Baker, Watts & Co. v. Miles & Stockbridge

HARRELL, Judge. On 20 October 1989, Baker, Watts & Co., appellant, filed suit in the Circuit Court for Baltimore City against Miles & Stockbridge and one of its partners, Timothy R. Casgar, appellees, alleging malpractice, breach of contract, and negligent misrepresentation and seeking contribution under the Maryland Securities Act, Md. Corps. & Ass’ns Code Ann. §§ 11-101 to -805 (1993) (hereinafter the Maryland Securities Act or the Act). On 30 November 1989, appellees filed a motion to dismiss pursuant to Md.Rule 2-322(b). On 21 December 1989, Baker, Watts filed a motion to consolidate this action, in accordance with Md.Rule 2-503, with a previously filed action, which had been dismissed from federal court, because the actions were based on the same set of events and involved identical parties and identical questions of law and fact. ¹⁵⁶ On 9 May 1990, a hearing was held on appellees’ motion to dismiss.

By order of even date, the circuit court (Ross, J.) granted the motion to dismiss as to Baker, Watts’s claims for malpractice, breach of contract, and negligent misrepresentation because the statute of limitations had run. The circuit court deferred until trial its decision on the motion to dismiss as to Baker, Watts’s claim for contribution under § 11-703 of the Maryland Securities Act. Appellees filed a “renewed” motion to dismiss Baker, Watts’s remaining claim on 8 January 1991. On 11 February 1991, the circuit court denied this motion.

The day before trial, 17 December 1991, appellees filed a motion for summary judgment pursuant to Md.Rule 2-501. 1 The following day, appellees also filed a motion in limine seeking to bar Baker, Watts, its counsel, and its witnesses from making any reference to a prior proceeding in federal court out of which this case arose. On the morning set for trial, 18 December 1991, the circuit court (Davis, J.) heard oral argument on appellees’ motion for summary judgment. Although counsel for Baker, Watts argued against the motion, he also argued that his client should be given fifteen days to respond to appellees’ motion. The circuit court granted appellees’ motion for summary judgment as to Baker, Watts’s remaining claim.

The circuit court also granted the motion in limine as a precautionary measure should the case ever be tried. On 30 December 1991, Baker, Watts filed a motion for reconsideration of the order granting summary judgment. 2 The circuit court denied the .motion for reconsidera ¹⁵⁷ tion by order dated 4 February 1992. Baker, Watts noted a timely appeal to this Court on 4 March 1992. Background In 1981, Baker, Watts acted as the lead dealer-manager in a private offering and sale of limited partnership interests in Superior Drilling Partners ’81 (Partners ’81).

Superior Petroleum, Inc. (Superior) was the general partner. Baker, Watts retained appellees to perform all necessary legal services in connection with this offering and sale. On 9 March 1981, the private offering of the interests in Partners ’81 began with the issuing of a Confidential Offering Memorandum. Appellees drafted the offering memorandum and a tax opinion, which was included in the memorandum.

The private offering closed on 1 June 1981. In January 1981, prior to the private offering, a purchase of stock in Superior had been consummated to resolve a deadlock between the two controlling groups of Superior— Anthony Biondi, Superior’s President, and the Spring brothers — each of whom owned a fifty percent interest in the company. Eighteen individuals from Baltimore (the Baltimore Group), purchased from Biondi and the Spring brothers a one-third interest in Superior. Appellee Casgar was a member of the Baltimore Group, as were fourteen partners and two employees from Baker, Watts.

Casgar owned 4.2% of the stock in Superior and the partners and employees from Baker, Watts collectively owned approximately twenty-eight percent of the stock. Conflicting allegations are made by the parties that during the private offering period from 9 March 1981 to 1 June 1981 several communications took place between Biondi and certain members of the Baltimore Group concerning the ¹⁵⁸ sale of the Baltimore Group’s stock to Biondi. Baker, Watts claims that Casgar, along with Hugh Grady, a Baker, Watts employee, handled the negotiations with Biondi. In contrast, appellees argue that only Grady took part in the negotiations to sell the stock.

Eventually, on 1 July 1981, one month after the private securities offering closed, the Baltimore Group sold its stock to Biondi. The bright future predicted for Partners ’81 did not become reality. By June of 1982 the limited partnership was in receivership. In April of 1983, certain investors who had purchased limited partnership interests in Partners ’81 during the private offering brought suit in federal court against Baker, Watts, Adalman v. Baker, Watts & Co., No. Y-83-2485 (D.Md.1985). 3 The Adalman investors alleged that the Confidential Offering Memorandum contained material omissions in violation of § 12(2) of the Securities Act of 1933, 15 U.S.C. § 111(2) (1988), and § 11-703(a)(1)(ii) of the Maryland Securities Act.

On 16 May 1985, a jury found that Baker, Watts had violated the federal and state securities laws by failing to disclose the negotiations between the Baltimore Group and Biondi in the offering memorandum. The investors obtained a judgment for $1,916,314.17, which was entered by the district court on 31 July 1985. After an unsuccessful appeal by Baker, Watts, Adalman v. Baker, Watts & Co., 807 F.2d 359 (4th Cir.1986), the parties entered into a settlement agreement, and on 28 November 1986, Baker, Watts paid the Adalman investors approximately $2.3 million. Also, in accordance with the terms of the settlement agreement, the parties entered into a stipulation that the case be dismissed with prejudice and that the judgment entered against Baker, Watts be vacated.

On 3 December 1986, the United States District Court for the ¹⁵⁹ District of Maryland signed an order giving effect to the parties’ stipulation. On 23 October 1987, Baker, Watts filed almost identical actions against appellees in the U.S. District Court for the District of Maryland and the Circuit Court for Baltimore City. Baker, Watts sought indemnification and contribution under § 12(2) of the Securities Act of 1933 and § 11-703 of the Maryland Securities Act, and brought state common law claims for malpractice, breach of contract, and negligent misrepresentation. On 24 November 1987, on a motion filed by appellees, the state action was removed to federal court.

On 18 March 1988, the U.S. District Court denied Baker, Watts’s motion to remand the state action and consolidated the two cases pursuant to Rule 42(a) of the Federal Rules of Civil Procedure. Appellees filed a motion to dismiss Baker, Watts’s claims, which the court treated as a motion for summary judgment because it presented matters outside the pleadings. Fed.R.Civ.P. 12(b). Ultimately, the district court granted appellees’ motion for summary judgment regarding the claims under the federal and state securities laws.

The district court remanded the state common-law claims for malpractice, breach of contract, and negligent misrepresentation to the Circuit Court for Baltimore City. Baker, Watts & Co. v. Miles & Stockbridge, 690 F.Supp. 431 (D.Md.1988). Both parties appealed to the United States Court of Appeals for the Fourth Circuit. On appeal, the Fourth Circuit held: (1) private rights of action for contribution and indemnification are not available under § 12(2) of the Securities Act of 1933; (2) Baker, Watts’s state statutory and common-law claims, to the extent that they provide a cause of action for indemnification, must fail because they are preempted by federal law, which does not allow indemnification; and (3) the district court erred in resolving, on the merits, Baker, Watts’s claim for contribution under § 11-703 of the Maryland Securities Act.

The Fourth Circuit also instructed the district court to dismiss without preju ¹⁶⁰ dice all pendent state claims, except those seeking indemnification. See Baker, Watts & Co. v. Miles & Stockbridge, 876 F.2d 1101 (4th Cir.1989). On 20 September 1989, in accordance with the decision by the Fourth Circuit, the district court ordered the following: (1) Baker, Watts’s claim for indemnification under § 11-703 was dismissed with prejudice; (2) Baker, Watts’s claim for contribution under § 11-703 was dismissed without prejudice; and (3) Baker, Watts’s state common-law claims for malpractice, breach of contract, and negligent misrepresentation were dismissed without prejudice subject to the preemptive scope of the federal securities laws as discussed by the court of appeals in its decision. We will include additional facts as necessary in our discussion of the issues presented.

Issues Appellant presents the following issues for our review: I. Whether the trial court erred in considering appellees’ motion for summary judgment on the morning set for trial without granting appellant fifteen days to respond; II. Whether there are material questions of fact in dispute which would preclude the grant of summary judgment; III. Whether the circuit court erred when it dismissed appellant’s state common-law claims for malpractice, breach of contract, and negligent misrepresentation as barred by the statute of limitations; and IV. Whether the circuit court erred in granting appellees’ motion in limine.

Discussion I. Baker, Watts first claims that the circuit court erred in hearing argument on appellees’ motion for summary judgment instead of proceeding to trial as originally scheduled. Baker, Watts contends that the Maryland Rules ¹⁶¹ require that a party be given fifteen days to file a response to a motion for summary judgment. In addition, appellant argues that its due process rights were violated because it was not afforded proper notice or allowed to put factual evidence in the record. Under the Maryland Rules, a party may file a motion for summary judgment at any time in a proceeding.

Md. Rule 2-501(a); Myers v. Montgomery Ward & Co., 253 Md. 282, 289-90 , 252 A.2d 855 (1969); Ralkey v. Minn. Mining & Mfg. Co., 63 Md.App. 515, 522 , 492 A.2d 1358 (1985); Joy v. Anne Arundel County, 52 Md.App. 653, 660-61 , 451 A.2d 1237 (1982), cert, denied, 295 Md. 440 (1983). Ordinarily, a party against whom a motion is directed must file a response within fifteen days after being served with the motion.

Rule 2-311(b). If the motion is based on facts not contained in the record, the response must be supported by affidavit and accompanied by any papers on which the response is based. Rule 2-311(d). We agree that the circuit court did not strictly comply with Rule 2-311 when it failed to give Baker, Watts an opportunity to file a response to the motion for summary judgment.

On appeal, however, Baker, Watts must show not only error committed by the work in circuit court, but also that the error was prejudicial. Beahm v. Shortall, 279 Md. 321, 330-31 , 368 A.2d 1005 (1977); Rippon v. Mercantile-Safe Deposit & Trust Co., 213 Md. 215, 222 , 131 A.2d 695 (1957). An error is prejudicial if it affected the outcome of the case. See, e.g., I.W. Berman Properties v. Porter Bros., Inc., 276 Md. 1, 11-12 , 344 A.2d 65 (1975); State Rds.

Comm’n v. Kuenne, 240 Md. 232, 235 , 213 A.2d 567 (1965). If an error does not affect the outcome of the case it is harmless, and an appellate court will not reverse a lower court for harmless error. Beahm, 279 Md. at 331 , 368 A.2d 1005 ; I. W. Berman Properties, 276 Md. at 11-12 , 344 A.2d 65 . We do not believe that the error committed by the circuit court was, in any way, prejudicial to Baker, Watts.

At the ¹⁶² hearing, Baker, Watts’s counsel was able to articulate the facts upon which his client would be relying if the case were to go to trial. In addition, in its motion for reconsideration, Baker, Watts essentially reiterated, although in a more organized fashion, the same factual arguments it presented at the hearing on the motion for summary judgment. Indeed, Baker, Watts presents the same factual arguments on appeal to this Court. Baker, Watts has, therefore, failed to establish that it was prejudiced by the circuit court hearing the motion for summary judgment on the morning set for trial.

Baker, Watts also contends that its due process rights were violated because it was not given adequate notice of the hearing. Nor was Baker, Watts given the opportunity to present evidence on the record to support its claims. To support its position, Baker, Watts relies on the Court of Appeals decision, Blue Cross of Md., Inc. v. Franklin Square Hosp., 277 Md. 93 , 352 A.2d 798 (1976), in which the Court set forth the relevant due process requirements: Generally, due process requires that a party to a proceeding is entitled to both notice and an opportunity to be heard on the issues to be decided in a case. Thus, unless an issue decided by the court is raised by the pleadings, or a party otherwise receives adequate notice of an issue during the course of a proceeding, due process is denied.

Id. at 101 , 352 A.2d 798 (citations omitted). We believe Baker, Watts misconstrues this passage’s application to its claim for denial of due process. Baker, Watts claims that it was not afforded proper notice of the summary judgment motion. Rule 2-501(a), however, clearly provides that a motion for summary judgment may be made at any time.

We do not believe it is unreasonable that a party should be aware of such a provision in the rules. In addition, Baker, Watts had adequate notice that establishing appellees as persons liable for contribution under § 11-703 of the Maryland Securities Act ¹⁶³ would be a major obstacle to Baker, Watts’s claims. First, on 21 December 1989, appellees filed a motion to dismiss the claim for contribution. Second, in their answer, filed 19 June 1990, appellees stated: “[T]he defendants [appellees] cannot be liable to Baker, Watts for contribution under Section 11-703(c)(2) because they could not have been jointly and severally liable to the investors under Section 11-703(c)(1).” Third, appellees “renewed” their motion to dismiss the state securities law claim for contribution on 8 January 1991.

Finally, the U.S. District Court for the District of Maryland had granted summary judgment in favor of appellees, finding that they were not parties who could be held liable under § 11-703. 4 Thus, it is clear from the record extract that Baker, Watts had adequate notice that appellees’ liability for contribution under § 11-703 was in issue. Indeed, this was the very heart of Baker, Watts’s case, which it should have been prepared to establish by the morning set for trial. See Placido v. Citizens Bank & Trust Co. of Md., 38 Md.App. 33, 42 , 379 A.2d 773 (1977) (trial court’s grant of plaintiff’s motion for summary judgment at close of plaintiff’s case was not denial of due process). Nor do we believe that Baker, Watts was denied an opportunity to be heard on the issue.

Baker, Watts was prepared to go to trial the same day that the circuit court held the hearing on the motion for summary judgment. Pre-trial discovery had been completed. It was not unreasonable to expect that Baker, Watts’s counsel would have been prepared to give an opening statement describing what he believed the evidence would show. At that point, Baker, Watts should have had a complete grasp of the case ¹⁶⁴ it wanted to present, especially with regard to this essential element.

With the parties in such a state of preparedness, there was no denial of due process when the circuit court asked Baker, Watts’s counsel to proffer any facts they intended to prove that would support a finding of liability under § 11-703. Compare Phillips v. Venker, 316 Md. 212, 222 , 557 A.2d 1338 (1989) (denial of due process found when counsel could not effectively participate in hearing because he was not given opportunity to review file, collect thoughts, or otherwise prepare); Van Schaik v. Van Schaik, 90 Md.App. 725, 739 , 603 A.2d 908 (1992) (denial of due process found because party did not have an opportunity for effective argument on issue when party had no notice that issue would be considered and there was no discussion of the issue at the hearing); Placido, 38 Md.App. at 42, 379 A.2d 773 (trial court’s grant of plaintiff’s motion for summary judgment at close of plaintiff’s case was not a denial of due process where record shows defendant had opportunity to suggest the existence of a material factual dispute).

II

Baker, Watts next argues that there are material questions of fact in dispute that should have precluded the circuit court from granting appellees’ motion for summary judgment. A trial court may grant a motion for summary judgment when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Rule 2-501(e). This procedure is not to be used as a substitute for trial, but is merely a means by which a trial court may determine if a trial is necessary.

Wash. Homes, Inc. v. Interstate Land Dev. Co., 281 Md. 712, 716 , 382 A.2d 555 (1978). In reviewing a disposition by summary judgment, we must first decide whether a material factual dispute exists and, in doing so, will resolve all factual inferences against the moving party.

McDermott v. Hughley, 317 Md. 12, 22 , 561 A.2d 1038 (1989); King v. Bankerd, 303 Md. 98, 110-12 , 492 A.2d 608 (1985); Syme v. Marks Rentals, Inc., 70 Md.App. 235, 238-39 , 520 A.2d 1110 (1987). A material fact is one that will affect the outcome ¹⁶⁵ of the case; thus, a dispute as to a non-material fact will not preclude a trial court from granting summary judgment. Bankerd, 303 Md. at 111 , 492 A.2d 608 . When a moving party establishes sufficient grounds for summary judgment, the opposing party must demonstrate, in some degree of detail, that there is a genuine dispute of material fact.

Id. at 112 , 492 A.2d 608 . A general denial is insufficient to defeat a motion for summary judgment. Id. If there are no material factual disputes, then we must decide whether the trial court was legally correct, because the trial court decides issues of law, not fact, when granting summary judgment.

Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591-92 , 578 A.2d 1202 (1990). Baker, Watts first argues that the circuit court erroneously focused solely on the issue of whether appellee Casgar was involved in the sale of interests in Partners ’81. Our review of the record extract reveals no such error. Baker, Watts presented several factual arguments to counter appellees’ motion for summary judgment.

In its oral ruling, the circuit court addressed every one of those arguments and did not focus solely on Casgar’s involvement in selling interests in Partners ’81. Baker, Watts next claims that appellees are among the persons that may be held liable under § 11-703 of the Maryland Securities Act and presents this Court with several factual and legal bases to support its position. In the case sub judice, we must determine the meaning and effect of § 11-703; therefore, we first set forth the principles of statutory construction that will apply throughout our discussion of Issue II. The cardinal rule of statutory construction is to ascertain and effectuate the intention of the General Assembly.

Jones v. State, 311 Md. 398, 405 , 535 A.2d 471 (1988); State v. Intercontinental, Ltd., 302 Md. 132, 137 , 486 A.2d 174 (1985). To fulfill this function, we must consider the words of the statute in their natural and ordinary significance. Rucker v. Comptroller of the Treasury, 315 Md. 559, 565 , 555 A.2d 1060 (1989); NCR Corp. v. ¹⁶⁶ Comptroller of the Treasury, 313 Md. 118, 124 , 544 A.2d 764 (1988). This Court will not resort to strained, subtle, or forced interpretations in order to limit or extend the operation of a statute.

Dickerson v. State, 324 Md. 163, 171 , 596 A.2d 648 (1991); City of Baltimore v. Hackley, 300 Md. 277, 283 , 477 A.2d 1174 (1984). Where “there is no ambiguity or obscurity in the language of a statute, there is usually no need to look elsewhere to ascertain the intent of the General Assembly.” Hackley, 300 Md. at 283 , 477 A.2d 1174 . Finally, “[a]bsent a clear indication to the contrary, a statute, if reasonably possible, is to be read so that no word, clause, sentence, or phrase is rendered surplusage, superfluous, meaningless, or nugatory.” Bd. of Educ. of Garrett County v. Lendo, 295 Md. 55, 63 , 453 A.2d 1185 (1982). Baker, Watts argues that the circuit court erred in finding that appellees were not parties that could be held liable under § 11-703 of the Maryland Securities Act.

Baker, Watts first refers us to § ll-703(c), which imposes joint and several liability on several categories of persons. Section,. ll-703(c) provides, in pertinent part: ■ Others jointly and severally liable with seller or purchaser. — (1) Every person who directly or indirectly controls a person liable under subsection (a) of this section ... every employee of the person liable who materially aids in the conduct giving rise to the liability, and every broker-dealer or agent who materially aids in ysuch conduct are also liable jointly and severally with and to the same extent as the person liable____ (2) There is contribution as in cases of contract among the several persons so liable. “Person” is defined in § 11 — 101(/) as: [A]n individual, a corporation, a partnership, an association, a joint-stock company, a trust where the interests of the beneficiaries are evidenced by a,-security, an unincorporated organization, a government, or a political subdivision of a government. / Baker, Watts argues that appellees fall within three categories of persons that may be he)d liable under § ll-703(c). ¹⁶⁷ They are: agents, controlling persons, and employees. Baker, Watts further contends that appellees may be held liable as sellers under § ll-703(a). We address each category separately.

Is There a Material Factual Dispute That Appellees Were Agents of Baker, Watts? Baker, Watts argues that it presented sufficient facts to the circuit court to establish the existence of an agency relationship between the parties, and thus, sufficient to defeat the motion for summary judgment. The facts to which Baker, Watts refers this Court include: (1) appellees represented and assisted Baker, Watts in effecting the sale of the partnership interests in Partners ’81; (2) appellees represented the Baltimore Group in the sale of its interest in Superior; (3) Casgar was an equity owner of Superior and, therefore, he had a personal and financial interest in the sale of the limited partnerships in Partners ’81; (4) appellees acted as legal counsel to Baker, Watts, Partners ’81, and two members of the Superior board of directors; (5) Casgar prepared the Confidential Offering Memorandum for Partners ’81; and (6) Casgar gave a tax opinion to the Partners ’81 investors. Baker, Watts also claims that the circuit court erroneously ignored the commonlaw definition of agency, which includes an attorney-client relationship.

Section 11-101(b) of the Maryland Securities Act defines “agent” as: [A]n individual other than a broker dealer who represents a broker-dealer or issuer in effecting or attempting to effect the purchase or sale of securities. The comment to § 401 of the Uniform Securities Act, from which § ll-101(b) was taken, states that the definition of “agent” “depends upon much the same factors which create an agency relationship at common law.” Unif.Sec.Act § 401, 7B U.L.A. 581 (1985). Under Maryland common law, the attorney-client relationship is generally one of agency. Brady v. ¹⁶⁸ Ralph Parsons Co., 308 Md. 486 , 510 n. 27, 520 A.2d 717 (1987); Henley v. Prince George’s County, 305 Md. 320 , 340 n. 5, 503 A.2d 1333 (1986).

We do not believe, however, that this fact brings appellees within the definition of “agent” in § 11-101(b). Although the statutory definition is based upon factors similar to those used in the common-law definition, the definition in § 11-101(b) and the references to the term “agent” throughout the Act clearly reflect the General Assembly’s intention to alter the common-law definition of agent. See Hardy v. State, 301 Md. 124, 131-32 , 482 A.2d 474 (1984); Gray v. State, 43 Md.App. 238, 241-43 , 403 A.2d 853 (1979), cert, denied, 286 Md. 747 (1980). Therefore, we must construe the meaning of the term “agent.” Because this question has never been addressed in the State of Maryland, we first examine the approaches to this issue taken in other jurisdictions.

The Court of Appeals of Wisconsin, in Rendler v. Maricos, 154 Wis.2d 420 , 453 N.W.2d 202 (App.1990), discussed the liability of attorneys who, the plaintiff alleged, had materially aided in the creation of a false and misleading prospectus in a limited partnership offering. The Wisconsin court, interpreting a statutory definition of “agent” almost identical to § 11-101(b), stated: The definition of agent ... does not include attorneys who merely render legal advice or draft documents for use in securities transactions. The definition covers persons who assist directly in offering securities for sale, soliciting offers to buy, or performing the sale, but who do not fit the definition of broker-dealer. It is not intended to cover professionals such as attorneys engaging in their traditional advisory functions.

Id. 453 N.W.2d at 206 . In Ackerman v. Schwartz, 733 F.Supp. 1231 (N.D.Ind.1989), aff 'd in part and rev’d in part on other grounds, 947 F.2d 841 (7th Cir.1991), investors in an equipment leasing program brought suit against an attorney who wrote a tax opinion letter and the attorney’s law firm. The defendants moved for summary judgment, claiming that ¹⁶⁹ they were not agents within the meaning of the Indiana Securities Act. In construing the definition of “agent” in the Indiana Act, a definition similar to that in § 11 — 101(b), the district court focused on the meaning of the term “effect.” The court held that liability under the Indiana Securities Act requires “more than the mere drafting of an opinion letter,” and granted the defendants’ motion.

Id. at 1252. The attorney and his firm could have been held liable, however, if they had “personally and actively employed the opinion letter to solicit investors.” Id. (emphasis supplied). In In re N. Am.

Acceptance Corp. Sec. Cases, 513 F.Supp. 608 (N.D.Ga.1981), purchasers of certain notes brought an action against several parties including the issuer’s law firm, claiming, inter alia, violations of the Georgia Securities Act of 1957. The law firm moved for summary judgment claiming that it could not be held liable because it was not an “agent” as defined in the Georgia Act. The district court interpreted the Georgia Securities definition of “agent,” 5 stating: To hold an individual to be an agent who has participated or aided in making sales of securities, the Court must find that the individual was so entangled in the actual sale of the security that his activities were at least a substantial factor in the purchaser’s decision to buy the security and that his activities were either authorized by or ratified by the issuer. Id. at 623 .

In Excalibur Oil, Inc. v. Sullivan, 616 F.Supp. 458 (N.D.Ill.1985), an oil and gas lease purchaser brought an ¹⁷⁰ action against the seller’s attorney under, inter alia, the Uniform Securities Act of West Virginia. The attorney moved to dismiss the state securities law claim. The court, construing an almost identical statutory definition of “agent” as that found in § ll-101(b), held that the purchaser had stated a claim because of the direct role the attorney played in the sale of the leases. The attorney’s direct role included “face-to-face and direct telephonic representations” to the purchaser.

Id. at 467. In Ahern v. Gaussoin, 611 F.Supp. 1465 (D.Or.1985), holders of demand notes brought suit against the issuer of the notes and its attorneys after the holders were unable to redeem the notes. The attorneys moved for summary judgment regarding the note holders’ claims under the Oregon securities laws. Under the Oregon statute, liability “extends to ‘every person who participates or materially aids in the purchase;’ O.R.S. 59.115(3).” Id. at 1491 .

To participate or materially aid in the purchase “requires more than the mere preparation and execution of documents.” Id. The district court, in denying the attorneys’ motion for summary judgment, stated: [W]hen an attorney prepares, attends to the execution of, and personally delivers and files documents required for the registration of a security with the knowledge that solicitation and sales of such security have already been made, such conduct goes beyond what plaintiff describes as the “preparation of documents and other services normally performed by a lawyer for a client” so as to constitute “participa[tion]” or “materially aid[ing]” in the sale of such security. Id. at 1491 (quoting Adams v. Am. W. Sec., Inc., 265 Or. 514 , 510 P.2d 838 (1973)).

Although the definition of “agent” in the state securities laws discussed above may vary to differing degrees from the definition in § 11-101(b), they each have one thing in common: they do not impose liability upon an attorney who merely provides legal services or prepares documents for ¹⁷¹ his or her client. To impose liability, the attorney must do something more than act as legal counsel. We agree with the approaches taken by the courts in these cases. Therefore, we hold that an attorney could conceivably be considered an agent if he or she “represents a broker-dealer or issuer in effecting or attempting to effect the purchase or sale of securities.” In order to be considered an “agent,” an attorney must act in a manner that goes beyond legal representation.

The definition of “agent” in § ll-101(b) does not include attorneys who merely provide legal services, draft documents for use in the purchase or sale of securities, or engage in their profession’s traditional advisory functions. To rise to the level of “effecting” the purchase or sale of securities, the attorney must actively assist in offering securities for sale, solicit offers to buy, or actually perform the sale. Our holding is further supported by §§ 11-401 and -402 of the Maryland Securities Act, which require an agent to be registered with the Securities Commissioner of the Division of Securities and which make it unlawful for a person to transact business in the State of Maryland as an agent unless that person is registered, respectively. An individual’s registration or failure to register under the Maryland Securities Act is not dispositive of his, her or its status as an “agent”; however, we can infer from these sections that an “agent” as defined in the Act is something different from an agent at common law.

We now turn to the factual allegations that Baker, Watts believes establish that appellees are its “agents.” None of the factual assertions are sufficient to overcome appellees’ motion for summary judgment. At no point did Baker, Watts assert that appellees took part in the solicitation of offers to sell the limited partnership interests in Partners ’81. Nor does Baker, Watts allege that appellees had any direct contact with the investors. Baker, Watts makes a general allegation that appellees represented it in effecting the sale of the limited partnership interests, but ¹⁷² offers no degree of detail.

In addition, Baker, Watts alleges that Appellee Casgar prepared the Confidential Offering Memorandum and a tax opinion. Both these functions, however, are document preparation and are part of the legal services provided by an attorney in a securities offering. Finally, Baker, Watts refers to several transactions and negotiations, other than the solicitation of investors for Partners ’81, in which appellees participated. This factual allegation is irrelevant because Baker, Watts failed to present any factual claims that appellees solicited investors in the Partners ’81 limited partnership offering.

As a result, the circuit court did not err in granting appellees’ motion for summary judgment as to its status as an agent of Baker, Watts. Is There a Material Factual Dispute that Appellees Controlled the General Partner, Superior? Baker, Watts argues that appellees were controlling persons of “a person liable,” namely, the general partner of Partners ’81, Superior. Baker, Watts claims that Superior is a person liable because it offered or sold the limited partnership interests in Partners ’81 in violation of § 11-703(a)(1)(ii) of the Maryland Securities Act.

Appellant claims that Casgar’s control of the Baltimore Group and the Group’s control of Superior implicate appellees as controlling persons under § 11-703(c)(l). Appellees counter that because Baker, Watts was the person held liable in the Adalman case, the suit out of which appellant’s claim for contribution grows, the only relevant “controlling person” issue is whether appellees controlled Baker, Watts. Appellant, in its reply brief, contends that appellees attempt to read into § ll-703(c) a clause that is not present; i.e., that in order to seek contribution under § ll-703(c) the defendant must be a control person of the person against whom the judgment was rendered. Baker, Watts further claims that Superior “would have been sued” by the Adalman investors if it had not been insolvent at the time of the Adalman case. ¹⁷³ Based on the facts of this case, we do not believe that Baker, Watts can proceed against appellees for contribution based on joint and several liability when there is no judgment against the person, i.e., Superior, appellant claims is the principal perpetrator of the violation. 6 In reaching our decision, we are aided by federal court interpretations of sections of the federal securities acts that are similar to § 11-703(c).

See Caucus Distribs., Inc. v. Md. Sec. Comm’r, 320 Md. 313, 324 , 577 A.2d 783 (1990) (federal interpretations of provisions of the federal securities acts are helpful in analyzing similar provisions in the Maryland Securities Act). The Securities Act of 1933 § 15 provides, in pertinent part: Every person who, by or through stock ownership, agency, or otherwise, or who, pursuant to or in connection with an agreement or understanding with one or more other persons by or through stock ownership, agency, or otherwise, controls any person liable under sections 77k or 111 of this title, shall be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable____ ¹⁷⁴ 15 Ú.S.C. § 77o (1988). Section 20(a) of the Securities Exchange Act of 1934 provides, in relevant part: Every person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable____ 15 U.S.C. § 78t (1988). “Controlling person” is given the same interpretation under both these acts because “[section 20(a) [of the Exchange Act] is an analogue of section 15 of the Securities Act.” Pharo v. Smith, 621 F.2d 656, 672-73 (5th Cir.), aff'd in part and remanded in part on other grounds, 625 F.2d 1226 (1980). Recent federal case law clearly supports the proposition that the person who was the primary violator must be proceeded against in order for a plaintiff to attempt to impose joint and several liability on a controlling person.

See McCowan v. Sears, Roebuck & Co., 722 F.Supp. 1069, 1075-76 (S.D.N.Y.1989) (wholly-owned subsidiary was an indispensable party because plaintiffs’ claims against defendant parent corporation were derivatively based on defendant’s control of subsidiary); FMC Corp. v. Boesky, 727 F.Supp. 1182 , 1199 n. 19 (N.D.Ill.1989) (pleadings failed because plaintiff must independently allege a violation by the “controlled person” before seeking to impose liability on the “controlling person”); O’Keefe v. Courtney, 655 F.Supp. 16, 19 (N.D.Ill.1985) (same); In re Investors Funding Corp. of N. Y. Sec. Litig., 523 F.Supp. 533, 543 (1980), reconsideration denied, certification of questions of law denied, 36 B.R. 1019 (S.D.N.Y.1983) (same). In contrast, the Seventh Circuit, in Kemmerer v. Weaver, 445 F.2d 76, 78 (7th Cir.1971), held that a defendant control person may be held liable even if the plaintiff fails to proceed against the principal violator — the controlled person. The Kemmerer Court, however, appeared to limit its holding to the facts of the case before it, where the controlling persons had voluntarily dissolved the controlled entity, ¹⁷⁵ apparently in an attempt to avoid liability as controlling persons. Such a concern is not present in this State because when a Maryland corporation is voluntarily dissolved the directors become trustees of the corporation’s assets; therefore, a party would still be able to proceed against the trustees of the corporation.

See Md. Corps. & Ass’ns Code Ann. § 3-410 (1993). The Kemmerer case, however, has been referred to as authority in other federal cases. See SEC v. Savoy Indus., Inc., 587 F.2d 1149 , 1170 n. 47 (D.C.Cir.1978), cert, denied, 440 U.S. 913 , 99 S.Ct. 1227 , 59 L.Ed.2d 462 (1979); McCarthy v. Barnett Bank of Polk County, 750 F.Supp. 1119, 1126-27 (M.D.Fla.1990). Because we hold that there must be a judgment against Superior before appellant may seek contribution, we need not consider whether there was a material factual dispute regarding appellees’ control of the general partner, Superior.

If we were to reach appellant’s factual argument, however, we would affirm the circuit court’s grant of summary judgment because, as a matter of law, appellees did not “control” Superior. In analyzing the term “control” in § ll-703(c), we again turn to the interpretation of that term, found in the federal securities laws, 15 U.S.C. §§ 77o and 78t(a), by the federal courts. See Caucus, 320 Md. at 324 , 577 A.2d 783 . Two basic tests for control have developed in the federal circuits.

Both tests adopted by the federal courts are two-pronged. The first prongs of the tests are very similar, if not identical. Because we decide that appellees did not control Superior based on the first prongs of the tests adopted by the federal circuit courts, we need not decide which entire test is applicable under the Maryland Securities Act, nor do we adopt or endorse any particular test. Initially, we observe that the Securities and Exchange Commission has defined “control” to mean: [T]he possession, direct or indirect, of the power to direct or cause the direction of the management and policies of ¹⁷⁶ a person, whether through ownership of voting securities, by contract, or otherwise. 17 C.F.R. § 230.405 (1992).

In Durham v. Kelly, 810 F.2d 1500 (9th Cir.1987), the Ninth Circuit reviewed its previous decisions that set forth the test to determine if a party was a “controlling person”: To establish that someone is a “controlling person” the complainant must show that there was a relationship between the controlling and the controlled person and that actual power or influence was exerted over the alleged controlled person. Kersh v. General Counsel, 804 F.2d 546 , 548 (9th Cir.1986). In Christoffel v. E.F. Hutton & Co., 588 F.2d 665 (9th Cir.1978), we noted that Congress, in using the term “controlling person” intended to encompass all persons who exerted actual control over someone who violated the securities laws. Id. at 668 .

Id. at 1503-04. See also Buhler v. Audio Leasing Corp., 807 F.2d 833, 835 (9th Cir.1987). In Barker v. Henderson, Franklin, Starnes & Holt, 797 F.2d 490 (7th Cir.1986), the Seventh Circuit, in discussing a law firm’s and an accounting firm’s controlling persons liability to purchasers of bonds and notes from a foundation which the firms advised, stated: The Firms had no ability to control the Foundation. Their ability to persuade and give counsel is not the same thing as “control,” which almost always means the practical ability to direct the actions of the people who issue or sell securities.

Id. at 494 . The Eighth Circuit, in Metge v. Baehler, 762 F.2d 621 (8th Cir.1985), cert, denied, 474 U.S. 1057 , 106 S.Ct. 798 , 88 L.Ed.2d 774 (1986), quoting with approval from the district court opinion, stated the applicable legal standard to establish “controlling person” liability: [PJlaintiffs must establish, first, that the defendant lender “actually participated in (i.e., exercised control over) ¹⁷⁷ the operations of the corporation [the controlled person] in general____” Id. at 631 (quoting Metge v. Baehler, 577 F.Supp. 810, 817 (S.D.Iowa 1984)). See also Rochez Bros., Inc. v. Rhoades, 527 F.2d 880, 890-91 (3rd Cir.1975) (heavy consideration given to the power or potential power to influence or control the activities of the person primarily liable); Hill York Corp. v. Am. Int’l Franchises, Inc., 448 F.2d 680, 694 (5th Cir.1971) (controlling person is one who has power to direct the management and policies of a person held liable under the securities laws); Dowling v. Narragansett Capital Corp., 735 F.Supp. 1105, 1122 (D.R.I.1990) (directors, officers, and shareholders may be deemed “controlling persons” if they dominated the activities of the corporation); Harrison v. Enventure Capital Group, Inc., 666 F.Supp. 473, 478 (W.D.N.Y.1987) (to be considered a control person, an individual must actively participate in the overall management and operation of the controlled entity).

The evidence that appellant presents regarding appellees’ power to control Superior is insufficient, as a matter of law, to establish liability as a “controlling person” under § 11-703(c). Casgar had a strong influence over the Baltimore Group, but this Group was only a one-third owner of Superi- or. Although Casgar’s recommendations were regularly adopted by the Baltimore Group, we make a distinction between Casgar’s ability to persuade the Group and his ability to direct the actions of Superior. Indeed, appellant, in its brief, refers to appellees as “trusted advisors” and to Casgar as a “counselor and advisor.” The Baltimore Group held two out of the five seats on the Superior board of directors, but there is no evidence of Casgar’s ability to direct those board members in the way they would vote or act.

Nor is there any evidence that those two board members from the Baltimore Group could overcome, subject to Casgar’s