Marmott v. Maryland Lumber Co.

• Decision Date: 22 December 1986
• Docket Number: Nos. 85-2344,s. 85-2344
• Citation: 807 F.2d 1180
• Parties: Stephen MARMOTT; Irene Marmott; Irene Lumber and Supply, Inc. (a Virginia corporation), Appellants, v. MARYLAND LUMBER COMPANY (a Maryland corporation); Milling, Drying and Treating, Inc. (a Maryland corporation); James Kolker; Fabian Kolker, Appellees. (Two Cases) (L), 86-3950.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1180

807 F.2d 1180

55 USLW 2370

Stephen MARMOTT; Irene Marmott; Irene Lumber and Supply Inc. (a Virginia corporation), Appellants, v. MARYLAND LUMBER COMPANY (a Maryland corporation); Milling Drying and Treating, Inc. (a Maryland corporation); James Kolker; Fabian Kolker, Appellees. (Two Cases)

Nos. 85-2344(L), 86-3950.

United States Court of Appeals Fourth Circuit.

Argued Oct. 8, 1986.

Decided Dec. 22, 1986.

Joseph H. Sharlitt (Daniel M. Twomey, Hessey & Hessey, on brief), for appellants.

Glenn M. Cooper (Keith A. Minoff, Paley, Rothman & Cooper, Alan I. Baron, Finley, Kumble, Wagner, Heine, Underberg, Manley & Casey, on brief), for appellees.

Before ERVIN, CHAPMAN and WILKINS, Circuit Judges.

ERVIN, Circuit Judge:

This is an appeal from summary judgment in a case involving an aborted "merger" of two closely-held lumber companies. Plaintiff-appellants Stephen Marmott, his wife Irene Marmott, and their company, Irene Lumber and Supply Co., Inc. (hereafter referred to collectively as "Marmott"), brought suit against James and Fabian Kolker, their company, Maryland Lumber Co., and a subsidiary of Maryland Lumber called Milling, Drying and Treating, Inc. (collectively hereafter "the Kolkers") over an alleged merger agreement reached in a meeting on December 19, 1981. Marmott claims that the parties agreed to merge and that Fabian Kolker agreed to memorialize the merger and handle the necessary legal details, but that the Kolkers never produced the written agreement and instead breached the contract in March, 1982.

The District Court for the District of Maryland entered summary judgment against Marmott on December 9, 1985. The court found that the purported contract was fatally vague as a matter of Maryland law; ¹ that its enforcement was barred by the statute of limitations; and that Marmott's other claims, which had both common-law and statutory components, ² were inadequate as a matter of law. We conclude that the district court was correct in finding that no contract existed and that the Marmott claim for interference with business relations fails. On those grounds, we affirm the summary judgment below.

I.

In 1981, Irene Lumber was a small, recently-started wholesale lumberyard located in Alexandria, Virginia. Its inventory of lumber and building supplies was worth a few thousand dollars. Stephen Marmott founded it and generally made its business decisions. He and his wife owned over seventy percent of the stock; the remainder was owned by his wife's parents. Stephen Marmott was apparently an experienced lumberyard manager, claiming for himself over fifteen years as principal operating officer of a New York City lumber company and a Florida retail lumber company.

Maryland Lumber, headquartered in Baltimore, was founded by Fabian Kolker's father in 1908. It had a much larger inventory and staff than did Irene Lumber. At the times involved in this case, it was owned equally by Fabian and his brother, M. Budd Kolker. Fabian was the president. His son, James, had been involved in company management for eight years. James, however, owned no stock and was not on the board of directors.

From June until the problematic meeting in December, 1981, Marmott operated in a distributorship arrangement with the Kolkers. Irene Lumber would solicit sales and place orders with Milling, Drying and Treating, the Maryland Lumber subsidiary. Milling, Drying and Treating did the bookkeeping and billing and paid a commission to Marmott. Both parties felt dissatisfied with the arrangement, so a meeting was called for December 19. The crux of this dispute concerns the nature of the new relationship, if any, agreed upon at that meeting.

Marmott claims that, at this meeting, he reached an oral agreement with Fabian and James Kolker to "merge" their businesses. The terms of this ostensible merger gave Marmott an option to purchase up to ten percent of the stock of Maryland Lumber at the end of 1982. Marmott suggested in a deposition that he was entitled eventually to purchase up to fifty percent of Maryland Lumber's stock. The price was to be agreed on later, based on the relative financial performance of the Kolkers in Maryland and Marmott in Virginia during the 1982 calendar year. Marmott further claimed that he was to receive a share of profits in the merged entity worth approximately $250,000 a year. He maintained that Fabian Kolker agreed at the meeting to put all of this into writing. That step was never taken.

In defense of his understanding of the meeting's import, Marmott produced a document labeled "Minutes of Special Meeting" (hereafter occasionally referred to as "Minutes") which outlines, in nine short paragraphs, some features of a merger between Maryland Lumber and Irene Lumber. The "Minutes" were based on notes made by Stephen Marmott's father-in-law, who had also attended the meeting. They were typed by Stephen Marmott's mother-in-law sometime after the meeting. They were not shown to the Kolkers, however, until the following March.

In the meantime, Marmott made some changes in his business immediately after the December 19 meeting: he began answering the telephone as "Maryland Lumber of Virginia" rather than "Irene Lumber & Supply"; he began to be paid directly by Maryland Lumber; and he received employees, equipment, and a substantial amount of inventory from the Kolkers. Maryland Lumber paid Marmott a salary of $600 per week, later converted to a $600 draw against commissions. Marmott styles this and his other actions after the December 19 meeting as partial or full performance of the merger agreement. The Kolkers point out that these actions are just as consistent with an agreement on their part to hire Marmott as a Maryland Lumber employee, which is essentially the outcome they attribute to the December 19 meeting.

During this time, Irene Lumber & Supply Co. continued to exist as a legal entity. No notices, still less articles of merger, ³ were filed with any governmental authorities. No leases were assigned; none of Marmott's equipment was transferred to Maryland Lumber.

In early March, Stephen Marmott inquired about changing Irene Lumber's telephone listing to Maryland Lumber, and an employee of the telephone company informed him that certain legal papers were needed to make such a change. At the suggestion of James Kolker, Marmott went to a local attorney to have the necessary papers drawn up. The attorney was unsure, on the basis of the "Minutes of Special Meeting," how the parties desired to structure the "merger." He advised Marmott about the differences between a joint venture and a merger and asked Marmott to inquire of the Kolkers what exactly they had envisioned on December 19. Marmott thereupon sent a piece of paper with two columns, one labeled "Joint Venture" and the other labeled "Merger," to the Kolkers. When he received this paper, James Kolker called Stephen Marmott to a meeting in Baltimore.

At this meeting, on March 13, 1982, Marmott showed the "Minutes" to the Kolkers for the first time. James Kolker informed Marmott that the "Minutes" did not represent the arrangement that they had discussed. Four days later, the Kolkers removed all their documents from the Alexandria lumberyard, notified Stephen Marmott that his employment was terminated, and attempted to remove their inventory. Marmott refused to give up the inventory until the Circuit Court of the City of Alexandria issued an order, on October 22, 1982, declaring the Kolkers' right of replevin for the lumber. Marmott alleges that, meanwhile, the Kolkers were calling some of his customers and telling them not to buy supplies from him, saying that his lumber was stolen. This allegation forms the basis of Marmott's claim for interference with business relations.

II.

We review the events of the December 19, 1981 meeting and the problems that subsequently arose mindful of the well-established principles of summary judgment. See generally Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985). In particular, the facts and inferences to be drawn from the facts must be viewed in the light most favorable to Marmott, as the party opposing the summary judgment motion. See United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). But settled principles of contract law and state requirements for consummating mergers limit the range of possible inferences that can be drawn from Marmott's allegations. Cf. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 280, 88 S.Ct. 1575, 1588, 20 L.Ed.2d 569 (1968) (antitrust case). Although disputes about contract formation most often raise issues to be resolved by a factfinder, rather than on summary judgment, see Charbonnages de France v. Smith, 597 F.2d 406, 414-15 (4th Cir.1979), in this case the facts as pleaded by Marmott and supplemented by the exhibits before the district court clearly eviscerate Marmott's claim that a merger agreement existed. The record, taken as a whole, demonstrates that a rational trier of fact could not find for Marmott. See Matsushita Electric Industrial Co. v. Zenith Radio Corp., --- U.S. ----, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), rev'g 723 F.2d 238 (3d Cir.1983).

The parties' agreement was too vague to be deemed a contract. It is a well-settled tenet of Maryland law that a verbal or written agreement is not valid unless "the parties express themselves in such terms that it can be ascertained to a reasonable degree of certainty what the agreement meant. If the agreement is so vague and indefinite that it is not possible to collect from it the full intention of the parties, it is void." Strickler Engineering Corp. v. Seminar, Inc., 210 Md. 93, 122 A.2d 563, 568 (1956) (collecting cases).

The "Minutes" state only that Irene Lumber "is to be merged with and become an integral part of Maryland Lumber ... under a new name that shall be determined at a future time." Marmott contends that the...