Cent. Truck Ctr. Inc. v. Cent. Gmc Inc.

• Citation: 194 Md.App. 375,4 A.3d 515
• Decision Date: 07 September 2010
• Docket Number: No. 1780, Sept. Term, 2008.,1780, Sept. Term, 2008.
• Parties: CENTRAL TRUCK CENTER, INC., et al. v. CENTRAL GMC, INC., et al.
• Court: Court of Special Appeals of Maryland

194 Md.App. 375

4 A.3d 515

CENTRAL TRUCK CENTER, INC., et al.

v.CENTRAL GMC, INC., et al.

No. 1780, Sept. Term, 2008.

Court of Special Appeals of Maryland.

Sept. 7, 2010.

COPYRIGHT MATERIAL OMITTED.

Brian D. Lyman (Michael P. Darrow, Marietta B. Warren, Hillman, Brown & Darrow PA, on the brief) Annapolis, MD, for appellant.

Kenneth S. Nankin (Nankin & Verma PLLC, on the brief) Rockville, MD, for appellee.

Panel: EYLER, JAMES R., KEHOE and J. FREDERICK SHARER (Retired, Specially Assigned), JJ.

J. FREDERICK SHARER, J. (Retired, Specially Assigned).

This appeal arises from the grant of summary judgment by the Circuit Court for Prince George's County in favor of appellees, Central GMC, Inc. and Burgess-Katz, LLC, (“Central GMC”) on claims of fraud, concealment, and negligent misrepresentation, asserted by appellants, Central Truck Center, Inc. and 3839 Ironwood Place, LLC (“Central Truck”). All of the claims and disputes in this litigation relate to a contract for the sale of a truck dealership by Central GMC to Central Truck.

Appellants' question to this Court, which we have rephrased slightly, is:

Did the trial court err by granting summary judgment in favor of appellees on appellants' claims of fraud, concealment, and negligent misrepresentation by enforcing an integration clause in a contract whose execution was arguably induced by the alleged fraud, concealment, and misrepresentation?

Central GMC filed a cross-appeal based on the trial court's overall net judgment entered with respect to the parties' contract-based claims and counterclaims, and asks us to consider:

Whether the trial court erred in calculating the overall net judgment with respect to the parties' contract based claims and counterclaims?

Finding neither error nor abuse of discretion, we shall affirm the judgments.

FACTS and PROCEEDINGS

In January 2006, the parties entered into an Asset and Real Estate Purchase Agreement (the “Agreement”), whereby Central GMC agreed to sell, and Central Truck agreed to buy, certain truck dealership assets and associated real property then owned by Central GMC. In its complaint, filed in December 2006, Central GMC averred that following the May 1, 2006 closing of the sale, Central Truck materially breached the terms of the Agreement by failing to pay the full settlement amount-leading to a $44,700 shortfall of the purchase price-and by failing to fulfill certain other requirements set forth in the Agreement. Central GMC further alleged that Central Truck had failed to account for money and/or property owed to Central GMC. ¹ Ultimately, by way of its fourth amended counterclaim, Central Truck alleged causes of action for breach of contract, fraud, concealment, and negligent misrepresentation by Central GMC and its principals, based, in part, on its claim that, following the purchase of the truck dealership, its income during the summer months of 2006 was considerably less than anticipated, given Central GMC's sales history. It was those figures, Central Truck alleged, upon which it relied in negotiating a price for the purchase of the dealership. This shortfall, Central Truck contended, was due to an inaccuracy in Central GMC's financial statements, resulting in large part from the cancellation of a contract between Central GMC and the District of Columbia Public Schools (“DCPS”). ² Central Truck asserted that the proceeds of the DCPS contract had inflated Central GMC's sales and service figures prior to the closing of the sale in May 2006. Central Truck averred that Central GMC had overbilled DCPS for parts and service and used the overbilled figures to enhance gross receipts and, hence, inflate the value of the truck dealership. Central Truck said it relied upon those figures in settling on the purchase price for the dealership as a going concern.

On April 18, 2008, Central GMC responded to Central Truck's fourth amended counterclaim by filing its second amended motion for summary judgment. Therein, Central GMC argued that the Agreement constituted a complete integration of the terms of the contract and did not provide for any representations or stipulations to Central Truck as to a continuation of Central GMC's past income. ³ Central GMC further asserted in its motion that the Agreement explicitly notified Central Truck that, while attempted collection of accounts receivable from DCPS on a contract that expired in September 2005 was continuing, DCPS had disputed the claim. Central GMC also noted in its motion that the DCPS contract represented income only to Central GMC and not to Central Truck, as the DCPS contract expired in September 2005, well before the effective date of the Agreement. Thus, Central GMC's argument continued, given the expiration of the DCPS contract in 2005, and the fact that the Agreement granted Central GMC retention of its right to collect its accounts receivable, Central Truck could not claim that it had an expectation of income from DCPS on the expired contract. Central GMC further contended that Central Truck was aware, by virtue of Schedule 5.1.7 to the Agreement, that the DCPS had notified Central GMC of its intent to conduct an audit of the parts and service department provided on its account. ⁴

Therefore, Central GMC argued, it was entitled to summary judgment as to the fraud, concealment, and negligent misrepresentation claims, as no material facts were in dispute. Moreover, in its view, Central Truck had not demonstrated the requisite intent and scienter on the part of Central GMC to prove its claims of fraud and concealment.

On August 29, 2008, the trial court (Hon. Sean D. Wallace) ruled on the fraud, negligent misrepresentation, and concealment issues in Central GMC's motion for summary judgment, ⁵ as follows:

THE COURT:.... That leaves the remaining issues, which are the fraud, negligent misrepresentation, and concealment issues. Again, and as Mr. Lyman [Central Truck's attorney] characterized it, essentially varieties and flavor of the fraud and the inducement type of claim.

Again, the defendant has to show by clear and convincing evidence that there was false representations [sic] and that they were made with the intent that the defendant rely on them and the defendant did rely on them. The problem for me the[n], and Mr. Lyman has gone to great lengths to try to convince me otherwise, but it seems to me the problem for the[m] is the integration clause, which says that this agreement sets forth all promises and understanding and supercedes any prior agreements, understandings, or inducements.

So there may be some factual issues as to whether or not Mr. Burgess [Central GMC's principal] made the factual representations, but the bottom line is, by the time they got it all down on paper, they were saying the ones that we're attaching here are the representations and the inducements and understandings that exist. Anything else, it's all forgotten.

And I understand defendant's argument is it's Mr. Keyton's [Central Truck's principal] position that he priced this based on his review of the books and accounts and records, and the price would have been lower if he had realized what he now knows or what he now claims to know. But the fact is, he didn't ask for any of that to be included in the agreement. It was very simple for him to have said, and also, we do attach as a schedule, or reference as part of a schedule, all the books and records that were provided to us. And they are an integral part of this agreement, and they weren't an inducement that we relied on. Instead, he did the contrary.

Furthermore, there's no evidence in the record that I could find on the summary judgment that the plaintiff made false representations and, moreover, that he intended to act, he intended the defendant to act in reliance on these. These are books and records and accounts which were in existence, obviously, long before the agreement and long before the agreement was contemplated.

And then, finally, the D.C. Schools issues was [sic] disclosed to the defendant and that's undisputed. What's disputed is how much they should have disclosed the characterization of that, and he's saying that it was an audit. The defendant characterizes it as an investigation. The fact is they did let the defendant know that D.C. Public Schools was looking into the billing and the accounts, and so the defendant was on notice that that was an issue.

I don't find, in light of that, that there is sufficient evidence, especially clear and convincing evidence, that the plaintiff intended to defraud the defendant as to the nature of that D.C. Public Schools account, which had terminated again under any analysis. It's undisputed that it had terminated in September of 2005. Of course, the question in dispute is whether it should have and how was it terminated and if it expired. Was it terminated by the D.C. upon the findings of some problems? Nonetheless, it was over before this, months and months and months before the closing.

So based on all those things, I find as a matter of law that there's insufficient evidence to rise to the level of clear and convincing evidence that the plaintiff engaged in fraud, concealment, or negligent misrepresentation. So for those reasons, I'm going to grant the motion for summary judgment as to those claims.

I believe that resolves all the issues that are before me. Does anybody think there's anything else out there?

[COUNSEL FOR CENTRAL GMC]: Your Honor, just for the point of clarification as to the Court's ruling on the motion for summary judgment, the Court has indicated that there's insufficient clear and convincing evidence, but under 2-501 did the Court find that there are material facts is [sic] dispute that would lead to that?

THE COURT: I don't find that there are any material facts that are in dispute. I acknowledge that there appear to be factual disputes, although I do note that the affidavit doesn't conform with the rule. The affidavit upon information...