Case Title: Towson v. Conte

Citation: 384 Md. 68

Docket Number: 55/03

State: maryland

Court: Maryland Supreme Court

Date: 2004-11-17T00:00:00Z

Document:
Circuit Court for Baltimore County
Case No. 03-C-00-000667
IN THE COURT OF APPEALS
OF MARYLAND
No. 55
September Term, 2003
TOWSON UNIVERSITY
v.
MICHAEL CONTE
Bell, C.J.
        
Raker
Wilner
Cathell
Harrell
Battaglia
Eldridge, John C. (retired, specially
        assigned),
JJ.
Opinion by Raker, J. 
Bell, C.J. and Eldridge, J., dissent.
Filed:   November 17, 2004
In this case, we must decide whether or to what extent a jury may examine or review
the factual bases of an employer’s decision to terminate an employee in the absence of an
express directive from the employment contract.  That question has been answered in this
jurisdiction with regard to two different types of employees, the employee at-will and the
employee subject to a satisfaction employment contract.  We determine the answer with
regard to a third type of employee, the employee who may be fired only for just cause.
I.
The controversy surrounds an employment agreement between Michael Conte, the
employee, and Towson University (the University), the employer.  In 1996, the University
hired Dr. Conte to become the director of the Regional Economic Studies Institute at Towson
University (RESI).  The University and Dr. Conte executed an employment contract that
enumerated Dr. Conte’s duties as the new director of RESI, as well as his compensation,
period of employment, and the causes for which he could be terminated.
In 1998, several events came to the attention of the University and led to the decision
to terminate Dr. Conte.  Most of these events centered around RESI’s relationship with the
State Department of Human Resources (DHR), RESI’s primary revenue source.  As the
owner of RESI’s computer database and software, under federal regulations, DHR was
entitled to compensation for any income generated by RESI’s use of DHR equipment.  Dr.
Conte was responsible for developing an acceptable methodology for compensating DHR.
In June 1998, DHR complained to Dr. Conte about RESI’s accounting of that compensation,
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which was, according to DHR, inconsistent and incomprehensible.  Troubled by RESI’s
accounting procedures, DHR hired a private accounting firm to review them and tried to
resolve its issues with RESI through Dr. Conte.  None of these attempts was successful, and
the relationship between DHR and Dr. Conte deteriorated until the University Provost John
Haeger was informed of the dispute and intervened.  Although the University eventually was
able to save the contract and settle the disputed costs with DHR, it became extremely
dissatisfied with the manner in which Dr. Conte had handled the issues and blamed him for
the accelerated reduction in DHR’s contract by $2,300,000.00 the following fiscal year.
Having lost confidence in Dr. Conte, the University initiated an internal investigation
into RESI’s activities and accounting procedures.  In August of 1998, the University
President Hoke Smith directed the University’s auditor to examine RESI’s records and to
determine whether RESI had properly accounted for its expenditures and costs.  A
preliminary report of the audit in November revealed that personnel costs were documented
improperly, in violation of University and federal regulations.  In addition, the audit showed
that the timekeeping procedures used by RESI attributed to DHR personnel costs which were
unrelated to DHR’s contract.
In November of 1998, President Smith convened a meeting to discuss RESI’s status.
The meeting included RESI’s associate director, an assistant director, and a former assistant
director who had raised concerns about Dr. Conte’s management of RESI.  Shortly after the
meeting, President Smith asked the University’s counsel to investigate whether the
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University had just cause to terminate Dr. Conte.  During the investigation, various other
problems with RESI came to the University’s attention, including irregularities in the
services provided to other clients and Dr. Conte’s alleged attempt to convert RESI into a
private entity.  After the meeting, Dr. Conte was informed of the University’s intent to
terminate him and its request for him to resign.
Because Dr. Conte refused to resign, Provost Haeger sent him a detailed letter
explaining the causes for his termination.  Alleging “incompetence” and “wilful neglect of
duty”—two of the just causes for termination enumerated in Dr. Conte’s employment
contract—the University cited Dr. Conte’s handling of the DHR contract, which resulted in
an approximate $2,300,000 revenue loss for the fiscal year 1999; RESI’s estimated operating
losses of $930,000 for the period between July and December 1998; RESI’s failure to abide
by federal, state, and University regulations in its record-keeping practices; the dissatisfaction
of other clients with RESI’s work product; the dissatisfaction of several RESI employees
who complained about Dr. Conte’s management style; as well as various other reasons for
the termination.  Dr. Conte disputed these allegations and said that they did not constitute
incompetence or wilful neglect of duty as required by the contract.  After a brief hearing
before the University President with his counsel, Dr. Conte was formally terminated from his
position as director on January 26, 1999.
Dr. Conte filed a complaint in the Circuit Court for Baltimore County against the
University, alleging, inter alia, that the University had wrongfully discharged him and
1While discovery was proceeding, the Circuit Court dismissed, on limitation grounds,
Dr. Conte’s claim for additional compensation for fiscal years 1997 and 1998.
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breached his employment contract.  He sought damages for his alleged wrongful termination
as director of RESI, the University’s refusal to pay him additional compensation as defined
by his employment agreement,1 and the University’s failure to appoint him to the faculty after
his termination as director as required by the agreement.  The University responded to the
complaint with several defenses, including the defense that the University had just cause
under the contract to terminate Dr. Conte.
In September 2001, trial commenced before a jury in the Circuit Court for Baltimore
County.  At the close of the evidence and testimony of several witnesses, the trial judge
instructed the jury that the “University has the burden to prove by a preponderance of the
evidence that one or more of the [causes in Dr. Conte’s] contract existed for the plaintiff’s
termination” (emphasis added).  The trial judge refused the University’s request to instruct
the jury that, in the event they find just cause to be required under the contract, the University
was nevertheless permitted to terminate Dr. Conte for “common law cause” or cause that
goes to the “essence of the contract.”  The jury returned with a verdict in Dr. Conte’s favor,
finding that the University did not prove by a preponderance of the evidence that just cause
existed under the contract to fire Dr. Conte, and awarding him $926,822.00 in damages.
The University noted a timely appeal to the Court of Special Appeals, arguing that the
trial court had erred when it instructed the jury that the University was required to show just
2We denied Dr. Conte’s cross-petition for certiorari.  376 Md. 543, 831 A.2d 3 (2003).
3Petitioner argues that the burden of proving just cause or the absence thereof lies with
Dr. Conte, and that the trial court erred when it assigned the burden to the University.  While
this issue was raised and argued before the trial and intermediate appellate courts, the issue
is not contained in the petition for certiorari, and we will not consider it.  See Maryland State
Police v. Zeigler, 330 Md. 540, 562-63, 625 A.2d 914, 925 (1993)
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cause for the termination and when it refused to instruct the jury on common law cause.  The
Court of Special Appeals, in an unreported opinion, agreed with the Circuit Court and
affirmed the judgment.
The University filed a petition for writ of certiorari in this Court to consider two
questions.2  376 Md. 543, 831 A.2d 3 (2003).  Slightly rephrased, the principal question
raised in the petition is whether or to what extent a jury may examine or review the factual
bases of an employer’s decision to terminate an employee.  The second question is whether
Dr. Conte’s employment contract was exclusive in its enumeration of the just causes for
which Dr. Conte could be terminated, thereby prohibiting termination based upon any other
cause, such as common law cause.3
II.
From petitioner’s perspective, a jury’s role in disputes involving just cause employees
is not to determine whether just cause in fact existed, but to determine whether the employer
acted in good faith, and not arbitrarily or capriciously, when it decided there was just cause
to fire the employee.  Put another way, provided the University genuinely believed that Dr.
Conte was incompetent or wilfully neglectful of his duties as director, whether Dr. Conte was
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actually incompetent or wilfully neglectful is irrelevant to the jury’s inquiry.  According to
petitioner, then, the jury’s inquiry must center on the employer’s motive and state of mind,
not on the actions of the employee and whether they constitute just cause for termination.
Underlying petitioner’s position is the strong judicial policy against interfering with
the business judgment of private business entities.  See Sadler v. Dimensions, 378 Md. 509,
526-27, 836 A.2d 655, 665 (2003).  To that end, petitioner relies heavily on a Court of
Special Appeals case, Elliott v. Board of Trustees, 104 Md.App. 93, 655 A.2d 46 (1995).
Writing for the panel, Judge Cathell, now on this Court, noted that courts and juries should
refrain from becoming involved in an employer’s personnel decisions, lest they become
“super personnel officers,” second-guessing an employer about its own business needs.  The
Elliott court gleaned from Maryland precedent that “absent evidence of bad faith on the part
of an employer, courts should be reluctant to overturn an employer’s decision to discharge
an employee when the employer has complied with its own procedures for resolving matters
such as this.”  Id. at 108-109, 655 A.2d at 53.  Petitioner argues that this rule is applicable
to the University’s decision to terminate Dr. Conte.
Supplementing the argument, petitioner also asserts that Dr. Conte’s employment
contract expressly reserved to the University, not to a trial court or jury, the right to determine
whether just cause existed, i.e., the fact-finding prerogative.  Petitioner reasons that because
Paragraph 6.2 of the employment contract establishes a procedure for appeal from the
employer’s decision to terminate, that procedure necessarily implies that the University had
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the sole authority to determine whether just cause existed.  Relatedly, petitioner argues that
absent any express provision assigning the fact-finding prerogative to a third-party or jury,
the trial court should not have permitted the jury to determine de novo whether just cause had
been proved by a preponderance of the evidence.  Petitioner urges this Court to “confirm, as
have a number of decisions from other states, that an employer reserves the right to terminate
an employee for cause unless the employment agreement expressly contracts away its fact-
finding prerogative.”  In short, petitioner proposes a legal presumption that, in the
interpretation of employment contracts, an employer retains all fact-finding prerogatives,
absent an express provision stating otherwise.
In response to petitioner’s arguments, respondent asserts that petitioner essentially
wants to transform an express, just cause employment contract into an at-will employment
contract.  The cases relied upon by petitioner are almost all in the context of “implied”
employment contracts, as in contracts implied from employee handbooks, or “satisfaction”
contracts, in which the employer expressly reserves the right to terminate if it deems the
employee’s performance unsatisfactory.  None of the cases deal with an express contract sans
a satisfaction clause, like the one agreed to by both parties to this litigation.
Furthermore, respondent states that petitioner’s reading of the contract distorts its
plain meaning, which indicates the intention by both the University and Dr. Conte to permit
termination only for just cause.  Paragraph 6.2 of the contract merely promises a perfunctory
hearing before the President, basically a “rubber-stamp” of the decision to terminate after it
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unquestionably had been determined already.  Respondent argues that under Maryland law,
one party is not permitted to retain the ultimate fact-finding prerogative with respect to a
breaching event, unless the contract expressly grants the fact-finding prerogative to one of
the parties.  Respondent cites Foster-Porter Ent’prises v. De Mare, 198 Md. 20, 81 A.2d 325
(1951), for the proposition that the party asserting a breach of contract must prove the breach
actually occurred, not that it was reasonable to believe it occurred.  Respondent would have
us adopt a rule permitting the jury to second-guess the University’s factual determination that
it had cause to fire Dr. Conte.
Notably, neither party points to Maryland case law that deals squarely with the jury’s
role in deciding wrongful termination cases.  Both parties rely mainly on cases from other
jurisdictions that have considered this issue and balanced the judicial policy of
noninterference with business judgment with that of enforcing contracts meant to ensure job
security.  In this issue of first impression, we shall consider external authorities, but also our
own case precedent, which provides a pathway for our decision.
III.
A.
Our analysis begins, as it should, with the language of the employment contract at
issue.  The interpretation of a contract, including the determination of whether a contract is
ambiguous, is a question of law, subject to de novo review.  Sy-lene v. Starwood, 376 Md.
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157, 163, 829 A.2d 540, 544 (2003); Calomiris v. Woods, 353 Md. 425, 434-35, 727 A.2d
358, 362-63 (1999).  Maryland courts follow the law of objective interpretation of contracts,
Atlantic v. Ulico 380 Md. 285, 301, 844 A.2d 460, 469 (2004); Sy-lene, 376 Md. at 166, 829
A.2d at 546, giving effect to the clear terms of the contract regardless of what the parties to
the contract may have believed those terms to mean:
“[A court is to] determine from the language of the agreement
itself what a reasonable person in the position of the parties
would have meant at the time it was effectuated.  In addition,
when the language of the contract is plain and unambiguous
there is no room for construction, and a court must presume that
the parties meant what they expressed.  In these circumstances,
the true test of what is meant is not what the parties to the
contract intended it to mean, but what a reasonable person in the
position of the parties would have thought it meant.
Consequently, the clear and unambiguous language of an
agreement will not give away to what the parties thought that the
agreement meant or intended it to mean.”
Calomiris, 353 Md. at 436, 727 A.2d at 363 (quoting General Motors Acceptance v. Daniels,
303 Md. 254, 261, 492 A.2d 1306, 1310 (1985)).
Paragraph 6 of the employment contract between Dr. Conte and the University
governs termination of employment and provides, in pertinent part, as follows:
6.  Termination:
6.1  The University may terminate this appointment for
cause which shall include:
(a)  the intentional violation of University of
Maryland System Regulations or University
regulations
(b)  wilful neglect of duty
(c)  insubordination
(d)  incompetence
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(e)  misconduct
(f)  criminal conduct
(g)  long-term physical or mental condition which
renders Dr. Conte unable to perform the duties
essential to the Director’s position
6.2  In the event the University terminates this
Appointment, for the above reasons, it shall notify the Director,
in writing, of the cause for which termination is sought and the
right of the Director to request a hearing by the University
President or the President’s designee.  The hearing must be
requested within 30 days of the Director’s receipt of the written
termination notice.  In the event no such hearing is requested,
the termination shall become immediately effective.
Two legal consequences relevant to our discussion can be drawn from the language of the
contract.
First, Paragraph 6.1 of the contract makes clear that Dr. Conte was not an “at-will”
employee.  The University could not fire Dr. Conte on a whim, nor could it avail itself of the
various legal protections afforded employers who terminate at-will employees.  Although
employment in Maryland is presumptively at-will, see Porterfield v. Mascari, 374 Md. 402,
421-22, 823 A.2d 590, 601-02 (2003); see also S. Mazaroff & T. Horn, Maryland
Employment Law, § 3.01 (2d. ed. 2004), a contract, whether express or implied, may
overcome that presumption and create an employment relationship whereby the employee
may be terminated only for just cause.  See 19 Williston on Contracts § 54:41 (4th ed. 2001).
While the language of the contract itself may express a just cause requirement, a contractual
delineation of the length of the employment period will also create a just cause employment
relationship because by specifying the length or term of employment, the employer usually
4Section 2 of Dr. Conte’s employment contract provides a set employment period from
April 1, 1996 to June 30, 1999.
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is considered to have surrendered its ability to terminate the employee at its discretion.  See
Shapiro v. Massengill, 105 Md.App. 743, 661 A.2d 202 (1995); Chai Management v.
Leibowitz, 50 Md.App. 504, 439 A.2d 34 (1982); cf. Gill v. Computer Equip. Corp., 266 Md.
170, 179, 292 A.2d 54, 58 (1972) (refusing to find a just cause employment relationship in
a contract that did not delineate specific term of employment); McCarter v. Chamber of
Commerce, 126 Md. 131, 94 A. 541 (1915) (same).  Dr. Conte’s contract contains a provision
that permits termination only for cause and a provision that sets the time period of his
employment,4 both of which independently establish he was not an at-will employee.  The
trial court found that he was not an at-will-employee and neither party has appealed this
finding.
Second, the language of the contract is ambiguous as to whether the fact-finding
prerogative lies with the University.  On the one hand, we note the glaring absence of express
language directing the fact-finding prerogative to the University.  Paragraph 6.2 provides a
procedural safeguard for Dr. Conte—a hearing before the President of the University before
termination may take effect.  But it does not say the President’s decision is final, nor does it
intimate that the traditional judicial remedy was foreclosed to Dr. Conte if he disagreed with
the President’s decision.  The contract is silent as to adequate investigation, fact-finding, or
arbitration in the event of dispute, and it provides no semblance of procedural or evidentiary
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safeguards that would imply that adjudicatory discretion is reserved to the University.  Cf.
Murphy v. Duquesne University, 777 A.2d 418, 433-34 (Pa. 2001) (noting that it would be
unreasonable to believe that an employment contract intended that a carefully elaborated
procedure for termination of a tenured professor could be completely circumvented by the
filing of a civil action).  Rather, all that is promised is a hearing, a meeting, essentially, with
the President before termination takes effect, and that is all that Dr. Conte received.  It is
difficult to read into Paragraph 6.2 an intention by the parties to exclude the traditional
remedy in court for contractual disputes.
On the other hand, it is just as difficult, if not more difficult, to understand Paragraph
6.2 as having a rational basis for existence unless it was meant to reserve, at some level, the
fact-finding prerogative for the University.  If the parties intended to permit the relitigation
of every fact related to Dr. Conte’s termination, why was it necessary to grant Dr. Conte the
right to a hearing in the first place?  One response is that Dr. Conte’s hearing provides an
avenue whereby a factual dispute or mistake might be resolved by the parties before resorting
to the expensive measure of litigation.  But that response is not persuasive with regard to
Paragraph 6.2, which grants Dr. Conte the “right” to a hearing.  Resolving disputes privately
does not require giving the employee the right to a hearing as a condition for effective
termination.  That avenue always exists, even in the absence of a provision like Paragraph
6.2.  In other words, a hearing would accomplish nothing that would not be accomplished in
court before the jury.  Paragraph 6.2 would be rendered superfluous, and courts do not
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interpret contracts in a manner that would render provisions superfluous or as having no
effect.  See Walker v. Human Resources, 379 Md. 407, 421 , 842 A.2d 53 , 61 (2004) (stating
that “[w]e also attempt to construe contracts as a whole, to interpret their separate provisions
harmoniously, so that, if possible, all of them may be given effect”).
Fortunately, we need not address which interpretation is more persuasive because we
find that, under either interpretation of the contract, the University retains the fact-finding
prerogative.  If petitioner’s reading of the contract prevails, and the contract expressly
reserves the right to the University, then the University retains the fact-finding prerogative,
and it was error for the lower courts to permit the jury to be the fact-finder in this case.
Nevertheless, because the contract is ambiguous, we will assume, without deciding, that
respondent’s reading is correct, and that the contractual language does not speak either way
on the issue of fact-finding prerogative.
In that case, we must decide, in the employment law sphere, who should
presumptively retain the fact-finding prerogative.  We have already addressed this issue with
regard to two different types of employees, the employee at-will and the employee subject
to a satisfaction employment contract.  We now address this issue with regard to a third type
of employee, who, like Dr. Conte, may be fired only for just cause.
B.
In order to glean guidance on this issue, we start with an analysis of the presumptive
fact-finder in the types of employment relationships for which this question has already been
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answered.  In the at-will employment context, we have held that a jury may not review any
aspect of the employer’s decision to terminate and that the employer may, absent a
contravening public policy, terminate an employer for any reason, even a reason that is
arbitrary, capricious, or fundamentally unfair.  See Porterfield, 374 Md. at 422, 823 A.2d at
602; Suburban Hospital v. Dwiggins, 324 Md. 294, 310, 596 A.2d 1069, 1077 (1991)
(declining the invitation “to impose a general requirement of good faith and fair dealing in
at-will employment situations”); Adler v. American Standard Corp., 291 Md. 31, 35, 432
A.2d 464, 467 (1981).  For our purposes, the significant point is that courts and juries may
not review either the employer’s (1) motivation or (2) factual bases for termination in the
context of an at-will employment relationship.
A jury’s review, however, is ratcheted up one step when the employment is pursuant
to a “satisfaction” employment contract.  See, e.g., H & R Block, Inc. v. Garland, 278 Md.
91, 100, 359 A.2d 130, 134 (1976) and cases cited therein.  A satisfaction employment
contract typically conditions employment on the employer’s satisfaction.  As we intimated
when we first explained satisfaction employment contracts in Ferris v. Polansky, 191 Md.
79, 59 A.2d 749 (1948):
“In a contract where the employer agrees to employ another as
long as the services are satisfactory, the employer has the right
to terminate the contract and discharge the employee, whenever
he, the employer, acting in good faith is actually dissatisfied
with the employee's work.  This applies, even though the parties
to the employment contract have stipulated that the contract
shall be operative during a definite term, if it provides that the
services are to be performed to the satisfaction of the employer.
5We do not intimate that the subjective standard applies to satisfaction contracts
outside the employment sphere.  See First National v. Warren-Ehret, 247 Md. 652, 658-659,
233 A.2d 811, 814 (1967) (noting that there are different types of satisfaction contracts,
dealing with different subject matters, and that the courts have not applied the same rule to
all of them).
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It is not necessary that there exist grounds deemed adequate by
the trier of facts for the employer's dissatisfaction.  He is the
judge as to whether the services are satisfactory.  However, this
dissatisfaction, to justify the discharge of the employee, must be
real and not pretended, capricious, mercenary, or the result of a
dishonest design.  If the employer feigns dissatisfaction and
dismisses the employee, the discharge is wrongful.  The
employer in exercising the right of dismissal because of
dissatisfaction must do so honestly and in good faith.”
Id. at 85-86, 59 A.2d at 752 (emphasis added).  Polansky teaches that when an employee is
subject to a satisfaction contract, the jury may not review the employer’s factual bases for
termination, but the jury is permitted to review the employer’s motive for
termination—specifically, the employer’s subjective motivation.  Subjective motivation
means whether the employer was genuinely or honestly dissatisfied with the employee’s
services or merely feigning dissatisfaction.  Id.  In contrast to at-will employment in which
a jury may review neither the motivation nor the factual bases of the employer’s decision, a
satisfaction employment contract permits a jury to review (1) the employer’s motivation,
limited to his subjective motivation,5 but not (2) the factual bases for termination, the
prerogative of which remains with the employer.  Id.; H & R Block, 278 Md. at 100, 359
A.2d at 134; Volos, Ltd. v. Sotera, 264 Md. 155, 170, 286 A.2d 101, 109 (1972) (noting that
the usual rule is that subjective, not objective, standard of review applies to sufficiency of
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performance issues in satisfaction employment contracts).
Finally, there are employment contracts that grant a greater level of protection from
termination than both the at-will and satisfaction employment contracts, by which we mean
the just cause employment contract.  To what extent may a jury review an employer’s
decision to terminate when the employer has promised not to terminate except for just cause?
At-will employment contracts permit review of neither the employer’s motivation nor the
factual bases for termination.  Satisfaction employment contracts permit review only of the
employer’s motivation, limited to his or her subjective motivation, but not the factual bases
for termination.  Just cause employment contracts, such as in the case sub judice, logically
permit the jury to review with greater scrutiny the employer’s decision to terminate than do
satisfaction contracts.  Does a just cause employment contract require, as respondent posits,
a jury’s review of the factual bases in addition to the employer’s motivation?  Or, as
petitioner argues, is a just cause contract similar to a satisfaction contract, permitting review
of the employer’s “good faith,” but nothing more?
While we disagree that just cause employment contracts should be treated like
satisfaction contracts, we will not take the extraordinary step—precluded by our case law in
all the employment contracts we have so far encountered—of permitting the jury to scrutinize
the factual bases for the decision to terminate.  Therefore, we hold that the jury may not
review whether the factual bases for termination actually occurred or whether they were
proved by a preponderance of the evidence submitted for its review.  Instead, the proper role
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of the jury is to review the objective motivation, i.e., whether the employer acted in objective
good faith and in accordance with a reasonable employer under similar circumstances when
he decided there was just cause to terminate the employee.  The jury’s inquiry should center
on whether an employer’s termination was based upon any arbitrary, capricious, or illegal
reason, or on facts not reasonably believed to be true by the employer.  But the fact-finding
prerogative remains with the employer, absent some express intention otherwise.  This view,
which is in accord with the majority of our sister states that have encountered this precise
issue, brokers an appropriate balance between the two views advocated by the parties.  See,
e.g., Life Care Centers of America v. Dexter, 65 P.3d 385 (Wyo. 2003); Almada v. Allstate
Ins. Co.,153 F.Supp.2d 1108 (D. Ariz. 2000); Thompson v. Associated Potato Growers, 610
N.W.2d 53 (N.D. 2000); Cotran v. Rollins Hudig Hall Intern., Inc., 948 P.2d 412 (Cal.
1998); Southwest Gas v. Vargas, 901 P.2d 693 (Nev. 1995); Braun v. Alaska Com. Fishing
& Agr. Bank, 816 P.2d 140 (Alaska 1991); Baldwin v. Sisters of Providence in Washington,
769 P.2d 298 (Wash. 1989); Kestenbaum v. Pennzoil Co., 766 P.2d 280 (N.M. 1988);
Simpson v. Western Graphics Corp., 643 P.2d 1276 (Or. 1982); cf. Gaudio v. Griffin Health
Services Corp., 733 A.2d 197, 208 n.13 (Conn. 1999); Wilde v. Houlton Regional Hosp., 537
A.2d 1137, 1138 (Me. 1988) (refusing to infer term into contract limiting employer's
fundamental right to reduce his work force, absent some express provision to the contrary,
due to essential business prerogatives and market forces).
In a minority of jurisdictions, the role of the jury is to determine whether the alleged
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misconduct actually occurred.  The leading case for this position is Toussaint v. Blue Cross
& Blue Shield of Mich., 292 N.W.2d 880 (Mich. 1980), in which the Michigan Supreme
Court held that the trier of fact, not the employer, determines whether there was cause
sufficient to warrant the employee’s termination.  That court reasoned that an employer’s
promise to discharge only for just cause would be rendered meaningless and illusory if the
employer was the final arbiter of the discharge.  Id. at 895.  Therefore, an employer’s good
faith belief that there was just cause to terminate could not by itself supply cause.  In other
words, under the Toussaint holding, the factual bases of the just cause asserted by the
employer must be proven by a preponderance of the evidence to the trier of fact.  See, e.g.,
Raymond v. International Business Machines, Corp., 954 F.Supp. 744, 751-52 (D. Vt. 1997);
cf. Schuessler v. Benchmark Marketing and Consulting, Inc., 500 N.W.2d 529, 538 (Neb.
1993) (“If the employer produces sufficient evidence, the employee may rebut, and if in
controversy, the issue goes to the trier of fact; however, the ultimate burden of proving
wrongful termination remains with the employee”); Sanders v. Parker Drilling Co., 911 F.2d
191 (9th Cir. 1990) (applying Alaska law, cast into doubt sub silentio by Braun, 816 P.2d
140); Alegria v. Idaho First Nat. Bank, 723 P.2d 858, 875 (Idaho,1986).
Following closely on the heels of Toussaint, however, a case by the Oregon Supreme
Court implicitly rejected the Toussaint holding.  Simpson v. Western Graphics Corp., 643
P.2d 1276, a case involving the disputed nature of threatening remarks made to a co-worker,
held that when an employer contracts to discharge only for just cause, it does not, absent
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indication of some other intent, contract away its inherent right to be the ultimate fact-finder
in determining whether just cause existed.  Therefore, to justify its decision to terminate, the
employer need not prove to the jury that the misconduct or just cause actually occurred by
a preponderance of the evidence.  643 P.2d at 1278.  As stated by that court: “In the absence
of any evidence of express or implied agreement whereby the employer contracted away its
fact-finding prerogative to some other arbiter, we shall not infer it.”  Id. at 1279.  In other
words, that court, in the absence of a contrary contractual provision, presumptively
designated the fact-finding prerogative to the employer.
We agree with the Oregon Supreme Court that absent some express indication
otherwise, an employer does not contract away his core function as ultimate fact-finder with
regard to an employer’s workplace performance.  We will not interpret Dr. Conte’s
employment contract as granting a third-party, the jury, the authority to review the factual
bases of the University’s decision to terminate him—especially in light of our previous
holdings, with regard to satisfaction and at-will employment relationships, that have
consistently attributed the fact-finding prerogative to the employer.  As Judge Cathell, then
on the Court of Special Appeals, aptly warned, “[t]o hold otherwise would be to put the
courts in the position of making . . . personnel decisions, acting as a super personnel officer,
or of second-guessing a company’s decisions.”  Elliott, 104 Md.App at 110, 655 A.2d at 54
(citation and quotations omitted).  Echoing Judge Cathell’s admonition, another supreme
court that encountered this precise issue has said: 
-20-
“[Allowing a jury to trump the factual findings of an employer
with regard to just cause] would create the equivalent of a
preeminent fact-finding board unconnected to the challenged
employer, that would have the ultimate right to determine anew
whether the employer’s decision to terminate an employee . . .
.  This ex officio ‘fact-finding board,’ unattuned to the practical
aspects of employee suitability over which it would exercise
consummate power, and unexposed to the entrepreneurial risks
that form a significant basis of every state’s economy, would be
empowered to impose substantial monetary consequences on
employers whose employee termination decisions are found
wanting.”
Vargas, 901 P.2d at 699.  We are in agreement with these concerns.
This premise that the employer, not the jury, retains the fact-finding prerogative does
not render “illusory” the promise not to terminate except for just cause.  In Cotran v. Rollins
Hudig Hall, the California Supreme Court also agreed with the Simpson holding that the
jury’s role did not encompass that of fact-finder in a wrongful termination case, and it
disagreed with the Toussaint court that this would render the promise meaningless.  Instead,
the jury’s role was to assess the “objective reasonableness” of the employer’s factual
determination that just cause existed.  948 P.2d at 419.  To flesh out the meaning of objective
reasonableness in the employment context, the court explained that just cause required (1)
that the employer act in objective good faith (meaning, as we have already stated, good faith
from the perspective of a reasonable employer, not of the individual employer), id. at 420,
and (2) that the employer base its decision on a reasoned conclusion supported by substantial
evidence.  Id. (citing Baldwin, 769 P.2d at 304).  Such an approach, said the court, achieved
-21-
a middle ground between the Toussaint rule and a toothless just cause doctrine.  The Cotran
court supported its decision with policy considerations it found persuasive in the personnel
context:
“As several courts have pointed out, a standard permitting juries
to reexamine the factual basis for the decision to terminate for
misconduct—typically gathered under the exigencies of the
workaday world and without benefit of the slow-moving
machinery of a contested trial—dampens an employer's
willingness to act . . . . 
“Equally significant is the jury's relative remoteness from the
everyday reality of the workplace.  The decision to terminate an
employee for misconduct is one that not uncommonly implicates
organizational judgment and may turn on intractable factual
uncertainties, even where the grounds for dismissal are fact
specific.  If an employer is required to have in hand a signed
confession or an eyewitness account of the alleged misconduct
before it can act, the workplace will be transformed into an
adjudicatory arena and effective decisionmaking will be
thwarted. Although these features do not justify a rule
permitting employees to be dismissed arbitrarily, they do mean
that asking a civil jury to reexamine in all its factual detail the
triggering cause of the decision to dismiss—including the
retrospective accuracy of the employer's comprehension of that
event—months or even years later, in a context distant from the
imperatives of the workplace, is at odds with an axiom
underlying the jurisprudence of wrongful termination.  That
axiom . . . is the need for a sensible latitude for managerial
decisionmaking and its corollary, an optimum balance point
between the employer's interest in organizational efficiency and
the employee's interest in continuing employment.”
Id. at 420-421 (citation omitted).  The majority of high courts that have considered the issue
are in agreement with California, see supra, and so are we.
As outlined above and in addition to the logical progression of our precedent, the
-22-
practical considerations of running a business overwhelmingly favor a legal presumption that
an employer retain the fact-finding prerogative underlying the decision to terminate
employment.  Indeed, this case is a good example as to why a jury should not be permitted
to review the factual bases for termination in the employment context.  Because of the strict
evidentiary rules of a judicial proceeding, the University was barred from admitting into
evidence hearsay statements relied upon by the University in its termination decision.
Nevertheless, employers often “rely on hearsay, on past similar conduct, on their personal
knowledge of people’s credibility, and on other factors that the judicial process ignores,”
indicating that “[w]hat works best in a judicial proceeding may not be appropriate in the
employment context.”  Waters v. Churchill, 511 U.S. 661, 676, 114 S.Ct. 1878, 1888, 128
L.Ed.2d 686 (1994).  Similarly, the University alone was in the best position to determine
whether there were facts sufficient to constitute “incompetence” and “wilful neglect of
duties,” the two just causes outlined by the contract as the basis for Dr. Conte’s termination.
Whether an employee was “incompetent” or in “wilful neglect of duties” is a question that
not only requires the special knowledge of the employer, but it is also so overbroad and
vague in its terminology that a jury’s attempt to figure out what those terms
mean—especially in the context of a highly competitive and complex research institute
involving, among other things, various private clients and public interests, interlocking
federal and state regulations, and the complex accounting protocol of a large public
university—is an endeavor doomed to failure or gross uncertainty.
-23-
Respondent refers us to two Court of Special Appeals cases, Tricat v. Harper, 131
Md.App. 89, 748 A.2d 48 (2000), and Foster-Porter Ent’prises v. De Mare as support for
the opposite position that the employer was required to prove “actual” cause by a
preponderance of the evidence.  We do not find these cases relevant to the issue of the jury’s
role as fact-finder.  Tricat did not address the issue of a jury’s role or “actual” cause, but
instead dealt with the proper placement of the burden of proof, an issue not presented in this
case, see supra n.3.  Respondent fares no better with the Foster-Porter case, which does not
deal with the employee-employer relationship (although it has occasionally been cited in that
context for a different proposition, see infra Part IV).  Instead, it involved a standard breach
of contract dispute between a distributor and manufacturer.
Finally, we are unpersuaded by respondent’s argument that many of the cases that
have held, as we do, that the presumption of fact-finder lies with the employer apply only to
the implied contract case.  Cf. Cotran, 948 P.2d at 414 n.1 (noting that “[w]rongful
termination claims founded on an explicit promise that termination will not occur except for
just or good cause may call for a different standard, depending on the precise terms of the
contract provision” (second emphasis added)); Khajavi v. Feather River Anesthesia Medical
Group, 100 Cal.Rptr.2d 627 (Cal. Ct. App. 2000) (holding that unlike wrongful discharge
based on an implied contract, employment for a specified term may not be terminated prior
to the term’s expiration based upon employer’s honest but mistaken belief of misconduct),
rehearing and review denied.  First, respondent’s premise is incorrect.  See, e.g., Thompson,
-24-
610 N.W.2d at 57-59 (adopting the Cotran holding in the context of an express just cause
contract); Manning v. Alaska R.R. Corp., 853 P.2d 1120, 1125 n.2 (Alaska 1993) (applying
the same definition of just cause to collective bargaining agreement that expressly stated the
employer may take disciplinary action against an employee for “just cause” because this is
the “appropriate” standard for just cause discharges).  Second, and perhaps more importantly,
the reasoning of the cases that adhere to the objective good faith standard in the context of
implied contracts apply with equal force in the context of express contracts.  Respondent
offers no reason why the two should be distinguished.  Perhaps respondent and other
jurisdictions do not provide rationales for treating differently implied contracts from express
contracts because the two do not differ in substance or effect, but only in the manner in
which they are formed.  Regarding that difference in contract formation, the comment to the
Restatement of Contracts explains, “Contracts are often spoken of as express or implied.  The
distinction involves, however, no difference in legal effect, but lies merely in the mode of
manifesting assent.”  Restatement (Second) of Contracts § 4 cmt. a (1981) (emphasis added).
In sum, we agree with the majority of jurisdictions that have considered this issue and
hold that a jury’s role in a wrongful discharge case does not include that of ultimate fact-
finder.  Instead, in the just cause employment context, a jury’s role is to determine the
objective reasonableness of the employer’s decision to discharge, which means that the
employer act in objective good faith and base its decision on a reasoned conclusion and facts
reasonably believed to be true by the employer.
-25-
IV.
Although Part III of this opinion resolves the dispute and will require a new trial, we
will give guidance on the second question presented, as it will undoubtedly arise again in the
litigation.  This issue is whether Dr. Conte’s employment contract was exclusive in its
enumeration of the just causes for which Dr. Conte could be terminated, thereby prohibiting
termination based upon any other cause, such as common law cause.  We hold that it was not
exclusive.  This interpretation of Dr. Conte’s employment contract is required by its clear
terms, which are unambiguous with regard to this issue and which are reproduced, in
pertinent part, as follows:
6.  Termination:
6.1  The University may terminate this appointment for
cause which shall include:
(a)  the intentional violation of University of
Maryland System Regulations or University
regulations
(b)  wilful neglect of duty
(c)  insubordination
(d)  incompetence
(e)  misconduct
(f)  criminal conduct
(g)  long-term physical or mental condition which
renders Dr. Conte unable to perform the duties
essential to the Director’s position
* * *
6.3  The appointment shall terminate for the following
reasons:
(a) 
The 
Director’s 
acceptance 
of 
other
employment; the Director’s resignation, or the
Director’s retirement.
-26-
(b) Pursuant to Maryland law, if funds are not
appropriated or otherwise made available to
support continuation of this position on or after
July 1, 1997, and the Director chooses not to
operate RESI on a self-supporting basis.
(c) The Director’s death.
7.  Faculty Appointment:
In the event the Director is terminated for reasons other
than those provided in paragraph 6.1(a) through (g) and 6.3(a),
or if this Appointment is not renewed, the Director shall be
appointed Professor of economics, with tenure, subject to the
University of Maryland System Appointment, Rank and Tenure
Policies and Procedures and University Policies and Procedures
on the appointment of tenured faculty, as amended from time to
time.
Because we find these provisions clearly and unambiguously manifest an intent by the parties
not to limit the just causes for which Dr. Conte could be terminated, we will enforce those
terms.
Dr. Conte’s contract does not limit the causes for his termination to those enumerated
by 6.1(a)–(g) because the language in Paragraph 6.1 of the contract is clear and
unambiguous.  “The University may terminate this employment for cause which shall include
[the enumerated seven causes].”  This language does not expressly or impliedly make those
causes exclusive.  The word “include” ordinarily means “comprising by illustration and not
by way of limitation.”  Group Health Ass'n v. Blumenthal, 295 Md. 104, 111, 453 A.2d 1198,
1203 (1983), cited with approval in State v. Wiegmann, 350 Md. 585, 593, 714 A.2d 841,
845 (1998).  There is nothing in the language of the contract—such as “shall include
only”—that would refute this ordinary understanding of the term and make the seven listed
-27-
causes exclusive.  See also Thompson, 610 N.W.2d at 57 (addressing the identical issue, and
finding that the list of causes was not exclusive).
This interpretation is further supported by the word “may” in Paragraph 6.1.
Connoting a permissive, discretionary action, the word “may” indicates that the University,
at its discretion, could terminate Dr. Conte for the seven enumerated causes, but it did not
require the University to do so.  Cf. Board of Physician v. Mullan, 381 Md. 157, 848 A.2d
642 (2004); Spencer v. Board of Pharmacy, 380 Md. 515, 846 A.2d 341 (2004); Planning
Comm. v. Silkor Corp., 246 Md. 516, 229 A.2d 135 (1967) (interpreting the word “may” to
signal the ordinary meaning of permission unless the context or the purpose of the statute
shows that it is meant to be imperative).  Paragraph 6.1 manifests an intention to describe the
types of causes for which Dr. Conte could be terminated, but there is no language signaling
the parties intended to limit those causes to the ones mentioned.
Second, and perhaps even more compellingly, the textual context of Paragraph 6.1
plainly indicates that the enumerated causes of that paragraph were not exclusive.  Paragraph
7 states that, “[i]n the event the Director is terminated for reasons other than those provided
in paragraphs 6.1 (a) through (g) and 6.3 (a),” Dr. Conte will be appointed a professor at the
University.  At the very least, Paragraph 7 anticipates that some causes were not listed in
Paragraph 6.1.
Respondent argues that the causes “other than those provided for in Paragraph 6.1 (a)
through (g) and 6.3 (a)” refer to 6.3(b) alone and do not imply that “other” just causes might
-28-
exist.  We find this explanation unpersuasive and objectively unreasonable.  If the parties had
truly intended such a thing, a much more logical, simple, and intuitive way of articulating
their intent would have been to use language such as “for the reason stated in 6.3(b) of this
contract.”  Indeed, the plain language of the contract refutes respondent’s interpretation, for
it uses the plural, “reasons,” indicating that the singular reason stated in 6.3(b) is not the only
reason for termination contemplated by the contract.  To adopt respondent’s understanding
of the contract would belie common sense.
Therefore, the claim that the contract intended the causes of Paragraph 6.1 to be
exclusive is unpersuasive.  The implication for petitioner is that the University may base its
cause for termination on reasons other than those listed in the contract.  See Regal Savings
Bank v. Sachs, 352 Md. 356, 364, 722 A.2d 377, 381 (1999) (holding that, in the context of
employment contracts, unless a provision for termination is in terms exclusive, it is a
cumulative remedy and does not bar the ordinary remedy of termination for “a breach which
is material, or which goes to the root of the matter or essence of the contract” (quoting
Foster-Porter, 198 Md. at 36, 81 A.2d at 333) (citations and internal quotations omitted)).
This understanding of the contract does not transform Dr. Conte into an employee at-
will.  As we have already stated, the contract establishes, and it is conceded, that Dr. Conte
could be terminated only for just cause.  Thus, as long as the University bases its termination
on just cause, it can do so regardless of whether that specific just cause is included in the
contract.  However, petitioner concedes that termination based on a cause subject to
-29-
Paragraph 7 will result in Dr. Conte being appointed to a tenured professorship.
In this case, the University could base its termination on “common law cause”—which
permits an employer to terminate an employee for a “material breach” of the contract, one
that goes “to the essence” of the contract itself—even though that cause is not mentioned in
the contract.  See id.  But it could not terminate Dr. Conte at its discretion or for any other
reason that would not satisfy the just cause requirement.
In his dissent, Judge Eldridge raises two jurisdictional or quasi-jurisdictional issues
– that Dr. Conte’s only available judicial remedy was to seek judicial review of the
administrative decision by the President of Towson, and that his breach of contract action
was filed beyond the one year allowed by Maryland Code, § 12-202 of the State Government
Article.  On the state of the record before us, neither of those issues appears apposite.
Towson University is part of the University System of Maryland.  See Maryland Code,
§ 12-101 of the Education Article.  Section 12-104(j)(2) of the Education Article makes clear
that, except with respect to grievance appeals under Title 13, subtitle 2 of the Education
Article, of which this action is not one, the contested case provisions of the Administrative
Procedure Act do not apply to the University, and there is, accordingly, no statutory provision
for any administrative hearing to which Dr. Conte would be entitled or any APA-type of
judicial review of administrative proceedings provided for in his contract. 
Although, under our case law, the courts have inherent authority, by mandamus or
injunction, to review administrative decisions alleged to be arbitrary, capricious, or unlawful
-30-
in some way (see, e.g., Criminal Inj. Comp. Bd. v. Gould, 273 Md. 486, 331 A.2d 55 (1975)
and cases cited therein), we have never held that such an action is, in all cases, the sole
remedy available or that resort to that avenue of judicial review is a jurisdictional
requirement.  Dr. Conte was not seeking a Gould-type of judicial review of any
administrative decision by the President of Towson but was, instead, seeking damages for
common law breach of contract.  Every breach of contract action against the State involves,
to some extent, an allegation that a State agency or official acted improperly and unlawfully
in failing to comply with the contract, but this Court has never suggested that, in the absence
of an applicable statutory administrative procedure, the plaintiff’s only remedy is to seek
judicial review of the administrative decision not to comply with the contract through an
action for mandamus or injunction. 
With respect to Conte’s alleged failure to comply with the one-year limitations period
provided in § 12-202 for bringing a breach of contract action against the State, it would
appear that his action was, in fact, timely.  His contract and employment were formally and
effectively terminated on January 26, 1999, and his action was filed on January 24, 2000.
Whether Dr. Conte could have sued for injunctive relief prior to January 26, 1999, to
preclude Towson University from terminating his contract or for an anticipatory breach of
contract—an issue that is not before us— his cause of action for the actual breach did not and
could not arise until the contract was, in fact, terminated.  
-31-
Citing and relying upon Delaware State College v. Ricks, 449 U.S. 250, 101 S.Ct. 498,
66 L.Ed.2d 431 (1980) and Chardon v. Fernandez, 454 U.S. 6, 102 S.Ct. 28, 70 L.Ed.2d 6
(1981) (per curiam), the dissent maintains that the statute of limitations begins when notice
of termination is issued by the employer and not when the termination is effective.
Dissenting op. at 7.  Ricks claimed that the College discriminated against him on the basis
of national origin in violation of Title VII and 42 U.S.C. § 1981.  The Supreme Court held
that the only alleged discrimination occurred at the time the tenure decision was made and
communicated to Ricks, and hence, the filing limitations period commenced at that time.  449
U.S. at 258, 101 S.Ct. at 504.  In Chardon, plaintiff Fernandez filed a complaint alleging that
his termination from the Puerto Rico Department of Education violated 42 U. S. C. § 1983.
Applying the holding in Ricks that the proper focus is the time of the alleged discriminatory
act, the Supreme Court held that the time for filing began to run when plaintiff received his
letter of termination because there was no allegation of any discriminatory act after that date.
454 U.S. at 8, 102 S.Ct. at 29.  Ricks and Chardon are inapposite to the case at bar.  There
is no allegation of discrimination or deprivation of civil rights.  
JUDGMENT OF THE COURT OF SPECIAL
APPEALS REVERSED.  CASE REMANDED
TO THAT COURT WITH DIRECTIONS TO
REVERSE 
THE 
JUDGMENT 
OF 
THE
CIRCU IT 
COURT 
FOR 
BALTIMORE
COUNTY AND TO REMAND THE CASE TO
THAT COURT FOR A NEW TRIAL.  COSTS
IN THIS COURT AND IN THE COURT OF
SPECIAL APPEALS TO BE PAID BY
RESPONDENT.
IN THE COURT OF APPEALS
OF MARYLAND
No. 55
September Term, 2003
TOWSON UNIVERSITY
v.
MICHAEL CONTE
Bell, C.J.
                  Raker
Wilner
Cathell
Harrell
Battaglia
Eldridge, John C. (retired,             
           specially assigned),
       JJ.
Dissenting Opinion by Bell, C. J. 
Filed:    November 17, 2004
1Paragraph 6 of the Employment Contract addressed the termination of the contract.
Section 6.1 provides
“The University may terminate this appointment for cause which shall include:
“(a)  the intentional violation of University of Maryland System
Regulations or University regulations
“(b)  wilful neglect of duty
“(c)  insubordination
“(d)  incompetence
“(e)  misconduct
“(f)  criminal conduct
“(g)  long-term physical or mental condition which renders Dr.
Conte unable to perform the duties essential to the Director’s
position.”
2Section 6.2 of the contract provides:
“In the event the University terminates this Appointment, for the above
reasons, it shall notify the Director in writing, of the cause for which
termination is sought and the right of the Director to request a hearing by the
University President or the President’s designee.  The hearing must be
requested within 30 days of the Director’s receipt of the written termination
notice.  In the event no such hearing is requested, the termination shall become
immediately effective.”
Bell, C.J., dissenting:
In this case, Towson University, the petitioner, and Michael Conte, the respondent,
entered into an employment contract, pursuant to which the petitioner’s right to terminate the
respondent’s employment was conditioned on  there being “just cause” for doing so.1 
Section 6.2 of the contract2 also provided for the notification of the respondent, “in writing,
of the cause for which termination is sought” and that the respondent could request a hearing
by the President or the President’s designee within thirty days of receipt of the notice of
termination.   The result of the failure to request a hearing, the contract warned, would be that
-2-
“the termination shall become immediately effective.”     
The majority accurately characterizes this contractual arrangement as a “just cause”
contract, one pursuant to which the employee “may be fired only for cause,” see Towson
University v. Michael Conte, ____ Md. ____, ____, ____ A.2d _____, ____ (2004) [slip. op.
at 1] , as opposed to one in which the employee serves at the will of the employer or subject
to the employer’s satisfaction.    The majority also recognizes, again correctly, that there are
substantial differences between these contracts - in an at will contract, the employee is
subject to termination “for any reason, even a reason that is arbitrary, capricious, or
fundamentally unfair,” id. at ____, ____ A.2d at ____, [slip op. at 14]; in a satisfaction
contract, the employee is subject to termination “whenever ... the employer, acting in good
faith is actually dissatisfied with the employee’s work,” id. at ____, ____ A.2d at ____, [slip
op. at 14], quoting Ferris v. Polansky, 191 Md. 79, 85, 59 A. 2d 749, 752 (1948); in a “just
cause” contract, the employee is subject to termination only for good cause.   Id. at ____,
____ A.2d at ____, [slip op. at  16].   The latter provides the employee with greater
protection from discharge than the other two.    Id. [slip op. at 16].
Despite its conclusion that “[j]ust cause employment contracts ... logically permit the
jury to review with greater scrutiny the employer’s decision to terminate than do satisfaction
contracts,” id. [slip op. at 16], and, therefore, should not be treated like satisfaction contracts,
id. [slip op. at 16], the majority proceeds nevertheless to do just that, treat them like
satisfaction contracts.  
3This latter statement is curious.  By limiting the employer’s right to discharge its
employee, except for “just cause,” I would have thought that the contract provision to that
effect was an “express intention otherwise.”
-3-
In defining the fact-finder’s limited role in the review of satisfaction contracts, the
majority relies on Ferris v. Polansky, from which it quotes the rule, as follows:
“In a contract where the employer agrees to employ another as long as the
services are satisfactory, the employer has the right to terminate the contract
and discharge the employee, whenever he, the employer, acting in good faith
is actually dissatisfied with the employee's work.  This applies, even though
the parties to the employment contract have stipulated that the contract shall
be operative during a definite term, if it provides that the services are to be
performed to the satisfaction of the employer.  It is not necessary that there
exist grounds deemed adequate by the trier of facts for the employer's
dissatisfaction.  He is the judge as to whether the services are satisfactory.
However, this dissatisfaction, to justify the discharge of the employee, must
be real and not pretended, capricious, mercenary, or the result of a dishonest
design.  If the employer feigns dissatisfaction and dismisses the employee, the
discharge is wrongful.  The employer in exercising the right of dismissal
because of dissatisfaction must do so honestly and in good faith.”
Towson, ___  at ____, ____ A.2d at ____, [slip op. at 14-15], quoting 191 Md. at 85-86, 59
A.2d at 752 (emphasis added).    With respect to the fact-finder’s role in the review of “just
cause” contracts, it holds:
“... the jury may not review whether the factual bases for termination actually
occurred or whether they were proved by a preponderance of the evidence
submitted for its review.  Instead, the proper role of the jury is to review the
objective motivation, i.e., whether the employer acted in objective good faith
and in accordance with a reasonable employer under similar circumstances
when he decided there was just cause to terminate the employee.  The jury’s
inquiry should center on whether an employer’s termination was based upon
any arbitrary, capricious, or illegal reason, or based on facts not reasonably
believed to be true by the employer.   But the fact-finding prerogative will
remain with the employer, absent some express intention otherwise.”[3] 
4The petitioner is, to be sure, a public university and not, as Judge Eldridge, in dissent,
points out, ___ Md. ___, ___, ___ A. 2d ___, ___ (2004) [slip op. at 1], (Eldridge, J.
dissenting), a private business entity.   Public universities, however, can be, and indeed must
be, held to their contracts, even their employment contracts.   Adoption of the position
espoused by the Eldridge dissent with respect to the review to which the respondent is
entitled, although with a different appellate focus, would leave the respondent no better, if
not worse, off than he would be under the majority formulation - in either case, the decision
as to his employment fate is left to the party to the contract who agreed that the respondent
could be dismissed only for cause, without, expressly or otherwise, reserving to itself the
right to determine whether, and when, cause existed.
-4-
Id. at ____, ____ A.2d at ____, [slip op. at 16-17].   
Underlying this decision, as urged by the petitioner, is “the strong judicial policy
against interfering with the business judgment of private business entities,” [4] for which
proposition the majority cites Sadler v. Dimensions Healthcare Corp., 378 Md. 509, 526, 836
A.2d 655, 665 (2003) and Elliott v. Bd. Of Trustees of Montgomery County Community
College, 104 Md. App. 93, 108-09, 655 A. 2d 46, 53 (1995).   Towson, ___ at ____, ____
A.2d at ____, [slip op. at  6].   Also critical to the majority decision is the fact that the
contract language fails to address definitively, one way or the other, the question of who, as
between the jury and the employer, will perform the fact-finding function, id. at ___, ___ A.
2d at ___ [slip op. at 11], thus, requiring it, the majority, to determine which presumptively
should do so.  Id. at ___, ___ A. 2d at ___ [slip op. at 13].     Refusing to interpret the
contract at issue as granting a third party the authority to review the factual basis for the
employer’s termination decision, the majority concludes that the “fact-finding prerogative”
rests with the employer. Id. at ____, ____ A.2d at ____, [slip op. at 19].    It reasons, agreeing
5It is well to repeat that this contract does expressly provide that the respondent could
be discharged only for cause and, thus, I submit, does contain an “express indication
otherwise that the employer is contracting away his fact-finding function as to the quality of
the employees’ workplace performance.   The rule that the majority espouses would be more
palatable were the parties’ contract to contain express language reserving to the University
the right to determine whether there was “just cause” for discharge.  
-5-
with the Oregon Supreme Court, that “absent some express indication otherwise,[5] an
employer does not contract away his core function as ultimate fact-finder with regard to an
employee’s workplace performance.” Id. at ____, ____ A.2d ____,  [slip op. at 19].  It
concludes, “[t]o hold  otherwise would be to put the courts in the position of making ...
personnel decisions, acting as a super personnel officer, or of second-guessing a company’s
decisions.”  Id. at ____, ____ A.2d ____,   [slip op. at 19], quoting Elliott, 104 Md. App. at
110, 655 A. 2d at 54 (citation and quotations omitted).    Moreover, the majority points out,
its result is consistent with the result reached by the majority of the courts that have
addressed the issue.  See Braun v. Alaska Commercial Fishing and Agriculture Bank, 816
P. 2d 140 (Alaska 1991); Cotran v. Rollins Hudig Hall, 948 P. 2d 412 (Cal. 1998); Southwest
Gas Corp. v. Vargas, 901 P.2d 693 (Nev. 1995); Thompson v. Assoc. Potato Growers, 610
N. W.2d 53 (N.D. 2000); Kestenbaum v. Pennzoil Co., 766 P.2d 280 (N. M. 1988); Simpson
v. Western Graphics Corp., 643 P. 2d 1276 (Ore. 1982); Baldwin v. Sisters of Providence,
769 P. 2d 298 (Wash. 1989); Life Care, Inc. v. Dexter, 65 P. 3d 385 (Wy. 2003); Almada v.
Allstate Ins. Co., Inc.,153 F. Supp.2d 1108 (D. Ariz. 2000); cf. Gaudio v. Griffin Health
Services Corp., 733 A.2d 197, 208 n.13 (Conn. 1999).
-6-
At the outset, I can see little, if any, distinction between the test the majority
enunciates for the review of “just cause” contracts and that applicable to satisfaction
contracts.    Although characterized as focusing on the review of the “objective motivation”
of the employer, in the case of a “just cause” contract, within the majority’s contemplation
and as it explains, what is really to be determined is the objective good faith with which the
employer acted and the consistency of those actions with those of a reasonable employer
under similar circumstances.  Id. at ____, ____ A.2d at ____, [slip op. at 17].  That
determination is made by assessing whether the challenged termination “was based upon any
arbitrary, capricious, or illegal reason, or based on facts not reasonably believed to be true
by the employer,” id. ____ A.2d at ____, [slip op. at 17], i.e. whether the employer acted in
good faith.   
Notwithstanding its being characterized as being a subjective one, Towson, ___ Md.
at ___, ___ A. 2d at ___ [slip op. at 15], this is the precise test that also applies in the case
of a satisfaction contract.    As the majority describes it, the employer’s subjective motivation
involves determining “whether the employer was genuinely or honestly dissatisfied with the
employee’s services or merely feigning dissatisfaction.”  Id.  at ____, ____ A. 2d at ____,
[slip op. at 15].     Thus, the test in a satisfaction contract is whether, when the employee was
terminated, the employer was acting in good faith. Elliott, 104 Md App. at 108, 655 A.2d at
6It seems clear to me that an employee’s proof of the non-existence of the purported
factual basis for his or her termination is quintessentially and a fortiori proof of bad faith and,
therefore, the lack of good faith.   Moreover, it is difficult to conceive of a better way to
attack an employer’s objective motivation than by demonstrating that the grounds on which
it acted did not exist.   By parity of reasoning, there is no better way for the jury to assess a
party’s subjective motivation.
-7-
53 (1995).6    Whether probative of the objective motivation of the employer or its subjective
motivation, the decisive factor is the same; in the case of either kind of contract, it is the good
faith with which the employer acted that counts and that defines the test.
I am not at all convinced that the “business judgment rule,” treated, and relied upon,
in Sadler and Elliot supports, lest more requires, the result the majority reaches in this case.
To be sure, that rule counsels against, and, indeed, prohibits the courts from inappropriately
interfering with the business judgment of a private business, thus limiting  the court’s role
in reviewing the actions of that business.  See Sadler, 378 Md. at 531, 836 A. 2d at 668.  But
Sadler is clear: the business judgment rule “has never precluded full litigation of complaints
sounding in tort or contract against the corporation.  A corporation, as a private entity, may
be held liable for tortious conduct and breaches of contracts, perpetrated by its officers,
directors, and agents, against third parties. ... Nothing in the jurisprudence of this State would
hold otherwise.”  Id. at 532, 836 A. 2d at 668-69, citing Maryland Code (1975, 1999 Repl.
Vol., 2002 Supp.) § 2-103 of the Corporations and Associations Article.  The petitioner
entered the employment contract at issue in this case voluntarily.  In return for the
respondent’s services, it agreed to limit its power to discharge the respondent, thus, however
7The court in Toussaint v. Blue Cross & Blue Shield of Michigan, 292 N. W.2d 880
(Mich. 1980) observed:
(continued...)
-8-
viewed, objectively or subjectively, intending to provide the respondent with greater job
security.    The business judgment rule does not, and should not, be construed to shield the
petitioner, even partially,  from its breach or to change, in the least, the bargain that the
parties made.
Rather than the cases on which the majority relies, the majority view, I am persuaded,
on both accounts, by the reasoning of Toussaint v. Blue Cross & Blue Shield of Michigan,
292 N. W. 2d 880 (Mich. 1980), and its progeny.  See  Raymond v. IBM , Corp., 954 F. Supp.
744, 751-52 (D. Vt. 1997); Schuessler v. Benchmark Marketing and Consulting, Inc., 500
N.W.2d 529, 538 (Neb. 1993) (“If the employer produces sufficient evidence, the employee
may rebut, and if in controversy, the issue goes to the trier of fact; however, the ultimate
burden of proving wrongful termination remains with the employee”); Alegria v. Idaho First
Nat. Bank, 723 P.2d 858, 875 (Idaho,1986); Sanders v. Parker Drilling Co., 911 F.2d 191
(9th Cir. 1990).   In Toussaint, the Michigan Supreme Court held that, like the determinations
of whether there is an express agreement to discharge the employee only for cause and the
compliance of that termination with the procedures governing it, “the question whether
termination of employment was in breach of the contract ... was also one for the jury.”  292
N. W. 2d at 895.   The court was aware of, and took account of, the facts that the role of the
jury may differ in each case,7 id. at 896, and may present some significant issues, if not
7(...continued)
“Where the employer claims that the employee was discharged for
specific misconduct intoxication, dishonesty, insubordination and the
employee claims that he did not commit the misconduct alleged, the question
is one of fact for the jury: did the employee do what the employer said he did?
...
“Where the employer alleges that the employee was discharged for one
reason excessive tardiness and the employee presents evidence that he was
really discharged for another reason because he was making too much money
in commissions the question also is one of fact for the jury. ... The jury is
always permitted to determine the employer’s true reason for discharging the
employee.”
Id. at 896 (footnotes omitted).
-9-
difficulties, id., including the danger, when the issue is the sufficiency of the cause for
termination, that the jury will substitute its judgment for that of the employer.  Id. 
Nevertheless, after considering the good faith/reasonableness test and the option of
instructing the jury consistent therewith and notwithstanding its  recognition that “[w]hile the
promise to  terminate for cause includes the right to have the employer’s decision reviewed,
it does not include a right to be discharged only with the concurrence of the communal
judgment of the jury,” id., the court rejected both the test and the instruction alternative. 
Noting that “[s]uch an instruction would transform a good-cause contract into a satisfaction
contract,” id., it explained:
“Where the employer has secured a promise not to be discharged except for
cause, he has contracted for more than the employer’s promise to act in good
faith or not to be unreasonable.   An instruction which permits the jury to
review only for reasonableness inadequately enforces that promise.”
Id.   
8It is well settled that contracts are construed in accordance with, and governed by, the
canons of statutory construction.  See Walker v. Department of Human Resources, 379 Md.
407, 421, 842 A2d. 53, 61 (2003).  One of them, and a most important one, is that the parties’
intention is to be gleaned from the words of the contract, and when they are unambigious,
no construction or interpretation is necessary or permitted.  Id.
9A legal presumption is necessary given the majority’s assumption, as the petitioner
argued, that the contract language is ambiguous and does not speak one way or the other to
(continued...)
-10-
 Moreover, rejecting the notion that there is an identity between satisfaction contracts
and “just cause” contracts, the court concluded, “[a] promise to terminate employment for
cause only would be illusory if the employer were permitted to be the sole judge and final
arbiter of the discharge.   There must be some review of the employer’s decision if the cause
contract is to be distinguished from the satisfaction contract.”   Id. at 895.   To the expressed
fear that enforcing cause only discharges will lead to employee incompetence and
inefficiency, id. at 896, the court responded, “no employer is obliged to enter into such a
contract.”  Id. at 896-97.  
The cases on which the majority relies, and therefore the basis on which the majority
has decided this case, proceed on a premise that is antithetical to the ordinary rules of
contract construction,8 that a contract that is clear and unambiguous with respect to the rights
and obligations of the parties may be construed so as to relieve one party of the obligations
it undertook and to redefine the rights the other contracted to receive.   The majority also
adopts “a legal presumption that the employer retain[s] the fact-finding prerogative
underlying the decision to terminate employment.” 9   Towson, ___ Md.  at ____, ____ A.2d
9(...continued)
the issue of the fact-finding prerogative. Towson, ___  at ____, ____ A.2d at ____ [slip op.
at 11] 
Although the majority did not resolve the conflicting arguments of the parties as to
the real meaning and effect of Paragraph 6.2, it does suggest the possibility that the
paragraph, because “a hearing would accomplish nothing that would not be accomplished
in court before a jury,” would be superfluous except as a means of reserving to the employer
the fact-finding prerogative.  Id. at ___, ___ A. 2d at ___ [slip op. at 12].   I can think of a
reason for Paragraph 6.2 that has absolutely nothing to do with the fact-finding prerogative.
 It is a timing provision; the  date of the hearing or of the decision following the hearing, or
the date of expiration of the time for requesting a hearing, triggers when the termination takes
effect.  Indeed, that is precisely what the Paragraph provides, however inartfully the majority
may think it is.  This also answers Judge Eldridge’s point with respect to the governmental
immunity issue, which is dependent on the timeliness of the contract action filed by the
respondent.   In this case, the President’s letter denying the respondent relief specifically
states the date of the respondent’s termination and that date is less than one year prior to the
filing of the respondent’s contract action.
-11-
at ____, [slip op. at 22]. This is required, the majority submits, due to “the practical
considerations of running a business,” “employers often ‘rely on hearsay, on past similar
conduct, on their personal knowledge of people’s credibility, and on factors that the judicial
process ignores,’ indicating that ‘[w]hat works best in a judicial proceeding may not be
appropriate in the employment context,”’ and, in any event, the petitioner in this case “alone
was in the best position to determine whether there were facts sufficient to constitute
‘incompetence’ and ‘wilful neglect of duties.”’ Id.  at ____, ____ A.2d at ____, [slip op. at
22], quoting Waters v. Churchhill, 511 U. S. 661, 676, 114 S. Ct. 1878, 1888,  128 L. Ed. 2d
686, 700 (1994).    This rule is given context and meaning by reference to the business
judgment rule and the majority’s interpretation of that rule as a non-interference rule for all
purposes.   Surely, the majority does not advocate that one party to the contract should be its
-12-
sole and final arbiter  in the absence of such an agreement.
The well settled rule of contract construction is, of course, to the contrary.   It is that,
where the words of the contract are clear and unambiguous, no interpretation is required or
permitted, see Wells v. Chevy Chase Bank, FSB , 363 Md. 232, 250-251, 768 A.2d 620, 630
(2001); effect is to be given to the contract as written.   See Walker v. Department of Human
Resources, 379 Md. 407, 421, 842 A2d. 53, 61 (2003).   Even when the contract terms are
ambiguous, we seek the intention of the parties, which may be supplied by parol evidence
or from other extraneous sources.  Beale v. American Nat’l Ins. Reciprocal, 379 Md 643,
658, 843 A.2d 78, 87 (2004).    I am simply unaware that, in contract cases, even those
involving a business entity,  the parties’ intention can be determined by means of a legal
presumption.   
In any event, there is nothing in the contract that suggests, much less establishes, that
the parties intended that the fact-finding as to the termination decision be made solely by the
employer.  Certainly, in the absence of an express provision to that effect, such an
interpretation is inconsistent with the employee’s intent, as evidenced by his having
successfully  negotiated for a “just cause” only termination.    Extracting such a promise is
inconsistent with an intent on the part of the employee to give his or her employer the degree
of control, or even close to that degree of control, that the employer retains when it enters
into an at will or a satisfaction contract.   A “just cause” contract is, as the majority admits,
significantly different from, and provides an employee with significantly greater protection
-13-
than, those other two kinds of contract.  Towson, ___ Md. at ___, ___ A. 2d at ___ [slip op.
at 16].   Rather than simply paying lip service to the distinction, the petitioner’s promise
should be reflected in the interpretation given the contractual relationship.  
 And the use of a legal presumption is not the appropriate way to resolve an
ambiguity; as I have pointed out, and this Court has repeatedly held, see Sy-Lene of
Washington Inc., v. Starwood  Urban Retail II, 376 Md. 157, 167-68, 829 A.2d. 540, 547
(2003); Langston v. Langston, 366 Md. 490, 506-507, 784 A.2d 1086, 1095 (2001);  Wells
363 Md. at 250-51,  ambiguity triggers a search for the parties’ intention, in the pursuit of
which a court must consider, inter alia, parol or extrinsic evidence, the literal or usual
meaning of the words used, the meaning of the words in light of the statute as a whole and
within the context of the objectives and purposes of the enactment.   See Marriott Employees
Fed. Credit Union, supra, 346 Md. 437, 445, 697 A.2d 455, 459 (1997) (citing Romm v.
Flax, 340 Md. 690, 693, 668 A.2d 1 (1995)); Sy-Lene, 376 Md. at 167-68, 829 A.2d at 547;
Langston, 366 Md. at 506, 784 A. 2d at 1095.  Even if an ambiguity may be resolved by use
of a legal presumption, the question still remains, why should the presumption favor the
employer and not the employee?  Indeed, logically, because the employer is not required to
enter into “just cause” contracts and may, as it often does, retain considerable authority to
discharge its employees, the ambiguity should be construed against the employer, at least in
the absence of evidence, by parol or otherwise, that both parties intended the employer to
have the fact-finding responsibility and that the court or jury defer to the employer’s exercise
-14-
of that responsibility.  The failure of the employer to negotiate a provision that clearly so
provides is, I believe, proof positive that the parties did not intend what the majority imposes
as a default.   
The only basis on which the majority can justify the legal presumption it applies to
hold in favor of the petitioner is by reference to the business judgment rule.   But, as I have
demonstrated, while the business judgment rule may preclude a court from substituting its
judgment for that of the business whose judgment is at the core of a case, it was never
intended to prevent the business from entering into contracts with such terms as the business
desires nor to impact, one way or the other, the bargain that the business and the other party
or parties to the contract made.   Stated differently, the business judgment rule does not, and
should not, change the terms of a contract negotiated at arms length.   That this is so is made
clear by the fact that no business is required to contract away its ability to terminate its
employees; it need not agree to a “just cause” contract.   
To be sure, the majority’s concern that permitting the jury to be the final arbiter of
whether the termination was justified may put the employer in a difficult position is
legitimate.   It may very well, and that might well be the situation in this case.   It should be
borne in mind, however, as the concurring and dissenting Justice in Cotran pointed out, that
“the difficulty of the employer’s position is matched or exceeded by the plight of a falsely
accused and wrongfully terminated employee who is denied all legal redress.”  948 P. 2d at
428 (Kennard,J, concurring and dissenting).   It is, in short, well and good to be concerned
-15-
about what is fair to the employer, but what is fair to the employee also should, and must, be
considered as well, and as seriously.    The rule the majority adopts, being very deferential
to the business entity, places the employee in at least as difficult a position as permitting a
jury to review the employer’s termination decision would place the employer.   The
difference between the two positions is that one gives effect to the contract terms, the bargain
the parties made, while the other does not.   Because both parties agreed to the contract
terms, as written, the contract should be enforced, as written.
The majority’s evident and expressed concern that  the everyday reality of the
workplace is respected and that the efficient conduct of business is protected is reminiscent
of the concern expressed by the dissenting judge in 
Sanders v. Parker Drilling Company, 911
F. 2d 191, supra.   In that case, the issue was the propriety of the jury’s review of  the
employer’s decision to terminate some of its employees for smoking marijuana on the
employer’s oil rigs, in violation of company policy.   Id. at 192.   Consistent with the
majority’s holding in this case, the employer argued that the jury’s responsibility in reviewing
the decision should be limited to determining whether the decision “was based on a good
faith belief that [the employees] smoked marijuana on the oil rigs, not whether the allegation
was actually true.”   Id. at 193.   The court rejected that argument, holding that the question
was whether the employees actually smoked marijuana.  
One judge took the contrary view.  Id. at 204-218 (Kozinski, J., dissenting).   He
expressed concern that the more expansive role of the jury would have an adverse impact on
-16-
the employer’s obligation to provide a safe working environment and did not give sufficient
deference to the employer’s policies against the use of drugs in the workplace, opining, in
part:
“Working on an oil rig is dangerous business.   It requires total
concentration, precise timing, a fair degree of coordination and a significant
amount of speed.   Rig accidents can have disastrous consequences, ranging
from severed limbs and multiple deaths to massive despoliation of the
environment. It goes without saying that drug abuse has no place on oil rigs
and that a company operating oil rigs has the right--indeed, the obligation--to
take decisive action when it obtains reliable information that some of its
employees may be abusing drugs while on duty. 
“This is the unhappy tale of a company that did just that.   Company
officials reasonably believed that three employees had used drugs on the job,
not once but repeatedly.  Two eyewitnesses fingered the drug-using
employees;  the company pursued the matter promptly, but not precipitously,
obtaining confirmation from yet a third eyewitness before discharging the
violators.  The personnel action was taken in a balanced, detached,
professional manner, free from any hint of rancor or personal animosity.   Had
the company acted less decisively, it would have betrayed its responsibility to
other employees and the environment we all share.   Yet when all is said and
done, the fingered employees walk off with a cool third of a million dollars,
while the company is left to pick up the tab, pay its lawyers and scratch its
head wondering what it could have done differently.   It is a question we all
might ponder as we contemplate the bitter lesson of this cockeyed morality
tale.”
Id. at 204-205.   Responding, the court pointed out:
“The dissent sympathizes with Parker's obligation to provide a safe
working environment for its employees.   It cites strong policy arguments
against the use of drugs as authority to alter Alaska's law.   Judge Kozinski
does not believe that the jury should have the prerogative to second-guess
Parker's determination that plaintiffs smoked marijuana on the oil rigs. 
Although we share Judge Kozinski's concern for safety in the workplace,  we
-17-
respectfully do not believe that concern provides us a mandate to water down
centuries of respect for the place of juries in our civil justice system.   At this
level of our system of jurisprudence--the appellate level--the issue we confront
as judges is not whether the use of certain drugs and narcotics is a serious
threat to our nation, which it is, or whether the use of marijuana is dangerous
to workers on oil rigs, which it is, but whether the verdict of the jury is
supported by the evidence presented.   The war on drugs can be waged without
turning our back on the rightful function of juries in resolving factual
disputes.”
Id. at 195.    This response is just as appropriate and applicable to the case sub judice.
Respect for, and deference to, the business judgment  rule may be, and should be, given in
an appropriate case, when the employer’s business judgment is at issue.   It should not be
used, and it was not intended, to emasculate, in cases of express contracts between businesses
and individuals employees, “the rightful functions of juries in resolving factual disputes” or
to render the end of the playing field allocated to the employees in such cases a steep and
ever increasing incline.
Certainly, evidence as to the business judgments made and the rationale for them may
well be admissible and the jury would have to be instructed appropriately in light of the
evidence.   This is not the same, however, as abdicating to the business itself, the final word
as to the efficacy of that judgment and its determinative effect in the case in which those
business judgments were applied.   Just as important, holding the parties to the bargain they
struck does not, in any way, undermine the business judgment rule.   Indeed, it really
enhances it; it is after all, the exercise of business judgment to enter into a contract with
specific and enumerated terms.   Having exercised its business judgment to negotiate a
-18-
contract  acceptable to it, in which it incorporated contract terms favorable to it, the business
should not be allowed then to decide, in the guise of business judgment, whether and, if so,
how, those terms acceptable, but not uniformly favorable, to it, but favorable to the
employee, are to be interpreted and applied.  
I dissent.
IN THE COURT OF APPEALS OF 
MARYLAND
No. 55
September Term, 2003
_________________________________________
TOWSON UNIVERSITY
v.
MICHAEL CONTE
__________________________________________
Bell, C.J
.
  
Raker
Wilner
Cathell
Harrell
Battaglia
Eldridge, 
John 
C. 
(retired,
specially  assigned),
                  JJ.
__________________________________________
Dissenting Opinion by Eldridge, J.
_________________________________________
Filed:   November 17, 2004
Eldridge, J., dissenting:
The majority opinion, Chief Judge Bell’s dissenting opinion, the courts below, and the
parties, all treat this case as an appropriate common law breach of contract action which was
timely filed.  The majority takes the position that this “breach of contract” action is controlled
by the so-called business judgment rule, i.e., “the strong judicial policy against interfering
with the business judgment of private business entities.”  (Slip opinion at 6, emphasis added).
This action, however, does not involve the business judgment of a private entity.  The
defendant Towson University is a state government entity.  Conte’s employment contract was
a public contract with an agency of the State of Maryland.
The difference between private employment contracts and public employment
contracts, terminable only for cause, has substantial ramifications.
First, if it were appropriate to treat this lawsuit as a common law breach of contract
action, I believe that the lawsuit would be untimely under the one-year limitations period for
breach of contract actions against state government agencies set forth in Maryland Code
(1984, 1999 Repl. Vol.), § 12-202 of the State Government Article.  Therefore, the suit
would be barred by governmental immunity.
Second, I believe that it would be more appropriate to treat this action as a Maryland
common law action for judicial review of a state government adjudicatory administrative
proceeding, and to remand the matter to the agency for proper findings of fact and
conclusions of law.  
-2-
Finally, regardless of whether Conte is entitled to an administrative hearing with
findings of fact and conclusions of law, or to a judicial breach of contract action, the
“business judgment” rule applied by the majority has no application to a governmental
employment relationship terminable only for cause.  Under due process principles applicable
to the state government, an employee in Conte’s position is entitled to present his defenses
and obtain a de novo determination either in an administrative hearing which complies with
Maryland law or in court.
I.
If the majority, Chief Judge Bell, the courts below, and the parties were correct in
treating this case as a common law breach of contract action, it was not filed within one year
of the date on which the claim arose, as required by Maryland Code (1984, 1999 Repl. Vol.),
§ 12-202 of the State Government Article.  Therefore, the suit was barred by governmental
immunity.
Although a private breach of contract action is subject to a three-year statute of
limitations which may be waived by a failure to raise the issue, a breach of contract action
against a state agency must be filed within one year.  Furthermore, as recently reaffirmed by
this Court in State v. Sharafeldin, 382 Md. 129, 140, 854 A.2d 1208, 1214 (2004), the one-
year period for bringing a breach of contract action against a state government agency is not
“a mere statute of limitations, waivable at will by State agencies or their respective
attorneys.”  The Court in Sharafeldin, 382 Md. at 148, 854 A.2d at 1219, concluded that the
1The parties in the courts below did raise the issue of the timeliness of Conte’s claims
for compensation in fiscal years 1997 and 1998, and the Court of Special Appeals held that
those claims were barred by § 12-202 of the State Government Article.  Conte’s cross-
petition for a writ of certiorari challenging that holding was denied by the Court.  It appears
that no issue has previously been raised concerning the timeliness of Conte’s entire action.
-3-
enactment of §§ 12-201 and 12-202 of the State Government Article 
“was intended as a conditional waiver of the State’s sovereign
immunity in contract actions, which was to be accomplished by
precluding the State and its agencies from raising that defense if the
action was founded on a written contract executed by an authorized
official or employee and the action was brought within the one-year
period.  If the action was not brought within that period, however, it
was ‘barred.’  The sovereign immunity that the State enjoyed remained
in effect; it could not be waived by subordinate agencies or their
attorneys, and thus the agencies were required by law to raise the
defense.  We hold, therefore, that §12-202 is not a mere statute of
limitations but sets forth a condition to the action itself.  The waiver of
the State’s immunity vanishes at the end of the one-year period . . . .”
Because neither Towson University nor its attorneys may waive the issue of governmental
or sovereign immunity by failing to raise it, this Court “must consider whether the doctrine
of sovereign immunity is applicable in this case even though it was not previously raised by
the parties.”  Board v. John K. Ruff, Inc., 278 Md. 580, 583, 366 A.2d 360, 362 (1976). 1
After Conte refused to resign, Towson University, on November 20, 1998, notified
Conte by letter that it had cause to terminate his employment and “that the University will
proceed to terminate your University employment for cause.”  The November 20, 1998, letter
went on to state that Conte was being “reliev[ed] of your responsibilities as RESI Director”
-4-
and was being placed “on administrative leave, with full pay and benefits” until the
termination became effective.  Then, on December 10, 1998, a ten-page letter signed by the
Provost of Towson University was hand-delivered to Conte, informing Conte that the
University terminated his employment; the December 10th letter set forth “the reasons
supporting your termination.”
Conte requested a hearing before the President of Towson University, as provided for
in the employment contract, and President Hoke L. Smith held the hearing on January 18,
1999.  On January 21, 1999, President Smith notified Conte that he was terminated for the
reasons set forth in the December 10, 1998, letter and that the termination was “effective the
close of business January 26, 1999.”  President Smith’s January 21st decision consisted of
one short paragraph and contained no findings of fact or conclusions of law based upon
evidence introduced or arguments made at the hearing. 
The statutory time limit for filing a breach of contract action begins to run from the
initial breach of the contract.  Jones v. Hyatt, 356 Md. 639, 648-649, 741 A.2d 1099, 1104
(1999), and cases there cited.  The complaint in the case at bar was filed in the Circuit Court
on Monday, January 24, 2000.
If January 21, 1999, the date on which Conte was last notified of his termination, was
the date on which his cause of action arose, the action was barred by the one year period set
forth in § 12-202 of the State Government Article.  The one-year period from January 21,
1999, expired either on Thursday, January 20, 2000, or at the latest, Friday, January 21, 2000.
-5-
Obviously, if his breach of contract cause of action accrued earlier, on November 20, 1998,
when Conte was first notified of the proposed termination and was suspended, or
December 10, 1998, when he was again notified of his termination and given detailed
reasons, the one-year period prescribed by § 12-202 had long expired.  Conte’s breach of
contract suit was timely only if the one-year period under § 12-202 did not begin to run until
his termination was effective and he was removed from the payroll on January 26, 1999.
The majority opinion baldly asserts, without citing any case-law or other authorities,
and without any reasoning, that Conte’s “cause of action for the actual breach” of his
employment contract arose when the contract was “effectively terminated on January 26,
1999.”  (Slip opinion at 30).   This assertion is erroneous and contrary to authority in this
Court and elsewhere.
If there were a breach of the employment contract between Conte and Towson
University, it is likely that the breach occurred on November 20, 1998, or December 10,
1998, when the University informed Conte that the contract was terminated and suspended
Conte.  A change in an employee’s status, such as a suspension, has been held to constitute
a breach of the employment contract even though the employee’s pay is not terminated or
changed.  See 9 Corbin On Contracts § 958, at 752 (Interim Edition 2002).  Furthermore, the
fact that a plaintiff may have defenses to the defendant’s action does not necessarily prevent
the running of limitations.  Cf. Himelfarb v. American Express Company, 301 Md. 698, 705,
484 A.2d 1013, 1016 (1984) (“From the standpoint of the Maryland common law of
2Furthermore, because an action for an injunction is equitable, in such an action
(continued...)
-6-
contracts, . . . [the] claimed defense is . . . ineffective to prevent accrual of [the plaintiff’s]
cause of action . . . .  The limitations clock begins to tick while the [contracting party] is
deciding whether an asserted defense is meritorious”).  Consequently, the one year period
under § 12-202 probably started to run on November 20, 1998, or December 10, 1998,
despite Conte’s assertion of defenses at the January 18, 1999, hearing.
At any rate, the breach of contract had certainly occurred, and Conte’s cause of action
had clearly arisen, by January 21, 1999, when Conte for the third and final time was notified
that the contract was terminated.
This Court has held that repudiation of an employment contract, even before the time
for performance, “in our judgment, constituted a breach which gave an immediate right of
action and entitled the plaintiff to recover damages,” Dugan v. Anderson, 36 Md. 567, 585
(1872).  The majority opinion implies that, for purposes of “injunctive relief,” Conte’s cause
of action may have accrued when Conte was notified of the termination, but that for purposes
of an “actual breach” of contract action, for money damages, Conte’s cause of action accrued
on the effective date of the termination, which was January 26, 1999.  (Majority slip opinion
at 30).  This position is directly contrary to Dugan v. Anderson, supra, 36 Md. 567.  The
Dugan case was a breach of contract action at law, for money damages, in a court which had
jurisdiction only in actions at law (the Superior Court of Baltimore City).2
2(...continued)
against a private employer, the statute of limitations would not ordinarily be directly
applicable, and the timeliness issue would be governed by principles of laches. 
-7-
In common law breach of employment contract actions, as well as statutory actions
based upon wrongful breaches of employment contracts or wrongful terminations of
employment, the general rule is that the running of limitations begins when notice of
termination is issued by the employer and not when the termination becomes effective.
For example, in the leading case of Chardon v. Fernandez, 454 U.S. 6, 102 S.Ct. 28,
70 L.Ed.2d 6 (1981), employees were notified prior to June 18, 1977, that their employment
would terminate at effective dates between June 30 and August 8, 1977.  One of these
employees on June 19, 1978, brought an action for unlawful employment termination
pursuant to a statute which, like Maryland’s § 12-202, had a one-year period of limitations.
The United States Court of Appeals for the First Circuit, like the majority today, held that the
limitations period did not begin running until the employment termination became effective
and the employment actually ended, and that, therefore, the action was timely.  The Supreme
Court of the United States, however, reversed, holding that the limitations period began to
run when the employee was notified of the termination.  The Court explained that “[t]he fact
that they [respondent and other employees] were afforded reasonable notice cannot extend
the period within which suit must be filed.”  Chardon v. Fernandez, supra, 454 U.S. at 8, 102
S.Ct. at 29, 70 L.Ed.2d at 9.  
-8-
Another leading Supreme Court case is Delaware State College v. Ricks, 449 U.S.
250, 101 S.Ct. 498, 66 L.Ed.2d 431 (1980), which was an action by a college professor based
upon the alleged unlawful termination of his employment.  The Supreme Court held that the
statute of limitations began to run from the time the college professor was notified that he
would be denied tenure and would be terminated, and not from the later date when the
termination was effective.
Numerous cases, both federal and state, have relied upon the Supreme Court’s
Chardon and Ricks opinions, as persuasive authority, to hold that the statute of limitations,
in an employee’s action based upon termination of employment, begins to run from the time
the employee received notice of the termination and not from a later date when the
termination became effective or the employment actually ceased.  See, e.g., Cooper v. St.
Cloud State University, 226 F.3d 964, 965, 967 (8th Cir. 2000) (Relying upon Delaware
State College v. Ricks, supra, the United States Court of Appeals stated:  “[W]e hold that the
statute of limitations began to run when the college announced its official tenure decision,
rather than at the time of termination”); Holmes v. Texas A&M University, 145 F.3d 681,
684-685 (5th Cir. 1998) (Texas statute of limitations ran from the notice to the university
professor that he would be terminated rather than from the later date when the university re-
affirmed its decision, with the United States Court of Appeals stating: “Although Ricks
concerned the statute of limitations for filing a complaint with the EEOC rather than the
Texas limitations period at issue here, we still consider the Ricks opinion persuasive on this
-9-
point”); Thurman v. Sears, Roebuck & Co., 952 F.2d 128, 133-134 (5th Cir.), cert denied,
506 U.S. 845, 133 S.Ct. 136, 121 L.Ed.2d 89 (1992) (Employee’s action under a state statute
for allegedly improper termination); Miller v. International Telephone and Telegraph Corp.,
755 F.2d 20, 23 (2d Cir.), cert. denied, 474 U.S. 851, 106 S.Ct. 148, 88 L.2d 122 (1985)
(citing Chardon v. Fernandez, supra, and Delaware State College v. Ricks, supra, the court
stated that the statute of limitations “starts running on the date when the employee receives
a definite notice of the termination, not upon his discharge”); Daniels v. Fesco Division of
Cities Service Co., 733 F.2d 622, 623 (9th Cir. 1984) (“[A]n employer’s liability for
wrongful discharge commences upon notice of the employee’s termination even though the
employee continues to serve the employer after receipt of such notice,” citing Delaware State
College v. Ricks, although the cause of action before the Ninth Circuit was under California
law); Eastin v. Entergy Corp., 865 So.2d 49, 54 (Supreme Court of Louisiana 2004) (“[W]e
adopt the Ricks/Chardon rule . . . .  Consequently, in the instant case, the prescriptive period
of one year began to run for each of the . . . Plaintiffs on the dates each of them were notified
of their respective terminations”); Martin v. Special Resource Management, Inc., 246 Mont.
181, 185, 803 P.2d 1086, 1088-1089 (1990) (In an employee’s breach of contract action, after
discussing the Chardon and Ricks cases, the Montana Supreme Court agreed that the
employee’s “cause of action accrued upon notice of her termination,” as “[a]ll the elements
needed for a claim of breach . . . were present then” and “[i]t is from the decision to terminate
itself which Martin seeks redress”) (emphasis in original); Delgado Rodriguez v. Nazario De
3In Oker v. Ameritech Corp., 729 N.E.2d 1177 (Ohio 2000), the Supreme Court of
Ohio, in an action under an Ohio statute relating to age discrimination, declined to apply the
(continued...)
-10-
Ferrer, 121 P. R. Dec. 347, 357 (Supreme Court of Puerto Rico 1988) (The employee’s
“cause of action accrued on March 19, 1981, when he was notified of his removal. * * * The
action was time-barred and should have been dismissed,” relying upon Chardon v.
Fernandez); Webster v. Tennessee Board of Regents, 902 S.W.2d 412, 414 (Tenn. App.
1995) (A state university’s Director of Finance and Accounting received notice on
September 3, 1991, “that he would be terminated from his employment, effective 30
September 1991, the day on which his contract for services ended.  Plaintiff continued to
work until 30 September 1991.”  After discussing Delaware State College v. Ricks, the court
held that limitations began to run on September 3, 1991, and that the action, filed on
September 28, 1992, was barred by the one-year statute of limitations); Yoonessi v. State
University of New York, 862 F. Supp. 1005, 1014 (W. D. N. Y. 1994), appeal denied, 56 F.3d
10 (2d Cir. 1995), cert. denied, 516 U.S. 1075, 116 S.Ct. 779, 133 L.Ed.2d 730 (1996)
(“[T]he date the decision to terminate was made [is when] the limitations period begins to
run . . ., or on the date the employee was notified of the decision,” citing Chardon and Ricks);
Montalban v. Puerto Rico Marine Management, Inc., 774 F.Supp. 76, 77 (D. P. R 1991)
(Applies the principle of Chardon and Delgado Rodriguez v. Nazario de Ferrer, supra, “that
all causes of actions for employment termination accrue” when the employee has notice or
knowledge of the termination, and not from the later effective date).3
3(...continued)
principle of Delaware State College v. Ricks.  In holding that the period of limitations did
not begin to run until the last day of employment, the Ohio Supreme Court did not disagree
with the Ricks opinion.  Instead, the court distinguished Ricks because of a provision in the
Ohio statute expressly providing for liberal construction and because of other language in the
Ohio statute.
The Supreme Court of Oregon, however, has disagreed with the rule set forth
in Ricks, holding that, in a tort action based on wrongful discharge, limitations runs from the
end of the employment relationship because the tortious discharge occurred on the last day
of employment.  Stupek v. Wyle Laboratories, 327 Or. 433, 439, 963 P.2d 678, 682 (1998).
The position taken by the Oregon  court is a distinct minority view.  Moreover, the Stupek
case is distinguishable from the case at bar, as it involved a tort action for abusive discharge.
In an action for breach of an employment contract, Maryland law clearly appears to be in
accord with the Ricks and Chardon opinions.  See Dugan v. Anderson, 36 Md. 567, 585
(1872).
-11-
Many other cases, although not specifically relying on Chardon or Ricks, have taken
the same position.  See, e.g., Eisenberg v. Insurance Co. of North America, 815 F.2d 1285,
1292 (9th Cir. 1987) (Holding, in a diversity case governed by California law, that “[a]n
‘employer’s liability for wrongful discharge commences upon notice of the employee’s
termination even though the employee continues to serve the employer after receipt of such
notice’”); Johnston v. Farmers Alliance Mutual Insurance Company, 218 Kan. 543, 548, 545
P.2d 312, 317 (1976) (An employee was notified of his termination on March 3, 1972,
although he was paid through May 31, 1972, and the Supreme Court of Kansas, in holding
that the action was time-barred, reasoned that “plaintiff sustained substantial injury upon
receipt of official notice of termination on March 3, 1972, and his cause of action accrued
on that date”); Nicholson v. St. John the Baptist Parish School Board, 707 So.2d 94, 95 (La.
-12-
App.) writ not considered, 716 So.2d 879 (La. 1998) (“The prescriptive period begins to run
when the plaintiff has actual or constructive notice of the alleged wrongful termination”)
(italics in original); Morgan v. Musselwhite, 101 N. C. App. 390, 393, 399 S.E.2d 151, 153,
review denied, 329N.C. 498, 407 S.E.2d 536 (1991) (“By no later than the spring of 1987,
plaintiff . . . knew [that] defendant no longer planned to employ him.  It was at this time that
his cause of action arose”).  
Moreover, even in situations where, after notice of termination, an employee is
entitled to invoke contractual or other grievance procedures or administrative procedures to
challenge the termination, the statute of limitations for an independent breach of contract,
tort, or statutory action based upon the termination, begins to run from the time of notice and
not from the decision under the grievance or administrative procedures.  See Holmes v. Texas
A&M University, supra, 145 F.3d at 685 (“Holmes deserves no equitable tolling for the
pendency of his university grievance procedures”); Walch v. University of Montana, 260
Mont. 496, 498, 502, 861 P.2d 179, 180, 182 (1993) (After notice of termination, the plaintiff
“filed a grievance contesting his discharge,” but the Supreme Court of Montana held that
limitations began running from the notice, stating “that a cause of action for wrongful
termination from employment, whether it is based on breach of the covenant . . . or a
common law wrongful discharge claim, ‘accrued upon notice of [the employee’s]
termination’”); Zachary v. State of Oklahoma ex rel. The Department of Corrections, 34 P.3d
1171, 1172-1173 (Okl. Civ. App. 2001) (Limitations began to run when the employee
-13-
received his notice of termination and not when his administrative remedies were exhausted);
Yoonessi v. State University of New York, supra, 862 F. Supp. at 1014 (“[T]he filing and
pendency of his grievances with the union did not toll the . . . period for filing”); Montalban
v. Puerto Rico Marine Management, Inc., supra, 774 F. Supp. at 78.  
If the present case is to be treated as a breach of contract action, it was untimely.
Under these circumstances, the judgments below should be vacated and the case should be
remanded to the Circuit Court with directions to dismiss the action on the ground of
governmental immunity.  This Court has no occasion to reach the questions dealt with in the
majority’s opinion and Chief Judge Bell’s dissenting opinion.  
II.
Towson University’s status as an agency in the Executive Branch of the State
Government, and Conte’s status as a government employee who could only be terminated
for cause, coupled with the express contractual provision for a hearing before the head of the
agency, i.e., the President of Towson University, necessarily presents the issue of whether
a common law breach of contract action in the Circuit Court is an appropriate proceeding for
resolving this dispute.
An employee in the Executive Branch of the State Government, who can only be
disciplined or terminated for cause, is, as a matter of constitutional due process, entitled to
a hearing at which the employee is given the opportunity to refute the charges against him
-14-
or present defenses.  Board of Regents v. Roth, 408 U.S. 564, 573, 92 S.Ct. 2701, 33 L.Ed.2d
548 (1972); Codd v. Velger, 429 U.S. 624, 97 S.Ct. 882, 51 L.Ed.2d 92 (1977); Maryland
Classified Employees Association v. State of Maryland, 364 Md. 1, 22, 694 A.2d 937, 947
(1997); De Bleecker v. Montgomery County, 292 Md. 498, 513 n.4, 438 A.2d 1348, 1356 n.4
(1982).  Such a hearing is normally an adjudicatory administrative hearing in the Executive
Branch of government, subject to a statutory or common law judicial review action in a
Maryland Circuit Court.  See Brukiewa v. Police Comm’r, 257 Md. 36, 42, 263 A.2d 210,
213 (1970).
The majority opinion seems to suggest that a common law breach of contract action
is a “remedy available” to an employee for purposes of defending against the charges brought
by the state agency.  (Slip opinion at 30).  Although perhaps due process requirements could
be satisfied by a de novo breach of contract action in a court at which the terminated
employee would have an opportunity to refute the charges or offer defenses, such a
proceeding involving a government employee would be highly unusual.  Moreover, in
Maryland Classified Employees Association v. State of Maryland, supra, 346 Md. at 22, 694
A.2d at 947, Judge Wilner for this Court took the position that the hearing must ordinarily
be “pre-termination,” saying:
“[W]hen the attributes attendant to public employment under State law
are such as to give the employee ‘a legitimate claim of entitlement’ to
the position, as under a tenure plan or where dismissal may only be for
cause, a property interest in that employment is created, and the right
4The majority intimates that my position is that an administrative/judicial review
proceeding “is a jurisdictional requirement.”  (Slip opinion at 30).  That is not my position.
Exhaustion of a required administrative/judicial review remedy is ordinarily not a
“jurisdictional” matter or a “jurisdictional requirement” under Maryland law.  Board of
Education for Dorchester Co. v. Hubbard, 305 Md. 774, 787, 506 A.2d 625, 631 (1986)
(Failure to invoke and exhaust a primary administrative/judicial review “remedy does not
ordinarily result in a trial court’s being deprived of fundamental jurisdiction,” per Eldridge,
J., for the Court).  See also, e.g., State Retirement v. Thompson, 368 Md. 53, 66, 792 A.2d
277, 284-285 (2002); Montgomery County v. Ward, 331 Md. 521, 526 n.6, 629 A.2d 619,
621 n.6 (1993).  In the case at bar, the Circuit Court clearly had subject matter jurisdiction
over Conte’s breach of contract action.  The issues concern how that jurisdiction should have
been exercised. 
-15-
to procedural due process ordinarily requires the opportunity of a pre-
termination hearing.”4
Furthermore, the majority opinion in the present case, by treating Towson University
as a private entity, applies a rule precluding the court in the breach of contract action from
reviewing the factual basis of the termination, even under a “substantial evidence” standard.
If a circuit court breach of contract action could provide the due process hearing for a
governmental employee, the type of court action outlined by the majority opinion clearly does
not provide due process.  It does not give the employee any right to refute the charges or
present defenses in a circuit court.  The Due Process Clause of the Fourteenth Amendment
and Article 24 of the Maryland Declaration of Rights are not applicable to private
employment relationships.  Towson University, however, is restrained by both constitutional
provisions.
Considerations of due process, plus the express provisions of the employment
-16-
contract, certainly appear to require an administrative hearing before the head of an agency
within the Executive Branch of Maryland Government, i.e., the President of Towson
University.  In fact, the majority’s deference to the governmental “fact- finder” confirms that
the majority, although unwittingly, is actually treating the proceedings culminating in Conte’s
termination as governmental administrative adjudicatory proceedings.
 In its insistence that this case should properly be treated as a common law breach of
contract action, the majority relies on Maryland Code (1978, 2004 Repl. Vol.), § 12-104(j)(2)
of the Education Article, which provides as follows:
“(2) Except with respect to grievance appeals under Title 13,
Subtitle 2 of this article, Title 10, Subtitles 1 and 2 of the State
Government Article (‘Administrative Procedure Act’) are not
applicable to the University.”
Title 13, Subtitle 2, of the Article deals with classified employees of the University System
of Maryland.  Consequently, termination proceedings with regard to classified employees of
Towson University are subject to the Administrative Procedure Act, and termination
proceedings concerning non-classified employees, including Conte, are exempt from the
Administrative Procedure Act.  
The fact that the termination proceedings here are exempt from the Administrative
Procedure Act furnishes no reason to conclude that a common law breach of contract action
is appropriate.   Numerous types of adjudicatory administrative proceedings are exempt from
-17-
the Administrative Procedure Act, but such exemption does not change the inherent nature
of such proceedings or convert them into common law breach of contract actions.  See, e.g.,
Code (1984, 1999 Repl. Vol.), §§ 10-102(b) and 10-203 of the State Government Article,
containing lists of administrative agencies or proceedings exempt from the Administrative
Procedure Act.
An exemption from the Administrative Procedure Act or other administrative law
statute simply means that the administrative proceeding is governed by Maryland common
law administrative law principles and that judicial review in a circuit court takes the form of
mandamus, certiorari, declaratory judgment, or equitable proceedings.  It also means that the
30-day period of limitations set forth in Maryland Rule 7-203 is inapplicable.  See Rule 7-
201(a).  The standards, however, are essentially the same regardless of whether the
administrative/judicial review proceedings are pursuant to statute or are governed by
Maryland common law administrative law principles.  See, e.g., Board of License Comm. v.
Corridor, 361 Md. 403, 411-412, 761 A.2d 916, 920 (2000); Bucktail v. County Council of
Talbot County, 352 Md. 530, 542-552, 723 A.2d 440, 446-450 (1999); State v. Board of
Education, 346 Md. 633, 642-644, 697 A.2d 1334, 1338-1339 (1997); Goodrich v. Nolan,
343 Md. 130, 146, 680 A.2d 1040, 1048 (1996); Medical Waste v. Maryland Waste, 327 Md.
596, 610-611, 612 A.2d 241, 248 (1992); Silverman v. Maryland Deposit, 317 Md. 306, 324-
326, 563 A.2d 402, 411-412 (1989); Criminal Inj. Comp. Bd. v. Gould, 273 Md. 486, 501-
507, 331 A.2d 55, 65-68 (1975), and cases there cited.
5In fact, using a breach of contract action instead of a “substantial evidence” judicial
review action, to review an adjudicatory administrative proceeding and decision by the
Executive Branch of the State Government, may well present serious Maryland constitutional
problems under the principles set forth in Department of Natural Resources v. Linchester
Sand and Gravel Corporation, 274 Md. 211, 222-229, 334 A.2d 514, 522-526 (1975), and
its progeny.
-18-
In fact, the General Assembly’s express exemption of all University System of
Maryland proceedings from the Administrative Procedure Act, except those involving
classified employees, could hardly be a determination that no such proceedings are by nature
adjudicatory administrative proceedings and that all disputes should be resolved by common
law contract or tort actions in the courts.  Obviously, numerous types of adjudicatory
administrative proceedings take place in the University System.  See, e.g., Frankel v. Board
of Regents, 361 Md. 298, 308, 761 A.2d 324, 329 (2000).  An exemption from the
Administrative Procedure Act clearly does not reflect a legislative intention that
governmental employment termination disputes should be treated as breach of contract
actions.  The General Assembly exempts administrative proceedings from the Administrative
Procedure Act.  It does not, to the best of my knowledge, enact statutes exempting common
law breach of contract actions from the Administrative Procedure Act.
It would seem that the Towson University proceedings leading up to Conte’s
termination should be regarded as adjudicatory administrative proceedings subject to normal
judicial review for substantial evidence underlying factual findings, arbitrariness, legal error,
etc.5  Under our cases, primary jurisdiction should be accorded to such administrative/judicial
-19-
review proceedings, and exhaustion of the administrative/judicial review remedy is required.
See, e.g., Fosler v. Panoramic Design, LTD., 376 Md. 118, 133-138, 829 A.2d 271, 280-283
(2003); Dorsey v. Bethel A.M.E. Church, 375 Md. 59, 76, 825 A.2d 388, 397-398 (2003);
Furnitureland v. Comptroller, 364 Md. 126, 133, 771 A.2d 1061, 1065 (2001); Josephson
v. Annapolis, 353 Md. 667, 674-678, 728 A.2d 690, 693-695 (1998); Holiday v. Anne
Arundel, 349 Md. 190, 201, 707 A.2d 829, 834-835 (1998); Zappone v. Liberty Life
Insurance, 349 Md. 45, 60-66, 706 A.2d 1060, 1067-1070 (1998).
Like governmental immunity, public policy considerations mandate that issues of
primary jurisdiction, exhaustion of administrative remedies, and the propriety of bringing an
action other than a judicial review action, “are issues which this Court will address sua
sponte.”  Furnitureland v. Comptroller, supra, 364 Md. at 132, 771 A.2d at 1065.  See, e.g.,
Montgomery County v. Broadcast Equities, 360 Md. 438, 451 n.7, 758 A.2d 995, 1002 n.7
(2000); Maryland Reclamation v. Harford County, 342 Md. 476, 490 n.10, 677 A.2d 567,
574 n.10 (1996); Montgomery County v. Ward, 331 Md. 521, 526 n.6, 629 A.2d 619, 621 n.6
(1993); Moats v. City of Hagerstown, 324 Md. 519, 525-526, 597 A.2d 972, 975 (1991);
Board of Education for Dorchester Co. v. Hubbard, 305 Md. 774, 787, 506 A.2d 625, 631
(1986).  
If, as I believe, the appropriate circuit court action in this case was not a breach of
contract suit but was a common law action for “substantial evidence” judicial review under
the principles set forth in Bucktail v. Talbot County, supra, 352 Md. at 549-552, 723 A.2d
-20-
at 448-450, and similar cases, this Court could in its discretion take any one of three different
approaches.  Since Conte failed to bring a judicial review action, and improperly sued for
breach of contract, the Court could simply vacate the judgments below and direct that the
breach of contract suit be dismissed.  See Holiday v. Anne Arundel, supra, 349 Md. at 202-
204, 214, 707 A.2d at 835-836, 841 (After a final administrative decision, the aggrieved party
pursued a declaratory judgment action instead of a judicial review action, and this Court
vacated the judgments below and directed the Circuit Court to dismiss the action).  Or, the
Court could vacate the judgments below, direct that Conte be allowed to amend his complaint
to assert the proper type of action, and, if he so amends, direct the Circuit Court to perform
a traditional judicial review function.  Lastly, because the function of a trial court and an
appellate court are the same in an action for judicial review of an adjudicatory administrative
decision, this Court could treat Conte’s complaint as an action for judicial review and
proceed to review the final administrative decision by the President of Towson University.
See Holiday v. Anne Arundel, supra, 349 Md. at 204-214, 707 A.2d at 836-841 (This Court,
as an alternative ground of decision, treated the improper declaratory judgment action as a
judicial review action, reviewed the administrative decision, and took the position that the
administrative decision should be upheld).
In the interests of justice, I would prefer this third alternative.  Furthermore, I would
direct that the administrative decision be vacated and that the case be remanded for findings
of fact and conclusions of law.  The short one-paragraph opinion of President Smith after the
-21-
January 18, 1999, hearing, contains no findings of fact or conclusions of law.  It fails to deal
with any evidence or arguments that may have been advanced at the January 18th
administrative hearing.  Thus, in Bucktail v. Talbot County, supra, 352 Md. at 552-553, 723
A.2d at 450-451, a non-statutory judicial review action, the Court in an opinion by Judge
Rodowsky summarized the applicable Maryland administrative law as follows:
“Logically, the next step in our analysis would be to determine if the
facts found by the Council are supported by substantial evidence.  The
difficulty here, however, is that the Council's ‘findings’ are insufficient
to permit judicial review.
“‘The court's task on review is not to “‘substitute its judgment
for the expertise of those persons who constitute the
administrative agency[.]’”  A reviewing “Court may not uphold
the agency order unless it is sustainable on the agency's findings
and for the reasons stated by the agency.” A court's role is
limited to determining if there is substantial evidence in the
record as a whole to support the agency's findings and
conclusions, and to determine if the administrative decision is
premised upon an erroneous conclusion of law.’
United Parcel Serv., Inc. v. People's Counsel for Baltimore County, 336
Md. 569, 576-77, 650 A.2d 226, 230 (1994) (citations omitted).  Accord
Harford County v. Earl E. Preston, Jr., Inc., 322 Md. 493, 505, 588
A.2d 772, 778 (1991) (‘[A] fundamental right of a party to a proceeding
before an administrative agency [is] to be apprised of the facts relied
upon by the agency in reaching its decision and to permit meaningful
judicial review of those findings.  In a judicial review of administrative
action the court may only uphold the agency order if it is sustained by
the agency's findings and for the reasons stated by the agency.’); United
Steelworkers of America AFL-CIO, Local 2610 v. Bethlehem Steel
Corp., 298 Md. 665, 679, 472 A.2d 62, 69 (1984) (same).  
-22-
“In accordance with the above standard of judicial review, in order
for the reviewing court to determine whether the Council's action was
fairly debatable, findings of fact are required.  
“Findings of fact must be meaningful and cannot simply repeat
statutory criteria, broad conclusory statements, or boilerplate
resolutions.”  
See also, e.g., Turner v. Hammond, 270 Md. 41, 56, 310 A.2d 543, 551 (1973) (The agency
“made no findings of fact worthy of the name”); Rodriguez v. Prince George’s County, 79
Md. App. 537, 550, 558 A.2d 742, 748, cert. denied, 317 Md. 641, 566 A.2d 101 (1989)
(Where Judge Wilner for the court stated: “It is not permissible for . . . any administrative
body, simply to parrot general statutory requirements or rest on broad conclusory statements.
* * * We have quoted in full the ‘determinations’ . . . that the [agency] adopted as its findings
and conclusions.  They do not suffice – they do not even begin to suffice – as ‘specific
written findings of basic facts and conclusions’”).
Nevertheless, regardless of the nature of the Towson University termination
proceedings or the appropriate type of court action, there is one thing about this case which
is clear.  The “business judgment” rule applied by the majority has no application to a
governmental employment relationship which can only be terminated for cause.  Conte is
entitled to and should receive either a proper administrative proceeding which complies with
Maryland law or a de novo breach of contract trial at which his defenses to the charges
should be considered and ruled upon.  The majority gives him neither.