*1 random assignment delegated by appellee regu- and not by a lar allowing appellant schedule Maryland to return to each weekend. Dixon,
In light of the holding above factors and the we that appellant’s conclude employment Maryland was not regular and thus he not a employee” “covered under L.E.
§ court, 9-203. The therefore, circuit in granting did not err summary judgment appellee. favor of
JUDGMENT OF THE CIRCUIT COURT FOR WICOMI- CO COUNTY AFFIRMED. APPELLANT. BE
COSTS TO PAID BY 838A.2d 404 FIRST UNION NATIONAL BANK
v.
STEELE SOFTWARE SYSTEMS CORPORATION. 1061, Sept. Term,
No. 2002. Special
Court of Appeals Maryland.
Dec. 2003. *8 (Lauren Andrew Frey L. Goldman, R. Mayer, Brown, Rowe Maw, brief), & on (Miriam the York, all of New NY. R.
Nemetz, Mayer, Brown, Maw, brief), Rowe & on the (James Washington, D.C. E. Gray, Stephen Marshall, E. Howard, L.L.P., Mirviss, Venable, Baetjer and on
Mitchell Y Baltimore, brief), appellant. for the all of (Harvard Hall, University on the H. Tribe Hauser Laurence brief), (Stephen Snyder, L. Andrew G. Cambridge, MA. Slutkin, Slutkin, Kopec, Snyder, Lodowski & Kopec, Mark C. Baltimore, brief), brief), Warnken, (Byron on the L. appellee. for KRAUSER, ADKINS, and THEODORE G.
Panel: (Retired, Assigned) BLOOM, Specially JJ.
ADKINS, Judge. we are asked to review high dispute,
In stakes business negotiation large lengthy of a business between evidence in a that culminated written bank and one its vendors contract. contract, bank’s deliberate breach of that and the sufficient to whether the evidence was We must determine bank, intending support vendor’s claim never induced vendor enter con- perform, fraudulently so, fraud- doing differentiate between actionable tract. we generalities do misrepresentations ulent indefinite fraud in context of discussions between two support analyze ambig- an sophisticated We also whether businesses. contract, is enforceable in uous “best efforts” clause limits of a fraud claim on the bank’s explore predicating respect of that clause. performance intentions with compensatory jury million verdict for We shall reverse $39 damages, both damages punitive and a million verdict for $200 (“First Bank appellant First National against entered Union”) Systems Corporation in favor of Software (“3S”) theory. theory was that First Union on a fraud 3S’s Agree- into a written fraudulently induced 3S to enter Service (“SA”), would under which 3S ment dated November provide appraisal and title services connection certain to its loans made First Union residential real estate perform shall intending without thereunder. We customers against judgment approximately affirm million $37 recovery by is based on of contract. The Union for breach *9 First Union’s failure to fulfill obligation its contractual purchase these real estate settlement services from as called for under the SA. following questions
We answer the presented by First Un- ion:
I. Whether First Union was to judgment entitled on 3S’s claim fraud because 3S failed to prove the elements of fraud. II. Whether First judgment entitled to with respect claim that 3S’s it breached the “best efforts” clause of the SA.
HI. Whether compensatory damages award must be set aside because the circuit impermissibly court limited the cross-examination of damages expert. 8S’s IV. Whether compensatory damage award must be set encompassed aside because it geo- transactions outside the graphic scope of the SA. yes I,
We answer question II, III, questions and no to do IV. We questions reach First Union’s regarding the amount of damages claim, the fraud or the amount of punitive damages, because of our rejection of 3S’s fraud claim. Nor do we reach First Union’s contention that 3S’s fraud claim was improperly predicated alleged theft of its busi- ness methods and is therefore preempted by Maryland Uniform Trade Secrets Act.
FACTS1 AND LEGAL PROCEEDINGS 3S Provides Settlement Services To First Union 3S is a settlement company, service in 1987, founded new, introduced First Union to a centralized and automated system for obtaining title appraisals searches and for home equity Union, loans. First large bank multiple branch- es States, eastern high United makes a volume residential equity home system loans. The new introduced facts, setting 1. forth these we have resolved all conflicts in evidence in favor of 3S. title away paper-based from a to move First Union
3S enabled to each system that was individual appraisal search *10 system. branch, computer-based, centralized to a and automated title about an presentation a 3S first made to Glenn known as “ATAPS” system processing appraisal lending business Kinard, First Union’s consumer manager of to Kinard retained 3S D.C., in fall of 1994. Washington, in in branches at a few First Union pilot program a conduct by First an email sent Union During pilot, region. D.C. said, pilot pilot in “You are the participating branches compa- entire processing for the testing this method group of 3S in the use and evaluation participation active ny, your so for our future efforts.” cornerstone is the First that area. began serving 15 to branches later 3S pilot a to automate and centralize 3S also retained Roanoke, equity loans campaign for home mail direct appraisals and performed the title searches Virginia. 3S then campaign. generated by the transactions associated with the centralized, bring that could advised Kinard Steele Scott to First Union. standardization technology and automation program. about this “very Kinard was excited” I opportunity, unique “this is such a Kinard told that headquarters Charlotte in] Union’s get you [First want to request, Steele At First Union’s than later.” [rather] sooner presenta- a to Charlotte and made 3S officer flew and another Dibble, Muse, Trent Tom Parkes tion to First Union officers Dibble, president wee Doug Crisp. Parkes Thompson, and every- if meeting “that told Steele at the Management, Risk real, they and high again, at a level thing presented, I had had, I inspect what diligence due and opportunity an to do had mutually being long-term benefi- see this as they that would Steele, told him Dibble also relationship.” According cial concept to deliver the promise “if on our that we delivered sup- automation, what we were executed centralization endeavor, would that we do, helped them their posed beneficiary could be the partner.... We long-term be their to us.” that could send of all the transactions meeting Crisp, At that same First Union’s senior officer in charge Division, of the Consumer Credit asked Steele whether 12,000 his firm “could monthly handle transactions on a ba- time, sis.” Steele told that not” Crisp he “could at that but put together that he “could implement staged process where could build Crisp [3S] level.” him later told honesty [Crisp] really good, Steele’s “made feel figured and he he would it to leave Parkes to work [Dibble] out the rest.” testimony, his Dibble confirmed that he and Steele potential ten-year relationship, discussed a adding, “my term goes of relationship long on for a explained time.” Dibble First attempt give Union would 3S all the transactions it “2,000 could within handle approximate Union’s branch blueprint”: “I would put position him in a to where he could get that. exclusive, That is correct.” “It was not an it was not meant to be everything, but that he could handle *11 significant volume, portion of yes.” Dibble that a considered contract between the bank and 3S would be step the “first to a long road partnership.” thought Dibble system 3S’s provided “big a competitive advantage to the bank.” Doug Crisp, a president senior boss, vice and Dibble’s acknowledged that he was aware that Dibble was “discussing long-term a relationship” with 3S. 23, 1995,
On January Muse, brought Dibble Thompson, and other officers of the bank to to inspect Baltimore 3S. Steele told them presentation that the “was confidential in nature and expected [he] them to treat it as such.”3 respond- Muse ed, worry “Don’t about that. go We won’t into this business. just buy We’ll thing.” the damn
Dibble left 1996, First Union in June and Bill Clewis took negotiations over contract with Steele. Steele testified that over, when Clewis took he told worry. Steele “not to Noth- 12,000 Crisp say 2. Steele clarified that “didn’t that he had transactions give me. He asked if I could handle them.” trial, however, 3. As 3S made clear repeatedly in its brief and at its against claim First Union misappropriation was not a claim for of trade 16, text, accompanying secrets. See note infra. aware of I had discussed with changed and he was what ing’s I were the and so trusted company Parkes and we [Dibble] that, although he Dibble confirmed never people.” these Steele, pretty said to “Bill knew told what he explicitly Clewis one-way It communica- was on. wasn’t a going much what Steele, grow, that he “As we acknowledged told tion.” Clewis business, up once we our grow.” “expected He revved you’ll vendor, grow his would would a business he Crisp, same supervisor, conveyed message. ours.” Clewis’ part presentation at the December As Steele’s long January meetings, proposed Steele term a five-year contract would have term with an service Dibble, he re- option five-year According for renewal. term, commit but that if 3S delivered on to that said fused and automation of promises its and achieved centralization loans, “long-term 3S would be First Union’s equity home partner.” advantage that competitive said that he believed the
Dibble offering the bank was his electronic method ability appraisals. “his on-line appraisals, to do performing was to home attempt equity That was—the bank’s shorten the into our cycle by essentially integrating Scott into—from 3S system!.]” application handling] Union, May presentation made another range
seeking to sell the bank automated centralized all of its offices nationwide. It loan settlement services formal, kind of proposed that the bank enter into again some *12 it, they that relationship suggesting create long-term purchase or that First Union debentures that joint venture 3S acquire give right the bank a of first refusal would joint what a would company. explained venture mean: arrangement, It more of a control business where [was] that it passing [is] has a volume of transactions Union parties today, any and of that capturing out to third not revenue, they independent are it sending because out providers. party third
Ill on, Early thought of concept taking we the busi- out, passing trying that, ness it to capture [was] dtiving through entity, thereby one sharing the revenue that now participating are in....
According Steele, responded Dibble there were regulatory transactions, barriers to such but that it was “a great interesting.” idea and Dibble later introduced Capital First Union’s Markets division with the idea that First might capital in, to, 3S, make a investment or a loan but negotiations broke down parties because the far apart were a valuation for company.
Development Relationship Of The Parties’ Negotiations Leading
And To The SA years discussions, Three after first their First Union and 3S Negotiations entered the SA. over the exact terms of this agreement spanned two years, and a half during which 3S provided appraisal extensive and title services First Union. During process, request 3S’s explicitly the SA give 3S right supply 75% of First Union’s for appraisal needs and title year services for five to ten period negotiated out. The negotiations, course which important resolution of this appeal, was agreements, reflected draft which are outlined below. Negotiations
Initial Contract Between Steele And Parkes Dibble The first draft of the was a intent,” SA “letter of which Steele sent to Dibble June 1995.4 It purportedly ad dressed “understanding parties] between ... [the concern ing First engagement Union’s of 3S as provider First Union’s of real estate settlement services and other related ser ” be, .... vices It called for 3S to after defined transition period, “the provider exclusive to First Union of Real Estate purported 4. This letter binding of intent 1obe parties on the and recited that it would be "followed prepared final document ... to be shortly executed after the execution of this letter of intent.” *13 Home consumer Equity for all residential Services and/or required to from 3S mortgages.” purchase It also First Union transactions, although of such the exact a minimum number agreement of the proposed number was left blank. The term an period [five] five “with automatic renewal years, at or provided there are no uncured incurable defaults years to terminate right First Union was to have that time.” a for “at agreement price if 3S its the services increased accept annually.” 10% First Union did not higher rate than proposal. 1995, inter draft, September proposed, second Steele’s alia, that
(cid:127) First transac- greater of: 70% of 3S receive Union’s 2,500 month for
tions, average per an transactions or 7,500 per month thereaf- year, and transactions the first ter.
(cid:127) “and will years, would in effect for five agreement The
automatically period, renew a unless notice like days prior to given by party the other at least 30 one expiration any Agreement date.” terms, agree First Union did to these either. a had no First circulated draft that March Union It exclusivity provision. and no requirement
minimum volume given right provide simply would have 3S non-exclusive requested promotions mail as settlement services direct First by Union. by March responded this draft letter dated that I to be describing “changes/ideas believe need for:
made to contract.” Steele asked (cid:127) “that right provide Reports exclusive Services Promotion,” except Mail by
are First Union generated requested a bank to use for which customer those attorney its choice. settlement (cid:127) as First Reports required “For Services and all other
Union, right ... use its best [the have] Steele, these transactions however efforts to direct this will not be an right except exclusive for the [minimum added.) guarantee].” volume (Emphasis *14 (cid:127) A minimum equal greater 2,000 volume to the of transac- per month,
tions or 75% of loans generated” “new after 31,1997. March
(cid:127) A of years, term five which would “automatically renew an
for years. additional term” of five (cid:127) provision A agreement that the “may only be Terminated
by First Union for a Material of Agreement Breach by [3S].” time,
Around this Steele and Dibble discussed “best efforts” meant “[t]hat could send all the transactions that could he and that I could handle.” First accept Union did not proposal, either this April or an by 1996 draft sent Steele that similar, but allowed Union to opt out after five years.
Crisp Union, left First departure Dibble’s followed shortly in 10, 1996, June 1996. On June Steele wrote Morgan Smith, officer, a First Union saying spoke that “I Parkes last [Dibble] week and this should finalize the issues wrap up Agreement.” sought This time he year a three term that “automatically would renew” for an additional three years, and a guarantee 2,000 minimum of packages per month.5 requested He that the bank “expedite approvals changes these final through any channels A necessary.” June agreement draft requests, set forth these includ- ing a minimum guarantee equal 2,000 volume greater packages per month or 75% of the bank’s generat- new loans agreement ed. This signed, was not and there was a break in negotiations about a contract. Relationship
Business During Negotiations Throughout negotiation period above, described 3S han- dled “a tremendous amount for work” First Union and "package” 5. A request consists of a for appraisal. both title work and A “transaction” would refer to one or the other. for it. He testified that June compensation
received direct two-million-piece projects for the bank included 3S’s and Wash- projects mail Roanoke campaign, centralization “Future Bank D.C., participation in First Union’s ington, Initiative,” designed long-term project to modernize testified products and services. Steele improve First Union’s that, long-term to be 3S’s based on First Union’s commitment and automate taught First Union how centralize partner, he equity loans. campaigns its direct mail home to First very appealing This Union. project was they first officials when described the reaction First Union proposal: mail campaign heard about his direct away. I think Parkes in the room blown people were ... was more because he understood more [Dibble] *15 driven, in the room people but of the technology the rest certainly you ... jaws and just, dropped, I think their were First response from Mrs. Clariss [from could hear the in the people rest of the office] Union’s Roanoke and the mail of our database direct room. That was start project. Ongoing Anticipation In Of Actions
3S Relationship First Union With compensated it was not many things did for which 3S partner do. In that is what should because Steele believed to advise request, at flew to Charlotte Dibble’s Steele machine, automated teller loan First Union about whether an Union, with would be beneficial unrelated to 3S business First my “appreciated told that he Crisp to the bank. Steele efforts,” that he and of their response support immediate being “appreciat- and that partner,” “looked our he forward During implementation 3S’s everything doing.” ed we were that First project, mail Steele discovered the database direct automating prevented “big problem” Union had a electronically enter way project direct mail lack of —the handling database. application into its loan customer data and help problem, to solve this Steele offered to for the to six weeks any First Union extra five charge did of work it took to I program write test the “because was doing partner what a helping support should do in them their doing efforts and whatever asked me to do.” fall of year executing SA, about a before substantially also increased capacity, upgrading its transaction staff, computers, adding its moving larger facility, to a all in anticipation ongoing of its relationship with First Union. Resumption Negotiations Among Of
Steele, Clewis, Thompson And Clewis, In the fall of replaced by Dibble was Bill who subordinates, previous was assisted one of Dibble’s Trent Thompson.6 Although there was a contract break negotiations, said Steele he wasn’t worried because Clewis worry.
told not to Nothing’s changed me and he was aware of what I had discussed with Parkes and we were [Dibble] I company and so Bill people.... trusted these was so, just position mean, kind of new in I I doing was what I supposed doing brought we the issue of the up bit, contract and Bill said get he would to it in a little still, know, which was fine with us.... They you were requesting things. us to do
Clewis told he was aware Steele’s discussions Dibble, and 3S remained First Union’s vendor choice— “nothing’s changed.” occasions, On several Clewis said to Steele, grow, you’ll grow.” “As we Although the two men *16 Thompson projects 6. Both Clewis and had worked on centralization in connection with First Union’s Future Bank Initiative. One of the goals management by Initiative's was to centralize performing vendor oversight through operations of settlements one of First Union's three participated diligence centers. Clewis had in First Union's due in Bank, acquisition Fidelity connection with headquar- its 1995 of First Jersey, doing. tered in New and had learned about centralization in so Thompson telling 7. Clewis and both repeatedly testified about Steele " ‘put that First Union eggs by using would not all of in [its] one basket' only, primarily, Doing or even one vendor for settlement services.” so would competition; risky, eliminate the benefit of vendor it would be business, computer problem because if the vendor had a or went out of commitments; First Union would be unable to meet its it and would negotia- of the earlier contract specifics not discuss the did much what was pretty “knew tions, testified Clewis Steele them. going regarding on” in Baltimore 1997, Thompson met with Steele January and automation of for centralization
regarding proposals 3S’s follow-up a letter the wrote First Union’s branches. Steele agreed that 3S that it had been day, seeking confirmation next and appraisal, title “preferred provider bank’s would be the mail categories in limited of direct services” settlement Thompson did not products. loan high-risk consumer copy did to Clewis writing, but send respond the letter “Bill, trip our to [Baltimore] Reference note: —we propos- but would entertain their any promises didn’t make trial, seeing that previously At denied als—Trent.” Clewis on letter, placed the letter Thompson but testified he about it. and talked with Clewis Clewis’ desk 21, 1997, as a “draft May sent what characterized On Thompson, with agreement” to performance of a based service D. Operating Officer Carl Gent. a cover letter from 3S Chief following clauses: agreement included the proposed “(cid:127) Steele, hereby grants National Bank ‘First Union loans, right perform real estate secured residential (in minimum Reports the Traditional Services vol- 2,000 per provided month such packages amount of total more than 50% of First Union’s ume exists and is not volume) A in Exhibit as attached hereto’.... as listed permit to bid agrees further [First Union] any of the Non-traditional providing Union] to [First A, any Appendix or Reports, as defined Services defined, Report, or as devel- Non-traditional Service other during the term of oped required Union] or [First Agreement, any or renewal thereof.” (cid:127) ... of three period shall continue for a Agreement “This
(3) provi- its or until accordance with years, terminated sions.” strengths advantage of the different leave the bank unable to take
various vendors. *17 (cid:127) Agreement “This automatically will be for an renewed (3) years
additional three ... unless party either notifies in writing the other of its intent not to renew.” (cid:127) agreement only could be terminated “For Cause.” This draft did not include the “best efforts language” from 21,1996 Steele’s March letter.8 responded by
Clewis crossing out the minimum volume level packages,” of “2000 replacing “1,000 it with transactions.” Steele testified he because,
was concerned about you know, the minimum I had stepped and, know, moved, out you there people, had a lot of feed, know, lot of mouths you employees. I had taken on doing said, know, debt to facilitate you this. And I can negotiate we the minimum still, transactions I you but know, and put then we back the best efforts because that’s what had been and agreed committed to before.... explained disappointed he was that Clewis changed the minimum debt, because “I ... went into ex- pand[ed][and] people[.]” hired explained He purpose the minimum:
The concern about the minimum they was that changed had tax law or something. process You do this for like home improvements pools So, and so forth as if they well. changed law, the tax purpose of the minimum was to transactions____ got make sure that I in no way [B]ut was imagined ever that a thousand units only would be First Union volume they drastically unless changed the tax law. Steele also said that he was unaware of the amount of First Union’s total at volume negotiations. the time these
According Steele, parties discussed the reduction the transactional volume to a thousand monthly: transactions
[Thompson and Clewis told Doug Crisp me] since no longer pushing there bank or the consumer credit division that Mr. Pruitt was now involved and didn’t reinserted, requested 8. Steele that it be appears and it in the next draft. the transaction able to achieve they would be think that *18 to but the intent concept agreed previously that we levels us, ... worry, with don’t was still there commitment and they cetera, they didn’t think but you, et there we’re signed large with document get able to would be in it. of transactions amount term, replaced and three-year crossed out the also
Clewis told to this and Clewis objected one-year term. Steele that, happy I and wasn’t acceptable that this was original what know, go to back to we needed you long- and that was had been promise commitment partnership. and a relationship term of the “best efforts” objected to the removal also Steele language that “best efforts” thought language. Steele continued produced, that, long performed, as we “as meant do, they would going were to then things that we doing the and all that that could handle transactions we us all the send a minimum that there would be to us and they could send protection!.]” our allow for would would send 3S that First Union thought meant mortgage loan equity 85% of Union’s
approximately at doing business and Dibble talked about He transactions. leaving prior discussions to Dibble during their that volume Thompson, or did not tell Clewis 1996. He the bank June of the meant 85% however, thought that “best efforts” he about his knew figured He bank’s transactions. with Dibble: discussions Mr. of what very aware reaffirmed he
Mr. Clewis explain ... to trying What I’m and I had discussed Dibble Mr. sir, was aware of what Mr. Clewis said he you, committed, represented me. promised, Dibble had I, numbers some various and we threw And Mr. Dibble around, 70, 75%. a specific discussed testify that he and Steele
Dibble did not business. of First Union’s percentage with the on was that and I worked agreement Scott ability get all the technology would have Scott exclusive, transactions. It was not an it was not meant to everything, significant portion but that he could handle a volume, yes. Dibble did not communicate Clewis that he “had made commitments to expected Scott Steele Mr. [he] Clewis up however, live to.” thought, pretty He that “Bill knew going much what was on.”
According Steele, and Clewis he never discussed what the best efforts clause meant:
Q: you Do memory sitting Steele, have a today, here Mr. discussing best efforts and what it going meant and it back in the contract with Bill Clewis? *19 Sir,
A: I never discussed what best efforts meant with Bill I language Clewis. discussed the in agree- the service .... ment I’ve never had a conversation asking Clewis, Mr. Clewis, Mr. you means, do know what best efforts sir. Q: know, sir, I want to if in fact you when discussed with Mr. Clewis putting best language contract, efforts in this if it in your fact testimony that at you that time had no discussion with him about what language meant. efforts,”
A: sir, The two words “best I never had that discussion, what that meant. I did have discussion with Mr.
Clewis with the promise commitment and that Mr. Dibble had made in the fact that the language best efforts was in the contract. acknowledged Bill yes, that was in fact and put true to back there exactly and that’s what I did, sir, and I any didn’t think more about it because he reaffirmed what supposed happen to along. all
Final Version Of SA SA, The final signed 29, version of the November partes’ defined the undertakings as follows: TO
2. RIGHT PERFORM SERVICES [3S], hereby grants to for real 2.1 First Union Services. loans, and perform to right the Services estate secured hereto, A as attached as needed Reports as listed Exhibit of, Union, and in by for the duration accordance First Agreement, this “Exhibit Agreement. this As used herein revisions Subsequent A” to “Exhibit A.1” attached. refers sequence decimal and to A will bear a numerical Exhibit date, replace will subsequent most current revision and the permit further to any prior agrees First Union revision. Non- any to to First Union of the providing bid on [3S] defined, or developed as Reports, Traditional Services Union, required during agreement. First the term of this by Also, manage to other Mail database agree shall Direct [3S] Union, per for the price First at a name or information for which added to perform shall be rights exclusive services infor- A, database provided and be included Exhibit mation related to traditional Services [3S’s] is not Reports, required as Reports. For all of Services Real secured Residential Estate First Union loans, will direct these use its best efforts to [3S], this a non-exclu- and while will be transactions subject provi- right agrees First Union sive Agreement. 2.1.1 of sions in Section guarantee 2.1.1. Minimum First Union will Volume. [3S], at May right perform least beginning (1,000) per month for Thousand Transactions calendar One *20 (1,000) Agreement. this If One Thousand the duration of average not delivered Transactions a calendar month on are year during the Term of perform, any calendar [3S] carry deficit Agreement, this First Union will forward the if of will up during Agreement, not made the Term this period of and Renewal Agreement extend the Term this (Empha- are fulfilled. until Transactional commitments the added.) sis possibility that First Union provided
The SA also for the more minimum might give significantly elect to than the of transactions. It stated: required volume In the [First Union] event wishes to increase its levels, transaction volume minimum above the transaction obligated will an perform [3S] be additional amount of (30%) Thirty percent of minimum transactions within delivery Agreement. stated times within this If First Union significantly wishes increase the volume above the Minimum stated in of Agreement Volume 2.1.1 with the anticipation schedules, its maintaining delivery [3S] of then First notify writing Union shall in of [3S] such increase sixty days prior upon receiving such increase. [3S] notice, obligated will consider but not re-negotiate pricing above schedule. SA, of
Regarding the term the the final version the SA provided:
4. TERM AND TERMINATION 4.1 This Agreement Term. .... in shall continue full (2) force and for a period effect of two years commencing Ramp Up after the period ending Period as a May [defined 1, 1998], or until provi- terminated with its accordance sions.
4.2 Agreement This Renewal. will be automatically re- year newable for one terms.
4.3 Termination.... First Union may terminate this Agreement 1,May without cause provided after how- ever, provides First Union year [3S] one notice of cancellation. Said notice shall not be prior delivered to [3S] to May 2000.
Steele testified that the step long-term SA was the first to the relationship partnership, something parties which was discussed early on.
Implementation Of SA SA, After execution 3S’s volume business from 1,500 from increased transactions the month signed 3,500 before the average exceeding SA to an month per transactions spring During 1998. *21 Period,” from Up the SA as the time
“Ramp defined 1, 1998, 29, May 1997 until transactions increased November any dramatically, giving bank advance without Steele that tell said he could not notice of the increases. Steele of getting he most the bank’s business because whether was list. had no to volume or transaction he access their providing other was aware that there were vendors Steele exclusivity, Regarding to Steele similar services First Union. to that but it wasn’t said, happen “we have loved have would backup to have a reality.... would not be unreasonable [I]t we some support imploded First Union in case for vendor ATM, vendors, told that one of Clewis Steele these reason.” just backup was vendor. year. first The revenue profitable for 3S the SA was million, about 40-50% approximately First
from $4 1998, In which was about million. gross of revenue in 3S’s $8 contract, $300,000 year gross lost on prior to the 3S SA, year million. In the first full of the revenues $3.8 $544,000 million. it had net income revenues $8.2 $862,000 of 8.3 million. profit on revenues 3S had 11, 1998, Thompson, in with First February connection On Conference,” Partnership nominated 3S “Supplier Union’s award, has a true writing proven partner that “3S an our First Their dedication serve external Union. day our exemplified each as drive exceed customer explained in nomination form that 3S He expectation.” property evaluation fully automated statistical “offers having away work to take time from eliminates our customers product costs appraiser. with an This independent to meet prod- property than 75% of traditional evaluation less ucts[.]”
Although providing its services the SA did not limit 3S Union, made Clewis only to First there were comments “go other should not across one bank officer comments mean interpreted street.” Steele these to their providing did want 3S services First Union Although told competitor, NationsBank. fiercest *22 Union, your organization, “we’re focused on we have no reason else,” go anywhere to he did have discussions with both Fargo joint and Wells about SunTrust ventures them.
Changes Pricing At First Union And Problems 1998, In late Clewis was to position transferred a new and was relieved of his management vendor responsibilities. Thompson had been relieved of his management vendor re- sponsibilities 1999, that year. By earlier March First Union’s three operations consumer credit had in been consolidated Brunswick, North Jersey, New under the direction Jim Buzzi, and Keenan Jennifer who had previously managed Fidelity’s services, credit using between 20 and 25 vendors.
Buzzi soon discovered that the Charlotte vendors were charging substantially higher rates than bank paying was Jersey up New to per more “Appalled” transaction. $30 — at disparity, Buzzi arranged to meet with 3S and three other vendors in 3, Charlotte on March 1999. At this meeting, Buzzi asked the vendors to decrease prices their to a reason- agreed able level. Steele pricing get review his back to 16, April her. On responded 3S that it would pricing lower its property for judgment reports counties, in specified $98 pricing but “contingent was upon maintaining 3S our current volume levels of a 3,000 minimum of property and judgment reports per Buzzi accept month[.]” did not proposal, only because “not did they drop [prices] low enough[,] they wanted more volume.” She indicated there was still a per transaction pricing, $20 difference which “would $60,000 have cost the bank ... a month.” 29, April
On price Steele offered the “fully same under- Property written Judgment reports,” and offered to “make available our product” $30, automated valuation without the new minimum By volume. May letter of Gent notified First Union that was officially dropping to these 3S, prices. however, right reserved the go back to its higher price “should significant we see a drop $113 volume.” The volume for the month April 4,432 1999 unaccepta- were that these terms Buzzi told 3S
transactions. ble. Not To Renew SA Election
First Union’s outlining her Buzzi sent letter April On requirement under the Volume of the Minimum interpretation SA: First Union Agreement, 2.1.1 of Section
Under opportunity perform Services provide agreed [3S] (1000) per month thousand loans minimum of one ... on a It is Agreement. month term the during twenty-four contemplates 2.1.1 that Section position First Union’s *23 Ac- average---- month volume is an per 1000 loans records, terms of the under the cording to First Union’s on at least provided Services has date Agreement, [3S] 29,000 loans. First Union terms obligation minimum under
Having met its providing longer [3S] will no be First Union Agreement, any additional on provide Services opportunity with the not constitute this action does loans. While First Union to contin- should desire Agreement, [3S] of the termination Union, willing First Union is to First provide Services ue and the Agreement of the early an termination negotiate for new provide which will agreement of a execution new criteria. price levels and performance agreement is executed that no new Finally, the event [3S], as this letter shall serve First and between Union Agree- 4.3 of the pursuant to Section First Union’s notice Agreement expire will allow this that First Union ment will Agreement of said 2000 and that no renewal May honored. Tucci, an Esq., by Christopher drafted Buzzi’s letter was Union, lawyer for corporate and a officer of First Tucci’s advice on First Union’s sought Buzzi Corporation. Buzzi conversed SA. Tucci and “specific obligations” under the April regarding 3S between about once a week letter, April drafted the 2000. At the time Tucci March planning he knew that First Union was to co-own a settlement company.9 services responded May 3, 1999, to Buzzi’s letter on express-
ing upon receiving “shock[ his it. pointed ]” He out that “ ” 1,000 SA called for ‘a minimum of per transactions month’ rejected interpretation 1,000 her that an average of over the entire term was sufficient. He continued: getting
Without into the details our extensive lengthy negotiations with management the Senior at that time, language mutually negotiated compro- as a provide mise to First Union with what it determined to be products and services it needed as well to ensure our 1,May volumes and work levels until 2001.... your
We also understand your directive in attempt your However, lower fees. we would like First Union to writing state in want change us to or eliminate our current standard of underwriting you as have to us stated verbally. you We have sent a proposed pricing structure existing our product. title attempt We will to push this down even further as get response we more from the field....
In closing, Jennifer, I do not think it is necessary to take approach “hardball” in attempting to negotiate. We value the First Union relationship and have serviced First Union by delivering highest quality products and services. We *24 look forward to continuing our relationship hope that First Union realizes provide. the value that Although we you may agree with existing Terms and Conditions ..., expect [SA] we to Union honor its current obligations. contractual open We are for further discus- sions attempt to to mutually come to a acceptable resolution. Although Gent and Buzzi had a conversation May on about the pricing 3S, new adopted by levels they did not April discuss the 28 letter of non-renewal. There is no that evidence Steele or anyone representing 3S said anything detail, 9. plans We discuss these in more infra. was entitled suggest to that 3S bank officials Buzzi or other
to transactions. bank’s to 85-90% the Invoices Overdue ongoing paralleled price about and volume discussions had not that claimed about certain invoices 3S communications submitted In October 3S by First Union. paid been invoices, many of outstanding several hundred First Union $375,227. These totaled pre-dated the SA. which they had not seen the told that officials Steele First Union time it would take considerable and that invoices before validly connect- verify that were them and through” “sort $72,630 February 1999. paid First Union with a loan. ed Buzzi’s tenure vendor pre-dated invoices Although the only paid partially invoices were when the management, Buzzi, asking get her to forwarded them April 3S Buzzi wrote to 3S request, to this Responding involved. 24, 1999: April identify the First Union you suggest [3S]
I would for responsible that was person and contact Department Division Credit orders with 3S. The Consumer placing these expenses. Division’s pay for another going is not can, considering any way I but try assist Steele [to] I will will considerable time invoices this take age of the will not Credit Please be advised Consumer research. both verified payment unless we have any invoice submit sufficient 3S responsible, up backed with that our Division is documentation, previously has not verify payment and also issued. been again with the provided First Union suggested, Buzzi 3S
As By invoices, them. letter parties and the discussed unpaid $150,000 pay 1999, First offered dated June outstanding balance First Union’s applied against “to be payment said that the The letter Steele[.]” purposes preventing solely made for the being way and in no hardship financial incurring from undue in- any such agreement an or admission constitutes *25 or charges by voices made under [3S] the terms of the [SA] are valid or enforceable. 3S,
The letter also upon asked that written demand of First Union, immediately payment, refund the not, and if it did bank would option have the any rights “exercise granted SA], remedies [under the including, but not limited to immediate termination Agreement.” of said accept 3S did not the terms of this offer. parties finally agreed to a mechanism for resolution of
their dispute. By agreement 9, 1999,10 letter July dated agreed $150,000 bank to pay immediately good “as a faith gesture disposition toward a final of the total balance out- standing,” reserving right to “research validity of the Invoices.” The bank agreed also
conclude its research the validity [on of the invoices] payment remit all [3S] on verified invoices no later than 31, August 1999. Should First Union any determine that the Invoices are not valid any or that of said Invoices had previously paid, been and therefore are not owing due and [3S], First will pay Union all undisputed invoices and [3S], provide with a written notice of its determination regarding disputed invoices, together with supporting docu- mentation, August 31, no later than shall 1999.[3S] have days fifteen from the date of such present notice to addition- al information in support of any such challenged invoices, to which First respond Union will within days. Any fifteen dispute concerning unresolved validity any such in- by voices shall be binding resolved arbitration[.] Although $150,000 paid July due it did up agreement live to its pay determine and the balance undisputed invoices August October, 1999. In First Union an made offer settle for $120,000, an additional provided 3S released First Union from any obligations under the SA. This offer was not accepted by 3S. 9, 1999, agreement July
10. The letter was dated payment but called for July on or about 1999. *26 until Novem- made was not dispute resolution Final “Agreement an parties entered when ber $245,000 within agreed pay Release,” First Union in which relating from claims First Union released day, and 3S one paid. This sum invoices. disputed Declining For 3S Volume to 3S sent First Union of transactions number Although the July through 1998 March 2,000 month from per exceeded and fell below August 1999 to decline 1999, they started expert 1999. Steele’s in October Volume Minimum agreed volume actual showing the a chart introduced witness Union, bank’s from First to 3S referred transactions from have handled could volume, amount 3S and the actual forth in is set This chart February 2003. January 1998— part below: relevant Appraisal Countvs. Actual Title
Steele’s 98), (Jan-May per growth Capacity 1000 month Projected at Steele’s 98) (Jun-Oct initially per month 60,000 caps capacity at per off until month *27 Steele wrote to September 22,1999: Buzzi on We continue to see a dramatic decrease transaction during volume the last 90 days. fact, Given this pursu- ant to Carl 4, Gent’s of May 1999, letter please be advised begin unless we to receive a flow of transactions similar to levels of year, earlier this we will return to a rate of reports, title per agreement.... $120.00 the service When transaction volume returns to previous levels we would welcome the opportunity to re-visit this issue with you.
During late fall 2000, 1999 and January Steele attempted to coordinate further discussions with First Union about volume, February success. without On
decrease summarizing long a Union Steele wrote letter including pay- relationship, problems with history of the declining of invoices and the volume business. ment highest approval from First historically enjoyed has [ 3S] quality, promptness, processors Union matters price.... support. only appears issue customer meeting at we goal always has been to convene which My positive solution. could find a business meeting In March First Union scheduled a with Steele In anticipation about the SA. to see what could be worked out meeting, presentation for First prepared of this Steele In this characterized the presentation, Union. 3S/First in New as until consolidation relationship “[t]remendous invoices, agreement pricing service Jersey unpaid where relationship to have issue.” seems created Under Issues,” heading, “Summary of Current Steele wrote: provides contract for: Current
(cid:127) (we currently per Minimum month 1000 orders are less).
receiving (cid:127) to lower our Pricing per agreed at P & J: we $120 per May, 1999 letter —instead volume dra-
pricing our decreased; matically subsequently we notified [First response. an of our intentions no Until Union] *28 reached, original our contract agreement alternative must be honored.
(cid:127) ( days Payment are from date of invoice terms net date currently AP holds invoices from
[First Union] invoice if is 11 approved receive even invoice overdue). months disagree point talk suggest agree that to at this
We we arrangements. about alternative correspondence with
In none of his First Union did Steele any obligated ever that First was to send mention Union 3S, any or specific percentage of its loan business to assert requirement except under the Minimum Vol- volume the SA ume. presidents
Four First vice and Tucci attended the Union Steele, meeting March According Steele. Bare, First Kirk Union Senior Vice President who Division, heading then the Consumer told him that “he Credit know, would also pay that, you the differential.... He stated business, doing that for us to continue we would have tear up agreement[.]” responded When that Bare’s Steele approach extremely heavy-handed way doing was “an busi- “ ness,” heavy-handed. Bare T can I’m First asserted: ” from meeting Union.’ Buzzi’s notes that Bare confirmed agreed pay outstanding only all invoices if would terminating “send letter the contract.” 19, 2000, meeting, April
After 3S sent a letter to First indicating Union construe agreement “we provide 12,000 orders, plus makeup for at least more any monthly shortages it volume before has satisfied.” been also that it proposed “substantively mix product alter its and pricing way for First Union in operate such that we can on a working basis would us to enable shelve the written agreement, according let it expire to its own terms.” The parties agreement failed to reach on continuing relation- their ship, and referrals business to 3S altogether ceased after June 2000.
First Union’s Plans Its For Own Settlement Company
Services prior 1993 or presentation first 3S’s Union, First internally discussed own creating its set- tlement company services to address the problem its thousands of individual were branches decentralized and that “the performed title, branches all acquiring the functions of appraisal at branch They it, level. up, followed tracked and did everything necessary to make that ... happen. And nightmare was a and mess.” The “drowning branches were in paper.” Margaret England, regulatory compliance attor- ney working (FUMC) Mortgage for First Union Company *29 Senior Maynor, Vice President Jim was tracking legislation its plan to establish own might affect First Union’s service business.
settlement First also considered the During years, these Union same company. of settlement As buying a services alternative earlier, early bank’s discussions Steele indicated the purchase equity for an interest plans First Union included for such Although proposals included some in 3S. Union, they First proposals in some written purchase of his part of final were not SA. 14, 1997, later, a date two weeks years
Three on November SA, strategic plan in signed First Union issued a before automating of goal centralizing it continued the which Comptroller equity process. loan June home Bank, advising N.A. Currency a letter Mellon issued a joint into a venture with permitted it was to enter for Mellon’s services provide national vendor to centralized provided service that First loans—the same residential Union. later, a memorandum England months distributed
Two FUMC, subsidiary that a First Union made suggesting mortgage loans, with two other First Union sub- home work sidiaries, Money Equity First Home Bank and Union Store, explore forming joint a venture with possibility manage services. The company to settlement an outside “major mortgage noted that August memo FUMC’s setting up ventures. banking competitors” were similar Request fall of For In the Union issued (“RFP”) vendors, seeking assistance to a number Proposals subsidiary automation and establishing providing companies project, on the Eight bid management services.11 ValuAmeriea, projected “five-year aggregate including which five-year aggre- billion and a approximately revenue $2.4 RFP to RFPs were 3S until sent 11. First did not send companies. eleven other *30 profit Although responded billion.” gate 3S to the $1.1 RFP, it as was not a finalist. selected When Steele learned selected, England 8S was not he called March and day her that had reminded the SA. The next he wrote offering ways in problems her which 3S could address the proposal. First Union had with its ValuAmerica, an agreement
First Union chose and entered services, provide allowing for ValuAmerica to First Union buy out for approximately ValuAmerica million. The $30 “GreenLink,” as company, new settlement services known 1, began doing year, 2000. business on June Within First bought out ValuAmerica became the sole owner of hugely profitable company. settlement services July Verdict trial,
At jury the end the the found that First Union SA, it give breached the did not proper notice of non- termination, or 1, renewal and that May the SA ended on $21,240,614 2001. It awarded 3S in for damages breach for period 1, January from 1998 to 2000. April It awarded $16,235,728 period an additional in damages May 1, for the April 2000 to 2001. It also found that First Union fraudulently SA, induced 3S enter awarded com- $39,476,342. pensatory damages of separate verdict the following day, punitive damages awarded for the fraud in $200,000,000. amount of Finding $37,476,342 compensatory damages breach duplicated of contract $39,476,342compensatory damages inducement, for fraudulent trial court judgment against First entered Union for compensatory damages $39,476,342. the amount of It en- judgment against $200,000,000 tered puni- Union for damages. tive trial,
First Union filed motions for a new for judgment verdict, notwithstanding remittitur, and for all of which by were denied the trial court. First a timely Union filed appeal from these verdicts.
DISCUSSION I.
The Facts Proven Not Sufficient Were
To Establish Fraud
Maryland
for a fraud action in
The elements
were
case,
clearly
leading
in a
fraud
Martens Chevro
summarized
(1982):
let,
Inc. v.
292 Md.
Id. at A.2d 534 must plaintiff 439 The by prove and VF convincing these elements “clear evidence.” 704, 693, Md. 715 Corp. Corp., v. Wrexham Aviation 350 A.2d (1998). of Although may a cause action for fraud not rest a events, fraud person may statement about future a commit if agreement or she an without something, he enters to do present performing: intention
[Wjhere part person money one another with his induces property by or means of which makes with promise a he it, performing guilty intention of not he is of actionable pretense fraud. In such a case fraud is committed false deception. presump- and is a prima deliberate There facie honesty tion of dealings mankind, fairness person hence when one makes a promise to another as an change position, inducement promisee has the right to promisor assume has an existing intention promise. to fulfill his existing intention of party at contracting the time of fact, is a matter and may be material to validity of the contract.
Appel
374, 382,
v. Hupfield,
(1951).
198 Md.
359 Md.
the at 174. 3S Union, the of dealings part First hard-nosed business contract, up to a and substantial breach of leading deliberate evidence, entirety, when we that the viewed its conclude fraud in proving falls short of the inducement. examining representations First Union that relies
In the 3S fraud, classify categories. we them in three upon prove to promise of First category The consists of the written first in the SA that we as the “best Union contained referred below, explain clause. As we further First Union’s efforts” the clause not suffi- regarding intentions “best efforts” were necessary prove fraudulent intent cient to show the scienter ambiguous, perform, largely not to because clause what it parties and did not discuss meant. the representations that could category consists The second in this reasonably not relied on commercial transaction be The they express contradict terms the SA. because the and representations that are broad category includes so third fall misrepresentations, not vague that are actionable As be in the category “puffing.” within shall shown the follows, overlap. categories that sometimes these discussion “Best Efforts” Clause First “best clause meant that argues that the efforts” it 75-85% of title promising give Union was by for loans appraisal equity work all home made needed at found that the efforts” clause bank. The trial court “best promised give First Union 3S the settle- least meant that support than 50% of their loans. ment services on more necessary proven, intent was their view fraudulent point trial court a statement made both 3S than give trial he intended to 3S more Clewis at never prudent because it was 50% of Union’s business eggs “put our in one basket.” bank all majority rule of “Maryland adopted overwhelming has may holding predicated fraud *33 American courts not present perform with promises made intention Poore, (1959). 1, 11,147 v. 219 Md. To them.” A.2d Tufts a claim based on establish for fraudulent inducement First give Union’s failure to 50% or its business to intend more 3S, however, requires showing first that First Union knew clearly required performance by that the SA level performance require- Union. Fraudulent to fulfill a intent undertook, support ment First Union never does not cause of action for fraudulent inducement. remembered, moreover,
It must be that 3S’s claim fraud based on was the fraudulent inducement enter SA. That is what said Steele stated. He that Clewis told him never was a two-year agreement 1,000 SA per limited transactions month, had, signed and that if have he Steele would not Rather, contract. he “would have to honor [Clewis] asked predecessors commitments that his he and had made to me.” Most importantly, jury find, that is what the was asked to find, interrogatories and did answer written on the sheet, respect verdict sheet. On the verdict with to the fraud count, jury following: asked answered the you convincing by
2. Do clear find evidence that fraudulently [First Union] induced to enter into [3S] [SA]?
[Yes] you Question 2, If please answered “Yes” to answer 2(a).... Question
2(a) preponderance evidence, Based on a of the how much, if any, you do award to for compensatory [3S] dam- ages for Fraud in the Inducement?
$39,476,342.00 Therefore, prove 3S needed to intent with respect fraudulent obligations to the undertaken the SA analysis
Our of whether First Union committed fraud signing the SA and its “best intending efforts” clause without perform its obligations thereunder starts close exami- itself, nation of and how within clause it fits the entire contract. Referring language to the 2.1 section that we
138 that, promised that First observe Union quoted previously, we First Reports, required by as and all the Services “[flor loans, Estate First Union Residential Real secured Union for [8S], transactions to efforts to direct these will use its best agrees right First Union while this will be non-exclusive Agree- 2.1.1 of this provisions to the Section subject be trans- Volume of 2.1.1 establishes Minimum ment.” Section guaranteed First to 3S. actions that inconsis- internally 2.1 2.1.1 is language sections trans- to direct these phrase, isolated “best efforts tent. The [3S],” interpreted parties that the could be to mean actions to that, precluding are laws or circumstances intend unless there 3S, the bank sending from all such transactions to First Union a “non- agreed also this is parties will do so. But any right[.]” language removes Significantly, exclusive First Union could make referrals doubt about whether other vendors, suggests may there be other even “best right can receive Union’s vendors who share Thus, reading one reasonable them business. efforts” to refer as on at least right had a to receive referrals is that 3S Alterna- as vendors. comparable a basis offered favorable tively, to mean that there are other vendors may be read business, necessarily may refer without whom First Union them. efforts” toward making “best in the SA. is of “best efforts” There no definition case under statute or meaning found a definitive Nor have we necessarily takes Rather, is a term “which law. “best efforts” Brew Bloor v. meaning its from circumstances.” Falstaff (S.D.N.Y.1978), F.2d 258, 266 601 F.Supp. aff'd, 454 ing Corp., (2d v. Cir.1979); Baseball Club Assocs. Triple-A 609 see also (1st Cir.1987), Inc., 214, Baseball, 832 225 F.2d Northeastern 1111, 272 denied, 935, 99 108 L.Ed.2d cert. 485 S.Ct. U.S. (1988)(best of a fixed “cannot be terms efforts defined of law ... with the facts and the field formula varies [but] Trimed, Co., F.Supp. 772 involved”); Inc. v. Sherwood Med. Bloor); v. 879, Polyglycoat Corp. (D.Md.1991)(quoting 885 Distrib., Inc., 200, 203 F.Supp. 534 C.P.C.
139 Bloor); (S.D.N.Y.1982)(quoting Victor P. Goldberg, Great Contracts Cases: Search Best Reinterpreting Efforts: Bloor v. Falstaff, (2000)(“best St. Louis L.J. only efforts” can be defined contextually).13 Thus, although interpretation contract generally law, a question of a factual may required determination be as to what is deemed “best efforts.” Prod., See Mor-Cor Packaging Inc. v. Inno vative Packaging Corp., 335-36, F.3d 2003 U.S.App. (7th *11-12 LEXIS Cir.2003)(treating question as of fact issue of whether product exclusive acquisition distributor’s *35 company competing potential purchasers product of con promise stituted breach of to use “best efforts” to sell manu product); Trimed, facturer’s F.Supp. 772 at (“Although 885 contract interpretation generally is a question law, of required contract a factual determination as to what is deemed ”). to be ‘best efforts’ article, a 1984 law review On Trying Keep To One’s
Promises: The Duty Law, Best In Contract Profes- of Efforts sor Farnsworth observed:
Best efforts is infrequently
mentioned
the [Uniform
(Second)
Code and
Commercial]
the Restatement
Con-
tracts and ... has
generally
been
neglected in the law
reviews....
Because courts sometimes confuse the stan-
dard of best efforts with
good faith,
that of
it will be well
...
plain
make
the distinction between the two stan-
dards. Good faith is a standard that has honesty and
fairness at its
imposed
core and that is
every
on
party to a
contract. Best efforts is a standard
diligence
that has
as its
essence and
imposed only
on
contracting parties
those
performance.
have undertaken such
Farnsworth,
E. Allan
Trying
One’s
Keep
Promises: The
Duty
Law,
Best
in Contract
1,
46 U. Pitt. L.Rev.
7-
Efforts
party’s entering
13. A
a contractual commitment to use "best efforts”
perform
without intent to
can be the basis of an action for fraud. See
Comm.,
Inc.,
123,
Travel
Airways,
Inc. v. Pan Am. World
Md.App.
91
179,
denied,
603
(1992).
A.2d
cert.
327 Md.
140 omitted). ques- answered the (1984)(footnotes Farnsworth 8 diligence to be set?” tion, this standard “how is first is ways. in two The responded generally have Courts single in a promisee united imagine promisor in that person a reasonable and to ask what efforts person second or own behalf. The on his her would exert situation promisor’s place to be imagine person a third is to would in that situation person a reasonable ask what efforts exert. Farnsworth, omitted). Allan (footnotes also E. See at 8
Id. 350-53; 7.17c, at 381- 7.17, § § at on Contracts Farnsworth ef- (2d of best ed.l998)(addressing interpretations various 88 clauses). forts can mean that “best efforts” has held Circuit
The Seventh
where
in similar contracts
has used
promisor
the efforts
Olympia
questioned.
See
of its efforts was
adequacy
F.2d
Dev.
Corp.,
Wax
Corp.
Hotels
v. Johnson
“best efforts”
(7th Cir.1990).
has held that
First Circuit
of the
licensing and use”
worldwide
promote
“to
in a contract
exploitation
required “active
contracting party’s product
Am.,
v. Bolt
Inc.
Geophysical Co.
faith.”
good
Western
(2d Cir.1978).
Assocs., Inc.,
1164, 1171
F.2d
*36
necessarily
not
efforts” does
promise
A
to use “best
all of its efforts
required
give
promisor is
that the
mean
or
interests
promisee’s
the
assisting
promoting
or
toward
promoting
from
prohibited
is
promisor
or that the
product,
Ne
Nooger &
Valkenburgh,
See Van
competing products.
Co.,
34, 330 N.Y.S.2d
ville,
30 N.Y.2d
Publ’g
Hayden
Inc. v.
875,
denied,
(1972),
409 U.S.
142,
cert.
329,
144-45
281 N.E.2d
(1972)(licensees
agree to
who
128
34 L.Ed.2d
93 S.Ct.
are
product
licensor’s
promote
“best efforts”
make
See also
competing products).14
in promoting
restricted
promisor makes
clause where the
example of a best efforts
14. For an
property,
selling competing
it is also
property, while
best efforts to sell
487, 502-03,
A.2d
Sys. Corp.,
Md.App.
v. Euclid
see Brooks
denied,
(2003)(stockbroker
"best
entered
We are signing best necessarily efforts clause means First officials Union contractually obligated knew that were to make more than Although 50% of their referrals to 3S. the clause uses Reports, required by term “For all as Services loans,” First Union for Residential Real Estate secured explicitly shall “right” states 3S’s be “non-exclusive.” Thus, reasonably expect First could that it would be referring meaningful amount business vendors. other
Furthermore, ambigui- the term itself “Services” creates an ty as to what was intended. “Services” defined elsewhere functions, documents, as provided SA “those or other data response Steele to First Union Bank in National to a request (Em- for information on a particular property.” real added.) phasis If Reports “all required by Services and as simply given response Union” means services those “in bank, to a request” from the then the bank would have nothing than an obligation good more act faith in requesting Thus, services. incorporating some definition 2.1, section reasonably “Services” into could believe that it was within requested. its discretion how much volume it contract,
In interpreting a
courts will review the con
tract
parties’
“as a whole to determine the
intentions.” Sull
Co.,
503, 508,
(1995).
ins v. Allstate Ins.
340 Md.
best not at efforts clause Volume,” only specific 2.1.1, indicates the “Minimum That section as to volume contained therein. guarantee [3S], begin- will to only guarantee that “First Union provides 1, 1998, right perform to at least One Thousand ning May the calendar for the duration of (1,000) per Transactions month Agreement.” this 2.1, A.1, also incorporated into section expressly
Exhibit that, as First Union remained above the long so indicates levels, First 2.1 it was within Un- Minimum Volume section any what additional volume discretion to decide ion’s would be: event wishes to increase its Union]
In the that [First above the minimum transaction lev- transaction volume els, perform to an additional amount obligated will be [3S] (30%) transactions within Thirty percent of the minimum If within First delivery Agreement. times this the stated significantly the above the wishes to increase volume Union Agreement in 2.1.1 of Minimum stated this the Volume maintaining delivery its schedules anticipation [as [3S] SA], notify First Union shall specified [3S] then sixty days writing prior of such to such increase. increase notice, [3S], obligat- will but not be upon receiving consider (Emphasis re-negotiate pricing to the above schedule. ed added.) clause as the “130%
We shall refer Clause.” short, that, at all its exerting was not clear SA 50%, efforts,” 75%, required give was “best First Union Although any specific percentage or other business. “all Services Re- best efforts clause referred was clause ports,” ambiguous, the term “Services” non-exclusive, suggested as and the 130% Clause qualified Volume, that, had the the Minimum discre- above tion to decide how much business refer.
Moreover, Thompson no or there is evidence Clewis representations suggest to Steele “best made than guarantee more 50% of efforts” clause was intended admitted that never bank’s he discussed volume.
143 Thompson meaning Clewis or of the “best efforts” Thompson either clause. He never told Clewis or that he thought that it meant 3S would 75-85% of the receive bank’s business, business, any specific 50% of the or bank’s other percentage Reviewing language SA, of business. of the any indicating discussion absence of that the “best that 50% required, efforts” clause meant was cannot we fraudulently a finding sustain that Clewis intended not to perform, simply he because never intended to refer more than of the bank’s 50% business. not that possessed
3S does contend Dibble fraudulent in- Rather, that argues tent. 3S Steele and Dibble had conversa- interpretation that would his support tions that the SA meant get business, would he 50% or more First that Union’s conversations, about Dibble informed Clewis these and that give never Clewis intended more than 50% the bank’s business. Clewis had Steele that told he “was aware what committed, promised, Mr. Dibble had represented me[,]” and that 3S remained First vendor of Union’s choice— “nothing changed.” had The conversations Steele said he had concrete, with Dibble far were from however. that if
Steele Dibble said that testified Steele deliv on his promises, beneficiary ered “could be of all the transactions that could send to Similarly, us.” Steele said he and Dibble discussed that “best efforts” meant “that he could send all the transactions that he could and that I could vague handle.” This statement in itself. All the easily transactions First “could” might send mean those taking could send into need, after account First Union’s explained, as maintain multiple get Clewis good vendors service, competitive to maintain pricing, and to safeguard against technological natural and A promise disasters. to use require efforts does disregard best that a party its own See Nat’l Bank interests. NCNB v. Bridgewater N.C. Co., (W.D.N.C. Power F.Supp.
Steam 740 1152 1990)(“The requirement that a party its use best efforts necessarily prevent does not the party giving from reasonable Bloor, interests”)(citing F.Supp. to its own
consideration 267). at specific percentage said about a was only thing Dibble, signed, year
that he and well over before SA around, 70, 75%.” But had some various numbers “thr[own] departure from in March even before Dibble’s Union, proposal rejected September Dibble had 3S’s contrary, To in March guarantee the bank 70%.15 *39 that had no minimum volume First Union circulated draft Moreover, exclusivity requirement and no clause. Steele did agreed or any that he Dibble that 75% testify not and ever guaran- be percentage of the bank’s business would particular Thompson acknowledged contract. also teed He him, respect told with to the Minimum Volume and Clewis reduced, being longer bank Doug Crisp pushing
since was no there or now in- credit division that Mr. Pruitt was consumer they able they volved think that would be to and didn’t previously concept the transaction levels that we achieve agreed but the and commitment was still there to intent cetera, you, us, worry with ... we’re for et but don’t there they get would to didn’t think be able the document large signed with a amount transactions in it. bank had at 50% of say promised
Nor did Dibble least put that he wanted to their transactions. Dibble testified position computerized appraisal and Steele into the where his directly by title could accessed all the branches. service testimony examine that below. We explained working first that when he was with Steele
Dibble for prepare perform appraisal to title and services significant necessary mail it was number project, direct at computer system of users to access the one time because contract, Septem- undisputed 15. It is that Steele’s second draft sent greater proposed receive the of: of First Union's ber transactions, that 3S 70% 2,500 average per an for the first or transactions month 7,500 per proposal year, thereafter. This was transactions month accepted by First Union. 2,000 branches, the bank had with one to in a three lenders computers branch. This that the have meant needed to 5,000 6,000 capacity up to to handle or users at time. He one completion pilot project, indicated that at the of the ATAPS goal accomplished, 2,000 approximately was branches log could onto 3S. clause,
When about the asked “best efforts” Dibble said nothing guaranteeing about 50% or more:
Q: intent, Dibble, it your way Was Mr. to in limit any amount go of transactions that other than were by limitations law? by
A: beyond my Limitations law and stuff that was authority. it, I couldn’t commit I branches to but wasn’t intentionally trying to limit.
Q: Was it your intent send 3S all that 3S could handle generate all that could except by FU law? limitations A: It my intent to create a mechanism where system, get appraisals, Scott —we access could Scott’s [Sjcott ramp ups could —and certain in service levels, coming Scott handle could the volume that was *40 through branches, those look whatever that would like. added.)
(Emphasis Dibble also asked was about his intent with to respect the “best April efforts” clause the 1996 draft of the SA. Q: you What did intend the term “best to efforts” mean with respect relationship? to this
A: That once we had a connection between and First Scott Union, that would be the best efforts to the transac- direct tions believing that the advantage branches would take an ability to close loans gain appraisals. faster and/or
And for that those chose not to because have some- body business, down to the street do this obviously would give ability them to do that.
Q: you But meant sending “best efforts” to include as many 2,000 within transactions entire branch [First footprint possible as Union] or that Scott could handle? them, my was that Scott I couldn’t direct but belief
A: of the portion aget significant assume to reasonably could limit him.... my intent was not to volume. And (Em- functionality get be for him to that. would there added.) phasis conceptual his said, agreement about
Dibble also when asked with Steele: I on was that with agreement Scott and worked
[T]he all the ability get to technology Scott would have exclusive, was not it was not meant transactions. It an significant portion everything, but that could handle he volume, yes. get than Thus, although might that more thought Dibble 3S did technology, his nowhere 50% because of of the transactions amount. agreed that to commit the bank this say Dibble he authority had he that he say Nor did Dibble that told Steele an commit the bank to such amount. testimony of was sufficient if the Dibble
Even Dibble that knew that Steele and jury allow the to infer Clewis business, do of the bank’s we getting had discussed 75% that sufficiently clear establish think the SA Clewis, Union, entering the SA on behalf knew of the making part kind of commitment on he was understood that he was commit- proof bank. Yet that Clewis is to 3S ting than of the bank’s business give more 50% his predicated intent proof if of his fraudulent essential 50%. testimony, give he intended to more than trial never that, saying as contractual us be clear. We are not Let no matter, meaning, had and that the “best efforts” clause only by First Union was the Minimum promise enforceable above, expand on in section suggested Volume. As we we claim, II, think, could assessing jury contract we 3S’s re- imposed some decided that the best efforts clause have *41 diligently significant refer quirement on First Union to 3S, require to if did not amount of business even of its agreed percentage specifically upon Union to refer a business.
147 however, fraud, A cause of action has strict “ tort ‘[R]ecovery in a action for requirement scienter. Maryland or in is a defendant’s upon fraud deceit based ” Wrexham, 704, Md. at 715 deliberate intent deceive.’ 350 Sav., 216, 230, (quoting 188 v. 337 Md. A.2d Ellerin Fairfax (1995)). Indus., A.2d 1117 See also Miller Fairchild v. 342, denied,
Inc.,
Md.App.
A.2d
cert.
333 Md.
(1993)(“Proof
172,
Motive For Fraud First, we look at 3S’s regarding evidence First Un possible ion’s getting SA, motives for 3S to enter the even though First no Union had intent its perform obligations agreement. quotes under that court’s trial Memoran accompanying dum its order denying a trial and new JNOV. “ ‘[First wanted Union] needed centralize and [3S] services;’that equity automate its loan home settlement in order to assist in [doing [First induce ... [3S] so] Union] represented [First Union] would its long [3S] [3S] partner for term all of transactions that [First Union] handle, could send to [8S] [3S] could with a written being step ...; contract first relationship ‘that ... motivation [First in its was to own Union’s] scheme its ” companyf.]’ own settlement services 3S contends that there evidence that this “scheme” was place because a First Union affiliate had discussions 1993- 1994 about forming company, its own settlement services
148
regulatory
to track
continued
First
thereafter
Union
because
of such a venture.
legality
regarding
developments
however,
fraud,
committing a
motive for
possible
A
Comm., Inc. v.
Travel
intent.
prove
not
fraudulent
does
Cf
123, 178-79,
A.2d
Inc.,
603
Md.App.
91
Airways,
Pan Am.
denied,
(1992)(general
797
610 A.2d
327 Md.
cert.
in
potentially
in manner
corporate direction
change
plan
did not suffice
commitment
contractual
consistent with
at time
by
to abide
contract
not
fraudulent
intent
show
Indus.,
that
execution).
we held
In Miller v. Fairchild
manufacturing
aircraft
of an
chief executive
speech
was
indicating
company
that the
plant employees
company
they could continue
plant, and
to close the
planning
fraud,
loss,
job
was not
fear of
without
major purchases
make
knew,
of the
at the time
the executive
proof
absent
major
its
contract
going to lose
plant
that the
was
speech,
343-45,
3S Its Trade Secrets Of context, that, remember, as 3S in this It is crucial trial, claim at its and several times acknowledged in its brief misappropriation not a claim for against any claim to disclaim strategic decision trade secrets. The by was made apparently trade secrets misappropriation for fraud was that its claim contention to avoid First Union’s Act.16 Trade Secrets Maryland Uniform by the pre-empted Maryland Trade Uniform bring action under the not to its 16. 3S chose (1975, Repl.Vol., (“MUTSA”), Md.Code at Act Secrets codified Other Evidence Of Fraudulent Intent Not
To Perform The Best Efforts Clause urges 3S also can we find fraudulent intent in First Union’s contract, immediate breach of the without a circumstances, change in together with subsequent its con duct. Appeals The Court of has educated us on the limits on such an exercise:
A
pre-existing
fraudulent
perform
intent not to
a promise
made cannot be inferred from
perform
failure
promise
But,
alone.
it may be considered with the subse-
quent conduct of
promisor
and the other circumstances
surrounding the transaction in sustaining such an inference.
And it has been stated that
conditions,
under certain
a
failure or
to perform
refusal
is strong
of an
evidence
intent
not to perform
promise
made,
at the time it was
as
only
where
period
short
elapses
time
between the
making
promise
of the
and the failure or
perform
refusal to
it, and there is no change in the circumstances.
Poore,
v.
1, 10,
(1959) (citations
219 Md.
Tufts omitted). We conclude this case does fall within the criteria for proving fraud from an immediate breach Tufts without a change circumstances, in for two reasons. Cum.Supp.) § seq. et 11-1201 of the Commercial Law Article (CL). Indeed, any repeatedly claim that First Union stole renounced or misappropriated trade secrets. These renouncements constituted a strategic subject decision not to its claims to the limitations contained provides MUTSA. MUTSA damages for misappropriation for of a secret, trade tion,” which consist of by the "actual loss misappropria- caused unjust by "[t]he enrichment misappropriation caused that is loss[,]” not taken into computing account in actual alternatively, or royalty" "reasonable for misappropriation.. 1203(b)— ihe § See CL 11— (c). It also exemplary damages, allows but in "an amount not exceed- any twice ing award” compensatory damage allowed under a theory, ” upon proof of misappropriation!;.] "willful and § malicious CL 11- added). 203(d)(emphasis tort, displace "conflicting MUTSA remedies restitutionary, and other providing law of this State civil remedies for secret[,]” misappropriation ll-1207(a), § a trade except, CL 1207(b)(i). Thus, contractual § remedies. See CL a claim under 11— precluded MUTSA would have 3S’s claim for fraud. 3S elected to claim, any
disclaim MUTSA and sued for breach of contract and fraud. performance
First, partial at least bank did undertake year period. and a half a two through June under the SA until requirements Minimum Volume breach the It did not Even years signing the SA. nearly two after October got from of business he with the volume happy in Novem- time the was executed SA First between Union announced letter May 3S mid-1999. 1997 and ber right go back reserving dropping prices, its that it was in volume.” significant drop “should we see higher prices 3,464 per averaged this letter preceding volume The 1999 2,000 per transactions above month, volume remained and the presenta- in a expressed also August 1999. Steele month until relationship that their in March of 2000 tion to Union “[tjremendous ... Jer- [New until consolidation had been place in 1999. sey],” which took 1999, First referred through July January 1998
From 2,936 transactions, trans constituting average an 55,785 II, we Although, explain as section month. we per actions 55,785 transactions could that these jury determine think the this was a performance, for full contractual not sufficient were *44 business, three times the approximately of amount substantial month, and more 1,000 per transactions Minimum Volume to receiving prior than had been in most months volume under these meaningful partial performance, Such the SA. an circumstances, drawing from inference jury the precludes v. itself. See Sass merely from the breach fraudulent intent (2003)(fraud Andrew, 433-43, A.2d 247 Md.App. build house but did promised who to against builder verdict partially performed). reversed because builder not finish in circumstances significant change Secondly, there was in drop off and before the signing of the SA after the regu- thought there were originally The bank referrals. company. its own settlement Seven latory owning barriers however, an the OCC issued signed, was months after SA with a joint venture competing for a bank authorization action regulatory This cleared company. services settlement forming purchas- or to move toward way for First Union that it could company. Learning services ing a settlement company own a may settlement services itself have well changed regard First Union’s intentions to buying these Thus, services from 3S. not fit case does within Tuft’s proving largely by criteria for fraud proving immediate breach.
Moreover, in organiza- restructured the Division, tion of its Lending Consumer man- consolidating its agement Brunswick, in Jersey, Charlotte, New rather than change North Carolina. This was also a in circumstance. learned, SA, The bank signing after other vendors Jersey New providing area similar were at sub- services stantially cheaper prices, approximately per less transac- $30 tion. undisputed The evidence shows that Steele was slow adjust his prices pointed differential, after Buzzi out the initially sought greater attach requirements any volume adjustment. Although there some evidence that 3S ulti- mately may approached have its competitors’ prices, recal- its doing can citrance in so also change be viewed as a a signal circumstances —it could be that a “partnership” future might prove difficult. To
Efforts Terminate do Nor used by the tactics First Union after execu tion of SA suffice to meet pre 3S’s burden to show contract fraudulent argues intent. 3S that we should look at the bank’s efforts to SA, by force termination “in vent[ing] phony complaints about pricing,” creating “pretex billing dispute, tual” and giving notice of termination before it allowed do so under the SA. all happened These or after year March than a more into the term of the SA. certainly notice of termination is evidence of an intent to ignore terms, bully the contract and to early 3S into an billing termination. The handling dispute may even *45 an to reflect effort obscure bank’s intentional breach SA. In to order establish pre-contractual by fraudulent intent evidence, clear and convincing however, Maryland requires simply than more an intentional breach of contract. None of upon by proved cases relied fraudulent intent one, entirely consisting post- as thin as evidence deliberately breaching the contract. actions contractual in of November 1997 rest fraud the inducement We cannot in and billing dispute that surfaced October contract on 1994-1995, dating early as as invoices from before related to explain. executed.17 We the SA was $375,000.18 in said question The invoices totaled Steele First normal course had sent to Union the invoices been all business, gave complete copies of again but that he no confusion on what 1998 make sure there was invoices in “to the information open outstanding, give and to them officials pay them[.]” to research needed difficult, them, and that it was having received asserted denied time, verify to that were so old. take transactions and would timely, sent we do jury if that the bills were Even believed largely to bills failing pay incurred not see how First Union’s to the SA an intent not send new execution of showed before is not suffi- business, required as the SA. This evidence existing prior to to fraudulent intent the SA support cient A Discussions About Settlement 1993-1994 Company Services to plans or 1994 of future Nor discussions are company enough in a acquire an interest settlement services what perform to to show a fraudulent intent only Stop-N-Go a three commitment. year admitted was Cf. th Co., (7 Madison, Inc. v. 184 F.3d Uno-Ven Cir.l999)(oil refining company’s interest and efforts to sell oil, a contract to rights prior entering obtain crude to its its aggressively market supply gasoline plaintiff, intent not did not show fraudulent gasoline, brand of contract). when especially This is so one considers perform Steele, many during According paid had other invoices been 17. period time 1996-1998. 3, 1999, May when September late or October 18. Between invoices, Buzzi, $72,000 outstanding paid First Union 3S wrote $303,000. reducing the balance *46 that knew that First Steele Union was interested an eventual purchase, because one of its officers told that Steele might it in purchasing be interested 3S. Testimony
Clewis About Renewal Clause that it proved testimony 3S claims fraud through Clewis’s about the renewal clause of contract:
Clewis testified that he never intended extend the Service Agreement beyond years, despite language two the clear it providing Indeed, that would automatically be renewable. Clewis himself was forced admit provid- that contract ed that years. it would run for three artful, upon
Counsel’s cross-examination of Clewis was but examination, provide close cannot foundation fraud.
The colloquy went as follows:
Q: your deposition] you you [At were asked whether or not had an that intent there be renewals in the and do contract you answer, recall your sir? Sir, yes,
A: my answer assumption was Mr. EDI ongoing would install the would we have relations and it would be no need for a contract.
Q: Sir, your part was there an intent on there be contract, yes renewals in the or no? contract, no,
A: Not a written sir.
Q: you So never intended there be renewal? A: I renewal, get— saw no need to do a if we fulfilled our agreement, there would no need to do contract written again.... ever
Q: 4.2, sir, renewal, How did this section get into this agreement your if it was intent that be no there renewals contract, get how did it in there? A: I’ll you. year Every tell Mr. I Steele and would sit down renegotiate pricing. going We’re not to pay price, business, same competitive this is a prices coming are down, knew it in terms, we the marketplace, the turn I spelled spelled EDI was out.... times were out.
around year. year after anything we had renew signing wasn’t Q: Sir, agreement, in the correct?
A: says It renewable. later, asked A time 3S counsel Clewis: short *47 says it rely, this where Q: agreement Mr. when Can at some year to a one notice of cancellation going get he’s 1st, 2000, says, is what it sir? May that point, not before years anything beyond two rely A: not Mr. Steele did spelled out that contract. which was sir, be a you don’t have to Q: say, contract Does this this, say that cannot you does contract lawyer to read this 1st, May a before 2000? deliver notice of termination that, yes. A: say It does get year a one notice
Q: say And does it also that he would of cancellation? say
A: It does that. says us this contract Q: enough to tell that you know So May to run until 1sl very going minimum it’s that at a says? that’s what this says, yes, sir.
A: That is what the contract claim fraud for support does not a dialogue This First, “automatically renewa making a contract two reasons. ble,” parties It that promise a to means is not renew. renewed, capable may of being contract is it—that the renew contrary, it Sec to the will be renewed. without notice ond, term of the SA a to renew the whether Clewis intended of the notice termination question from whether different two-year year to the added third stated effectively clause did not intend renew the term. stated he Clewis relationship would contract, although expected he written not rely did on more Although be he said that Steele ongoing. abide that he intended to years, say than did never two he require notice of termination by one-year, post-May its being as evidence simply colloquy cannot ment. We view not to of pre-existing intent abide the notice termi- provision nation contract.
January 29, 1997 Letter January 3S makes much of Steele’s 1997 letter Thompson, meeting proposals which regarding followed 3S’s for centralization Union’s and automation branches. sought agreed
Steele’s letter confirmation that had been “preferred appraisal, that 3S would provider be the bank’s categories. title settlement seivices” certain limited argues Thompson that this had showed “Clewis and no of honoring obligations intention their We do not 3S.” see letter, Thompson’s respond how or his failure note to any promises Clewis “we didn’t make would but entertain proposals,” per- their is evidence of intent not to fraudulent form First Union’s obligations under the SA. intelligent practice
It is corporate employee business for a appreciate careful to discussing difference between *48 proposals making a actually contractual commitment. Thompson’s failure to write Steele might back evidence if suing inducing fraud 3S were it to fraudulently provide without services a contract. fact that written But the 3S later actually entered into dishonesty, the SA reflects not but a willingness to its obligations writing commit to in and better parties’ the relationship.19 define
3S’s On Cases Fraudulent Intent The cases cited on inferring fraudulent intent do not persuade Poore, 1, us v. otherwise. 219 Md. 147 A.2d Tufts (1959), a woman wealthy lovely with a on home Potomac, Hill,” called “Tulip wrote a will in which she Hill, life in Tulip assets, left estate and one half of her other daughter, to her with the pass remainder to interest her son and his Although descendants. the testatrix disliked her section, 19. As we phrase “preferred discuss later in this we consider the provider” vague general too misrepre- to amount actionable an sentation. 3, daughter’s request, July on husband, at her
daughter’s
will,
codicil
that
simultaneous-
1955,
the testatrix executed
executing a
own. The
daughter
will of her
ly
with
outright
daughter
Hill
in fee
Tulip
left
her
mother’s codicil
daughter
to her
also
other assets
simple. She
left substantial
equally
them
“request
she divide
outright,
7,
upon
Id. at
grandchildren
her death.”
among the testatrix’
time,
was ill with
At
the testatrix’s son
The Court
daughter
had never
jury
for the
to infer
evidence
effect, thereby
depriving
will
intended maintain her
from
assets
inheriting
of her
those
left
descendants
brother
id. at
Id. at
717.
“is
by
[proven]
only, by
particulars,
circumstances
inductions
12,
trivial,”
of them
at
apparently
some
often
id.
tion have frequently courts importance the significance stressed the situation of parties, them, existing the the relations activity between the promisor instrument, of the in procuring the and the failure promisor of the perform. 10-11,
Id. at 147A.2d 717. seeWe marked differences between and this case. Tufts There, jury daughter the could have inferred that the never because, will intended maintain her as as soon she returned Europe, put from she it in failed her mother’s lock box as Moreover, parties intended. six within months at the outside,20 daughter changed will, exactly doing her what promised she In contrast, her mother she would not do. here bank did not breach the Minimum for Volume almost two years, and any early jury breach found must have clause, related imprecise “best efforts” with its obli- gations performance. of the making circumstances of the agreement Tufts
were different as In Tufts, daughter well. was the sole will, instigator change the mother’s which benefitted only her and heirs, her rather than Here, mother. her we negotiated agreement, have a strongly pursued by 8S, which parties. benefitted both Heckenbach, v. 144 Md.App. 797 A.2d
Greenfield
denied,
cert.
(2002),
Md.
ed, representa- introduction of parol under evidence the as to to obstruct by made the seller a house his intent tions by building adjacent on his lot. The defendants did view the address, sufficiency did the of the argue, not and we not fraudulent intent. show evidence 22, Co., 1, Mgmt. 69 515 A.2d Md.App.
Bocchini v. Gorn (1986), helpful because there we held there 1179 is 3S complaint of fraud in the were insufficient allegations that the motion to withstand a dismiss. Bank, 514, 1 Md. Nat’l 278 366 A.2d Henderson v. Md. liability (1976), fraud bank was not a case. The admitted employee repossession a bank ordered the conversion when in non-payment, payments when fact all had car for plaintiffs that Appeals The Court of held there was timely. been employee to show malice evidence actual when sufficient checking without summarily repossession, other ordered telephone an in angry after conversation employees, bank bank plaintiff explained previous errors the had which delinquent his account was because had thinking made 523, by the name. See at 366 A.2d another customer same id. repossession summary following employee’s 1. The immediate call, facts, phone checking compelling angry an without Here, no such of malice. we have evidence. evidence Inc., Sussex, 247, (1993), 1156 332 Md. 630 A.2d Gross v. 3S, Appeals summary relied on the Court reversed also in favor of contractor on claim for fraudulent judgment contractor, inducement because there was evidence home, falsely a contract for construction of a prior signing plaintiffs permits place, so that he could told the were 276, at immediately start work construction. id. 630 See found sufficient of fraudulent A.2d 1156. The Court evidence that, at plaintiffs able show intent because the were statement, approv- was no subdivision time he there made al, is no building permits. no See id. There hence misrepresentation comparable factual demonstrated case.
159 asserts fraudulent intent can be inferred from evidence, Raines, circumstantial citing 582, State v. 326 Md. 591, denied, 265, 606 A.2d cert. 506 U.S. 113 121 S.Ct. (1992), L.Ed.2d v. Geisey Holberg, 185 Md. (1946).21
A.2d true, and, This is certainly above, as we see *51 the permitted case an inference of fraudulent intent Tufts from circumstantial But evidence. neither Raines Geisey nor analogous are to this case. Raines, the issue whether a trier of fact could infer specific
defendant’s
intent to kill from evidence that he shot at
the driver’s window of a
being
tractor-trailer
driven down the
highway. The Court held that “Raines’ actions in directing
window,
gun
the
at the
and therefore at the driver’s head on
window,
the other
permitted
side
the
in inference that
shot
gun
Raines,
Raines
the
with the intent to kill.”
326 Md.
592-93,
at
Geisey involved a by estranged scheme an husband his good friend and business associate to deprive his wife of her interest in property through real proceeding. foreclosure specific facts in Geisey complex, are and do not warrant detailed recitation here. say, Suffice we simply do not find the post-contract evidence of breach First Union analogous sure, to those facts. To be of Appeals Court in Geisey observed:
Fraud
easily proved
cannot be
by direct evidence because
secrecy
with which it generally is surrounded, but a
court of equity
eyes
cannot close its
to a series of circum-
stances, all pointing
way, indicating
one
one purpose in view.
Geisey,
653-54,
21. 3S
Md.App.
(1969),
also cites Pearson v.
Maryland when are often good fraud reason. Contracts breached competi- change business direction because companies their know entering persons Business contracts tive market forces. times, anticipate parties Many this. because expect damages breach, provide liquidated contracts potential *52 a provides The attorney’s if breach occurs. law fees and/or to enter will be hesitant breach. Businesses remedy for breach, a of pre-existing all if without evidence contracts at intent, punitive damage them to awards. expose can fraudulent To The
Representations Collateral SA that argues 3S fraudulent that made [First Union] is clear
[T]he record [SA], to the and in and collateral representations both Agree- executing such representations 3S relied commitment preparing to service an increased ment and long-term on a basis. [First Union] following representations: verbal points specifically 1995-1997, (1) plans and with Steele in In his discussions “long-term parties would a told Steele that have Dibble relationship.” mutually beneficial
(2) Crisp you’ll “as grow, grow.” and said we Crisp Clewis 12,000 transactions on also “could handle asked whether 3S out it to to work monthly [Dibble] basis” and “left Parkes the rest.”
(3) Prior only to June Dibble said that was the SA long step parties’] partnership.” [in “the first road (4) negotiated year contract with like renew- Dibble “five als,” ten-year meaning parties that the would have a rela- tionship.
(5) Dibble, After he took over from said “don’t Clewis worry, everything’s fine, nothing’s changed[.]” (6) January from Thompson, letter Steele to expressed understanding Steele’s that 3S to be the was “preferred provider bank’s of appraisal, title and settlement service[s];” respond. First Union did not (7) Clewis told Steele that the term of the was two SA years, and automatically “[i]t would be renewed each every year thereafter, which consistent [sic] long-term relationship, partnership expected that we and it going would up.” continue unless I screwed below, As explain we representa we conclude that the (1), (2), (3), (6) tions (5), identified as numbers overly are general of expectation statements sufficiently that are not definite terms a sophisticated person business reason ably rely representations (4) on. The identified as numbers (7) sufficiently definite, were reasonably but could not relied on by a sophisticated entity entering negoti business ated contract because explicit were contradicted Although instances, terms the SA. in certain fraud can be premised on representations that are a writ inconsistent with agreement, do agree ten we that the circumstances of this recovery. case allow such Vague
Overly
Expectation
Statements Of
*53
Appeals
The Court of
general
has differentiated between
expectations and actionable representations
for over a hun
Parks,
years.
dred
118, 132,
Robertson v.
76 Md.
[Representations material, to be in respect must have been facts, of as distinguished ascertainable from matters of mere opinion or speculation. A representation merely which
162 or judgment, probability opinion, to a of
amounts statement in its nature and vague or is and indefinite expectation, terms, loose, conjectural, exaggerated a or merely or is true; for statement, though may it not a goes naught, justified placing in reliance on such statement party is not or representation. Robertson, Court, later, seventy years reaf-
Relying on the of fraud: this limitation on claims firmed definite, however, must be Ordinarily, representation the insuf- vague, statements are general, and mere or indefinite should, rule, put a ficient, general as because no such right rely upon is upon inquiry, hearer there statements. (1962), 579, Benton, 571, A.2d 344 cert. v. 229 Md. 185
Fowler
Comm’rs, 375 U.S.
County
v. Bd.
denied sub nom. Fowler
of
(1963).
845,
98,
Comment
from
fraud those statements
section 530 excludes
actionable
merely “puffing”:
transaction
are
business
a fact as
state of
of a man’s mind is as much
The state
own
representation
A false
actor’s
digestion.
his
thing is
if
particular
not to
actionable
do or
do
intention
interpreted
expressing
reasonably
is
to be
as
the statement
merely
“puffing”
as one of those
a firm intention and
frequent
regarded
so
and so little
which are
statements
unjusti-
as to
negotiations for a business transaction
make
upon
recipient
rely
for the
them.
fiable
in Milk
decision
Appeals’
find instructive the Court
We
(1930).
French,
A.
Md.
28
There the
ton v.
lot,
which was
from the defendants
plaintiff purchased
about
improved
bungalow.
plaintiff
with a
was concerned
many
roof
had
so
[he
heard]
and the
“because
basement
damp
about the
cellars
complaints here
Baltimore
requested at
A. 28. He
leaking roofs.” Id.
assuring
insert a covenant in the documents
sale
defendants
at
bungalow]
right.”
Id.
that “the construction
[of
inquire
if he was
163 wiling covenant, this he include said that he “refused to give any heating degrees,” assurance to 70 but the house purchaser concrete, perfectly the “was on roof and safe the everything of the had built it else construction because [he] himself.” Id. The Court held the statement seller’s about the puffing: condition the house was mere
In
place,
the first
of the
in
“perfectly
use
term
safe”
every
connection with
detail of construction was so extrava-
gant
measure,
in scope and
and so
indefinite and elusive
meaning, that the statement would fall within
category
puff
of a
of a representation,
instead
and
plaintiff,
who
was
experience,
an
architect
could not have been misled
words,
or
It
influenced....
to find
difficult
these
when
considered,
reasonably
capable
as
of being
understood
a
intelligence
man of average
represen-
as a clear and definite
tation of any particular
language
fact. The
not
does
conde-
vague
scend to
detail.
words used are
and
so
general
incapable
particular
application.
as to be
They fail, therefore, to
to misrepresentation,
amount
and
are but
generalities
of exaggeration.
indefinite
(citations
132-33,
at
Id.
In a more recent v. Loyola Court McGraw Ford, Inc., 560, denied, Md.App. 566, 502, 124 723 A.2d cert. 473, Md. (1999), summary
353
that a home construction lender’s assurances to its borrower that there was need to lawyers investigate no have bank mid-job contractor because the “value was in ground,” only opinion, an representation. a factual
Here, “long mutually about term these statements grow, “as we relationship,” “long relationship,” term beneficial “long partners” have no concrete grow,” and term you’ll *55 terms, expectation opinion. of or general and are statements vague category being into the of “so and they think fall We Milk incapable particular application.” as of general to be ton, 133, dealing 150 with transac 159 Md. at A. 28. When dollars, sophisticated millions of a involving potentially tions vague reasonably rely on such and entity business cannot statements, parties contemplate particularly when the general relationship. agreement that will define their a written context, “only Similarly, in this the statement that the SA only road can seen as a step long partnership” first to a be expectation. parties discussed vari- general statement of working together. There ways and of were complex ous organizations to many potential ways too for these two simply a for “long partnership” road those words consti- structure meaningful representation. parties When the were tute agreement, of a written state- negotiating terms concrete complex agreements might further ments about what road, terms, any cannot down the without concrete enter reasonably anything on as more than statements of be relied expectation. “preferred
Nor
would
are statements that 3S
sufficiently
to warrant
of certain services
concrete
provider”
Comm.,
See,
Inc.
Am.
Travel
v. Pan
World
e.g.,
reliance.
1301,
Inc.,
123, 180,
Md.App.
91
603 A.2d
cert.
Airways,
denied,
525,
(1992)(representations
327
610
797
Md.
A.2d
agent would be Pan Am’s “most favored
wholesale travel
Assocs.,
puffery); Snyder v. Greenbaum &
nation” were mere
149,
Inc.,
144,
(1977)(carpet
Md.App.
suppli
38
3S cites the Fourth
in
Assocs.
Circuit’s decision Edell
v.
&
(4th Cir.2001),
Law
Peter G.
Edell the Angelos Law Offices Peter G. Firm”) (“Angelos Edell, an pay breached a contract attor- ney expertise with in litigation, mass tort tobacco fair share any contingency recovered, fee, in hourly fee addition to his in return Angelos litigation for his work with Firm the brought by of Maryland against the State indus- the tobacco try. alleged Angelos’ Edell also representations false of the Firm’s pay intent to contingency the award. the con- Both tract and fraud claims such were based statements as: Angelos fairly!;]” “deal with “gener- would him Edell would be ously compensated!;]” compen- Edell would receive “additional rates; hourly they “partners were in the tobacco
sation” above “rewarding partner- experience would litigation[;]” approach!;]” be a “one for all team ship[;]” there would resolved, right was Peter will do the litigation “when the summary judgment vacated the thing.” The Fourth Circuit Maryland court for in favor by federal district entered the counts. See Angelos Firm on both the contract fraud the at 428. id. claim, heavily on contract the court
Regarding the relied (MLRPC) 1.5(e)(2), Maryland of Professional Conduct Rule fees, respect contingency provides “[a] which firm who are not in the same lawyers division of between fee (1) to the only proportion if: division is may be made the or, lawyer by agreement performed each written services client, lawyer joint responsibility assumes with the each that, although the representation.” The court reasoned percentage contingen- on a of the parties agreed specific never so fee, fairly fee was cy contingency contract share MLRPC overly as to be enforceable because the vague 1.5(e)(2) proportion” sufficiently “in standard definite any dispute as to the actual allow the fact finder resolve place, id. at 443. this rule in the proportion. See With reasoned, sought missing supplied “the term to be court than court.” Id. implied by law rather Edell’s analysis Circuit was brief its Fourth claim, reasoning summary fraudulent inducement judgment record fraudulent- plan by Angelos masterful Firm to
reveals a undisputed reputation experi- ly from Edell’s benefit *57 law litigation him and his expert luring ence as a tobacco Angelos share falsely believing firm the Firm would into might it at fairly any contingency ... fee receive Maryland they Action if continued conclusion of the AG expense participation their the case at the substantial fee-generating cases. working on other Id. at 445. fraud interpret
We the Fourth Circuit’s decision on the it analysis contract as light claim of its of the claim. Just 167 found that the MLRPC 1.5 requirement that fees between separate proportion law firms be divided the work performed imply missing term, sufficient contractual we representations think that the a fair considered contin- paid gency sufficiently fee would be were also specific form gave basis for 1.5 fraud because MLRPC them concrete meaning. Because there is no profit-sharing standard for joint law, Maryland bank ventures under no such concrete meaning promises can attached to “long be of a term mutually relationship” “long partnership” beneficial road distinguishable 3S relies on here. Edell is also because disputed in a single, large, issue involved the fee albeit lawsuit, general concepts rather than the and broad of “rela- tionship” “partnership” Further, on which 3S relies. here, in Edell
parties did as did contemplate, agreement their would not final until a written contract containing specific terms was executed.
Representations By Contradicted The Terms Of The SA he
Dibble’s statements that
made an agreement for
terms,
five-year
“ten-year agreement”
Steele,
two
or a
certainly
specific
general
more
than the
statements discussed
term, however,
specifically
above. This
was
negotiated out of
SA,
(a
three-year
term,
and a
two-year
contract
with an
year’s
additional
notice of termination which could not be
until
given
years)
the end of two
substituted.
cannot
reasonably rely
agreement
an
or representation
on
that was
specifically negotiated
See,
out of
parties’
contract.
e.g.,
Co.,
41,
v.
Cooper
60-63,
Berkshire
Ins.
148 Md.App.
810
Life
(2002),
denied,
A.2d 1045
cert.
373 Md.
168 businessmen, promises oral by sophisticated negotiated two agreement cannot reason directly contradict written that Enter., Caruso, v. 848 Inc. ably upon); One-O-One be relied 1283, 1287 (D.C.Cir.1988)(removalclause from contract F.2d integration must be abandonment containing clause deemed clause, explicit representations); in face of earlier even th(4 Carl, 554 F.2d 630-31 Corp., Inc. v. B.P. Oil Call Cir.1977) (oral only be that contract would representation upon in face good with cause cannot relied terminated good cause forth without set right clear terminate Heckenbach, 144 contract)(cited v. approval in with Greenfield denied, 108, 128, A.2d cert. 370 Md. Md.App. (2002)). A.2d 266 Bank, separate trans- negotiated Mellon two loan
In Mellon Mortgage Estate Equity with Union actions First Real (“First develop- involving real estate Equity”), Union different by detailed both of which were documented projects, ment deal, First money In one Mellon loaned agreements. loan Equity in the First loaned Equity, Union other Union agreements, loan money to Mellon. Under the loan Mellon’s by without Equity prepayment penalty allowed First Union borrower, not. Equity’s but First Union loan Mellon did loan, alleged its an Equity prepaid Mellon When First Union Equity promised First agreement which Union oral side loan, protect its it would Mellon that, pre-paid if it otherwise risk in interest The against the market decline rates. fraud, reasoning claim of rejected Mellon’s Third Circuit Equi- reasonably could have relied on Union Mellon not Mellon ty’s promises prepay protecting not without oral against a in interest rates. decline agreements sophisticated this case are between banking a major Mellon Bank is institution.
businessmen. all of the consulting stages at transaction After counsel documents, it is not reason- closing on detailed written directly rely promises for Mellon to on oral able agreements parties.... contradict the written between formally agreed [Equity’s] to First Union Mellon When agreement, it should have when it executed the terms offices, [Equity’s] good known it was left to First law, to insulate from market risk if First Union *59 here, [Equity] prepaid. present Under the circumstances rely say justifiably we are unable to could on a Mellon gentlemen’s agreement agree- do what not to the formal gave party, other, ment right one but not the the to do. (citations omitted). Id. at 1412 Bank, 346,
Our
Parker
holding
Md.App.
v. Columbia
91
363,
521,
denied,
524,
604 A.2d
cert.
327 Md.
A.2d 796
610
(1992),
transaction,
that in a consumer banking
parol evidence
did not bar
that
introduction
certain fraudulent statements
parties’
agreement,
contradicted
contrary.
the
written
is not
First,
basing
we
not
on
parol
are
our decision
evidence
Parker,
rule.
appeal
Unlike
which was an
from the dismissal
of a complaint, we
evaluating
sufficiency
are
of the evi
dence to
importantly,
show fraud. More
Parker
we noted
that, although
buyers
“they
had
professional people,
were
experience
transactions;
little or no
in real estate
had never
home;
built a
relying
custom
on
[and] were
Columbia’s coun
sel,
representations
advice
regarding
all
of the
aspects
project
financing[.]”
362,
that
Id. at
related
Clewis’s
statement
Steele that the term of the SA was
years,
two
and that it
every year
would be “renewed each and
Inc.,
Toyota,
418,
22. Smith
Md.App.
v. Rosenthal
573 A.2d
cert.
denied,
(1990),
distinguishable.
320 Md.
We would not exercise its him that promised Clewis contrary, he right of To the Steele testified termination. years: only last for three agreement might knew the you Steele, say Mr. Clewis Q: anything if did Mr. what agreement, agreement? the final about term of this automatically term, years. It would A: it was two thereafter, every year which was consis- each renewed *60 partnership that we long-term relationship, tent of the it I screwed expected going and would continue unless up.... agree- length the minimum of this
Q: was absolute What here? language ment under the years. It years....
A: The initial term two Three year for First automatically renew a thereafter. would the but opportunity agreement Union had the terminate cancellation, year’s notice of at give had to me one after, 1st, May I it was 2000. point some think SA, the and understand- language clear of Steele’s Given the term, finding affirm a of fraud ing its limited we cannot about promise longer a predicated on of term. Regarding Fraud
Conclusion sum, hold that there was insufficient evidence we fraud, representations on support claim for based either 3S’s SA, prior to its execution. representations in the or made denying in First Union’s Accordingly, the trial court erred reverse judgment notwithstanding motion the verdict. We for judgment the ruling, accordingly trial court’s reverse the $39,476,342 based on fraud. We also reverse in the amount of $200,000,000 punitive damages because judgment for
171
punitive damages
only
are
is a valid
allowable when there
of
compensatory damages
award
based
a tort. See Wrex-
ham,
2,
address,
II. The To Breach Evidence Was Sufficient Prove The Best Clause
Of
Efforts
law
Maryland
subject
Contracts
are
to the
of
NationsBank, N.A.,
objective interpretation. See
v.
Taylor
(2001).
166, 178,
365 Md.
354 Md.
731
441
language
A.2d
Contractual
ambiguous “if,
reasonably
is considered
read
pru
when
person,
susceptible
meaning.”
dent
it is
of more than one
Woods,
(1999).
425, 436,
Calomiris v.
353 Md.
727 A.2d
ambiguous
determination whether contract language is
question
Ashton,
is a
law the court. See
354 Md. at
A.2d
441.
language
ambiguous,
When the
the trier of
fact, in
jury,
this case the
must determine “what a reasonable
person
position of
parties
thought
would have
meant.” Fultz v.
Shaffer, Md.App.
299,
First Union that argues the efforts of best clause the SA give not to a does rise valid claim for of breach contract. grounds
First Union three support offers in conclusion. this First, vague claims the best efforts clause was too to be enforceable, from suffered an absence of mutual assent.
Second, it urges record, that there was no the evidence in evidence, from support either the or SA extrinsic to 3S’s SA, person contention that a reasonable in entering the First 172 “agreed obligate itself position, can be said to have
Union’s
Third, it insists that
virtually
on a
exclusive basis.”
to use 3S
not
that Steele himself did
believe
record demonstrates
“[t]he
any binding obligation on
imposed
the
clause
that
best efforts
unpersuasive.
find
contentions
We
these
Union].”
[First
Vague
Too
To Be Enforceable
Best Efforts Not
And Mutual Assent Shown
I that there could be no inference
in section
We said
SA,
merely signing
with its
fraud
First Union’s
the
from
clause,
intending
give
more than
efforts
without
best
this
of its
We reached
conclusion because we
50%
business.
sufficiently clear to
language
of the SA
do
consider
Clewis,
Union,
an
that
behalf of
draw
inference
necessarily
committing
that
to send 3S more
knew
he was
ambiguous
definition of
than 50% of its volume because of
“Services,”
clause,
non-exclusivity
130% Clause.
only
to show
that the evidence was sufficient
We concluded
that,
agreeing
best efforts
that Clewis
believed
clause,
diligent
to make
efforts to
obligated
First Union
3S,
defining
a
amount of business to
without
send
substantial
by specific volume.
diligence
that level of
specificity
in the
clause
The lack
best efforts
however,
meaningless.
mean,
the clause was
does not
efforts,”
clearly defining
specific
The term
while not
“best
business,
amount of
“is
standard
has
percentage or
Farnsworth,
diligence
E. Allan
On
essence[.]”
as its
See
Duty
Promises: The
Best
Trying Keep One’s
Efforts
(1984).
Contract,
indicated, it is
As
46 Pitt. L.Rev.
we
Bloor
from the circumstances.”
meaning
term
“takes its
(S.D.N.Y.1978),
F.Supp.
Brewing Corp.,
v. Falstaff
(1979).
determining
'd,
173 vendors, multiple in sending the risks Union took vendor, majority of transactions to one what business they efforts,” people promise mean when make “best industry standard in the regarding similar contracts be- per- tween banks and their settlement service vendors. of a required parties may formance best efforts clause explicit in be the contract or from implied the circumstances. Bridgewater See NCNB Nat’l Bank v. N.C. Steam Power of Co., (W.D.N.C.1990). 1140, 740 F.Supp. 1152 party A commit- to using give ted efforts may best still reasonable consider- ation its own interests. jury See id. The also able to consider the expectations light reasonable of of the pattern negotiations his discussions and with Dibble and We do Clewis. not consider it critical to the formation contract that did parties specifically not what discuss “best meant. efforts” contracting parties
When relationships enter business specifically advance, cannot be up defined set stan- dards that will allow neutral decision maker some basis for decision. See Mark P. Gergen, The Use Open Terms in Contract, 997, 92 Columbia (1992)(“open L.Rev. 1000 terms” such as best efforts clauses are “similar form function or rule”). negligence so, In doing they recognize that there certain to exactly murkiness applied how standard will be to the business circumstances that eventually exist. however,
This uncertainty,
preclude
does
formation of
an
if
enforceable contract
that is what
parties
intended.
Thus, best
generally
efforts clauses
have been held enforce
able
parties
bound,
because the
intend
and there is an
See,
articulated standard.
e.g.,
Prods.,
Mor-Cor Packaging
v.
331, 334,
Inc.
Packaging Corp.,
Innovative
328 F.3d
2003
(7th Cir.2003)(factual
U.S.App. LEXIS
*5
determination
breached);
as to whether
efforts
best
clause
Geophy
Western
Am.,
Inc.,
sical Co.
v.
Inc. Bolt Assocs.
584 F.2d
(2d
1169-73Cir.1978)(construing
clause); Bloor,
best efforts
454
F.Supp. at
(finding
clause);
breach of best efforts
CKB &
Assocs.,
Petroleum,,
Inc. v. Moore
Inc.,
McCormack
S.W.2d
581-82 (Tex.Ct.App.1991)(failure to use best ef-
*63
Farnsworth,
forts).23
E.
on
Allan
Farnsworth
Con
also
See
(2d ed.1998)(best
7.17c,
are no
§
at 381
efforts clauses
tracts
enforceable).
to
too indefinite
be
longer considered
non-specific contractu
have construed different
Other cases
See,
Illiano,
Md.App.
v.
126
e.g.,
al
Scamardella
standards.
denied,
90,
115,
76,
421
Md.
A could infer that parties rational had a meeting of minds and requirement therefore met the mutual assent because understood First Union was undertaking reasonably diligent referring business to “ efforts,’ They agreed 3S. the standard ‘best on a non They necessarily exactly exclusive basis. did not agree what volume of referrals would meet that standard. First determining clearly had some discretion what was diligent. Lynchburg, See Brewster Inc. v. Dial Corp., (4th Cir.1994)(in requirements contract, 364-65 buy F.3d *64 zero, was its requirement long er entitled to reduce as it so faith); good did so in Angelica Uniform, v. Ponde Group, Inc. C (8th Inc., Sys., ir.1980)(same); rosa 636 F.2d 232 R.A. Assocs., Constr., Inc., & Inc. v. Asphalt Weaver 587 F.2d (D.C.Cir.1978)(requirements buyer 1322 may require diminish ments, if disproportionate even reductions are to the normal prior requirements estimate, or any stated provided the faith”). buyer good is acting in obligation
But it also an good had in determining faith 1, 9, that volume. Julian v. Christopher, See 320 Md. “ (1990)(in contract, A.2d 735 every an implied ‘there exists covenant that parties each the thereto in good will act ” faith,’ discretion). including party times when a exercises Thus, although diligence efforts, is at core of the best First also in obligation good Union has an to act jury faith. The may Union, have determined First the circum- under stances, good did not exercising diligence, act faith in even though the specific best efforts clause did create a obli- gation to certain percentage direct a of First Union’s transac- tions to 3S. We do not the damage read award as an jury indication that the concluded parties the made a specific agreement to give a certain percentage, but rather as by jury, fact, a determination the after the of what level of business would have reasonably resulted from diligent efforts. First Union’s Business Volume
85% Of
damages
jury
for contract
First
attacks the
verdict
Union
that the bank
ground
jury’s finding
on the
on the
rested
its
much
85% of
business
3S.
obligated to refer as
as
was
SA,
negotiations preceding
the
complains
It
that neither
the
dealing
SA,
parties’
supported
course of
the
nor the
the
obligated
First
was
refer 85% its
conclusion that
Union
argument
persuaded
are not
business to 3S. We
below,
may
because,
explain
jury
have concluded
as we
under the SA.
percentage
required
that much smaller
specify
jury
form did not ask the
special
verdict
jury
First Union
exactly
many transactions the
decided
how
immediately
Nor
is this number
should have referred
3S.
because,
verdict,
calculating
jury
apparent from
award,
assumption
an
as to what
damage
jury
had to make
could have made had
per transaction 3S
profit
denial of
obligations.
reviewing
completely fulfilled its
JNOV,
from the
consider all inferences
evidence
we
whom
motion is
party against
to the
light most favorable
Platinum,
(U.S.A.),
Impala
Ltd. v.
made.
Sales
Impala
See
(1978).
Inc.,
296, 327,
any
If
Applying these could First Union’s business that have lowest of percentage by the first jury. verdict awarded We damage resulted the jury the could have utilized an incremental conclude $70, profit assigned by which was the per transaction of profit figure, compute testimony.24 Using in his this we expert 3S’s was to 42.5% of jury may have found that 3S entitled that the 1, 1998 to period January for the First Union’s transactions average profit per this was the incremental expert 24. The testified that years question. the transaction over 30, 2000, April 1, and 51% for period May through the 30, April Alternatively, jury 2001.25 simply the could have 535,376transactions, determined that 3S which entitled is 46.1% of Union’s during First loan volume these same periods. They computed damages could have the total award ($37,476,342) 535,376 by multiplying by average this the $70 profit. incremental
We previously negotiations leading reviewed up to the during SA which First Union to agree refused to commit itself specific to a percentage why of business. We do not know that, or why did it decided to commit itself to the best efforts deciding clause. to commit stan- non-specific itself clause, by dard however, created the best efforts First Union took risk as to what volume the trier of fact would level good diligence required. determine that faith A person reasonable could conclude that Union was First contractually required percentages send one of of 3S these business, its considering after factors such as the amount of SA,26 business 3S was getting provision before the contract a “ramp-up” for period (suggesting that would in business crease), the high quality provided timeliness and of the service 3S, by operation the smooth centralized automated service, adjusted the ease with which huge to the bank’s expansions, adjustments and the downward in pricing offered by 3S. A person reasonable could have reached this conclu 1, 30, damage period January April 25. award for the from 1998 to $21,240,614. Assuming 2000 was profit per an incremental transaction $70, 303,437 jury this meant decided that 3S was entitled to ($21,240,614 $70). 303,437 by transactions repre- divided transactions 713,567, sents period. First Union’s total transactions for this 42.5% 30, 2001, period May For the April jury 2000 to awarded $16,235,728. 231,938 Dividing by arrive at we as the number of transaction should have referred to This number 3S. 448,167, divided period, First Union’s total transactions equals jury single If the used 51.8%. transactions number for the 535,376, volume, they total award of which the bank’s 46.1% could just periods have allocated it between the two time on the verdict sheet. 1,500 approximately 26. 3S per received transactions the latter month months of before the SA. *66 spread its risk
sion, into bank’s need to taking account the volume of business large Given among several vendors. Union, person could conclude that enjoyed by First a rational would 48—58% of its business for other vendors preserving relationships with good business preserve the bank to enable those vendors.27 other from claim its
Again, distinguish 3S’s breach contract we not claim that support does fraud claim. The evidence committing in that he was fraudulently knew advance Clewis business, specific percent a of the bank’s equal to a volume Nevertheless, agree, he comply. did and intended never that bank, best efforts standard non-specific of the to a behalf was that 42-52% of business jury allow the to find would diligence requirement of best efforts required to meet the words, we think circumstances. other clause under the standard, specific rather than parties up that set Clewis, saying and he never intended percentage, business, may bank’s have more than 50% the refer jury. mean to a fully could what standard anticipated non-exclusivity provision up by His was backed view Clause, 2.1, was suggesting 130% Section and the jury much But the how to send. within the bank’s discretion only for may interpreted the 130% Clause to be intended have 3S, expected it notice of increases protection giving services, for as Steele testified. demand inter- is more than one reasonable key that there was The why This is the trial of the in the SA. pretation provisions parties and allowed the ambiguous, court that it was held meaning. explain its extrinsic evidence introduce 415,274 was Union’s of transactions 27. First volume 199,331 419,928, equaled trans- respectively. of these volumes 48% 201,565 transactions, profit per respectively. a If vendor’s actions and $70, spread of First business to the volume transaction $13,953,170 equal among competitors would between 3S’s $14,109,580. say to conclude that the cannot that it irrational We vendors, and there- good with two other bank could maintain relations interests, referring by protect each of them annual business its own approximating $7 million. *67 jury’s agreement, so, to it interpret task was did the within of the bounds a rational fact finder. Rights Failure
3S’s
To Assert Its
Under
The Best Efforts Clause
urges
“interpretation
First Union
that
of the best
3S’s
that,
by
efforts
also decisively
despite
clause is
belied
the fact
many
so,
occasions when it would
do
have been natural to
3S
never
that
it
right
anything
asserted
had a contractual
to
beyond
1,000
per
the
transaction
month minimum[.]” We
agree that it
odd that
efforts
never mentioned the best
clause when First Union
the
decreased
volume of business
going to
agree, however,
3S.
do not
We
this failure
grounds
constitutes
to
jury’s
reverse the
decision
enforce
the best efforts clause.
no dispute
There is
that the clause
appeared in
contract.
ambiguous,
the
Because the clause was
jury
job
the
determining what,
anything,
had the
if
it
meant.
jury
considered all of the evidence about the best
clause,
efforts
it
obviously
found
Al
be enforceable.
though First
“waiver,”
Union doesn’t use the term
the under
pinning of
argument
the bank’s
seems
be
Whether
waiver.
question
waiver exists
ais
of fact for
“for
jury,
the
the
determination of its existence vel non turns on
intent of
the
party ostensibly
waiving
right, a
state of mind which is
to be
from
derived
the facts
surrounding
and circumstances
purported
relinquishment.”
Paul Fire
St.
& Marine Ins.
Co. v. Molloy,
(1981).
291 Md.
III. Jaynes’s Dr. Testimony Regarding Damages 3S’s complains First Union also proof damages 3S’s rested on testimony of economist Dr. which Jaynes, Gerald that Dr. argues been First Union
should not have admitted. Jaynes constructed model and costs for the incremental revenue
purported to account ... had [First received and incurred that 8S would have by generated transactions percent sent 3S Union] nationwide, capacity only limited 3S’s all of its branches ____[a] It model had no foundation the evidence. [that] capacity; actual rested ignored performance 3S’s it disre- growth assumptions; and spectacularly unrealistic has no expert’s opinion “An garded market conditions.... upon is a basis which force there sufficient probative unless support his conclusions.” *68 not complaint Jaynes is that Dr. “did primary First Union’s performance capacity rate of take into account 3S’s actual —its during the its cost and revenue time growth and structure — “Jaynes himself period question.” complains in It also actually any at of many employees had no how had the idea times, employment and market he did research relevant determining company whether the conditions as a means of people to enough been to hire meet those would have able growth.” rates of persuaded by contentions because
We are not Union’s merely weight given they all be the we think address Dr. was well testimony, admissibility. Jaynes not its expert economist, jury by providing he as an and aided the qualified calculating assumptions. on certain damages, model for based if may be See Md. Rule (expert testimony 5-702 admitted of fact to determine a court will assist trier determines issue). fact from per profit actual transaction differed his
Although 3S’s trans- per what assumptions, Jaynes’s project role was 3S’s higher could with a much potentially action have been profit vol- Jaynes higher Dr. testified that volume of transactions. per produced greater umes have incremental revenue would scale, while fixed costs transaction because of economies of say unwilling to would have remained the same. We are the familiar business wisdom that expert testimony based higher profit can per higher one earn a transaction with a business, is so volume unrealistic as to without founda- and tion inadmissible. Jaynes’s assumptions
Dr. capacity as to also are based in Jaynes reason. described work he did the course testimony on preparing his damages.
I looked at the counts or tax documents of Steele Soft- ware and various other for pertaining documents to that business, I also several made site visits operation Software to examine the that business talk working to Mr. people Steele and for him.
Now, primary reason for that was one of because things do, first that an in attempt- economist would have to kind, ing to build a model of this is to attempt to model what production we basically would call the function or in more lay process terms to model [sic] which Steele appraisals Software they does titles. And how evaluate how, effect, those and run their business to make decisions on the amounts of time it would take to do a particular of appraisal kind how many versus title because a given Steele Software could do length over time was going very important determining be a factor in what the damages were.
Jaynes prepared the chart in part, that we earlier forth set showing which column included a capacity produce 3S’s monthly titles and on a appraisals January basis from into January 1998, 3,000 2003.28 For used a capacity per he month, very which said was “a he small number which I already probably knew was than capacity lower what Steele’s actually was as initial point.” a[n] basis He then 1,000 by
[increased] that units a month because that was lower than all of the evidence that I had seen the growth amount of ... employees in capacity and therefore beyond 28. The period jury chart extended that the to be the found term of the SA. produced by could be appraisals and titles that May me 1998. would be. That took 1998, May Jaynes information he period For the after used August a letter wrote to First Union had received from 8S “ 1998, up’ staffed 31, stating ‘geared [its] that 3S had per day, beginning organization” to handle 500 transactions 1998, per day, beginning and 650 transactions September numbers, Taking Jaynes 1998. the October used October 14,500 He worked back capacity for October 1998.29 then May capacity “allow increase between [3S’s] from these to by give an amount would them that which October repeatedly the fall arrived.” He made clear capacity when assigned for month were estimates that the numbers he each period after he allo- projections. For October that, appro- capacity theory based on the cated increased notice, capacity to expand 3S could its business priate advance more by hiring people. the available demand meet capacity Although may actually possessed 3S have that, if Jaynes, it by suppose Dr. is rational First projected 3S, then higher had volume of business to referred Jaynes accordingly. its As Dr. capacity could have increased required give First Union to advance explained, the SA transactions, allow in which would 3S to big notice of increases preparation question its in for them. The capacity increase availability employees researched the of new Jaynes whether subject was a had the marketplace in the First Union could It also opportunity to cover cross-examination. say that experts. We cannot addressed Union’s admitting Jaynes’ its testimo- trial court abused discretion say damage was insufficient ny. Nor can we evidence million verdict for of contract.30 support breach $37 October, Twenty weekdays multiplied by 650 transactions 29. three 14,950 per weekday equals for month of October. Notably, considerably $140 less than the million 30. this verdict *70 Jaynes. projected by Dr. also complains First Union that trial court im properly its of Dr. Jaynes limited cross-examination when it declined to allow the bank to him about cross-examine his methodology computing damages by using in 3S’s tax returns or profit figures. permitted actual First was to ask Union Dr. Jaynes whether, during several times in cross-examination model, calculating damage Jaynes his had at “actual” looked capacity particular points. or at capability Jaynes responded that, although he at capacity looked actual for 1997 and used 1997 capacity point, actual November as a starting and his capacity, damages looked at November 1998 was model capacity. explained based actual He that capacity actual was “pretty calculating much irrelevant to damages[,]” and his “on model was based actually difference between what happened should happened and what have if contract were explained capacity honored.” He could 3S increase its hiring employees taking steps. new and other His model was “assumption based on the the contract had started and working smoothly November of ’97 that they given warning were the transactions that would need any doing subsequent be months might increasing.” Jaynes also asked Dr. profits how the he projected up” “matched to what profit 3S’s actual per transac- 3S, tion was history over the attempting to 3S’s tax use profit return and and loss statement to do so. When 3S objected, agreed the court that “he’s comparing apples to oranges,” suggested that First Union “figure ask what used, gross that he itwas or after net deductions in taxes?” Counsel First Union then insisted: No, figure.
He didn’t use either I right have to cross- They examine the witness. put million number out $140 there and I want show is ignoring reality that he coming up things. with this model of
I So want to show him reality and then I’m to ask going him to compare do some calculations his methods to real and I think I’m perfectly that, world do entitled to Judge.... *71 part based in on actuals and he tried to used model
He costs, for and I think he didn’t account for actual account through I’m take him his model. going costs and to those objection: 3S’s court sustained The confusing. specific get I It’s You want to into agree. extrapolation that from that he any would detract examples to any interpolation regard or that he made made in, past like when he backed but existing figures, figures to---- resemble what he testified this doesn’t even gross represents what It’s it’s model because used he have received had the defendant receipts would why, to That’s [3S]. transactions best effort send says is not why right when he relevant that’s he’s testimony. his probative not scope has control
A trial court
discretion to
Lara,
v.
Md.
See Wrobleski
de
cross-examination.
(1999). Here,
Jaynes’s
First
Even experts criticized no both of its economic prejudice because solely model Jaynes failing damage Dr. base his 3S’s Further, experts of the bank’s testified profits. historical one solely using 3S’s damages his calculation of about detailed contradict- experience. figures None of these were historical figures he said that actual were by Jaynes simply ed because Thus, damage jury calculations. had his irrelevant testimony if it wished to do reject Jaynes’ basis to sufficient so.
IV. Geographic Scope Of SA Finally, that, if “[e]ven [First Union contends duty efforts’ pursuant Union] had an enforceable the ‘best clause, duty only speci region extended to the six-state [SA], fied in Exhibit A.1.0 of the not to entire [First Union’s] footprint.” points nationwide It out that Section 2.1 of the SA granted right perform Reports 3S “the as the Services listed in argues Exhibit as attached It [A.1] hereto.” *72 “A’T.O, A.1, only Exhibit which of part was Exhibit listed six Tennessee, Carolina, Carolina, states: North Georgia, South Virginia, Maryland. and Affiliates,”31
The SA “First by was entered Union and its and body agreement geographic the the no limita- contains tion regarding which Union First branches are included. “SA, the A’ ‘Exhibit to A.1’ “Ex- refers ‘Exhibit attached.” A.1,” attached, hibit which is provide states that 3S “will to (collectively and its affiliates [First Union] ‘First Union Na- Bank’), tional the following Reports, prices Services and at the general as listed provisions pricing below.” After some about (not list), price following the services are listed under the heading, Service/Report Pricing “Traditional and Turnaround Report, Time”: Recording Service, Title Drive-By Evaluation (referred “DB”), (referred Appraisal “AP”), to as Report to as Ownership Automated Verification and Report, RealValue and Tax Assessment Confirmation. Next to each listed service item are forth set details about nature of the the service timing completion. the specifics regarding the and/or Report, Drive-By Evaluation, Title the and Appraisal the Report, say Pricing.” each “see Attached Chart for is There no geographical description limitation the on services Exhibit A.1. mean, any entity, any
31. is respect “Affiliates” defined to "with to other entity controlling by, entity or or controlled control with under such any during Agreement.” now or time however, titled A.1, to document Attached Exhibit ll/21/97[,]” ‘AT.O, as which lists counties Pricing “Exhibit Carolina, Carolina, Tennes- Maryland, North South Georgia, see, services Virginia, assigns prices three different and Although does properties for located those counties.32 favor, unambiguous in its appeal on that was argue the SA heavily price support list its Union relies cover First Union argument only was intended to the SA six operations within those states. respect ambiguous court
The trial held the SA of intent. and allowed extrinsic evidence geographic scope, ruling, contract we are not asked to review this Although question we starting point resolving our for are itself is i.e., review, supported asked to whether the evidence work appraisal damages award of for failure to refer title footprint. relating to 3S the six state Section loans outside “right says perform 2.1 of the SA has in Exhibit attached.” The Reports [A.1] Services and as listed that, “For says all of Services best efforts clause for Real Reports, required as First Union Residential loans, First will use efforts to [its] Estate secured best placement A natural Steele[.]” direct these transactions *73 of clauses would have geographical a limitation either these 2.1, A.1, which body of or Exhibit been either the section agree- included in the describes the nature the Services ment. relying on Exhibit parties
While it is that the were clear services, designate it is not as clear prices “A’T.Oto for the relating designate prices for services the failure to necessarily six area a properties outside the state meant on the contract. No- geographical imposed restriction was is a clear statement of intent to on Exhibit “A’T.O there where “ limitation, as, Reports’ and as de- impose such ‘Services “AP”, is "AP” apparent 32. are "DB” “TA.” It means These and may Appraisal Report, Drive-By mean "DB” Evaluation. "TA” means Report, the which is referred to as a "title abstract.” Title often
187 fined on A.1 following Exhibit shall be limited to the states.” only It is quite possible that 3S listed the six state area on yet developed Exhibit A1.0 because it had not for pricing Indeed, other Exhibit A.1 states. states ...
[Djuring Agreement, the term of this or Re- Services ports modified, may Reports may be other or Services be added, made, pricing changes or if are revised “Exhibit A”, date, with a new decimal and numerical suffix effective will provided Union], to [First at the notification address per Agreement. as significant
There was
extrinsic evidence offered
both
parties.
parties’
This included evidence as to the
construction
of the contract after its execution. See Anne Arundel County
666,
(1980)(when
v.
Corp.,
673,
286 Md.
There was supporting interpretation evidence 3S’s that the SA had no geographical Shortly limitation. after execution SA, February 3, Thompson 3S sent a nationwide price list. He testified that he did pursuant so authori- ty to modify pricing given to Although- 3S on Exhibit A.1.34 page, At appears following: 33. the bottom of the "All other counties not listed are charge $275 above considered to be rural will be AP, DB, $175 for $100 provision for TA.” This could be interpreted party. to favor either It could mean that counties outside the six state area are Or it included. could mean that since all other rural, designated parties areas are as did not intend to cover other states, obviously which have non-rural areas. *74 authority 34. This promise change was prices limited 3S’s not per year, more than once and to limit each increase to more than not existing price. 10% the 188 “A.1.0,” designed Exhibit nationwide list was not as Steele
this was so explained this one, it was attached to the first sir.... being [I]t
because replac- It not original the A.l. wasn’t being was attached to that, Maryland, Georgia, If look at the ing you sir.... states, exactly existing match with the up other those will It list, part to be a of that.... was price was it, adding to sir. Thompson. The price was sent to trans-
The nationwide list scope the price suggests mittal of this list that 3S considered not in parties at time when the were to be nationwide SA, is meaning of the thus evidence as dispute about the Mort., See Nat’l meaning. Md. at to its (construction signifi- by party dispute before arises A.2d cant). price also that Exhibit “A’T.O list testified of the SA. geographical scope to limit the was intended anyone ... that testified, “there was no limitation with He regarding geographical First Union we ever talked at [T]hey do transactions wanted us to limitation.... added.) (Emphasis people first wherever were.” limit price that list was intended to assert to Steele attorneys in scope of SA geographical were defense this case. Union, turn, 8,0000 paid for transactions
That First original price supports on the list 3S’s outside the states listed that more than six states.35 interpretation the SA covered through First Union’s pre-contract provision services 3S’s 2,000 Union, branches marketing program direct area, than the also corrobo- which far more six-state covered interpretation of the SA. rates 3S’s Thompson First Union
Trent also testified affiliate arm, Direct, marketing Union’s en- which was First direct argues payment invoices for outside the 35. First Union areas necessarily obligated does not mean that bank six state area agree refer the six We under the SA to business outside states. drawn, necessary that is to sustain alternate inferences can be but all jury’s permissible that the inference be a one. the verdict is *75 gaged Thus, in nationwide transactions. the inclusion of as to parties “Affiliates” the contract interpreted could be to parties mean that the greater intended to cover a geographic scope than the six states in directly operated.36 which Clewis that, argues
First Union if the interpreted even SA could be area, a nationwide include extrinsic that evidence showed Thompson beyond neither Clewis nor authority had the re- gions specified price on the Specifically, list. Union urges that Thompson “Steele conceded that Clewis had and ‘no ability direct Jersey transactions out either New service center or the Jacksonville ‘they service center’ until operations’ did, consolidated the in March 1999[.]” Steele indeed, that, acknowledge until they “not consolidated the operations they would ability have the to do that.” First Union, however, ignores testimony given his a few moments later: couldn’t, say they
I don’t They sir. not taking were that approach from political standpoint internally, They sir. merged were, They know, were banks. you it’s a political going football on.... I authority, had believe [Clewis] sir. bound Bank, He it for First Union National whether they politically sir, did it internally, that’s different issue. jury may have chosen to believe this latter statement accurately reflected Steele’s understanding.
During his dealings Union, with First knew Steele at high officers levels of the bank were aware offered, services he and delegating authority were to lower- officers, level such Clewis, as Dibble and negotiate early days formalize a contract. negotiations, of the Doug Crisp, included First Union’s Senior Officer charge Later, of the Consumer Credit Division. Clewis and Thompson told Mr. Pruitt Crisp’s had taken over role. Again, i.e.,
36. an possible, alternate inference is also that First only intended to use its direct mail affiliate transactions region, within the six-state does not bar this inference.
“[Sjince bank Crisp pushing no Doug longer was there Pruitt was now division that Mr. the consumer credit or they they think that would be able didn’t involved previously concept transaction levels that we achieve the there the intent commitment still agreed but get us, they think would be able ... but didn’t with amount of transactions signed large the document it.” *76 of the
Thus, phases 1997 during both the 1995-1996 the holding that was made to believe officials negotiations, Steele presumably Thompson, than or who positions higher Clewis area, were bind bank the six-state authority to the outside had First does negotiations. course the overseeing the authority that had no any to evidence these officers point not area, had or that Steele to the bank outside the six-state bind authority. lacked told been the belief 1996 bank illustrates Steele’s
A June letter necessary authority would be obtained corporate the that letter, that asked any signed. was before contract “expedite approvals Morgan Smith to First Union officer through necessary. Once changes any final channels these Union, two for by prepare originals First we will reviewed given also that had aware Clewis execution.” Steele for legal department SA to First versions Union’s review. actual prove -3S that Clewis had required
It is that apparent if author authority, the evidence is sufficient show at that with ity. “In to establish was clothed [Clewis] order agreement, authority subject [3S to enter the apparent least [Clewis], when prove that the actions of required was] authority gave apparent rise to reasonably interpreted by [3S] Atl. such actions was reliance on reasonable.” [3S’s] 74, 84, 441 1079 Md.App. 51 A.2d Sybert, Co. v. Richfield (1983). (1982), Md. Our aff'd, 456 A.2d examina infer jury for tion of the record reveals sufficient evidence Clewis, reasonably thought vice-president senior that Steele above, authority had to bind direction from who received Union to a contract for services outside the six-state area. The record also includes sufficient for jury evidence conclude that parties did not to limit intend toSA the six-state area.
JUDGMENT FOR BREACH OF CONTRACT AF- FIRMED. FRAUD, JUDGMENT FOR INCLUDING AND DAMAGES, COMPENSATORY PUNITIVE RE- \ % VERSED. COSTS TO BE PAID BY APPELLANT, BY APPELLEE. BLOOM, Retired,
THEODORE G. Judge, Specially Assigned, concurring.
I opinion concur in the written the Court Judge Adkins, but for a different reason than that set forth in that opinion respect to reversal of judgment the verdict and appellee favor of on its claim for fraud. brief,
In its appellee referred to evidence indicated that phrase “best efforts” that was inserted in the written contract parties between the had a special meaning. Further references that evidence were made during argument. oral I agree with majority opinion the “best efforts” *77 (absent phrase special meaning) some was too ambiguous, too general, to serve as a basis for a claim of fraudulent induce- to ment into a enter contract that appellant never had any perform. intention to Appellee however, refers to testimony that, by Mr. negotiations between him and Parkes Dibble, appellant’s one of vice-presidents, the term “best efforts” had given been a particular meaning: Dibble told him “they that could send all the transactions he could and that could [Steele] handle.” Mr. Steele understood that “best efforts” meant that appellee would approximately receive 85% to appellant’s transactions, 90% of provided appellee had the capacity many handle that transactions.
There was also testimony that, to the effect when Senior Vice-president Bill Clewis succeeded appellant’s Dibble as agent in negotiating the terms of the contract between the parties, he told Mr. worry. Steele “not to Nothing’s changed,” had of what discussed [Steele] that aware “[Clewis]
and company.” That evi- Parkes we are [Dibble] with that, no cir- dence, coupled testimony by Clewis under with than of the appellee receive more 50% cumstances would could, I processing, the bank would refer for transactions that believe, finding appellee have had been supported Agreement by appellant’s into the induced to enter Service appel- representation appellant would refer to fraudulent agreement the transactions covered all of lee appellee had could handle. and that appellant inducement,” theory special “fraudulent based on a That of efforts, however, presented was never agreed meaning of best “best respect for its consideration. With jury Agreement, judge in the the trial provision efforts” Service jury as follows: instructed this it calls for best Best efforts contract efforts. obligation good light act with faith in impose an
clauses own capabilities. one’s good intangi- faith is an faith is defined as follows:
Good meaning or statu- quality and abstract with no technical ble definition, things, other an tory encompasses, among design or seek belief the absence of to defraud honest advantage personal good and an individual’s unconscionable spirit. Honesty his own mind and concept faith is inner of circumstances knowledge intention and freedom from ought upon put inquiry. which holder ordinarily used to describe usage In common term honesty denoting purpose, mind freedom that state of defraud, generally speaking means intention to from duty obligation. or being faithful to one’s majority opinion’s That instruction is consistent meanings of the that courts and writers thorough discussion phrase subject have to the “best efforts” on the ascribed *78 agree majority opinion I with the conclusion in the contacts. phrase Agreement in that the “best efforts” the Service in its parties, as defined the court between ambiguous support appel- jury, was too instructions claim lee’s inducement, fraud in the although it is sufficient to support the breach of contract verdict.
The court did jury instruct the plaintiffs claim that promised it was long-term relationship only “is relevant the fraud in claim,” the inducement appellee’s attor- ney did stress point in argument his jury. I agree majority opinion, however, that, its conclusion light of the provisions short-term Agreement, the Service appellee could not have relied on “long-term relationship” assurances as a basis for its fraud claim.