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HEADNOTE: Thomas G. Hicks v. Cindy Gilbert, et al., No. 2841, September Term 1999.

UNCLEAN HANDS DOCTRINE - SUMMARY JUDGMENT - Appellant sued appellee to recover the property he had transferred to her during their cohabiting relationship. The circuit court summarily dismissed the case because appellant admitted in his trial complaint that he had transferred the property to prevent his creditors from reaching it. In accordance with the unclean hands doctrine, the court did not abuse its discretion in declining to hear matters stemming from that undisputed material fact of fraud.

REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2841 September Term, 1999 _________________________________ __

THOMAS G. HICKS

v.

CINDY GILBERT, et al.

_________________________________ __

Sonner, Byrnes, Bishop, John J., Jr., (retired, specially assigned) JJ.

_________________________________ __

Opinion by Sonner, J. _________________________________ __

Filed: November 30, 2000

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In

this

appeal,

we

consider

the

venerable

doctrine

of

unclean hands in the context of a motion for summary judgment. The Circuit Court for St. Mary's County summarily dismissed the complaint of appellant, Thomas G. Hicks, against appellees,

Cindy, Aaron, and Sara Gilbert, pursuant to Manown v. Adams, 89 Md. App. 503, 598 A.2d 821 Adams v. Manown, and we 328 Md. (1991), rev'd on other grounds, 615 the A.2d 611 (1992). Hicks the

463,

appealed,

affirm

because

trial

court

applied

correct law to the undisputed fact of Hicks's misconduct. We review the facts, and any reasonable inferences that can be drawn from them, in a light most favorable to Hicks.

Baltimore Gas and Elec. Co. v. Lane, 338 Md. 34, 43, 656 A.2d 307 (1995); Burwell v. Easton Mem'l Hosp., 83 Md. App. 684, 687, 577 A.2d 394 (1990) (citing Lawless v. Merrick, 227 Md. 65, 70, 175 A.2d 27 (1961)). for approximately joint tenants, a Hicks and Cindy Gilbert were cohabitating In 1989, they in the acquired, Golden course as

twelve years. parcel to of real

property

Beach, of the the the

Maryland.

According he of

Hicks,

throughout time

relationship, construction

invested a home

"funds, on the

and

labor" which

into

property,

became

couple's only significant asset. separation in 1998. In burdens." 1991-1992, Hicks

They resided there until their

"accumulated

significant

financial

Although creditors had not filed suit against Hicks

or encumbered the property, he anticipated they might do so.

He

and Cindy Gilbert transferred the property to Cindy Gilbert and her parents, Sara and Aaron Gilbert. As Hicks explained in

paragraph 13 of his trial complaint, "[t]hat . . . transfer was made to avoid any attachment of the property for the debts of [Hicks] which had not been reduced to judgment." Hicks claims,

but appellees deny, that the Gilberts did not give consideration for the property or pay transfer taxes. appellees also deny, that the He also claims, and the orally agreed to

parties

compensate Hicks for his contributions and investments in the property in the event it was sold. After satisfied the his transfer, creditors Hicks so that restructured he did not his debts to and file

need

bankruptcy and was not sued for debt collection.

He continued

to live with Cindy Gilbert and pay expenses for the property until 1998, when the relationship ended. Cindy Gilbert for reimbursement of his Hicks then approached contributions to the

property.

She refused.

On March 31, 1999, Cindy Gilbert and

her parents transferred the property to Michael Gilbert, Cindy's brother, for $50,000. In August 1999, Hicks filed a complaint1 against the

Hicks actually filed three versions of the complaint. Amended Complaint filed on August 27, 1999.

1

We refer to the

2

Gilberts for (1) unjust enrichment; (2) promissory estoppel; (3) notice of lis pendens; and (4) "complaint to set aside real estate conveyance." He sought imposition of a constructive

trust on the property, compensatory damages in the amount of $150,000, invalidation of the conveyance to Michael Gilbert, and imposition of a lien upon the property in the amount of the judgment. complaint property. The Gilberts his denied the allegations and in Hicks's in the 13,

regarding They

contributions the

interests in

admitted

allegation

paragraph

however, that Hicks transferred the property to protect it from creditors. The Gilberts moved for summary judgment on the grounds that the parties agreed to the material fact of the furtive motive behind the conveyance and that the unclean hands doctrine, as examined in Manown, precluded him from seeking redress for any matter related to the misconduct. the summary was judgment motion, it Hicks not In his initial response to emphasized the that of when any have assets the debt been in The

property

conveyed, He

was the

subject

proceeding. completed for

suggested

conveyance or to

could

estate of the

planning financial 13, in

consolidate of

anticipation wording of

burdens his

litigation. did not

paragraph

view,

trigger,

necessarily, the unclean hands doctrine.

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In a supplemental response, filed two weeks later, however, Hicks adopted a new strategy. Citing Sherwood Company v.

Sherwood Distilling Company, 177 Md. 455, 9 A.2d 842 (1939), he urged the unclean hands doctrine did not apply because he paid his creditors. He stated:

In the present case, as in Sherwood Co., the Plaintiff has purged the alleged fraudulent conveyance of his property, made with the admitted intent to hinder his creditors, by paying all of his creditors. By paying his creditors, the plaintiff has corrected and made restitution for his wrongful act. Under these circumstances, he is not barred by unclean hands from seeking relief in this case. (Emphasis added.) Thus, Hicks turned from hypothetical readings

of paragraph 13 to a straight forward admission of wrongdoing. He attempted to shift the court's focus from the impropriety to what he did following the impropriety.2 The court convened a hearing on December 27, 1999, where the following interchange transpired between the court and Hicks's attorney: [THE COURT]: Are you saying the facts, if this went to trial, would show that his

The language quoted from the supplemental motion also suggests that the court consider the negligible effect of the wrongdoing, the argument being that Hicks's misconduct should not bar his suit since it caused no harm to his creditors. As discussed below, however, the unclean hands doctrine protects the judicial process, not people. See Schneider v. Schneider, 96 Md. App. 296, 312, 624 A.2d 1319 (1993), rev'd on other grounds, 335 Md. 500, 644 A.2d 510 (1994). The misconduct's effect on parties or interested persons is therefore irrelevant.

2

4

intent for this transfer of this deed to this girlfriend and her parents was not to prevent legitimate business people, friends, neighbors, relatives from collecting monies that he owed them, because he had gotten rid of the asset? Are you telling me the facts are going to show something different than what he is basically saying here? * * * [HICKS'S ATTORNEY]: I can't show -- I am not about to stand before the Court, after practicing for 12 years, and tell the Court that my allegations in the complaint are going to be any different than what they say. * * * Truthfully he says I have got financial burdens, which are debts. No one is suing me. No one is attaching anything. I am going to set it away from their reach for now until I resolve the problem. Following the hearing and review of the pleadings, the court issued an opinion and order on January 13, 2000, granting

summary judgment in favor of the Gilberts. Summary judgment is appropriate when there is no genuine dispute as to any material fact, and the moving party is

entitled to judgment as a matter of law. (2000).

Md. Rule 2-501(a)

The trial court does not make findings of fact, but Brown v. (citations

determines only whether a real factual dispute exists. Dermer, 357 Md. 344, 354-55, 744 A.2d 47 (2000)

5

omitted); Commercial Union Ins. Co. v. Harleysville Mutual Ins. Co., 110 Md. App. 45, 51, 675 A.2d 1059 (1996). We review

whether the grant of summary judgment was "legally correct." Brown, 357 Md. at 355; Joswick v. Chesapeake Mobile Homes, Inc., 130 Md. App. 493, 498, 747 A.2d 214 (2000) (quoting

Harleysville, 110 Md. App. at 51). Hicks's reason for transferring the property to the Gilberts was, for purposes of the summary judgment motion, the material fact in this case. The trial court found that fact revealed and

undisputed in paragraph 13 of the complaint, where Hicks stated the purpose of the conveyance was "to avoid any attachment of the property for the debts of the Plaintiff which had not been reduced finding; admitted to judgment." clearly Indeed, The court it, did and that not the make that factual clearly in his

Hicks it.

averred he

Gilberts again

asserted

fact

supplemental response in opposition to the Gilbert's motion for summary judgment, in which he "admitted [the] intent [of the transfer was] to hinder his creditors," and at the hearing on the summary judgment motion. purpose behind the transfer, Even though Hicks admitted the he cites DiGrazia v. County

Executive for Montgomery County, (1980), for the proposition

288 Md. 437, 418 A.2d 1191 that summary judgment is A

inappropriate when there is a question of motive or intent. 6

more complete recitation of that proposition, however, is that "summary judgment generally is inappropriate when matters -- such as knowledge, intent or motive -- that ordinarily are reserved for resolution by the fact-finder are essential elements of the plaintiff's case or the defense." Brown, 357 Md. at 355; see

also Clea v. Mayor & City Council of Baltimore, 312 Md. 662, 677, 541 A.2d 1303 (1988). Hicks's misconduct was not an

essential element of the four causes of action enumerated in his complaint, although it was basic to the Gilberts' defense of unclean hands. factual "While the unclean hands doctrine may involve [however], it is the [court that] must

questions,

determine when the doctrine should be invoked to bar a claim." Manown, 89 Md. App. at 513. Thus, Hicks's reason for the

conveyance was not the kind of question "reserved for resolution by the fact-finder," and therefore inappropriate for resolution by summary judgment. Brown, 357 Md. at 355.

We now turn to the question of whether the Gilberts were entitled to judgment as a matter of law. The unclean hands

doctrine "refuses recognition and relief from the court to those guilty of unlawful or inequitable conduct pertaining to the

matter in which relief is sought."

Manown, 89 Md. App. at 511.

It is "not applied for the protection of the parties nor as a punishment to the wrongdoer." 7 Adams v. Manown, 328 Md. 463,

474-75, 615 A.2d 611 (1992).

Rather, it protects the integrity

of the court and the judicial process by denying relief to those persons "whose very presence before a court is the result of some fraud or inequity." Manown, 89 Md. App. at 511; see also

Niner v. Hanson, 217 Md. 298, 309, 142 A.2d 798 (1958). There must be a nexus "[w]hat dirty, between is but the misconduct is not and that them the the in

transaction, plaintiff's

because hands are

material that he

dirties

acquiring the right he now asserts." (citing D. Dobbs, Remedies

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