Hrehorovich v. Harbor Hospital Center, Inc.

HARRELL, Judge. This case arises from a dispute between appellant, Victor . R. Hrehorovich, M.D., and his employer, appellee Harbor Hospital Center, Inc. L. Barney Johnson, the President and Chief Executive Officer of the Hospital, is also an appellee in this case. After appellees discharged appellant from his position as Director of the Department of Medicine, appellant asserted several causes of action against them.

The Circuit Court for Baltimore City (Noel, J.) granted appellees’ motion to dismiss the entire complaint and denied appellant’s subsequent motion to alter or amend the judgment. This appeal followed. Facts Appellee Harbor Hospital Center, Inc. (the Hospital) manages and operates a hospital in Baltimore under the direction of its Board of Trustees. Appellee L. Barney Johnson is the President and Chief Executive Officer of the ⁷⁷⁷ Hospital and is charged with implementing the decisions of the Board of Trustees and overseeing the daily operations of the Hospital.

Appellant, Victor R. Hrehorovich, M.D., 52, is licensed to practice medicine in Maryland. Since 1976, appellant has been a member of the Hospital’s Medical Staff, which is an organization made up of physicians who practice at the Hospital. 1 The Medical Staff is an entity separate from the Hospital and has its own by-laws, though these by-laws operate to a large extent in conjunction with the Hospital’s by-laws. From 1976 until 1991, appellant was also employed as the Director of the Department of Medicine. His duties as Director were administrative in nature; he was responsible for the professional and administrative activities within the department and for developing the department’s own rules and regulations.

In February 1991, appellant, who was also serving as Chairman of the Medical Staff at the time, communicated to appellees the Staff’s concerns about what the Staff considered to be the Hospital’s financial and administrative problems. The areas of concern included: appellees’ refusal actively to pursue certain goals of a previously expressed strategic plan; reductions in the hospital work force, especially in the number of nurses; delays in X-ray and laboratory reporting; and the lack of effective mechanisms for communication between the Hospital and the Staff. On 3 April 1991, the Advisory Committee to the Medical Executive Committee 2 voted to hold a special meeting of the Medical Staff for the purpose of considering a vote of ⁷⁷⁸ “No Confidence” with regard to appellee Johnson. Such a vote could have led to Johnson’s dismissal.

The meeting was scheduled for 18 April 1991. On 13 April 1991, appellees attempted to dissuade the Medical Staff from taking a “No Confidence” vote. On 17 April 1991, appellees terminated appellant’s employment as Director of the Department of Medicine. Appellant was not given any advance notice of his dismissal.

His subsequent attempts to ascertain the precise grounds for his termination were unsuccessful. Since the time of appellant’s discharge as Director, his privileges at the Hospital, his membership on the Medical Staff, and his positions as Chairman of the Medical Staff and Chairman of the Medical Executive Committee have remained unaffected. We will include additional facts as necessary in our discussion of the issues presented. Proceedings Below After unsuccessful attempts to gain relief through hospital administrative procedures, appellant filed a complaint in the Circuit Court for Baltimore City, asserting causes of action for breach of contract, breach of implied covenant of good faith and fair dealing, wrongful discharge, negligence, and intentional infliction of emotional distress.

Pursuant to Maryland Rule 2-322(b)(2), appellees moved to dismiss the complaint for failure to state a claim upon which relief can be granted. Appellant filed an opposition to the motion to dismiss, and appellees followed with a reply memorandum of their own. On 5 November 1991, the circuit court dismissed appellant’s complaint. Appellant timely filed a motion to alter or amend the judgment, pursuant to Rule 2-534.

After the parties again exchanged opposition and reply memoranda, the circuit court denied appellant’s motion. The circuit court did not issue an opinion with either of its rulings. ⁷⁷⁹ Issues On appeal, appellant has posed several questions. We have consolidated and restated these questions. The first issue is a procedural one: I. Whether the lower court erred in considering matters outside the complaint in deciding appellees’ motion to dismiss for failure to state a claim upon which relief can be granted.

The remaining questions ask whether the lower court erred in granting appellees’ motion to dismiss for failure to state a claim upon which relief can be granted as to each of appellant’s causes of action. Our disposition of the first issue, however, affects the nature of these remaining issues. Because we conclude that, by its actions, the circuit court impliedly and necessarily transmuted the motion to dismiss into a motion for summary judgment, we treat the lower court’s decision as a grant of summary judgment and will review the decision in that light. Accordingly, we combine and rephrase the remaining issues for discussion as follows: II.

Whether the lower court erred in granting summary judgment on each count of appellant’s complaint. After explaining our decision on the first issue, we will discuss the appropriateness of summary judgment for each cause of action separately. Discussion I. MOTION TO DISMISS In his complaint, appellant referred to and relied on certain provisions of the Medical Staff By-laws and the Hospital’s Employee Policy Manual (EPM) and alleged that these provisions constituted an enforceable contract of employment between appellant and the Hospital as to the position of Director of the Department of Medicine. In their motion to dismiss, appellees set forth certain other provisions of the Medical Staff By-laws and the EPM that were not referred to by appellant, and some provisions of ⁷⁸⁰ the Hospital’s By-laws.

Using these facts, they argued that neither the Medical Staff By-laws nor the EPM could serve as a basis for finding that a contract existed between appellant and the Hospital. Appellant responded in his opposition memorandum that on a motion to dismiss the court should not consider any new allegations of fact by appellees. But appellant added that “even if the Court goes beyond the pleadings, the facts in this case and the law in the State of Maryland will require the Court” to conclude that the complaint sufficient ly states causes of action. Now, on appeal, appellant claims that for the circuit court to have granted the motion to dismiss, it must have considered the facts set forth by appellees that went beyond appellant’s complaint.

Because such consideration is not proper for a motion to dismiss, appellant argues, the trial court’s decision must be reversed. Appellees, on the other hand, maintain that the trial court could properly examine the documents that form the basis for appellant’s complaint “to determine whether those documents, on their face, defeat Appellant’s claim as a matter of law.” According to appellees, a trial court should not have to decide a case based upon “a view of the tip of the iceberg.” In essence, appellees argue that they had the right to “complete” the pleading by providing additional portions of the documents relied on by appellant. This “right,” they assert, is similar to the evidentiary “rule of completeness” that permits a party to introduce the remainder of a written or oral statement that the opposing party has introduced into evidence, usually for impeachment purposes. 3 In its Order, the circuit court granted appellees’ motion to dismiss after “having considered the Complaint, the submissions of counsel, and being otherwise fully advised[.]” As stated earlier, the court did not issue an opinion with its order. ⁷⁸¹ For reasons we shall explain, we conclude that the trial court’s consideration of documents outside the complaint was proper, and that its ruling was in fact a grant of summary judgment. Despite the lack of an opinion by the circuit court explaining its decision, we think that the court treated the motion to dismiss as a motion for summary judgment and determined that appellees were entitled to judgment as a matter of law on all counts.

Appellees have not cited any authority for their position that a defendant must be able to “complete” a pleading that has not set forth all pertinent portions of the documents attached to or referenced by the pleading. Indeed, no such rule exists in Maryland. 4 Nevertheless, we find that the trial court’s obvious consideration of the additional portions of the documents supplied by appellees in this case was proper under Maryland Rule 2-322(c). In considering a motion to dismiss for failure to state a claim under Rule 2-322(b)(2), a court must assume the truth of all well pleaded facts and all inferences that can be reasonably drawn from those pleadings. Sharrow v. State Farm Mut.

Auto. Ins. Co., 306 Md. 754, 768 , 511 A.2d 492 (1986). Rule 2-322(b)(2), of course, serves the same function as the demurrer under former Rules 345 and 371 b.

When a defendant demurred under those rules, a court was not permitted to consider additional facts not plead by the plaintiff, especially facts set forth by the defendant in the demurrer. See, e.g., Beach v. Mueller, 32 Md.App. 219, 224 , 359 A.2d 232 (1976). A demurrer in which the defendant alleged new facts was known as a “speaking demurrer.” Id. n. 2. ⁷⁸² The same general principle applies to the motion to dismiss under modern rules. The revision of the Maryland Rules of Procedure, however, effected a significant change in this area of the law.

The last sentence of Rule 2-322(c) provides: If, on a motion to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 2-501, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 2-501. Thus, the rule permits a “speaking demurrer” — the moving party may go beyond the facts of the complaint and set forth exhibits and other facts to support the argument for dismissal. See Paul V. Niemeyer & Linda M. Richards, Maryland Rules Commentary 149 (1984). In our view, the language “and not excluded by the court,” which refers to the matters outside the pleadings, gives the trial court the discretion to consider such matters.

The trial court’s decision here will dictate how it must analyze the motion. If the court excludes the extraneous materials, then it must decide the motion based on the legal sufficiency of the pleading. If the court does not exclude the outside matters, however, the rule mandates that “the motion shall be treated as one for summary judgment____” (Emphasis added). This Court has addressed this question in previous cases.

In Castiglione v. Johns Hopkins Hosp., 69 Md.App. 325 , 517 A.2d 786 (1986), cert. denied, 309 Md. 325 , 523 A.2d 1013 (1987), the plaintiff brought an action for breach of an alleged employment contract. The defendant moved to dismiss the action or, in the alternative, to grant summary judgment. Castiglione, 69 Md.App. at 328 , 517 A.2d 786 . We cited the above provision of Rule 2-322 and concluded that because the trial court based its decision to grant the defendant’s motion on an exhibit that was attached to the ⁷⁸³ defendant’s supporting memorandum, we would treat the court’s decision as a grant of summary judgment.

Id. at 332 , 517 A.2d 786 . Similarly, in Haselrig v. Public Storage, Inc., 86 Md.App. 116 , 585 A.2d 294 (1991), the plaintiff sued his employer for wrongful discharge. The employer moved to dismiss the complaint, or alternatively, for summary judgment, alleging that disclaimers in an employee handbook, which were not pleaded by the plaintiff, precluded the existence of an implied or express employment contract. Haselrig, 86 Md. App. at 120 , 585 A.2d 294 .

The trial court dismissed the plaintiff’s complaint, ruling that “the Complaint ... fail[ed] to state a claim upon which relief can be granted — ” Citing Castiglione , we determined that despite the language of the court’s order, the ruling was on the motion for summary judgment, not the motion to dismiss. Id. at 118 n. 1, 585 A.2d 294 . In the case sub judice, despite the absence of an express indication of how the trial judge treated the case, we hold that the lower court transmuted appellees’ motion to dismiss to a motion for summary judgment. This was not accomplished through alchemy, but by virtue of what the trial court must have considered in reaching the disposition it did.

The order stated that the court considered the “submissions of counsel.” Also, the court did not give any indication that appellees’ references to facts not plead by appellant were improper or excludable. In fact, before deciding the motion, the trial judge accepted an opposition to the motion to dismiss filed by appellant and a reply to that opposition from appellees, both of which contained even more references to the “matters outside the pleadings.” Unlike the appellees in Castiglione and Haselrig , appellees in the instant case did not request alternative relief; that is, their motion was titled “Motion to Dismiss” and not “Motion to Dismiss, or in the Alternative, for Summary Judgment.” The additional language may have been a ⁷⁸⁴ factor in the earlier decisions. But we do not believe that the different title of the motion in this case should lead to a different result. The last sentence of Rule 2-322(c) applies to “a motion to dismiss for failure of the pleading to state a claim upon which relief can be granted.” We think that language refers to any motion to dismiss, whether standing alone or with an alternative motion for summary judgment.

Nothing in the language of the rule suggests that the application of the rule is triggered only by a motion with “Summary Judgment” in the title. Although we decide in the instant case that the title of the motion at issue is not a critical factor, we suggest to future defendants that they be more clear and precise than appellees here in requesting relief from the court. A motion to dismiss for failure to state a cause of action is a different animal from a motion for summary judgment. When moving to dismiss, a defendant is arguing that even if the pleaded facts are true, the plaintiff is not entitled to recover under the law.

There should be no need to refer to matters that are not in the complaint. The prudent defendant who wants the court to consider extraneous matters will not file a simple motion to dismiss and hope that the trial judge exercises the discretion given by Rule 2-322(c), but rather will style the motion as an alternative one and ask the court to grant relief on either of two grounds: failure to state a claim and summary judgment. When the court considers the motion to dismiss, it should consider only the sufficiency of the pleading. If the trial judge determines that the complaint does state a claim upon which relief can be granted, then he can consider the outside matters and decide whether the defendant is entitled to summary judgment.

In addition, we caution trial courts that failure to articulate clearly the nature of its ruling in these circumstances is risky business. Just as a defendant should specify what relief is sought, so should a trial court specify what relief is given. As stated above, Rule 2-322(c) gives the trial court discretion to convert a motion to dismiss to a ⁷⁸⁵ motion for summary judgment by considering matters outside the pleading. When a judge exercises that discretion, however, best management practice indicates he should either (1) issue an oral or written opinion indicating that he has considered extraneous information and is deciding the motion on a summary judgment basis, or (2) put appropriate language in the order granting or denying relief that indicates that he has transmuted the motion to one for summary judgment.

Specifying the precise relief given and the grounds therefor is important for the purpose of appellate review. When reviewing the grant of either a motion to dismiss or a motion for summary judgment, an appellate court must determine whether the trial court was legally correct. But this determination depends on the nature of the relief given. The grant of a motion to dismiss is proper if the complaint does not disclose, on its face, a legally sufficient cause of action.

Bramble v. Thompson, 264 Md. 518, 520 , 287 A.2d 265 (1972). On the other hand, the grant of a motion for summary judgment is proper only if there is no genuine dispute of any material fact and the movant is entitled to judgment as a matter of law. Brady v. Ralph Parsons Co., 308 Md. 486, 495 , 520 A.2d 717 (1987). In addition, if the lower court’s basis for granting summary judgment was erroneous, the appellate court will not ordinarily seek to affirm the judgment by ruling on another ground that was not ruled upon by the lower court, if that other ground is one as to which the trial court had discretion to deny summary judgment.

See Orkin v. Holy Cross Hosp. of Silver Spring, Inc., 318 Md. 429, 435 , 569 A.2d 207 (1990). The importance to appellate courts oí a trial court clearly articulating what action it is taking cannot be overemphasized. Appellant further complains that the trial court’s action of transmuting the motion to dismiss into a motion for summary judgment was improper because the court did not adequately notify the parties of its intention to consider appellees’ extraneous materials. Appellant argues that if he had known that the trial court would use the appellees’ ⁷⁸⁶ supplemental allegations of fact in deciding the motion to dismiss, he would have presented to the court his “evidence, testimony and documents” that refute appellees’ arguments.

In our view, however, the record is clear that appellant was sufficiently aware of the trial court’s ability to consider the motion as one for summary judgment, and appellant cannot now claim that the trial court’s action was improper. We do not consider it unreasonable to assume that appellant knows the law, including the Maryland Rules of Procedure. From its unambiguous language, Rule 2-322(c), on its face, informs the appellant that a trial court may transmute a motion to dismiss into a motion for summary judgment. We find further support for our conclusion in this record in that the trial judge did not immediately exclude the outside matters referred to by appellees, and that the court even accepted another exchange of documents by the parties before rendering its decision.

From this action, we, as well as appellant, can reasonably infer that the lower court might be considering the additional information. Additionally, in appellant’s opposition to the motion to dismiss, he stated that “even if the Court goes beyond the pleadings, the facts in this case and the law in the State of Maryland will require the Court” to deny the motion. We read this argument to say that “even if the court does consider the extra information provided by the Hospital, the court must still find in favor of Dr. Hrehorovich.” Thus, appellant was arguing to the trial court that it should rule in his favor even under a summary judgment test. In light of these circumstances and the authority of Rule 2-322(c), we hold that appellant was aware, at least implicitly, that the lower court could exercise its discretion under Rule 2-322(c), and that he had sufficient opportunity to present additional matters.

This conclusion is further buttressed by the federal decisions that have interpreted Fed.R.Civ.P. 12(b)(6), from which Md. Rule 2-322(b) is partially derived. 5 Generally, ⁷⁸⁷ federal litigants are entitled to be expressly notified of a district court’s intention to convert a Rule 12(b)(6) motion into a motion for summary judgment. 6 James W. Moore et al., Moore’s Federal Practice 1156.14[1] (2d ed. 1988). Federal courts have recognized, however, that in certain circumstances, express notice is not necessary. In these cases, the failure to expressly notify the parties of the court’s intention was harmless error if, for example, the complaining party knew of the extraneous materials, had an opportunity to respond to them, and had not refuted their accuracy. See Kaestel v. Lockhart, 746 F.2d 1323, 1324 (8th Cir.1984).

In Moody v. Town of Weymouth, 805 F.2d 30 (1st Cir.1986), the defendants submitted an affidavit and other documents in support of their Rule 12(b)(6) motion to dismiss. The district court did not issue a ruling until almost a year later, when it granted the motion. During that time, the plaintiff never filed his own affidavit or other materials to dispute the accuracy of the defendants’ assertions. Moody, 805 F.2d at 31 .

Instead, the plaintiff moved to strike the defendants’ materials. The district court implicitly denied this motion when it relied on the defendants’ materials in granting the motion to dismiss. Id. The First ⁷⁸⁸ Circuit rejected the plaintiffs claim that the district court committed reversible error when it failed to expressly notify the parties of its conversion of the motion to a motion for summary judgment.

According to the court, “[t]he plain language of Rule 12(b)(6) that materials outside the pleading may be considered if not excluded by the court put plaintiff on notice that the motion might be converted into one for summary judgment.” Id. The court also observed that the plaintiff never disputed the accuracy of the defendants’ materials and did not show that he would have done anything different if the district court had provided express notice of the conversion. Id. We believe this pragmatic approach of the federal courts is sensible and provides additional support for our holding.

In the instant case it appears that appellant did not present any additional information because he could not do so. Our review of the record convinces us that there was no additional information for appellant to use to support his arguments. His complaint relied almost exclusively on the alleged existence of a contract between him and the Hospital. The only documents necessary to resolve the issue of whether a contract existed were the Medical Staff By-laws, the Hospital By-laws, and the EPM, all of which were before the court.

Appellant has, in his complaint and response to the motion to dismiss, conceded the existence of these documents and the various language highlighted therefrom by the parties. See Castiglione, 69 Md.App. at 334-37 , 517 A.2d 786 . Appellant has not brought to our attention any specific additional information that he possessed and that would have been appropriate for summary judgment consideration. 6 The trial court could properly dispose of the case on summary judgment. ⁷⁸⁹ By holding that appellant was sufficiently aware of the trial court’s ability to exercise discretion under Rule 2-322(c), we are not saying that the lower court’s conduct in this case would be ideal or desirable in all situations where that rule comes into play. There can be no hard and fast rule in applying Rule 2-322(c); each case must be evaluated separately.

Trial judges should recognize that there may be circumstances in which the better practice would be expressly to notify the parties that the court is going to treat a motion to dismiss as one for summary judgment, and act accordingly. In sum, in the absence of any authority for the trial court to consider “completed” documents on a motion to dismiss, we find that the trial court, under Rule 2-322(c), could, and did, transmute the motion to dismiss to a motion for summary judgment, even absent a styling of the motion as one in the alternative for summary judgment, and that it properly did so. We now turn to each count of the complaint to decide whether summary judgment was appropriate.

II

MERITS OF THE CASE The standard for appellate review of a trial court’s grant of a motion for summary judgment is whether the court was legally correct. Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591 , 578 A.2d 1202 (1990). Summary judgment is appropriate only where there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Md. Rule 2-501; Brady v. Ralph Parsons Co., 308 Md. 486, 495 , 520 A.2d ⁷⁹⁰ 717 (1987).

In determining whether a factual dispute exists, all inferences should be drawn in the light most favorable to the