Case Title: Dual v. Lockheed Martin

Citation: 383 Md. 151

Docket Number: 115/03

State: maryland

Court: Maryland Supreme Court

Date: 2004-09-13T00:00:00Z

Document:
Dual, Inc. v. Lockheed Martin Corp., No. 115, Sept. Term 2003.  Opinion by Harrell, J.
CORPORATIONS - FORFEIT CHARTER - POWER TO SUE - STATUTE OF
LIMITATIONS
TORTS - TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS -
TERMINATION OF CONTRACT - STATUTE OF LIMITATIONS
The president and sole shareholder of a Maryland corporation, in the name of the corporation
and in his corporate capacities, filed a civil action for damages against another corporation
for tort and contract claims resulting from the termination of two contracts.  Unfortunately,
the corporate charter was forfeit at the time the suit was filed and remained thus for two years
thereafter.  When a corporation’s charter becomes forfeit, the corporation loses the power to
sue.  Any complaint filed by a defunct corporation is a nullity as a matter of law and no
amended complaint may relate back for statute of limitations purposes.  If the statute of
limitations expires on a claim while a corporation’s charter is forfeit, the revival of the
charter is ineffective to resurrect the expired claims.  The Appellants claimed the suit was
proper under Md. Code (1975, 1999 Repl. Vol.), § 3-515 of the Corporations & Associations
Article.  A director-trustee, however, may bring a suit under § 3-515 only if there is a rational
relationship between the suit and a legitimate winding up activity of the corporation.  The
statute of limitations for a claim of tortious interference with contractual relations will begin
to accrue when the aggrieved party becomes either actually aware of the tortious conduct or
when the party becomes aware of the termination of the contract in question, unless fraud or
concealment by the tortfeasor prevents that party from discovering the existence of a
potential claim.  Other claims whose harm can be derived from the tortious interference with
contractual relations claim will begin to accrue, for statute of limitations purposes, when the
party is either actually aware of the tortious conduct or when the party is aware that the
contract in question has been terminated.
Circuit Court for Baltimore City
Case # 24-C-01-004752
IN THE COURT OF APPEALS OF
MARYLAND
No. 115
September Term, 2003
DUAL INCORPORATED, et al.
v.
LOCKHEED MARTIN CORPORATION, et al.
Bell, C.J.
                    Raker
Wilner
Cathell
Harrell
Battaglia
Greene,
JJ.
Opinion by Harrell, J.
Filed:   September 13, 2004
On 1 October 2001, J. Frederick Dual, Jr. (“Dual”), purporting to act in the capacities
of “President and sole shareholder” of Dual, Incorporated (“Dual, Inc.”), filed a complaint
2
in the Circuit Court for Baltimore City against Lockheed Martin Corporation and two of its
subsidiaries (collectively “Lockheed”).  In the complaint, Dual alleged various torts related
to the terminations of two contracts: one between Dual, Inc. and Lockheed, and another
between Dual, Inc. and the United States Air Force (“Air Force”).  Dual, a non-lawyer, filed
the complaint pro se, identifying both himself and Dual, Inc. as plaintiffs.  At the time suit
was filed, the corporate charter for Dual, Inc. was forfeit.  This complaint, however, was
never served on Lockheed.
One year later and after reviving Dual, Inc.’s corporate charter, Dual and Dual, Inc.,
now with counsel’s assistance, filed an amended complaint modifying some of the previously
pleaded counts and adding additional counts.  After Lockheed was served with the amended
complaint on 11 October 2002, it responded with a motion to dismiss based essentially on
the statute of limitations.  Lockheed’s position was that: (a) all of the wrongful conduct
alleged by Dual/Dual, Inc. was completed by no later than May-June 1999; (b) any complaint
based thereon had to be filed by no later than June of 2002, under the applicable three year
statute of limitations; (c) the original complaint was a nullity because Dual, Inc.’s corporate
charter was forfeit at the time of filing and Dual improperly, both as a non-lawyer and
otherwise, initiated the suit in a derivative or representational capacity; and (d) the amended
complaint, filed after the June 2002 deadline, was time-barred.  The Circuit Court agreed
with Lockheed and dismissed the suit in its entirety, entering judgment in favor of Lockheed
on 1 October 2003.  Dual and Dual, Inc. appealed to the Court of Special Appeals.  Before
3
the intermediate appellate court could consider the appeal, we, on our initiative, issued a writ
of certiorari.  We shall affirm the Circuit Court’s judgment.
I.
Based on his experiences as a Vietnam-era veteran of the United States Navy, Dual
formed Dual, Inc. in 1983 to engage in the aircraft simulator business.  Dual, Inc. was an
attractive business partner because it was certified by the U.S. Small Business Administration
as a “Section 8” minority-owned enterprise as a result of Dual’s physical disability incurred
during the war.
In 1994, Lockheed awarded a subcontract to Dual, Inc. to provide Lockheed with
engineering designs and related support for its Johnson Space Center Science Engineering
and Technology (“SEAT”) contract with the National Aeronautics & Space Administration
(“NASA”).  Also in 1994,  Dual, Inc. received a direct contract from the Air Force to develop
a flight simulator to test the Air Force’s Joint Surveillance Target Attack Radar System
(“JSTARS”).
 For reasons that are not entirely clear on this record, Dual, Inc.’s Maryland corporate
charter was forfeited on 2 October 1997. The charter was not revived until 25 July 2002.  
The Air Force terminated the JSTARS contract “for cause” on 29 April 1999.
Lockheed terminated Dual’s SEAT subcontract on 17 May 1999.  On 10 June 1999, the Air
Force changed the basis of the termination of the JSTARS contract to “for the convenience
of the government.”  Why these contracts were terminated animated the initiation of the
present litigation.
1According to Dual, Inc.’s complaint and exhibits, a change from a termination “for
cause” to a termination “for the convenience of the government” dramatically improved its
financial situation because a termination “for cause” would have a negative implication to
potential employers and creditors.  In addition, Dual, Inc. stated that the change in reason for
termination frustrated Lockheed’s attempts to step immediately into the JSTARS contract
because a termination “for cause,” as opposed to a termination “for the convenience of the
government,” would have allowed Lockheed to assume the JSTARS contract without going
(continued...)
4
Dual, Inc. and Dual alleged in the original complaint that in 1999 Lockheed engaged
in a scheme to drive Dual, Inc. out of business in order to assume its employees, contracts,
and client base, most notably in the latter two regards the JSTARS contract and the Air
Force, respectively. To accomplish these objectives, it was alleged that Lockheed worked
behind the scenes with Air Force officials to bring about the termination of Dual, Inc.’s
involvement with the JSTARS contract.  In addition, after Dual, Inc. protested the Air
Force’s termination of the JSTARS contract “for cause,” Lockheed allegedly retaliated
within a few weeks by terminating the SEAT subcontract with Dual, Inc.   Lockheed
continued its alleged scheme to destroy Dual, Inc. by subsequently “reassigning” many of
Dual, Inc.’s employees to Lockheed’s own projects, effectively inducing them to become
employees of Lockheed.  It was claimed further that, after terminating the SEAT subcontract,
Lockheed seduced Dual, Inc. with false promises of “bigger and better” subcontracts, all the
while draining Dual, Inc.’s ability to engage in other business opportunities.  On the other
front, Appellants’ protests to the Air Force subsequently fell short of complete success when
the Air Force upheld the termination of the JSTARS contract, although  changing the reason
to “for the convenience of the government.”1  Nonetheless, Dual, Inc. claimed that the actions
1(...continued)
through a competitive bidding process. 
2 Throughout the course of this litigation, neither party has argued, for purposes of the
statute of limitations analysis, a difference between claims grounded in equity, such as
quantum meruit, and tort or contract claims based in law. The parties and the Circuit Court
assumed a three-year statute of limitations for claims in law applied generally.  See Md. Code
(1973, 2002 Repl. Vol.), § 5-101 of the Courts & Judicial Proceedings Article (“A civil
action at law shall be filed within three years from the date it accrues unless another
provision of the Code provides a different period of time within which an action shall be
commenced.”).  We have held that “[i]f the remedy sought in equity is analogous to a remedy
(continued...)
5
of Lockheed by that time already had undermined Dual, Inc.’s ability to carry on its business
and effectively destroyed the company.  
Dual, Inc. contended that it first learned of Lockheed’s duplicity in early to mid-2000.
The vehicle of discovery was Dual, Inc.’s acquisition sometime during that period of a copy
of a 6 December 1999 final status report by Lockheed to the Department of Defense outlining
Lockheed’s efforts to complete the JSTARS contract.  From information and clues discerned
from this report, Appellants apparently formed a belief that Lockheed had engaged in a
scheme to destroy Dual, Inc.’s business and assume its clients and employees.  More than a
year and a half later, Dual filed the first complaint framing counts including breach of
fiduciary duty, breach of good faith and fair dealing, tortious interference with contractual
relations, tortious interference with economic and business relations (and “prospective
advantage”), misappropriation of trade secrets, and breach of contract.  The amended
complaint, filed on 2 October 2002, added counts of breach of partnership agreement, fraud
in the inducement, quantum meruit, and unjust enrichment.2
2(...continued)
cognizable at law, and the statute of limitations prescribes a time within which the legal
action must be instituted, equity will follow the law and bar the action.”  Ver Brycke v. Ver
Brycke, 150 Md. App. 623, 646, 822 A.2d 1226, 1239 (2003), aff’d in part and rev’d in part
on other grounds, 379 Md. 669, 843 A.2d 758 (2004) (quoting Grandberg v. Bernard, 184
Md. 608, 611, 42 A.2d 118, 119 (1945)).  We apply this principle here. 
3 When this Court takes a case on “bypass” of the Court of Special Appeals by issuing
a writ of certiorari on its own initiative before the intermediate appellate court decides an
appeal, we most frequently do so based on the Appellant’s brief filed in the Court of Special
Appeals.  In that event, we rely on the Appellant’s questions as framed in its brief before the
intermediate appellate court to frame the issues we consider.  In the present case, however,
we granted certiorari on the basis of the prehearing information report filed in the Court of
Special Appeals before the parties filed their briefs in that court.  See Md. Rule 8-205.  For
that reason, we look here to the prehearing information report for guidance as to the scope
(continued...)
6
Lockheed, in response to the amended complaint, filed a motion to dismiss.  Lockheed
argued that the initial complaint was a nullity for the purpose of tolling the statute of
limitations because it was filed improperly on behalf of a defunct corporation by a non-
lawyer.  Lockheed also argued that the claims in the amended complaint were time-barred
because they accrued no later than 26 June 1999, more than three years before the filing of
the amended complaint.  
The Circuit Court agreed with Lockheed that the initial complaint was invalid and that
the amended complaint was time-barred by the statute of limitations.  Dual/Dual, Inc.
appealed the judgment of the Circuit Court.  Before the Court of Special Appeals could
decide the case, we granted certiorari on our own initiative, 379 Md. 224, 841 A.2d 339
(2004), in order to consider the following questions, which we have rephrased for the sake
of clarity:3
3(...continued)
of the questions to be considered.
7
1. Was the trial court correct in holding that the initial complaint was
invalid?
2. Did the trial court err in ruling that all of the claims in the amended
complaint were time-barred by the statute of limitations because they each
accrued no later than 26 June 1999? 
II.
In considering Lockheed’s motion to dismiss and Dual/Dual, Inc.’s opposition, the
record indicates that the Circuit Court considered factual matters, placed before it by the
parties, beyond those alleged in the complaint or amended complaint.  For example, the facts
of the forfeiture and revival of Dual, Inc.’s corporate charter and a copy of Lockheed’s 6
December 1999 report to the Department of Defense regarding its performance under the
JSTARS contract were submitted to the Circuit Court and apparently considered in acting
on the motion.  When a party presents factual matters outside the pleadings, and the court
does not exclude them from consideration in the course of acting on a facial motion to
dismiss, the court must treat the motion as a motion for summary judgment.  See Md. Rule
2-322(c) (“If, on a motion to dismiss for failure of the pleading to state a claim upon which
relief can be granted, matters outside the pleading are presented to and not excluded by the
court, the motion shall be treated as one for summary judgment and disposed of as provided
in Rule 2-501, and all parties shall be given reasonable opportunity to present all material
8
made pertinent to such a motion by Rule 2-501.”).  Therefore, Lockheed’s motion to dismiss
amounted to a motion for summary judgment under Md. Rule 2-501.
A trial court’s grant of a summary judgment motion is proper if “there is no genuine
dispute as to any material fact and ... the party in whose favor judgment is entered is entitled
to judgment as a matter of law.”  Md. Rule 2-501(e).  Maryland courts hold that a “material
fact is a fact the resolution of which will somehow affect the outcome of the case.”  Arroyo
v. Bd. of Educ., 381 Md. 646, 654, 851 A.2d 576, 581 (2004) (citations omitted). 
Once the moving party provides the trial court with a prima facie basis in support of
the motion for summary judgment, the non-moving party is obliged to produce sufficient
facts admissible in evidence, if it can, demonstrating that a genuine dispute as to a material
fact or facts exists.   These tendered facts should be given under oath, based on the personal
knowledge of an affiant.  Id. at 655, 851 A.2d at 581.  “Bald, unsupported statements or
conclusions of law are insufficient.”  Id. (citations omitted).
If no genuine dispute of material fact is found to exist, a court then considers whether
the movant is entitled to judgment as a matter of law.  See Md. Rule 2-501.  On appellate
review of the grant of summary judgment, we review the trial court’s conclusions of law de
novo.  Messing v. Bank of America, N.A., 373 Md. 672, 683-84, 821 A.2d 22, 28 (2003).  As
we consider the trial court’s conclusions of law, “we construe the facts properly before the
court, and any reasonable inferences that may be drawn from them, in the light most
favorable to the non-moving party.”   Jurgensen v. New Phoenix Atl. Condo. Council of Unit
Owners, 380 Md. 106, 114, 843 A.2d 865, 869 (2004).
9
III.
We hold that the initial complaint filed in this case was a nullity and therefore
ineffective for the purpose of tolling the running of the statute of limitations.  A corporation,
the charter for which is forfeit, is a legal non-entity; all powers granted to Dual, Inc. by law,
including the power to sue or be sued, were extinguished generally as of and during the
forfeiture period.  See Md. Code (1975, 1999 Repl. Vol.), §§ 2-103(2), 3-503(d) of the
Corporations & Associations Article (stating that after the State Department of Assessments
and Taxation declares a corporation’s charter forfeit, “the powers conferred by law on the
corporations are inoperative, null, and void as of the date of the proclamation, without
proceedings of any kind either at law or in equity”); see also Stein v. Smith, 358 Md. 670,
675, 751 A.2d 504, 507 (2000) (stating that upon forfeiture of the corporate charter, a
corporation loses the power to sue).   In this case, Dual, Inc.’s charter became forfeit on 2
October 1997. Therefore, generally any suit filed on behalf of Dual, Inc. while its charter was
forfeit, was a nullity as a matter of Maryland law.  Stein, 358 Md. at 675, 751 A.2d at 507.
Dual argues, however, that he filed the October 2001 complaint in his capacity as a
trustee of Dual, Inc. under Md. Code (1975, 1999 Repl. Vol.), § 3-515 of the Corporations
& Associations Article.  This argument is unavailing.  Section 3-515 provides that “[w]hen
the charter of a Maryland corporation has been forfeited, until a court appoints a receiver, the
directors of the corporation become the trustees of its assets for purposes of liquidation.”
Md. Code (1975, 1999 Repl. Vol.), § 3-515(a) of the Corporations & Associations Article
4Although nowhere in the initial or amended complaint did he claim to be a director
or trustee of Dual, Inc. (claiming rather that he was “the President and sole shareholder”),
Dual, in the affidavit accompanying his opposition to the motion to dismiss, added that he
was “a director of Dual, Inc.,” and filed the action “in order to preserve the corporation’s
claims against the Defendants.”
5Under Md. Code (1957, 2001 Repl. Vol.), Art. 2B § 10-202(e)(1), the Board of
License Commissioners for Baltimore City may deny the grant or transfer of a liquor license
if it appears that more than fifty percent of the owners and tenants of property situated within
200 feet of the applying business are opposed to the transfer or grant.  At issue in Patten was
the power of a director-trustee of a defunct corporation to exercise its right to oppose the
transfer of a liquor license under this provision.  107 Md. App. at 228, 667 A.2d at 942.
10
(emphasis added).  Assuming that Dual intended to file the suit as a director-trustee,4 § 3-515
granted him no legal authority to do so under the circumstances of this case.  The powers
granted to directors-trustees by § 3-515 clearly are intended only for the “winding up” of a
corporation’s affairs.  Patten v. Bd. of Liquor License Comm’rs, 107 Md. App. 224, 233-234,
667 A.2d 940, 944-945 (1995); see Md. Code (1975, 1999 Repl. Vol.),  § 3-515(a), (c)(4) of
the Corporations & Associations Article.  Thus, a trustee only may sue in the trustee’s own
name if there is a “rational relationship” between the suit and a legitimate “winding up”
activity of the corporation.  Patten, 107 Md. App. at 234, 667 A.2d at 945.  
In Patten, a board director, purporting to act on behalf of a corporation whose charter
had been forfeit for four years, attempted to express to a board of license commissioners the
corporation’s opposition to a licensee’s request to transfer the ownership and location of an
alcoholic beverage license.5  107 Md. App. at 228, 667 A.2d at 942.  The protesting director
had not engaged in any activity normally associated with “winding up” the corporation’s
affairs during the four years between forfeiture of the charter and the purported corporate
11
opposition to the license transfer in question.  Id. at 234, 667 A.2d at 945.  Although the
director argued that the protest vote came within the “winding up” powers listed in § 3-515,
the Court of Special Appeals held that such statutory powers are merely  “administrative in
nature” and pertain only to the completion of existing corporate business.  Id.  In addition,
the intermediate appellate court concluded that “even if the vote cast by [the director] was
consistent with ‘winding up’ duties, the length of time between forfeiture of the charter and
the casting of the vote raises an unexplained, perhaps unexplainable, doubt as to there being
any logical association between these two actions.”  Id.  As a result, the Court of Special
Appeals held that nothing in § 3-515 gave the protesting director the power to vote on behalf
of the defunct corporation.  Id. at 233, 667 A.2d at 944.
Dual’s initiation of the litigation in the present case is analogous to the circumstances
in Patten.  There are no allegations in the initial or amended complaint to support Dual’s
argument that he was “winding up” Dual, Inc.’s affairs at the time of the October 2001
complaint or at any time between forfeiture and these filings.  The only support in the record
for his argument is a vague allusion to “significant creditors that have to be paid,” asserted
by Dual’s attorney at oral argument before the Circuit Court in an apparent reference to at
least some of the intended beneficiaries of the money damages sought from Lockheed.  That
is inadequate.
In fact, the record indicates not that Dual was “winding up” Dual, Inc.’s affairs after
its charter became forfeit in 1997, but rather that he actively was conducting business during
6 It is a misdemeanor to transact business in the name or for the account of a
corporation with knowledge that its charter is forfeit and has not been revived.  Md. Code
(1975, 1999 Repl. Vol.), § 3-514 of the Corporations & Associations Article.
7This subcontract was both executed and terminated on 26 June 1999.
8We need not, and do not, reach the Circuit Court’s alternate ground for finding the
October 2001 complaint to be a nullity, that is that Dual, as a non-lawyer, could not file a suit
on behalf of Dual, Inc.  See First Wholesale Cleaners, Inc. v. Donegal Mut. Ins. Co., 143 Md.
App. 24, 32-36, 792 A.2d 325, 330-33 (2002) (citations omitted) (stating that although Md.
Rule 2-131(a)(2) prohibits a corporation from appearing in court except through licensed
counsel, the rule does not mandate any particular sanction, and allows the court discretion
(continued...)
12
this time on behalf of a corporation with a forfeit charter.6  Dual, Inc. purported to continue
performance under contracts with both the Air Force and Lockheed as late as April and May
of 1999, respectively, before the contracts were terminated.  Dual even alleged that Dual, Inc.
was in lengthy negotiations with Lockheed as late as June of 1999, culminating in a new
“bigger and better” subcontract.7  Such activities directly contradict the notion that Dual
merely was attempting to wind up existing corporate business and dispose of Dual, Inc.’s
assets following the 1997 charter forfeiture.  Furthermore, nothing in the record indicates that
Dual made any attempt to dispose of existing assets, debts, or obligations of Dual, Inc.
between June of 1999 and October of 2001.  Therefore, the Circuit Court’s determination that
Dual was not winding up Dual, Inc.’s affairs when he filed his initial complaint in October
of 2001 was not erroneous.  As a result, Dual’s October 2001 complaint was not sanctioned
by § 3-515.  Because Dual could not sue on behalf of Dual, Inc. while its charter was forfeit,
the Circuit Court correctly determined the October 2001 complaint to be a nullity for the
purpose of tolling the applicable statute of limitations.8 
8(...continued)
to either “compel compliance with the rule or [to] determine the consequences in light of the
totality of the circumstances”).
13
Dual, Inc. argues that the claims alleged in its amended complaint, filed after the
revival of its corporate charter, should relate back to the original complaint for statute of
limitations purposes.  Because Dual’s October 2001 complaint was a nullity, however, no
cause of action repeated in Dual, Inc.’s October 2002 amended complaint may relate back
to the original complaint for statute of limitations tolling purposes.  Stein, 358 Md. at 674,
751 A.2d at 506.  While the revival of a corporate charter may validate retrospectively the
capacity of a corporation to sue in certain circumstances, Chrysler Credit Corp. v. Superior
Dodge, Inc., 538 F.2d 616, 618 (4th Cir. 1976), such a revival does not restore rights that
were divested during the period when the corporate charter was forfeit.  See Md. Code (1975,
1999 Repl. Vol.), § 3-512 of the Corporations & Associations Article (stating that all assets
and rights of a corporation are restored after the revival of its charter “except those sold or
those of which [the corporation] was otherwise divested while the charter was void”); Stein,
358 Md. at 676, 751 A.2d  507.  Therefore, under Maryland law, where a corporation’s claim
is barred by the applicable statute of limitations, that claim is not resuscitated thereafter when
the corporation’s charter is revived.  U.S. v. Firemen’s Ins. Co. of Newark, N.J., 869 F. Supp.
347, 348-49 (D. Md. 1994).
All causes of action alleged in the amended complaint accruing before 2 October 1999
also are time-barred.  Thus, the Circuit Court was correct in entering judgment for Lockheed
9Dual, Inc. concedes that, if the October 2001 complaint is a nullity or otherwise
ineffective to toll the statute of limitations as to the claims relative to the SEAT subcontracts,
such claims are time-barred.  Appellants’ Brief at 17.
10Although Dual, Inc. sprinkled its JSTARS claims over five counts in the amended
complaint, all of them spring from Lockheed’s alleged tortious interference with the JSTARS
contract.  Accordingly, we analyze when the statute of limitations began to run on that
particular claim as the litmus test for all, save the misappropriation of trade secrets claim
which we consider separately infra. 
14
as to all of Dual, Inc.’s alleged causes of action related to the SEAT subcontract.9  We
consider next whether Dual, Inc.’s claims arising out of Lockheed’s alleged conduct
regarding the JSTARS contract were divested by the statute of limitations before Dual, Inc.
filed its amended complaint.
IV.
We also agree with the Circuit Court’s determination that Dual, Inc.’s claims with
regard to the JSTARS contract are time-barred.  As a matter of law, the termination of the
JSTARS contract between Dual, Inc. and the Air Force put Dual, Inc. on notice to investigate
any claims that might arise from that termination.  Absent any specific facts demonstrating
fraud or concealment designed to frustrate a potentially aggrieved party’s ability to discover
evidence of wrongdoing connected with the termination of a contract, the statute of
limitations begins to run when the harmed party becomes aware of the termination.10
Under Maryland’s discovery rule, the statute of limitations does not begin to accrue
on a claim until the plaintiff knows or should know of the potential claim.  Lumsden v.
Design Tech Builders, Inc., 358 Md. 435, 443-44, 749 A.2d 796, 801 (2000).  The discovery
15
rule acts to balance principles of fairness and judicial economy in those situations in which
a diligent plaintiff may be unaware of an injury or harm during the statutory period. 
Pennwalt Corp. v. Nasios, 314 Md. 433, 440-41, 550 A.2d 1155, 1159 (1988).  This
standard, however, does not require actual knowledge on the part of the plaintiff, but may be
satisfied if the plaintiff is on “inquiry notice.” Am. Gen. Assurance Co. v. Pappano, 374 Md.
339, 351, 822 A.2d 1212, 1219 (2003); Doe v. Archdiocese of Washington, 114 Md. App.
169, 188-89, 689 A.2d 634, 644 (1997).  A plaintiff is put on inquiry notice when he, she,
or it possesses “facts sufficient to cause a reasonable person to investigate further, and ...
[that] a diligent investigation would have revealed that the plaintiffs were victims of ... the
alleged tort.”  Pennwalt, 314 Md. at 448-49, 550 A.2d at 1163-64.
V.
We hold that, absent a showing of fraud or intentional concealment, the statute of
limitations for a claim for tortious interference with contractual relations, based on the
termination of a contract, begins to accrue on the date that the contract was terminated.  See
D’Arcy and Assocs., Inc. v. K.P.M.G. Peat Marwick, L.L.P., 129 S.W.3d 25, 30 (Mo. Ct.
App. 2004) (stating that the “tortious conduct was complete when [the defendant] induced
or caused the breach”); see also Hwang v. Dunkin’ Donuts, Inc., 840 F. Supp. 193, 196
(N.D.N.Y. 1994) (holding that the “statute of limitations for a claim of tortious interference
[with] contractual relations begins to run when the contract in question has been breached”);
Trembath v. Digardi, 118 Cal. Rptr. 124, 126 (Ct. App. 1974) (holding that tort actions based
on inducement of breach of contract begin to accrue “no later than the date of the breach
16
[that] has been tortiously induced”). The discovery rule is premised on the discovery of the
harm, even if the aggrieved party may not be aware of the extent of the harm, the source of
the tortious conduct, or other intimate details of the tort.  Doe, 114 Md. App. at 185-86, 689
A.2d at 643; see also D’Arcy, 129 S.W.3d at 30 (stating that a “cause of action [for tortious
interference with contractual relations] accrues when damage can be ascertained – not when
the precise amount of damage is known”).  In the case of a claim for tortious interference
with contractual relations, the inherent harm occurs when the contract is terminated as a
result of the conduct of the tortfeasor.  See D’Arcy, 129 S.W.3d at 30; see also Fury Imports,
Inc. v. Shakespeare Co., 625 F.2d 585, 588 (5th Cir. 1980) (stating that “inducing another
to break a contract does not become a legal wrong upon which an action may be based until
damage is suffered as a result, and that occurs only when the breach happens”).   
Therefore, once a putative plaintiff is aware, or should be aware, that its contract has
been terminated, that plaintiff is under a duty to investigate the circumstances surrounding
that termination.  Doe, 114 Md. App. at 188, 689 A.2d at 644 (stating that once a plaintiff is
aware that it has been harmed, “a potential plaintiff is charged with responsibility for
investigating, within the limitations period, all potential claims and all potential defendants
with regard to the injury”).  The aggrieved party is then charged with any knowledge that
could be obtained as the result of a reasonably diligent investigation within the statutory three
year period.  Id.  Furthermore, the statute of limitations begins to run with the discovery of
the harm (in this case the knowledge of the termination of the contract at issue), and is not
11Appellants’ amended complaint claims Lockheed assumed performance of the
JSTARS contract “less than one week after Dual[, Inc.]’s termination for cause.”
17
delayed until the completion of a diligent investigation.  Lumsden, 358 Md. at 447-48, 749
A.2d at 803.
In this case, Dual, Inc. claims that Lockheed tortiously interfered with Dual, Inc.’s
JSTARS contract with the Air Force.  Although the JSTARS contract initially was terminated
“for cause” in April of 1999, the final basis for termination was not resolved until 10 June
1999.  At the latest on 10 June 1999, Dual, Inc. was on notice to discover any claims that
may arise as a result of that termination.11  
Dual, Inc. claims, however, that Lockheed engaged in fraud and concealment with
regard to its activities surrounding the JSTARS contract and, therefore, the statute of
limitations did not begin to run until Dual, Inc. received in early to mid-2000 the 6 December
1999 Lockheed-to-Department of Defense report.  Maryland law recognizes that it is unfair
to impart knowledge of a tort when a potential plaintiff is unable to discover the existence
of a claim due to fraud or concealment on the part of the defendant.  Md. Code (1973, 2002
Repl. Vol.), § 5-203 of the Courts & Judicial Proceedings Article; see also Frederick Road
Ltd. P’ship v. Brown & Sturm, 360 Md. 76, 98-99, 756 A.2d 963, 975 (2000) (stating that §
5-203 was passed to avoid situations where a plaintiff, despite a diligent investigation, is kept
ignorant of the existence of a claim by the fraud of the defendant).  When a defendant acts,
through fraud or concealment, to frustrate the plaintiff’s ability to discover a claim, the
statute of limitations is tolled until “the time when the party discovered, or through the
18
exercise of ordinary diligence should have discovered the fraud.” Md. Code (1973, 2002
Repl. Vol.), § 5-203 of the Courts & Judicial Proceedings Article. The aggrieved party
asserting such fraud or concealment must plead affirmatively and with specificity the
supporting facts in its complaint.   Doe, 114 Md. App. at 187, 689 A.2d at 643.  The
“complaint relying on the fraudulent concealment doctrine must also contain specific
allegations of how the fraud kept the plaintiff in ignorance of a cause of action, how the fraud
was discovered, and why there was a delay in discovering the fraud, despite the plaintiff’s
diligence.”  Id.  Finally, the pleadings must demonstrate specific facts that support a finding
of fraud or concealment, and must go beyond mere conclusory statements.  Id. (citing
Antigua Condo. Assoc. v. Melba Investors Atl., Inc., 307 Md. 700, 735, 517 A.2d 75, 93
(1986)).
Nowhere in the record do we find any specific or detailed factual assertions as to how
Lockheed concealed from Dual, Inc. its alleged role in the termination of the JSTARS
contract.  In lieu of that, there are only conclusory allegations unsupported by even minimal
factual support.  It is not enough merely to allege, in essence, that Lockheed’s interference
with the JSTARS contract was concealed from Dual and Dual, Inc.  Dual/Dual, Inc. was
required to plead with specificity facts that would tend to support the claims that Lockheed
and/or its pertinent subsidiaries engaged in fraud and concealment with regards to
Appellants’ ability to discover the claims.  Doe, 114 Md. App. at 187, 689 A.2d at 643.
Dual, Inc. failed to meet its burden.
12It is unclear from the record the circumstances by which Dual or Dual, Inc. obtained
the report to the Department of Defense.  
19
Appellants point to the receipt in early to mid-2000  of Lockheed’s 6 December 1999
report to the Department of Defense concerning the JSTARS contract as the paramount event
that eventually triggered, under its application of the discovery rule, the commencement of
the statute of limitations period.  As stated above, however, the statute of limitations began
to run when the contract termination was communicated to Dual, Inc., unless a prima facie
case is shown that the putative defendant or defendants engaged in intentional concealment
or fraud concerning the wrongful conduct.  In addition to the lack of specific allegations
supporting fraud or concealment, Appellants failed to advance facts that demonstrate why
Dual, Inc. was unable to discover the information contained in the report prior to the time
that it obtained the report.12  
Dual, Inc. initiated an investigation after the Air Force terminated the JSTARS
contract “for cause” in April of 1999.  That investigation appears to have been curtailed when
the Air Force changed its reason for termination to “for the convenience of the government”
in June of 1999.  Although Dual, Inc. contends in its complaint that the termination for
convenience “exposed the utter baselessness of the Air Force’s claim of a termination for
‘cause’,” Dual, Inc. does not appear to have regarded such a flip-flop by the Air Force as
sufficient to warrant the continuation of the investigation into the “real” circumstances that
may have procured the termination.  Instead, Dual, Inc. failed to investigate further, and
claims it did not become aware of Lockheed’s involvement in the termination of the JSTARS
13Dual, Inc.’s counsel’s explanation of how the 1999 report revealed Lockheed’s
scheme included a concession that it took “a trained eye and a knowledgeable party” to
discern what Dual, Inc. found in the document.  Having reviewed the document, we certainly
concur with that assessment. 
20
contract and Lockheed’s assumption of performance of the contract until it received a copy
of the Department of Defense report in early to mid-2000.  Dual, Inc., however, fails to
explain or demonstrate why it did not, or could not, discover Lockheed’s role in the
termination at an earlier date.  See Doe, 114 Md. App. at 189, 689 A.2d at 644 (stating that
“fraudulent concealment requires that the complaint articulate how the plaintiff learned of
the fraud, and why a diligent plaintiff could not discover it sooner”).  Until oral argument on
the motion to dismiss before the Circuit Court, Dual, Inc. did not attempt to explain why or
how the December 1999 report revealed to it Lockheed’s wrongful conduct.13 
Furthermore, absent the presence of a fiduciary relationship or other duty to disclose,
it is not enough to toll running of the statute of limitations merely to demonstrate that a
defendant failed to disclose its role in the termination of a contract.  Frederick Road Ltd.
P’ship, 360 Md. at 100 n.14, 756 A.2d at 976 n.14.  Rather, it is the duty of the plaintiff to
conduct a diligent investigation or demonstrate affirmative fraud or concealment.    See id.
(stating that “[a]bsent a fiduciary relationship, this Court has held that a plaintiff seeking to
establish fraudulent concealment must prove that the defendant took affirmative action to
conceal the cause of action and that the plaintiff could not have discovered the cause of
action despite the exercise of reasonable diligence, ... and that, in such cases, the affirmative
act on the part of the defendant ... must be some act intended to exclude suspicion and
21
prevent injury, or there must be a duty on the part of the defendant to disclose such facts, if
known”).  Had Lockheed, or the Air Force acting in concert with Lockheed, made
misrepresentations in response to inquiries by Dual, Inc., then Dual, Inc. should have pleaded
specifically the “who, when, and what” of the circumstances to meet its burden to
demonstrate a prima facie case of fraud or concealment.  Doe, 114 Md. App. at 188-89, 689
A.2d at 644. 
Dual, Inc. simply alleges in conclusory fashion that Lockheed engaged in “breaches
and subterfuge”  designed to instigate the termination of the JSTARS contract.  It neglects,
however, to identify how Lockheed perpetuated its scheme or when the meetings with Air
Force personnel allegedly occurred.   Bald allegations are insufficient.  Doe, 114 Md. App.
at 187, 689 A.2d at 643; Villareal v. Glacken, 63 Md. App. 114, 130-31, 492 A.2d 328, 336-
37 (1985).   Because there is no factual foundation to support the conclusion that Lockheed
fraudulently or intentionally concealed its alleged role in the termination of the JSTARS
contract, we hold that the Circuit Court did not err in determining that the statute of
limitations began to run at the time of the termination of the JSTARS contract. 
 VI.
Dual and Dual, Inc. also argue that, based on the dealings surrounding the SEAT
subcontract, a fiduciary relationship existed with Lockheed, and as such, Appellants had
“less reason to investigate potential claims against a fiduciary than a person acting at arms’
length.”  This reasoning, even if legally sound in the abstract, is not applicable to this case.
In Frederick Road Limited Partnership, this Court stated that Maryland recognizes the
22
“continuation of events” principle, in which the statute of limitations for certain claims is
tolled where there exists a fiduciary relationship between the parties.  360 Md. at 97, 756
A.2d at 974.  Under this principle, the existence of a fiduciary relationship “generally gives
the confiding party the right to relax his or her guard and rely on the good faith of the other
party so long as the relationship continues to exist.”  Id. at 97-98, 756 A.2d at 974-75. 
In this case, although Dual, Inc. maintains that it was in a fiduciary relationship with
Lockheed, Dual, Inc. does not offer any specific facts supporting such a relationship with
regard to the SEAT subcontract, let alone the JSTARS contract.  Dual, Inc. offers only
conclusory allegations in its complaint, and echoes those conclusions in its briefs here.
Nevertheless, even if a fiduciary relationship existed  between Lockheed and Dual, Inc. with
regards to the SEAT subcontract, that relationship may not be imported into the analysis
regarding Lockheed’s alleged involvement in the termination of the JSTARS contract.   
Dual, Inc.’s JSTARS claims also fail in this regard because any fiduciary relationship
Lockheed had with Dual, Inc. ceased to exist once the second SEAT subcontract was
terminated on 26 June 1999.  As noted previously, under the “continuation of events”
principle, a harmed party’s duty to investigate claims against a fiduciary for statute of
limitations purposes is relaxed during the existence of the relationship.   Frederick Road Ltd.
P’ship, 360 Md. at 97-98, 756 A.2d at 974-75. When the parties cease their fiduciary
relationship, however, the harmed party thereafter is subject to the ordinary standard for
investigating the presence of claims.  Id. at 99, 756 A.2d at 975.  After Lockheed terminated
the second SEAT subcontract on 26 June 1999, the record indicates that Dual, Inc. no longer
23
had any relationship whatsoever with Lockheed.  Therefore, it was upon the termination of
that relationship that Dual, Inc. was on notice to investigate any claims that may have arisen
during the alleged fiduciary relationship.  
The Court in Frederick Road Limited Partnership applied the general principles of
the discovery rule to situations involving fiduciaries.  360 Md. at 99-100, 756 A.2d at 975-
76.  The Court held that despite the existence of a fiduciary relationship among the parties,
the statute of limitations would begin to run against an aggrieved party if that party had
knowledge of facts that would lead a reasonable person to undertake an investigation that,
with reasonable diligence, would have revealed wrongdoing on the part of the fiduciary.  Id.
In this case, Dual, Inc. was on notice that Lockheed may not have been acting in the best
interest of Dual, Inc. when it terminated the initial SEAT subcontract and by its subsequent
conduct relating to the second SEAT subcontract.  Dual, Inc. concedes in Paragraph 45 of
its amended complaint that, during negotiations for the second SEAT subcontract, Lockheed
attempted to have Dual, Inc. sign (which Dual refused to do) a release that purported to
release Lockheed from “any and all liabilities Plaintiff would have against [Lockheed] for
the breach of the First [SEAT] Contract and liabilities associated with the termination and
destruction of [Dual, Inc.’s] JSTARS’S (sic) contract and business.”
VII.
Dual, Inc.’s claims relating to the misappropriation of trade secrets are also time-
barred.  Under Md. Code (1975, 2000 Repl. Vol.), § 11-1206 of the Commercial Law Article,
an action for misappropriation of trade secrets “must be brought within 3 years after the
24
misappropriation is discovered or by the exercise of reasonable diligence should have been
discovered.”  Although Dual, Inc. claims that it did not acquire actual knowledge of
Lockheed’s alleged misappropriation until early to mid-2000 when it received the 6
December 1999 report to the Department of Defense, constructive knowledge sufficient to
trigger the statute of limitations was derived from the termination of the JSTARS contract.
Dual, Inc. failed to plead adequately or specifically why it was unable to discover that
Lockheed assumed Dual, Inc.’s former role in the JSTARS contract.  Moreover, because
Dual, Inc. failed to demonstrate that its attempts to investigate were frustrated by intentional
concealment or fraud, Dual, Inc. was on notice of any consequences of knowledge of the fact
that Lockheed assumed the JSTARS contract.  In fact, Dual, Inc. admitted in oral argument
in the Circuit Court that the knowledge that Lockheed, or anyone else, assumed the JSTARS
contract within days of Dual, Inc.’s termination “raised questions” about the existence of
wrongdoing surrounding the termination.  In this case, Dual, Inc.’s knowledge of the
termination of its JSTARS contract was sufficient to place Dual, Inc. on notice to investigate
how another company was able to assume the JSTARS contract so quickly after Dual, Inc.’s
termination.
JUDGMENT AFFIRMED. COSTS TO BE PAID
BY PETITIONERS.