Mathis v. Hargrove

Decision Date22 December 2005
Docket NumberNo. 2604 September Term, 2004.,2604 September Term, 2004.
Citation166 Md. App. 286,888 A.2d 377
PartiesJerry J. MATHIS et al. v. Aaron HARGROVE.
CourtCourt of Special Appeals of Maryland

Randy McRae (Stan D. Brown, Will Purcell, on brief), Landover, for appellant.

George Huckabay, Bethesda, for appellee.

Panel DAVIS, SALMON and ADKINS, JJ.

DAVIS, J.

Appellants, Jerry Mathis, Prudential Mathis Realtors and Mathis Realty, Inc.,1 appeal from the verdict of a jury in the Circuit for Prince George's County, Clark, J., in favor of appellee, Aaron Hargrove. Appellants raise the following issues on this appeal:

I. Whether the circuit court wrongfully declined to decide on the motion for summary judgment;

II. Whether the circuit court erred by denying appellants' motion for summary judgment, where appellee failed to file an opposition to the motion;

III. Whether the circuit court, appellants' attorney, and appellee's attorney violated appellants' constitutional due process rights regarding a subpoenaed witness and by ignoring appellants' right to a ruling on motion;

IV. Whether the jury's verdict was supported by substantial evidence in a written record V. Whether appellee voluntarily breached his orally modified contact [sic];

A. Parties' Agreement Creates An Independent Contractor Relationship; and

B. Appellee Unilaterally Modified the Oral Contract, therein Breaching; and

VI. Whether the finding of fraud, evil intent, willful or knowing requires a showing of intent.

FACTS AND PROCEDURAL BACKGROUND

On August 1, 2001, appellant and Mathis Realtors, Inc., d/b/a, Prudential Mathis Realtors, entered into a Broker Associate Independent Contracting Agreement with appellee. Pursuant to § 9(B) of the Agreement, appellee promised to pay $2,000 per month to Prudential Mathis Realtors, Inc. Under the Agreement, appellee was to retain 100 percent of commissions he earned and, pursuant to the Addendum of even date, appellee was allowed to have, on his staff, up to four licensed agents working out of his designated office space without incurring any additional monthly rental fees. Each additional member of his "team," up to a maximum of seven, was required to pay a $150 per month rental fee and each associate under appellee's supervision was required to pay $150 per transaction up to four transactions per month.

In September 2002, appellant and appellee verbally agreed to modify the Broker Associate Agreement. Appellee would establish a new office in Bowie, pay fifty percent of the initial opening expenses, fifty percent of all subsequent operating expenses, and receive fifty percent of any future profits. Appellant insisted that they had agreed appellee was also to pay $2,000 per month as his initial investment capital as consideration for a partnership in the business. Appellant would continue to manage the Fort Washington office and appellee would manage the new office in Bowie.

According to appellee, there was a further agreement that the $25,000 rental commission paid by the owner of the office building for the five-year lease on the Bowie location executed by appellant would be divided equally between them. Appellee also claimed that he paid $27,329 of his own money between January and March of 2003, which constituted payment of the initial expenses to which they had agreed. In addition, he paid a rental commission of approximately $29,000. Appellants, in their submission to this Court, state: "On March 25, 2003, appellee, Hargrove, informed appellant, that he would have to disassociate himself from Jerry J. Mathis and Prudential Mathis Realtors, Inc."

In reference to the termination of the relationship, appellee testified that, after he, Jerry Mathis and his wife and other members of the Company returned from a convention in Las Vegas, Mathis and his wife summoned him into their office and told him that they were dissatisfied with his production. Appellee had a bad managerial style, he did not smile enough, and agents were afraid to talk to Jerry for fear that anything they said to him would be used by appellee against them. According to Hargrove, he was told by appellant and Ms. Mathis that "they no longer wanted me to manage the Ft. Washington — the midway office and our partnership arrangement was being abolished and I could no longer manage the Bowie office, the 50/50 percent arrangement, I could be anything but 50 percent." In short, Hargrove was told that Mathis had to have a controlling interest, that he could be anything in the Company except a manager and that he could work out of any office other than the manager's office. When asked to describe his reaction to appellant's repudiation of their agreement, Hargrove explained:

Well, you know, I was devastated by it, because here's something that we both went into together. At this time I had almost in excess of you know 20, 30, $40,000 invested into their venture, and then I felt like the rug was being pulled out from underneath of me, and I thought that if he could change the rules of the game three months in the venture, what would happen if I got a year down the line or two years down the line with more invested into this venture. So at that point in time I just told him if your rules are going to change, then I can't continue to partner with you, and I took the option of taking no percentage and I offered him my resignation.

Appellee subsequently transferred his license, as did other members of his "team," to Realty Executives, 2000 in Bowie. On December 10, 2003, appellee filed a three-count complaint alleging in Count I, Replevin, Trespass and Conversion, stemming from appellant's "wrongfully barring Aaron Hargrove from retrieving his furniture and files" from the Fort Washington office of Prudential-Mathis Realtors, Inc.; Count II, Breach of Contract, Breach of Fiduciary Duty, Fraud, based on appellant's alleged failure to make a full accounting and to remit commissions due within 20 business days after May 20, 2003 after securing drafts, made payable to Jerry J. Mathis and Prudential Mathis Realtors, Inc., received from appellee for transactions he procured; Count III, Breach of Partnership Agreement, Fraud, based on appellant's alleged termination of appellee and reduction in ownership interest from 50% to 49% after having been induced "to invest time and money into the opening of the Bowie office in return for a 50% ownership interest."

Prior to trial, the following transpired regarding appellants' motion for summary judgment:

THE COURT: All right. I'm ready to proceed. I see that there is a motion for summary judgment, but I don't understand why it wasn't ruled on.

[APPELLEE'S COUNSEL]: If I might just explain for the record, Your Honor?

THE COURT: Go ahead.

[APPELLANTS' COUNSEL]: May I invoke the rule on witnesses, or is that necessary?

THE COURT: No, that's all right. Anyone who is going to testify in this matter needs to remain outside the courtroom. While you're outside the courtroom, you're not to discuss this matter amongst yourselves or with anyone else.

[APPELLEE'S COUNSEL]: Thank you, Your Honor. Your Honor, as opposing counsel has indicated, the motion for summary judgment was actually filed after the date of the scheduling order. We had our pretrial conference on June the 23rd. At that time, which I originally entered my appearance as counsel in the case, outgoing counsel had not conducted discovery.

The defendant was prejudiced in that matter, so we asked the judge at the time to allow reopening of discovery. He did so. Discovery was reopened for a sixty-day period. Co-counsel — opposing — counsel and myself agreed to extend it beyond that. In fact, we did not complete discovery in this matter until September, I think it was, 17th of this year time frame. By the time approximately twenty depositions and hundreds of pages of deposition testimony and exhibits were actually produced for us and then got a chance to decipher it and apply the theory to the case, it was the November time frame.

We then, looking at the evidence, the affidavit, you know, the admissions, submitted a motion for summary judgment.

As counsel indicated, by the date that was filed their response was not due until, again, tomorrow. He filed a motion to strike on behalf of the plaintiff. We did not get that because of a mail mix up. The motion linked to the wrong address, came back, and counsel diligently had it Fed Ex'd to me. The second I received it I immediately turned around and filed an opposition and also asked the court at that time I filed a motion last Friday to continue the trial.

Pending the court's decision with respect to the motion for summary judgment, of course, counsel indicates, you know, that he wants to proceed. We are prepared to proceed. However, as the court will recognize, we've got two attorneys over here. I've handled it as pro hac vice. The defendant, as counter-plaintiff. Is [sic] required to have two counsels [sic] here. My position was that it prejudices the defendants.

THE COURT: Has there been an order permitting you to practice?

[APPELLEE'S COUNSEL]: Yes, ma'am. There's one in there. Judge Missouri signed it and — but the problem, obviously, that we have, that if the matter can be resolved via summary judgment, therefore it reduces the amount of the money that the client has to pay. So I thought it was a prudent way to go, given the evidence that we discovered in the case via discovery. Had discovery been originally conducted according to the original schedule, of course, those motions would be filed on time and we wouldn't be in this predicament.

THE COURT: I think we have to proceed with the trial. We already selected the jury.

[APPELLANTS' COUNSEL]: Your Honor, may I be heard just so-I need to know what my comfort level is as to whether I have to go back to my office and spend overnight opposing that motion for summary judgment.

THE COURT: No, you don't.

[APPELLANTS' C...

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