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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2905 September Term, 1999 _______________________________

LUIZ R. S. SIMMONS

V.

MICHAEL LENNON

_______________________________ Davis, Salmon, Eyler, James R. JJ. _______________________________ Opinion by Salmon, J.

Filed: June 6, 2001

Beginning sometime in 1995 and continuing into early 1998, a secretary and a bookkeeper conspired with one another to defraud their employer, Luiz R. S. Simmons, Esq., of funds he kept in his escrow accounts and in his general office accounts. As a consequence of their scheme, Simmons's signature was forged on numerous checks, and large sums of money were withdrawn from his accounts without his knowledge. One of the checks forged by Simmons's secretary was in the amount of $13,000 and was made payable to Michael Lennon

("Lennon"), who sold a vehicle to the secretary and received the forged check in partial payment for the vehicle. According to

Simmons, Lennon knew, or should have known, that the check was forged when he accepted it. In this case, we are called upon to decide two issues: (1) whether, under either the Uniform Commercial Code or

Maryland common law, the payee of a check bearing the forged signature of the drawer can be successfully sued by the drawer for conversion of the check and (2) whether the payee of a check, who knows or should have known that the check bears the drawer's forged signature, owes a duty, which will support a cause of action sounding in negligence, to warn the drawer that his signature has been forged. Like the trial judge below, we

answer both questions in the negative.

I. In 1993, Luiz Simmons

FACTS1 hired Michelle Campbell as a

receptionist at his Silver Spring, Maryland, law office. later became Simmons's secretary. she formed an

She

After Ms. Campbell was hired, with Simmons's outside

acquaintanceship

bookkeeper, Denise Evans, who kept track of funds in Simmons's office and escrow accounts. Neither Ms. Campbell nor Ms. Evans

was authorized to sign checks drawn on any of Simmons's accounts -- Simmons alone had check signing authority. At all times here relevant, Ms. Campbell's responsibility included keeping Simmons's check register accurate and making deposits into his accounts. Ms. Campbell began in 1995 to forge

Simmons's name to checks drawn on several of her employer's accounts. Because Ms. Evans was a participant in the scheme and

because Simmons trusted his employees, Ms. Campbell's forgeries went undetected by Simmons for over two years. Appellee, Michael Lennon, is a retired Prince George's County police officer. live-in girlfriend. At one time Ms. Campbell was Lennon's

While residing with Lennon, Ms. Campbell

forged Lennon's name to several credit card application forms resulting in her receipt of credit cards from four companies. The cards were issued in Lennon's name. Ms. Campbell proceeded

1 Solely for the purposes of the summary judgment motion, the parties accepted the facts set forth in Part I, above, as true. It seems likely that, if this matter were to be presented to a jury, Lennon would dispute at least some of these facts.

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to use the credit cards to fraudulently accumulate over $17,000 in credit card debt in Lennon's name. In March 1994, Lennon

discovered that Ms. Campbell had forged his name to the credit card applications. He reported the matter to the credit card companies and to the police. In 1994, Ms. Campbell was

convicted of fraud based on her forgery of Lennon's name on the credit card applications. Ms. Campbell introduced Mr. Lennon to Simmons sometime in 1994. Thereafter, Lennon periodically worked as a private As a consequence of his work as a

process server for Simmons.

private process server, Lennon saw Simmons fairly frequently -- and the two enjoyed a cordial relationship. In October 1996, at a point when Lennon was still friendly with Ms. Campbell but was no longer romantically involved with her, Lennon agreed to sell Ms. Campbell his Chevrolet Blazer for $22,000. Ms. Campbell paid for the vehicle with a $9,000 check,

which represented the proceeds of a bank loan, and a separate $13,000 check, payable to Lennon, drawn on an escrow account Simmons held at NationsBank. Simmons's signature on the $13,000 Lennon cashed the two checks

check was forged by Ms. Campbell.

and transferred title to the Blazer to Ms. Campbell in late October 1996. In early February 1998, which was more than fifteen months after the sale of the Chevrolet Blazer, Simmons discovered that

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Ms. Campbell, with the aid of Ms. Evans, had been embezzling funds from his accounts for over two years. the $13,000 check was forged, scores In the period after checks, totaling

of

$109,362, were cashed by Ms. Campbell after she had forged Simmons's signature as the drawer of those checks. I. COMPLAINT AND PROCEEDINGS

Simmons filed a complaint against Lennon in the Circuit Court for Prince George's County on June 8, 1998. a jury trial. He asked for

One count in his complaint was for conversion and Another count was for

related solely to the $13,000 check. negligence.2

On the morning of trial, Simmons, representing himself, made an opening statement, as did counsel for Lennon. Simmons then

began his testimony, but shortly after his testimony commenced, Judge Stephen I. Platt told Simmons, out of the presence of the jury, that he had grave doubts as to whether he could prevail even if everything he had said in his testimony and in his opening statement were believed by the jury. Specifically, in

regard to the negligence count, the trial court said he doubted that Lennon had breached any duty owed to Simmons. Simmons to try to convince him otherwise. Simmons argued that Lennon, on the date he received the $13,000 check, had a duty to notify him that Campbell had forged He invited

2The complaint also included voluntarily dismissed by Simmons.

a

count

for

restitution.

That

count

was

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his name to the escrow account check.

According to Simmons, if

Lennon had not breached that duty, he would have fired Campbell immediately, and her forgeries would have stopped. And, if the

forgery scheme had been terminated at that point, the loss of $109,362 would have been avoided. In addition, the $13,000 Simmons based

check would not have been paid by NationsBank.

his allegation that Lennon "knew or should have known" that the check he received was forged upon the following facts: 1. The words "escrow account" were printed on the NationsBank check that Lennon received; Lennon, who obtained a Florida real estate license in 1985, knew or should have known that it was impermissible for an attorney to pay for an employee's motor vehicle out of an escrow account;[3] Lennon, due to the fact that he served private process for Simmons, was familiar with Simmons's signature; The signature on the $13,000 check did not look like Simmons's signature; and Based on the fact that Campbell had been convicted of fraud due to her forgery of Lennon's name on forged credit card applications, Lennon knew that Campbell was a person likely to forge checks. trial judge's invitation, and with Simmons's

2.

3.

4.

5.

At

the

acquiescence, Lennon's counsel then moved for summary judgment as to both counts. The parties agreed that Judge Platt should

3The $13,000 escrow check did not reveal the name of the person for whose benefit the monies were being held in escrow. Simmons did not say how Lennon would have known that the money was not held in escrow for Campbell.

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decide the motion based on the assumption that all statements of facts in the complaint, together with all statements of facts set forth in either Simmons's opening statement or in his trial testimony, were truthful. Judge Platt ruled that the facts relied upon by Simmons were insufficient to support a cause of action for conversion. He

also ruled that Simmons could not recover against Lennon on the negligence count because Lennon owed Simmons no duty to warn him that Campbell had forged an escrow check.

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III. A. Simmons argues:

ANALYSIS

The Conversion Count

Granting summary judgment on the conversion count was improper because the [d]efendant's acceptance for value of the stolen and forged checks [sic] and subsequent receipt of the underlying proceeds wrongfully deprived the [p]laintiff of the proceeds [in] his Attorney Escrow Account. 1. Because negotiable The Uniform Commercial Code (1996 Version) the $13,000 we check must received first by Lennon to the was a

instrument,

look

Uniform

Commercial Code to determine whether Lennon's actions concerning the $13,000 check constituted a conversion of it. In October

1996, when Lennon cashed the check, the Maryland legislature had recently revised the Uniform Commercial Code in several

significant respects, but the effective date of the revision was January 1, 1997. 1996 M. Laws, Chap. 91

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