as been no analysis of whether, as to any given fiduciary relationship, the tort would duplicate existing remedies at law or would eliminate, as in the case of trustees, the nearly complete exclusivity of equitable jurisdiction. There has been no analysis of the effect of the new
tort on the probate area. Further recognition of the new tort would make trustees, and any other fiduciaries whose breaches are currently primarily remediable in equity, subject to potential liability for punitive damages.
* * *
Accordingly, we hold that there is no universal or omnibus tort for the redress of breach of fiduciary duty by any and all fiduciaries. This does not mean that there is no claim or cause of action available for breach of fiduciary duty. Our holding means that identifying a breach of fiduciary duty will be the beginning of the analysis, and not its conclusion. Counsel are required to identify the particular fiduciary relationship involved, identify how it was breached, consider the remedies available, and select those remedies appropriate to the client's problem. Whether the cause or causes of action selected carry the right to a jury trial will have to be determined by an historical analysis. Counsel do not have available for use in any and all cases a unisex action, triable to a jury. This Court would not preside over the death of contract by recognizing as a tort a breach of contract that was found to be in bad faith. Nor shall we preside over the death of equity by adopting [the appellant's contentions.
Id. at 713,
690 A.2d 509 (internal citations omitted) (italics in original; bold added).
The breach of fiduciary duty tort claim Lasater is pursuing is for the violation by one spouse of an alleged fiduciary responsibility to the other spouse to properly use and maintain marital funds for the benefit of the marital unit. (Although Lasater and Guttmann no longer are married, Lasater's breach of fiduciary duty claim is based upon their prior status as spouses and upon events alleged to have happened during the marriage.) Under Kann, therefore, the threshold question is whether any fiduciary duty could exist under the facts asserted, when the claimed fiduciary relationship was husband and wife.
Before we embark upon our analysis of that issue, we must disabuse Lasater of the notion, central to the arguments she makes, that the abrogation of the doctrine of interspousal immunity in Maryland compels the conclusion that breaches of marital duties now may be vindicated in this State by causes of action in tort for breach of fiduciary duty between spouses. The doctrine of interspousal immunity acted as a bar to a civil action by one spouse against the other. It operated to prevent one spouse from taking legal action against the other spouse for a civil wrong that, had it been committed by a nonspouse, would have been actionable. For example, a driver on a Maryland road owes a duty to others generally to operate his or her vehicle with care. In the days of interspousal immunity, a spouse who drove negligently, causing injury to the other spouse, could not be sued for damages, even though the negligent spouse would have been liable in tort to the injured spouse if they were not married.
The removal of the bar of interspousal immunity in Maryland means that the same injured spouse now can sue the negligent spouse in tort, just as the injured spouse could have sued any other negligent driver. It does not mean, however, that the marital relationship itself now gives rise to duties that are actionable in tort. See Doe v. Doe, 358 Md. 113, 121, 747 A.2d 617 (2000) (stating that "[a] claim of immunity is a defense. It need be reached only if the plaintiff has alleged a viable cause of action."). Accordingly, the question whether Maryland recognizes marital torts is independent of the issue of interspousal immunity To be sure, because interspousal immunity existed throughout Maryland's legal history, until the last vestiges of the doctrine were removed in 2003, the marital tort issue never could arise, as spouses could not sue each other at all. It does not follow from the abrogation of the doctrine, however, that marital torts are now cognizable in Maryland.
We return to our analysis. A fiduciary relationship sometimes is described in contrast to a confidential relationship, with which it often is confused but from which it differs. In Buxton v. Buxton, 363 Md. 634, 654, 770 A.2d 152 (2001), the Court of Appeals explained the difference between "the duties and obligations of true fiduciaries" and the duties and obligations "that may exist between any two or more people" who by their conduct enter into a confidential relationship:
Professor Scott articulates the distinction quite well. A fiduciary relationship, he observes, such as between trustee and beneficiary, guardian and ward, agent and principal, attorney and client, partners in a partnership, corporate directors and their corporation, "involves a duty on the part of the fiduciary to act for the benefit of the other party to the relation as to matters within the scope of the relation." 1 SCOTT AND FRATCHER, THE LAW OF TRUSTS [] § 2.5 [(4th ed. 1988)]. That is not necessarily the case with respect to persons in a confidential relationship. Scott and Fratcher note:
"A fiduciary relation is to be distinguished from a merely confidential relation. A confidential relation exists between two persons when one has gained the confidence of the other and purports to act or advise with the other's interest in mind. A confidential relation may exist although there is no fiduciary relation; it is particularly likely to exist where there is a family relationship. . . . A fiduciary relation involves certain consequences as to transactions between the parties that flow automatically as a matter of law from the relation. . . . On the other hand, where there is merely a confidential relation between the parties, such consequences do not automatically follow."
Buxton, supra at 654-55,
770 A.2d 152 (quoting 1 SCOTT FRATCHER, THE LAW OF TRUSTS,
supra, § 2.5).
As the above makes evident, in Maryland, a husband and wife are not true fiduciaries, as a matter of law, absent an agreement establishing that relationship. More over, Maryland law also makes plain that a husband and wife are presumed not to occupy a confidential relationship. Upman v. Clarke, 359 Md. 32, 42, 753 A.2d 4 (2000); Bell v. Bell, 38 Md.App. 10, 13-14, 379 A.2d 419 (1977). The Court in Upman explained that, while there are some relationships that are presumed confidential, "[o]therwise, and particularly in family relationships, such as parent-child and husband-wife, the existence of a confidential relationship is an issue of fact and is not presumed as a matter of law." 359 Md. at 42, 753 A.2d 4.
In at least nine states, spouses are considered to occupy a fiduciary relationship: Arizona ( Mezey v. Fioramonti, 204 Ariz. 599, 608, 65 P.3d 980 (Ariz.Ct.App. 2003), overruled on other grounds by Bilke v. State, 206 Ariz. 462, 80 P.3d 269 (Ariz. 2003)); California (Cal. Fam. Code §§ 1100(e), 1101 (West 2004)); Idaho ( Compton v. Compton, 101 Idaho 328, 612 P.2d 1175, 1182-83 (1980)); Louisiana (La. Civ. Code Ann. arts. 2354, 2369 (2009)); Nevada ( Williams v. Waldman, 108 Nev.466, 836 P.2d 614, 618 (1992)); New Mexico ( Roselli v. Rio Cmtys. Sen. Station, Inc., 109 N.M. 509, 513-14, 787 P.2d 428 (N.M. 1990)); Oregon ( Dunkin v. Dunkin, 162 Or.App. 500, 507-08, 986 P.2d 706 (Or.Ct.App. 1999)); Texas ( Knight v. Knight, 301 S.W.3d 723, 731 (Tex.App. 2009)); and Washington ( In re Marriage of Maison, 107 Wash.2d 479, 484, 730 P.2d 668 (Wash. 1986)). The majority of these states are community property, as opposed to equitable distribution, states. See Wilkinson v. Wilkinson, 905 So.2d 1, 8-10 n. 2 (Ala.Civ.App. 2004) (cataloguing the equitable distribution and community property states).
Before ratification of the Maryland Equal Rights Amendment in 1972, Maryland law presumed that in any marriage "a husband was the dominant party in marital situations," Tedesco v. Tedesco, 111 Md.App. 648, 666, 683 A.2d 1133 (1996), and wielded final decision-making authority in financial (and other) matters. See, e.g., Manos v. Papachrist, 199 Md. 257, 262, 86 A.2d 474 (1952) (discussing the "natural dominance of the husband over the wife"); Cannon v. Cannon, 156 Md.App. 387, 412-13, 846 A.2d 1127 (2004), aff'd by 384 Md. 537, 865 A.2d 563 (2005). Thus, cases decided during that time describe the spousal relationship as "confidential." See e.g. Richardson v. Richardson, 17 Md.App. 665, 683-84, 304 A.2d 1 (1973) (observing that husband and wife occupy a confidential relationship and duty of mutual candor between them). After passage of the Maryland ERA, the presumption of dominance no longer could stand. Bell, supra, 38 Md.App. at 13-14, 379 A.2d 419. See also Eckstein v. Eckstein, 38 Md.App. 506, 511, 379 A.2d 757 (1978). Now, it is well established that one spouse does not have authority over the other spouse. Neale v. Wright, 322 Md. 8, 18-19, 585 A.2d 196 (1991).
By contrast, in some states, the spousal relationship is presumed to be a confidential one. See, e.g., Florida ( Beers v. Beers, 724 So.2d 109, 117 (Fla.Dist.Ct.App. 1998)); North Carolina ( Smith v. Smith, 113 N.C.App. 410, 438 S.E.2d 457, 459 (1994)); South Dakota ( Jeffries v. Jeffries, 434 N.W.2d 585, 587-88 (S.D. 1989)); Virginia ( Grow v. Grow, 2000 WL 84438, at *1-2, 2000 Va.App. LEXIS 32, at *4 (Va.Ct.App. 2000)).
The proponent of a confidential relationship bears the burden of showing that it exists, i.e., that by virtue of the relationship she (or he) was justified in assuming that the other spouse would not act in a manner inconsistent with her (or his) welfare. Hale v. Hale, 74 Md.App. 555, 566, 539 A.2d 247 (1988); Tedesco, supra, 111 Md.App. at 673, 683 A.2d 1133; Bell, supra, 38 Md.App. at 13, 379 A.2d 419. See also Green v. Michael, 183 Md. 76, 84, 36 A.2d 923 (1944) (holding that, "`[t]o establish [a confidential relationship,] there must appear at least a condition from which dependence of the grantor [of a trust] may be found'") (quoting Snyder v. Hammer, 180 Md. 690, 23 A.2d 653 (decision reported without opinion), 180 Md. 690, 23 A.2d 653, 655 (opinion reported in full) (1942)). Among the factors to be considered in deciding whether a confidential relationship exists are "`the age, mental condition, education, business experience, state of health, and degree of dependence of the spouse in question.'" Tedesco, supra, 111 Md.App. at 671, 683 A.2d 1133 (quoting Bell, supra, 38 Md.App. at 13-14, 379 A.2d 419).
The Maryland law of confidential relationships has developed in cases involving family relations in which the validity vel non of particular transactions or agreements between the parties has been in question. See, e.g., Upman, supra, 359 Md. at 42, 753 A.2d 4 (confidential relationship between elderly and questionably competent donor of trust and donee nephew who cared for her needs was not in dispute); Hale, supra, 74 Md.App. at 555, 539 A.2d 247 (confidential relationship between husband and wife when wife less educated and physically and emotionally unwell). In such cases, the effect of the trier of fact finding a confidential relationship between the parties is to shift the burden of proof away from the person seeking to set the transaction or agreement aside and to place the burden on its proponent to show that it should remain in place. In Bell, for example, this Court explained that, in the absence of proof of a confidential relationship, a separation agreement between spouses that is not facially unjust or inequitable is presumed valid, and the spouse challenging the agreement bears the burden of proving that it resulted from fraud, coercion, or mistake. 38 Md.App. at 14, 379 A.2d 419. When a confidential relationship is shown to exist between the parties, however, the burden shifts to the spouse advocating the agreement to prove that it was not the product of fraud, coercion, or mistake.
As noted above, Maryland law does not presume that spouses are in a confidential relationship. That is not the case with people who are engaged to marry, however. Maryland law presumes that an engaged couple occupies a confidential relationship. See Cannon, supra, 384 Md. at 570-71, 865 A.2d 563; Hartz v. Hartz, 248 Md. 47, 56, 234 A.2d 865 (1967); Martin v. Farber, 68 Md.App. 137, 141, 510 A.2d 608 (1986). Therefore, in the case of a prenuptial agreement, the party who is the proponent of the agreement bears the burden to show that there was not "overreaching." Cannon, supra, 384 Md. at 573, 865 A.2d 563. Most often, this burden is met through proof of a "full, frank, and truthful disclosure of his or her assets and their worth" prior to the execution of the agreement. Id.
Because Maryland does not consider the relationship between spouses to be one that is by nature fiduciary, and there is no allegation that by agreement Guttmann was acting as a true fiduciary, Lasater's breach of fiduciary duty claim must be based, if at all, on an assertion that, as a matter of fact, she occupied a confidential relationship with Guttmann with respect to the couple's finances. (For ease of discussion, we shall continue to call the claim one for breach of fiduciary duty.) It is important to note, however, that this case does not concern a particular transaction or agreement between Lasater and Guttmann that Lasater is seeking to set aside. Her breach of fiduciary duty claim is far more expansive than that. She is alleging that, for virtually all of the parties' marriage, she occupied a position of trust and confidence vis a vis her husband regarding his financial management of their marital funds; that for the duration of the marriage, at least until 2003, he mismanaged those funds; and that, as a result, over time the couple's marital estate lost its value, so that it was worth less than it would have been had Guttmann not been mismanaging it. This action is not an attempt by Lasater to set aside a particular transaction or agreement, or even specific transactions or agreements, between her and Guttmann. It is an attempt to recover as damages her portion of the loss in value of the marital estate caused by Guttmann's breach of the duty she maintains he owed her to properly manage the marital funds he controlled.
As already mentioned, Lasater maintains that Guttmann depleted the parties' marital estate over the years by spending marital funds on unsuccessful real estate transactions in the Carribean, on an extensive CD collection, and on other items and activities not specified. One particular example she gives, to illustrate that she will be able to prove damages, is the couple's marital home in Bethesda. Lasater asserts that because Guttmann was wasting marital funds on losing endeavors, or at least on endeavors that did not advance the position of the marital estate, he did not spend any of the funds on upkeep of the marital home. As a consequence, it became run down. When the parties put it on the market as part of the divorce settlement, it sold to a developer for $650,000. Within months, the developer renovated the house and sold it for $1,150,000. Lasater is seeking tort damages from Guttmann for breach of fiduciary duty for the difference between 75% of the profit that would have been realized from the sale of the marital home had the home been maintained and 75% of the profit that actually was realized from the sale of the home.
Our survey of cases from other jurisdictions reveals that, even when the relationship of husband and wife is considered confidential as a matter of law, courts have not permitted a spouse or former spouse to use a breach of fiduciary duty action to launch a broad attack on the other spouse's (or former spouse's) handling of financial matters during the marriage. For example, in Smith v. Smith, supra, 438 S.E.2d at 458, the North Carolina Court of Appeals upheld a trial court's dismissal of a breach of fiduciary duty claim by a former husband against a former wife. The former husband had alleged that, during the marriage, the former wife had engaged in numerous adulterous affairs, and had used marital funds to finance them. He sought to recover those funds as damages.
The court observed that the North Carolina appellate courts only had found a breach of a spouse's confidential duty to the other spouse "within the context of a distinct agreement or transaction between the spouses." Id. at 459. Noting that the former husband was not seeking to set aside a particular transaction or agreement between the former spouses, the court held that he had not stated a cause of action for which relief could be granted. See also Beers, supra, 724 So.2d at 117 (affirming the dismissal of a tort action for breach of fiduciary duty and fraud against a former husband and holding "that one spouse may not be sued by the other in tort for a breach of [the] confidential relationship [of husband and wife] which results in a loss of marital property, in the absence of a distinct agreement or transaction between the spouses" (footnote omitted)).
The courts in Smith and Beers also both declined to draw an analogy between marriage and a business partnership, in which the members owe duties to account for funds and to spend them reasonably. Smith, supra, 438 S.E.2d at 459; Beers, supra, 724 So.2d at 117 n. 5.
The closest we have come in our research to finding a broad cause of action between spouses for mismanagement of marital property is a statutory claim that exists in Wisconsin for breach of a duty of good faith between spouses. Section 766.15(1) of the Wisconsin Statutes Annotated ("WSA") (West 2009) states: "Each spouse shall act in good faith with respect to the other spouse in matters involving marital property or property of the other spouse." WSA section 766.70 establishes remedies for a violation of the duty to act in good faith, including an accounting, the addition of a spouse's name to an item of marital property, and temporary or permanent limitation or termination of a spouse's management or control rights over certain marital property. These statutory provisions are unique to Wisconsin; they come verbatim from the Uniform Marital Property Act of 1983, sections 2(a) and 15. 9A U.L.A. 114 143 (1998). Effective January 1, 1986, Wisconsin adopted that act. WSA §§ 766.001 to 766.97. It is the only state to have done so.
Interestingly, the Wisconsin cases in which these "good faith" statutes have been interpreted have held that they apply only to spouses who have not petitioned for divorce. "[O]nce a divorce action is filed, a claim made encompassing such a cause of action must be resolved in divorce court." Knafelc v. Dain Bosworth, Inc., 224 Wis.2d 346, 591 N.W.2d 611 (App. 1999). Thus, in Wisconsin, a case like the one at bar would not be permitted.
Indeed, courts in other jurisdictions in which the spousal relationship is considered confidential as a matter of law have declined to recognize tort claims between spouses for breach of fiduciary duty, fraud, and the like on the ground that whatever wrong was committed can be remedied in the parties' divorce action. In Schlueter v. Schlueter, 975 S.W.2d 584 (Tex. 1998), in the parties' suit for divorce, the wife filed a counterclaim against her husband and a claim against her father-in-law for fraud, breach of fiduciary duty and conspiracy on the allegation that, prior to the filing of the divorce action, the husband transferred various "community" assets to his father. (Texas is a community property state.) The tort claims were tried to a jury, which found in favor of the wife. Based upon the jury's finding, the trial court declined to divide the community property equally, but exercised its discretion to distribute a larger share of the assets to the wife. The court also awarded the wife punitive damages.
The Texas Supreme Court reversed the judgment in part, holding that the discretion courts in Texas have to render a "just and right" distribution of community property upon divorce ( i.e., not to divide it equally), accords a wronged spouse an adequate remedy for fraud on the community, and therefore "there is no independent tort cause of action between spouses for damages to the community estate." Id. at 585. See also Beers, supra, 724 So.2d at 117 (holding that husband's transfer of money out of the marital estate prior to divorce could be dealt with in the divorce action under the dissipation doctrine); Horwitz v. Horwitz, 16 S.W.3d 599, 603-04 (Mo.Ct.App. 2000) (holding that husband's taking of certain marital funds prior to the divorce was properly handled by the divorce court under the doctrine of dissipation and that the wife's breach of fiduciary duty claim based upon that same conduct was barred by collateral estoppel).
In Massachusetts, as in Maryland, the relationship of husband and wife is not presumed confidential but can be found confidential on the facts. Yousif v. Yousif, 61 Mass.App.Ct. 686, 814 N.E.2d 14 (Mass.App.Ct. 2004), is an example of a trial court's making a finding, affirmed on appeal, of a confidential relationship between a husband and wife. The parties had married in Lebanon when the wife was an impoverished 18-year-old and the husband was in his 50s and claimed to be a man of means. He told the wife he had been married twice before. He promised her that if they married they would move to the United States and live an affluent life. They married and moved to this country, but instead of living well, the wife was practically held hostage in a small apartment for seven years. The husband lived extravagantly but did not share any of his wealth with the wife. Contrary to what he had told her, this was his fourth marriage.
During the seven years she lived in the small apartment, the wife gave birth to two children. She did not speak English, although she was able to learn some of the language from watching television. She rarely left the apartment because the husband told her that he had arranged for her throat to be slit if she went outside. The only times she went outside was with the husband, and only after she had begged him. Her eyes were not able to adjust properly to light because of the amount of time she spent inside. The husband physically and verbally abused the wife and, if not actually abusing her, was threatening to do so. He kept complete control over her, and did not allow her to have any information about the family finances. The wife was expected to perform all household chores and to raise the children without assistance from the husband.
The husband undertook to have a house built for the family. He considered the house to be his only, and not his wife's, notwithstanding that marital funds were used to purchase the land and build the house. At the husband's direction, the wife was tasked with making all repairs to the property necessitated by contractors who did not finish their work, performing yard work, shoveling, and decorating. After the construction was completed, the husband conveyed the house to a family trust in Lebanon to which the wife had no access. He accomplished the conveyance by forcing the wife to sign papers under threat of physical harm and lying to her, telling her that he was putting the house solely in her name, to make her "human." Id. at 695, 814 N.E.2d 14. In fact, the documents she signed had placed the house in the family trust.
The husband then purchased a service station and forced the wife to work there with him, for no pay. When he sold the service station, he transferred most of the money to Lebanon.
The husband only rarely permitted the wife to talk on the telephone to her family members in Lebanon, and when he did, he monitored the calls. The family returned to Lebanon to visit three times. During the last visit, which was 14 years after the parties were married, she was allowed to see her family for one hour only, and her children were not allowed to see them at all. When the family returned to the United States from that visit, the wife filed for divorce.
The trial court found as a matter of fact that there was a confidential relationship between the husband and the wife that obligated the husband to act for the wife's benefit, and that the husband violated that duty by placing the marital home in a trust, "`effectively eliminating the wife's interest'" Id. As a remedy, the court imposed a constructive trust, for the wife's benefit, on all the proceeds of the sale of the marital home.
In affirming the trial court's findings, the appellate court held that, although a confidential relationship does not exist between spouses merely because they are married, the evidence was sufficient to support the finding that a confidential relationship existed between the husband and wife because of the husband's complete domination of the wife and her reliance upon his experience in financial affairs; and the evidence further supported the finding that the husband breached the confidential relationship by tricking the wife into transferring her interest in the couple's house into a trust.
To be sure, the facts in Yousif'were extreme. Hale v. Hale, supra, 74 Md.App. at 555, 539 A.2d 247, is tame by comparison, but nevertheless provides a good example of the dominant/subservient nature of a confidential relationship between spouses. In Hale, the circuit court set aside a separation agreement entered into by spouses on the ground, among others, that the husband and wife were in a confidential relationship and the agreement did not fairly distribute the parties' considerable assets. The couple had been married for 17 years. The wife had attended a community college for one year; had limited business experience, functioning in a merely ministerial role with her husband's company; managed the couple's household only by following a budget given to her by her husband; did not have a bank account before the couple separated; only had signed documents relating to the husband's business because he had directed her to; and was not well physically or emotionally. She had signed a separation agreement that her husband presented to her that was prepared by the husband's lawyer (even though she thought the lawyer was representing her) and upon reassurances by the husband that if she signed the agreement they would reconcile.
This Court affirmed the ruling of the circuit court on the ground that the non-clearly erroneous factual findings established that the husband long had occupied a position of dominion and control over the wife in financial and business matters; that he thus was in a confidential relationship with her; that she was entitled, based on that relationship, to trust that he would take care of her, even in the creation of a separation agreement; and, with the confidential relationship established as a matter of fact, the husband had failed to satisfy his burden of showing that the separation agreement was fair to his wife. (In fact, the agreement gave her only a tiny fraction of the marital estate.)
We return to our analysis of whether Lasater's claim for breach of fiduciary duty is actionable under Maryland law. We conclude that it is not.
As we already have explained, any claim by Lasater that there was a true fiduciary relationship that was breached is not supported by law or by any allegation of fact in this case. Maryland does not recognize the relationship of husband and wife to be fiduciary in nature, and there is no evidence that Lasater can produce that she and Guttmann entered into an agreement creating a fiduciary relationship between them. Accordingly, we hold that, on the summary judgment record, Lasater cannot maintain a tort claim against Guttmann for breach of a true fiduciary duty.
We further hold that the facts Lasater alleged and attested to in opposition to Guttmann's motion for summary judgment can not, as a matter of law, support a reasonable finding of a confidential relationship between the two. The funds Lasater claims Guttmann mismanaged were deposited (or, with respect to Guttmann's income, should have been deposited) in the parties' Joint Checking Account or the Education Account. These accounts were in both parties' names. Regardless of where Guttmann put the monthly statements that came in the mail for those accounts, as an account holder, Lasater had access to all information about the accounts through the bank. And, money placed in a joint account is available for use by and for the benefit of both parties to the account. Doe v. Doe, 122 Md.App. 295, 357, 712 A.2d 132 (1998) (quoting opinion of the trial court to this effect), rev'd on other grounds, 358 Md. 113, 747 A.2d 617 (2000).
Lasater's allegations that Guttmann hid his mismanagement of the couple's finances and lied to her about the state of their finances concern these joint accounts only. Unlike the husband in the Yousif case, who maintained sole access to the spouses' assets, Guttmann shared access to the joint accounts with Lasater, and therefore could not effectively hide his mismanagement of the money in those accounts or lie about the funds in them without Lasater's complicity. And, unlike the wife in Hale, Lasater is not a poorly educated and not very competent person who is not capable of handling financial matters, or understanding them. On the facts alleged by Lasater, taken in the light most favorable to her, she did not know the true circumstances about the money in the joint accounts and where it was being spent because she did not take advantage of the access to the accounts to which she was entitled, choosing instead to remain ignorant of the couple's finances. By her own admission, Lasater did not read the account statements that came in the mail and did not take any steps to obtain information about the accounts from the bank, which was obligated to give her any information she would seek.
Moreover, with respect to a confidential relationship, the facts that are not disputed or are as advocated by Lasater establish that she is in her 40's, is mentally stable, holds a law degree, worked for 20 years as a lawyer, both in law firms and in her own practice, and is not in ill health. None of these factors supports a finding of a confidential relationship. As to degree of dependence upon Guttmann, Lasater acknowledges that when she became disturbed by the state of the couple's finances, she "took over stewardship" of them. There are no facts offered by Lasater that are remotely of the sort as those in Yousif or Hale that would show that Guttmann exercised complete dominion over Lasater in any aspect of the marriage, including with respect to the couple's finances. Indeed, over and over in her affidavit, Lasater asserts that she trusted Guttmann completely with the family's finances because she loved him and did not think that he would mismanage their money to their, and her, detriment, and because he said things that made her feel guilty about not contributing to the family's finances herself. The blind love, hurt feelings, and other sometimes unfortunate emotions that spouses may experience are not a basis for a finding of a confidential relationship as the law knows it.
It also is important in considering the issue of a confidential relationship that Lasater did not make use of discovery in the divorce action to obtain information that she claims she does not have about what Guttmann wasted the couple's funds on. To the extent that he used marital money to purchase real estate, any such real estate would constitute marital property, and would be subject to equitable distribution. Moreover, Lasater's complaint that the doctrine of dissipation would not have aided her, because she could not have proven that Guttmann spent marital assets when the marriage was breaking down, for the purpose of keeping marital assets from her, is not relevant to the distribution of any existing marital assets, such as real property and the CD collection. To the extent Lasater could have shown that Guttmann engaged in wasting of marital assets, even if she could not prove dissipation, she could argue that his conduct was a factor that militated strongly in favor of an award to her of virtually all of the marital assets.
Finally, we hold that, even if a trier of fact crediting all of Lasater's allegations reasonably could find that she and Guttmann occupied a confidential relationship (which we do not think is the case) Lasater's claim nevertheless is not actionable under Maryland law. As we already have explained, the cases from Maryland and elsewhere in which there either is a presumption or a finding of a confidential or fiduciary relationship between spouses all concern the viability vel non of a particular transaction between the two. The central issue in those cases is whether the transaction in question will be set aside or will survive. The existence of a fiduciary or confidential relationship between the spouses affects what must be shown, and who must make the showing, to set the transaction aside.
In the case at bar, we are not dealing with a single transaction. We are not even dealing with a set of discrete transactions. Nor are we dealing with any transaction that is capable of being set aside. Rather, we are dealing with all the steps Guttmann took or did not take in managing the couple's finances throughout the couple's marriage. Should Guttmann have spent the couple's money on the upkeep of the parties' Bethesda house instead of on CDs? Should he have invested money in the stock market instead of in real estate in the Carribean? To the extent any vehicle might exist to right these perceived wrongs, it would be an action for breach of a general duty of good faith between spouses, of the type created by statute in Wisconsin. There is no such cause of action in Maryland either by statute or common law, however.
For all these reasons, the circuit court properly granted summary judgment in favor of Guttmann on Lasater's breach of judiciary duty claim.
(b) Fraud
Lasater's fraud claim is premised on essentially the same facts she asserted in support of her breach of fiduciary duty claim. The fraud claim never was pursued separately below and Lasater devotes less than one page of her brief to argument on this count. In her amended complaint, she alleged that Guttmann misrepresented to her the state of their finances and "remained silent when there was a duty to speak [] about material matters relating to the couple's and Lasater's finances." According to Lasater, he fraudulently represented to her that he was using monies from their Joint Checking Account, and her own money, "for purposes directly related to the family's basic needs." He also misrepresented that he needed Lasater to pay, from her separate non-marital funds, his income taxes. Finally, she maintains that he failed to tell her, when he had a duty to do so, that he was making expenditures on real estate ventures; that he opened "at least one secret bank account"; and that he was otherwise spending the couple's joint funds for personal purposes.
In her reply brief, Lasater argues that Guttmann concedes that he did not move to dismiss her fraud count and that he moved for summary judgment as to this count only on the basis of limitations. In his motion for summary judgment, Guttmann argued that the facts alleged by Lasater in support of her claim of fraud "expose her complaint to be without legal merit." He further argued that she could not allow him to manage their finances "without question or oversight" and then claim fraud based on his failure to inform her of certain expenditures. Lastly, he contended that Lasater could not justifiably rely on the alleged misrepresentations because she had equal access to their joint marital funds. Thus, Lasater's assertion that Guttmann argued only limitations below is not supported by the record.
We begin with Lasater's claim that Guttmann fraudulently concealed material facts from her regarding his expenditures and investments. As she recognizes, in order to prevail on such a claim, she must demonstrate that he owed her a duty to speak. See Lloyd v. GM, 397 Md. 108, 139, 916 A.2d 257 (2007) (element of claim of fraudulent concealment is that "`the defendant owed a duty to the plaintiff to disclose a material fact'" (quoting Green v. H R Block, 355 Md. 488, 525, 735 A.2d 1039 (1999))). According to Lasater, Guttmann's duty to disclose flowed from their confidential and/or fiduciary relationship. For the reasons discussed supra, we conclude that the facts put forth below, viewed in a light most favorable to Lasater, do not support a finding of such a relationship between the parties, as a matter of law. It follows that her fraudulent concealment action fails as a matter of law.
Turning to Lasater's claim premised on fraudulent misrepresentations made by Guttmann, the Court of Appeals has explained:
In order to recover damages in an action for fraud or deceit, a plaintiff must prove (1) that the defendant made a false representation to the plaintiff, (2) that its falsity was either known to the defendant or that the representation was made with reckless indifference as to its truth, (3) that the misrepresentation was made for the purpose of defrauding the plaintiff, (4) that the plaintiff relied on the misrepresentation and had the right to rely on it, and (5) that the plaintiff suffered compensable injury resulting from the misrepresentation.
Nails v. S R, Inc., 334 Md. 398, 415, 639 A.2d 660 (1994). Each element must be proved by clear and convincing evidence.
Gourdine v. Crews, 405 Md. 722, 758-59, 955 A.2d 769 (2008).
We begin by reviewing the misrepresentations Lasater asserts Guttmann made. They fall into three categories. The first category involves statements of blame. In her opposition to summary judgment, Lasater stated that Guttmann "affirmatively represented to her" that "any financial tightness they ever had before the children were born was because [she] did not earn as much as [he did]; that financial strain after the children were born was due to her not working; that she was to blame for their not being able to afford to maintain their home; and that the cost of a babysitter to watch the children while Lasater was working on her book was the cause of "financial tightness" in the summer of 2002. She further averred that, when she discovered the "huge equity debt against their home" in January of 2003 and asked Guttmann why he had not told her about it, he represented that he "didn't want [ her] to know what [ she] w[as] doing to our family." (Emphasis added.)
The second category of misrepresentations involves statements by Guttmann respecting his own income or earning power. According to Lasater, Guttmann stated that he could barely afford to pay the family's day-to-day living expenses on his salary, and that he had gone "of counsel" at his law firm and therefore did not receive year-end distributions.
The last category involves misrepresentation related to how Guttmann used the joint marital funds. Lasater claims that Guttmann falsely represented that he was depositing all of his earnings in their Joint Checking Account; that, in the summer of 2002, in response to her queries as to whether they could afford two "lavish" vacations he had arranged, Guttmann lied and said they could, even though he had borrowed against their home; and that, for several years, Guttmann misrepresented that he owned season tickets to the Redskins games when, in fact, he did not. Further, after Lasater "assumed stewardship of the family finances" in 2003, Guttmann represented to her that he was recording all of his expenditures in their daily expense journal when, in fact, he was not. Finally, Guttmann lied to her about paying off his American Express card.
We conclude that, for several reasons, Lasater did not produce facts on the summary judgment record to support an actionable claim of fraud. First, the majority of representations in question were in the nature of opinions and are too vague to be actionable. "A statement that is `vague and indefinite in its nature and terms'" cannot support a cause of action for fraud. Goldstein v. Miles, 159 Md.App. 403, 436, 859 A.2d 313 (2004) (quoting Buschman v. Codd, 52 Md. 202, 207 (1879)). See also Parker v. Columbia Bank, 91 Md.App. 346, 359-60, 604 A.2d 521 (1992) ("false representation" must be a misrepresentation of material fact, not an estimate, an opinion, or puffing). This is because such statements are deemed to put the party to whom they are made on inquiry notice to investigate further. Goldstein, supra, 159 Md.App. at 436, 859 A.2d 313.
All of Guttmann's statements blaming Lasater for their financial difficulties were statements of opinion that cannot form the basis of an action for fraud. A husband and wife are likely to disagree at many times as to which party contributes more, financially and otherwise, to the marriage. Guttmann's statements that Lasater's decision not to work outside the home or her decision to hire a babysitter to watch the children while she worked on her book were causing the family's financial problems reflect his opinion that, were she earning an income, the family would have had more spending power. Whether Guttmann was spending well beyond their means or not, Lasater's lack of income was a factor in their financial situation. His opinion on this matter cannot be deemed a false representation of material fact. Similarly, his statement that they could afford a vacation in the summer of 2002 is not a false representation. It merely represents a difference of opinion as to whether borrowing against their home was an acceptable means to pay for a family vacation.
The statements also are arguably immaterial. See 2 Fowler V. Harper, et al., HARPER. JAMES GRAY ON TORTS § 7.9 at 516-17 (3d ed. 2006) ("Where the fact represented would not influence the reasonable person, either because of its triviality or because of its irrelevance to the subject dealt with, the law will ordinarily regard that fact as immaterial and reliance on it unjustified." (footnotes omitted)).
For related reasons, even the alleged misrepresentations that would qualify as statements of material fact do not support a cause of action in fraud because Lasater could not reasonably have relied upon the statements. This Court has explained that, "[i]n determining if reliance is reasonable, a court is required to View the act in its setting[.]'" Parker, supra, 91 Md.App. at 361-62, 604 A.2d 521 (quoting Giant Food, Inc. v. Ice King, Inc., 74 Md.App. 183, 192, 536 A.2d 1182 (1988)). In the instant case, the "setting" is a marriage between two educated and intelligent parties with equal access to all of the information about their joint finances.
Lasater asserts that she reasonably relied on Guttmann's alleged false statements about his level of income and his inability to afford to pay for his income taxes and their day to day living expenses on his income alone. As a fellow attorney with at least 20 years of experience in the legal world, Lasater could not have reasonably relied upon her husband's statements to this effect. Moreover, she was not free to rely on these statements when their falsity was obvious and she was able to discover the truth simply by opening one of the hundreds of bank statements sent to their home over the years or from a cursory review of their joint tax returns. See RESTATEMENT (SECOND) OF TORTS § 541, Comment (a) (1977) (recipient of a fraudulent misrepresentation is "required to use his senses, and cannot recover if he blindly relies upon a misrepresentation the falsity of which would be patent to him if he had utilized his opportunity to make a cursory examination or investigation."); see also 2 HARPER, JAMES AND GRAY ON TORTS, supra, § 7.12 at 544 ("If a statement is patently preposterous in the light of common knowledge or if it would be shown up as false on the most casual inspection immediately available to the recipient," reliance upon it is not justified as a matter of law (footnotes omitted)).
It also is difficult to reconcile certain of the alleged misrepresentations made by Guttmann. Lasater maintains that, at times, Guttmann falsely represented that their finances were secure and, at other times, falsely represented that it was her fault that their finances were strained. For example, according to Lasater, in the summer of 2002, Guttmann was simultaneously telling her that they could not afford a babysitter for their children and that they could afford two "lavish vacations" to Florida and the Caribbean. It is inconceivable that Lasater could simultaneously have been acting in justifiable reliance upon two contradictory misrepresentations and suffering damages flowing from such reliance.
In another example, Lasater complains that, when she was practicing law early in the marriage, Guttmann continually told her that she did not earn as much as he did, making her "feel bad and. ashamed that [she] did not earn the big law firm salary he did." (Emphasis added.) Yet, she simultaneously contends she justifiably relied on his representations years later that he was not earning enough money to support their family.
With respect to damages flowing from reliance on Guttmann's representations, Lasater does not assert, with certain limited exceptions, how she would have acted differently had Guttmann not made the allegedly false statements. We confronted a similar situation in Doe v. Doe, supra, 122 Md.App. at 295, 712 A.2d 132, when this Court considered whether a husband could maintain a tort suit against his wife for, inter alia, fraud. The husband's claims were premised on two sets of fact. First, the husband alleged that his wife defrauded him by falsely representing that he was the father of their three children and/or not disclosing that another man was the father. Second, the husband alleged that his wife defrauded him by falsely representing that, upon retirement, he could rely upon her stockholdings for income. In reliance upon this promise, he deposited his entire income into the couple's joint checking account and did not contribute to his 401 (k) plan.
Lasater did aver in opposition to summary judgment that, "because of [Guttmann's] frauds and diversion of our assets," the marital home was not maintained or renovated. As discussed, supra, the marital home was sold in 2007 for $650,000, just $200,000 more than the couple paid for it more than eighteen years prior. The purchaser, a real estate developer, then made repairs and renovations and resold the property for $1,150,000 "in a matter of weeks." It is noteworthy that in her opposition Lasater gave no reason why she could not have used her personal funds in the Inheritance Account to maintain the marital home so as to prevent waste of an obviously valuable marital asset.
In the circuit court, the husband's fraud claims both were dismissed for failure to state a claim for which relief could be granted. On appeal to this Court, we reversed the dismissal of the fraud claim premised on the paternity of the children, but affirmed dismissal of the fraud claim premised on financial misrepresentations. In affirming the dismissal of the latter claim, we quoted the trial court's ruling in the circuit court:
The Court of Appeals granted a writ of certiorari on the limited issue of whether Maryland recognizes a tort action for fraud or intentional infliction of emotional distress based upon a wife's alleged adultery and subsequent misrepresentations concerning the paternity of children born during the marriage. 358 Md. 113, 747 A.2d 617. It held that no such action could be maintained. Id.
Marriage contemplates numerous promises for the future Promises made with regard to the future (including those of a financial nature) may not be binding in the event the parties no longer have a future together. . . . Moreover, it was a mutual decision between the parties that Plaintiff would not contribute to his 401 [(k)] retirement plan. The money was placed in a joint checking account — available for use by and for the benefit of both parties. The Defendant did not obtain use of those funds without Plaintiffs complicity.
Id. at 357,
712 A.2d 132.
We upheld the circuit court's ruling, reasoning that the husband had failed to allege with adequate specificity the fraudulent representations made by his wife and damages suffered in reliance upon them. His assertion that she falsely promised that he could rely on her stockholdings was insufficient when he failed to allege the nature of her stockholdings or how much money he would have invested in his 401 (k) plan absent her promise. Thus, both the reasonableness of his reliance and any alleged damages were purely speculative.
In the instant case, Lasater also has not alleged damages with adequate specificity. Would she have declined to take the "lavish vacation" had she known the couple had to borrow against the home? Would she have continued working on her book instead of taking over care of the children had she known it was Guttmann's alleged overspending, not the cost of the babysitter, causing their financial difficulties? How would she have spent or invested the couple's joint income had she not been ignorant of their financial dealings?
Finally, as discussed, supra, evidence of wasteful or imprudent conduct by one spouse with respect to marital finances properly may be considered in the context of a divorce proceedings as a factor weighing in favor of awarding most, if not all, of the marital property to the non-offending spouse. See Md. Code (2006 Repl.Vol, 2009 Supp.) §§ 8-205(b)(1), (3) (11) of the Family Law Article (factors the court shall consider in adjusting the equities include contributions made by each party to the well-being of the marriage; circumstances leading to the estrangement of the parties; and any other factor necessary and appropriate in reaching a fair and equitable result). It is for this reason that, even if we were to conclude that Guttmann's statements were actionable, that Lasater reasonably could rely on them, and that damages could be proved as a policy matter, we simply cannot countenance separate tort actions for fraud by one spouse against the other premised on statements regarding expenditures of joint marital funds. The parties to a marriage bring with them differing views of necessary and discretionary expenditures. They may be comfortable with differing levels of investment risk. And despite those differences, both parties bear the responsibility for managing joint finances and bear the risk that the other spouse will spend marital funds in a manner not to their liking. We decline to open the door to tort suits arising from disagreements over allocation of marital resources when these grievances properly can be remedied in the divorce setting. See, e.g., Beers, supra, 724 So.2d at 116 — 17 (exclusive remedy for waste of marital assets is in the divorce proceedings).
As discussed, supra, with respect to the breach of fiduciary duty claim, there are circumstances under which particular transactions between spouses possibly could give rise to a claim for fraud. We speak only to the types of allegations present here, where the asserted fraud was that Guttmann overspent marital funds and lied about it.
For example, Lasater averred below that Guttmann repeatedly told her that the marital home's state of disrepair "bother[ed her] more than it bother[ed him]." While she contends that this was one more misrepresentation intended to end discussion of why they couldn't afford to invest money in their home, it also could be a true statement of Guttmann's views on the matter. This is one of many areas where married couples may disagree.
Lasater also argues on appeal that it was error for the circuit court to deny her cross-motion for summary judgment. For the same reasons discussed above with respect to her breach of fiduciary duty and fraud claims, her cross-motion properly was denied.
JUDGMENT AFFIRMED. COSTS TO BE PAID BY THE APPELLANT.