B–Line Med., LLC v. Interactive Digital Solutions, Inc.

• Decision Date: 20 December 2012
• Docket Number: No. 1085,Sept. Term, 2011.,1085
• Parties: B–LINE MEDICAL, LLC v. INTERACTIVE DIGITAL SOLUTIONS, INC.
• Court: Court of Special Appeals of Maryland

209 Md.App. 22

57 A.3d 1041

B–LINE MEDICAL, LLC

v.INTERACTIVE DIGITAL SOLUTIONS, INC.

No. 1085, Sept. Term, 2011.

Court of Special Appeals of Maryland.

Dec. 20, 2012.

Bryan D. Bolton (Michael P. Cunningham, Funk & Bolton PA, on the brief), Baltimore, MD, for Appellant.

Steven J. Lewicky (Angela Grau, Davis, Agnor, Rapaport & Skalny, LLC, on the brief), Columbia, MD, for Appellee.

Panel: DEBORAH S. EYLER, WRIGHT, CHARLES E. MOYLAN, JR. (Retired, Specially Assigned), JJ.

WRIGHT, J.

This appeal arises from a jury verdict in favor of appellee, Interactive Digital Solutions, Inc. (“IDS”), on counts of breach of contract, tortious interference with contract, and tortious interference with business relations. The jury awarded undifferentiated damages totaling $769,422 and on June 8, 2011, the Circuit Court for Howard County entered judgment against appellant, B–Line Medical, LLC (“B–Line”). On June 20, 2011, B–Line timely filed a Motion to Revise Judgment, a Motion for Judgment Notwithstanding the Verdict (“JNOV”), and a Motion for a New Trial. On July 28, 2011, the circuit court denied the motions. On August 1, 2011, B–Line filed this appeal.

Questions Presented

B–Line asks us to determine:

1) Whether the judgment on plaintiff's contract claim must be reversed because (a) as a matter of law no work was subcontracted to B–Line in connection with the Clarian Simulation Center under the Mutual Subcontract Agreement, and (b) the trial court failed to instruct the jury on the interpretation of contract provisions restricting competition under Maryland law?

2) Whether the judgment on the tortious interference with contract and business relations claims must be reversed because (a) the trial court's jury instructions were contrary to Indiana law and Indiana's civil pattern jury instructions; (b) as a matter of law IDS was not a third-party beneficiary of any contract or relationship between Clarian Health Partners, Inc. (“Clarian”) and AT & T Communications, Inc. (“AT & T”); (c) as a matter of law no valid and enforceable contract existed between Clarian and AT & T at the time of the alleged “interference” and the jury instructions permitted the jury to speculate about the existence of an oral or implied contract contrary to the statute of frauds; (d) B–Line's conduct was not “illegal” as a matter of law; and (e) IDS had no protected business relationship with Clarian as a matter of law?

3) Whether the undifferentiated damages award must be vacated if any part of the judgment is reversed?

IDS presents one issue on cross-appeal, which IDS asks us to address only if we remand the case for a new trial:

1) Whether the trial court erred in striking the Second Amended Complaint?

Finding no error or abuse of discretion, we affirm the circuit court's judgment. As such, we need not address B–Line's third question or IDS's cross-appeal.

Facts

B–Line is a Maryland limited liability corporation that creates proprietary medical simulation software used to train medical and nursing students and other healthcare professionals. IDS is an Indiana corporation that creates and sells video networking products for use in interactive distance learning, web-based training, and other purposes as well as sells media distribution, consultation, installation, and maintenance services.

On or about March 20, 2006, B–Line and IDS entered into a Mutual Subcontract Agreement (“MSA”), a teaming arrangement where the parties could bundle their services to sell as a package to prospective customers. The MSA was a non-exclusive agreement whereby either party could, but was not required to, contract with the other to provide services or materials in connection with a project in which the other party was involved. Under the MSA, a project would be initiated when the “Prime,” or party entering a contract with a third-party, requested that the non-contracting party become the “Supplier” of goods and services under the contract. If either B–Line or IDS had a relationship with a third-party client, the other party was barred by the MSA from providing services to that client unless the party with the existing relationship consented in writing. Section 3.1.5 of the MSA states that “Supplier shall not provide any service directly to a client for solutions provided as a subcontractor to the Prime without written authorization from the Prime.”

When the MSA was formed, B–Line was involved in two projects ¹ for which it needed an audio-visual integrator, as was IDS. Pursuant to the MSA, because B–Line brought IDS into each of those two projects, B–Line was the Prime and IDS was the Supplier. These projects were completed without any difficulties.

In the latter half of 2006, Clarian, an Indiana non-profit corporation that owns and operates several hospitals and medical centers in Indiana, engaged in a joint venture with the Indiana University School of Medicine & School of Nursing (“IU”) to construct a new building for the medical and nursing schools containing a clinical skills simulation center (“Clarian Simulation Center”).² In late 2006, AT & T, a corporation engaged in numerous communications activities, including extensive work with Clarian, ³ submitted a proposal to Clarian to design, implement, and support the Clarian Simulation Center. AT & T had both an existing relationship with Clarian and a teaming arrangement in place with IDS. In its proposal to Clarian, AT & T included IDS as its subcontractor for the video simulation center portion of the project. In turn, IDS included B–Line as the provider of software in its proposal to AT & T. IDS's proposal comported with § 14 of the MSA, which stated that B–Line appointed IDS as the exclusive distributor of its products to AT & T.

On November 28, 2006, AT & T, IDS, and B–Line gave a presentation to Clarian and IU representatives.⁴ At the time of this presentation, Clarian and IU were considering two software solutions—the one presented by the AT & T/IDS/B–Line team, and one presented by another vendor. In January 2007, AT & T, IDS, and B–Line made a second team presentation to Clarian and IU representatives. It is undisputed that the purpose of the meetings was to sell B–Line's software to Clarian, who was already familiar with AT & T and IDS.

On February 9, 2007, the Midwest regional sales representative for IDS, Zac Cook, was notified via phone call by Melody Korous, a Clarian project manager, that Clarian had selected the AT & T, IDS, and B–Line team. Cook then sent an e-mail to AT & T and B–Line stating that “[w]e were just awarded the project for the Clarian/IU Medical Clinical Skills & Simulation Center!!!” Dave Ramsay of B–Line responded, “Great news Zac! Best I've heard in a while [sic]. Let me get back to you about our availability for the next meeting and who will be attending.” IDS subsequently engaged in planning and design work, including development of detailed floor plans for the Clarian Simulation Center. From March 2007 until September 2007, B–Line worked with IDS to provide data, equipment lists, specifications, and requirements for IDS to incorporate into the plans.

On May 15, 2007, Korous sent Cook an e-mail stating that Clarian wanted to pay a retainer fee for the project. On June 29, 2007, Clarian faxed an executed Master Purchase Agreement and issued a written purchase order (“P.O.”) to AT & T, agreeing to pay $160,000 as a ten percent down payment on the then-estimated project cost of $1.6 million to compensate AT & T and IDS for the work performed between February and June 2007. AT & T then paid IDS $159,400 for its design services, which constituted Phase I in the Master Purchase Agreement. B–Line was to be paid under Phase II, when AT & T and IDS received a second purchase order from Clarian. Lucas Huang, then-Chief Executive Officer of B–Line, testified that, with rare exceptions, it was normal for B–Line to “consult” and provide “advice during [the] whole [design] process” without being paid.

B–Line created the “detailed, room-by room equipment requirements that formed the basis for this Scope of Work document” comprising Phase II. B–Line reviewed and approved the completed design work in September and the completed designs were then provided to Clarian. Cook testified that various departments within Clarian and IU were contributing funds to the project's budget, which caused delays in getting the P.O. for Phase II issued. Cook stayed in regular contact with Korous and Clarian, and on November 8, 2007, Korous sent Bob Brake, the AT & T account executive assigned to Clarian and IU, an e-mail stating that “although we have approved project, we can't dedicate dollars until we know for sure where they're coming from. Once we have this figured out, we'll get you to sign the contract. We plan to deliver the P[.] O [.] and contract at the same time.”

On December 28, 2007, AT & T received a second P.O. from Clarian for $1,890,000, the balance of the contract after the down payment for the design work was paid. The second P.O. encompassed the B–Line software modules, hardware, and corresponding services for implementation and contained the same Scope of Work document that was approved by B–Line in September 2007. The P.O. referenced Master Agreement No. 705568, which was signed between Clarian and AT & T in 2004.⁵ AT & T, to satisfy internal procedures, then submitted to Clarian several addenda to the June 2007 Master Purchase Agreement it had with Clarian, delaying the ordering of work under the second P.O.

Meanwhile, problems arose between B–Line and IDS on a separate IU Nursing School project, where IDS was acting as the Prime and B–Line was the Supplier. Succinctly, B–Line had continued to develop its software over the course of the year in other projects, necessitating the use of particular equipment that was outside of the Nursing School's budget by $50,000. According to Mills, B–Line refused to accommodatethe Nursing School's budget by removing a module from its software....