Filed: July 29, 2022
Opinion: Michael
W. Reed
Holding:
The trial court erred in finding that there was no
enforceable contract because there was insufficient consideration, as the
appellant might recover under his claim for detrimental reliance depending on
the version of events found credible. The trial court also erred in finding
appellee did not breach his fiduciary duty to appellant because he was not
appellant’s exclusive agent for the purpose of claiming the horse named Hydra,
as appellee was appellant’s agent, owed appellant a fiduciary duty, and could not
serve as agency for more than one principal who was seeking to purchase the
same horse. Finally, the court incorrectly concluded that there was no factual
basis or law that required it to address the legal theory of fraud. The Special
Court of Appeals reversed and remanded for a new trial.
Facts:
Mr. John Robb (“Mr. Robb” or “Appellee”) is a horse trainer
who owns his own stable, and has served as a horse trainer for Mr. Herman
Braude (“Mr. Braude” or “Appellant”), a horse enthusiast and attorney, for more
than 30 years. The dispute in this case centers on whether there was an
enforceable oral agreement between Mr. Braude and Mr. Robb that Mr. Robb would
claim for Mr. Braude a horse named Hydra during a race on January 4, 2020, at
the Laurel Park Racetrack. According to Mr. Braude, Mr. Robb assured him
several times that he would claim the horse. According to Mr. Robb, he had
advised Mr. Braude that he would not claim the horse for him.
On January 2, 2020, Mr. Braude reviewed the advance race
sheet for the Laurel Park Racetrack and became interested in Hydra, a
one-year-old race horse racing two days from then for the claiming price of $25,000.
A “claiming race” is one in which all horses racing are for sale at the same
price, and one cannot physically examine a horse prior to the race. A horse is
“claimed” by dropping a claim slip with the name of the horse, claimant,
trainer, and the signature of the claimant into a lock box located at the
Racing Office at least ten minutes before the post time for the race. Many
claims are made in the minutes prior to the race when the horse is brought into
the paddock area where a person can visually observe the condition of the
horse. Mr. Robb had claimed at least 25 horses on behalf of Mr. Braude over the
years.
Mr. Braude called Mr. Robb and asked him to submit a claim
slip for Hydra before the race, and Mr. Braude asked his legal secretary, Ms.
Dodd, to make formal arrangements with Mr. Robb to claim the horse. Mr. Robb
texted Ms. Dodd that Mr. Braude needed to fill out a 2020 Authorized Agent
form, since it was a new year. Mr. Robb and Ms. Dodd also communicated
regarding wiring $25,000 from Mr. Braude’s personal bank account into his
racing account at the Laurel Park Racetrack. On January 4, the day of the race,
Mr. Braude filed the Authorized Agent form and added funds to his racing
account to cover state taxes.
Mr. Braude met Mr. Robb in the paddock area to watch another
horse owned by Mr. Braude and trained by Mr. Robb race. Mr. Braude informed Mr.
Robb that he had $26,500 in his racing account and to meet him before Hydra’s
race so they could jointly look at Hydra. Mr. Robb said he had not yet dropped
a claim slip for Hydra, but he would. Video evidence shows Mr. Robb speaking to
a man later identified as Mr. Eugene Gould, Jr. The parties provided
conflicting testimony regarding their conversations about Mr. Robb dropping a
claim slip on Mr. Braude’s behalf.
After the race, Mr. Robb told Mr. Braude there had been
multiple claimants for Hydra and someone else had won. Mr. Braude later saw a
report listing Mr. Gould as Hydra’s new owner and Mr. Robb as the new trainer. Mr.
Braude fired Mr. Robb, and withdrew him as his authorized agent the following
day.
On September 15, 2020, Mr. Braude filed a complaint in the
Circuit Court for Montgomery County against Mr. Robb, alleging, among other
things, breach of contract, breach of fiduciary duty, and fraud. After a bench
trial, the circuit court denied Mr. Braude’s complaint for breach of contract
and breach of fiduciary duty, but did not address the fraud count.
Analysis:
The court reviewed the bench trial decision, viewing the evidence in the light most favorable to the party who prevailed at trial, but reviewing the trial court’s legal findings de novo.
(1) The trial court in considering the breach of contract claim failed to make a credibility determination and determine whether detrimental reliance occurred.
Where a contact lacks formal consideration, a formal
contract may nevertheless exist by virtue of the doctrine of detrimental
reliance. The trial court found no enforceable contract because there was a
lack of consideration; however, it failed to make any findings as to which
version of events it believed. If Mr. Braude’s version of events were found
credible and the court found that he had relied to his detriment on Mr. Robb’s
promise to drop a claim for him, Mr. Braude might recover under his claim for
detrimental reliance.
The trial court found other problems with the parties’ alleged contract, including that too much time had elapsed between the offer and acceptance, and that Mr. Braude failed to mitigate his injury because he did not put down his own claim and he chose not to claim Hydra in her next six claim races. The Court of Special Appeals finds these are not failures to contract in this context. If Mr. Braude’s version of events were found credible, there was offer and acceptance. Furthermore, under the theory of detrimental reliance, Mr. Braude was under no duty to drop a claim slip himself, as he had relied on Mr. Robb to do so for 30 years and was not in the physical condition to retrieve the horse himself. The Court directs the trial court to make findings of fact and a credibility assessment, and then conclusions of law as to whether there was a breach of contract.
(2) The trial court erred in denying the breach of fiduciary count, as a non-exclusive agent could not serve as an agent for more than one principal who sought to purchase the same horse.
Mr. Braude argues that the trial court erred in rejecting his
breach of fiduciary duty count, on the ground that Mr. Robb did not owe him a
fiduciary duty because Mr. Robb was not Mr. Braude’s exclusive agent for the purpose
of claiming Hydra. The Court considers the duties of an agent to a principal,
including the duty to “act solely for the benefit of the principal in all
matters connected with his agency,” the duty to “avoid any conflict between his
or her self-interest and that of the principal,” and the duty to “‘make full
disclosure of all known information that is significant and material to the
affairs’ of the fiduciary relationship.” Green
v. H & R Block Inc., 355 Md. 488, 517–18 (1999) (citing RESTATEMENT
(SECOND) OF AGENCY § 387 (1958); Ins. Co.
of N. Am. v. Miller, 362 Md. 361, 380 (2001); Impala Platinum v. Impala Sales, 283 Md. 296, 324 (1978) (quoting Herring v. Offutt, 266 Md. 593, 597
(1972)).
The Court found Mr. Robb was Mr. Braude’s agent and owed him a fiduciary duty. Due to the conflicting testimony about whether Mr. Robb told Mr. Braude he would claim Hydra for him, the Court directs the trial court upon remand to make findings of fact and a credibility assessment, and then conclusions based on the applicable law as to whether there was a breach of duty.
(3) The trial court incorrectly concluded there was no factual basis or law that required it to address the legal theory of fraud.
Mr. Braude argues that the trial court erred when it failed
to address his fraud count. Prior to addressing what error if any was made by
the trial court, the Court holds that the trial court addressed all of the
claims presented to it by the Appellant, including the fraud claim. The trial
court disposed of the claim, even though it did not address each of the legal
theories that Mr. Braude presented to support his claim: breach of contract,
breach of fiduciary duty, and fraud. The trial court incorrectly concluded that
there was no factual basis or law that required it to address the legal theory
of fraud, therefore the Court remands for retrial on the issue of fraud.
The full opinion is available here.
