Watson v. Bank of Delmarva

SANDRA K. WATSON v. THE BANK OF DELMARVA, ET AL.

No. 283

No. 2845

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2017

September Term, 2018

May 7, 2020

Circuit Court for Wicomico County

Case No. 22-C-15-001577

UNREPORTED

CONSOLIDATED CASES

Berger, Leahy, Shaw Geter, JJ.

Opinion by Shaw Geter, J.

*This is an unreported opinion, and 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 This appeal arises from the grant of summary judgment by the Circuit Court for Wicomico County in favor of appellees, the Bank of Delmarva (the "Bank") and Metropolitan Life Insurance Company ("MetLife").¹ On October 13, 2015, Sandra K. Watson ("Ms. Watson") filed a complaint in the Circuit Court for Wicomico County against her husband, Garfield Watson ("Mr. Watson"), the Bank of Delmarva, and MetLife. Appellant alleged negligence and breach of contract as to the Bank and MetLife, and that Mr. Watson fraudulently withdrew annuity funds. MetLife and the Bank each filed a Motion for Summary Judgment. On July 20, 2016, the court heard argument on the motions and subsequently entered an order granting summary judgment in favor of appellees.

This timely appeal followed. Appellant presents the following questions for our review, which we have rephrased and consolidated:

1. Was the Variable Annuity issued by MetLife a simple insurance contract subject to simple insurance contract defenses or was it an investment security subject to SEC Regulation and Maryland Securities Regulation?

2. Was MetLife in breach of contract when it paid out funds on a forged signature and issued a check in stacked format rather than jointly?

3. Was MetLife negligent when it paid out funds on a forged withdrawal form and issued a check in stacked format rather than jointly?

4. Was Bank of Delmarva entitled to rely on an agency theory of indorsement?²

5. Was Bank of Delmarva entitled to rely on a special period of limitations set forth in the contract?

6. Did Bank of Delmarva assume a duty when it reviewed, accepted and approved a check with two indorsements?

7. Once a duty not otherwise required by law is undertaken by a party, must that duty be discharged in a non-negligent manner?

8. Was Bank of Delmarva entitled to judgment as a matter of law?

For reasons to follow, we affirm the circuit court's grant of summary judgment.

BACKGROUND

Sandra K. Watson and Garfield Watson married in 1997. On October 26, 2007, the couple purchased a Variable Annuity Contract (the "Annuity Contract" or "Contract") from MetLife for an initial purchase price of $400,000.³ In the contract, appellant was listed as the owner and annuitant of the annuity, Mr. Watson was listed as a joint owner.

On or about November 5, 2012, it became apparent to appellant that Mr. Watson wanted to end their marriage. As a result, appellant searched Mr. Watson's car for evidence. She discovered a briefcase containing financial documents. Among those documents were two Annuity Withdrawal Request forms ("Withdrawal Forms") that Mr. Watson filed with MetLife and documents showing that Mr. Watson had opened a new bank account and safe deposit boxes at various banks.

The first withdrawal request was for a net partial payment of $150,000 in the form of a check. The first Withdrawal Form designated "Sandra K. Watson" and "Garfield R. Watson" as the owners, however, the signatures were signed as "Gary R. Watson" and "Sandy K. Watson." The second withdrawal request was for a net partial payment of $150,000 to be made via an Electronic Funds Transfer ("EFT"). This request designated "Sandra K. Watson" as the annuitant and "Gartfield R. Watson" and "Sandra K. Watson" as the owners. Under owner, the form is signed with a scribble and under joint owner, the form is signed "Sandy K. Watson."

Appellant claims she never signed the Withdrawal Forms, and instead, Mr. Watson signed his name and forged her name on the forms. In accordance with the first Withdrawal Form, MetLife issued a check in the amount of $150,000, payable in stacked format to appellant and Mr. Watson. He deposited the check into the joint checking account he and appellant shared at the Bank of Delmarva. In accordance with the second Withdrawal Form, MetLife made an EFT in the amount of $150,000, into the parties' joint checking account at the Bank of Delmarva. Mr. Watson, subsequently, withdrew all of the money received from MetLife from the joint checking account.

On November 5, 2012, appellant notified MetLife via telephone that she did not sign the Withdrawal Forms and she believed Mr. Watson had forged her signature. MetLife informed appellant it would conduct an investigation regarding her complaint. On November 7, 2012, to initiate the investigation of her complaint, MetLife mailed appellant an Affidavit of Check Payee for her completion. However, appellant never received the Affidavit because Mr. Watson had changed the address MetLife had on file to a P.O. Boxthat only he could access. Mrs. Watson did not take any further action to follow-up with MetLife.

On October 13, 2015, appellant initiated litigation against Mr. Watson, MetLife, and the Bank. Appellant alleged Mr. Watson committed fraud by forging her signature on the two annuity Withdrawal Forms. In addition, she claimed MetLife breached the terms of the Annuity Contract and was negligent in accepting the Withdrawal Forms that were endorsed with her forged signatures. Against the Bank, appellant alleged breach of contract, negligence, and conversion for accepting the check deposited by Mr. Watson, failing to discover the forged signature on the check, and paying the $150,000 check that contained the forged endorsement. In June 2016, both MetLife and the Bank filed Motions for Summary Judgment. On July 20, 2016, the court heard argument on the motions and subsequently entered an order granting the motions in favor of MetLife and the Bank.

As to her claims against Mr. Watson, a jury trial was held on January 4, 2017. The jury found in favor of Ms. Watson and she was awarded $451,710.52 in economic damages and $677,565 in emotional distress damages for a total judgment of $1,129,275.52. This timely appeal followed.

STANDARD OF REVIEW

We review a trial court's grant of summary judgment de novo, "determining for ourselves whether the record on summary judgment presented a genuine dispute of material fact, and if not, whether the moving party was entitled to summary judgment as a matter of law." Dett v. State, 161 Md. App. 429, 441 (2005) (citations omitted). In reviewing the summary judgment record, "if the facts are susceptible to more than oneinference, the court must view the inferences in the light most favorable to the non-moving party." Laing v. Volkswagen of America, Inc., 180 Md. App. 136, 153 (2008) (quotations omitted). Here, appellant concedes "no material facts are in dispute," thus we must determine if appellees are entitled to summary judgment as a matter of law.

DISCUSSION

METLIFE

I. The issue of whether or not the variable annuity issued by MetLife was a simple insurance contract or an investment security was not raised below.

Relying on a case tried in the U.S. District Court for the Eastern District of New York, Banco Multiple Santa Cruz S.A., v. Moreno, 888 F.Supp. 2d 356 (2012), appellant argues the variable annuity issued by MetLife is "not a simple insurance contract but rather a regulated investment security," and thus, is subject to "SEC Regulation, Maryland Securities Regulations, general contract law and considerations of negligence that can arise when there is a breach of contract." Conversely, appellee asserts "appellant did not raise the foregoing arguments at the trial court level." We agree.

In her brief and before this Court during oral argument, appellant concedes she did raise this argument before the trial court. Maryland Rule 8-131(a) provides that, except for jurisdiction of the trial court, "[o]rdinarily, the appellate court will not decide any other issue unless it plainly appears by the record to have been raised in or decided by the trial court." Md. Rule 8-131(a). Because this issue was not preserved for appeal, we decline further review.

II. Appellant did not preserve her "stacked format" arguments.

Appellant presents two arguments regarding MetLife issuing the check in stacked format. First she contends "MetLife was in breach of contract when it issued a check in stacked format." Second, she asserts "MetLife was negligent when it issued a check in stacked format rather than jointly." Appellant claims the MetLife Annuity Contract requires that a withdrawal check be made to the joint owners and be payable to the owners jointly. However, the check issued by MetLife for $150,000 "was not paid to the owners jointly, but rather made out in a stacked format which as a matter of law means that it is payable to either [owner]." Specifically, appellant points out that MetLife issued the check "in stacked format with names one above the other," not including the word "and" between the two names.

MetLife contends "appellant's arguments as to the formatting of the October 9, 2012 check were not properly presented to the trial court and thus have not been preserved for appeal." MetLife notes appellant raised this theory of liability for the first time in her Opposition to MetLife's Motion for Summary Judgment," however "neither appellant's original complaint nor her amended complaint (which was filed on the day discovery closed) allege MetLife breached the Annuity Contract by issuing the . . . check in 'stacked format.'"

We agree. In her Original Complaint, as it pertains to MetLife, appellant specified that MetLife breached the Annuity Contract by "accept[ing] an application for disbursal based on a signature that varied from the name in which the annuity was established." She averred MetLife "owed a duty of care to [her] to...