On July 27, 2006, Saxon Mortgage Services, Inc., appellant, filed a complaint in the Circuit Court for Frederick County, asserting claims of conversion and negligence against Middle-burg Bank and Chesapeake Bank of Maryland (Chesapeake Bank), appellees, in relation to payment of a $140,000 check issued by Joint Insurance Association (JIA), which appellant, as a co-payee, neither indorsed nor authorized to be indorsed on its behalf. Appellant’s complaint further alleged breach of contract on the part of JIA and asserted claims of conversion, fraud, intentional misrepresentation and breach of contract against Paula Harrison and Steven Siegel. On November 13, 2006, the negligence claim against Chesapeake Bank was dismissed. On June 21, 2007, the circuit court entered default judgments against Harrison and Siegel, neither of whom are parties to this appeal. On October 4, 2007, the circuit court awarded summary judgment in favor of JIA on the breach of contract claim. In addition, on October 4, 2007, the circuit court stayed a cross claim filed by Chesapeake Bank against Middleburg Bank.
On October 31, 2007, the circuit court entered an order granting appellees’ motions in limine and precluding appellant from introducing evidence at trial that appellant first disclosed after the discovery deadline. The circuit court subsequently denied appellant’s motion for reconsideration of that decision.
A bench trial on the conversion claims against appellees and the remaining negligence claim against Middleburg Bank commenced on May 6, 2008. At the close of appellant’s case-in-chief, the circuit court granted judgment in favor of appellees on all counts and denied appellant’s motion for judgment on the conversion claims. Appellant appeals from the judgments against it
1
and presents four questions for our review, which we have rephrased, reordered and consolidated as follows
I. Did the circuit court abuse its discretion by precluding appellant from using evidence that it first disclosed after the court-ordered discovery deadline?
II. Did the circuit court erroneously conclude that appellant, one of multiple payees of a check, had the initial burden, under § 3-420(b) of the Commercial Law Article,[ 3 ] of proving its actual interest in the proceeds of the instrument?
III. Did the circuit court err by granting appellee Middle-burg Bank’s motion for judgment on appellant’s negligence claim on the grounds that appellant failed to adduce expert testimony regarding banking industry standards?
For the reasons that follow, we answer the first question in the negative and the second and third questions in the affirmative. Accordingly, we affirm the circuit court’s judgment in relation to appellant’s discovery violations but reverse the circuit court’s judgments in favor of appellees on appellant’s conversion and negligence claims.
PROCEDURAL & FACTUAL BACKGROUND
This case involves claims of conversion and negligence brought by a payee against a depositary bank and a payor bank in relation to the payment of a check bearing a forged indorsement. An agreed stipulation of facts, which was jointly submitted at trial by appellant and appellees, provides the following factual background:
JIA provided insurance coverage on a property located at 123 Ninth Avenue in Brunswick, Maryland, pursuant to the terms of an insurance policy. Appellant was listed on the “Declarations Page” of the insurance policy as the “first mortgagee and/or loss payee.” Harrison and Siegel were named as the insureds on the insurance policy. On the same “Declarations Page,” the insurance policy also identified American General Financial Services (American General) as the “second mortgagee and/or loss payee.”
Following an April 27, 2005 fire on the property, Harrison and Siegel submitted an insurance claim to JIA in relation to the fire loss. After adjusting the claim, JIA determined that it would pay the $ 140,000 policy limit for damage to the property, pursuant to the terms of the insurance policy. Consequently, on May 13, 2005, JIA, the drawer,
4
issued a check in the face amount of $140,000, made payable to the order of “PAULA HARRISON and STEVEN SIEGEL and SAXON MORTGAGE SERVICE and AMERICAN GENERAL FINANCIAL SERVICES ITS SUCCESSORS, AND/OR ASSIGNS, ATIMA.” JIA included appellant on the check because appellant was named as the first mortgagee and/or loss payee under the insurance policy. American General was also named by JIA as a co-payee because of its status as the second mortgagee and/or loss payee under the insurance policy. The parties stipulated that the term
JIA’s adjuster, Joe Zynel, hand-delivered the check to Harrison. On May 19, 2005, the law firm of Dunlap Grubb Weaver and Whitbeck, P.C. (the Dunlap Firm) endorsed the check and presented it for deposit to Middleburg Bank in Leesburg, Virginia, thus casting Middleburg Bank in the role of “depositary bank,” as far as the subject check is concerned, from that point forward. 5 Although the stipulation of facts does not explain why the Dunlap Firm, which has never been a party to this case, endorsed the check, appellant’s opening statement at trial suggested that Harrison may have endorsed the check to an attorney at the Dunlap Firm. The Dunlap Firm also held an account at Middleburg Bank.
Although appellant neither indorsed the check nor authorized any person to indorse the check on its behalf, the word “Saxon” was handwritten on the back of the check. Middle-burg Bank accepted the check for deposit, without contacting either appellant or JIA to confirm the validity of the purported indorsement. Middleburg Bank delivered the check to its intermediary bank. The check was ultimately transferred through the Federal Reserve Bank to Chesapeake Bank, where Chesapeake Bank electronically debited $140,000 from JIA’s account. Chesapeake Bank thus became, for our purposes, the drawee, or payor, bank. 6 A sum of $140,000 was ultimately credited to the Dunlap Firm account at Middleburg Bank.
Upon learning that the check was deposited and paid without appellant’s indorsement, appellant contacted JIA and requested that JIA offer appellant a replacement payment for the check. Once JIA became aware that appellant neither indorsed nor authorized indorsement of the check and that appellant had never received any of the proceeds of the check, JIA contacted Chesapeake Bank, which informed JIA that Middleburg Bank had accepted the check as if it were fully indorsed. Chesapeake Bank refused JIA’s demand to credit its account for $140,000. JIA, in turn, declined appellant’s request for a replacement payment.
After appellant filed its complaint in this case, Middleburg Bank instituted an action against Harrison, Siegel and the Dunlap Firm in the Circuit Court for Loudoun County, Virginia. That action was still pending at the time of trial.
A series of pretrial proceedings disposed of various claims originally filed by appellant and the case proceeded to trial on (1) appellant’s conversion claims against Middleburg Bank and Chesapeake Bank, under the Maryland Uniform Commercial Code, and (2) appellant’s negligence claim against Middleburg Bank. Evidence was adduced establishing that, in September 2003, Harrison granted a deed of trust on the property to First Franklin Financial Corporation, a Delaware corporation, which, in turn, loaned Harrison $153,000. Appellant’s Senior Claims Representative, Paul McAllister, testified during his deposition that First Franklin Mortgage Loan Trust 2003-FF5 assigned the deed of trust and note
7
to Wells Fargo Bank’ National
Additional facts shall be discussed, as required, throughout the remainder of this opinion.
LEGAL ANALYSIS
I
Discovery Violations & Exclusion of Evidence
Appellant assigns error to the circuit court’s decision to grant appellees’ motions in limine, precluding appellant from introducing, in any proceeding before the court, any reference to certain documents and information produced by appellant after July 20, 2007, the deadline by which discovery was to have been completed. Appellant further challenges the circuit court’s denial of appellant’s Motion for Reconsideration, which requested that the circuit court reconsider its ruling granting appellees’ motions in limine. In order to address the merits of appellant’s arguments, we first review the timeline of events forming the backdrop of the discovery dispute between the parties.
A
Discovery Deadlines
Appellant’s complaint was filed on July 27, 2006. 8 Throughout 2006, various pre-trial matters were submitted to and addressed by the court. On March 21, 2007, the circuit court entered a scheduling order requiring that discovery be completed at least seventy-five days prior to the August 21, 2007 trial date or by June 7, 2007. On May 14, 2007, the circuit court extended the discovery deadline to July 7, 2007. In a subsequent order, the circuit court extended the discovery deadline to July 20, 2007.
B
Discovery Requests & Motion for Protective Order
On June 6, 2007, Middleburg Bank propounded interrogatories and served a request for production of documents on appellant. On June 28, 2007, Middleburg Bank served a notice of deposition, expressing its intent to depose appellant’s corporate designee. Through these combined discovery requests, Middleburg Bank sought the disclosure of information pertaining to the following topics: 9
1. The purported assignment of (a) the Adjustable Rate Note dated September 22, 2003, attached as ExhibitA to the Complaint (“Note”) and (ii) Deed of Trust dated September 22, 2003, attached as Exhibit B to the Complaint (“Deed of Trust”) to Wells Fargo Bank National Association, as Trustee (“Wells Fargo”) for First Franklin Mortgage Loan Trust 2003-FF5 (“FF Trust”);
2. All communications between [appellant] on the one hand, and First Franklin Financial Corp., Wells Fargo, and/or FF Trust, on the other, concerning the Note and/or the Deed of Trust;
3. The purported “attorney-in-fact” relationship between [appellant], on the one hand, and Wells Fargo and/or FF Trust, on the other;
4. [Appellant’s] purported status as the current “holder of the Note;”
5. All communications between [appellant], on the one hand, and defendants, Paula M. Harrison (“Harrison”) and/or Steven H. Siegel a/k/a Steven H. Seigel (“Siegel”), as well as their agents and representatives, on the other, concerning, (a) the Note, (b) the Deed of Trust, (c) any application by Harrison to refinance prior indebtedness secured by the Property (for the purported purpose of refinancing an existing Deed of Trust recorded in Liber 2110 folio 555), (d) insurance coverage for the Property, (c) the fire that occurred on or about April 27, 2005 (“Fire”) at that property located at 123 Ninth Avenue, Brunswick, Maryland (“Property”), (f) any proof of loss concerning the Fire, (g) that $140,000 JIA check dated May 13, 2005 (“Check”), (h) restoration of the Property and/or (i) breach of the Note and/or the Deed of Trust.
10. [Appellant’s] relationship or arrangement with First Franklin or FF Trust regarding the Note, the Deed of Trust, and the Complaint; and
11. [Appellant’s] purported damages, including any claim for attorney’s fees and costs.
On July 6, 2007, appellant also filed a Motion for a Protective Order, pursuant to Maryland Rule 2-403, alleging that appellant was prohibited from providing Middleburg Bank with responses to its discovery requests. Specifically, appellant argued that Middleburg Bank sought the disclosure of “private financial information about [appellant’s] customer with third parties,” information that was, according to appellant, protected under the “Gramm-Leach-Bliliey [sic] Act, 15 U.S.C. Section 6801 et. al. [sic]” 10 Appellant asked the court to enter an order “striking all discovery request [sic] for financial information related to [appellant’s] customer.”
On July 16, 2007, appellant filed “[Appellant’s] Responses to ... Middleburg Bank’s First Set of Interrogatories,” in which it raised a general objection to the interrogatories “to the extent that they seek information [that] is protected by the Gramm-Leach-Bliliey Act, 15 U.S.C. Section 6801
et
al.” Additionally, appellant asserted that Middleburg Bank’s interrogatory requests attempted to obtain irrelevant information “which is not likely to lead to the discovery of any admissible evidence.” Notwithstanding these objections, appellant indicated that “various employees of [appellant] has [sic] information
C
Deposition of Appellant’s Corporate Designee
On July 19, 2007, one day before the discovery deadline, appellees deposed McAllister, who testified at the deposition in his capacity as appellant’s corporate designee. Appellant’s counsel noted that the circuit court had yet to rule on the pending Motion for Protective Order:
Before—before we start with [Chesapeake Bank’s counsel and JIA’s counsel], I—the notice of deposition was only sent by Middleburg. I don’t have any objection to you asking questions. Just so that you know that we did file a motion of protective order and so we are going to object to any line of questioning regarding any private financial information which relates to the borrower Paula Harrison. So refrain from asking those questions as long as—and we also filed an objection as to any line of irrelevant questions, not that you would ask any, but just so that it would be limited to the allegations of the complaint and notice.
As forewarned, appellant’s counsel objected to deposition questioning that she characterized as being subject to the pending Motion for Protective Order. Notably, appellant’s counsel did not object when McAllister testified that (1) he was “never given a copy of the adjuster’s report of damages to know what the total amount of the damages were,” (2) he never tried to determine whether $140,000 could have rebuilt a house on the subject property and (3) he had no knowledge of any damages that his company claimed in the lawsuit. Similarly, appellant’s counsel declined to object when McAllister testified that (1) appellant was not the holder of the note but rather a “servicer” to Wells Fargo Bank, who acted in its capacity as trustee for First Franklin Mortgage Loan Trust 2003-FF5 and (2) he did not know whether a power of attorney existed between Wells Fargo and appellant as it pertained to the Paula Harrison note.
D
Post-Discovery Deadline Disclosures
On August 7, 2007, approximately eighteen days after the July 20, 2007 discovery deadline, the circuit court denied appellant’s pending Motion for Protective Order. 11
On August 8, 2007, fourteen days after the close of discovery, but four days prior to the court’s denial of the Motion for Protective Order, appellant served a copy of its Motion for Summary Judgment on the parties to this ease.
12
Appellant argued,
inter alia,
that summary judgment should be granted against appellees on the conversion claims and against Middle-burg Bank on the negligence claim. In support of its argument, appellant attached a notarized affidavit that was
dated
August 1, 2007 (twelve days after the close of discovery) and signed by Michael McCreary on behalf of appellant. In this affidavit, McCreary attested that the value of the property decreased from $215,000 before the fire to $50,000 after the fire.
On August 13, 2007, appellant filed its opposition to summary judgment motions submitted by appellees and JIA, attaching, as an exhibit, another affidavit signed by McCreary. This affidavit, however, was dated August 10, 2007, twenty-one days after the close of discovery and three days after the circuit court issued its order denying appellant’s Motion for Protective Order. This second McCreary affidavit repeated much of the same information initially presented in McCreary’s first affidavit. However, rather than giving a specific figure as to the alleged debt owed on the property, the second affidavit provided that, “at the time of the fire loss on April 27, 20Ó5, the unpaid principal, interest and payments of taxes and assessments by the mortgagee as well as all foreclosure cost was over $140,000.” In addition to this second affidavit, appellant attached a signed power of attorney. Notably, this power of attorney was created on July 20, 2007, the day after McAllister testified at his deposition that he did not know if a power of attorney existed between appellant and Wells Fargo. The power of attorney purportedly gave appellant the right to act on behalf of Wells Fargo in servicing mortgage loans.
This phase of the discovery dispute timeline is critical to our analysis. In its appeal to this court, appellant repeatedly emphasizes that it waited to disclose the “supplemental discovery” until after the circuit court ruled on its pending Motion for Protective Order:
The discovery deadline, according to a consent order, was July 20, 2007. The [circuit court] did not rule upon the Motion for Protective Order until August 13, 2007, which was substantially after the deadline to serve responses to the Bank’s requests. After the [circuit court’s] denial of the Motion for Protective Order, [appellant] served supplemental discovery documents and [affidavits to the Banks which were responsive to the Bank’s requests.
Appellant’s position is not supported by the record. To be sure, McCreary’s second affidavit was first disclosed after the denial of appellant’s Motion for Protective Order. However, appellant neglects to mention the existence of McCreary’s first affidavit, which was created and filed after the discovery deadline but before the court’s denial of appellant’s Motion for Protective Order. McCreary’s first affidavit disclosed information requested by Middleburg during discovery and was nearly identical to his second affidavit. 13
E
Motions in Limine
On August 15, 2007, JIA filed a motion
in limine,
requesting that appellant be prevented from introducing evidence regarding the mortgage debt at the time of the fire loss, a fact first disclosed by appellant in McCreary’s post-discovery deadline
Not surprisingly, appellant opposed these motions in limine, asserting, in part, that the “delayed disclosure by [appellant] related to any information regarding the debt amount was completely due to compliance with the GrammLeach-Bliliey Act.” Appellant stressed that, once the court ruled on its Motion for Protective Order, appellant “[was] now able to disclose such information without violating the federal statute.” In its opposition to the motions in limine filed by JIA and Chesapeake Bank, appellant added:
Nonetheless, [JIA & Chesapeake Bank] fail to show how they are prejudiced by [appellant’s] showing the amount owed on the mortgage debt after discovery. Contrary to [their] belief, the measure of [appellant’s] damages does not relate to Defendant Harrison’s debt amount under the mortgage loan. The Complaint is seeking damages against [appellees] based upon the value of the Check which is $140,000, not the amount due under the Note. 15
According to appellant, McAllister’s July 19, 2007 deposition testimony was not deficient. Appellant stressed that McAllister provided appellees with names of other employees who could answer specific questions and that appellees did not “bother to schedule a deposition” of those employees or file a motion to compel discovery. Appellant asserted that appellees were not prejudiced by the late disclosures.
On October 4, 2007, the circuit court granted JIA’s motion for summary judgment against appellant, which disposed of appellant’s breach of contract claim against JIA and denied all remaining summary judgment motions. The court also scheduled a hearing on October 25, 2007, to address the merits of the various pending motions in limine. On October 9, 2007, shortly after the October 4 hearing, appellant produced what appellees characterize as “[seventy-six] pages of information concerning the account of Harrison.” Although those documents are not clearly identified in the record, appellant does not dispute this fact.
At the October 25, 2007 hearing on the pending motions
in limine,
the circuit court heard argument from counsel and granted appellees’ motions
in limine:
I quite frankly don’t know what’s going on with this case. When I look at all of the, that’s happened, I am disturbed by
The circuit court later clarified that its ruling extended only to the following:
[The] [affidavit of Michael McCreery (phonetic) including the substance of the facts contained in those documents, the limited power of attorney dated July 20th, and the 76 pages of documents produced on October 9th, 2007, any additional information or documents not disclosed by [appellant] prior to July 20th, 2007. Anything that existed prior to that date, that all comes in. Just granted the motion as to those items[.]
(Emphasis added). 17 An order was entered memorializing this ruling on October 31, 2007. The order reflected that, along with the aforementioned documents, appellant was barred from “[introducing in any proceeding before this Court evidence contrary to the testimony of its corporate designee Paul McAllister.”
F
Motion for Reconsideration
Appellant subsequently filed a Motion for Reconsideration, on November 8, 2007, arguing that the court’s order granting appellees’ motions
in limine
penalized appellant for complying with a federal statute and was overbroad. As to the breadth of the order, appellant contended that, because the order excluded the substance of all facts contained in McCreary’s August 10 affidavit, the court succeeded in also
Subsequent to the filing of appellant’s Motion for Reconsideration, but prior to any ruling on that motion, a Scheduling Order dated November 13, 2007 extended the discovery deadline in the case to March 22, 2008. Appellant filed an amended Motion for Reconsideration, in which it alleged that, in light of the new discovery deadline, appellant’s disclosures were, in fact, timely; consequently, appellees suffered no prejudice. Appellees jointly filed a motion to strike all provisions of the scheduling order, other than the provision setting the May 6-7, 2008 trial date. On December 17, 2007, in two separate orders, the circuit court granted appellees’ motion to strike the extended discovery deadline and denied appellant’s Motion for Reconsideration.
G
Trial
McAllister testified on behalf of appellant at trial. During his direct examination, appellant’s counsel attempted to elicit testimony regarding the extent of damages owed to appellant as a result of the fire. McAllister was permitted to testify, over the objections of opposing parties, that appellant, as the mortgage servicer for the first lienholder of the property, was responsible for obtaining insurance money paid by JIA on the insurance claim. However, the circuit court sustained objections to his testimony as to “how” appellant was injured by the facts of this case. The circuit court noted on the record that it sustained the objection to this testimony on the grounds provided by appellees’ counsel, namely, that such testimony would be “inconsistent with prior testimony” and was excluded by the motion in limine.
McAllister subsequently testified that he recalled stating, during his deposition, that he did not know if there were any damages. When appellant’s counsel asked, “When you were answering that question at the time of the deposition ... did you mean to testify that [appellant] did not incur any damages?”, the circuit court sustained objections to the question and ruled: “[McAllister] said he didn’t know [if appellant sustained any damages]. Not whether they had any [damages] or not. So and in light of my, my ruling on the lim—in limine motion, sustain.” McAllister was permitted, however, to testify that he had, at the deposition, identified the name of an individual working for appellant who had a “better idea” about the damages incurred in this case.
After further objections were lodged by appellees, the following colloquy took place:
[APPELLANT’S COUNSEL]: Okay. Your Honor, we have our opportunity to clarify his deposition testimony.
[THE COURT]: As to what issue?
[APPELLANT’S COUNSEL]: As to the issue as [sic] damages.
[THE COURT]: I’d clarify, however I ruled in limine after the deposition that there would not be ...
[APPELLANT’S COUNSEL]: Any inconsistent testimony. However, what these, these questions—
[THE COURT]: And he said he didn’N-
[APPELLANT’S COUNSEL]:—lead to—
[THE COURT]:—know of any damages at the time of deposition.
[APPELLANT’S COUNSEL]: Total damages. If I can have him review the, the actual question that was asked. This is not inconsistent with his testimony. He was, he did not know of any total damages.
[MIDDLEBURG’S COUNSEL]: Well, now wait—
[THE COURT]: So wait—
[MIDDLEBURG’S COUNSEL]:—this is unfair. I asked him the question do you have knowledge, Mr. McAllister, of the damages that your company claims in this lawsuit? Answer: Total damages? No sir. Question: Any damages? Answer: No sir.
[APPELLANT’S COUNSEL]: Your Honor, the following question is, the following testimony is that he identified someone at Saxon with the information. At that time he did not have personal knowledge of what the total damages of— [THE COURT]: [Appellant’s counsel], I have already ruled on this issue. I will sustain that objection. I know you’ve raised it again so you’ve preserved it for the record.
On redirect examination, appellant’s counsel asked McAllister if he knew of any property damage from the fire or if any repairs were made on the property after the fire. Objections to both questions were sustained by the court on the grounds that any such knowledge would be either based on hearsay or beyond the scope of redirect.
H
Propriety of Circuit Court’s Ruling on Motions in Limine & Motion for Reconsideration
Appellant discusses the holding of the Court of Appeals in Taliaferro, supra, and argues that the circuit court abused its discretion when it precluded the use of information disclosed by appellant subsequent to the discovery deadline. Appellant further argues that, even if the circuit court properly granted appellees’ motions in limine, the scope of the in limine order was “unjustifiably broad” and prevented appellant from adducing evidence as to its damages in this case. We disagree with appellant on both counts.
The circuit court granted appellees’ motions
in limine
on the grounds that appellant’s post-discovery disclosures should have been made available to appellees, in response to Middleburg Bank’s discovery requests, prior to July 20, 2007, the discovery deadline that was agreed upon by the
parties and established by court order. We review the granting of a motion
in limine
for discovery violations under an abuse of discretion standard.
Lowery v. Smithsburg Emergency Med. Serv.,
whether the disclosure violation was technical or substantial, the timing of the ultimate disclosure, the reason, if any, for the violation, the degree of prejudice to the parties respectively offering and opposing the evidence, whether any resulting prejudice might be cured by a postponement and, if so, the overall desirability of a continuance.[ 20 ]
i
Technical v. Substantial Violation
Appellant concedes that the production of McCreary’s affidavit and other “supplemental discovery” occurred after the July 20, 2007 discovery deadline. Appellant contends, however, that its post-deadline disclosures represent “technical” violations of the discovery rules, because the November 13, 2007 order, which “extended” the discovery deadline to March 22, 2008, rendered appellant’s disclosures “technically” within the discovery period. The discovery provisions of that scheduling order, however, were stricken by the court in December 2007. Appellant’s argument on this point is without merit.
There can be little doubt that appellant’s belated disclosures were material and relevant to appellees’ ability to prepare a defense as to the amount of damages actually suffered by appellant. Middleburg’s discovery requests asked appellant to disclose the type of information contained in McCreary’s affidavits. Moreover, it was in McCreary’s affidavits that appellant first disclosed any evidence regarding the current amount of debt owed on the property. Prior to the discovery deadline, however, appellant never identified McCreary as an individual with knowledge pertaining to Middleburg’s discovery requests.
Apart from deposing McAllister, who was identified by appellant as its corporate designee and the person with knowledge and information pertaining to Middleburg’s discovery requests, it is unclear how appellees would have been able to obtain such information prior to the discovery deadline. In light of the substance of
u
Reasons for Belated Discovery
Appellant stresses that its timely filed Motion for Protective Order was not ruled upon by the circuit court until August 7, 2007. According to appellant, it believed that disclosure of financial information relative to Harrison, the mortgagor on the property, was prohibited by the federal borrower privacy statute. Appellant further contends that it “served its additional discovery responses and information to all [appellees] after the result of the [court’s] ruling on [appellant’s] Motion for Protective Order.”
As the preceding timeline of events delineates, we cannot credit the reason proffered by appellant in its attempt to justify its discovery violations. McCreary’s first affidavit was filed before the court ruled on the Motion for Protective Order. The contents of McCreary’s second affidavit mirrored those of his first affidavit. Appellant, therefore, cannot be said to have waited until the court’s disposition of its Motion for Protective Order before disclosing the substance of McCreary’s second affidavit.
Appellant has provided us with no other reason explaining its motives in delaying disclosure of McCreary’s affidavits. In light of the record in this case, we are constrained to reject appellant’s argument on this point and conclude that appellant’s delay in disclosure was unjustified.
See Hossainkhail v. Gebrehiwot,
143 Md.App.- 716, 726,
We further observe that appellant’s counsel represented to the circuit court, both in its opposition to Middleburg Bank’s motion in limine and at the October 25, 2007 hearing on the motions in limine, that appellant deliberately delayed disclosing seventy-six pages of financial documents pending a resolution of various summary judgment motions. Specifically, in its opposition to the motions in limine, appellant stated: “[T]his court scheduled a dispositive motion hearing on Oct. 4, 2007, which possibly could have resolved all issues without trial and therefore, disclosure of additional information (including updated attorney’s fees and bills, tax statements and disclosure of borrower’s social security number) was delayed until the Court enforced a ruling on the dispositive motions.’ ” (Emphasis added).
Appellant cannot deliberately disregard discovery orders because it anticipates the results of future summary judgment proceedings. This delay was unjustified and unreasonable. “If scheduling orders are to be permitted to be treated in such a casual fashion, why bother with them?”
Naughton v. Bankier,
iii
Timing of Disclosure, Degree of Prejudice & Curative Postponement
The discovery period in this case was first extended, by court order, from June 7, 2007 to July 7, 2007. Another extension set the discovery deadline for July 20, 2007. Middleburg’s discovery requests were served in June of 2007. McAllister’s deposition was conducted on July 19, 2007. Appellees subsequently became apprised
[
5
] It was not until November 13, 2007 that trial in the matter was scheduled for May 2008. However, the absence of a set trial date, in and of itself, does not necessarily equate with lack of prejudice.
See Warehime v. Dell,
Moreover, Maryland Rule 2-412(d) provides that, upon notice and subpoena by a party seeking to depose a corporation, a corporate party shall designate one or more persons to testify on its behalf during depositions requested by an opposing party and that the “persons so designated shall testify as to matters known or reasonably available to the organization.” Appellees both refer to the decision of the United States District Court for the District of Columbia in Rainey v. Am. Forest & Paper Ass’n, Inc., 26 F.Supp.2d. 82, 94 (D.D.C.1998), wherein the Rainey Court held that, under Federal Rule of Civil Procedure 30(b)(6), the federal counterpart to Maryland Rule 2-412(d), “a corporation cannot later proffer new or different allegations that could have been made at the time of the 30(b)(6) deposition” of the corporation’s designee, unless it can prove that the information was neither known nor accessible at the time.
We decline to address whether Maryland Rule 2-412 should be construed consistent with the reasoning in
Rainey
in all instances.
21
However, we agree that appellant was on notice to prepare its designee to be able to give responsive answers on its behalf.
See Wilson v. Lakner,
Finally, in opposing appellees’ motions in limine, appellant indicated that it would suffer little prejudice if the court excluded the contents of McCreary’s affidavits. Specifically, appellant argued to the court that appellees “failed to show how they are prejudiced by [appellant’s] showing the amount owed on the mortgage debt after discovery,” because,
[c]ontrary to [appellees’] belief, the measure of [appellant’s] damages does not relate to Defendant Harrison’s debt amount under the mortgage loan. The Complaint is seeking damages against [appellees] based upon the value of the Check which is $140,000, not the amount due under the Note.
Notwithstanding the fact that this statement ignores that appellees may have chosen to present an alternative theory of damages in this case, appellant’s statement further had the effect of informing the court that the content of McCreary’s affidavit, at least as it pertained to the amount owed on the mortgage, was not relevant to appellant’s case.
Because the discovery violation was both unjustified and substantial in nature, and in light of the prejudice to appellees and lack of prejudice to appellant, we conclude that the circuit court did not abuse its discretion in either granting appellees’ motions in limine or denying appellant’s Motion for Reconsideration. The circuit court was evidently troubled at the nature, substance and the timing of McCreary’s August 10 affidavit and other subsequent disclosures, including the power of attorney produced one day after McAllister testified at his deposition that he was unaware of any power of attorney relationship between appellant and Wells Fargo as it pertained to the Harrison note. 23 The circuit court was clearly persuaded that appellant lacked a meritorious reason justifying its discovery violations. As we have explained, it cannot be credibly argued that appellant’s disclosure was delayed because the court had yet to rule on its Motion for Protective Order. In light of the foregoing discussion, we affirm the circuit court’s order.
I
Scope of In Limine Order
Appellant next argues that, even if the circuit court properly exercised its discretion in granting appellees’ motions in limine, the “language of the In Limine Order was unjustifiably broad because it included facts not subject to any discovery violation.” Specifically, appellant argues that the order “precluded [appellant] from introducing any facts indicated in the Affidavit of Michael McCreary....” Appellant continues:
The Affidavit included a broad range of documents and facts which were not subject to even an arguable discoveryviolation, such as the following: 1) a statement that the subject mortgage loan amount was greater than the Check amount of $140,000.00 (this fact was not requested by [appellees] through discovery); 2) a copy of the corporate assignment which was attached to the Complaint; 3) a statement that [appellant] has the right to collect all mortgage and insurance payments related to the subject mortgage (this fact was disclosed within the discovery deadline and consistent with deposition testimony); 4) evidence of the value of the Property before the fire loss in January 2005 ($215,000.00) and the value of the Property after the fire loss in January 2006 ($50,000.00) (also disclosed at the deposition prior to discovery deadline).
Appellant contends that, as a result of the court’s ruling, it was precluded from introducing any evidence relating to the above-mentioned matters, even though they were not, according to appellant, “subject to any discovery violation [sanction].” We see it otherwise.
Initially, we observe that the circuit court’s order specifically precluded use of appellant’s post-discovery disclosures and the substance of the facts contained therein, provided that those facts were not initially disclosed prior to the discovery date. The court further precluded introduction of evidence contrary to the testimony of appellant’s corporate designee, Paul McAllister. 24 As for any “statement that the subject mortgage loan amount was greater than the Check amount of $140,000.00,” this fact was first disclosed in McCreary’s post-deadline affidavits and we have held that the circuit court did not abuse its discretion in disallowing use of this evidence.
Furthermore, in regard to appellant’s allegation that it was unjustifiably precluded by the “overbroad” order from introducing evidence as to the decrease in the property’s value after the fire, appellant does not address whether it attempted to introduce such evidence at trial and was prevented from doing so by the court. To be sure, the court did not permit appellant to explain “how” appellant was injured in this case.
This ruling, however, was consistent with the court’s
in limine
order, in light of McAllister’s deposition testimony reflecting that McAllister knew nothing about appellant’s claimed damages in this case. More importantly, McAllister did offer testimony at his deposition regarding the alleged decrease in the value of the property after the fire.
25
Appellant, for its part, neglected to introduce that evidence at trial.
26
We further observe that appellant never proffered, in response to the
In addition, as Chesapeake Bank points out, a copy of the promissory note was, in fact, introduced as a trial exhibit by Chesapeake Bank, as an attachment to various excerpts from McAllister’s deposition testimony. Furthermore, while the court sustained an objection to the introduction of a certified copy of the corporate assignment from First Franklin Mort gage Loan Trust to Wells Fargo Bank, appellant has not explained how the court’s error in precluding that document, if any, harmed appellant. The court ultimately allowed McAllister to testify as to the contents of that document and excerpts of McAllister’s deposition testimony, in which he testified as to the contents of that document, were also admitted as a defendant’s exhibit at trial.
Finally, appellant’s assertion that it was precluded from introducing “a statement that [appellant] has the right to collect all mortgage and insurance payments related to the subject mortgage” is not supported by the record. McAllister testified, over the opposing parties’ objections, that appellant was the servicer for the first lienholder in this case and was responsible for obtaining insurance money paid by JIA on the insurance claim. The parties also stipulated to the fact that appellant was named as the loss payee and mortgagee under the insurance policy. Accordingly, we perceive no error.
II
Motions for Judgment—Conversion
At the close of appellant’s case-in-chief, the circuit court granted judgment in favor of appellees on appellant’s conversion claims and denied appellant’s motion for judgment on appellant’s conversion claims. Additionally, the circuit court granted judgment in favor of Middleburg Bank on appellant’s negligence claim. We address each of appellant’s challenges to these judgments seriatim.
A
Standard of Review
Maryland Rule 2-519(a) provides that “[a] party may move for judgment on any or all of the issues in any action at the close of the evidence offered by an opposing party, and in a jury trial at the close of all the evidence.” Maryland Rule 2-519(b) provides:
When a defendant moves for judgment at the close of the evidence offered by the plaintiff in an action tried by the court, the court may proceed, as the trier of fact, to determine the facts and to render judgment against the plaintiff or may decline to render judgment until the close of all the evidence. When a motion for judgment is made under any other circumstances, the court shall consider all evidence and inferences in the light most favorable to the party against whom the motion is made.
Unlike in a jury trial, a trial judge in a bench trial considering a Rule 2-519 motion for judgment “is not compelled to make any evidentiary inferences in favor of the party against whom the motion for judgment is made.”
Bricker v. Warch,
[appellate review] of the decision of the trial court on the evidence is governed by the “clearly erroneous” standard set out in Rule 8-131(c)[ 27 ] and the trial judge is “allowed to evaluate the evidence as though he [or she] were the jury, and to draw his [or her] own conclusions as to the evidence presented, the inferences arising therefrom and the credibility of the witnesses testifying.”
Id. (citations omitted).
A trial court’s factual findings are not clearly erroneous as long as they are supported by any competent material evidence in the record.
See Figgins v. Cochrane,
B
Appellees’ Motions for Judgment on Conversion Claims
At the close of appellant’s case-in-chief, appellees moved for judgment on appellant’s conversion claims, arguing, inter alia, that appellant had failed to prove damages on the conversion counts. Appellees stressed that appellant was only one of four payees named on the instrument of the check and emphatically maintained that appellant had adduced no evidence at trial proving the degree of its actual interest in the proceeds of the check.
Appellant countered that, under § 3-420(b) of the Maryland Uniform Commercial Code, the damages in a conversion claim are presumed to be the amount payable on the instrument. C.L. § 3-420 provides, in pertinent part:
(a) The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by (i) the issuer or acceptor of the instrument or (ii) a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.
(b) In an action under subsection (a), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiffs interest in the instrument
(Emphasis added). Appellant contended that, by producing the converted check, it was entitled to the presumption that the measure of damages was $140,000, or the amount payable on the check. Thus, appellees
The parties also made various alternative arguments. Chesapeake Bank, for example, asserted that, even if appellant correctly interpreted C.L. § 3-420(b), appellees had sufficiently rebutted the statutory presumption by highlighting the deposition testimony of McAllister, wherein he stated that he had no knowledge of any damages incurred by appellant. Appellant argued that the “Declarations Page” in the insurance policy designated appellant as the first loss payee and American General as the second loss payee, evincing an intent to give appellant an interest in the policy senior to that of American General, another co-payee on the check. Appellant also argued that, because the three other co-payees validly endorsed the check, they “endorsed away their interests and so as a practical matter the check was negotiable only upon the endorsement of [appellant],” such that “at the time that it was presented to Middleburg Bank for negotiation the interest was owned by [appellant].”
The circuit court granted appellees’ motion for judgment on the conversion counts, rejecting appellant’s interpretation of C.L. § 3^20(b):
I have no evidence of damages. None. And 4, ah, 3-420(b) makes it clear, and I’m gonna read from the comment that there does need, there is a presumption that the amount of damages, that the amount of [sic] is the amount of the check, but it’s different in the case of co-payees. And I’m reading right from the official comment. The but clause in subsection B, I will note it doesn’t refer back to 3-420, but that is the section it’s referring to, addresses the problem of conversion actions, which is what we have here against Middleburg and against Chesapeake in multiple payee checks.
(Emphasis added). The court quoted directly from the following paragraph in Official Comment 2 to C.L. § 3-420(b):
The “but” clause in subsection (b) addresses the problem of conversion actions in multiple payee checks. Section 3-110(d) states that an instrument cannot be enforced unless all payees join in the action. But an action for conversion might be brought by a payee having no interest or a limited interest in the proceeds of the check. This clause prevents such a plaintiff from receiving a windfall. An example is a check payable to a building contractor and a supplier of building material. The check is not payable to the payees alternatively. Section 3-110(d). The check is delivered to the contractor by the owner of the building. Suppose the contractor forges supplier’s signature as an indorsement of the check and receives the entire proceeds of the check. The supplier should not, without qualification, be able to recover the entire amount of the check from the bank that converted the check. Depending upon the contract between the contractor and the supplier, the amount of the check may be due [1] entirely to the contractor, in which case there should be no recovery, [2] entirely to the supplier, in which case recovery should be for the entire amount, or [3] part may be due to one and the rest to the other, in which case recovery should be limited to the amount due to the supplier.
(Emphasis added).
Ultimately, the court compared the hypothetical scenario discussed in Official Comment 2 to the facts of this case and concluded that appellant, as a co-payee on the check, was required, at the outset, to prove its actual interest in the proceeds of the check:
Other than we have a few more parties than just the building contractor and the building supplier, that’s the situation that we have here. I have no idea what anybody’s interest is in the proceeds and I note that I did grant a motion in limine on the deposition responses of Mr. McAllister. There could have been other ways to try to prove what other people’s interests were, but that was not done. I don’t know in this instance what the damages were. They might have been 100—they probably were—but the Court cannot guess or speculate as to the possible damages and that, I mean it’s just word for word right out of the comment that there is no proof of what, what the interest is. Therefore I don’t find an [sic], damages are an essential part of any cause of action and the Defendant has no obligation to prove damages. It’s the Plaintiffs obligation to prove each and every element of, of an offense and there just—of, of a charg—of a count. And there’s just no evidence of that.
(Emphasis added).
i
C.L. § 3-420(b)
The specific provision of C.L. § 3-420 that we are called upon by appellant to construe is subsection (b), which provides:
In an action under subsection (a), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiffs interest in the instrument.
Appellant asks us to hold that C.L. § 3-420(b) establishes a rebuttable presumption that the measure of liability is the amount payable on the check and that this rebuttable presumption applies equally in conversion cases involving single or multiple payees. This issue appears to be one of first impression in Maryland. 28 Accordingly, resolving appellant’s claim requires us to construe various provisions of the Maryland Uniform Commercial Code.
The Court of Appeals reiterated the principles that inform this process of statutory analysis:
Although we are directed by the General Assembly to construe the Uniform Commercial Code in a manner which “makes uniform the law among the various [states]” adopting it, Md. Code (1975), Commercial Law Art., §§ 1-102(1), -102(2)(c), we nonetheless utilize, in interpreting the Code, the same principles of statutory construction that we would apply in determining the meaning of any other legislative enactment. These well settled principles require ascertainment of the legislative intent, and if, as is the case here, construction becomes necessary because the terminology chosen is not clear, then we must consider not only the significance of the literal language used, but the effect of our proposed reading in light of the legislative purpose sought to be accomplished. Unlike most state statutory enactments,the U.C.C. is accompanied by a useful aid for determining the purpose of its provisions'—the official comments of the Code’s draftsmen. While these comments are not controlling authority and may not be used to vary the plain language of the statute, they are an excellent place to begin a search for the legislature’s intent when it adopted the Code. .
Messing v. Bank of Am., N.A.,
“[W]e begin our inquiry with the words of the statute, and, when the words of the statute are clear and unambiguous, according to their commonly understood meaning, we ordinarily end our inquiry there also.”
Comptroller of the Treasury v. Kolzig,
The plain and unambiguous language of the first clause, or “presumption clause,” of C.L. § 3-420(b) establishes that, in a conversion action brought under § 3-420(a), the measure of liability is presumed to be the amount payable on the instrument. C.L. § 1-201(31) defines the terms “presumption” and “presumed” as follows:
Subject to additional definitions contained in the subsequent titles of this article which are applicable to specific titles or subtitles thereof, and unless the context otherwise requires, in Titles 1 through 10 of this article:
(31) “Presumption” or “presumed” means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence. 29
(Emphasis added). The term “presumed” in C.L. § 3-420(b) thus refers to a rebuttable presumption, which is “[a]n inference drawn from certain facts that establish a prima facie case, which may be overcome by the introduction of contrary evidence.” Black’s Law Dictionary 1224 (8th Ed. 2004). Rebuttable presumptions shift the burden of proof to the opposing party, where it remains until that party produces the quantum of evidence required to sufficiently rebut the presumption. See Maryland Rule 5-301(a) (establishing that, unless otherwise provided by statutes or the Maryland Rules, a presumption in all civil actions “imposes on the party against whom it is directed the burden of producing evidence to rebut the presumption” until “the party introduces evidence tending to disprove the presumed fact”).
Nothing in the language of the qualifying clause, or “but” clause, of C.L. § 3-420(b) indicates that this rebuttable presumption only applies to conversion claims involving a single payee. Rather, the “but” clause modifies or limits the preceding “presumption” clause by providing that “recovery may not exceed the amount of the plaintiffs interest in the instrument.” Thus, the “but” clause reinforces that the presumption established in the preceding
The party against whom the presumption is directed carries the burden of producing evidence to rebut the presumption. See Maryland Rule 5-301(a). That party is not relieved of that burden merely because the plaintiff is a co-payee amongst multiple payees. Placing the burden on the plaintiff in a multiple payee conversion claim to prove, in the first instance, the amount of his or her exact interest in the check would obviate the need for an explicit statutory presumption as to the measure of liability. It would also require us to insert meaning into the statute that is not supported by the plain language of the statute. 30
Because the language of statute of is clear and unambiguous, we may choose to end our statutory analysis of C.L. § 3-420(b) at this point.
See Maryland Div. of Labor & Indus. v. Triangle Gen. Contractors, Inc.,
Official Comment 2 explains that C.L. § 3-420(b) was amended from its predecessor statute, C.L. § 3-419(2),
31
in
order
Subsection (2) of former Section 3—419 is amended because it is not clear why the former law distinguished between the liability of the drawee and that of other converters. Why should there be a conclusive presumption that the liability is face amount if a drawee refuses to pay or return an instrument or makes payment on a forged indorsement, while the liability of a maker who does the same thing is only presumed to be the face amount?
(Emphasis added).
The second paragraph of Official Comment 2, which the circuit court quoted and upon which the court placed dispositive emphasis in ruling on appellees’ motions for judgment, does not eviscerate the “presumption” clause in multiple payee conversion actions. Rather, as the official comments explain, the “but” clause “addresses,” or speaks to, “the problem of conversion actions in multiple payee checks.” When read in the light cast by the plain language of the statute, these official comments explain that, where the issue of a co-payee’s limited interest in the instrument has been generated by the opposing party, i.e., where the presumption established in C.L. § 3-420(b) has been successfully rebutted by the opposing party, a co-payee cannot, under those circumstances, recover more than what the evidence demonstrates to be his or her interest in the instrument’s proceeds, absent “qualification,” or evidence, adduced by the co-payee plaintiff establishing his or her entitlement to a larger portion of the proceeds. The discussion in Official Comment 2 regarding the respective interests of a hypothetical building contractor and a supplier, as co-payees, in the amount of the check merely provides one scenario illustrative of C.L. § 3-420(b). It does not, and cannot, vary the plain language of the statute.
ii
Other Jurisdictions
Because the General Assembly has mandated that the Commercial Code be “liberally construed and applied to promote its'underlying purposes and polices,” C.L. § 1-102(1), which includes making “uniform the law among the various jurisdictions,” C.L. § l-102(2)(c), we have looked to other jurisdictions to determine how they have applied the Uniform Commercial Code’s presumption as to the measure of liability in conversion actions in claims involving multiple payees. We have come across only a handful of reported opinions that are instructive.
Appellant asks us to consider two cases construing conversion claims under the predecessor statute to C.L. § 3-420, or its
Appellant also asks us to consider the holding in
Northwestern Nat’l Life Ins. Co. v. Laurel Fed. Sav. Bank,
Edwards v. Allied Home Mortg. Capital Corp.,
The Supreme Court of Alabama construed Alabama’s counterpart to C.L. § 3-420(b), along with the official comment upon which the circuit court placed heavy emphasis, and rejected Allied’s argument that the official comment restricted the qualifying clause, or “but” clause, to circumstances involving multiple payee checks:
Allied’s arguments on the compensatory-damages issue are not well-founded. The trial court should not have prohibited Edwards from arguing to the jury that Allied’s interest in the converted checks was less than their face value. This Court is bound by rules of statutory construction “to interpret the language of [a statute] to mean exactly what it says and to give effect to the apparent intent of the legislature.” IMED Corp. v. Systems Eng’g, Assocs. Corp.,602 So.2d 344 , 349 (Ala.1992). The first clause in § 7-3-420(b) states that the measure of liability is presumed to be the amount payable on the instrument. Although the statute creates that presumption, the plain language in the clause that immediately follows the first clause indicates that the measure of liability is not equal to the face amount if the “recovery ... exceed[s] the amount of the plaintiff’s interest in the instrument.” The Official Comment to § 7-3-420(b) states that the purpose of that qualifying clause is to “prevent ... a plaintiff [with no interest or little interest in the proceeds of the check] from receiving a windfall.” That Comment concludes that the amount of recovery for conversion of a check could be “depend[ent] upon [a] contract” between the parties.
Section 7-3-420(b), Ala.Code 1975, creates a rebuttable presumption that the amount of compensatory damages for conversion of a negotiable instrument is the face value of the instrument. Here, Allied presumptively established that Edwards’s liability for her conversion of checks payable to Allied was $ 425,309 (ie., the face value of the converted checks). Edwards rebutted that presumption, however, when she presented testimony that, considering the rights of the parties in the agreement, Allied’s “interest” in those checks was $ 64,467—the aggregate corporate fee Allied would have earned had Edwards delivered the closing checks she had retained to Allied.
Id. at 205-06.
Because Edwards rebutted the statutory presumption by presenting testimony regarding
The opinion articulated
Am. State Bank v. Union Planters Bank, N.A.,
When one payee indorses a check that is payable jointly to two payees, and a bank pays the indorsing payee without the other’s consent, Article 3 of the Arkansas Uniform Commercial Code provides that the bank is liable for conversion to the non-consenting payee. In this situation, “the measure of liability is presumed to be the amount payable on the instrument.” ARK. CODE ANN. § 4-3-420(b) (emphasis added). The appeal in this diversity case raises the difficult question whether the bank’s liability under Arkansas law is limited to the actual harm to the co-payee caused by the conversion.
Id. at 534.
American State Bank (ASB) of Arkansas granted a $425,000 revolving line of credit to a partnership, secured by liens on the partnership’s crops and agricultural subsidy payments received by the partnership. Id. at 535. Between October 1999 and April 2000, a partner indorsed twenty-four checks totaling $262,330.76 and deposited the proceeds into the partnership’s account at Union Planter’s Bank (UPB) of Tennessee. Id. Although each check was jointly payable both to the partnership and ASB, reflecting ASB’s liens, UPB paid the checks solely on the partner’s indorsement. Id. The partner ultimately withdrew these proceeds from the partnership account and lost the money in his gambling ventures. Id. ASB subsequently sued UPB for conversion. Id.
In response to ASB’s motion for summary judgment, submitted in ASB’s conversion action against UPB, UPB presented evidence that, notwithstanding the partner’s misconduct, ASB extended the term of its secured loan to the partnership and was eventually repaid for a substantial amount of the loan. Id. Nevertheless, the district court granted summary judgment in favor of ASB, awarding ASB damages totaling the face amount of the converted checks. Id. On appeal, UPB conceded its liability for conversion, but argued that the measure of its liability should be restricted to ASB’s actual damages, adding that genuine issues of material fact on the damages issue rendered summary judgment inappropriate. Id.
The Eighth Circuit Court of Appeals agreed with UPB. Addressing the issue of whether “UPB’s evidence of reduced actual harm, if believed, [was] legally sufficient to rebut the presumption in § 3-420(b) that UPB is liable for the face amount of the checks,” id., the Eighth Circuit reflected on the relevant statutory presumption:
“Ordinarily, the proper measure of damages for conversion of property is the market value of the property at the time and place of its conversion.”McQuillan v. Mercedes-Benz Credit Corp., 331 Ark. 242 ,961 S.W.2d 729 , 733 (Ark.l998).[ 34 ] su fpjluS) ft js sensible to create a statutory presumption that the value of a converted check or other negotiable instrument is its face amount. And it is apparent that the UCC drafters had this issue in mind in creating the presumption.
Id. at 535-36. The Eighth Circuit observed that the cases relied upon by both parties in support of their arguments construed the irrebuttable presumption that applied to actions against drawee banks under the predecessor statute and concluded that “there is no ‘prevailing view’ as to whether a bank’s liability is limited to the plaintiffs actual loss, despite the presumption in § 3—420(b).” Id. at 536-37. Rather, according to the Eighth Circuit, “courts applying the UCC have determined when and how the presumption may be rebutted in accordance with more general state law damage principles, which of course vary from State to State.” Id. at 537.
Arkansas state law provided that, even under the former irrebuttable presumption, a drawee bank could not be liable to the extent that the money actually reached the intended payees. Id. at 537. Thus, the Eighth Circuit concluded that “the § 3-420(b) presumption may be rebutted by evidence that the proceeds of converted checks in fact found their way to the intended recipient(s).” Id. at 537. The Eighth Circuit made no distinction between cases involving a single payee or multiple payees. The inquiry, rather, focused on the ability of a defendant in a conversion claim to rebut the statutory presumption by producing evidence of the plaintiffs actual loss. The Eighth Circuit determined that it could not rule, as a matter of law, that the payments received by ASB from the partnership were from a source sufficiently collateral to the conversion warranting a “double recovery” by ASB. 35 Id. at 538. The judgment of the district court was thus reversed and the case remanded for further proceedings. Id.
The decisions discussed supra collectively reinforce our holding that the plain language of C.L. § 3-420(b) creates a presumption that the measure of liability in a conversion claim, whether that claim involves multiple payees or single payees, is the full amount payable on the instrument—a presumption that may be rebutted by the introduction of evidence that the plaintiffs interest is, in fact, less- than that full amount. When the C.L. § 3—420(b) presumption is so rebutted, a factual question is created as to the extent of the plaintiffs damages for conversion of the instrument, unless the court concludes that the evidence is legally insufficient or so conclusive that it rebuts the presumption as a matter of law. See Md. Rule 5-301(a).
Before ending our discussion of this issue, we must address various arguments that have been raised by the parties in anticipation of our interpretation of C.L. § 3-420(b).
■ Appellant asserts that, even if it was required to prove its interest in the amount payable on the check, it satisfied that burden by entering into the record, by stipulation, a copy of the insurance policy, which provided that any loss payable under the policy would be paid to the mortgagee and the insured, as their interests appear. The insurance policy further provided that, if more than one mortgagee is named, “the order of payment will be the same as the order of precedence of the mortgages.” According to appellant, it had priority to the insurance proceeds over American General, the second named mortgagee and loss payee. 37 In addition, McAllister testified that appellant was the servicer for the first lien holder and responsible for obtaining the insurance money paid by Joint Insurance on the insurance claim. 38
Appellant also insists that it had a superior right to the check proceeds over the insureds, who would only be able to recover any balance in excess. Because a default judgment was entered against Harrison and Siegel, appellant posits that they effectively waived their right to oppose appellant’s right to recover the check proceeds. In addition, according to appellant, because it was the only payee that did not endorse the check, it “retained the sole
Appellant is not required to prove the extent of its interest in the instrument unless appellees have sufficiently rebutted the C.L. § 3-420(b) presumption as to the measure of liability. We cannot determine whether appellees adduced evidence at trial sufficient to rebut this presumption and, if so, whether appellant has presented sufficient evidence demonstrating its interest in the check proceeds, without resolving certain factual disputes and weighing the evidence, particularly as it pertained to whether appellant was entitled to collect all, some or none of the insurance proceeds. In ruling on appellees’ motions for judgment, the circuit court made no specific factual findings on these issues. The circuit court, having observed the presentation of appellant’s case-in-chief, is in the best position to make these factual determinations.
Accordingly, we shall reverse the judgment of the circuit court and remand for a new hearing on appellees’ motions for judgment as to appellant’s conversion claims. Appellant, in its case in chief, presented evidence that appellees “made or obtained payment” of the $140,000 check issued by Joint Insurance Association, which appellant, as a co-payee, neither indorsed nor authorized to be indorsed on its behalf. In other words, appellant presented evidence that Middleburg Bank and Chesapeake Bank “ma[de] or obtainfed] payment with respect to the instrument for [co-payees] not entitled to enforce the instrument or receive[d] payment.” C.L. § 3-420(a.) By virtue of appellant’s prima facie showing of conversion pursuant to § 3-420(a), on remand, the circuit court shall, in the first instance, accord to appellant the statutory presumption set forth in C.L. § 3-420(b), i.e., that, as a matter of law, appellant’s damages are presumed to be the face amount on that check. The burden then shifts to appellees to demonstrate that the evidence adduced during the presentation of appellant’s case-in-chief establishes that appellant’s interest in the instrument is less than the amount payable on the instrument. C.L. § 3-420(b).
In the event that the circuit court, upon consideration of the evidence and argument of counsel, determines that the statutory presumption has not been rebutted by appellees, appel lees’ motions for judgment, based on the grounds that appellant did not prove its damages, must fail. The circuit court should then permit appellees, in their case, to present evidence of appellant’s actual interest in the instrument. Consequently, in the event that the court denies appellees’ motions for judgment because they have failed to rebut the presumption that their liability is the amount payable on the instmment pursuant to C.L. § 3-420(b), they would nevertheless be afforded the opportunity, during the presentation of their cases, to rebut the presumption.
Alternatively, assuming that the circuit court determines that appellees
have sufficiently rebutted
the statutory presumption, the burden then shifts to appellant to prove its actual interest in the instrument; the court, upon the failure on the part of appellant to prove its actual interest in the instrument, would be constrained to grant appellees’ motion for judgment. Appellant, however, will only be permitted to premise its opposition to appellees’ motion for judgment on the evidence it adduced in its case-in-chief. Should appellant be successful in establishing a
prima facie
case
C
Appellant’s Motion for Judgment on Conversion Claims
After the circuit court granted appellees’ motion for judgment, appellant asked the circuit court to grant judgment in favor of appellant on the conversion counts:
Your Honor, with respect to the conversion claim, we were—what we would request on [appellant’s] behalf is the Court does have a, an equitable jurisdiction here and the Court made clear even from the, the, the justification for the, the Court’s decision that it is quite possible if not probable that [appellant] would be entitled to something, some portion of this check. So what we were thinking would be the best idea would be if the Court could have a judgment entered on conversion that was in, was applicable to all four of the payees on this check and that the payees could then have a, an opportunity to discuss with each other exactly who had what interest. And the reason that I say that is that if the problem here, if the only problem here is that there hasn’t been enough evidence to show who has what interest in the check, the Court has just provided a windfall to the party that converted the check to save somebody who may or may not also have an interest in the check and that can easily be resolved by just having the money paid into the registry of the court and then [appellant], American General, and the two individual payees can then have either an informal discussion or if necessary, ah, a show cause proceeding that could then divide up the interest accordingly. Because we do believe that there is a conversion that occm~red here and the fact that Saxon has not shown in the Court’s view the correct proportion of the total check proceeds is probably not a good result when it is clear that the check has been converted.
(Emphasis added). The circuit court responded, “I don’t have any basis to amend on that basis. Note your request, but it’s denied.” Appellant argues that the circuit court erred by declining to grant judgment in favor of appellant as to its conversion claims against appellees.
C.L. § 8—110(d) provides that an instrument made payable to two more persons, jointly and not alternatively, is payable to all of the named payees and may only be negotiated or enforced if the payees act jointly. Official Comment 4 to C.L. § 3-110 explains that “[i]f an instrument is payable to X and Y, neither X nor Y acting alone is the person to whom the instrument is payable,” such that neither X nor Y, acting alone, can be considered the holder or a person entitled to enforce or negotiate the instrument. In this instance, the check was made jointly payable to “Paula Harrison
and
Steven Siegel
and
Saxon Mortgage Service and American General Financial Services, its Successors and/or Assigns, ATIMA.” (Emphasis added).
See generally Dynalectron Corp. v. Equitable Trust Co.,
C.L. § 3-420(a) provides that an instrument is converted “if ... a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce
Prior to trial, the parties stipulated that, although the check was payable jointly, appellant never indorsed the check nor did it authorize any person to do so. The parties further stipulated that Middleburg Bank, as the depositary bank, did not contact either appellant or JIA to verify the authenticity of the word “Saxon,” which appeared on the check as appellant’s purported indorsement. Rather, when presented with the check, Middleburg Bank deposited the proceeds into the account of the Dunlap Firm and delivered the check to its intermediary bank. The check was ultimately presented to Chesapeake Bank, the drawee bank, which electronically debited $140,000 from JIA’s account and credited that amount to the Middleburg Bank account. On May 20, 2005, Middleburg Bank credited $140,000 to the Dunlap Firm’s account.
In sum, a check in which appellant claims an interest was taken for deposit (in the case of Middleburg Bank) and paid (in the case of Chesapeake Bank) upon a forged indorsement and without appellant’s consent. Although there is, thus, no dispute as to many of the facts essential to appellant’s conversion claim, final judgment cannot be entered on appellant’s motion for judgment until the circuit court resolves the damages question. Moreover, because appellant’s argument in support of its motion for judgment focused almost exclusively on resolving the issue of damages, and because the circuit court appeared to have denied appellant’s motion for judgment on those grounds, appellees were not afforded the opportunity to present any argument against appellant’s contention that appellees were liable for conversion as a matter of law. There may be defenses that appellees are able to assert that, on this record, we are unable to discern.
Accordingly, we reverse the judgment of the circuit court insofar as it determined that appellees were not liable on appellant’s conversion claims because damages
Ill
Motion for Judgment—Negligence Claim
In its motion for judgment, Middleburg Bank asserted that appellant had failed to provide any evidence regarding the standard of care governing Middleburg Bank, the sole bank against whom a negligence count was brought, which actually went to trial. Appellant countered that an expert was not required to establish Middleburg’s duty of care and emphasized that the check included express instructions that all payees must endorse the check exactly as their names appeared therein. According to appellant, the fact that Middle-burg Bank accepted the handwritten word “Saxon” as appellant’s indorsement, while the check was made payable to “Saxon Mortgage Services,” demonstrated that Middleburg Bank failed to act reasonably in taking the check for deposit. After granting appellees’ motions for judgment on appellant’s conversion claims, the circuit court turned to the negligence claim and ruled as follows:
As to the negligence count. One, you need damages for negligence count as well and there’s no evidence once again of damages, and two, there is absolutely no evidence of what the standard is for [the] reasonable banking industry. Therefore, I’m granting the mo—granting judgment for Middleburg Bank on the negligence count as well.
(Emphasis added).
On appeal, appellant argues that the circuit court erroneously granted Middleburg Bank’s motion for judgment on the negligence claim on the grounds that appellant failed to offer any evidence of banking industry standards through expert testimony. Middleburg Bank counters that expert testimony was required to establish what banking practices, procedures and standards governed its conduct, because those matters are beyond the ordinary knowledge of laypersons.
We initially observe that the circuit court’s ruling did not expressly mention the absence of expert testimony as the basis for its judgment. However, the necessity vel non of such testimony, in order to establish the applicable standard of care, was argued by both appellant and Middleburg Bank. Moreover, neither party has argued that the circuit court did not base its ruling on the lack of expert testimony. Based on our review of the record, we discern that the circuit court’s conclusion that there was “absolutely no evidence of what the standard is for the reasonable banking industry” referred both to (1) the absence of expert testimony specifically establishing a banking industry standard and (2) the general need to establish a banking industry standard prior to determining that Middleburg Bank failed to exercise the appropriate degree of commercial reasonableness required under the circumstances.
Certainly, a plaintiff alleging a bank’s negligence “must show that a defendant failed to exercise that degree of care which a reasonably prudent bank would have exercised under the same or similar circumstances.”
Jacques,
Nonetheless, in
Free State Bank & Trust Co. v. Ellis,
Although there may be situations that necessitate expert testimony relative to the standard of care required of a bank in dealings with customers, this case is not of that category. Certainly, no expert testimony was needed to show that banks do not ordinarily release the collateral of a customer and take in substitution thereof a paper writing which is not collateral, and which does no more than allow the bank to collect monies due on the collateral and credit it to the account of another. No expert testimony is needed to show the jurors that banks do not ordinarily release a deed of trust that secures a $200,000 promissory note payable to the bank’s customer and which has been assigned to the bank as collateral for the customer’s loan, and accept as substitute collateral a note secured by a deed of trust, payable to a party other than the bank’s customer, and which is not even assigned to the bank, except, for all practical purposes, for collection. No expert testimony is needed to demonstrate to the jury that by doing what it did in the instant case, the Bank stripped its customer of his security for a $200,000 loan to another party.
Id.
at 163,
We think that even if expert testimony is ordinarily, needed to prove the standardof reasonable care used by banks in the community in its dealings with its customers, the case now before us is of the type that the average juror would know without expert testimony that banks simply do not ordinarily do what the Appellant Bank did in this case.
Id.
at 164,
Similarly, we conclude that the facts of this case are not of the category requiring expert testimony establishing a “bank
ing industry practice” in order for the circuit court to determine whether Middleburg Bank breached its duty of care to appellant relative to its payment on the instrument despite the forged indorsement. The check itself contained the following instruction on the back of the check above the indorsement lines: “All Payees must endorse below exactly as written on face of check.” Appellant was designated as a payee, on the face of the check, as “Saxon Mortgage Service.” The forged indorsement, however, consisted of one word: “Saxon.” In addition, Lisa Kilgore, Middleburg Bank’s Senior Vice President of Operations, testified as to the contents of what she characterized as “an internal document used for training purposes.” According to these training guidelines, a payee should endorse its name exactly as it appears on the front of the check.
See generally Inventory Locator Service, Inc. v. Dunn,
Kilgore also testified that “Saxon appears as an endorsement on the check as a business and abbreviations of businesses are common practice in endorsements for checks.” The circuit court was entitled to weigh this testimony against the other evidence adduced at trial to determine whether appellant proved that Middleburg Bank breached a duty to appellant in this case. Nonetheless, the circuit court granted Middleburg Bank’s motion for judgment on the negligence claim on the grounds that there was “absolutely no evidence of what the standard is” for the banking industry, following argument during which Middleburg’s position on this point was that appellant had presented no evidence regarding the applicable standard of care. Appellant was required to show that Middleburg Bank failed to exercise “that degree of care which a reasonably prudent bank would have exercised under the same or similar circumstances,”
Jacques,
We now turn to the lingering issue of damages. Appellant, in its brief to this Court, neglected to challenge the circuit court’s ruling that there was no proof of damages as to the negligence claim. In fact, appellant first addresses this ruling in its reply belief. Ordinarily, we will not consider issues raised for the first time in a reply brief.
Gazunis v. Foster,
COSTS TO BE PAID ONE-HALF BY APPELLANT, ONE-FOURTH BY APPELLEE MIDDLEBURG BANK AND ONE-FOURTH BY APPELLEE CHESAPEAKE BANK.
Notes
. Chesapeake Bank filed a motion in this Court to dismiss appellant's appeal, arguing that the judgments from which appellant appealed were neither final nor appealable, in light of Chesapeake Bank's pending cross claim against Middleburg Bank. Chesapeake Bank further argued that an August 8, 2008 order by the circuit court granting appellant’s Motion for a Determination of Order of Final Judgment Nunc Pro Tunc was erroneously issued. On November 10, 2008, we denied Chesapeake Bank's motion without prejudice to seek such relief in its brief to this Court, which Chesapeake Bank has declined to do.
. Appellant’s questions were originally phrased as follows:
1. Whether the circuit court correctly denied [appellant’s] complaint for conversion against [appellees] because [appellant] allegedly failed to present evidence of damages.
2. Whether the circuit court correctly denied [appellant's! motion for judgment against [appellees] for liability for conversion.
3. Whether the circuit court erred by granting Middleburg Bank's motion for judgment on [appellant’s] negligence claim because [appellant] did not offer evidence of banking industry standards by expert testimony.
4. Whether the circuit court abused its discretion in entering the order in limine and in denying [appellant's] motion for reconsideration of the order in limine.
. Unless otherwise specified, our discussion of the Commercial Law Article shall refer to Md. Code (2002 Repl. Vol., 2008 Supp.), Commercial Law (C.L.).
. C.L. § 3-103(a)(3) defines “drawer" as “a person who signs or is identified in a draft as a person ordering payment." See also C.L. § 3-104(f)(i) (defining “check" as “a draft, other than a documentary draft, payable on demand and drawn on a bank”).
. Pursuant to C.L. § 4-105(2), a depositary bank is the first bank to take an item, even though it is also the payor bank, unless the item is presented for immediate payment over the counter.
See also Chicago Title Ins. Co. v. Allfirst Bank,
. A “payor bank” is the bank that is the drawee of a draft. C.L. § 4-105(3). A “drawee” is defined as a “person ordered in a draft to make payment.” C.L. § 3-103(a)(2).
. For the sake of simplicity, we shall hereafter refer to both the deed of trust and the note as the “mortgage” on the property. Although mortgages and deeds of trust are different types of instruments, they are often treated the same for purposes of appellate review.
See Legacy Funding LLC v. Cohn,
. Appellant's complaint was subsequently amended on September 26, 2007.
. These "topics” were expressly set forth in an exhibil to Middleburg Bank's Notice of Deposition. In addition, in Interrogatories 1 (i) through (v) of Defendant Middleburg Bank's First Set of Interrogatories, appellant's request to "identify each person with knowledge or information concerning” the aforementioned "topics” merely restated the first five of those "topics” verbatim. Middleburg Bank’s first set of requests for production of documents further asked appellant to produce documents referred to by appellant in answering these interrogatories.
. Tlie provisions of this federal statute are not set forth or explicated in the written submissions to this Court. For reasons that shall soon become clear, we need not address the applicability of the federal statute to this case.
. This order was entered on August 13, 2007.
. The motion was filed on August 6, 2007, which was the deadline for filing the motion for summary judgment established in the circuit court's scheduling order.
. Appellant inexplicably has failed, in its submissions, to bring to our attention the existence of this initial affidavit by McCreary. Nor did appellees, in their response, allude to this critical fact. It was only through our review of the voluminous record that we learned of the existence of this initial affidavit. The timing and substance of McCreary's first affidavit are bolh relevant and material to our analysis.
. Chesapeake Bank filed an additional motion in limine on October 9, 2007, repeating the arguments raised in its previous motion.
. Appellant first filed an "Opposition to Defendant Joint Insurance Association and Chesapeake Bank’s Motion in Limine'" on September 26, 2007. Appellant's opposition to Middleburg Bank's motion in limine was filed on October 23, 2007. The above-excerpted passage was taken from appellant's September 26, 2007 filing.
. Appellant's counsel subsequently clarified that McAllister testified at the deposition and McCreary authored the affidavit. The circuit court was apparently not aware of the first McCreaty affidavit.
. On appeal, appellant challenges only the decision to deny the affidavit and we shall focus on that accordingly.
. Topic 11 identified in Middleburg Bank's notice of deposition indicated that Middleburg Bank would depose appellant’s corporate repre sentative as to appellant’s purported damages. At the deposition, McAllister was asked if he was aware of any damages incurred by appellant as a result of the fire. He responded that he was not.
. Similarly, in
Dorsey
v.
Nold,
Just as there are sanctions for the violation of the discovery rules, sanctions are available for the violation of directives in scheduling orders, although they are not specified in any rule.
See Manzano v. Southern Md. Hospital,
. Although
Taliafeno
was a criminal case, we have previously concluded that these factors are applicable in civil cases and that “absent cases involving extraordinarily complex litigation, the factors must be given considerable weight.”
Lowery,
. At least one other federal court lias disagreed with the holding announced in Rainey.
See, e.g., A.I. Credit Corp. v. Legion Ins. Co.,
. Middleburg Bank’s notice of deposition requested information regarding “[appellant’s! purported damages, including any claim for attorney's fees and costs.” In its Motion for Protective Order, appellant did not identify this topic as subject to the alleged privacy provisions of the federal statute. McAllister was asked at his deposition if he was aware of the damages incurred by appellant in this case. Appellant’s counsel posed no objection to the question and never argued, in relation to those damages questions, that this information was privileged or protected. McAllister responded that he was unaware of the damages suffered by appellant.
. The circuit court, in the sound exercise of its discretion, discussed only those factors it deemed essential to its opinion. "When a court exercises its discretion by balancing and weighing the rights, interests, and reasons of the parties, the court is not required to discuss each factor considered.”
Hossainkhail,
. Appellant does not specifieally a11ack that portion of the order that precluded the use of evidence inconsistent with McAllister’s deposition testimony.
. At his deposition, McAllister testified that a January 31, 2006 "broker’s price opinion” (BPO) report stated that there had been a fire at the home, such that only the foundation remained, and valued the remaining land at $50,000. McAllister also testified that a February 13, 2005 “broker’s price opinion” valued the two-story house on the property at $215,000.
. We recognize that the court sustained objections to questions asked by appellant's counsel, on redirect examination, regarding whether there was property damage from the fire and whether repairs were made on the property after the fire. Those matters, however, are sufficiently distinct from the narrow issue of whether appellant could testify to the value of the property before and after the fire. Furthermore, the former objection was sustained on hearsay grounds, while the latter was sustained on the grounds that it exceeded the scope of redirect. The court’s in limine order, in other words, was neither argued by counsel nor relied upon by the court in the context of these particular questions.
. Rule 8-131(c) provides that, in an appeal from an action tried without a jury, we review the judgment of the trial court on both the law and the evidence and will not set aside the trial court’s judgment on the evidence unless it is clearly erroneous, giving due regard to the opportunity of the trial court to judge the credibility of the witnesses.
. Although appellant cites to
Peoples Nat’l Bank of Maryland v. Am. Fidelity Fire Ins. Co.,
. Section 3-103(d) of the Maryland Uniform Commercial Code establishes that Title 1 of the Maryland Uniform Commercial Law Code contains “general definitions and principles of construction and interpretation applicable throughout this title.”
. Other provisions in the Code reinforce our conclusion that the drafters would have expressly exempted multiple payee conversion actions from the presumption established in C.L. § 3-420(b) if that had, in fact, been their intent. For example, C.L. § 3-308, which addresses the required proof of signatures and status as a holder in due course in a negotiable instruments claim, provides in subsection (a):
In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature. If an action to enforce the instrument is brought against a person as the undisclosed principal of a person who signed the instrument as a party to the instrument, the plaintiff has the burden of establishing that the defendant is liable on tire instrument as a represented person under § 3-402(a).
(Emphasis added).
. The predecessor statute, Md. Code Ann. (1992 Repl. Vol., 1995 Supp.), C.L. § 3-419, provided:
(1) An instrument is converted when
(a) A drawee to whom it is delivered for acceptance refuses to return it on demand; or
(b) Any person to whom it is delivered for payment refuses on demand either to pay or to return it; or
(c) It is paid on a forged indorsement.
(2) In an action against a drawee under subsection (1) the measure of the drawee's liability is the face amount of the instrument. In any other action under subsection (1) the measure of liability is presumed to be the face amount of the instrument.
(3) Subject to the provisions of Titles 1 through 10 of this article concerning restrictive indorsements a representative, including a depositary or collecting bank, who has in good faith and in accordance with the reasonable commercial standards applicable to the business of such representative dealt with an instrument or its proceeds on behalf of one who was not the true owner is not liable in conversion or otherwise to the true owner beyond the amount of any proceeds remaining in his hands.
(4) An intermediary bank or payor bank which is not a depositary bank is not liable in conversion solely by reason of the fact that proceeds of an item indorsed restrictively (§§ 3-205 and 3-206) are not paid or applied consistently with the restrictive indorsement of an indorser other than its immediate transferor.
. C.L. § 3-420(c) now excludes depositary banks from this affirmative defense.
. The District Court later determined, after briefing by the parties, that the defendant did not introduce such evidence as would support a finding that the plaintiff was entitled to less than the face amounts of the checks and ordered summary judgment in plaintiff's favor.
See Northwestern Nat’l Life Ins. Co. v. Laurel Fed. Sav. Bank,
. Similarly, the measure of damages in Maryland in an action for conversion of personal property is the fair market value of the property at the time of conversion, along with the legal interest that accrues from the time of the conversion to the date of the verdict.
Keys v. Chrysler Credit Corp.,
. The Eighth Circuit explained that, under the "collateral source" rule, “[a plaintiff's] recoveries from collateral sources do not redound to the benefit of a tort feasor, even though double recovery for the same damage by the injured party may result,” if "the third-party payment [is] wholly independent of the tort feasor.”
. Appellees, citing to
Rent-A-Car Co. v. Globe. & Rutgers Fire Ins. Co.,
. As we have explained, die insurance policy identified appellant as the "first mortgagee and/or loss payee” and American General "and its successors [sic] and/or assigns, ATIMA,” as the "second mortgagee and/or loss payee.”
. Appellant also argues that the circuit court erroneously prevented McAllister from testifying that Harrison owed over $140,000 on the mortgage or that the extent of damage caused by the fire exceeded $140,000. We have held that the circuit court's ruling on the motions in Limine was proper. We decline to further address this issue.
. The Court of Appeals also recognized, however, that
[t]he exposure created by this strict or absolute liability is somewhat mitigated by § 3-419(3), which limits the liability of a bank to the proceeds that remain in the bank’s hands, if the bank establishes (1) that it acted in good faith and (2) that it acted “in accordance with the reasonable commercial standards applicable to the business.”
A representative, other than a depositary bank, who has in good faith dealt with an instrument or its proceeds on behalf of one who was not the person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.
. In its appellate brief, appellant states that the "exact issue” presented to this Court,
i.e.,
whether appellant was required to introduce expert testimony to prove reasonable banking industry standards in order to succeed in its claim against Middleburg Bank, was addressed in
Citizens Bank of Maryland v. Maryland Indus. Finishing Co.,
whether, for the purposes oí a conversion action under Maryland Code (1975, 1992 Rep. Vol.), § 3-419 of the Commercial Law Article, an agent’s indorsement on checks payable to the agent’s principal were unauthorized (1) when the agent indorsed the checks with an improper motive or later misappropriated the checks, or (2) when the agent omitted restrictive language required by the principal to be part of the indorsement.
Id.
at 452,
In our decision in
Maryland Indust. Finishing Co. v. Citizens Bank of Maryland,
The Court of Appeals did not squarely address this issue, but did observe, in a footnote, that we had erroneously determined that the trial
court’s comments regarding the burden to establish industry standards related to the conversion claim, when, according to the Court, they actually referred to a negligence claim that was also litigated at trial.
Citizens Bank,
It is evident that Citizens Bank, supra, does not address the "exact issue" that we now discuss. In any event, appellant, in its reply brief, is notably less fervent about the applicability of Citizens Bank.
. Appellant argues that a plaintiff must prove actual damages in order to obtain recovery in a negligence action.
See Johnson v. Valu Food, Inc.,