Maryland Court of Special Appeals Case Summaries: September 17, 2007

Daily Record, The (Baltimore), Sep 17, 2007 by The Daily Record

Maryland Court of Special Appeals

Civil Procedure

Nonmutual collateral estoppel

BOTTOM LINE: The ALJ properly applied the offensive use of nonmutual collateral estoppel where the appellant, a disbarred attorney who was challenging the revocation of his insurance producer's license, sought to relitigate matters already decided by the Court of Appeals in the attorney grievance case.

CASE: Culver v. Maryland Insurance Commissioner, No. 2508, September Term 2005 (filed Sept. 7, 2007) (Judges SALMON, Adkins & Meredith).

FACTS: Anyone selling insurance in Maryland must be licensed as an insurance producer by the Maryland Insurance Administration (MIA). Allan J. Culver, while an attorney admitted to practice in Maryland, submitted his application for a license to sell insurance in August 2001.

On the application, Culver informed the MIA that he was under investigation by the Attorney Grievance Commission of Maryland (AGC). The MIA put Culver's application on hold until the AGC concluded its investigation.

As a result of the AGC's investigation, legal proceedings were brought against Culver; which were concluded by an opinion by the Maryland Court of Appeals. The Court held that Culver had MRPC 1.5(c), as adopted by Maryland Rules 16-812 (Fees) and 16- 607(b)(2), during the course of his representation of a client. Culver was suspended indefinitely from the practice of law but was granted the right to seek reinstatement after thirty days.

In February 2003, about four months after the effective date of his suspension, Culver's license to practice in Maryland was reinstated. By letter dated March 17, 2003, Culver informed the MIA of the outcome of the disciplinary proceedings and his reinstatement. His letter advised that the AGC was still investigating another matter involving his conduct. On May 2, 2003, the MIA issued Culver an insurance producer's license.

The other matter that the AGC was investigating involved allegations stemming from Culver's representation from 1993 to 1994 of a female client who was seeking a divorce. That investigation led to charges that were ultimately considered by the Court of Appeals. The Court held that Culver had violated MRPC 1.2 (Scope of representation), 1.3 (Diligence), 1.5, 1.7 (Conflict of interest), 1.15 (Safekeeping property), 3.1 (Meritorious claims and contention s), 3.2 (Expediting litigation), 3.3 (Candor toward the tribunal), 3.4 (Fairness to opposing party and counsel), and 8.4 (Misconduct).

Among other things, the Court ruled: (1) Culver's sexual intercourse with his client while representing her in a divorce case violated several rules; (2) Culver's advice to his client to obtain credit card loans in order to pay legal fees with the intent of having the debt discharged in bankruptcy was fraudulent conduct; and (3) Culver violated rules governing fees and payments from his client.

The Court of Appeals disbarred Culver from the practice of law in Maryland effective May 13, 2004. In December 2004, the MIA revoked Culver's insurance producer's license.

Intending to challenge the revocation, Culver asked for an evidentiary "contested hearing" to be held by the Office of Administrative Hearings (OAH). The MIA moved for summary disposition of the matter.

The Administrative Law Judge (ALJ) assigned to the matter refused to issue the subpoena requested by Culver and sent the parties a letter advising that the "contested hearing" requested was being converted to a "motions hearing." The motions hearing was held before the ALJ on April 13, 2005.

The ALJ held that in light of the facts as established by the most recent Court of Appeals decision involving Culver's actions, an evidentiary hearing was unnecessary. The ALJ issued a recommendation for summary disposition in favor of the MIA.

On July 14, 2005, the MIA issued its final order of revocation. Both the circuit court and the Court of Special Appeals affirmed the MIA's order.

LAW: Collateral estoppel, or issue preclusion, bars a party from re-litigating an issue that he or she has already litigated unsuccessfully in another action. Collateral estoppel is of the "nonmutual" variety if one of the parties in the present suit was neither a party nor in privity with a party to the prior action.

Nonmutual collateral estoppel may arise in two circumstances: Offensive use of nonmutual collateral estoppel occurs when a plaintiff seeks to foreclose a defendant from relitigating an issue the defendant has previously litigated unsuccessfully in another action against a different party.

Defensive use of nonmutual collateral estoppel occurs when a defendant seeks to prevent a plaintiff from relitigating an issue the plaintiff has previously litigated unsuccessfully in another action against a different party. Welsh v. Gerber Prods., Inc., 315 Md. 510 , 518 n.6 (1989).

The Court of Appeals has recognized defensive nonmutual collateral estoppel but has "yet to formally embrace offensive nonmutual collateral estoppel." Rourke v. Amchem Prods., Inc., 384 Md. 329, 349 (2004). The Court's holding was based on conflict of laws considerations rather than on the merits of offensive nonmutual collateral estoppel as a rule of law.