## Facts

- Dorothy J. Smith owned a house in Baltimore County, Maryland.
- Smith intended that her son, George J. Kafka, Jr., would receive her property upon her death and had arranged other assets to pass to him outside probate.
- In 2009, Smith executed a deed (prepared by her attorney) conveying the house to Kafka, while reserving a life estate for herself.
- The 2009 deed was recorded in 2010.
- In 2011, Smith executed and recorded a second deed reserving a life estate but purporting to convey the remainder interest in the same house to her sister, Gladys C. Hess, subject to a contingency tied to Smith’s reserved power to dispose of the property during her lifetime.
- Smith died on March 31, 2015.
- When Kafka came to Maryland for the funeral, he found most valuable personal property missing from the house, and Hess demanded that he leave the premises.
- Unsure of his immediate rights and wanting to avoid conflict, Kafka stayed away from Hess.
- Kafka later learned that Hess was trying to sell the house even though she acknowledged that a title search showed the property had been deeded to Kafka.
- Kafka attempted to sell the property, but title insurers would not insure title because the 2011 deed created a cloud on the record title.
- Hess (and/or those acting with her) spent substantial sums—about $71,000 or more—on maintenance, services, and work intended to prepare the property for sale.
- An attorney sent Kafka a letter asserting that, because Hess had spent significant money on the property, she should receive half the net proceeds from any sale.
- Kafka filed a federal diversity action seeking declaratory judgment confirming his ownership and that he owed Hess nothing.
- Hess filed a separate state action; it was removed to federal court and consolidated with Kafka’s case.
- In the consolidated litigation, Hess ultimately conceded Kafka was the rightful owner but continued to seek restitution based on her expenditures.
- Kafka moved for summary judgment on the declaratory claim and on Hess’s remaining restitution/unjust-enrichment claim.

## Issues

1. Whether the earlier recorded deed conveying a remainder interest to Kafka left Smith with any remainder interest she could later convey to Hess by a second deed.
2. Whether Hess could recover restitution/unjust enrichment for money spent maintaining and preparing the property for sale when Kafka did not request the work and did not have a meaningful opportunity to accept or reject the alleged benefit.
3. Whether Kafka was entitled to summary judgment declaring he owed Hess no reimbursement based on her post-death (and related) expenditures connected to the property.

## Decision

- The court granted Kafka’s motion for summary judgment on his declaratory-judgment claim and on the remaining unjust-enrichment/restitution count asserted by Hess in the consolidated case.
- The court declared that Kafka held title to the property because Smith could not convey to Hess a remainder interest she had already conveyed to Kafka by the 2009 deed.
- The court concluded the 2011 deed could not defeat Kafka’s ownership because the earlier conveyance left Smith without the remainder interest necessary to transfer it again.
- The court rejected Hess’s unjust-enrichment claim for her expenditures because, even assuming Kafka received some benefit from work performed on the property, Kafka did not have a realistic opportunity to accept or reject the expenditures as “benefits” for which he would be charged.
- The opinion also addressed a motion to dismiss filed by Hess and related parties against Kafka’s counterclaim and third-party claims in the consolidated action, granting that motion in part and denying it in part.

## Legal Principles

- Under Maryland property law, once a grantor conveys a remainder interest (while reserving only a life estate), the grantor generally lacks power to convey that same remainder interest to a different grantee in a later deed.
- Declaratory relief is appropriate where competing recorded instruments cloud title and prevent marketable, insurable title, and the parties dispute the legal effect of the instruments.
- Maryland unjust enrichment requires proof that: (1) the plaintiff conferred a benefit on the defendant, (2) the defendant knew of or appreciated the benefit, and (3) the defendant accepted or retained the benefit under circumstances that make it unfair to keep without payment.
- Restitution is not available where the defendant did not have a fair chance to accept or reject the alleged benefit—particularly where expenditures were made without the defendant’s request, control, or ability to stop the work.
- A party who spends money improving or maintaining property while lacking enforceable title runs the risk that the record owner will not be required to reimburse those costs absent facts satisfying unjust-enrichment elements.

## Conclusion

Kafka established ownership under the earlier deed conveying him the remainder interest, and the later deed purporting to convey the same interest to Hess could not defeat that title. Although Hess spent significant money on the property, the court held she could not recover restitution because Kafka had no meaningful chance to accept or reject the expenditures as a benefit for which he should pay, so summary judgment was entered for Kafka on both the title declaration and Hess’s unjust-enrichment claim.


Kafka v. Hess, 2017 WL 2439142 (2017)