Weichert Co. v. Faust
19 A.3d 393
Md.2011Background
- Faust, Weichert's Vice President and Bethesda office manager, signed a Manager's Employment Agreement with a non-solicitation clause in Paragraph 22 and a mutual fee-shifting provision in Subsection H.
- Weichert sued Faust for breach of loyalty and for violation of the non-solicitation clause; Faust counterclaimed MWPL-related damages.
- Jury found Faust breached the duty of loyalty but did not breach the non-solicitation clause; damages awarded to Weichert for the loyalty breach and to Faust under MWPL for Weichert's violation.
- Circuit Court awarded Faust attorney's fees under Paragraph 22(H); Court of Special Appeals affirmed; Weichert challenged on appeal to the Maryland Court of Appeals.
- Key issues: whether loyalty breach forfeits fee rights, whether the fee shift covers the entire contract or only Paragraph 22, and whether Faust incurred the fees personally.
- Court of Appeals ultimately affirms that Faust is entitled to fees under the non-solicitation fee provision; Faust’s loyalty breach did not forfeit that right.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does breach of loyalty forfeit fee rights? | Faust breached loyalty; forfeit not automatic. | Weichert argues breach forfeits fees. | No forfeiture; loyalty breach not automatically eliminating fees. |
| Scope of the fee-shifting provision | Hereunder covers entire contract. | Hereunder applies only to Paragraph 22 non-solicitation. | Hereunder is limited to Paragraph 22; fees awarded for non-solicitation action. |
| Did Faust incur the fees personally or via indemnification? | Indemnification by Long & Foster means no personal incurrence. | Incurring can occur on her behalf; no personal payment required. | Faust incurred fees on her behalf; she is entitled to recovery. |
Key Cases Cited
- Nova Research, Inc. v. Penske Truck Leasing Co., L.P., 405 Md. 435, 952 A.2d 275 (2008) (Md. 2008) (contract interpretation and de novo review; objective interpretation of unambiguous terms)
- Tomran, Inc. v. Passano, 391 Md. 1, 891 A.2d 336 (2006) (Md. 2006) (hereunder refers to rights within the document; limits application to specific rights)
- Regal Savings Bank v. Sachs, 352 Md. 356, 722 A.2d 377 (1999) (Md. 1999) (breach of duty may be material or not; not every breach extinguishes all obligations)
- Maryland Credit v. Hagerty, 216 Md. 83, 139 A.2d 230 (1958) (Md. 1958) (loyalty treated as a material duty; disloyalty can forfeit contracted compensation)
- Chai Management v. Leibowitz, 50 Md.App. 504, 439 A.2d 34 (1982) (Md. Ct. App. 1982) (material breach evidence; limitations when seeking to enforce non-breaching party's rights)