By Alan Sternstein

The Court of Appeals expressly held in Kann v. Kann, 344 Md. 689, 510, 690 A.2d 509, 510 (1997), that “allegations of breach of fiduciary duty, in and of themselves, do not give rise to an omnibus or generic cause of action at law that is assertable against all fiduciaries.” Ever since, Maryland’s lawyers and courts have labored under the maxim that “Maryland does not recognize a separate tort action for breach of fiduciary duty.” Int’l Brotherhood of Teamsters v. Willis Corroon Corp., 369 Md. 724, 727 n.1, 802 A.2d 1050, 1051 n.1 (2002) (dictum). Yet, since Kann, lawyers have sought and courts have granted and affirmed relief for breaches of required standards of conduct in various fiduciary relationships. See, e.g., Shenker v. Laureate Education, Inc., 411 Md. 317, 983 A.2d 408 (2009) (corporate directors and minority shareholders); Della Ratta v. Larkin, 382 Md. 553 (2004) (general partner and limited partners); Ins. Co. v. Miller, 362 Md. 361, 765 A.2d 587 (2001) (insurance company and agent of company). With its recent decision in Plank v. Cherneski, Misc. No. 3, Sept. Term 2019 (Md., July 14, 2020) (“Slip Op. at ___”), the Court of Appeals, after exhaustively surveying and scrutinizing relevant Maryland state and federal decisions in the 23 years since Kann, has exposed the emptiness of the maxim rejecting a generic cause of action for breach of fiduciary duty. Despite the 23 year wait, however, Judge Booth’s 79-page unanimous opinion for the court leaves no suspense for the end, stating on page 2:

This Court recognizes an independent cause of action for breach of fiduciary duty. To establish a breach of fiduciary duty, a plaintiff must demonstrate: (1) the existence of a fiduciary relationship; (2) breach of the duty owed by the fiduciary to the beneficiary; and (3) harm to the beneficiary.

Slip Op. at 2.[1]

By Steve Klepper (Twitter: @MDAppeal)

On August 3, the Court of Special Appeals reported an opinion of the kind that gives attorneys anxiety attacks. In Hayes v. State, the Court addressed a consolidated appeal involving two jointly tried co-defendants, Hayes and Winston. Both claimed on appeal that the circuit court failed to ask necessary voir dire questions under Kazadi v. State. The State conceded that both defendants preserved the error, and that both were entitled to a new trial. But the Court of Special Appeals originally held, contrary to the State’s concession, that only Winston preserved the issue for review on appeal, and that Hayes therefore was not entitled to a new trial.

On Hayes’ motion for reconsideration, however, the Court issued a revised opinion holding that “Hayes did raise the issue before voir dire ended, if just barely,” by handing the trial judge a written request for the same questions that Winston requested. The Court lamented that Hayes’ “tactical approach does not represent best voir dire practice,” and that “it took more than 4,000 words worth of analysis to reach the conclusion, as we now do, that Ms. Hayes preserved her Kazadi claims.”

The Court engaged in this 4,000-word analysis because it held itself obligated to ensure that the matter was preserved under Rule 8-131:

We can dispose quickly of [Hayes’ argument] that the State’s concession that Ms. Hayes had preserved the Kazadi argument waived any  preservation objection. The State’s concession of error does not bind us. Coley v. State, 215 Md. App. 570, 572 n.2 (2013) (an appellate court is not bound by a party’s erroneous concession of error on a legal issue). Under Maryland Rule 8-131, we “will not decide any [ ] issue unless it plainly appears by the record to have been raised in or decided by the trial court….” 

The Court deserves credit for recognizing on reconsideration that Hayes preserved her claim of error. Nevertheless, I believe that the Court should have begun and ended its analysis with the State’s waiver of any preservation challenge.