Blow limitations, file for arbitration.

 The three-year Statute of Limitations is Maryland Canon- if you fail to file a lawsuit for breach of contract or most torts within three years, you are out-of-court. Many lawsuits are dead on arrival where a claim has been filed even one-day beyond the Statute of Limitations.

The Statue of Limitations is memorialized in the Maryland Code, established by the Legislature, and enforced daily by the judiciary at all levels. It is an ancillary fact that a top cause of legal malpractice is missing Statutes of Limitations, resulting in a total loss of client rights to sue. The deadline for filing claims is just that important.

Contracts sued upon often contain arbitration clauses. These give parties to a contract the right to elect privately conducted arbitration, complete with all the trappings of a court case, such as written discovery, depositions, witness subpoenas and evidentiary hearings. For decades, it has been an article of faith that the same three-year Statute of Limitations applicable to court cases also limited the time for filing a demand for arbitration. 

But not anymore. On March 25, 2022, Maryland's highest appellate court issued its opinion that the Statute of Limitations does not impose the same three-year limitation on a demand for arbitration that it imposes on a civil court filing.

In Park Plus v. Palisades Parking, the Court held that an arbitration provision in a written contract is not automatically constrained by the Statute of Limitations. The Statute of Limitations applies only to "a civil action at law." A demand for private arbitration is not "a civil action at law."

A decision that may well breathe life into otherwise stagnate and expired claims.

The Court did make clear that parties to a contract are free to impose filing deadlines on arbitration demands. You can expect language doing just this in your next contract, as lawyers throughout the State are now bent over keyboards, pecking out language that will quickly bring arbitration demands to heel within three-years, or less. 

Pay when paid, or pay if paid? What's in your contract?

General contractors rely on others to complete their work on behalf of an owner, including masons, electricians, iron workers and countless suppliers of wood, steel and equipment. Payment by an owner to the general contractor then cascades like a waterfall to all who have put labor and materials into the project.

Except when it doesn't.

General contractors routinely include one of two types of payment provisions in contracts with sub-contractors and suppliers. The first is commonly called "pay-when-paid," and the second is called "pay-if-paid." Both clauses alter the traditional situation where a sub-contractor or materialman is entitled to immediate payment for delivery of work or product.

On May 24, 2018 Maryland's highest appellate court decided Young Electrical Contractors v. Dustin Construction, which provides an excellent summary of the difference between the two provisions. 

During the latter half of the twentieth century, general contractors began to include contingent payment provisions in their subcontracts. Although there apparently was no standard language, such a clause would typically provide that the general contractor was not obligated to pay the subcontractor until some specified number of days after the general contractor received payment under the prime contract from the owner of the project. Thus, for example, a window distributor that entered into a subcontract to supply windows for a project would not necessarily receive payment upon delivery of the windows, but would be required to await payment of the general contractor by the owner of the project

As is explained by the Court of Appeals, this "pay-when-paid" provision does not excuse the obligation to pay a sub-contractor, only the timing of the payment. And so a sub-contractor that has completed all its contract requirements might have to wait some time to receive payment. In the real world, extended delays put real companies and real employees out of work. This type of provision forces sub-contractors and suppliers to finance a project, to a certain extent.

A derivation of this clause says the sub-contractor or supplier will get paid if, and only if, the owner pays the general contractor. The "pay-if-paid" clause is a draconian provision (Draco was an ancient Greek politician who advocated that the most minor of infractions warranted the harshest punishment, usually death).  A small contractor that does a superlative job can go out of business if payment disputes among the general contractor and the owner do not resolve. It is not hard to imagine smaller  or marginally capitalized contractor having to withhold payroll for employees, miss loan payments, or simply go fishing.

Where our Nation's economic recovery is thin, it is even more important for a sub-contractor to avoid the uncertainty of "pay-if-paid." Some jobs are simply not worth that risk.

Do you know what's in your contract documents?

Maryland lawsuits can be a whale of a problem

A contract is a collection of promises. When a promise is broken, it may require court action to get the remedies you seek. We can help!

Non-disparagement clauses now illegal in Maryland- mostly.

When an American's expectation of "free speech" overlaps commercial relationships, things get weird. The First Amendment of the U. S. Constitution gives you the absolute right to stand before the White House and shout your grievances across the south lawn toward the Oval Office, but the contract you signed to purchase a thing to be tossed after it breaks can force you to keep negative opinions about the retailer to yourself. Post your negative review on the internet, and you may well face civil penalties and a lawsuit.

The First Amendment restricts your government from silencing your speech, but contracts may have language preventing you from disparaging a company or a product. Can you Imagine getting sued for something you post on Yelp, Facebook or Amazon about something you purchased? It happens, and is mostly legal.

Maryland is just the second State to pass a law to make illegal and unenforceable anti-disparagement clauses in contracts for consumer products. California is the other state, having passed Assembly Bill 2365 in 2014.A federal bill called the Consumer Review Freedom Act passed through the U. S. Senate in 2015, but has not made it through the House of Representatives to the President's desk. It is extremely unlikely that the newly elected administration and legislature will pass the measure into law.You are a "consumer" when you are the "actual or a prospective purchaser, lessee or recipient of consumer goods or services. "
"Consumer goods" are defined as "goods or services that are primarily for personal, household or family purposes." The introductory language to the bill says that this definition is intended to mirror the definitions found in the Consumer Protection Act, where consumer goods are broadly defined to include credit, debts, obligations, goods and real property.
Any business that seeks your promise to keep silent with a non-disparagement clause now commits a false and deceptive trade practice under the Consumer Protection Act. A violation of the Consumer Protection Act further exposes the business to your claim for damages and attorney fees.
Because the new law does not apply to contracts made before October 1, 2016, you must rely on traditional contract analysis to beat a non-disparagement clause in a contract made before that date.  For example, a consumer's silence may not have been purchased for real or adequate consideration-- they are often buried in long documents, they seem unconnected with the subject of the contract, and there is no extra money paid for the promise. The promise may also reside in what a court would call a "contract of adhesion" where the consumer has so little bargaining power that it is patently unfair to include the restriction. And there are other available contract defenses, depending on your specific situation.
Other types of non-disparagement clauses will remain legal and widely used. The restriction routinely appears in settlement agreements where money is paid in exchange for silence and no admission of liability for specific claims. Where silence is a material object of the agreement, the term will be readily enforced. The clause also routinely appears in documents where business people share proprietary information while negotiating a deal, but the deal is never made. The parties then agree to walk away without disparaging each other or their products.
The Maryland law makes good sense, particularly in this age of on-line reviews and websites that aggregate product and service recommendations and reviews. An informed consumer needs all the information-- both positive and negative-- before making an informed decision. The courts have for years reminded us that the market place is governed by "caveat emptor," the principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made. This new law simply assures that the consumer will have more information. After all, if a business provides for customer reviews on its Facebook, Amazon or Yelp page, then it should be prepared to receive both negative and positive reviews. Anything less presents an incomplete and perhaps dishonest portrayal of the entity's products and services.
The consumer bears some responsibility for making honest and accurate reviews. The false accusations of bad service or poor quality can haunt a business for some time. State laws punishing libel and slander, coupled with rules for the imposition of injunctions,  remain available to the business to curtail the most extreme behavior.
Use your newly enhanced powers wisely!




Maryland H.B 131 became law in 2016 and applies to contracts made after October 1, 2016. It makes illegal and unenforceable contract provisions that bar disparaging public comments and social media postings by a "consumer."

Don't settle for less, you may already have a deal.

Here's your riddle of the day: When is an unsigned settlement agreement really a final settlement agreement?

Answer:  When a judge is persuaded that all the material terms of the deal are written down.

A November 1, 2013 decision of the Maryland Court of Special Appeals affirmed a longstanding belief in the legal community that the absence of a final document is not fatal to a deal.

Post by Young & Valkenet.

This case caught my attention because is had elements that are common to our real estate litigation practice- two adjoining land owners disagreed over ownership of several dozen parking spaces used by their tenants. One sued the other, and the parties began to negotiate a settlement while the court case was squeezing through the circuit court.  As is common in these cases, the court deadlines were pushed back, by agreement, to accommodate the continuing settlement negotiations.

The two sides exchanged written documents, starting with a "letter of intent" that outlined the key terms of the deal, with the promise that both sides would sign a "final document" containing all terms. But as is also common, one side backed out of negotiations.

The reasonable folks pressed to conclude the deal, and were forced to sue in the circuit court to enforce what was perceived to be a settlement of the original dispute.

What a mess!

The circuit court ruled in favor of the agreement, and the appellate court affirmed that decision.  The parties had a final deal, even though all the details had not been fully discussed, and even though a final document was not executed.

Can you be forced into a settlement? Not really.  What you should take from this decision is that an agreement exists when all the MATERIAL terms are established. Think of a sale of a box (full of desirable goodies and widgets).  If you and the seller agree on the contents of the box, the price of the box, and the date of sale, then you likely have a deal.  Later disagreement on the color of the box, whether it arrives by wagon, truck or boat, are not necessarily material to the deal and will not bar enforcement by one side or the other.

Think you have a deal? Tell us all about it.