Creamer v. Helferstay

448 A.2d 332, 294 Md. 107, 1982 Md. LEXIS 298
CourtCourt of Appeals of Maryland
DecidedAugust 4, 1982
Docket[No. 7, September Term, 1981.]
StatusPublished
Cited by49 cases

This text of 448 A.2d 332 (Creamer v. Helferstay) is published on Counsel Stack Legal Research, covering Court of Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Creamer v. Helferstay, 448 A.2d 332, 294 Md. 107, 1982 Md. LEXIS 298 (Md. 1982).

Opinions

Eldridge, J.,

delivered the opinion of the Court. Murphy, C. J., concurs in the result and filed a concurring opinion at page 133 infra.

We granted certiorari in this case to resolve important questions concerning some of the grounds for rescission of a contract under Maryland law.

Several limited partners of a real estate partnership which had invested in a land venture known as the Route 29 — Lewis Property Partnership, brought suit in the Superior Court of Baltimore City against the Baltimore law firm of Weinberg & Green and several of its partners individually, alleging negligent breach of fiduciary duties, breach of contract and fraud.1 These allegations arose out of the law firm’s concurrent representation of the real estate limited partnership and of the general partner thereof (who is not a party to this case). In essence, the limited partners claimed that Weinberg & Green’s representation of the general partner personally, and its relationships with him in busi[110]*110ness dealings, had created a conflict of interest and had resulted in financial loss to the limited partners. The limited partners alleged that Weinberg & Green had had a duty to disclose the full extent of its relations with the general partner and that, had it made this disclosure, the limited partners would not have invested in the partnership. The limited partners sought compensatory damages and, under the fraud count, punitive damages.2 Weinberg & Green counterclaimed for damages, alleging that, to the extent that the law firm caused the limited partnership to have lost money, the loss was due to the failure of certain of the limited partners to have disclosed information to the law firm which would have enabled the venture to have been profitable.

Responding to the suggestion of the trial judge presiding in the case, the parties negotiated a partial settlement agreement which was signed on October 24, 1979. The limited partners agreed to dismiss with prejudice the fraud count and to release Weinberg & Green from all other claims of fraud or conspiracy relating to the real estate partnership. Weinberg & Green agreed to dismiss its counterclaim, and "to enter into good faith settlement negotiations” on the negligence and breach of contract counts. The following provision was also included in the written agreement:

"This agreement ... constitute^] the entire agreement of the parties. There are no additional promises made by the parties except those expressly set forth in this agreement.”

Pursuant to the settlement agreement, the fraud count and the counterclaim were dismissed. Thereafter, the parties met three times to negotiate on the remaining counts, and at the third meeting Weinberg & Green offered $80,000 in settlement. The limited partners rejected this offer, and, as found by the trial court, their counsel [111]*111"immediately announced his intention to seek rescission [of the settlement agreement] and acted upon that intention the following day by filing the motion for appropriate relief.”

The limited partners argued that the settlement agreement should be rescinded and the fraud count reinstated because, they alleged, Weinberg & Green had intentionally made "false representations” during the negotiations which had induced the limited partners to enter into the settlement agreement. Specifically, the limited partners alleged that during negotiations they had repeatedly stated that any settlement would have to be in the range of $275,000 to $550,000.3 Weinberg & Green, however, refused during those negotiations to agree expressly in writing or orally to a specific settlement range. Nevertheless, the limited partners claimed that, by certain statements, the law firm had caused them to understand that, even though the settlement agreement provided only for "good faith settlement negotiations,” in reality the agreement was different. According to the limited partners, the law firm represented that, as soon as the fraud count was dropped, the law firm would offer to settle for between $275,000 and $550,000.4

[112]*112In an opinion, the trial court found that there was "no evidence of intentional misrepresentation” by Weinberg & Green.5 However, the court did find that Weinberg & Green had made an "honest misrepresentation” which had induced in the respondents the belief that Weinberg & Green intended to negotiate a settlement in the $275,000 — $550,000 range. The court further found that the limited partners had entered into the settlement agreement in reliance upon this misrepresentation. The trial court entered an order rescinding the settlement agreement and reinstating the counterclaim and the fraud counts. The trial judge based his order of rescission on the alternative grounds of misrepresentation and unilateral mistake. Weinberg & Green appealed to the Court of Special Appeals which affirmed on the ground of unilateral mistake. Creamer v. Helferstay, 47 Md.App. 243, 422 A.2d 395 (1980).6 The law firm then filed a petition for a writ of certiorari, arguing that neither misrepresentation nor unilateral mistake furnished grounds for rescission of the settlement agreement under the circumstances of this case.

I.

Before discussing the substantive rulings of the trial court and of the Court of Special Appeals, however, a procedural matter must be considered.

The appeal in this case was taken from the following order of the trial court:

[113]*113"[I]t is this 31st day of December, 1979, by the Superior Court of Baltimore City ORDERED that:
1. The contracts which were executed by the parties on October 24, 1979 are rescinded; and
2. The orders filed October 24, 1979 dismissing the fraud count of the declaration and the counterclaim and all copies of such orders thereafter filed are stricken.”

At oral argument, we raised the question of whether, in an action at law, a trial court has the power to affirmatively order the rescission of a contract. Although raised in the trial court, the parties did not raise this issue on appeal. Nevertheless, it is the type of matter which we ordinarily address when it comes to our attention even though not raised by the parties. See, e.g., Sec., Dep’t of Human Res. v. Wilson, 286 Md. 639, 644-645, 409 A.2d 713 (1979), and cases there cited; Maryland Nat’l Capital Park & Planning Comm’n v. Washington Nat’l Arena, 282 Md. 588, 594, 386 A.2d 1216 (1978) (concerning "the power of the chancellor ... to award relief . . .”).

The original action brought by the limited partners against the law firm was at law for damages. The procedural distinctions between actions at law and suits in equity are, of course, still preserved in this State. In the counties, the circuit courts maintain separate law and equity dockets. See Dormay Corp. v. Doric Co., 221 Md. 145, 151, 156 A.2d 632 (1959); see generally Brown, The Law/Equity Dichotomy in Maryland, 39 Md. L. Rev. 427 (1980).

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Bluebook (online)
448 A.2d 332, 294 Md. 107, 1982 Md. LEXIS 298, Counsel Stack Legal Research, https://law.counselstack.com/opinion/creamer-v-helferstay-md-1982.