MCG, Inc. v. MGSJ Holdings, Inc.
Filing
UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:14-cv-03997-GLR Copies to all parties and the district court/agency. [999827458].. [15-1547]
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1547
MCG, INC.,
Plaintiff - Appellant,
v.
MGSJ HOLDINGS,
MENDIETA,
INC.;
MICHAEL
MOORE;
GARY
WARD;
STEVEN
Defendants - Appellees.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. George L. Russell, III, District Judge.
(1:14-cv-03997-GLR)
Submitted:
February 29, 2016
Decided:
May 19, 2016
Before KING, DIAZ, and FLOYD, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Eric S. Lipsetts, ERIC LIPSETTS, P.A., Annapolis, Maryland, for
Appellant.
Lars H. Liebeler, LARS LIEBELER, PC, Washington,
D.C., for Appellees.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
MCG, Inc. (MCG) appeals the district court’s order granting
judgment
on
the
pleadings,
or
in
the
alternative,
summary
judgment, in favor of MGSJ Holdings, Inc. (Holdings), Michael
Moore, Gary Ward, and Steven Mendieta (collectively, Defendants)
in
this
civil
contract.
action
arising
out
of
an
alleged
breach
of
The district court held that MCG failed to fulfill a
condition precedent as required under the terms of an Investment
Agreement entered into by Mendieta, acting as the sole director
of
MCG,
Holdings.
and
Ward
and
Moore
and
Ward,
who
signed
as
principals
of
The district court also held that Mendieta, Moore,
later
cancelled
the
Investment
Agreement,
ratified its cancellation, so there was no breach.
and
MCG
We have
thoroughly reviewed the record and find that the district court
did not err in granting Defendants’ motion for judgment on the
pleadings,
Accordingly,
or,
we
in
affirm
the
the
alternative,
district
summary
court’s
order
judgment.
for
the
reasons set forth below.
I.
This court reviews “de novo a district court’s ruling on a
motion for judgment on the pleadings under Federal Rule of Civil
Procedure 12(c).”
(4th Cir. 2014).
Drager v. PLIVA USA, Inc., 741 F.3d 470, 474
A motion for judgment on the pleadings “should
only be granted if, after accepting all well-pleaded allegations
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in the plaintiff’s complaint as true and drawing all reasonable
factual inferences from those facts in the plaintiff’s favor, it
appears certain that the plaintiff cannot prove any set of facts
in support of his claim entitling him to relief.”
Edwards v.
City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
Similarly, this court reviews de novo the district court’s
grant of summary judgment.
Spriggs v. Diamond Auto Glass, 242
F.3d 179, 183 (4th Cir. 2001).
only
in
those
cases
where
Summary judgment is appropriate
the
pleadings,
affidavits,
and
responses to discovery “show that there is no genuine issue as
to any material fact and that the moving party is entitled to
judgment
as
a
matter
of
law.”
Fed.
R.
Civ.
P.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
56(c);
see
A material
fact is one “that might affect the outcome of the suit under the
governing law.”
248 (1986).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
A disputed fact presents a genuine issue “if the
evidence is such that a reasonable jury could return a verdict
for the nonmoving party.”
Id.
II.
In this case, the district court pronounced its findings
through a bench ruling during a hearing on Defendants’ motion
for judgment on the pleadings, or, in the alternative, summary
judgment.
The district court found that Mendieta, as director
of MCG, had “sole authority to contract, to bargain, [and] to
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negotiate
with
Mendieta
entered
Moore,
and
individual
MCG
establishing
into
failed
bank
an
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entities.”
As
to
accounts
required in that contract.
perform
with
sole
director,
Agreement
Investment
the
with
Ward
a
two
condition
specific
and
precedent
signers
–
–
as
And “the failure of MCG to fulfill
the terms of the agreement . . . prevented the formation of a
contract.
Because the ultimate basis for the contract was the
disbursement of the loan funds.”
concluded,
regardless
“the
of
the
condition
The district court therefore
precedent
circumstances
of
was
its
not
fulfilled,
fulfillment,”
and
Holdings, Ward, Moore, and Mendieta did not breach the contract.
The district court also addressed an additional argument
“that the ratification of the agreement compelled Holdings to
perform
under
the
contract.”
Again,
the
district
court
concluded that a contract did not exist because MCG did not
fulfill
the
condition
precedent.
The
court
alternatively
concluded that the Investment Agreement was a contract that,
once ratified, was impossible to perform because Mendieta had
resigned from MCG.
On appeal, MCG argues the district court erred for several
reasons when it dismissed the complaint and granted Defendants’
motion.
MCG further argues the trial court improperly dismissed
its tort claims against Mendieta.
4
Defendants argue that the
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“principle reason MCG’s claims fail is that MCG did not meet the
condition precedent set forth” in the Investment Agreement.
In Maryland, * the interpretation of a contract is a question
of
law,
and
courts
interpret
contracts
objectively.
Nova
Research, Inc. v. Penske Truck Leasing Co., 952 A.2d 275, 283
(Md. 2008).
Contract interpretation therefore begins with the
plain meaning of the contractual terms.
Storetrax.com, Inc. v.
Gurland, 895 A.2d 355, 367 (Md. Ct. Spec. App. 2006), aff’d, 915
A.2d 991 (Md. 2007).
for
breach
of
Additionally, “[t]o prevail in an action
contract,
a
plaintiff
must
prove
that
the
defendant owed the plaintiff a contractual obligation and that
the defendant breached that obligation.”
Taylor v. NationsBank,
N.A., 776 A.2d 645, 651 (Md. 2001).
Here, the duty owed between MCG and Defendants, like most
contract cases, rests on the terms of the contract.
In this
case, the duties owed are set forth in the Investment Agreement.
Among
other
things,
the
provision that stated:
two
loans,
MCG
bank
Investment
Agreement
included
a
“As a condition of Investor providing
accounts
[shall]
bear
Steve Mendieta and, as a backup, Jeff Wray.”
*
two
signers
only,
The district court
The parties do not dispute that Maryland law controls the
Investment Agreement.
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relied on this provision when it determined that MCG failed to
fulfill a condition precedent.
A condition precedent has been defined as a fact, other
than mere lapse of time, which, unless excused, must exist or
occur
before
arises.
a
duty
of
immediate
performance
of
a
promise
Chirichella v. Erwin, 310 A.2d 555, 557 (Md. 1973).
“Generally,
when
a
condition
precedent
is
unsatisfied,
the
corresponding contractual duty of the party whose performance
was conditioned on it does not arise.”
v.
Monro
Muffler/Brake,
Inc.,
891
Chesapeake Bank of Md.
A.2d
384,
391-92
(Md.
Ct.
Spec. App. 2006) (internal quotation and citation omitted); see
also Laurel Race Course, Inc. v. Regal Const. Co., 333 A.2d 319,
327 (Md. 1975) (“It is fundamental that where a contractual duty
is subject to a condition precedent, whether express or implied,
there is no duty of performance and there can be no breach by
nonperformance until the condition precedent is either performed
or excused.”) (citations omitted).
Because the Investment Agreement required MCG to establish
the bank accounts “as a condition” of the loan, Holdings, Ward,
and Moore were not obligated to make loans to MCG before such
bank accounts were established.
decided
contract.
to
withdraw
from
Mendieta, Ward, and Moore then
investing
in
MCG,
or
cancel
the
The district court, therefore, did not err when it
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concluded that MCG failed to fulfill a condition precedent found
in the Investment Agreement.
The
district
court
also
did
not
err
when
it
held
that
Mendieta, Ward, and Moore cancelled the Investment Agreement,
and MCG could not revive the contract after Mendieta resigned
from MCG and MCG appointed new directors.
“At common law the
parties to a written contract have the right to rescind it by
mutual
consent,
even
though
there
contract permitting them to do so.”
408,
424
(Md.
Ct.
Spec.
App.
is
no
provision
in
the
Maslow v. Vanguri, 896 A.2d
2006)
(internal
quotation
and
citation omitted).
“The parties to a contract may, either in
writing
release
or
orally,
themselves
from
its
obligations.”
Id. (citations omitted); see also Lemlich v. Bd. of Trs. of
Harford
Cmty.
(discussing
how
Coll.,
a
385
contract
agreement of the parties).
A.2d
may
1185,
be
1189-90
1978)
through
rescinded
(Md.
mutual
“It has frequently been held that
the mutual assent requisite to rescind a contract need not be
express; it may be inferred from the conduct of the parties in
the light of the surrounding circumstances.”
Maslow, 896 A.2d
at 425 (internal quotation and citation omitted).
Here, the record shows Ward and Moore, along with Mendieta,
acting
as
the
sole
director
of
rescind, the Investment Agreement.
MCG,
decided
to
abandon,
or
Mendieta notified the future
officers of MCG in writing about their decision to walk away
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from the deal, and Mendieta then resigned from MCG.
MCG cannot
compel Holdings to perform under the Investment Agreement after
the parties agreed to cancel it.
Additionally,
the
district
court
did
dismissed the tort claims against Mendieta.
not
err
when
it
Although MCG relies
on Shapiro v. Greenfield, 764 A.2d 270, 278 (Md. Ct. Spec. App.
2000),
to
assert
that
the
district
court
applied
the
wrong
standard, that case analyzes the corporate opportunity doctrine.
In contrast, this is a breach of contract case that turns on the
fulfillment of a condition precedent, and the cancellation or
rescission of the Investment Agreement.
a
corporate
opportunity
when
he
Agreement and resigned from MCG.
Mendieta did not usurp
simply
ended
the
Investment
As a result, the district
court did not need to decide whether Mendieta’s departure was
fair and reasonable to the corporation.
MCG’s
authority
Articles
as
the
of
sole
Incorporation
director.
As
vested
sole
Mendieta
director,
could negotiate and contract on MCG’s behalf.
with
Mendieta
Mendieta could
also end business dealings on MCG’s behalf, as happened here.
See Dialist Co. v. Pulford, 399 A.2d 1374, 1378 n.3 (Md. Ct.
Spec. App. 1979) (explaining the nature of a rescission).
result,
the
district
court
did
not
err
when
it
As a
granted
Defendants’ motion for judgment on the pleadings, or, in the
alternative, summary judgment.
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Accordingly, the order of the district court is affirmed.
We
dispense
contentions
with
are
oral
argument
adequately
because
presented
in
the
facts
and
the
materials
legal
before
this court and argument would not aid the decisional process.
AFFIRMED
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