Luria v. Standard Federal Savings & Loan Ass'n ( 2004 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-1356
CHARLES LURIA,
Plaintiff - Appellant,
versus
STANDARD FEDERAL SAVINGS AND LOAN ASSOCIATION;
RESOLUTION TRUST CORPORATION,
Defendants - Appellees.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Jillyn K. Schulze, Magistrate Judge. (CA-
02-3656-8-JKS)
Argued: October 28, 2004 Decided: November 23, 2004
Before WILKINSON and WILLIAMS, Circuit Judges, and Glen E. CONRAD,
United States District Judge for the Western District of Virginia,
sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: Aaron Robert Caruso, ABOD & CARUSO, L.L.C., Rockville,
Maryland, for Appellant. Jaclyn Chait Taner, FEDERAL DEPOSIT
INSURANCE CORPORATION, Washington, D.C., for Appellees. ON BRIEF:
Ann S. DuRoss, Assistant General Counsel, Colleen J. Boles, Senior
Counsel, FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, D.C.,
for Appellees.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
The appellant, Charles Luria (“Luria”), was the general
partner of C. L. Marsh/Inglewood Limited Partnership
(“Marsh/Inglewood”). Marsh/Inglewood planned to construct a hotel
in Landover, Maryland. In October 1988, the partnership obtained
construction financing from Standard Federal Savings Bank
(“Standard Federal”) in the form of two notes, one for $9,800,000
and the other for $1,700,000. Both notes were secured by deeds of
trust that granted Standard Federal a lien on the property as well
as on the proceeds of the business. After Marsh/Inglewood missed
several payments, Standard Federal exercised its right to receive
all operating revenues attributable to the hotel’s operation.
On June 20, 1991, Luria and a representative of Standard
Federal entered into a letter agreement whereby all proceeds
generated by the hotel would be deposited in an account maintained
and operated by Standard Federal. Under the terms of the letter
agreement, Marsh/Inglewood would continue to operate the hotel and
would submit requests to Standard Federal for the payment of
operating expenses with priority for the mortgage, payroll and
suppliers. Standard Federal would wire the requested funds
directly to Marsh/Inglewood’s account.
Beginning on June 24, 1991, Marsh/Inglewood commenced
depositing the hotel proceeds into the Standard Federal account.
The letter agreement remained in effect until October 1992, when
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Marsh/Inglewood filed for Chapter 11 bankruptcy protection. During
the term of the letter agreement, a variety of federal, state and
local taxes went unpaid.
Luria himself filed for personal bankruptcy protection in
May 1994 because of issues related to the hotel and the unpaid
taxes. At some point in the bankruptcy case, Luria asserted that
Standard Federal was responsible for the unpaid taxes. The
bankruptcy trustee declined to pursue a claim for the unpaid taxes
against Standard Federal. After the trustee filed a notice that he
was abandoning any such claim, the bankruptcy court permitted Luria
to pursue the claim himself. Ultimately, Luria’s personal
bankruptcy estate paid $550,000 to satisfy the various obligations
to federal, state and local taxing authorities.
In November 2002, Luria filed a complaint in the United
States District Court for the District of Maryland against Standard
Federal and the Resolution Trust Corporation, the receiver for
Standard Federal. Luria claimed that Standard Federal had a duty
to pay federal, state and local taxes during the period covered by
the letter agreement and asserted claims against Standard Federal
for breach of fiduciary duty, indemnification, negligence and
fraud. In March 2004, the United States Magistrate Judge* granted
the motion for summary judgment filed by the FDIC, the Resolution
* This case was decided by the Magistrate Judge upon consent
of the parties under 28 U.S.C. § 636(c)(1).
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Trust Corporations’s successor. The Magistrate Judge held that
Luria had failed to demonstrate that Standard Federal had any legal
duty to pay the taxes related to the hotel’s operation.
On appeal, Luria contends that the Magistrate Judge erred
in granting summary judgment to the defendants because Standard
Federal did have contractual, legal, and statutory duties to ensure
the payment of all taxes during the term of the letter agreement.
We affirm.
We review the Magistrate Judge’s grant of summary
judgment de novo. Hooven-Lewis v. Caldera, 249 F.3d 259, 265 (4th
Cir. 2001). A party is entitled to summary judgment if there is no
genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(c). We review the
record in the light most favorable to the non-moving party.
Hooven-Lewis, 249 F.3d at 265.
Under Maryland law, the interpretation of a written
agreement is initially a question of law for the court. Suburban
Hosp., Inc. v. Dwiggins, 596 A.2d 1069, 1075 (Md. 1991). When the
language of an agreement is unambiguous, however, a court will not
construe the agreement. General Motors Acceptance Corp. v.
Daniels, 492 A.2d 1306, 1309 (Md. 1985). Instead, the parties are
presumed to have meant what a reasonable person in their positions
would have thought the plain language stated. Id.4
The letter agreement between Luria and Standard Federal
provided as follows:
1. All proceeds from the hotel are to be deposited in the
Standard Federal account on a daily basis.
2. Funds will be wired or transferred into your account upon
submission of the bills you are requesting to be paid.
We will pay bill [sic] on a daily or weekly basis, or
whenever they need to be paid. Chris Long, Rick Morrison
and myself are authorized to permit a transfer of funds.
3. All funds from the property are to be used for the
property. The priority of payment will be for the
mortgage, payroll and suppliers.
4. There is no reason for any changes in management.
The Magistrate Judge examined the language of the letter
agreement and concluded that the language was clear, unambiguous
and complete, and did not indicate any intention for Standard
Federal to assume Marsh/Inglewood’s tax obligations or to act in
Marsh/Inglewood’s best interests. Although Standard Federal did
pay the hotel’s real estate taxes on one occasion, the Magistrate
Judge concluded that this isolated payment did not support a
conclusion that Standard Federal had assumed all of the hotel’s tax
obligations. We agree with the Magistrate Judge’s well considered
analysis of the letter agreement and the circumstances at issue
here. The record does not support the existence of a contractual
duty on Standard Federal’s behalf to pay the hotel’s tax
obligations.
Luria contends that Standard Federal had a legal duty
under the common law to pay the hotel’s taxes because a portion of
the hotel proceeds represented funds that were held in trust for
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the taxing authorities. As the Magistrate Judge noted, however,
there is no basis in the evidence or law upon which to find that
Standard Federal held the hotel’s proceeds in trust for taxing
authorities. Control of the hotel’s proceeds, alone, does not
provide a basis for a legal duty, particularly when Marsh/Inglewood
retained the capacity to request funds for the payment of all its
operating expenses.
On appeal, Luria references several provisions of the
Internal Revenue Code and Maryland’s general tax law claiming that
these sections provide a statutory basis for Standard Federal’s
duty to pay the hotel’s tax obligations. His reliance on these
statutes, however, is unavailing.
A person having control of the payment of wages may be
deemed an employer responsible for withholding taxes. 26 U.S.C. §
3401(d). In this case, however, Standard Federal did not pay
Marsh/Inglewood employees and did not make any determination as to
which employees should be paid. Standard Federal simply forwarded
funds to Marsh/Inglewood. Marsh/Inglewood retained control and
discretion in the payment of wages to its employees.
A “responsible person” may have a duty to ensure payment
of withholding taxes if that person had the actual authority or
ability to pay the taxes owed. 26 U.S.C. § 6671(b); Plett v.
United States, 185 F.3d 216, 219 (4th Cir. 1999). Also see Md. Code
Ann., Tax-Gen. § 10-905(d). Here, however, Marsh/Inglewood
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retained the authority for day-to-day management of the hotel,
controlled the company’s payroll, had the power to write checks
after receiving funds from Standard Federal, and had the sole
ability to hire and fire employees. Thus, Marsh/Inglewood, not
Standard Federal, was the “responsible person” liable for the
payment of withholding taxes.
A lender may be liable for payroll taxes if that lender
“supplies funds to or for the account of an employer for the
specific purpose of paying wages of the employees of such employer,
with actual notice or knowledge . . . that such employer does not
intend to or will not be able to make timely payment or deposit” of
the required amounts of payroll taxes. 26 U.S.C. § 3505(b).
Liability under this section “presupposes advances for the specific
purpose of paying wages with actual notice or knowledge that the
trust funds will not or cannot be paid by the employer.” Abrams v.
United States, 333 F. Supp. 1134, 1147 (D.C. W. Va. 1971). Here,
however, there is no evidence in the record that Standard Federal
had actual notice or knowledge that Marsh/Inglewood or Luria were
not paying the proper amount of withholding taxes.
We agree with the Magistrate Judge that Standard Federal
was under no duty, legal, contractual or statutory, to pay the tax
obligations of Marsh/Inglewood. As a result, we also agree that it
is unnecessary to consider Standard Federal’s argument that Luria’s
claims are barred by Maryland’s three year limitations period. The
decision of the district court is therefore
AFFIRMED.
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