Southern Management Corporation v. Robert Rood, IV

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-2359
SOUTHERN MANAGEMENT CORPORATION RETIREMENT TRUST,
Plaintiff - Appellee,
v.
ROBERT FULTON ROOD, IV,
Defendant – Appellant,
and
CHARLES TIMOTHY JEWELL,
Defendant,
and
GARY A. ROSEN,
Trustee.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Deborah K. Chasanow, Chief District
Judge. (8:11-cv-03059-DKC; 08-17199-PM; 09-00188-PM)
Submitted: June 24, 2013 Decided: July 10, 2013
Before DUNCAN, KEENAN, and FLOYD, Circuit Judges.
Affirmed by unpublished per curiam opinion.
John O. Iweanoge, II, IWEANOGE LAW CENTER, Washington, D.C., for
Appellant. Paul Sweeney, YUMKAS, VIDMAR & SWEENEY, LLC,
Annapolis, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
Robert F. Rood, IV, appeals from the district court’s
order affirming the judgment of the bankruptcy court finding him
liable for fraud and civil conspiracy and fraudulent conveyance
of corporate assets under Maryland law. Rood challenges the
sufficiency of the evidence to support the judgment and he
contends that the bankruptcy court erred by proceeding with the
trial when a prior judgment had been entered against him based
on the same conduct, and that the bankruptcy court abused its
discretion by prohibiting him from introducing evidence and
testifying at the trial.
Fraud, under Maryland law, requires evidence that the
defendant made a false representation to the plaintiff, that the
defendant knew the statement was false or made the statement
with reckless indifference to the truth of the statement, that
the misrepresentation was made with the purpose of defrauding
the plaintiff, and that the plaintiff reasonably relied on the
statement and suffered damages from that representation.
Gourdine v. Crews, 955 A.2d 769, 791 (Md. 2008); VP Corp. v.
Wrexham Aviation Corp., 715 A.2d 188, 193 (Md. 1998). Civil
conspiracy requires a showing that one or more other persons
agreed “to accomplish an unlawful act or to use unlawful means
to accomplish an act not itself illegal” and that the act or
means employed resulted in loss or damage to the plaintiffs.
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Mackey v. Compass Mktg., Inc., 892 A.2d 479, 485 (Md. 2006).
For fraudulent conveyance, the plaintiff must show that a
transfer was made while the transferor was insolvent or that the
transfer rendered the transferor insolvent and no fair
consideration was given for the transfer. Lacey v. Van Royen,
267 A.2d 91, 93-95 (Md. 1970). With these standards in mind, we
have reviewed the evidence in this case and we find that the
bankruptcy court’s judgment as to each cause of action was
supported by sufficient evidence.
Rood also contends that the bankruptcy court erred by
proceeding with the trial in light of his assertion of the
defense of res judicata. Southern Management Corporation
Retirement Trust (“SMCRT”) had filed a previous adversary
proceeding against Rood. The bankruptcy court entered a default
judgment against Rood in that case in the amount of
$13,876,353.47.
Prior to resolution of SMCRT’s adversary proceeding,
the bankruptcy trustee for Rood’s bankruptcy estate and for the
numerous entities controlled by Rood which were also in Chapter
7 bankruptcy, filed the adversary proceeding underlying this
appeal. Although Rood asserted res judicata as an affirmative
defense, he did not move to dismiss the complaint or move for
summary judgment on that basis.
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The case proceeded to trial without an objection by
Rood on the basis of res judicata. In the Memorandum of
Decision entering judgment against Rood, the bankruptcy court
acknowledged SMCRT’s judgment against Rood in the prior
proceeding and ruled that “the Plaintiffs’ recovery from Rood in
the prior case [] should be credited and thus damages in this
case are not an additional recovery but rather are co-extensive
with that judgment. The plaintiff is not entitled to double
recovery for the same injury.”
Generally, res judicata is asserted as a basis for
dismissing a complaint or entering summary judgment for a party.
The doctrine of res judicata was “‘designed to protect litigants
from the burden of relitigating an identical issue with the same
party or his privy and [to promote] judicial economy by
preventing needless litigation.’” Laurel Sand & Gravel, Inc. v.
Wilson, 519 F.3d 156, 161-62 (4th Cir. 2008) (internal
quotations omitted)). Where, as here, the issue was not
presented to the court for a ruling until after a trial on the
issues, the defense is waived. Because the bankruptcy court
limited SMCRT’s recovery under the single recovery rule, Rood
cannot show that he was harmed by the entry of judgment in this
action. We find no abuse of discretion by the district court by
declining to address this issue, which was raised for the first
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time on appeal. See Levy v. Kindred, 854 F.2d 682, 685 (4th
Cir. 1988).
Rood also asserts that the district court erred by
prohibiting him from presenting any evidence and calling any
witnesses as a sanction for his repeated discovery violations.
Rule 37(d) of the Federal Rules of Civil Procedure, made
applicable to bankruptcy cases by Fed. R. Bankr. P. 7037(a),
affords the trial court wide discretion to sanction a party for
failing to comply with discovery requests and orders. Fed. R.
Civ. P. 37(d). This court reviews the decision to sanction a
party for discovery violations for abuse of discretion.
National Hockey League v. Metro. Hockey Club, Inc., 427 U.S.
639, 642 (1976); Mutual Fed. Sav. and Loan Ass’n v. Richards &
Assocs., Inc., 872 F.2d 88, 92 (4th Cir. 1989). Factors to
consider in reviewing a discovery sanction are whether the
violations were done in bad faith, any prejudice to other
parties, the need for deterrence, and whether a less severe
sanction would be effective. Southern States Rack & Fixtures,
Inc. v. Sherwin-Williams Co., 318 F.3d 592, 597 (4th Cir. 2003);
Mutual Fed. Sav. & Loan, 872 F.2d at 92.
We have reviewed the record in light of these
standards and conclude that, in light of Rood’s continuing
violations of discovery orders and failure to comply with the
bankruptcy court’s prior sanctions order, the bankruptcy court
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did not abuse its discretion by prohibiting Rood from testifying
or presenting evidence in this case. See Fed. R. Civ. P.
37(b)(2)(A) (made applicable to bankruptcy cases by Fed. R.
Bankr. P. 7037(a)); Chambers v. NASCO, Inc., 501 U.S. 32, 44-45
(1991) (“A primary aspect of th[eir] discretion is the ability
to fashion an appropriate sanction for conduct which abuses the
judicial process.”); see also Mut. Fed. Sav. & Loan, 872 F.2d at
94 (upholding default judgment entered as a sanction stating,
the “judicial system will not tolerate repeated
misconduct . . .”).
Accordingly, we affirm the district court’s order
upholding the judgment of the bankruptcy court. We dispense
with oral argument because the facts and legal contentions are
adequately presented in the materials before this court and
argument would not aid the decisional process.
AFFIRMED
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