Sachs v. Regal Savings Bank, FSB

MOYLAN, Judge. When both sides in a case move for summary judgment, the trial judge must be prepared to shift perspective quickly and decisively before moving from the resolution of one of the motions to the resolution of the other. A single view of what is before the court will not do. The appellant, Stewart D. Sachs, sued the appellee, Regal Savings Bank, FSB, et al., in the Circuit Court for Baltimore County, for breach of an employment contract.

After discovery had been completed, both the appellant and the appellee moved for summary judgment. The circuit court denied the appellant’s motion for summary judgment in his favor and granted summary judgment in favor of the appellee. On this appeal, the appellant raises essentially two contentions: 1. That the trial judge erroneously failed to grant summary judgment in the appellant’s favor; and 2.

That the trial judge erroneously granted summary judgment in the appellee’s favor. Before we undertake an analysis of what was before the trial court in this case, it is meet to have before us the controlling standard. In Southland Corp. v. Griffith, 332 Md. 704, 712 , 633 A.2d 84 (1993), Chief Judge Murphy succinctly set it forth: A trial court may grant summary judgment when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Md. Rule 2-501(e).

Under this rule, “a trial court determines issues of law; it makes rulings as a matter of law, resolving no disputed issues of fact.” Beatty v. Trailmaster, 330 Md. 726, 737 , 625 A.2d 1005 (1993). In reviewing a disposition by summary judgment, an appellate court resolves all infer ²⁷⁸ enees against the party making the motion. Rosenberg v. Helinski, 328 Md. 664, 674 , 616 A.2d 866 (1992). Because a trial court decides issues of law when granting a summary judgment, the standard of appellate review is whether the trial court was legally correct.

Beatty, 330 Md. at 737 , 625 A.2d 1005 ; Rosenberg, 328 Md. at 674 , 616 A.2d 866 ; Heat & Power v. Air Products, 320 Md. 584, 592 , 578 A.2d 1202 (1990). It is not, of course, every genuine dispute of fact that will defeat summary judgment. It is only a genuine dispute as to a material fact that will do so. What, then, makes a factual dispute material?

In the case before us, there is little, if any, dispute as to any of the first-level facts. There is a very real dispute, however, as to the significance of those facts. The significance to be afforded a given set of facts is sometimes and in some circumstances a question of law. That is not, however, the situation in this case.

The significance to be afforded a given set of facts may also be, at other times and in other circumstances, a question of fact, to wit, a question of conclusory, abstract, or inferential fact. The possible inferential significance to be drawn in this case is a genuine dispute of fact. For such an inference-drawing dispute to be deemed material, the balance in the case must be delicate enough that although a permitted inference in one direction would support summary judgment, a permitted inference in the opposite direction would defeat it. It was with this in mind that Southland advised: In reviewing a disposition by summary judgment, an appellate court resolves all inferences against the party making the motion.

Id. (Emphasis supplied). Collectively, the two contentions in this case provide a textbook application of Southland’s direction to “resolve all inferences against the party making the motion.” In analyzing, initially, whether the appellant should have been granted summary judgment in his favor, we are going to resolve every ²⁷⁹ possible inference against him. In then moving to the second contention, however, we are going to turn the telescope completely around and look at the same predicate facts with a diametrically different perspective.

In analyzing whether the appellant should have suffered the grant of summary judgment against him, we are going to indulge every possible inference in his favor. Our final conclusion is that neither party was entitled to summary judgment and that it should not, therefore, have been granted in either direction. The Underlying Facts The appellant was hired in 1976, at twenty-five years of age, as the managing officer of Regal Savings and Loan, the predecessor to the primary appellee, Regal Savings Bank, FSB. Shortly thereafter, he assumed the titles of both President and CEO of the Bank.

He was also named as President of Regal, a holding company and corporate parent of the Bank, and as an officer of five non-bank subsidiaries of Regal. In addition, he served as a member of the Board of Directors of Regal, the Board of Directors of the Bank, and the Board of Directors of each of Regal’s non-bank subsidiaries. As a financial manager, the appellant was eminently successful. In 1976, Regal Savings and Loan had approximately $800,000 in assets but no net worth.

The appellant was given a free hand by the Bank’s Board of Directors to turn things around financially. As of the time of his resignation in early 1993, Regal Bank had a net worth of $6 million with assets worth $40 million. As successful as the appellant was in a purely financial sense, he progressively had growing difficulty in a very different sense. As, during the course of the 1980’s, the original savings and loan association was converted first to a stock company and then to a savings bank, it became increasingly subject to federal rules regulating banks.

The savings and loan crisis in the 1980’s, moreover, led to increased federal regulation and supervision. Both appellant and appellee ²⁸⁰ agree that it was not simply a case that the appellant found it difficult to operate -within the highly regulated environment that the banking industry had become. It was rather the case that the appellant was openly and almost belligerently disdainful of such regulations. Although continuing to value highly the appellant’s financial skill and judgment, the Board of Directors became increasingly embarrassed by and leery of his almost contemptuous spurning of regulations which he deemed to be, at best, a nuisance to be avoided wherever possible.

Accordingly, the Board of Directors of the Bank determined in early 1993 that the appellant should relinquish his duties as President and CEO of the Bank. The appellant and the Bank mutually agreed upon a course of action. A search committee was formed to locate a new President and CEO. That new President would be responsible for the day-to-day operations of the Bank but the appellant would continue to be responsible for its business development as well as for the management of the holding company and the non-bank subsidiaries.

By March of 1993, however, several candidates for President and CEO had been interviewed but none had been hired. On March 8, the appellant tendered his resignation as President and CEO. At a special meeting of the Board of Directors on March 18, his resignation was accepted. The Board agreed, however, that the appellant would continue to hold his remaining positions both with Regal and with the non-bank subsidiaries.

He would, moreover, serve as a “consultant” to the Bank. In that capacity, he would continue to receive the salary and the benefits that he had been receiving as President and CEO. That salary agreement would continue for a period of two years ending March 31, 1995. The minutes of the Board of Directors meeting of March 18 memorialized the agreement between the appellant and the Bank: The Board accepted the resignation of Stewart D. Sachs as President of Regal Savings Bank, FSB.

Mr. Sachs will retain his position as President and Chief Executive Officer ²⁸¹ of Regal Bancorp and will also remain as a member of the Board of Regal Savings Bank, FSB. Mr. Sachs’ salary and benefits will continue to be paid for a period of two years ending March 31, 1995. During this time Mr. Sachs will serve as a consultant to the Bank so that the Bank may utilize the experience accumulated by Mr. Sachs during the years that he was President. Duties performed by Mr. Sachs on behalf of other subsidiaries of Regal Bancorp will be charged to those operations accordingly.

There Was a Contract of Employment In clearing away the clutter, one issue may be quickly disposed of. In arguing that it was entitled to summary judgment, the Bank puts forth as an alternative position that the appellant was an at-will employee and could, therefore, have been dismissed by it at any time. The circuit court, however, ruled to the contrary. That legal ruling was not appealed by the Bank.

It was, of course, not appealed by the appellant, who prevailed on the issue. The ruling was, moreover, in our judgment, correct: A review of the pleadings and their attached exhibits demonstrate that the memorialization of the parties’ agreement regarding the Plaintiffs consulting position is found within the Bank’s Board of Directors’ minutes from its March 18, 1993, meeting. Specifically, it is stated that “Mr. Sachs’s salary and benefits will continue to be paid for a period of two years ending March 31, 1995. During this time Mr. Sachs will serve as a consultant to the bank ...” This language appears abundantly clear and unambiguous, leaving this Court no room for construction.

Accordingly, it must be presumed that the parties meant what they expressed. Gen’l Motors Acceptance Corp. [v. Daniels], 303 Md. at 261-62 [ 492 A.2d 1306 ]. Unlike other cases resolved by the appellate courts of this State which uncovered ambiguity in the language utilized in employment agreements, here there are no precatory words such as “I expect,” “assuming” or “anticipating.” See Shapiro [v. Massengill], 105 Md.App. at 755 [ 661 A.2d 202 ]. Use of an exact date of ²⁸² termination of the agreement bolsters the Plaintiffs contention that this agreement was for a fixed term, and not at will.

The Termination of Employment Shortly after the appellant resigned as President, an independent auditor conducted an audit of the Bank’s business accounts. He advised the Bank that a review of the records revealed a pattern of improper banking activity relating to accounts that were controlled either by the appellant himself, the appellant’s family, or entities that were either owned, controlled, or closely affiliated with the appellant. Specifically, the auditor noted that the appellant had accumulated approximately eight hundred “overdrafts” as a result of writing checks for which' there were insufficient funds in the accounts and that, contrary to both bank policy and federal regulations, no “overdraft fees or interest” were charged against the accounts. The bank typically assessed a $25 penalty for each overdraft, as well as any interest that would have accumulated as a result of a negative balance.

Thus, the Bank claims, it lost approximately $25,000 in revenue as a result of the appellant’s actions. Two members of the Bank’s Board of Directors confronted the appellant with the audit. He did not deny any of the information presented nor did he attempt to explain his actions. He was requested to resign all of his remaining positions with the Bank or face termination for cause.

On April 2, 1993, he resigned his remaining positions. On April 2, the Board of Directors for the Bank and the Board of Directors for Regal Bankcorp held special meetings at which each board formally accepted the appellant’s resignation. Each Board voted to “rescind Mr. Sachs’ two year consulting agreement as detailed in [its] resolution of March 18.” The Issue: Was There “Just Cause” for the Termination? The appellant sued the Bank for breach of contract for terminating his employment as a consultant within the