Brass Metal v. E-J

• Decision Date: 30 November 2009
• Docket Number: No. 1580 September Term, 2008.,1580 September Term, 2008.
• Citation: 984 A.2d 361,189 Md. App. 310
• Parties: BRASS METAL PRODUCTS, INC. v. E-J ENTERPRISES, INC. et al.
• Court: Court of Special Appeals of Maryland

984 A.2d 361

189 Md. App. 310

BRASS METAL PRODUCTS, INC. v. E-J ENTERPRISES, INC. et al.

No. 1580 September Term, 2008.

Court of Special Appeals of Maryland.

November 30, 2009.

Robert G. Landolt, Columbia, MD, for Appellant.

John P. Lynch (Charles H. Henderson, McNamee, Hosea, Jernigan, Kim, Greenan & Lynch, P.A., on the brief), Greenbelt, MD, for Appellee.

Panel: HOLLANDER, GRAEFF and JAMES A. KENNEY, III (Retired, Specially Assigned), JJ.

GRAEFF, Judge.

This appeal arises from a dispute between appellant, Brass Metal Products, Inc. ("Brass Metal"), and appellees, E-J Enterprises, Inc. ("E-J Enterprises") and its President, Eric Johnson. E-J Enterprises, a wholesale metal distributor, entered into an agreement with Brass Metal to provide "just-in-time" inventory services, which entailed purchasing aluminum railings directly from aluminum extrusion mills, storing these railings, and selling them to Brass Metal as needed. The railings were designed by Brass Metal's owner and President, James Burger, but Mr. Burger did not patent his railing designs.

In April 2006, E-J Enterprises sold railings that were being held for Brass Metal to another company, Parthenon Installations ("Parthenon"). Thomas Martin, a Brass Metal salesman, owned a majority interest in Parthenon. In July 2006, when Mr. Burger discovered that Parthenon had established a manufacturing facility that was a "duplicate" of his facility, Mr. Burger fired Mr. Martin. Mr. Burger then requested that E-J Enterprises stop selling railings based on Mr. Burger's design to Parthenon. E-J Enterprises declined Mr. Burger's request.

In October 2006, Brass Metal filed a complaint in the Circuit Court for Howard County against E-J Enterprises, Mr. Johnson, Parthenon, Mr. Martin, and Anastasios Pantoulis, part-owner of Parthenon, requesting injunctive relief and damages. Prior to trial, Brass Metal settled with Parthenon, Mr. Martin, and Mr. Pantoulis, and they were dismissed from the case. Trial proceeded against E-J Enterprises and Mr. Johnson. On August 22, 2008, after six days of trial, at the close of Brass Metal's case, the circuit court granted appellees' motion for judgment.

Brass Metal appealed. It presents five questions for our review, which we have reorganized and rephrased:

1. Did the circuit court err in granting appellees' motion for judgment on Count I, conversion?

2. Did the circuit court err in granting judgment on count II, tortious interference with contract, on the ground that there was insufficient evidence to present to the jury regarding damages or the existence of contracts with third parties?

3. Did the circuit court err in granting appellees' motion for judgment on counts IV, V, VII, VIII, and IX, which asserted claims for injurious falsehood, civil conspiracy, false representations, non-disclosure or concealment, and constructive fraud and misrepresentation?

4. Did the circuit court err in precluding Brass Metal from using the term "trade secret" in front of the jury and in finding that the Maryland Uniform Trade Secret Act ("MUTSA") preempted a common law claim for misappropriation of trade secrets?

5. Did the court err in excluding from evidence: (1) two depositions; and (2) a non-disclosure agreement between Mr. Martin and Mr. Burger?

For the reasons set forth below, we shall affirm the judgment of the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

Brass Metal is a manufacturer and distributor of aluminum railing products. Mr. Burger, President of Brass Metal, testified that he designed several aluminum railings for his company to sell. The railing system had interchangeable caps, which were named the Jersey Cap, the Senate Cap, the Waverly Cap, the Snap Cap, the Top Rail Cap, the Winchester Cap, the Maryland Cap, and the Slimline Cap, and each had a different shape and design. No patent was obtained for the designs of these aluminum railings. There was testimony that the shapes of at least some of these railings were similar to others in the aluminum industry.

Brass Metal purchased its aluminum railings from four different mills: Tifton; Loxcreen; Bonnell; and Pennex. The mills created Mr. Burger's aluminum railings using an extrusion process. Brass Metal described this process as making "a shape by forcing the metal through a die or mold to give the railing its specific design."¹ A die is a tool or device "for imparting a desired shape, form, or finish to a material." WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY, UNABRIDGED 628 (2002).

Mr. Burger testified that, per his agreements with the mills, Brass Metal was the only company that was allowed to "run the material" from his dies, and "if [he] wanted anybody else to have access to that material, [he] would have to give written permission ... to allow [the mills] to take materials of those d[ies] and shapes."² Once a die was created, the mill retained possession of the die. Mr. Burger testified that he chose these mills because he received assurances that his "designs were going to be protected, and the designs and profiles were not going to be copied or distributed anywhere else."

In 1999, Mr. Martin contacted Mr. Burger to discuss the possibility of purchasing Brass Metal and operating the business. Mr. Burger was concerned that Mr. Martin lacked the money to purchase the business and the necessary experience in the industry. Mr. Burger and Mr. Martin agreed that Mr. Burger would train Mr. Martin, which he did for approximately a year and a half, during which time Mr. Martin was not paid.

In March or April 2001, Mr. Burger formally hired Mr. Martin as a salesperson for Brass Metal. Mr. Burger initially paid Mr. Martin through his company, Thomas Martin & Associates, $5,000 per month. This was subsequently increased in 2002 to $8,000 per month. Brass Metal did not provide Mr. Martin with any employment benefits. During the time that Mr. Martin worked for Brass Metal, he also worked for three other companies.

In 2001, Mr. Martin's son-in-law, Mr. Pantoulis, created Parthenon Installations, a company that provided installation services for Brass Metal's clients. Because Brass Metal did not provide installation services, Brass Metal would direct customers who requested installation services to Parthenon or one of the other two companies that performed installation work for Brass Metal. The companies that provided installation services for Brass Metal would install the railings and, once the companies received payment from the customer, they would pay Brass Metal for the railings. If a customer wanted to purchase the railings without installation services, it would purchase the railings directly from Brass Metal.

Mr. Burger had been purchasing general materials for the railings from E-J Enterprises beginning in 1986 or 1987. In 2002, E-J Enterprises and Brass Metal agreed that E-J Enterprises would provide "just-in-time" inventory services for Brass Metal. E-J Enterprises became the exclusive supplier for Brass Metal's products, which involved ordering Brass Metal's products from various mills, stockpiling the railings, and supplying the material to Brass Metal as needed. Pursuant to this agreement, Brass Metal was required to pay E-J Enterprises for the inventory within 30 days of delivery to Brass Metal. Mr. Burger sent letters to Bonnell, Loxcreen, and Pennex authorizing these mills to sell E-J Enterprises' railings based on the dies created for Mr. Burger's designs.³ Mr. Burger testified that he advised E-J Enterprises that he would "buy all the dies that [E-J Enterprises] would need for [his] usage so [he] could keep control."

In 2003, Mr. Martin and Mr. Pantoulis met with Mr. Burger to revisit the issue of purchasing Brass Metal. Mr. Burger did not agree to sell the business to Mr. Martin.

In 2004, Mr. Martin purchased a 60 percent interest in Parthenon. Mr. Martin did not advise Mr. Burger that he purchased a controlling interest in this company.

In 2005, Mr. Martin visited E-J Enterprises' offices and advised Mr. Johnson that "he was planning to build a manufacturing facility to manufacture railing," and "he would like for E-J to do for his company what they did for Brass Metal Products." Mr. Johnson testified that, initially, he declined Mr. Martin's offer, and he instructed his wife, who was E-J's contact with Brass Metal, to advise Mr. Burger about Mr. Martin's proposal.

In March 2006, Mr. Johnson reconsidered his earlier decision and decided to supply Parthenon with aluminum railings. Mr. Martin provided E-J Enterprises with drawings for the railings. E-J Enterprises determined that, once Parthenon paid for the rights to a die that was identical to that used to make the designs sold by Brass Metal, E-J Enterprises could immediately sell the identical railings in its inventory to Parthenon, as long as it could supply Brass Metal with the inventory it needed. E-J Enterprises provided an invoice to Parthenon, which included a "die service charge." After Parthenon paid the invoice, in April 2006, E-J Enterprises began to supply Parthenon with railings from its inventory.

In July 2006, Mr. Burger required that Parthenon purchase railings on a cash on delivery basis. Parthenon was not paying Brass Metal for the materials it installed in 30 days, as agreed. Rather, it was waiting to pay until 120 to 150 days after completing the work. After Parthenon was "put on a COD" status, it did not purchase any more railings from Brass Metal.

That same month, Mr. Burger learned that Mr. Martin and Parthenon had set up a "separate operation" to manufacture railings. Mr. Burger went to the address, and he discovered a "duplicate of [his] operation," which he described as six people "cutting, punching, welding ... and powder coating, and all ... [his] shapes were sitting there on the racks." After he discovered this facility, Mr. Burger terminated Mr. Martin's employment as a salesman with Brass Metal.

Mr. Burger called Mr. Johnson to learn "how Tom had gotten...