Justia Business Law Opinion SummariesArticles Posted in Maryland Court of Appeals
Plank v. Cherneski
The Court of Appeals answered certified questions asking whether Maryland recognizes an independent cause of action for breach of fiduciary duty, holding that this Court recognizes an independent cause of action for breach of fiduciary duty and outlining its scope and parameters.The Court of Special appeals filed a certification pursuant to Maryland Rule 8-304 requesting that the Court of Appeals provide guidance concerning whether an independent cause of action exists for breach of fiduciary duty. The Court of Appeals answered (1) Maryland does recognize such a cause of action, and to establish a breach of fiduciary duty a plaintiff must demonstrate the existence of a fiduciary relationship, breach of the duty owed by the fiduciary to the beneficiary, and harm to the beneficiary; and (2) a court should consider the nature of the fiduciary relationship and possible remedies afforded for a breach on a case by case basis, and the remedy will depend upon the specific law applicable to the specific fiduciary relationship at issue. View "Plank v. Cherneski" on Justia Law
7222 Ambassador Road, LLC v. National Center on Institutions & Alternatives, Inc.
The Court of Appeals dismissed this appeal concerning compliance with the law governing Maryland LLCs, holding that this appeal was not properly before the Court.Petitioner 7222 Ambassador Road, LLC initiated this action against Respondent National Center for Institutions and Alternatives, Inc. Respondent prevailed in the circuit court and the court of special appeals. Before Petitioner filed a petition for certiorari with the Court of Appeals it forfeited its right to do business in Maryland and failed to reverse that forfeiture. Respondent filed a motion to dismiss the appeal based on the forfeiture. The Court of Appeals granted the motion to dismiss, holding that, as a result of Petitioner's forfeiture of its right to do business in Maryland, it lost the ability to prosecute this action during the period of forfeiture, including the filing of a timely petition for a writ of certiorari. View "7222 Ambassador Road, LLC v. National Center on Institutions & Alternatives, Inc." on Justia Law
Plank v. Cherneski
The Court of Appeals held that an independent cause of action exists for breach of fiduciary duty and that, to establish a breach of fiduciary duty, a plaintiff must demonstrate the existence of a fiduciary relationship, breach of the duty owed by the fiduciary to the beneficiary, and harm to the beneficiary.William Plank and Sanford Fisher, both minority members of Trusox, LLC, filed an action alleging direct and derivative claims against James Cherneski, Trusox's president and majority member. Among other relief, Plank and Fischer (together, Minority Members), sought an order dissolving the LLC or appointing a receiver to take over its management. The circuit court entered judgment in favor of Cherneski on most of the Minority Members' claims and in favor of the Minority Members on certain other claims and awarded attorneys' fees in favor of Cherneski and Trusox. The Court of Appeals affirmed, holding that the circuit court (1) did not err in entering judgment in favor of Cherneski on the breach of fiduciary duty count; (2) did not err in interpreting the contractual language of the fee-shifting provision and concluding that Cherneski and Trusox were the substantially prevailing parties; and (3) did not abuse its discretion by awarding Cherneski and Trusox all of their attorneys' fees. View "Plank v. Cherneski" on Justia Law
MAS Associates, LLC v. Korotki
The Supreme Judicial Court reversed the determination of the trial court that the parties in this case intended to form a general partnership, holding that the evidence could not sustain the simultaneous intent to form both an LLC and a partnership and that Respondent failed to provide competent material evidence demonstrating intent to form a partnership.Respondent brought this action claiming breach of contract and requesting a declaratory judgment asking for a determination of "the buyout price of his partnership interest." The trial court concluded that there was no enforceable written agreement but that that a partnership existed between the parties. The court then awarded Respondent more than $1 million. The Court of Special Appeals affirmed. The Court of Appeals reversed, holding that where the parties were also actively engaged in the process of negotiating to become members of an LLC, there was insufficient evidence of the parties' intent to form a partnership. View "MAS Associates, LLC v. Korotki" on Justia Law
Hanover Investments, Inc. v. Volkman
When P. Thomas Hoff, the founder of One Call Concepts, Inc. and Hanover Investments, Inc. (Hanover), terminated the employment of Susan Volkman and redeemed her shares of Hanover, Hoff and others brought this declaratory judgment action against Volkman in the circuit court to defend the procedures it followed to redeem her stock. At the time the declaratory judgment action was filed, Volkman had already filed, in a Minnesota state court, a breach of contract action against Hanover concerning the same issue. The circuit court refused to dismiss or stay the action in deference to the pending Minnesota action. The court then issued a declaratory judgment in favor of Hanover. The court of special appeals ruled that there were not unusual and compelling circumstances justifying the circuit court’s issuance of a declaratory judgment to resolve the same question at issue in the pending Minnesota litigation. The Court of Appeals affirmed, holding that this action did not create unusual and compelling circumstances that would justify an exception to the principle that a court should not entertain a declaratory judgment action when there was a pending lawsuit involving the same issues. View "Hanover Investments, Inc. v. Volkman" on Justia Law
Oliveira v. Sugarman
This suit arose from the actions of iStar’s Board of Directors in modifying performance-based executive compensation awards, which were granted in the form of stock. Petitioners filed suit against current and former members of iStar’s Board and senior management, alleging breach of fiduciary duty, unjust enrichment, waste of corporate assets, breach of contract, and promissory estoppel. The circuit court dismissed all of Petitioners’ claims for failure to state a claim upon which relief can be granted. The Court of Special Appeals affirmed. The Court of Appeals affirmed, holding (1) Petitioners’ claims were properly dismissed by the circuit court for failure to overcome the business judgment rule presumption; and (2) furthermore, Petitioners’ claims for breach of contract and promissory estoppel are derivative claims that are subject to the business judgment rule. View "Oliveira v. Sugarman" on Justia Law
Comm’r of Fin. Regulation v. Brown, Brown & Brown, P.C.
Brown, Brown & Brown, P.C. (BB&B), a Virginia law firm, entered into more than fifty agreements over a nine-month period with Maryland homeowners facing foreclosure. Under the agreements, in return for an advance payment of money, BB&B promised to attempt to renegotiate the mortgage loan so that the homeowner could avoid foreclosure. Ultimately, BB&B did not obtain loan modifications for any of the homeowners. The Commissioner of Financial Regulation (Commissioner) concluded that BB&B had violated the Maryland Credit Services Businesses Act (MCSBA) and directed BB&B to pay treble damages to the Maryland homeowners with whom they had agreements. The circuit court reversed, concluding that the MCSBA did not apply to BB&B because the agreements at issue were for legal services rather than credit services. The Court of Appeals reversed, holding (1) BB&B’s activities fell within the definition of “credit services business” under the MCSBA; and (2) BB&B did not qualify for the attorney exemption in the MCSBA. View "Comm'r of Fin. Regulation v. Brown, Brown & Brown, P.C." on Justia Law
CR-RSC Tower I, LLC v. RSC Tower I, LLC
The owners of two properties leased them to developer-tenants for the purpose of building an apartment building on each. As construction was beginning, the landlords breached the leases by refusing to provide estoppel certificates and contesting the tenants' building permits. The landlords' breach prevented the tenants from obtaining financing, which ended the development project. The tenants sued for lost profits. Before trial, the circuit court ruled against the landlords on several motions, holding in part (1) the landlords could not introduce evidence of the 2008 crash in the real estate market to show that the tenants would not have made profits, and (2) the tenants could introduce evidence of the landlords' reasons for breaching, including communications with their former counsel. The jury awarded the tenants over $36 million in damages, holding the landlords jointly and severally liable. The court of special appeals held the landlords could not be held jointly and severally liable but otherwise affirmed. The Court of Appeals affirmed, holding (1) the trial court did nor err in excluding all evidence of post-breach market data in measuring damages; and (2) the landlord waived the attorney-client privilege as to communications relevant to the subject matter of the claim of bad faith. View "CR-RSC Tower I, LLC v. RSC Tower I, LLC" on Justia Law
Gomez v. Jackson Hewitt, Inc.
At issue in this appeal was whether the Maryland Credit Services Businesses Act (CSBA) applies to a tax preparer who receives payment from a lending bank for facilitating a consumer's obtention of a refund anticipation loan (RAL) where the tax preparer receives no direct payment from the consumer for this service. In this case, the circuit court dismissed Consumer's CSBA claim for failure to state a claim, concluding that the General Assembly enacted the CSBA to regulate credit repair agencies and not RAL facilitators. The court of special appeals affirmed. The Supreme Court affirmed, holding (1) the plain language of the CSBA most logically is understood as reflecting the legislative intent that the "payment of money or other valuable consideration" in return for credit services flow directly from the consumer to the credit service business; and (2) therefore, under the CSBA, Tax Preparer in this case was not a "credit services business" nor a "consumer"; and (3) accordingly, the CSBA did not apply in this case. View "Gomez v. Jackson Hewitt, Inc." on Justia Law
Boland v. Boland Trane Assocs.
These two consolidated appeals involved two lawsuits, a derivative claim and a direct shareholder action, both arising from a series of stock transactions in two family corporations owned primarily by eight siblings. After the death of one of the sisters, the corporations attempted to repurchase her stock pursuant to the terms of a stock purchase agreement. The sister's estate refused. The corporations filed a declaratory judgment action, seeking enforcement of the agreement. Meanwhile, two siblings, aggrieved by an earlier stock transaction, filed a derivative action, alleging self-dealing and breach of fiduciary duty. The circuit court (1) granted summary judgment in favor of the corporations on the derivative action after deferring to the judgment of a special litigation committee (SLC); and (2) granted summary judgment to the corporation in the declaratory judgment proceeding. The Supreme Court (1) reversed the circuit court's judgment in the derivative action, holding that the court made an inadequate inquiry into the SLC's independence and the reasonableness of its procedures; and (2) reversed in part the circuit court's grant of summary judgment in the declaratory judgment action, holding that the circuit court erroneously applied res judicata to the issue.