Lubore v. RPM Associates, Inc.

DAVIS, Judge. This is an appeal from a June 15, 1995 order of the Circuit Court for Montgomery County granting a motion to dismiss. Three questions are presented on this appeal; we restate (and rearrange) them as follows: I. Did the circuit court err in granting a motion to dismiss for failure to state a claim upon which relief can be granted with respect to appellant’s claim for breach of contract?

II

Did the circuit court err in granting a motion to dismiss for failure to state a claim upon which relief can be granted with respect to appellant’s claim for fraud and deceit?

III

Did the circuit court err in granting a motion to dismiss for failure to state a claim upon which relief can be granted with respect to appellant’s claim for negligent misrepresentation? We respond in the negative to the first question and in the affirmative to the second and third questions. We, therefore, affirm in part and reverse and remand in part the judgment of the circuit court. FACTS On April 12, 1995, appellant Jeffrey M. Lubore filed a complaint in the Circuit Court for Montgomery County against appellees RPM Associates, Inc. (RPM), a Maryland corporation, and Robert P. Miller, Jr. (Miller), president of RPM.

Appellant’s complaint contained three counts: Count I for “Fraud and Deceit,” Count II for “Negligent Misrepresentation,” and Count III for “Breach of Contract.” Given the procedural posture of this case, the following facts are taken directly from appellant’s complaint. On several occasions during the fall of 1993 and summer of 1994, appellant and Jeffrey A. Simpson, a manager and part owner of RPM, discussed RPM’s growth and its future need to employ a marketing and sales executive. These discussions culminated with Simpson asking appellant whether he would ³¹⁸ be interested in a position with RPM, directing business development operations, beginning on January 1, 1995. On September 14, 1994, appellant and appellee Miller met while attending a trade show in Atlanta, at which time they discussed the prospect of appellant working for RPM.

In early December 1994, appellant and Miller met for lunch and discussed an outline of an employment contract. During this luncheon, Miller told appellant that he knew appellant was currently employed in a lucrative position with another company, and that appellant would have to be offered a substantial equity position in RPM in order to leave his current employer. The two then proceeded to discuss the structure of a compensation and equity package, and the nature of appellant’s duties. Ultimately, it was agreed that there would be a follow-up meeting between appellant, Miller, and Simpson.

That follow-up meeting was held in late December 1994, when appellant, Miller, and Simpson discussed salary, a benefits package, and an equity stake in RPM. The three men also discussed appellant’s responsibilities should he accept the position. At the conclusion of their meeting, Miller agreed to confirm an offer of employment in writing. On January 19, 1995, appellant met with Miller for a third time.

They again discussed compensation and duties of the position. Two days later, on January 21, 1995, Miller faxed a written offer of employment to appellant, offering him the position of “Business Development Vice President,” in accordance with the terms discussed at the late December and January 19 meetings. The offer reflected a base salary of $150,000 with a sales bonus of 4% of revenue, and equity terms, among other things, as follows: “2% vest after 15 months,” and “3% option after 36 months.” The offer also contained a “Projected Year 1” total salary of $310,000, and a “Projected Year 2” total salary of $470,000. . The next day, on January 22, 1995, appellant responded to the offer by fax.

Appellant’s fax response stated that the “offer looks great,” but informed Miller that there were some further questions. Later that day, appellant and Miller spoke ³¹⁹ on the telephone. During their conversation, after Miller clarified the terms and conditions of the offer, appellant “formally accepted” the offer. They agreed to a March 1, 1995 start date.

Also during this conversation, Miller requested that appellant begin working on a business development plan to be completed on March 1,1995. Following the telephone conversation of January 22, 1995, appellant resigned from his current employer, effective January 31, 1995. Miller knew that appellant would resign effective January 31, 1995, because this was also discussed during their January 22, 1995 telephone conversation. Indeed, when appellant informed Miller that he would resign on January 31, 1995 because he wanted to take a month off before starting with RPM on March 1, 1995, Miller responded that taking a month off was a “ ‘great idea.’ ” Between January 22, 1995 and February 15, 1995, appellant placed several telephone calls to Miller, requesting a letter “reaffirming the terms of the offer of employment by RPM and [appellant’s] acceptance of that offer.” On February 15, 1995, Miller sent a letter by fax to appellant “memorializing the terms of' RPM’s previous offer of employment ... as modified by [appellant] and Miller’s January 22, 1995 oral agreement.” The opening portion of this letter reads: As promised, here is a letter outlining the offer to you from RPM Associates, Inc. As you understand, the purpose of this letter is to reach agreement on terms under which you will come to work for RPM Associates.

I am looking forward to you joining RPM Associates. Here is the outline of my offer: Miller’s letter concluded: “Finally, there is a contract that must be signed by each employee.” On March 1, 1995, appellant began working for RPM. At 5 p.m. on the next day, appellant received by fax a fifteen-page document entitled “Employment Agreement.” According to appellant, the Employment Agreement, and many of its terms, were not previously disclosed to him. The Employment ³²⁰ Agreement contains, among other things, new terms and provisions that we restate as follows: (1) A $1,000,000 liquidated damages provision; (2) A provision allowing RPM to terminate appellant’s employment at will; (3) A provision allowing RPM to decrease the part of appellant’s compensation based on revenue at RPM’s sole discretion; (4) A provision allowing RPM to assign the agreement and to convert it from an employment at will agreement to a two-year term agreement in the event of a company consolidation, merger, or tender offer; and (5) An extensive non-compétition and non-solicitation clause covering a large geographic area pertaining to existing, previous, and prospective clients, and precluding him from working for a period of time in the field of network integration services or any other business similar to that engaged in by RPM.

From March 1,1995 to March 23,1995, appellant “continued to work for RPM, and at the same time attempted to resolve the disagreement regarding RPM’s attempt to modify the terms of the January 22, 1995 employment agreement.” On March 23, 1995, however, Miller informed appellant that because appellant refused to sign the Employment Agreement “ ‘as is,’ ” the employment offer was “ ‘rescinded.’ ” Later that day, Miller sent appellant a letter by fax terminating appellant’s employment. After alleging the foregoing facts, appellant’s complaint set forth a claim for fraud and deceit (Count I). This count, in pertinent part, reads: During the course of negotiations, [appellant] and Miller agreed to the terms pursuant to which [appellant] would be willing to leave his lucrative position with CommVision and accept employment with RPM. Ultimately, these terms were memorialized in a letter which Miller transmitted on ³²¹ behalf of RPM to [appellant] on February 15, 1995 (Exhibit “D”). 19.

Prior to [appellant’s] acceptance of RPM’s offer of employment, Miller and RPM failed to disclose to [appellant] that they intended to condition his employment with RPM upon his acceptance of a fifteen (15) page document entitled Employment Agreement which contained additional unconscionable terms ... 20. [Appellant] relied on the belief that Miller and RPM intended to honor the employment agreement of January 22, 1995 as memorialized in the February 15, 1995 letter (Exhibit “D”), and he was justified in his reliance. 21. As a result of Miller and RPM’s fraud and deceit, [appellant] has suffered damages. 22. Miller and RPM’s concealment of the additional unconscionable terms upon which they intended to condition [appellant’s] continued employment with RPM was willful, intentional and malicious. The complaint also alleges a claim for negligent misrepresentation (Count II), as follows: 24.

Miller and RPM owed [appellant] a duty of care and made misrepresentations of material facts to [appellant], including but not limited to: (1) that RPM intended to employ [appellant] pursuant to the terms and conditions set forth in Miller’s facsimile transmission of January 21, 1995 (Exhibit “A”), as orally modified and accepted by [appellant] on January 22, 1995, and reaffirmed by Miller in his February 15,1995 correspondence. 25. Miller and RPM made the misrepresentations intending that [appellant] would act in reliance on them. 26. Miller and RPM knew, or should have known, that [appellant] was likely to rely on the misrepresentations, which if false would cause injury or loss to [appellant]. 27. [Appellant] reasonably relied on the [appellees’] material misrepresentations. Had [appellant] known the truth concerning the misrepresentations, he would not have left his employment with CommVision. ³²² 28.

As a direct, proximate, and foreseeable result of the [appellees’] material misrepresentations, [appellant] has suffered damages.... The complaint finally contained a count for breach of contract. In this count, appellant alleged that on “January 22, 1995, RPM entered into an employment agreement with [appellant],” and that on “March 23, 1995, RPM materially breached its employment agreement with [appellant] by terminating [appellant’s] employment because he refused to sign the fifteen (15) page document entitled Employment Agreement ... which was received by him on March 2, 1995, after he had begun working for RPM.” Appellant alleged that as a result of this breach he incurred a substantial monetary loss. On May 24, 1995, in response to this complaint, appellees filed a motion to dismiss the complaint pursuant to Maryland Rule 2-322(b)(2) for failure to state a claim upon which relief can be based.

On June 15,1995, the circuit court conducted a hearing on the motion. At the conclusion of the hearing, the circuit court issued a ruling from the bench granting appellees’ motion to dismiss. From this ruling, appellant appeals to this Court. DISCUSSION I Before addressing the merits of this appeal, we shall first set forth our standard of review.

Under Maryland Rule 2-322(b)(2) (1996), a defendant may seek a dismissal on the ground that the complaint fails “to state a claim upon which relief can be granted.” When moving to dismiss, a defendant is asserting that, even if the allegations of the complaint are true, the plaintiff is not entitled to relief as a matter of law. Hrehorovich v. Harbor Hosp. Ctr., 93 Md.App. 772, 784 , 614 A.2d 1021 (1992). Thus, in considering a motion to dismiss for failure to state a claim, the circuit court examines ■ only the sufficiency of the pleading.

Id. “The grant of a motion to dismiss is proper if the complaint does not disclose, on its face, a legally sufficient cause of action.” Id. at 785 , 614 A.2d 1021 . ³²³ This Court, therefore, shall assume the truth of all well-pleaded relevant facts as alleged in appellant’s complaint and all reasonable inferences drawn therefrom. Morris v. Osmose Wood Preserving, 340 Md. 519, 531 , 667 A.2d 624 (1995). Accordingly, because they were directly taken from appellant’s complaint, we shall assume the truth of the facts set forth above. II First, we shall determine whether the circuit court erred in dismissing appellant’s breach of contract claim.

As to this count, appellees argue that appellant failed to allege properly (1) the existence of a contract; and, in the alternative, (2) a breach of that contract. With respect to the first argument, appellees contend that a contract was never formed because appellant refused to sign the Employment Agreement. Citing Eastover Stores, Inc. v. Minnix, 219 Md. 658, 665 , 150 A.2d 884 (1959), and Peoples Drug Stores, Inc. v. Fenton Realty Corp., 191 Md. 489, 494 , 62 A.2d 273 (1948), appellees argue that, because the parties in the instant dispute intended to reduce their agreement to writing and intended that a manifestation of assent shall only be evidenced by their signature to the Employment Agreement, any prior oral understandings were not enforceable. See Binder v. Benson, 225 Md. 456, 462 , 171 A.2d 248 (1961).

Appellant disagrees, however, that such was the intent of the parties. Rather, appellant asserts that the parties merely intended to memorialize a previously executed oral contract by a written document. See Peoples Drug, 191 Md. at 493 , 62 A.2d 273 . Thus, according to appellant, whether that intent was as appellees describe it or was as appellant describes it is a factual issue that cannot be resolved on a motion to dismiss for failure to state a claim.

We agree with appellant. Viewing all facts and reasonable inferences therefrom in appellant’s favor, appellant’s complaint sufficiently alleged the existence of appellees’ offer of employment and appellant’s acceptance of that offer. In ³²⁴ addition, the reasonable inferences drawn from the facts contained in the complaint support appellant’s claim that any post-contractual writing merely was to serve as “evidence” or as a “memorialization” of a prior agreement. The complaint alleges that, on January 22, 1995, appellant “had a phone conversation with Miller during which the terms of the offer [as allegedly made in Miller’s January 21, 1995 fax] were clarified by Miller and formally accepted by [appellant].” Also, according to the complaint, following the alleged offer and acceptance, and following appellant’s resignation, Miller sent appellant a letter on February 15, 1995 referring to “a contract that must be signed by each employee.” From the chronology of these allegations, it is reasonable to infer that appellant and appellees intended the offer and acceptance to be binding, and merely intended the “contract that must be signed by each employee,” to be a document—under RPM’s company policy—memorializing that agreement.

Although appellant alleged the existence of a contract, we hold that his claim must fail because he did not allege a breach of that contract. Appellees were legally entitled to terminate the contract at any time (and, therefore, did not breach it) because it was an at-will employment contract. In other words, because appellant was an at-will employee and not hired for a fixed period of time, RPM could terminate appellant at its pleasure. See, e.g., Adler v. American Standard Corp., 291 Md. 31, 35 , 432 A.2d 464 (1981) (an at-will employment contract “can be legally terminated at the pleasure of either party at any time.”).

Appellant, however, argues that appellees agreed to employ him for at least two years, and points to “a number of factors which [purportedly] support a finding that Appellant was not an at-will employee.” We summarize these factors in list form as follows: (1) Appellant was hired not as a low-level employee, but as a Vice President of Business Development; (2) Appellant’s compensation included equity in RPM; ³²⁵ (3) Appellant and Miller discussed the long-term growth of RPM; (4) Miller requested appellant to draft a business development plan for the purpose of organizing and categorizing those areas which directly affect business expansion in the eastern U.S. during the next nine to fifteen months; (5) Appellant’s responsibilities were to include the allegedly long-term responsibilities of “New Account Development,” “Personnel Recruitment,” “Marketing Strategy,” and “Partnership Strategy”; (6) Salaries and bonuses for appellant were projected for Year 1 and Year 2 of appellant’s employment; (7) “Appellant was to receive, in addition to a base salary, a sales bonus based on a percentage of revenue, obviously intended to be calculated at the end of the year.”; (8) Appellant’s projected bonus compensation was a larger proportion of total compensation than was base salary, allegedly “meaning that the bulk of appellant’s annual salary was conditioned upon being employed at the end of each of the two years.”; (9) A certain number of appellant’s equity shares in RPM would vest after the first year, then a certain number more would vest after the second year; (10) In his reply letter dated January 22, 1995, appellant stated, “I will be a major part of RPM’s explosive growth over the next several years.”; (11) The business plan that appellant drafted contains a proposal to increase staff over the next nine months; and (12) Appellant gave up a lucrative position with an established company to accept the position with RPM. None of these factors—taken together or viewed individually—indicate that the duration of appellant’s position was for a specific period of time or until certain conditions occur. Stated differently, from these factors it is legally impossible to ³²⁶ conclude that appellant was anything other than an at-will employee. We explain.

It is a longstanding principle in Maryland that an indefinite hiring is prima facie a hiring at-will. Gill v. Computer Equip. Corp., 266 Md. 170, 179 , 292 A.2d 54 (1972) (citing McCullough Iron Co. v. Carpenter, 67 Md. 554, 557 , 11 A. 176 (1887)). Where, therefore, the employment contract is of an indefinite duration, the contract is one for at-will employment, and, as we have already stated, either party at any time may legally terminate it.

Adler, 291 Md. at 35 , 432 A.2d 464 . See also Yost v. Early, 87 Md.App. 364, 384 , 589 A.2d 1291 (1991) (when the length of the employment contract is not specified, the employee is deemed to be an employee at-will). Appellant’s litany of factors is legally insufficient to create an inference that appellant’s employment was anything other than at-will. Many of the above factors (6, 7, 8, and 9) concern the manner in which compensation was projected, paid, or calculated in the first two years of appellant’s employment.

These factors do not indicate that appellant was hired for a specific duration. See Gill, 266 Md. at 179 , 292 A.2d 54 (“ ‘It is also well settled that a hiring at so much a week, month, or year, no time being specified, does not, of itself, make more than an indefinite hiring.’ ”) (quoting McCullough Iron Co., 67 Md. at 557 , 11 A. 176 ); Board of Trustees v. Fineran, 75 Md.App. 289, 302 , 541 A.2d 170 (1988) (“Nor would the mere mention of a 12-month salary in Dr. Bellavance’s 1984 letter or his 1985 salary memorandum suffice to create a 12-month term.”). Factors 3, 4, 5, and 11 deal with appellant’s job responsibilities as they relate to the long-term growth and development of RPM. According to appellant, these factors indicate that the parties agreed to a long-term employment situation (to last for at least two years).

Although the focus of appellant’s job was long-range business development and marketing, the period of appellant’s employment was not tied to the accomplishment of any particularly defined task, the duration of which is fixed or finite. This case, therefore, is not akin to ³²⁷ Sperling v. Terry, 214 Md. 367, 370 , 135 A.2d 309 (1957), where the employee was hired to “ ‘supervise and work on the construction’ of the house until completed.” As the Court of Appeals noted, “This, ordinarily, would require between two and four months.” Id. Therefore, the Court affirmed the trial court’s determination that the contract was not at-will but, rather, bound the employer to retain the employee until the completion of the job. Id.

In the instant case, therefore, we cannot infer that, because appellant was responsible for RPM’s long-term business growth, RPM was prohibited from terminating appellant at any time. Moreover, even if we were to conclude that the period of appellant’s employment was for the “long term,” such a period is far too indefinite and non-specific for this Court to conclude that the contract precluded appellees from terminating appellant until after the lapse of a fixed period of time. See Mazaroff, Maryland Employment Law § 3.2 at 166 (1990) (The presumption of at-will employment “can be overcome by express or implied terms which show that the parties clearly intended to create a binding relationship for a specific period of time or until certain conditions occur.”) (emphasis added). Factors 1 and 10, as we understand them, are intended to show that the parties envisioned a long, prosperous, and happy association with each other. 1 From these factors, however, it is legally impossible to conclude that the parties agreed that appellant’s employment with RPM would last for a specified time period.

Commonly, an employer and employee jointly expect and desire that the employment will continue for years to come. This, however, does not change an at-will contract to a contract for a specified duration. See Winand v. Case, 154 F.Supp. 529, 545 (D.Md.1957) (even where a contract stated, “ ‘it is also our desire to have [the employee] remain ³²⁸ active in the business indefinitely,’ ” the employee was an at-will employee for an indefinite period). We are confident that, at the inception of most employment relationships, the employee and employer desire—from an optimistic standpoint— that the relationship will last for a long time.

Even though they may share this desire, reasonable business people realize that the employee is not bound to remain on the job and may quit at any time without being liable for breach of contract damages, and that, by the same token, the employer may terminate the employee at any time without being similarly liable. We further disagree that the second factor (appellant’s compensation included equity in RPM) and the twelfth factor (appellant gave up a lucrative position with an established company) indicate a contract for a fixed term. In Gill , the employee’s compensation was a base salary of $25,000 and “remuneration based on sales and upon bonuses and shares of stock____” Gill, 266 Md. at 176 , 292 A.2d 54 . Specifically, the bonus provision provided for additional shares based upon earnings over three calendar years.

Id. at 173-74 , 292 A.2d 54 . Nonetheless, the Court of Appeals determined that the employee “has failed to establish an employment contract other than a hiring at will.” Id. at 179 , 292 A.2d 54 . The implication of Gill is clear: there is no legal basis for inferring from the fact that a component of an employee’s compensation is equity based that the employment contract is for a fixed term. The remaining factor, number 12, is similarly insufficient.

That appellant gave up a lucrative position with an established company sheds no light on the issue of the duration of his contract with RPM. Based on the foregoing, therefore, we hold that appellant failed to allege any facts from which we could infer that appellant was anything other than an at-will employee. Accordingly, appellees legally could (and did) terminate appellant at their pleasure. As a result, appellees did not breach the alleged employment contract.

Thus, we affirm the circuit ³²⁹ court’s dismissal of the breach of contract count. 2 Ill Our second task is to determine whether the circuit court erred in granting the motion to dismiss with respect to appellant’s claim for fraud and deceit. Appellant makes clear that this count is not based on the pure falsity of appellees’ affirmative representations, but rather is based on the misleading nature of those representations in light of the material facts that appellees failed to disclose. The tort of deceit—also called concealment or non-disclosure—consists of the following five elements: (1) Defendant owed a duty to plaintiff to disclose a material fact; (2) Defendant failed to disclose that fact; (8) Defendant intended to defraud or deceive plaintiff; (4) Justifiably relying on the concealment, plaintiff takes action; and (5) Plaintiff suffers damages from defendant’s concealment. See Finch v. Hughes Aircraft Co., 57 Md.App. 190, 231-32 , 469 A.2d 867 (1984); Schnader v. Brooks, 150 Md. 52, 57-58 , 132 A. 381 (1926) (fraud may consist of the suppression of truth as well as the assertion of a falsity, where one owes a duty to speak).

Appellees argue that appellant did not allege any facts establishing that RPM or Miller owed appellant a duty to disclose the contents of the Employment Agreement. See Impala Platinum, Ltd. v. Impala Sales (U.S.A.), Inc., 283 Md. 296, 323 , 389 A.2d 887 (1978) (non-disclosure is not actionable unless a duty to disclose exists). In this regard, appellees contend that there was not a fiduciary relationship or similar confidential relationship between the parties that would give ³³⁰ rise to a duty on the part of appellees to disclose. See id. at 323-24 , 389 A.2d 887 (the duty to disclose may be triggered by a fiduciary relationship between the parties); Finch, 57 Md.App. at 234-36 , 469 A.2d 867 (duty to disclose may arise out of a confidential relationship).

We agree that the complaint does not allege facts sufficient to support an inference that a fiduciary or confidential relationship existed between the parties whereby appellees owed an affirmative duty to disclose. 3 Just because the relationship between the parties is not such that a duty to disclose is owed does not mean that appellant is legally foreclosed from maintaining a deceit action against appellees. One who conceals facts that materially qualify affirmative representations may be liable for fraud. Finch, 57 Md.App. at 239 , 469 A.2d 867 . Furthermore, concealment may amount to fraud where it is effected by misleading and deceptive talk, acts, or conduct, or is accompanied by misrepresentations, or where, in addition to'a party’s silence, there is any statement, word, or act on his part, which tends affirmatively to the suppression of the truth, or to a covering up or disguising of the truth, or to a withdrawal or distraction of a party’s attention from the real facts.

Schnader, 150 Md. at 57-58 , 132 A. 381 . Thus, ordinarily when one owes no legal obligation to speak, mere silence is not actionable; but if what is