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

Signed April 11, 2007. Memorandum Opinion by William D. Quarles, Jr. (Approved for publication).

Opinion granting defendant's motion for summary judgment.

Issues: Did a prior dismissal, pursuant to Rule 12(b)(6), for failure to state a claim bar litigation of the plaintiff's claim for breach of contract where the claim was based on the same alleged wrong and the parties to the suit were identical?

Did the statute of limitations or statutory qualified immunity bar the plaintiff's claim against his former employer for defamation arising in the context of providing a prospective employer a negative employment reference?

Held: Yes to both. The plaintiff's claim for breach of contract alleged the same wrong as his previous claim for discriminatory termination. Accordingly, the doctrine of res judicata applied. In addition, the statute of limitations barred the plaintiff's claim for defamation where the claim was filed more than 1 year after the alleged wrong. Even if it did not, the qualified privilege set forth in Md. Code. Ann., Cts. & Jud. Proc. s. 5-423, precluded the plaintiff's claim, absent evidence of malice or intentional or reckless disclosure of false information.

Facts: Home Depot fired the plaintiff for falsely stating that he was properly licensed to operate a forklift. When the plaintiff subsequently applied for a job at Lowe's, Lowe's contacted Home Depot for a reference. A Home Depot employee allegedly told Lowe's that the plaintiff was fired for theft.

The plaintiff filed suit in the United States District Court for for retaliatory and discriminatory discharge in violation of Title VII and Maryland law. The court dismissed the claims under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. Then the plaintiff filed suit, alleging breach of contract and wrongful discharge, in the Circuit Court for Anne Arundel County. Home Depot removed the case to the U.S. District Court. The court dismissed the complaint without prejudice. The plaintiff then filed an amended complaint, restating the breach of contract claim and adding a defamation claim.

Home Depot moved for summary judgment on the breach of contract claim on the grounds that 1) the plaintiff was an "at will" employee, and 2) the doctrine of res judicata, arising from the prior dismissal pursuant to Rule 12(b)(6), barred the claim. Home Depot moved for summary judgment on the defamation claim on grounds that 1) it was filed more than 1 year after the alleged wrong, and 2) the claim was barred by privilege under Md. Code. Ann., Cts. & Jud. Proc. s. 5-423.

Applying the elements of res judicata, the court found that 1) the earlier dismissal was an adjudication on the merits, 2) the two lawsuits "centered" on the same alleged wrong, and 3) the parties were identical. Accordingly, the court held that the doctrine of res judicata barred the plaintiff's breach of contract claim.

Turning to the defamation claim, the court found that the alleged defamation occurred more than 1 year before the filing of the complaint. As the statutory limitations period for defamation in Maryland is 1 year, the court held that the claim was barred.

The court further held that, even were the claim not barred by the statute of limitations, the qualified privilege afforded to employers under Md. Code. Ann., Cts. & Jud. Proc. s. 5-423 would bar the claim. The privilege bars claims against employers for giving good faith references to prospective employers. An employer is “presumed to be acting in good faith unless it is shown by clear and convincing evidence that the employer: 1) acted with actual malice toward the employee or former employee; or 2) intentionally or recklessly disclosed false information about the employee or former employee.” The plaintiff offered no evidence supporting a finding of actual malice or intentional or reckless disclosure. Accordingly, the privilege barred his claim.

The Memorandum Opinion is available in PDF format.

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.

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.

Swam v. Upper Chesapeake Medical Center (Ct. of Appeals)

Filed March 16, 2007 -- Opinion by Judge John Eldridge (Judges Cathell and Harrell Concur)

The Court of Appeals held that the general statute of limitations did not bar a claim initially filed in the wrong forum, the Health Care Alternative Dispute Resolution Office ("Health Care Office"), and subsequently filed in the appropriate forum, the Circuit Court for Harford County. Plaintiffs-appellants, Mary C. Swam and Scott Swam, filed a claim with the Health Care Office for alleged personal injury resulting from an abandoned hypodermic syringe on the premises of Upper Chesapeake Medical Center, Inc. Although Swam’s injury was not a medical injury within the meaning of the Health Claims Act and thus was not properly filed with the Health Care Office, the Court held that the claim was not time-barred even though it was not filed in the circuit court until after the general statute of limitations had run. According to the Court, the policy supporting the tolling exception rule was satisfied by the ambiguity regarding the appropriate forum for a medically-related claim and basic fairness to the parties. The Court noted that Upper Chesapeake would suffer no unfairness because it already had notice of the claim prior to the expiration of the limitations period.

In a concurring opinion, Judge Cathell expressly disavowed any holding that an action begun in an executive branch agency could toll the running of a statute of limitations applicable to judicial branch proceedings. Judge Cathell would reach the same result based on holding that Upper Chesapeake waived the defense of limitations by not raising it prior to or in its answer. Judge Harrell joined in the concurring opinion.

The opinion can be found in PDF here.

Tarquini v. Superior Products, Inc. (U.S.D.C.)(Not Approved for Publication)

Filed March 12, 2007 – Memorandum Opinion by Judge James K. Bredar

Plaintiff Tarquini, a former sales representative for Defendant Superior Products, brought this suit for wrongful discharge and violation of federal, Maryland and Virginia equal pay acts, violation of the Maryland Wage Payment Collection Act, breach of contract, and violations of Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act.

In response to Superior’s Motion for Summary Judgment, the Court found that Tarquini’s claims based on Title VII and the Equal Pay Act alleging gender-based wage discrimination were not time-barred to the extent that a jury could find the violations willful (which extends the limitations period to three years). Tarquini’s sexually hostile environment claim also was not time-barred because, under the “continuing violation” doctrine, a letter terminating Ms. Tarquini within the statutory time period could serve as an act contributing to the alleged hostile environment, thereby allowing acts outside the limitation period to be brought in to support the claim.

The Court also denied summary judgment for Superior as to Tarquini’s retaliatory discharge claim. Although the Judge considered it undisputed that Tarquini was an at-will employee, other terms of her employment could permit Tarquini's claims based on breach of contract and violation of the Maryland Wage Payment Collection Act, so summary judgment on those issues also was dened.

The Court granted summary judgment as to Tarquini’s ADA claims after finding that she had not sufficiently demonstrated that she had a disability under the ADA. Finally, the Court granted summary judgment as to abusive discharge, since it is a judicial exception to create a remedy where none exists by statute and, in this case, Tarquini had statutory remedies available.

The full opinion is available in PDF as is the Order.

Tobacco Technology, Inc. v. Taiga International, N.V. (Maryland U.S.D.C.) (Not Approved for Publication)

Memorandum Opinion and Order Denying Motion to Dismiss pursuant to Rule 12(b)(6). Filed February 26, 2007 -- Opinion by Judge Catherine C. Blake. (Not approved for publication.)

The defendants moved to dismiss the complaint on grounds that the plaintiff's claims were time-barred and that Maryland does not recognize an omnibus cause of action for "Breach of Fiduciary Duty."

The court, sitting in diversity and applying Maryland law, resolved three questions: 1) Whether an agent's knowledge of its principal's cause of action can be imputed to the principal for the purpose of triggering the statute of limitation when the agent's interests are adverse to the principal on that matter; 2) whether a plaintiff's failure to discover a cause of action in the context of alleged active concealment of that cause of action can be decided as a matter of law upon a motion to dismiss; and 3) whether Maryland recognizes an omnibus cause of action for "Breach of Fiduciary Duty."

Held: In this case, the complaint alleged sufficient facts concerning the agent's adverse interests to preclude imputation of the agent's knowledge of the cause of action to the principal as a matter of law. In addition, the complaint alleged sufficient facts concerning the defendants' efforts to conceal the wrongdoing that the failure to discover the cause of action earlier could not be attributed to the plaintiff's lack of due diligence as a matter of law. Finally, Maryland case law supports the conclusion that while the State does not recognize a universal tort for the redress of breach of fiduciary duty, breach of an agent's duty to his principal does provide a claim for breach of fiduciary duty.

Accordingly, the court denied the motion to dismiss.

This case was the subject of a previous opinion concerning a motion to seal synopsized here.

The Court's opinion denying the motion to dismiss is available in PDF. The order is also available in PDF.

Haas v. Lockheed Martin (Ct. of Appeals)

Decided January 9, 2007--Opinion by Judge Glenn T. Harrell, Jr.

Respondent had employed Petitioner in Montgomery County as a human resources specialist since 1998. Following a corporate restructuring, Petitioner applied for a newly created human resources position with Respondent in April 2001, said new position to subsume many or most of Petitioner's prior professional duties of employment. Respondent did not extend an offer to Petitioner for that new position, and notified Petitioner in writing on October 9, 2001 that Petitioner would be laid off effective October 23, 2001, which date indeed became Petitioner's last day of work with Respondent.

Petitioner filed suit against Respondent in the Circuit Court for Montgomery County on October 23, 2003 for alleged discrimination on the grounds of disability under Md. Ann. Code, Art. 49B, Sec. 42(b), a Maryland statute specific to Montgomery County, said discrimination alleged to have occurred on the basis of Petitioner's Attention Deficit Disorder. Respondent moved for summary judgment, citing the two-year limitations provision in that statute. The Circuit Court granted summary judgment and the Court of Special Appeals affirmed.

The Court of Appeals ("the Court") reversed and remanded the case to the Court of Special Appeals with instructions to reverse the Circuit Court's grant of summary judgment and to remand the case to the Circuit Court for further proceedings.

In its opinion, the Court held that the two-year limitations period from the date of "discharge" - an undefined term - ran not from the date of discovery of an impending discharge or of a notice of such discharge, but from the actual discharge upon cessation of employment. The Court noted that this view was a minority view among the states with largely similar statutes, but cited a number of grounds for the ruling including the rule's bright-line simplicity for the benefit of employers, employees and courts and the furtherance of the remedial purpose of the statute in sustaining meritorious claims. The Court rejected the so-called "Ricks/Chardon" majority rule dating a discharge to the date of notice thereof, due to that rule's potential to interfere with possible conciliation and to propagate unripe suits.

In dissent, Judge Battaglia opined that the discriminatory act of discharge prohibited under section 42(b) is, in fact, the decision to discharge the employee, rather than the termination of employment itself. Judge Battaglia noted that an employee suffers harm upon the very notice of discharge, not merely later on her last date of employment, and that the federal employment statutes which section 42(b) and similar Maryland statutes mimic calculate the date of discharge for limitations from the date of notice. Judge Battaglia cited as a policy ground for her view the benefit to employees of a longer grace period in which to find new employment and to continue to receive benefits before the last date of employment; calculating the limitations period from the last date of employment would discourage employers from extending such benefits and grace periods. Judge Raker joined in part A of the dissenting opinion expressing the foregoing grounds.

In part B of the dissenting opinion, Judge Battaglia cited the "discovery rule" applied to many Maryland statutes of limitations and urged that the calculating "discharge" from the date of notice of discharge would be consistent with that principle.

The full text of the opinion and dissent can be found here in PDF.

Berkowitz v. U.S. Army (Maryland U.S.D.C.)(not approved for publication)

Filed December 21, 2006--Opinion by Judge J. Frederick Motz (not approved for publication)

Defendant United States Army's motion to dismiss a non-tort monetary claim for lack of subject matter jurisdiction denied. Defendant suggested that transfer of the matter to the Court of Federal Claims would be inappropriate given the significant statute of limitations issues and motioned for dismissal by the District Court for lack of subject matter jurisdiction.

The Court transferred the action to the Court of Federal Claims pursuant to 28 U.S.C. §1631 based on the lack of subject matter jurisdiction and consequent impropriety for any District Court ruling on the statute of limitation issues.

The opinion did not describe the precise nature of the claim.

The full opinion is available in PDF

Dashiell v. Meeks (Ct. of Appeals)

Filed December 14, 2006--Opinion by Judge Dale R. Cathell. Dissenting opinion by Judge Glenn T. Harrell, Jr.

In a legal malpractice case, the Court of Special Appeals, in reviewing a grant of a motion for summary judgment in favor of the defendant, ordered that the record on appeal be supplemented by material from the record in another case. Ultimately, the Court of Special Appeals did not consider this material in reaching its decision.

Held: There is no requirement that an appellate court must consider portions of the record from a prior case that it (i.e., the appellate court) has ordered to be obtained as a supplement to the record in a subsequent case. The Court of Special Appeals did not abuse its discretion by doing exactly that in this case. In so holding, the Court of Appeals affirmed the judgment of the Court of Special Appeals that: (1) the Circuit Court for Wicomico County erred as a matter of law in finding that the plaintiff's claim was barred by the statute of limitations; (2) the Circuit Court for Wicomico County, in a summary judgment context, did not abuse its discretion in denying the defendant's motion based on judicial estoppel grounds; and (3) upon remand the defendant is free to assert the claims of limitations, judicial estoppel, and any other defenses.

With respect to the statute of limitations defense, the Court of Appeals discussed the discovery rule in the context of a claim with respect to a contract executed by the plaintiff where part of the plaintiff's claim involves alleged negligence of the attorney with respect to the attorney's advice in the course of the negotiation and preparation of the contract.

The full opinion is available in WPD or PDF.