Posted on April 12, 2021 in Fiduciary

Being appointed an agent under a financial power of attorney, or as a Court-appointed guardian, comes with a significant delegation of authority.  However, it is important to know that such delegation of power is not without limits.  For example, an agent can only exercise powers specifically granted under the power of attorney document.  And, in the case of a guardianship, the guardian is obligated to periodically account for the Court of their efforts on behalf of the ward.  And, of course, a fiduciary under either scenario cannot abuse their power or use their power unlawfully.

Recently, the Court of Appeals issued an opinion that provides yet more useful guidance for fiduciaries.  In United Bank v. Richard Buckingham, et al., the Court answered the following two certified questions from the United States District Court for the District of Maryland: (1) whether changing beneficiaries on a life insurance policy constitutes a conveyance under the Maryland Uniform Fraudulent Conveyance Act; and (2) whether a guardian of property has the authority to change beneficiaries for a life insurance policy of the ward.

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 Posted on March 29, 2021 in Business Law

After the enactment of the Tax Cuts and Jobs Act in 2017, the limitation on an individual’s ability to itemize tax deductions resulted in higher income tax for many Maryland business owners.  On May 8, 2020, Maryland enacted legislation allowing pass through entities (primarily LLCs, partnerships and S corporations) to elect to pay tax on a member’s distributive share at the entity level.  As a result, the taxable gross income of individuals receiving distributive shares of the entities net income is less.  In addition, the election creates a federal income tax deduction for the business that is not subject to the $10,000 itemized deduction limit established by the Tax Cuts and Jobs Act.

Single member LLCs, partnerships and S corporations are the most likely beneficiaries of the pass-through election and they should carefully consider their options.  C corporations and Schedule C taxpayers that are ineligible for taxation at the entity level should seek counsel to determine if restructuring may be beneficial.

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 Posted on January 19, 2021 in Business Law

WeWork.  WeLitigate.

We Holdings LLC and We Company (collectively “WeWork”) is a privately held company that leases office space on a short-term basis.  Following a failed IPO in 2019, the company was faced with a liquidity crisis.  In response, the board of directors formed a special committee (the “Special Committee”) to evaluate strategic alternatives to the IPO and to negotiate a potential transaction to save the company.  The Special Committee was comprised of two directors.  Together, the two Special Committee members and entities affiliated with them held over 34 million shares of WeWork.

On October 22, 2019, the Special Committee entered into a Master Transaction Agreement with Softbank Group (“SBG”) which contemplated a tender offer, equity financing, and debt financing.  On November 22, 2019, SBG made a tender offer to purchase shares from WeWork.  Issues arose shortly thereafter and on April 1, 2020, SBG terminated the tender offer.  On April 7, 2020, at the direction of the Special Committee, WeWork filed suit against SBG.  WeWork’s co-founder, Adam Neumann, also filed suit.  The suits were consolidated by the Court of Chancery of the State of Delaware (the “Court”) into In re WeWork Litigation (“WeWork”).

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 Posted on January 04, 2021 in Business Law

The Statutory Right to Purchase Shareholder Stock in the Dissolution of a Close Corporation

In Bartenfelder v. Bartenfelder, 248 Md. App. 213 (2020), the Court of Special Appeals considered whether a complaint by a stockholder in a close corporation seeking the appointment of a receiver triggers the right of another stockholder to purchase the complainant’s stock in the company under § 4-603(a) of the Corporations and Associations Article (“CA”) of the Maryland Code.  The Court held that “in the absence of a petition for dissolution, the request for a receiver does not trigger the statutory purchase right.”  Id. at 219.  In other words, the purchase right in CA § 4-603(a) applies only in the context of a dissolution proceeding.

The Facts and Procedural History

The case arose out of a dispute between Kimberly Bartenfelder and Thomas Bartenfelder.  Mr. Bartenfelder and Ms. Bartenfelder were the sole stockholders of two Maryland close corporations, Bartenfelder Sanitation Service, Inc. and Bartenfelder Landscape Service, Inc. (together, the “Corporations”), and the sole members of a Maryland limited liability company, 3340 Forge Hill LLC (the “LLC”).  Id. at 219–20.

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 Posted on December 30, 2020 in Protective Orders

What is a peace order?

By Maryland statute, a peace order is a court order that requires another person to stay away from you and not contact you. Do not confuse a peace order with a protective order. If you are related to the other person, have a sexual-type relationship with the other person, or are a victim of sexual assault, you should consider a protective order, not a peace order.  A peace order is for issues with a neighbor, co-worker, stranger, etc., and it only applies if you do not have a familial or intimate relationship with the other person.

Where do I file for a peace order in Maryland?

If you need to file for a peace order, visit the clerk’s office of your local District or Circuit Court, Monday through Friday from 8:30 a.m. until 4:30 p.m.  If the District or Circuit Court is closed you may file for a Peace Order with your local District Court Commissioner. They are generally available 24 hours per day, 7 days per week. You can locate your nearest District Court Commission on the Maryland Court’s website here. This site also has links to the Petition For Peace Order Form and the Peace Order Addendum Form that the Court will require you to fill out.

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 Posted on December 24, 2020 in Child Custody

What is a protective order?

By Maryland statute, a protective order is a court order that says one person must refrain from doing certain acts against another person. While not legally accurate, many people commonly refer to a protective order as a retaining order or ex parte.

Who can obtain a protective order in Maryland?

In order for the Court to grant you a protective order, you must testify before a judge that you have a certain type of relationship with the person you want to be protected from.

The following relationships qualify for a protective order in the State of Maryland if you:

• Are married, divorced, or currently separated;
• are related by marriage, blood, or adoption (this includes stepparents and stepchildren if they have lived with you for at least 90 days in the past year);
• have lived together in a sexual relationship for at least 90 days in the past year;

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 Posted on December 24, 2020 in Child Custody

It is important to be aware that Maryland Courts and Orders recognize two parts to custody in the State of Maryland, physical custody and legal custody.

What does Physical Custody mean in Maryland?

If you have physical custody of your child, it means that you have the right and obligation to provide a home for your child at given times, and to make the day-to-day decisions required during the time your child is actually with you. In Maryland, physical custody can be primarily with one parent and your child visits the other parent or shared between the parents.

What does Legal Custody mean in Maryland ?

If you have legal custody of your child, it means that you have the right and obligation to make long range decisions involving education, religious training, discipline, medical care, and other matters of major significance concerning the life and welfare of your child. It is important to understand that legal custody has nothing to do with where your child lives. In Maryland, legal custody can be sole, joint, or joint with tiebreaker.  Sole legal custody means one parent makes these decisions without the need to have the input of the other parent.  Joint legal custody means both parents work together to make agreed upon decisions for their child. Joint custody with tiebreaker requires both parents to work towards an agreed upon decision on the issue(s). However, if an agreement cannot be reached after trying to do so in good-faith, the parent with  tiebreaking authority makes the final decision on the issue.

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 Posted on October 01, 2020 in Trials

WEIRD SCIENCE:  MARYLAND’S NEW TEST FOR THE ADMISSIBILITY OF EXPERT TESTIMONY.

           For more than forty years, Frye-Reed endured as Maryland’s test for the admissibility of expert testimony based on novel scientific principles or techniques.  Named after its near century-old progenitor, Frye v. United States, 293 F. 1013 (D.C. Cir. 1923), and the Maryland case that adopted it, Reed v. State, 283 Md. 374 (1978), the test asks whether the scientific principle or technique at issue is “generally accepted” in the relevant scientific community.  Before the Supreme Court’s decision in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), the Frye test was the predominant standard for the admissibility of scientific evidence in state and federal courts.  Daubert, however, held that Frye was superseded by Federal Rule of Evidence 702.  The Supreme Court interpreted Rule 702 as providing for a “flexible” inquiry focused on the reliability of evidence, under which “general acceptance” is only of several relevant factors.  Id. at 594–95.  In years following Daubert, the majority of states followed the federal courts and replaced the Frye test with Daubert.  Maryland was one of the few hold outs, but no longer.

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 Posted on August 31, 2020 in Repeat Offender Sentencing

On August 25, 2020 the Court of Appeals issued an important ruling regarding the modification of mandatory sentences for drug offenders who had entered into a guilty plea.  The Court unanimously ruled that the trial court does in fact have the authority to modify mandatory sentences given to certain drug offenders who entered into a guilty plea.  The Court went further and said these sentences may be modified even over the objection of the State.  The further concluded that these mandatory drug offense sentences may be modified by the trial court even in instances in which the defendant failed to file a timely motion to modify sentence.  This important decision will allow thousands of inmates the right to file a request to have their mandatory drug offense sentences be modified.  The attorneys at Silverman Thompson Slutkin and White have combined criminal experience of well over 100 years and include both a State Court of Appeals Judge and a former Federal Judge.  Our aggressive and experienced attorneys stand ready to file motions to modify mandatory sentences in any jurisdiction in the State.

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 Posted on August 31, 2020 in Appellate

On July 14, 2020, the Maryland Court of Appeals issued its opinion in Plank v. Cherneski, (Misc. No. 3, Sept. Term 2019) (July 14, 2020), which finally harmonized Maryland case law as to the existence of a standalone “breach of fiduciary duty” claim. The Court held that such a claim exists under Maryland law and that its elements are: “(1) the existence of a fiduciary relationship; (2) breach of the duty owed by the fiduciary to the beneficiary; and (3) harm to the beneficiary.” The Court stressed that the nature of the fiduciary relationship and available remedies are fact specific and considered on a case-by case basis. “If a plaintiff describes a fiduciary relationship, identifies a breach, and requests a remedy recognized by statute, contract, or common law applicable to the specific type of fiduciary relationship and the specific breach alleged, a court should permit the count to proceed.” The remedy available depends on the specific fiduciary relationship at issue.

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