Educational Testing Service v. Hildebrant (Ct. of Appeals)

Filed: May 10, 2007—Opinion by Judge Irma Raker

Hildebrant sued Educational Service ("ETS") for malicious defamation and breach of contract after ETS concluded that Hildebrant had not followed mandatory testing procedures and canceled her test scores. According to Hildebrant, ETS breached its contract with her by failing to “"fairly and accurately report her leadership assessment scores" to the Montgomery County Board of Education. The Court of Special Appeals had earlier reversed summary judgment on the breach of contract claim and remanded for further proceedings based on an affidavit by Hildebrant denying that she failed to follow testing procedures.

The Court of Appeals disagreed on the ground that an affidavit that presents a general, conclusory denial of misconduct is not sufficient to establish a genuine dispute of material fact as to whether a testing proctor acted in bad faith. The Court ruled that the trial judge was correct in granting summary judgment for ETS where Hildebrant acknowledged her acceptance of the contract with ETS and did not create a genuine issue of material fact as to whether Baker had acted in bad faith. The decision by the CSA was reversed with instructions to remand.

The full opinion is available in PDF.

O’gray Import & Export v. British Airways (U.S.D.C. Md.)(Not Approved for Publication)

Filed May 4, 2007--Opinion by Judge Richard D. Bennet

In an action by O’gray Import & Export against British Airways, PLC for damages due to British Airways’s delivery of spoiled cargo, the court granted a defense motion for summary judgment. According to the facts found by the Court, O’gray Import & Export hired British Airways to transport smoked fish from Accra, Ghana to Baltimore-Washington International Airport. The cargo arrived more than five days after the expected date and was delivered to the wrong shipper. When the FDA inspected the fish it was released to O’gray but placed on a hold because there was evidence of mold. Eventually the FDA found that the fish was not edible for sale to the public and denied entry of the shipment.

The Court determined that O’gray had failed to comply with the notice requirements of the Warsaw Convention, which governed the transportation at issue, and therefore its claim against British Airways was barred. On that basis the court granted the Defendant’s Motion for Summary Judgment.




The full opinion is available in PDF.

Halpert v. Dental Care Alliance, LLC (Maryland U.S.D.C.) (Not approved for publication)

Signed April 30, 2007. Memorandum Opinion by Judge Richard D. Bennett (not approved for publication)

In an action to enforce the contractual obligation of another entity, which obligation had been assumed by the defendant ("Dental Care Alliance"), to pay certain sums to the plaintiff ("Halpert"), on consideration of cross motions for summary judgment, the judge DENIED Halpert's motion, GRANTED summary judgment in favor of Dental Care Alliance on three of four counts and DENIED summary judgment on the final count, so the case will proceed to trial.

(synopsis to follow)

The Memorandum Opinion is available in PDF format.

Metro Ready Mix, Inc. v. Essroc Cement Corp. (Maryland U.S.D.C.)(Not Approved for Publication)

Order Signed April 25, 2006--Judge Catherine C. Blake. Not approved for publication.

Metro Ready Mix, Inc. claims damages in a case arising out of contracts for the supply of cement. Metro initially filed a complaint in this court against Essroc Cement Corp. alleging breach of contract and breach of warranty; subsequently it amended the complaint to add allegations of intentional misrepresentation, intentional concealment, negligence, and negligent misrepresentation and to seek punitive damages. This ruling deals with Essroc's motion to dismiss the added claims.

Metro is in the business of supplying and placing ready mix concrete for construction jobs. Cement is a necessary ingredient in order to mix concrete, and for the years leading up to and including 2004, Metro obtained much of its cement from Essroc. In late 2004, Metro bid for, and was awarded, several large contracts for various projects all requiring high-strength concrete. At unclear times between November 2004 and March 2005, Metro and Essroc allegedly entered into oral contracts for the delivery of cement sufficient to cover Metro's needs for these projects. In December 2004 and January 2005, Metro, using cement supplied by Essroc, created concrete mix designs for its large projects. These mix designs received approval from the contractors and from independent testing agencies, certifying that the concrete met strength and other testing requirements.

Beginning in May 2005, Metro began to receive complaints about the strength of its concrete. In December 2005 and January 2006, Metro had its concrete tested, and the tests revealed that the cement supplied by Essroc was defective. As a result of the defective cement, Metro alleges that its customers began terminating their contracts and charging Metro for remedial costs caused by the problematic concrete. Because of the terminated contracts, Metro had to sell off some equipment at a loss, and pay for the cancellation of other leased equipment. Apparently Metro has since been forced to close its business.

Metro alleges that Essroc made misrepresentations inducing Metro to contract with Essroc. Metro representatives met with Essroc representatives in the fall of 2004 and early 2005. At these meetings, Metro alleges that Essroc stated it could provide Metro with the quality and quantity of cement it needed. Metro alleges that when Essroc made these assurances, however, it knew it was not capable of providing safe and suitable cement.

Metro's complaint included claims for intentional misrepresentation, intentional concealment, negligence, and negligent misrepresentation. Metro alleged that Essroc's two main plants were experiencing severe maintenance and quality control problems in the spring of 2005, which brought Essroc's cement in violation of the standards for cement manufacturing established by the American Society for Testing and Materials (ASTM). In its intentional misrepresentation claims, Metro alleges that in 2004 and February 2005, Essroc falsely represented that it was capable of supplying Metro with suitable cement that would meet ASTM standards, and did so "with actual malice, ill will, and spite towards Metro."

In its intentional concealment claim, Metro alleges that Essroc knew and did not disclose the problems at its manufacturing plants. In its negligence claim, Metro alleges that Essroc had a duty to exercise ordinary care in the production of cement, and breached that duty by selling substandard cement. Lastly, in its negligent misrepresentation claim, Metro alleges that Essroc falsely represented that the cement would be safe and suitable for Metro's needs. Essroc moved to dismiss the added claims.

As to the fraud allegations, the Court found that there appears to be no specific evidence or allegation that Essroc did not believe it could fulfill the contracts at the time they were entered or that it was attempting to deceive or defraud Metro with its representations. Thus, it dismissed Metro's claims for fraudulent misrepresentation and fraudulent concealment for failure to meet the specificity requirements of Rule 9(b). Because Metro did not proffer in its opposition or at the hearing any evidence that would support these claims, the Court ruled that no further leave to amend would be granted.

Because it found that the "application of the somewhat uncertain contours of Maryland law" pertaining to negligence and negligent misrepresentation in the context of a business dispute might be assisted by further factual development, and discovery will be proceeding on the contract claims in any event, Essroc's motion to dismiss the negligence and negligent misrepresentation claims were denied, subject to renewal if warranted as a summary judgment motion at the close of discovery.

Finally, because Metro has not alleged facts to show that Essroc acted with "actual malice," the Court dismissed any claim for an award of punitive damages.

The opinion and order are available in PDF.

Holland v. Psychological Assessment Resources, Inc. (Maryland U.S.D.C.) (Approved for Publication)

Signed April 30, 2007--Memorandum and Order by Judge Christine C. Blake.

Dr. John Holland ("Holland") contracted with PAR in 1986 and again in 1989 to publish his career guide ("SDS"). Under the terms of the agreement, Holland transferred his rights in SDS to PAR, subject to those expressly reserved, in exchange for royalty payments based on PAR's sales of the SDS and related products. PAR created an internet version of the SDS between 1997 and 1998 and launched it on-line in September 1998 without Holland's consent. Despite Holland's continued objections to the internet version of SDS ("internet version"), PAR has maintained it on-line and attached Holland's name and biographical information to it.

Holland's intitial 1999 complaint alleged the agreement had been breached due to PAR's failure to obtain Holland's consent and to pay him proper royalties for the internet version. Holland's subsequent amendments resulted with the following claims: breach of contract (count II); breach of the covenant of good faith and fair dealing (count III); false light (invasion of privacy) (count IV); unfair and deceptive trade practices (count V); violation of the Lanham Act (count VI); and unjust enrichment/restitution (count VII). Holland further requested the court to render a declaratory judgment under the Maryland Uniform Declaratory Judgments Act regarding the breach of contract issue (count I) and the parties' rights and obligations under the contract (count VIII).

The core conflict in this case is the result of a contract that was entered into before the rise of the internet; specifically, differences between pre- and post-internet contracts and, in this case, the effect on post-internet SDS. The standard for summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The Supreme Court has clarified that this does not mean that any factual dispute will defeat the motion. The party opposing a properly supported motion for summary judgment may not rest upon the mere allegations or denials of pleadings, but rather must set forth specific facts showing that there is a genuine issue for trial. The court must view the evidence in the light most favorable to the nonmovant and draw all reasonable inferences in his favor without weighing the evidence or assessing the witness' credibility. However, the court also must abide by the affirmative obligation to prevent factually unsupported claims and defenses from proceeding to trial.

Under Maryland law, contracts are interpreted objectively. A court generally interprets the terms of a written contract as a matter of law; a determination that terms are ambiguous is likewise a matter of law. Ambiguity arises when, to the perception of a reasonably prudent person in the position of the parties, the terms are susceptible to more than one meaning. To resolve ambiguity and determine the intent of the parties, a court will look to evidence from extrinsic sources. At the heart of this case is a conflict over whether Holland's consent was required prior to PAR's release of the internet version. The consent requirement only arose when PAR sought to publish and print a revised edition of the original works. "When PAR seeks to publish all test materials which incoroprate the original works, Holland must be afforded an opportunity to review and comment on the materials but his consent is not required." The court reasoned that, despite the contract's ommission of revised editions of original works, logic would dictate that PAR would wish to incorporate the most up to date material possible - revisions - into its new products, implying the existence of a category of materials other than original works - again, revisions - which PAR might seek to incorporate, thereby giving rise to a category of products incorporating revisions which is not specifically defined by the terms of the contract.

This Court was presented with two key ambiguities which required resolution in order to establish the parties' rights and responsibilities under the contract. First, the definition of "revised edition" under the contract is unclear. Second, once this definition has been established, is whether the internet version is a revised edition, in which case the consent provision of the contract is triggered. The Court accepted the parties' agreement that a revised edition is one in which the content has been substantively changed from previous editions. "Substantive" was defined as "belonging to the essence or intrinsic nature of the substance." The Court adopted "substantive change" as the basis of the understanding of "revised edition." In this instance, changes from print to internet were a substantive change because millions of people may be exposed to an abbreviated version of the test where the truncation is not offset by the presence of a counselor.

In addition to the breach of contract claim, Holland requested the Court to construe the contract and declare the parties' rights under it (count VIII). As one of the contract's central ambiguities could not be resolved, this request was denied. With respect to the breach of contract claim , Holland based his claim on an express contractual provision stating that "the parties hereto shall deal with one another fairly and in good faith." This claim should have been characterized as another ground for breach of contract rather than as a separate cause of action, which is not available. The allegations of breach of the covenant of good faith and fair dealing were thus subsumed within the breach of contract claim (count I) and did not proceed as an independent cause of action. Presenting an individual "before the public in a false light" (count III) is one variation of the more general tort of invasion of privacy. For liability to attach for a false light claim in Maryland, "(a) the false light in which the other person was placed would be highly offensive to a reasonable person, and (b) the actor had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the other person would be placed." If the statements on which the claim for false light is based are true, however, the "defendant in a false light case is entitled to judgment as a matter of law." In the instant case, PAR would nonetheless be entitled to summary judgment because it is not disputed that the statements on which Holland's claim is based are true. The parties agreed that Holland could not bring suit for unfair or deceptive trade practices under the Maryland Consumer Protection Act because Holland is not a consumer of the internet version but the creator of the materials on which it is based (consumer defined as "an actual or prospective purchaser, lessee, or recipient of consumer goods, consumer servces, consumer realty, or consumer credit"). The general rule is that no quasi-contractual claim (such as unjust enrichment) (count VII) can arise when a contract exists between the parties concerning the same subject matter on which the quasi-contractual claim rests. This rule is closely adhered to, and exceptions have been granted only when there is evidence of fraud or bad faith, there has been a breach of contract or mutual recission of the contract, when recission is warranted, or when the express contract does not fully address a subject matter. Holland's attempt here failed because both the agreement between the parties addressed marketing and promotion and because Holland, himself, revealed in his complaint that this claim was concerned with revenue PAR received from the internet version rather than on redressing promotional and marketing violations. Whether PAR was entitled to market the internet version depended wholly on an interpretation of the express contract between the parties. PAR was thus entitled to summary judgment on Holland's unjust enrichment claim. The Lanham Act (count VI) generally has been construed to protect against trademark, service mark or trade infrginement even though the mark or name has not been federally registered. Holland's claim does not arise in the typical context of a Lanham violation as he and PAR are not marketplace rivals but parties to a contract, the terms of which are undisputed. Holland sought to proceed under a "false endorsement" theory under which courts have found " (a) injury where the plaintiff's voices, uniforms, likenesses, published works or names were used in such a way as to deceive the public into believing that they endorsed, sponsored or approved of the defendant's product." To succeed using a false endorsement theory, the plaintiff must prove the likelihood of consumer confusion as to the origin, approval or endorsement of the project making summary judgment for the defendant appropriate where the plaintiff cannot possibly show confusion as to the source or sponsorship. As both parties acknowledge Holland's standing within the field of career testing, Holland's value of his persona seems undisputed. However, Holland's claim hinges in part on the outcome of the underlying breach of contract dispute. If Holland's consent was not required for the publication of the internet version because it was not a revised edition, his endorsement or approval of the product is contractually established and, although he may not like hte internet version, he has no legal claim that his endorsement or approval has been falsely implied. The Lanham Act turns in part on the answer as to whether there was a substantive change between the internet and print versions of SDS resulting in a revised edition and requiring consent. This answer must be presented for a jury for resolution.

The full opinion is available in PDF.

Frank v. Home Depot (U.S.D.C. Maryland)

Filed April 11, 2007—Opinion by Judge William Quarles


The District Court granted Home Depot’s motions for summary judgment of a suit by Charles Frank, a former employee, for breach of contract and defamation related to his termination and certain statements made by a Home Depot employee to Frank’s potential future employer.

Home Depot had terminated Frank because he falsely stated that he had been properly licensed to operate the forklift when his license had expired. Thereafter, Lowe’s allegedly failed to hire him because of defamatory statements made by a Home Depot employee to someone at Lowe’s.

This is the second suit brought by Frank against Home Depot. In the first, Frank sued pro se, alleging retaliatory and discriminatory discharge in violation of Title VII of the Civil Rights Act of 1964 and wrongful discharge in violation of Maryland law. The Court had dismissed that suit for failure to state a claim.

The instant suit alleging breach of contract and wrongful discharge was previously dismissed without prejudice and reinstated on an amended complaint that added the defamation claim. The Court determined that the first count was barred by res judicata, while the defamation claim was barred by the statute of limitations and, in any event, by a statutory and common law qualified privilege, citing Md. Code Ann., Cts. & Jud. Proc. § 5-423 and Gohari v. Darvish, 363 Md. 42, 56 (2001).

The opinion and order are available in PDF.

Jackson v. Pasadena Receivables (Ct. of Appeals)

Filed April 11, 2007 --Opinion by Judge Alan Wilner

This case arose from a collection action in the District Court to recover judgment on a credit card debt. The debtor, Sheri Jackson, never denied that she used the credit card to purchase the items which, together with finance charges, comprise the debt and that, at some point, she simply stopped making payments on the account. She argued that, because she never signed the credit card agreement and the credit card issuer, Citibank, made no reasonable attempt to obtain her signature, the credit card agreement violates a provision of the Maryland Retail Credit Accounts Law (RCAL), codified at Maryland Code, § 12-503(e)(1) of the Commercial Law Article (CL). As a result, Ms. Jackson claimed that, in accordance with CL § 12-513(a), all of the finance charges that had ever been assessed during the nine years that she used the credit card were forfeited.

The Court disagreed and holding that the choice of law provision in credit card agreement, calling for South Dakota law to be applied to disputes arising under the agreement or in connection with the use of he card, was valid and enforceable in Maryland. The Maryland Retail Credit Account Law provision requiring that the credit card agreement be signed by buyer or that issuer make reasonable attempt to obtain buyer's signature was not such a fundamental policy of Maryland that it could override the choice of law provision.

The Opinion is available in PDF.

Montrose Educational Services, Inc. v. Sylvan Learning Systems, Inc. (U.S.D.C. Maryland)(Not approved for publication)

Decided March 30, 2007—Opinion by Judge Richard D. Bennett

Montrose Educational Services, Inc. (“Montrose”) alleged that Sylvan Learning Systems, Inc. (“Sylvan”) had made fraudulent representations to induce Montrose to enter into a franchise agreement and then breached their contractual duties by failing to provide proper assistance. Montrose argued that Sylvan had presented certain demographic information from 1998 to Montrose regarding the territory in the franchise agreement and Montrose had relied on this information in its decision to buy that particular territory. Under the terms of the license agreement, Montrose had promised to pay certain fees and to operate in compliance with Sylvan’s standards of operation. In return, Montrose was to receive supervision and assistance, most notably through a Quality Assurance Review, which was to be conducted “approximately one hundred twenty (120) days after Licensee first opens its Center.” The Defendants allegedly did not offer much support to Montrose’s center and did not conduct a Quality Assurance Review until approximately two years after the opening of the center.

From early 2002 to 2003, Montrose negotiated with the owners of two other Sylvan Learning Center franchises in Reno, Nevada, and Mobile, Alabama, in an attempt to purchase those franchises. During these negotiations, but before any sales were finalized, Defendants allegedly spoke to the Reno and Mobile franchise owners and told them that they would get a higher purchase price if they allowed Defendants to broker the sale to outside buyers rather than selling to Montrose. Montrose was not able to purchase either franchise.

The Complaint filed by Montrose sought damages in connection with five causes of action: breach of contract; breach of a covenant of good faith and fair dealing; fraud; negligent misrepresentation; and tortious interference with business relationships. Sylvan moved to dismiss or for summary judgment to the extent appropriate. Because the parties attached extrinsic documents to their briefs, the Court determined that the motion could be converted to a motion for summary judgment.

The Defendants argued that all of the causes of action were subject to Maryland's three-year statute of limitations and were time-barred. Montrose argued that, under the discovery rule, the claims were timely. Rejecting any continuing breach of contract theory and holding that by any measure, Montrose must have been aware of facts prior to February 6, 2003, with respect to the demographics and value of the territory, the Court granted summary judgment based on a statute of limitations bar as to all but the claim of tortious interference with business relationships. The Court determined that resolution of the tortuous interference count required more discovery and further briefing by the parties.

The opinion is available in PDF.

Cochran v. Norkunas (Ct. of Appeals)

Filed March 20, 2007. Opinion by Judge Irma Raker.

Held: A letter of intent is not enforceable as a binding contract for the sale of real property where the letter indicates that a standard form contract would be delivered and specified how certain terms in that contract would be construed. This indicates a lack of intent by the parties to be bound by the letter.

A contract for the sale of real property is not enforceable where the offeree did not manifest acceptance of the contract by mailing or other action.

Facts: The dispute arose over the sale of residential real property. The Buyers tendered a letter of intent ("LOI") to purchase the property. Among other things, the LOI specified that the parties would execute a standard form Maryland Realtors contract. The Buyers then delivered a contract and addenda to the Seller to effect the transaction. The Seller signed the contract and addenda on the majority of the signature lines, but the Seller crossed out and did not sign certain contingency provisions. Ultimately, the Seller did not return the documents to the Buyers. Nor did she otherwise communicate to the Buyers that she had accepted their offer. The Seller simply retained the signed documents. After a week had passed, the Seller communicated to the Buyers that she was taking the property off the market.

The Buyers sued for specific performance of the LOI. During discovery, the Buyers learned that the Seller had privately signed the contract and most addenda. Upon learning this, the Buyers amended the complaint to request specific performance of the contract. The Buyers submitted affidavits stating that the changes the Seller had made to the proposed contract would have been acceptable to them.

The Circuit Court for Baltimore City granted summary judgment in favor of the Buyers, holding that the LOI and contract "signed by all parties constitute the contract in this case and together they constitute an enforceable contract of sale."

The Court of Special Appeals reversed. A copy of the opinion is available here. The CSA concluded that the LOI did not indicate that the parties had reached final agreement at the time the LOI was signed. Second, the CSA held that the Seller did not accept the contract, even though she signed the documents, because the Seller did not mail the signed contract to the Buyers so as to communicate her acceptance.

On appeal to the Court of Appeals, the Court held that a manifestation of mutual assent is an essential prerequisite to the creation of a contract. Upon reviewing the LOI, the Court concluded that a reasonable person would have understood the LOI to mean that a formal contract offer was to follow the letter of intent. The Court found that the plain language of the document indicated that the parties intended to finalize the sale through a standard form Maryland Realtors contract. Accordingly, the Court held that the LOI was the type of preliminary "agreement to agree" generally held to be unenforceable in Maryland.

Regarding enforcement of the executed but undelivered sales contract, the Court held that the Seller had not manifested acceptance of the terms of the agreement. The Court rejected the Buyers' argument that execution of a document in private, without delivery of the document or other manifestation of assent was sufficient. Rather, the Court held that notice of acceptance must be communicated to the counter-party in some way. In the case at hand, the Seller had not communicated her acceptance.

Accordingly, the Court affirmed the opinion of the CSA overturning the judgment of the Circuit Court in favor of the Buyers.

The full opinion is available in PDF.

Doyle v. Finance America LLC (Ct. of Special Appeals)

Filed March 15, 2007 – Opinion by Judge Raymond Thieme

Appellants, Richard A. Doyle and Ruth M. Doyle, sued Finance America, LLC, to recover the interest associated with a mortgage loan, which was disbursed one day late. On the day scheduled for settlement, the Doyles had signed a Dispute Resolution Agreement stating in part that "any dispute, regardless of when it arose, shall be resolved, at your option or ours, by arbitration in accordance with this agreement." The Doyles sued in circuit court to recover damages, on behalf of a putative class. Finance America filed a motion to dismiss and motion to compel arbitration, which were granted by the circuit court.

Among other things, the Doyles contended that arbitration should not have been mandatory because a condition precedent had not been met, because theirs was a class action suit and such suits were excluded from the agreement, because arbitration was permissive rather than mandatory, and because the agreement was unenforceable as procedurally and substantively unconscionable.

The Court of Special Appeals disagreed and affirmed the decision of the circuit court.

The opinion is available in PDF.