Bank of New York Mellon v. Georg
175 A.3d 720
Md.2017Background
- Heinz and Susan Georg executed a refinance deed and note signed only by Heinz; title insurer Old Republic issued a policy insuring the deed would be executed by both spouses. First Horizon was master servicer; BNYM later became owner/trustee under a PSA.
- First Horizon (as plaintiff, though not the owner) sued in 2010 to reform the deed to include Susan; Old Republic controlled and funded the litigation and retained counsel.
- At a 2012 bench trial, after First Horizon rested, the court granted judgment for the Georgs: the court found First Horizon failed to prove mutual mistake (merits) and, alternatively, that First Horizon lacked standing because the PSA schedule identifying the loan was absent.
- First Horizon’s appeal was dismissed for untimeliness. In 2013 BNYM and Old Republic filed a new suit asserting the same reformation/subrogation claims.
- The trial court in the second suit held BNYM and Old Republic were in privity with First Horizon and that Judge Alexander’s earlier merits ruling was an independent, final decision; it denied application of judicial estoppel and granted summary judgment for the Georgs. The Court of Special Appeals affirmed; the Court of Appeals granted cert and affirmed that judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether judicial estoppel bars Georgs from asserting privity (because they argued lack of standing in the first suit) | Plaintiffs (BNYM/Old Republic): Georgs took an inconsistent position (argued First Horizon lacked standing earlier but now say plaintiffs are in privity), so judicial estoppel should apply. | Georgs: Standing and privity are distinct concepts; their prior standing argument is not inconsistent with arguing privity now; no intent to mislead or unfair advantage. | Court held judicial estoppel does not apply: prerequisites not met; positions not inconsistent; no intent to mislead. |
| Whether Judge Alexander’s merits ruling (no mutual mistake) was a final judgment for collateral estoppel / res judicata | Plaintiffs: The merits ruling was contingent on standing and thus not a final judgment with preclusive effect. | Georgs: The merits ruling was an independent, alternative ruling and therefore final and preclusive. | Court held the merits ruling was an independent, alternative final judgment and has preclusive effect. |
| Whether BNYM and Old Republic are in privity with First Horizon for claim/issue preclusion | Plaintiffs: Not in privity because First Horizon lacked standing and the PSA schedule wasn’t shown at first trial. | Georgs: BNYM owned the loan and First Horizon acted as servicer under the PSA; Old Republic controlled the litigation—both had direct interests and were adequately represented. | Court held BNYM and Old Republic are in privity with First Horizon for res judicata and collateral estoppel purposes. |
| Whether res judicata / collateral estoppel bar the second suit | Plaintiffs: No—no final judgment on merits; res judicata / collateral estoppel therefore inapplicable. | Georgs: All elements satisfied: same parties/privies, identical claims/issues, final judgment, and full/fair opportunity to be heard. | Court held both doctrines apply and bar the second suit; judgment for Georgs affirmed. |
Key Cases Cited
- Dashiell v. Meeks, 396 Md. 149 (judicial estoppel requires (1) inconsistent position, (2) court acceptance, and (3) intentional misleading to gain unfair advantage)
- Powell v. Breslin, 430 Md. 52 (elements of res judicata: same parties/privity, identical claim, and final judgment on the merits)
- Colandrea v. Wilde Lake Cmty. Ass’n, Inc., 361 Md. 371 (elements of collateral estoppel; issue actually litigated and essential to valid final judgment)
- State Ctr., LLC v. Lexington Charles Ltd. P’ship, 438 Md. 451 (explaining Maryland’s standing/cause-of-action approach)
- Kramer v. Globe Brewing Co., 175 Md. 461 (historical rationale for judicial estoppel; preventing parties from taking directly inconsistent positions to the prejudice of others)
- FWB Bank v. Richman, 354 Md. 472 (privity defined for res judicata; when nonparties who controlled or had direct interest are bound)