Wright Solutions, Inc. v. Wright et al

Filing 66

MEMORANDUM OPINION. Signed by Magistrate Judge Charles B. Day on 4/18/2013. (kns, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division
WRIGHT SOLUTIONS, INC.,
Plaintiff,
v.
ROCKY WRIGHT,
Defendant.

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Civil Action No. CBD-12-178

MEMORANDUM OPINION
Before this Court is Plaintiff Wright Solutions, Inc.’s Motion For Summary Judgment
(ECF No. 43) (“Plaintiff’s Motion”) and Defendant Rocky Wright’s Motion for Partial Summary
Judgment (ECF No. 54) (“Defendant’s Motion”). The Court has reviewed Plaintiff’s Motion,
Defendant’s Motion, related memoranda, and applicable law. No hearing is deemed necessary.
See Local Rule 105.6 (D. Md.). For the reasons presented below, the Court DENIES Plaintiff’s
Motion and GRANTS IN PART and DENIES IN PART Defendant’s Motion.
FACTUAL AND PROCEDURAL BACKGROUND
In its Complaint, Plaintiff alleges that Defendant is liable for breach of contract,
detrimental reliance, and fraud resulting from a series of three agreements made in 2011. Am.
Compl. ¶¶ 27-75 (ECF No. 15). These three agreements were reached during and subsequent to
an earlier case involving the parties, Wright et al., v. The Payer Player LLC, et al., No. 10-cv01161 (D. Md.). The earlier case was resolved with an Order of Judgment in favor of plaintiffs
Calvert Wright and Wright Solutions in the amount of $1,013,943.25 plus attorneys’ fees. Id.
(ECF No. 42). The defendants in that case were three technology companies who had received

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loans from Plaintiff. Defendant Rocky Wright was involved in the technology companies either
as an owner, partner, or employee, although the parties dispute the extent of his involvement and
whether he was personally liable for the judgment. Pl.’s Br. 4-5; Def.’s Br. 1-5. Plaintiff and
Defendant share no family relationship despite their common surname. Def.’s Aff. Ex. 2 (ECF
No. 34).
The following facts are undisputed: While the earlier case was still ongoing, Plaintiff and
Defendant negotiated a business relationship to help Plaintiff recoup its losses from the unpaid
loans. Pl.’s Br. 6; Def.’s Br. 5-6. The parties entered into a two-part written agreement on
January 24, 2011 (“the Agreement”), and on January 28, 2011 (“the Licensing Agreement”).
Pl.’s Br. 6; Def.’s Br. 6. The parties later signed two addendums on May 19, 2011 (“First
Addendum”), and on October 13, 2011 (“Second Addendum”). Pl.’s Br. 7-8; Def.’s Br. 8-12.
Meanwhile, the earlier case was reduced to judgment on April 27, 2011. Pl.’s Br. 5; Def.’s Br. 5.
In the Agreement, Defendant agreed to develop code for a technology which Plaintiff would
market and sell; in exchange, Plaintiff would forgive the debt owed by the three technology
companies from the earlier case. Pl.’s Br. 6; Def.’s Br. 5-8. In the First Addendum, the parties
agreed that instead of providing the originally agreed-upon code, Defendant would provide
“Qubeey” technology, a browser-free internet viewing platform which he had been developing.
Pl.’s Br. 7; Def.’s Br. 8-9. The Qubeey technology operates through the use of “Qubeey
channels,” which are tools akin to a website used to communicate with people who “follow” the
channels. Pl.’s Br. 6; Def.’s Br. 8. In the Second Addendum, Defendant agreed to build an
“integrated analytic engine” feature into the Qubeey technology, which would provide statistics
regarding access and use of the channels. Pl.’s Br. 8-9; Def.’s Br. 11-12.

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The parties’ primary dispute is whether Defendant breached the Agreement and
subsequent Addendums by failing to provide functional Qubeey technology and an integrated
analytic engine. Pl.’s Br. 10-13. Defendant argues that he fully met his obligations and that
Plaintiff filed suit instead of allowing Defendant to demonstrate that the product was functional
and complete. Def.’s Br. 13-17. Further, the parties dispute whether Defendant fraudulently
informed Plaintiff that his prior technology companies were insolvent to prevent it from pursuing
its judgment. Pl.’s Br. 17-19; Def.’s Br. 20-22. Finally, the parties dispute whether Plaintiff
justifiably and reasonably relied to its detriment on Defendant’s promises to provide Qubeey
technology. Pl.’s Br. 13-16; Def.’s Br. 26-35.
ANALYSIS
Rule 56 of the Federal Rules of Civil Procedure provides that a “court shall grant
summary judgment if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving
party is entitled to summary judgment when the nonmoving party “fails to make a showing
sufficient to establish the existence of an element essential to that party's case, and on which that
party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
The Court views “facts and reasonable inferences in the light most favorable to the non-moving
party.” Dulaney v. Packaging Corp. of America, 673 F.3d 323, 330 (4th Cir. 2012); see also
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). “A genuine question of material fact
exists where, after reviewing the record as a whole, a court finds that a reasonable jury could
return a verdict for the nonmoving party.” Dulaney, 673 F.3d at 330 (citing Newport News
Holdings Corp. v. Virtual City Vision, 650 F.3d 423, 434 (4th Cir. 2011); Evans v. Techs.
Applications & Serv. Co., 80 F.3d 954, 959 (4th Cir. 1996)).

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The parties cross-move for summary judgment on each count of Plaintiff’s amended
complaint: breach of contract, fraud, and detrimental reliance. Further, Defendant alleges that
Plaintiff’s Motion must be denied in its entirety because Plaintiff failed to support the motion
with admissible evidence. Def.’s Br. 36-39.
I.

The Court may not consider unsworn, unauthenticated exhibits, but Plaintiff’s
Motion need not be denied in its entirety because of its reliance on such exhibits.
Defendant argues that because the majority of the exhibits attached to Plaintiff’s Motion

are inadmissible and not authenticated, it must be denied. Def.’s Br. 37. As an initial matter, a
court is not required to deny a motion for summary judgment merely because of the lack of
supporting affidavits or other similar materials. Federal Rule of Civil Procedure 56(e) states that
if a party fails to properly support an assertion of fact, the court may: (1) give an opportunity to
properly support or address the fact; (2) consider the fact undisputed for purposes of the motion;
(3) grant summary judgment if the motion and supporting materials—including the facts
considered undisputed—show that the movant is entitled to it; or (4) issue any other appropriate
order.
In the Fourth Circuit, a court may not consider unauthenticated, unsworn documents on a
motion for summary judgment. Orsi v. Kirkwood, 999 F.2d 86, 92 (4th Cir. 1993); see generally
Sook Yoon v. Sebelius, No. 08-3173, 2010 WL 4293513 (D. Md. Nov. 1, 2010); Tillery v.
Borden, No. 07-1092, 2010 WL 2132226 (D. Md. May 25, 2010). Rule 56 is not unduly rigid—
evidence appropriate for summary judgment need not be in a form that would be admissible at
trial. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). However, the
party relying on the exhibit must “introduce evidence sufficient to support a finding that the
document is what the proponent claims.” Stanley Martin Cos. v. Universal Forest Prods.
Shoffner, 396 F. Supp. 2d 606, 613 (D. Md. 2005). Although a party not bearing the burden of
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proof may be entitled to summary judgment without introducing affidavits or other similar
supporting materials, a party bearing that burden cannot meet it without sufficiently
authenticated evidence. See Carr v. Deeds, 453 F.3d 593, 608 (4th Cir. 2006) (citing Celotex,
477 U.S. at 323-25).
Here, Plaintiff is the party that would bear the burden of proof at trial. Plaintiff’s Motion
contains a host of attached exhibits (such as emails and letters) which are not incorporated into a
sworn affidavit or deposition, and are therefore not sufficiently authenticated. The Court cannot
consider these exhibits in evaluating Plaintiff’s Motion. In the past, this Court has allowed
litigants the chance to resubmit motions for summary judgment when based on similarly
unsworn evidence. See Sook Yoon, 2010 WL 4293513, at *5, Tillery, No. 2010 WL 2132226, at
*6. It does not take that step here because even if Plaintiff sufficiently authenticated all of its
exhibits, Defendant’s authenticated evidence raises a genuine and material dispute of fact. As
permitted by Rule 56(e), the Court will proceed while considering only the sufficiently
authenticated evidence.
II.

A genuine question of material fact exists as to whether Defendant breached the
Agreement and Addendums by failing to provide functional Qubeey technology.
Plaintiff argues that there is no genuine dispute of fact as to whether Defendant breached

the contract by failing to provide functional Qubeey technology, while Defendant argues that
Plaintiff will be unable to prove such a breach. Pl.’s Br. 12; Def.’s Br. 16. “A breach of contract
is a failure without legal excuse to perform any promise which forms the whole or part of a
contract.” Duncan Services, Inc. v. ExxonMobil Oil Corp., 722 F. Supp. 2d 640, 647 (D. Md.
2010) (quoting Weiss v. Sheet Metal Fabricators, Inc., 110 A.2d 671, 675 (Md. 1955)). While
any breach of a contract may give rise to a cause of action for damages, only a material breach
excuses the non-breaching party’s duty to perform. Jay Dee/Mole Joint Venture v. Mayor of
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Baltimore, 725 F. Supp. 2d 513, 526 (D. Md. 2010); Barufaldi v. Ocean City Chamber of
Commerce, 7 A.3d 643, 656 (Md. Ct. Spec. App. 2010). A breach is material where it renders
any subsequent performance “different in substance from that which was contracted for,” or
where it alters the purpose of the contract in a vital way. Jay/Dee Mole, 725 F. Supp. 2d at 516;
Barufaldi, 7 A.3d at 656 (internal quotation marks omitted). Ordinarily, it is a question of fact
whether or not a breach is material. Barufaldi, 7 A.3d at 656-57.
Plaintiff treated Defendant’s actions as a material breach by ceasing performance and
filing suit before the time for performance contemplated by the parties had elapsed.1 See Def.’s
Br. Ex. 5(F). Therefore, the burden is on Plaintiff to establish that Defendant’s actions failed to
comport with the bargained-for performance in a vital way. In support of its assertion, Plaintiff
offers the affidavit of its employee Wesley Samuel. Pl.’s Br. Ex. 10. Mr. Samuel stated that the
Qubeey technology delivered by Defendant contained only graphical representations or “skins,”
that the tabs and buttons did not work, and that the analytics mechanism did not work.2 Id.
Defendant claims that it is entitled to summary judgment because Plaintiff cannot
produce evidence to establish that the analytic engine was not integrated into the Qubeey
technology. Def.’s Br. 16. According to Defendant, the only relevant issue is whether the
analytic engine was integrated, not whether it was functioning properly. Id. Defendant relies on
a separate affidavit of Mr. Samuel stating that the analytic engine had been integrated into the

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The original Licensing Agreement between the parties, entered into on January 28, 2011, referred to a five-year
term during which Plaintiff would market and sell Defendant’s technology, which could be extended if necessary for
Plaintiff to fully recoup the judgment in the earlier case. Def.’s Br. Ex. 5(B) ¶ 3.1. The Second Addendum entered
into by the parties, on October 13, 2011, gave Defendant sixty days to produce Qubeey technology with a
functioning analytic engine. Def.’s Br. Ex. 5(E) ¶ 1. As the Court will address infra in Section III, the Second
Addendum required Defendant to complete certain elements of his performance within the sixty-day period.
Nonetheless, Plaintiff’s cessation of its own performance by filing suit one year into the contract could only be
excused if Defendant committed a material breach.
2
Plaintiff also relies on emails by unidentified Qubeey employees, which arguably suggest that it was not possible
to integrate the analytic engine into the Qubeey technology. Pl.’s Br. 12. However, as discussed above these emails
were not authenticated and cannot be considered.

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“Calvert Qubeey channels,” but did not see that it was functioning properly. Def.’s Br. Ex. 6. In
his own affidavit, Defendant states that the analytic engine was integrated into each of the
channels. Def.’s Br. Ex. 4. Further, Defendant refers to excerpts from the deposition of
Plaintiff’s chief of operations and part owner, Calvert Wright, who testified that he did not
himself test the analytic engine and instead relied on Mr. Samuel. Def.’s Br. Ex. 8, Wright Dep.
337-38.
Plaintiff responded to Defendant’s Motion with additional evidence from the deposition
of its director, Calvert Wright.3 Pl.’s Opp. Br. 10 (ECF No. 55). In the deposition, Mr. Wright
states that some of the Qubeey channels Defendant provided were mere graphics lacking in
functionality, and that the analytic engine was not integrated. Pl.’s Opp. Br. Ex. 9, Wright Dep.
122, 263. Plaintiff also restated the evidence from the affidavit of Wesley Samuel which it
provided in its own motion. Pl.’s Opp. Br. 10.
The evidence demonstrates that there is a genuine factual dispute as to whether
Defendant complied with the Agreement and Addendums by providing functional Qubeey
channels with integrated analytic engines. Although Defendant asserts that only the integration
of the analytic engine is relevant and not its functionality, the Second Addendum attached as an
exhibit by both parties (and authenticated by Defendant’s affidavit) states that Defendant “will
provide an integrated analytic engine for each of the Qubeey Channel [sic] he has already built”
and that the engine “shall be complete, integrated and functional into the Qubeey Channel.”
Def.’s Br. Ex. 5(E). Therefore, Plaintiff’s evidence that Defendant did not integrate a
functioning analytic engine into each Qubeey channel raises a genuine issue of material fact.

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Unlike in its motion for summary judgment, Plaintiff’s opposition to Defendant’s Motion included authenticated
and sworn copies of the deposition of Calvert Wright. Pl.’s Opp. Br. Ex. 9.

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Finally, Defendant argues that it is entitled to summary judgment because Plaintiff did
not provide sufficient evidence that it sustained damages from Defendant’s breach. Def.’s Br.
17-19. Failure to prove damages is not a proper reason for granting summary judgment in an
action for breach of contract. A plaintiff who successfully establishes a breach of contract is
entitled to nominal damages even if actual damages cannot be proven. PFB, LLC v. Trabich,
304 F. App'x 227, 228 (4th Cir. 2008); Stueber v. Arrowhead Farm Estates Ltd. P'ship, 519 A.2d
816, 818 (Md. Ct. Spec. App. 1987). Therefore, the Court cannot grant summary judgment on
this basis and does not evaluate the sufficiency of Plaintiff’s evidence of damages.
III.

A genuine dispute of fact exists as to whether Plaintiff detrimentally relied on
Defendant’s promise to produce functional Qubeey technology, but the claim is
moot if the Court finds an enforceable contract.
Plaintiff has moved for summary judgment on a separate count of detrimental reliance.

Pl.’s Br. 13-16. Detrimental reliance, also known as promissory estoppel, allows a party to seek
relief under a contract which is rendered unenforceable by lack of consideration, the statute of
frauds, or some other defense. See Suburban Hosp., Inc. v. Sampson, 807 F. Supp. 31, 33 (D.
Md. 1992); Pavel Enters. v. A.S. Johnson Co., 674 A.2d 521, 531-32 (Md. 1996). Maryland
courts apply the following four-part test to determine whether promissory estoppel applies:
(1) a clear and definite promise; (2) where the promisor has a reasonable
expectation that the offer will induce action or forbearance on the part of the
promisee; (3) which does induce actual and reasonable action or forbearance by
the promisee; and (4) causes a detriment which can only be avoided by the
enforcement of the promise.
Pavel, 674 A.2d at 532. As to the fourth element, the plaintiff is required to prove some
damages or harm, in contrast to an action for breach of contract. See havePower, LLC v.
General Elec. Co., 256 F. Supp. 2d 402, 410-12 (D. Md. 2003).
A party may bring an action seeking both breach of contract and promissory estoppel,
because if the court finds that the contract is unenforceable it may nonetheless provide relief
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based on detrimental reliance. See Suburban Hosp., 807 F. Supp. at 33; 28 Am. Jur. 2d Estoppel
and Waiver § 54 (2013). However, a claim for promissory estoppel or detrimental reliance is
moot when there is no dispute as to the existence of an enforceable contract. Jay Dee/Mole Joint
Venture v. Mayor of Baltimore, 725 F. Supp. 2d 513, 531-32 (D. Md. 2010); Harte-Hanks Direct
Mktg./Baltimore, Inc. v. Varilease Tech. Fin. Group, Inc., 299 F. Supp. 2d 505, 523 (D. Md.
2004); Holland v. Psychological Assessment Res., Inc., No. 04-437, 2004 WL 1368873, at *3 (D.
Md. June 16, 2004). Promissory estoppel does not provide a cause of action or source of
recovery independent from a breach of contract claim. Suburban Hosp., 807 F. Supp. at 33.
Defendant’s Motion does not argue that the Agreement or subsequent Addendums is
unenforceable. Nonetheless, the Court will not yet rule the promissory estoppel claim to be moot
because of the possibility that Defendant might raise such a defense at trial.4 If the Court finds
that the parties’ Agreements are enforceable, Plaintiff would not be entitled to any relief separate
from its cause of action for breach of contract. Jay Dee/Mole, 725 F. Supp. 2d at 532; HarteHanks, 299 F. Supp. 2d at 523; Suburban Hosp., 807 F. Supp. at 33.
In support of its motion for summary judgment, Plaintiff makes largely unsupported
factual assertions that it detrimentally relied on Defendant’s promise to produce Qubeey
channels with a functioning analytic engine. Pl.’s Br. 13-16. Plaintiff mentions, without factual
support, two meetings in which it tried to sell Qubeey channels to prospective clients during
which the technology did not function properly. Pl.’s Br. 14-15. The lack of supporting
documents or affidavits precludes Plaintiff from carrying its burden of eliminating any genuine
dispute of fact.

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Defendant’s answer to Plaintiff’s amended complaint included contractual defenses such as lack of consideration.
Answer ¶¶ 61-71 (ECF No. 21).

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In cross-moving for summary judgment, Defendant argues that Plaintiff cannot establish
that its reliance was reasonable because it prematurely filed its lawsuit before Defendant’s time
for performance had elapsed, failed to take reasonable steps to cure the problem, failed to make a
good faith attempt to sell the channels, and did not suffer a detriment. Def.’s Br. 26-35.
Defendant states that because the original Agreement contemplated a “five year term,” it was
unreasonable to file this lawsuit only five months after Defendant provided the first iteration of
the technology and one year after entering into the Agreement. Def.’s Br. 27. Defendant also
states that Plaintiff acted unreasonably by refusing Defendant’s attempts to demonstrate the
product’s functionality. Def.’s Br. 28-31.
In response, Plaintiff cites to the written Addendums in which Defendant agreed to
provide Qubeey channels with a functioning analytic engine. Pl.’s Opp. Br. 10, Ex. 11, 16. The
Court finds that the Addendums are sufficient for Plaintiff to raise a question of fact as to
whether Defendant made a clear and definite promise with the reasonable expectation of
producing action or forbearance. As to justifiable reliance and detriment, there is a genuine
question of fact raised by the affidavit of Wesley Samuels, who testified that the technology
delivered by Defendant was not functional and hampered Plaintiff’s ability to sell the product.
Pl.’s Opp. Br. Ex. 10. As to the time for performance, the Second Addendum requires Defendant
to produce a functioning analytic engine within sixty days of October 13, 2011. Pl.’s Opp. Br.
Ex. 16. The same clause requires that the analytic engine be integrated into Qubeey channels
that are customized for Plaintiff and “functional and appropriate for sale.” Id. This lawsuit was
filed by Plaintiff in state court on December 19, 2011, which is after the sixty-day period had
elapsed. Notice of Removal ¶ 1. Therefore, it is not premature.

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Defendant’s final argument is that by seeking extensive damages for “lost business
opportunities,” Plaintiff failed to seek the only available relief under a theory of promissory
estoppel, which is “enforcement of the promise.” Def.’s Br. 35. The Restatement (from which
Maryland courts derived the promissory estoppel test) states that a promise enforced by
promissory estoppel is “a contract, and full-scale enforcement by normal remedies is often
appropriate.” Restatement (Second) of Contracts § 90 (1981); see also Sedghi v. PatchLink
Corp., 823 F. Supp. 2d 298, 306 (D. Md. 2011); Maryland Transp. Auth. Police Lodge No. 34 of
Fraternal Order of Police, Inc. v. Maryland Transp. Auth., 5 A.3d 1174, 1227 (Md. Ct. Spec.
App. 2010), rev'd on other grounds sub nom. Maryland Transp. Auth. v. Maryland Transp. Auth.
Police Lodge No. 34 of Fraternal Order of Police, 21 A.3d 1098 (Md. 2011). However, the
Fourth Circuit has held that “[d]amages recoverable under a claim of detrimental reliance are
carefully circumscribed; the plaintiff may recover only those specific expenditures made in
reliance upon the defendant's promise.” RCM Supply Co. v. Hunter Douglas, Inc., 686 F.2d
1074, 1079 (4th Cir. 1982); Sherlock v. Lockheed Martin Corp., No. 01–254, 2004 WL 3681614,
at *8 (D. Md. Feb. 26, 2004). But see Sedghi, 823 F. Supp. 2d at 306 (stating that this limitation
only “sometimes” applies). The plaintiff is typically not entitled to damages based on lost
profits. Abt Associates, Inc. v. JHPIEGO Corp., 104 F. Supp. 2d 523, 536 (D. Md. 2000), aff'd,
9 F. App'x 172 (4th Cir. 2001).
Plaintiff’s amended complaint seeks extensive damages for “lost business opportunities”
far exceeding the value of the debt which the Agreement was intended to recover. Am. Compl. ¶
75. Defendant is correct in asserting that Plaintiff is most likely unable to recover these lost
profits under a theory of promissory estoppel. Nonetheless, construing the facts in the light most
favorable to Plaintiff, there is a question of fact as to whether it suffered some out-of-pocket or

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otherwise compensable damages when it relied on Defendant’s promise and attempted to sell a
deficient product. Therefore, the detrimental reliance claim cannot be fully dismissed on this
basis. Defendant’s cross-motion for summary judgment on Plaintiff’s detrimental reliance claim
will be denied.
IV.

Defendant is entitled to summary judgment on Plaintiff’s fraud claim because there
is insufficient evidence that Defendant falsely represented the insolvency of his prior
companies and that Plaintiff justifiably relied on such a statement.
Plaintiff claims that there is no genuine issue of material fact that Defendant

misrepresented the insolvency of the technology companies from the earlier lawsuit and that it
was fraudulently induced into not pursuing the judgment it was granted. Pl.’s Br. 16-19.
Plaintiff is not claiming fraud as a contractual defense, but rather seeking damages in tort for the
alleged misrepresentation. Defendant responds that there is no evidence that he ever made the
alleged statement, that the statement was false, or that Plaintiff reasonably and justifiably relied
on it. Def.’s Br. 22-26.
In order to prevail in a claim for fraud under Maryland law, the plaintiff must establish:
(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.
Edell & Associates, P.C. v. Law Offices of Peter G. Angelos, 264 F.3d 424, 444-45 (4th Cir.
2001) (citing Nails v. S & R, Inc., 639 A.2d 660, 668 (Md. 1994); Dixon v. Process Corp., 382
A.2d 893, 900 (Md. Ct. Spec. App. 1978)). To be actionable, the misrepresentation must have
been one of material fact. Parker v. Columbia Bank, 604 A.2d 521, 528 (Md. Ct. Spec. App.
1992). To establish reliance on the misrepresentation, the plaintiff must show that he or she
would have acted differently but for the representation. Dynacorp Ltd. v. Aramtel Ltd., 56 A.3d
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631, 667 (Md. 2012). But see Sass v. Andrew, 832 A.2d 247, 267 (Md. Ct. Spec. App. 2003)
(stating that the misrepresentation need only substantially induce the plaintiff to act). A
misrepresentation will not be found if the party to whom it was made knew the actual facts or
could reasonably have ascertained them. Sass, 832 A.2d at 266; McGraw v. Loyola Ford, Inc.,
723 A.2d 502, 515 (Md. Ct. Spec. App. 1999).
Fraud claims are subject to a heightened “clear and convincing” evidentiary standard.
Edell, 264 F.3d at 444; Dixon, 382 A.2d at 900. On a motion for summary judgment, “a trial
judge must bear in mind the actual quantum and quality of proof necessary to support liability”
under the substantive evidentiary standard. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254
(1986). The judge must view the evidence “through the prism” of the evidentiary burden that the
party would face at trial. Id. at 254; City of Virginia Beach v. U.S. Dept. of Commerce, 995 F.2d
1247, 1252 (4th Cir. 1993). Therefore, the Court must consider whether a fair-minded jury could
find that Plaintiff has proven the fraud clearly and convincingly. See Anderson, 477 U.S. at 252.
Further, a party who does not bear the burden of proof may be granted summary judgment by
showing that the adverse party cannot produce admissible evidence to support an essential fact.
Fed. R. Civ. Proc. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). A moving party
who does not bear the burden of proof may be granted summary judgment if “there is an absence
of evidence to support the non-moving party’s case.” Celotex, 477 U.S. at 325; Carr v. Deeds,
453 F.3d 593, 608 (4th Cir. 2006).
Plaintiff has not provided sufficient evidence that Defendant made a false representation
regarding the solvency of his prior technology companies. Its brief cites to an email written by
Defendant, which even if it were authenticated makes no mention of the insolvency or financial
health of the companies. Pl.’s Br. 17; Ex. 6. The only mention of the companies’ insolvency

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comes in the Agreement signed by the parties on January 24, 2011. Pl.’s Br. Ex. 7; Def.’s Br.
Ex. 5(A). There is no indication in the Agreement that this information was specifically
provided by Defendant. To establish that the alleged statement was false, Plaintiff provides
documentation from Defendant’s United States Bankruptcy Court proceedings showing that
Defendant received 360,000 dollars of income from the companies in 2011. Pl.’s Br. 18.
However, insolvency is “having liabilities that exceed the value of assets; having stopped paying
debts in the ordinary course of business or being unable to pay them as they fall due.” Black's
Law Dictionary (9th ed. 2009). Defendant’s income alone does not establish that the companies
were insolvent and Plaintiff provides no further evidence regarding their assets or liabilities.
As to justifiable reliance, Plaintiff states only that Defendant was the majority
shareholder of the technology companies and makes no references to any steps taken to verify
the insolvency of the companies. Pl.’s Br. 18. As to damages, Plaintiff states in conclusory
fashion, without citing evidence, that but for Defendant’s misrepresentation it would not have
entered into the Agreement underlying this lawsuit and would have instead pursued its prior
judgment. Pl.’s Br. 18-19.
Defendant’s cross-motion for summary judgment cites to several portions of the
deposition of Plaintiff’s chief of operations, Calvert Wright. Def.’s Br. 20-21. Wright testified
that he has no reason to believe that the companies were in fact solvent and operational, and that
he conducted an assets search of the companies and found no assets. Def.’s Br. Ex. 8, Wright
Dep. 159-61. Wright also testified that he has no reason to believe that Defendant was untruthful
when he represented that the companies were insolvent. Id. at 367. Finally, Wright testified that
Defendant made the representation about insolvency after the judgment in the earlier case was

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entered, which was four months after the initial Agreement between the parties. Id. at 99, 104.
Therefore, it is not possible that the Agreement was induced by the misrepresentation.
The Court is convinced that no reasonable fact-finder could find by clear and convincing
evidence that Defendant made fraudulent statements regarding the insolvency of the technology
companies. The only evidence that exists to suggest that Defendant made representations as to
the insolvency of the technology companies relates to statements made after the relevant period.
Plaintiff has not provided evidence to show that Defendant’s alleged statement was materially
false, because the fact that Defendant received income from the companies in 2011 can be
consistent with them being insolvent. The deposition of Plaintiff’s chief of operations indicates
that Plaintiff either knew the truth about the companies’ financial affairs or failed to reasonably
investigate. Finally, Plaintiff’s claim of injury is undermined by its failure to produce evidence
that the companies possessed any assets.
In Plaintiff’s response to Defendant’s Motion, it for the first time alleged that other
statements Defendant made regarding the Qubeey technology and the analytic engine were
fraudulent. Pl.’s Opp. Br. 13-16. Plaintiff argues that Defendant knew that he lacked the ability
to produce this technology at the time he promised to do so in the First and Second Addendums
to their contract. Id. Mere predictions or statements which are promissory in nature are not
actionable as fraud. Miller v. Fairchild Indus., Inc., 629 A.2d 1293, 1302 (Md. Ct. Spec. App.
1993). The simple failure to perform a contract does not give rise to a claim for fraud. Kwang
Dong Pharm. Co. v. Han, 205 F. Supp. 2d 489, 495 (D. Md. 2002). However, promises or
predictions made with the “present intention not to perform” may be actionable as fraud if they
relate to matters within the declarant’s exclusive control. Dierker v. Eagle Nat. Bank, 888 F.
Supp. 2d 645, 652 (D. Md. 2012); Miller, 629 A.2d at 1302.

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To support its claim that Defendant lacked present intent to perform the contract, Plaintiff
cites to emails exchanged by Defendant’s employees which as discussed above were never
authenticated and cannot be considered by the Court. See supra Section II n. 2. Therefore, they
fail to raise a material question of fact as to Plaintiff’s fraud claim. Even if they had been
authenticated, they do not provide evidence of Defendant’s intent to perform at the relevant time
period. Defendant was not the writer or recipient of any of the emails but was merely copied or
“cc’d” on them. Pl.’s Br. Ex. 19-20. Therefore, Plaintiff interprets the emails as putting
Defendant on notice that he was unable to integrate an analytic engine into the Qubeey channels
at the time he agreed to the Addendums. Pl.’s Opp. Br. 14. However, the emails were
exchanged in December of 2011, several months after Defendant agreed to the two Addendums.
Further, Plaintiff’s interpretation of the content of the emails is quite strained.5 No reasonable
juror could find that they support a claim of fraud by clear and convincing evidence. Defendant
is entitled to summary judgment on the fraud claim because of the “absence of evidence” that he
made a false representation and that Plaintiff justifiably relied on it. Celotex, 477 U.S. at 325;
Carr, 453 at 608.

5

In the emails, one employee states, “I think for the above stats I can not implement inside channel itself, please let
me know so that I can start this weekend and can complete more and more channel [sic].” Pl.’s Br. Ex. 19. Another
employee responds, “You and I discussed this before and you said it would be difficult to do from inside the channel
so I wrote it in the qube.” Pl.’s Br. Ex. 20. Defendant is cc’d on both emails.

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CONCLUSION
For the foregoing reasons, the Court DENIES Plaintiff’s Motion, and DENIES IN PART and
GRANTS IN PART Defendant’s Motion.

April 18, 2013

/s/
Charles B. Day
United States Magistrate Judge

CBD/ISA

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