon allegations contained in the pleadings, but shall support the response by an affidavit or other written statement under oath. (Emphasis added.) A deposition, because it is a statement under oath, qualifies under Rule 2-501 as evidence that can controvert facts submitted under oath by the moving party. Seeking to carve out an exception from the general rule, Perlberg argues that Daniel’s deposition was not admissible because it was taken in a case involving different parties. We do not agree that the difference in parties creates an exception to the general rule allowing the use of deposition testimony to oppose summary judgment.

The Court of Appeals recently addressed the issue of whether testimony taken in a previous proceeding could be used to defeat a motion for summary judgment. In Imbraguglio v. Great Atlantic & Pacific Tea Co., Inc., 358 Md. 194 , ²⁷⁰ 747 A.2d 662 (2000), a worker was killed when he fell from a forklift-elevated pallet. The worker’s wife sued to recover damages for her husband’s death. In support of its motion for summary judgment, the employer offered the testimony of a manager at a workers’ compensation hearing regarding the incident.

The manager was employed by the decedent’s employer, which was a party in the workers’ compensation proceeding. The Court of Appeals held that the prior testimony was admissible in the summary judgment proceeding. It recognized that “[a] transcript of former testimony possesses the same indicia of reliability as an affidavit in the summary judgment context.” Id. at 207 , 747 A.2d 662 . Imbraguglio differed from the instant case, because there the workers’ compensation action and the circuit court action involved the same parties and dealt with the same underlying event.

Accordingly, the plaintiff against whom the manager’s testimony was being offered in the civil lawsuit “had ‘an opportunity and similar motive to develop [that] testimony by direct, cross, or redirect examination’ in the workers’ compensation proceeding.” Id. at 206 , 747 A.2d 662 . The Imbraguglio Court did recognize, however, that some courts have refused to evaluate a summary judgment motion by considering testimony taken in another action. See Copeland v. Samford Univ., 686 So.2d 190 (Ala.1996); Gatton v. A.P. Green Svcs., Inc., 64 Cal.App.4th 688 , 75 Cal.Rptr.2d 523 (1998). The Court distinguished these cases because they “appear to involve the use of trial or deposition testimony from a previous case to which the plaintiff or defendant against whom the evidence was presented was not a party.” Imbraguglio, 358 Md. at 209 , 747 A.2d 662 .

In a narrow holding, the Court “indicate[d] no opinion” concerning whether testimony from such a non-party case would be admissible. Id. The instant case presents the issue left unresolved in Imbraguglio , because Perlberg was not a party to the Holloway case in which Daniel’s deposition was taken. Perlberg seizes upon Imbraguglio’s distinction of Copeland and Gatton , urging that we adopt that distinction as our holding in this case. ²⁷¹ After reviewing these cases and others addressing this issue, we decline to do so.

We explain. Other than the Gatton and Copeland cases cited by Perl-berg, we found only three cases addressing the use of a certified deposition transcript from a previous case involving different parties. 2 See United States v. O’Connell, 890 F.2d 563, 567 (1st Cir.1989); Leake v. Jones, 18 F.R.D. 80, 87 (W.D.Okla.1955); Farmers Union Oil Co. of Williston v. Harp, 462 N.W.2d 152 (N.D.1990). Although all three allowed use of the non-party transcripts, two did so without commenting on the fact that the transcripts involved different parties. See O’Connell, 890 F.2d at 567 ; Leake, 18 F.R.D. at 87 .

The third offers persuasive reasoning justifying the use of such non-party deposition testimony: [Appellee] asserts that the prior trial testimony of [the witness] is inadmissible for consideration in the present action because [appellee] was not a party to the prior action and had no opportunity to cross-examine [the witness]. While [appellee’s] assertion that he had no opportunity to cross-examine [that witness] is correct, it is not relevant. Affidavits submitted in support of, or opposing, summary judgment are never subject to cross-examination. Certainly, the degree of reliability attending [the witness’] sworn testimony from the prior trial is as great as the degree of reliability attending the sworn statements submitted by [appellee] in the present action.

Farmers’ Union Oil Co., 462 N.W.2d at 155 (emphasis added). Similar considerations cause us to reject appellant’s argument that we should follow Copeland and Gatton by limiting ²⁷² the use of depositions to those involving the same parties. In Gatton , the intermediate California appellate court rejected the use of a non-party deposition on the grounds that, unlike evidence presented by affidavit, “there are questions whether the [deposition] witness, even if alive, can testify competently to the deposition’s contents. Memories fade, especially with a deposition like the