Baker, Watts & Co. v. Miles & Stockbridge, No. 518

CourtCourt of Special Appeals of Maryland
Writing for the CourtArgued before WILNER; HARRELL
Citation620 A.2d 356,95 Md.App. 145
PartiesBAKER, WATTS & COMPANY v. MILES & STOCKBRIDGE, et al. ,
Decision Date01 September 1992
Docket NumberNo. 518

Page 145

95 Md.App. 145
620 A.2d 356
BAKER, WATTS & COMPANY
v.
MILES & STOCKBRIDGE, et al.
No. 518, Sept. Term, 1992.
Court of Special Appeals of Maryland.
Feb. 24, 1993.

[620 A.2d 360]

Page 155

David F. Albright and Harry M. Rifkin (Semmes, Bowen & Semmes, on the brief), Baltimore, for appellant.

Francis B. Burch, Jr. and David Clarke, Jr. (Piper & Marbury, on the brief), Baltimore, for appellees.

[620 A.2d 361] Argued before WILNER, C.J., and GARRITY and HARRELL, JJ.

HARRELL, Judge.

On 20 October 1989, Baker, Watts & Co., appellant, filed suit in the Circuit Court for Baltimore City against Miles & Stockbridge and one of its partners, Timothy R. Casgar, appellees, alleging malpractice, breach of contract, and negligent misrepresentation and seeking contribution under the Maryland Securities Act, Md. Corps. & Ass'ns Code Ann. §§ 11-101 to -805 (1993) (hereinafter the Maryland Securities Act or the Act). On 30 November 1989, appellees filed a motion to dismiss pursuant to Md.Rule 2-322(b). On 21 December 1989, Baker, Watts filed a motion to consolidate this action, in accordance with Md.Rule 2-503, with a previously filed action, which had been dismissed from federal court, because the actions were based on the same set of events and involved identical parties and identical questions of law and fact.

Page 156

On 9 May 1990, a hearing was held on appellees' motion to dismiss. By order of even date, the circuit court (Ross, J.) granted the motion to dismiss as to Baker, Watts's claims for malpractice, breach of contract, and negligent misrepresentation because the statute of limitations had run. The circuit court deferred until trial its decision on the motion to dismiss as to Baker, Watts's claim for contribution under § 11-703 of the Maryland Securities Act.

Appellees filed a "renewed" motion to dismiss Baker, Watts's remaining claim on 8 January 1991. On 11 February 1991, the circuit court denied this motion.

The day before trial, 17 December 1991, appellees filed a motion for summary judgment pursuant to Md.Rule 2-501. 1 The following day, appellees also filed a motion in limine seeking to bar Baker, Watts, its counsel, and its witnesses from making any reference to a prior proceeding in federal court out of which this case arose. On the morning set for trial, 18 December 1991, the circuit court (Davis, J.) heard oral argument on appellees' motion for summary judgment. Although counsel for Baker, Watts argued against the motion, he also argued that his client should be given fifteen days to respond to appellees' motion. The circuit court granted appellees' motion for summary judgment as to Baker, Watts's remaining claim. The circuit court also granted the motion in limine as a precautionary measure should the case ever be tried.

On 30 December 1991, Baker, Watts filed a motion for reconsideration of the order granting summary judgment. 2 The circuit court denied the motion for reconsideration

Page 157

by order dated 4 February 1992. Baker, Watts noted a timely appeal to this Court on 4 March 1992.

Background

In 1981, Baker, Watts acted as the lead dealer-manager in a private offering and sale of limited partnership interests in Superior Drilling Partners '81 (Partners '81). Superior Petroleum, Inc. (Superior) was the general partner. Baker, Watts retained appellees to perform all necessary legal services in connection with this offering and sale.

On 9 March 1981, the private offering of the interests in Partners '81 began with the issuing of a Confidential Offering Memorandum. Appellees drafted the offering memorandum and a tax opinion, which was included in the memorandum. The private offering closed on 1 June 1981.

[620 A.2d 362] In January 1981, prior to the private offering, a purchase of stock in Superior had been consummated to resolve a deadlock between the two controlling groups of Superior--Anthony Biondi, Superior's President, and the Spring brothers--each of whom owned a fifty percent interest in the company. Eighteen individuals from Baltimore (the Baltimore Group), purchased from Biondi and the Spring brothers a one-third interest in Superior. Appellee Casgar was a member of the Baltimore Group, as were fourteen partners and two employees from Baker, Watts. Casgar owned 4.2% of the stock in Superior and the partners and employees from Baker, Watts collectively owned approximately twenty-eight percent of the stock.

Conflicting allegations are made by the parties that during the private offering period from 9 March 1981 to 1 June 1981 several communications took place between Biondi and certain members of the Baltimore Group concerning the

Page 158

sale of the Baltimore Group's stock to Biondi. Baker, Watts claims that Casgar, along with Hugh Grady, a Baker, Watts employee, handled the negotiations with Biondi. In contrast, appellees argue that only Grady took part in the negotiations to sell the stock. Eventually, on 1 July 1981, one month after the private securities offering closed, the Baltimore Group sold its stock to Biondi.

The bright future predicted for Partners '81 did not become reality. By June of 1982 the limited partnership was in receivership. In April of 1983, certain investors who had purchased limited partnership interests in Partners '81 during the private offering brought suit in federal court against Baker, Watts, Adalman v. Baker, Watts & Co., No. Y-83-2485 (D.Md.1985). 3 The Adalman investors alleged that the Confidential Offering Memorandum contained material omissions in violation of § 12(2) of the Securities Act of 1933, 15 U.S.C. § 77l(2) (1988), and § 11-703(a)(1)(ii) of the Maryland Securities Act. On 16 May 1985, a jury found that Baker, Watts had violated the federal and state securities laws by failing to disclose the negotiations between the Baltimore Group and Biondi in the offering memorandum. The investors obtained a judgment for $1,916,314.17, which was entered by the district court on 31 July 1985. After an unsuccessful appeal by Baker, Watts, Adalman v. Baker, Watts & Co., 807 F.2d 359 (4th Cir.1986), the parties entered into a settlement agreement, and on 28 November 1986, Baker, Watts paid the Adalman investors approximately $2.3 million. Also, in accordance with the terms of the settlement agreement, the parties entered into a stipulation that the case be dismissed with prejudice and that the judgment entered against Baker, Watts be vacated. On 3 December 1986, the United States District Court for the

Page 159

District of Maryland signed an order giving effect to the parties' stipulation.

On 23 October 1987, Baker, Watts filed almost identical actions against appellees in the U.S. District Court for the District of Maryland and the Circuit Court for Baltimore City. Baker, Watts sought indemnification and contribution under § 12(2) of the Securities Act of 1933 and § 11-703 of the Maryland Securities Act, and brought state common law claims for malpractice, breach of contract, and negligent misrepresentation.

On 24 November 1987, on a motion filed by appellees, the state action was removed to federal court. On 18 March 1988, the U.S. District Court denied Baker, Watts's motion to remand the state action and consolidated the two cases pursuant to Rule 42(a) of the Federal Rules of Civil Procedure. Appellees filed a motion to dismiss Baker, Watts's claims, which the court treated as a motion for summary judgment because it presented matters outside the pleadings. Fed.R.Civ.P. 12(b). Ultimately, the district court granted appellees' motion for summary judgment regarding the [620 A.2d 363] claims under the federal and state securities laws. The district court remanded the state common-law claims for malpractice, breach of contract, and negligent misrepresentation to the Circuit Court for Baltimore City. Baker, Watts & Co. v. Miles & Stockbridge, 690 F.Supp. 431 (D.Md.1988).

Both parties appealed to the United States Court of Appeals for the Fourth Circuit. On appeal, the Fourth Circuit held: (1) private rights of action for contribution and indemnification are not available under § 12(2) of the Securities Act of 1933; (2) Baker, Watts's state statutory and common-law claims, to the extent that they provide a cause of action for indemnification, must fail because they are preempted by federal law, which does not allow indemnification; and (3) the district court erred in resolving, on the merits, Baker, Watts's claim for contribution under § 11-703 of the Maryland Securities Act. The Fourth Circuit also instructed the district court to dismiss without prejudice

Page 160

all pendent state claims, except those seeking indemnification. See Baker, Watts & Co. v. Miles & Stockbridge, 876 F.2d 1101 (4th Cir.1989).

On 20 September 1989, in accordance with the decision by the Fourth Circuit, the district court ordered the following: (1) Baker, Watts's claim for indemnification under § 11-703 was dismissed with prejudice; (2) Baker, Watts's claim for contribution under § 11-703 was dismissed without prejudice; and (3) Baker, Watts's state common-law claims for malpractice, breach of contract, and negligent misrepresentation were dismissed without prejudice subject to the preemptive scope of the federal securities laws as discussed by the court of appeals in its decision.

We will include additional facts as necessary in our discussion of the issues presented.

Issues

Appellant presents the following issues for our review:

I. Whether the trial court erred in considering appellees' motion for summary judgment on the morning set for trial without granting appellant fifteen days to respond;

II. Whether there are material questions of fact in dispute which would preclude the grant of summary judgment;

III. Whether the circuit court erred when it dismissed appellant's state common-law claims for malpractice, breach of contract, and negligent misrepresentation as barred by the statute of limitations; and

IV. Whether the circuit court erred...

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49 practice notes
  • Burt v. Maasberg, Civil Action No.: ELH-12-0464
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • March 28, 2014
    ...1128 (2002); Usher v. Emmett A. Larkin Co., Inc., 205 F. Supp. 2d 475, 479 (D. Md. 2002); Baker, Watts & Co. v. Miles & Stockbridge, 95 Md. App. 145, 620 A.2d 356, 369-70 (Md. 1993)). Under the plain text of C.A. § 11-703(a)(2), the buyer of a security may be held directly liable only to "t......
  • Mathis v. Hargrove, No. 2604 September Term, 2004.
    • United States
    • Court of Special Appeals of Maryland
    • December 22, 2005
    ...a motion for summary judgment may be filed at any time prior to or during the trial, see Baker, Watts & Co. v. Miles & Stockbridge, 95 Md.App. 145, 161, 620 A.2d 356 (1993)2, the reservation of the court's ruling on the motion defeats the very purpose for Page 387 the motion pretrial, i.e.,......
  • State Com'n on Human Relations v. Suburban Hosp., Inc., No. 424
    • United States
    • Court of Special Appeals of Maryland
    • September 1, 1996
    ...of the work except as to its product or result," then the worker is an independent contractor. Baker, Watts & Co. v. Miles & Stockbridge, 95 Md.App. 145, [686 A.2d 718] 180, 620 A.2d 356 (1993) (quoting Williams Constr. Co. v. Bohlen, 189 Md. 576, 580, 56 A.2d 694 (1948)). That is the Maryl......
  • IN RE RESSLER HARDWOODS AND FLOORING, INC., Bankruptcy No. 1:08-bk-01878MDF.
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Middle District of Pennsylvania
    • March 19, 2010
    ...129, 133 (4th Cir.2001) cert. denied, 534 U.S. 1128, 122 S.Ct. 1065, 151 L.Ed.2d 968 (2002); Baker, Watts & Co. v. Miles & Stockbridge, 95 Md.App. 145, 620 A.2d 356, 369-70 (Md.1993). Thus, I find that it is appropriate to consider cases interpreting state laws modeled on the USA as well as......
  • Request a trial to view additional results
49 cases
  • Burt v. Maasberg, Civil Action No.: ELH-12-0464
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • March 28, 2014
    ...1128 (2002); Usher v. Emmett A. Larkin Co., Inc., 205 F. Supp. 2d 475, 479 (D. Md. 2002); Baker, Watts & Co. v. Miles & Stockbridge, 95 Md. App. 145, 620 A.2d 356, 369-70 (Md. 1993)). Under the plain text of C.A. § 11-703(a)(2), the buyer of a security may be held directly liable only to "t......
  • Mathis v. Hargrove, No. 2604 September Term, 2004.
    • United States
    • Court of Special Appeals of Maryland
    • December 22, 2005
    ...a motion for summary judgment may be filed at any time prior to or during the trial, see Baker, Watts & Co. v. Miles & Stockbridge, 95 Md.App. 145, 161, 620 A.2d 356 (1993)2, the reservation of the court's ruling on the motion defeats the very purpose for Page 387 the motion pretrial, i.e.,......
  • State Com'n on Human Relations v. Suburban Hosp., Inc., No. 424
    • United States
    • Court of Special Appeals of Maryland
    • September 1, 1996
    ...of the work except as to its product or result," then the worker is an independent contractor. Baker, Watts & Co. v. Miles & Stockbridge, 95 Md.App. 145, [686 A.2d 718] 180, 620 A.2d 356 (1993) (quoting Williams Constr. Co. v. Bohlen, 189 Md. 576, 580, 56 A.2d 694 (1948)). That is the Maryl......
  • IN RE RESSLER HARDWOODS AND FLOORING, INC., Bankruptcy No. 1:08-bk-01878MDF.
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Middle District of Pennsylvania
    • March 19, 2010
    ...129, 133 (4th Cir.2001) cert. denied, 534 U.S. 1128, 122 S.Ct. 1065, 151 L.Ed.2d 968 (2002); Baker, Watts & Co. v. Miles & Stockbridge, 95 Md.App. 145, 620 A.2d 356, 369-70 (Md.1993). Thus, I find that it is appropriate to consider cases interpreting state laws modeled on the USA as well as......
  • Request a trial to view additional results

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