Hector v. Bank of New York Mellon
473 Md. 535
| Md. | 2021Background
- Two children (Ashley and Alyaa Hector) lived in a Baltimore rowhouse with chipping lead paint; blood tests in January 2002 showed elevated lead levels; family moved out spring 2002.
- The landlord’s mortgage was securitized; Bank of New York Mellon (BNYM) served as trustee of the RMBS trust, caused foreclosure, purchased the leasehold at auction (Dec. 27, 2001), and the sale was ratified Feb. 5, 2002.
- The Hectors sued BNYM in its individual (and trustee) capacities in 2016 for negligence under the Baltimore City Housing Code, alleging BNYM failed to maintain the property and caused lead poisoning.
- The circuit court granted summary judgment/dismissal as to BNYM’s individual capacity; the Court of Special Appeals held a trustee can be sued individually but affirmed on the ground the plaintiffs failed to show BNYM was "personally at fault."
- The Maryland Court of Appeals held: (1) a trustee may be sued in its individual capacity for torts arising in trust administration, (2) individual liability requires the trustee be "personally at fault," (3) violation of a statute/ordinance (e.g., Housing Code) can establish personal fault (the Statute or Ordinance Rule), and (4) BNYM became an "owner" under the Housing Code as of the foreclosure sale date and plaintiffs produced sufficient facts to survive summary judgment; case remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a trustee be sued in its individual capacity for torts committed in trust administration? | Hectors: Yes; they named BNYM individually and trustee. | BNYM: Suable only in fiduciary capacity; individual capacity improper. | Trustee may be sued individually for torts arising in trust administration; plaintiffs may plead both capacities. |
| What standard governs individual trustee liability? | Hectors: Liability can follow from statutory violation (no separate fault showing). | BNYM: Trustee only personally liable if it "personally committed, inspired, or participated" in the tort. | Trustee is individually liable only if personally at fault; Maryland adopts the UTC/Restatement-related personal-fault rule as common law. |
| Does the Statute or Ordinance Rule (violation of Housing Code) apply to trustees? | Hectors: Yes—violation of Housing Code is prima facie negligence; no trustee exception. | BNYM: Trustees should be excepted; cannot be held personally liable merely for statutory violation absent personal participation. | No trustee exception: a trustee who is an "owner" may be personally at fault via statutory/ordinance violation; trustee cannot avoid duties by delegating them. |
| Did BNYM become an "owner" under the Baltimore Housing Code while Hectors lived there? | Hectors: BNYM became owner at foreclosure sale (Dec. 27, 2001), while occupants remained. | BNYM: Not an owner until possession order (Aug. 15, 2002) or at ratification (Feb. 5, 2002). | BNYM became an "owner" as of the foreclosure sale because beneficiary had contractual right to possession pre-ratification; thus Housing Code duties attached during occupancy. |
Key Cases Cited
- Allen v. Dackman, 413 Md. 132 (2010) (discusses when a non-record individual qualifies as an "owner" and when personal participation can ground individual liability)
- Brooks v. Lewin Realty III, Inc., 378 Md. 70 (2003) (articulates the Statute or Ordinance Rule for negligence based on code violations)
- Dyer v. Otis Warren Real Estate Co., 371 Md. 576 (2002) (interprets exclusion of mortgagees from "owner" definition under similar statutory scheme)
- Empire Properties, LLC v. Hardy, 386 Md. 628 (2005) (foreclosure purchaser possession principles and pre-ratification possession where deed permits)
- IA Construction Corp. v. Carney, 341 Md. 703 (1996) (effect of foreclosure ratification on passing title to purchaser)
- Doermer v. Oxford Financial Group, 884 F.3d 643 (7th Cir. 2018) (background on common-law treatment of trusts and trustees for tort liability)