Thursday, July 30, 2009

Green v. N.B.S. Inc. (Ct. of Appeals)

Opinion by Judge Joseph F. Murphy, Jr.
Filed July 21, 2009

Held: The statutory cap on non-economic damages applies to personal injury claims brought pursuant to the Consumer Protection Act.

Facts: The Plaintiff won a verdict in the Circuit Court for Baltimore City on her claim for lead paint poisoning pursuant to the Maryland Consumer Protection Act (the "CPA"). The Circuit Court reduced the verdict to comply with Maryland's statutory cap on non-economic damages for personal injury - §11-801, Courts and Judicial Proceedings Article.

The Plaintiff argued on appeal that the cap on non-economic damages, which applies to "victims of tortious conduct" in "personal injury actions," does not apply to awards pursuant to the CPA. She contended that a violation of the CPA is not a tort, and an action for violation of the CPA is not a "personal injury action."

The Court of Appeals rejected the argument. The full opinion is available in PDF.

Wednesday, July 29, 2009

Baltimore Street Builders v. Stewart (Ct. of Special Appeals)

Filed: July 7, 2009
Opinion by Judge James P. Salmon

Held: Home improvement contractor that failed to comply or "substantially comply" with the regulatory requirement to hold a home improvement license was not entitled to enforce its contract.

Facts: Affirming the Circuit Court's dismissal of a petition to establish a mechanic's lien based on construction contract where builder did not have home improvement license.

A builder entered into a contract and performed construction on a residence in Maryland. The defendant owner failed to pay in full. The builder sued to establish and enforce a mechanic's lien. The builder was not licensed as a home improvement contractor. The builder protested that a principal owner of the builder did hold a license.

The Court noted that contracts made by unlicensed persons subject to regulatory statutes designed to protect the public are illegal and unenforceable. The Court discussed the principle that strict application of the rule is not always appropriate. There may be circumstances where such contracts may be enforced. Such circumstances would include where the contractor "substantially complied" with the regulatory requirement. Factors relevant to this issue would be (1) whether the contractor had a license at the time of contracting; (2) whether the contractor readily secured a license; (3) the responsibility and competence of the contractor.

Finding that neither the contractor nor its contracting agent ever held a license, the Court rejected the notion that the contractor substantially complied.

The full opinion is available in PDF.

*The opinion contains a detailed explication of the principle of "substantial compliance."

Saturday, July 11, 2009

Milchling v. U.S. (Maryland U.S.D.C.)

Filed: July 7, 2009
Opinion by Judge J. Frederick Motz


Held: CFO and controller of corporation found personally liable under 26 U.S.C. § 6672 for unpaid federal wage withholding amounts.

Facts: Milchling was responsible for payroll for the entire company when he was controller or CFO, as well as when he was project manager. Milchling also prepared checks to the company's creditors. According to Bryan Meinken, one of the company's principals, Milchling participated in decisions as to which creditors to pay and when to pay them. Milchling prepared the company's quarterly federal employment tax returns for the four taxable periods at issue in this case.

In arguing that Milchling was a “responsible person” for the company, the government pointed to evidence that Milchling:
  • Was the controller and CFO of the company,
  • Had control over the company's payroll,
  • Had input on which creditors to pay and when to pay them,
  • Participated in the day-to-day management of the company,
  • Possessed the power to write checks, and exercised that power,
  • Had the authority to hire or fire employees,
  • Had access to the company's books and records, and
  • Was aware of the outstanding trust fund tax liabilities as they were accruing.
The Court held that:

1. Milchling was a "responsible person" within the meaning of § 6672(a) because he "so participated in decisions concerning payment of creditors and disbursement of funds that he effectively had the authority – and hence a duty – to ensure payment of the corporation’s payroll taxes.” Citing Plett v. United States, 185 F.3d 216, 219 (4th Cir. 1999).

2. Milchling was a "responsible person" even for quarters when he was not actually employed by the company, because he was a "responsible person" at the time when the tax payments were due.

3. Milchling "willfully" failed to pay over the tax because he "was aware throughout the period of his employment with [the company] that [the company] was not paying the withholding taxes which it was required to pay to the government and that [the company] was instead paying employee salaries and paying other creditors."

The full opinion is available in PDF. The opinion has not been approved for publication.

Friday, July 3, 2009

Siegel v. Comptroller (Ct. of Special Appeals)

Filed: July 2, 2009
Author: Judge Timothy E. Meredith

Held: Gifts to nephews and great-nephews and great-nieces made by 87 year old man who died within two years after gifts were made are subject to Maryland inheritance tax.

Facts: Decedent died on November 23, 2003, at the age of 88. He had made gifts of partnership interests to his nephews on August 1, 2002. Those interests had a total value of $861,668. He made gifts totaling $385,000 via transfers on January 15, 2003, to "Section 529 Plans" of $55,000 for each of his seven great-nephews and great-nieces. Both the Maryland Tax Court and the Circuit Court for Montgomery County had previously upheld the assessment of inheritance taxes with respect to the transfers.

First, the Court concluded that the gifts, either considered individually or in the aggregate, constituted a material part of the property of the decedent.

Second, the Court rejected the argument that gifts were not made in contemplation of death because the decedent was healthy and vigorous when he made the gifts. The Court found that, based upon the decedent's medical records that had been introduced into evidence, the decedent was in declining health. The decedent suffered from, inter alia, coronary artery disease, congestive heart failure, prostate cancer, and progressive dementia.

The full opinion is available in PDF.

Gomez v. Jackson Hewitt, Inc. (Cir. Ct. Mont. Cnty)

Filed June 18, 2009
Opinion by Judge Ronald B. Rubin

Held: The Maryland Credit Services Business Act (the "CSBA") does not apply to tax preparers who, ancillary to preparing tax returns, arrange for Refund Anticipation Loans ("RAL's") issued by other companies.

Facts: Judge Rubin dismissed a complaint demanding statutory damages and attorneys' fees for violation of the CSBA. The plaintiff alleged that Jackson Hewitt violated the act by failing to provide certain documents and disclosures, including the buyer's rights and detachable copies of a notice of cancellation. Jackson Hewitt maintained that it did not need to comply because it is not a "credit service business." It contended that it merely arranged the RAL, and the fee it received was for the preparation of the plaintiff's tax return.

The Court agreed. Looking to the legislative history, the Court concluded that the CSBA was intended to protect consumers from credit repair agencies who offer to "fix" credit ratings or obtain loans for a fee. It was significant to the Court that the only fee the plaintiff was obligated to pay Jackson Hewitt was for preparation of her return. The full opinion is available in PDF.

*The opinion is a great reference on statutory construction and the legislative history of the CSBA.