Trusted Sci. & Tech., Inc. v. Evancich

• Docket Number: s. 38,1437
• Decision Date: 09 September 2024
• Citation: 262 Md. App. 621,320 A.3d 474
• Parties: TRUSTED SCIENCE AND TECHNOLOGY, INC. v. Nicholas EVANCICH, et al.
• Court: Court of Special Appeals of Maryland

262 Md. App. 621

320 A.3d 474

TRUSTED SCIENCE AND TECHNOLOGY, INC.

v.Nicholas EVANCICH, et al.

Nos. 38, 1437, Sept. Term, 2023

Appellate Court of Maryland.

July 22, 2024

Reconsideration Denied September 9, 2024

Circuit Court for Montgomery County, Case No.: 174579FL, J. Bradford McCullough & Jeannie E. Cho, Judges.

Argued by Shirley M. Steinbach(Glenn C. Etelson, Shulman Rogers, P.A., Potomac, MD), on brief, for Appellant.

No argument on behalf of the Appellee.

Argued before: Leahy, Reed, Ripken, JJ.^*

Leahy, J.

This consolidated appeal is brought by Trusted Science and Technology, Inc.("TST") from a pair of orders entered in the Circuit Court for Montgomery County in a divorce action between appellees, Nicholas Evancich("Husband") and Belen Coleman("Wife").The first order compelled the company’s production of certain highly confidential business records, subject to a protective order, in response to a third-party discovery subpoena.The second order struck TST’s contempt petition, which it filed to enforce the protective order upon learning that Husband, Wife, and their counsel may have breached it.On appeal, TST presents two issues for our review:

1."Whether the circuit court erred in concluding that a third party lacks legal standing to argue overbreadth and relevance under Maryland Rule 2-510, and in ordering [TST] to produce all documents subpoenaed by the parties, without any consideration of [TST’s] substantive objections, on the ground that [TST’s] interests are covered by a protective order entered in the case."

2."Whether the circuit court erred in striking [TST’s]petition for contempt against the parties under Maryland Rule 2-322(e) for their violations of that same protective order, on the ground that a third party lacks legal standing under Maryland Rule 15-206(b)(2) to initiate contempt proceedings for violations of an order entered exclusively for that third party’s benefit, and without regard to the doctrine of judicial estoppel."

Although we conclude that the first issue is moot, for the reasons provided in our discussion, we exercise our discretion to reach the merits under the particular circumstances presented.Accordingly, we hold that the ability of a person (including a nonparty) to object under Maryland Rule 2-510(f) encompasses an objection that the discovery sought by the subpoena exceeds the bounds of Rule 2-402, including that the discovery sought is not "relevant to the subject matter involved in the action[.]"Here, TST had standing to object to Wife’s subpoena on relevance and overbreadth grounds, and the circuit court erred in compelling TST’s production without considering its objections on those grounds.Third parties that are subpoenaed for their confidential information and involuntarily drawn into divorce actions should be able to seek protection from the courts.

Second, we conclude that under Kadish v. Kadish,254 Md. App. 467, 274 A.3d 482(2022), andPack Shack, Inc. v. Howard County,371 Md. 243, 808 A.2d 795(2002), TST’s appeal from the circuit court’s decision to strike the petition for contempt is not properly before this Court.Therefore, we shall dismiss appeals Nos. 1437 and 38.

BACKGROUND

Husband and Wife married in November 2017.Husband is the co-founder of TST and owned shares of the company during the marriage.TST is an engineering company focused on cyber security with its headquarters in Rockville, Maryland.TST engages in highly competitive government contracting with various defense industry agencies.Wife worked for TST as an administrator during the marriage.

Underlying Action: Husband v. Wife

Husband initiated the underlying case in March 2021 when he filed for an absolute divorce in the Circuit Court for Montgomery County.In April 2021, before Wife even filed her answer, the court held a hearing at which the parties placed on the record the terms of a consent agreement reached in a separate case emanating from protective orders that the parties had filed against each other.¹That agreement provided, among other things, that Husband and Wife would stay at least 500 feet away from one another and would have no contact except through counsel"and only for the purposes of resolving or litigating their pending divorce."Wife filed her Answer in May 2021, and, on June 15, the court entered an order incorporating, but not merging, the parties’ on-the- record agreement.

Shortly thereafter, Wife petitioned for contempt, alleging Husband "ha[d] violated practically every provision of the June 15[ ], 2021, Order and Agreement" and seeking Hus band’s incarceration until he purged the contempt.From there, the parties remained embroiled in discovery disputes throughout the first year of the divorce case until discovery closed, initially, on January 25, 2022.

Then on May 13, 2022, the discovery disputes ramped up again after Wife filed an amended answer in which she requested that the court, among other things, determine "the ownership of all personal and real property titled in the name of both parties, or either of them, including any and all retirement and pension benefits."She also filed a separate motion seeking leave to conduct additional discovery.Husband, in turn, filed a "supplemental and amended complaint for absolute divorce."Wife responded by filing an answer to Husband’s amended complaint and a countercomplaint in which she included, for the first time, a claim for equitable distribution seeking—in relevant part—a valuation of Husband’s shares in TST.Husband moved to strike all of Wife’s pleadings, but the trial court ultimately denied Husband’s motions and granted Wife’s.On July 18, 2022, the court allowed Wife 11 days to conduct additional discovery.TST was drawn into the case during this second discovery phase.

Parallel Action: TST v. Wife

Before continuing our overview of the underlying divorce action, we must first rewind a bit to discuss a separate, but not wholly unrelated, action.As earlier mentioned, Wife worked for TST during the marriage.She handled many administrative tasks and responsibilities for the company but had no specific written duties.As part of her employment, TST gave Wife a laptop for both personal and business use.On that laptop, Wife maintained information related to the company’s human resources and accounting data.She also had access to TST’s financial information, bid proposals, government contracts, corporate records, and other trade secrets.Wife was tasked with creating a company website, to which she alone retained administrator access on her laptop.

In March 2021, the co-founder of TST, Dr. Kyung Kwak, asked Wife to fill in a spreadsheet with account information for the accounts which she handled, and to return company property in her possession.Wife imparted some of the information requested, but stated that most of it was on her computer, which she kept in her possession.At the April 9 hearing in the protective order case, Wife agreed to turn over to Dr. Kwak the passwords and specific information needed for TST’s accounts and programs.Wife did not comply with her agreement to turn over the requested information by close of business April 12, nor did she respond to Dr. Kwak’s ensuing request for return of TST’s information and property.

On April 23, 2021, Dr. Kwak sent Wife a formal letter terminating her employment with TST for, among other reasons, disclosing company confidential information to an employee and "holding company assets hostage[.]"When Wife refused to return TST’s property and confidential information, the company sued her, also in the Circuit Court for Montgomery County.TST requested injunctive relief and damages arising out of Wife’s alleged conversion, computer fraud and abuse, misappropriation of trade secrets, and violation of the federal Defend Trade Secrets Act.This case progressed parallel to the underlying divorce case.

After a hearing in June 2021, the court granted TST a preliminary injunction and ordered Wife to transfer the domain name for the website to TST and to return, through counsel, the computer in her possession to TST.TST was authorized to review the computer and delete or remove any company files before returning the computer to Wife.The transfer was to take place no later than July 2, 2021.

Before turning the laptop over to TST, however, Wife copied all the information onto a thumb drive and wiped the laptop by resetting the operating system two days before the transfer deadline.The next day, she placed 13 files back onto the laptop and turned it over to the company.Although TST was immediately aware of Wife’s misconduct, the company waited more than a year before petitioning for contempt and enforcement.²

Following a hearing in January 2023, Wife was found in contempt for removing the information from the laptop.She was given until January 11 to purge the contempt by "providing to her counsel all thumb drives and external hard drives in her possession or control that include any information or files that in any way pertain to TST … except for information that was produced to her in her domestic case."She failed to do so, and the court modified the contempt order to provide that Wife was to report to the seventh floor of the courthouse from 8:00 a.m. until 5:00 p.m., starting on January 27, each business day until she purged her contempt by delivering the drives to TST’s counsel.

After a two-day bench trial, the circuit court, on February 7, 2023, held a hearing to deliver the court’s ruling in the case.The court observed that Wife "has spent the last seven or eight business days on the seventh floor of the [c]ircuit [c]ourt, as she has refused to turn over the required drives as ordered, in defiance of now several court orders."The court found that "[t]here was no legitimate business reason for [Wife’s] actions.She acted purposefully to spite [TST] and/or [Husband].Her actions were intentionally spiteful and malicious."The court also...