Martin v. Winston

LUJUAN F. MARTIN v. FREDDIE L. WINSTON, JR.

No. 2252

No. 319

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2017

September Term, 2018

October 8, 2019

Circuit Court for Prince George's County

Case No. CAE-14-29260

CONSOLIDATED

UNREPORTED

Berger, Leahy, Eyler, James R. (Senior Judge, Specially Assigned), JJ.

Opinion by Leahy, J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

The saga of the tangled litigation underlying the current appeal began in 2006 when LaJuan Martin ("Appellant") and Freddie Winston ("Appellee") formed Winston Martin Holding Group, LLC ("WMHG") to develop a restaurant on a parcel of real property in Prince George's County (the "Property") that they purchased for $900,000. That company has been defunct since 2011 when Inglewood Restaurant Park Association ("Inglewood") foreclosed on the Property to recover a lien for $30,000 based on association assessments that WMHG failed to pay. Winston, in his individual capacity, then bought the Property at a foreclosure sale. The Circuit Court for Prince George's County, in an order issued by the Honorable Thomas P. Smith on January 16, 2014, ratified the foreclosure sale over exceptions that Martin (individually) filed as an intervenor. Martin's appeal of that order (the "Inglewood action") was eventually dismissed for failure to post a supersedeas bond. Inglewood issued Winston the deed to the Property in fee simple on May 14, 2014.

Martin then instituted the underlying action against Winston in the Circuit Court for Prince George's County on October 29, 2014, asserting that Winston breached duties owed as a member of WMHG. The circuit court dismissed his claims, deciding that they were barred by res judicata based on his participation in the Inglewood action. This Court, in a 2016 opinion authored by the Honorable Glenn T. Harrell, reversed and remanded, ruling that Martin's personal claims against Winston were not barred by res judicata because they were not claims that could have been brought in the Inglewood action. Martin v. Winston, No. 915, September Term, 2015 (filed on August 11, 2016) (unreported) ("Martin I").

On remand, Martin filed a second amended complaint in the underlying action on behalf of himself and WMHG. Prior to trial, the circuit court granted Winston's motion todismiss WMHG from the complaint because the LLC has been defunct since 2011 and was not represented by counsel as required by Maryland law.¹ The court granted summary judgment in Winston's favor on two other claims, and the case proceeded to trial from November 28 to 29, 2017, on two claims: (1) a breach of duty of loyalty and care and (2) fraud/misrepresentation. At the close of the plaintiff's case, the circuit court granted Winston's motion for judgment on both remaining counts and awarded fees to Winston because, the court ruled, Martin lacked substantial justification to bring his claims. Martin's appeal from that judgment presents five questions for our review:

I. "Whether the trial court erred in sustaining the objection of the Appellee that Appellants failed to satisfy the notice of a foreign law requirement under Judicial Proceedings Article § 10-504?"

II. "Whether the trial court erred in ruling that Appellants, individually as trustee and member of WMHG, was precluded from asserting claims on behalf of WMHG?"

III. "Whether the trial court erred in ruling that Appellants had not established fraud?"

IV. "Whether the trial court erred in sustaining the objection of Appellee that the amended order to docket foreclosure in CAE11-02632 was not relevant to proving counts 2 and 3 of the complaint?"

V. "Whether the trial court erred in finding Appellants' lawsuit frivolous and imposing attorney's fees in the amount of $22,862.50?"

Seeing no merit in Martin's contentions on appeal, we affirm the circuit court's judgment, including its imposition of attorney's fees against him for bringing an action without substantial justification.

BACKGROUND

The relevant background concerning Martin, Winston, and WMHG was set out by Judge Harrell in our 2016 opinion ordering a remand in the underlying action:

Martin and Winston were business partners and sole members with equal ownership of WMHG, a commercial development company organized under the laws of the District of Columbia. In June 2006, WMHG bought a parcel of land located at 9620 Lottsford Court (the "Property") in Prince George's County, Maryland, with plans to build a restaurant. The Property was purchased for $900,000 with the "intent and understanding of Martin and Winston that each would personally contribute to [WMHG] 50% of the purchase price to reflect their respective co-equal, 50% ownership interests in [WMHG]", as alleged by Martin in his Complaint in the present litigation. According to the circuit court, the purchase price of the Property was handled in the following manner:

The record in this case and the consolidated cases would show, [WMHG] acquired the subject property on or about June 22, 2006 for the sum of $900,000.00; $500,000.00 of this sum was borrowed from the Industrial Bank of Washington. While legal title to the property was in the name of the LLC, Martin personally negotiated and obtained the loan from Industrial Bank. As a result of an error, the Deed of Trust securing this loan was in the name of the individual Winston and not [WMHG].

The titling error became the basis of a lawsuit, Industrial Bank v. Winston-Martin Holding Group, LLC, CAE 13-04739, brought in the circuit court in 2013 to correct the mistake. The case was settled purportedly by the litigants without further action by the court, other than its dismissal later in 2013. There was no apparent disclosure on the record of the terms of the settlement.

A. The Fenwick Action

Between 2006 and 2008, WMHG (with Martin handling its managerial duties) began to move on the development of the Property. Jason Fenwick was hired as CEO of WMHG to work on the restaurant concept.

When WMHG decided to discontinue its pursuit of the restaurant and Fenwick's employment ended, Martin issued a confessed judgment promissory note for $75,000 to compensate Fenwick for the work he had completed. When payment under the note was not made, Fenwick obtained, in 2008, a monetary judgment against WMHG and a lien on the Property. A foreclosure action was initiated by Fenwick. He bought the Property at a Sheriff's sale. WMHG filed exceptions, which were denied, and, after ratification of the sale, WMHG appealed the decision. In deciding the appeal in Fenwick, this Court, in an unreported opinion filed 18 June 2012, reversed the circuit court's ratification of the sale to Fenwick (because it was determined that the Sheriff posted the wrong property for sale), set aside the deed to Fenwick, and remanded the case.

B. The Inglewood Action

Before the Fenwick appeal was decided, [Inglewood]² filed in the circuit court an Order to Docket Foreclosure, requesting the right to auction and sell the Property to enforce a lien to recover assessments owed by WMHG and Fenwick. Fenwick filed a Motion to Release the Property from the purported Inglewood lien, levy and order to docket foreclosure. A hearing was held on 31 March 2011 to determine whether probable cause existed to establish Inglewood's lien. The circuit court issued an order on 23 June 2011, finding probable cause, declaring a lien in the amount of $30,060.20 against Fenwick, in favor of Inglewood (the "Inglewood Lien"). The then pending cases³ involving the Property were consolidated, and on 18 July 2011, Inglewood amended its Order to Docket Foreclosure, again naming both Fenwick and WMHG as defendants, but alleging facts implicating only Fenwick. Pursuant to the Inglewood Lien, the Property was sold at an auction on 17 October 2011 to Winston (individually), with a winning bid of $250,000. Martin, in the name of WMHG, filed exceptions to the sale on 19 December 2011, alleging violations of the corporate loyalty doctrine. On 13 January 2012, Winston intervened and moved to Strike WMHG's Exceptions.

On 19 August 2013, Martin filed an intervenor motion (as an individual) to dismiss Inglewood's foreclosure action because he believedthat the overdue assessments had been satisfied and, as a result, there was no longer a controversy related to the Inglewood foreclosure action. He included also a counter-claim for declaratory relief, damages and sanctions against Inglewood. Winston and Inglewood opposed Martin's Motion to Dismiss. A hearing was conducted on 7 October 2013 in regard to WMHG's Exceptions to the previous sale to Winston. At this hearing, evidence was presented that showed that money paid by Winston toward the auction purchase price was not in any part in satisfaction of the Inglewood lien, as Martin maintained. Winston testified also that he purchased the Property at the 17 October 2011 auction sale for his personal account.

After an exchange of additional legal memoranda, on 16 January 2014, the circuit court (Judge Thomas P. Smith presiding) issued a Memorandum Opinion and Order ratifying the sale of the Property to Winston. In discussing WMHG's exceptions, Judge Smith explained that:

As the Court has noted on the record repeatedly, if there is a dispute between Freddie Winston and LaJuan Martin and Winston Martin Holding Group, LLC or any combination thereof, it is not resolvable in a foreclosure proceeding involving inter alia the rights of Inglewood Restaurant Park Association, Inc. These parties are certainly free to institute other litigation regarding these issues.

Martin filed additional motions to challenge the sale, requesting that the circuit court recognize this Court's intervening decision in the appeal of Fenwick v. Winston Martin and stay the judgment because Winston was not a bona fide purchaser. These motions

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