Filed: January 25, 2010
Per curiam opinion
Held: Affirming the district court’s setting aside of an arbitration award in which the arbitrator ignored critical language in an applicable collective bargaining agreement (CBA), the Court held that courts are bound to set aside awards when an arbitrator exceeds the scope of his authority and the express provisions in the parties' agreement.
Facts: Verizon and a union disputed whether a local letter agreement was superseded by a renegotiation of the parties' CBA. The dispute, which concerned what level of employees would perform certain tasks, was submitted to arbitration. The arbitrator found that the letter agreement was not superseded by the new CBA by virtue of a provision which stated that all local agreements that were valid and enforceable under the previous CBA would continue in effect for the life of the new CBA. Ignoring a negotiated letter agreement that was incorporated into the new CBA and that expressly addressed the issue, the arbitrator ruled in favor of the union.
Analysis: The governing documents were not disputed. As such, the arbitrator was bound to consider and apply the relevant contractual provisions defining the duties of the employees. Under the renegotiated CBA, and a letter agreement that was specifically incorporated into the new CBA, the parties explicitly agreed concerning assignment of the tasks. In the arbitrator’s decision, he did not acknowledge the existence of that agreement. The Court set aside the arbritrator’s award and concluded that the award was beyond the scope of the arbitrator’s authority because he “ignored” “critical language in a Collective Bargaining Agreement” and “introduce[d] some of his own brand of industrial justice.”
The full opinion is available in PDF.
Friday, January 29, 2010
Davis v. The Terminix International Co., LLP (Maryland U.S.D.C.)
Filed: January 27, 2010
Opinion by Judge Frederick Motz
Held:
1. Purchaser of all of the assets of a business is not liable for liabilities arising prior to the date of purchase unless it expressly assumes those liabilities.
2. The Maryland Bulk Transfers Act, Title 6 of the Maryland Commercial Law Article, does not subject bulk transferees to claims for personal injury or property damage caused by the negligence of the transferor.
Facts and Analysis: The Plaintiffs’ asserted claims for property damage and personal injury arising from a pest control application at their home on August 11, 2006. The application was performed by Safeguard Pest control, not by The Terminix International Co., LLP. Thereafter, Terminix purchased Safeguard’s assets. The Asset Purchase Agreement obligated Terminix to continue to perform services at the accounts that were acquired from Safeguard. However, Terminix did not assume Safeguard’s liabilities in the Asset Purchase Agreement. Indeed, the Asset Purchase Agreement expressly excluded Terminix’s assumption of any Safeguard liability arising prior to the Agreement’s closing date. Thus, the Plaintiffs have no claim against Terminix under the Agreement.
The Plaintiffs also raised a claim under the Bulk Transfers Act. Citing Fico, Inc. v. Ghingher, 287 Md. 150 (1980), and Chromacolour Labs, Inc. v. Snider Bros. Prop. Mgmt., 66 Md. App. 320 (1986). The Court held that the Bulk Transfers Act was designed to protect a merchant’s unsecured creditors from his disposition of inventory outside the ordinary course of business, not to subject bulk transferees to claims for personal injury or property damage caused by the negligence of the transferor.
The opinion is available in PDF.
Opinion by Judge Frederick Motz
Held:
1. Purchaser of all of the assets of a business is not liable for liabilities arising prior to the date of purchase unless it expressly assumes those liabilities.
2. The Maryland Bulk Transfers Act, Title 6 of the Maryland Commercial Law Article, does not subject bulk transferees to claims for personal injury or property damage caused by the negligence of the transferor.
Facts and Analysis: The Plaintiffs’ asserted claims for property damage and personal injury arising from a pest control application at their home on August 11, 2006. The application was performed by Safeguard Pest control, not by The Terminix International Co., LLP. Thereafter, Terminix purchased Safeguard’s assets. The Asset Purchase Agreement obligated Terminix to continue to perform services at the accounts that were acquired from Safeguard. However, Terminix did not assume Safeguard’s liabilities in the Asset Purchase Agreement. Indeed, the Asset Purchase Agreement expressly excluded Terminix’s assumption of any Safeguard liability arising prior to the Agreement’s closing date. Thus, the Plaintiffs have no claim against Terminix under the Agreement.
The Plaintiffs also raised a claim under the Bulk Transfers Act. Citing Fico, Inc. v. Ghingher, 287 Md. 150 (1980), and Chromacolour Labs, Inc. v. Snider Bros. Prop. Mgmt., 66 Md. App. 320 (1986). The Court held that the Bulk Transfers Act was designed to protect a merchant’s unsecured creditors from his disposition of inventory outside the ordinary course of business, not to subject bulk transferees to claims for personal injury or property damage caused by the negligence of the transferor.
The opinion is available in PDF.
Freedman v. Comcast Corporation (Ct. of Special Appeals)
Filed: January 28, 2010.
Opinion by Judge J. Matricciani.
Held:
1. Defendant's (a) filing of a motion for summary judgment that sought a judicial determination on the merits of the action, (b) request for the court to instruct the arbitrator to hear plaintiff's claims on an individual basis, and (c) attempt to remove to federal court did not constitute a waiver of defendant's right to compel arbitration of claim.
2. The presence of a meaningful choice to enter into an arbitration provision precludes the need for a court to analyze whether an arbitration provision is a contract of adhesion in order to determine whether the provision is procedurally unconscionable.
Facts: Plaintiff claimed defendant violated the 1997 Maryland Wiretapping and Electronic Surveillance Act, alleging the various phone calls he made were recorded without warning. After several pleadings, the Circuit Court denied defendant's motion to dismiss but granted its motion to compel arbitration. Plaintiff appealed the Circuit Court's decision to compel arbitration.
On appeal, plaintiff challenged the validity of the arbitration provision, arguing waiver and unconscionability, among other theories. The Court of Special Appeals denied the appeal after construing the plain terms of the arbitration provision.
Analysis:
1. Waiver.
The plaintiff contended the defendant waived its right to arbitration because defendant (a) filed an alternative motion for summary judgment in conjunction with one of its motions to dismiss, (b) requested the court instruct the arbitrator to hear plaintiff's claim on only an individual basis, and (c) sought to remove the case to federal court.
The Court recited prior cases regarding waiver, stating "the intention to waive must be clearly established and will not be inferred from equivocal acts or language . . . Thus, waiver is a question of intent that ordinarily turns on the factual circumstances of each case."
The Court found plaintiff relied "on a misstatement of federal case law" to argue that a party filing a motion for summary judgment, which seeks judicial determination on the merits of the action, has waived the right to arbitration. Rather, the Court noted that a motion for summary judgment could waive arbitration if it approached a "voluminously documented defense." Here, defendant's motion to dismiss relied on a single document outside the pleadings, a Maryland Public Service Commission certificate, to argue defendant was exempted by the statute that gave rise to plaintiff's claims. As the motion was limited to a procedural flaw, the Court did not find an effective waiver.
The Court found one of defendant's motions, which argued plaintiff was barred from arbitrating his claims on a class basis, was not a waiver. Instead, the motion was a reaffirmation of its intent to arbitrate and merely protected a right defendant believed it possessed.
Lastly, defendant's attempt to remove to federal court did not waive the right to arbitrate because defendant argued in federal court that the court's jurisdiction was limited rather than lacking entirely.
2. Unconscionability.
The plaintiff contended the arbitration provision was (a) procedurally unconscionable because it was a contract of adhesion and (b) substantively unconscionable because it (i) required the arbitrator decide the "validity, enforceability and scope" of the provision, (ii) required the arbitrator to apply the rules of the provision if they were to conflict with the arbitrator's rules, (iii) required the arbitrator to enforce the provision as written, (iv) required the plaintiff to reimburse defendant if defendant overturns an award greater than $75,000, (v) only allowed limited discovery, and (vi) is enforceable only if the class action waiver clause is also enforceable.
Both procedural and substantive unconscionability must be present for a court to invalidate a contract provision as unconscionable. In making its determination on procedural unconscionability, the Court declined to analyze the bargaining power among the parties in order to determine whether the arbitration provision was a contract of adhesion because plaintiff had a "meaningful choice." Here, both the notice plaintiff received and the opt-out provision contained in the notice were clear, conspicuous, and, regarding the opt-out provision, convenient.
Although not necessary, the Court thought it was prudent to address plaintiff's substantive unconscionabilty arguments as well, finding that none of the provision's features were unconscionable individually or in their entirety.
This opinion is available in PDF.
Opinion by Judge J. Matricciani.
Held:
1. Defendant's (a) filing of a motion for summary judgment that sought a judicial determination on the merits of the action, (b) request for the court to instruct the arbitrator to hear plaintiff's claims on an individual basis, and (c) attempt to remove to federal court did not constitute a waiver of defendant's right to compel arbitration of claim.
2. The presence of a meaningful choice to enter into an arbitration provision precludes the need for a court to analyze whether an arbitration provision is a contract of adhesion in order to determine whether the provision is procedurally unconscionable.
Facts: Plaintiff claimed defendant violated the 1997 Maryland Wiretapping and Electronic Surveillance Act, alleging the various phone calls he made were recorded without warning. After several pleadings, the Circuit Court denied defendant's motion to dismiss but granted its motion to compel arbitration. Plaintiff appealed the Circuit Court's decision to compel arbitration.
On appeal, plaintiff challenged the validity of the arbitration provision, arguing waiver and unconscionability, among other theories. The Court of Special Appeals denied the appeal after construing the plain terms of the arbitration provision.
Analysis:
1. Waiver.
The plaintiff contended the defendant waived its right to arbitration because defendant (a) filed an alternative motion for summary judgment in conjunction with one of its motions to dismiss, (b) requested the court instruct the arbitrator to hear plaintiff's claim on only an individual basis, and (c) sought to remove the case to federal court.
The Court recited prior cases regarding waiver, stating "the intention to waive must be clearly established and will not be inferred from equivocal acts or language . . . Thus, waiver is a question of intent that ordinarily turns on the factual circumstances of each case."
The Court found plaintiff relied "on a misstatement of federal case law" to argue that a party filing a motion for summary judgment, which seeks judicial determination on the merits of the action, has waived the right to arbitration. Rather, the Court noted that a motion for summary judgment could waive arbitration if it approached a "voluminously documented defense." Here, defendant's motion to dismiss relied on a single document outside the pleadings, a Maryland Public Service Commission certificate, to argue defendant was exempted by the statute that gave rise to plaintiff's claims. As the motion was limited to a procedural flaw, the Court did not find an effective waiver.
The Court found one of defendant's motions, which argued plaintiff was barred from arbitrating his claims on a class basis, was not a waiver. Instead, the motion was a reaffirmation of its intent to arbitrate and merely protected a right defendant believed it possessed.
Lastly, defendant's attempt to remove to federal court did not waive the right to arbitrate because defendant argued in federal court that the court's jurisdiction was limited rather than lacking entirely.
2. Unconscionability.
The plaintiff contended the arbitration provision was (a) procedurally unconscionable because it was a contract of adhesion and (b) substantively unconscionable because it (i) required the arbitrator decide the "validity, enforceability and scope" of the provision, (ii) required the arbitrator to apply the rules of the provision if they were to conflict with the arbitrator's rules, (iii) required the arbitrator to enforce the provision as written, (iv) required the plaintiff to reimburse defendant if defendant overturns an award greater than $75,000, (v) only allowed limited discovery, and (vi) is enforceable only if the class action waiver clause is also enforceable.
Both procedural and substantive unconscionability must be present for a court to invalidate a contract provision as unconscionable. In making its determination on procedural unconscionability, the Court declined to analyze the bargaining power among the parties in order to determine whether the arbitration provision was a contract of adhesion because plaintiff had a "meaningful choice." Here, both the notice plaintiff received and the opt-out provision contained in the notice were clear, conspicuous, and, regarding the opt-out provision, convenient.
Although not necessary, the Court thought it was prudent to address plaintiff's substantive unconscionabilty arguments as well, finding that none of the provision's features were unconscionable individually or in their entirety.
This opinion is available in PDF.
Thursday, January 28, 2010
Collins/Snoops Associates, Inc. v. CJF, LLC (Ct. of Special Appeals)
Filed: January 27, 2010.
Opinion by Judge Timothy Meredith.
Held: In a rare manifestation of the principle of equipoise, the Court held that where plaintiff and defendant file breach of contract claims against each other, neither party will prevail if the breach is not proven by a preponderance of the evidence.
Facts: A contractor engaged a subcontractor to perform certain renovations on school buildings. In the middle of the renovations, the contractor terminated the subcontractor for allegedly failing to make sufficient progress. Subsequently, the owner terminated the contractor because the owner was not satisfied with its progress.
The subcontractor sued the contractor for breach of contract, claiming damages in the amount of work and materials provided. The contractor counterclaimed for breach of contract, claiming damages flowing from the subcontractor’s alleged failure to perform.
After a bench trial on the merits, the trial court denied relief to both parties. With respect to the subcontractor’s claim, the court held that subcontractor failed to prove by a preponderance of the evidence that the contractor wrongfully withheld payment. Regarding the contractor’s claim, the court held that the contractor failed to prove by a preponderance of the evidence that the subcontractor failed to perform.
Analysis: The Court of Special Appeals held that the trial court did not err in denying relief to both parties. Both breach of contract claims essentially turned on whether the subcontractor properly performed. Because the trial court found the evidence to be in equipoise, neither party prevailed on its claim. The result, while unusual, involved a standard application of principles of burden of persuasion to each claim.
The full opinion is available in PDF.
Wednesday, January 6, 2010
The Classics Chicago, Inc. v. Comptroller of the Treasury (Ct. of Special Appeals)
Filed: January 4, 2010.
Opinion by Judge James Eyler.
Held: When a parent company does business in Maryland, its subsidiary which does not do business in the State may be constitutionally required to pay State income taxes. Such taxation is constitutional if the subsidiary’s income is generated by the parent’s business in the State.
Facts: A subsidiary held its parent’s trademarks and licensed to the parent the right to use the trademarks in exchange for royalty payments. During a several year period, the parent, which did business in Maryland, filed State income tax returns that deducted royalty payments made to the subsidiary. The subsidiary, which did not do business in Maryland, did not file State income tax returns and received a tax assessment from the Comptroller for the royalty payments. The issue on appeal was whether the assessment against the subsidiary is constitutional.
Analysis: The court stated that the constitutionality of the tax is governed by the Commerce Clause to the U.S. Constitution and principles of due process. The analysis turns on whether there is a substantial nexus between the state and the person it seeks to tax. Both parties’ arguments addressed their differing interpretation of Comptroller of the Treasury v. SYL, Inc., 375 Md. 78, cert. denied, 540 U.S. 984 and 540 U.S. 1090 (2003).
As in the case at hand, SYL involved a subsidiary that licensed intellectual property rights to its parent in exchange for royalties. The SYL court held that a tax on the subsidiary was constitutional. In the matter at hand, the subsidiary argued that SYL adopted the “sham doctrine,” which examines whether an entity’s motivation behind a corporate structure was to obtain tax benefits. Because the subsidiary was not formed for tax-related reasons, it allegedly should not have been taxed. The Comptroller argued that SYL did not adopt the “sham doctrine,” and, accordingly, an entity’s motivation is not dispositive.
The court accepted the Comptroller’s argument, holding that SYL did not adopt the “sham doctrine.” Rather, the constitutional analysis simply turns on whether the parent’s business in the taxing state is what produced the subsidiary’s income. Because the subsidiary’s income was generated solely by the parent, the court held that the tax was constitutional.
The full opinion is available in PDF. The opinion in SYL is also available in PDF.
Opinion by Judge James Eyler.
Held: When a parent company does business in Maryland, its subsidiary which does not do business in the State may be constitutionally required to pay State income taxes. Such taxation is constitutional if the subsidiary’s income is generated by the parent’s business in the State.
Facts: A subsidiary held its parent’s trademarks and licensed to the parent the right to use the trademarks in exchange for royalty payments. During a several year period, the parent, which did business in Maryland, filed State income tax returns that deducted royalty payments made to the subsidiary. The subsidiary, which did not do business in Maryland, did not file State income tax returns and received a tax assessment from the Comptroller for the royalty payments. The issue on appeal was whether the assessment against the subsidiary is constitutional.
Analysis: The court stated that the constitutionality of the tax is governed by the Commerce Clause to the U.S. Constitution and principles of due process. The analysis turns on whether there is a substantial nexus between the state and the person it seeks to tax. Both parties’ arguments addressed their differing interpretation of Comptroller of the Treasury v. SYL, Inc., 375 Md. 78, cert. denied, 540 U.S. 984 and 540 U.S. 1090 (2003).
As in the case at hand, SYL involved a subsidiary that licensed intellectual property rights to its parent in exchange for royalties. The SYL court held that a tax on the subsidiary was constitutional. In the matter at hand, the subsidiary argued that SYL adopted the “sham doctrine,” which examines whether an entity’s motivation behind a corporate structure was to obtain tax benefits. Because the subsidiary was not formed for tax-related reasons, it allegedly should not have been taxed. The Comptroller argued that SYL did not adopt the “sham doctrine,” and, accordingly, an entity’s motivation is not dispositive.
The court accepted the Comptroller’s argument, holding that SYL did not adopt the “sham doctrine.” Rather, the constitutional analysis simply turns on whether the parent’s business in the taxing state is what produced the subsidiary’s income. Because the subsidiary’s income was generated solely by the parent, the court held that the tax was constitutional.
The full opinion is available in PDF. The opinion in SYL is also available in PDF.
Monday, January 4, 2010
Chicago Title Insurance Co. v. Mary B. (Ct. of Special Appeals)
Filed: January 4, 2010
Opinion by Judge Deborah S. Eyler
Held: A recorded deed of trust dated prior to a recorded judgment has priority over the judgment despite the deed of trust being recorded after the judgment.
Facts: On May 11, 2007, a judgment was obtained for $2,000,000 following a tort action involving battery. The judgment-creditor obtained a writ of execution and the sheriff levied on the debtor's real property in Baltimore County. The sheriff's sale was scheduled for October 25, 2007.
Opinion by Judge Deborah S. Eyler
Held: A recorded deed of trust dated prior to a recorded judgment has priority over the judgment despite the deed of trust being recorded after the judgment.
Facts: On May 11, 2007, a judgment was obtained for $2,000,000 following a tort action involving battery. The judgment-creditor obtained a writ of execution and the sheriff levied on the debtor's real property in Baltimore County. The sheriff's sale was scheduled for October 25, 2007.
On October 18, 2007, Aegis Funding Corporation sued the judgment-creditor and the defendant to enjoin the sheriff's sale and to establish priority of Aegis' lien against the real property.
Aegis had made a loan to the defendant secured by the real property and received a deed of trust dated before the judgment. Through "inadvertence", the deed of trust was not recorded in the land records until after the sheriff's sale was advertised.
Analysis: Section 3-201 of the Real Property Article provides that the effective date of a deed, "is the date of delivery. The delivery date is the last date of acknowledgment or the date stated on the deed, whichever is later." Both the date on the Aegis deed of trust and the date of the last acknowledgment on the deed of trust predated the judgment. Section 3-201 provides that once a deed is recorded, it takes effect from its effective date against every purchaser with notice of the deed and creditor of the grantor with or without notice. The court found the judgment-creditor to be a "creditor" of the defendant rather than a "purchaser."
Analysis: Section 3-201 of the Real Property Article provides that the effective date of a deed, "is the date of delivery. The delivery date is the last date of acknowledgment or the date stated on the deed, whichever is later." Both the date on the Aegis deed of trust and the date of the last acknowledgment on the deed of trust predated the judgment. Section 3-201 provides that once a deed is recorded, it takes effect from its effective date against every purchaser with notice of the deed and creditor of the grantor with or without notice. The court found the judgment-creditor to be a "creditor" of the defendant rather than a "purchaser."
The full opinion is available in PDF.
Wednesday, December 23, 2009
State of Maryland, Comptroller of Maryland v. Ciotti (Maryland U.S.D.C.)
Filed: December 16, 2009.
Opinion by Judge Frederick Motz.
Held: A debtor that owes additional Maryland State taxes after a federal determination of additional income cannot discharge such debt in bankruptcy if it did not report the federal determination to the State.
Facts: The IRS audited the debtor’s prior tax returns and found additional taxable income. Maryland law requires that taxpayers file a report of federal adjustment with the State upon such an IRS determination. The debtor did not do so, but the IRS itself reported the adjustment to Maryland tax authorities. As a result, the Comptroller of Maryland made adjustments to the debtor’s tax returns that resulted in increased tax liability. The debtor subsequently filed for Chapter 7 bankruptcy and sought a declaration that her additional State tax liability as a result of the upward adjustment was discharged. The bankruptcy court granted the discharge, and the State appealed to the district court.
Analysis: Whether the debtor’s additional State tax liability can be discharged turns on the meaning of the words “or equivalent report or notice” added to 11 U.S.C. § 523(a)(1)(b) by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”). Section 523(a)(1) provides that a debtor shall not be discharged from any debt for a tax “with respect to which a return, or equivalent report or notice, if required – (i) was not filed or given” (emphasis added). Accordingly, the issue is whether the debtor’s failure to report the federal adjustment to the State amounts to an “equivalent report or notice” that was “not given.”
Reversing the bankruptcy court, the district court held that the failure to report was indeed a failure to provide an equivalent report. In so holding, the district court looked to legislative history provided by a House of Representatives report which addresses the changes made to section 523(a)(1). The district court also expressly rejected the bankruptcy court’s reasoning that the report required under Maryland law is not a “return” – and thus cannot be deemed to be the “equivalent of a return.” The court stated that to equate “return” and “equivalent report or notice” would render the latter phrase redundant. In addition, the inclusion of “or given” provides further evidence that Congress contemplated something less formal than a “return.”
Sunday, December 13, 2009
Erie Insurance Exchange v. Davenport Insulation, Inc. (Maryland U.S.D.C.)
Filed: December 9, 2009
Opinion by Judge Benson E. LeggHeld: The court denied the plaintiff insurance company's motion to reconsider denial of its motion to remand. This validated the court's prior determination that the "reciprocal exchange" insurance company's policyholders are its customers, not its members, for purposes of diversity jurisdiction.
Facts: An insurance company sued its subrogation target in the Circuit Court for Queen Anne's County. The defendant removed based on diversity jurisdiction. The insurance company moved to remand. The insurance company argued that, because it is a reciprocal insurance exchange, it constitutes an unincorporated association. Under Fourth Circuit law, an unincorporated association is a citizen of each state in which its members reside. The insurance company argued that, because some of its policyholders reside in the defendant's home state, there was no diversity.
The court rejected the insurance company's argument for remand. Relying on an analogous case from the Northern District of Illinois (Garcia v. Farmers Insurance Exchange, 121 F. Supp. 2d 667 (2000)), the court reasoned that the insurance company's policyholders are its customers, not its members. Thereafter, the court granted summary judgment in favor of the defendant. After summary judgment, the insurance company moved for reconsideration of its motion to remand.
Analysis: The insurance company relied on a new case from the Northern District of Illinois that directly conflicts with the decision that the court relied upon (Lavaland, LLC v. Erie Insurance Exchange, 2009 WL 3055489 (2009)). The new opinion held that the insurance company was a citizen of every state in which its policyholders reside. The new case also was consistent with an unpublished decision issued by Judge Andre M. Davis in the District of Maryland (Hiob v. Progressive American Insurance Co., 2008 WL 5076887 (2008)).
Nonetheless, the court noted that case law limits the reasons for which the court may grant relief under the given circumstances, after judgment has been entered. This includes where "such action is appropriate to accomplish justice." This exception is limited to "situations involving extraordinary circumstances."
The court held that the case did not present extraordinary circumstances. In making this determination, the court noted that the Lavaland case was decided before the court entered summary judgment, and the insurance company had not raised it with the court. Rather, the insurance company only brought the case to the court's attention after the court ruled against it. The court stated that the insurance company, "believing that it might obtain a favorable outcome in this Court, took a calculated risk. Accordingly, [the insurance company] is not entitled to relief."
In addition, the insurance company did not take an interlocutory appeal from the court's decision on the motion to remand. The failure to file an appeal is fatal to a claim of extraordinary circumstances.
The letter opinion is available in PDF.
Friday, December 11, 2009
Animal Welfare Institute v. Beech Ridge Energy, LLC (Maryland U.S.D.C.)
Filed: December 8, 2009
Opinion by Judge Roger R. Titus
Held: Defendants were enjoined from constructing new wind turbines and operating a wind farm during certain months because the project would kill endangered bats in violation of the Endangered Species Act (“ESA”) and the Defendants failed to obtain an "incidental taking permit."
Facts: “This is a case about bats, wind turbines, and two federal policies, one favoring the protection of endangered species, and the other encouraging development of renewable energy resources.”
The Defendants ignored evidence that endangered bats are present in the area of the wind farm project and ignored requests by federal officials to conduct more extensive surveys as to the presence of these bats. The Defendants failed to obtain an incidental taking permit, that would have permitted the construction in spite of the risk to the wildlife.
Analysis: The ESA makes it unlawful to take any endangered species within the United States. The definition of take includes “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.”
Anyone who knowingly takes an endangered species in violation of the ESA is subject to significant civil and criminal penalties. In order to provide a safe harbor from these penalties, the ESA includes an “incidental taking permit” process that allows a person or other entity to obtain a permit to lawfully take an endangered species without fear of incurring penalties.
The Court found that there is a virtual certainty that construction and operation of the wind farm will take endangered Indiana bats in violation of the ESA. The only avenue available to the Defendants to continue construction and regular operation of the wind farm is to obtain an incidental taking permit.
The full opinion is available in PDF.
Facts: “This is a case about bats, wind turbines, and two federal policies, one favoring the protection of endangered species, and the other encouraging development of renewable energy resources.”
The Defendants ignored evidence that endangered bats are present in the area of the wind farm project and ignored requests by federal officials to conduct more extensive surveys as to the presence of these bats. The Defendants failed to obtain an incidental taking permit, that would have permitted the construction in spite of the risk to the wildlife.
Analysis: The ESA makes it unlawful to take any endangered species within the United States. The definition of take includes “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.”
Anyone who knowingly takes an endangered species in violation of the ESA is subject to significant civil and criminal penalties. In order to provide a safe harbor from these penalties, the ESA includes an “incidental taking permit” process that allows a person or other entity to obtain a permit to lawfully take an endangered species without fear of incurring penalties.
The Court found that there is a virtual certainty that construction and operation of the wind farm will take endangered Indiana bats in violation of the ESA. The only avenue available to the Defendants to continue construction and regular operation of the wind farm is to obtain an incidental taking permit.
The full opinion is available in PDF.
Thursday, December 10, 2009
Thomas v. Capital Medical Management Associates, LLC (Ct. of Special Appeals)
Date: December 7, 2009
Opinion by Judge Alexander Wright, Jr.
Held:
Because the defendants, a doctor and a medical practice, failed to raise negative averments in their answer concerning their capacity to be sued, they were precluded from disputing their status as parties to the contract. Further, because terms in the agreement were found to be ambiguous, parol evidence was admissible to prove that the defendants had additional duties to facilitate the plaintiff billing company's collection efforts. The plaintiff was entitled to recover lost profit for work yet to be performed because it was able to prove the losses with reasonable certainty. Finally, because the indemnification clause in the agreement did not expressly provide for recovery of attorney fees in a first-party enforcement claim, the plaintiff was precluded from recovering attorney fees and costs.
Facts:
The defendant doctor and medical practice retained the plaintiff billing company to process its bills. The billing company terminated the contract after 16 months and sued, alleging that the defendants failed to provide the billing company with timely information, failed to compensate the billing company, and failed to take steps necessary to ensure that the bills processed by the billing company would be paid.
The trial court ruled in favor of the billing company and awarded it contract damages, including lost profit for work not yet performed. The trial court also awarded attorneys' fees and costs.
The defendants appealed, arguing four issues: (1) The defendants were not proper parties to the lawsuit; (2) The defendants had no contractual duty to provide the information and assistance at issue; (3) The plaintiff was not entitled to damages for work yet to be performed; and (4) The plaintiff was not entitled to attorneys' fees pursuant to the contract's indemnification clause.
Analysis:
(1) The defendants were parties to the agreement
Opinion by Judge Alexander Wright, Jr.
Held:
Because the defendants, a doctor and a medical practice, failed to raise negative averments in their answer concerning their capacity to be sued, they were precluded from disputing their status as parties to the contract. Further, because terms in the agreement were found to be ambiguous, parol evidence was admissible to prove that the defendants had additional duties to facilitate the plaintiff billing company's collection efforts. The plaintiff was entitled to recover lost profit for work yet to be performed because it was able to prove the losses with reasonable certainty. Finally, because the indemnification clause in the agreement did not expressly provide for recovery of attorney fees in a first-party enforcement claim, the plaintiff was precluded from recovering attorney fees and costs.
Facts:
The defendant doctor and medical practice retained the plaintiff billing company to process its bills. The billing company terminated the contract after 16 months and sued, alleging that the defendants failed to provide the billing company with timely information, failed to compensate the billing company, and failed to take steps necessary to ensure that the bills processed by the billing company would be paid.
The trial court ruled in favor of the billing company and awarded it contract damages, including lost profit for work not yet performed. The trial court also awarded attorneys' fees and costs.
The defendants appealed, arguing four issues: (1) The defendants were not proper parties to the lawsuit; (2) The defendants had no contractual duty to provide the information and assistance at issue; (3) The plaintiff was not entitled to damages for work yet to be performed; and (4) The plaintiff was not entitled to attorneys' fees pursuant to the contract's indemnification clause.
Analysis:
(1) The defendants were parties to the agreement
The defendants argued that neither was actually a party to the contract. The Court rejected the argument. The Court noted that the defendants failed to raise negative averments concerning their capacity in the answer as required by Maryland Rule 2-323(f). Instead, the defendants admitted that there was an agreement between the parties and averred that it spoke for itself. Accordingly, the Court held that a written contract was properly executed between the parties and the defendants were bound by it.
(2) Parol evidence established that the defendants had duties to facilitate the plaintiff's billing work
The trial court accepted the plaintiff's theory that the defendants had a duty to provide demographic information and to perform certain credentialing so that the plaintiff could process the defendants' bills. On appeal, the defendants argued that there was no such duty written into the contract. The Court found the terms of the contract ambiguous. Reviewing the parol evidence, the Court concluded that the trial court properly held that the defendants had such a duty.
3. The plaintiff was properly awarded damages for lost profits
The defendants argued that the award of damages for lost profit on future work was entirely speculative. The Court stated that a claimant may recover for lost profit if the loss is reasonably foreseeable and can be proven with reasonable certainty. Damages can be proven by reference to some fairly definite standard, such as market value, established experience, or direct inference from known circumstances.
At trial, the plaintiff proved its lost profit by means of testimony from its billing manager. She had experience in medical billing and was acquainted with the plaintiff's transactions. After considering the records of prior collections, she calculated an estimate of the lost expected profit on the work yet to be performed. The Court approved of the method and affirmed the award.
4. The plaintiff was not entitled to recover for attorneys' fees
An indemnification clause in the contract was the only clause that provided for recovery of attorneys' fees. The Court noted that a party may recover attorneys' fees pursuant to contract only if the contract expressly provides for it. Here, the indemnification clause did not expressly provide for attorney's fees for enforcement in a first-party breach of contract action. Accordingly, the Court held that the plaintiff was not entitled to recover its fees from the defendants.
The full opinion is available in PDF.
The full opinion is available in PDF.
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