Lubore v. RPM Associates, Inc.

• Decision Date: 01 September 1995
• Docket Number: No. 1226,1226
• Parties: Jeffrey W. LUBORE v. RPM ASSOCIATES, INC., et al. ,
• Court: Court of Special Appeals of Maryland

Page 312

109 Md.App. 312

674 A.2d 547

Jeffrey W. LUBORE v. RPM ASSOCIATES, INC., et al.

No. 1226, Sept. Term, 1995.

Court of Special Appeals of Maryland.

April 4, 1996.

Joseph M. Mott and Daniel L. Owel (J. Stephen McAuliffe and Miles & Stockbridge, P.C., on the brief) Rockville, for Appellant

James T. Heidelbach (Gebhardt & Smith, on the brief) Baltimore, for Appellees.

Argued before MOYLAN, DAVIS and MURPHY, JJ.

DAVIS, Judge.

This is an appeal from a June 15, 1995 order of the Circuit Court for Montgomery County granting a motion to dismiss. Three questions are presented on this appeal; we restate (and rearrange) them as follows:

I. Did the circuit court err in granting a motion to dismiss for failure to state a claim upon which relief can be granted with respect to appellant's claim for breach of contract?

II. Did the circuit court err in granting a motion to dismiss for failure to state a claim upon which relief can be granted with respect to appellant's claim for fraud and deceit?

III. Did the circuit court err in granting a motion to dismiss for failure to state a claim upon which relief can be granted with respect to appellant's claim for negligent misrepresentation?

We respond in the negative to the first question and in the affirmative to the second and third questions. We, therefore, affirm in part and reverse and remand in part the judgment of the circuit court.

FACTS

On April 12, 1995, appellant Jeffrey M. Lubore filed a complaint in the Circuit Court for Montgomery County against appellees RPM Associates, Inc. (RPM), a Maryland corporation, and Robert P. Miller, Jr. (Miller), president of RPM. Appellant's complaint contained three counts: Count I for "Fraud and Deceit," Count II for "Negligent Misrepresentation," and Count III for "Breach of Contract." Given the procedural posture of this case, the following facts are taken directly from appellant's complaint.

On several occasions during the fall of 1993 and summer of 1994, appellant and Jeffrey A. Simpson, a manager and part owner of RPM, discussed RPM's growth and its future need to employ a marketing and sales executive. These discussions culminated with Simpson asking appellant whether he would In early December 1994, appellant and Miller met for lunch and discussed an outline of an employment contract. During this luncheon, Miller told appellant that he knew appellant was currently employed in a lucrative position with another company, and that appellant would have to be offered a substantial equity position in RPM in order to leave his current employer. The two then proceeded to discuss the structure of a compensation and equity package, and the nature of appellant's duties. Ultimately, it was agreed that there would be a follow-up meeting between appellant, Miller, and Simpson.

be interested in a position with RPM, directing business development operations, beginning on January 1, 1995. On September 14, 1994, appellant and appellee Miller met while attending a trade show in Atlanta, at which time they discussed the prospect of appellant working for RPM.

That follow-up meeting was held in late December 1994, when appellant, Miller, and Simpson discussed salary, a benefits package, and an equity stake in RPM. The three men also discussed appellant's responsibilities should he accept the position. At the conclusion of their meeting, Miller agreed to confirm an offer of employment in writing.

On January 19, 1995, appellant met with Miller for a third time. They again discussed compensation and duties of the position. Two days later, on January 21, 1995, Miller faxed a written offer of employment to appellant, offering him the position of "Business Development Vice President," in accordance with the terms discussed at the late December and January 19 meetings. The offer reflected a base salary of $150,000 with a sales bonus of 4% of revenue, and equity terms, among other things, as follows: "2% vest after 15 months," and "3% option after 36 months." The offer also contained a "Projected Year 1" total salary of $310,000, and a "Projected Year 2" total salary of $470,000.

The next day, on January 22, 1995, appellant responded to the offer by fax. Appellant's fax response stated that the "offer looks great," but informed Miller that there were some further questions. Later that day, appellant and Miller spoke Following the telephone conversation of January 22, 1995, appellant resigned from his current employer, effective January 31, 1995. Miller knew that appellant would resign effective January 31, 1995, because this was also discussed during their January 22, 1995 telephone conversation. Indeed, when appellant informed Miller that he would resign on January 31, 1995 because he wanted to take a month off before starting with RPM on March 1, 1995, Miller responded that taking a month off was a " 'great idea.' "

on the telephone. During their conversation, after Miller clarified the terms and conditions of the offer, appellant "formally accepted" the offer. They agreed to a March 1, 1995 start date. Also during this conversation, Miller requested that appellant begin working on a business development plan to be completed on March 1, 1995.

Between January 22, 1995 and February 15, 1995, appellant placed several telephone calls to Miller, requesting a letter "reaffirming the terms of the offer of employment by RPM and [appellant's] acceptance of that offer." On February 15, 1995, Miller sent a letter by fax to appellant "memorializing the terms of RPM's previous offer of employment ... as modified by [appellant] and Miller's January 22, 1995 oral agreement." The opening portion of this letter reads:

As promised, here is a letter outlining the offer to you from RPM Associates, Inc. As you understand, the purpose of this letter is to reach agreement on terms under which you will come to work for RPM Associates. I am looking forward to you joining RPM Associates.

Here is the outline of my offer:

Miller's letter concluded: "Finally, there is a contract that must be signed by each employee."

On March 1, 1995, appellant began working for RPM. At 5 p.m. on the next day, appellant received by fax a fifteen-page document entitled "Employment Agreement." According to appellant, the Employment

Agreement, and many of its terms, were not previously disclosed to him. The Employment[674 A.2d 551] Agreement contains, among other things, new terms and provisions that we restate as follows:

(1) A $1,000,000 liquidated damages provision;

(2) A provision allowing RPM to terminate appellant's employment at will;

(3) A provision allowing RPM to decrease the part of appellant's compensation based on revenue at RPM's sole discretion;

(4) A provision allowing RPM to assign the agreement and to convert it from an employment at will agreement to a two-year term agreement in the event of a company consolidation, merger, or tender offer; and

(5) An extensive non-competition and non-solicitation clause covering a large geographic area pertaining to existing, previous, and prospective clients, and precluding him from working for a period of time in the field of network integration services or any other business similar to that engaged in by RPM.

From March 1, 1995 to March 23, 1995, appellant "continued to work for RPM, and at the same time attempted to resolve the disagreement regarding RPM's attempt to modify the terms of the January 22, 1995 employment agreement." On March 23, 1995, however, Miller informed appellant that because appellant refused to sign the Employment Agreement " 'as is,' " the employment offer was " 'rescinded.' " Later that day, Miller sent appellant a letter by fax terminating appellant's employment.

After alleging the foregoing facts, appellant's complaint set forth a claim for fraud and deceit (Count I). This count, in pertinent part, reads:

During the course of negotiations, [appellant] and Miller agreed to the terms pursuant to which [appellant] would be willing to leave his lucrative position with CommVision and accept employment with RPM. Ultimately, these terms were memorialized in a letter which Miller transmitted on 19. Prior to [appellant's] acceptance of RPM's offer of employment, Miller and RPM failed to disclose to [appellant] that they intended to condition his employment with RPM upon his acceptance of a fifteen (15) page document entitled Employment Agreement which contained additional unconscionable terms ...

behalf of RPM to [appellant] on February 15, 1995 (Exhibit "D").

20. [Appellant] relied on the belief that Miller and RPM intended to honor the employment agreement of January 22, 1995 as memorialized in the February 15, 1995 letter (Exhibit "D"), and he was justified in his reliance.

21. As a result of Miller and RPM's fraud and deceit, [appellant] has suffered damages.

22. Miller and RPM's concealment of the additional unconscionable terms upon which they intended to condition [appellant's] continued employment with RPM was willful, intentional and malicious.

The complaint also alleges a claim for negligent misrepresentation (Count II), as follows:

24. Miller and RPM owed [appellant] a duty of care and made misrepresentations of material facts to [appellant], including but not limited to: (1) that RPM intended to employ [appellant] pursuant to the terms and conditions set forth in Miller's facsimile transmission of January 21, 1995 (Exhibit "A"), as orally modified and accepted by [appellant] on January 22, 1995, and reaffirmed by Miller in his February 15, 1995 correspondence.

25. Miller and RPM made the misrepresentations intending that [appellant] would act in reliance on them.

26. Miller and RPM knew, or should have known, that [appellant] was likely to rely on the misrepresentations, which if false would cause injury or loss to [appellant].

27. [Appellant] reasonably relied on the [appellees'] material misrepresentations. Had [appellant] known the truth concerning the...