eNotes: Liability – November 2024 – Maryland

SIGNIFICANT CASE SUMMARIES

Maryland Case Summaries

In the Matter of the Petition of Md. Bio Energy LLC
Maryland Appellate
No. 251, Sept. Term, 2023

Decided: September 3, 2024

Maryland reaffirms “universally accepted” and “commonsensical principles” of contract law, requiring mutual assent and the intent to be bound as prerequisites to contract formation.

Background

In 2011, Maryland’s Department of General Services (“DGS”) issued a Request for Proposals for the development of a renewable energy facility. Green Plant Power Solutions, Inc. (“GPPS, Inc.”) responded with a proposal. GPPS, Inc. claimed that if it were awarded the contract it would serve as the “prime contractor,” but proposed to DGS the creation of a special purpose entity to conduct the project, Maryland Bio Energy, LLC (“MBE”). GPPS, Inc. claimed that it would remain the general contractor of the project as the owner of MBE. DGS awarded GPPS, Inc. the contract. During negotiation of the Power Purchase Agreement (“PPA”), GPPS, Inc. removed all mention of itself from the PPA, replacing its name with MBE’s name – including removing its signature block from the signature page. In doing so, GPPS, Inc. told DGS that it was not a party to the PPA. After MBE signed the PPA, but before DGS signed the PPA, GPPS, Inc. created GPPS, LLC, and sold its interest in MBE to GPPS, LLC.

Two years later, DGS terminated the PPA as void because the PPA could not be awarded to a party other than the responsible offeror – i.e., since GPPS, Inc. was the responsible offeror originally awarded the contract, and GPPS, Inc. is no longer a party to the PPA, the PPA is void. GPPS, Inc., MBE, and DGS all appealed to the Maryland State Board of Contract Appeals (“MSBCA”). The MSBCA ruled in favor of DSG. It held that GPPS, Inc. did not assent to the contract terms, in fact, it expressly denied its intent to be bound by removing its signature block and telling DGS it was not a party to the PPA. GPPS, Inc. and MBE appealed to the Circuit Court for Baltimore City. The Circuit Court reversed the MSBCA decision, holding that MBE and GPPS, Inc. are one in the same. Thus, if MBE intended to be bound, so did GPPS, Inc. DGS appealed to the Appellate Court of Maryland.

Holding

Maryland statutory law requires that procurement contracts be awarded to the responsible offeror who submits the proposal. The party who submits the proposal must assent to being bound by all the contractual terms. Here, GPPS, Inc. was the responsible offeror awarded the PPA. However, from the time negotiations started to signing the final agreement, GPPS, Inc. not only replaced itself with MBE, but also sold its interest in MBE to GPPS, LLC. As such, the Appellate Court of Maryland held, GPPS, Inc. did not mutually assent to the terms because it did not execute the PPA. Further, GPPS, Inc. did not intend to be bound by the PPA as it removed itself from the PPA, stated it was not a party to the PPA, and retained no interest, controlling or otherwise, in MBE. The Appellate Court of Maryland’s decision reaffirmed the “universally accepted” and “commonsensical principles” of contract law, requiring mutual assent and the intent to be bound as prerequisites to contract formation.

Questions about this case can be directed to Alex Mitchell at (443) 641-0563 or amitchell@tthlaw.com.

The Abell Found. v. Baltimore Dev. Corp.
Maryland Appellate Court
No. 1890, Sept. Term, 2022

Decided: August 2, 2024

Records are confidential under the MPIA when that information is treated as private by its owner and the government provides an assurance of privacy.

Background

This Maryland Public Information Act (“MPIA”) dispute stems from a payment in lieu of taxes agreement (“Agreement”) between Baltimore City and a developer over the construction of the Legg Mason Tower. This Agreement began in 2009 and granted Baltimore City a certain portion of the profits from the project. In return the developer was exempted from local real property taxes. Additionally, the developer was required to annually provide Baltimore City with its financial records. In 2016, the developer offered to buy out Baltimore City from the Agreement. Baltimore City conducted an analysis and determined that the buy-out was agreeable, after which a deal was reached. The Abell Foundation, a non-profit, attempted to obtain records related to the buyout via MPIA requests, but Baltimore City determined some of the requested financial records were confidential and refused to release those records.

The Abell Foundation filed suit in the Circuit Court for Baltimore City claiming that the unprovided documents were not confidential and must be produced. Initially, the federal circuit courts of appeal used a two-tiered approach to determining the confidentiality of financial and commercial records under FOIA. If the records were provided voluntarily, the records were confidential if they would not have customarily been released to the public by the provider. If a party was required to provide the financial records, they were confidential if the release of those records would cause substantial harm to the party’s competitive position. However, during litigation, the U.S. Supreme Court issued a ruling which held that under FOIA, where commercial or financial information is customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, that information is confidential.

Holding

Noting that the MPIA was modeled after the FOIA and had an identical purpose, the Circuit Court for Baltimore City granted Baltimore City’s Motion for summary judgment, citing to the U.S. Supreme Court’s interpretation. The Abell Foundation filed a timely appeal. The Appellate Court of Maryland affirmed the Circuit Court’s decision, holding that as Maryland’s approach to statutory interpretation is similar to the approach taken by the U.S. Supreme Court in their decision, an analysis of the plain language of the MPIA supported the same conclusion regarding confidentiality. The Appellate Court of Maryland applied the U.S. Supreme Court’s interpretation of confidentiality under FOIA to the MPIA. Applying that new standard, the Appellate Court held that the financial statements and models used in Baltimore City’s revenue analysis were indeed confidential and not subject to release under the MPIA.

Questions about this case can be directed to Lucas Duty at (443) 641-0572 or lduty@tthlaw.com.

Trusted Science & Tech., Inc. v. Evanich
Maryland Appellate Court
Nos. 38 & 1437, Sept. Term, 2023

Decided: July 22, 2024

The Appellate Court of Maryland holds non-parties have standing to challenge subpoenas on grounds of relevance and overbreadth.

Background

Nicholas Evanich (“Husband”) and Belen Coleman (“Wife”) married in 2017. Husband was the co-founder of Trusted Science and Technology, Inc. (“TST”) and owned shares of the company during the marriage. Wife worked for TST during the marriage. In 2021, Husband initiated an action for absolute divorce in the Circuit Court for Montgomery County. Wife, seeking documents to evaluate the value of TST in the divorce action, issued a subpoena upon TST. TST moved to quash and for a protective order. Wife issued a second subpoena upon TST requesting additional documents. TST filed an objection under Maryland Rule 2-510 and produced some documents. The parties then executed a Stipulated Protective Order drafted by TST. Wife then moved to compel the additional documents not produced by TST. Husband consented and joined the Motion.

TST noted an appeal from the Court’s Order compelling discovery. TST attached an exhibit to its opposition, that being an Expert Declaration stating that the parties sought documents which were not necessary for a valuation of the company. Wife filed a Motion to amend the Court’s compulsion Order and attached an Expert Declaration stating the documents were needed to value the company. The Court held a hearing on the Motions, ruling in favor of Wife and denying TST’s request for a stay of compulsion pending appeal. TST produced the requested documents and filed a second notice of appeal. The pertinent issue on appeal was whether the Circuit Court erred in concluding that a third party lacks legal standing to argue overbreadth and relevance under Maryland Rule 2-510.

Holding

The Appellate Court of Maryland held that TST’s appeal was moot as TST had already produced the documents. However, the Court exercised its discretion to reach the merits of the appeal because the issue on appeal was “capable of repetition, yet evading review.” As to the substantive issue, the Court held that the ability of a person (including a nonparty) to object to a subpoena under Maryland Rule 2-510(f) encompasses the most basic objection that the discovery sought by the subpoena exceeds the bounds of Maryland Rule 2-402. Maryland Rule 2-402 delineates the scope of discovery under the Maryland Rules and provides for objections to discovery on grounds of relevance and overbreadth. The Court ordered that Husband and Wife were required to return or destroy the protected material produced by TST within 60 days.

Questions about this case can be directed to Nicholas Daetwyler at (443) 641-0567 or ndaetwyler@tthlaw.com.