Spacesaver Systems, Inc. v. Adam
440 Md. 1
| Md. | 2014Background
- SSI and Adam signed a written executive Employment Agreement containing a for-cause termination provision but no defined term of employment.
- A Stock Purchase Agreement paired with the Employment Agreement allowed SSI to repurchase shares if employment ended, including for Prohibited Acts mirroring for-cause grounds.
- Adam remained a 1/3 shareholder along with her siblings Hamilton and Craig; Craig’s departure preceded ongoing disputes over roles and compensation.
- SSI terminated Adam in 2010; Adam sued claiming the Employment Agreement guaranteed lifetime termination only for cause.
- The trial court held the contract was ambiguous and transformed an at-will relationship into a for-cause, lifetime-like arrangement; appellate courts disagreed on labeling and interpretation.
- The Maryland Court of Appeals ultimately affirmed that the Employment Agreement is not at-will, but is a distinct “continuous for-cause” contract rather than a lifetime contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a for-cause clause with no definite term negate at-will status? | Adam argues the for-cause clause creates life-long job security. | SSI argues it merely creates a continuous for-cause contract, not a lifetime contract. | Not at-will; contract is continuous for-cause. |
| Is there a meaningful distinction between continuous for-cause and lifetime contracts? | Adam contends there is no real distinction and the contract should be treated as lifetime. | SSI contends continuous for-cause is a valid, distinct category. | Yes, a meaningful distinction; contract is continuous for-cause, not lifetime. |
| Does Conte’s dicta about for-cause or term defeating at-will govern this case? | Conte’s dicta should recognize at-will status unless definite term or clear for-cause provision exists. | Conte supports distinguishing for-cause/term from at-will and is persuasive. | Conte supports the result; contract not at-will. |
| Does the Employee Handbook affect the contract’s interpretation? | Handbook could modify or contradict the Employment Agreement. | The Employment Agreement controls; Handbook cannot override it. | Handbook does not alter the contract’s classification. |
| Is special consideration required to sustain a continuous for-cause contract? | Special consideration is needed to support lifetime-like terms. | No special consideration requirement applies to continuous for-cause contracts. | No special consideration required. |
Key Cases Cited
- Board of Street Commissioners v. Williams, 96 Md. 232 (Md. 1903) (tenure for-cause can be definite even without a term clause)
- County Bd. of Educ. v. Cearfoss, 165 Md. 178 (Md. 1933) (tenure until abrogated for sufficient cause)
- Conte v. Towson Univ., 384 Md. 68 (Md. 2004) (for-cause or term defeats at-will; three-category framework)
- Dwiggins v. Suburban Hosp., Inc., 324 Md. 294 (Md. 1991) (probationary restraint not converting at-will to for-cause)
- Murray v. Chesapeake & Potomac Tel. Co., 198 Md. 526 (Md. 1951) (lifetime employment concepts distinguished; definite terms defined)
