Shapiro v. Massengill

• Decision Date: 01 September 1994
• Docket Number: No. 999,999
• Citation: 105 Md.App. 743,661 A.2d 202
• Parties: Steven A. SHAPIRO v. Alan D. MASSENGILL, et al. ,
• Court: Court of Special Appeals of Maryland

Page 743

105 Md.App. 743

661 A.2d 202

Steven A. SHAPIRO v. Alan D. MASSENGILL, et al.

No. 999, Sept. Term, 1994.

Court of Special Appeals of Maryland.

July 6, 1995.

Julian S. Greenspun (Michael J. Dixon and Storch & Brenner, on the brief), Washington, DC, for appellant.

Richard E. Schimel (Budow and Noble, P.C., on the brief), Bethesda, for appellees.

Argued before WILNER, C.J., and MOYLAN and HOLLANDER, JJ.

HOLLANDER, Judge.

"An eminent lawyer cannot be a dishonest man," Daniel Webster once said. ¹ This thought underlies the employment dispute between two attorneys--one who fired an associate out of distrust for his integrity and his judgment, and the other who claims he was defamed and wrongly discharged. Appellant Steven A. Shapiro was terminated from employment by appellees Alan D. Massengill and Alan D. Massengill, P.A. because, during employment negotiations, Shapiro did not inform Massengill that his former employer was under federal investigation for fraud involving a contract with which Shapiro had some involvement. After the discharge, Shapiro filed suit in the Circuit Court for Montgomery County, alleging three claims: breach of contract, wrongful discharge, and defamation. The jury returned a verdict for appellees on all claims, and Shapiro has appealed.

Issues Presented

Shapiro presents a pentad of issues for our review:

1. Did the Court err by refusing to instruct the jury that if they found it was a minimum term contract, then under Dorrance v. Hoopes, 122 Md. 344, 90 A. 92, 94 (1914), it could only be broken before the end of the term by conduct which was gross, evil or actually injurious to the employer's business?

2. Did the Court err by not ruling as a matter of law that the employment agreement was a minimum term contract?

3. Did the Court err by refusing to instruct the jury on whether a job applicant has a duty [not] to disclose to prospective employers that his current employer is or had been under investigation?

4. Did the Court err by not ruling that Massengill's written and verbal statements to his employees and the unemployment office were defamatory per se?

5. Did the Court err in withdrawing punitive damages from jury consideration?

Our review of the record leads us to conclude that the court did not err in declining to rule, as a matter of law, that the employment contract in dispute was a term contract. Further, the court did not err in its instructions as to the concept of "good cause" to justify termination of a term contract, or in its instructions as to the tort of abusive discharge. We agree with Shapiro, however, that the court erred with respect to appellant's defamation claim and shall reverse and remand as to that claim only. As a result, we decline to reach the punitive damages issue.

We shall address the substance of each assertion, but in a varied order, and not exactly as appellant has presented them.

Factual Summary

For the purposes of this appeal, most of the relevant facts are undisputed.

Shapiro became a member of the West Virginia Bar in 1983. Thereafter, in 1986, Shapiro began working for Contel Federal Systems, Inc. ("Contel"), as one of twelve in-house contracts administrators. The federal government was one of Contel's customers. In August 1990, the Army discovered a discrepancy in a claim for payment submitted by Contel and initiated an investigation. Although Shapiro had not prepared the bills that were the focus of the investigation, he had drafted a transmittal letter for one of the bills in question. Nevertheless, Shapiro was never a subject of the investigation. Ultimately, the Army concluded that the discrepancies resulted from clerical error and no charges were ever lodged against anyone.

Even before the commencement of the Contel investigation, Shapiro had decided to pursue a private law practice. Accordingly, in July 1990, he took the Maryland Bar examination, which he passed, and began searching for opportunities to develop a law practice. In December 1990, Shapiro met Massengill, who expressed an interest in expanding his firm's practice, which then consisted primarily of personal injury and domestic cases, to include business and government contract components. During the negotiations which ensued, Shapiro made clear that he wanted a secure position, lasting at least a year, that could provide him with an opportunity to develop a client base for his own practice. Shapiro concedes that, during his employment discussions with Massengill, he never advised Massengill of the Contel investigation.

On January 31, 1991, Shapiro received an employment contract and an accompanying cover letter from Massengill. Shapiro promptly signed the contract and, on April 1, 1991, he began working for Massengill. Of particular relevance to this dispute, the contract provided:

I expect the term of this arrangement to go for at least one year, assuming we both continue working as we anticipate. However, we each reserve the right to cancel the arrangement after 9 months with the next 90 days to count as part of the year.

If our efforts are successful, I expect to increase your salary appropriately each year after the first year. We will have to negotiate this based upon clients, earnings, and profits.... Also, it is my intent that if we are successful and work well together, then I will consider having you become a junior partner at the end of 3 years.

(Emphasis added).

On April 24, 1991, just three weeks after Shapiro began working for Massengill, Phillip Radoff, Contel's general counsel, advised Shapiro that the Army wanted to conduct a final interview of Shapiro before closing the investigation. The interview was purely voluntary; Shapiro could have declined to be interviewed. Radoff informed Shapiro that Contel would hire an attorney to represent Shapiro at this interview, if he wanted one. Shapiro then informed Massengill of the Contel investigation and his impending interview.

Massengill was angry that Shapiro had failed to inform him of the investigation, that Shapiro could be a witness in criminal proceedings, or perhaps--in the worst case--that Shapiro himself could even be indicted. Shapiro explained to Massengill that he did not disclose the Army's inquiry earlier because no one at Contel had ever been implicated of wrongdoing, he believed the matter had essentially been resolved prior to the time that he met Massengill, and he was never a subject of the inquiry. Moreover, he considered the investigation "insignificant," and therefore did not think it necessary to disclose it during his employment discussions with Massengill. Although Shapiro acknowledged that "anything is possible," he steadfastly denied that he could be indicted.

In addition, Shapiro specifically asked Massengill to call Radoff to confirm his story, but Massengill never did so. Nor did Massengill take any other steps to verify Shapiro's account. Instead, on May 3, 1991, just a month after Shapiro began working for Massengill, Shapiro was fired. Shortly thereafter, at a meeting of the firm's employees, Massengill explained his decision to discharge Shapiro.

Subsequently, at Shapiro's request, the Army's Special Agent in charge of the Contel investigation wrote Massengill a letter, dated May 16, 1991, confirming that "Mr. Shapiro was never the target of this investigation, nor has any wrongdoing been attributed to him." At trial, through deposition testimony, Massengill acknowledged that this letter reflected what Shapiro had told him on April 24, 1991. Massengill nonetheless sent a statement to the Department of Employment and Economic Development ("DEED"), dated May 20, 1991, opposing Shapiro's claim for unemployment benefits. ²

Additional facts will be included where pertinent to our discussion of the issues presented.

Discussion

I. Breach Of Contract

A. Term vs. At-Will

Appellant argues that the employment contract was unambiguous and, therefore, the court erred in submitting to the jury the issue of whether the contract was terminable at will or provided a definite term. Instead, he claims the court should have ruled, as a matter of law, that the contract created a fixed term of employment.

An employment agreement may either be for a fixed term or at will. Hrehorovich v. Harbor Hospital, 93 Md.App. 772, 790, 614 A.2d 1021 (1992), cert. denied, 330 Md. 319, 624 A.2d 490 (1993); Chai Mgmt., Inc. v. Leibowitz, 50 Md.App. 504, 513, 439 A.2d 34 (1982). Generally, an employer or an employee may terminate an at-will employment relationship, for almost any reason or no reason, at any time. Lee v. Denro, 91 Md.App. 822, 829, 605 A.2d 1017 (1992); Beery v. Md. Medical Laboratory, 89 Md.App. 81, 94, 597 A.2d 516 (1991); Haselrig v. Publ. Storage, Inc., 86 Md.App. 116, 122, 585 A.2d 294 (1991); Castiglione v. Johns Hopkins Hosp., 69 Md.App. 325, 338, 517 A.2d 786 (1986); see also Adler v. Amer. Standard Corp., 291 Md. 31, 35, 432 A.2d 464 (1981). An employment contract is deemed at will, and therefore terminable without cause, when it does not expressly specify a particular time or event terminating the employment relationship. Staggs v. Blue Cross of Md., Inc., 61 Md.App. 381, 388, 486 A.2d 798, cert. denied, 303 Md. 295, 493 A.2d 349 (1985). On the other hand, when an employment contract specifies a definite term, it may only be terminated prior to the end of the term for just cause. Chai Mgmt., 50 Md.App. at 513, 439 A.2d 34.

Shapiro alleges that Massengill breached the employment agreement by terminating him, without good cause, before the expiration of the term. Therefore, whether the employment contract was at will or for a fixed term is significant. If it was at will, as appellees claim, then Massengill was entitled to terminate Shapiro with or without good cause. But if it was for a stated term, as Shapiro argues, then the employer could only fire Shapiro for sufficient cause.

Construction of a contract is, in the first instance, a question of law...