MATRICCIANI, J.
These consolidated appeals arise from a central factual situation but raise wholly disparate legal issues. In the interests of clarity, we begin by noting that the underlying dispute began on October 27, 2010, when Herschel Blumberg,
During pre-trial discovery, appellees sent subpoenas duces tecum to non-parties James Catler, Mark Blumberg, and Susan Blumberg Levin in an effort to obtain relevant documents. The non-parties objected to certain requests for document production on the grounds of protective privilege. The circuit court found that no privilege applied to the documents in question and ordered their production. As permitted by statute, the nonparties noted timely appeals from the various orders of the circuit court.
The contested documents were then produced, and, based on the discovery, the Arent Fox appellees proceeded to file a number of motions seeking summary judgment in the case. In total, appellees filed
The non-party appellants present eight questions for our review which we combine and rephrase for clarity as:
For the reasons that follow, we answer no and affirm the decisions of the circuit court.
The real party appellants present seven questions for our review with respect to the grants of summary judgment. We combine the questions and rephrase them as:
For the reasons that follow, we answer no and affirm the decisions of the circuit court.
Herschel Blumberg, as appellants
By the end of 2005, appellants were in the midst of constructing University Town Center. In appellees' words, "it had always been the appellant entities['] plan to start construction using their own funds and then, once substantial progress has been made, to obtain bank financing to continue and complete the project." By refinancing the mortgages on the buildings comprising Prince George's Metro Center, the Blumberg entities drained 40 million dollars of their own equity. The equity available through the refinancing was distributed through, and alternatively taken from, an entity called the Blumberg Family Limited Partnership. Monies were loaned among the companies, ultimately financing the early stages of development.
Although Arent Fox provided legal advice to the Blumberg entities throughout the time they negotiated with Wells Fargo, Mr. Leval, the Arent Fox partner chiefly responsible for appellants' representation, only ran a conflicts check in July of 2006 — months after negotiation of the loan's terms was underway — uncovering the fact that Arent Fox represented Wells Fargo in unrelated transactions. Wells Fargo executed a written waiver of the conflict, but it is contested whether or not Mr. Tucker, on appellants' behalf, executed a sufficient waiver.
Possibly predating, but definitely running concurrent to the financing and construction, was appellants' concern for Mr. Blumberg's mental state. As appellants contend, "in the early 2000[']s, as planning for the [University Town Center] project proceeded, Mr. Blumberg began to show troubling signs of a cognitive decline." The record is replete with examples like that provided by former Senior Vice President and Chief Operating Officer Christopher Hanessian — "I voiced concerns about [the risks of construction, Mr. Blumberg's mental state, and undertaking the loans]
In their five count complaint filed on October 27, 2010, appellants alleged malpractice
At the close of pre-trial discovery, appellees filed nine motions for summary judgment and one motion to dismiss. Each motion pertained to a separate theory:
In advance of filing the lawsuit, on October 5, 2009, Marjorie Blumberg
Thereafter, Catler began reviewing 52 boxes of source documents containing information potentially relevant to future litigation. Catler and appellees dispute how to treat the fruit of his document review. Catler argues that Shulman Rogers engaged him as a litigation support consultant, thereby cloaking his work
Arent Fox served Catler with a subpoena and notice of deposition duces tecum on
At a two day motions hearing, the circuit court denied the emergency motion and ordered Catler to produce "all remaining documents responsive to the Subpoena Duces Tecum ... including all documents listed on [Catler's] privilege log for the James Catler Production, except the last eleven (11) documents listed on the log, which eleven (11) documents shall be provided... to the [c]ourt for in camera review." After the court's review, it ordered the production of all but 24 pages of the eleven documents. Catler appealed, also moving to stay enforcement of the order,
The attorney-client privilege "is a rule of evidence which prohibits the disclosure of the substance of a communication made in confidence by a client to his attorney for the purpose of obtaining legal advice." Levitsky v. Prince George's County, 50 Md.App. 484, 491, 439 A.2d 600 (1982). The related but distinct work product doctrine "protects from discovery the work of an attorney done in anticipation of litigation or in readiness for trial." E.I. du Pont de Nemours & Co. v. Forma-Pack, Inc., 351 Md. 396, 407, 718 A.2d 1129 (1998). Catler argues that the attorney-client privilege and the work product doctrine entitled him to withhold certain documents that were responsive to appellees' requests for documents. Appellees counter-argue that Catler was not a client of Shulman Rogers with respect to the lawsuit against Arent Fox and that his retention to provide litigation support was artificially constructed to meet the desired end of avoiding production.
"Once the attorney-client privilege is invoked, the trial court decides as a matter of law whether the requisite privilege[d] relationship exists, and if it does, whether or not any such communication is privileged." E.I. du Pont de Nemours & Co., 351 Md. at 415, 718 A.2d 1129 (internal quotation and citation omitted). Although the court makes a legal determination about the existence of a protective privilege, "[t]he burden of substantiating
We conclude that Catler was not a client of Shulman Rogers for the purpose of the litigation against Arent Fox. Accordingly, no attorney-client privilege attached to the documents that were withheld. We explain. First, the letter retaining Shulman Rogers on behalf of Catler and Ms. Blumberg insufficiently identifies the purpose for the representation to be a potential lawsuit against Arent Fox. Second, Catler was unable to provide testimony about when, or if, Shulman Rogers was representing him and in what capacity.
The subject line of the October 5, 2009 engagement letter signed by Catler and Ms. Blumberg reads "Investigation of Liability and Recovery in Wells Fargo Bank and Key Bank Loans." We consider the terms of the engagement letter objectively. Towson Univ. v. Conte, 384 Md. 68, 78, 862 A.2d 941 (2004) ("Maryland courts follow the law of objective interpretation of contracts, giving effect to the clear terms of the contract regardless of what the parties to the contract may have believed those terms to mean."). The objective terms of the retention letter never state that Shulman Rogers was being retained for the purposes of a suit against Arent Fox. "Investigation of Liability and Recovery in Wells Fargo and Key Bank Loans" objectively refers to investigation only. Assuming arguendo that the investigation also includes litigation, within the ambit of the engagement letter may be future litigation against not only the appellees here, but also against the banks themselves and/or the agents that played supporting roles at any point from inception of the loans to their disbursement. The language is too vague, especially in light of the complete record, to support the existence of an attorney-client relationship between Catler and Shulman Rogers with respect to litigation against Arent Fox.
In addition to the ambiguous terms of the letter of engagement, Catler "could not speak" to whether he personally retained Shulman Rogers for the purpose of filing suit against Arent Fox. He was asked at deposition, "at any point did you retain Shulman Rogers to file an action against Arent Fox [?]" He responded "I don't know. I really don't. I can't speak to that." We decline to find the existence of an attorney-client relationship where the purported client was unable to testify to the relationship's existence. See Greenberg v. State, 421 Md. 396, 406, 26 A.3d 955 (2011) ("[P]rivilege may be invoked only where a finding that the [proponent's] subjective belief [that] an attorney-client relationship existed would be minimally reasonable.") (internal quotations omitted). What Catler was able to testify to did not advance his position with respect to the existence of an attorney-client relationship in the manner now claimed, viz., Catler agreed that "the exercise for which Shulman Rogers was originally retained was... a defensive retention meaning it was to determine what liability the family had." On these facts
Mark Blumberg and Susan Blumberg Levin appeal from an order of the circuit court directing them to produce all documents recorded on their privilege logs. Among other pleadings with respect to the document requests in question, the Blumbergs filed a motion for protective order and Arent Fox responded by filing a motion to compel production. The circuit court held a hearing on the motions, ultimately denying the motion for protective order and setting the time frame under which all the questioned documents were to be produced. The court found that "not only were the privilege logs untimely and legally insufficient, but also that [Arent Fox] had been prejudiced...."
As noted supra, "whether a document is subject to withholding from discovery as a result of some privilege is essentially a question of fact to be determined by the trial court[]" and that finding is entitled to deference on appeal. Gallagher Evelius & Jones, LLP, 195 Md.App. at 598, 7 A.3d 160 ("[T]he same deference [that] is accorded the trial court's fact-findings in a trial must be given the trial court's assessment of the circumstance surrounding a discovery situation."). The Blumbergs asserted protective privilege over several tranches of communications. Specifically, they withheld documents evidencing communications with Shulman Rogers, communications with Claudine Malone, the onetime board member of the Blumberg entities and trustee of the Herschel Blumberg Revocable Trust, communications with in house counsel Michael Crehan, and communications regarding the guardianship proceeding. Again, we conclude that the court correctly denied the claims of protection from the production of documents.
First, Shulman Rogers never represented either Mark Blumberg or Susan Blumberg Levin. The retainer agreement was signed only by Marjorie Blumberg and James Catler. In the circuit court's words, those messages "between [the Blumbergs] on the one hand and Shulman Rogers on the other hand simply were not privileged." We agree. Second, the circuit court "made the same decision about Ms. Malone and Dickstein Shapiro."
The facts and procedure relevant to our discussion of summary judgment have been laid out above; when additional facts become necessary to our discussion, they will be added.
The circuit court granted summary judgments to appellees. Under Maryland Rule 2-501(f), "[t]he court shall enter judgment in favor of or against the moving party if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law." "The standard of review of a trial court's grant of a motion for summary judgment on the law is de novo, that is, whether the trial court's legal conclusions were legally correct." Messing v. Bank of Am., N.A., 373 Md. 672, 684, 821 A.2d 22 (2003). As we said in the case of Cooper v. Berkshire Life Ins. Co.:
148 Md.App. 41, 56, 810 A.2d 1045 (2002) (internal quotations omitted). "When properly reserved, we pass upon the sufficiency of evidence to take a case to the jury...." Benkoe v. Plastic Assembled Products, Inc., 231 Md. 419, 420, 190 A.2d 638 (1963); Seaboard Surety Co. v. Richard F. Kline, Inc., 91 Md.App. 236, 244-45, 603 A.2d 1357 (1992); Mackey v. Dorsey, 104 Md.App. 250, 256-57, 655 A.2d 1333 (1995).
Before reaching the merits, infra, it is necessary for us to expound briefly upon the permissible grounds for affirmation. Appellants contend that "Maryland appellate courts will not review a grant of summary judgment on grounds not specifically
Although the circuit court granted the motions "largely for the reasons set forth by Arent Fox[,]" the court supplemented this statement with a larger discussion punctuated by distinctive legal conclusions. In making an oral ruling on the motions for summary judgment, the circuit court remarked:
(emphases added). Notwithstanding the depth of the circuit court's oral ruling, even if it had agreed with appellees generally, without specifying which aspects of their position were persuasive, our review could still reach all of appellees' asserted grounds justifying summary judgment. Kimmel v. SAFECO Ins. Co., 116 Md.App. 346, 354-55, 696 A.2d 482 (1997) ("If the trial court did not specify the grounds upon which it granted summary judgment, appellate courts assume that the trial court carefully considered all of the asserted grounds and determined that all or at least enough of them ... were meritorious." (internal quotation omitted)).
Our discussion necessarily begins with those motions that appellants fail to address.
Appellees argue that the statute of limitations bars a wide swath of appellants' claims.
"[I]n Maryland in cases of professional malpractice the [Court of Appeals has] established the discovery rule — the rule that the cause of action accrues when the claimant discovers or reasonably should have discovered that he has been wronged."
Id. at 296, 831 A.2d 1091. Ordinarily, the dispositive issue is "when [] the appellant [was] put on notice that she may have been injured." Russo v. Ascher, 76 Md.App. 465, 470, 545 A.2d 714 (1988). "[B]eing on
Appellees argue that three of appellants' claims accrued before the limitations cut-off of October 29, 2006. First, appellees contend that appellants' assertions of conflicted advice, especially regarding the loan financing, are untimely. Second, appellees argue that claims based on business advice are barred. Third, appellees claim that if they had a duty to have a guardian appointed for Mr. Blumberg, a failure to satisfy that duty was no longer actionable by the limitations cut-off date.
Appellants have failed to address when any of the aforementioned causes of action accrued. At the summary judgment hearing, counsel for both parties argued this issue. Because a cause of action does not accrue until all of its elements are present, including damages, Doe v. Archdiocese of Washington, 114 Md.App. 169, 177, 689 A.2d 634 (1997), it appears that the circuit court implicitly found as a matter of law the date when appellants were first injured. The court found that the damages appellants suffered as a result of any conflicted advice they received occurred sometime during the loan's origination and not at its default, viz., at a time preceding October 29, 2006.
The same conclusion must follow for both the business advice claims, discussed further infra, and the guardianship claims. Whatever business advice appellees dispensed in connection with or facilitating the loans necessarily took place before the limitations cut-off. Similarly, because of the transparency of Mr. Blumberg's mental decline, the need to appoint a guardian, if it arose at all, must have occurred before October 29, 2006.
Appellees argue, alternatively, that there "is no separate count or cause of
We note that the decision to "enter into a complex set of financial transactions" is a business decision that only secondarily relies on legal advice. How to finance the companies, and any construction that they initiate, is a business decision. Legal advice may be sought or received about how to implement the decision (e.g., how to incorporate investment vehicles, or what the tax consequences of the deals may be) but the decision to loan money from external sources or to transfer funds internally remains a business decision committed to the discretion of the companies themselves. We agree with the Supreme Court of California that "Courts are properly cautious about making attorneys guarantors of their clients' faulty business judgment." Viner v. Sweet, 30 Cal.4th 1232, 1241, 135 Cal.Rptr.2d 629, 70 P.3d 1046 (2003). We have uncovered no Maryland case foisting onto counsel the duty to indemnify its clients for the clients' own business judgments. We shall not impose that duty here.
Appellees recycle the limitations defense and apply it directly to appellants' claims that appellees failed to satisfy their duty of loyalty by giving conflicted advice.
"The issue of when plaintiff knew or should have known of his injury and its cause is a question of fact for the jury." CSX Transp., Inc. v. Miller, 159 Md.App. 123, 153, 858 A.2d 1025 (2004). "In the case of actual knowledge, the cause of action accrues when the character of the condition and its cause first come together for the plaintiff." Id. "The test is not a could have known test[;] [r]ather, it requires a very substantial common-sense likelihood that a reasonably careful person would discover the existence of the injury and its cause." Id. But we are unable to address this question because the parties have not briefed it. Although the questions of conflict and waiver are contested, there is neither argument nor briefing concerning whether or not these claims are now time-barred. We have not been asked to answer when appellants were injured by the financing scheme ultimately enacted, or how the conflicted advice resulted in appellants' damages. By failing to brief us on the element of timeliness, appellants have left us with nothing to review. We conclude that appellants have waived their right to complain about the conflicts. See Maryland Rule 8-504(a) ("A brief shall ... include the following items in the order listed: (6) [a]rgument in support of the party's position on each issue."); Beck v. Mangels, 100 Md.App. 144, 149, 640 A.2d 236 (1994).
We conclude, as well, that appellants have waived one other purported claim. As noted supra, appellants take the position that appellees breached their retainer agreement, and therefore their contract, by, inter alia, "providing incompetent legal advice that [appellants] should enter into a complex set of financial transactions that were doomed to fail from the outset."
To begin our discussion of fiduciary duty, we note that if count one of the complaint (legal malpractice) and count two (breach of fiduciary duty) were transposed into a Venn diagram,
344 Md. 689, 713, 690 A.2d 509 (1997). As we said in the case of Wasserman v. Kay, "[i]n a claim for monetary damages at law [which appellants claim here], however, an alleged breach of fiduciary duty may give rise to a cause of action, but it does not, standing alone, constitute a cause of action." 197 Md.App. 586, 631-32, 14 A.3d 1193 (2011). "Here, the allegations in the count are relevant to other causes of action alleged (e.g., fraud, [], breach of contract, and negligence [in the form of legal malpractice]), but they do not constitute a stand alone nonduplicative cause of action." Id. We therefore affirm the court's grant of appellees' motion for summary judgment on this ground.
Although appellants may not succeed on an individual count for the breach of fiduciary duty, the remedy for such a breach may be connected to another cause of action.
Appellants contend that appellees knew of Mr. Blumberg's deteriorating mental state "as early as 1999, if not earlier."
In reviewing these allegations, we are mindful that: "a former client may have an action against a lawyer if the client can prove (1) the attorney's employment, (2) the attorney's neglect of a reasonable duty, and (3) loss to the client proximately caused by that neglect of duty." Thomas v. Bethea, 351 Md. 513, 528-29, 718 A.2d 1187 (1998).
Appellees cite the predicates for action under Rule 1.14 to argue that, before a duty may attach, appellants must demonstrate that appellees knew or believed that (i) Mr. Blumberg was mentally incompetent, (ii) that the companies were at risk of substantial harm if protective action was not taken, and (iii) that the companies could not adequately protect their own interest. Assuming, without deciding, that the prerequisites to Rule 1.14 were present here, it states only that a lawyer "may take reasonably necessary protective action." The rule does not, on its face, require any action on appellees' part. Because of the permissive nature of the rule's applicability, in order to establish a duty
As we said in the case of CIGNA Prop. & Cas. Cos. v. Zeitler, "[o]ften, allegations of professional malpractice require expert testimony, because the intricacies of professional disciplines generally are beyond the ken of the average layman." 126 Md.App. 444, 464, 730 A.2d 248 (1999). The Court of Appeals framed the need for expert testimony in malpractice cases by saying:
Crockett v. Crothers, 264 Md. 222, 224-25, 285 A.2d 612 (1972) (internal citations omitted). But expert testimony may be considered by the jury if and only if the requirements of Maryland Rule 5-702 are satisfied. Under Maryland Rule 5-702, expert testimony may be admitted if the testimony will assist the trier of fact in considering the ultimate issues. In determining the propriety of expert testimony, "the court shall determine (1) whether the witness is qualified as an expert by knowledge, skill, experience, training, or education, (2) the appropriateness of the expert testimony on the particular subject, and (3) whether a sufficient factual basis exists to support the expert testimony." Id. Respecting the third factor of Rule 5-702, the Court of Appeals has said, "no matter how highly qualified the expert may be in his field, his opinion has no probative force unless a sufficient factual basis to support a rational conclusion is shown." Bentley v. Carroll, 355 Md. 312, 337, 734 A.2d 697 (1999).
We note initially that the court's ruling, in disagreeing with certain experts,
Appellants argue that:
In appellants' words, "the trial court misconstrued its role in connection with defining the standard of care by putting itself in the position of expert witness." We agree. Although the existence of a legal duty is a question of law for the court,
The court additionally erred by finding that appellants' experts failed to state clearly enough the precise scope of the duty owed. Here, the court stated that:
We address first the factual sufficiency of the expert testimony because it appears that the court's application of Maryland Rule 5-702 played a role in its ultimate decision, viz., that the appellants' experts' testimony failed to identify the scope of duties allegedly owed.
Professor Hazard, one of appellants' standard of care experts, based his opinions on the "facts and evidence made available... during the discovery process." He opined that "consistent with Rule 1.14, Mr. Leval should have taken reasonably necessary action to protect Mr. Blumberg's financial well-being, at a minimum preventing him from signing the legal instruments." Ms. Schwartz, another of appellants' experts, also based her opinions on the facts and evidence presented during discovery. She opined that "a reasonably prudent real estate lawyer under the circumstances presented to Gerard Leval would not have proceeded with the contemplated transactions, including the preparation and execution of loan documents with respect to those transactions that required the informed decision of Mr. Blumberg." The substantive thoroughness of their reports supports our view that appellants' experts' opinions were sufficiently supported by the record. This case does not raise questions about the mathematical or scientific methods through which appellants' experts reached their conclusions — it is not a case where the "supply of data" or "methodology" is at issue. CSX Transp., Inc. v. Miller, 159 Md.App. 123, 189, 858 A.2d 1025 (2004). Because Professor Hazard and Ms. Schwartz rendered their opinions about what actions this situation required of Arent Fox, and on the UTC expansion's propriety, it was sufficient for them to rely on the deal documents and evidence garnered through discovery.
Moving on from the factual basis for the expert testimony to its legal validity, we conclude that appellants sufficiently identified the duties that they were allegedly owed. It is appellants' experts' opinion that appellees had, at least, a duty to stop the loans from proceeding. Appellants' position is that because appellees knew or should have known that their client lacked the necessary capacity, they should either have prevented Mr. Blumberg from closing on the loans, or withdrawn from the representation. Although this is a fuzzy area, we think there was enough substance to the opinions to survive a motion for summary judgment. We are not convinced as a matter of law, as the circuit
Although the court erred by finding appellants' expert opinions insufficient, we conclude that such error does not require reversal. "[I]t has long been the settled policy of this court not to reverse for harmless error." Brown v. Daniel Realty Co., 409 Md. 565, 613, 976 A.2d 300 (2009). "[T]he burden is on the appellant in all cases to show prejudice as well as error." Crane v. Dunn, 382 Md. 83, 91, 854 A.2d 1180 (2004). "Prejudice will be found if a showing is made that the error was likely to have affected the verdict below." Id. "It is not the possibility, but the probability, of prejudice which is the object of the appellate inquiry." Id. This point will be discussed further, infra, but we conclude that the error was harmless because, assuming the benefit of their expert testimony, appellants' potential recovery remains barred by the doctrine of contributory negligence.
The general theme of appellants' contributory negligence pervades appellees' various theories, although appellees commit a specific motion to arguing directly that recovery for negligence, if any, is barred by appellants' contributory negligence and the doctrine of in pari delecto.
In our view, there are two flaws in appellants' reasoning. First, as we have discussed above, appellants' decision on how to raise capital was the product of their own business judgment and not insularly caused by appellees' legal advice. Second, this is not a case in which the court impermissibly extended itself into the boardroom in order to impute the junior officer's knowledge, (in this case, that of Messers. Hanessian and Tucker) to the corporation itself. As appellants state, "[i]n short, [appellants'] losses were foreseen by everyone around Mr. Blumberg." Even if the losses (and Mr. Blumberg's cognitive decline) were less than readily apparent, section 2-414(a) of the Corporations article resolves any imputation question in favor of appellees.
The court colorfully relayed its understanding of appellants' position, saying "[b]ut the way you're painting it, I think, the corporate officers were basically being told the sky is purple and they just said, okay, well, he [Mr. Blumberg] said the sky is purple and everybody knows the sky is not really purple, but he said it's purple, so let's pretend it's purple. It's just like the emperor has no clothes fable." Based on this assessment, the trial court held that "[t]he evidence ... makes out a case against the corporate officers for contributory negligence as a matter of law." The court continued, stating that "[t]he bylaws of the corporation make it clear, not only did they have the power to engage in the conduct that is questioned here, they had the duty to run the company in the event Mr. Blumberg became disabled."
Appellants attempt, in vain, to escape this finding. However, the circuit court correctly determined that although the Blumberg entities may have considered Mr. Blumberg to be both necessary and singularly sufficient for making business decisions, the bylaws governing University Town Center confer decision making power on other corporate officers in the event that the president suffers incapacity. Specifically, the bylaws state that "[i]n the absence or disability of the President, the Vice President ... shall perform the duties and exercise the powers of the President." The bylaws continue, stating that "[n]o loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name without the endorsement of the Chairman of the Board, if any, the President, or a Vice President, if any." By their own governance documents, appellants demonstrate that decision making authority vested, at the time of Mr. Blumberg's incompetence — if ever — in the companies' Vice Presidents, Messers. Hanessian and Tucker.
"The question of contributory negligence must be considered in the light of all the inferences favorable to the plaintiff's case that may be fairly deduced from the evidence." Patapsco & B. R. R. Co. v. Bowers, 213 Md. 78, 88, 129 A.2d 802 (1957) (quoting Baltimore Transit Co. v. Castranda, 194 Md. 421, 434, 71 A.2d 442 (1950)). "[T]o establish contributory negligence as a matter of law, the act relied on must be distinct, prominent and decisive, and one about which ordinary minds cannot differ." Crunkilton v. Hook, 185 Md. 1, 6, 42 A.2d 517 (1945). Although the act here is, in reality, a lack of action — that of failing to prevent the loans from closingwe conclude that it was both prominent and decisive, notwithstanding that appellants argue that they cured their own negligence by informing Arent Fox of Mr. Blumberg's condition. Although appellants took some action, by way of informing Arent Fox of their suspicions that Mr. Blumberg was in the process of cognitive decline, the entities' Vice Presidents were ultimately the persons responsible to act, and the record demonstrates that they, at least, share responsibility in failing to prevent Mr. Blumberg from signing the loan documents.
The court added to its findings that the doctrine of "in pari delicto applie[s] [saying]... I could not in good conscience let the claims as to which the doctrine applied go to a jury." In the case of Schneider v. Schneider, 335 Md. 500, 508, 644 A.2d 510 (1994), the Court of Appeals explained that "the maxim, in pari delicto potior est conditio defendentis [stands for the proposition that] where fault is mutual, the law will leave the case as it finds it." "[I]n pari delicto, [] literally means in equal fault." 27A Am.Jur.2d Equity § 103. "The common-law defense of in pari delicto prohibits a party from recovering damages arising from misconduct for which the party bears responsibility, bears fault, or which resulted from his or her wrongdoing." Id. "Thus, relief will be denied where the parties are shown to have been in pari delicto or to have acted with the same degree of knowledge as to the illegality of the transaction." Id. As the circuit court acknowledged, only rarely have our cases invoked this maxim. The extraordinary invocation notwithstanding, the record supports its application here. Assuming arguendo that appellees were guilty in their failure to act based on their knowledge of Mr. Blumberg's alleged incompetence, so too were appellants.
Appellees next focus on appellants' contention that they fraudulently concealed the "imminent financial collapse"
In their complaint, appellants contend that appellees' actions amount to fraudulent concealment. In the case of Lloyd v. GMC, the Court of Appeals said that "[t]he essential elements for a claim of fraudulent concealment include: (1) the defendant owed a duty to the plaintiff to disclose a material fact; (2) the defendant failed to disclose that fact; (3) the defendant intended to defraud or deceive the plaintiff; (4) the plaintiff took action in justifiable reliance on the concealment;
Appellants, however, invert the parties' burden with respect to knowledge of the Blumberg entities' internal affairs. Appellants characterize themselves as passive players in a nefarious game presided over by their entrusted counsel. Appellants argue that appellees monopolized the internal workings of the Blumberg entities, wielding mutually exclusive possession over 100% of both the business decision making power and the knowledge supporting it. This argument, however, fails for the reason that to conclude otherwise would immunize businesses from taking responsibility for their own business judgments, the business judgment rule notwithstanding.
The undisputed record reflects that on December 18, 2007, Cushman & Wakefield (whom appellants retained to solicit offers for Student Towers) received a letter of intent, purportedly valuing Student Towers at 80 million dollars. That same day, Cushman & Wakefield transmitted the letter of intent directly to the Blumberg entities. The letter of intent expired at 5:00 pm on December 24, 2007. Mr. Blumberg and Mr. Tucker decided to reject the letter because they felt the price was insufficient. On December 28, 2007, four days after the letter's expiration, appellants sent a copy of it to appellees for legal review. Six days after that, Mr. Tucker instructed appellees to cease work with respect to the letter. As a logical matter, appellees could not conceal, intentionally or otherwise, a letter of intent that they became aware of only after appellants made the business judgment to reject it.
In a related claim, appellants assertion that appellees fraudulently concealed the "imminent financial demise" of the companies must also fail. This position, too, assumes that the entities' outside counsel knew more about the internal finances of the entities than they themselves did. The record reflects that knowledge of the financial problems faced by the companies and possessed by appellees was possessed by appellants also. Therefore, we conclude that appellees were not capable of concealing the "imminent financial demise" of the companies.
Although causation
In order for appellants to succeed on their malpractice claims, they must demonstrate a "loss [] proximately caused by [] neglect of [a] duty [owed]." Thomas, 351 Md. at 528-29, 718 A.2d 1187. Similarly, "[i]n order to prevail on a claim of negligence in Maryland, a plaintiff must prove the existence of: (a) a duty owed by the defendant to the plaintiff, (b) a breach of that duty, and (c) injury proximately resulting from that breach." Barclay v. Briscoe, 427 Md. 270, 292, 47 A.3d 560 (2012).
In the case of Pittway Corp. v. Collins, the Court of Appeals discussed the law relevant to causation by stating that:
409 Md. 218, 243-44, 973 A.2d 771 (2009) (internal quotations and citations omitted). With regard to legal causation, the Court of Appeals has said "foreseeability of harm and manner of occurrence are the primary indicia of legal cause." Board of County Comm'rs v. Bell Atlantic-Maryland, 346 Md. 160, 184, 695 A.2d 171 (1997).
As noted above, in its oral ruling, the circuit court concluded that "I am not persuaded that based on the record, even viewed in the light most favorable to the plaintiffs, that a jury rationally, lawfully, in a non-speculative way, could find cause in fact.... I am not persuaded that a rational jury would find, or could legally find, that it is more likely than not that the plaintiffs could have obtained a more favorable result, either by walking away from the Wells Fargo loan, by walking away from the Key Bank loan, or by walking away from the UTC project at any time...."
Ordinarily, the factual determination of proximate cause is reserved for the jury. Sacks v. Pleasant, 253 Md. 40,
The University Town Center development, undisputably, did not produce the results that appellants envisioned. The record here supports a finding that it was, however, motivated by the Blumberg entities' longstanding goal of expanding the Prince George's Metro Center. The appellees could not have foreseen that this expansion project would coincide with our nation's largest recession since the Great Depression. That significant, intervening event is absent from appellants' version of the facts. Also missing is any explanation as to how their losses would have been stemmed or eliminated had the loan transactions not occurred or somehow been truncated. Unfortunately, instead of an expansion to their empire here, Rome fell. Proof of proximate causation is wanting, as the circuit court observed. We are not inclined to disturb its ruling on that issue.
KRAUSER, PETER B., C.J., WOODWARD, PATRICK L., and ZARNOCH, ROBERT A., JJ., did not participate in the Court's decision to report this opinion pursuant to Md. Rule 8-605.1.
Appellants Mark Blumberg and Susan Blumberg Levin present five questions. They are:
Grounds For Motion COSA Disposition
(1) Limitations Affirmed on the basis of
waiver.
(2) Appellees owed no duty to provide business Affirmed on the basis of
advice. waiver.
(3) Appellees did not breach a duty to have a Affirmed.
guardian appointed for Mr.
Blumberg.
(4) Appellants' claims are barred by contributory Affirmed.
negligence and the doctrine of in pari delicto.
(5) The conflicts alleged by appellants are either Affirmed.
"illusory" or waived.
(6) Arent Fox did not conceal any letters of Affirmed.
intent.
(7) Arent Fox did not conceal from appellants Affirmed.
knowledge of their financial status.
(8) There is no distinct cause of action for Affirmed; see Kann v. Kann,
breach of fiduciary duty. 344 Md. 689, 713 (1997).
(9) The claim for malpractice does not support Affirmed on the basis of
a breach of contract claim. waiver.
(10) Appellants failed to prove causation. Affirmed; moot in light of
motion (4).
