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Fedder Development v. FB Hagerstown, LLC, 05-1689 (2006)

Court: Court of Appeals for the Fourth Circuit Number: 05-1689 Visitors: 2
Filed: Jun. 23, 2006
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 05-1689 FEDDER DEVELOPMENT CORPORATION, Plaintiff - Appellant, versus FB HAGERSTOWN, LLC, Defendant - Appellee. Appeal from the United States District Court for the District of Maryland, at Baltimore. James K. Bredar, Magistrate Judge. (CA- 04-2694-JKB) Argued: May 24, 2006 Decided: June 23, 2006 Before WILKINSON, TRAXLER, and GREGORY, Circuit Judges. Affirmed by unpublished per curiam opinion. ARGUED: Ira Lee Oring, FEDDER &
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                             UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT


                             No. 05-1689



FEDDER DEVELOPMENT CORPORATION,

                                              Plaintiff - Appellant,

           versus


FB HAGERSTOWN, LLC,

                                              Defendant - Appellee.



Appeal from the United States District Court for the District of
Maryland, at Baltimore. James K. Bredar, Magistrate Judge. (CA-
04-2694-JKB)


Argued:   May 24, 2006                      Decided:   June 23, 2006


Before WILKINSON, TRAXLER, and GREGORY, Circuit Judges.


Affirmed by unpublished per curiam opinion.


ARGUED: Ira Lee Oring, FEDDER & GARTEN, P.A., Baltimore, Maryland,
for Appellant.    Craig David Roswell, NILES, BARTON & WILMER,
L.L.P., Baltimore, Maryland, for Appellee.      ON BRIEF: Timothy
Manuelides, FEDDER & GARTEN, P.A., Baltimore, Maryland, for
Appellant. Kathleen L. H. Petty, NILES, BARTON & WILMER, L.L.P.,
Baltimore, Maryland, for Appellee.


Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:

     Fedder Development Corporation commenced this action against

FB Hagerstown, LLC seeking specific performance of an alleged

agreement     for       the    sale   of   Long     Meadow   Shopping     Center   in

Hagerstown, Maryland.           The trial judge granted summary judgment to

FB Hagerstown, concluding that no enforceable contract existed.

Fedder appeals and we affirm.



                                            I.

     In late 2003, the parties entered into negotiations concerning

purchase of the shopping center.                    During the negotiations, FB

Hagerstown’s attorney sent Fedder’s attorney an e-mail containing

a draft real estate purchase agreement, stating that “the contract

is not binding on either party unless and until executed by and

delivered to both parties.”                J.A. 19.       The following month, in

response    to      a    set    of    changes      from   Fedder’s     attorney,   FB

Hagerstown’s     attorney        revised     the    draft    agreement    and   again

explained that “the contract is not binding on either party unless

and until executed by both parties.”                  J.A. 32.       FB Hagerstown’s

attorney further wrote that the draft of the contract is “subject

to whatever comments [my client] may have.”                  J.A. 33.    The parties

continued to make revisions to the agreement, with FB Hagerstown’s

attorney continuing to qualify that the agreement was subject to FB




                                            2
Hagerstown’s approval and was not binding on FB Hagerstown until FB

Hagerstown signed it.

     On June 10, 2004, FB Hagerstown’s attorney sent a “redline”

comparison of the most recent draft agreement and, working on the

“assumption that [the] changes [were] acceptable” to Fedder, an

“execution copy” of the agreement.                  J.A. 39.        FB Hagerstown’s

attorney   stated    that,   if    Fedder      executed      five    copies    of    the

agreement and delivered them to the parties’ escrow agent with an

initial deposit of $100,000, he would ask his client to print out

and execute the same number of copies of the agreement.

     At the end of the month, Fedder’s attorney responded that he

had five signed copies of the agreement and the deposit check, and

asked   whether     he   should    send       the   copies     and    check     to   FB

Hagerstown’s attorney or directly to the escrow agent.                          After

several    days   without    any    response,        Fedder     learned       that   FB

Hagerstown had called off the deal.                 Fedder then forwarded the

signed copies and deposit check to the escrow agent. FB Hagerstown

never signed the agreement.

     The following month, Fedder brought suit in a Maryland state

court seeking specific performance of the agreement. FB Hagerstown

removed the action to federal court, where the parties consented to

have the case heard by U.S. Magistrate Judge James K. Bredar.                        On

cross-motions for summary judgment, Judge Bredar granted summary

judgment to FB Hagerstown.         Judge Bredar found that FB Hagerstown


                                          3
made it clear that the contract would not be binding until it was

signed. Furthermore, to the extent that any agreement existed, the

statute      of    frauds   required    proof    of    a   writing   signed   by    FB

Hagerstown or someone with authority to bind FB Hagerstown.                   Judge

Bredar    also      determined   that    Fedder    failed     to   comply   with   FB

Hagerstown’s execution and delivery terms prior to FB Hagerstown’s

disavowal of the agreement.

       Fedder appeals, claiming that the statute of frauds does not

bar this cause of action and that Fedder properly accepted the

contract.         We review de novo the grant of summary judgment.                 See

Summerville v. Microcom Corp., 
42 F.3d 891
, 893 (4th Cir. 1994).



                                         II.

                                          A.

       We turn first to Fedder’s argument that the statute of frauds

does   not    bar    this   action     because    FB   Hagerstown    admitted      the

existence of the contract in deposition testimony.                      Maryland’s

statute of frauds traces its ancestry to the 1677 English Statute

of Frauds.         See Litzenberg v. Litzenberg, 
514 A.2d 476
, 479 (Md.

1986).    The current version of the statute applicable in Maryland

provides:

       No action may be brought on any contract for the sale or
       disposition of land or of any interest in or concerning
       land unless the contract on which the action is brought,
       or some memorandum or note of it, is in writing and
       signed by the party to be charged or some other person
       lawfully authorized by him.

                                          4
Md. Code Ann., Real Prop. § 5-104 (2006).

      The purported contract Fedder seeks to enforce is undoubtedly

a contract for the sale of land and, thus, is subject to the

statute. The problem for Fedder is that FB Hagerstown never signed

the agreement.       Nevertheless, Fedder argues that the contract is

enforceable    under    the   “in-court       admission”     exception   to    the

statute.   Under this exception, an oral contract otherwise barred

by the statute of frauds can still bind a party if the party admits

its existence with “sworn testimony in court or on deposition, or

in an answer to a complaint.”       Litzenberg, 
514 A.2d 476
, 479 (Md.

1986); see also Trossbach v. Trossbach, 
42 A.2d 905
, 908 (Md. 1945)

(“Admissions of a party in testifying, though in form evidence, are

in   essence   not   mere   evidence,       but   make    evidence   against   him

unnecessary.     We think the Statute of Frauds requires no more.

Furthermore, admissions of a party in the form of testimony would

constitute sufficient ‘memoranda’ under Section 4 or Section 17, or

‘writings’ under Section 7, of the statute [then in force].”)

(citations omitted).

      We do not agree with Fedder that the in-court admission

exception to the statute applies to this case.               From the outset of

the negotiations, FB Hagerstown’s attorney made it clear that his

client would not consider itself bound by any agreement until it

had signed a final, written document.                    Thus, this is not the

typical in-court admission case where the parties to a contract

                                        5
subject to the statute of frauds always intended the contract to

remain oral.         Rather, the parties contemplated an agreement in

written form that would not be binding until it was signed by and

delivered      to    both     of   them.          See   J.A.   19   (e-mail      from   FB

Hagerstown’s attorney stating that “the contract is not binding on

either party unless and until executed by and delivered to both

parties”).      Maryland law is clear that where the transfer of land

contemplates        execution      of    a    written      document,      the    in-court

admission exception does not apply.                     See 
Litzenburg, 514 A.2d at 482
(“[W]here, as here, the oral agreement for the transfer of an

interest in land contemplates the execution of a written document

the   contract       is   subject       to    disavowal     until    it    is    formally

executed.”); Pearlstein v. Maryland Deposit Ins. Fund, 
552 A.2d 51
,

56 (Md. Ct. Spec. App. 1989) (“Under [the statute of frauds] and

Litzenberg, the agreement should have been in writing and signed,

because it concerned land and because it contemplated the execution

of    formal,       written     documentation.             Accordingly,     we     reject

appellants’ argument that the oral testimony exception to the

statute   of    frauds        applies    in    this      case.”);   cf.    Barranco     v.

Barranco, 
604 A.2d 931
, 934 (Md. Ct. Spec. App. 1992) (finding that

in-court admission exception did apply because the oral agreement

“was not a tentative agreement[,] . . . was not contingent upon a

written agreement[,] . . . [and] did not contemplate a written

agreement to finalize terms not already finalized”).


                                              6
     Because the purported agreement concerned the sale of land and

contemplated that it would not become binding until execution of a

formal written agreement by the parties, we decline to apply the

in-court admission exception to the statute of frauds.



                                  B.

     We next address Fedder’s contention that, even if the in-court

admission exception does not apply, the June 10 e-mail from FB

Hagerstown’s   attorney   satisfies    all    required   elements   of   the

statute.     In other words, Fedder argues that the e-mail is a

written memorandum “signed by the party to be charged or some other

person lawfully authorized by him.”          Md. Code Ann., Real Prop. §

5-104.

     The June 10 e-mail contained a “redline” comparison of the

most recent draft agreement and, on the “assumption that [the]

changes [were] acceptable” to Fedder, an “execution copy” of the

agreement.     J.A. 39.   The e-mail instructed that, if Fedder’s

attorney delivered five executed copies of the agreement to the

parties’ escrow agent with an initial deposit of $100,000, FB

Hagerstown’s attorney would ask FB Hagerstown to print out and

execute the same number of copies of the agreement.            The e-mail

contained the attorney’s printed name and contact information at

the bottom, as had appeared in his previous e-mail correspondence.




                                  7
Fedder      claims   this   e-mail   constitutes   a    signed    memorandum

satisfying the statute of frauds.          We disagree.

      To be enforceable under the statute of frauds, “the required

memorandum must be (1) a writing (formal or informal); (2) signed

by the party to be charged or by his agent; (3) naming each party

to the contract with sufficient definiteness to identify him or his

agent; (4) describing the land or other property to which the

contract relates; and (5) setting forth the terms and conditions of

all   the    promises   constituting   the   contract     made   between   the

parties.”     Beall v. Beall, 
434 A.2d 1015
, 1018 (Md. 1981).        Some of

these required elements certainly appear to be present.                    For

example, the contract attached to the e-mail was in writing, named

each party to the contract with sufficient definiteness, and

described the land or other property to which the contract related.

However, the e-mail fails to satisfy the statute of frauds because

it was not signed by FB Hagerstown or by some other person lawfully

authorized by it.

      Throughout the negotiations, FB Hagerstown’s attorney stressed

that the agreement would not be binding until his client signed and

that his client reserved the right to make changes to the drafts of

the agreement.       See, e.g., J.A. 19 (e-mail from FB Hagerstown’s

attorney forwarding initial draft to Fedder’s attorney, reserving

for comments or changes by FB Hagerstown and explaining that

contract would not be binding unless and until signed by and


                                       8
delivered to both parties); J.A. 31 (e-mail from FB Hagerstown’s

attorney   stating   that   there   may    be   further   changes   from   FB

Hagerstown); J.A. 33 (e-mail from FB Hagerstown’s attorney noting

that draft was “subject to whatever comments [my client] may

have”).      Furthermore,    the    June   10    e-mail   stated    that   FB

Hagerstown’s attorney would not ask his client to execute the

agreement until Fedder had executed five copies of the agreement

and forwarded them to the escrow agent with a $100,000 deposit.

These requirements demonstrate that FB Hagerstown, and not its

attorney, possessed the sole authority to bind itself to the

agreement.   Thus, even if we construe the attorney’s automatically

generated name and contact information to be a “signature” for

purposes of the statute of frauds, there is no legitimate dispute

that he was not authorized to bind his client to the agreement.*

     Importantly, Fedder explicitly states in its reply brief that

it does not contend that FB Hagerstown’s attorney had the authority

to bind FB Hagerstown to the agreement.            Fedder argues instead

that, because FB Hagerstown authorized its attorney to transmit the

agreement for execution, the attorney’s “signature” satisfied the

statute of frauds.    We are not persuaded.         Fedder has offered no



     *
      Given our conclusion that FB Hagerstown’s attorney lacked the
authority to bind it to the agreement, we express no opinion
concerning whether automatically generated contact information in
an e-mail amounts to a “signature.” This appears to be an issue of
first impression under Maryland law, and we decline to address
because it is not necessary to our decision.

                                     9
case law or rationale to support this argument, and we are hard

pressed to accept that the signature of one whose authority is

limited to delivering a proposed contract can satisfy the statute

of frauds.       The statute is clear that the memorandum must be in

writing and signed by “the party to be charged or some other person

lawfully authorized by him.”            Md. Code Ann., Real Prop. § 5-104;

cf. 
Beall, 434 A.2d at 1018
(requiring the memorandum to be “signed

by the party to be charged or by his agent”).                  The scope of this

authority    or    agency      must   include    the   authority     to   bind   the

principal to the contract, not merely the authority to deliver the

contract. Otherwise, the signatures of couriers and delivery staff

could bind principals even where, as in this case, the principal

had reserved the sole authority to act in its own name.



                                          C.

      Finally, Fedder argues that a binding contract existed because

it   properly     accepted      the   contract    prior   to    FB   Hagerstown’s

disavowal.        As discussed above, because the statute of frauds

applies to this case and there is no signed memorandum, Fedder’s

claim is barred.      However, even if it were not so barred, Fedder’s

actions did not amount to an acceptance of an offer that could form

a binding contract.

      In   his     June   10    e-mail,    FB    Hagerstown’s      attorney      gave

instructions on how Fedder should execute and deliver the contract.


                                          10
The attorney asked the appropriate authorized officer of Fedder to

sign five copies of the agreement and stated:

     If you will deliver the copies to the Escrow Agent for
     its signature along with the Initial Deposit of
     $100,000.00, I will request [FB Hagerstown] print out and
     execute the same number . . . for delivery to the Escrow
     Agent as well. The Escrow Agent can then sign and date
     all copies of the Contract, retain one original, and then
     return two fully executed originals to you, and return
     two originals to me for [FB Hagerstown] along with
     evidence of receipt of the Initial Deposit.

J.A. 39.

     Fedder’s attorney responded by saying that the changes were

acceptable and that he was forwarding the document to his client

for signature “with the instruction that he send to [the escrow

agent].”   J.A. 84.   Over two weeks later, Fedder’s attorney sent

another e-mail saying that he had the executed copies and deposit

check, and wanted to know if he should send the contracts to FB

Hagerstown’s attorney for signing or send them to the escrow agent.

Without ever signing the agreement, however, FB Hagerstown called

off the deal before Fedder delivered the signed contracts to the

escrow agent or to FB Hagerstown’s attorney.    Fedder claims that,

by notifying FB Hagerstown’s attorney that it had signed the

agreement and prepared a deposit check, it accepted the offer and

formed a binding contract.

     We disagree.     Under general principles of contract law, an

enforceable contract is formed where one party makes an offer and

the other party accepts before the offer is revoked.    See Prince


                                 11
George’s County v. Silverman, 
472 A.2d 104
, 112 (Md. Ct. Spec. App.

1984) (“A contract is formed when an unrevoked offer made by one

person    is    accepted    by   another.”).         “An     ‘offer’       is     the

‘manifestation of willingness to enter into a bargain, so made as

to justify another person in understanding that his assent to that

bargain    is   invited    and   will    conclude    it.’”         
Id. (quoting Restatement (Second)
of Contracts § 24 (1979)). In other words, an

offer is something that can be accepted to form a binding contract

without any further action on the part of the offeror.

     In the present case, FB Hagerstown made clear from the outset

that “the contract is not binding on either party unless and until

executed by and delivered to both parties.”                J.A. 19.      Thus, the

June 10 e-mail specifying instructions for Fedder’s signature and

delivery could not have amounted to an “offer,” because, even had

Fedder followed the instructions exactly, FB Hagerstown still had

to sign the agreement to be bound.           In other words, FB Hagerstown

reserved the last act of contract formation for itself.

     Even had the June 10 e-mail been an offer, Fedder failed to

accept in the manner prescribed by FB Hagerstown’s attorney.

“Under    general   principles   of     contract    law,    when   a     method   of

performance necessary to constitute acceptance of an offer has been

prescribed, performance in some other manner does not constitute

acceptance.”     Baltimore County v. Archway Motors, Inc., 
370 A.2d 113
, 116 (Md. Ct. Spec. App. 1977).           By stating that “if” Fedder


                                        12
delivered five signed copies of the agreement to the escrow agent

with a deposit check, “I will request [FB Hagerstown] print out and

execute the same number,” J.A. 39, FB Hagerstown’s attorney was

placing an express condition on how Fedder should proceed.     Cf.

Gilbane Bldg. Co. v. Brisk Waterproofing Co., 
585 A.2d 248
, 251

(Md. Ct. Spec. App. 1991) (“Although no particular form of words is

necessary in order to create an express condition, such words and

phrases as ‘if’ and ‘provided that,’ are commonly used to indicate

that performance has expressly been made conditional, as have the

words ‘when,’ ‘after,’ ‘as soon as’ or ‘subject to.’”) (citations

omitted).

     As Judge Bredar correctly explained, “it is crystalline . . .

that material terms of the contract - the execution and delivery

terms deliberately designed to preserve [FB Hagerstown’s] position

to the last - were not met by [Fedder] prior to repudiation of the

deal by [FB Hagerstown].”   J.A. 12.   Thus, because FB Hagerstown

reserved the last act of contract formation for itself, and because

Fedder failed to follow instructions that were a condition to FB

Hagerstown’s completion of that act, no enforceable agreement

exists.




                                13
                              III.

    From day one, FB Hagerstown reserved the right not to be bound

by the contract until it had been signed by and delivered to both

parties.   Thus, whether viewed under the statute of frauds or

simply the intentions of the parties, without FB Hagerstown’s

signature, no enforceable agreement could have existed.   For the

foregoing reasons, we affirm the grant of summary judgment to FB

Hagerstown.

                                                          AFFIRMED




                               14

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