Plank v. Cherneski, 231 A.3d 436

Background

Trusox, LLC formed to market patented non‑slip athletic socks; James Cherneski was majority member (65%), President and CEO with broad management authority under an Amended and Restated Operating Agreement.
Minority members William Plank and Sanford Fisher invested and later sued Cherneski and Trusox alleging overlapping claims: breach of contract, invasion of privacy, breach of fiduciary duty, dissolution, and appointment of a receiver.
The Complaint sought equitable relief (injunction/dissolution/receiver) and attorneys’ fees; plaintiffs conceded no monetary damages.
Six‑day bench trial resulted in judgment for defendants on most counts (including the fiduciary count) and judgment for plaintiffs on some breach‑of‑contract counts (books/records, IP assignment, brother compensation).
Trial court awarded defendants attorneys’ fees under a broad fee‑shifting clause in the Operating Agreement; plaintiffs appealed and the Court of Special Appeals certified questions to the Court of Appeals about the existence and scope of an independent breach‑of‑fiduciary‑duty cause of action.
The Court of Appeals (Booth, J.) affirmed: (1) recognized an independent breach‑of‑fiduciary‑duty cause of action (case‑by‑case, remedies depend on relationship/historical rules), (2) held trial court did not err on the facts (insufficient evidence of breach), and (3) upheld the fee award and non‑apportionment under the Operating Agreement and the "common core of facts" approach.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Maryland recognizes an independent cause of action for breach of fiduciary duty	Plank/Fisher: Maryland should permit a standalone fiduciary‑duty tort; they pleaded breach and sought equitable relief.	Cherneski: Kann precludes a free‑standing fiduciary tort; any remedy must be contract or another tort.	Court: Maryland recognizes an independent breach‑of‑fiduciary‑duty cause of action; availability and form of remedy depend on the fiduciary relationship and historical remedies (case‑by‑case).
Whether trial court erred in entering judgment for Cherneski on the fiduciary claim	Plank/Fisher: Trial court applied Kann incorrectly or ignored facts (wage delays, alleged securities and publicity violations).	Cherneski: Court decided on the merits; record supports factual finding of no breach.	Court: Trial court made factual finding of insufficient evidence of breach; not clearly erroneous.
Scope of fee‑shifting clause in Operating Agreement ("arising hereunder or between the parties")	Plaintiffs: Clause is limited to claims enforcing the Operating Agreement; fees should not apply to all claims between the parties.	Defendants: Clause applies broadly to actions arising under the Agreement or otherwise between the parties; fees therefore cover the whole dispute.	Court: Plain language covers both categories; clause applies to this litigation and defendants were substantially prevailing.
Apportionment / reasonableness of attorneys’ fees award	Plaintiffs: Fees should be apportioned to counts they won; defendants should not recover full fees.	Defendants: Claims overlap and involve a common core of facts; apportionment is impractical.	Court: No abuse of discretion—trial court reasonably applied the "common core of facts" doctrine and awarded defendants full fees.

Key Cases Cited

Kann v. Kann, 344 Md. 689 (1997) (announced case‑by‑case framework: identify fiduciary relationship, breach, remedies historically available)
Ins. Co. of N. Am. v. Miller, 362 Md. 361 (2001) (applied Kann to permit damages against an agent for breach of fiduciary duty)
Int’l Bhd. of Teamsters v. Willis Corroon Corp. of Md., 369 Md. 724 (2002) (discussed Kann; footnote led to confusion but was treated as dicta)
Shenker v. Laureate Educ., Inc., 411 Md. 317 (2009) (recognized direct fiduciary‑duty claims by shareholders in certain contexts and applied Kann analysis)
Hensley v. Eckerhart, 461 U.S. 424 (1983) ("common core of facts" principle for fee awards)