Kramer v. Liberty Property Trust

GREENE, Judge. Section 2-418 of the Corporations and Associations Article, Md.Code (1975, 2007 Repl.Vol.), authorizes a corporation to indemnify or advance expenses to a director who is a “party” to a “proceeding.” Under the statute, a “ ‘[p]arty’ includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding.” Id. § 2-418(a)(6). “ ‘Proceeding’ means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative.” Id. § 2-418(a)(7). In this advancement case, pursuant to the governing documents of Republic Property Trust (“Republic”), we must determine whether the expenses incurred by Richard L. Kramer, Republic’s former Chairman and trustee, following an internal investigation, and in response to a recommendation that he either resign or face “further action,” were incurred in connection with a “proceeding” under § 2-418. If so, then we must determine whether Kramer was made a “party” to the “proceeding” by reason of his status as a trustee of Republic.

Kramer, the appellant, contends that he incurred his expenses in a “proceeding” within the meaning of § 2-418. Specifically, he asserts, “[I]t is well-established that adversarial actions taken by companies against their officers or directors constitute ‘proceedings’ that trigger the right to mandatory advancement.” (Appellant’s brief at 16-17.) Kramer further contends that he was made a “party” to the “proceed ⁶ ing” by reason of his status as a trustee of Republic, because “he was the express target of the efforts to investigate his conduct and oust him from his positions as Chairman and Trustee of Republic.” (Appellant’s brief at 25.) Liberty Property Trust (“Liberty”), the appellee and Republic’s successor-in-interest, disagrees with Kramer, contending that there was no “proceeding” to which Kramer was made a “party’ by reason of his status as a trustee. We hold that a “proceeding” within the meaning of § 2-418 is an actual or threatened adjudicative or administrative process, or any stage of either process, including an investigation. The term “proceeding” does not, however, comprise a corporation’s internal governance functions, such as the removal of a director or officer for cause.

Although the internal investigation in this case was a “proceeding” under § 2-Í18, it was not one to which Kramer was made a “party” by reason of his status as a trustee of Republic. The investigation focused upon Kramer, not because of his status as a trustee of Republic, but because of his involvement with another entity, Republic Properties Corporation (“RPC”). Furthermore, Republic’s actions following the internal investigation, during which it considered the recommendation that Kramer either resign or face “further action,” did not constitute a “proceeding” within the meaning of § 2-418. Therefore, Kramer is not entitled an advancement, and we shall affirm the judgment of the Circuit Court for Baltimore City. /.

A. Republic’s Governing Documents Republic was a Maryland real estate investment trust (“REIT”) engaged in the acquisition, development, ownership, management, control, and disposition of real property. During the pendency of the instant litigation, Republic merged with Liberty and ceased to exist. Liberty assumed Republic’s ⁷ liabilities, including the liabilities to which Republic committed itself through its governing documents. Republic’s governing documents, its Declaration of Trust and Bylaws, contained, among other things, a commitment to indemnify its trustees for certain expenses incurred in their service as trustees.

Included was the imperative that Republic advance to its trustees such expenses as incurred. Article IX, § 9.3 (“Indemnification”) of the Declaration of Trust provided: To the maximum extent permitted by Maryland law in effect from time to time, and in accordance with applicable provisions of the Bylaws, the Trust shall indemnify ... any present or former Trustee or officer who has been successful in the defense of a proceeding to which he or she was made a party by reason of service in such capacity, against reasonable expenses incurred by the Trustee or officer in connection with the proceeding and shall pay or reimburse, in advance of [the] final disposition of the proceeding, such reasonable expenses. (Emphasis added.) Likewise, Article XI (“Indemnification and Advance of Expenses”) of the Bylaws provided, in pertinent part: To the maximum extent permitted by Maryland law in effect from time to time, the Trust shall indemnify ... any Trustee or officer ... who has been successful, on the merits or otheiwise, in the defense of a proceeding to which he or she was made a party by reason of service in such capacity, against reasonable expenses incurred by him or her in connection with the proceeding.... In addition, the Trust shall pay or reimburse, as incurred, in advance of [the] final disposition of a, proceeding, reasonable expenses incurred, by a Trustee or officer or former Trustee or officer made a party to a proceeding by reason of such status, provided that the Trust shall have received: (i) a written affirmation by the Trustee or officer of his or her good faith belief that he or she has met the applicable standard of conduct necessary for indemnification by the Trust as au ⁸ thorized by these Bylaws and (ii) a written undertaking by or on his or her behalf to repay the amount paid or reimbursed by the Trust if it shall ultimately be determined that the applicable standard of conduct was not met.... * * * * Any indemnification or payment or reimbursement of the expenses permitted by these Bylaws shall be furnished in accordance with the procedures provided for indemnification or payment or reimbursement of expenses, as the case may be, under Section 2-418 of the MGCL for directors of Maryland Corporations.[ 1 ] (Emphasis added.) In addition to providing indemnification and advancement rights, Republic’s Declaration of Trust set forth certain procedures with respect to matters of corporate governance.

Under Article VIII, § 8.2 (“Voting Rights”), the shareholders of Republic were to elect its trustees. Pursuant to Article V, § 5.3 (“Resignation, Removal or Death”), a trustee of Republic could only be removed for cause, by a two-thirds vote of the shareholders. ⁹ B. Kramer’s Request for an Advancement Richard L. Kramer was the Chairman of the Board of Trustees and a trustee of Republic. Steven A. Grigg served as Republic’s President and Chief Development Officer. In addition to their positions with Republic, Kramer and Grigg co-owned RPC, an affiliate of Republic engaged in real estate development in the City of West Palm Beach, Florida.

The events pertinent to this case began in October of 2004, when the West Palm Beach Community Redevelopment Agency (“CRA”) voted to approve a Professional Services Agreement (“PSA”) between the City and RPC for a project known as “City Center.” Subsequently, in November of that year, RPC entered into a consulting agreement with West Palm Beach City Commissioner Raymond Liberti, who also served on the CRA. Although Kramer was active in engaging the assistance of Commissioner Liberti, it was Grigg who, on behalf of RPC, executed the consulting agreement and two of the three extensions thereto. After Commissioner Liberti entered into the consulting arrangement with RPC, the CRA voted to amend the PSA on three occasions. The first amendment inured to the benefit of RPC.

The second and third amendments inured to the benefit of Republic because, on December 19, 2005, the CRA voted to approve an assignment of the PSA from RPC to Republic. 2 In May of 2006, federal prosecutors charged Commissioner Liberti with fraud and corruption in abuse of his elected position. Although these charges had nothing to do with Republic or RPC, the local press revealed that RPC paid ¹⁰ consulting fees to Liberti while he was voting on matters affecting RPC. The press also reported that federal and State prosecutors knew about RPC’s consulting arrangement with Commissioner Liberti and that State prosecutors planned to conduct a grand jury investigation into Liberti’s dealings with RPC. In response to the potential criminal investigation into RPC’s dealings with Commissioner Liberti, Republic’s Audit Committee engaged the law firm of Shulman, Rogers, Gandal, Pordy & Eeker, P.A.

(“Audit Committee Counsel”) to investigate the extent of Republic’s involvement. According to Audit Committee Counsel, its “focus” of the investigation consisted of the following: (i) assessing the nature of the dealings between Commissioner Liberti and Mr. Grigg in connection with the City Center project and other projects in Florida, (ii) the legality of the consulting agreements entered [into] between Commissioner Liberti and Mr. Grigg, (iii) who associated with [Republic] knew about the consulting agreements and when, (iv) whether [Republic] had a duty to disclose the consulting agreements to the City of West Palm Beach or to others, and (v) whether [Republic] contravened any laws in connection with the consulting agreements. Audit Committee Counsel also examined “whether (i) Mr. Grigg’s conduct in Florida ... provide[d] a basis for [Republic] to terminate Mr. Grigg for cause, and (ii) any other facts and circumstances learned in the course of the investigation suggesting] violations of law, contract, and corporate governance or ethical standards.” As such, Republic recommended that Grigg take a leave of absence during the investigation and be prohibited from accessing company e-mail and materials. Beginning in July of 2006, Audit Committee Counsel reviewed more than 40,000 documents and interviewed several persons, including Kramer, Grigg, Commissioner Liberti, and Robert Sanders, an attorney who allegedly suggested to Grigg that RPC hire Commissioner Liberti as a paid consultant.

Kramer did not retain private counsel during the internal investigation. He cooperated initially, providing reasonable ¹¹ access to RPC documents. In his interview with Audit Committee Counsel, however, Kramer sought to cut short questioning. In addition, in the course of attorney Robert Sanders’s interview with Audit Committee Counsel, Kramer placed extensive limitations on Sanders’s ability to answer questions.

The most significant of the subjects that Audit Committee Counsel could not explore were the consulting agreements between Commissioner Liberti and RPC. Eventually, Kramer began to question and challenge the authority of Republic’s Audit Committee to conduct the investigation, appearing at a meeting of the Audit Committee and insisting that “this folly must stop now.” On October 31, 2006, Audit Committee Counsel issued a report detailing the findings of its internal investigation and providing certain recommendations. Of particular importance, Audit Committee Counsel found that Commissioner Liberti “cast at least eight votes affecting RPC and/or Republic.” In addition, Audit Committee Counsel recommended that Grigg’s employment with Republic be terminated for cause. Pertaining to Kramer, Audit Committee Counsel observed that Kramer questioned vigorously, in several e-mails, Grigg’s competence and “whether [Grigg] should play any role in [Republic].” While “offeifing] no prediction as to whether federal or state prosecutors w[ould] bring charges in connection with Commissioner Liberia's dealings with RPC, Mr. Grigg, and Richard Kramer,” Audit Committee Counsel also opined that Kramer’s actions could possibly serve as the basis for a criminal obstruction of justice charge against him. 3 Thus, Audit Committee Counsel concluded that Kramer’s con ¹² duct during the investigation did not reflect an appropriate “tone at the top.” As such, Audit Committee Counsel recommended that Republic seek the voluntary resignation of Kramer as Chairman and member of the Board of Trustees; if Kramer would not resign, then Audit Committee Counsel recommended that the Board “evaluate, weighing all material considerations, whether to take further action.” In response to the recommendations of Audit Committee Counsel, Kramer retained the law firm of Williams & Connolly, L.L.P. to “defend” him.

Also in response, on November 30, 2006, Republic’s Board held a special meeting to, among other things, remove Kramer from office. The Board adjourned the meeting without taking such action, however. Following the November 30 board meeting, Republic’s outside counsel agreed that Kramer would be able to appear before the Audit Committee on January 8, 2007, to respond to the recommendations of Audit Committee Counsel. Kramer requested that his attorneys be provided with the documents that Audit Committee Counsel relied upon in concluding that he should be removed from office.

Republic’s outside counsel agreed initially to produce the documents but recanted soon thereafter. Also around this time, on December 11, 2006, on the basis of Republic’s governing documents, Kramer requested that Republic advance to Kramer the “legal expenses incurred by [him] in connection with the proceeding [Republic] ha[d] begun against [him] as á Trustee of [Republic].” 4 With this request, Kramer submitted his attorneys’ time records, 5 ¹³ an affirmation stating that he had met the applicable standard of conduct necessary for indemnification, and an undertaking promising to repay the amount advanced if it was later determined that the standard of conduct was not met. Republic denied Kramer’s request, which is the subject of the instant lawsuit. On January 1, 2007, Republic’s General Counsel wrote to Kramer that “a reckoning is coming upon Grigg, and you can get yourself caught up in it, we can join forces in support of it or you can get out of the way.” Kramer never appeared at the January 8, 2007, meeting of Republic’s Audit Committee, and on January 18, Republic’s outside counsel agreed finally to provide Kramer with the documents that Kramer requested.

Only a small fraction of the documents were provided, however, and Republic’s outside counsel informed Kramer that no other documents would be produced later. Furthermore, Republic’s outside counsel delivered to Kramer’s attorneys the following ultimatum: The Audit Committee does not intend to allow further delay. If you would like to schedule a meeting before the end of the month for your client to address the conclusions of [Audit Committee Counsel’s] report that concern him (i.e., his failure to cooperate with the investigation), please let me know. If your client does not choose to avail himself of this opportunity, then the Audit Committee will proceed accordingly.

Kramer never appeared before the Audit Committee, and on May 3, 2007, in the Circuit Court for Baltimore City, Kramer filed a complaint against Republic to collect the expenses for which advancement was denied. On October 4, by way of the Republic/Liberty merger, Republic ceased to exist, and Kramer no longer held a position to defend. On November 2, the Circuit Court heard argument on the parties’ cross-motions for summary judgment. Deciding that there ¹⁴ was no “proceeding” that triggered Kramer’s right to an advancement under Republic’s Bylaws, the court stated: The Court has before it a motion for summary judgment as filed by Plaintiff, basically saying that it was a threatened or actual proceeding and there was right of Plaintiff Kramer, to have — to seek counsel, have counsel, in those matters.

The defendant, Republic Property Trust, has, in fact, argued in a cross-motion, motion to dismiss, in the alternative, a motion for summary judgment, stating that all of these matters are internal and there was no actual proceeding or no definable proceeding or no proceeding within the meaning of 2-418. That under the circumstances, the Court recognizes the argument. It appears that the real issues here was [sic] around whether or not Plaintiff would remain as a member of the Board, as well as, in his position as chairman. It appears very clear, from the arguments made and the affidavits and other information submitted, that the defenses by Kramer was [sic] over whether or not he would be able to defend his position and remain as chairman and member of the Board.

It is the Court’s finding, that after argument and review of the facts and circumstance[s], the cases cited — and we do appreciate your argument as to Gentile[ 6 ] and your interpretations on both sides. This Court does find ... that there was not a proceeding within the actual meaning of the statute and that these were internal matters. Defendants motion for summary judgment is hereby granted. Plaintiffs motion for summary judgment is hereby denied. ¹⁵ Kramer appealed the order of the Circuit Court to the Court of Special Appeals.

We issued a writ of certiorari prior to any proceedings in the intermediate appellate court. For our review are two questions: (1) Did the trial court err in concluding that an action to remove a trustee from the board of a Maryland “REIT” for an alleged breach of fiduciary duty was not a “proceeding” within the meaning of Section 2^18 of the Maryland Code? (2) Did the trial court err in denying appellant’s motion for summary judgment where he “was made a party to a proceeding by reason of such status” as a trustee and officer?

II

Section 2-418 of the Corporations and Associations Article authorizes a corporation to indemnify or advance expenses to a director who is a “party” to a “proceeding.” Authorizing advancement is subsection (f), which provides: (f). Payment of expenses in advance of final disposition of action. — (1) Reasonable expenses incurred by a director who is a party to a proceeding may be paid or reimbursed by the corporation in advance of the final disposition of the proceeding upon receipt by the corporation of: (1) A written affirmation by the director of the director’s good faith belief that the standard of conduct necessary for indemnification by the corporation as authorized in this section has been met; and (ii) A written undertaking by or on behalf of the director to repay the amount if it shall ultimately be determined that the standard of conduct has not been met. (2) The undertaking required by paragraph (l)(ii) of this subsection shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make the repayment. ¹⁶ (8) Payments under this subsection shall be made as provided by the charter, bylaws, or contract or as specified in subsection (e) of this section[ 7 ] Md.Code (1975, 2007 Repl.Vol.), § 2-418(f). Regarding the difference between advancement and indemnification: Indemnification is the right to be reimbursed for all out of pocket expenses and losses caused by an underlying claim.

The right is typically subject to a requirement that the indemnitee have acted in good faith and in a manner that he reasonably believed was in the best interests of the company. As a result, an indemnification dispute generally cannot be resolved until after the merits of the underlying controversy are decided because the good faith standard requires a factual inquiry into the events that gave rise to the lawsuit. Advancement, by contrast, is a right whereby a potential indemnitee has the ability to force the company to pay his litigation expenses as they are incurred regardless of whether he will ultimately be entitled to indemnification. Advancement is typically not conditioned on a finding that the party seeking advancement has met any standard of conduct.

A grant of advancement rights is essentially a decision to advance credit to the company’s officers and directors because the officer or director must repay all sums advanced to him if it is later determined that he is not entitled to be indemnified. Majkowski v. American Imaging Mgmt. Servs., 913 A.2d 572, 586-87 (Del.Ch.2006) (footnotes omitted) (emphasis in original). Nevertheless, the authorization to indemnify or advance expenses under § 2-418 depends, generally, upon whether the expenses to be reimbursed or advanced were (or will be) incurred in a “proceeding” to which the indemnitee or potential indemnitee was made a “party.” Section 2-418 provides that the term “ fpjarty’ includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding.” Md.Code (1975, ¹⁷ 2007 Repl.Vol.), § 2-418(a)(6). “ ‘Proceeding’ means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative.” Id. § 2-418(a)(7).

The requirement that one be a “party” to a “proceeding” under § 2-418 to obtain an advancement was incorporated into the governing documents ol‘ Republic. Republic’s Bylaws provided, in pertinent part: Article XI Indemnification and Advancement of Expenses To the maximum extent permitted by Maryland law in effect from time to time, the Trust shall indemnify ... any Trustee or officer ... who has been successful, on the merits or otherwise, in the defense of a proceeding to which he or she was made a party by reason of service in such capacity, against reasonable expenses incurred by him or her in connection with the proceeding.... In addition, the Trust shall pay or reimburse, as incurred, in advance of [theI final disposition of a proceeding, reasonable expenses incurred by a Trustee or officer or former Trustee or officer made a party to a, proceeding by reason of such status, provided that the Trust shall have received: (i) a written affirmation by the Trustee or officer of his or her good faith belief that he or she has met the applicable standard of conduct necessary for indemnification by the Trust as authorized by these Bylaws and (ii) a written undertaking by or on his or her behalf to repay the amount paid or reimbursed by the. Trust if it shall ultimately be determined that the applicable standard of conduct was not met____ * * * * Any indemnification or payment or reimbursement of the expenses permitted by these Bylaws shall be furnished in accordance with the procedures provided for indemnification or payment or reimbursement of expenses, as the case may ¹⁸ be, under Section 2-418 of the MGCL for directors of Maryland Corporations.

(Emphasis added.) Thus, as Kramer agrees, his entitlement to an advancement under Republic’s Bylaws depends upon two things: first, that he incurred his expenses in connection with a “proceeding” under § 2-418; and second, that he was made a “party” to the “proceeding” by reason of his status as a trustee of Republic. In analyzing Kramer’s entitlement to an advancement, we begin by noting that the parties filed cross-motions for summary judgment. The Circuit Court granted summary judgment in favor of Liberty and denied Kramer’s motion. In considering a trial court’s grant of a motion for summary judgment, this Court reviews the record in the light most favorable to the non-moving party.

Doe v. Board of Elections, 406 Md. 697, 711 , 962 A.2d 342, 350 (2008); Anderson v. The Gables, 404 Md. 560, 570 , 948 A.2d 11, 18 (2008); see Rhoads v. Sommer, 401 Md. 131, 148 , 931 A.2d 508, 518 (2007) (“We review the record in the light most favorable to the non-moving party and construe any reasonable inferences that may be drawn from the facts against the moving party.”). If there is no genuine dispute of material fact, this Court must determine whether the trial court correctly entered summary judgment as a matter of law. See Maryland Rule 2 — 501(f) 8 ; Doe, 406 Md. at 711 , 962 A.2d at 350 . Here, there is no dispute of material fact.

Next, we recognize that this case involves an issue of statutory interpretation. In Smith v. State, 399 Md. 565, 578-79 , 924 A.2d 1175, 1182 (2007), we explained our principles of statutory interpretation as follows: Our goal, when interpreting statutes, is to “identify and effectuate the legislative intent underlying the statute(s) at ¹⁹ issue.” Gilmer v. State, 389 Md. 656, 662 , 887 A.2d 549, 553 (2005); Cain v. State, 386 Md. 320, 327 , 872 A.2d 681, 685 (2005); Derry v. State, 358 Md. 325, 335 , 748 A.2d 478, 483 (2000); Pete v. State, 384 Md. 47, 57-58 , 862 A.2d 419, 425 (2004); Graves v. State, 364 Md. 329, 345 , 772 A.2d 1225, 1235 (2001). See also Harris v. State, 331 Md. 137, 148-49 , 626 A.2d 946, 951 (1993) (“ ‘[T]he search for [legislative] intent is most accurately described as an effort to discern some general purpose, aim, or policy of the statute.’ ”); In re Keith G., 325 Md. 538, 542 , 601 A.2d 1107, 1109 (1992); Mustafa v. State, 323 Md. 65, 73 , 591 A.2d 481, 485 (1991) (“Our focus is, therefore, centered upon the statute’s policy or purpose.”). The best source of legislative intent is the statute’s plain language, and when the language is clear and unambiguous, our inquiry ordinarily ends there.

Gilmer, 389 Md. at 663 , 887 A.2d at 553 ; Cain, 386 Md. at 327 , 872 A.2d at 685 ; Pete, 384 Md. at 57-58 , 862 A.2d at 425 ; Drew/ v. First Guaranty Mortgage Corp./, 379 Md. [318] at 327, 842 A.2d [1] at 6 [2003]; Whack v. State, 338 Md. 665, 672 , 659 A.2d 1347, 1350 (1995); State v. Thompson, 332 Md. 1, 6-7 , 629 A.2d 731, 734 (1993). “In the interest of completeness, however, we may look at the purpose of the statute and compare the result obtained by use of its plain language with that which results when the purpose of the statute is taken into account.” Harris v. State, 331 Md. 137, 146 , 626 A.2d 946, 950 (1993). See also Robey v. State, 397 Md. 449, 454 , 918 A.2d 499, 502 (2007); Stanley v. State, 390 Md. 175, 185 , 887 A.2d 1078, 1084 (2005). In other words, the resort to legislative history is a confirmatory process; it is not undertaken to seek contradiction of the plain meaning of the statute. Robey, 397 Md. at 454 , 918 A.2d at 502 ; Stanley, 390 Md. at 185 , 887 A.2d at 1084 .

In such instances, we may find useful the context of a statute, the overall statutory scheme, and archival legislative history of relevant enactments. Robey, 397 Md. at 454 , 918 A.2d at 502 . We begin our statutory analysis by determining what constitutes a “proceeding” within the meaning of § 2M18, as that determination is dispositive in this case. In other words, if we ²⁰ conclude that Kramer did not incur his expenses in a “proceeding,” then we need not consider whether Kramer was made a “party” to any “proceeding” by reason of his status as a trustee of Republic.

See Shearin v. E.F. Hutton Grp., Inc., 652 A.2d 578, 593 (Del.Ch.1994) (noting that the first step in analyzing one’s entitlement to indemnification is determining “whether the expense incurred (or to be incurred) has been incurred in connection with a covered proceeding”). Neither this Court nor the Court of Special Appeals has yet clarified what constitutes a “proceeding” within the meaning of § 2-418. We have opined, however, in the context of an administrative proceeding, that “[t]he word ‘proceedings’ is a term of broad scope, encompassing both the investigative and adjudicative functions of an administrative agency.” Banach v. St. Comm’n on Human Rel., 277 Md. 502, 509-10 , 356 A.2d 242, 247 (1976) (citing United States v. Fruchtman, 421 F.2d 1019, 1021 (6th Cir.1970) (“ ‘[Pjroceeding’ is a term of broad scope, encompassing both the investigative and adjudicative functions of a department or agency.”), cert. denied, 400 U.S. 849 , 91 S.Ct. 39 , 27 L.Ed.2d 86 (1970)). We have also noted that “any initial step before a judicial tribunal preliminary to the commencement of a civil suit or a criminal prosecution is a proceeding.” State v. Ensor and Compton, 277 Md. 529, 544 , 356 A.2d 259, 267 (1976) (internal quotations and citation omitted). 9 ²¹ Because we are guided by “ordinary, popular understanding of the English language” when interpreting a given statute, we shall first turn to the dictionary to aid our statutory analysis.

See Stoddard v. State, 395 Md. 653, 668-69 , 911 A.2d 1245, 1254 (2006) (applying definitions contained in Black’s Law Dictionary to interpret the meaning of the word “incident” as it appears in the Maryland Code). As we have noted, § 2-418 defines a “proceeding,” in broad terms, as “any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative.” Md.Code (1975, 2007 Repl.Vol.), § 2-418(a)(7). According to Black’s Law Dictionary, an “action” is “[a] civil or criminal judicial proceeding,” and a “suit” is “[a]ny proceeding by a party or parties against another in a court of law.” Black’s Law Dictionary 31, 1475 (8th ed.2004). In addition, Black’s Law Dictionary defines a “proceeding” as: “1.

The regular and orderly progression of a lawsuit, including all acts and events between the time of commencement and the entry of judgment. 2. Any procedural means for seeking redress from a tribunal or agency. 3. An act or step that is part of a larger action....” Black’s Law Dictionary, supra, at 1241; see also Webster’s II New College Dictionary 902 (3d ed.2005) (providing the legal definition of “proceeding” as “[Ijitigation” or “[t]he act of instituting or conducting litigation”); Edwin E. Bryant, The Law of Pleading Under the Codes of Civil Procedure 3 (1894) (“ ‘Proceeding’ is a word much used to express the business done in courts.”). Thus, based on the express language of the statute, as illuminated by these definitions, we conclude that a “proceeding” within the meaning of § 2-418 is an actual or threatened adjudicative or administra ²² tive process, or any stage of either process, including an investigation.

Having concluded that the term “proceeding” involves a process that is civil, criminal, administrative, or investigative in nature, we need not resort to external sources to determine legislative intent. Nevertheless, “[i]n the interest of completeness,” we shall venture beyond the express language of the statute to confirm that our interpretation is correct. Smith, 399 Md. at 578 , 924 A.2d at 1182 . The portion of § 2-418 defining the term “proceeding” has its origin in Senate Bill 756 of the 1981 General Assembly’s legislative session, 10 as evolved from Md. Ann.Code art. 23, § 60 (1951).

In the Department of Legislative Services’s Bill File on Senate Bill 756 is an “Explanation of Senate Bill 756: Indemnification” that provides, “This Bill is designed to provide uniformity with the Model Act.” 11 Addressing the policies underlying § 2-418, the explanation further provides: The Bill would provide a more