O'Brien & Gere Engineers, Inc. v. City of Salisbury, 135 A.3d 473

Background

The City of Salisbury hired O’Brien & Gere (OBG) as design engineer and CDG as construction manager for an $80M WWTP upgrade; the project failed and the City sued OBG and others.
In June 2012 the City and OBG executed a settlement: OBG paid $10M and the City released OBG; the City agreed to indemnify/defend OBG against future claims related to the WWTP and to reduce recoverable damages if OBG was later found a joint tortfeasor.
The Settlement Agreement contained a mutual non‑disparagement clause prohibiting disparaging remarks about the parties and provided injunctive relief and attorney’s fees for breach.
After release, the City pursued a breach of contract suit against CDG; at CDG trial the City’s counsel and witnesses criticized OBG’s design performance in court, and those courtroom statements were reported in the press.
OBG sued the City for breach of the non‑disparagement clause. The trial court granted the City’s motion to dismiss; the Court of Special Appeals affirmed and the Court of Appeals granted certiorari to decide (1) whether the litigation privilege bars contract claims for in‑court disparaging statements, and (2) whether a settlement’s non‑disparagement clause can waive that privilege.

Issues

Issue	Plaintiff's Argument (OBG)	Defendant's Argument (City)	Held
Whether the litigation privilege can bar a breach‑of‑contract claim based on statements made in judicial proceedings	The privilege should not displace settlement protections; parties can draft around privilege and the contract shows an intent to prevent disparagement regardless of forum	Litigation privilege protects free, candid judicial participation and should apply regardless of the claim’s label	The litigation privilege can operate as a defense to contractual claims when applying it advances the privilege’s policies; it applies here
Whether entering a non‑disparagement settlement clause waives the litigation privilege	The clause waived the City’s right to rely on the privilege; intent to prevent any disparagement (including in court) is reflected in plain terms	There is a rebuttable presumption against waiver of the privilege; contract language does not clearly waive the privilege for courtroom statements	Court adopts a rebuttable presumption against waiver for non‑disparagement clauses and finds no clear waiver here
Whether dismissal on a motion to dismiss was premature because factual intent issues required discovery/remand	Intent to waive privilege is a factual question not resolvable on the pleadings	The complaint and incorporated trial transcripts permit the reasonable inference that the Settlement did not prohibit courtroom discussion; dismissal proper	Dismissal was proper: on the pleadings and with presumption against waiver, the agreement does not clearly prohibit the challenged in‑court statements
Mootness and remedies available (injunctive relief vs. damages/fees)	Injunctive relief unnecessary now but monetary relief and fees remain available	Settlement language about inadequacy of legal remedies shows parties intended injunctive relief; City argues injunctive claim is moot and money damages barred	Injunctive relief moot, but the contract does not unambiguously bar legal remedies; the dispute is not moot as to damages/fees

Key Cases Cited

Adams v. Peck, 288 Md. 1 (Md. 1980) (describing public‑policy basis for litigation privilege and need for free judicial disclosure)
Norman v. Borison, 418 Md. 630 (Md. 2011) (clarifying absolute privilege for witnesses/parties and scope limits for attorneys)
Rain v. Rolls‑Royce Corp., 626 F.3d 372 (7th Cir. 2010) (applying litigation privilege to bar a breach‑of‑non‑disparagement claim where courtroom statements were necessary to a separate suit)
Wentland v. Wass, 25 Cal. Rptr. 3d 109 (Cal. Ct. App. 2005) (refusing privilege where applying it would not advance privilege policies and would defeat the parties’ separate agreement)
United States v. Mezzanatto, 513 U.S. 196 (U.S. 1995) (recognizing some fundamental evidentiary protections may be nonwaivable)