Stewart v. Sampson et al

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
In Re: 	Case No. 04-15105WIL
Georgette Sampson,
Chapter 13
Debtor.
Marie V. Stewart, Personal Representative 	AP No. 04-02297WIL
of the Estate of Shirley M. Perry, deceased,
Plaintiff,
v.
Georgette Sampson, Nancy Spencer
Grigsby, Chapter 13 Trustee, and
Federal Title & Escrow Company,
Defendants.
MEMORANDUM OF DECISION
This matter came before the court on the plaintiff’s “Motion for Rehearing and to Alter or
Amend Order, Entered 17 Jan. 2006, Denying Amended Supplemental Application for Judgment
by Default as to Third Cause of Action.” For the following reasons, the plaintiff’s motion will
be granted, in part, and denied, in part.
The plaintiff’s amended complaint included four causes of action. Count I sought an
order directing the Clerk of the Court to release to the plaintiff funds representing one-half of the
net proceeds of the sale of the debtor/defendant’s and the plaintiff’s real property. This count
was adjudicated by the entry of a judgment by default in favor of the plaintiff and against the
Signed: July 05, 2006
SO ORDERED
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debtor/defendant. The second cause of action sought reimbursement or contribution from the
debtor/defendant pursuant to 11 U.S.C. § 502(e)(2). In the third cause of action, the plaintiff
alleged that the debtor/defendant acted fraudulently and sought damages in the form of
attorney’s fees and costs. The fourth cause of action targeted the defendant title company,
alleging negligence and seeking damages.
Following a status conference held before the Honorable Nancy V. Alquist, the court
decided to adjudicate the third cause of action by affidavit pursuant to F.R.B.P. Rule 7055. An
“Amended Supplemental Application for Judgment by Default as to Third Cause of Action” was
filed by the plaintiff seeking $11,929.35, plus accrued interest, representing counsel’s fees and
costs incurred in this adversary proceeding. In support, counsel for the plaintiff, Alfred
Lawrence Toombs, filed an “Amended Affidavit Submitted in Support of Supplemental
Application for Judgment by Default as to Third Cause of Action,” along with billing and
expense statements. Judge Alquist denied the supplemental application by order entered January
17, 2006. Relying on federal law, Judge Alquist found that departure from the “American Rule”
regarding attorney’s fees was not warranted.
The plaintiff makes four newly-raised arguments in support of an award for attorney’s
fees and costs and, for the first time, cites authority for the requested relief.
First, the plaintiff asserts that consequential and compensatory damages are recoverable
in an action for fraud or deceit. His statement of the law is correct; however, his fees and costs
are not compensable under the facts of this case. Under Maryland law, the tort of fraud is
comprised of acts, omissions and concealment involving a breach of a legal or an equitable duty
that resulted in damage to another. See Green v. Lombard, 28 Md. App. 1 (1975); cert. denied,
276 Md. 743 (1975); Suburban Props. Mgmt., Inc. v. Johnson, 236 Md. 455 (1964) (setting forth
the five elements required to prove fraud). A prevailing plaintiff may recover compensatory
damages only – that is damages for injury sustained that was the natural and proximate cause of
the fraudulent act. Empire Realty Co., Inc. v. Fleisher, 269 Md. 278, 284 (1973); Crawford v.
Mindel, 57 Md. App. 111 (1984). As held by the Court of Appeals of Maryland:
The general rule is that, other than usual and ordinary court costs, the expenses of
litigation – including legal fees incurred by the successful party – are not
recoverable in an action for damages. (citations omitted).
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Empire Realty Co., Inc. v. Fleisher, 269 Md. at 285-6. 	Similar to the federal law set forth in
Judge Alquist’s order, in Maryland, attorney’s fees and litigation expenses are not an element of
damages in the absence of special statutory authorization, contractual provision or special
circumstances. Id. at 284-7. 	The cases cited by the plaintiff merely discuss the circumstances
warranting deviation from the American Rule. 	At no point does she cite to a statute or case
entitling her to reimbursement of attorney’s fees herein. However, consistent with the Empire
Realty Co., Inc. v. Fleisher case, this court will award the usual and ordinary court costs of
litigation totaling $150.00.
By the second and third arguments, the plaintiff asserts the existence of “special
circumstances.” Citing to McGaw v. Acker, Merrall & C. Co., 111 Md. 153, 160, 73 A. 731,
734 (1909), she argues entitlement to fees and costs because the defendant’s wrongful conduct
forced the plaintiff into litigation with a third-party. The plaintiff misreads McGaw. Indeed, in
McGaw, fees and costs were awarded; however, those fees and costs were not related to
litigation directly with the alleged wrongdoer but with a third-party. Here, the plaintiff seeks
fees and costs against the defendant in litigation with the defendant. None of the fees incurred
by virtue of the defendant’s wrongdoing forced the plaintiff into litigation with another to protect
the plaintiff’s interests. Similarly, the plaintiff misunderstands the common fund doctrine, which
is litigation taken on by one that benefits the general public. The subject litigation was taken on
to benefit the decedent’s beneficiaries, not the public at large. No special circumstances exist in
this matter warranting deviation from the generally-applied rule.
Lastly, the plaintiff asserts that public policy supports the award because the plaintiff has
exposed the defendant’s fraud on the bankruptcy court/system. There has been no previous
mention of bankruptcy fraud in this action. Further, the allegation is improperly raised by this
plaintiff. See 18 U.S.C. § 157.
An appropriate order granting, in part, and denying, in part, the plaintiff’s motion and
setting a status conference on the remaining counts of the complaint will be entered.
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cc: 	Marie V. Stewart, Personal Representative of the Estate of Shirley M. Perry, Deceased
c/o Alfred Lawrence Toombs
8957 Edmonston Rd., Ste A
Greenbelt, MD 20770
Alfred Lawrence Toombs
8957 Edmonston Rd., Suite A
Greenbelt, MD 20770-4044
Georgette Sampson
6435 Pennsylvania Avenue, #201
Forestville, MD 20747
Nancy Spencer Grigsby
4201 Mitchellville Rd.
Suite 401
Bowie, MD 20716
Federal Title & Escrow Company
4530 Wisconsin Ave. NW, Ste. 340
Washington, DC 20815
David C. Tobin
Tobin, O'Connor, Ewing & Richard
5335 Wisconsin Avenue, NW
Suite 700
Washington, DC 20015
End of Memorandum Decision
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