Sage Title Group, LLC v. Roman
166 A.3d 1026
Md.2017Background
- In April 2009 Robert Roman delivered three cashier’s checks totaling $2,420,000 to individuals (McCloskey/Belzner) who caused the funds to be deposited into Sage Title’s Baltimore escrow/trust account; the ledgers listed “Robert Roman” for each deposit.
- Sage Title maintained a single office escrow account with per-file ledger entries; funds were tracked by ledger but physically held in one account for the office.
- Sage Title employee and branch manager Kevin Sniffen deposited uncertified personal checks into the escrow account (violating company policy), later disbursed the $2,420,000, and was terminated after overdrafts occurred.
- Roman sued Sage Title for conversion and negligence and sought vicarious liability (respondeat superior) for Sniffen’s acts; the jury found for Roman on conversion and awarded $2,420,000 but the trial court granted Sage Title JNOV on conversion based on commingling.
- The Court of Special Appeals reversed as to conversion (finding the funds identifiable in escrow) and affirmed the dismissal of negligence for lack of expert testimony; the Maryland Court of Appeals granted certiorari and affirmed the intermediate appellate court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether funds in a title company escrow account were commingled so as to bar conversion | Roman: Funds were specifically identifiable by Sage Title’s ledger entries listing his name and amounts; escrow status did not destroy identifiability | Sage Title: Single escrow account mixed clients’ funds; commingling prevents a conversion claim under Allied Investment v. Jasen | Funds were sufficiently identifiable; deposit and ledger entries satisfied the Jasen exception and conversion claim could go to jury |
| Whether Sage Title preserved its respondeat superior (scope/foreseeability) defense for JNOV | Roman: Sage Title failed to preserve the foreseeability/scope argument at the proper time | Sage Title: Raised scope/foreseeability in memorandum supporting its Rule 2-519 motion and renewed motion; thus preserved | Preserved: referencing the earlier memorandum and colloquy was sufficient; issue reached the jury and employer may be vicariously liable |
| Whether Sniffen’s acts were within scope of employment and foreseeable (vicarious liability) | Roman: Sniffen was authorized to accept deposits and disburse funds; prior policy violations put Sage on notice; acts furthered Sage’s business | Sage Title: Prior policy violations were non-criminal and did not make subsequent theft foreseeable; serious crime not within scope | Held for Roman: Sniffen acted in furtherance of employer business and was authorized to deposit/disburse; foreseeability supported by prior policy violations; respondeat superior applies |
| Whether Sage Title waived unclean hands/in pari delicto defense by failing to raise it earlier | Roman: Sage Title waived by not raising the specific in pari delicto argument in its Rule 2-519 motion | Sage Title: Doctrine is a court question and may be raised at JNOV; waiver argument inapplicable | Waived: Court enforces Rule 2-519/2-532 particularity — unclean hands argument not preserved for JNOV |
| Whether expert testimony was required to prove negligence standard of care for a title company | Roman: No expert needed; it is obvious a title company cannot give away someone’s funds without permission | Sage Title: Standard of care for title companies is specialized; expert is required to establish duty/breach to non-customer depositor | Expert testimony required; negligence claim properly dismissed for lack of expert evidence (Schultz analogy) |
Key Cases Cited
- Allied Inv. Corp. v. Jasen, 354 Md. 547, 731 A.2d 957 (1999) (conversion claim survives only when funds are specific, segregated, or identifiable)
- Limbaugh v. Merrill Lynch, Pierce, Fenner & Smith, 732 F.2d 859 (11th Cir. 1984) (funds must be described with reasonable certainty to support conversion)
- Attorney Grievance Comm’n v. Cherry-Mahoi, 388 Md. 124, 879 A.2d 58 (2005) (attorney’s withdrawal of client funds from trust account constitutes conversion; trust accounts are separate from operating accounts)
- Barclay v. Briscoe, 427 Md. 270, 47 A.3d 560 (2012) (scope of employment requires acts be in furtherance of employer’s business and authorized by employer)
- Schultz v. Bank of America, 413 Md. 15, 990 A.2d 1078 (2010) (expert testimony often required to establish a financial institution’s standard of care where practices occur behind closed doors)