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Credible Behavioral Health, Inc. v. Johnson

Court of Appeals of Maryland

November 20, 2019

CREDIBLE BEHAVIORAL HEALTH, INC.
v.
EMMANUEL JOHNSON

          Argued: October 8, 2019

          Circuit Court for Montgomery County Case No. 9858D.

          Barbera, C.J. McDonald, Watts, Hotten, Getty, Booth, Greene, Clayton, Jr. (Senior Judge, Specially Assigned) JJ.

          OPINION

          Greene, J.

         Petitioner, Credible Behavioral Health, Inc. ("Credible") offers a tuition loan program to its employees aimed at incubating and furthering their professional development. Respondent, Emmanuel Johnson, a former employee of Credible, participated in this program from August 10, 2016 until he was fired several months later. Under a promissory note outlining the agreement, the amount of the loan that must be repaid is dependent upon the length of time an employee works for Credible after completing his or her education.

         This case presents two issues for our consideration: (i) the appropriate standard of review in an appeal on the record from the district court to the circuit court; and (ii) the interpretation of a promissory note. As to the second issue, Mr. Johnson contends that the agreement contemplates repayment only if an employee quits within a relevant time period; whereas, Credible argues that repayment is required upon the conclusion of employment within that time period, regardless of whether an employee is fired or quits. We shall hold that: (i) a circuit court, in hearing an appeal on the record from the district court, reviews the district court's factual determinations for clear error and its legal conclusions de novo; and (ii) the promissory note, when read as a whole and viewed in the appropriate context, requires repayment of the principal balance in both situations where an employee quits and where Credible fires an employee.[1]

         FACTUAL AND PROCEDURAL BACKGROUND

         Credible is a Delaware corporation that provides software solutions to behavioral health and human service providers. To cultivate its employees' professional development, Credible offers a tuition loan program to them. Under the program, Credible agrees to loan funds to employees who wish to obtain additional education-be it undergraduate, graduate, or post-graduate certificate programs. The percentage of the loan that an employee must repay is dependent upon the length of time he or she works for Credible subsequent to completing his or her studies.

         Mr. Johnson was an employee of Credible in 2016. On August 10, 2016, Mr. Johnson entered into Credible's tuition loan program, and the parties memorialized their agreement under the terms of an unsecured promissory note. Paragraph 1(a) of the promissory note contains a schedule which sets forth the conditions of tuition repayment under the program:

FOR VALUE RECEIVED, Emmanuel Johnson ("Borrower"), an individual and an employee of CREDIBLE BEHAVIORAL HEALTH, INC., a Delaware corporation ("Company"), hereby unconditionally promises to pay to the order of Company in lawful money of the United States of America and in immediately available funds the aggregate principal amount set forth on Schedule A together with all accrued and unpaid interest thereon, if any (the "Loan"). It is the intent of Borrower and Company that the purpose of this Promissory Note (the "Note") is to pay tuition expenses for undergraduate, graduate or post-graduate certificate programs in connection with the Company's Tuition Loan program.
1. Principal Repayment
(a) The principal balance of the Loan plus all accrued interest thereon shall be due and payable in accordance with the following schedule:
(i) If you terminate employment with the Company within 12 months following achievement of the degree, 100% of the Loan;
(ii) If you terminate employment with the Company after the 12 month anniversary but on or before the 24 month anniversary following achievement of the degree, 75% of the Loan;
(iii) If you terminate employment with the Company after the 24 month anniversary but on or before the 36 month anniversary following achievement of the degree, 50% of the Loan; or
(iv) If you terminate employment with the Company after the 36 month anniversary following achievement of the degree, 0% of the Loan.

(Emphasis in original). The final part of Paragraph 1(a) sets forth the relevant scope of the agreement:

The appropriate percentage of the Loan set forth above, plus all accrued interest thereon shall be due and payable (i) ninety (90) calendar days after the termination of your employment, whether by you or the Company, for any or for no reason whatsoever, or (ii) immediately or at the option of Company, as set forth in Section 4(b) below, upon the occurrence of any Event of Default (as defined by in Section 4 below). Borrower understands that taxes will be deducted from these paychecks based upon the amount that would have been paid Borrower had payments for principal and/or interest not been deducted.

         Pursuant to the agreement, Credible loaned Mr. Johnson $12, 529 to assist him in paying his tuition. In December of 2017, Credible fired Mr. Johnson. At the time of his termination, Mr. Johnson had not yet obtained a degree. Subsequently, Credible and Johnson entered into a payment plan under which Mr. Johnson made one payment in the amount of $325 on February 28, 2018 and made no further payments. As a result, the balance due on the promissory note was reduced to $12, 204.

         On April 25, 2018, attorneys for Credible sent a demand letter to Mr. Johnson, which indicated that the principal balance of the loan was due on March 13, 2018 and requested Mr. Johnson make payment by May 25, 2018. As a result of Mr. Johnson's failure to make any additional payments due under the promissory note, on June 8, 2018, Credible brought an action against Mr. Johnson in the District Court of Maryland sitting in Montgomery County seeking repayment of the debt.

         The district court held a trial in the matter on September 12, 2018. That same day, the district court entered a judgment in Mr. Johnson's favor. The district court judge reasoned that, under the language of Paragraph 1(a), the amounts set forth only became due if Mr. Johnson quit from his employment with Credible. In its analysis, the district court concluded that Paragraph 1(a) and the provision that follows it were inconsistent. Particularly, the court determined that the provision following Paragraph 1(a) referenced back to Paragraph 1(a) for the amount that would be due if an employee was terminated. In its view, however, the schedule set forth in Paragraph 1(a) only applied in situations where employees quit and therefore there was no basis to determine the amount Mr. Johnson owed by reference to Paragraph 1(a), because he was fired. The trial judge ultimately determined that "[a]t best I'm interpreting it as it exactly is written. At worse it's an inconsistency which goes against the person who drafted the contract."

         The following day, September 13, 2018, Credible appealed the judgment of the district court to the Circuit Court for Montgomery County pursuant to Courts and Judicial Proceedings Article § 12-401(a). The circuit court heard the appeal on the record under Maryland Rule 7-102(b) and held a hearing on February 15, 2019. Before that court, Credible argued that Mr. Johnson was required to repay the loan regardless of whether he was fired or quit. In contrast, Mr. Johnson contended that the district court correctly interpreted the note, and he was only required to repay the loan if he quit. Ultimately, in a written opinion and order dated March 7, 2019, the circuit court found that the district court "was [not] clearly erroneous in its interpretation of the promissory note at issue in this case" and therefore affirmed its judgment.

         Thereafter, Credible petitioned this Court for a writ of certiorari, which we granted on June 7, 2019. Credible Behavioral Health, Inc. v. Johnson, 464 Md. 7, 210 A.3d 182 (2019). In its petition for a writ of ...


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