Fitzgerald v. Bell

246 Md.App. 69

227 A.3d 796

John FITZGERALD, et al.

v.Tatyana S. BELL, Personal Representative of the Estate of John Thurman Bell

No. 3499, Sept. Term, 2018

Court of Special Appeals of Maryland.

April 30, 2020

Argued by: John C. Hanrahan, Frederick, MD, for Appellant.

Argued by: Theodore P. Stein (Offit, Kurman, PA, on the brief), Bethesda, MD, for Appellee.

Panel: Arthur, Leahy, Gould, JJ.

Leahy, J.

This appeal is from the grant of summary judgment by the Orphans’ Court for Montgomery County on January 25, 2019, in favor of appellee Tatyana S. Bell, in her capacity as personal representative of the Estate of John Thurman Bell (the "Estate"). Appellants John J. Fitzgerald, Jr. and his company, JJF Management Services, Inc. ("JJF Management") (collectively, the "Fitzgerald Parties"), challenged the Estate's disallowance of their claims on two loans purportedly made to Mr. Bell in 1992 and 1998. Until his death in 2017, Mr. Bell was Mr. Fitzgerald's close friend, and he was counsel to the Fitzgerald Parties.

The orphans’ court found that the claims were barred by the applicable statute of limitations notwithstanding, for purposes of summary judgment, the existence of a confidential relationship. The Fitzgerald Parties timely noted their appeal and present four issues for our review,¹ which we recast and consolidate into the following two questions:

I. Did the orphans’ court err in finding that there were no material facts in dispute?

II. Did the orphans’ court err in granting summary judgment to the Estate due to the expiration of the applicable statute of limitations, despite finding that a confidential relationship existed between Mr. Bell and the Fitzgerald Parties?

We reverse the orphans’ court's grant of summary judgment under the applicable statute of limitations on the claim relating to the 1992 Deed of Trust because the record does not establish when that claim accrued. Conversely, we affirm the grant of summary judgment in favor of the Estate on JJF Management's claim relating to the 1998 Note. In so doing, we hold that, in the absence of fraudulent concealment, the discovery rule does not apply to toll the applicable statute of limitations for an action to enforce a demand promissory note under Maryland Code (1975, 2013 Repl. Vol.), Commercial Law Article ("CL") § 3-118(b). Accordingly, we affirm, in part, and reverse, in part, the judgment of the orphans’ court and remand for further proceedings consistent with this opinion.

BACKGROUND²

John Thurman Bell died testate on June 17, 2017. Beginning some time prior to 1976 until his death, Mr. Bell, an attorney, rendered legal services to JJF Management and Mr. Fitzgerald, personally. JJF Management paid Mr. Bell a monthly retainer, and Mr. Fitzgerald paid Mr. Bell after legal services were rendered.

Mr. Fitzgerald deposed that he and Mr. Bell also developed a close personal friendship: they "often ate meals together on weekends, spoke on the phone often, and maintained a very happy and collegial relationship." Mr. and Mrs. Bell received regular invitations to join Mr. Fitzgerald for Thanksgiving dinner at his club.

During the course of their four-decades-long professional relationship and friendship, Mr. Bell would occasionally request loans from Mr. Fitzgerald and, according to Mr. Fitzgerald, Mr. Bell would "often repay these loans as agreed, would renegotiate the terms of the loan, or would roll the obligation into another new obligation." When Mr. Bell requested a loan, he would "always create the paperwork documenting the loan, including promissory notes, and any security interests such as deeds of trust." Between 1982 and 1989, Mr. Fitzgerald made a number of loans to Mr. Bell, and each was secured by various promissory notes to Mr. Fitzgerald. Mr. Bell had paid off a number of these loans during this seven-year period.

According to Gregg J. Steinbarth, an attorney who worked for Mr. Bell and his law firm and is currently General Counsel of JJF Management, "[b]y October of 1992, the amount owed by Mr. Bell to Mr. Fitzgerald totaled somewhere between $235,000 to $305,000." The parties decided to consolidate the debt, extend the time for repayment, and secure the debt with a Deed of Trust on Mr. Bell's real property.

The 1992 Deed of Trust

On October 10, 1992, Mr. Bell executed a "Money Loaned Deed of Trust" ("1992 Deed of Trust") in favor of John J. Fitzgerald, Jr. as security for debt owed to Mr. Fitzgerald in the amount of $255,000.00 plus accrued interest.³ The 1992 Deed of Trust was "prepared under the supervision of Robert T. Wilson, an attorney duly admitted to practice before the Court of Appeals of the State of Maryland." The 1992 Deed of Trust provides:

This debt is evidenced by Borrower's note* dated the same date as this Security Instrument [ ], which provides for monthly payments, with the full debt, if not paid earlier, due and payable on the day and year as set forth in the note.

The asterisk typed by the phrase "Borrower's note" was retyped below with the following clarification: "The borrower has executed and delivered his four promissory notes payable in accordance with the specific terms as set forth herein." Neither the Estate nor Mr. Fitzgerald produced the four promissory notes referenced in the Deed of Trust or testified as to their content before the orphans’ court. The Deed of Trust identified four parcels of land at Washington Grove Shopping Center, 105-117 Laytonsville Road, as the security conveyed to the trustee for the notes. Stephen J. Beck was present at the execution of the Deed of Trust and, as Mr. Fitzgerald's agent, "made oath in due form of law that the consideration recited in said Deed of Trust is true and bona fide as therein set forth." Mr. Bell allegedly never paid Mr. Fitzgerald any amounts on the note or notes secured by the 1992 Deed of Trust. Mr. Fitzgerald never demanded payment.

The 1998 Note

On July 8, 1998, JJF Management loaned Mr. Bell the sum of $281,649.00, as reflected in a "Confessed Judgment Note" ("1998 Note"). The 1998 Note provides:

FOR VALUE RECEIVED, the undersigned, JOHN T. BELL, promises to pay to the order of JJF MANAGEMENT SERVICES, INC., the principal sum of Two Hundred Eighty One Thousand Six Hundred Forty Nine Dollars ($281,649.00) and accruing interest at the rate of 11.9%. Said principal and final interest payment to be due and owing upon demand.

Mr. Bell allegedly never paid JJF Management any amounts on the 1998 Note, and JJF Management never demanded payment.

In his affidavit submitted in the orphans’ court, Mr. Fitzgerald attested that, for the 1992 Deed of Trust, the 1998 Note, and any other loan obligations:

I always placed total trust and confidence in Mr. Bell. He was not only my attorney but also my close personal friend. I expected him to advise me concerning the many on-going loans I and [JJF Management] had made to him. I counted on Mr. Bell to keep the loans separate and to keep a proper accounting of payments made. I also expected Mr. Bell to advise of any events that would prejudice my or [JJF Management]’s interests with respect to the loans.

The Estate

On June 26, 2017, Mr. Bell's Last Will and Testament, dated December 20, 2014, was filed in the Office of the Register of Wills for Montgomery County. Mrs. Bell was named as personal representative of Mr. Bell's estate.

On October 31, 2017, Mr. Fitzgerald filed a claim against the Estate in the amount of $927,823.57, based on the 1998 Note. On March 12, 2018, JJF Management filed a "Corrected & Amended Claim Against Decedent's Estate" ("JJF Management Claim"), correcting and certifying that the proper claimant was JJF Management, rather than Mr. Fitzgerald, and that the actual sum due and owing pursuant to the Note was actually $916,980.75.⁴

Also, on October 31st, Mr. Fitzgerald filed another claim against the Estate in the amount of $828,750.00, based on the 1992 Deed of Trust ("Fitzgerald Claim").⁵

Mrs. Bell, in her capacity as personal representative of the Estate, filed notices of disallowance against the entire $927,823.57 and $828,750.00 claimed by Mr. Fitzgerald on December 1st. In response, on January 8, 2018, Mr. Fitzgerald filed petitions for allowance of the JJF Management Claim and the Fitzgerald Claim.

Summary Judgment

On September 27, 2018, the Estate filed a motion for summary judgment on the Fitzgerald Claim and the JJF Management Claim on the grounds that both claims were barred by the applicable statute of limitations. The Estate averred that "it is undisputed that both claims, one 20 years old and a second 25 years old, are barred by the applicable statutes of limitations[.]" In its statement of undisputed facts, the Estate alleged that in regard to the JJF Management Claim, Mr. Fitzgerald: "does not recall the circumstances of the promissory note"; "does not know if he had ever seen the Note"; "does not know whether Mr. Bell made a payment"; and "does not know (a) if JJF [Management] or [Mr. Fitzgerald] made a demand for payment ... (b) if anyone else at JJF [Management] made a demand for payment and (c) if he ever discussed the note with decedent Bell." Regarding the Fitzgerald Claim, the Estate averred that Mr. Fitzgerald: "does not remember if he or JJF [Management] made a loan to decedent Bell for $255,000 in approximately 1992"; "does not remember if decedent signed a written promissory note for the loan or loans on which the Fitzgerald Claim is based"; "does not know and does not remember if decedent made a payment on any loan for up to $255,000 reflected by the Fitzgerald Claim" or "if a demand for repayment was ever made."⁶

The Estate argued that the Fitzgerald Claim was barred by the three-year statute of limitations. Because Mr. Fitzgerald does not recall whether the loan was made to Mr. Bell in 1992 or whether Mr. Bell had signed any note in connection with the Deed of Trust, according to the Estate, "at best the Fitzgerald Claim alleges an unpaid loan to decedent made on or about October 10, 1992,"...