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Christian v. Maternal-Fetal Medicine Associates of Maryland, LLC

Court of Appeals of Maryland

April 23, 2018

HEATHER STANLEY CHRISTIAN
v.
MATERNAL-FETAL MEDICINE ASSOCIATES OF MARYLAND, LLC, et al.

          Argued: February 2, 2018

          Circuit Court for Montgomery County Case No. 281804

          Barbera, CJ. Greene, Adkins, McDonald, Watts, Hotten Getty, JJ.

          OPINION

          Greene, J.

          The questions before us in this case involve the application of Maryland Rule 1-341(a), the rule granting a court authority to award attorney's fees to an adverse party who was subjected to proceedings that were brought in bad faith or lacked substantial justification. We are called upon to determine what findings a court must make in order to require attorney's fees to be paid to an adverse party. Also we are tasked with determining the appropriate means for calculating attorney's fees, pursuant to Maryland Rule 1-341(a), when a court determines that a party's complaint includes claims that have substantial justification and claims that lack substantial justification. Petitioner, Heather Stanley-Christian, M.D. ("Petitioner" or "Dr. Christian") sued Respondents, Maternal-Fetal Medicine Associates of Maryland, LLC ("Maternal-Fetal"), and its principal, Sheri L. Hamersley, M.D. ("Dr. Hamersley") (collectively "Respondents"), after a disagreement that ultimately resulted in Petitioner ending her employment with Respondents. Dr. Christian brought multiple causes of action against Respondents, and Respondents prevailed in having the trial judge dispose of Petitioner's claims after the close of all the evidence.

         Respondents then requested an award of attorney's fees under Maryland Rule 1-341. During the hearing for attorney's fees, the hearing judge found no substantial justification, pursuant to Rule 1-341(a), for each of the claims brought by Petitioner against Respondents. The hearing judge awarded $300, 000 in attorney's fees to Respondents.

         Petitioner appealed to the Court of Special Appeals, and that court vacated the judgment entered in the Circuit Court. Maternal-Fetal Medicine Assocs. v. Christian, No. 0967, 2009 (Md. Ct. Spec. App., July 24, 2013). The Court of Special Appeals affirmed the hearing judge's findings of no substantial justification for the fraudulent inducement, negligent misrepresentation, and wrongful termination claims. Id. The Court of Special Appeals, however, reversed the hearing judge's findings of no substantial justification for the breach of contract and tortious interference with contract claims. Id.

         We granted certiorari and affirm the judgment of the Court of Special Appeals. We hold that the hearing judge did not commit clear error in finding no substantial justification for the claims brought by Petitioner, namely, fraudulent inducement, negligent misrepresentation, and wrongful termination. We determine, however, that the hearing judge abused his discretion in assessing $300, 000 in attorney's fees against Petitioner without articulating how he calculated the fees. Therefore, we affirm the judgment of the Court of Special Appeals vacating the award of attorney's fees and we remand the case to the Circuit Court for further fact finding.

         I.

         This case has meandered through the judicial system for over a decade, and, unfortunately for the parties, its odyssey does not end with us. Dr. Christian entered into an employment agreement with Maternal-Fetal on November 14, 2005.[1] After a deterioration in relations between Drs. Christian and Hamersley, Dr. Christian left her employment with Maternal-Fetal on July 17, 2006. In March 2007, Petitioner began employment at Greater Washington Maternal-Fetal Medicine and Genetics ("Greater Washington"), located in the Washington area. Soon after, Dr. Hamersley informed Greater Washington of a non-compete agreement between Dr. Christian and Maternal-Fetal. Greater Washington terminated Petitioner's employment shortly thereafter. Petitioner, in turn, filed a complaint in the Circuit Court for Montgomery County on April 19, 2007, alleging fraudulent inducement, breach of contract, tortious interference with contract, wrongful termination, and sought declaratory judgment, damages, attorney's fees, injunctive relief, and equitable relief.

         After dismissal of the original complaint without prejudice, Petitioner filed an amended complaint on August 27, 2007. The amended complaint included all five of the original claims and added a claim for negligent misrepresentation. Respondents filed a counterclaim for breach of contract, asserting that Petitioner had breached the terms of the non-compete clause. Respondents filed and the trial judge granted a motion for summary judgment in favor of Respondents on all of Petitioner's claims, except the wrongful termination claim. After the close of plaintiff's case in chief, Respondents moved for judgment as a matter of law, which the trial court denied. The trial judge, however, granted Respondents' renewed motion for judgment at the close of all the evidence. When granting judgment on the wrongful termination claim, the trial judge explained:

[Petitioner] has demonstrated that it wasn't intolerable to the point that she was required to leave. She only made that decision to leave when [Respondents] wouldn't accede to her financial request to up the ante in what she was getting paid and to shorten the time and increase the amount of business that she could buy from the [Respondents].

         Additionally, the trial judge found that "[Petitioner] made allegations and assertions of changed billing records for which there's no proof that Dr. Hamersley changed them. [Also] [t]here was not evidence that [Dr. Christian] was threatened ever of being fired." The jury returned a verdict in favor of Respondents on the breach of contract counterclaim and awarded damages in the amount of $22, 902.

         After the jury returned its verdict on Respondents' counterclaim, Respondents filed a motion for attorney's fees and expenses pursuant to Maryland Rule 1-341. On December 29, 2009, the hearing judge indicated he would assess attorney's fees in an amount to be determined upon submission of the legal bills to the court. The hearing judge awarded $300, 000 in attorney's fees and costs on July 25, 2011. Both parties noted timely appeals.

         The First Appeal

         On the first appeal, the Court of Special Appeals addressed four questions. Maternal-Fetal Medicine Assocs. v. Christian, No. 0967, 2009 (Md. Ct. Spec. App., July 24, 2013). The only one relevant to our inquiry is whether the trial court erred in awarding $300, 000 in attorney's fees to Respondents.[2] Id. In its unreported opinion, the Court of Special Appeals grappled with the basis of the trial court's award of fees, and remanded for clarification. Id. The Court of Special Appeals identified that an award of attorney's fees based on the contractual provision for fees would have been improper, signaling to the trial court that an articulation of a basis beyond the contract itself was necessary. Id.

         On remand, the Circuit Court requested supplemental briefing and held an additional hearing specific to the issue of attorney's fees. On February 3, 2015, the hearing judge entered a Memorandum Opinion & Order in which he explained, in part, the basis for his award of attorney's fees. The hearing judge cited Inlet Assocs. v. Harrison Inn Inlet, Inc., 324 Md. 254, 596 A.2d 1049 (1991), and then determined whether there was a lack of substantial justification for each party's litigation position. In his discussion, the hearing judge found that each claim brought by Petitioner lacked substantial justification. The judge explained:

1. Medical Billing and Prescription of Lovenox:
The basis for most of Dr. Christian's claims was [Respondents'] medical billing and prescription of the drug Lovenox. Dr. Christian's allegations of misconduct regarding these issues lack merit.
Dr. Christian alleged [Respondents] overbilled patients and Dr. Hamersley improperly signed billing forms when Dr. Christian was the physician who provided the service. Dr. Hamersley denied this allegation and presented exhibits at trial that showed billing forms alleged to be signed by Dr. Hamersley were actually signed by Dr. Christian. [Respondents] also presented evidence showing Dr. Hamersley was not even in town when the bills at issue were signed. [Respondents'] medical billing expert, Robin Roach, testified at trial that it is appropriate for a supervising physician to sign billing forms on behalf of a practice, and the supervising physician obtained no benefit from signing the forms. Dr. Christian did not retain a medical billing expert for trial or even cross-examine Robin Roach. While Dr. Christian claims that others (i.e., Wayne Kramer and Megan Sterner) have witnessed improper billing, none of these individuals were called as witnesses at trial. Dr. Christian failed to present any evidence to the jury that [Respondents'] billing practices were illegal or unethical.
After trial, Dr. Christian has argued an advisory letter to Dr. Hamersley from the Board of Physicians indicates fault. These letters are issued to inform, educate or admonish a health care provider. Dr. Christian has not read the letter nor does she have any information about its contents; however, she admits that the letter resulted from [] allegations she made against Dr. Hamersley. The Court will not speculate as to the contents of that letter nor will it require Dr. Hamersley to produce it. This case has been fully litigated and Dr. Christian had plenty of opportunity to present evidence to support her claims, but failed to do so.
Dr. Christian also claimed Dr. Hamersley had a financial arrangement with the manufacturers of the blood thinner, Lovenox, and Dr. Hamersley over-prescribed Lovenox because of the financial relationship. As a result of this allegation, [Respondents] were required to hire Adam Duhl, a medical expert on the prescription of Lovenox during pregnancy, to justify Dr. Hamersley's prescription of Lovenox to patients. No evidence was brought forth by Dr. Christian to support this claim, so this claim is without justification.
2. Fraud in the Inducement:
"[F]raudulent inducement means that a party has been led to enter into an agreement to his or her disadvantage as a result of deceit." Sass v. Andrew, 152 Md.App. 406, 422 (2003). This must include a willful non-disclosure or false representation of a material fact. Id. Dr. Christian alleged Dr. Hamersley made material omissions about patient care, billing practices, and the treatment of employee doctor's medical judgment and patient relations.
At [the] summary judgment [hearing], [the Circuit] Court [judge] found that Dr. Christian failed to establish any material misrepresentation made by [Respondents] and failed to show that [Respondents] had any intent to defraud Dr. Christian. In Dr. Christian's deposition she said that she consulted with her mentors about the opportunity and decided to take the position. Dr. Christian did not mention any representations by [Respondents] that caused her to enter [into] the employment contract. Because Dr. Christian failed to bring forth a fraudulent misrepresentation, this claim was also without substantial justification.
3. Negligent Misrepresentation:
Similar to the issue of Fraud in the Inducement, Dr. Christian failed to plead or prove any facts to support a claim of Negligent Misrepresentation. There is no evidence that Dr. Hamersley intended Dr. Christian to act on any omission or negligent misrepresentation.
* * *[3]
6. Constructive Discharge/Wrongful Termination:
The standard for constructive discharge is whether the employer has deliberately caused or allowed the employee's working conditions to become so intolerable that a reasonable person in the employee's place would have felt compelled to resign. Beye v. Bureau of Nat'l Affairs, 59 Md.App. 642, 653 (1984). Dr. Christian alleged ethical issues with [Respondents'] billing practices and allegations that Dr. Hamersley yelled at Dr. Christian and denied her access to the records rooms as the underlying facts for this claim. Dr. Christian complained her medical license would be jeopardized if she did not leave MFMA because [of Respondents'] billing practices and patient treatment.
These claims are inconsistent with Dr. Christian's actions. Prior to her departure from MFMA, Dr. Christian made handwritten changes to her employment contract. In order for Dr. Christian to stay, the conditions she added had to be met. They were mostly financial conditions, including the opportunity to purchase a 49% ownership interest in MFMA instead of the 20-30% membership interest agreed upon in the initial contract. Dr. Christian also added a more favorable calculation of her bonuses and MFMA to pay all [] her malpractice insurance coverage.
Dr. Christian claimed that the conditions at MFMA were so intolerable that she had to leave; however, she was willing to remain and purchase half of the practice if her financial conditions were met. Clearly the conditions were not so intolerable that a reasonable person in her position would leave because she was negotiating to stay if her demands were met. Consequently, the evidence presented by Dr. Christian was not even close to the standard required for a constructive discharge claim.

         The hearing judge found that "[t]he total amount of attorney's fees accumulated by [Respondents] was $555, 995.81." He awarded Respondents "$300, 000 in attorney's fees as the amount [he] f[ound] to be reasonable and necessary to defend the claims brought by Dr. Christian without substantial justification."

         The Second Appeal

         On March 2, 2015, Petitioner noted a timely appeal to the Court of Special Appeals. In its second unreported opinion, the Court of Special Appeals vacated the judgment of the Circuit Court. Christian v. Maternal-Fetal Medicine Assocs., No. 0013, 2015 (Md. Ct. Spec. App., July 3, 2017). The Court of Special Appeals affirmed the hearing judge's findings of no substantial justification for the fraudulent inducement, negligent misrepresentation, and wrongful termination claims. Id. However, the Court of Special Appeals reversed the hearing judge's findings of no substantial justification with respect to the breach of contract and tortious interference with contract claims.[4] Id. The Court of Special Appeals then remanded the case. Id.

         This Court granted certiorari to answer the following questions, which we have

revised for clarity:
1. Whether the hearing judge in the Circuit Court for Montgomery County committed clear error when he determined that Petitioner did not have substantial justification for the fraudulent inducement, negligent misrepresentation, and wrongful termination claims under Maryland Rule 1-341 and whether he abused his discretion when he awarded $300, 000 in attorney's fees?
2. Whether this Court should expressly adopt the "but-for" test set forth by the United States Supreme Court in Fox v. Vice, 563 U.S. 826 (2011) for ...

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