75 A.3d 382
Md. Ct. Spec. App.2013Background
- CAS sued Await for breach of a PSA covenant not to compete, seeking damages of $313,999.50, fees, costs, and injunctive relief.
- Section 9 of the PSA imposes a liquidated damages of 150% of the solicited employee’s annual compensation for breaches.
- Trial began Dec 5, 2011; Await moved in limine to void the liquidated damages clause; court reserved; mistrial declared after nonunanimous verdict.
- Circuit court later voided the liquidated damages clause as punitive; judgment entered; CAS appealed.
- Maryland appellate court reversed, holding the liquidated damages clause valid and arguing burden of proof on the challenger, remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of the liquidated damages clause | CAS contends the clause is valid, reasonable, and supported by damages. | Await argues the clause is punitive and unenforceable without proof of actual damages. | Clause is valid; court erred in voiding it. |
| Need for retrial on merits | CAS seeks retrial on liability. | Await argues no retrial is needed. | Not reached; case remanded for other proceedings. |
Key Cases Cited
- Barrie School v. Patch, 401 Md. 497 (Md. 2007) (burden on challenger to show clause invalid; liquidated damages must be reasonable and compensatory at contract formation)
- Willard Packaging Co., Inc. v. Javier, 169 Md.App. 109 (Md. App. 2006) (initial framework for burden allocation; later clarified by Barrie School)
- Hester v. Heister, 392 Md. 140 (Md. 2006) (three-element test for liquidated damages: certainty, reasonableness, and non-uncertainty about damages)
- Traylor v. Grafton, 273 Md. 649 (Md. 1975) (foundational test for whether liquidated damages are penalties or real damages)