O'Brien & Gere Engineers, Inc. v. City of Salisbury
113 A.3d 1129
Md. Ct. Spec. App.2015Background
- City of Salisbury sued OBG and CDG over a failed wastewater-plant upgrade; OBG settled with the City for $10 million and signed a mutual non-disparagement clause in a comprehensive settlement agreement.
- The non-disparagement clause barred any party from making statements that “adversely reflect” on the other’s reputation or business, and provided injunctive relief and attorneys’ fees for breaches; the agreement contained no confidentiality provision.
- After OBG’s dismissal from the case, the City proceeded to trial against CDG; the City’s opening statement and trial witnesses criticized OBG’s design work (naming OBG), and a local newspaper reported on the trial.
- OBG sued the City for breach of the non-disparagement clause, seeking TRO/injunction, damages, and fees, asserting disparagement by the City’s counsel and witnesses during the ongoing trial.
- The trial court denied the TRO, then dismissed OBG’s breach-of-contract suit on a motion to dismiss, holding the absolute litigation privilege barred liability for in-court statements; OBG appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether absolute litigation privilege bars contract claim for breach of a non-disparagement clause based on in-court statements | OBG: privilege applies only to defamation; parties bargained against disparagement and did not waive contract remedies; privilege should not shield breach-of-contract liability | City: absolute litigation privilege immunizes participants from civil liability for statements made in judicial proceedings, including contract claims based on such statements | Court: privilege applies as a matter of law here and bars OBG’s breach claim arising from in-court statements |
| Whether court abused discretion in denying TRO to enjoin City from making disparaging statements at trial | OBG: irreparable harm and likelihood of success on merits justify TRO; trial ongoing so injunction needed | City: injunction would chill presentation of evidence and argument; privilege protects in-court speech so OBG unlikely to succeed | Court: denial affirmed — OBG unlikely to succeed; public interest favors unfettered litigation |
| Whether City counsel should be disqualified (MRPC 3.7) | OBG: counsel will be necessary witnesses because their statements are at issue, so disqualification required | City: disqualification premature and would be moot if motion to dismiss granted | Court: denial affirmed as premature; motion to dismiss later resolved case |
| Whether parties can contractually waive the privilege by non-disparagement agreements | OBG: settlement should bar disparaging statements even in court; contract rights enforceable | City: privilege protects public interest and cannot be waived to foreclose in-court advocacy | Court: privilege may preclude contract remedies for in-court statements when applying privilege furthers administration of justice (no categorical waiver rule applied) |
Key Cases Cited
- Hunckel v. Voneiff, 69 Md. (Md. 1888) (early Maryland recognition of an absolute privilege for statements in judicial proceedings)
- Bartlett v. Christhilf, 69 Md. (Md. 1888) (policy supporting absolute privilege to protect judicial truth-seeking)
- Norman v. Borison, 418 Md. 630 (Md. 2011) (describing Maryland’s hybrid absolute litigation privilege distinguishing lawyers and other participants)
- Mixter v. Farmer, 215 Md. App. 536 (Md. Ct. Spec. App. 2013) (absolute privilege can bar non-defamation torts arising from the same in-court statements)
- Briscoe v. LaHue, 460 U.S. 325 (U.S. 1983) (Supreme Court on importance of testimonial immunity for witnesses)
- Rain v. Rolls-Royce Corp., 626 F.3d 372 (7th Cir. 2010) (Seventh Circuit: absolute privilege bars breach-of-non-disparagement claim when statements made in judicial proceedings)
- Kelly v. Golden, 352 F.3d 344 (8th Cir. 2003) (Eighth Circuit: absolute privilege protected in-court disparaging statements from contract enforcement)
- Wentland v. Wass, 126 Cal.App.4th 1484 (Cal. Ct. App. 2005) (California court declined privilege for breach-of-contract where applying it would frustrate settlement purpose)
- Vivian v. Labrucherie, 214 Cal.App.4th 267 (Cal. Ct. App. 2013) (privilege applied where public interest in investigative communications supported immunity)