O'Brien & Gere Engineers, Inc. v. City of Salisbury
O'Brien & Gere Engineers, Inc. v. City of Salisbury
Dissenting Opinion
As the majority states up front, “the primary issue in this case 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 words spoken by a lawyer or witness in court, during a judicial proceeding.” Op. at 496, 113 A.3d at 1131 (emphasis added). The majority answers that question in the affirmative and I agree with that general principle as far as it goes. Here, though, the circuit court erred in applying that principle on a motion to dismiss posture and despite the hotly disputed factual question about the meaning and scope of the Agreement.
1. OBG’s claims should not have been dismissed.
Because we are reviewing a decision to grant a motion to dismiss, I begin with the complaint, which includes two counts that sound in contract, not tort, and turn on the scope of the non-disparagement provision of the Agreement. OBG alleges that in exchange for $10 million, among other things, the City agreed not to make disparaging comments or remarks about OBG and its work on the Salisbury wastewater treatment plant. The City counters that the non-disparagement clause was not meant to limit its positions or testimony in the Plant Upgrade Case. This is an intractable point of dispute, one that the circuit court didn’t resolve and that we can’t resolve on the present record (nor should we). See Samuels v. Tschechtelin, 135 Md.App. 483, 527, 763 A.2d 209 (2000) (noting that it is not “the function of the motions court to consider matters outside the pleadings in order to resolve disputed facts”); see also Debbas v. Nelson, 389 Md. 364, 372, 885 A.2d 802 (2005) (“In reviewing the underlying grant of a motion to dismiss, 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.”).
But instead of assuming the truth of the allegations here, the circuit court found (in language the majority cites, op. at 503, 113 A.3d at 1135-36) when it denied the request for a TRO that when the parties executed the Agreement, it was “clear ... that the question of the ... appropriateness of [OBG’s] design of the [plant upgrade] would remain an issue
The circuit court erred, in my view, when it skipped over the threshold question of whether the parties actually intended to include litigation within the scope of the non-disparagement clause in the Agreement. And beyond the mere procedural error, resolution of this question would have framed OBG’s breach of contract claims more precisely. If the court or a jury were to find that the parties did not intend the non-disparagement claims to encompass the parties’ positions in the Plant Upgrade Case, that would end the case, since the City could not have breached the Agreement in that manner. But if the court or a jury were to make the opposite finding, the court would assess the City’s privilege claim (and whether the Agreement waived it) against the backdrop of that finding. For the reasons I explain next, that context matters.
2. These parties could have waived the litigation privilege.
If the litigation privilege were to apply at all, I take a different view of how it applies, beginning with its scope. The majority refers frequently to the privilege as “absolute,” and I agree that the privilege applies absolutely to the in-court statements of a party or witness when it applies. I respectfully disagree, though, that the privilege is absolute in the sense that parties cannot waive it.
Privileges may, as the litigation privilege and attorney-client privilege both do, serve broader societal purposes. See, e.g., Mixter v. Farmer, 215 Md.App. 536, 543, 81 A.3d 631 (2013) (“The absolute privilege is broad and comprehensive in order to serve its purpose to foster the ‘free and unfettered administration of justice.’ ” (quoting Keys v. Chrysler Credit Corp., 303 Md. 397, 404, 494 A.2d 200 (1985))). But privileges don’t exist in a vacuum — they attach to and protect individuals and parties. The litigation privilege protects the whole range of participants in the litigation process, and it applies differently to different players: witnesses, parties, and judges enjoy total
Next, parties generally are free to waive privileges, such as the attorney-client, spousal, and other testimonial privileges, just as they can waive claims, defenses, arguments, and objections. They can do so for substantive reasons, tactical reasons, by neglect, or for no reason at all. Like the litigation privilege, these other privileges serve broader societal purposes — the attorney-client privilege, for example, furthers the broader purposes of justice by allowing clients to speak freely with counsel. See CR-RSC Tower I, LLC v. RSC Tower I, LLC, 429 Md. 387, 433, 56 A.3d 170 (2012). So in this case— where sophisticated parties to a complex infrastructure contract represented by able counsel settled complex litigation through an Agreement that featured an eight-figure payment from OBG to the City — I struggle to understand why, if it wanted to, the City could not agree as part of settling one case to limit the positions it could take in another, i.e., to try the Plant Upgrade Case on the theory that the plant failed because of faulty construction. Again, I don’t know and don’t opine on whether the parties in fact intended the non-disparagement clause to apply to arguments or testimony in the Plant Upgrade Case. But $10 million from OBG might well justify such an agreement, just as favorable treatment in settlements or plea bargains — or indeed, simply as a trial tactic — might justify a party’s decision in another case to waive another privilege. See, e.g., McCarthy v. United States, 394 U.S. 459, 466, 89 S.Ct. 1166, 22 L.Ed.2d 418 (1969) (“A defendant who enters [a guilty] plea simultaneously waives several constitutional rights, including his privilege against compulsory self-incrimination ...”); United States v. Woodall,
Moreover, an informed decision on the City’s part to try the case in an agreed fashion (in exchange for $10 million) doesn’t interfere with the due administration of justice or the ability of participants to speak freely. The City could readily have decided, on its own, for all sorts of reasons, to focus on faulty construction rather than faulty design. Perhaps, for example, a jury would be more likely to understand a trial theory focused entirely on faulty construction, or a narrower focus might allow the City to avoid presenting witnesses who might perform poorly on the stand or emphasizing documents that undermined its case. CDG would, of course, be free to defend the case however it wished, and the City’s strategic and tactical decisions might ultimately have consequences it regrets. But the litigation privilege does not compel parties to present the ideal case, or even their entire potential case — it protects their ability to participate as they wish, consistently with the law, without fear of civil liability, and I think it allows them to agree to forego claims or defenses or positions.
Neither the cases the majority cites nor the principles underlying them elevates the litigation privilege above informed waiver. First, our recent decision in Mixter presented the analytical inverse of the situation before us. Mixter, 215 Md.App. at 541-42, 81 A.3d 631. That case stands for two propositions; the one relevant here
Second, the out-of-state cases the majority cites don’t account for the important competing interest — previously recognized by this Court — in encouraging settlement and bringing litigation to finality. The majority looks to a case cited by the City, Rain v. Rolls-Royce Corp., 626 F.3d 372 (7th Cir. 2010), in which the United States Court of Appeals for the Seventh Circuit held that the absolute litigation privilege protected an aircraft engine manufacturer for two purported breaches of a non-disparagement agreement it had executed with a seller of engine parts in settling a prior suit. The non-disparagement provision was nothing like the one at issue here: it said simply that “None of the Parties will disparage the others.” Id. at 375. When the manufacturer made allegations in another complaint that disparaged the seller, it sued and asserted that the manufacturer had breached the non-disparagement agreement. The manufacturer moved for summary judgment, arguing that the absolute litigation privilege applied to bar the suit under the law of Indiana. The trial court granted summary judgment in favor of the manufacturer and the seller appealed. Id. at 376.
Whether because it viewed the policy argument as being waived or for other reasons, Rain overlooked the important countervailing principle that parties are free, and should be encouraged, to settle lawsuits by agreement rather than resorting to litigation. See Smelkinson SYSCO v. Harrell, 162 Md.App. 437, 875 A.2d 188 (2005) (discussed below). For that reason, I find more persuasive the California Court of Ap
Section 47(b) provides in part that a privileged communication is one made in a judicial proceeding. “The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.”
Id. at 1490, 25 Cal.Rptr.3d 109 (quoting Silberg v. Anderson, 50 Cal.3d 205, 266 Cal.Rptr. 638, 786 P.2d 365 (1990) (citations omitted)).
After looking at prior cases, the court held that the privilege applied absolutely with regard to tort claims, but that no court had precluded any and all breach of contract claims based on the privilege, and that “whether the litigation privilege applies to an action for breach of contract turns on whether its application furthers the policies underlying the privilege.” Id.
This cause of action is not based on allegedly wrongful conduct during litigation ... Rather, it is based on a breach of a separate promise independent of the litigation .... This breach was not simply a communication, but also wrongful conduct or performance under the contract, ... [and] here application of the privilege would frustrate the purpose of the Parkview Terrace agreement.
Id. at 1494, 25 Cal.Rptr.3d 109 (emphasis added). The court saw no reason to allow the party who had, on the one hand, voluntarily agreed to keep silent to use the litigation privilege later to circumvent, on the other hand, the non-disparagement clause and the party’s prior agreement:
Application of the litigation privilege in this case does not encourage finality and avoid litigation. In reaching settlement in the Parkview Terrace matter, the parties presumably came to an acceptable conclusion about the truth of Reiss’s comments about Wentland’s management of the partnership. Allowing such comments to be made in litigation, shielded by the privilege, invites further litigation as to their accuracy and undermines the settlement reached in the Parkview Terrace matter.
The privilege here arises, if at all, in the context of a litigation settlement agreement that conferred rights and imposed obligations on both sides (including,, again, a $10 million payment from OBG to the City). We explained in Smelkinson that non-disparagement clauses in settlements are valuable and enforceable:
What SYSCO bought through the negotiated settlement ... was immediate and long-term “peace” with Harrell, with the*541 attendant right to expect that it would no longer have to expend money, effort, or goodwill in responding to his disparaging allegations. The language [in the contract] and the circumstances surrounding the execution of the Settlement Agreement leave no doubt that SYSCO and Harrell struck a bargain that was designed to prevent precisely what happened here — that SYSCO would pay Harrell $185,000 to drop all his allegations, claims and agitations against the company, only to have Harrell later resume them.
Smelkinson, 162 Md.App. at 453, 875 A.2d 188. And as we permitted SYSCO to recover damages against Mr. Harrell based on his breach of a non-disparagement clause, we also pointed out Maryland courts’ long-standing reluctance to nullify a “negotiated remedy at the heart of a settlement agreement,” id.:
“The law always favors compromises and amicable adjustments of disputes, rather than compel parties to resort to litigation and it would be strange if, in the absence of clear evidence of fraud or mistake, the parties were not bound and concluded after what has taken place in respect to this award.”
Id. (quoting Sisson v. Baltimore, 51 Md. 83, 95-96 (1879)).
The ultimate question, then, is whether the City agreed, as part of settling its differences with OBG, not to disparage OBG in the Plant Upgrade Case. The outcome of that question depends in the first instance on what the parties intended the non-disparagement clause to cover. The circuit court erred in dismissing the case in the face of that looming factual dispute, and I would reverse and remand on that basis. From there, I would hold that the City could well have agreed to limit its litigation positions in the ongoing litigation, whether viewed as a positional or tactical decision or as a waiver of the litigation privilege, and direct the circuit court on remand to address OBG’s claims against that backdrop. And for those reasons, I respectfully dissent.
. The circuit court and the majority both assume, correctly on this posture, that the statements themselves were disparaging, and I will as well. I express no views on whether in fact they are disparaging, or whether they would violate the Agreement if the merits of the issue were reached.
. The court did not exactly go outside the complaint, which would have had the effect of converting the motion to dismiss to one for summary judgment. See D'Aoust v. Diamond, 424 Md. 549, 574, 36 A.3d 941 (2012) (noting that where "the trial judge clearly looked outside the 'four comers of the complaint’ in reviewing Respondents' Motion to Dismiss, [he] thereby converged] it into a Motion for Summary Judgment'.’). Instead, the court assumed an answer — the opponent's answer — to the disputed question.
. Although OBG claims that the disparaging statements were "publicly reported” in an Eastern Shore newspaper, the article included in the Record Extract does not identify OBG by name.
. No relation.
. The other proposition is that letters prepared and sent for the purpose of preparing for litigation are protected by the privilege in the same way as in-court statements. Id. at 544.
Opinion of the Court
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
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,
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.
In opening statement, the City’s lawyer told to the jurors that the evidence would show that CDG’s contract required it
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 ...
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.”
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.
On November 7, 2012, the City and OBG appeared for a hearing on the TRO request, before the same judge specially
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
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
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.
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.
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?
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-
(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.
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.
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).
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
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.
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
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
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
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
(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.
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.
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
After the district court granted summary judgment in favor of Golden on Kelly’s claims, Golden amended his counterclaim, alleging that Kelly had breached the non-disparagement clause of their settlement agreement by his court filings, and seeking injunctive relief, damages, and attorneys’ fees. Golden filed a motion for summary judgment, which the court granted, enjoining Kelly from further disparaging or defaming him. Kelly appealed.
The Eighth Circuit reversed. It explained that, although Kelly’s disparaging statements could have subjected him to “court-initiated sanctions,” he was exempt from liability for breaching the non-disparagement agreement, because his disparaging statements were made in the course of a judicial proceeding and therefore “were protected by the absolute privilege.” Id. at 350. The court emphasized that the policy underlying the absolute litigation privilege “favor[s] freedom of expression and the desire not to inhibit parties from detailing and advocating their claims in court.” Id.
In Wentland v. Wass, 126 Cal.App.4th 1484, 25 Cal.Rptr.3d 109 (2005), a California intermediate appellate court applied a similar analysis but reached a different result. Charles Went-land, Warren Wass, and Walter Reiss (and various trusts they controlled) were partners in Parkview Terrace, a real estate investment partnership. When Parkview Terrace started to fail, Wass and Reiss began to suspect that Wentland had been misappropriating funds. They hired a certified public accountant (“CPA”) to audit the partnership’s books. Wentland denied any wrongdoing and cooperated with the audit. Ulti
Wass and Reiss held interests in other real estate investment partnerships that Wentland managed. Sometime after entering into the Parkview Terrace settlement, Wass and Reiss sued three of the other real estate investment partnerships and Wentland, seeking an accounting. Wentland moved for summary judgment on the ground that there were no allegations of wrongdoing to support an accounting. Wass and Reiss filed an opposition, to which they attached a “declaration” by the CPA who had audited Parkview Terrace’s books. In the “declaration,” the CPA stated that the Park-view Terrace audit had revealed self-dealing by Wentland. Wass and Reiss argued that this was sufficient evidence of wrongdoing to support their request for an accounting.
Wentland reacted by filing a counterclaim, alleging that the assertions of wrongdoing made against him in the opposition to summary judgment and the CPA’s “declaration” disparaged him, in violation of the settlement agreement, and further breached that agreement by making it public. Wass and Reiss moved to dismiss the counterclaim, arguing that California’s statutory absolute litigation privilege for civil cases protected them from liability to Wentland for the words they had written in documents filed in court and for the words written in the “declaration.”
The California Court of Appeal for the Third District reversed, holding that California’s absolute litigation privilege did not insulate Wass and Reiss from liability for breaching the non-disparagement agreement. Like the courts in Rain and Kelly, the Wentland court focused its analysis on whether applying the privilege would advance its underlying policies. The court opined that the purposes of the absolute litigation privilege are to “ensure free access to the courts, promote complete and truthful testimony, encourage zealous advocacy, give finality to judgments, and avoid unending litigation.” Id. at 115. It concluded that immunizing Wass and Reiss from liability for breaching their settlement agreement with Went-land would not “further[ ]” “the policies underlying the privilege,” id. at 116, explaining:
Unlike in the usual derivative tort action, application of the privilege in the instant case does not serve to promote access to the courts, truthful testimony or zealous advocacy. This cause of action is not based on allegedly wrongful conduct during litigation.... Rather, it is based on breach of a separate promise independent of the litigation.... This breach was not simply a communication, but also wrongful conduct or performance under the contract.... [H]ere application of the privilege would frustrate the purpose of the [non-disparagement agreement.]
Application of the privilege in this case does not encourage finality and avoid litigation. In reaching settlement in the Parkview Terrace matter, the parties presumably came to an acceptable conclusion about the truth of [Wass and] Reiss’s comments about Wentland’s management of the [Parkview Terrace] partnership. Allowing such comments to be made in litigation, shielded by the privilege, invites further litigation as to their accuracy and undermines the settlement reached in the Parkview Terrace matter.
Id. at 116-17
More recently, an intermediate appellate court in another district in California held that the absolute litigation privilege
The following month Vivian and Dodi entered into a settlement. Dodi agreed to drop his request for a permanent injunction and he, Vivian, and Labrucherie agreed not to disparage “any other party.” Id. at 710. Even though she was not a party, Labrucherie signed the settlement agreement and represented that (with an exception not relevant here) she would be bound by it.
A year later, Vivian sued Labrucherie, her mother, and Dodi, alleging among other things that Labrucherie had violated the settlement agreement by making disparaging statements about him to people in the sheriffs office’s internal affairs department, during its investigation.
The appellate court reversed, holding that the absolute litigation privilege insulated Labrucherie from liability for breaching the non-disparagement agreement by means of her communications about Vivian to the sheriffs department. It found that applying the privilege would “further!. ] the policies underlying the privilege.” Id. at 715. Specifically, in the context of police investigations, that policy is “ ‘to assure
Finally, and most recently, a Florida intermediate appellate court analyzed principles of waiver in holding that the absolute litigation privilege immunized a party to a non-disparagement agreement from liability for breaching that agreement by words written in the course of a judicial proceeding. In James v. Leigh, 145 So.3d 1006 (Fla.Dist.Ct.App. 2014), the parties were former law partners. They entered into an agreement that included a mutual non-disparagement clause. Later, James recited disparaging facts about Leigh in a motion James filed in his ongoing divorce case. Specifically, in seeking to set aside a marital settlement agreement, James alleged that his earnings had declined because Leigh had fired him and James’s expectation that he would take over the law practice, because Leigh was facing disciplinary action, proved unfounded when the disciplinary proceedings against Leigh were dismissed.
Leigh brought a contract action against James, alleging that he breached the non-disparagement clause of their agreement by including derogatory information about him in the motion filed in the divorce case. James moved to dismiss, invoking the absolute litigation privilege. The court denied the motion. James noted an interlocutory appeal, challenging that ruling.
Before the appellate court, Leigh argued that the absolute litigation privilege did not protect James from liability for breaching the non-disparagement clause because, by entering into an agreement that included a non-disparagement clause, James had waived the absolute litigation privilege. In other
The appellate court rejected the waiver argument and held that the absolute litigation privilege applied. It observed that as a matter of law “ ‘an individual cannot waive a right designed to protect both the individual and the public.’ ” Id. at 1008-09 (quoting Chames v. DeMayo, 972 So.2d 850, 860 (Fla. 2007)). It concluded that because the absolute litigation privilege protects a public right, an individual cannot waive it:
Since the absolute litigation privilege is a firmly established right of immunity designed to protect the public by ensuring the free and full disclosure of facts in the conduct of judicial proceedings, we conclude the parties’ non-disparagement agreement could not be construed as a waiver of the privilege.
Id. at 1009. On that basis, the appellate court reversed the denial of the motion to dismiss. See also Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348, 173 Cal.Rptr.3d 289, 327 P.3d 129, 148-49 (2014) (employee could not waive in arbitration agreement the right to bring a representative action for labor code violation because the statute permitting those actions protected a public right); Andrews v. Wisconsin Public Serv. Corp., 315 Wis.2d 772, 762 N.W.2d 837, 840 (Ct.App. 2008) (explaining that “[pjersonal rights may be waivable, but public rights are not” and holding the power of eminent domain effectuates a public purpose and may not be waived); Campbell v. Mahoney, 306 Mont. 45, 29 P.3d 1034 (2001) (distinguishing between nonwaivable public rights and waivable private rights and concluding that Montana’s “good time” statute for inmates was waivable).
As our review of the decisional law shows, there is a strong trend favoring application of the absolute litigation privilege to immunize litigation participants from liability for any tort claim (not just defamation) that is based on words written or spoken in the course of a judicial proceeding. Just as this Court concluded in Mixter, courts elsewhere have concluded that what matters is not the cause of action alleged but whether immunity from tort liability will advance the policies the privilege is meant to protect. That substance-over-form analysis likewise has guided the courts that have considered whether the absolute litigation privilege will immunize a litigation participant from liability for breaching a non-disparagement agreement by words written or spoken in a judicial proceeding. Significantly, none of these courts have held that the absolute litigation privilege will not apply merely because a cause of action against a litigation participant that is based on words spoken or written in the course of judicial proceeding sounds in contract, not tort. Instead, they have considered whether immunity from liability is consistent with and will serve the public policy objectives of the privilege, and have applied the privilege when that is the case.
We agree with this consensus view. The absolute litigation privilege is a policy implementing tool. Ordinarily, a person has a right to legal redress in tort for words spoken or written in violation of a duty recognized in the law, when the elements of the tort are proven. If the words that form the basis for the tort were spoken or written in the course of a judicial proceeding, the individual right to redress is trumped by the paramount public right to judicial proceedings that afford the trier of fact “free and unfettered” access to information necessary to its search for the truth. Bartlett, 69 Md. at 226, 14 A. 518. When people bargain privately for restrictions on the words they may speak or write about each other, such as by a non-disparagement agreement, they may obtain legal redress for a violation of that privately imposed duty through a cause of action for breach of contract. If the breach of such
This approach comports with the principles the Court of Appeals has followed in assessing the scope of the absolute litigation privilege in Maryland, for instance, as applied to extrinsic statements. “We extend the absolute privilege to [certain categories of out of court] statements for the traditional reason — to encourage the free divulgence of information in pursuit of justice.” Norman, 418 Md. at 654, 17 A.3d 697 (holding that the absolute litigation privilege protected lawyers from liability for defamation for allegations made in a complaint not yet filed in court and given to the news media for publication). See, e.g., Adams, 288 Md. at 8, 415 A.2d 292 (extending the absolute litigation privilege to defamatory statements made in documents prepared for use in litigation, but not filed, because “[t]he evaluation and investigation of facts and opinions for the purpose of determining what, if anything, is to be raised or used in pending litigation is as integral a part of the search for truth ... as is the presentation of such facts and opinions during the course of the trial ...”); Offen v. Brenner, 402 Md. 191, 202, 935 A.2d 719 (2007) (commenting that “the basis for extending absolute immunity [is] to prevent unduly hindering important speech, and to ensure that otherwise actionable conduct thus is protected where the accused acts in furtherance of a recognized socially important interest.”) (quotation omitted).
The City’s claims against OBG, which were settled, and its claims against CDG, which went to trial, were facets of the same litigation — the Plant Upgrade Case — and that litigation concerned a single project — the plant upgrade. OBG designed the plant upgrade and CDG managed its construction, under a contract that required it to inform the City about any problems with the upgrade’s design. Consequently, the facts material to whether CDG breached its contract with the City were interrelated with the facts material to whether OBG’s design was flawed. Likewise, the facts relevant to whether any breach of contract by CDG caused the plant upgrade to fail were not separable from the facts relevant to whether OBG’s design caused the plant upgrade to fail.
Evidence about flaws in OBG’s design for the plant upgrade and any cause and effect between flaws in the design and the plant upgrade failure was indispensable to an informed factual resolution of the City’s contract claim against CDG. Without assessing OBG’s design work, the jury could not decide the
The City was entitled to use the court system to seek compensation for the losses it sustained due to the failed plant upgrade; and it did so, blaming the failure on OBG and CDG, the only defendants named in its original complaint. The City’s settlement with OBG did not limit its right to continue to use the court system, in the same case, to pursue its claims against CDG. Indeed, the Agreement expressly provided that it would not inure to the benefit of any other party to the Plant Upgrade Case. The facts underlying the Plant Upgrade Case and the disputes about those facts were the same before and after the City’s settlement with OBG, as was the interconnection between OBG’s design work and CDG’s contract supervision work. To decide the truth of the City’s contract claim against CDG, the jurors needed the same “unfettered access” to the evidence relevant to the upgrade’s design that they would have had absent the settlement between OBG and the City.
There are additional circumstances that militate in favor of applying the absolute privilege in this case. The non-disparagement clause did not preclude CDG from introducing evidence disparaging OBG’s design for the plant upgrade. In fact, CDG did so. As noted, a central theme in its defense was that OBG’s design was so flawed that the upgrade was bound to fail, regardless of anything it did or did not do. Absent countervailing evidence from the City that CDG knew about OBG’s design flaws and failed to apprise the City about them, as was required by the terms of its contract, the jurors would be deciding the contract claim on but a portion of the relevant evidence, and OBG’s design would be disparaged anyway.
This distinguishes the case at bar from Wentland, in which the court reasoned that applying the absolute litigation privilege to immunize Wass and Reiss from liability for breaching the non-disparagement agreement in the Parkview Terrace settlement would frustrate the purpose of that agreement. The non-disparagement agreement in Wentland was unilateral, running only from Wass and Reiss to Wentland, and was the sole consideration Wentland received in the Parkview Terrace settlement. In that circumstance, the Wentland court concluded that in entering into that settlement “the parties presumably came to an acceptable conclusion about the truth of [Wass and] Reiss’s comments about Wentland’s management of the partnership” — i. e., that they were not true. 25 Cal.Rptr.3d at 116.
By contrast, in the case at bar, the non-disparagement clause was mutual and was a single feature of a wide-ranging settlement between the City and OBG. The primary consideration OBG received for its $10 million dollar payment to the City was its release from liability for the City’s claims against it that, if tried successfully, could have resulted in its liability for significantly more than that amount. In addition, the indemnity provisions of the Agreement freed OBG from the cost of defense and from having to pay any judgment or settlement in a suit or claim by another arising out of the failed plant upgrade (for example a claim for indemnification or contribution by CDG).
Unlike in Wentland, there was no agreement between the City and OBG that it was untrue that OBG’s design was flawed or that its design had caused the plant upgrade failure. To be sure, OBG denied fault. The City did not agree that OBG was not at fault, however. Moreover, and significantly, the joint tortfeasor provision of the Agreement allowed for
Here, the purpose of the non-disparagement clause was not frustrated by applying the absolute liability privilege to immunize the City from liability for the words used in arguing its case and presenting evidence at trial; and the fair administration of justice would have been frustrated had the privilege not been applied. In contrast to Wentland, applying the absolute litigation privilege in this case promoted access to the courts to resolve a dispute, presentation of truthful testimony, and zealous advocacy; and did not contribute to any lack of finality of judgments or repetitive litigation.
As in Rain, if the absolute litigation privilege were not applied here, the City would have been deprived of its “fundamental right” to vigorously litigate its breach of contract claim against CDG without fear of liability for words spoken in court. 626 F.3d at 378.
For all these reasons, under the circumstances of this case, the absolute litigation privilege applied as a matter of law to OBG’s breach of contract action, and therefore the circuit court correctly dismissed OBG’s amended complaint for failure to state a cause of action for which relief may be granted.
II.
TRO
A circuit court’s decision to deny a request for injunctive relief is reviewed for abuse of discretion. Schisler v. State, 394 Md. 519, 535, 907 A.2d 175 (2006). A court may issue a TRO only if it finds: (1) the plaintiff is likely to succeed on the merits; (2) the “balance of convenience” weighs in favor of the plaintiff; (3) the plaintiff will “suffer irreparable injury unless the injunction is granted”; and (4) “the public interest” weighs in favor of granting the temporary injunctive relief. LeJeune v. Coin Acceptors, Inc., 381 Md. 288, 300-301, 849 A.2d 451 (2004).
In the instant case, the court did not abuse its discretion by denying OBG’s request for a TRO. As our holding makes plain, OBG was not likely to succeed on the merits of its claim because the absolute litigation privilege immunized the City from liability for breaching the non-disparagement agreement by words spoken by its lawyer and witnesses at the trial of the Plant Upgrade Case. Moreover, under the fourth factor, the public interest weighed strongly in favor of the trial going
III.
Motion to Disqualify Counsel
The circuit court denied OBG’s motion to disqualify the City’s lawyer because the motion was based on that lawyer’s expected participation as a witness at trial, and that eventuality would not come to fruition if the motion to dismiss were granted. The motion to dismiss then was granted, and, for the reasons we have explained, was properly granted. The court did not err in denying OBG’s motion to disqualify counsel.
JUDGMENT AFFIRMED. COSTS TO BE PAID BY THE APPELLANT.
Dissenting Opinion by NAZARIAN, J.
. CDG and OBG in fact obtained the District of Columbia contract.
. OBG attached the following documents to its complaint: the Agreement; excerpts of trial transcripts for November 1 and 2, 2012; the Daily Times article; an affidavit by the lawyer for OBG who sent the cease and desist letter; the cease and desist letter; and an affidavit by an executive vice president of OBG summarizing the provisions of the Agreement, quoting from the opening statement given by the City's
. In fact, CDG noted an appeal from the judgment entered in favor of the City in the Plant Upgrade Litigation. It did not prevail. On January 17, 2014, this Court filed an unreported opinion affirming the judgment in favor of the City. Construction Dynamics Group v. City of Salisbury, No. 2404, Sept. Term, 2012. CDG filed a petition for writ of certiorari, which the Court of Appeals denied. 438 Md. 143, 91 A.3d 613 (2014).
. MRPC 3.7 states, in pertinent part, that "[a] lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary
. The circuit court did not address the City’s argument that the language of the non-disparagement clause regarding injunctive relief and damages limited a non-breaching party to injunctive relief for a breach of the non-disparagement clause, thus prohibiting the recovery of damages against the breaching party. By granting the City’s motion to dismiss on the basis of the absolute litigation privilege, after already denying injunctive relief, it appears that the court assumed that the clause permits recovery of damages. The parties do not address this issue on appeal. If it were argued, the issue could, conceivably, moot the absolute litigation privilege issue; but again, the parties do not address it.
. During the hearing on the TRO request, the court made remarks that could be interpreted as factual findings. The court did not make any factual findings when it granted the motion to dismiss, however.
. As the dissent points out, the parties were in dispute over whether the non-disparagement clause applied to the Plant Upgrade Case. Because the court assumed that it did, i.e., assumed OBG’s position in the
. In the case at bar, there is no dispute that the words spoken by the City's lawyer during the trial in the Plant Upgrade Case were relevant to the proceeding.
. The absolute litigation privilege dates to the emergence of the adversary system in the common law of medieval England. Briscoe v. LaHue, 460 U.S. 325, 330-31, 103 S.Ct. 1108, 75 L.Ed.2d 96 (1983) ("The immunity of parties and witnesses from subsequent damages liability for their testimony in judicial proceedings was well established in English common law") (footnote omitted) (citing Cutler v. Dixon, 76 Eng. Rep. 886 (K.B. 1585)).
. To be sure, there are evidentiary limits on the information the decision-maker can receive, but they too are designed to advance the judicial process, by ensuring that decisions are made fairly.
. The Court of Appeals has held that the absolute litigation privilege applies to some quasi-judicial proceedings, depending upon the nature of the right the proceeding is meant to protect and the presence of procedural safeguards. Gersh, 291 Md. at 196-97, 434 A.2d 547. Attorney Grievance Commission Proceedings have been held to be quasi-judicial proceedings to which the absolute litigation privilege applies. See Kerpelman v. Bricker, 23 Md.App. 628, 630, 329 A.2d 423 (1974).
. Rolls-Royce did not identify Paramount and Rain by name in its complaint. It referred to them as the “Principal Corporation” and
. Indiana's absolute litigation privilege is the American version of the privilege, which is not as broad as Maryland’s hybrid English/American privilege. It does not differ from the Maryland privilege in any way that is of consequence here, however. As to words spoken or written by lawyers, both privileges require the words to be relevant to the proceedings. In that case, as here, the words at issue plainly were relevant to the proceedings.
. Wass and Reiss also provided Wentland with a letter of apology that Wentland could use if Wass and Reiss violated the agreement.
. California Civil Code section 47 states in pertinent part: "[a] privileged publication or broadcast is one made ... (b) In any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law,.... ”
. Vivian also alleged that Labrucherie and her mother had conspired to have Dodi file the petition lor injunctive relief for an improper purpose, based on false information they had fed him.
. In Rain, Paramount and Rain argued before the Seventh Circuit that Rolls-Royce had waived the absolute litigation privilege by entering into the non-disparagement agreement. The Rain court declined to consider that argument because it had not been raised in the district court.
. The City amended its complaint to include additional defendants that OBG had brought into the case as third party defendants, but dismissed them after settling with OBG. Clearly, the target defendants in the case were OBG and CDG.
. The City’s “conflict of interest” evidence regarding the “teaming agreement” between CDG and OBG did not disparage OBG beyond the assertion that OBG’s design was flawed. It disparaged CDG. The “conflict of interest” evidence (as prefaced by the City's lawyer in his opening statement) was being used by the City to show that CDG did not report the design flaws as its contract with the City required it to do because criticism of OBG by CDG could jeopardize CDG's interest in obtaining the District of Columbia contract.
. In its brief, OBG asserts that under the indemnity clauses in the Agreement, if at the trial of the Plant Upgrade Case CDG were to criticize OBG’s design for the plant upgrade, the City would have to respond by defending the design to the jury. This assertion discloses a complete misunderstanding not only of the indemnity language of the Agreement but also of the legal concept of indemnily. As explained, the City agreed to defend, indemnify, and hold harmless OBG from claims and suits brought against it by others arising out of the failed plant upgrade. The Agreement specifies that the City will defend OBG from such claims and suits "with counsel paid for and selected by the City.” The plain meaning of this language is that, if a claim were made or a
. We note, furthermore, that the Parkview Terrace settlement agreement included a confidentiality provision that Wentland alleged Wass and Reiss violated by the allegations in their opposition to the motion for summary judgment and the CPA’s “declaration.” In the case at bar, there was no confidentiality or non-disclosure provision in the Agreement. The City could have disseminated the Agreement, which on its face showed that OBG was paying the City a $10 million settlement to resolve the City’s claim that OBG had negligently designed the plant upgrade.
. The dissent argues that the City could have limited the theories of liability it pursued against CDG to focus on faulty construction rather than faulty design. This overlooks two things. First, the Agreement specified that it would not inure to the benefit of any other party. Obviously, eliminating a viable theory of recovery against CDG would inure to CDG’s benefit. Second, and even more important, breach and causation were integral elements of the City’s contract claim against CDG; and causation — what made the plant upgrade fail — necessarily implicated any flaws in the design of the plant upgrade.
. As noted, OBG amended its complaint to add a claim for unjust enrichment. This claim is not addressed by the parties in their briefs.
Reference
- Full Case Name
- O’brien & Gere Engineers, Inc. v. City of Salisbury
- Cited By
- 10 cases
- Status
- Published