Educational Testing Service v. Hildebrant

RAKER, J. This case arises out of the administration of a standardized test by Educational Testing Service (“ETS”), petitioner, to Elba Hildebrant, respondent. We granted certiorari to consider the following two questions: 1. Whether one contracting party, which commits an issue to the exclusive discretion of a second party, may nonetheless go to trial against the second party for relying in good faith on its agent’s report merely by alleging that the agent wrote that report in bad faith and against the interests of the second party. 2. Whether a party suing for breach of the covenant of good faith and fair dealing may avoid summary judgment merely by alleging, without evidentiary support, that the moving party acted in bad faith.

Educational Testing v. Hildebrant, 396 Md. 11 , 912 A.2d 648 (2006). I. ETS administered the standardized Praxis Series School Leaders Licensure Assessment Test on September 11, 2004 at Montgomery College in Rockville, Maryland. ETS is a nonprofit corporation that develops, administers, and grades the ¹³² standardized Praxis test at issue in this case. The Praxis test is a standardized licensing examination required by many school districts, including Montgomery County Public Schools, for a teacher to become a County school principal.

Hildebrant, a principal-intern at a Montgomery County elementary school, registered for the Praxis test and was among the candidates who took the test at Montgomery College on September 11, 2004. Dana Baker, a professor at Montgomery College, administered the test and monitored the room on behalf of ETS. Before taking the test, a test taker is required to sign an acknowledgment agreeing to the conditions set forth in ETS’s published “Information and Registration Bulletin,” which provides detailed information about the Praxis test and ETS’s testing policies. The Bulletin contains, for example, sections entitled, “Contact Information,” “Registration Information,” “On the Test Day,” “Scores & Score Reports,” and “Forms.” The Bulletin lists the various test centers and codes for academic institutions.

All candidates who take the Praxis test are sent a Bulletin beforehand. The Bulletin addresses the consequences of breaking ETS’s testing rules and procedures. In the “Scores & Scores Reports” section, ETS states that “ETS reserves the right to cancel any test score when, in ETS’s judgment, a testing irregularity occurs, there is an apparent discrepancy in a test taker’s identification, the test taker engages in misconduct or plagiarism, or the score is invalid for another reason.” Misconduct is broadly defined. The Bulletin states the following regarding misconduct: “When ETS or test center personnel find that there is misconduct in connection with a test, the test taker may be dismissed from the test center, or ETS may decline to score the test, or cancel the test score.

Misconduct includes, but is not limited to, noncompliance with the ‘Test Center Procedures and Regulations,’ pages 10-12 of this Bulletin.” The “Test Center Procedures and Regulations” provide that scores may be canceled by ETS for actions such as, but not ¹³³ limited to, “working on any test, or test section, when not authorized to do so, or working after time has been called.” The “Test Center Procedures and Regulations” emphasize that test takers must comply with the test administrator’s directions. The Bulletin includes the following pertinent paragraph: “ETS reserves the right to take all action — including, but not limited to, barring you from future testing and/or canceling your scores — for failure to comply with test administration regulations or the test administrator/supervisor’s directions. If your scores are canceled, they will not be reported, and your fees will not be refunded.” Hildebrant accepted the terms of the Bulletin by signing, in her own hand, the following certification standard: “CERTIFICATION STATEMENT: (Please write the following statement below. DO NOT PRINT.) T hereby agree to the conditions set forth in the Registration Bulletin and certify that I am the person whose name and address appear on this answer sheet.’ “/s/ I hereby agree to the conditions set in the Registration Bulletin and certify that I am the person whose name and address appear on this answer sheet. “SIGNATURE: /s/ E. Hildebrant DATE: /s/ 9/11/04 Month Day Year.” After the test was administered, Baker submitted a “Supervisor’s Irregularity Report” to ETS.

The report cited Hildebrant for an irregularity during two of the testing sessions; both irregularities were categorized as “misconduct.” During Session I of the test, Baker’s report stated that Hildebrant “refused to stop writing when time was called. Warning given. Material Taken.” In Session II, Baker noted that Hildebrant “had to be instructed twice to stop work and close the test book. (She insisted on completing her thought.).” ETS informed Hildebrant by letter on September 30, 2004 that it was considering canceling her scores because it had been reported that she had continued to work on a section of the test after time was called and failed to follow directions. ¹³⁴ ETS stated that it had not yet made a final decision concerning the report of the irregularity, and would take no action until she responded in writing or October 28, 2004, whichever came first.

ETS requested Hildebrant to provide a written statement providing any additional information to help explain the report of the irregularity. Hildebrant responded to ETS by letter dated October 9, 2004. In her letter, Hildebrant stated that she did not engage in any irregularity and criticized the test proctor’s “overzealous perception of the test procedures.” Hildebrant informed ETS that she was “willing to accept that the staff may think they were doing what they were instructed to do to maintain the secure, standard conditions” of the test center, but that she had “conformed completely to those standards, and that the report to the contrary was an error in judgment on the part of the proctor.” ETS reviewed Hildebrant’s response and concluded that Hildebrant had not followed the required testing procedures. As a result, ETS canceled Hildebrant’s test scores and informed her of the decision by letter dated October 14, 2004.

Hildebrant’s counsel requested on October 18, 2004 that ETS reconsider its decision to cancel her scores, but ETS did not respond to this request. Hildebrant filed a complaint in the Circuit Court for Montgomery County against ETS, alleging malicious defamation and breach of contract. Hildebrant amended her complaint to add Baker as a defendant on the malicious defamation count while deleting ETS as a defendant on that same count and to add a third cause of action sounding in negligence against ETS. Count one of the amended complaint, against Baker only, alleged that Baker defamed Hildebrant by falsely and maliciously implying to individuals within ETS that Hildebrant had acted dishonestly in taking the Praxis test.

Count two, against ETS, alleged that ETS breached its contract with Hildebrant by fading to “fairly and accurately report her leadership assessment scores” to the Montgomery County Board of Education. Count three, against ETS, alleged that ¹³⁵ ETS was negligent in failing to properly train and supervise Baker. As part of discovery, Baker and Hildebrant completed affidavits and Baker was deposed on December 21, 2004. Baker testified that she had administered roughly ten to fifteen tests per year for the past eight years for ETS.

Baker further testified that she was “an associate supervisor of a testing site” and that she “generally [has] no knowledge of what ETS does after the testing session is over.” When asked how long Hildebrant continued to write after time was called during the second testing session, Baker stated that “it was a significant amount of time. I don’t time it on my timepiece. More than 30 seconds, not five minutes.” Baker’s affidavit provided information about her background and testing experience with ETS. The affidavit, dated January 18, 2005, stated as follows: “1.

I am currently a Professor in and Department Chair of the Department of Counseling at Montgomery College, Rockville campus. I was chosen as one of twelve faculty members at the college to receive a Faculty Outstanding Service Award for 2003-2004. “2. I received a B.A. in psychology from The College of Wooster in 1981. “3. I received a M.A. in counseling and guidance from Trinity College in Washington, DC in 1992. “4.

I am currently pursuing a Ph.D. at American University in Washington, DC. “5. I have administered tests for Educational Testing Service (“ETS”) and other testing companies for approximately ten years. “6. On behalf of ETS, I administered the September 11, 2004 The Praxis Series: Professional Assessments for Beginning Teachers, The School Leaders Licensure Assessment test (“Praxis test”) at Montgomery College. Assisting me in my duties, which included monitoring the testing room, was a room proctor, Ms. Jocelyn Lowry. ¹³⁶ “7.

One of the candidates who took the September 11, 2004 Praxis test that I administered at Montgomery College was Elba Hildebrant. I had never previously met Ms. Hildebrant, nor did I know anything about her before the test. “8. On September 11, 2004, I filled out a “Supervisor’s Irregularity Report” regarding Ms. Hildebrant. I provided this report to the test site supervisor, who sent the report on to ETS.” In opposition, Hildebrant filed an affidavit, stating, in pertinent part, as follows: “1.

I am a principal intern at an elementary school in Montgomery County School System in Maryland (“MCPS”). One of the requirements to become a principal in MCPS is to take and pass the Praxis II, School Leaders Licensure Assessment test (“Assessment Test”), which is administered by ETS. “2. I registered by telephone with ETS to take the Assessment Test scheduled for September 11, 2004, for which I paid a fee of $465. I did not receive from ETS at any time a document entitled, “Registration Bulletin” or similar title. 1 “2.

I have read the Supervisor’s Report of Irregularities ____Each statement on the report concerning my conduct during the administration of the Assessment Test is false in every respect and has no basis in fact whatsoever. These statements are so contrary to any reasonable understanding or interpretation of anything that could have been observed that I have readily concluded that they were made with the knowledge that they were false and with the intent to harm me personally.” ETS and Baker filed a Motion to Dismiss or, in the alternative, for Summary Judgment. Hildebrant filed an opposition to that motion. After a hearing on the motion, Judge John W. ¹³⁷ Debelius, III, granted summary judgment as to the breach of contract count and dismissed the defamation and negligence counts.

The court concluded as follows: “Well, I’ve considered the motion to the parties as well as the argument that we’ve heard on the record, and it seems to me that there’s a contract. The contract has been acknowledged by plaintiff. And the contract did reserve to ETS the judgment to make those calls and it seems to me that it’s inescapable that that’s exactly what ETS did. I don’t see the defamation here.

I think that it does fail on both harm and lack of communication to someone else because the defendant Baker was acting as an agent and employee of ETS. And I think that with regard to the negligence, the same problem. The duty, the breach — I don’t see that here.” 2 Hildebrant noted a timely appeal to the Court of Special Appeals as to the breach of contract claim. Before the Court of Special Appeals, Hildebrant argued that, in deciding whether to cancel the test scores, ETS must exercise its discretion in good faith, because in every contract, there exists an implied covenant that each of the parties thereto will act in good faith and deal fairly with the others.

Hildebrant maintained that an issue of material fact existed as to whether ETS canceled the test scores in good faith. 3 ETS did not dispute ¹³⁸ Hildebrant’s position that it must act in good faith, but argued that Baker’s knowledge could not be imputed to ETS because the Bulletin expressly reserves to ETS, not to test administrators, the judgment of whether to cancel a test score for misconduct. The Court of Special Appeal analyzed the law of principal and agent and held that it was proper to impute Baker’s knowledge to ETS. Hildebrant v. Educational Testing, 171 Md.App. 23, 34 , 908 A.2d 657, 663 (2006). The intermediate appellate court held that summary judgment was granted improperly because there was a dispute of material fact.

Id. at 37-38 , 908 A.2d at 665 . The court concluded: “Here there exists a material dispute of fact as to whether Ms. Baker made up her allegations of misconduct against Hildebrant. If she did make up those allegations, her knowledge of the false allegation is imputable to ETS and that imputed knowledge would suffice to show bad faith on the part of ETS.” Id. Accordingly, the Court of Special Appeals reversed the entry of summary judgment on the breach of contract claim and remanded for further proceedings.

Id. ETS filed a petition for writ of certiorari, which we granted. Educational Testing v. Hildebrant, 396 Md. 11 , 912 A.2d 648 .

II

Before this Court, petitioner argues that the Court of Special Appeals applied agency law principles improperly by expanding the implied contractual covenant of good faith and fair dealing impermissibly into a mechanism for overriding explicit contractual terms. Petitioner asserts also that the intermediate appellate court erred in concluding that Hildebrant established a genuine dispute as to a material fact. Hildebrant responds in several ways: (1) that ETS acts through its agents and may not disavow its relationship with ¹³⁹ agents through a contract provision; (2) that the knowledge of Baker, as ETS’s agent, in submitting a false report is imputed to ETS; (3) that Hildebrant met the evidentiary standard for overcoming a motion for summary judgment; and (4) that there is no valid public policy reason to insulate ETS from liability for the acts of its agents.

III

This Court’s review of the Circuit Court’s grant of a motion for summary judgment is de novo. Harford County v. Saks Fifth Avenue Distribution Co., 399 Md. 73 , 923 A.2d 1 , 2007 WL 1119877 (2007). In reviewing a grant of summary judgment, we independently determine first whether a genuine dispute of material fact exists and only where such dispute is absent will we proceed to determine whether the moving party is entitled to judgment as a matter of law. Hill v. Knapp, 396 Md. 700, 711 , 914 A.2d 1193, 1199 (2007).

The law in regard to the sufficiency of allegations in a response to a motion for summary judgment motion is well settled. In order to defeat a motion for summary judgment, the party opposing the motion must identify with particularity each material fact in genuine dispute and provide support