Fedder Development Corp. v. FB Hagerstown, LLC

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-1689
FEDDER DEVELOPMENT CORPORATION,
Plaintiff - Appellant,
versus
FB HAGERSTOWN, LLC,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. James K. Bredar, Magistrate Judge. (CA-
04-2694-JKB)
Argued: May 24, 2006 Decided: June 23, 2006
Before WILKINSON, TRAXLER, and GREGORY, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Ira Lee Oring, FEDDER & GARTEN, P.A., Baltimore, Maryland,
for Appellant. Craig David Roswell, NILES, BARTON & WILMER,
L.L.P., Baltimore, Maryland, for Appellee. ON BRIEF: Timothy
Manuelides, FEDDER & GARTEN, P.A., Baltimore, Maryland, for
Appellant. Kathleen L. H. Petty, NILES, BARTON & WILMER, L.L.P.,
Baltimore, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Fedder Development Corporation commenced this action against
FB Hagerstown, LLC seeking specific performance of an alleged
agreement for the sale of Long Meadow Shopping Center in
Hagerstown, Maryland. The trial judge granted summary judgment to
FB Hagerstown, concluding that no enforceable contract existed.
Fedder appeals and we affirm.
I.
In late 2003, the parties entered into negotiations concerning
purchase of the shopping center. During the negotiations, FB
Hagerstown’s attorney sent Fedder’s attorney an e-mail containing
a draft real estate purchase agreement, stating that “the contract
is not binding on either party unless and until executed by and
delivered to both parties.” J.A. 19. The following month, in
response to a set of changes from Fedder’s attorney, FB
Hagerstown’s attorney revised the draft agreement and again
explained that “the contract is not binding on either party unless
and until executed by both parties.” J.A. 32. FB Hagerstown’s
attorney further wrote that the draft of the contract is “subject
to whatever comments [my client] may have.” J.A. 33. The parties
continued to make revisions to the agreement, with FB Hagerstown’s
attorney continuing to qualify that the agreement was subject to FB
2
Hagerstown’s approval and was not binding on FB Hagerstown until FB
Hagerstown signed it.
On June 10, 2004, FB Hagerstown’s attorney sent a “redline”
comparison of the most recent draft agreement and, working on the
“assumption that [the] changes [were] acceptable” to Fedder, an
“execution copy” of the agreement. J.A. 39. FB Hagerstown’s
attorney stated that, if Fedder executed five copies of the
agreement and delivered them to the parties’ escrow agent with an
initial deposit of $100,000, he would ask his client to print out
and execute the same number of copies of the agreement.
At the end of the month, Fedder’s attorney responded that he
had five signed copies of the agreement and the deposit check, and
asked whether he should send the copies and check to FB
Hagerstown’s attorney or directly to the escrow agent. After
several days without any response, Fedder learned that FB
Hagerstown had called off the deal. Fedder then forwarded the
signed copies and deposit check to the escrow agent. FB Hagerstown
never signed the agreement.
The following month, Fedder brought suit in a Maryland state
court seeking specific performance of the agreement. FB Hagerstown
removed the action to federal court, where the parties consented to
have the case heard by U.S. Magistrate Judge James K. Bredar. On
cross-motions for summary judgment, Judge Bredar granted summary
judgment to FB Hagerstown. Judge Bredar found that FB Hagerstown
3
made it clear that the contract would not be binding until it was
signed. Furthermore, to the extent that any agreement existed, the
statute of frauds required proof of a writing signed by FB
Hagerstown or someone with authority to bind FB Hagerstown. Judge
Bredar also determined that Fedder failed to comply with FB
Hagerstown’s execution and delivery terms prior to FB Hagerstown’s
disavowal of the agreement.
Fedder appeals, claiming that the statute of frauds does not
bar this cause of action and that Fedder properly accepted the
contract. We review de novo the grant of summary judgment. See
Summerville v. Microcom Corp., 42 F.3d 891, 893 (4th Cir. 1994).
II.
A.
We turn first to Fedder’s argument that the statute of frauds
does not bar this action because FB Hagerstown admitted the
existence of the contract in deposition testimony. Maryland’s
statute of frauds traces its ancestry to the 1677 English Statute
of Frauds. See Litzenberg v. Litzenberg, 514 A.2d 476, 479 (Md.
1986). The current version of the statute applicable in Maryland
provides:
No action may be brought on any contract for the sale or
disposition of land or of any interest in or concerning
land unless the contract on which the action is brought,
or some memorandum or note of it, is in writing and
signed by the party to be charged or some other person
lawfully authorized by him.
4
Md. Code Ann., Real Prop. § 5-104 (2006).
The purported contract Fedder seeks to enforce is undoubtedly
a contract for the sale of land and, thus, is subject to the
statute. The problem for Fedder is that FB Hagerstown never signed
the agreement. Nevertheless, Fedder argues that the contract is
enforceable under the “in-court admission” exception to the
statute. Under this exception, an oral contract otherwise barred
by the statute of frauds can still bind a party if the party admits
its existence with “sworn testimony in court or on deposition, or
in an answer to a complaint.” Litzenberg, 514 A.2d 476, 479 (Md.
1986); see also Trossbach v. Trossbach, 42 A.2d 905, 908 (Md. 1945)
(“Admissions of a party in testifying, though in form evidence, are
in essence not mere evidence, but make evidence against him
unnecessary. We think the Statute of Frauds requires no more.
Furthermore, admissions of a party in the form of testimony would
constitute sufficient ‘memoranda’ under Section 4 or Section 17, or
‘writings’ under Section 7, of the statute [then in force].”)
(citations omitted).
We do not agree with Fedder that the in-court admission
exception to the statute applies to this case. From the outset of
the negotiations, FB Hagerstown’s attorney made it clear that his
client would not consider itself bound by any agreement until it
had signed a final, written document. Thus, this is not the
typical in-court admission case where the parties to a contract
5
subject to the statute of frauds always intended the contract to
remain oral. Rather, the parties contemplated an agreement in
written form that would not be binding until it was signed by and
delivered to both of them. See J.A. 19 (e-mail from FB
Hagerstown’s attorney stating that “the contract is not binding on
either party unless and until executed by and delivered to both
parties”). Maryland law is clear that where the transfer of land
contemplates execution of a written document, the in-court
admission exception does not apply. See Litzenburg, 514 A.2d at
482 (“[W]here, as here, the oral agreement for the transfer of an
interest in land contemplates the execution of a written document
the contract is subject to disavowal until it is formally
executed.”); Pearlstein v. Maryland Deposit Ins. Fund, 552 A.2d 51,
56 (Md. Ct. Spec. App. 1989) (“Under [the statute of frauds] and
Litzenberg, the agreement should have been in writing and signed,
because it concerned land and because it contemplated the execution
of formal, written documentation. Accordingly, we reject
appellants’ argument that the oral testimony exception to the
statute of frauds applies in this case.”); cf. Barranco v.
Barranco, 604 A.2d 931, 934 (Md. Ct. Spec. App. 1992) (finding that
in-court admission exception did apply because the oral agreement
“was not a tentative agreement[,] . . . was not contingent upon a
written agreement[,] . . . [and] did not contemplate a written
agreement to finalize terms not already finalized”).
6
Because the purported agreement concerned the sale of land and
contemplated that it would not become binding until execution of a
formal written agreement by the parties, we decline to apply the
in-court admission exception to the statute of frauds.
B.
We next address Fedder’s contention that, even if the in-court
admission exception does not apply, the June 10 e-mail from FB
Hagerstown’s attorney satisfies all required elements of the
statute. In other words, Fedder argues that the e-mail is a
written memorandum “signed by the party to be charged or some other
person lawfully authorized by him.” Md. Code Ann., Real Prop. §
5-104.
The June 10 e-mail contained a “redline” comparison of the
most recent draft agreement and, on the “assumption that [the]
changes [were] acceptable” to Fedder, an “execution copy” of the
agreement. J.A. 39. The e-mail instructed that, if Fedder’s
attorney delivered five executed copies of the agreement to the
parties’ escrow agent with an initial deposit of $100,000, FB
Hagerstown’s attorney would ask FB Hagerstown to print out and
execute the same number of copies of the agreement. The e-mail
contained the attorney’s printed name and contact information at
the bottom, as had appeared in his previous e-mail correspondence.
7
Fedder claims this e-mail constitutes a signed memorandum
satisfying the statute of frauds. We disagree.
To be enforceable under the statute of frauds, “the required
memorandum must be (1) a writing (formal or informal); (2) signed
by the party to be charged or by his agent; (3) naming each party
to the contract with sufficient definiteness to identify him or his
agent; (4) describing the land or other property to which the
contract relates; and (5) setting forth the terms and conditions of
all the promises constituting the contract made between the
parties.” Beall v. Beall, 434 A.2d 1015, 1018 (Md. 1981). Some of
these required elements certainly appear to be present. For
example, the contract attached to the e-mail was in writing, named
each party to the contract with sufficient definiteness, and
described the land or other property to which the contract related.
However, the e-mail fails to satisfy the statute of frauds because
it was not signed by FB Hagerstown or by some other person lawfully
authorized by it.
Throughout the negotiations, FB Hagerstown’s attorney stressed
that the agreement would not be binding until his client signed and
that his client reserved the right to make changes to the drafts of
the agreement. See, e.g., J.A. 19 (e-mail from FB Hagerstown’s
attorney forwarding initial draft to Fedder’s attorney, reserving
for comments or changes by FB Hagerstown and explaining that
contract would not be binding unless and until signed by and
8
delivered to both parties); J.A. 31 (e-mail from FB Hagerstown’s
attorney stating that there may be further changes from FB
Hagerstown); J.A. 33 (e-mail from FB Hagerstown’s attorney noting
that draft was “subject to whatever comments [my client] may
have”). Furthermore, the June 10 e-mail stated that FB
Hagerstown’s attorney would not ask his client to execute the
agreement until Fedder had executed five copies of the agreement
and forwarded them to the escrow agent with a $100,000 deposit.
These requirements demonstrate that FB Hagerstown, and not its
attorney, possessed the sole authority to bind itself to the
agreement. Thus, even if we construe the attorney’s automatically
generated name and contact information to be a “signature” for
purposes of the statute of frauds, there is no legitimate dispute
that he was not authorized to bind his client to the agreement.*
Importantly, Fedder explicitly states in its reply brief that
it does not contend that FB Hagerstown’s attorney had the authority
to bind FB Hagerstown to the agreement. Fedder argues instead
that, because FB Hagerstown authorized its attorney to transmit the
agreement for execution, the attorney’s “signature” satisfied the
statute of frauds. We are not persuaded. Fedder has offered no
*
Given our conclusion that FB Hagerstown’s attorney lacked the
authority to bind it to the agreement, we express no opinion
concerning whether automatically generated contact information in
an e-mail amounts to a “signature.” This appears to be an issue of
first impression under Maryland law, and we decline to address
because it is not necessary to our decision.
9
case law or rationale to support this argument, and we are hard
pressed to accept that the signature of one whose authority is
limited to delivering a proposed contract can satisfy the statute
of frauds. The statute is clear that the memorandum must be in
writing and signed by “the party to be charged or some other person
lawfully authorized by him.” Md. Code Ann., Real Prop. § 5-104;
cf. Beall, 434 A.2d at 1018 (requiring the memorandum to be “signed
by the party to be charged or by his agent”). The scope of this
authority or agency must include the authority to bind the
principal to the contract, not merely the authority to deliver the
contract. Otherwise, the signatures of couriers and delivery staff
could bind principals even where, as in this case, the principal
had reserved the sole authority to act in its own name.
C.
Finally, Fedder argues that a binding contract existed because
it properly accepted the contract prior to FB Hagerstown’s
disavowal. As discussed above, because the statute of frauds
applies to this case and there is no signed memorandum, Fedder’s
claim is barred. However, even if it were not so barred, Fedder’s
actions did not amount to an acceptance of an offer that could form
a binding contract.
In his June 10 e-mail, FB Hagerstown’s attorney gave
instructions on how Fedder should execute and deliver the contract.
10
The attorney asked the appropriate authorized officer of Fedder to
sign five copies of the agreement and stated:
If you will deliver the copies to the Escrow Agent for
its signature along with the Initial Deposit of
$100,000.00, I will request [FB Hagerstown] print out and
execute the same number . . . for delivery to the Escrow
Agent as well. The Escrow Agent can then sign and date
all copies of the Contract, retain one original, and then
return two fully executed originals to you, and return
two originals to me for [FB Hagerstown] along with
evidence of receipt of the Initial Deposit.
J.A. 39.
Fedder’s attorney responded by saying that the changes were
acceptable and that he was forwarding the document to his client
for signature “with the instruction that he send to [the escrow
agent].” J.A. 84. Over two weeks later, Fedder’s attorney sent
another e-mail saying that he had the executed copies and deposit
check, and wanted to know if he should send the contracts to FB
Hagerstown’s attorney for signing or send them to the escrow agent.
Without ever signing the agreement, however, FB Hagerstown called
off the deal before Fedder delivered the signed contracts to the
escrow agent or to FB Hagerstown’s attorney. Fedder claims that,
by notifying FB Hagerstown’s attorney that it had signed the
agreement and prepared a deposit check, it accepted the offer and
formed a binding contract.
We disagree. Under general principles of contract law, an
enforceable contract is formed where one party makes an offer and
the other party accepts before the offer is revoked. See Prince
11
George’s County v. Silverman, 472 A.2d 104, 112 (Md. Ct. Spec. App.
1984) (“A contract is formed when an unrevoked offer made by one
person is accepted by another.”). “An ‘offer’ is the
‘manifestation of willingness to enter into a bargain, so made as
to justify another person in understanding that his assent to that
bargain is invited and will conclude it.’” Id. (quoting
Restatement (Second) of Contracts § 24 (1979)). In other words, an
offer is something that can be accepted to form a binding contract
without any further action on the part of the offeror.
In the present case, FB Hagerstown made clear from the outset
that “the contract is not binding on either party unless and until
executed by and delivered to both parties.” J.A. 19. Thus, the
June 10 e-mail specifying instructions for Fedder’s signature and
delivery could not have amounted to an “offer,” because, even had
Fedder followed the instructions exactly, FB Hagerstown still had
to sign the agreement to be bound. In other words, FB Hagerstown
reserved the last act of contract formation for itself.
Even had the June 10 e-mail been an offer, Fedder failed to
accept in the manner prescribed by FB Hagerstown’s attorney.
“Under general principles of contract law, when a method of
performance necessary to constitute acceptance of an offer has been
prescribed, performance in some other manner does not constitute
acceptance.” Baltimore County v. Archway Motors, Inc., 370 A.2d
113, 116 (Md. Ct. Spec. App. 1977). By stating that “if” Fedder
12
delivered five signed copies of the agreement to the escrow agent
with a deposit check, “I will request [FB Hagerstown] print out and
execute the same number,” J.A. 39, FB Hagerstown’s attorney was
placing an express condition on how Fedder should proceed. Cf.
Gilbane Bldg. Co. v. Brisk Waterproofing Co., 585 A.2d 248, 251
(Md. Ct. Spec. App. 1991) (“Although no particular form of words is
necessary in order to create an express condition, such words and
phrases as ‘if’ and ‘provided that,’ are commonly used to indicate
that performance has expressly been made conditional, as have the
words ‘when,’ ‘after,’ ‘as soon as’ or ‘subject to.’”) (citations
omitted).
As Judge Bredar correctly explained, “it is crystalline . . .
that material terms of the contract - the execution and delivery
terms deliberately designed to preserve [FB Hagerstown’s] position
to the last - were not met by [Fedder] prior to repudiation of the
deal by [FB Hagerstown].” J.A. 12. Thus, because FB Hagerstown
reserved the last act of contract formation for itself, and because
Fedder failed to follow instructions that were a condition to FB
Hagerstown’s completion of that act, no enforceable agreement
exists.
13
III.
From day one, FB Hagerstown reserved the right not to be bound
by the contract until it had been signed by and delivered to both
parties. Thus, whether viewed under the statute of frauds or
simply the intentions of the parties, without FB Hagerstown’s
signature, no enforceable agreement could have existed. For the
foregoing reasons, we affirm the grant of summary judgment to FB
Hagerstown.
AFFIRMED
14