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Arthur v. Dist. of Columbia

September 09, 2004


Appeals from the Superior Court of the District of Columbia (CA9279-80) (Hon. Gregory Mize, Trial Judge).

Before Schwelb, Ruiz and Reid, Associate Judges.

The opinion of the court was delivered by: Reid, Associate Judge

Argued May 26, 2004

This case involves very contentious, labyrinthine litigation relating not only to marital property belonging to appellant Morris Arthur and his wife, Christine Arthur, but also to questions pertaining to interest on sums of money deposited initially in the court registry but later transferred to the District of Columbia Treasurer. Specifically, the issues presented in this appeal concern the trial court's decision to vacate the entry of default against Ms. Arthur in one aspect of the litigation, the relative equities of Mr. and Ms. Arthur in their marital property, and the interest earned, if any, on the principal sums paid into the court registry in this case. Because the trial court did not address or decide questions essential to appellate resolution, we vacate the trial court's judgment and remand the case to the trial court with instructions to address and resolve three matters consistently with this opinion: (1) the reason for its decision to vacate the entry of default against Ms. Arthur; (2) the question of ownership of the $14,500.00 principal paid into the court registry, and whether Mr. and Mrs. Arthur have consented to a partition of their marital property which they acquired as tenants by the entireties and if they have consented, their relative equities in the property; and (3) the determination of how much interest, if any, was earned on the $14,500.00 principal sum and the court-ordered $350.00 security deposited in the court registry and later transferred to the District's general fund; and whether the District had a fiduciary duty to see that interest was earned and computed. Furthermore, we hold that any interest earned or which should have been earned on the sums deposited in the court registry and later transferred to the District's general fund belonged to Mr. or Ms. Arthur, or both, and that the District's retention of such interest constituted a taking for public use under the Fifth Amendment to the Constitution of the United States; such taking may or may not require just compensation, depending on the net loss suffered by the owner(s) of the deposited funds.


The record shows that this matter has been in the courts since 1980 and has had a complicated procedural history, including a period of dormancy from around 1982 to 1996, traceable in part to Mr. Arthur's incarceration from about 1985 to 1996. The case commenced on July 7, 1980, when Mr. Arthur filed a complaint for injunction against a foreclosure sale of the Arthurs' marital property (held under a tenancy by the entireties), located in the 2600 block of Tenth Street, in the Northeast quadrant of the District of Columbia. The complaint against Irving Kamins and others alleged that Ms. Arthur's "whereabouts is presently unknown," and that Mr. Kamins had served Mr. Arthur with a foreclosure notice due to failure to pay a promissory loan note of $14,500.00. Since he had not been informed of the loan and the signature on the loan documents was not his, Mr. Arthur sought a judgment declaring the note and the accompanying deed of trust null and void due to forgery.*fn2 He also requested a temporary restraining order, as well as a preliminary injunction, both of which were granted.*fn3 However, the Honorable Paul R. Webber, III ordered him to "deposit additional security of $650 cash into the registry of the Court, in monthly installments of $65 each by the 10th day of each month commencing October 10, 1980.*fn4

When Mr. Arthur was unable to meet monthly mortgage payments on the marital property, he and Mr. Kamins reached an agreement to avoid foreclosure. To reflect their agreement, they filed a stipulation in the trial court on February 9, 1981, designed "to permit the sale of the property. . . ." "[T]he sum of $14,500.00 of the gross proceeds of [the] sale [of the marital property] [was] place[d] . . . into the Registry of the Court, to be held pending final disposition of this suit." The stipulation required whatever sum remained after the "satisfaction of the note" to be "disburse[d] . . . to [Mr. and Ms.] Arthur . . . in accordance with their equities in [the marital property]." Ms. Arthur was not a party to the stipulation.

In light of the stipulation and the deposited funds, however, Ms. Arthur was a necessary party. See Super. Ct. Civ. R. 19 (b).*fn5 Hence, on September 16, 1982, the trial court, the Honorable Joseph M. Hannon, "removed [the case of Morris Arthur v. Irving Kamins, et al.] from the trial calendar" and ordered Mr. Arthur's counsel to make Ms. Arthur a party to his lawsuit, and to serve her with a copy of the complaint within 30 days. In response to Mr. Arthur's motion, the time to serve Ms. Arthur was extended to November 15, 1982.*fn6 At this point, the case became dormant since Ms. Arthur was not served and the case was not restored to the calendar.

On February 17, 1988, the civil finance office of the Superior Court of the District of Columbia sent a check to the D.C. Treasurer in the amount of $14,850.00.*fn7 A praecipe noted, "Unclaimed deposits over 3 years old." Consequently no funds pertaining to this case remained in the court registry. There is no indication in the record that the parties were notified about the transfer of the deposit from the court registry to the D.C. Treasurer.

The case was lifted from its dormancy when Abraham Zaiderman, successor in interest to Mr. Kamins, duly moved on July 30, 1995, to restore the case to the active docket. He indicated that he would take steps to locate Mr. and Mrs. Arthur, and would "request that funds released from the court registry be restored . . . ." The court granted the motion on August 29, 1995. Thereafter, in mid-October 1995, Mr. Zaiderman filed two motions, one to join the District of Columbia as a party or third party plaintiff, and the other to restore the $14,850.00 to the court registry. On December 22, 1995, the District responded, asserting that the funds "should be deemed abandoned under the [District of Columbia] Disposition of Unclaimed Property Act, D.C. Code §§ 42-201 et seq. (1990). The Honorable Stephen Milliken denied Mr. Zaiderman's motion relating to the restoration of the $14,850.00 to the court registry and granted the sum to the District as abandoned property.

In addition to his effort to restore the funds to the court registry, Mr. Zaiderman filed a counterclaim against Mr. Arthur on August 31, 1996, seeking to have disbursed to him (that is, to Mr. Zaiderman) "$14,500.00 plus interest from March 10, 1980, to date of the entry of judgment at the rate provided for in the [promissory loan] Note." He also moved to add Ms. Arthur's name as a party plaintiff; this motion was granted on September 23, 1996.

New attorneys for Mr. Arthur entered their appearance on March 12, 1997, and filed motions designed to secure for Mr. Arthur all the funds originally placed in the court registry, and interest thereon. For example, on August 6, 1997, Mr. Arthur filed a motion for "summary judgment against the District of Columbia on any claim it may have as a third-party defendant to the $14,850.00 paid into the court registry in this matter and to the interest earned (approximately $8,000.00 to date) on that sum since February 17, 1988."*fn8 The motions were intended to establish that neither Ms. Arthur, Mr. Zaiderman, nor the District had any right to those funds or the interest that Mr. Arthur alleged should have accumulated through the years, and that such interest properly belonged to him. In 1998, the Honorable Shellie Bowers entered a "default judgment" against Ms. Arthur, subject to review by the trial judge scheduled to take over the later stage of the case, the Honorable Gregory Mize. When Judge Mize assumed responsibility for the case, he scheduled a jury trial that took place from July 24-26, 2000. After hearing testimony from several individuals at the trial, including former counsel for Mr. Arthur, Ms. Arthur, and her mother, the court resolved all of the issues as a matter of law, and dismissed the jury. An order summarizing its oral rulings was signed on July 27, 2000, and docketed on August 10, 2000. The trial court concluded that Mr. Zaiderman "is entitled to nothing" "as a matter of law," and that Mr. Arthur and Ms. Arthur "are entitled to $14,500.00 as tenants by the entireties." The trial court also vacated the entry of default against Ms. Arthur "on [Mr.] Arthur's cross[-]claim against her . . . because it is contrary to established D.C. statutes and case law," and hence the court denied Mr. Arthur's cross[-]claim "as [a] matter of law." Subsequently, on October 17, 2000, the court docketed an order denying prejudgment interest on both the $350.00 sum paid into the court registry by Mr. Arthur, and the $14,500.00, because "there is no legal basis for interest to accrue in [Mr. Arthur's] favor on [these sums]." Mr. Arthur filed timely notices of appeal.


This appeal requires us to focus on three matters: (1) the trial court's decision to vacate the default judgment against Ms. Arthur; (2) the ownership of the $14,500.00 in proceeds from the marital property of Mr. and Ms. Arthur; and (3) interest on the sums deposited in the court registry and later transferred to the District's general fund. We turn first to the entry of default issue.

Entry of Default

We begin by providing a factual context for our analysis. On April 17, 1997, some seventeen years after his complaint initiating this case was filed, Mr. Arthur lodged a motion for leave to file a cross-claim against Ms. Arthur, who had been added as a co-plaintiff, and whose time for entering an appearance in the case had been extended to April 27, 1997. Mr. Arthur's cross-claim sought a judgment declaring that Ms. Arthur's actions in arranging for someone else to sign his name on the $14,500.00 loan note and deed of trust "w[ere] fraudulent and inequitable and did not entitle her to any portion of the $14,500 paid into the court registry." Simultaneously, Mr. Arthur requested "entry of default judgment" against Ms. Arthur on his cross-claim. He based his request upon Ms. Arthur's failure to enter an appearance and to file an answer after she was added as a co-plaintiff. As he put it: "The Order of Publication in this case plainly placed Ms. Arthur on notice that any claim she has to the $14,500 in the court registry will be extinguished if she does not cause her appearance to be entered." Citing Super. Ct. Civ. R. 55 (b) (2), he further asserted that: "An application for judgment by default need not be served on Ms. Arthur, because she did not respond to the Order of Publication."

During a November 14, 1997, hearing before Judge Bowers, Mr. Arthur's motion for leave to file the cross-claim and for entry of default judgment was discussed. Judge Bowers reported that his chambers received a telephone call from Ms. Arthur advising that she was in South Carolina and would not be in court. Mr. Arthur's counsel reported that he had spoken with Ms. Arthur who "indicated in communications to [him] that she does not plan to become involved because she faces criminal liability for forgery if she does and that she has elected all along not to get involved for that reason." The trial court granted Mr. Arthur's motion for leave to file the amended cross-claim reflecting this information.

At a hearing on May 29, 1998, Judge Bowers declared that he had entered a "default judgment" against Ms. Arthur on April 27, 1998. Those present claimed that they did not receive the order. Subsequently, during a hearing on July 31, 1998, the parties informed Judge Bowers that they did not receive the order entering judgment of default against Ms. Arthur on Mr. Arthur's amended cross-claim. Judge Bowers responded that the order had been entered because there was a reference to it in another order granting Mr. Arthur's motion to strike Mr. Zaiderman's amended counterclaim against Ms. Arthur. That order stated in relevant part:

In view of the default judgment rendered against her on this date, Christine Arthur no longer has any interest in the registry funds which could be subject to any counterclaim. This default judgment was based not upon any alleged ruling from the bench on December 19, 1997, but from the fact that, as of April 27, 1998, she'd filed no responsive pleading to the amended cross[-]claim of [plaintiff], Morris Arthur, which was served on her on November 31, 1997 [sic].

After the court finished reading the docket entry, counsel for the District asserted: "Ms. Arthur has testified under oath that she can't come forward because she's been threatened by Mr. Arthur . . . ." When the trial court reiterated its view that Ms. Arthur had filed no pleading since being served in November 1997, counsel for the District referenced filings then recently made, and mentioned Ms. Arthur's "fear for her life," Mr. Arthur's alleged attacks on Ms. Arthur, and his incarceration "for 11 years for assault with intent to kill."*fn9 Upon further discussion at the July 31, 1998 hearing, relative to the reasons why Ms. Arthur had not filed a responsive pleading once she was added as a co-plaintiff, the trial court commented that it would sign the order entering "default judgment" and "indicating [Ms. Arthur] has no interest, but . . . [would] put a footnote on [the order]" to show that "[t]his is all subject to reconsideration . . . once [the court] hear[s] . . . [further] evidence. . . ." The trial court then signed an order, dated July 31, 1998, "nunc pro tunc to April 27, 1998." In the final paragraph of its order, the trial court declared:

FURTHER ORDERED, that a default judgment is entered on this Cross-Complaint against [Ms.] Arthur, and in favor of [Mr.] Arthur, DECLARING:

[Ms.] Arthur has no equity in the $14,500 paid into the court registry as against plaintiff [Mr.] Arthur. First American Insurance Company (successor in interest to Columbia Real Estate Title Insurance Company, which succeeded to the interest of Washington Title & Abstract Corporation) is so instructed, in accordance with the "Stipulation" filed with this*fn10 court on or about February 9, 1981.

The trial court added a footnote to its order which reads: "This default judgment against [Ms.] Arthur on [Mr.] Arthur's Amended Cross-Complaint will be revisited and reconsidered following the hearing and resolution of [Mr.] Zaiderman's recently filed Motion to Vacate Summary ...

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