Goldstein v. Miles

• Citation: 159 Md. App. 403,859 A.2d 313
• Decision Date: 08 October 2004
• Docket Number: No. 232,232
• Parties: Scott B. GOLDSTEIN, Esq. et al. v. Stephen L. MILES, Esq.
• Court: Court of Special Appeals of Maryland

859 A.2d 313

159 Md. App. 403

Scott B. GOLDSTEIN, Esq. et al. v. Stephen L. MILES, Esq.

No. 232, Sept. Term, 2003.

Court of Special Appeals of Maryland.

October 8, 2004.

Mark T. Mixter (Mixter & Oliveri, on the brief), Baltimore, for appellant.

Severn E.S. Miller (Thomas & Libowitz, PA, on the brief), Baltimore, for appellee.

Panel: ADKINS, KRAUSER, and THEODORE G., BLOOM (Retired, specially assigned), JJ.

KRAUSER, Judge.

In this case, tort and contract law converge to produce a tort claim for fraud and negligent misrepresentation coupled with a demand for contract damages, a conceptual composite recognized by Maryland law.¹ To assure that this hybrid is not used as a device to obtain contract damages where no enforceable promise or agreement exists or as a means to circumvent standard contract defenses, we join other jurisdictions today in holding that benefit-of-the-bargain damages are obtainable for such tortious conduct but only where there is in fact an enforceable bargain. The failure of appellants to allege, much less to produce, sufficient evidence of that, is fatal to their claim, leading us to conclude, for this and other reasons, that the circuit court did not err in granting summary judgment in favor of appellee.

The tort claim of which we speak was brought by former employees of the Law Offices of Stephen L. Miles,² appellants Scott B. Goldstein, Esquire, and James K. MacAlister, Esquire. Relying upon the representations of appellee, Steven L. Miles, that he would sell his law firm to them when he retired, both men claim that they turned down other employment opportunities to stay with Miles's firm. When Miles chose instead to sell his practice to the law firm of Saiontz & Kirk, P.A.,³ Goldstein and MacAlister filed suit in the Circuit Court for Baltimore County, accusing him of fraud and negligent misrepresentation and requesting lost profits and benefit-of-the-bargain damages.

Claiming that there was no evidence of any actionable promises, reasonable reliance, fraudulent intent, or actual damages, Miles moved for summary judgment as to both counts. The circuit court granted that motion, ruling that appellants had failed to produce sufficient evidence that they had ever struck a "bargain" with Miles to purchase his practice.

Requesting reconsideration of that decision, Goldstein and MacAlister submitted, among other things, the affidavit of Bruce D. Block, an attorney who, at one point, had considered purchasing the firm with Goldstein. The effect of that submission, however, was to convince the court that appellants had little cause to have brought the fraud and negligent misrepresentation claims in the first place: the affidavit flatly contradicted representations made by appellants at the summary judgment hearing concerning a statement Miles purportedly made to Block.

At that hearing, Goldstein and MacAlister represented to the court that Miles had told Block that he never intended to sell his practice to Goldstein and MacAlister. That statement conflicted with the Block affidavit that Goldstein and Miles subsequently produced at the reconsideration hearing. The affidavit stated that what Miles actually said to Block was that "he would not sell his law firm to Scott Goldstein, alone, due to the fact that [he] did not perceive that Mr. Goldstein had the financial backing or wherewithall [sic] to permit him to purchase the law firm." After reaffirming its earlier decision that Miles was entitled to summary judgment on the benefit-of-the-bargain issue, the court then declared that it was granting "Summary Judgment ... in favor of [Miles] on all counts and all issues."

From that decision, Goldstein and MacAlister noted this appeal. Despite the circuit court's pronouncement that it was granting summary judgment as to "all counts and all issues," Goldstein and MacAlister mischaracterize the court's ruling in their brief by stating, "the trial court properly determined that there were sufficient issues of fact on the issues of liability to submit this case to a jury." Consistent with this misdescription of the circuit court's holding, they present only one question for our review, and that question appears to focus principally, as does their argument, on whether there was sufficient evidence of benefit-of-the-bargain damages to survive a summary judgment motion. They frame that question as follows:

Did the trial court, by granting Appellee's Motion For Summary Judgment and subsequently denying Appellants' Motion for Reconsideration, abuse its discretion under Rules 2-501, 2-534, and 2-535 and improperly interpret the facts and law regarding the proper assessment of damages arising from ... properly presented and supported counts in fraud and negligent misrepresentation, when it determined that Appellants' theories of damages, including "benefit of the bargain[,"] were not properly presentable to the trier of fact?

In the course of presenting their argument, however, appellants do touch upon whether Miles made actionable promises and whether they reasonably relied upon them by reciting the facts as they believed the evidence presented them. They did not, however, submit a reply brief though these issues were fully developed and presented in Miles's brief.

FACTS

The parties present a farrago of facts. Their frequent inability to assign dates to the very statements or actions upon which the principal claims rest, or even, at times, to establish a comprehensible sequence of events, has required us to engage in a painstaking review of the record. Complicating matters further, appellants have lumped together material and, according to appellants, false representations that Miles purportedly made, at different times, to different combinations of potential purchasers, to presumably create the impression that all of the alleged misrepresentations are relevant to their claim. Only some are.

In reviewing the facts below, one must keep in mind that, during the roughly fifteen year period they cover, there were at least four different sets of potential buyers: (1) Goldstein and MacAlister; (2) Goldstein and Tom Bernier; (3) Goldstein, MacAlister, and Bernier; and (4) Goldstein and Bruce D. Block. But, for the purposes of this appeal, the only relevant purchasing unit is Goldstein and MacAlister. They are the ones who brought this suit and now this appeal. Consequently, the only representations that are material to the claims of fraud and negligent misrepresentation now before us are those that are relevant to the attempt of Goldstein and MacAlister to buy the firm together. With this in mind, we now turn to the facts of this case as presented in the pleadings, the depositions, and the affidavits submitted both in support of and in opposition to appellee's motion for summary judgment.

Miles's law firm, the Law Offices of Stephen L. Miles, concentrated in personal injury law. Miles marketed his firm by appearing in television commercials, and the firm prospered. In 1985, Goldstein joined Miles's firm as an associate. When he interviewed for that position, Miles told him, "If it worked out to be a marriage between [them], [his] future would be very bright."

As time passed, Miles began to spend, according to Goldstein, "less and less time in the practice," while Goldstein's "level of responsibility and [his] commitment to the practice in the form of hours and obligations... drastically increas[ed]." Goldstein maintained that he was largely responsible for managing the firm, and generally worked sixty or seventy hours per week. Consistent with his growing responsibilities, Goldstein's salary increased during his employment with Miles, reaching a high of $198,000 in 1994 or 1995.⁴

Goldstein stated that, in 1997, Miles promised to pay him a salary of at least $200,000 that year, but did not. Instead, Miles paid him a salary of $166,000.

On several occasions, Miles discussed with Goldstein agreements that the two might enter regarding the practice, in the event that Miles died while Goldstein was still with the firm. In 1985 or 1986, Miles expressed the wish to enter into a "contingent death agreement," providing that, upon his death, Goldstein and another associate would have the opportunity to purchase the law firm from his estate. Although a written agreement was drafted, it was never signed because, according to Goldstein, "Miles was [not] satisfied with the final draft." In 1989 "Miles proposed the drafting and the execution of what he referred to as a nonequity partnership agreement," Goldstein stated. Although drafted, that agreement was also never executed.

Miles stated, according to Goldstein, that the firm "would be sold to [him] as an acknowledgment of [his] longevity and [his] commitment to the practice[,] for less than what was otherwise perceived to be the market value." Miles promised, he asserted, that Miles would sell the practice to him "on the terms that he knew that [Goldstein] could afford and make."

Describing the understanding he purportedly had with Miles, Goldstein stated:

Mr. Miles ... regularly told me that we would hire an appraiser who would come in and would appraise the belongings of the practice ... the furniture or whatever there was, that we would agree on a payout for that, that ... we would agree on a percentage of the fees to be paid to him, that we would have to agree to affix a number for the good will, that he would take back the financing on the ... practice because he knew... that I wouldn't be able to ... go out and borrow the kind of money necessary, so that he would hold the financing on it because what he was primarily interested in achieving from the sale of the practice was a stream of income....

But Goldstein acknowledged that the deal was also always contingent on Goldstein purchasing the firm with a partner acceptable to Miles. Even when he insisted that Miles "had essentially already guaranteed to [him] by 1993 that the practice would be [...