Bennett v. Ashcraft & Gerel, LLP

• Court: Court of Special Appeals of Maryland
• Decided: September 1, 2023
• Docket: 0031/22
• Status: Published

Opinion

Jamie Bennett v. Ashcraft & Gerel, LLP, No. 31, Sept. Term 2022. Opinion by Arthur, J.

FEE-SHARING AGREEMENT—ENFORCEABILITY OF AGREEMENT

Maryland Rule 19-305.6(a) prohibits an attorney from making “a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of an attorney to practice after termination of the relationship, except an agreement concerning benefits upon retirement.” The rule is based on ABA Model Rule of Professional Conduct 5.6(a).

The policy underlying the rule is enunciated in Comment 1: “An agreement restricting the right of attorneys to practice after leaving a firm not only limits their professional autonomy but also limits the freedom of clients to choose an attorney.” The rule prohibits agreements not to practice within a particular geographic or substantive area, agreements not to represent any of the firm’s clients, and restrictions on client contact or use of client information. Financial disincentives for representing certain clients may violate Rule 5.6(a) if they are disguised attempts to penalize competition.

An agreement “in clear and flagrant violation” of the rules of professional conduct may be “unenforceable,” because “it would be anomalous to allow a lawyer to invoke the court’s aid in enforcing an unethical agreement when that very enforcement, or perhaps even the existence of the agreement sought to be enforced, would render the lawyer subject to discipline.” Post v. Bregman, 349 Md. 142, 168 (1998).

An agreement between a law firm and one of its attorneys concerning the division of a contingent fee that is earned after the attorney leaves the firm does not violate Maryland Rule 19-305.6(a), provided that the agreement endeavors to make a reasonable forecast of what a likely quantum meruit division of fees would have been. In the absence of such an agreement, the parties’ respective shares would be determined by principles of quantum meruit. But to determine its quantum meruit share, the firm would have to sue the client and the departing lawyer to establish the reasonable value of the services that it provided to the client. Lawyers should be encouraged to enter into agreements to resolve these kinds of potential disputes in advance and to avoid unseemly bickering over fees.

In this case, a law firm and one of its attorneys entered into an agreement concerning the division of a contingent fee that was generated after the attorney left the firm and was engaged by a client whom she had represented while she was at the firm. The agreement calls for the division of fees based on a sliding scale. The agreement compares the amount of time in which the firm was responsible for the client and the amount of time in which the attorney was responsible for the client. Then it uses those factors as a surrogate for the parties’ respective contributions to the outcome. The agreement does not purport to restrict the right of the attorney to practice law or prohibit the attorney from representing the firm’s clients. Nor does it limit the freedom of clients to choose to use the attorney’s services. And it does not penalize the attorney by requiring the forfeiture of a right that has already been earned. The Appellate Court of Maryland held that this agreement did not violate Maryland Rule 19-305.6(a) on its face or as applied to the facts of this case. The circuit court did not err upholding the enforceability of the agreement in this case.

FEE SHARING AGREEMENT—AWARD OF PRE-JUDGMENT INTEREST

Pre-judgment interest compensates judgment creditors for their inability to use the funds that should have been in their hands before the entry of judgment. Pre-judgment interest is available as a matter of right when the obligation to pay and the amount due is certain, definite, and liquidated by a specific date prior to judgment such that the effect of the debtor’s withholding payment was to deprive the creditor the use of a fixed amount as of a known date.

In this case, a lawyer received certain, definite, and liquidated settlement payments on discrete dates. She was contractually obligated to remit a certain, definite, and liquidated percentage of those payments to her former firm, but failed to do so. Hence, the firm was entitled to pre-judgment interest, as a matter of right, on each payment that she failed to make. The pre-judgment interest ran from the date on which each payment became due until the date of the judgment. The circuit court erred in denying the firm’s request for pre-judgment interest. Circuit Court for Prince George’s County Case No. CAL-18-36527 REPORTED

IN THE APPELLATE COURT

OF MARYLAND*

No. 31

September Term, 2022 ______________________________________

JAMIE BENNETT

v.

ASHCRAFT & GEREL, LLP ______________________________________

Berger, Arthur, Tang,

JJ. ______________________________________

Opinion by Arthur, J. ______________________________________ Pursuant to the Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. Filed: September 1, 2023 2023-09-01 14:40-04:00

Gregory Hilton, Clerk

* At the November 8, 2022, general election, the voters of Maryland ratified a constitutional amendment changing the name of the Court of Special Appeals of Maryland to the Appellate Court of Maryland. The name change took effect on December 14, 2022. This case principally involves a dispute between a law firm and an attorney who

was formerly employed by the firm. At the outset of her employment, the attorney and

the firm entered into an agreement about how they would divide a contingent fee if she

left the firm, was engaged by a client of the firm, and earned the fee after leaving the

firm.

The attorney contends that the agreement violates the Maryland Attorneys’ Rules

of Professional Conduct and, thus, is unenforceable. On that premise, she withheld over

$700,000.00 in fees that were due to the firm under the agreement.

For the reasons stated below, we shall hold that the agreement is not unenforceable

on its face or as applied in the circumstances of this particular case. Consequently, we

shall largely affirm the judgment of the Circuit Court for Prince George’s County, which

upheld the agreement and ordered the attorney to pay the fees that she had withheld in

violation of it. We shall, however, vacate the judgment insofar as the circuit court failed

to award pre-judgment interest to the firm. We shall remand the case with instructions to

amend the judgment to include the undisputed amount of $81,212.10 in pre-judgment

interest.

BACKGROUND

The “Prenuptial Agreement”

In 2011, after approximately 20 years as an Assistant United States Attorney,

appellant and cross-appellee Jamie Bennett joined the law firm of Ashcraft & Gerel, LLP

(“Ashcraft”). Ashcraft, the appellee and cross-appellant, is a regional law firm that primarily represents plaintiffs on a contingent-fee basis. Ashcraft hired Ms. Bennett to

take over its False Claims Act practice.1

Ms. Bennett began her employment with Ashcraft on April 1, 2011. On April 5,

2011, Ms. Bennett signed an agreement, to which the parties refer as the “Prenuptial

Agreement.” Ashcraft requires its attorneys to sign the Prenuptial Agreement as a

condition of their employment.

The Prenuptial Agreement is not an employment agreement; it is a departure

agreement. It governs the division of fees between Ashcraft and an attorney if the

attorney leaves the firm, is retained by any of the firm’s former clients, and settles the

clients’ cases after leaving the firm.

In the absence of an agreement like the Prenuptial Agreement, the parties’ share of

a contingent fee would be governed by principles of quantum meruit, under which the

firm would have to show the extent to which it contributed to the client’s success. See,

e.g., Somuah v. Flachs, 352 Md. 241, 257-58 (1998); First Nat’l Bank of Md. v. Meyer,

1 In very brief summary, the False Claims Act, 31 U.S.C. § 3729, imposes liability on persons who defraud the United States by submitting false claims for payment, among other things. In addition to a civil penalty, the statute requires the wrongdoer to pay treble damages. 31 U.S.C. § 3729(a)(1). Under 31 U.S.C. § 3730(b)(1), a private party may file suit in the name of the United States to address a violation of the False Claims Act. The government may then elect to pursue the so-called “qui tam” action brought by the private party (who is also known as the “relator”). See 31 U.S.C. § 3730(c). If the government proceeds with the action, the relator is entitled to “receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim” (31 U.S.C. § 3730(d)(1)), as well as an “amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys’ fees and costs.” Id. 2 Faller, Weisman & Rosenberg, P.C., 125 Md. App. 1, 20-23 (1999). The Prenuptial

Agreement attempts to resolve these potential fee disputes in advance.

The Prenuptial Agreement uses a sliding-scale formula to apportion the division of

fees. The formula considers two factors: (1) the amount of time between when the client

retained the firm and when the attorney departed, and (2) the amount of time between

when the attorney departed and when a fee was generated.

The Prenuptial Agreement provides as follows:

In summary, if the client retained the firm more than two years before the attorney

left, the firm’s share of the fee ranges from 75 percent to 65 percent, depending on

whether the fee was generated within one year, two years, or three years of when the

attorney left. If the client retained the firm between one and two years before the

attorney left, the firm’s share of the fee ranges from 70 percent to 60 percent, depending,

3 again, on whether the fee was generated within one year, two years, or three years of

when the attorney left. And if the client retained the firm less than a year before the

attorney left, the firm’s share of the fee ranges from 65 percent to 55 percent, depending

on whether the fee was generated within one year, two years, or three years of when the

attorney left.

The Prenuptial Agreement goes on to say that, when fees are generated more than

three years after the attorney leaves the firm, Ashcraft receives 55 percent if the clients

had been with the firm as long as they had been with the attorney; Ashcraft receives 50

percent if the clients had been with the attorney longer than they had been with the firm.

In effect, the Prenuptial Agreement focuses on the amount of time in which the

firm was responsible for the client and the amount of time in which the attorney was

responsible for the client. The Prenuptial Agreement uses those factors as a surrogate for

the parties’ respective contributions to the outcome. In general, under the Prenuptial

Agreement, the longer the case was with the firm before the attorney departed, the greater

the share of the fee for Ashcraft. On the other hand, the longer it took for the case to

generate the fee after the attorney’s departure, the lesser the share of the fee for the firm.

Based on the percentages assigned to the firm, the agreement appears to assume that the

firm typically makes a large investment of time, money, or both at the outset of an

engagement.

Ms. Bennett signed the Prenuptial Agreement, but about six months later she

formed the opinion that the agreement was unethical and that it violated the Maryland

4 Attorneys’ Rules of Professional Conduct. She expressed her opinion to Ashcraft’s

managing partner.

The Barker Cases

In February of 2012, Richard Barker retained Ashcraft to represent him in claims

arising under the False Claims Act. Pursuant to his retainer agreement with Ashcraft,

Barker agreed to pay 40 percent of any award to Ashcraft. Barker also agreed that any

recovery of statutory attorneys’ fees and costs would go to Ashcraft.

Ashcraft represented Barker in two False Claims Act cases that he brought on

behalf of the United States: United States ex rel. Barker v. Columbus Regional

Healthcare Sys., et al., No. 4:12-cv-108 (M.D. Ga.); and United States ex rel. Barker v.

Columbus Regional Healthcare Sys., et al., No. 4:14-cv-304 (M.D. Ga.). Ms. Bennett

was principally responsible for the representation.

The Barker cases settled in principle on April 3, 2015. Less than two months

later, on May 29, 2015, Ms. Bennett gave Ashcraft four weeks’ notice that she was

resigning from the firm. She left on June 26, 2015. When she left, Mr. Barker chose to

terminate his relationship with Ashcraft and to retain Ms. Bennett.

On September 2, 2015, the parties to the Barker cases, including Mr. Barker,

entered into a written settlement agreement. The agreement obligated the defendants to

pay between $25 million and $35 million to the United States and the State of Georgia,

on a quarterly basis, over five years. At the time of the settlement, Ashcraft had

advanced over $700,000.00 in legal fees and over $300,000.00 in costs.

5 Pursuant to the settlement agreement in the Barker cases, Mr. Barker would

receive over $5,000,000.00, which was subject to a contingent fee of over $2,000,000.00.

The settlement agreement also awarded Mr. Barker $675,000.00 in statutory attorneys’

fees. Ms. Bennett asserts that, as a result of her efforts after she left the firm, Mr.

Barker’s share of the recovery increased from $3,750,000.00 to over $5,000,000.00. Ms.

Bennett received the first installment of the settlement payments on September 3, 2015,

the day after the settlement agreement was signed, and less than three months after she

left the firm.

At the time of the settlement in the Barker cases, Ms. Bennett and Ashcraft

disagreed about the enforceability of the Prenuptial Agreement and the fees to which

Ashcraft was entitled from the Barker cases and others. Through counsel, the parties

reached a negotiated agreement as to the Barker fees, which was memorialized in email

dated October 5, 2015. In that agreement, Ashcraft and Ms. Bennett agreed to divide the

fees in the Barker cases in accordance with the formula set out in the Prenuptial

Agreement: 75 percent to Ashcraft and 25 percent to Ms. Bennett.

In accepting Ashcraft’s settlement proposal on Ms. Bennett’s behalf, Ms.

Bennett’s attorney stated that Ashcraft “should not interpret Ms. Bennett’s agreement in

this case as an admission regarding the validity of the prenuptial agreement.” Ashcraft

acknowledged Ms. Bennett’s position and replied, “This agreement does not release or

waive any rights Ashcraft may have with respect to any other issues with respect to Ms.

Bennett’s departure.”

6 Ms. Bennett and Ashcraft authorized the United States Department of Justice to

wire the Barker settlement proceeds and the statutory attorneys’ fees to an escrow

account established and held by Ms. Bennett’s attorney. Ms. Bennett’s attorney would

then pay Ashcraft and Ms. Bennett from that escrow account in the agreed percentages:

75 percent to Ashcraft and 25 percent to Ms. Bennett.2

In August of 2016, Ms. Bennett informed Ashcraft that her attorney’s escrow

account had been closed because of inactivity. She asked Ashcraft to consent to having

the settlement proceeds deposited into a new escrow in her name. Ashcraft consented on

the understanding that Ms. Bennett would continue to disburse the attorneys’ fees in

accordance with the parties’ agreement.

The Whipple Case

Before Ms. Bennett joined Ashcraft in 2011, the firm had entered into a joint

venture with another firm to represent Robert Whipple in a case under the False Claims

Act: United States ex rel. Whipple v. Chattanooga-Hamilton Cnty. Hosp. Auth., No. 3-11-

0206 (M.D. Tenn.). After Ms. Bennett joined the firm, she worked on the Whipple case.

Following her departure from Ashcraft, Ms. Bennett continued to represent Mr. Whipple

until his case settled in the summer of 2016. The settlement generated about $160,000.00

in fees.

2 In her recitation of the facts, Ms. Bennett asserts that, at the time of the settlement, Ashcraft was “eager, if not desperate, to receive a share of the Barker recovery.” Despite Ashcraft’s alleged desperation, however, it settled for the figure dictated by the Prenuptial Agreement. 7 On August 29, 2016, Ms. Bennett sent an email to Ashcraft’s attorney to “resolve

the disposition of the fees.” In the email, Ms. Bennett stated: “Under the pre-nuptial

agreement, I’m entitled to one third of the fees, since more than a year had passed since

my departure from the firm when the settlement was finalized.” In a subsequent email,

dated October 1, 2016, Ms. Bennett stated:

The case stayed with me after I left A & G[;] the settlement was finalized on June 22, 2016 (1 year and one month after I resigned from A & G, 1 year and 3 days after my 4 week notice period ended). Under our agreement, I am entitled to 30% of the fees, which total about $160k . . . . A &G’s share would be (approximately) $112 and $48k to me.

In another email, dated October 6, 2016, Ms. Bennett wrote that the Whipple case

“went with [her] when [she] left the firm,” that her co-counsel “specifically asked [her] to

continue working on the case,” and that “under the pre-nuptial agreement, [she is]

entitled to a 30% share of ALL fees that are paid as a result of that case.” She added:

“This is how we approached Barker, and there is no legally justifiable reason for a

different approach to this case.”

On October 16, 2016, Ashcraft agreed to divide the Whipple fees in accordance

with the Prenuptial Agreement, as Ms. Bennett had proposed.

Ms. Bennett’s Decision to Withhold Ashcraft’s Share of the Barker Fees

Ms. Bennett paid Ashcraft its 75 percent share of the settlement payments in the

Barker cases through July of 2018. Beginning in October of 2018, however, Ms. Bennett

stopped paying Ashcraft. Instead, she deposited Ashcraft’s share into her operating

account and paid it to herself. Ms. Bennett’s action coincided with the commencement of

this action against Ashcraft.

8 Procedural Background

On October 5, 2018, Ms. Bennett filed a complaint against Ashcraft. The

complaint asserted claims for tortious interference with prospective advantage, breach of

contract, and recission and requested a declaration that the Prenuptial Agreement was

unenforceable. The complaint did not mention the Barker cases. Instead, it concerned a

dispute involving another client, a Dr. Emmanuele.

After the court denied a motion to dismiss, Ashcraft answered the complaint. The

answer, which was filed on April 4, 2019, included the affirmative defense that Ms.

Bennett’s claims “are barred by the doctrines of estoppel and waiver.”

On June 5, 2019, Ms. Bennett filed an amended complaint, which she was allowed

to do without leave of court. See Md. Rule 2-341(a). The amended complaint added new

factual allegations and a number of new counts relating to the Barker cases. Among

other things, Ms. Bennett alleged that she had paid a portion of the Barker fees to

Ashcraft in consideration for Ashcraft’s agreement not to argue that she had waived her

right to challenge the Prenuptial Agreement. She alleged that Ashcraft had breached that

agreement when the firm included the affirmative defense of waiver in its answer. She

sought to recover the $1.6 million in fees that she had previously paid to Ashcraft out of

the Barker settlement. She also sought to rescind the Prenuptial Agreement on various

grounds. Finally, she sought a declaration that the Prenuptial Agreement was

unenforceable.

9 On July 10, 2019, Ashcraft moved to dismiss Ms. Bennett’s amended complaint.

In an order dated October 4, 2019, but not docketed until more than a month later, the

court denied Ashcraft’s motion.

Ashcraft answered the amended complaint on October 16, 2019, two days before

the answer was due. See Md. Rule 2-341(a); Md. Rule 2-321(a). The answer included a

counterclaim containing several counts related to the Barker cases.

Although Ashcraft was not even required to file its counterclaim until 30 days

after it filed its answer (see Md. Rule 2-331(d)), Ms. Bennett moved to strike it. On

December 5, 2019, the court granted the motion and struck the counterclaim. The court

may have been motivated by an impending trial date of February 10, 2020.

In an order dated January 14, 2020, but not docketed until a month later, the court

permitted Ms. Bennett to file a second amended complaint. On approximately January

16, 2020, Ms. Bennett apparently filed3 a second amended complaint, which added two

Barker-related counts.

In total, Ms. Bennett’s second amended complaint included 13 counts. Count I,

which concerned a client other than Barker, alleged tortious interference with prospective

economic advantage. Counts II through VI asserted claims for fraudulent

3 Both parties have proceeded as though Ms. Bennett actually filed a second amended complaint on that date. But although a copy of the second amended complaint is attached to Ms. Bennett’s motion for leave to amend, the court docket does not reflect that the second amended complaint was ever accepted for filing. Nor do Maryland Judiciary Case Search or MDEC reflect that any such document was ever accepted for filing. Ms. Bennett needed court approval to file the second amended complaint, because the putative filing date was less than 30 days before the trial date. Md. Rule 2-341(a).

10 misrepresentation, negligent misrepresentation, promissory estoppel, unjust enrichment,

and fraud in the inducement based on the firm’s alleged “promise” or “representation”

that it would not contend that Ms. Bennett had waived her right to contest the

enforceability of the Prenuptial Agreement. Count VII asked the court to rescind the

October 2015 settlement agreement because the firm had allegedly “repudiated” that

agreement by asserting that Ms. Bennett had waived her right to contest the Prenuptial

Agreement. Count VIII alleged that the firm had breached the Prenuptial Agreement by

seeking to obtain fees not covered by that agreement. Counts IX through XI asked the

court to rescind the Prenuptial Agreement on the ground that it is unenforceable under the

Maryland Attorneys’ Rules of Professional Conduct,4 among things. Count XII asserted

a claim for “money had and received,” which sought to recover the portion of the Barker

fees that Ms. Bennett had paid to Ashcraft. Finally, Count XIII requested a declaration

that the Prenuptial Agreement is unenforceable and “void ab initio” because it violates

the Rules of Professional Conduct and various common-law principles. Among other

authorities, Ms. Bennett cited Rule 5.6(a) of the ABA’s Model Rules of Professional

Conduct, on which Maryland Rule 19-305.6(a) is based.5

4 Maryland Rules 19-300.1 to 19-308.5. 5 Rule 19-305.6 provides as follows:

An attorney shall not participate in offering or making:

(a) a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of an attorney to practice after

11 On January 23, 2020, the parties invoked Maryland Rule 2-502 in a joint request

for the court to determine whether the Prenuptial Agreement was enforceable under the

Rules of Professional Conduct and the common law.6 The docket reflects that on January

24, 2020, the trial was postponed (i.e., that “civil try by date” was waived).

On January 31, 2020, Ashcraft moved to dismiss all counts in Ms. Bennett’s

second amended complaint, except for Count I, which alleged tortious interference with

prospective economic advantage with respect to a client other than Barker.

On February 21, 2020, before the court had decided the motion to dismiss,

Ashcraft filed an answer to the second amended complaint and a counterclaim. The

counterclaim was identical to the counterclaim to Ms. Bennett’s first amended complaint

in all respects but one: the new counterclaim added a count alleging that Ashcraft had

termination of the relationship, except an agreement concerning benefits upon retirement; or

(b) an agreement in which a restriction on the attorney’s right to practice is part of the settlement of a client controversy. 6 Maryland Rule 2-502 sets forth the procedure for obtaining the resolution of a pure question of law. Rule 2-502 states:

If at any stage of an action a question arises that is within the sole province of the court to decide, whether or not the action is triable by a jury, and if it would be convenient to have the question decided before proceeding further, the court, on motion or on its own initiative, may order that the question be presented for decision in the manner the court deems expedient. In resolving the question, the court may accept facts stipulated by the parties, may find facts after receiving evidence, and may draw inferences from these facts. The proceedings and decisions of the court shall be on the record, and the decisions shall be reviewable upon appeal after entry of an appealable order or judgment.

12 detrimentally relied on Ms. Bennett’s promise to keep the Barker settlement proceeds in

her escrow account and to distribute 75 percent of the fees to the firm.7

Again, Ms. Bennett filed a motion to dismiss and strike Ashcraft’s counterclaims

to her second amended complaint as untimely under Md. Rule 2-331. The circuit court

denied Ms. Bennett’s motion.

On July 9, 2020, the circuit court ruled that the Prenuptial Agreement did not

violate the Maryland Attorneys’ Rules of Professional Conduct and that it was

enforceable under Maryland common law. On that same day, the court dismissed all

counts of Ms. Bennett’s second amended complaint, with prejudice, except for Count I,

which did not relate to the Barker cases.

The court did not disclose the reasoning underlying either of the rulings. In light

of those rulings, however, the only remaining issues involved Count I of Ms. Bennett’s

second amended complaint (for tortious interference with respect to a client other than

Barker) and the issues in Ashcraft’s counterclaim.

After the court had dismissed most of her case and ruled that the Prenuptial

Agreement was enforceable, Ms. Bennett filed a series of three motions for sanctions

against Ashcraft and its attorneys. In brief summary, the motions asserted that Ashcraft

and the attorneys had made misrepresentations to the court when they denied Ms.

Bennett’s contention that Ashcraft had agreed not to argue that she waived the right to

7 Counts I through IV of the counterclaims remained the same. The claim for detrimental reliance became Count V. Count V of the earlier counterclaim, which requested a declaratory judgment, became Count VI. 13 challenge the Prenuptial Agreement. On September 13, 2021, the circuit court denied all

three of the motions for sanctions.

Before trial, which was scheduled to begin on November 2, 2021,8 both parties

renewed their motions for summary judgment on Ashcraft’s counterclaims. On October

26, 2021, the circuit court denied Ms. Bennett’s motion for summary judgment on

Ashcraft’s counterclaims and granted Ashcraft’s cross-motion for summary judgment on

its counterclaim for breach of contract.

On that same date, the court imposed a constructive trust on all monies received

by Ms. Bennett in the Barker cases on behalf of Ashcraft, including some $387,000.00

that she had received in November 2019. In addition, the court ordered Ms. Bennett to

provide “a complete accounting of all funds she has received in the Barker cases from

August 6, 2018 forward, the dates on which those funds were received, how those funds

have been distributed, to whom, and in what amount, and the present status of those

funds.”

On October 27, 2021, the parties agreed that all that remained was a calculation of

Ashcraft’s damages. The parties stipulated to the dismissal of the sole remaining count

of Ms. Bennett’s second amended complaint and of the unadjudicated counts in

Ashcraft’s counterclaim. The circuit court agreed that the parties could submit a

proposed order or orders with calculations of Ashcraft’s damages once Ms. Bennett

provided Ashcraft with the required accounting.

8 The trial date had been continued on March 26, 2020, and again on June 29, 2020, as a result of the COVID-19 pandemic. 14 On October 29, 2021, Ms. Bennett provided Ashcraft with information regarding

all payments she had received in the Barker cases since August 2018. Ashcraft used this

information to calculate that the damages on its breach of contract claim totaled

$706,164.83, not including pre-judgment interest. Ashcraft requested pre-judgment

In an order dated November 2, 2021, but not docketed until November 15, 2021,

the circuit court issued a declaratory judgment stating that the Prenuptial Agreement is

enforceable. In a second order dated November 2, 2021, and docketed on November 15,

2021, the court entered judgment against Ms. Bennett in the amount of $706,164.83. The

court awarded no pre-judgment interest.

On November 15, 2021, Ms. Bennett moved for reconsideration. The court denied

her motion on February 18, 2022.

Ms. Bennett noted an appeal on March 8, 2022. Ashcraft noted a cross-appeal

from the denial of the claim for pre-judgment interest on March 23, 2022.

QUESTIONS PRESENTED

Ms. Bennett raises the following questions, which we have reworded and re-

ordered in the interest of concision:

1. Whether the circuit court erred in concluding that the Prenuptial Agreement is an enforceable contract under the Maryland Rules of Professional Conduct and Maryland common law;

2. Whether the circuit court erred in granting summary judgment in favor of Ashcraft on its breach of contract claim against Ms. Bennett for withholding payment of the Barker fees;

15 3. Whether the court erred in dismissing Counts II (fraudulent misrepresentation), III (negligent misrepresentation), VI (fraud in the inducement), and VII (recission) of Ms. Bennett’s second amended complaint;

4. Whether the circuit court erred in imposing a constructive trust;

5. Whether the circuit court erred when it allowed Ashcraft to file counterclaims in response to Ms. Bennett’s second amended complaint; and

6. Whether the circuit court erred in denying Ms. Bennett’s motions for sanctions.9

9 Ms. Bennett phrased her questions as follows:

I. Whether a restrictive covenant in a law firm’s employment agreement requiring Bennett to pay her former firm more than $2.4 million for goodwill for a single client violates the public interest as expressed in Maryland Rules of Professional Conduct 5.6, 1.7 and 1.8 and/or constitutes an impermissible penalty under Maryland common law.

II. Whether Judge Dawson erred by granting Ashcraft summary judgment on a breach of contract claim where the evidence was undisputed that the law firm itself repeatedly breached a material term of that contract.

III. Whether Judge Dawson’s decision to grant Ashcraft equitable and legal relief on its breach of contract counterclaim was legally correct.

IV. Whether Judge Dawson’s dismissal of Counts II (fraudulent misrepresentation), III (negligent misrepresentation), VI (fraud in the inducement), and VII (rescission) of Bennett’s [Second Amended Complaint] was legally correct where the allegations of the [Second Amended Complaint], read in the light most favorable to Bennett, stated legally cognizable claims for rescission and fraud arising out of Ashcraft’s breach of the October 2015 Settlement Agreement.

V. Whether Judge Dawson’s refusal to strike Ashcraft’s renewed counterclaims asserted in an Answer responding to the [Second Amended Complaint] filed with leave of court was legally correct under applicable res judicata principles and Maryland Rules 2-322, 2-324 and 2-341(b).

VI. Whether Judge Dawson erred when he relied upon confidential settlement

16 In Ashcraft’s cross-appeal, it raised the following issue, which we have reworded:

Whether the circuit court erred by failing to award Ashcraft pre-judgment interest.10

DISCUSSION

I. ENFORCEABILITY OF THE PRENUPTIAL AGREEMENT

The parties filed a joint motion for a ruling under Maryland Rule 2-502, asking the

circuit court to determine: (1) whether the Prenuptial Agreement violates the Maryland

Attorneys’ Rules of Professional Conduct and (2) whether the Prenuptial Agreement is

enforceable under Maryland common law. The circuit court determined that the

agreement did not violate the rules and that it was enforceable under the common law.

An appellate court reviews that legal determination without deference. See Bender v.

Schwartz, 172 Md. App. 648, 664 (2007).

A. Is the Validity of the Prenuptial Agreement a Moot Question?

Ms. Bennett asserts that the October 2015 settlement agreement is “independently

enforceable under Maryland law.” “The parties agree,” she says, that the settlement

agreement constitutes an enforceable contract. Indeed, it would seem that the October

negotiations in granting summary judgment for the law firm.

VII. Whether Judge Dawson abused his discretion when he denied Bennett’s motions for sanctions under Maryland Rule 1-341, given the law firm’s and its counsel’s clear misconduct in litigating a breach of contract claim which indisputably has no merit under Maryland law. 10 Ashcraft phrased its question as follows: “Whether the circuit court erred by failing to award the Firm prejudgment interest on its successful summary judgment claim for a certain, definite, and liquidated amount that was known prior to judgment?”

17 2015 settlement agreement was an accord and satisfaction that replaced the Prenuptial

Agreement, at least with respect to the Barker fees. Thus, Ashcraft argues that “the

question of whether the Prenuptial Agreement is enforceable is moot.”

Were that so, it would greatly simplify the task before us. In the circuit court,

however, both parties proceeded as though the enforceability of the Prenuptial Agreement

was the overarching issue in the case. For example, Ashcraft requested and obtained a

money judgment on Count I of its counterclaim, which alleged that Ms. Bennett had

breached the Prenuptial Agreement, not the October 2015 settlement agreement.

Similarly, Ashcraft requested and obtained a declaratory judgment that the Prenuptial

Agreement is valid. Conversely, Ms. Bennett sought a declaration that the Prenuptial

Agreement was unenforceable, and several counts of her second amended complaint

sought to rescind the Prenuptial Agreement. Both parties invoked Rule 2-502 to obtain

the circuit court’s decision about whether the Prenuptial Agreement was enforceable.

Finally, Ms. Bennett asserts that she continues to represent Ashcraft’s former clients and

that the validity of the Prenuptial Agreement remains a live issue as to the division of any

fees generated in those matters.

In these circumstances, the validity of the Prenuptial Agreement remains a live

controversy. We cannot decline to decide that issue on the ground that it is moot.

B. Enforceability of Prenuptial Agreement under Rules of Professional Conduct

The Rules of Professional Conduct contain statements of public policy to which

agreements among lawyers are subject. See Post v. Bregman, 349 Md. 142, 168 (1998).

An agreement “in clear and flagrant violation” of such a rule may be “unenforceable,”

18 because “it would be anomalous to allow a lawyer to invoke the court’s aid in enforcing

an unethical agreement when that very enforcement, or perhaps even the existence of the

agreement sought to be enforced, would render the lawyer subject to discipline.” Id.

Ms. Bennett’s challenge principally involves a disciplinary rule that pertains to

lawyers: Maryland Rule 19-305.6(a). The rule is based on the Ethics 2000 Amendments

to the ABA Model Rules of Professional Conduct: Maryland Rule 19-305.6(a) is based

on Model Rule 5.6(a).11

Most of the authorities in Maryland and elsewhere refer to the ABA Model Rules.

The older Maryland cases use the numbering in the Model Rules, because the Maryland

Attorneys’ Rules of Professional Conduct did not become part of Title 19 of the

11 In her second amended complaint, Ms. Bennett alleged that the Prenuptial Agreement violated Maryland Rule 19-301.5(e), the counterpart of ABA Model Rule 1.5(3). She does not press that point on appeal, but if she did, she would not prevail. Maryland Rule 19-301.5(e) provides:

A division of a fee between attorneys who are not in the same firm may be made only if: (1) the division is in proportion to the services performed by each attorney or each attorney assumes joint responsibility for the representation; (2) the client agrees to the joint representation and the agreement is confirmed in writing; and (3) the total fee is reasonable.

A Michigan court explained why ABA Model Rule 1.5(e) does not apply to agreements like the Prenuptial Agreement:

[Rule] 1.5(e) is designed to prohibit brokering, to protect a client from clandestine payment and employment, and to prohibit aggrandizement of fees. Plainly, none of these concerns is implicated in this case. . . . The agreement is simply a mechanism for dividing an already existing fee. In other words, this is not a referral situation contemplated by the rule.

McCroskey, Feldman, Cochrane & Brock, P.C. v. Waters, 494 N.W.2d 826, 828 (Mich. Ct. App. 1992) (internal citation omitted). 19 Maryland Rules until 2016. Consequently, in our discussion of applicable rules, we will,

from time to time, also use the numbering in the Model Rules.

Maryland Rule 19-305.6(a) provides:

(a) a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of an attorney to practice after termination of the relationship, except an agreement concerning benefits upon retirement[.]

Rule 5.6(a) and Maryland Rule 19-305.6(a) require a much more detailed

discussion. Those rules, once again, prohibit agreements that “restrict[] the right of an

attorney to practice after termination of the relationship, except an agreement concerning

benefits upon retirement[.]”

“Rule 5.6(a) prohibits employment agreements designed to prevent lawyers from

competing with their former firms after they change jobs.” Ellen J. Bennett, Helen W.

Gunnarsson & Nancy G. Kisicki, Annotated Model Rules of Professional Conduct 610

(10th ed. 2023). “These include promises not to practice within a particular geographic

or substantive area, promises not to represent any of the firm’s clients, and restrictions on

client contact or use of client information.” Id. “Financial disincentives for taking ‘firm’

clients violate Rule 5.6 if they are disguised attempts to penalize competition.” Id. at

613.

The policy underlying Rule 5.6(a) and Maryland Rule 19-305.6(a) is enunciated in

Comment 1: “An agreement restricting the right of attorneys to practice after leaving a

20 firm not only limits their professional autonomy but also limits the freedom of clients to

choose an attorney.”

Ms. Bennett argues that the Prenuptial Agreement is unenforceable under Rule 19-

305.6(a) because, in her view, the agreement places “a burden on a departing lawyer’s

ability to practice law and a client’s choice of counsel.” We disagree that the Prenuptial

Agreement is invalid on its face—i.e., we disagree that the Prenuptial Agreement is

categorically unenforceable under any and all circumstances. We also disagree that the

Prenuptial Agreement is unenforceable under the circumstances presented in this

particular case.

The Prenuptial Agreement addresses a well-known and longstanding problem in

the practice of law: When a lawyer leaves a firm and is engaged by one of the firm’s

clients before a contingent fee is earned in the client’s case, how do the lawyer and the

firm divide the fee?

In the absence of an advance agreement like the Prenuptial Agreement, the parties’

respective shares would be determined by principles of quantum meruit, “based on the

reasonable value of services rendered” by the firm “prior to [its] discharge.” See, e.g.,

Somuah v. Flachs, 352 Md. at 258; id. at 268 n.8; see Geoffrey Hazard, Jr., W. William

Hodes & Peter R. Jervis, The Law of Lawyering § 50.03 (4th ed. 2023) (stating that,

“[f]or flat fee or contingent fee matters . . . the approach in the absence of an express

agreement is typically done on a quantum meruit basis, by comparing the value provided

to the client by the pre-departure work to the value of the work that would be done post-

departure[]”) (emphasis added); Jacob A. Stein & Andrew M. Beato, The Law of Law

21 Firms § 5.12, at 194 (2021 ed.) (stating that, “[w]here there is no fee-division agreement

between the firm and the attorney, courts generally hold that the firm is entitled to

recover a fee on the basis of quantum meruit after the contingency has occurred[]”)

(emphasis added).12

Quantum meruit actions present a number of difficult procedural and practical

problems. First, the firm must name its former client as a defendant, because the client

owes the fee. See Somuah v. Flachs, 352 Md. at 263 (stating that “[t]he primary rationale

for permitting quantum meruit recovery is to prevent unjust enrichment to the client of

the benefits of the attorney’s services prior to discharge”). In addition, the firm must join

the other lawyer, because the firm’s recovery will be derived from the other lawyer’s

share of the recovery. Id. at 268 n.8.

In a quantum meruit action, proving the reasonable value of services rendered

prior to discharge can be a factually intensive exercise, with competing experts and

acrimonious charges and counter-charges. See, e.g., Brault Graham, LLC v. Law Offices

12 Citing Brault Graham, LLC v. Law Offices of Peter G. Angelos, P.C., 211 Md. App. 638, 674 (2013), Ms. Bennett argues that “a discharged attorney may not claim a contractual entitlement to a former client’s contingency fee based upon its retainer agreement with that client but may only seek quantum meruit.” Ms. Bennett has misstated the holding in that case. In Brault Graham this Court held “that, when a client discharges his or her lawyer, any contingency fee contract ceases to exist, and generally, absent contractual language to the contrary, any fee-splitting agreement predicated on the initial contingency fee contract also ceases to exist.” Id. (emphasis added.) In any event, in this case, Ashcraft is not asserting a “contractual entitlement to a former client’s contingency fee based upon its retainer agreement with that client.” It is asserting a contractual right to a portion of the fee based upon an agreement with a former employee, Ms. Bennett, who left the firm and took the client before the fee was generated.

22 of Peter G. Angelos, P.C., 211 Md. App. 638 (2013). It is difficult to imagine how a firm

could prove the reasonable value of the services that it performed without a full-blown

trial. In addition, the cost of litigation will consume a considerable portion of everyone’s

share of the fees. And quarrelling over fees does not put the legal profession in the best

possible light.13

Agreements like the Prenuptial Agreement attempt to avoid these problems by

requiring the parties to stipulate, in advance, to something resembling a forecast of what a

quantum meruit division of the fees would be. Rule 5.6(a) does not “preclude

enforcement of fee-allocation agreements logically related to the anticipated financial

impact of the lawyer’s departure.” Bennett, et al., Annotated Model Rules of Professional

Conduct, supra, 614. Thus, the authorities have generally upheld such agreements.

Hazard, et al., The Law of Lawyering § 50.03, supra, at 50-09 (citing Barna, Guzy &

Steffen, Ltd. v. Beens, 541 N.W.2d 354 (Minn. Ct. App. 1995); McCroskey, Feldman,

Cochrane & Brock, P.C. v. Waters, 494 N.W.2d 826 (Mich. Ct. App. 1992)); see also

Groen, Laveson, Goldberg & Rubenstone v. Kancher, 827 A.2d 1163, 1165, 1171-72

(N.J. Super. Ct. App. Div. 2003).

In 1989 the Ethics Committee of the Maryland State Bar Association reviewed an

agreement with some similarities to the one in this case. MSBA Ethics Comm., Formal

13 Under Maryland law, if the client discharged one of the attorneys because of “serious misconduct, i.e., fraud or illegal conduct, etc.,” then “the attorney is not entitled to any fee.” Somuah v. Flachs, 352 Md. at 256. Consequently, in a zero-sum battle over a finite sum of money that is being depleted by the cost of litigation, one lawyer may have an incentive to charge the other with “serious misconduct.” 23 Op. 1989-29 (1989), https://perma.cc/P7PZ-KPBN. The Ethics Committee’s opinion “‘is

advisory, and is not binding on this Court’” (Attorney Grievance Comm’n v. Carithers,

421 Md. 28, 54 n.14 (2011), quoting Attorney Grievance Comm’n v. Gregory, 311 Md.

522, 531-32 (1988)), but it is still “persuasive authority, where our case law and rules are

silent on a particular issue[.]” Id.

In the 1989 opinion, the agreement in question had a “sliding chart with respect to

the division of fees,” much like the sliding scale in the Prenuptial Agreement. MSBA

Ethics Comm., Formal Op. 1989-29. Under the “sliding chart,” the fee division was

“based upon a combination of the length of time that the case was in the law firm prior to

the attorney’s termination and the period of time in which the fee is realized after the

attorney has left the firm,” much like the fee division in the Prenuptial Agreement. The

Ethics Committee concluded that this agreement did “not violate” Rule 5.6(a) of the

Rules of Professional Conduct, the predecessor of Rule 19-305.6(a). MSBA Ethics

Comm., Formal Op. 1989-29. The Committee explained that it did “not view” the

agreement as an agreement that “restricts the right of a lawyer to practice after

termination of the relationship.” Id. It wrote:

The subject agreement does not purport to restrict the right of a departing attorney to practice law. It contains no restrictive covenants, nor does it contain any prohibition against a departing attorney from representing prior clients of the firm. What it does do is to provide, in advance of the termination of employment, for the division of fees to be earned by the law firm and attorney respectively.

Id.

24 The Committee added that “the agreement does not limit the freedom of clients to

choose to utilize the services of the departing attorney.” Id. “Rather, it defines in

advance of any controversy the division of fees in a manner somewhat akin to a provision

for liquidated damages.” Id.

Similarly, in 1991 the Legal Ethics Committee of the District of Columbia Bar

considered and generally approved of an agreement that appears to be substantively

identical to the Prenuptial Agreement. D.C. Ethics Comm., Formal Op. 221 (1991),

https://perma.cc/AZZ3-K5NT. In that opinion, the agreement under review “provide[d] a

sliding chart whereby the fee will be divided between the departed attorney and the firm

based on a combination of [the] length of time the case was with the firm before the

attorney left and [the] length of time it is with the attorney before the fee is realized.” Id.

For example:

[I]f the firm was retained prior to two years before the attorney left the firm and the fee is realized within one year after the attorney’s departure, the firm is entitled to 75% of the fee. The lowest percentage taken by the firm is 55% for cases in which the firm was retained within one year of the attorney’s departure and where the fee is not realized until two to three years after the departure date.

The Committee concluded that those fee provisions “do not violate the Rules of

Professional Conduct.” Id. The Committee reasoned that “the fee division agreement at

issue in this inquiry seeks compensation for work already performed by the firm.” Id. It

added:

One purpose of predetermined fee-sharing with a departing lawyer is to avoid the unseemly bickering and the potential for litigation over clients

25 and fees that can occur when a departing lawyer takes clients whose matters are being handled on a contingent fee basis. The agreement here applies only in contingent[-]fee personal injury cases in which significant costs may be incurred by the firm near the beginning of the attorney-client relationship. Fees ultimately realized are divided on a percentage basis which varies according to the length of time the case was handled by the firm and the length of time it was handled separately by the departing lawyer.

Id. (footnote omitted).

The Committee cautioned that it could “neither approve nor disapprove the

specific percentages” used in the agreement. Id. The Committee volunteered, however,

that “[i]f the percentages represent a generally fair allocation of fees based on the firm’s

historical experience there is no violation of Rule 5.6(a),” the counterpart of Maryland

Rule 19-305.6(a).

By contrast, in 1993, the MSBA Ethics Committee opined that a different

agreement, with no sliding scale, would violate the predecessor of Rule 19-305.6(a).

MSBA Ethics Comm., Formal Op. 1993-21 (1989), https://perma.cc/BR8W-TQ7A.

Although the opinion does not clearly describe the terms of the agreement in question, it

appears that the firm would receive 50 percent of the fees if the client had engaged the

firm less than 45 days before the attorney left and 66.6 percent if the client had engaged

the firm more than 45 days before the attorney left. Id.

In disapproving of this agreement, the Committee distinguished the agreement in

the 1989 opinion. Unlike that earlier agreement, the Committee wrote, the agreement

before it did “not ‘slide,’” but contained two rigid tiers. Id. In other words, unlike the

earlier agreement, this agreement did not account for the amount of time in which the

26 departing attorney had had the sole responsibility for the client; rather it assigned two-

thirds of the fee to the firm whenever the client had engaged the firm more than six

weeks before the attorney left. The Committee added that, “[b]ecause the arbitrary fee

division percentages” applied “to all cases, the effect of this contract would be to restrict

the [departing] attorney’s practice after termination.” Id. In some cases, the Committee

opined, “the percentage would be so high as to discourage the attorney from taking the

case,” thereby denying the clients the attorney of their choice. Id.

The North Carolina State Bar cited both of the MSBA opinions in opining that “a

lawyer may participate in the offering or making of an . . . agreement that includes a

provision for dividing fees following a lawyer’s departure from a firm[,] provided the

formula or procedure for dividing fees is, at the time the agreement is made, reasonably

calculated to compensate the firm for the resources expended by the firm on the

representation as of the date of the lawyer’s departure and will not discourage a departing

lawyer from taking a case and thereby deny the client access to the lawyer of his choice.”

N.C. State Bar, Formal Ethics Op. 2008-8 (2008), https://perma.cc/M4FY-YUZU.

Citing one of their earlier opinions, the North Carolina authorities wrote that

“agreements that resolve the division of contingent fees received after a lawyer leaves a

law firm ‘prevent clients from being put in the middle of a dispute between lawyers.’”

Id. (citing N.C. State Bar, Ethics Decision 2000-6 (2000)). For that reason, “lawyers are

encouraged to enter into agreements that will resolve such potential disputes fairly and

without rancor.” Id.

27 The North Carolina opinion specifically approved of an agreement that used a

sliding scale similar to that of the Prenuptial Agreement: “The formula allocates to the

firm a percentage of the fee equivalent to the amount of time that the lawyer represented

the client while the lawyer was employed by the firm and receiving compensation from

the firm.” Id. “Thus,” the opinion concluded, “the departed lawyer[s] will be fully

compensated for any work that [they] perform[] on a case after [they] leave[] the firm and

will not be discouraged from the continued representation of clients who desire [their]

services.” Id.

A number of cases from other jurisdictions have considered the validity of

agreements like the Prenuptial Agreement. Those cases have unanimously rejected the

contention that such agreements violate Rule 5.6(a).

In McCroskey, Feldman, Cochrane & Brock, P.C. v. Waters, 494 N.W.2d 826

(Mich. Ct. App. 1993), the agreement required a departing attorney to remit varying

percentages of the contingent fees, depending on the progress of the case at the time

when the client engaged the attorney. See id. at 827. In essence, the closer the case was

to resolution when the client engaged the departing attorney, the greater the percentage

the attorney would have to remit to the firm. See id.

The Michigan court immediately recognized that this “contract simply seeks to

obviate time-consuming squabbles that formerly arose when [the firm’s] entitlement to its

fair share of any fee generated by a departing client’s file was determined on a quantum

meruit basis.” Id. at 828. The court agreed with the firm that “such arrangements, as

long as they are reasonable, should be encouraged.” Id.

28 In holding that the agreement did not violate Michigan’s version of Model Rule

5.6(a), the court wrote that the provisions were “not so overreaching that they amount to

an actual restriction on [the departing attorney’s] right to practice law.” Id. The court

explained that the agreement “reasonably assign[ed] to [the departing attorney] a ratable

proportion of a given fee on the basis of the stage of the litigation at the time of

departure.” Id. at 828-29. “Although the percentages [were] arguably imperfect,” the

court did “not deem it appropriate to require precision.” Id. at 829. Because the

agreement was “a reasonable attempt to relate [the firm’s] fee entitlement to the amount

of work done on a given file before it left the firm[,]” the court held that it did not violate

Rule 5.6(a). Id.

In Barna, Guzy & Steffen, Ltd. v. Beens, 541 N.W.2d 354 (Minn. Ct. App. 1995),

the court considered an agreement that required the departing attorney to pay 50 percent

of any contingent fees generated in a matter in which one of the firm’s former clients

followed him to his new firm. Id. at 355-56. The departing lawyer argued that the 50-50

split operated as a “financial disincentive,” restricting his “future practice, as well as the

client’s right to choose a lawyer.” Id. at 357. The Minnesota court disagreed.

In reaching its decision, the court perceived that “[t]he focus of [its] decision is the

client.” Id. It wrote that the rule’s “‘underlying purpose is to ensure the freedom of

clients to select counsel of their choice, despite its wording in terms of the lawyer’s right

to practice.’” Id. (quoting Jacob v. Norris, McLaughlin & Marcus, 607 A.2d 142, 146

(N.J. 1992)). But the court distinguished the agreement in that case from the type of

agreement that typically runs afoul of Rule 5.6(a)—one that “penalizes an attorney for

29 continuing to represent certain clients” (id.) by, for example, requiring attorneys to forfeit

compensation otherwise due if they went into competition with the firm. See, e.g., Jacob

v. Norris, McLaughlin & Marcus, 607 A.2d at 152-53. Under the agreement in the

Minnesota case, the court observed, the departing lawyer “would have received less than

50% of the contingency if he had remained at the firm.” Barna, Guzy & Steffen, Ltd. v.

Beens, 541 N.W.2d at 357. For that reason, the court concluded that “there [was] no

incentive” for him to decline the representation of the firm’s former clients. Id. “If such

agreements cannot be enforced,” the court commented, “law firms will face instability

because attorneys will be motivated to leave firms when they receive lucrative contingent

fee cases, and attorneys will be encouraged to battle over clients.” Id. at 356.14

Finally, in Groen, Laveson, Goldberg & Rubenstone v. Kancher, 827 A.2d 1163

(N.J. Super. Ct. App. Div. 2003), the court upheld an agreement, similar to the one in the

Minnesota case, which required the departing attorney to pay 50 percent of any

contingent fees generated in a matter in which one of the firm’s former clients followed

him to his new firm. Id. at 1163-64. Like the Minnesota court, the court distinguished

agreements that require departing attorneys to forfeit compensation if they go into

competition with their former firm. Id. at 1165; id. at 1169. The court saw nothing in the

record to establish that the agreement prevented the departing attorney from continuing

his practice or handling cases that clients wanted him to take from his former firm. Id. at

14 The court made this final comment while holding that the agreement did not violate Model Rule 1.5, the counterpart to Maryland Rule 19-301.5, but the comment applies equally to Rule 5.6(a). 30 1169. The court approvingly quoted the Minnesota court’s observation that, “‘[i]f such

agreements cannot be enforced, law firms will face instability because attorneys will be

motivated to leave firms when they receive lucrative contingent fee cases, and attorneys

will be encouraged to battle over clients.’” Id. at 1171 (quoting Barna, Guzy & Steffen,

Ltd. v. Beens, 541 N.W.2d at 356). Finally, the court approvingly quoted a Louisiana

court, which had said that agreements of this sort are “‘actually very conducive to the

orderly conduct of practicing law’” and that it “‘approves of contracts whereby attorneys

avoid unnecessary litigation by setting up formulas between themselves which allow for

the orderly break up of a law practice.’” Id. at 1172 (quoting Walker v. Carimi Law

Firm, 725 So.2d 592, 595 (La. Ct. App. 1998)).

In view of these authorities, we conclude that the Prenuptial Agreement is not

unenforceable on its face—i.e., that it is not facially invalid. We are persuaded by the

1989 MSBA ethics opinion, which approved an agreement with a sliding-scale formula,

much like Ashcraft’s—one in which the division of fees is “based upon a combination of

the length of time that the case was in the law firm prior to the attorney’s termination and

the period of time in which the fee is realized after the attorney has left the firm.” MSBA

Ethics Comm., Formal Op. 1989-29. We are also persuaded by the 1991 District of

Columbia ethics opinion, which approved an agreement that seems almost identical to

Ashcraft’s—one in which the “[f]ees ultimately realized are divided on a percentage basis

which varies according to the length of time the case was handled by the firm and the

length of time it was handled separately by the departing lawyer.” D.C. Ethics Comm.,

Formal Op. 221. We are persuaded as well by the Michigan Court of Appeals’ decision

31 in McCroskey, which upheld an agreement under which the departing attorney received

“a ratable proportion of a given fee on the basis of the stage of the litigation at the time of

departure.” McCroskey, Feldman, Cochrane & Brock, P.C. v. Waters, 494 N.W.2d at

828-29.

Like the agreement at issue in the 1989 MSBA ethics opinion, the Prenuptial

Agreement “does not purport to restrict the right of a departing attorney to practice law.”

MSBA Ethics Comm., Formal Op. 1989-29. Nor does the Prenuptial Agreement “limit

the freedom of clients to choose to utilize the services of the departing attorney.” Id. The

Prenuptial Agreement “contains no restrictive covenants, nor does it contain any

prohibition against a departing attorney from representing prior clients of the firm.” Id.

Nor does it penalize the attorney by withholding a benefit otherwise owed (see Barna,

Guzy & Steffen, Ltd. v. Beens, 541 N.W.2d at 357) or by requiring the forfeiture of earned

compensation. See Groen, Laveson, Goldberg & Rubenstone v. Kancher, 827 A.2d at

1165, 1169. Instead, the Prenuptial Agreement simply provides for a division of fees in

advance of termination. See MSBA Ethics Comm., Formal Op. 1989-29.

In other words, the Prenuptial Agreement “defines in advance of any controversy

the division of fees in a manner somewhat akin to a provision for liquidated damages.”

Id. It benefits both the firm and the departing attorney because it “seeks to obviate time-

consuming squabbles” about what the parties’ respective shares of a fee might be under

principles of quantum meruit. McCroskey, Feldman, Cochrane & Brock, P.C. v. Waters,

494 N.W.2d at 827. It also benefits the firm and the attorney in that it endeavors to

“avoid the unseemly bickering and the potential for litigation over clients and fees that

32 can occur when a departing lawyer takes clients whose matters are being handled on a

contingent fee basis.” D.C. Ethics Comm., Formal Op. 221. The agreement benefits

clients as well, because it “‘prevent[s] them from being put in the middle of a dispute

between lawyers’” (N.C. State Bar, Formal Ethics Op. 2008-8 (citing N.C. State Bar,

Ethics Decision 2000-6)), as they would have to be in a quantum meruit suit by the

former firm.

The Prenuptial Agreement achieves these ends by assigning “a ratable proportion

of a given fee” to the departing attorney “on the basis of the stage of the litigation at the

time of departure.” McCroskey, Feldman, Cochrane & Brock, P.C. v. Waters, 494

N.W.2d at 828-29. “[S]uch arrangements, as long as they are reasonable, should be

encouraged.” Id. at 828.

The Prenuptial Agreement is not unreasonable on its face. The agreement’s

sliding-scale recognizes that in a contingent-fee matter “significant costs may be incurred

by the firm near the beginning of the attorney-client relationship.” D.C. Ethics Comm.,

Formal Op. 221. Because the Prenuptial Agreement must forecast what quantum meruit

might require in an array of circumstances, “precision” is not required. McCroskey,

Feldman, Cochrane & Brock, P.C. v. Waters, 494 N.W.2d at 829. Even if the

percentages are “arguably imperfect,” the agreement is valid if it represents “a reasonable

attempt to relate [the firm’s] fee entitlement to the amount of work done on a given file

before it left the firm.” Id.

The Prenuptial Agreement differs from the rigid, two-tier system that the MSBA

disapproved in its 1993 ethics opinion. Unlike the percentages at issue in the agreement

33 in that opinion, the percentages in the Prenuptial Agreement are not “arbitrary.” Rather,

they relate the amount of time when the firm had responsibility for the matter to the

amount of time when the departing attorney had responsibility for the matter. They

attempt to forecast a likely quantum meruit division by using time as a surrogate for the

value contributed by each of the respective parties. The forecasts may not correspond

perfectly with the dictates of quantum meruit in every instance, but they are certainly not

“arbitrary.” They represent “a reasonable attempt to relate [the firm’s] fee entitlement to

the amount of work done on a given file before it left the firm.” McCroskey, Feldman,

Cochrane & Brock, P.C. v. Waters, 494 N.W.2d at 829. The Prenuptial Agreement is not

unenforceable on its face.

Nor is the Prenuptial Agreement unenforceable as applied to the facts before us in

this case. As applied to the Whipple fee, Ms. Bennett could not possibly contend that the

fee division dictated by the Prenuptial Agreement is unreasonable, because she insisted

that the parties adhere to the agreement.

As applied to the Barker fee, the fee division dictated by the Prenuptial Agreement

was not unreasonable either. The Barker cases generated over $2.8 million in fees, of

which Ms. Bennett received 25 percent under the Prenuptial Agreement. Therefore, Ms.

Bennett earned over $700,000.00 for taking over a case that had already been settled in

principle and securing an increase in the client’s percentage of the recovery. That is by

no means a paltry fee. She probably “would have received less” (Barna, Guzy & Steffen,

Ltd. v. Beens, 541 N.W.2d at 357) had she remained with the firm. The Prenuptial

Agreement did not create an incentive for her to decline to represent Mr. Barker.

34 In the circuit court and in her appellate brief, Ms. Bennett relied prominently on

cases that hold that Rule 5.6(a) prohibits what are called “forfeiture for competition”

provisions—contractual provisions that require attorneys to forfeit vested contractual

rights or earned compensation if they leave a firm and go into competition with it. See,

e.g., Cohen v. Lord, Day & Lord, 550 N.E.2d 410, 411 (N.Y. 1989) (invalidating a

provision that required departing partners to forfeit their share of the firm’s profits

representing unpaid fees, and fees for services performed but not yet billed at the time of

departure, if they left and practiced law in competition with the firm); see also Jacob v.

Norris, McLaughlin & Marcus, 607 A.2d 142, 146-52 (N.J. 1992) (invalidating an

agreement that required lawyers to forfeit “termination compensation,” including a

percentage of their annual draw, amounts owed to them by the firm, and an interest in

future profits, if but only if they went into competition with the firm); but see Howard v.

Babcock, 863 P.2d 150, 151 (Cal. 1993) (holding that “an agreement among law partners

imposing a reasonable toll on departing partners who compete with the firm is

enforceable”); Bennett, et al., Annotated Model Rules of Professional Conduct, supra,

612-14 (collecting authorities).

The New Jersey court distinguished forfeiture-for-competition provisions from

advance agreements to divide an unearned fee (Groen, Laveson, Goldberg & Rubenstone

v. Kancher, 827 A.2d at 1165; id. at 1169), as did the Minnesota court. Barna, Guzy &

Steffen, Ltd. v. Beens, 541 N.W.2d at 357. Simply put, in the case of an agreement like

the Prenuptial Agreement (and the agreements in the Minnesota and New Jersey cases), a

lawyer does not forfeit a contractual right by going into competition with the firm. As an

35 employee of Ashcraft, for example, Ms. Bennett had no contractual right to a share of any

fees that might be earned in the future. Thus, she did not forfeit any contractual rights

when she agreed to a formula for the division of any fees that might be earned after she

left the firm. Instead, she gave up the right to be sued, along with her client, in a

quantum meruit action brought by her former firm.15

In summary, the Prenuptial Agreement is neither unenforceable on its face nor

unenforceable as applied in the circumstances of this case. Much like an enforceable

liquidated damages clause, which “must provide a fair estimate of potential damages at

the time the parties entered into the contract,” when the damages are “incapable of

estimation, or very difficult to estimate,”16 the Prenuptial Agreement endeavors to

provide a fair estimate of a likely quantum meruit fee division at a time when the fee

division is, at a minimum, very difficult to estimate. See MSBA Ethics Comm., Formal

Op. 1989-29. We agree with the Michigan Court of Appeals that “such arrangements, as

long as they are reasonable, should be encouraged.” McCroskey, Feldman, Cochrane &

15 In a brief footnote, Ms. Bennett contends, in passing, that the Prenuptial Agreement also violates Maryland Rules 19-301.7 and 19-301.8, which pertain, generally, to conflicts of interest. Arguably, her contention is not properly before us because of the cursory manner in which she has presented it. See Md. Rule 8-504(a)(6) (requiring a brief to contain “[a]rgument in support of a party’s position on each issue”); Impac Mortgage Holdings, Inc. v. Timm, 245 Md. App. 84, 117 (2000) (holding that the “failure to present sufficient argument in his appellate brief means that [a party] has waived his challenge to the court’s . . . ruling). But even if the cursory argument were before us, we would reject it, because Ms. Bennett cites no authority other than the rules themselves. She does not even quote or discuss the language of the rules to explain how the Prenuptial Agreement creates some kind of impermissible conflict. 16 Barrie School v. Patch, 401 Md. 497, 510 (2007).

36 Brock, P.C. v. Waters, 494 N.W.2d at 828. We also agree with the North Carolina State

Bar that lawyers should be “encouraged to enter into agreements that will resolve such

potential disputes fairly and without rancor.” N.C. State Bar, Formal Ethics Op. 2008-8.

Lastly, like the New Jersey and Louisiana courts, we “‘approve[] of contracts whereby

attorneys avoid unnecessary litigation by setting up formulas’”—reasonable formulas—

“‘which allow for the orderly break up of a law practice.’” Groen, Laveson, Goldberg &

Rubenstone v. Kancher, 827 A.2d at 1172 (quoting Walker v. Carimi Law Firm, 725

So.2d at 595).17

C. Enforceability of Prenuptial Agreement under Maryland Common Law

In a fallback argument, Ms. Bennett contends that the Prenuptial Agreement is

unenforceable at common law because, she says, it operates as an impermissible penalty.

Her argument has no merit.

Ms. Bennett invokes the general principles concerning the enforceability of

restrictive covenants in employment agreements, as enunciated in cases like Holloway v.

Faw Casson & Co., 319 Md. 324 (1990). As discussed at length above, however, the

Prenuptial Agreement does not contain a restrictive covenant: if it did, we would not need

to discuss the common law, because the agreement would violate Model Rule 5.6(a) and

Maryland Rule 19-305.6(a).

17 Although the Prenuptial Agreement is not facially invalid and not invalid as applied to the facts in this case, we do not hold that the Prenuptial Agreement is valid in every conceivable factual scenario in which it might applied. It is entirely conceivable that the agreement might dictate an unreasonable division of fees if, for example, the departing attorney had responsibility for the matter for many years after the client left Ashcraft. 37 Citing Willard Packaging Co. v. Javier, 169 Md. App. 109 (2006), Ms. Bennett

likens the Prenuptial Agreement to a liquidated damages clause that is unenforceable

because it unfairly penalizes an employee for competing. But we have already held that

the Prenuptial Agreement endeavors to provide a fair estimate of a likely quantum meruit

fee division. On its face and as applied in this case, the Prenuptial Agreement does not

penalize Ms. Bennett for competing with the firm.

Finally, Ms. Bennett argues, at some length, that, in disputes with other attorneys

who left the firm and went into competition, Ashcraft compromised its claim to a fee. In

her case, however, she says that the firm refused to compromise. This, she infers,

evidences Ashcraft’s intention to punish her. The short answer to her contention is that,

even if Ashcraft struck other deals in other disputes with other attorneys, the firm had no

obligation to offer her the same deal that it offered to them. The record contains no basis

for the conclusion that the Prenuptial Agreement, either on its face or as applied in this

case, violates Maryland’s common law.18

18 As an additional basis to conclude that Ashcraft deployed the Prenuptial Agreement in order to punish her, Bennett cites Ashcraft & Gerel v. Coady, 244 F.3d 948 (D.C. Cir. 2001), a case in which Ashcraft asserted a contractual claim for liquidated damages in response to a former partner’s material breach of his employment agreement. See id. at 949. The employment agreement included the Prenuptial Agreement, but the alleged breach appears to have concerned other provisions. See id. at 949 n.1 (citing Coady v. Ashcraft & Gerel, 996 F. Supp. 95, 98 (D. Mass. 1998)). Bennett points out that in Coady an Ashcraft partner testified that a “liquidated damages provision” of some sort “was designed to penalize an attorney who sought to compete with the firm[.]” Id. at 955. The United States Court of Appeals for the District of Columbia Circuit was unimpressed: “Notwithstanding” that testimony, the court wrote, “the terms of the employment contract are readily distinguishable from a contract not to compete.” Id. The court ultimately affirmed the trial court’s decision not to strike Ashcraft’s claim for

38 II. SUMMARY JUDGMENT ON BREACH OF CONTRACT CLAIM

The circuit court granted Ashcraft’s motion for summary judgment on its

counterclaim for breach of contract. Ms. Bennett challenges that ruling. We see no error.

When a party moves for summary judgment, the court “shall enter judgment in

favor of or against the moving party if the motion and response show that there is no

genuine dispute as to any material fact and that the party in whose favor judgment is

entered is entitled to judgment as a matter of law.” Md. Rule 2-501(f).

Whether a circuit court properly granted summary judgment is a question of law.

See, e.g., Butler v. S & S P’ship, 435 Md. 635, 665 (2013). In an appeal from the grant of

summary judgment, an appellate court conducts a de novo review to determine whether

the circuit court’s conclusions were legally correct. See, e.g., D’Aoust v. Diamond, 424

Md. 549, 574 (2012). In doing so, the court determines whether the parties properly

generated a dispute of material fact and, if not, whether the moving party is entitled to

judgment as a matter of law. Chateau Foghorn LP v. Hosford, 455 Md. 462, 482 (2017).

The appellate court considers “the record in the light most favorable to the nonmoving

party and construe[s] any reasonable inferences that may be drawn from the facts against

the moving party.” Blackburn Ltd. P’ship v. Paul, 438 Md. 100, 107-08 (2014) (citations

and quotation marks omitted).

On the merits, it is undisputed that in October of 2015 Ashcraft and Ms. Bennett

agreed to divide the fees in the Barker cases in accordance with the Prenuptial

liquidated damages. Id. In short, Coady adds nothing meaningful to the analysis in this case. 39 Agreement. It is undisputed that for three years thereafter Ms. Bennett adhered to that

agreement and paid the percentage of the fee dictated by the Prenuptial Agreement. It is

also undisputed that Ms. Bennett ceased making payments in October of 2018, when she

commenced this action (by filing a complaint that made no mention of the Barker cases).

Finally, it is undisputed that, between October of 2018 and the entry of judgment, Ms.

Bennett failed to remit $706,164.83 in fees, not including pre-judgment interest. It would

seem, therefore, that Ashcraft has indisputably established all of the elements of its

breach of contract claim.

Ms. Bennett responds that she did not breach the contract by failing to remit those

payments, because, she says, her performance was excused. According to Ms. Bennett,

Ashcraft “promised,” in the settlement agreement in the Barker dispute, that it would not

assert a defense of waiver. Thus, Ms. Bennett concludes that, when Ashcraft asserted the

affirmative defenses of waiver and estoppel in its answer to the original complaint, she no

longer had any obligation to perform.

Ms. Bennett’s argument has multiple problems. The first is temporal: Ashcraft did

not assert the affirmative defense of waiver or estoppel until April 4, 2019, about six

months after Ms. Bennett stopped remitting the payments. Ms. Bennett’s performance

could not have been excused as a result of something that had yet to occur when she

stopped performing.

A larger problem is that, in the October 2015 settlement agreement, Ashcraft did

not agree that it would never, under any circumstances, raise the defense of waiver;

Ashcraft merely agreed that Ms. Bennett did not waive her contention that the Prenuptial

40 Agreement was unenforceable when she agreed to divide the Barker fees in accordance

with the Prenuptial Agreement. Ashcraft cautioned, however, that it did “not release or

waive any rights [Ashcraft] may have with respect to any other issues with respect to Ms.

Bennett’s departure.” Thus, Ashcraft certainly did not agree that it would refrain from

asserting the defense of waiver if, for example, Ms. Bennett took an inconsistent position

on the validity of the Prenuptial Agreement, as she did when she demanded that the

Whipple fees be divided in accordance with the Prenuptial Agreement. In other words,

the October 2015 settlement agreement did not prohibit Ashcraft from alleging that Ms.

Bennett’s perspective on the enforceability of the Prenuptial Agreement varied as a

function of whether she was or was not satisfied with the fee dictated by the Prenuptial

Agreement in any given case.19

Finally, Ms. Bennett contends that her contract with Ashcraft was illegal and that

one cannot breach an illegal contract. In a variant of that argument, Ms. Bennett

contends that it was impossible for her to perform under the contract because the contract

19 Ms. Bennett argues that her statements in the Whipple settlement negotiations are inadmissible under Maryland Rule 5-408(a). Rule 5-408(a) provides, in pertinent part, that “[c]onduct or statements made in compromise negotiations or mediation” are “not admissible to prove the validity, invalidity, or amount of a civil claim in dispute.” Rule 5-408(c) adds, however, that “[e]xcept as otherwise provided by law, evidence of a type specified in section (a) of this Rule is not excluded under this Rule when offered for another purpose[.]” Ashcraft did not use Ms. Bennett’s statements “to prove the validity, invalidity, or amount of” her civil claim to the Whipple fees; Ashcraft used the statements for “another purpose”—specifically, to show that Ms. Bennett was content to insist on the application of the allegedly unenforceable Prenuptial Agreement when she thought that it was in her interest to do so. Thus, Rule 5-408(a) did not make Ms. Bennett’s statements inadmissible.

41 was illegal.20 We have previously rejected Ms. Bennett’s contention that the Prenuptial

Agreement was unenforceable, either on its face or as applied in the circumstances of this

case. Consequently, we reject Ms. Bennett’s defenses of illegality and impossibility.

The circuit court did not err in concluding that, on the undisputed facts of this case,

Ashcraft was entitled to judgment as a matter of law on its counterclaim for breach of

contract.

III. DISMISSAL OF CLAIMS IN SECOND AMENDED COMPLAINT

The circuit court granted a motion to dismiss all but one count of Ms. Bennett’s

13-count second amended complaint for failure to state a claim upon which relief can be

granted. Ms. Bennett voluntarily dismissed the sole surviving count.

On appeal, Ms. Bennett contends that the court erred in dismissing Counts II, III,

VI, and VII of the second amended complaint. Those counts purported to assert claims

for fraudulent misrepresentation, negligent misrepresentation, “fraudulent inducement,”

and recission.

The counts for fraudulent misrepresentation and negligent misrepresentation

alleged that Ashcraft had falsely represented that it “would accept payment from the

Barker settlements without considering those payments binding and without contending

20 At various points, Ms. Bennett argues that the October 2015 settlement agreement “is separately enforceable” from the Prenuptial Agreement. If so, it is unclear how the alleged invalidity of the Prenuptial Agreement could excuse Ms. Bennett’s performance under the settlement agreement. We do not consider that question, however, because Ashcraft said that it had filed suit to enforce the Prenuptial Agreement, not a separate agreement that took the place of the Prenuptial Agreement with respect to the Barker fees. 42 that [Ms. Bennett] had waived her right to contest the [Prenuptial] Agreement.” The

count for fraudulent inducement alleged that Ashcraft falsely “represented that it would

accept payment of the [Barker] fee without waiving [sic] [Ms. Bennett’s] right to contest

the [Prenuptial Agreement].”21 The count for recission alleged that Ashcraft had

“materially repudiated the agreement the parties reached in October, 2015 that payments

made to [Ashcraft] would not waive [Ms. Bennett’s] right to challenge the [Prenuptial

Agreement].”

In ruling on a motion to dismiss for failure to state a claim, the circuit court

considers only the facts alleged in the complaint and any supporting exhibits incorporated

into the complaint. See, e.g., RRC Northeast, LLC v. BAA Maryland, Inc., 413 Md. 638,

643 (2010). A court, however, need not accept the truth of pure legal conclusions

(Margolis v. Sandy Spring Bank, 221 Md. App. 703, 713 (2015)) or of “[m]ere

conclusory charges that are not factual allegations.” Shenker v. Laureate Educ., Inc., 411

Md. 317, 335 (2009). Moreover, “[a]ny ambiguity or uncertainty in the allegations

bearing on whether the complaint states a cause of action must be construed against the

pleader.” Id. Dismissal is proper if, even after assuming the truth of all well-pleaded

factual allegations and after drawing all reasonable inferences from those allegations in

favor of the pleader, the pleader would still not be entitled to relief. See, e.g., O’Brien &

Gere Eng’rs, Inc. v. City of Salisbury, 447 Md. 394, 403-04 (2016).

21 The second amended complaint probably meant to allege that Ashcraft represented that it would accept payment of the Barker fees without asserting that Ms. Bennett had waived her right to contest the Prenuptial Agreement. 43 On review of the grant of a motion to dismiss, the appellate court analyzes

whether the trial court’s ruling was legally correct, without any deference to that court’s

legal conclusions. Patton v. Wells Fargo Fin. Maryland, Inc., 437 Md. 83, 95 (2014).

This Court may affirm the dismissal of a complaint on any ground adequately shown by

the record, regardless of whether the trial court relied on that ground or whether the

parties raised that ground. Mostofi v. Midland Funding, LLC, 223 Md. App. 687, 695-96

(2015).

To prevail on a claim for fraud or “fraudulent inducement,”22 a plaintiff must

allege facts establishing:

(1) that the defendant made a false representation to the plaintiff;

(2) that its falsity was either known to the defendant or that the representation was made with reckless indifference as to its truth;

(3) that the misrepresentation was made for the purpose of defrauding the plaintiff;

(4) that the plaintiff relied on the misrepresentation and had the right to rely on it and

(5) that the plaintiff suffered compensable injury resulting from the misrepresentation.

See, e.g., Sass v. Andrew, 152 Md. App. 406, 429 (2003).

To prevail on a claim for negligent misrepresentation, a plaintiff must allege facts

establishing:

22 “‘Fraud encompasses, among other things, theories of fraudulent misrepresentation, fraudulent concealment, and fraudulent inducement.’” Sass v. Andrew, 152 Md. App. 406, 432 (2003) (quoting Iverson v. Johnson Gas Appliance Co., 172 F.3d 524, 529 (8th Cir. 1999)). 44 (1) that the defendant, owing a duty of care to the plaintiff, negligently asserted a false statement;

(2) that the defendant intended that the plaintiff would act upon the statement;

(3) that the defendant knew that the plaintiff would probably rely on the statement and that the plaintiff would suffer loss or injury if the statement was erroneous;

(4) that the plaintiff, justifiably, took action in reliance on the statement; and

(5) that the plaintiff suffered damages proximately caused by the defendant’s negligence.

See, e.g., Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP, 451 Md.

600, 627 n.18 (2017).

Ms. Bennett’s second amended complaint did not adequately allege that Ashcraft

made a false statement, much less that it made a false statement that it knew to be false or

with reckless disregard as to its falsity. Consequently, she failed to allege the first

element of a claim for fraud, “fraudulent inducement,” or negligent misrepresentation.

The second amended complaint alleges that, in October 2015, when Ashcraft’s

attorney acknowledged Ms. Bennett’s contention that she did not waive her right to assert

that the Prenuptial Agreement was unenforceable when she agreed to divide the Barker

fees in accordance with that agreement, the attorney knew or, in the alternative, should

have known that her statement was false, and that Ashcraft actually intended to assert that

Ms. Bennett had waived her right to assert that the Prenuptial Agreement was

unenforceable. Yet, even read in the light most favorable to Ms. Bennett, the only bases

for that allegation are that Ashcraft benefitted from the settlement agreement, which is 45 true of virtually all agreements, and that Ashcraft asserted the affirmative defenses of

waiver and estoppel in its answer more than three years later. Those allegations do not

suffice to establish the first element of the claims for fraud, fraudulent inducement, or

negligent misrepresentation.

Ms. Bennett characterizes the attorney’s statement as a promise that Ashcraft

would never raise a defense of waiver. The breach of an alleged promise, alone, does not

establish that the promissor never intended to perform the alleged promise. See Tufts v.

Poore, 219 Md. 1, 10 (1959). Furthermore, without evidence of a present intention not to

perform, fraud “‘cannot be predicated on statements which are merely promissory in

nature, or upon expressions as to what will happen in the future.’” Sass v. Andrew, 152

Md. App. at 438 (quoting Levin v. Singer, 227 Md. 47, 63 (1961)). Nor can negligent

misrepresentation. See Miller v. Fairchild Indus., Inc., 97 Md. App. 324, 346 (1993).

With only these allegations before it, therefore, the circuit court correctly concluded that

Ms. Bennett failed to state a claim upon which relief can be granted.23

23 There is an additional reason why the allegations of fraud and fraudulent inducement failed to state a claim. “Although Rule 2-305 generally requires that a complaint contain only ‘a clear statement of the facts necessary to constitute a cause of action,’ Maryland courts have long required parties to plead fraud with particularity.” McCormick v. Medtronic, Inc., 219 Md. App. 485, 527 (2014). The requirement of particularity ordinarily means that a plaintiff must identify who made what false statement, when, and in what manner (i.e., orally, in writing, etc.); why the statement is false; and why a finder of fact would have reason to conclude that the defendant acted with scienter (i.e., that the defendant either knew that the statement was false or acted with reckless disregard for its truth) and with the intention to persuade others to rely on the false statement. Id. at 528 (citing Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769, 781 (4th Cir. 2013)). Ms. Bennett’s second amended complaint contains no allegations explaining how a finder of fact could conclude that Ashcraft acted with scienter.

46 This leaves the count for recission. Recission is a remedy for the violation of

certain rights, and not a stand-alone claim or cause of action. Parker v. American

Brokers Conduit, 179 F. Supp. 3d 509, 521 (D. Md. 2016); see also 17A Am. Jur. 2d

Contracts § 535 (May 2023 update) (stating that “[r]escission of a contract is only a

remedy, not a cause of action”). In this case, the putative violation is Ashcraft’s

“repudiation” of its allegedly false statement that it would never assert a defense of

waiver. The count fails for the same reason that Ms. Bennett’s other counts fail: she did

not adequately allege that Ashcraft knowingly or negligently made a false representation

of a material fact. The circuit court, therefore, did not err in dismissing the count for

recission.24

IV. IMPOSITION OF CONSTRUCTIVE TRUST

On the same day as it granted Ashcraft’s motion for summary judgment on the

claim for breach of contract, the court imposed a constructive trust on all payments

received by Ms. Bennett in the Barker cases on behalf of Ashcraft since November 2019.

Ms. Bennett argues that the court erred in imposing the constructive trust.

24 In its brief, Ashcraft argues that Ms. Bennett’s demand for recission has no basis in the factual record developed in discovery. For example, Ashcraft argues that Ms. Bennett insisted on the application of the Prenuptial Agreement in settling the dispute over the Whipple fees. Thus, Ashcraft argues that Ms. Bennett sought both to rescind the agreement and to selectively enforce it, which she cannot do. Ashcraft’s argument is correct, but it is irrelevant to the analysis of the motion to dismiss the count for recission. In evaluating the merits of that motion, we are generally confined to the allegations of the pleading and any exhibits attached thereto. Those materials did not disclose Ms. Bennett’s attempt to selectively enforce the agreement.

47 “‘A constructive trust is the remedy employed by a court . . . to convert the holder

of legal title to property into a trustee for one who in good conscience should reap the

benefits . . . of [the] property.’” Robinette v. Hunsecker, 439 Md. 243, 255 (2014)

(quoting Wimmer v. Wimmer, 287 Md. 663, 668 (1980)). “The remedy is applied by

operation of law where property has been acquired by fraud, misrepresentation, or other

improper method, or where the circumstances render it inequitable for the party holding

the title to retain it.” Wimmer v. Wimmer, 287 Md. at 668. “A constructive trust is not a

matter of right, ex debito justitiae,[25] but rests in the discretion of the court, to be imposed

or denied according to the circumstances of the case.” Starleper v. Hamilton, 106 Md.

App. 632, 640 (1995).

Citing Washington Suburban Sanitary Commission v. Utilities, Inc. of Maryland,

365 Md. 1, 39 (2001), Ms. Bennett asserts that a constructive trust is a remedy for unjust

enrichment. Citing County Commissioners of Caroline County v. J. Roland Dashiell &

Sons, 353 Md. 83, 96 (2000), she asserts that Ashcraft could not pursue an unjust

enrichment claim, because it sought to enforce an express contract. Therefore, she

concludes that Ashcraft had no right to a constructive trust.

Ms. Bennett takes too narrow a view of the circuit court’s powers. Here, the court

concluded that Ms. Bennett had breached her contract with Ashcraft by failing to remit

over $700,000.00 in fees that she had agreed to receive in her escrow account and to

25 “Ex debito justitiae” means “from debt to justice.” David M. Walker, The Oxford Companion to Law 444 (1980). It refers to “[t]hat which an applicant is entitled to as of right, as distinct from what may be granted in the exercise of discretion.” Id. 48 disburse to Ashcraft. Ms. Bennett had agreed to hold those funds as a fiduciary for

Ashcraft. Roman v. Sage Title Grp., LLC, 229 Md. App. 601, 613 (2016), aff’d, 455 Md.

188 (2017). Moreover, even though Ms. Bennett disputed Ashcraft’s entitlement to the

funds, she had an ethical obligation, under Maryland Rule 19-301.15(e), to keep the

funds separate from her own and those of the client. Instead, however, she distributed the

disputed funds to herself. In the circumstances of this case, where Ashcraft’s claim for

breach of contract asked the court to “grant[] such other and further relief as” it

“deem[ed] just and proper,” the court did not abuse its discretion in imposing a

constructive trust on the funds that Ms. Bennett held as a fiduciary, but distributed to

herself.

V. REFUSAL TO STRIKE COUNTERCLAIM

On January 14, 2020, Ms. Bennett obtained leave of court to file her second

amended complaint. At that time, the scheduled trial date was three weeks away.

Ms. Bennett apparently filed the second amended complaint on approximately

January 16, 2020.26 A few days later, the parties jointly requested that the court decide

the issue of whether the Prenuptial Agreement was enforceable, and the court postponed

the trial.

On January 31, 2020, Ashcraft moved to dismiss Counts II through XII of Ms.

Bennett’s second amended complaint. On February 21, 2020, Ashcraft answered the

second amended complaint and asserted a counterclaim. Ashcraft’s counterclaim was

26 See supra n.3. 49 largely identical to a counterclaim that the court had stricken a few months earlier, before

it had postponed the trial.

Ms. Bennett moved to strike Ashcraft’s counterclaim. The court denied the

motion and ultimately entered judgment in Ashcraft’s favor on Count I of the

counterclaim.

On appeal, Ms. Bennett contends that the circuit court erred in denying her motion

to strike the counterclaim. In support of that contention, Ms. Bennett argues that the

previous ruling, in which the court struck an earlier counterclaim, was “res judicata.”

Ms. Bennett’s contention has no merit.

“[T]he doctrine of res judicata precludes the relitigation of a suit if (1) the parties

in the present litigation are the same or in privity with the parties to the earlier action; (2)

the claim in the current action is identical to the one determined in the prior adjudication;

and (3) there was a final judgment on the merits in the previous action.” Powell v.

Breslin, 430 Md. 52, 63-64 (2013).

The ruling by which the court struck the earlier counterclaim was not a final

judgment on the merits. Rather, it was an interlocutory order that the court was free to

revise and reconsider at any time before the entry of a final judgment. See Md. Rule 2-

602(a).27 The order could not possibly have been res judicata as to Ashcraft’s ability to

assert a counterclaim in response to another amended complaint.

27 Rule 2-602(a) provides as follows:

50 Furthermore, when the court struck the original counterclaim, the trial date was

only a few months away. When the court declined to strike the subsequent counterclaim,

however, the court had postponed the trial, and the parties were awaiting a legal decision

about whether the Prenuptial Agreement was enforceable. In these circumstances, the

court acted well within the wide range of its discretion in declining to strike the

subsequent counterclaim. See Mattvidi Assocs. Ltd. P’ship v. NationsBank of Virginia,

N.A., 100 Md. App. 71, 80 (1994) (explaining a circuit court's decision to grant a motion

to strike a counterclaim is discretionary and “will be reversed on appeal only if that

discretion has been abused[]”).

VI. SANCTIONS

After the circuit court had dismissed her Barker claims against Ashcraft, Ms.

Bennett filed a series of three motions for sanctions against Ashcraft and its attorneys.

Ms. Bennett based the motions on her contention that Ashcraft and its counsel had acted

in bad faith and had “willfully mislead [sic]” the circuit court by “continu[ing] to make

Except as provided in section (b) of this Rule, an order or other form of decision, however designated, that adjudicates fewer than all of the claims in an action (whether raised by original claim, counterclaim, cross-claim, or third-party claim), or that adjudicates less than an entire claim, or that adjudicates the rights and liabilities of fewer than all the parties to the action:

(1) is not a final judgment;

(2) does not terminate the action as to any of the claims or any of the parties; and

(3) is subject to revision at any time before the entry of a judgment that adjudicates all of the claims by and against all of the parties. 51 serious and significant misrepresentations regarding the scope of the parties’ October

2015 Settlement Agreement relating to the payment of fees received in the Barker cases, .

. . without revealing to the Court that [Ashcraft] is itself in breach of the contract it seeks

to enforce because it has failed to comply with a condition precedent to that contract.” In

other words, Ms. Bennett argued that Ashcraft and its attorneys had acted in bad faith or

without substantial justification because they disputed her contention that Ashcraft had

agreed not to assert that she waived the right to challenge the Prenuptial Agreement. The

circuit court denied the motions for sanctions on September 13, 2021.

Ms. Bennett premised her motions on Maryland Rule 1-341(a). That rule states:

In any civil action, if the court finds that the conduct of any party in maintaining or defending any proceeding was in bad faith or without substantial justification, the court, on motion by an adverse party, may require the offending party or the attorney advising the conduct or both of them to pay to the adverse party the costs of the proceeding and the reasonable expenses, including reasonable attorneys’ fees, incurred by the adverse party in opposing it.

“[A]warding attorney’s fees under this rule is an extraordinary remedy, and it

should be used sparingly.” Major v. First Virginia Bank-Central Maryland, 97 Md. App.

520, 530 (1993); accord Christian v. Maternal-Fetal Med. Assocs. of Md. LLC, 459 Md.

1, 19 (2018). “Rule 1-341 sanctions should be imposed only when there is a clear,

serious abuse of judicial process.” Black v. Fox Hills North Community Ass’n, 90 Md.

App. 75, 84 (1992).

Before granting a motion for sanctions, a court must make two separate findings.

Inlet Assocs. v. Harrison Inn Inlet, Inc., 324 Md. 254, 267-68 (1991). “The judge must

first find that the conduct of a party during a proceeding, in defending or maintaining the

52 action, was without substantial justification or was done in bad faith.” Christian v.

Maternal-Fetal Med. Assocs. of Maryland, LLC, 459 Md. at 20-21. Second, the judge

must “find that the acts committed in bad faith or without substantial justification warrant

the assessment of attorney’s fees.” Id. at 21.

Ordinarily, a trial court should make an express determination as to bad faith or

substantial justification even when denying a motion for sanctions under Rule 1-341. See

Fowler v. Printers II, Inc., 89 Md. App. 448, 487 (1991). Nevertheless, even without

explicit findings, this Court will uphold the denial of a motion under Rule 1-341 where

the record “clearly reflect[s] the meritlessness” of the motion. Id. If “the Rule 1-341

motion is patently groundless, i.e., if there is no basis for granting it apparent from the

record, the trial judge need not issue any findings.” Id.; see also Century I Condo. Ass’n,

Inc. v. Plaza Condo. Joint Venture, 64 Md. App. 107, 115-17 (1986) (upholding a

summary denial of a motion for sanctions when, upon a review of the record, the

appellate court was satisfied that there was no basis for sanctions).

In this case, the court made no findings, but findings were unnecessary because it

is abundantly clear from the record that the motions for sanctions were patently

groundless. The motions were based on Ms. Bennett’s disagreement with Ashcraft’s

interpretation of the law and the facts. Ms. Bennett contended that Ashcraft had falsely

represented that Ms. Bennett had waived the right to challenge the enforceability of the

Prenuptial Agreement. Ashcraft denied that it had agreed never, under any

circumstances, to assert that Ms. Bennett had waived that right. In dismissing most of

Ms. Bennett’s second amended complaint, including all of the counts relating to the

53 Barker settlement, the court concluded that her allegations failed to state a claim upon

which relief could be granted. In these circumstances, Ashcraft could not have acted in

bad faith or without substantial justification. See Needle v. White, Mindel, Clarke & Hill,

81 Md. App. 463, 476 (1990).

VII. FAILURE TO AWARD PRE-JUDGMENT INTEREST

On October 26, 2021, the circuit court granted Ashcraft’s motion for summary

judgment on its breach of contract claim and ordered Ms. Bennett to provide “a complete

accounting of all funds she has received in the Barker cases from August 2018

forward[.]” From Ms. Bennett’s accounting, Ashcraft calculated that she owed the firm

the principal amount of $706,164.83. Ashcraft claimed the right to pre-judgment interest

in the amount of $81,212.10.

Ms. Bennett did not dispute Ashcraft’s calculations, but she opposed an award of

pre-judgment interest.

On November 2, 2021, the trial court entered judgment in favor of Ashcraft and

against Ms. Bennett in the amount of $706,164.83. The judgment did not include any

pre-judgment interest. In its cross-appeal, Ashcraft challenges the court’s decision not to

award pre-judgment interest.

Pre-judgment interest compensates judgment creditors for their inability to use the

funds that should have been in their hands before the entry of judgment. See Nationwide

Prop. & Cas. Ins. Co. v. Selective Way Ins. Co., 473 Md. 178, 189 (2021). “Prejudgment

interest falls into one of two distinct categories—that which is discretionary and that

which is awarded as of right.” Id. In general, “a party’s entitlement to prejudgment

54 interest is an issue for the finder of fact and accordingly ‘left to the discretion of the jury,

or the Court when sitting as a jury.’” Id. at 189-90 (quoting I. W. Berman Props. v.

Porter Bros., Inc., 276 Md. 1, 18 (1975)) (further citation omitted). “However, there are

well-established exceptions to this general rule.” Id. at 190.

“Prejudgment interest is available as a matter of right when ‘the obligation to pay

and the amount due’ is ‘certain, definite, and liquidated by a specific date prior to

judgment’ such that ‘the effect of the debtor’s withholding payment was to deprive the

creditor of the use of a fixed amount as of a known date.’” Id. (quoting Buxton v. Buxton,

363 Md. 634, 656 (2001)) (further citation omitted). A debt or amount is “liquidated” if

it is “‘settled or determined, esp[ecially] by agreement.’” Baltimore County v. Aecom

Servs., Inc., 200 Md. App. 380, 430 n.19 (2011) (quoting Black’s Law Dictionary 949

(8th ed. 1999)).

The exception for debts that are certain, definite, and liquidated “‘arises under

written contracts to pay money on a day certain, such as bills of exchange or promissory

notes, in actions on bonds or under contracts providing for the payment of interest, in

cases where the money claimed has actually been used by the other party, and in sums

payable under leases as rent . . . as well [as] in conversion cases where the value of the

chattel converted is readily ascertainable.’” Nationwide Prop. & Cas. Ins. Co. v.

Selective Way Ins. Co., 473 Md. at 190 (quoting Buxton v. Buxton, 363 Md. at 656).

“[W]e review a circuit court’s decision to award prejudgment interest under a de

novo standard of review to determine whether it is legally correct.” Nationwide Prop. &

Cas. Ins. Co. v. Selective Way Ins. Co., 473 Md. at 189.

55 Pursuant to the settlement agreement in the Barker cases, the United States

Department of Justice wired the settlement proceeds into Ms. Bennett’s escrow account

on a periodic basis. The deposits occurred on the following dates and contained the

following amounts:

From this chart, it is obvious that, on each occasion on which the Justice

Department wired the settlement proceeds to Ms. Bennett’s account, the amount that she

received was certain, definite, and liquidated.

The client, Mr. Barker, was entitled to a certain, definite, and liquidated

percentage of each settlement payment—specifically, 60 percent. The remaining 40

percent, which is also certain, definite, and liquidated, was to be divided between the

lawyers.

The October 2015 settlement agreement obligated Ms. Bennett to pay Ashcraft a

certain, definite, and liquidated percentage of the remaining amount—specifically, 75

56 percent.28 Therefore, the amount due to Ashcraft from each settlement payment was

certain, definite, and liquidated.

For example, on October 15, 2018, Ms. Bennett received $164,870.11 in

settlement proceeds. Ms. Bennett was obligated to disburse 60 percent of that sum, or

$98,922.07, to the client. After she had disbursed that sum, 40 percent of the settlement

proceeds, or $65,948.04, remained. The October 2015 settlement agreement obligated

Ms. Bennett to pay Ashcraft 75 percent of the remainder, or $49,461.03.

By withholding that certain, definite, and liquidated amount, and the certain,

definite, and liquidated amounts that Ashcraft was entitled to receive from each of the

subsequent payments, Ms. Bennett repeatedly deprived the firm of the use of a fixed and

ascertainable amount of money. See Harford County v. Saks Fifth Ave. Distrib. Co., 399

Md. 73, 95 (2007). In each instance, the deprivation began on the day when the payment

was due—“a specific date prior to judgment”29—and continued until the date of the

judgment. Ashcraft, therefore, was entitled to pre-judgment interest on each of the

payments that Ms. Bennett withheld. The circuit court erred in concluding otherwise.

In the circuit court, Ashcraft presented calculations showing that it was entitled to

$81,212.10 in pre-judgment interest at the legal rate of six percent per annum. See Md.

Const. Art. III, § 57. Ashcraft’s calculations showed the amount of attorneys’ fees that

Ms. Bennett was obligated to pay out of each of the installments that she received from

28 I.e., 30 percent of the total amount of each settlement payment (.4 x .75 = .3). 29 Harford County v. Saks Fifth Ave. Distrib. Co., 399 Md. at 95. 57 the Justice Department. The calculations also showed the amount of interest that had

accrued on each of the payments that Ms. Bennett failed to make from the date when Ms.

Bennett had received the settlement proceeds until the date of the judgment.

Ms. Bennett did not challenge those calculations. On remand, therefore, the

circuit court shall revise the judgment to include the $81,212.10 in pre-judgment interest

to which Ashcraft was entitled as a matter of law.

JUDGMENT OF THE CIRCUIT COURT FOR PRINCE GEORGE’S COUNTY AFFIRMED IN PART AND VACATED IN PART; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO AWARD $81,212.10 IN PRE-JUDGMENT INTEREST TO APPELLEE; COSTS TO BE PAID BY APPELLANT.