Beery v. Maryland Medical Laboratory, Inc.

• Decision Date: 01 September 1990
• Docket Number: No. 1797,1797
• Citation: 597 A.2d 516,89 Md.App. 81
• Parties: Joanne S. BEERY v. MARYLAND MEDICAL LABORATORY, INC. ,
• Court: Court of Special Appeals of Maryland

Page 81

89 Md.App. 81

597 A.2d 516

Joanne S. BEERY v. MARYLAND MEDICAL LABORATORY, INC.

No. 1797, Sept. Term, 1990.

Court of Special Appeals of Maryland.

Oct. 30, 1991.

Certiorari Denied Jan. 27, 1992.

Mercedes C. Samborsky, Joppa, for appellant.

Norman R. Buchsbaum (Michael D. Carlis, Michael Hendler and Adelberg, Rudow, Dorf, Hendler & Sameth, on the brief), Baltimore, for appellee.

Argued before BISHOP, BLOOM and HARRELL, JJ.

BLOOM, Judge.

Appellant, Joanne Beery, was the attorney for Mary DePaolo in an action brought by DePaolo against appellee, Maryland Medical Laboratory, Inc., in the Circuit Court for Baltimore City. At the conclusion of the case, after dismissing counts for negligent infliction of emotional distress (Count IV in the original complaint), wrongful or abusive discharge and intentional infliction of emotional distress (Counts II and III, respectively, in both the original complaint and the amended complaint), and after granting summary judgment in favor of appellee on the sole remaining count (Count I--Slander) in the amended complaint, the court granted appellee's motion for "sanctions" under Md.Rule 1-341 and awarded appellee a judgment against appellant and her client in the amount of $10,000, for counsel fees. An appeal resulted in our affirmance on the merits of the case itself, but a remand as to counsel fees to enable the trial court to determine whether the counts for abusive discharge, intentional infliction of emotional distress, and negligent infliction of emotional distress had been instituted or maintained in bad faith or without substantial justification. Upon remand, the circuit court found both bad faith and lack of substantial justification and entered judgment, against appellant only, for $12,000.00 awarded as counsel fees pursuant to Md.Rule 1-341.

In this appeal from that judgment, appellant presents us with a pentad of assertions of error:

1. The trial court's finding that appellant acted with bad faith or without substantial justification was clearly erroneous in light of its finding that appellant acted without "evil intent" and with what she believed to be "appropriate conduct."

2. The trial court abused its discretion when it sanctioned appellant based on "all of the evidence received in this matter" instead of limiting its inquiry to the proceedings related solely to the two alternative counts of appellant's amended complaint.

3. The trial court erred in ruling appellant had no substantial justification for filing and maintaining the two alternative counts of appellant's amended complaint.

4. The trial court abused its discretion when it imposed Md.Rule 1-341 sanctions against appellant solely because the appellant had "cost the defendant a substantial amount of money in counsel fees."

5. The trial court abused its discretion when it imposed Rule 1-341 sanctions against appellant for defending a motion to dismiss two alternative counts of appellant's amended complaint.

We shall address the substance of each of those contentions, but not as appellant presented them.

Our review of the record leads us to conclude that the trial court was not clearly erroneous in finding that appellant acted without substantial justification in filing and maintaining the actions for negligent infliction of emotional distress, abusive discharge, and intentional infliction of emotional distress. We need not address the issue of whether the court was clearly erroneous in finding bad faith, since the finding of lack of substantial justification will support an award of counsel fees under Rule 1-341. The court did err, however, in arriving at the amount of $12,000 as a sanction. Accordingly, we shall vacate the judgment and remand for further proceedings to determine an appropriate award of counsel fees.

Background

A summary of the anfractuous path the litigation has taken to reach this point may place the issues in proper perspective.

Mary DePaolo was employed by Maryland Medical Laboratory, Inc., as an acting assistant supervisor. On 3 April 1987 she was called into the department head's office where, in front of other employees, based primarily on information received from a co-worker, she was accused of misconduct, including acts that could be construed as theft. She was then told that she was fired. She denied the accusations and threatened to sue the company. The company personnel manager was then called to the office, and she "suspended" the termination of employment pending further investigation. The entire incident lasted less than an hour and a half, at the end of which time Ms. DePaolo was still employed. Nevertheless, Ms. DePaolo had become emotionally upset and felt too ill to work that evening. She was told to go home and report for work the following Monday.

Ms. DePaolo never returned to work; instead, she filed a claim for worker's compensation, alleging that the emotional damage she had sustained as a result of the incident constituted an accidental injury arising out of her employment. While her compensation claim was still pending, Ms. DePaolo, through appellant, her attorney, instituted this civil action against appellee in the Circuit Court for Baltimore City.

As noted, supra, the original complaint consisted of four counts: I--slander; II--abusive or wrongful discharge; III--intentional infliction of emotional distress; and IV--negligent infliction of emotional distress. Appellee answered the complaint and filed a motion to dismiss Counts II, III, and IV for failure to state a cause of action. As to Count II, appellee asserted that the discharge did not violate any clear mandate of public policy; Count III was challenged on the sufficiency of the averments; and Count IV was contested on the basis that Maryland does not recognize an action for negligent infliction of emotional distress. Prior to a ruling on the motion, the Workers' Compensation Commission concluded that DePaolo had suffered a compensable injury and awarded benefits for temporary total disability. Appellee then amended its motion to add the defense of estoppel to Counts III and IV.

The trial court (Ward, J.) dismissed Count IV with prejudice and Counts II and III with leave to amend. DePaolo then filed an amended complaint containing three counts: slander (Count I), abusive discharge (Count II), and intentional infliction of emotional distress (Count III). Appellee responded with a motion to dismiss Counts II and III, which the court (Greenfeld, J.) granted, dismissing Counts II and III without leave to appeal.

Several months later, appellee filed a motion for sanctions under Rule 1-341, contending that Counts II, III, and IV had been filed in bad faith and without substantial justification. Shortly thereafter, appellee moved for summary judgment on the remaining count, slander. The court (Ward J.) granted the motion for summary judgment as to Count I, thereby making final the judgment in favor of appellee. The court also granted appellee's motion for sanctions, ordering appellant and DePaolo to pay $10,000 in attorneys' fees and related expenses on Counts II, III, and IV. Appellee's supplemental motion for sanctions seeking attorneys' fees and expenses for defending Count I was denied.

Appellant and DePaolo appealed the granting of the motion for summary judgment on Count I, the dismissal of Count II, the dismissal of Count III, and the order for sanctions in the amount of $10,000. Appellee cross-appealed on the denial of its motion for sanctions on Count I.

In an unreported decision, DePaolo v. Maryland Medical Laboratory, Inc. (No. 431, September Term, 1989, filed 17 November 1989), this Court affirmed the granting of the motion for summary judgment on Count I; affirmed the dismissal of Counts II and III; affirmed the trial court's refusal to grant appellant's motion to withdraw her appearance; and affirmed the trial court's denial of appellee's motion for sanctions on Count I. We remanded the assessment of expenses in the amount of $10,000, directing the trial court to review its award in light of the then recent decision in Talley v. Talley, 317 Md. 428, 564 A.2d 777 (1989), which held that before a court awards attorney's fees and costs it must make an evidentiary finding of "bad faith" or "lack of substantial justification," and that "some brief exposition of the facts upon which the finding is based and an articulation of the particular finding involved" are necessary for subsequent review. Talley, 317 Md. at 436, 564 A.2d 777. There being nothing in the record to indicate that those required findings specified in Talley were made, we could neither affirm nor reverse the order of the trial court with respect to the attorneys' fees and costs.

On remand, the trial court had two issues before it: a motion by appellant that Judge Ward recuse himself, and the remand by this Court on the issue of the attorneys' fees and costs. The recusal motion was denied, but since appellant takes no issue with that ruling in this appeal, we shall not discuss it.

The trial court, in an oral decision rendered in open court on 10 August 1990, held: (1) as to Counts II (abusive discharge) and III (Intentional infliction of emotional distress), there was bad faith and lack of substantial justification; (2) as to Count IV (negligent infliction of emotional distress), there was no bad faith, but there was lack of substantial justification.

In its Memorandum Opinion and Order on 17 September 1990, the trial court affirmed its finding of bad faith and lack of substantial justification articulated orally on 10 August 1990, and assessed $12,000 in attorneys' fees and costs against appellant, Beery, only, the claim against Ms. DePaolo having been dropped.

I

The judgment against appellant for counsel fees was imposed pursuant to Md.Rule 1-341, which provides:

In any civil action, if the court finds that the conduct of any party in maintaining or defending any proceeding was in bad faith or...