Saturday, August 29, 2009

Crescent City Estates, LLC v. Bank of America, NA (Maryland U.S.D.C.)

Filed August 13, 2009
Opinion by Judge Catherine C. Blake

Held: Under the Maryland Uniform Commercial Code (the "Code"), the term "forgery" includes signatures that are unauthorized in addition to signatures that are fake.

Facts: In a suit for statutory conversion under section 3-420 of the Code, the signature on a draft was the real signature of a person who lacked authority to sign on behalf of the plaintiff payee. The defendant raised a comparative negligence defense under section 3-406 of the Code. The defense is viable only in circumstances where a claim is based upon a "forged" signature. The plaintiff countered that because the signature was the genuine signature of the signor, the defense was not available.

Analysis: The Court examined the history of the term "forgery" under Maryland law. Noting Maryland's traditionally broad treatment of the term, it held that the term "forgery" encompasses both fake signatures and unauthorized signatures. Because the signature at issue was unauthorized, the comparative negligence defense was available.

The full opinion is available in PDF.

Thursday, August 27, 2009

Fischer v. Fischer (Cir. Ct. Mont. Cnty)

Filed May 21, 2009.
Opinion by Judge Mary Beth McCormick.

Held: Unnamed co-owner of a business was entitled to one half of the net proceeds from the sale of the business, despite the lack of agreement or "paper trail" evidencing ownership, because an implied-in-fact contract existed between the co-owners.

Facts: A father and son created a business based upon the son's business plan to create coin changing machines for retail and grocery stores. The son's name was kept off of all documents to shield him and the business from his creditors and the bankruptcy trustee. Upon a sale of the business, the son sought one half of the proceeds of sale as a co-owner.

The Court found it to be clear that the son "did a great deal of the work necessary to start up" the business. The son developed the software that allowed the business to be run through a telephone or computer, which was instrumental to the company's profitability. The buyer of the company, a competitor, did not have this technology. The son also found customers, conducted mass mailings and ran the day-to-day workings of the business. In summary, "his efforts were relentless." The Court also noted the father's e-mails, which demonstrated the "actual intent behind the ownership of the company."

The full opinion is available in PDF.

Monday, August 3, 2009

Glynn v. EDO Corp. (Maryland U.S.D.C.)

Opinion by Judge J. Frederick Motz
Filed July 23, 2009

Facts: Glynn sold assets of his company to EDO and signed a non-disclosure and confidentiality agreement and restrictive covenants. He went to work for EDO and worked with one James Martin. EDO ultimately discharged both Glynn and Martin who formed companies that began to compete against EDO.

Glynn brought this action against EDO alleging retaliation in violation of the False Claims Act, 31 U.S.C. § 3730 et seq., and wrongful termination. EDO filed counterclaims against Glynn and his wholly-owned LLC asserting numerous state law causes of action arising from Glynn’s alleged actions during and after his employment with EDO's corporate predecessor, including breach of contract, breach of fiduciary duty, misappropriation of trade secrets, conversion, defamation, tortious interference with advantageous relations, unjust enrichment, and civil conspiracy. While styled as a "cross-claim," EDO asserted similar claims against Martin.

Martin was not a resident of Maryland. He was served while in Maryland to file, pro se, a request for an extension of time to challenge EDO's assertion of the Court's ability to exercise personal jurisdiction over him.


1. Claim for conversion based upon alleged conversion “proprietary documents, employee information, technology design and schematics, contact lists, vendor and pricing information, and other trade secrets and non-trade secret proprietary and confidential information” are based on the misappropriation of EDO's information. Hence, such claims are subject to dismissal because such claims are preempted by the New Hampshire Uniform Trade Secrets Act (“NHUTSA”). Claims for conversion of physical property such as a desk or a chair is not preempted.

2. A claim for conversion by spending company time on matters for the company's competitors is also subject to dismissal because an employee's conduct on company time is not in the nature of a property or right which may be the subject of conversion.

3. EDO asserted that the alleged wrongful acts of Glynn and his company allowed them to “gain a head start” in developing and producing products, resulted in benefits such as profits, earnings, patent royalties, and commissions. Thus, EDO made a claim for unjust enrichment. Judge Motz denied the motion to dismiss of the unjust enrichment claim, holding that it was “premised on wrongdoing over and above” the misappropriation or misuse of EDO's information.

4. The Court denied the motion to dismiss claims of civil conspiracy because the allegations that Glynn et al. agreed and conspired to “misappropriate, defraud, and convert [EDO]’s proprietary and confidential information and trade secrets” and “unlawfully commit unfair competition and interference with [EDO]'s contractual and prospective business relationships” was sufficient to state a claim “where the elements of the claim require[d] some allegation or factual showing in addition to that which [formed] the basis for [the] claim of misappropriation of a trade secret.”

5. As to Martin, there were insufficient facts upon which to assert either general or long-arm jurisdiction. Martin's appearance in Maryland to request an extension of time to raise the jurisdictional defense does not constitute an implied waiver of the defense.

The opinion has been recommended for publication and the full opinion is available in PDF.