Filed: August 3, 2012
Opinion by Judge Ellen Lipton Hollander
Held: State law claims related to an employment agreement's confidentiality and non-soliciation provisions in the transportation industry are not preempted by the Interstate Commerce Commission Termination Act ("ICCTA") because the Act's preemption provision was created to ensure that the States would not undo federal deregulation with regulation of their own.
Facts: Cowan Systems, LLC ("Employer"), a broker in the transportation industry, filed suit against Jeffrey Shane Ferguson ("Employee"), a former employee, for breach of his employment agreement, and Lipsey Logistics Worldwide, LLC ("Competitor"), also a broker in the industry, for tortious interference with contract, tortious interference with prospective economic advantage, violation of the Maryland Uniform Trade Secrets Act, and civil conspiracy.
Employee entered into an employment agreement with Employer that contained confidentiality and non-solicitation provisions prohibiting him from from ever disclosing Employer's business secrets and from soliciting Employer's customers for one year post-termination. Employee resigned from Employer and began working for Competitor, a direct competitor of Employer's, the next day. Employer alleges that Employee violated his employment agreement by communicating and soliciting Employer's customers on Competitor's behalf before and after his tenure with the company. Employer also claims that both Employee and Competitor are causing an immediate threat to Employer's business.
Competitor filed a motion to dismiss based on the premise that state law claims are preempted the ICCTA which provides in part, "a State...may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier...or any...broker...with respect to the transportation of property." Employer opposed the motion.
Analysis: The USDC for Maryland denied Competitor's motion following the ruling in Aloha Airlines, Inc. v. Mesa Air Group, Inc., No. 07-00007, 2007 WL 842064 (D. Haw. Mar. 19, 2007), which found that an intentional tort claim was not preempted by the Airline Deregulation Act ("ADA"), a federal law in which the Supreme Court has recognized as having a preemption provision with identical scope as that of the preemption provision of the ICCTA. The Aloha Court found that courts have upheld state tort claims against entities subject to the ADA when those claims do not contravene the law's purpose to promote competition in that industry. That Court concluded that to find otherwise would indeed undermine the purpose of the ADA which was to ensure the components of the transportation industry relied upon competitive market forces. It found that the ADA's preemption provision was to prevent the States from superceding federal deregulation with its own regulation.
The Court denied Competitor's motion to dismiss finding that the same principles in the ADA apply to the ICCTA preemption provisions. The purpose of the ICCTA preemption provision was to promote competition within the transportation industry and to free it from state laws and regulations that could interfere with interstate commerce. The fact that Employer's claims against Competitor pertained to pricing information "should not serve to insulate Competitor from liability" because it engages in brokerage services. Congress never intended to shield individual bad actors from "thwarting competitive enterprise."
The full opinion is available in PDF.
Showing posts with label brokers. Show all posts
Showing posts with label brokers. Show all posts
Monday, September 17, 2012
Monday, November 30, 2009
Wilkens Square, LLLP v. W.C. Pinkard & Co., Inc. t/a Colliers Pinkard (Ct. of Special Appeals)
Filed: November 30, 2009
Opinion by Judge Deborah S. Eyler
Held: Proof of dual agency must consist of evidence that the broker represented opposite sides of a transaction when the transaction took place. The mere co-existence of a brokerage agreement and a listing agreement does not constitute a dual agency as a matter of law in Maryland.
Facts: In early 2005, Colliers Pinkard entered into a brokerage agreement with Charles McMann Investments ("CMC") in which Colliers Pinkard would identify potential investment properties for CMC in the Baltimore City/Washington, D.C. area. By August 2005, the relationship between CMC and Colliers Pinkard had not proven successful and CMC and Colliers Pinkard decided that the brokerage agreement would expire on December 31, 2005.
In the meantime, Wilkens Square, LLLP decided to put up for sale an office building it owned at 300 W. Pratt Street in Baltimore City. On November 18, 2005, Wilkens entered into a listing agreement with Colliers Pinkard wherein Colliers Pinkard would serve as Wilkens' broker in the sale of the property.
In December 2005, CMC representatives met with Colliers Pinkard to view properties in the Baltimore area. Wilkens' Pratt Street property was not one of them. Colliers Pinkard suggested that CMC take a look at the Pratt Street property but did not accompany CMC on its visit.
The sale of the Pratt Street property was done by "controlled auction." CMC had shown interest in the Pratt Street property following its visit in December 2005 and as a result Colliers Pinkard added CMC to the list of potential buyers who would receive promotional material and information about the sale. CMC continued to show interest in the property and proceeded with the controlled auction. By February 2006, CMC was one of two remaining bidders on the Pratt Street property. Ultimately, CMC purchased the property on June 14, 2006. Prior to the closing, Colliers Pinkard sent an invoice to Wilkens for its commission under the listing agreement. Wilkens failed to pay Colliers Pinkard's commission.
Colliers Pinkard sued Wilkens for breach of contract seeking payment of its commission. Wilkens filed counterclaims for breach of contract, negligence, intentional concealment of material facts and conspiracy by a fiduciary.
The case in the lower court was tried before a jury which found for Colliers Pinkard on the breach of contract claim and against Wilkens on its counterclaims. The jury awarded Colliers Pinkard $226,321.67 for Wilkens' breach of contract. Wilkens appealed asserting: (1) the trial court erred in not finding, as a matter of law, that Colliers Pinkard was in a dual agency with Wilkens and CMC; (2) the trial court erred by not ruling, as a matter of law, that Colliers Pinkard's relationship with CMC was a material fact that Colliers Pinkard had a duty to disclose; and (3) that the trial court erred by not giving requested jury instructions.
Analysis: A real estate broker stands in a fiduciary relationship to his client. Because of the opposing interests of a buyer and seller in a real estate transaction, a broker cannot represent one without violating his fiduciary duty to the other. Under this theory, Maryland law has long held that a broker cannot profit from a transaction in which he represents opposing parties (a dual agency relationship) without the parties' consent. The court noted that "There are no Maryland dual agency cases that extend the commission forfeiture rule to situations in which a real estate broker . . . has represented two parties to a transaction at different periods of time."
Relying on the holding in Ricker v. Abrams, 263 Md. 509 (1971) that "proof of dual agency must consist of evidence that the broker represented the opposite sides to a transaction when the transaction took place", the court held that Colliers Pinkard was not acting as a dual agent because it did not represent CMC when the sale went forward or when the auction for the sale was held. As a result, the court held that there was no dual agency as a matter of law.
The court dismissed Wilkens' argument that the overlap of the brokerage agreement and the listing agreement from November until December 31, 2005 rendered Colliers Pinkard a dual agent. In its analysis the court explains that the prohibition on dual agency stems from the conflict between the interests of buyer and seller. At the time the contracts overlapped there were no conflicts between Wilkens' and CMC's interests such that Colliers Pinkard would have violated its fiduciary duty.
As to Wilkens' contention that Colliers Pinkard breached its duty to disclose a material fact, the court noted that "the materiality of a fact will depend upon the nature of the transaction and the effect, if any, the fact may have on its outcome." The court held that there was no evidence that Colliers Pinkard's contract with CMC would have been material to Wilkens with respect to the ultimate sale of its property.
Finally, Wilkens argued that the trial court erred in not providing jury instructions on the issue of when disclosure of dual agency must be made. The court dismissed this argument holding that "even if the court had erred by failing to instruct the jury on when disclosure should have been made, the error would not have been prejudicial," because the jury's finding that there was no dual agency rendered as moot the the issue of when disclosure must be made.
The full opinion is available in PDF.
Opinion by Judge Deborah S. Eyler
Held: Proof of dual agency must consist of evidence that the broker represented opposite sides of a transaction when the transaction took place. The mere co-existence of a brokerage agreement and a listing agreement does not constitute a dual agency as a matter of law in Maryland.
Facts: In early 2005, Colliers Pinkard entered into a brokerage agreement with Charles McMann Investments ("CMC") in which Colliers Pinkard would identify potential investment properties for CMC in the Baltimore City/Washington, D.C. area. By August 2005, the relationship between CMC and Colliers Pinkard had not proven successful and CMC and Colliers Pinkard decided that the brokerage agreement would expire on December 31, 2005.
In the meantime, Wilkens Square, LLLP decided to put up for sale an office building it owned at 300 W. Pratt Street in Baltimore City. On November 18, 2005, Wilkens entered into a listing agreement with Colliers Pinkard wherein Colliers Pinkard would serve as Wilkens' broker in the sale of the property.
In December 2005, CMC representatives met with Colliers Pinkard to view properties in the Baltimore area. Wilkens' Pratt Street property was not one of them. Colliers Pinkard suggested that CMC take a look at the Pratt Street property but did not accompany CMC on its visit.
The sale of the Pratt Street property was done by "controlled auction." CMC had shown interest in the Pratt Street property following its visit in December 2005 and as a result Colliers Pinkard added CMC to the list of potential buyers who would receive promotional material and information about the sale. CMC continued to show interest in the property and proceeded with the controlled auction. By February 2006, CMC was one of two remaining bidders on the Pratt Street property. Ultimately, CMC purchased the property on June 14, 2006. Prior to the closing, Colliers Pinkard sent an invoice to Wilkens for its commission under the listing agreement. Wilkens failed to pay Colliers Pinkard's commission.
Colliers Pinkard sued Wilkens for breach of contract seeking payment of its commission. Wilkens filed counterclaims for breach of contract, negligence, intentional concealment of material facts and conspiracy by a fiduciary.
The case in the lower court was tried before a jury which found for Colliers Pinkard on the breach of contract claim and against Wilkens on its counterclaims. The jury awarded Colliers Pinkard $226,321.67 for Wilkens' breach of contract. Wilkens appealed asserting: (1) the trial court erred in not finding, as a matter of law, that Colliers Pinkard was in a dual agency with Wilkens and CMC; (2) the trial court erred by not ruling, as a matter of law, that Colliers Pinkard's relationship with CMC was a material fact that Colliers Pinkard had a duty to disclose; and (3) that the trial court erred by not giving requested jury instructions.
Analysis: A real estate broker stands in a fiduciary relationship to his client. Because of the opposing interests of a buyer and seller in a real estate transaction, a broker cannot represent one without violating his fiduciary duty to the other. Under this theory, Maryland law has long held that a broker cannot profit from a transaction in which he represents opposing parties (a dual agency relationship) without the parties' consent. The court noted that "There are no Maryland dual agency cases that extend the commission forfeiture rule to situations in which a real estate broker . . . has represented two parties to a transaction at different periods of time."
Relying on the holding in Ricker v. Abrams, 263 Md. 509 (1971) that "proof of dual agency must consist of evidence that the broker represented the opposite sides to a transaction when the transaction took place", the court held that Colliers Pinkard was not acting as a dual agent because it did not represent CMC when the sale went forward or when the auction for the sale was held. As a result, the court held that there was no dual agency as a matter of law.
The court dismissed Wilkens' argument that the overlap of the brokerage agreement and the listing agreement from November until December 31, 2005 rendered Colliers Pinkard a dual agent. In its analysis the court explains that the prohibition on dual agency stems from the conflict between the interests of buyer and seller. At the time the contracts overlapped there were no conflicts between Wilkens' and CMC's interests such that Colliers Pinkard would have violated its fiduciary duty.
As to Wilkens' contention that Colliers Pinkard breached its duty to disclose a material fact, the court noted that "the materiality of a fact will depend upon the nature of the transaction and the effect, if any, the fact may have on its outcome." The court held that there was no evidence that Colliers Pinkard's contract with CMC would have been material to Wilkens with respect to the ultimate sale of its property.
Finally, Wilkens argued that the trial court erred in not providing jury instructions on the issue of when disclosure of dual agency must be made. The court dismissed this argument holding that "even if the court had erred by failing to instruct the jury on when disclosure should have been made, the error would not have been prejudicial," because the jury's finding that there was no dual agency rendered as moot the the issue of when disclosure must be made.
The full opinion is available in PDF.
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