Advance Telecom Process LLC v. DSFederal, Inc. , 224 Md. App. 164 ( 2015 )

REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 1371
September Term, 2014
______________________________________
ADVANCE TELECOM PROCESS LLC
v.
DSFEDERAL, INC.
______________________________________
Krauser, C.J.,
Graeff,
Kehoe,
JJ.
______________________________________
Opinion by Graeff, J.
______________________________________
Filed: July 30, 2015
Advance Telecom Process, LLC (“Advance”), appellant, appeals from the order of
the Circuit Court for Montgomery County granting the motion filed by DSFederal, Inc.
(“DSFederal”), appellee, to dismiss Advance’s complaint for failure to state a claim upon
which relief could be granted. Advance raises three questions for our review, which we
have rephrased slightly, as follows:
1. Did the circuit court apply the proper standard in granting DSFederal’s
motion to dismiss?
2. Did the circuit court correctly determine that the Teaming Agreement was
not an enforceable contract, and therefore, that Count I of the complaint
failed to state a cause of action for breach of contract?
3. Should this Court allow Advance leave to amend its circuit court
complaint?
For the reasons that follow, we shall affirm the judgment of the circuit court.
FACTUAL AND PROCEDURAL BACKGROUND
On June 3, 2014, Advance filed an eight-count complaint against DSFederal,
alleging that DSFederal unlawfully terminated a Teaming Agreement between the parties
and committed a variety of other torts.1 Because this appeal involves the propriety of the
circuit court’s ruling granting a motion to dismiss for failure to state a claim upon which
relief could be granted, the relevant facts are those alleged in the complaint, set forth as
follows.
1
In the circuit court, Advance did not oppose DSFederal’s motion to dismiss Counts
II, III, IV, VI, VII, and VIII, but instead, it defended the legal sufficiency of only Count I
(breach of contract) and Count V (unjust enrichment). On appeal, Advance challenges
only the dismissal of Count I, breach of contract. Accordingly, that is the only count we
will address.
Advance is a Virginia limited liability company and a certified Small Disadvantaged
Business 8(a) Contractor, as defined by the U.S. Small Business Administration (“SBA”).2
DSFederal is a Maryland corporation and a woman-owned SBA 8(a) Contractor.
DSFederal also is certified by the U.S. General Services Administration as an 8(a) STARS
Contractor.3
The Complaint alleged that, over a twelve-month period, Advance created and
developed two projects: (1) Enterprise Applications Security, Identity Management &
Access Management, and (2) Rapid Development of “Proof Concept” Application.
Advance then submitted a White Paper to U.S. Citizenship & Immigration Services, U.S.
Department of Homeland Security (“USCIS-DHS”), proposing the projects. The White
Paper was formatted in a way that “it could be submitted to other federal agencies for
implementation into their systems once it had been fully approved, implemented and
deemed a success by USCIS-DHS, thereby increasing its value as a selling point of”
Advance.
2
A disadvantaged business is generally one that is 51% or more owned and
controlled by one or more persons who are socially and economically disadvantaged.
Disadvantaged Businesses, www.SBA.gov, http://perma.cc/TP6Q-MM6M (last visited
June 1, 2015). In order to help small, disadvantaged businesses compete in the
marketplace, the U.S. Small Business Association created the 8(a) Business Development
Program. The 8(a) Business Development Program is a business assistance program for
small disadvantaged businesses. 8(a) Business Development Program, www.SBA.gov,
http://perma.cc/4N97-WLHC (last visited May 5, 2015).
3
8(a) STARS is a small business set-aside Government Wide Acquisition Contract
(“GWAC”) that provides flexible access to customized internet technology solutions from
a large, diverse pool of 8(a) industry partners. 8(a) STARS II GWAC, www.GSA.gov,
http://perma.cc/4VU2-GF8F (last visited May 5, 2015).
2
After Advance presented the White Paper, USCIS-DHS notified Advance that it
would accept the proposal under a sole-source contract, based upon Federal Acquisition
Regulations (“FAR”) 6.3. USCIS-DHS also informed Advance that the sole-source
contract would be subject to the 8(a) STARS II GWAC program. Advance then began
researching the available certified 8(a) STARS contractors, and it was referred to
DSFederal.
Advance contacted DSFederal and disclosed “all the relevant facts and details
involving” the proposal. DSFederal then entered into a contractual relationship with
Advance. The Complaint characterized this relationship as including “the parties’
execution of any and all Teaming Agreement(s), subcontract(s), and/or any and all required
necessary documentation for the purpose of obtaining and working on the sole-source
contract of the proposed project that [Advance] had submitted to USCIS-DHS.”
DSFederal agreed and contracted with Advance to “jointly develop and submit a bid to
USCIS-DHS for said project.” Based on the contractual relationship between the parties,
Advance submitted DSFederal’s name to USCIS-DHS as the 8(a) STARS contractor for
the project.
Thereafter, Advance and DSFederal “actively pursued, developed and created a
proposal and bid to submit to USCIS-DHS,” which offer and proposal included “the
relationship between” Advance and DSFederal. Advance and DSFederal also entered into
a Teaming Agreement, which the complaint alleged incorporated the scope of work to be
performed by each party. According to the complaint, the Teaming Agreement provided
that, within ten days of receipt of the contract from USCIS-DHS, DSFederal was to provide
3
a copy of the contract to Advance, DSFederal was required to issue a subcontract to
Advance “for consulting support to meet the overall solicitation requirement of the USCIS-
DHS contract,” and DSFederal was to “use its best efforts to award [Advance] a target
work share of fifty-eight (58%) percent of effort based on labor costs awarded under the
contract or the valuable consideration of the Teaming Agreement and expected and
required Subcontract.” Advance was required to provide DSFederal with “proprietary
information and industry expertise.”
Advance and DSFederal worked together to complete all applicable requirements
of the pre-bid solicitation. Sometime after submitting the bid, DSFederal was awarded a
sole-source GWAC by the USCIS-DHS to develop and implement the two projects based
on the “combined efforts of the parties.” Thereafter, the Complaint alleges, DSFederal
“constructively terminated” Advance, despite a clause in the Teaming Agreement requiring
mutual termination.
Count I of the Complaint, alleging breach of contract, stated that DSFederal had a
contractual obligation to execute a subcontract with Advance “that it knows, and knew, is,
and was always, required by USCIS-DHS, in order for [Advance] to work, and continue to
work, to complete this project, but has failed to do so.” DSFederal also failed to present
Advance with a copy of the contract with USCIS-DHS, failed to allow Advance’s staff to
begin work, and illegally terminated the Teaming Agreement. Advance sought damages
in the amount of $2,200,000.
DSFederal filed a motion to dismiss the complaint. It attached as Exhibit 1 the
Teaming Agreement, which Advance did not attach to the complaint. The Teaming
4
Agreement was executed on September 11, 2013, by DSFederal, “Team Leader,” and
Advance, “Team Member.”
The Teaming Agreement stated that the parties had “concluded that it is to their
mutual benefit to act as a team for the purpose of preparing and submitting a proposal in
response to” the Request for Proposal (“RFP”) that the USCIS-DHS would be issuing for
Identity, Credential, and Access Management (“ICAM”). It provided that, if USCIS-DHS
awarded DSFederal a contract, DSFederal “intends to negotiate a subcontracting agreement
with” Advance, and Advance “intends to perform work as set forth in” the statement of
work (“SOW”) attached.
With respect to the specific obligations of the parties, section 1(e) of the Teaming
Agreement provided for duties regarding submission of the proposal, and it stated that,
“[i]n the event that the contract awarded by [USCIS-DHS] as a result of proposals
submitted in response to the RFP (“the Prime Contract”) is awarded to [DSFederal], the
parties will negotiate in good faith and execute a subcontract agreement . . . subject to
applicable laws and regulations, and, if required by the Prime Contract, the
consent/approval of [USCIS-DHS].”
Section 1(b) provided that DSFederal “shall, with the assistance of [Advance],
prepare the Proposal and submit the Proposal to [USCIS-DHS] identifying [Advance] as a
subcontractor providing the services identified in Attachment A.” Attachment A identified
two categories of work to be performed by the parties under the headings “Proposal
Development” and “Contract Performance Work Distribution.” The work under the
“Contract Performance Work Distribution” category was listed as follows:
5
1. Within 10 calendar days of award, [DSFederal] will issue a Subcontract
to [Advance] for consulting support to meet the overall solicitation
requirements.
2. [Advance] will designate a corporate executive who will attend periodic
team meetings, provide status to DSFederal, and ensure that [Advance]
project staff collaborate with the DSFederal Project Manager, DSFederal
management, and staff as necessary to identify and mitigate risks, timely
resolve issues, prepare and review deliverables specifically called out
herein or in the SOW.
3. As required by the Government, [Advance] shall track and report
progress and costs in a format to be specified by DSFederal.
4. [Advance] staff will fully cooperate with DSFederal’s efforts to manage
the DSFederal project team as an integrated whole, focused on the
delivery of high-quality, compliant services to the Government, without
respect to employment affiliation.
5. DSFederal will use best efforts to award [Advance] a target work share
of 58% of the effort based on labor costs awarded under the contract.
6. Work Share level of work is contingent upon:
 [Advance] filling offered positions in a timely manner.
 [Advance] performing at such a level that it does not
adversely impact on [DSFederal’s] past performance
ratings.
 [DSFederal’s] performing the minimum level of work
required by law or regulation.
In its motion to dismiss, DSFederal argued that the Complaint failed to state a cause
of action for breach of contract, and therefore, it should be dismissed with prejudice. In
support, it argued that the “Teaming Agreement is nothing more than an agreement to
negotiate open issues in good faith to reach a contractual objective within an agreed
framework,” i.e., it was an agreement to agree, rather than a valid and enforceable contract.
In its opposition, Advance acknowledged the cases holding that teaming agreements
were unenforceable contracts. It argued, however, that the Teaming Agreement here was
distinguishable because it is clear that the parties intended to negotiate a subcontract, and
6
the essential terms of the Agreement “have been determined or have set in place an
objective framework with which to ascertain that essential term.”
In reply, DSFederal again asserted that the Teaming Agreement here was merely an
unenforceable agreement to agree. In support, it stated that the Agreement provided that
the parties would negotiate a subcontract at some point in the future, and it “failed to
identify essential terms such as exactly what services [Advance] would provide, how
[Advance] would provide them, when [Advance] would provide them, and what [Advance]
would be paid for them.”
On August 19, 2014, the court held a hearing on the motion.4 At the conclusion of
the hearing, the court granted the motion to dismiss, agreeing with DSFederal that the
Teaming Agreement was “an agreement to agree,” and therefore, it was not an enforceable
contract. This appeal followed.
STANDARD OF REVIEW
“A trial court may grant a motion to dismiss if, when assuming the truth of all well-
pled facts and allegations in the complaint and any inferences that may be drawn, and
viewing those facts in the light most favorable to the non-moving party, ‘the allegations do
not state a cause of action for which relief may be granted.’” Latty v. St. Joseph’s Soc’y of
the Sacred Heart, Inc., 198 Md. App. 254, 262-63 (2011) (quoting RRC Northeast, LLC v.
BAA Md., Inc., 413 Md. 638, 643 (2010)). The facts set forth in the complaint must be
4
The court inquired regarding the Agreement’s requirement that DSFederal
“negotiate in good faith.” Counsel for DSFederal stated, without contradiction, that there
was no claim that DSFederal did not negotiate in good faith, but rather, Advance was
alleging that DSFederal failed to complete an agreement with it.
7
“pleaded with sufficient specificity; bald assertions and conclusory statements by the
pleader will not suffice.” RRC, 413 Md. at 644.
“‘We review the grant of a motion to dismiss de novo.’” Unger v. Berger, 214 Md.
App. 426, 432 (2013) (quoting Reichs Ford Road Joint Venture v. State Roads Comm’n,
388 Md. 500, 509 (2005)). Accord Kumar v. Dhanda, 198 Md. App. 337, 342 (2011) (“We
review the court’s decision to grant the motion to dismiss for legal correctness.”), aff’d,
426 Md. 185 (2012). We will affirm the circuit court’s judgment “‘on any ground
adequately shown by the record, even one upon which the circuit court has not relied or
one that the parties have not raised.’” Monarc Constr., Inc. v. Aris Corp., 188 Md. App.
377, 385 (2009) (quoting Pope v. Bd. of Sch. Comm’rs, 106 Md. App. 578, 591 (1995)).
DISCUSSION
I.
Status of Motion
Advance’s first argument is that the circuit court erred by “treating the Motion to
Dismiss hearing as a Motion for Summary Judgment” and granting the motion “prior to
determining whether material facts existed that were not discernible from the [c]omplaint.”
It asserts that “there are genuine disputes of material facts” that “cannot be resolved merely
by looking to the [c]omplaint” but must wait until the “parties have had their opportunity
to complete discovery.”
DSFederal contends that the court correctly decided its motion to dismiss by
considering only those facts alleged in Advance’s complaint and the “Teaming Agreement
referenced and relied on in the complaint.” It asserts that consideration of the Teaming
8
Agreement did not require the court to treat the motion to dismiss as a motion for summary
judgment because Advance’s breach of contract claim was based on this document. It
disputes Advance’s argument that the court should have allowed discovery to be completed
before considering DSFederal’s motion to dismiss, noting that Advance conceded before
the circuit court that the “sufficiency of its claim for breach of contract was properly judged
based on the allegations of the [c]omplaint and the text of the Teaming Agreement.”
Moreover, it asserts that discovery cannot be used at the motion to dismiss stage to “provide
the multiple and reasonable inferences that its pleading allegations lack.”
We begin with Advance’s suggestion that the court’s consideration of the Teaming
Agreement converted the motion to dismiss into a motion for summary judgment. We
agree, as a general proposition, that where matters outside of the allegations in the
complaint and any exhibits incorporated in it are considered by the trial court, a motion to
dismiss generally will be treated as one for summary judgment. See, e.g., Worsham v.
Ehrlich, 181 Md. App. 711, 722 (The trial court has “discretion to convert a motion to
dismiss to a motion for summary judgment by considering matters outside the pleading.”),
cert. denied, 406 Md. 747 (2008). Where, however, a document such as the Teaming
Agreement merely supplements the allegations of the complaint, and the document is not
controverted, consideration of the document does not convert the motion into one for
summary judgment. See Margolis v. Sandy Spring Bank, 221 Md. App. 703, 788, n.4
(2015) (although the plaintiff did not attach a Deposit Account Agreement to his complaint,
“he expressly referred to it and repeatedly alleged that its disclosures that did not satisfy
the” Consumer Protection Act; thus, the court properly regarded the agreement as “simply
9
supplementing the allegations in the complaint.”); Smith v. Danielczyk, 400 Md. 98, 105
(2007) (because there was no dispute regarding the extraneous material appended to
defendant’s motion to dismiss, and plaintiff did not controvert the defendant’s factual
averments, appellate court treated the extraneous materials “as simply supplementing the
allegations in the complaint”). Accordingly, the circuit court’s consideration of the
Teaming Agreement did not convert the motion to dismiss into a motion for summary
judgment.
Indeed, the record reflects that the parties and the circuit court proceeded on the
understanding that the hearing was addressing a motion to dismiss. Counsel for Advance
agreed that the “standard at this stage – and we’re at the motion to dismiss stage – is
basically . . . whether the complaint, on its face, discloses a legal and sufficient cause of
action.” The contention that the court “erred by treating the motion to dismiss hearing as
a motion for summary judgment” is not supported by the record. We thus turn to the
propriety of the court’s ruling granting the motion to dismiss.
II.
Teaming Agreement
On the merits, Advance contends that the circuit court erred in granting DSFederal’s
motion to dismiss its complaint for failure to state a claim for breach of contract. In
support, it asserts that the court erred in finding “that the Teaming Agreement is an
agreement to agree and not a contract.”
Advance concedes that “relevant Maryland law, and other jurisdictions, generally
speaks to the unenforceability of teaming agreements, where future negotiations between
10
the parties are contemplated.” It argues, however, that in this case, where the terms of the
Teaming Agreement are “either explicitly stated and/or provide a framework for
interpreting the terms,” the agreement shows mutual assent to be bound, and therefore, the
Teaming Agreement is an enforceable contract.
DSFederal responds in two ways. Initially, it urges this Court not to consider the
merits of Advance’s challenge to the trial court’s “ruling that the Teaming Agreement was
an unenforceable agreement to agree,” asserting that Advance offers no explanation of
precisely how the trial court erred, and it does not identify the “supposed” explicitly stated
terms “or the interpretative framework that it claims exists.” In any event, it contends that
Advance’s argument fails on the merits because “it is clear under applicable Maryland
precedent that the Teaming Agreement lacked the certainty and definiteness of terms
necessary for it to be an enforceable contract.”
We address first DSFederal’s argument that we should not consider the merits of
the appeal. Although we agree that the brief could have been more detailed, see Diallo v.
State, 413 Md. 678, 692-93 (2010) (“‘arguments not presented in a brief or not presented
with particularity will not be considered on appeal’”) (quoting Klauenberg v. State, 355
Md. 528, 552 (1999), the argument in the brief, as fleshed out in oral argument, was
sufficiently presented for us to address the merits of the claim.
We ultimately conclude, however, that Advance’s argument is without merit. It is
clear in Maryland that “an essential prerequisite to the creation or formation of a contract”
is “a manifestation of mutual assent.” Cochran v. Norkunas, 398 Md. 1, 14 (2007).
“Manifestation of mutual assent includes two issues: (1) intent to be bound, and (2)
11
definiteness of terms.” Id. The “‘[f]ailure of parties to agree on an essential term of a
contract may indicate that the mutual assent required to make a contract is lacking.” Id.
Likewise, “[i]f parties do not intend to be bound until a final agreement is executed, there
is no contract.” Id.
Addressing first the intent requirement, this Court has stated that “‘[t]he primary
source for determining the intention of the parties is the language of the contract itself.’”
8621 Ltd. P’ship v. LDG, Inc., 169 Md. App. 214, 226 (quoting Hartford Accident &
Indem. Co. v. Scarlett Harbor Assocs. Ltd. P’ship, 109 Md. App. 217, 291 (1996)), cert.
denied, 394 Md. 480 (2006). Contracts are interpreted objectively, and “[i]f the language
of a contract is unambiguous, we give effect to its plain meaning and do not contemplate
what the parties may have subjectively intended by certain terms at the time of formation.”
Cochran, 398 Md. at 16. “The interpretation of a contract, including the determination of
whether a contract is ambiguous, is a question of law,” which we review de novo. Sy-lene
of Washington, Inc. v. Starwood Urban Retail II, LLC, 376 Md. 157, 163 (2003).
In Cochran, 298 Md. at 18, the Court of Appeals addressed whether a letter of intent
to purchase property was an enforceable contract. The Court looked to the language of the
agreement to ascertain the intent of the parties, and it held that, because the language of the
document clearly indicated that the parties intended to formalize their agreement through
a standard Maryland Realtor’s contract, the letter of intent constituted a “preliminary
‘agreement to agree,’” which the Maryland appellate courts generally have held to be
unenforceable. Id. at 18-21. See Horsey v. Horsey, 329 Md. 392, 420-21 (1993) (an
agreement to negotiate a future agreement, an agreement to agree, is not enforceable); First
12
Nat’l Bank of Md. v. Burton, Parsons & Co., Inc., 57 Md. App. 437, 449 (“‘Where an
essential element of a contract is reserved for future agreement, no legal obligation as to
such element arises until such future agreement is made.’”) (quoting Richmond Screw
Anchor Co., Inc. v. Umbach, 173 F.2d 532, 534 (7th Cir. 1949)), cert denied, 300 Md. 88,
cert. denied, 300 Md. 90 (1984).5
Applying these principles, we address whether the Teaming Agreement here is
enforceable. Although the Maryland appellate courts have not addressed whether, or under
what circumstances, teaming agreements are enforceable, courts in other jurisdictions have
done so. We find the analysis in these cases instructive.
In ATACS Corp. v. Trans World Commc’ns, Inc., 155 F.3d 659, 666-67 (3d Cir.
1998), the United States Court of Appeals for the Third Circuit discussed teaming
agreements as follows:
Typically, a teaming agreement is an arrangement whereby a subcontractor
will “team” with a company intending to bid on a government contract as a
prime contractor in order to pool financial and technical resources. . . . The
subcontractor would ordinarily provide technical expertise and assist in the
prime contractor’s bid submission in return for the prime contractor’s
promise to award the subcontract. Parties to such a teaming agreement
benefit from the arrangement not only as a means of sharing resources, but
also as a hedge against the many uncertainties involved in government
contracting. In many cases, the finalized subcontract between the parties to a
teaming agreement will specifically enumerate the scope of obligations for
each party contingent upon the prime contractor winning the RFP so that
there is usually little need to enforce the teaming arrangement itself. Often,
however, the parties may reach an understanding to team, but fail to execute
5
In Cochran v. Norkunas, 398 Md. 1, 13 n.5 (2007), the Court of Appeals noted
that a preliminary agreement to negotiate in good faith regarding open terms is an
enforceable agreement. If negotiations fail, however, “no final contract exists because this
type of preliminary agreement does not commit the parties to their ultimate contractual
objective.” Id.
13
a subcontract as anticipated in the teaming agreement. . . . As with most
other “preliminary agreements” precedent to an executed contract, see
generally E. Allan Farnsworth, Precontractual Liability and Preliminary
Agreements: Fair Dealing and Failed Negotiations, 87 Colum. L.Rev. 217
(1987), the question arises whether the teaming agreement itself, absent an
executed subcontract, may constitute the basis for contractual liability.
***
The fact that the parties never finalized an implementing subcontract
is usually not fatal to enforcing the teaming agreement on its own—if the
parties intended the teaming agreement itself to constitute a binding
agreement that enumerated definite terms of behavior governing the parties
during, or even after, the bidding process.
In ATACS, the court held that, where a teaming agreement provides for obligations
that are definite and mutually agreed upon, such as an agreement to negotiate in good faith
or an agreement to negotiate exclusively, the obligations can be enforced. Id. at 667-68.
A simple “promise to enter into a subcontract at a later date,” however, does not constitute
an enforceable contract. Id. at 667.
In Cyberlock Consulting, Inc., v. Info. Experts, Inc., 939 F. Supp. 2d 572, 579
(2013), aff’d, 549 Fed. Appx. 211 (4th Cir. 2014), the United States District Court for the
Eastern District of Virginia addressed the enforceability of a teaming agreement entered
into for the purpose of obtaining a contract award from the federal government. Cyberlock
argued, similar to the argument made by Advance here, that the teaming agreement
obligated the prime contractor to provide it with a percentage of the contract, and the prime
contractor breached the teaming agreement by failing to do so.
The court noted that, in Virginia, “[m]ere ‘agreements to agree in the future’ are
‘too vague and too indefinite to be enforced,’” as are “‘agreements to negotiate at some
14
point in the future.’” Id. at 578 (quoting W.J. Schafer Assocs., Inc. v. Cordant, Inc., 493
S.E.2d 512, 515 (Va. 1997) and Beazer Homes Corp. v. VMIF/Anden Southbridge Venture,
235 F. Supp. 2d 485, 490 (E.D. Va. 2002)). It stated that “an agreement ‘to negotiate open
issues in good faith’ to reach a ‘contractual objective within [an] agreed framework will be
construed as an agreement to agree rather than a valid contract.’” Id. (citation omitted).
In assessing whether there was “mutual assent . . . to terms reasonably certain,” a
requirement for the contract to be enforceable, the court looked to the language of the
teaming agreement. It agreed with Cyberlock that there was some language in the
agreement suggesting that Information Experts (“IE”) was obligated to give 49% of the
prime contract to Cyberlock. Id. at 581. In that regard, the Court noted that, in the
“Responsibilities and Performance” section the agreement provided that if IE was awarded
a prime contract, IE agreed to execute a subcontracting agreement to provide Cyberlock
49% of the prime contract, in accordance with the work as set forth in the attached exhibit.
Additionally, the “Purpose of Teaming Agreement” section stated that, upon the Contract
Award, IE “will perform 51% of the scope of work with [Cyberlock] performing 49%.”
Id. at 581.
The court held, however, that “the agreement read as a whole indicates that this
particular language was not meant to provide a binding obligation but rather to set forth a
contractual objective and agreed framework for the ‘negotiat[ion] [of] a subcontract in the
future along certain established terms.’” Id. at 581 (quoting Beazer Homes Corp., 235
F. Supp. 2d at 491-92). It pointed to several provisions in the agreement demonstrating that
“(1) the parties contemplated that a future, formal subcontract would have to be negotiated
15
and potentially executed and (2) that they ‘contemplated the possibility that the future
transaction . . . might not ever come to fruition.’” Id. (citation omitted). The agreement
stated that the parties had the responsibility to “exert reasonable efforts . . . to negotiate a
subcontract,” that the agreement would terminate if, despite good faith negotiations, the
parties failed to reach agreement on a subcontract, that the agreement described the
subcontract as “contemplated” and described Cyberlock’s work share as “work anticipated
to be performed,” and the subcontract contemplated “was subject to the approval of the
client.” Id.
The court ultimately concluded as follows:
The most reasonable reading of [the] Second Teaming Agreement, construed
as a whole, is that any seemingly mandatory language to award Cyberlock
with a portion of the prime contract was modified by the provisions
indicating that: (1) the award of such work would require the negotiation and
execution of a future subcontract; (2) the award of such work was dependent
on the success of such future negotiations; (3) any future executed
subcontract was subject to the approval or disapproval of OPM FIS; and (4)
suggesting that the framework set out for the work allocation in a future
subcontract potentially could change as it merely was based on the work
anticipated to be performed by Cyberlock as then-presently understood by
the parties.
Id. at 581-82. The court held that the agreement was “an agreement to negotiate in good
faith to enter a future subcontract, which was an unenforceable ‘agreement to agree’ on a
subcontract.” Id. at 582.
We find the analysis set forth in these cases to be persuasive. We hold that the terms
of a Teaming Agreement, like any other contract, are enforceable only if the parties
demonstrate mutual assent, i.e., the intent to be bound and definite terms. Here, the
16
Teaming Agreement contained some obligations that were enforceable. For example,
under the SPECIFIC OBLIGATIONS OF THE PARTIES section, the agreement states:
In the event that the contract awarded by the Client as a result of proposals
submitted in response to the [Prime Contract] is awarded to [DSFederal], the
parties will negotiate in good faith and execute a subcontract agreement (“the
Subcontract”), subject to applicable laws and regulations, and, if required by
the Prime Contract, the consent/approval of the Client.
Because this provision contained a definite and mutually agreed upon requirement
to negotiate in good faith, this was an enforceable obligation. See ATACS, 155 F.3d at 667-
68; Cochran, 398 Md. at 13 n.5. Advance does not argue, however, that DSFederal
breached its duty to negotiate in good faith. Instead, it asserts that DSFederal breached the
Teaming Agreement by failing to actually execute a subcontract.
We disagree with Advance and hold that the Teaming Agreement, when read as a
whole, did not impose a contract obligation on DSFederal to execute a subcontract. Rather,
it was an “agreement to agree” on a potential future subcontract, which is not an
enforceable contract provision. We explain.
As in Cyberlock, there is some language in the Teaming Agreement suggesting an
obligation by DSFederal to issue a subcontract to Advance. One of the WHEREAS clauses
provides that, if DSFederal is awarded a contract, it “intends to negotiate a subcontracting
agreement” with Advance, and Advance “intends to perform work as set forth in the [SOW]
attached hereto and incorporated herein as Attachment A.” Attachment A, in turn provides
that, within 10 calendar days of award, DSFederal “will issue a Subcontract to [Advance]
for consulting support to meet the overall solicitation requirements,” and “will use best
17
efforts to award [Advance] a target work share of 58% of the effort based on labor costs
awarded under the contract.”
The remainder of the Teaming Agreement, however, read as a whole, indicates that
the parties intended, not a binding obligation to issue a subcontract, but rather, as in
Cyberlock, an agreed framework for negotiation of a future subcontract. As indicated, the
contract provided that, if a contract was awarded to DSFederal, the parties would negotiate
in good faith a subcontract agreement. This provision, as well as the provision stating that
approval of the contemplated subcontract by the client may be required, makes clear that
there was no binding agreement in place. Rather, it is clear from the terms of the Teaming
Agreement that the parties envisioned that future negotiations were required before an
enforceable subcontract would be executed.6
Because the Teaming Agreement left material terms for future negotiation, it
constituted an agreement to agree on a future subcontract, and there was no enforceable
requirement that DSFederal issue a subcontract to Advance. The circuit court properly
found that the complaint failed to state a legal cause of action for breach of contract, and it
properly granted the motion to dismiss.
III.
Leave to Amend
6
Indeed, the Teaming Agreement did not set forth the material terms that the
contemplated subcontract would contain, failing to specify what services Advance would
actually perform, and what Advance would be paid. The inchoate nature of material terms
of the contemplated subcontract show that there was no mutual assent regarding a contract.
18
Advance’s final contention is that it should be allowed to file an amended complaint.
It acknowledges that it did not seek leave to amend its complaint in the circuit court,
pursuant to Md. Rule 2-341.7 Nevertheless, it states that it “has not located or is unaware
of any rule preventing it from requesting leave at this point in the proceedings. It requests,
“[o]ut of the interest of justice” that this Court grant leave to file an amended complaint.
DSFederal contends that Advance’s “request for leave to amend comes too late and
should be denied.” It asserts that this Court does not have the authority under Rule 2-341
to grant Advance leave to amend its complaint.
We agree. As we explained in Bijou v. Young-Battle, 185 Md. App. 268, 289 (2009),
although Rule 2-341(b) is “silent as to when a request for leave to amend may be filed,”
a party may not amend the pleadings in the “appellate court after an appealable final
judgment has been entered.” Advance states no valid claim for relief in this regard.
JUDGMENT AFFIRMED. COSTS TO BE
PAID BY APPELLANT.
7
Rule 2-341(b) provides that a “party may file an amendment to a pleading [later
than 30 days before the trial date] only with leave of court.”
19