O'Brien & Gere Engineers, Inc. v. City of Salisbury

DEBORAH S. EYLER, J. The primary issue in this appeal is whether the absolute litigation privilege may immunize a party to a non-disparagement agreement from liability for breaching that agreement when the breach was by words spoken by a lawyer or witness in court, during a judicial proceeding. We hold that it may, and that in the circumstances of this case it did, as a matter of law. FACTS AND PROCEEDINGS The parties to this appeal are O’Brien & Gere Engineers, Inc. (“OBG”), the appellant, and the City of Salisbury (“City”), the appellee. In the early 2000’s, the Maryland Department of the Environment (“MDE”) directed the City to upgrade its outdated wastewater treatment plant to comply with federally mandated standards.

In 2004, the City contracted with OBG to perform the design engineering for the plant upgrade. The next year, the City contracted with Construction Dynamics Group, Inc. (“CDG”) to serve as the construction manager for the plant upgrade. Among other things, CDG’s contract required it to oversee OBG’s design engineering work and report any problems with the design to the City. It is an understatement to say the plant upgrade did not go well.

The City paid over $80 million dollars for the upgrade, but the plant as upgraded never satisfied federal standards. Ultimately, the MDE required the City to complete an entirely new plant upgrade. On February 28, 2011, in the Circuit Court for Wicomico County, the City sued OBG and CDG, alleging breaches of contract and wrongful acts and omissions that caused the plant upgrade to fail (“The Plant Upgrade Case”). OBG ⁴⁹⁷ joined a number of subcontractors and some of their sureties as third party defendants.

The City amended over against the third party defendants, and OBG filed cross-claims against them. The parties engaged in extensive discovery. Expert witnesses were disclosed in early 2012. The case was specially assigned and given a November 1, 2012 trial date.

On June 7, 2012, the City and OBG entered into a comprehensive settlement, which they memorialized in a written Settlement Agreement (“the Agreement”). The salient terms are as follows. OBG agreed to pay the City $10 million ($10,000,000) and the City agreed to release OBG from all claims the City had made or could have made against it relating to the plant upgrade. All claims, cross-claims, and third-party claims relating to OBG would be dismissed and OBG would dismiss a separate suit it had brought against the City under the Maryland Public Information Act (“MPIA”).

No provision of the Agreement would “inure to the benefit of’ anyone else, including any other party to the Plant Upgrade Case. OBG denied fault and tortfeasor status. The City and OBG agreed that if, at the trial of the Plant Upgrade Case, OBG were found to be a tortfeasor, then any judgment in tort in favor of the City would be reduced in accordance with the Maryland Uniform Contribution Among Joint Tort-Feasors Act. See Md.Code (2013 Repl.Vol.), §§ 3-1401 et seq.

The City agreed to defend, indemnify, and hold harmless OBG from any claim made against it at any time by any other party to the Plant Upgrade Case, relating to the design or construction of the Plant. The stated purpose of this provision was to protect OBG from having to expend “any further monies” in connection with the Plant Upgrade Case and, together with the joint tortfeasor provision, to protect OBG “from any liability and expense associated with any claims that the City is now pursuing, or hereafter may initiate or pursue, against any person other than OBG arising from or in any way relating to the [plant upgrade] and the facts and events alleged by the City in the [Plant Upgrade Case].” In addition, ⁴⁹⁸ the City agreed to defend, indemnify, and hold harmless OBG from any claim or suit made or filed against it at any time concerning the design and construction of the plant upgrade. In consideration for the release and indemnification agreements, OBG agreed to release the City from any claims — past, present, and future — relating to the plant upgrade, except claims for enforcement or breach of the Agreement. Central to this appeal, the Agreement contains a mutual non-disparagement clause: The City and [OBG] mutually agree that they will not make, or cause or encourage other persons or entities to make, any disparaging remarks or comments about each other relating to any matter having occurred prior to the effective date of this Settlement Agreement or in the future relating directly or indirectly to the Salisbury wastewater treatment plant through any means, including without limitation, oral, written or electronic communications, or induce or encourage others to publicly disparage the other settling party. “Disparaging” is defined to mean: [A]ny statement made or issued to the media, or other entities or persons that adversely reflects on the other settling party’s personal or professional reputation and/or business interests and/or that portrays the other settling party in a negative light.

In addition, the clause states with respect to injunctive relief and damages: The parties agree that, in the event of any breach of this non-disparagement provision, damages/actual losses will be difficult or impossible to prove with requisite precision, and that an adequate remedy at law will not exist. Accordingly, in the event of a breach of this provision, the non-breaching party shall be entitled to equitable relief including but not limited to a temporary restraining order, a preliminary injunction, and a permanent injunction. Further, the non-breaching party shall not be required to post any bond in connection with seeking or obtaining a temporary restraining order, a preliminary injunction, and/or a permanent ⁴⁹⁹ injunction. Further, the non-breaching party shall be entitled to an award of reasonable attorney’s fees and other litigation costs and expenses associated with enforcement of this provision against the breaching party.

The Agreement does not include a confidentiality or nondisclosure provision. The Council of the City of Salisbury approved the Agreement the day it was signed. Five days later, after receiving the $10 million payment, the City filed a stipulation of voluntary dismissal with prejudice of OBG from the Plant Upgrade Case. OBG voluntarily dismissed with prejudice its cross-claims and the MPIA case.

Soon thereafter, the City dismissed with prejudice the claims it had filed against the defendants originally brought into the case by OBG. That left CDG as the only remaining defendant. The City filed an amended complaint against CDG for breach of contract only, with an ad damnum clause reduced from $60 million dollars to $4 million dollars. The jury trial in the Plant Upgrade Case began on schedule on November 1, 2012.

The City advocated that CDG had breached its contract in a number of ways, including by failing to oversee OBG’s design engineering work and by failing to bring flaws in that work to the City’s attention; and that those design flaws caused the plant upgrade to fail. The City theorized that CDG did not report the problems with OBG’s design engineering because the year before CDG executed its contract with the City, CDG and OBG had entered into a “teaming agreement,” in which they were collaborating to win a $20 million construction contract in the District of Columbia, and it would not have served CDG’s interests in seeking that lucrative contract to reveal OBG’s design flaws in the plant upgrade. 1 In opening statement, the City’s lawyer told to the jurors that the evidence would show that CDG’s contract required it ⁵⁰⁰ to inform the City of any design flaws in the plant upgrade, but that CDG failed to do so: This becomes very important. Because most of the problems at this plant, and this plant was a disaster, most of the problems were design problems created by the design engineer, [OBG]. And [CDG] should have been advising the City of those problems.

Particularly when, you’ll hear at the end of the project, this plant didn’t work. But [CDG] walked away, they didn’t advise the City. (Emphasis added.) He continued: [CDG] [flailed to provide the required information in their monthly reports. They failed to tell us about all of the things that weren’t working.

They failed to tell us about the myriad of design problems that they should have told us about. Remember the word design. (Emphasis added.) The lawyer foreshadowed the evidence about the teaming agreement, characterizing it as a conflict of interest on CDG’s part: I’ll talk to you about conflicts of interest. Why didn’t CDG report the engineer [OBG]?

Why didn’t CDG come to the City and say the engineer is causing problems or has caused problems big time? The engineering was a mess. This engineering, you’ll hear, most of it failed. But CDG wasn’t reporting that.

Why? Well, what we found out is, remember, CDG is hired in 2005, in 2004 CDG entered into what’s called a teaming agreement with the engineering firm [OBG] an agreement to try to get a job in the District of Columbia. A job in the District of Columbia, which, if they got it, would give them 20 million dollars for the package. Millions each.

Six million for CDG. Six million for [OBG], O’Brien and Ge[re]. Six million for another partner. They entered into a teaming agreement in 2004.

So you’re going to — it doesn’t matter to us whether they [CDG] mistakenly and in breach of their contract declared this plant substantially complete because they’re incompetent or because they’re in bed with the engineer ... ⁵⁰¹ (Emphasis added.) The City’s lawyer mentioned OBG by name four times in his opening statement. CDG’s defense was that it had fulfilled all its contractual obligations to the City by ensuring that the plant was upgraded in accordance with specifications. It took the position that OBG’s design, not anything it had done or not done, caused the plant upgrade to fail; and it was not responsible for OBG’s design failures and could not have done anything to make the upgraded plant functional. In his opening statement, CDG’s lawyer explained that OBG’s design for the plant upgrade was “experimental” and emphasized that as the construction manager, CDG’s responsibilities did not include uncovering the problems with that design.

CDG’s lawyer mentioned OBG by name 23 times in his opening statement. The evidence phase of the trial began the next day. The City called Enos Stover, Ph.D., an expert in environmental engineering. On direct examination, Dr. Stover was asked to identify component-by-component the failures in the plant upgrade.

He did so, opining that most of the components failed due to “design issues.” On cross-examination, Dr. Stover stated that OBG’s design for the plant upgrade had been “likely to fail” from the outset. The City then called John Jacobs, the former director of the City’s Department of Public Works. Mr. Jacobs testified that under the terms of its contract with the City, CDG was responsible for overseeing OBG’s work, including bringing any “design issues” to the City’s attention. That same day, the Daily Times, a Salisbury newspaper, published a story headlined, “Attorneys set stage in city sewer plant trial.” The story summarized the opening statements in the Plant Upgrade Case, quoting the City’s lawyer as having said that CDG was “in bed — partners—with the very engineering firm they were supposed to watch.” It reported that CDG’s lawyer countered, “There’s nothing a construction manager can do to make a failed design work ...

There was no harm caused to the [C]ity by CDG because the project was built on time, on budget and with no construction deficiencies.” ⁵⁰² The article, which described the plant upgrade as “the largest public works project in the [CJity’s history,” did not identify OBG by name. OBG’s lawyer read the Daily Times article and immediately ordered trial transcripts and sent the City a “cease and desist” letter. In the letter, he said he was “monitoring” the trial, quoted the non-disparagement clause in the Agreement, and “instruct[ed] the City, its attorneys, and any witnesses it calls to testify at trial to comply strictly and fully [with that clause],” by “regulat[ing] [its] conduct at trial (in regard to [its] arguments and [its] questioning of any and all witnesses)” and by “preparing] [its] witnesses accordingly, so that OBG is not disparaged ... in any way.” On November 5, 2012, after receiving the trial transcripts, OBG’s lawyer filed a “Complaint for Injunctive and Other Relief’ against the City, also in the Circuit Court for Wicomi-co County, alleging that the City had breached the non-disparagement clause of the Agreement by the words spoken by its lawyer in opening statement at the trial of the Plant Upgrade Case and by Dr. Stover and Mr. Jacobs in their trial testimony. It sought a temporary restraining order (“TRO”) and preliminary and permanent injunctive relief, claiming it would suffer “immediate substantial and irreparable injury” if the City were not enjoined from making disparaging statements about it in the ongoing trial in the Plant Upgrade Case.

It asked the court to “restraint ] and enjoin[ ] the City (and its counsel, witnesses, employees, and officials) from making any statements at the trial in the [Plant Upgrade Case] or otherwise that portray OBG in a negative light” and to award it attorneys’ fees. It also sought $1.5 million in damages. 2 On November 7, 2012, the City and OBG appeared for a hearing on the TRO request, before the same judge specially ⁵⁰³ assigned to the Plant Upgrade Case. The trial in that case still was in progress. OBG argued that the City was violating the non-disparagement clause by making arguments and introducing evidence critical of OBG’s design work on the plant upgrade.

The City responded that, among other things, it was evident when the parties entered into the Agreement that if the Plant Upgrade Case went to trial, other defendants would be taking the position that OBG’s design had caused the plant upgrade to fail, and therefore had caused the City’s injuries and damages. It argued that in any event the non-disparagement clause could not be enforced to restrain speech by lawyers and witnesses in a judicial proceeding because words spoken in that setting are covered by the absolute litigation privilege. The court denied the request for a TRO. The judge opined that the non-disparagement clause was “enforceable between the parties” and that the City and OBG were “bound by [its] terms.” He concluded, however, that when the City and OBG executed the Agreement, it was “clear ... that the question of the ... appropriateness of [OBG’s] design of the [plant upgrade] would remain an issue in the [Plant Upgrade Case],” and therefore evidence critical of OBG’s design would be introduced and commented upon in any trial of the case.

Also on November 7, 2012, the City moved to dismiss OBG’s complaint and OBG amended its complaint, adding a count for unjust enrichment. Two days later, OBG noted an appeal from the interlocutory order denying a TRO. The trial in the Plant Upgrade Case continued until November 16, 2012, when the jury returned a verdict in favor of the City and against CDG for $1,968,417.43 in damages. On November 19, 2012, the City filed an amended motion to dismiss OBG’s amended complaint.

It argued that the conclu ⁵⁰⁴ sion of the trial in the Plant Upgrade Case had rendered the request for injunctive relief moot; the Agreement only permitted injunctive relief, not damages, for breach of the non-disparagement clause; and if recovery of damages were permitted under the terms of the Agreement, OBG did not state a claim for which relief could be granted, because the absolute litigation privilege immunized the City from liability for damages based on the words spoken by its lawyer and witnesses in the trial of the Plant Upgrade Case, including any liability for damages for breach of the non-disparagement clause. OBG filed an opposition, arguing that its claim for equitable relief was not moot because, in all likelihood, CDG would appeal the judgment against it 3 ; the language of the Agreement permits equitable relief and damages; the absolute litigation privilege only applies to defamation actions, not to any other cause of action, including an action for breach of contract; and the City entered into the Agreement with full knowledge that the non-disparagement clause would foreclose it from criticizing OBG’s design work at any trial in the Plant Upgrade Case. Shortly before the hearing on the motion to dismiss, OBG filed a motion to disqualify the City’s counsel of record. Citing Maryland Lawyer’s Rules of Professional Conduct (“MRPC”) 3.7 (Lawyer as Witness), it asserted that because the conduct and statements of the lawyers representing the City in the trial of the Plant Upgrade Case were directly at issue, they were “necessary witnesses” and could not continue to act as advocates for the City. 4 The City countered that the ⁵⁰⁵ motion to disqualify was premature given the pending motion to dismiss because, were the court to grant that motion, the case would come to an end without any witness testimony.

On December 21, 2012, the court held a hearing on the pending motions. It denied the motion to disqualify counsel, agreeing that it was premature. It granted the motion to dismiss on the basis of the absolute litigation privilege. Noting that the gravamen of the complaint “relatefd] solely to statements and utterances spoken by witnesses and lawyers within the confínes of the courtroom,” the judge concluded that although the law respects “the principles that protect non-disparagement agreements, the larger principle” of “permitting, encouraging free statements, vigorous statements, between the parties and lawyers to aid in the resolution of a dispute is paramount.” Thus, even if in trying its case against CDG the City breached the Agreement by disparaging OBG’s design work on the plant upgrade, the absolute litigation privilege protected the City from liability for that breach. 5 The court entered a judgment dismissing the case with prejudice.

OBG noted an appeal, which was consolidated with its earlier appeal from the order denying its TRO request. OBG poses three questions for review, which we have rephrased slightly: I. Did the circuit court err in granting the City’s motion to dismiss? ⁵⁰⁶ II. Did the circuit court abuse its discretion in denying OBG’s TRO request?

III

Did the circuit court err in denying OBG’s motion to disqualify counsel? We hold that in the circumstances of this case, the circuit court’s decision to dismiss OBG’s claims on the basis of the absolute litigation privilege was legally correct. We further hold that the court did not abuse its discretion in denying the TRO request or err in denying the motion to disqualify counsel. DISCUSSION I. Motion to Dismiss We review de novo a circuit court’s decision to grant a motion to dismiss a complaint for failure to state a claim for which relief can be granted.

Gasper v. Ruffin Hotel Corp. of Md., Inc., 183 Md.App. 211, 226 , 960 A.2d 1228 (2008). In so doing, “we must assume the truth of the well-pleaded factual allegations of the complaint, including the reasonable inferences that may be drawn from those allegations.” Adamson v. Corr. Med. Servs., Inc., 359 Md. 238, 246 , 753 A.2d 501 (2000). “Dismissal is proper only when the alleged facts and permissible inferences, even if later proven to be true, would fail to afford relief to the plaintiff.” Morris v. Osmose Wood Preserving, 340 Md. 519, 531 , 667 A.2d 624 (1995). “In sum, because we must deem the facts to be true, our task is confined to determining whether the trial court was legally correct in its decision to dismiss.” Adamson, 359 Md. at 246 , 753 A.2d 501 .

Although not in this order, OBG offers three reasons to support its contention that the circuit court’s decision to grant the motion to dismiss was legally incorrect. First, the court engaged in fact finding, which it must not do in ruling on a motion to dismiss for failure to state a claim for which relief can be granted. Second, the plain language of the non- ⁵⁰⁷ disparagement clause covers any disparaging statement made in any setting, including in the course of a judicial proceeding. Finally, the absolute litigation privilege did not apply because it only immunizes litigation participants from liability for defamation and the purpose of the privilege will not be served if it is applied to protect them from liability for breach of contract.

(a) We can quickly dispose of OBG’s first two arguments. OBG is correct that in ruling on a motion to dismiss, the circuit court is not to make factual findings. See Magnetti v. Univ. of Md., 171 Md.App. 279, 284 , 909 A.2d 1101 (2006) (motion to dismiss is decided based upon “allegations” not upon “evidence”). However, the record does not support its assertion that the court made factual findings in ruling on the motion to dismiss.

The court granted the motion upon a determination that if the City breached the non-disparagement clause of the Agreement by the words of its lawyer and its witnesses spoken at the trial of the Plant Upgrade Case, the City could not be held liable for that breach, because it was immunized from liability by the absolute litigation privilege. This ruling did not involve any fact finding. 6 OBG’s argument that the language of the non-disparagement clause covers any disparaging remark made in any setting, including in the course of a judicial proceeding, is not pertinent to whether the court erred in granting the motion to dismiss. In making its ruling, the court assumed that the City could breach, and did breach, the non-disparagement clause by words spoken by its lawyers and witnesses at the trial of the Plant Upgrade Case. 7 ⁵⁰⁸ (b) We turn to OBG’s third argument — the central issue in this case — that the court erred as a matter of law in ruling that the absolute litigation privilege immunized the City from liability for breaching the non-disparagement clause of the Agreement by words spoken in the trial of the Plant Upgrade Case. Well over 100 years ago the Court of Appeals recognized in Maryland common law an absolute litigation privilege that immunizes litigation participants from liability in tort for words spoken or written in the course of a judicial proceeding.

Hunckel v. Voneiff, 69 Md. 179 , 14 A. 500 (1888). See also Bartlett v. Christhilf, 69 Md. 219 , 14 A. 518 (1888). It crafted an absolute litigation privilege for Maryland that is a hybrid of the English and American versions of that privilege. Lawyers are protected by the American version, which immunizes them from liability in tort for words spoken or written in the course of a judicial proceeding so long as the words are relevant to the proceeding.

Norman v. Borison, 418 Md. 630, 650 , 17 A.3d 697 (2011). 8 Other litigation participants, including witnesses, are protected by the English version of the privilege, which immunizes them from liability in tort for words spoken or written in the course of a judicial proceeding even when the words are irrelevant and incidental. Hunckel, 69 Md. at 193 , 14 A. 500 . In both the American and English versions of the absolute litigation privilege, the privilege applies notwithstanding that the litigation participant’s “purpose or motive was malicious, [that] he [or she] knew that the statement was false, or [that] his [or her] conduct was otherwise unreasonable.” Adams v. Peck, 288 Md. 1 , 415 A.2d 292 (1980). See ⁵⁰⁹ also Gersh v. Ambrose, 291 Md. 188, 192 , 434 A.2d 547 (1981) (stating that under both the American and the English versions of the absolute litigation privilege, the privilege is not “defeasible by malice.”).

The purpose of the absolute litigation privilege is to protect “the free and unfettered administration of justice,” Bartlett, 69 Md. at 226 , 14 A. 518 , by “serving] the ultimate goal of information exchange and discovery of the truth.” Norman, 418 Md. at 660 , 17 A.3d 697 (footnote omitted). The privilege is an essential component of the adversary system of justice. 9 In that system, the truth of a dispute is decided by a neutral fact-finder in a judicial proceeding where each party, ordinarily through counsel, advocates his position by presenting evidence, challenging his opponent’s evidence through cross-examination and otherwise, and arguing in favor of what the party sees as the just result. It is key to this process that all evidence material to the search for the truth be available to the decision-maker, regardless of whether the evidence harms, could harm, or appears to harm someone’s reputation. 10 Because “[t]he ultimate purpose of the judicial process is to determine the truth,” participants in a legal proceeding must be free to speak without “fear of private suits for defamation.” Adams, 288 Md. at 5 , 415 A.2d 292 . A witness who faces the prospect of civil liability for the words he speaks at trial will be reluctant to testify, and if he does testify, may distort his testimony to protect himself. “[T]he fear of subsequent liability” may limit or skew the evidence the decision-maker needs to fairly decide the case.

Briscoe, 460 U.S. at ⁵¹⁰ 333, 103 S.Ct. 1108 . It therefore is of “great importance to the administration of justice that witnesses should testify with minds absolutely free from the apprehension of being annoyed by civil actions for any thing they may say as witnesses.” Hunckel, 69 Md. at 198 , 14 A. 500 . See also Gersh, 291 Md. at 192 , 434 A.2d 547 (observing that the absolute litigation privilege exists not “merely to protect [a litigation participant] from ultimate liability, but [also] to protect him from the annoyance of suit itself.”). The absolute litigation privilege is so important to the administration of justice in an adversary system that it will apply even though an “incidental result” may be protection of an “evil disposed and malignant slanderer.” Bartlett, 69 Md. at 226 , 14 A. 518 .

Lawyers are duty bound by the Maryland Lawyer’s Rules of Professional Conduct to zealously advocate for their clients, which includes introducing evidence that supports their clients’ positions and presenting argument in furtherance of their clients’ claims or defenses. See Preamble to MRPC (“as advocate, a lawyer zealously asserts the client’s position under the rules of the adversary system.”). The specter of civil liability for words spoken or written in the course of a judicial proceeding will inhibit lawyers from abiding by their professional obligation to advocate zealously, imperiling the rights of their clients. See T. Leigh Anenson, “Absolute Immunity from Civil Liability: Lessons for Litigation Lawyers,” 31 Pepp.

L.Rev. 915, 922 (2004); see also Greenberg Traurig, LLP v. Frias Holding Co., — Nev.-, 331 P.3d 901 , 903 (2014) (explaining that “[t]he policy behind the [litigation] privilege, as it applies to attorneys participating in judicial proceedings, is to grant them as officers of the court the utmost freedom in their efforts to obtain justice for their clients.”) (internal quotation marks and citations omitted) (alteration in Greenberg). (c) Until 2013, every reported Maryland opinion about the absolute litigation privilege arose in the context of a defamation action, that is, an action in which the plaintiff alleged that ⁵¹¹ he had been defamed by words spoken or written by the defendant during a trial or in another phase of the judicial process. That changed when this Court decided Mixter v. Farmer, 215 Md.App. 536 , 81 A.3d 631 (2013). Mixter, a lawyer, sued Farmer, also a lawyer, for defamation, intentional infliction of emotional distress, tortious interference with contract, and tortious interference with prospective advantage.

The claims stemmed from derogatory statements Farmer made about Mixter in letters Farmer sent to other lawyers and to one of Mixter’s former clients seeking information for an anticipated (and eventually filed) grievance with the Maryland Attorney Grievance Commission. 11 This Court held that the absolute litigation privilege insulated Farmer from liability for all the claims against him, not just the defamation claim. We reasoned that, when liability is sought based on a common set of events concerning words spoken or written in the course of or in connection to a judicial proceeding, the precise theory of recovery is not determinative. The underlying policy of protecting the adversary system of justice by enabling full and free expression in judicial proceedings is implicated, regardless of the theory of recovery, and is advanced by applying the absolute litigation privilege. The absolute litigation privilege protected Farmer from liability for claims against him that were based on the words he wrote in the course of a judicial proceeding, whether packaged as a cause of action for defamation or as causes of action for intentional infliction of emotional distress, tortious interference with contract, or tortious interference with prospective advantage.

In so holding, we examined Maryland cases in which other immunities have been applied to protect litigation participants ⁵¹² from liability not only for defamation but also for other causes of action. For example, in Walker v. D’Alesandro, 212 Md. 163, 169 , 129 A.2d 148 (1957), the Court held that the public official privilege was not “confined in the law of torts to matters of defamation.” Likewise, in Carr v. Watkins, 227 Md. 578, 582 , 177 A.2d 841 (1962), the Court held that the qualified privilege enjoyed by certain police officers when performing their duties applies not only to a claim for defamation but also to claims for invasion of privacy, divulging information without legal right, malicious interference with contract of employment, and conspiring to cause termination of employment. The Carr Court observed that “if there was immunity from liability for defamation, there was immunity from liability for the other alleged torts claimed ... to have been committed” as the “privilege is not limited to immunity from liability for defamation.” Id. at 583 , 177 A.2d 841 . We pointed out in Mixter that other state appellate courts have “support[ed] the expansion of immunity beyond defamation torts when those other torts arise from the same conduct.” 215 Md.App. at 547 , 81 A.3d 631 .

See, e.g., Sullivan, D.D.S., P.C. v. Birmingham, 11 Mass.App.Ct. 359 , 416 N.E.2d 528, 533 (1981) (absolute litigation privilege is a complete defense to action for intentional infliction of emotional distress); Rainier’s Dairies v. Raritan Valley Farms, 19 N.J. 552 , 117 A.2d 889, 895 (1955) (absolute litigation privilege is a complete defense to an action for malicious interference with business). See also Briscoe, 460 U.S. at 325 , 103 S.Ct. 1108 (absolute litigation privilege protected defendant from liability in claim for violation of civil rights under 42 U.S.C. section 1983 based on statements made during trial); Buschel v. MetroCorp, 957 F.Supp. 595, 598 (E.D.Pa.1996) (absolute litigation privilege “applies equally in causes of action for invasion of privacy”); Pinto v. Internationale Set, Inc., 650 F.Supp. 306, 309 (D.Minn.1986) (absolute litigation privilege “entitles defendant to judgment on plaintiffs’ claim for intentional interference with contractual and business relations”); LaPlante v. United ⁵¹³ Parcel Service, Inc., 810 F.Supp. 19 (D.Me.1993) (absolute litigation privilege applies to action for sex discrimination, harassment, and constructive discharge); Loomis v. Tulip, Inc., 9 F.Supp.2d 22, 25 (D.Mass.1998) (absolute litigation privilege applies to action for tortious interference with contract; “it remains well-established that the privilege applies ‘not only in defamation cases, but as a general bar to civil liability based on [an] attorneys’s [sic] statements’ ” (quoting Blanchette v. Cataldo, 734 F.2d 869, 877 (1st Cir.1984))); W. Technologies, Inc. v. Sverdrup & Parcel, Inc., 154 Ariz. 1 , 739 P.2d 1318 (Ct.App.1986) (absolute litigation privilege applies to bar action for injurious falsehood and intentional interference with contractual relationship). (d) The Maryland appellate courts have not addressed whether and in what circumstances the absolute litigation privilege will immunize a litigation participant from liability for speaking or writing disparaging words about a person in the course of a judicial proceeding, when the participant had contracted not to disparage that person. A handful of federal and state appellate courts have analyzed this issue.

The most widely cited opinion on this topic is Rain v. Rolls-Royce Corporation, 626 F.3d 372 (7th Cir.2010) (applying Indiana law). Rolls-Royce and Paramount International, Inc., were competitors in the business of repairing certain model Rolls-Royce helicopter engines. Rolls-Royce sued Paramount and David Rain, Paramount’s sole shareholder, for misappropriating Rolls-Royce’s intellectual property. The parties settled the case in a written agreement governed by Indiana law.

The agreement included a mutual non-disparagement clause. A year later, Rolls-Royce sued several other business competitors in a federal district court in Texas (“the Texas Lawsuit”), alleging that they had engaged in racketeering in order to obtain its proprietary information, and had done so in conspiracy with Paramount and Rain. 12 ⁵¹⁴ When Paramount and Rain learned of the Texas Lawsuit, they sued Rolls-Royce in an Indiana federal district court for breach of contract, asserting, inter alia, that Rolls-Royce’s racketeering allegations disparaged them, in violation of the non-disparagement clause in their settlement agreement. Rolls-Royce moved for partial summary judgment, invoking the absolute litigation privilege. The Indiana federal district court granted the motion, reasoning that even if Rolls-Royce’s allegations of wrongdoing against Paramount and Rain in the Texas Lawsuit disparaged them, in breach of the settlement agreement, Rolls-Royce was “immune from liability under Indiana’s absolute litigation privilege.” Id. at 376 .

Following a bench trial on Paramount and Rain’s remaining claims, they appealed, challenging the grant of partial summary judgment. Guided by the policy underlying Indiana’s long-recognized absolute litigation privilege, the Seventh Circuit affirmed. The purpose of the privilege, the court explained, is to “ ‘presence] the due administration of justice by providing actors in judicial proceedings with the freedom to participate without fear of future defamation claims.’ ” Id. (alteration in Rain) (quoting Hartman v. Keri, 883 N.E.2d 774, 777 (Ind.2008)).

The court reasoned that a claim for breach of a contract not to disparage that is based on words spoken or written in the course of a judicial proceeding is “largely indistinguishable from a tort claim alleging injury flowing from statements made in a judicial proceeding,” and that, ordinarily, Indiana’s absolute litigation privilege would immunize Rolls-Royce from liability for its wrongful allegations against Paramount and Rain in the Texas Lawsuit. 13 626 F.3d at 378 . ⁵¹⁵ The Rain court emphasized that the question before it was not whether the non-disparagement agreement was enforceable at all, in any circumstance. Rather, it was whether, assuming that Rolls-Royce’s allegations against Paramount and Rain in the Texas Lawsuit disparaged them, in breach of the agreement, Rolls-Royce should be subject to liability for that breach. The court held that it should not, because the purpose of the absolute litigation privilege would be advanced if it were applied to protect Rolls-Royce from liability for breaching the non-disparagement agreement. It reasoned that ensuring that Rolls-Royce could make use of the courts for their intended purposes — for example to protect its intellectual property rights against third parties' — without fear that doing so would expose it to future liability would serve the administration of justice. “By contrast, the failure to apply the privilege would frustrate the underlying policy [of the privilege] by discouraging Rolls-Royce from exercising its fundamental right to resort to the courts to protect its rights.” Id. at 378 .

Therefore, Rolls-Royce’s words, spoken or written in the course of the Texas Lawsuit, would not expose it to liability in contract for breach of the non-disparagement agreement, any more than they would expose it to liability in tort. Seven years before the Seventh Circuit’s decision in Rain , the Eighth Circuit Court of Appeals reached a like conclusion in Kelly v. Golden, 352 F.3d 344 (8th Cir.2003), although the settlement agreement in Kelly differed from that in Rain . Kelly and Golden had been business partners. When their working relationship deteriorated, Kelly sued Golden in federal district court.

The two settled the case in a written agreement that included a clause in which each party agreed not to “disparag[e]” or “defam[e]” the other and not to disclose any information about the agreement, or a prior agreement, unless it was “privileged, within arbitration proceedings, made with consent, or required by law.” Id. at 348. The ink was barely dry on the agreement when Kelly sued Golden in a Missouri state court seeking rescission and alleging among other claims breach of fiduciary duty. Golden ⁵¹⁶ removed the case to federal district court and filed a counterclaim. Kelly, who was self-represented, filed “lengthy pleadings containing irrelevant and scandalous allegations that reflected his anger and personal feelings regarding the case.” Id.

The court struck some of the pleadings and admonished Kelly to refrain from making personal attacks in his filings, to no avail. Kelly continued on the same path and also sent letters and faxes to Golden and his lawyer containing “numerous inappropriate, vituperative, and coercive