Mercy Medical Center, Inc. v. United Healthcare of Mid-Atlantic, Inc.

KRAUSER, J. Appellant, Mercy Medical Center, Inc. (“Mercy”), guaranteed a medical services contract between Maryland Personal Physicians, Inc. (“MPPI”), a physicians’ network created by Mercy, and appellee, United Healthcare of the Mid-Atlantic, Inc. (“United”), a health maintenance organization (“HMO”). 1 Specifically, Mercy guaranteed the payments MPPI was to make, under that contract, to medical service providers for services rendered by those providers to United’s members. When MPPI was unable to make those payments, United turned to Mercy. ³⁴⁴ Invoking Mercy’s guarantee, United demanded that Mercy pay the outstanding medical fees and costs that MPPI had promised to cover. Mercy demurred, insisting that the guarantee had expired and that, even if it had not, Mercy owed substantially less than the total amount claimed by United. Its payment demand rejected, United turned to the Circuit Court for Baltimore City for assistance.

That court ordered Mercy to fund a bank account in the amount of $5,108,476.00, from which United could pay outstanding medical service claims but denied United’s request for pre-judgment interest on that amount. Cross-appeals followed. Mercy maintains that the circuit court erred in concluding that it had agreed to guarantee payment of over five million dollars of MPPI’s unpaid obligations, and presents the following issues for our review, which, although re-ordered, have been set forth below as they appear in Mercy’s brief. They are: I. Whether the court erred when it ignored the express termination of the April 1998 amendment, which served as the document pursuant to which Mercy’s guarantee was given.

II

Whether the court erred when it found that [Mjercy impliedly consented to the drastic modifications to the IPA agreement in October 1998.

III

Whether the court erred when it determined that the language of attachment Q and the guarantee do not limit Mercy’s liability to a maximum amount of $1.1 Million. On cross-appeal, United presents the following question: Did the circuit court err in denying United’s demand for pre-judgment interest for Mercy’s breach of its Guarantee? For the reasons that follow, we shall affirm the judgment of the circuit court. BACKGROUND Mercy is a hospital located in Baltimore City.

Sometime ³⁴⁵ between 1994 and 1996, 2 Mercy formed MPPI. According to MPPI’s 1997 Annual Report, it was “an integrated network of primary care and specialist physicians in Central Maryland” created for the purpose of “negotiat[ing] service contracts and provid[ing] practice management services.” Mercy capitalized MPPI with a $14,000,000.00 investment. At the outset, Mercy held about 90% of the stock in MPPI, and remained a majority stockholder in 1997 and 1998, with 57% of the stock. Although MPPI had a separate corporate identity from Mercy, Mercy’s chief executive officer and chief financial officer sat on MPPPs board of directors and on its Joint Policy Committee in 1997 and 1998.

In addition, Mercy provided funding to MPPI, including a $4,000,000.00 line of credit, from which MPPI drew throughout 1997. Mercy created MPPI to establish a geographically-dispersed network of physicians. That network, Mercy hoped, would send patients to Mercy for treatment. Once MPPI was formed, MPPI entered into “full risk capitated contracts” with health maintenance organizations like United; they, in turn, were to send their members to MPPI and Mercy for medical services.

A “full-risk capitated contract” is one in which an “individual practice association”(“IPA”), such as MPPI, accepts a fixed monthly payment from an HMO, such as United, for each HMO member who chooses or is assigned to the individual practice association. In consideration for the fixed monthly payment, the individual practice association agrees to accept full responsibility for the medical treatment of each HMO member, even if the cost of that medical treatment exceeds the fixed amount paid to the individual practice association by the HMO. In the spring of 1997, after months of negotiations, MPPI entered into a contract with United that commenced on April 1, 1997 (“IPA Agreement”). During those negotiations, MPPI and Mercy were represented by Mercy Ventures, Inc., a ³⁴⁶ Maryland Corporation that was formed by Mercy.

Mercy Ventures was created by Mercy to provide medical practice management services to physicians, physician groups, and hospitals. One such service was to review and negotiate managed care contracts on behalf of such clients as MPPI and Mercy. Under the IPA Agreement, United was to compensate MPPI on a “monthly fee for service” basis for each of United’s commercial members. But with respect to each Medicaid and Medicare member, United was to pay MPPI a “monthly capitation payment.” 3 “[I]n consideration of said capitation payments,” MPPI agreed to “provide or arrange for all those physician services [ ] required in [the] Agreement and [to] assume the responsibility for the costs of said services.” Some of those services were provided by “External Providers.” An “External Provider” is defined by the IPA Agreement as “any physician, health professional, or other health care provider, including [MPPI] Physicians, health service contractors, and Health Centers contracted with [MPPI] to provide Covered Services to all Members of [United].” To comply with the Health Maintenance Organization Act, Maryland Code (2002), § 19-713.2(d)(3) of the Health-General Article (“HMO Act”), the parties added “Attachment Q” to the 1997 IPA Agreement.

Section 19-713.2(d)(3) of the HMO Act provides that an HMO cannot enter into an administrative services contract 4 unless the HMO files a plan with the Insurance Commissioner that: ³⁴⁷ (3) Require[s] the health maintenance organization to establish and maintain a segregated fund, in a form and an amount approved by the Commissioner, which may include withheld funds, escrow accounts, letters of credit, or similar arrangements, or require the availability of other resources that are sufficient to satisfy the contracting provider’s obligations to external providers. Accordingly, Attachment Q states that [plursuant to Maryland Health-General 19-713.2, [MPPI] shall provide [United] with reasonable acceptable collateral to secure an amount equal to the immediately preceding sixty (60) days of IPA capitation. The purpose of such Reserve is to ensure that sufficient funds are on hand to reimburse [United] for any payments made to External Providers, as required by law, if [MPPI] fails to make any such payments. [United] agrees that a Letter of Guarantee from Mercy Medical Center shall be deemed reasonably acceptable collateral for such purpose. Such Letter of Guarantee shall be delivered prior to contract signature and will be made part of this Agreement.

Although MPPI and United signed the 1997 IPA Agreement in April 1997, the letter of guarantee required by Attachment Q was not provided by MPPI before the execution of the IPA Agreement. Despite MPPI’s failure to provide such a letter, United did not discontinue making capitation payments to MPPI. Instead of providing a letter of guarantee, Mercy informed United in a letter dated April 16, 1997, that it would “accept financial responsibility for any debts up to $100,000 per year incurred by [MPPI] related to its contract dated April 1, 1997 with [United].” That offer was rejected, and the parties continued to negotiate the issue throughout 1997, with Mercy Ventures representing both Mercy and MPPI. ³⁴⁸ The IPA Agreement, as noted earlier, was effective April 1, 1997; it automatically renewed each year on its anniversary date. As the April 1, 1998 renewal date approached, the guarantee issue remained unresolved.

United wanted a fluctuating guarantee, that is, “an amount equal to the immediately preceding sixty (60) days of IPA capitation,” as set forth in • Attachment Q. But Mercy wanted a fixed amount. Mercy’s position was expressed in a letter dated December 16, 1997 from Steven Murphy, a Managed Care Coordinator of Mercy Ventures, to Sharon Pavlos of United: For auditing purposes, [Mercy] cannot commit to a Letter of Guarantee with a fluctuating monthly balance. It is best if both parties agree to a set amount to be guaranteed in the contract which may be re-negotiable each contract year. [Mercy] would like to set the limit of the 1997-98 Letter of Guarantee at $300,000. That arrangement was not acceptable to United, but the parties continued to do business, pursuant to the IPA Agreement, without a guarantee. 5 In December of 1997, MPPI notified United that it was dissatisfied with the capitation rates, and consequently wanted to terminate the IPA Agreement.

Negotiations continued. Eventually, United agreed to increase the capitation rates, but the guarantee issue remained unresolved. In a memo dated March 26, 1998, United warned MPPI that it considered their agreement to increase capitation rates was “contingent upon MPPI obtaining and delivering a parent guarantee equivalent to two months current capitation.” Despite this warning, no guarantee was signed; the IPA Agreement automatically renewed on April 1, 1998; and the parties continued to do business together. To memorialize the parties’ agreement to increase capitation rates, United drafted and sent to MPPI a proposed amendment to the IPA Agreement dated April 3, 1998 (“April 1998 ³⁴⁹ IPA Amendment”).

That amendment increased capitation rates, but it also addressed the persistent failure of MPPI to provide the agreed-upon guarantee. Paragraph 9 of the April 1998 IPA Amendment stated: “Attachment Q: This attachment entitled Letter of Guarantee dated April 14, 1997 shall hereby be deleted.” And Paragraph 10 of that amendment stated: “Attachment Q: A new Attachment Q entitled Issuance of Guarantee, dated March 31, 1998, is hereby added to the Agreement.” The new Attachment Q referred to in Paragraph 10 of the April 1998 IPA Amendment (“Amended Attachment Q”) was sent along with the amendment together with a separate one page document entitled “Guarantee.” 6 Amended Attachment Q, in contrast to the original Attachment Q that accompanied the IPA Agreement, states that MPPI “shall assure that Mercy Medical Center and St. Joseph Medical Center (“Guarantors”), executes a guarantee in the form attached to this Appendix (the “Guarantee”) under which Guarantors will guarantee [MPPI’s] obligations to pay External Providers as required under this Agreement, initially up to the amount of $1.1 Million (“Guarantee Amount”).” “Guarantee Amount” is defined by Amended Attachment Q as “equal to two months Capitation payments payable to [MPPI] under this Agreement.” And “[e]very 12 months following the Start Up Date,” according to Amended Attachment Q, United “will recalculate the required Guarantee Amount.” The term “Start Up Date” is not defined in the IPA Agreement, Attachment Q, Amended Attachment Q, or the Guarantee. Amended Attachment Q further states that once United has calculated the new Guarantee Amount, MPPI “will have 30 days following written notification [by United] to assure that Guarantors amend the Guarantee to reflect the new required Guarantee Amount.” Amended Attachment Q also provides that “[t]he amount payable under the Guarantee shall be used ³⁵⁰ to fund a reserve restricted bank account (“Reserve Account”) in the event [MPPI’s] non-payment or late payment to External Providers gives [United] the right to make payments directly to External Providers____” And finally, according to that attachment, “[United] shall have sole right to demand the payment of the Guarantee Amount from Guarantors in one lump sum upon 5 days written notice to Guarantors.... ” The Guarantee that accompanied Amended Attachment Q stated that Mercy “unconditionally guarantees to [United] the punctual payment of External Providers by [MPPI] as required under the [1997 IPA Agreement] to which this guarantee is appended ... initially up to the amount of $1.1 Million (the “Guarantee Amount”).” “The Guarantee Amount,” according to the Guarantee, “shall be payable to [United] in one lump sum upon 5 days written notice from [United] in the event that [United] decides to pay External Providers directly because of [MPPI’s] non-payment or late payment of External Providers, in accordance with Attachment Q of the [IPA Agreement].” The Guarantee also stated that “[i]t is understood and agreed that [MPPI] shall recalculate the required Guarantee Amount from time to time as described in Attachment Q of the Agreement, and that this Guarantee shall be amended to reflect any new required amount.” By late April 1998, Mercy had still not agreed to this guarantee. Consequently, in a letter dated June 25, 1998, United declared that if it was “not in receipt of [an] executed Amendment and Guarantee ... by July 1, 1998, [it] would be unable to retroactively implement the terms referenced therein to April 1, 1998.” Following that warning, Mercy, on July 6, 1998, executed the Guarantee and faxed it, along with Amended Attachment Q, to United.

During roughly the same time period that Mercy and MPPI were negotiating the capitation rates and the terms of a guarantee with United, from the end of 1997 to mid-1998, they were also engaged in merger discussions with Upper Chesapeake Health Systems (“UCHS”). UCHS owned an interest in Landmark Medical Group, Inc., a physician network like ³⁵¹ MPPI, and Steller Management Services Organization, a management services agency like Mercy Ventures. As a result of those negotiations, Mercy, Mercy Ventures, and MPPI entered into an “affiliation agreement,” with UCHS, Landmark, and Stellar to begin August 1, 1998. Although that agreement is not part of the record, Mercy and United agree that, pursuant to the affiliation agreement, Mercy and UCHS formed a new limited liability corporation under the name of “Healthcare Management Technologies, Inc.” (“HMT”).

HMT is described in UCHS’s Consolidated Financial Statements as “a physician practice management company.” To form HMT, UCHS agreed to contribute assets of Stellar, and Mercy agreed to contribute assets of Mercy Ventures. In return, each received a 50% interest in HMT. According to UCHS’s Consolidated Financial Statements, upon “the formation of HMT, the operations of Steller [ ] and [Mercy Ventures] were terminated.” The affiliation agreement also apparently provided that UCHS would contribute certain assets of Landmark and Stellar to MPPI in exchange for a 15% ownership interest in MPPI. Among those assets was a “full risk payor contract” Stellar had with United 7 (“Stellar-United Agreement”).

The Stellar-United Agreement was similar to MPPI’s IPA Agreement with United in that both Steller and MPPI received capitation payments and were at full risk for United’s Medicaid and Medicare members. But, unlike the IPA Agreement, the Stellar-United Agreement placed Stellar at full risk for United’s commercial members, while MPPI was paid on a fee-per-service basis for United’s commercial members under its agreement with United (the IPA Agreement). In August and September of 1998, MPPI and United entered into negotiations regarding ways in which the IPA Agreement and the Steller-United Agreement could be merged. At that time, United still had separate contracts ³⁵² with MPPI and Stellar: the IPA Agreement with MPPI and the Stellar-United Agreement with Stellar.

At issue was, among other things, the method of reimbursement for commercial members and rates of capitation payments. On October 6, 1998, the parties signed a Letter of Intent. Its purpose, the letter declared, was to “evidence the intention of [United] and [MPPI] to enter into a contract for the provision of health care services to commercial members, Medicare members, and Medical Assistance members ... which will include the members formerly a part of [Stellar].” The letter further stated that “MPPI and Stellar will merge their respective providers into one network under MPPI, effective November 1, 1998.” To facilitate that merger, the letter announced that “United and [Stellar] intend to terminate their contract effective October 31, 1998 and transfer those members under the Stellar contract to the MPPI contract [IPA Agreement] on November 1, 1998.” The Letter of Intent also described three amendments to the IPA Agreement that would merge the MPPI and Stellar Agreements: The first amendment was the April 1, 1998 IPA Amendment that had been drafted by United and sent to MPPI, but had not yet been signed by the parties. That amendment provided for a retroactive implementation of increased rates of capitation payments to MPPI.

It also deleted the original “Attachment Q” and added Amended Attachment Q to the IPA Agreement. According to the Letter of Intent, “when executed,” the April 1, 1998 Amendment would “result in such terms and conditions being effective April 1, 1998 through October 31, 1998” and would “apply solely to the contract between [United] and [MPPI], which became effective on April 1, 1997.” With respect to the second amendment, the Letter of Intent stated that the parties sought “to reflect compensation to be paid on behalf of commercial members,” including commercial members “who were covered under [United’s] contract with Stellar.” And the third amendment stated that United shall draft an amendment for the purpose of placing Stellar’s and ³⁵³ MPPI’s Medicare and Medicaid members under the IPA Agreement. All three amendments were signed by the parties in October 1998 (“October 1998 IPA Amendments”). Also, in the fall of 1998, at about the same time that MPPI and United were negotiating the October 1998 IPA Amendments, United transferred Medicare members, for which it bore the risk of loss, to various IPAs, including MPPI.

By transferring Medicare members to IPAs such as MPPI, the financial risks involved in providing services to Medicare members were shifted from United to the IPAs. In November of 1998, MPPI had 1,344 Medicare members and received $506,316.00 in capitation payments for those members. In January of 1999, MPPI had 4,866 Medicare members and received $1,724,411.38 in capitation payments for those members. Those figures include Medicare members of United that were transferred to MPPI during this time.

During the months following the October 1998 IPA Amendments and the addition of Medicare members to MPPI, MPPI’s financial situation deteriorated. In March of 1999, MPPI gave United notice of its intent to terminate the IPA Agreement, and on June 30, 1999, the IPA Agreement ended. In September of 1999, MPPI filed for bankruptcy, at which time it purportedly owed millions of dollars to medical providers and hospitals in Maryland. That led United, in a letter Dated November 22, 1999, to demand $5,108,476.00 from Mercy as the guarantor of the IPA Agreement.

When Mercy failed to pay that sum, United file a complaint in the Circuit Court for Baltimore City. In that complaint, United claimed that Mercy had defaulted on its guarantee and demanded judgment against Mercy in the sum of $5,108,476.00, which, according to United, represented its “capitation payments to MPPI for the two month period prior to the [IPA Agreement’s] last anniversary date of April 1, 1999.” United also sought “interest, costs, and disbursements as may be further ordered and taxed by this Court.” Following a trial, the circuit court entered a judg ³⁵⁴ ment in favor of United in the amount of $5,108,476.00, “exclusive of interest.” Mercy subsequently filed a motion to alter or amend the judgment, claiming that “a money judgment in the amount of $5.1 million in United’s favor is inconsistent with the obligations of both Mercy and United pursuant to the express language of Attachment Q and the Guarantee.” Specifically, Mercy pointed out that, in its current form, the court’s May 30, 2001 order would allow United to enforce the $5.1 million judgment “without having ever acknowledged that it owes the money to MPPI’s external providers and without having ever made payment to such external providers.” That result, Mercy argued, would be contrary to the express terms of Amended Attachment Q, which stated in part that the Guarantee Amount would be used “to fund a reserve restricted bank account” from which, if MPPI failed to timely pay external providers, United could draw funds to pay such providers. On August 17, 2001, United filed a motion to revise the circuit court’s May 30, 2001 judgment, claiming that it was entitled to prejudgment interest as a matter of right. On August 22, 2001, the circuit court entered an order granting Mercy’s motion, and denying United’s motion for prejudgment interest.

In that order, the court also vacated the money judgment and ordered, among other things, that Mercy “shall immediately create for the exclusive benefit of United an account to be funded forthwith by [Mercy] in the principal amount of $5,108,476.00.” United could use that account, the court further ordered, to reimburse itself for claims it had paid. And the court, as noted, denied United’s “claim for pre-judgment and post-judgment interest.” STANDARD OF REVIEW Because the trial below was a non-jury trial, our standard of review is governed by Maryland Rule 8-131. Boyd v. State, 22 Md.App. 539 , 323 A.2d 684 , cert. denied, 272 Md. 738 (1974). That rule provides that this Court “will not set aside the judgment of the trial court on the evidence unless clearly ³⁵⁵ erroneous, and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses.” Md. Rule 8—131(c). “A finding of a trial court is not clearly erroneous if there is competent or material evidence in the record to support the court’s conclusion.” Lemley v. Lemley, 109 Md.App. 620, 628 , 675 A.2d 596 (1996).

Moreover, “[ujnder the clearly erroneous standard, this Court does not sit as a second trial court, reviewing all the facts to determine whether an appellant has proven his case.” Id. Nor is it our function to weigh conflicting evidence. Bausch & Lomb, Inc. v. Utica Mut. Ins.

Co., 355 Md. 566, 586-87 , 735 A.2d 1081 (1999); Weisman v. Connors, 76 Md.App. 488 , 547 A.2d 636 (1988), cert. denied, 314 Md. 497 , 551 A.2d 868 (1989). Our task is limited to deciding whether the circuit court’s factual findings were supported by “substantial evidence” in the record. GMC v. Schmitz, 362 Md. 229, 234 , 764 A.2d 838 (2001)(quoting Ryan v. Thurston, 276 Md. 390, 392 , 347 A.2d 834, 835-36 (1975)). And, in doing so, we must view all the evidence “in a light most favorable to the prevailing party.” Id.

Thus, the factual determinations of the circuit court are afforded significant deference on review. Its legal determinations, however, are not. “ ‘[T]he clearly erroneous standard for appellate review in [Maryland Rule 8-131] section (c) ... does not apply to a trial court’s determinations of legal questions or conclusions of law based on findings of fact.’ ” Ins. Co. of N. Am. v. Miller, 362 Md. 361, 372 , 765 A.2d 587 (2001)(quoting Heat & Power Corp. v. Air Prods. & Chem. Inc., 320 Md. 584, 591 , 578 A.2d 1202, 1205 (1990)).

Indeed, the appropriate inquiry for such determinations is whether the circuit court was “legally correct.” Maryland Envtl. Trust v. Gaynor, 140 Md.App. 433, 440 , 780 A.2d 1193 (2001). DISCUSSION I Mercy contends that its Guarantee of payments owed by MPPI to medical service providers, who provided medical ³⁵⁶ services to United’s members, was terminated, or at least limited, by the October 6, 1998 Letter of Intent, signed by United and MPPI, regarding the merger of the IPA and Stellar-United Agreements. Specifically, Mercy points to Paragraph A of that document, which states that “[t]he [April 1, 1998 IPA Amendment], attached hereto as Exhibit A, when executed, shall result in such terms and conditions being effective April 1, 1998 through October 81, 1998, and shall apply solely to the contract between [United] and [MPPI], which became effective on April 1, 1997.” According to Mercy, that language “impacts Mercy’s Guarantee in two significant ways.” First, “if the terms of the April 1998 Amendment were effective only through October 31, 1998, then Amended Attachment Q was effective only through October 31, 1998.” And second, even if Amended Attachment Q survived beyond October 31, 1998, it applied only to the members under the IPA Agreement because the Letter of Intent states that the April 1998 IPA Amendment “shall apply solely to” the IPA Agreement.

That argument ignores the finding of the circuit court that the Guarantee was a “separate, collateral contract or an accessory contract,” that, as a collateral contract, it was “separate and distinct” from the April 1, 1998 IPA Amendment and therefore survived the merger of the two agreements. In reaching that conclusion, the circuit court cited General Motors Acceptance Corp. v. Daniels, 303 Md. 254 , 492 A.2d 1306 (1985). That durable decision outlined the differences between a contract of guarantee and one of suretyship. The distinction between the two, as we shall see, disposes of Mercy’s claim.

There are principally two types of third-party contractual obligors under Maryland law: a guarantor and a surety. Although the two are closely-related, the differences between them are significant and, for the purposes of this decision, crucial in determining the continuing vitality of Mercy’s guarantee. It therefore behooves us to now limn those distinctions. ³⁵⁷ In determining which category a third-party contractual obligor falls, we do not solely or even principally rely upon the title of the document creating the obligation. As the Court of Appeals has stated, “[wjhether a party has entered into a contract of suretyship or guaranty is to be determined by the substance of the agreement and not by its nomenclature.” Id. at 264 , 492 A.2d 1306 .

With respect to suretyships, the Court of Appeals in General Motors, explained: A contract of suretyship is a tripartite agreement among a principal obligor, his obligee, and a surety. This contract is a direct and original undertaking under which the surety is primarily or jointly liable with the principal obligor and therefore is responsible at once if the principal obligor fails to perform. A surety is usually bound with his principal by the same instrument, executed at the same time, and on the same consideration. Id. at 259 , 492 A.2d 1306 (citations omitted).

The Court further observed that [ujltimate liability rests upon the principal obligor rather than the surety, but the obligee has remedy against both. The surety, however, becomes subrogated to the rights of the obligee when the surety pays the debt for the principal obligor. Id. And, “[w]ith respect to notice of default,” the Court added: [T]he surety is ordinarily held to know every default of his principal because he is under a duty to make inquiry and ascertain whether the principal obligor is discharging the obligation resting on him.

Consequently, the surety is ordinarily liable without notice. Id. at 259-260 , 492 A.2d 1306 (citations omitted). Distinguishing a guarantee from a suretyship, the Court declared that first, unlike a surety agreement, a contract of guarantee is collateral to and independent of the principal contract that is guaranteed and, as a result, the guarantor is not a ³⁵⁸ party to the principal obligation. A guarantor is therefore secondarily liable to the creditor on his contract and his promise to answer for the debt, default, or miscarriage of another becomes absolute upon default of the principal debtor and the satisfaction of the conditions precedent to liability.

Id. at 260 , 492 A.2d 1806 (emphasis added). Second, the Court observed that the original contract of the principal is not the guarantor’s contract, and the guarantor is not bound to take notice of its nonperformance. Rather, the guarantor agrees that the principal is able to and will perform a contract that he has made or is about to make, and that if he defaults the guarantor will pay the resulting damages provided the guarantor is notified of the principal’s default. As such, the guarantor insures the ability or solvency of the principal.

Third, as the Court pointed out, a contract of guaranty is often founded upon a separate consideration from that supporting the contract of the principal and, consequently, the consideration for the guarantor’s promise moves wholly or in part to him. And fourth, the duties imposed by each are different: [T]he guarantor promises to perform if the principal does not. By contrast, a surety promises to do the same thing that the principal undertakes. The surety’s promise is in form a direct and primary promise to pay the debt of another.

It is usually, though not necessarily, made jointly or jointly and severally with the principal and for the same consideration, and gives rise to a primary duty. The guarantor’s promise is separate, is expressly conditioned on the principal’s failure to perform, and gives rise to a secondary duty. Id. at 260-61, 492 A.2d 1306 (citations and footnote omitted). The facts of General Motors are also instructive and provide an illuminating contrast to those presently before us.

In ³⁵⁹ General Motors, “John Daniels agreed to purchase a used automobile from Lindsay Cadillac Company” by signing an installment sales contract. 303 Md. at 258 , 492 A.2d 1306 . John Daniels had poor credit, so his brother, Seymoure, cosigned the contract “on the line designated ‘Buyer.’ ” Id. The contract did not state whether it was a contract of guarantee or suretyship. But the Court of Appeals noted: “|b]oth Seymoure and John signed the contract at the same time.” Id. at 263 , 492 A.2d 1306 . “Although not dispositive,” the Court cautioned, “this fact tends to establish the existence of a contract of suretyship rather than a contractor guaranty.” Id. “Furthermore,” the Court continued, “there are no competent facts indicating that Seymoure expressly agreed to pay for the automobile only upon the default of John,” and “Seymoure,” the Court further noted, “did not qualify his signature in any manner.” Id.

Then, pointing out that “by the terms of the contract Seymoure agreed to be primarily and jointly liable with John for the purchase of the automobile,” the Court of Appeals held that Seymoure was his brother’s surety not his guarantor. Id. at 263-64 , 492 A.2d 1306 . In contrast to the agreement in General Motors, the Guarantee is clearly labeled a “guarantee.” What is more, it states that the “Guarantee Amount” shall be payable to United “in the event” that United pays external providers “because of [MPPI’s] non-payment or late payment.” Thus Mercy’s liability was “expressly conditioned on the principal’s failure to perform” and was therefore a “secondary duty,” rather than, as with a surety, a “direct and primary promise to pay the debt of another ... made jointly or jointly and severally with the principal.” General Motors, 303 Md. at 261, n. 1 , 492 A.2d 1306 . Furthermore, the Guarantee was a separate document from the IPA Agreement, signed by both Mercy and United, but not by MPPI.

Moreover, Mercy never signed the IPA Agreement. And, contrary to Mercy’s assertion, it is of no consequence that Amended Attachment Q was expressly incorporated into the IPA Agreement by the April 1, 1998 IPA ³⁶⁰ Amendment. The Guarantee, itself, was not. As the Court of Appeals noted in General Motors, “ ‘in most eases, ‘the joint execution of a contract by the principal [MPPI in this case] and another operates to exclude the idea of a guaranty and that in all cases such fact is an index pointing to suretyship.’ ” Id. at 263 , 492 A.2d 1306 (quoting Phoenix Ins.

Co. v. Lester Bros., 203 Va. 802 , 127 S.E.2d 432, 436 (1962) (citation omitted)). Further, the Guarantee was executed at a different time than the IPA Agreement. Moreover, it is clear that notice of non-performance was required under the Guarantee. It stated that “[t]he Guarantee Amount shall be payable to [United] in one lump sum upon 5 days written notice from [United].” As previously mentioned, a surety, unlike a guarantor, “is ordinarily liable without notice.” General Motors, 303 Md. at 260 , 492 A.2d 1306 .

But a guarantor promises to pay damages resulting from the principal’s default, “provided the guarantor is notified of the principal’s default.” Id. Finally, although not explicitly stated in the Guarantee, the record indicates that it “was founded upon a separate consideration from that supporting the contract of the principal” which “move[d] wholly or in part to” Mercy. Sister Helen Amos, Mercy’s chief executive officer during 1997 and 1998, testified that MPPI’s goal was “to create a geographically dispersed physician network” and that Mercy’s “complimentary” goal was to “creatfe] centers of excellence downtown.” Indeed, it was Mercy’s expectation, according to the sister, that “the partnership [between Mercy and MPPI] would produce a relationship in which some of [the] patients [from the geographically dispersed physician’s networks] would be referred to [Mercy].” Thus, Mercy received “separate consideration from that supporting the contract of the principal” which “move[d] wholly or in part to” Mercy. General Motors, 303 Md. at 260 , 492 A.2d 1306 .

Given that Mercy did not execute the IPA Agreement, that the Guarantee was executed by Mercy at a different time than the IPA Agreement, that the Guarantee was a separate document, that notice of non-performance was required by the ³⁶¹ Guarantee, and that the Guarantee was supported by consideration separate from that supporting the IPA agreement, there can be no dispute that Mercy’s Guarantee was, as its title declares, a contract of guarantee. As such, it was “collateral to and independent of” the IPA Agreement and the April 1, 1998 IPA Amendment. Consequently, the Letter of Intent’s language limiting the April 1, 1998 Amendment to October 31, 1998 and to the IPA Agreement, contrary to Mercy’s assertion, did not terminate the Guarantee on October 31, 1998, or limit it to the members under the IPA Agreement.

II

Mercy contends that it was discharged from its obligation under