Dual v. Lockheed Martin Corporation

• Decision Date: 13 September 2004
• Docket Number: No. 115,115
• Citation: 383 Md. 151,857 A.2d 1095
• Parties: DUAL INCORPORATED, et al. v. LOCKHEED MARTIN CORPORATION, et al.
• Court: Maryland Court of Appeals

857 A.2d 1095

383 Md. 151

DUAL INCORPORATED, et al. v. LOCKHEED MARTIN CORPORATION, et al.

No. 115, Sept. Term, 2003.

Court of Appeals of Maryland.

September 13, 2004.

Raymond D. Battocchi (Gabeler, Battocchi, Griggs & Powell, PLLC, McLean, VA; Alfred F. Belcuore, Montedonica, Belcuore & Tazzara, P.C., Washington, DC), all on brief, for Appellants.

Robert J. Mathias (Kenneth L. Thompson and Jeffrey E. Gordon, Piper Ridnick LLP, Baltimore), on brief, for Appellees.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

HARRELL, Judge.

On 1 October 2001, J. Frederick Dual, Jr. ("Dual"), purporting to act in the capacities of "President and sole shareholder" of Dual, Incorporated ("Dual, Inc."), filed a complaint in the Circuit Court for Baltimore City against Lockheed Martin Corporation and two of its subsidiaries (collectively "Lockheed"). In the complaint, Dual alleged various torts related to the terminations of two contracts: one between Dual, Inc. and Lockheed, and another between Dual, Inc. and the United States Air Force ("Air Force"). Dual, a non-lawyer, filed the complaint pro se, identifying both himself and Dual, Inc. as plaintiffs. At the time suit was filed, the corporate charter for Dual, Inc. was forfeit. This complaint, however, was never served on Lockheed.

One year later and after reviving Dual, Inc.'s corporate charter, Dual and Dual, Inc., now with counsel's assistance, filed an amended complaint modifying some of the previously pleaded counts and adding additional counts. After Lockheed was served with the amended complaint on 11 October 2002, it responded with a motion to dismiss based essentially on the statute of limitations. Lockheed's position was that: (a) all of the wrongful conduct alleged by Dual/Dual, Inc. was completed by no later than May-June 1999; (b) any complaint based thereon had to be filed by no later than June of 2002, under the applicable three year statute of limitations; (c) the original complaint was a nullity because Dual, Inc.'s corporate charter was forfeit at the time of filing and Dual improperly, both as a non-lawyer and otherwise, initiated the suit in a derivative or representational capacity; and (d) the amended complaint, filed after the June 2002 deadline, was time-barred. The Circuit Court agreed with Lockheed and dismissed the suit in its entirety, entering judgment in favor of Lockheed on 1 October 2003. Dual and Dual, Inc. appealed to the Court of Special Appeals. Before the intermediate appellate court could consider the appeal, we, on our initiative, issued a writ of certiorari. We shall affirm the Circuit Court's judgment.

I.

Based on his experiences as a Vietnam-era veteran of the United States Navy, Dual formed Dual, Inc. in 1983 to engage in the aircraft simulator business. Dual, Inc. was an attractive business partner because it was certified by the U.S. Small Business Administration as a "Section 8" minority-owned enterprise as a result of Dual's physical disability incurred during the war.

In 1994, Lockheed awarded a subcontract to Dual, Inc. to provide Lockheed with engineering designs and related support for its Johnson Space Center Science Engineering and Technology ("SEAT") contract with the National Aeronautics & Space Administration ("NASA"). Also in 1994, Dual, Inc. received a direct contract from the Air Force to develop a flight simulator to test the Air Force's Joint Surveillance Target Attack Radar System ("JSTARS").

For reasons that are not entirely clear on this record, Dual, Inc.'s Maryland corporate charter was forfeited on 2 October 1997. The charter was not revived until 25 July 2002.

The Air Force terminated the JSTARS contract "for cause" on 29 April 1999. Lockheed terminated Dual's SEAT subcontract on 17 May 1999. On 10 June 1999, the Air Force changed the basis of the termination of the JSTARS contract to "for the convenience of the government." Why these contracts were terminated animated the initiation of the present litigation.

Dual, Inc. and Dual alleged in the original complaint that in 1999 Lockheed engaged in a scheme to drive Dual, Inc. out of business in order to assume its employees, contracts, and client base, most notably in the latter two regards the JSTARS contract and the Air Force, respectively. To accomplish these objectives, it was alleged that Lockheed worked behind the scenes with Air Force officials to bring about the termination of Dual, Inc.'s involvement with the JSTARS contract. In addition, after Dual, Inc. protested the Air Force's termination of the JSTARS contract "for cause," Lockheed allegedly retaliated within a few weeks by terminating the SEAT subcontract with Dual, Inc. Lockheed continued its alleged scheme to destroy Dual, Inc. by subsequently "reassigning" many of Dual, Inc.'s employees to Lockheed's own projects, effectively inducing them to become employees of Lockheed. It was claimed further that, after terminating the SEAT subcontract, Lockheed seduced Dual, Inc. with false promises of "bigger and better" subcontracts, all the while draining Dual, Inc.'s ability to engage in other business opportunities. On the other front, Appellants' protests to the Air Force subsequently fell short of complete success when the Air Force upheld the termination of the JSTARS contract, although changing the reason to "for the convenience of the government."¹ Nonetheless, Dual, Inc. claimed that the actions of Lockheed by that time already had undermined Dual, Inc.'s ability to carry on its business and effectively destroyed the company.

Dual, Inc. contended that it first learned of Lockheed's duplicity in early to mid-2000. The vehicle of discovery was Dual, Inc.'s acquisition sometime during that period of a copy of a 6 December 1999 final status report by Lockheed to the Department of Defense outlining Lockheed's efforts to complete the JSTARS contract. From information and clues discerned from this report, Appellants apparently formed a belief that Lockheed had engaged in a scheme to destroy Dual, Inc.'s business and assume its clients and employees. More than a year and a half later, Dual filed the first complaint framing counts including breach of fiduciary duty, breach of good faith and fair dealing, tortious interference with contractual relations, tortious interference with economic and business relations (and "prospective advantage"), misappropriation of trade secrets, and breach of contract. The amended complaint, filed on 2 October 2002, added counts of breach of partnership agreement, fraud in the inducement, quantum meruit, and unjust enrichment.² Lockheed, in response to the amended complaint, filed a motion to dismiss. Lockheed argued that the initial complaint was a nullity for the purpose of tolling the statute of limitations because it was filed improperly on behalf of a defunct corporation by a non-lawyer. Lockheed also argued that the claims in the amended complaint were time-barred because they accrued no later than 26 June 1999, more than three years before the filing of the amended complaint.

The Circuit Court agreed with Lockheed that the initial complaint was invalid and that the amended complaint was time-barred by the statute of limitations. Dual/Dual, Inc. appealed the judgment of the Circuit Court. Before the Court of Special Appeals could decide the case, we granted certiorari on our own initiative, 379 Md. 224, 841 A.2d 339 (2004), in order to consider the following questions, which we have rephrased for the sake of clarity:³

1. Was the trial court correct in holding that the initial complaint was invalid?

2. Did the trial court err in ruling that all of the claims in the amended complaint were time-barred by the statute of limitations because they each accrued no later than 26 June 1999?

II.

In considering Lockheed's motion to dismiss and Dual/Dual, Inc.'s opposition, the record indicates that the Circuit Court considered factual matters, placed before it by the parties, beyond those alleged in the complaint or amended complaint. For example, the facts of the forfeiture and revival of Dual, Inc.'s corporate charter and a copy of Lockheed's 6 December 1999 report to the Department of Defense regarding its performance under the JSTARS contract were submitted to the Circuit Court and apparently considered in acting on the motion. When a party presents factual matters outside the pleadings, and the court does not exclude them from consideration in the course of acting on a facial motion to dismiss, the court must treat the motion as a motion for summary judgment. See Md. Rule 2-322(c) ("If, on a motion to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 2-501, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 2-501."). Therefore, Lockheed's motion to dismiss amounted to a motion for summary judgment under Md. Rule 2-501.

A trial court's grant of a summary judgment motion is proper if "there is no genuine dispute as to any material fact and... the party in whose favor judgment is entered is entitled to judgment as a matter of law." Md. Rule 2-501(e). Maryland courts hold that a "material fact is a fact the resolution of which will somehow affect the outcome of the case." Arroyo v. Bd. of Educ., 381 Md. 646, 654, 851 A.2d 576, 581 (2004) (citations omitted).

Once the moving party provides the trial court with a prima facie basis in support of the motion for summary judgment, the non-moving party is obliged to produce sufficient facts admissible in evidence, if it can, demonstrating that a genuine dispute as to a material fact or facts exists. These tendered facts should be given under oath, based on the personal knowledge of an affiant. Id. at 655...