*1 of Officer his examination during counsel conceded defense “place[d] him under [appellee] officer could have Rager, the Farley Ms. Farley] [Ms. sa[id.]” she upon arrest based what her and threatened pointed gun that a man had police told the house identify she both kill could her. She stated man who as well as the place in which incident took home, Rowlett them the her. She then directed threatened assailant, him and, as her seeing identified upon appellee, “[tjhat’s Thus, him, shortly he that’s him.” after exclaiming, home and well before entered arrived at the Rowlett room, Rager probable had cause arrest appellee’s Officer appellee for assault. until delayed arresting after police appellee
That the right had room did not affect their arrest searched his assault, proved him for of whether that search regardless appellee’s person fruitful or lawful. The search of even Accordingly, to that we hold followed incidental arrest. was it, on which was found pipe” that the “crack residue lawful should not appellee’s person, evidence suppressed. have been APPELLEE’S
CIRCUIT RULING ON MO- COURT’S REMANDED TION CASE TO SUPPRESS REVERSED. THE TO CIRCUIT FOR BALTIMORE CITY FOR COURT TRIAL. PAID APPELLEE. TO BE BY COSTS
Stephen L. 232, Sept. Term,
No. 2003. Appeals Maryland. Special Court of 8, 2004. Oct. *4 (Mixter Oliveri, brief), Baltimore,
Mark T. Mixter & for appellant.
408 (Thomas Libowitz, PA,
Severn E.S. brief), Miller & on the Baltimore, for appellee. ADKINS, KRAUSER,
Panel: G., and THEODORE (Retired, BLOOM specially assigned), JJ.
KRAUSER, Judge. case,
In this tort and contract law converge to produce tort claim for fraud and negligent misrepresentation coupled with a demand for contract damages, a conceptual composite recognized by Maryland law.1 To assure that this hybrid is not used as a device obtain contract damages no where enforceable promise agreement exists or as a means to defenses, circumvent standard contract join jurisdic- we other tions today holding that benefit-of-the-bargain damages are obtainable for such tortious conduct but only is in where there fact an enforceable bargain. The failure of appellants much allege, less to produce, that, sufficient evidence of claim, fatal to leading conclude, their us to for this and other reasons, that the circuit court did not err in granting summary judgment in favor of appellee. tort claim of which speak we was brought by former
employees of the Law
Miles,2
Offices of Stephen L.
appellants
Goldstein,
Scott B.
Esquire,
MacAlister,
James K.
Es-
quire. Relying upon the representations of appellee, Steven
Miles,
L.
that he would
sell
law firm to them when he
retired, both
men claim that
turned down
employ-
other
ment opportunities
stay
with Miles’s firm. When Miles
chose instead to sell his
practice
the law firm of Saiontz &
See,
Co.,
e.g.,
502,
1.
Hinkle v. Rockville Motor
262 Md.
Claiming there reliance, intent, or actual fraudulent reasonable promises, as to both summary judgment Miles moved for damages, motion, ruling court that that granted counts. The circuit that they produce had to sufficient evidence appellants failed prac- his purchase to “bargain” had struck a ever tice. decision, of that reconsideration Goldstein
Requesting submitted, things, other the affidavit among MacAlister Block, who, attorney at had considered point, Bruce D. one that sub- firm with The effect of purchasing the Goldstein. mission, however, appellants to convince court that was brought negligent had cause fraud and little to flatly first the affidavit misrepresentation place: claims the sum- representations appellants contradicted made at mary hearing concerning purport- statement Miles judgment edly to Block. made
At and MacAlister to hearing, represented Goldstein had Block to the court that Miles told never intended to and MacAlister. That practice sell Goldstein statement Block affidavit that conflicted with the Goldstein hearing. subsequently produced the reconsideration affidavit stated that what Miles said Block was that actually alone, Goldstein, “he not sell his law firm to Scott would due perceive the fact that did not that Mr. had [he] backing permit or wherewithall him pur- [sic] financial chase law firm.” After its earlier decision that reaffirming judgment on the summary Miles was entitled benefit-of-the- issue, that it bargain granting the court then declared actually merged, 3. The law but we shall refer to it as a sale two firms parties because the do. Judgment ... in favor of “Summary all counts and [Miles] all issues.” decision,
From that Goldstein and MacAlister noted this appeal. court’s Despite pronouncement the circuit that it was issues,” granting summary as to “all judgment counts and all Goldstein and MacAlister the court’s mischaracterize ruling their trial by stating, brief court properly “the determined there were sufficient issues of fact on the issues liability to submit this a jury.” case Consistent with this misdescription only the circuit court’s holding, present review, one for our question and that question appears to focus their principally, argument, does on whether there was sufficient of benefit-of-the-bargain evidence damages a summary judgment survive motion. They frame ques- tion as follows: *7 court,
Did the trial by granting Motion Appellee’s For Summary Judgment subsequently denying and Appellants’ Reconsideration, Motion for abuse its discretion under 2-501, 2-584, Rules and 2-535 and interpret the improperly facts proper and law the regarding assessment of damages ... from arising properly presented supported and counts in negligent misrepresentation, fraud and it when deter- Appellants’ mined that of theories damages, including “ben- bargain[,”] efit of the were to the properly presentable trier of fact?
In of however, the course their presenting argument, appel- lants upon do touch promises whether made actionable they reasonably upon whether relied reciting them the facts as they presented believed the evidence them. They did not, however, submit a brief reply though these issues were fully in developed presented Miles’s brief.
FACTS parties present of farrago facts. Their frequent inability assign very dates to or actions upon statements rest, even, times, which principal claims at to establish events, comprehensible sequence required has us Complicating record. in a review of the painstaking engage material further, lumped together appellants have matters and, that Miles representations according appellants, false times, made, at to different combinations different purportedly impression purchasers, presumably create potential their alleged misrepresentations are relevant that all are. Only claim. some that, below, in keep must mind
In the facts one reviewing cover, there were year during roughly period fifteen (1) potential buyers: four Goldstein least different sets (3) (2) Bernier; Goldstein, MacAlister; Tom Goldstein and (4) MacAlister, Bernier; and and Bruce D. Goldstein But, appeal, only of this relevant purposes Block. for the They MacAlister. are the unit is Goldstein and purchasing Consequent- this appeal. this suit and now brought ones who claims of that are material to the ly, only representations now before us are those negligent misrepresentation fraud and and MacAlister attempt relevant to the of Goldstein are mind, in we now turn to together. the firm With this buy pleadings, case as presented the facts this depositions, support and the affidavits submitted both summary judgment. and in motion for opposition appellee’s firm, Miles, of Stephen law Law Offices L. Miles’s injury his firm personal concentrated in law. Miles marketed commercials, pros- and the firm by appearing television joined Miles’s firm as an associate. pered. him, position, told “If When he interviewed for *8 [them], marriage out to be a [his] worked between future very would be bright.” passed, began spend, according
As time Miles Gold- stein, in while practice,” “less and less time Goldstein’s responsibility and commitment to the in practice [his] “level ... obligations drastically increased].” the form of hours for man- largely responsible Goldstein maintained that he was firm, generally seventy worked or hours aging sixty growing his per responsibilities, week. Consistent with Gold- salary during Miles, stein’s his employment increased $198,000 a in reaching high 1994 or 1995.4 that, promised stated Miles him pay Goldstein $200,000 Instead, salary of least that but not. year, did $166,000. him a paid salary Miles occasions, agree- On several Miles discussed with Goldstein might that ments the two enter regarding practice, event that Miles died while was still with Goldstein the firm. expressed the wish to Miles enter into a that, death, “contingent agreement,” providing death upon Goldstein another associate would have opportunity purchase the law from his Although firm estate. written drafted, because, was agreement signed was never accord- Goldstein, ing to “Miles was satisfied with the final [not] proposed draft.” In 1989 the drafting “Miles and the execu- tion nonequity of what he referred as a partnership agree- ment,” drafted, Although agreement Goldstein stated. that was also never executed. stated, Goldstein, according firm “would be acknowledgment
sold to as an longevity [him] [his] [his] commitment to than practice[,] less what was otherwise perceived to be promised, the market value.” Miles he assert- ed, that Miles would sell the to him practice “on the terms knew that he could afford and make.” [Goldstein]
Describing the understanding purportedly had with Miles, Goldstein stated:
Mr. ... regularly told me that would we hire who appraiser appraise would come and would the be- ... longings practice the furniture or whatever there was, that, agree that we would on a ... payout we agree him, on a percentage would of the fees to paid be agree would good we have to to affix for the number will, that he would take back the on the ... financing ... I practice because he knew that wouldn’t able to ... 4. testified that he unsure whether he earned that amount in 1994 or 1995. *9 that necessary, kind of so he go money out and borrow the financing primari- on it what he was would hold the because from of was a ly achieving practice the sale interested income.... stream of acknowledged
But deal also always that the was Goldstein partner the firm with a contingent purchasing Goldstein acceptable to Miles. Even when he insisted that “had that already by 1993 essentially guaranteed [him] [his],” added, “along co-partici- would be he with practice anticipated any might Because Miles that deal he pants.” would require strike Goldstein MacAlister with time, paid profitability over the continued of purchase price him. importance the firm was of vital He therefore lawyer, he sell if another only stressed that would to Goldstein him, acceptable purchased with Goldstein. To practice end, go “to out to a identify Miles directed Goldstein identify or to a to come in.” potential [partner] person Goldstein, that “that would plan, according person was explained as they come in and would work an associate.” He that, it, as proved marriage, call[ed] “if it to be then [Miles] would person opportunity nonequity have type sharing position. ultimately And then profit [Miles] would ... practice th[e] sell and that individu- [Goldstein] al.” Miles,
Over course employment of Goldstein’s “a series individuals ... in with brought were that intention.” rejected by But individuals were ultimately these either potential partners for Goldstein or left Miles’s firm to pursue employment opportunities. other that, acknowledged specific as of terms agreed of the sale had not upon: been specifics were a lot cold that had
[T]here stone been format, It more a agreed upon. an outline within which firm was occur. acquisition There were certain absolutely that were hard fast.... That he things take back the that he that I financing, recognized would time, him off period have to pay would over wanted to have someone else involved in practice addition to myself.
It was agreed that he would paid money his an over period installment of time so that he would an income generated. It was agreed that would he make avail- himself able to assist marketing law firm by perform- ing on commercials.
Those are that things clearly were essential elements the deal.
During Miles, his with employment Goldstein believed he did everything Miles asked of him in connection with the practice:
I did everything that this man asked me to do and exceeded period over a of 15 years. I couldn’t have been more efforts, committed. And despite my my efforts, undying and despite the fact that I sat down and a significant made effort to negotiate faith, with Mr. in good Mr. Miles refused to sell firm me the and Mr. specifically misled as far me as his negotiations with parties. other MacAlister testified at his deposition that began working for Miles as an associate on January 1990. Although with satisfied performance MacAlister’s as a lawyer, trial both Miles and Goldstein were deeply concerned about his “organi- zational skills.” Those apparently justified, concerns were MacAlister admitted his disorganized working habits his were “Achilles’heel.” MacAlister accepted offer of employment with “Gordon, firm
the Baltimore Feinblatt.”5 When MacAlister offer, told Miles about the Miles purportedly upset, became insisting talk, MacAlister meet him at house while purportedly exclaiming: “I can’t you’re believe leaving me.... “Gordon, 5. We assume that MacAlister's testimonial references to Fein- blatt,” “Gordon, Feinblatt, were shorthand firm known as Rothman, Hollander, Hoffberger & LLC.” or, ... or this this is horrible you without operate can’t [W]e staying.” I I can into you us. know talk bad news for really home, upon arriving he Miles at his but MacAlister met with I’m out of you here just emphasize “I want cautioned: listen to but you, tell I won’t you. anybody I never respect word, given my I’m I’ve leaving. leaving. I am committed Describing the conversation story.” and that’s the end of ensued, MacAlister stated: me way you treat okay. happy I I’m not with the said staff. way you I’m treat the happy upset I And you. said ever done And he what have I know, you I all the time. yell said it’s because then he Steve, said, I at me all the time. you just yell don’t It’s to fire me all the time. yelling. abusive You threaten *11 of mortgage pay- I own houses. I have a lot now two ments, interruption. I income and can’t afford an yell to to at MacAlister not threaten fire promised Gordon, financial terms in the future to meet the and prom- MacAlister told Miles that those Feinblatt offer. When stay, to him to Miles offered to enough ises induce were retirement, MacAlister, firm, pur- to if he upon his sell his Bernier, Tom another firm it with chased Goldstein exchange: That following associate. prompted I you. if I offer the to said what what business [Miles said] 60, you, when I turn that mean. And he said Scott does buy Tom will me out.... [Bernier] subject approval, [Goldstein’s] have to be to would
[T]his put up any money. guys wouldn’t have We you I turn 60 or about when appraised would have the business that time. me an income like guarantee have to guys
You would 200,000 it off of firm you until out year paid a [$]175 up with way don’t have come proceeds. you And that off, continue to make ads me I any money. guys pay You firm, running are you guys time while the whole you things on how were and, course, keep I’d some voice so going you guys wouldn’t drive it into ground, make my sure investment safe.
Miles told purchase MacAlister that the the firm price of an appraisal subject would be based on but that it was “all approval.” [Goldstein’s] MacAlister that he replied would Gordon, overnight, think about it but Feinblatt would “off let him the hook” before he could Miles’s accept proposal. proposal,
When MacAlister informed Goldstein Miles’s responded already Goldstein “had a deal 50/50 Bernier,”6 But, Tom to purchase the firm. “I he added: want really you stay.” MacAlister then agreed greater that MacAlister would have a role management of the firm. And Miles increased MacAlister’s salary assuring while him: allegedly put everything “[W]e’ll writing. know, worry. totally Don’t You I’m committed. And, know, you you I’ll never at yell again.” | Gordon, Glancy, partner
When MacAlister told Tom a Feinblatt, offer, about Miles’s Glancy advised him purportedly that, if Gordon, offer, he accepted Feinblatt’s two or after years three “eligible partnership.” he would MacAlis- ter claims he “I have an own replied: opportunity to this I money. business. don’t come from I don’t from come family that has the buy partnership. resources into I’ve got owning operation a chance half quite makes *12 bit a money,” responded to which that Glancy the decision was Miles, Deciding stay MacAlister’s. to with MacAlister told deal, that on.” Goldstein “the deal was That according MacAlister, he, Goldstein, Bernier, was that pur- and would firm, chase Miles’s and each would own a in one-third interest But, materialize, that firm. arrangement before that could Bernier left firm. the MacAlister, Goldstein, employed by
6. Bernier was Miles at the time and subsequently had these discussions. He left the firm in or 1998. communications, Miles ex- frequently oral and In written that and MacAlister would his Goldstein expectation pressed the Summarizing his firm. contents eventually purchase Miles, “They say stated: would by sent MacAlister emails buy me or ‘when you ‘when and Scott out’ things, example, you ‘when and practice’ the or Scott and Scott take over you in know, I and Scott come you you when turn day, some ” But, as himself and take over.’ Goldstein place here this testified, not that Miles would parties was understood made firm unless MacAlister substantial his to them sell day in his day in “more becoming organized progress attorney practice” as an more “accessible activities normal hours.” during work however, “I claims, in 1997 Miles him:
MacAlister that told really have is on. You you want know whatever deal we I’m yourself very impressed you. around. with turned In trying getting great You’re lot of cases. You’re results.” Miles, MacAlister, summer of said according percent “deal a hundred on.” [was] bat mitzvah of one of September attended the event, At that he had daughters. Goldstein’s conversation Block, Bruce D. in which he attorney, with raised subject purchasing Block and Goldstein firm. minutes,” couple “a never amounted to colloquy lasted but than, in words: he was “[M]aybe more Block’s interested was, It maybe I was selling buying.” interested time, that Block that not sell his law firm Miles told “he would alone, Goldstein, fact that due to the did [he] Scott financial backing Goldstein had the perceive Mr. firm.” permit purchase him to the law [sic] wherewithall another, and Block later one discussed with Miles, firm. possibility purchasing Miles’s then Describing conversations that he Block had with Miles, Goldstein stated: various as a agreements. tried reach different And
We transpired during result of different things various times, negotiations, things changed. course At those times, At price was discussed at level. it was purchase one *13 discussed another fashion.... There were different prices depending upon what Mr. Miles was willing to do and how it was going work.
Two months after Block, Miles first spoke with Miles sent an Goldstein e-mail “I stating: you want and [Block] me by to know no later than February 1st what we are doing leave, if you because decide to I want to start running an ad as soon as possible.” replied by Goldstein e-mail: “I will inform your [Block] deadline of February 1st and he will try put an together. succeed, offer If don’t email, we in light your I imagine that I will not otherwise opportunity buy you out.” Despite 1, 1999, the February deadline, Goldstein and Block did not submit an offer date.
In April Miles stated that he would accept purchase price of million paid to be $1.75 over time at a percent five interest proposed rate. He purchase price entire would be him paid salary, making it tax deductible to what would abe new firm consisting of Goldstein and Block. That proposal was not accepted, and negotiations continued.
In May Block first mentioned a possible purchase price of $100,000. million and a downpayment of $1.3 Although both, Miles eventually said “okay” he did not believe Goldstein and Block offer,” had “a firm made “they because kept changing” the terms their offer never committed it to writing. Goldstein,
According to they “had inching been closer deal,” that, closer but he acknowledged May as of no “agreement had been reached.” Miles characterized the discussions with regard purchase to a price, down payment, rate, and interest as “an ongoing thing.” meantime, In the apparently Goldstein had left MacAlister dark as to his plans buy firm with Block. Sensing amiss, something MacAlister asked Gold- stein what was going on. Goldstein declined to discuss the matter with him and suggested speak with Miles. When did, he Miles told him: to sell the firm. looking I’m you. to lie to going
I’m not *14 was And he said deal I have a deal. And said we out. You and buy to me you being able contingent on doing isn’t well. out. The business buy can’t me [Goldstein] So, somebody to it to else. looking I’m sell with negotiations Goldstein the 1999 point, during At some with Block, negotiating that was and disclosed he also Miles Block prompted That Goldstein else. disclosure someone firm his purchase with a written present proposal Miles involved” that “wasn’t million. MacAlister testified he $1.3 “only and that found out and Block offer he the Goldstein rejected.” had their offer been afterwards once that proposal, attached to Goldstein In a handwritten note “[Pjlease I genuine consideration. give proposal this wrote: it against I that opportunity. hope weighing want this ” alternative, always my loyalty.... consider you other he would consider the offer response, told Goldstein that Miles Goldstein, According to Miles said “he over the weekend. that Monday and would let reach a decision before he wouldn’t me know.” with Miles was was the party, negotiating,
The other whom 1999,7 May Kirk. At a meeting law firm of Saiontz & Kirk’s million accept offer agreed $1.75 Miles Saiontz and Block Although for his firm. Miles informed Goldstein else, did that he not advise negotiating he was someone from Kirk. In he had an accepted them that offer Saiontz & fact, deal that only learned the weekend Goldstein considering his and Block’s offer. supposed Miles was Goldstein stated: he and told me wouldn’t Friday, left office
[0]n Monday reach a decision before and that he would let me person ultimately I would be first to know what know. picked up I Saturday morning, his decision was. And meeting, precise 7. of this he testified Miles could not recall the date but May deposition May, that it occurred and he used 15th meeting occurred. estimate as when the and found that newspaper he had a deal with consummated law firm [the Saiontz & Kirk to that time. prior of] produced expert Goldstein MacAlister testimony $9,510,068 they could have from earned the firm had Miles they sold it to them. They claimed were entitled to the also firm, difference between the value which allege million,8 was and the million that allegedly $2 $1.3 agreed accept from them as purchase price.
MOTION TO DISMISS Court, Miles filed a motion to dismiss with this which without prejudice. denied then renewed motion Court, in his arguing brief this MacAlis *15 ter’s should dismissed appeal they because
(a) (b) necessary transcripts failed order timely, failed to the transcripts included in the Record transmitted to (c) Court, by this the claiming—contrary misled Court transcript—that they private the were unaware that a court stenographer (d) was February hearing, used the concerning never consulted the preparation [him] the (e) Extract, unilaterally Record filed a 1200-page Rec ord Extract not does with Rules and comply contains obviously extraneous material. sum, that this Court dismiss requests Goldstein
and MacAlister’s appeal because the record extract did not 8-501, Maryland with Rule comply governing rule that, filing of record extracts. But 8-501 Rule states “[ordi- not narily, appeal will be dismissed for failure to file a in this compliance record extract Md. Rule.” Rule 8- 501(m). February which alleges was transcript, extract, from in
omitted the record fact in included possible record in gaps extract. Other extract record argues regarding 8. Miles the evidence offered the value of the practice appeal, was inadmissible. Given our resolution of this it is unnecessary for us to this reach issue. brief, to his which included appendix cured Miles’s were omit- improperly that he believed were additional documents extract with Miles that the record agree And we ted. while required in format not presented and was was voluminous appeal. 8-501, not warrant dismissal it does by Rule motion to dismiss therefore denied. Miles’s MOTION TO STRIKE appendix, Miles’s and MacAlister moved strike proper- in were not appendix documents claiming claimed, a sepa- further They the circuit court. ly before brief, that portions of Miles’s rate motion to strike certain Court, this issues that are not before Miles’s brief addresses sufficient evidence fraud they presented whether notably, misrepresentation. or negligent contained Miles’s were either appendix
The documents Court, court, or filed in the circuit this the Court pleadings to those Further- Appeals, pleadings. were exhibits more, ultimately granted summary circuit court because the issues,” “on counts all judgment favor of Miles all correctly issue the circuit court ruled that Gold- of whether negligent claims for fraud and misrep- and MacAlister’s stein’s summary judg- motion for resentation did survive Miles’s deny Goldstein and ment is before this Court. We therefore their mo- appendix MacAlister’s motion strike Miles’s portions tion strike dismiss certain Miles’s brief. and/or
DISCUSSION and MacAlister contend that the circuit court summary judgment in Miles’s motion for on granting erred ground parties the that no ever existed between the bargain profits and that were therefore not lost or entitled But was the bargain damages. only benefit of the circuit court in ground upon by granting summary relied the to this judgment. Ultimately, as we noted the introduction reconsideration, court, motion the for opinion, appellants’ judgment favor of Miles “on all counts granted summary 422
and all shall issues.” begin analysis by We nonetheless our considering benefit-of-the-bargain first as that the issue upon the which principal issue the circuit court relied in granting summary judgment in favor Miles. issue, itself, this and ultimately
Because
the case
were
disposed
summary
on a motion for
judgment, our task is to
if
genuine
and,
“determine
there is
fact
if
dispute material
not,
moving party
whether the
is entitled
judgment
as a
Hollenbach,
609,
624,
matter
law.”
v.
126
Crews
Md.App.
(2000).
742 (1999), aff'd,
730 A.2d
358 Md.
Benefit-of-the-bargain Damages “the determining proper damages measure of cases,” Maryland applies fraud deceit “flexibility Co., theory.” Hinkle v. Motor Rockville Md. (1971).
A.2d 42 a victim theory, Under of fraudulent or negligent misrepresentation may elect recover either “out- of-pocket” expenses benefit-of-the-bargain damages. permit plaintiff will to recover his or former her actual losses; “put[s] party latter the defrauded in the same position if the representations financial fraudulent had in Distrib., true,” fact Midwest Home Inc. v. been Domco Indus. (Iowa Ltd., 1998), 735, by awarding 585 N.W.2d as dam “ ages property ‘the difference between the actual value time of making contract and the that it would value
423
”
true.’ Hall
had
if the
been
representations
possessed
12,
1,
121
708
Md.App.
P’ship,
Ltd.
Regency
v.
Homes
Lovell
Co., 245
(1998)
Burgess
v. T.D.
Beardmore
(quoting
A.2d 344
(1967)). But, as will become
387, 390,
(2)
also amounted
representation
if the fraudulent
bargain
recovery may be had
loss
warranty,9
by “warranty.”
altogether
what the
court meant
9. 11is not
clear
Selman
Llewellyn
at
the time Seiman
Karl
observed
about
As the inestimable
decided,
legal
say ‘warranty’
say nothing definite
is to
as
was
“To
Llewellyn,
210
on the Law of Sales
K.
Cases Materials
effect....”
Jr.,
543,
(1930), quoted
Murray, Murray on Contracts
John Edward
course,”
advised,
(3d ed.1990).
he
"is to
“[T]he sane
discard
n. 19
He, nonetheless, “agreed
thinking.” Id.
to retain
word from one’s
19,
543,
UCC,”
supra,
Murray,
at
n.
we are
‘warranty’ in the
but
term
Murray,
Edward
Jr. that "its
cautioned
Professor John
retention
compromises
[Llewellyn]
to ascer
simply one
made
of innumerable
throughout
Country.” Id. More
of the new Code
tain
recently,
enactment
Williston,
expressed similar sentiments:
Professor Samuel
"
any
‘Warranty’
well
other
word which illustrates as
as
the fault
is a
naturally
ambiguous
in the
use of terms. The word
the common law
varying
used
promise, but in different kinds of contracts is
means
meanings.”
Williston,
A Treatise on the Law Cotttracts
1 Samuel
38.19,
ed.,
ed.l990)(internal
(Richard
§
omitted).
Lord
4th
citation
A.
Indeed,
may
"warranty”
simply
word
court
have used the
Seiman
as,
sentence,
synonym
“promise,”
to a
in the same
refers
as
amounting]
warranty”
“representation ...
a
event,
bi
of a
each
Selman,
promise.”
any
was the
because broken should alone; cost as wrongdoer the as much the latter (3) the by proof where circumstances disclosed the so are vague as cast no virtually light upon the value of the had it property representations, conformed the court sustained; will damages equal only award to the loss and (4) .., the damages where under the benefit-of-the-bargain proved rule are with sufficient that rule will be certainty, employed.”
Hinkle,
511-12,
Selman,
Those four “conclusions” have
as
been described
“four alter
an injured
native methods
party
available
ascertaining
Aeropesca
damages arising from an action for fraud and deceit.”
Int’l, Inc.,
610, 630,
v. Butler
Md.App.
Aviation
44
Ltd.
(1980).
That is also born out (1) (2), framed four conclusions. Conclusions these lan- parallel are cast in recovery, two measures different choices, but conclu- they are indicating that alternative guage, (4) (3) not, that the two conclu- signaling are latter sions (1) recovery, not two rules of as conclusions sions are different (2) are, alternative descriptions but of when two *19 (1) (2), contained in conclusions are damages, measures of applicable.
And, four conclusions as “four alterna- finally, treat these damages arising from an “ascertaining methods” tive or would in create two measures action for fraud deceit” effect benefit-of-the-bargain damages within the four obtaining conditions, theory repetitious flexibility either rendering internally inconsistent. two, four, presents types thus of flexibility theory
The Its four damages: “benefit-of-the-bargain.” “actual loss” and one or of measures of conclusions instruct when both these damages injured to an And that construc- party. are available is T. tion consistent with Professors Charles McCormick description describing In theory. L. Prosser’s of William doctrine, the four flexibility Professor McCormick divided of damages, stating: conclusions into two measures every place, the first it seems that case the defrauded should be allowed to claim under the “out-of- plaintiff if In the pocket” theory prefers. place, loss second theory [bene- should be allowed to choose the other plaintiff bargain and recover value of fit-of-the-bargain], judge, if trial in his considers represented, discretion that, of probable culpability in view the moral defen- representations dant and of the definiteness of the and the 426 value,
ascertainability of the is an represented the case such appropriate one for treatment. McCormick, T.
Charles Handbook on the Damages Law of (footnotes (1935) 121, omitted); at § 454 see also William L. Prosser, (3rd 105, § Handbook the Law Torts 752 ed.1964).
Nonetheless,
flexibility
has
theory
caused some confu
among
sion
state courts
sought
adopt
those
that have
it.
While some courts have embraced the notion that this theory
See,
only
creates
two measures
Edward
damages.
e.g.,
J.
Coopers
557,
DeBartolo Corp. v.
Lybrand,
&
928
565
F.Supp.
(W.D.Pa.1996)
law);
Pennsylvania
v.
(applying
Sorensen
Gardner,
255,
471,
(1959);
215
334 P.2d
476
Staley
Or.
v.
(2000).
1220,
Taylor,
Or.App.
P.2d
Others
See,
not.
e.g., McConkey
v.
Corp.,
N.J.Super.
AON
804 A.2d
588-89 (App.Div.2002). The latter case
(4)
(2)
treated conclusions
as if
created
separate
kinds
damages, ruling
distinct
that to obtain benefit-of-the-
(4)
damages
conclusion
bargain
proof
under
does not require
(2).
of a
or a
warranty
promise under conclusion
See McCon
key,
But this of opinion difference need not us. divert question required whether Goldstein and MacAlister were representations prove “warranty” Miles’s constituted a *20 (2) review, conclusion beyond scope under lies of our show, because Goldstein not and MacAlister have been able to held, circuit court that as the had ever into a they entered bargain purchase Miles to his firm.
To recover beneflt-of-the-bargain damages,
MacAlister must
show that
a bargain
first
entered into
Hall,
with Miles for
of his firm.
121
purchase
See
12,
at
427 § at 408 329)); & Deceit 226 37 Fraud A.2d Am.Jur.2d be- (2001) difference benefit-of-the-bargain “the (defining making at time of property the actual value of tween if the that possessed the value it would have the contract and true”). is a bargain? But what had been representations understood if we contrivance can be best That transactional do, we discover it in a context. When we place conceptual in but broader agreement it is than an scope that narrower a than contract. scope or set promise prom
“A ‘a of contract is defined as or the gives remedy, of which the law a ises for breach recognizes as a way which law in some performance of ” Md., 102 Md.App. v. First Nat’l Bank duty.’ Kiley of (1994) Williston, 1.1, § at (quoting supra, 649 1145 A.2d hand, 2-3). is “a manifestation An on the other “agreement,” or Rest persons.” on two more part mutual assent (1981). (Second) meaning 3 It has “a wider § Contracts contract, contract, unlike it “con bargain promise;” than or a not are or are implication legal consequences no tains cmt. a. produced.” Id. A two a concepts “bargain.” between those lies exchange is for the agreement parties between
bargain “[a]n Dictionary Black’s Law promises performances.” or (7th ed.1999) (Second) ]; see Rest Black’s also [hereinafter Contracts, (“A § 3 is an to ex bargain agreement supra, exchange performance or to for a change promises promise definition, therefore, the “By or to exchange performances.”). agreement bargain term is both narrower than the term yet it is to all broader applicable agreements, contract, a number of promises than the term since includes are not definable as contracts.” properly themselves omitted). 1.4, (footnote Williston, § at 16-17 supra, always agreement “But an for an ex bargain is Corbin, Arthur Linton Corbin Contracts change.” ed.1993). 1.10, ed., § (Joseph M. Perillo rev. “Since requires promises per bargain agreement exchange (that formances, man- agreements it is many obvious *21 428 assent)
ifestations of an mutual which do contemplate fit exchange do not within of 1 bargain.” the definition 1.4, Williston, “bargain § at 17. But a is not supra, necessari- aly contract may because consideration be insufficient Black’s, may illegal.” the transaction at supra, 143. De- distinction, however, spite this “bargain,” theoretical the term when in the employed phrase “benefit-of-the-bargain dam- ages,” always has almost referred to “enforceable con- tract.” appellate
While our
courts
not expressly required
“bargain”
existence of a
obtain benefit-of-the-bargain
cases,
damages
negligent
fraud and
misrepresentation
by
have done so
of
impliedly
only recognizing the legitimacy
such damages in fraud and negligent misrepresentation cases
in which
was an actual
parties.
there
contract between the
See,
344, 345, 349,
e.g.,
Reighard,
Downs v.
265 Md.
289 A.2d
(1972) (contract
survey
land);
299
to complete
parcel
of a
Hinkle,
503,
(contract
513,
What is in each of Maryland’s Hall, deal Ward—the authorized the contract was consummated, court, which least state see v. .one Gold Dubish, 549 Ill.App.3d Ill.Dec. N.E.2d (1989) (concluding the benefit-of-the-bargain rule was “designed for situations transaction where the between the parties has been based on actually consummated the fraudu- lent representation”), well as official comments (Second) Torts, section 549 of Restatement see Rest. (Second) (1977), § 549 g-1 Torts cmts. has suggested *22 in a benefit-of-the-bargain damages recovering prerequisite That, course, did occur not here. tort action. contract or “benefit-of-the-bargain” Moreover, Maryland while all contracts, the instant case did involved enforceable tort cases not.
Nonetheless, seek in tort that and MacAlister Goldstein have been denied contract: benefit-of-the- they which would they admit that and MacAlister damages. Goldstein bargain Indeed, firm. their purchase a contract Miles’s never had at conceding, the reconsidera- by took it a further step counsel “agreed-to have an they did not even hearing, tion that wholly warranted Despite stunning, though that bargain.” that they they claim admission, and MacAlister now Goldstein law with Miles: “the sale bargain [Miles’s] did in fact have market value.” The specific price firm to below [them] claim, $1,300,000. was specific price, Yet, to sell the it was that Miles never offered undisputed for that amount. That firm and MacAlister Goldstein mentioned, MacAlister, by first not Goldstein and figure was Block, negotiations with by during and their but Goldstein firm. Goldstein and Block later Miles to his When purchase the two negotiating party, with another learned that Miles was and submit- proposal of them that amount a written placed a note from proposal Attached to that was ted to Miles. what was the and urging accept Goldstein Goldstein that to think responded Block he would have offer. Miles But, about over the weekend. while Goldstein proposal their him, they from waiting were hear learned Block purchase an offer from Saiontz & Kirk to accepted Miles had generous his firm under more terms. party proposal MacAlister was never a to the
Because Block, and, fact, did by Goldstein and even submitted Miles, by he rejected know offer it was of their until after end, as cannot claim offer theirs. there Goldstein Block and different units: Goldstein and purchasing were two That Goldstein a member of Goldstein and MacAlister. blur confuse but does not buyers may both sets Indeed, important distinction. he and Goldstein cannot now rejected complain they, purchas- offer that as a unit, ing only never made. The “bargain” evidence of a between MacAlister and Miles were statements them, Miles that he would sell firm to aat “below market price, value” when retired. representations Those hardly a bargain. constituted
A bargain agreement parties “[a]n between exchange Black’s, of promises or performances.” supra, at 143. But that requires definition further explication, “promise,” term has meanings: two different lay legal. lay meaning of “promise While denotes a to which pledge *23 Garner, the law no obligation,” Bryan attaches A. A Dictio (2d ed.1995) Legal Usage nary (emphasis Modem 701 of omitted), the of the “is legal meaning word synonymous omitted). (emphasis contract.” Id.
We, course, only of are concerned with the legal here meaning of A “legal” promise the word. has been defined as of an intention act “[t]he manifestation to or from refrain manner, in acting a in specified conveyed way such a justified another is in understanding that a commitment has Black’s, made.” at supra, gener been 1228. And that is the (Second) Contracts, accepted ally definition. Rest. supra, of (“A § 2 is a promise manifestation of act intention to from in a acting specified way, refrain so as justify made a in promisee understanding a has commitment been made.”); Corbin, 1.13, 1 supra, § at 35 (defining promise a as “an expression of to act in a ... specified way commitment way communicated in such a expres the addressee of the may expect sion justly performance may reasonably rely thereon”); Williston, 1.2, § 1 at supra, (defining promise 10 a “ as ‘a of manifestation intention act or refrain from acting way,’ in specified way a in such a a justify made ‘as that a promisee understanding has commitment been ” (Second) Contracts, 2)); § made’ Rest. (quoting supra, of (2004) 3,§ 17A at 39 promise Am.Jur.2d a (defining Contracts as a of to act acting “manifestation intention or refrain from
431 in under- justify promisee so as way, made specified Rest. (citing made” a commitment has been standing that 2)). (Second) Contracts, § supra, “ its ‘illusory when indefinite promise But a ” Health Cheek v. United legal defies enforcement.’
nature
Inc.,
150,
139,
Goldstein and MacAlister
Distributor,
Ltd.,
v.
Inc. Domco Industries
both cases rested agreement—a enforceable written Distributor, Inc., in Midwest Home distributorship agreement American Service a letter of intent in Family Corp.—they in highlight evidentiary gap Goldstein and MacAlister’s claim: the of an agreement. absence enforceable case, Midwest, distributor,
In the a covering former floor Domco, agreement into a with distributorship vinyl entered Distrib., Inc., floor manufacturer. Midwest Home at 737. Relying upon representations N.W.2d Domco’s Domco “was in growing increasing its market share promises United States” Domco’s Midwest would be only stocking Iowa,” product “the distributor Domco’s agreed to stocking Midwest become Domco distributor in Id. Despite assurances, 1988. October those Domco then into a written agreement corporation, entered with another Onthank, Onthank a Domco making stocking distributor Iowa as well. Id. When Iowa’s could not market both support distributors, stocking Domco terminated distribu- Midwest’s Id. torship. Domco, claiming,' among
Midwest things, sued other fraudulently Domco misrepresented that would be Iowa’s only stocking distributor for Domco and that Domco’s market Id. A growing. jury share at 737-38. awarded Midwest $400,000 in compensatory benefit-of-the-bargain damages to- Id. $750,000 gether punitive damages. 738. below,
Affirming the decision Supreme Court Iowa jury held that reasonable could found that Dom- “had *25 (that is, a was growing true Domco statements been co’s distributor), Midwest Midwest would remain sole company and Id. It financially.” consequent- at 742. have benefitted would $400,000 [in award benefit-of- jury’s “[t]he concluded that ly Id. It evidence.” damages] supported the-bargain damages. Id. at jury’s punitive affirmed the award also 743. case, Pamela and Ted negotiating with the latter while (“the Michelfelders”) Michelfelder, Inc.
Michelfelder business, Family care Service child American their purchase (“AFSC”) were learned the Michelfelders Corporation Family Corp., Am. Serv. party. with another negotiating guarantee 668. “a of exclu- F.2d at When AFSC demanded sent a letter rights,” the Michelfelders AFSC bargaining sive with other until negotiate any buyer will stating: “LW]e a your diligence due complete have the you opportunity has achieved.” Id. agreement been definitive a letter intent then signed AFSC and the Michelfelders their agreed the Michelfelders sell business wherein clause,” “no-shop Id. 668-69. AFSC. at The letter included stated: which shareholder, officer, di- Companies any nor
[N]either the rector, shall, any directly or them agent representative or or any any or solicit all of the indirectly, proposal acquire Assets, Companies, stock of the or any Business all of the negotiate any any person or enter into discussions such matters. concerning
Id. at 669. AFSC, gave assurances that the
Despite the Michelfelders into a to sell their child care business they entered contract this, it filed third Id. at 670. AFSC learned party. When and breach of con- against Michelfelders10 fraud suit and, conclusion, followed, jury Id. A trial its tract. counts, specifically grant- on both damages awarded AFSC 10. against parties, those AFSC's also included claims other but lawsuit before claims are not relevant to the issues this Court.
ing benefit-of-the-bargain damages AFSC on its claim of fraud. Id.
Concluding that the damages that AFSC as a suffered result of the Michelfelders’ fraud were the same as the contract, damages they suffered as a the result of breach of the trial court reduced the fraud award and total limited the damages to by those that were awarded on originally jury the the breach of claim. contract Id. at 671. The United States Appeals Eighth Court of for the disagreed. Circuit It found that “trial evidence demonstrated that if the had Michelfelders exclusively dealt with AFSC as they promised, AFSC would bought have Michelfelders’ child care business benefit- financially fed from Id. at acquisition.” [that] 671-72. AFSC entitled, concluded, the court therefore benefit-of-the- bargain damages by in the amount jury awarded because that was jury the amount the determined AFSC would bargain benefitted under the had “the Michelfelders [not] promise exclusivity.” fail[ed] to live to their Id. at & up n. 6.
Thus, chiefly upon the two cases by relied Goldstein and claim MacAlister bolster their for benefit-of-the-bargain that, damages actually undermine that claim highlighting Inc., Distributor, unlike Midwest Home and American Fami- claim ly Service their did not rest on an Corp., enforceable agreement. Negligent Misrepresentation
Fraud and Claims vagueness and generality Miles’s state MacAlister, ments to concerning purchase firm, of his law only undermine and MacAlis Goldstein’s ter’s demand for damages but their benefit-of-the-bargain claim negligent were victims fraud and misrepresenta tion a plaintiff reasonably as well. Just must show relied upon promises the defendant’s to receive benefit-of-the- bargain must damages, so he show such reliance to recover fraud or negligent misrepresentation. The statements attrib provide uted to Miles did not basis for either. fraud,
To prevail on a claim for plaintiff prove: must to the 1) representation made false that the defendant plaintiff; or that the defendant
2) known to falsity that its was either as to indifference with reckless representation was made truth; its
3) purpose was made misrepresentation that the plaintiff; defrauding had
4) misrepresentation relied on the plaintiff that the it; and right rely resulting 5) compensable injury plaintiff that the suffered misrepresentation. from *27 (2003) 406, 429, 247 Andrew, 832 A.2d 152 Md.App.
Sass v.
398, 415,
R, Inc.,
Similarly, plaintiff prove: the must
(1) defendant, plaintiff, care the owing duty the statement; a false negligently assert[ed] (2) that his statement intend[ed] [would] the defendant upon by the plaintiff; acted
(3) knowledge the plaintiff [would] the defendant ha[d] erroneous, statement, which, on if rely [would] probably injury; cause loss or
(4) plaintiff, justifiably, action reliance on the [took] statement; and
(5) by damage proximately caused plaintiff suffered] negligence. defendant’s Chevrolet, 328, 337, v. 292 Md. 439 A.2d Seney, Inc. Martens (1982). 534 misrepresenta- contention Miles’s support of their or, least, very at negligent misrep- constituted fraud
tions resentation, point and MacAlister the same asser- their claim for they support tions that did to benellt-of-the- is, damages, allegedly statements bargain firm that would his law made he sell Goldstein and MacAlister than its market value when he retired. Whether less 436 “ ”
Goldstein and MacAlister had
‘the
on
right
rely’
those
statements,
claim,
required
Sass,
as
their
152
by
fraud
Md.
429,
Nails,
415,
A.2d
App.
(quoting
832
247
A “vague that is statement and indefinite in its nature terms, merely conjectural or is a loose or exaggerated statement, is not to support” sufficient either a fraud or action, negligent misrepresentation because “such indefinite representations ought to put person they whom are made, if upon inquiry, put chooses faith such statements, inquiry, and abstained from he has no reason Id. As the complain.” Appeals recently Court more ob “Ordinarily representation definite, served: ... must be general, vague, and mere insuffi indefinite statements are cient, should, rule, general put because hearer upon inquiry, right rely upon and there is no such state Benton, v. ments.” Fowler 229 Md. 185 A.2d (1962).
Miles’s assertions that he would his firm sell to Goldstein *28 and for less its upon MacAlister than market value his retire- ment, expressions were not a firm of intention to the firm sell them; were, rather, they of probability statements or Buschman, expectation. 52 Md. at See 207. The expectation that if was Goldstein and MacAlister still employed by were retire, if ready Miles when he was and the parties could of agree purchase, terms the an sell agreement the reached, practice but expectation would be this does not to an if it misrepresentation, amount actionable in was fact a misrepresentation. ever vague than a and firm general
Other statement that the would be price sold Goldstein and MacAlister below market value and would occur at an in unspecified date retirement, did not future, the assertions Miles’s namely, the price, No purchase contain material terms sale. any rate, sale, were dis- payment or terms of date of interest cussed, Consequently, those state- agreed upon. much less indefinite, vague, too be considered general ments were of expressions probabili- more or anything expectation as than negligent as not actionable fraudulent ty therefore are misrepresentations.
Furthermore, determining in whether reliance rea sonable, experience party background Parker See v. representation relied relevant. upon Bank, (1992) 346, 362, 604 Md.App. A.2d Columbia in party’s experience the area (considering relying occurred). not one in This situation was transaction that entity and party sophisticated was a business which one in parties inexperienced other consumer. All of the this MacAlister, matter—Goldstein, lawyers Miles—were It is not many years practice under their belts. respective inconceivable, unreasonable, just experienced lawyers but representations. Surely, would have relied on such nebulous representations would counseled a client that such especially in context of a vague upon, were too to be relied million appellants dollar deal. We therefore conclude that produce failed to sufficient they reasonably evidence representations. relied Miles’s upon Backpay
Goldstein’s Claim to, this was not or even alluded Although presented, issue brief, “Question appellants, section their Presented” brief, following of their tack on the claim: paragraph the final The circuit court because entirely erred “failed address Goldstein, damages the additional element of Mr. sought $33,000 obligations to fulfill his the amount Miles’ failure income for pay concerning Mr. Goldstein his additional this year calendar 1997.” brief describes claim “an separate liquidated claim for a fixed sum.” “At a entirely *29 brief, to the “motion for according summary minimum” Miles’s judgment should have been denied on this aspect Appellants’ argument claims.” No further presented.
But, hearing at the on Goldstein and MacAlister’s motion reconsideration, issue, circuit court did address that stating: $33,000 claim, respect Goldstein,
With to the of Mr. evidence is most light favorable the Plaintiff that the was for promise wages made and it Now, due, 1997. wages those became from the Plaintiffs evidence, at the end of 1997 for It wages. was due any then. action to So recover on the to pay failure those accrued at that wages time within a reasonable time end of year, enough after the after time calculate $666,000 whether Mr. Miles had ... and to earned see how much Mr. But Goldstein earned. than certainly more three years passed due, have from the time that if wages, those were payable.... The Amended this Complaint [raising 21st, 2001, was filed anyway, claim] December but more years than passed. three The claim is by barred Statute of Limitations. thus clearly
The record shows that circuit court did claim backpay address Goldstein’s hearing motion for reconsideration. argued Because Goldstein only issue, the circuit court in failing erred to address the we need not propriety review the the circuit court’s ruling on that issue.
APPELLEE’S MOTION TO DENIED. DISMISS APPELLANTS’ TO MOTION STRIKE APPELLEE’S AND APPENDIX TO MOTION STRIKE DIS- AND/OR DENIED. MISS
JUDGMENT AFFIRMED. BE PAID BY
COSTS TO APPELLANTS. ADKINS, opinion
Dissenting J.
ADKINS, J., dissenting. counseled, facetiously “See poet Ovid once Ancient Roman in In promise? prom- harm is there promise: what you defining This all about can be rich.”11 case is anyone ises if in are especially they harm can be promises, what there kept allegedly appel- riches falsely promises made. False MacAlister, Goldstein, Esq. K. Esq. B. and James lants Scott (“the Associates”) long-term Stephen in employ appellee other, Miles, more thereby causing L. lose Esq., them allege business The Associates profitable opportunities. that, representations upon retire- made fraudulent law firm to
ment, personal injury lucrative he would sell his terms, wealthy enabling on favorable them become them lawyers. my majority from the decision. respectfully
I dissent in available this case view, benefit-of-the-bargain damages are certainty, proven could reasonable because out-of-pocket rendered alleged negligence fraud and Miles’ Further, benefit-of-the- prove. difficult or impossible losses involving to cases damages should not be limited bargain warranty. question does not reach the of wheth-
Although majority fraud, 1 it here er there was evidence sufficient address circuit ground by was an relied on because alternative summary in granting judgment. court
FACTS12 attorney began to work for Miles as an associate Goldstein firm successfully in 1985. Miles marketed his approximately Naso, Amatoria, 1.443-44, at The Columbia 11. See Publius Ovidius Ars Quotations 1996), (Columbia University Press World http://www.bartleby.com. Although overlap forth with the factual 12. some the facts set here facts, opinion, rely majority I some narration in the different point can be from those For out different inferences that drawn facts. reason, views, clarity setting my in forth I have included this appeal in this is from a of facts this dissent. Because an statement appeared. ads which television The firm prospered. that, deposition during employment testified
interview, that, told him “If it worked out to be a I, marriage my he and very bright.” between future would be years began spend As the time in passed, Miles less practice, and of responsibility Goldstein’s level and time com- dramatically mitment largely increased. Goldstein was re- firm, sponsible managing the generally worked per high hours week. Miles still earned a from income firm, $666,000 making as much as practice from the one *31 year. highest year Goldstein’s one earnings with Miles was $198,000, in approximately which he made 1994 or 1995. In 1997, $166,000. Goldstein earned 1998, that,
In 1997 or Miles told Goldstein because Miles much, $200,000 was earning so Goldstein would earn least year for the or 1997 1998. Miles failed to him this pay amount, only $166,000 him compensating year for of this employment. many during
On occasions the employ- course of Goldstein’s Miles, ment with the told practice latter Goldstein that the as “would sold to an of acknowledgment [Goldstein] [his] to longevity the than practice^] [his] commitment for less perceived what was otherwise be the value[.]” market told that practice Goldstein he would sell the to him “on I the terms that he knew that afford could and make.” Goldstein, 1993, According to by essentially Miles “had al- guaranteed to ... that ready me the practice would be mine As along co-participants.” Goldstein characterized the discussions:
Mr. told regularly Miles had me that we an would hire in who would appraiser appraise come would the be- longings practice ... the furniture whatever there was, that, that agree payout we would on ... that we agree him, would on percentage the fees be paid grant summary judgment appellee, in of an I favor consider them in Hollenbach, light appellants. most to the favorable See Crews v. (2000). Md. n. A.2d 481 good agree to affix a number for the would have that we the ... will, financing that he would take back go able to knew ... that I wouldn’t be practice because he necessary, that money the kind of so we out and borrow financing primari- it he was would hold on because what ... was a stream of income.... ly achieving interested anoth- was that acquisition of Miles’ requirements One purchase must with Goldstein. lawyer practice er that, acknowledged deposition in his acquisition were not the exact terms of the finalized: cold had a lot of stone been specifics [T]here were not format, outline which agreed upon. It was more a within firm There certain acquisition of the was occur. were absolutely hard fast ... That he would were things I financing, recognized that he that would take back the time, him off over a that he wanted to pay period have to in the practice someone involved in addition else myself.... agreed It was would make himself he firm marketing available assist law performing on commercials. are essential elements of things clearly
Those were It once started to involve the deal. was others ... the road process, agreed specifically more down *32 in a to or managing that I would also be be the position majority practice. owner of the of him in connection everything
Goldstein did Miles asked practice acquisition: with the and intended I did that this man asked me do and exceeded everything of 15 I period years. that over couldn’t have been more efforts, efforts, despite my my undying committed. And that I down made despite significant the fact sat and faith, negotiate good effort to with Mr. Miles in Mr. Miles Mr. specifically to sell me the firm and Miles misled refused far as with negotiations parties. me as his other for attor- working MacAlister Miles as associate began ney January on 1990. The between MacAlister relationship smooth, however, eventually and Miles was not MacAlis- sought opportunities employment. ter other he accepted job told Miles that he had with firm the Baltimore “Gordon, Feinblatt.”13 When MacAlister told Miles that he Gordon, had resigning accepted offer, was Feinblatt was upset, repeatedly Miles him asked MacAlister to meet at his house to talk. As MacAlister their characterized tele- conversation, phone Miles said: “I you’re can’t believe leaving know, I with—you can’t me. live not that I can’t live without know, or, but you, I—you we can’t without operate you you know, this is or this is horrible bad news for us. I know really I talk you staying.” can into at
MacAlister testified his deposition only he willing to meet with Miles to burning avoid bridges, made mind. up had his When MacAlister at arrived Miles’ house, just he told “I Miles: want to I’m emphasize you out of respect you. here I I anybody never tell won’t you, am listen but I to leaving. leaving. committed I’m word, given my and that’s I’ve the end MacAlis- story.” ter conversation elaborated between them: “okay.
I said I’m not happy way with the you treat me and not happy I’m way you treat ... staff.” And he said “what I to upset have ever done And you.” know, he said “I it’s yell you then I at all because the time.” said, “Steve, you just I don’t at yell me all time. It’s abusive You yelling. threaten to fire allme the time.
nowI own two houses. I a lot mortgage pay- ments, I and can’t afford an interruption.” income promised not to yell fire MacAlister in the future, and then offered meet financial terms Gordon, from complimented offer Feinblatt. He also MacAlis- MacAlister, trial ability lawyer. ter on as a According to told promises when he Miles these were induce enough him stay, I, too, that, "Gordon, Feinblatt,” referring
13. assume when MacAlis- *33 "Gordon, Feinblatt, Rothman, currently ter meant firm known as Hollander, “Gordon, Hoffberger & LLC.” I shall use when Feinblatt” referring to this firm. business to to “what if I offer the said me paused, then And said that does that mean.” he you.” I said “what buy will me I Scott and Tom you, [Bernier] turn “when out____ subject be to Gold- [Scott have to would [T]his up have put any wouldn’t you guys approval, stein’s] I turn when appraised business money. We would 60 or about that time. an income of like guarantee have to me guys
You would 200,000 it off of firm you out year paid until [$]175 way up don’t have come proceeds. you And that off, I continue to make ads any money. guys pay You me firm, guys running time are you the whole while you and, course, keep things on how were I’d some voice ground, so wouldn’t drive into the make going you guys is my safe[.]” sure investment “subject to [Gold- told MacAlister that the deal was
Miles that of the firm would be approval” price stein’s] appraisal. meeting, based At the end Miles said on that talk with Goldstein. MacAlister told he would by me overnight, “any about it but that decision would think Gordon[,] off letting hook[.]” Feinblatt me contingent Goldstein, who went to discuss the offer with MacAlister Bernier,[14] “had a deal with Tom and what said he 50/50 up give to do is to a chunk asking give Steve’s me give a chunk of you, asking up some to and he’s [Bernier] stay.” I you.... you want give really some Miles, as After further conversations between Goldstein and them, it was parties expressed well as the three of “a greater They deal.” discussed that MacAlister would have put firm. Miles said: management “[W]e’ll role know, I’m worry. totally Don’t You everything writing. know, And, you again[.]” I’ll you yell committed. never Gordon, Tom partner called Feinblatt When MacAlister offer, Glancy about advised MacAlis- Glancy to tell him Miles’ years “eligible ter after two or he would three employ in 1997 14. Bernier left the or 1998.
partner[.]” Glancy, MacAlister told “I an opportunity have this I I money. own business. don’t come from don’t come a has family buy from that the resources to into a partnership. got I’ve a chance half an owning operation quite makes Glancy a a him money.” any bit After released from obli- Gordon, Feinblatt, gation MacAlister told Miles and Gold- stein “the deal was on.”
Thereafter, Miles also made various to the references deal and conversation e-mails he sent MacAlister. As explained, “They MacAlister would say things, example, you when and out or buy you Scott me when and take Scott practice know, and you day, over when Scott some you I turn you place when and Scott come in this here take One asked him day, over.” after Miles MacAlister to meet Starbucks, a you Miles told MacAlister: “I want to know whatever we is on. really deal You turned yourself very around. I’m with impressed you. You’re lot of trying getting great cases. You’re results.” September In had a conversation with Bruce D. Block, Miles, attorney an known both about Goldstein joining with in his purchase practice. Goldstein of the There- after, Block negotiated and Goldstein with Miles about their of joint purchase practice.15 asked When whether he buy made offer to the practice, definite Goldstein said Block, conjunction exact, with In Mr. Yes. I don’t recall the specific agreed upon. amount was We to reach tried various agreements.... different There were different Mr. prices depending upon what Miles was do and willing to time, how it was to work. At going point one was there offer, believe, interest, I million and Mr. plus $1.3 any Appellants portion explaining not 15. do cite us to the record play proposed acquisition. what role MacAlister was intended to in this question argument, appellants When asked this at oral counsel replied part purchasing that MacAlister was intended to be of the group. Although point absence evidence on this leaves an evidentiary gap, significance I not vel obvious do address its non ruling summaty because was not basis of the motion court’s judgment. amortization tables provided Miles was with series out. paid how was Block, 1999, he, acknowledged May, that as
Goldstein minds where an meeting a total Miles had “reached in the 1999 had time late agreement been reached.” Some Block, that he Miles disclosed negotiations practice. purchase with someone else negotiating a firm offer to Block and Goldstein made June million. Miles’ firm for purchase $1.8 *35 agreed parties to this and the orally purchase price,
Miles final agreement. to out the working were close terms according Goldstein: June inching to the deal Mr. had been closer closer [W]e that we kept leading along, leading Miles me me believe that consummating were closer and closer deal. that told me Friday, on he left office and
And and that he would Monday wouldn’t reach a decision before person ultimately know. I be first to know let me would I Saturday morning, picked up what his decision was. And that he had deal newspaper and found consummated ofj prior law firm Saiontz & Kirk time. [the Kirk merge with Saiontz & at a luncheon agreed Miles 15, 1999, on about under an May occurred or meeting He arrangement which he would receive million. never $1.7 advance notice his intention to gave Goldstein MacAlister this took on do so. The on deal June 1999. closing place Ruling Circuit Court’s theories, damage relying two both The Associates offered First, analysis. they claimed that benefit-of-the-bargain to the between the million they were entitled difference $1.3 promised actual fair market purchase price that Miles firm, & Kirk for value of the which was sold Saiontz $1.7 they they claimed that entitled to Alternatively, million. were from $9,510,068 have earned profits they lost would firm, had owners. they been its The trial court ruled that the not Associates were entitled to benefit-of-the-bargain however, damages, they because had not produced any a bargain. evidence of It they reasoned that could proven damages they what proving would have firm, earned so, had left the but that they did do failed to produce out-of-pocket other evidence of damages resulting from Miles’ alleged misrepresentations.
At ruled, alternative, court hearing, later the trial in the that the Associates had not produced any evidence any harbored fraudulent intent.
DISCUSSION I.
There Sufficient Evidence Was To Material Create
Dispute Of Fact ToAs Whether Miles Had
Fraudulent
Intent Not To Perform
for a
of action
elements
cause
in Maryland
fraud
case,
were
Chevrolet,
set forth
fraud
leading
Martens
(1982):
Inc. v.
292 Md.
A.2d
Seney,
(1)
To
plaintiff
entitle the
recover must
shown:
*36
(2)
false;
the representation made is
its falsity
was
either known to
or
speaker,
the
the misrepresentation was
such
made with
a
truth
reckless
to
as to
indifference
be
(3)
to
equivalent
knowledge;
actual
that it
was made
the
purpose
person
of
defrauding
claiming
injured
the
be
(4) that
thereby;
such
not
person
only
upon
relied
the
a
misrepresentation,
right
but had
it
rely upon
full
the
truth,
of
belief
its
and that he would not have done the thing
from which the injury resulted had not such misrepresenta-
made;
(5)
tion been
that he actually suffered damage
directly resulting from such
misrepresentation.
fraudulent
(citation omitted).
Id. at
447
as an
argument
court
this
accepted
of Miles. The circuit
part
summary
grounds
grant
judgment.
for its decision to
alternate
on summary
not decided
Ordinarily, matters of intent are
good
of
faith
Questions involving determinations
judgment.
“ordinarily”
involve
motive
are
which
intent and
resolvable
Aid
v.
Corp.
See Rite
summary judgment.
on motion for
a
(2003).
sure,
665, 684,
To
Hagley,
374
The Court of instructed that intent not proven by a contract made perform may when refusal made, perform with shortly after the contract combined surrounding trans- subsequent conduct and circumstances action: fraudulent,
A intent not to pre-existing perform promise perform cannot be from the failure to made inferred But, may alone. be considered the subse- promise and the other circumstances quent promisor conduct an sustaining such inference. surrounding the transaction conditions, And it stated under certain has been strong intent perform failure refusal evidence made, perform not to at the it was promise time *37 short the only period elapses where time between making promise perform the failure refusal to it, in is no circumstances. change there Poore, 1, 10, (1959) (citations v. Md. A.2d 717
Tufts omitted). my view,'this
In criteria, case falls within allowing the Tufts fraudulently an inference that Miles represented his intent to circumstances, perform The following under Deal. taken together, support are sufficient to an inference of Miles’ fraudulent intent:
(cid:127) Miles did not make the offer to until MacAlister losing faced with an “couldn’t associate he live with- only
out” as an inducement for to stay MacAlister with firm instead of with an from a proceeding offer different firm.
(cid:127) Deal, jettisoned on the opportu- reliance MacAlister his Gordon,
nity later, Feinblatt. Three or four months October or November MacAlister approached Miles and asked him if wasn’t about time to put so, in writing.16 claiming Deal Miles refused to do about-face, work MacAlister’s had been “bad.” This so Miles, soon years after with six which upon to evaluate MacAlister, him complimented on his skills as trial lawyer and told MacAlister that firm “oper- could not [him],” ate without allows the only inference that Miles promised MacAlister Deal because he his needed services, without an This perform. intent criticism MacAlister, whom indispensable Miles considered three earlier, months simply could be viewed as an not to excuse put below, As writing. Deal indicated in Miles’ view, if is not it is not a promise writing, promise. promises I use the "Deal” 16. terra to refer made to Goldstein and MacAlister to sell them the fair business at or below value, them, allowing pay market terms favorable them to for the earning, practice marketing out of the firm’s to continue to do Although behalf I commercials on of the firm. use the term “sell” so, parties may contemplated because the do the actual transaction firms, merger employment been a contract for Miles activities, etc., requiring advertising much like the transaction & entered into Miles with Kirk. Saiontz *38 (cid:127) to him 1997, MacAlister meet Miles asked In the winter Washington, in and said restaurant Mount
at a Starbucks is we have on. to know whatever deal just you “I want very I’m impressed around. really yourself turned You getting a lot of cases. You’re you. trying You’re with results.” great
(cid:127) 1998, inter- after of 1997 or MacAlister In the summer Piven, a job lawyer with named opportunity
viewed on, said, the Deal was Miles inquired of Miles whether he doing “Jim, percent is a hundred on. You’re your deal you. I don’t job. Everyone happy with phenomenal to you want leave.”
(cid:127) Block, suggest- approached In Miles September join purchase with Goldstein that he
ed negotiated with Miles soon thereafter When practice. practice, and Block about purchasing Goldstein secret negotiations that Goldstein those required keep MacAlister, and Goldstein that he would from threatened negotia- if business off didn’t. While negotiations cut secret, instance, when Miles had are this tions often team, and MacAlister as a to sell Goldstein promised MacAlis- suggests an intent to deceive the secretiveness ter.
(cid:127) approached Miles April In March or MacAlister wilting. Deal to again suggested they reduce the said, it when I great “that’s a We’ll talk about
Miles idea. California at the end of the summer.” back from get nothing negotiations about ongoing Miles said Block, Kirk. This is or with Saiontz & Goldstein in an again, that he lied to MacAlister effort evidence merger him until payroll on the occurred. keep (cid:127) Kirk, merge with Saiontz & agreeing after I [Saiontz] that “Donald
Miles told MacAlister years.” Although Miles characterized talking been joking way,” jury as “done in a could discussions these otherwise, never indicating interpret them intended live to his up promise and MacAl- ister.17
(cid:127) During MacAlister, post-sale the same discussion with also told MacAlister that Kirk Harvey “since had no I practice,
children could probably arrange- make his practice ments take over ...” day According some MacAlister, false, Harvey “[this was] because Kirk has Bar, a son who recently passed the and who is now Saiontz, Kirk employed & Miles.” *39 (cid:127) During discussion, post-sale the same when MacAlister Miles, deal,”
confronted saying “we have a Miles said: deal was contingent you buy “the to being able me out. and buy You Scott can’t out. isn’t me The business doing So, I’m to looking well. sell it to I somebody else. have a family to think about.”
(cid:127) Miles, During a with discussion Goldstein confronted $33,000 unpaid compensation about that Miles had were,
promised well, but not “exact paid. Miles’ words it’s you not like that in have You writing. only my have word Block, for that.” who was ... present, was “stunned left ... with impression yes, [and] Mr. Miles agreed you with Mr. I money Goldstein owe but hey, I’m not do paying you, you writing?” have it in This permits evidence that in dealings inference Miles’ with MacAlister, Goldstein and he had no to up intention live to compensation his about promises they unless in were writing.
(cid:127) Although there was evidence Miles had discussions
with Saiontz years & Kirk several before or never disclosed these discussions Goldstein MacAlis- ter until he told Goldstein June 1999 or later. Because a place period years, these discussions took over may during period occurred he was while re- assuring Goldstein MacAlister of his intent to sell They simply plans, 17. back-up could also be viewed as case Goldstein motion, perform. summary judgment MacAlister did not On a however, non-moving party. we must view all favor inferences in occurred Further, disclosure Goldstein Miles’ them. to sell to agreed verbally the date he May after (He negotiate continued to & Kirk. Saiontz date.) Block this after 5-404(a)(l), charac- person’s of a “evidence Under Md. Rule purpose is not or trait of character admissible ter occasion on a conformity particular action in therewith proving or MacAlister about ...” to lie Goldstein willingness Miles’ however, admissible “to compensation, is employment and intent, of ... ... common proof such as purposes, show other or mistake or plan, knowledge, identity absence scheme v. Id. Inc. Baskin & Bagel Enterprises, accident.” also See (1983)(while Sears, 184, 203, 467 evidence Md.App. A.2d issue, to a is irrelevant transaction another transaction of a when is conduct defendant alleged fraud fraudulent admissible”).18 transaction similar view, jury allow facts outlined above would my his long-term that he needed retain infer that Miles knew firm to enable keep operating profitably, employees him to sell at “going to have business” asset retirement. in a engaged pattern could also that Miles jury infer *40 so, him do in matters lying to the Associates when suited to to of an employment acquisition equity their and pertaining them, although in the firm. This to pattern lying interest Deal, after could that he occurring support the inference represented. never to as he perform intended may support not an infer- The circumstances outlined above knew would not sell to Goldstein and ence that Miles he Rather, they may only MacAlister when he made Deal. might sell them if support thought an that he he to inference offer, get keep better and he wanted to his he did view, however, also options open. my In this lesser intent proffer, lying, Miles’ 18. The Associates also evidence of habitual others, clients, when Miles lied to over the numerous instances years. probably This is under dictates of evidence inadmissible 5-404(a)(l) Rule because it does not involve a transaction similar one at issue. 452
rises to the level of fraud he misrepresented because his level of commitment to the jury Deal.19 could infer that allowed and MacAlister to make career decisions Deal, on the do knowing they reliance would not so if they knew intent to the highest may sell bidder. He perpetuated that fraud when repeatedly assured them over years was “on.” the Deal
I distinguish this case from our decision in First Union v.
Steele
Systems Corp., Md.App.
Maryland differentiates between intentional breach and with good fraud reason. Contracts are often breached when companies change their business direction because com- petitive market force. Business persons entering contracts this. expect know
Id. First, A.2d 404. The distinctions are several. Union, promises negotiated First the bank reduced its and signed defining parties’ obligations written document each A expectations. party’s agreement execution a written forth its setting obligations by facilitates enforcement alleged 19. The cause of here unlike action the claim in Miller v. Industries, 324, 340-45, (1993), Md.App. Fairchild 629 A.2d predicated management made the local statements CEO and case, airplane employees. despite In manufacturer rumors plant major Boeing that local was about to lose its build contract 757's, management plant the CEO and assured them that the would not closing, “rosy" they major purchases its future could make Miller, losing jobs. fear of without we indicated that the statements if, made, only speakers would be "actionable at the time were *41 plant the enough knew that would be closed there not be or that would there, keep work to Id. at A.2d afloat.” 1293. But the Boeing executives had no control over the contrast, loss contract. In practice here completely the sale of his the was Associates within Miles' control. an to avoid side, at odds intent other therefore performance.20 contrast, promised agreement when Miles written here months, Deal, within 3 refused but parties made Notwithstanding that one. request execute
MacAlister’s that repeatedly the Associates refusal, thereafter assured he sixty, they he on,” age and that when reached the Deal “was Thus, that suggest firm.21 the circumstances would own the loyalty longevity the benefits sought retain in Associates, place but intended to himself from never to, damages up pay where had live he position to, loyalty. up promises inspired failure to live Goldstein, his prom- that because implied Miles’ statement $200,000 only verbal he would salary was guaranteed ise it, supports not discuss this inference. even First Union explicitly Second, speci- in contract the written not exclusive parties fied that the deal between the one, contemplated that the bank parties necessarily so that the the con- business to other vendors. To referring would be (so to the Associates that he would sell trary, promised purchase), with them the long lawyer participated as a third that he sell to possibility excluded the would promise and this including them. party another without Union, early repudiation by First there was no
Finally,
Indeed,
bank
to the
satis-
performed
apparent
the bank.
year
18 months
the three
parties
faction of both
at least
Steele,
contract,
55,785
approximate-
transactions to
referring
minimum
under the
guaranteed
times the
business
ly three
id. The
later found
contract. See
jury
what the to determined be its “best a term we held to be ambiguous. alleged fraud was predicated, large part, the bank’s failure to give plaintiff the more than business, fifty of its percent by and the a bank statement there, official that it so.22 never intended to do But the “best reasonably efforts” clause could interpreted require be to less fifty business, than percent of the bank’s had parties the never otherwise, discussed and Steele had never that asserted “best required efforts” than greater fifty percent until the filing Andrew, v. Sass 406, suit. Our decision in 152 Md.App. (2003), A.2d 247 also rested on the per- defendant’s partial formance under construction the contract. contrast, parties explicitly to discussed Miles’ sale
Associates, and MacAlister asked for promptly written reas steps surances of that performance. But Miles took no as to perform MacAlister. He negotiated never even with terms, MacAlister about purchase any or offered him terms at Further, all. that Miles had talking evidence been Kirk Saiontz & a merger years, about could interpreted be belie intent to sell the Associates when he made the Deal.23 asserts, in support summary
Miles his motion for judg- “[tjhere ment, that genuine no dispute April that by had Miles made a detailed offer to sell firm to Goldstein million.” Although supplies [Block] Miles no $1.75 types alleged representations 22. The other of fraud were verbal that contract, expressly parties were repre- contradicted written vague they sentations that were “so broad and are not actionable misrepresentations, category fall within puffing.” Id. at Here, grant A.2d 404. because the circuit court did not summary judgment theory misrepresentations on the were “puffing,” portion I do not this address of First Union. tracking regulatory developments 23. Nor does evidence of First Union’s governing forming legality compa- itsof its own settlement services Union, ny, support which we found insufficient First fraud in compare to Miles' & discussions Saiontz Kirk. A sale to Saiontz & Union, preclude Kirk would to the a sale Associates. First on the other hand, easily company could own expiration form its after the three-year Steele. contract with assertion, to Gold- may referring for this he record cite told Goldstein April admission that on stein’s million, plus 1.75 5% agreed pay if and Block he interest, accept pay- a hundred agree percent “will [purchase price] de- salary, making thus the entire ment this as “one us.” characterized ductible to could not but said negotiation phases,” LMiles’] vital informa- kept revising a deal consummate because *43 firm, which would necessitate profitability tion about the denied that Miles was generally also negotiations. further He deposition in willing to a deal. Goldstein testified consummate that, significant I sat and made a the fact that down “despite faith, Mr. good Mr. Miles negotiate effort to with Miles specifically and me firm Mr. Miles misled refused sell the negotiations parties.” his with me as far as other It what happened is not clear from the record 17, 1999, except that Goldstein said negotiations April after May Block a firm Miles that he and made offer 1999. also verbally agreed accept he point admitted that one $1.3 dollars, occurred, this million but it is not clear when further the record. muddying that Miles also sent Goldstein email
Goldstein admitted 1998, things, for certain castigating on him and December I they you “Let me know what decide. demanding [Also] you by, want Bruce no than 1 and me know later Feb[.] doing what ...” It is what with happened we are unclear deadline, respect February although parties to the that date. clearly negotiate continued after in the preceding paragraphs The evidence described three jury would a made a faith good allow to infer Miles effort obligation jury his But satisfy Goldstein. could that, infer while offer from equally seeking binding well Block, himself, binding Goldstein and without Miles was sim and Block as a tool to obtain a ply using negotiating Goldstein from higher price Saiontz & Kirk.24 Moreover, jury good Miles
24. could infer that made faith satisfy obligation if effort to his to MacAlister it found that Miles keep negotiations secret from MacAlister. intended to if about negotiations
Even the facts the 1999 undisputedly reflected that offered the deal to same Goldstein eventually Kirk, Block that entered Saiontz & which view, not,25 my we not affirm summary do should judgment on this basis. circuit court did its not rest decision on had obli- ground performed gation by $1.7, offering to sell to MacAlister 1) 2) shown; but rather damages because: there were no there was no evidence fraudulent intent. do not “We ordinarily to sustain summary judgment] by undertake [a court, ruling ground, another not ruled on trial if the as to trial ground alternative one which the court had discretion to deny summary judgment.” Geisz v. Greater Ctr., Baltimore Med. 313 Md. n. 545 A.2d (1988). This is not a case in which we should do so.
II.
Background:
Damages
Proof Of
From Fraud
of Appeals
Maryland
appellate
Court
reviewed
history regarding treatment of
awards in
ac-
damages
fraud
*44
tions,
Maryland
concluding
“flexibility theory”
follows the
Co.,
502,
of
Hinkle v.
damages. See
Rockville Motor
262 Md.
(1971)(“this
511,
“In it every the first seems that in case place, the defrauded plaintiff should be allowed to claim under the ‘out-of-pocket’ theory loss if prefers. place, plaintiff the second the should theory, be allowed choose the other and recover record, 25. As far I from the as can tell the actual contract between Miles and Saiontz & Kirk was not disclosed.
457 judge trial if the represented, as bargain of value the the moral that, probable of the in view considers his discretion the of of the definiteness of the defendant culpability the ascertainability represented and the representations for such value, one treatment.” appropriate the is case McCormick, T. 512, 42 Charles (quoting 278 A.2d Id. at (1935)). 122, § at 454 Damages, set rules that had been adopted four Appeals
The Court 582, 85 161 Or. Shirley, v. of Selman forth in the seminal case (1938), measure 384, guide proper 394 “as P.2d cases.” these damages recovery
“(1) with the party If content the defrauded lost, damages will actually the amount that he only rule; measured under to a
(2) also amounted representation If the fraudulent bargain be had for loss warranty, recovery may should promise a broken accompanied by fraud because alone; much as latter wrongdoer cost the so (3) proof are circumstances where the disclosed upon no the value virtually light as to cast vague court representations, to the property had conformed sustained; and the loss damages only will award equal (4) benefit-of-the-bargain ... damages where under certainty, that will be with sufficient rule proved are rule employed.”
Hinkle,
512,
recent
Although
262
cert. 1971. topic addressed since *45 damages” “flexible Maryland’s Associates contend
The damages by proof benefit-of-the-bargain rule allows of their (1) the Miles price promised the difference between showing (2) value, market to them and firm’s fair sell profits lost not being Associates owners of the Miles contends, firm in 1999 and thereafter. majority Miles holds, to any were not entitled benefit-of-the-bargain damages. reasons, two Miles asserts first of which the First, as majority adopts. the trial court and majority concluded, they Second, no proved “bargain.” claims benefit-of-the-bargain only rule is applicable when the given plaintiff defendant has a warranty or its equivalent. I address each these issues in turn.
III. Alleged Miles’ Promise To The Associates Was Suf- ficiently Qualify Bargain Definite To As A And
Support Benefit-Of-The-Bargain Damages contends, majority holds, and the that the Associates to benefit-of-the-bargain damages are entitled because the parties made a final agreement. majority never points terms, agreement the absence of on many including price, date sale, and the terms of financing purchase price, Miles’ such as interest rate. clearly
The Associates most answered this contention hearing court: before the circuit They
This isn’t a contract case. want it to [0]ur be.... Block, case is not the negotiations about between Bruce Scott Goldstein and is Steve Miles.... Our case about the repeated ... promise Mr. Miles made to MacAlis- Jim Goldstein, you ter and Scott shall own this firm a price below the market value I when retire. That’s it. about, your about,
It’s not to sign. does wife have It’s not years what are the payback, number what’s the interest that’s going accumulating the indebted- .... ness case is about that simple They Our promise.... Miles, Block, want to be based on what Mr. Mr. Mr. negotiated years That’s not what later. we’ve alleged____ The lawsuit about that which was promise made over and again.... over *46 the defrauded Rule affords Bargain Benefit
[T]he out-of-pocket recoup they’re when not the party right would they of what in the value the difference anything, for. In this paid have they would gotten have what instance, profits. that is lost not majority parties that the did
I with Miles and agree on financial in 1999 on the exact terms agreement reach final Goldstein, firm.26 buy would the Miles which the Associates on behalf MacAlister negotiating who was apparently no final terms were Block, that explicitly acknowledged and closer to the only “inching closer agreed, they that were Associates, against of this issue Resolution deal[.]”27 however, not their claim. does vitiate parties’ and the negotiations that occurred agreement purchase price, million was
tentative $1.3 claim viable not facts that made Associates’ were Rather, the Associ- judgment motion. summary the face a evi- summary judgment claim because their ates’ survives that, earlier, promised to sell them years dence value, on specified fair market terms. practice or below holds, not, as too majority was alleged promise This bargain, though for a even the exact be the basis indefinite fatal no was set. Nor was it interest purchase price not this financing. was set for take-back The heart of rate Miles’ would sell his firm to bargain was value, fair greater MacAlister for no than market that Miles them that would allow provide financing would terms revenues, firm payments be made from that the Associates payment, not a down and that Miles supply would have by "buy loosely, phrase 26. I use the as this is the term used firm" may parties. contemplated The actual transaction have been firms, purchase merger employment an of ihe stock or activities, etc., requiring advertising contract for Miles much like the & transaction entered into Miles with Saiontz Kirk. agreement $1.3 purchase 27. million was Because Miles' to the offer only days few or before the sale Saiontz made in June weeks Kirk, agreement & what on in not the Associates relied deciding to remain with the Miles firm. would continue the firm advertise on television after the sale. What was crucial for the Associates was that would able to acquire ownership in a hugely interest profitable firm, though even they did capital either the borrowing power purchase such a firm from someone else. I find analogous support my repre- views about Miles’ Family Corp. Michelfelder, sentations American Service v. *47 (8th 667, Cir.1992), Circuit,
968 F.2d in which the Eighth law, applying Iowa that a held fraudulent intention perform promised shop” “no clause in letter of intent supported benefit-of-the-bargain ease, In damages. (AFSC) American Family Corp. began Service negotiating with the to purchase defendants their child care business. When AFSC realized that the defendants were negotiating potential with another for a buyer, guarantee asked exclusive bargaining rights. The agreed they defendants “ would ‘not negotiate any other until buyer you have the opportunity complete your due diligence and a definitive ” agreement has been achieved.’ Id. at 668. This “no shop” clause was in a signed parties included letter intent by all on June 1989. AFSC,
Unbeknown to defendants the continued to simulta- neously negotiate with a party. third When AFSC and the deal, defendants were close to a abruptly the defendants “ informed longer AFSC were ‘no interested negotiate attempting sale of the assets child their ” later, care Id. A business.’ at 670. on August week signed the defendants contracts to sell their child care party. business to a third jury
The awarded damages against the defendants for fraud, in in profits the amount AFSC lost that it would have earned had the transaction gone through. There was evidence “paramount that the defendants’ concern” to sell their business of 1989. during summer id. at 672. The See Eighth Circuit this as “demonstrating] characterized evidence if dealt exclusively [the defendants] had with AFSC as they promised, AFSC would have bought [defendants’] this financially acquisi- from business and benefitted child care that the argued defendants appeal, Id. at 671. On tion.” was their plaintiffs could have recovered maximum that negotiating over the summer out-of-pocket expenses while 1989. “ contention, rejected ‘[t]he this because Eighth Circuit put rule is to the de- benefit-of-the-bargain
purpose if position ‘in the financial the fraudu- party frauded same ” (citations in fact true.’ Id. representations had been lent omitted). award, jury’s pointed court reinstating In “experienced nearly a testimony that AFSC would have expert worth inclusive of the transactions million increase net $3.5 at 672. costs.” Id. damage Family, benefit-of-the-bargain American of a definite notwithstanding the absence
award was sustained based purchase, upon terms purchase price any specific to sell agreement negotiate exclusively. promise Miles’ “no analogous shop” to the clause to the Associates certainly to offer the Family promised American in that he *48 Indeed, to retire. Miles’ firm to them when he decided than in American specific were more those representations on promised in that he to finance the terms Family venture all payments that would allow the Associates to make out down, no earnings, require money continue the firm’s of the firm. appearing in television advertisements behalf was not promise Because the on which the Associates relied million, breach of agreement Miles’ tentative sell $1.3 bargain damages would not include the difference between agreed million price price, million sale and the as the $1.3 $1.7 alternative, Associates, specific no contend. There was made by representations established Miles when he price practice. sell and Miles that he would them the Goldstein at a that he sell Although promised price would value, determining fair market was no method for below there Thus, fair be. price how much below market value the would size of although could not establish the Associates discount, purchase had the the firm for right least
its Johnson, fair market v. value. See Bohn 371 N.W.2d (N.D.1985)(intent to provide buyout than price less fair enforceable, market value is but fair will market value be used if plaintiff prove price cannot lesser and convincing clear evidence).
The lack of a definite discount does not mean there was no As the bargain. recognizes, Restatement bargain may [a] be concluded which leaves choice of be terms to made party one the other.... The more is, important the choice the more it is likely parties that the do not intend to be bound until is made. But choice subject even on such matters as price, party matter and one given often a wide choice. (Second) § Restatement Contracts 34 cmt. a. Given the repeatedly evidence that Miles invoked his promise sell the Associates, firm juror that, a reasonable could find despite Miles’ concerning “wide choice” size of dis- any count, was an there firm bargain enforceable to sell the to the Associates.
As in American Family, the absence of a stated price does Indeed, formation preclude of a contract. is common agreements to “fair business set pur market value” chase while price, providing determination of that value will made aby appraiser third party upon based future See, Inc., business conditions. e.g., Dairy v. King, Kraft, Inc. 1185-87 F.Supp. (D.Md.1987)(buy-back obligation in exclusive distributorship agreement was contract enforceable assets); to purchase company NBD Inc. v. Fed. Bancorp, Ins. Deposit Corp., F.Supp. 1122-23 (E.D.Mich.1986)(citing testimony by expert that it is appraiser “quite common” for parties friendly buy-out to business use Drever, a fair price); Stephenson market value v. 16 Cal.4th *49 1167, 764, (1997)(stock Cal.Rptr.2d 69 947 P.2d 1303-05 agreement value, purchase at fair setting price market to be agreed upon by parties appraiser, by determined was enforceable). Disputes price over calculation of the sale can business assets be resolved the fact-finder based on See, Bancorp, F.Supp. NBD testimony. e.g., expert 1122-23. Miles’ representations holds majority also because than intention to no more statements
“amounted way that the address- such not “communicated they were I expect performance.” justly expression [could] ee First, of whether it question disagree, for two reasons. on a rely to performance, expect was reasonable generally jury question. See employer’s representations, (1988)(in Connors, 312 Md. A.2d v. Weisman issues of whether de- misrepresentation, for negligent claim be acted representations his would fendant intended that on them justified relying upon, and whether defendant fact). questions were view, sufficient, in
Second, my was legally the evidence for the Associ- to conclude that intended jury allow the Miles for several on his reasons. rely representations, ates had told Deal to after MacAlister only offered the MacAlister Gordon, offer, and that him that had Feinblatt accepted compensation promise by and a cease an increase MacAlister to his verbal abuse was not induce sufficient Moreover, to MacAlis- with firm. Miles’ statements stay like, you” can’t without and the rein- operate ter “[w]e intent, of his as did Miles’ caveat forced the serious nature subject “all This approval.” that his offer was [Goldstein’s] that Miles intended signaled to both MacAlister seriously. Finally, par- representations to be treated as a mutual their conduct “deal” ties’ characterization A lawyer bound. suggested further intended from his boss. reasonably representations on these rely could “not majority’s just view that it is I with the disagree unreasonable, inconceivable, experienced lawyers but Like representations.” relied on such nebulous would have shoes, go who without children proverbial shoemaker’s verbal, defined, under- imperfectly lawyers rely upon often bosses, co-shareholders, their standings partners, to a reality reducing agreement is that verbal others. The *50 464
written document is difficult and time-consuming. my In estimation, it when comes writing down business under- firm, within a small standing lawyers no diligent are more than average the person. Although profits business in this was, indeed, firm very high, Moreover, were a small firm. parties were business corporate lawyers, accus- to, at, adept writing tomed buy-sell They agreements. personal injury attorneys, were trial in practice whose success quite rested on different skills.
Nor parties did the failure of to identify who would be co-purchaser support grant A summary judgment. jury might conclude that Miles’ representations that would Associates, sell to the provided lawyer another was a co- purchaser, promise included an implied that Miles would use reasonable standards in approving the co-purchaser selected by Indeed, the Associates. Goldstein testified his deposi- tion promised that Miles that he require would not that the co-purchaser must “financial bring resources” to the deal. Thus, competent who any attorney could with work support and MacAlister and help operations ongoing addition, satisfy the firm would the condition. there was Block acceptable evidence that as co-purchaser, and that Block was willing and able to enter transaction. Thus, jury could infer that the condition a co- regarding purchaser was satisfied the inclusion of Block.
IV. Benefit-Of-The-Bargain Damages Appropriate Was
Under These Circumstances
A. Benefit-Of-The-Bargain Damages Appropriate Is When
The Defendant’s Fraud Rendered Out-Of-Pocket
Damages Impossible Difficult Or To Prove Hinkle, a plaintiff may Under defrauded recover benefit-of- “ if the-bargain damages ‘case is an appropriate one for ” Hinkle, treatment.’ Md. at A.2d 122). McCormick, § Restatement Damages See also (quoting (1977 (Second) § h & Supp.2003)(“Besfaie- 549 cmt. Tatis “in case any ”)(benefit-of-the-bargain damages allowed ment in accor- by proof ... can be established which the measure certainty damages”). usual rules dance benefit-of-the case an one for appropriate I consider this *51 (1) damages proven such could be because bargain damages (2) allegedly the Associates certainty, with reasonable prove to position but not been injury, may have suffered reason, could profits As to the first lost out-of-pocket losses. an firm was sufficiency with because Miles be calculated earnings, with a track record of established business busi- had been largely operating because the Associates to Associ- years. According for several ness themselves which Miles evidence, only they service for needed ates’ advertising, things of the he the television one was continue represented that he would do. proving promised terms difficulty
The exact us under to the Associates should not deter by sale Miles wrongful conduct alleged these circumstances. Where Miles’ difficulty in the exact proving cause of the Associates’ should able to from the damages, profit amount of he not be so as the by proof precision, long such requiring fraud a reasonable inference. supports evidence position out-of-pocket were not in a prove The Associates Miles, because, may had been they they left damages than what only marginally greater same as or paid salaries the however, mean, they Miles. This does not they earned at prospect for the damages. They bargained not suffer did to make rights, which would allow them ownership future It is substantially employee. than a reasonable more salaried firm, that, they if they had worked another suppose ownership positions, would have had secure opportunities Gordon, gone if had Fein- MacAlister would have had he they not what would have prove blatt. The Associates could however, opportunities, if such pursued had other they earned They uncertain. contingent because that potential in much position prove were better what they lost having firm, interest in the ownership they which had managing operating been for a number of successfully (benefit § years. See Restatement 549 cmt. g bargain damages may be available dam- plaintiffs out-of-pocket when “just ages are not and satisfactory”).
B. Flexibility Damages Rule For Fraud Is Warranty To Not Limited Situations Maryland only contends that courts have allowed if benefit-of-the-bargain damages misrepresentation warranty, amounted to and that we should not extend to a non-warranty rule situation. Miles’ promises Because of a warranty, argues, were not in the Associ- nature “preferred” out-of-pocket damages, ates were limited to the I prove. which elected not have found no Although *52 Maryland applying benefit-of-the-bargain damages decisions case, a non-warranty any in fraud neither do I see intent on part the of to limit. Appeals impose Court such a Moreover, below, jurisdictions, I as set forth least five this I am seemingly majority, approach. taken aware jurisdiction only of holding benefit-of-the-bargain one damages involving “warranty are limited to cases of value.” Staley Taylor, Or.App. See v. 994 P.2d (2000). on Hinkle’s of “four from adoption relies the rules” Shirley,
the seminal case of v. 85 P.2d at which I Selman rules, forth in Section I. He of set views the second these that “if the also providing misrepresentation fraudulent to a had for of warranty, recovery may amounted loss the bargain accompanied by promise because fraud a broken alone,” should cost the as as as wrongdoer much the latter limiting benefit-of-the-bargain cases. damages warranty Both alleged repre- Selman Hinkle involved fraudulent buyer, of by goods sentations the seller the about the thus courts were goods, of the quality or those condition warranty. of a in the nature representations focused on i.e., rule, that a benefit-of-the-bargain The rationale wrongdoer cost as should fraud a broken plus promise alone, equally is howev- promise applicable, much a broken warranty. other than a er, something is promise when the (Second) not limit 549 does Torts section The Restatement It also fraud cases. damages warranty out-of-pocket rule, option “giving plaintiff follows the flexible in benefit-of-the-bargain or the rule out-of-pocket either the can case in which latter measure be established any of certainty usual rules dam- accordance with the proof phrases cmt. h. The Restatement § Restatement ages.” the rule as follows:
(1) misrepresentation of a fraudulent enti- recipient The against damages tled recover as an action deceit misrepresen- to him of which pecuniary maker the loss cause, a legal including tation is
(a) between the value of what has the difference purchase in the and its other price received transaction it; given value
(b) consequence as a pecuniary loss suffered otherwise recipient’s upon representation. reliance (2) recipient misrepresentation fraudulent in a of a business transaction is also entitled recover addition- give damages him of his al sufficient the benefit maker, proved damages if are contract with the these certainty. with reasonable added). § 549 (emphasis Notably,
Restatement Restate- transaction,” nothing is said to ment refers “business *53 benefit-of-the-bargain damages that are limited to suggest or with personalty realty warranty. sales of a explains A that dam- out-of-pocket comment subsection circumstances, often not ages many are sufficient in but are a “just the has busi- satisfactory” plaintiff and when entered ness transaction the defendant: has plaintiff bargain
When the made a with the defen- dant, ... situations arise in which the rules stated in (1) compensation Subsection ... do not just afford that is If satisfactory. the of what plaintiff value the has from fully equal price received the defendant is to the he paid has for it or other has parted value he with and he has consequential suffered no damages, may be unable to (1). at all the recover under rules stated Subsection He may something be acquired nevertheless left with under which, misrepre- the transaction because matter sented, may he does not want and cannot use. He opportunity acquiring the lost substitute the price same and because of his made commitments expenses variety incurred or for a of other reasons he may recovery find rescission of the transaction and price paid unsatisfactory the reme- insufficient dy. case, (1), In this under the stated in rules Subsection would all defrauding party escape liability. the added). Restatement § 549 cmt. g (emphasis Again, there is no suggestion that the business must transaction be sale a warranty. involves a floor approving covering recovery distributor’s lost
profits fraudulently when a manufacturer represented have an distributorship distributor would exclusive for the state, the Restatement Supreme Court Iowa relied its explain holding: losses, plaintiff
When the has no out-of-pocket benefit- must of-the-bargain apply, rule otherwise defendant has defrauding successfully accomplished his fraud and is still an action in immune from deceit.... justice This not between parties. admonitory function of law not requires escape defendant liability justifies allowing plaintiff benefit of bargain. (Second) (1977). i, § 549 cmt. Restatement Torts at 115 Thus, say defendant will defrauding heard misrepresentations any its intentional were not the cause of
469 out was not plaintiff plaintiff to the because the damages quotation in the above public policy stated anything. find causal will allow factfinder to from the Restatement misrepresentations injury between connection it to the represented to what has holding the defendant reason, benefit-of-the-bargain rule plaintiff. For this inextricably analysis the causation are intertwined. Distrib., Industries, Inc., 585 Inc. v. Domco Home Midwest 735, (Iowa 1998). 739-40 N.W.2d jurisdictions
At
have allowed benefit-of-the-bar
least five
misrepresenta
in which the fraudulent
damages in cases
gain
968
warranty.
Family,
tion
not involve a
See American
did
law,
jury’s
Iowa
court
benefit-of-
(applying
upheld
F.2d at 671
award for
the-bargain damages
misrepresentations
fraudulent
negotiating
regarding
bargain exclusively
purchase
intent
v.
agreement
plaintiffs); Laney
Equity
American
Inv.
1347,
Co.,
(M.D.Fla.2003)(ap
243
1355-56
F.Supp.2d
Ins.
Life
law,
court
was entitled
recover
plying
plaintiff
Florida
held
damages
churning
for
benefit-of-the-bargain
brokers’ fraud
Distrib., Inc.,
account);
Home
585
at 739-42
Midwest
N.W.2d
(Iowa 1998)(distributor
benefit-of-the-bargain
dam
entitled
ages
fraudulently
consisting
profits
lost
when manufacturer
represented that distributor would have exclusive distributor
25,
state);
Aon
354
ship
McConkey
Corp.,
N.J.Super.
for
v.
denied,
804 A.2d
(App.Div.2002),
cert.
N.J.
(2003)(upholding benefit-of-bargain damages
It impossible the Associates to seek rescission recovery contract and price paid, price because the Miles, allegedly paid years of dedicated service to which above, cannot be recovered. As I indicated the Associates allegedly lost opportunity acquire ownership interest *55 in profitable through another firm years because of service on the Associates’ reliance Miles’ misrepresentations. sum, Hinkle,
In Appeals the Court in adopting the flexibility case, it to applying warranty rule nothing did suggest applied that it could not be in other contexts. The Restatement listed cases above have applied rule in a broad spectrum eases the warranty outside context. The rationale for the is equally rule in these applicable other I contexts. consider this rationale per- and these authorities suasive, and hold therefore would that a misrepre- fraudulent contract, sentation of a party’s perform intent including here, alleged one of the sort can give rise to benefit-of-the- bargain damages.
y. Benefit-Of-The-Bargain Damages Be Can Recovered Misrepresentation Negligent Actions For trial granted court summary on the Associ- judgment ates’ counts for negligent misrepresentation and for fraudulent misrepresentation for the same reason: could not rely bargain damages.28 beneflt-of-the We previously plaintiff held that a negligent misrepresentation case also has the out-of-pocket choice dam- benefit-of-the-bargain ages. Ingrao, See Ward Dev. v. Md.App. Co. 63 493 (1985)(“We perceive A.2d no why reason flexible th[e] approach should not be as applied negligent cases of well as Thus, misrepresentation”). fraudulent I would hold trial court in granting summary judgment erred on the negli- hearing summary 28. At the judgment, second on the motion for when added failure court to show fraudulent intent an alternative count, ground for any its decision on the fraud it did not mention ground negligent misrepresentation alternative for the count. set forth for the same reasons count misrepresentation gent trial whether I do not address sections. previous negligent on the summary judgment granted court could have for other reasons. count misrepresentation
Conclusion above, the circuit I reverse stated would For reasons Miles, in favor summary judgment granting court’s order opin- with this consistent proceedings for further and remand ion. A.2d
PRINCE GEORGE'S COUNTY
v. TRUST. GOVERNMENT INSURANCE LOCAL Term, Sept. No. 2003. Special Appeals Maryland.
Court 8, 2004.
Oct.