William H. Plank, II, et al. v. James P. Cherneski, et al., Misc. No. 3, September Term,

2019, Opinion by Booth, J.

FIDUCIARY DUTIES – MANAGING MEMBERS OWED TO LIMITED 

LIABILITY COMPANY AND MEMBERS – AGENCY. Managing members of an 

LLC owe common law fiduciary duties to the LLC and to the other members based upon 

the fiduciary relations governing the principles of agency. 

BREACH OF FIDUCIARY DUTY AS AN INDEPENDENT CAUSE OF ACTION. 

In Kann v. Kann, 344 Md. 689 (1997), and our jurisprudence that followed, this Court 

recognized a breach of fiduciary duty claim as an independent cause of action. To establish 

a breach of fiduciary duty, a plaintiff must show: (1) the existence of a fiduciary 

relationship; (2) breach of the duty owed by the fiduciary to the beneficiary; and (3) harm 

to the beneficiary. The remedy for the breach is dependent upon the type of fiduciary 

relationship, and the historical remedies provided by law for the specific type of fiduciary 

relationship and the specific breach in question, and may arise under a statute, common 

law, or contract. A breach of fiduciary duty cause of action should be analyzed on a caseby-case basis. If the plaintiff describes a fiduciary relationship, identifies a breach, and 

requests a remedy historically recognized by statute, contract, or common law applicable 

to the particular type of fiduciary relationship, the court should permit the count to proceed. 

The cause of action may be pleaded without limitation as to whether there is another viable 

cause of action to address the same conduct. To be clear, this does not mean that every 

breach will sound in tort, with an attendant right to a jury trial and monetary damages. The 

remedy will depend upon the specific law applicable to the specific fiduciary relationship 

at issue.

BREACH OF FIDUCIARY DUTY – SUFFICIENCY OF EVIDENCE. The circuit 

court did not err in entering judgment in favor of the managing member on the independent 

breach of fiduciary duty count. The court made a factual determination that there was 

insufficient evidence of a breach of fiduciary duty. 

ATTORNEYS’ FEES ARISING UNDER FEE-SHIFTING PROVISION IN 

OPERATING AGREEMENT. The circuit court correctly interpreted the fee-shifting 

provision of the parties’ Operating Agreement and did not err in determining that the 

managing member and the Company were the “substantially prevailing parties” and in 

awarding the defendants their attorneys’ fees in their entirety. Considering the overlapping 

nature of the claims, the circuit court’s approach to awarding attorneys’ fees in this case is 

consistent with the “common core of facts” doctrine, which was a reasonable method for 

awarding attorneys’ fees in this case. 
Circuit Court for Anne Arundel County

Case No.: C-02-CV-16-002078

Argued: December 5, 2019

IN THE COURT OF APPEALS

OF MARYLAND

Misc. No. 3

September Term, 2019

WILLIAM H. PLANK, II, et al.

v.

JAMES P. CHERNESKI, et al.

Barbera, C.J.

McDonald

Watts

Hotten

Getty

Booth

Battaglia, Lynne A.

 (Senior Judge, Specially Assigned),

JJ.

Opinion by Booth, J.

Filed: July 14, 2020
Does Maryland recognize an independent cause of action for breach of fiduciary 

duty? Courts and commentators have been asking this question for 23 years since this 

Court articulated its holding in Kann v. Kann, 344 Md. 689 (1997).1 When attempting to 

answer the question, Maryland appellate courts have not spoken uniformly on this issue. 

Indeed, this Court has made seemingly inconsistent pronouncements, at times calling for a 

case-by-case analysis, see Kann, 344 Md. at 713, and at other times, making a blanket 

assertion that “Maryland does not recognize a separate tort action for breach of fiduciary 

duty.” Int’l Bhd. of Teamsters v. Willis Corroon Corp. of Md., 369 Md. 724, 727 n.1 

(2002). Litigants pick and choose which statement they believe to be controlling, 

depending on which outcome benefits their position. Understandably, the muddled state 

of our jurisprudence has created inconsistent and irreconcilable conclusions by the Court 

of Special Appeals, federal courts, and state circuit courts. For this reason, the Court of 

Special Appeals filed a Certification pursuant to Maryland Rule 8-304, requesting that this 

Court provide guidance concerning whether an independent cause of action exists, as well 

as its scope and parameters.

 

1 See, e.g., Froelich v. Erickson, 96 F. Supp. 2d 507, 526 n.22 (D. Md. 2000)

(explaining that there appears to be “a split of authority . . . as to whether the Court of 

Appeals rejected breach of fiduciary duty as an independent tort”); Paul Mark Sandler & 

James K. Archibald, Pleading Causes of Action in Maryland at 576–79 (6th ed. 2018) 

(posing, but not purporting to answer the question of whether Maryland recognizes an 

independent cause of action for breach of fiduciary duty); Kevin Arthur, Breach of 

Fiduciary Duty: a Cause of Action in Maryland?, Federal Bar Association Maryland 

Chapter Newsletter (March 2013) (“Does Maryland recognize an independent cause of 

action for breach of fiduciary duty? The courts disagree amongst themselves.”). 
2

For the reasons more fully outlined below, we answer the certified questions as 

follows. This Court recognizes an independent cause of action for breach of fiduciary duty. 

To establish a breach of fiduciary duty, a plaintiff must demonstrate: (1) the existence of a 

fiduciary relationship; (2) breach of the duty owed by the fiduciary to the beneficiary; and 

(3) harm to the beneficiary. Under our Kann analysis, a court should consider the nature 

of the fiduciary relationship and possible remedies afforded for a breach, on a case-by-case 

basis. If a plaintiff describes a fiduciary relationship, identifies a breach, and requests a 

remedy recognized by statute, contract, or common law applicable to the specific type of 

fiduciary relationship and the specific breach alleged, a court should permit the count to 

proceed. The cause of action may be pleaded without limitation as to whether there is 

another viable cause of action to address the same conduct. To be clear, this does not mean 

that every breach will sound in tort, with an attendant right to a jury trial and monetary 

damages. The remedy will depend upon the specific law applicable to the specific fiduciary 

relationship at issue. 

We explain our answer to the certified questions within the context of the dispute 

between the members of Trusox, LLC, a Maryland limited liability company (“Trusox” or 

the “Company”). William H. Plank, II and Sanford R. Fisher, both minority members of 

Trusox, filed an action alleging direct and derivative claims against James P. Cherneski, 

the Company’s President, Chief Executive Officer (“CEO”), and majority member. 

Among other monetary and injunctive relief, Mr. Plank and Mr. Fisher (“Minority 

Members”) sought an order dissolving the LLC or appointing a receiver to take over its 

management. 
3

Following a bench trial, the Circuit Court for Anne Arundel County entered 

judgment: (1) in favor of Mr. Cherneski on most of the Minority Members’ claims, 

including the claims for dissolution and receivership and, as most relevant to the issue 

raised in the Court of Special Appeals’ Certification, their claim for breach of fiduciary 

duty, and (2) in favor of the Minority Members on certain other claims. Finding Mr. 

Cherneski and the Company to have prevailed on the most significant claims, the court 

entered an award of attorneys’ fees in favor of Mr. Cherneski and the Company pursuant 

to a fee-shifting clause in the Trusox Operating Agreement. 

The Minority Members assert that the circuit court committed multiple errors in 

resolving their breach of fiduciary duty claim. They also contend that the circuit court 

erred in its award of attorneys’ fees by misinterpreting the contractual fee-shifting 

provision in the Trusox Operating Agreement. For the reasons explained below, we hold 

that the circuit court did not err in entering judgment in favor of Mr. Cherneski on the 

breach of fiduciary duty count. We further hold that the circuit court did not err in 

interpreting the contractual language of the fee-shifting provision by determining that the 

operative contractual language applied to all counts between the parties to this action, and 

by concluding that Mr. Cherneski and Trusox were the substantially prevailing parties. 

Finally, we hold that the circuit court did not abuse its discretion by awarding Mr. 

Cherneski and Trusox all of their attorneys’ fees, as the court’s methodology was consistent 

with the “common core of facts” doctrine. We affirm the circuit court’s judgment in its 

entirety. 
4

I.

Factual Background and Procedural History

James Cherneski is a former professional soccer player who invented and patented 

a non-slip athletic sock. Based upon his personal experience, Mr. Cherneski was 

determined to create an athletic sock that would eliminate movement of a player’s foot in 

his or her shoe during athletic activity. Over the course of many years, through trial and 

error, Mr. Cherneski developed a non-slip sock, and ultimately obtained patents for the 

athletic sock and its components. 

As he was developing the product and securing patents, Mr. Cherneski accepted 

investments by Sanford Fisher and Jeff Ring. In April 2011, Mr. Cherneski formed Trusox, 

LLC to produce and sell the patented sock. Mr. Cherneski, Mr. Fisher, and Mr. Ring were 

the original members. At all times, Mr. Cherneski retained legal control of the Company. 

By November 2011, the Company had a product that could be sold and marketed. 

Mr. Cherneski undertook marketing efforts, attempting to convince stores to sell the 

product. When the product did not sell, Mr. Cherneski determined that the product needed 

visibility, and he gave the product to professional soccer players in Europe in order to boost 

exposure and visibility. Mr. Cherneski traveled to England to work his connections in the 

professional soccer world, attempting to have the most high-profile players wear Trusox

athletic socks. Mr. Cherneski’s strategy worked. With an increase in product visibility, 

Trusox began receiving more orders for its product. 

In June 2013, Mr. Cherneski began discussions with William H. Plank, II, about a 

possible investment. In October 2013, Mr. Plank invested $1.5 million in Trusox and 
5

acquired a 20% membership interest, with Mr. Cherneski owning a 65% membership 

interest, and Mr. Fisher and Mr. Ring each owning a 7.5% membership interest.

The members of Trusox, along with Trusox (by Mr. Cherneski as its CEO and 

President) entered into an Amended and Restated Operating Agreement (“Operating 

Agreement”) on October 14, 2013. The Operating Agreement gives Mr. Cherneski, as the 

majority member, President, and CEO, general authority over most decisions relating to 

Trusox and its operations, including: (1) the right to make most decisions and take most 

actions2 on behalf of the company; (2) the power to appoint and remove officers of the 

company and assign them such powers, authorities, and responsibilities as “he may 

determine”; and (3) the “authority to manage and operate the Company in the ordinary 

course of business . . . .”

Consistent with the authority granted in the Operating Agreement, Mr. Cherneski’s

role in Trusox has always been significant—he not only created the sock; he marketed it. 

The circuit court summarized Mr. Cherneski’s instrumental and key role, as the President, 

investor, marketer, and producer as follows: 

Every bit of evidence shows that it is [Mr.] Cherneski who is 

focused on the marketing, investment, the development, the 

maintaining, the establishing the relationship with the athletes, 

the agents, the distributers. It is [Mr.] Cherneski who sells the 

socks. It is [Mr.] Cherneski who is able to relate the slippage 

issues in terms of the foot–the placement, the striking. It is 

 

2 Given Mr. Cherneski’s 65% ownership interest, only actions that require 

supermajority consent under the Operating Agreement are outside his authority. These 

actions include amendments to the Operating Agreement or articles of organization; 

merger; sale or transfer of all or substantially all of the Company’s assets; sale, transfer, or 

encumbrance of the Company’s intellectual property; dissolution; certain transactions 

related to members of Mr. Cherneski’s family; and making a capital call. 
6

[Mr.] Cherneski who created the business. It is [Mr.] 

Cherneski who knows the business. It is [Mr.] Cherneski who 

is the business. 

From the formation of the Company until the lawsuit was filed by the Minority 

Members, the Company had fits and starts. As the circuit court determined, Trusox was a 

fledgling business, which faced challenges in its efforts to grow and become a successful and 

sustainable business. Although the Company experienced some success, it continued to 

struggle financially. In January 2015, after receiving two shipments of defective adhesive 

material that was necessary for production of the sock, Trusox needed to obtain replacement 

material. Mr. Cherneski testified that a production delay ensued, which interfered with the 

Company’s cash flow, leading to additional cash and accounts payable issues. 

At the time of trial in 2017, Trusox had only five employees. At various times before 

then, it had employed more than 20 people. In 2015, Trusox averaged manufacturing 910 

pairs of socks per day, with a high of 2,100 pairs in a single day. In 2016, the average 

production was 230 pairs of socks per day, with some months much higher, and other months 

much lower. Slowdowns in production generally occurred when Trusox ran out of materials 

and lacked funds to obtain more. The Company often lacked funds to pay its vendors and 

consistently owed much more in payables than it had in cash on hand. On several occasions 

in 2015 and 2016, Trusox had been late in paying its employees, for as many as 14 days. By 

the time of trial in 2017, however, the Company had received additional funding, was hiring 

additional personnel, and was ramping up production. 

In late 2015, the Minority Members were disenchanted with Mr. Cherneski’s 

leadership of the Company. In particular, they were concerned about Trusox’s failure to 
7

make timely payments to vendors. Mr. Plank was disappointed that Mr. Cherneski had not 

followed his suggestions concerning the direction and priorities of the Company. All of the 

members agreed that Trusox needed a cash infusion, but they disagreed on the manner in 

which it should be raised. Mr. Plank offered to loan Trusox $750,000 on terms that required 

repayment within two years, and if not repaid, Mr. Cherneski would lose his majority interest 

in the Company. Mr. Cherneski was not interested in Mr. Plank’s offer, and instead, sought 

to raise $3 million through a limited public offering. At the time of trial, Mr. Cherneski had 

successfully raised $1.8 million in a process that took significantly longer than he had 

originally anticipated. Mr. Cherneski’s funding efforts became the source of additional 

disputes, with the Minority Members asserting that Mr. Cherneski distributed inaccurate 

information to potential investors, and Mr. Cherneski contending that the Minority Members 

were interfering with his efforts by attempting to dissuade potential investors from investing. 

We discuss additional facts below as they pertain to the parties’ contentions. 

A. The Lawsuit

In June 2016, Minority Members, Messrs. Fisher and Plank,

3

filed an action against 

Mr. Cherneski and Trusox,4alleging, among other things, that Mr. Cherneski was violating 

the Operating Agreement, had engaged in unlawful conduct related to investors and 

employees, and had breached contractual and fiduciary duties. In their operative second

amended complaint (“Complaint”), the Minority Members alleged nine causes of action, 

 

3 Minority Member Jeff Ring was not a party to this litigation. 

4 The Minority Members named Trusox as a nominal defendant. 
8

including counts for breach of contract (Counts I, II, III, and IV), invasion of privacy 

(Counts V and VI), breach of fiduciary duty (Count VII), dissolution (Count VIII), and 

appointment of a receiver (Count IX). The Minority Members sought injunctive relief, 

compensatory and punitive damages, and attorneys’ fees and costs. 

Only the Minority Members’ cause of action for breach of fiduciary duty (Count VII) 

and the attorneys’ fees dispute are at issue on appeal. With respect to the breach of fiduciary 

duty count, the Minority Members alleged that Mr. Cherneski placed the Minority Members’

investments at risk by engaging in unlawful actions that exposed the Company to potential 

future damages claims for regulatory violations and lawsuits. Specifically, the Minority 

Members alleged that Mr. Cherneski breached his fiduciary duties by: (1) violating 

Maryland’s wage laws by paying employees late on multiple occasions; (2) refusing to 

provide the Minority Members with reasonable access to the Company’s books and records 

despite their written demand for the same; (3) exposing the Company to liability by selling 

unregistered securities in violation of securities laws and misleading potential investors by

presenting inflated and unrealistic financial projections and failing to disclose the existence 

of this lawsuit; and (4) violating trademark and right to publicity laws by failing to obtain 

appropriate permission before using certain images and logos in promotional materials. 

Although the Complaint sought both monetary and injunctive relief, the Minority Members 

conceded at trial that they had not incurred any monetary damages as the result of Mr. 

Cherneski’s alleged breaches and were only seeking equitable relief. 

The parties proceeded with an expedited bench trial which took place over the course 

of six days in February and March 2017. At the close of the Minority Members’ case-in-
9

chief, defense counsel moved for judgment, and the circuit court heard arguments. The 

circuit court found “very little compelling evidence to support [the Minority Members’] case 

in the light most favorable to [the Minority Members] as it related to dissolution or 

receivership, the breach of contract . . . , the invasion of privacy, publicity, and false light.” 

As part of its ruling from the bench, the circuit court discussed the elements of each count, 

and the facts pertaining to the count, and granted judgment in favor of Mr. Cherneski and 

Trusox on Count III (breach of contract); and Counts V and VI (invasion of privacy). The 

Court denied the Defendants’ motion for judgment on three of the breach of contract counts 

(Counts I, II, and IV), and Count VII (breach of fiduciary duty). After requesting trial

memoranda from the parties on Count VIII (dissolution) and Count IX (appointment of a 

receiver), the circuit court granted the Defendants’ motion for judgment on those counts, 

providing detailed findings of fact and legal conclusions from the bench. 

After the Defendants presented their case,

5

the court entered judgment in favor of 

the Minority Members on the breach of contract claims alleged in Counts I, II, and part of 

IV, and awarded injunctive relief on those counts. Specifically, with respect to Count I, 

the court ordered Mr. Cherneski to make available Trusox’s books and records within ten 

days of any reasonable request by the Minority Members and to provide them with tax 

documentation within 75 days of the end of each tax year. As to Count II, the court ordered 

Mr. Cherneski to execute necessary documentation to assign to Trusox certain intellectual 

property identified in the Operating Agreement. As to Count IV, the court precluded Mr. 

 

5 The Defendants’ case consisted of testimony by Mr. Cherneski, after which the 

Defendants rested. 
10

Cherneski’s brother from receiving any benefit from “any oral or written contract relating 

to any services that [the brother] provided to Trusox, LLC.” 

Breach of Fiduciary Duty Count

At the close of the Minority Members’ case-in-chief, when considering the 

Defendants’ motion for judgment, the trial court initially reserved judgment on Count VII, 

for breach of fiduciary duty, stating that the court had read the decision in Kann v. Kann, 

344 Md. 689 (1997), and that “there seem[s] to be within that case a clear recognition that 

there is no stand-alone tort for a breach of fiduciary duty,” but that “the actions may have 

been a breach of fiduciary duty.” The court concluded, however, that relief under Count 

VII “would be effectively perhaps of no weight. Because the Court is not sure how if there 

is a breach of fiduciary duty for failing to inspect the books, records, assign the patents, or 

the breach of contract regarding [Mr. Cherneski’s brother], what damages may flow.” The 

court reasoned that such relief “might be more of the injunctive relief or the declaratory 

relief that the parties are requesting.” When it later entered judgment in favor of Mr. 

Cherneski on Count VII, however, the court found that there was “insufficient evidence to 

show that there has been a breach of fiduciary duty.” 

Attorneys’ Fees 

Having decided each count in the Complaint, the circuit court considered the 

provisions of the Operating Agreement which addressed attorneys’ fees. After a three-day 

evidentiary hearing at which the circuit court considered the appropriateness and fairness 

of attorneys’ fees, the court determined that under the fee-shifting provisions of Section 

14.13 of the Operating Agreement, Mr. Cherneski and Trusox had prevailed on a majority 
11

of the claims and were entitled to attorneys’ fees. The circuit court entered judgment in 

favor of Mr. Cherneski against Mr. Plank and Mr. Fisher, jointly and severally, in the 

principal amount of $453,806.49, representing attorneys’ fees and expert and deposition 

costs, and entered judgment in favor of Trusox against Mr. Plank and Mr. Fisher, jointly 

and severally, in the amount of $189,269.15, representing attorneys’ fees, deposition costs,

and expenses incurred in its defense, together with post-judgment interest. 

B. Proceedings Before the Court of Special Appeals 

The Minority Members filed a timely appeal to the Court of Special Appeals. On 

appeal, they raised the following questions, which we have consolidated and rephrased:

6

1. Did the circuit court err in entering judgment in favor of 

Mr. Cherneski and Trusox on the Minority Members’

breach of fiduciary duty claims? 

2. Did the circuit court err in awarding attorneys’ fees to Mr. 

Cherneski and Trusox under the Operating Agreement’s 

fee-shifting provisions? 

 

6 The questions presented by the Minority Members in their brief to the Court of 

Special Appeals are as follows: 

1. Did the Circuit Court err in determining that no independent cause of action for 

breach of fiduciary duty exists under Maryland law?

2. Did the Circuit Court err in not applying the factors set forth in Kann v. Kann, 

344 Md. 689 (1997), to analyze the breach of fiduciary claim? 

3. To the extent the Circuit Court ruled in favor of Cherneski based on its finding 

that there was insufficient evidence to show there [sic] that was a breach of 

fiduciary duty, did it err as a matter of law in disregarding uncontroverted 

evidence of Cherneski’s violations of Maryland and Federal law? 

4. Did the Circuit Court err in awarding attorneys’ fees to Defendants rather than 

Plaintiffs under the fee-shifting clause of the Amended and Restated Operating 

Agreement? 
12

The Court of Special Appeals heard oral arguments in March 2019. Subsequently, 

the panel determined that the legal questions presented in this matter should be certified to 

the Court of Appeals. On August 15, 2019, the Court of Special Appeals filed a 

Certification Pursuant to Maryland Rule 8-304. In the Certification, the Court of Special 

Appeals posed two questions of law as follows:

1. May minority members of an LLC (a) bring a stand-alone 

cause of action for breach of fiduciary duty against the 

managing member of the LLC (b) premised on allegations 

that the managing member was engaged in unlawful actions 

that placed at risk the investments of the minority 

members?

2. If so, is such a claim (a) limited to allegations that would 

also support another viable cause of action, (b) limited to 

allegations that would not also support another viable cause 

of action, or (c) not limited by whether or not there is 

another viable cause of action to address the same conduct? 

This Court granted the Certification, and pursuant to Maryland Rule 8-304(c)(3), 

issued a writ of certiorari that included the entire action. The Court permitted additional 

briefing on the certified questions. 

II.

Discussion

A. Standard of Review

Pursuant to Maryland Rule 8-131(c), “[w]hen an action has been tried without a 

jury, the appellate court will review the case on both the law and the evidence.” We will 

“not set aside the judgment of the trial court on the evidence unless clearly erroneous,” 

giving “due regard” to the trial court’s opportunity to “judge the credibility of the 
13

witnesses.” Id. A trial court’s findings are not clearly erroneous if “any competent material 

evidence exists in support of the trial court’s factual findings[.]” Webb v. Nowak, 433 Md. 

666, 678 (2013). “A trial court’s decision whether to award particular forms of equitable 

relief based on its fact findings and the applicable legal standards is reviewed for abuse of 

discretion.” Bontempo v. Lare, 444 Md. 344, 363 (2015) (citing Comm’n on Human 

Relations v. Talbot Cty. Det. Ctr., 370 Md. 115, 127 (2002)). 

“When a trial court decides legal questions or makes legal conclusions based on its 

factual findings, we review these determinations without deference to the trial court.” MAS 

Assocs., LLC v. Korotki, 465 Md. 457, 475 (2019) (citing Ins. Co. of N. Am. v. Miller, 362 

Md. 361, 372 (2001)). “Where a case involves the application of Maryland statutory and 

case law, our Court must determine whether the lower court’s conclusions are legally 

correct under a de novo standard of review.” Spaw, LLC v. City of Annapolis, 452 Md. 

314, 338 (2017) (citations and quotations omitted). Similarly, “[t]he interpretation of a 

written contract is a question of law for the court subject to de novo review.” Nova 

Research, Inc. v. Penske Truck Leasing Co., 405 Md. 435, 448 (2008) (citing Diamond 

Point v. Wells Fargo, 400 Md. 718, 751 (2007)). 

B. Parties’ Contentions

The Minority Members contend that the circuit court committed multiple errors in 

resolving their breach of fiduciary duty claim, by: (1) concluding that Maryland does not 

recognize an independent cause of action; (2) failing to consider and apply the factors set 

forth in Kann v. Kann, 344 Md. 689 (1997); and (3) finding that “there is insufficient 

evidence to show” that Mr. Cherneski breached his fiduciary duties. They also assert that 
14

the circuit court erred in its award of attorneys’ fees by misinterpreting the contractual feeshifting provision in the Operating Agreement. 

Conversely, Mr. Cherneski contends that the case law is clear: Maryland does not 

recognize an independent breach of fiduciary duty tort. Alternatively, Mr. Cherneski 

argues that if Maryland does allow an independent cause of action, the circuit court did not 

enter judgment based upon a legal conclusion that no cause of action existed. Rather, Mr. 

Cherneski contends that the circuit court considered the independent cause of action and 

entered judgment after making a factual determination that there was “insufficient evidence 

to show that there was a breach of fiduciary duty.” Mr. Cherneski asserts that there is 

ample factual evidence in the record to support the circuit court’s factual finding, which he 

contends was not clearly erroneous. 

Concerning the court’s attorneys’ fee award, Mr. Cherneski argues that the circuit 

court correctly applied the fee-shifting language in the Operating Agreement, in 

determining that the language applied to all claims brought by the Minority Members 

within the action, and that the court did not abuse its discretion in awarding Mr. Cherneski 

and the Company all of their attorneys’ fees without apportionment. 

C. Analysis

Maryland Limited Liability Companies – Statutory Framework

The dispute between the parties in this case arises from their membership in Trusox,

LLC, a Maryland limited liability company. It is useful to start our analysis with a brief 

overview of the Maryland Limited Liability Company Act (“LLC Act”), Maryland Code 
15

Corporations and Associations Article (“CA”), Title 4A, because this statute, together with 

the Operating Agreement, creates the legal obligations and duties discussed herein. 

The LLC Act provides the statutory genesis for the formation of a Maryland limited 

liability company. An LLC is an unincorporated business organization. CA § 4A-101(k). 

The LLC Act was formed “to give the maximum effect to the principles of freedom of 

contract and to the enforceability of operating agreements.” CA § 4A-102(a). An LLC is 

formed by an individual causing articles of organization to be executed and filed with the 

State Department of Assessments and Taxation. CA § 4A-202. The owners of the LLC 

are referred to as “members.” CA § 4A-101(m). The members’ relationship with one 

another, the affairs of the LLC, and the conduct of the LLC’s business are governed by 

contract, defined as an “operating agreement.” CA § 4A-101(p). The operating agreement 

adopted by the members addresses, inter alia, how the LLC “shall be managed, controlled, 

and operated”; the manner in which members share profits and losses; the manner in which 

new members may be admitted; procedures for assignment of membership interests; and 

meeting and voting procedures. CA § 4A-402(a)(1)-(8).

Accordingly, here, the parties’ relationship is governed by the contractual terms of 

their Operating Agreement. Under the Operating Agreement, the parties designated Mr. 

Cherneski as the President and CEO. Per the terms of the Operating Agreement, aside 

from extraordinary actions which required super-majority consent, see footnote 2, supra, 

as the owner of a 65% membership interest, Mr. Cherneski had broad decision-making 

authority over most decisions relating to Trusox and its operations. 
16

Although the Operating Agreement provides the general terms of Mr. Cherneski’s 

authority as the President, CEO, and owner of a majority interest in the Company, the 

Operating Agreement is silent with respect to any fiduciary duties that Mr. Cherneski owes 

to the Minority Members. So too, is the LLC Act.7 With no statutory or contractual 

provisions establishing a fiduciary duty between the parties, we look to whether such a 

fiduciary relationship exists under common law.

Common Law Fiduciary Duty Owed by Managing Members to the LLC and the 

Minority Members

This Court has not previously decided whether a managing member of an LLC owes 

a common law fiduciary duty to the Minority Members. Many courts have answered that 

 

7 Maryland is not the only state that does not specify by statute the fiduciary duties 

of members or managers. William Callison & Allan W. Vestal, They’ve Created a Lamb 

with Mandibles of Death: Secrecy, Disclosure, and Fiduciary Duties in Limited Liability 

Firms, 76 Ind. L.J. 271, 281–86 (2001). In 2001, Professors Callison and Vestal observed 

that some state LLC statutes, including the Maryland LLC statute, do not address the 

member or manager fiduciary duties, leaving the matter to be addressed in the operating 

agreement, or through judicial common-law development. Id. at 281 n.49. Like Maryland, 

Arizona and New Mexico also remain silent as to any fiduciary duty owed. TM2008 Inv., 

Inc. v. Procon Capital Corp., 323 P.3d 704, 707 (Ariz. Ct. App. 2014) (“Unlike other 

statutorily-blessed business arrangements, the LLC Act does not refer to any baseline 

fiduciary duties that members of an LLC owe to the LLC or to one another.”) (footnote 

omitted); In re Deerman, 482 B.R. 344, 371–73 (Bankr. D.N.M. 2012) (recognizing that 

the state LLC statute uses trust-type language but does not create a fiduciary relationship 

between the parties). Other states impliedly recognize the common law fiduciary duty 

without statutorily governing the fiduciary duty of the members. See Kan. Stat. Ann. § 17-

76,134(c) (2014) (“To the extent that, at law or in equity, a member or manager or other 

person has duties, including fiduciary duties, to a limited liability company or to another 

member or manager . . . the member’s or manager’s or other person’s duties may be 

expanded or restricted or eliminated by provisions in the operating agreement[.]”); Tex. 

Bus. Orgs. Code Ann. § 101.401 (2006) (“The company agreement of a limited liability 

company may expand or restrict any duties, including fiduciary duties, and related 

liabilities that a member, manager, officer, or other person has to the company or to a 

member or manager of the company.”).
17

question in the affirmative, including the Court of Special Appeals in George Wasserman 

& Janice Wasserman Goldsten Family LLC v. Kay, 197 Md. App. 586 (2011). For the 

reasons so aptly explained in Wasserman, we join these courts and hold that managing 

members of an LLC owe common law fiduciary duties to the LLC and to the other members

based on principles of agency. 

Despite the statutory silence concerning fiduciary duties in the LLC Act,

“[m]anaging members are clearly agents for the LLC and each of the members, which is a 

fiduciary position under common law.” Id. at 616 (emphasis in original) (citations 

omitted). Accordingly, managing members of an LLC owe fiduciary duties to the LLC 

and the minority members arising under traditional common law agency principles. As 

succinctly stated by the Court of Special Appeals in Wasserman:

In the partnership and corporate context, fiduciary duties are 

not born of statutory language-the underlying fiduciary duties 

pre-exist the statutes, and those duties exist as such unless 

limited by statute . . . . The same holds true in the LLC context. 

Because no Maryland statute precludes, or even limits, 

managing members’ fiduciary duties under common law, those 

underlying duties apply. 

Id. We also agree with the intermediate appellate court that the language of the LLC Act 

suggests “that provisions within operating agreements could alter existing duties or create 

other duties that would otherwise not exist.” Id. (citing CA § 4A-402(a) (“Except for the 

requirement set forth in § 4A-404 of this subtitle that certain consents be in writing, 

members may enter into an operating agreement to regulate or establish any aspect of the 

affairs of the limited liability company or the relations of its members . . . .”)). However, 
18

here, there are no limitations in the Operating Agreement that would otherwise displace or 

alter the fiduciary duties arising from the agency relationship.8

As the President, CEO, and majority interest member in Trusox, Mr. Cherneski 

owed fiduciary duties to the Minority Members and the LLC arising under common law 

principles of agency.

Breach of Fiduciary Duty Case Law in Maryland

Before we consider the circuit court’s disposition of the Minority Members’ breach 

of fiduciary duty count, it is necessary to consider and answer the certified questions from 

the Court of Special Appeals involving whether this Court recognizes an independent 

 

8 After Wasserman was decided, in the 2011 Legislative session, the General 

Assembly considered a bill that addressed, inter alia, the fiduciary duties of an LLC 

member. House Bill 637, as introduced, would have added a new section 4A-402.1 to the 

LLC Act, which would have permitted members of an LLC, through their operating 

agreement, to eliminate a member’s fiduciary duties to other members, other than for acts 

or omissions that constitute a bad faith violation of the implied contractual covenant of 

good faith and fair dealing. House Bill 637 passed the House of Delegates with proposed 

Section 4A-402.1 intact. The House of Delegates Economic Matters Committee Floor 

Report for House Bill 637 described the “Current Law and Background” as follows: 

Unlike the corporate and general partnership context, there is 

no statute expressly addressing LLC members’ fiduciary 

duties. However, as recently explained in Wasserman v. Kay, 

____ Md. App. ___ (No. 2836, Sept. Term., 2009), managing 

members of LLCs owe common law fiduciary duties to the 

LLC and to the other members.

The Senate deleted proposed section 4A-402.1 in its entirety. See Senate Judicial 

Proceedings Committee Floor Report, Committee Amendments, Amendment No. 2. The 

House concurred with the Senate Amendments and the bill was enacted without proposed 

Section 4A-402.1. See 2011 Md. Laws ch. 597. There have been no legislative 

amendments that alter the holding in Wasserman that managing members owe common 

law fiduciary duties to the LLC and to the other members, which we adopt. 
19

breach of fiduciary duty cause of action, and if so, whether there are any parameters or 

limitations on such a cause of action. To answer the certified questions, we start with our 

review and analysis of the seminal breach of fiduciary duty case in Maryland, Kann v. 

Kann, 344 Md. 689 (1997). We also review our case law that interpreted or discussed 

Kann, as well as cases decided by this Court that did not discuss or cite to Kann, but that 

otherwise considered or discussed breach of fiduciary duty claims. Most of the reported 

discussion of whether Kann permits an independent cause of action has taken place in the 

Court of Special Appeals and in the United States District Court for the District of 

Maryland. 

1. Kann v. Kann 

In Kann, an individual was the trustee of two different trusts. 344 Md. at 694. In 

his capacity as trustee of one of those trusts, he filed a complaint for declaratory judgment, 

seeking a declaration as to the proper ownership of disputed funds held by the other trust. 

Id. at 695. The complaint named a beneficiary of the second trust as a defendant. Id. The 

beneficiary filed a counterclaim against the trustee alleging, among other things, breach of 

fiduciary duty. Id. at 695–96. The beneficiary sought compensatory damages against the

trustee individually and asked for a jury trial on that claim. Id. The trial court dismissed 

the beneficiary’s counterclaim, thereby denying her a jury trial on the breach of fiduciary 

duty claim, and issued a declaratory judgment ruling, finding, among other things, that the 

trustee had not breached any fiduciary duties. Id. at 697. 

On appeal, the issue before this Court was whether a beneficiary of a trust could 

assert a common law claim for breach of fiduciary duty against a trustee, with a right to a 
20

jury trial and noneconomic and punitive damages. Id. 697–98. In concluding that a 

beneficiary could not assert such a claim, we observed that all of the beneficiary’s claims 

were brought in her capacity as a beneficiary of the trust, that disputes concerning trusts 

have traditionally fallen within the court’s equitable jurisdiction, and that jury trials have 

not been available for such claims. Id. at 702–03. As a result, we concluded that under 

existing Maryland law, the beneficiary “was not entitled to a jury trial.” Id. at 706. 

We then turned to the beneficiary’s argument that the Court should “substantially 

alter existing Maryland law by declaring that a breach of any fiduciary duty constitutes a 

tort in the sense that it would be actionable at law, triable to a jury, and, in appropriate 

cases, capable of supporting punitive damages.” Id.

As part of our analysis, we looked to § 874 of the Restatement (Second) of Torts

(1977), titled “Violation of Fiduciary Duty,” which provides “[o]ne standing in a fiduciary 

relation with another is subject to liability to the other for harm resulting from a breach of 

duty imposed by the relation.” Kann, 344 Md. at 706. We concluded that § 874 “does not 

mean that the American Law Institute recognizes that any breach of fiduciary duty is triable 

to a jury.” Id. at 707. The Court observed that the comments to § 874 describe that the 

remedy for a breach is dependent upon the local rules of procedure, the type of relationship 

between the parties, the nature of the transaction involved, and the remedy traditionally 

afforded. Id. We concluded that § 874 “recognizes the universal proposition that a breach 

of fiduciary duty is a civil wrong, but the remedy is not the same for any breach by every 

type of fiduciary.” Id. at 710. Thus, remedy for some breaches “may be at law, for others 

it may be exclusively in equity, and for still others there may be concurrent remedies.” Id. 
21

We rejected the beneficiary’s request for the Court to “make a very far reaching change in 

Maryland law by creating a tort that will apply to all fiduciaries[,]” which would eliminate 

the distinctions between remedies at law and those remedies traditionally lying exclusively 

in equity. Id. at 712 (emphasis in original). 

Rejecting the “wholesale changes in Maryland law” advocated by the beneficiary, 

we held that “there is no universal or omnibus tort for the redress of breach of fiduciary 

duty by any and all fiduciaries.” Id. at 713. We added, however, that “[t]his does not mean 

that there is no claim or cause of action available for breach of fiduciary duty.” Id.

(emphasis added). Writing for the Court, Judge Rodowsky proceeded to instruct the courts

and litigants on how to determine whether a party could assert a claim involving a breach 

of fiduciary duty: 

Our holding means that identifying a breach of fiduciary duty 

will be the beginning of the analysis, and not its conclusion. 

Counsel are required to identify the particular fiduciary 

relationship involved, identify how it was breached, consider 

the remedies available, and select those remedies appropriate 

to the client’s problem. Whether the cause or causes of action 

selected carry the right to a jury trial will have to be determined 

by an historical analysis. 

Id. at 713. The Court reiterated that attorneys “do not have available for use in any and all 

cases a unisex action, triable to a jury.” Id. We explained that just as we “would not 

preside over the death of contract by recognizing as a tort a breach of contract that was 

found to be in bad faith[,]” we similarly would not “preside over the death of equity” by 

adopting a universal tort for breach of fiduciary duty. Id. (citations omitted).
22

2. Our Jurisprudence Involving Breach of Fiduciary Duty Claims 

Post-Kann

Since Kann was decided, it has been cited ten times in our decisions,

9 but only two 

cases provide explanation or discussion concerning whether Maryland recognizes an 

independent cause of action for breach of fiduciary duty. 

In Insurance Company of North America v. Miller, an insurance company filed a 

complaint against one of its insurance agents, alleging several causes of action, including

conversion, breach of fiduciary duty, and negligence. 362 Md. 361, 363–64 (2001). The 

agent was involved in a “complex double financing scheme[,]” with a third-party agency,

which involved, among other things, collecting premiums from the insurance company’s

insureds, diverting the funds and using them to pay premiums due to other companies on 

completely unrelated transactions, all in violation of Maryland insurance regulations. Id. 

at 364–66. During the trial, the defendant agent’s counsel had stipulated that the defendant

was the company’s agent, and the parties had agreed that the amount of money owed to the 

company by the third-party agency (which had collapsed and was no longer in business), 

was close to $600,000. Id. at 372–73. The agent also admitted: (1) that he had knowledge 

of the financing scheme; (2) that he did not advise the insurance company or the Maryland 

Insurance Administration that the collected premiums had been placed in an account that 

 

9 Bontempo v. Lare, 444 Md. 344 (2015); Scarfield v. Muntjan, 444 Md. 264 (2015); 

Green v. Nassif, 426 Md. 258 (2012); BAA, PLC v. Acacia Mut. Life Ins. Co., 400 Md. 136 

(2007); Legum v. Brown, 395 Md. 135 (2006); Ver Brycke v. Ver Brycke, 379 Md. 669 

(2004); Int’l Bhd. of Teamsters v. Willis Corroon Corp. of Md., 369 Md. 724 (2002); Beyer 

v. Morgan State Univ., 369 Md. 335 (2002); Ins. Co. of N. Am. v. Miller, 362 Md. 361 

(2001); Hartlove v. Md. School for the Blind, 344 Md. 720 (1997).
23

was held “out-of-trust” in violation of Maryland insurance regulations; and (3) that he 

participated in the scheme with the third-party agency. Id. at 372.

After a bench trial, the circuit court entered judgment in favor of the agent on all 

counts. Id. at 363–64. The insurance company appealed the issue of whether the trial court 

erred in entering judgment in favor of the agent on the breach of fiduciary duty count and 

the negligence count. Id. at 364. This Court held that the trial court erred on both counts. 

Id. With respect to the breach of fiduciary duty count, we considered the evidence 

presented at trial under our own application of the Kann factors stating: 

Contrary to the trial court’s ruling, we hold that appellant: (1) 

identified the particular principal-agent fiduciary relationship 

created in the case at bar; (2) identified that it was breached by 

appellee participating in the double financing scheme, not

forwarding premiums, and not informing [the insurance 

company] that premiums were out-of-trust; (3) considered the 

remedies available; and (4) selected those remedies appropriate 

to the client’s problem.

Id. at 379. We identified a fiduciary relationship between the insurance company and agent 

arising under principles of agency. Id. at 379–81. After discussing at length the duties 

owed by an agent to a principal, including the duty of loyalty and duty to disclose 

information material to the agency, we pointed out that under our existing case law, 

damages were available for the breach in the form of lost profits. Id. at 381 (citations 

omitted). We described the evidence in the record specifically demonstrating the agent’s 

knowledge and participation in the scheme, which caused damages to the company. Id. at 

383–85. We concluded that the trial court erred entering judgment in favor of the agent on 

the breach of fiduciary duty count. Id. at 384–85.
24

After considering the insurance company’s breach of fiduciary duty claim, 

separately, we also considered the company’s negligence claim based upon the same 

conduct and held that the agent’s actions could also constitute negligence. Id. at 385–87. 

We reversed and remanded the case for “further proceedings consistent with this opinion, 

including the assessment and rendering of judgment as to damages[].” Id. at 388. 

The Court’s next citation to Kann came 18 months after Miller, in International 

Brotherhood of Teamsters v. Willis Corroon Corp. of Maryland, 369 Md. 724 (2002). In 

that case, a labor organization was required under federal law to bond its officials who 

handled funds in order to provide protection against loss by reason of fraud or dishonesty. 

Id. at 726. The labor organization retained an insurance broker to obtain the federally 

mandated insurance. Id. Unbeknownst to the labor organization, the insurance broker

procured an insurance policy limiting the insurer’s liability “per loss,” not “per person” as 

federal law mandated. Id. After two of the labor organization’s officials covered by the 

policy misappropriated funds, the organization made a claim on its policy “per person,” 

but when the insurance company resisted, the labor organization settled and reserved “any 

claim that it might have against any insurance broker involved in the procurement of the 

policy.” Id. at 727. Subsequently, the labor organization filed a claim against the insurance 

broker for negligence and breach of fiduciary duty connected with the broker’s

procurement of the insurance policy. Id. The complaint sought compensatory damages, 

plus interest, recovery of commissions paid to the broker, and attorneys’ fees. Id. at 727–

28. The insurance broker answered the complaint and moved for summary judgment on 

the ground that, by not reading the insurance policy and discovering, at the outset, the 
25

contractual limitation of liability contained in the policy, the labor organization was 

contributorily negligent. Id. at 728. The circuit court agreed with the insurance broker’s

argument that the labor organization was contributorily negligent as a matter of law and 

granted summary judgment in favor of the insurance broker. Id.

Prior to arguments in the Court of Special Appeals, we granted certiorari, on our 

own initiative, to review that judgment. Id. The sole focus of our analysis was whether 

the circuit court erred in entering summary judgment on the issue of contributory 

negligence under the facts of the case. Id. at 737–41. We determined that the 

reasonableness of an insured’s conduct “normally will be fact-specific” and therefore, is 

“for the trier of fact to determine.” Id. at 740. Based upon the record, we reversed the 

judgment of the circuit court on the basis that “a jury could reasonably find that [the labor 

organization] acted reasonably in relying on [the insurance broker] to procure a proper 

policy and in not making its own independent investigation.” Id. at 741. 

Although the Court mentioned that the labor organization had pleaded a count 

alleging breach of fiduciary duty in addition to the negligence claim, the breach of fiduciary 

duty count was not part of this Court’s discussion or analysis, other than a footnote

“point[ing] out” that, based on Kann, “Maryland does not recognize a separate tort action 

for breach of fiduciary duty.” Id. at 727 n.1. The Court continued stating, “[b]ased on the 

underlying averments, [the labor organization] may have been able to plead an action for 

breach of contract, in addition to its claim for negligence, but it chose not to do so. We 

shall treat the complaint as one for negligence.” Id. Accordingly, the Court reviewed the 

lower court’s grant of summary judgment on the negligence claim and reversed the circuit 
26

court’s erroneous conclusion that the labor organization was contributory negligent. Id. at 

741. Beyond the footnote, the Court did not address the possibility of a fiduciary duty or 

the alleged breach. 

Other decisions of this Court have addressed claims for breach of fiduciary duty 

without noting or discussing Kann. In Della Ratta v. Larkin, the Court considered a claim 

by limited partners against the sole general partner seeking dissolution of the partnership 

and an injunction barring capital calls. 382 Md. 553, 557 (2004). The limited partners 

alleged that the general partner breached his fiduciary duty and acted in bad faith. Id. The 

Court affirmed the circuit court’s determination that the general partner had breached his 

fiduciary duty and acted in bad faith and, therefore, affirmed the circuit court’s injunction 

against the capital call. Id. at 580. Although the Court did not discuss Kann, we upheld 

the circuit’s court’s injunction based upon a breach of fiduciary claim arising from the 

partnership relationship. Id. 

In Storetrax.com, Inc. v. Gurland, the Court considered a breach of fiduciary duty 

claim filed by a corporation against a former employee and director of the corporation. 397 

Md. 37, 42 (2007). In that case, a director brought a breach of contract action against the 

employer corporation seeking payment of a severance package. Id. at 45. He obtained a 

default judgment against the corporation and enforced the judgment by attaching the 

corporation’s bank account. Id. at 46. After the director refused to voluntarily relinquish 

the default judgment upon the corporation’s request, the corporation sued, arguing that the 

director breached his fiduciary duty to the corporation. Id. at 46–47. We held that the 

director did not breach his fiduciary duty by obtaining a judgment against the corporation 
27

and enforcing the writ of garnishment against the corporate bank account. Id. at 67. The 

Court did not address the validity of a cause of action for breach of fiduciary duty. Instead, 

the Court’s focus was on whether there was a breach of a fiduciary duty. 

In Clancy v. King, the Court considered a breach of fiduciary duty claim against 

author Thomas Clancy by Wanda King, his former wife and partner in a partnership of 

which Mr. Clancy was the managing partner. 405 Md. 541, 546 (2008). Ms. King filed a 

lawsuit claiming both a breach of fiduciary duty and a breach of the partnership agreement 

between herself and Mr. Clancy, alleging that Mr. Clancy, as managing partner, breached 

his fiduciary duty to the limited partnership and to Ms. King by planning to remove his 

name from a book series, the profits of which were to be split between the limited 

partnership and an unrelated corporation. Id. at 550–51. Ms. King sought injunctive relief 

to prohibit Mr. Clancy from taking actions detrimental to the book series, naming Ms. King 

as managing partner, and she also sought recovery of attorneys’ fees and expenses. Id. Mr. 

Clancy filed a counterclaim seeking a declaratory judgment that his fiduciary duties were 

established by contract, specifically, the partnership agreement, which expressly limited 

the duty of loyalty ordinarily owed by the managing partner to the partnership and the 

partners. Id. at 551. The trial court found that Mr. Clancy had breached his fiduciary duty 

and awarded Ms. King damages, which was affirmed by the Court of Special Appeals. Id. 

at 553. 

Concerning the breach of fiduciary duty count, the question presented on certiorari

to this Court was “[w]hether the lower courts erred in failing to recognize that principles 

of contract preempt fiduciary duties where the contract is unambiguous and the parties have 
28

made their intentions clear?” Id. at 553. This Court answered in the affirmative and 

reversed the trial court. Id. at 572. We held that Mr. Clancy’s fiduciary duties were 

established by the partnership agreement, which expressly limited the duty of loyalty 

ordinarily owed by the managing partner to the partnership. Id. at 557. However, we 

observed that Mr. Clancy, nonetheless, had a requirement to act in good faith under contract 

law, as well as partnership law. Id. at 565–71. We reversed the judgment and remanded 

for the trial court to determine whether Mr. Clancy’s actions were undertaken in good faith. 

Id. at 571–73. In other words, although the Court concluded that the circuit court erred in 

failing to consider Mr. Clancy’s fiduciary duties through the modifications and limitations 

agreed upon by the parties in the partnership agreement, the Court nonetheless remanded 

the case on Ms. King’s breach of duty count for further factual proceedings on the issue of 

whether Mr. Clancy’s actions were undertaken in good faith. Id.

In Shenker v. Laureate Education, Inc., this Court addressed the issue of whether 

shareholders in a corporation could bring a claim for breach of fiduciary duties against 

some of its directors. 411 Md. 317, 326–27 (2009). In connection with this issue, the 

Court considered (1) whether the directors owed common law fiduciary duties to the 

shareholders of the corporation, or alternatively, whether their fiduciary duties were 

exclusively provided by statute; and (2) whether the shareholders were permitted to bring 

breach of fiduciary duty claims individually or only as derivative claims. Id. at 327, 347–

51. We held that the statute governing corporate director duties, CA § 2-405.1(a), does not 

supersede common law duties owed by corporate directors to their shareholders that preexisted the adoption of the statute. Id. at 341. We explained that, under the common law, 
29

in situations where the corporation was undergoing a change of control, “corporate 

directors owe their shareholders fiduciary duties of candor and maximization of 

shareholder value.” Id. Accordingly, we held that, in the context of a cash-out merger 

transaction where the decision to sell the corporation had already been made, “shareholders 

may pursue direct claims against directors for breach of their fiduciary duties of candor 

and maximization of shareholder value.” Id. at 342. In analyzing the shareholders’ right 

to bring a direct action for breach of fiduciary duty, we also recognized that “the injury 

alleged, namely, a lesser value that shareholders received for their shares in the cash-out 

merger, is an injury suffered solely by the shareholders and not by [the corporation] as a 

corporate entity.” Id. at 346. 

As part of their case, the shareholders also brought a claim for civil conspiracy 

against the investors in the corporation who purchased shares as part of the cash-out 

merger. Id. at 329. This Court affirmed the circuit court’s dismissal of the shareholder’s 

conspiracy claim on the ground that the investors “did not owe fiduciary duties to [the 

shareholders] and were consequently legally incapable of committing the underlying tort.”

Id. at 351 (internal citations omitted). In affirming the lower court’s dismissal of the civil 

conspiracy claim, in a footnote, we stated that we “assume, without deciding that it is so 

solely for the purposes of this appeal, that breach of fiduciary duties is a cognizable tort in 

Maryland.” Id. at 351 n.16. The placement of this footnote is significant in that it appears 

within the context of our discussion of the conspiracy claim against the investors, where 

there was no underlying fiduciary duty owed to the shareholders.
30

To summarize our jurisprudence involving breach of fiduciary duty claims in the 

aftermath of Kann, this Court upheld specific claims for specific breaches of fiduciary 

duties in the following contexts: Miller, 362 Md. at 387–88 (permitting an insurer to assert

a breach of fiduciary duty claim for damages against an agent under agency principles);

Della Ratta, 382 Md. at 557 (affirming a circuit court’s factual findings that a general 

partner had “breached his fiduciary duty and acted in bad faith” and upholding the circuit 

court’s injunctive relief); Clancy, 405 Md. at 565–72 (remanding for determination of 

whether the managing partner of a limited partnership had breached his fiduciary duty of 

good faith and fair dealing); and Shenker, 411 Md. at 351 (holding that in a cash-out merger 

transaction, where the decision to sell the corporation had already been made, that 

shareholders could pursue direct claims against directors for their breach of common-law 

fiduciary duties of candor and maximization of shareholder value). These cases 

demonstrate that we have recognized independent claims for breach of fiduciary duty in 

various contexts. In Miller and Shenker, we applied a Kann analysis, describing the 

fiduciary relationship, and identifying a remedy that provided for damages arising out of 

the common law in each instance. Additionally, in Miller, we reversed and remanded for 

a consideration of the plaintiff’s breach of fiduciary duty count notwithstanding the fact 

that the plaintiff had another cause of action alleging negligence that addressed the same 

conduct. 

Despite the above case law to the contrary, our case law became less than clear when

we “pointed out” in a footnote that under Kann, “although the breach of a fiduciary duty 

may give rise to one or more causes of action, in tort or in contract, Maryland does not 
31

recognize a separate tort action for breach of fiduciary duty.” Int’l Bhd. of Teamsters, 369 

Md. at 727 n.1. Later, in Shenker, we stated that we were “assum[ing] . . . solely for the 

purposes of this appeal, that breach of fiduciary duties is a cognizable tort in Maryland.” 

Shenker, 411 Md. at 351 n.16. These footnotes created problems for courts attempting to 

understand Kann and to follow the outlined analysis. 

3. Kann’s Progeny in the Court of Special Appeals

Understandably, the Court of Special Appeals’ cases interpreting Kann have not 

always been consistent.10 As the Court of Special Appeals noted in its Certification, the 

intermediate appellate court has “held in some cases that there is no stand-alone claim for 

breach of fiduciary duty; in others that such a cause of action may exist, but only for 

equitable relief; and yet in others that such a cause of action may exist, without necessarily 

restricting the type of relief available.” We examine these cases below. 

In Moshyedi v. Council of Unit Owners of Annapolis Road Medical Center 

Condominium, a condominium unit owner sued the unit council, seeking declaratory relief 

and damages for the unit council’s alleged failure to repair his condominium unit with 

insurance proceeds that had been paid to the unit council for the purpose of repairing 

damaged units. 132 Md. App. 184, 187–88 (2000). The unit owner argued that under the 

 

10 We have not included within our survey all cases that cite to Kann v. Kann, 344 

Md. 689 (1997), but only those cases that discuss whether an independent cause of action 

exists, and the circumstances in which the Court applied the factors or analysis in Kann. 

For example, our survey does not include Lyon v. Campbell, 120 Md. App. 412 (1998), 

where the court held that there was insufficient evidence to support a breach of fiduciary 

duty claim “even if we assume without holding” that a shareholder owed the corporation a 

fiduciary duty. Id. at 441. 
32

Maryland Condominium Act, a fiduciary relationship existed between the unit council and 

him, that the council breached that duty by failing to make repairs, and that he was entitled 

to damages. Id. at 191. In a separate case, the unit council filed a complaint for past-due 

condominium fees. Id. at 188. The cases were consolidated for trial. Id. Although both 

parties prayed a jury trial, the jury only considered the unit council’s claim against the unit 

owner for past-due fees. Id. at 190. The jury returned a verdict in favor of the unit council 

for the past-due condominium fees. Id. After the jury returned its verdict, the trial court 

entered judgment in favor of the unit council on the unit owner’s claim for compensatory 

damages. Id. On appeal, the issue was whether the jury should have considered the unit 

owner’s claim for compensatory damages. Id. at 190–91. 

The Court of Special Appeals rejected the unit council’s argument that Maryland 

does not recognize a cause of action for breach of fiduciary duty, and explained under 

Kann, although “there is no universal or omnibus tort for the redress of breach of fiduciary 

duty by any and all fiduciaries[,]” the parties and the court are required to undertake the 

analysis outlined in Kann to “identify the particular fiduciary relationship involved, 

identify how it was breached, consider the remedies available, and select those remedies 

appropriate to the client’s problem.” Id. at 193 (quoting Kann, 344 Md. at 713). The 

intermediate appellate court analyzed the unit owner’s claim and determined that the circuit 

court did not err in treating the claim as one in equity rather than at law. Id. at 196. The 

court further concluded that under the by-laws, the unit council had a duty to make the 

necessary repairs from the insurance proceeds paid for that purpose, and that the unit owner 

had expended his own funds to repair the unit. Id. at 206. The court vacated the judgment 
33

and remanded the case to the circuit court for further findings of fact on the issue of the 

total amount expended by the unit owner on the repairs and the amount of the excess 

insurance proceeds remaining in the unit council’s trust account dedicated to the repairs on 

the owner’s unit. Id. at 206–07. 

In Garcia v. Foulger Pratt Development, Inc., the defendant owners of partnership 

interests in a limited partnership sought attorneys’ fees and costs under Maryland Rule 1-

341, against the plaintiff general partner, for maintaining a proceeding in “bad faith or 

without substantial justification.” 155 Md. App. 634, 678 (2003). To support its attorneys’ 

fees claim, one of the defendants’ arguments was that the “‘law is clear’ in Maryland, that 

an independent cause of action for breach of fiduciary duty is not recognized if the 

allegations are duplicative of a breach of a contract claim.” Id. at 682 (emphasis in 

original). The Court of Special Appeals rejected the defendant’s interpretation of Kann, 

and instead concluded that “the Court of Appeals held that the analysis must be done on a 

case-by-case basis[,]” observing that following Kann, “the Court of Appeals recognized 

breach of fiduciary duty as a viable cause of action in [Miller].” Id. 

Two years after Garcia, relying on this Court’s footnote in International 

Brotherhood of Teamsters, 369 Md. at 727 n.1, discussed supra, the Court of Special 

Appeals changed course, and held that a plaintiff’s separate claims for breach of fiduciary 

duty and negligence “condense to only one: the claim based on the tort of negligence.” 

Vinogradova v. SunTrust Bank, Inc., 162 Md. App. 495, 510 (2005). The Court of Special 

Appeals described the footnote in International Brotherhood of Teamsters as this Court’s 

“clarification of its Kann holding[.]” Id.
34

In Lasater v. Guttmann, the Court of Special Appeals considered whether there was 

a breach of fiduciary duty tort claim “for the violation by one spouse of an alleged fiduciary 

responsibility to the other spouse to properly use and maintain marital funds for the benefit 

of the marital unit.” 194 Md. App. 431, 454 (2010). After quoting the relevant passage 

from Kann, the court explained that “the threshold question is whether any fiduciary duty 

could exist under the facts asserted, when the claimed fiduciary relationship was husband 

and wife.” Id. Thus, the court did not reject the existence of an independent cause of action 

for breach of fiduciary duty outright, but instead analyzed whether the plaintiff had 

identified a fiduciary relationship that might give rise to such a cause of action, and 

concluded that under Maryland law, she had not. Id. at 466. 

In 2011, the Court of Special Appeals decided two cases in which the court 

interpreted Kann as permitting independent breach of fiduciary claims, but only those 

seeking equitable, rather than legal, relief. In George Wasserman & Janice Wasserman 

Goldsten Family LLC v. Kay, the court considered claims by members of real estate trusts 

against, among others, the managing member of an LLC real estate trust, over losses of 

funds that had been invested with entities controlled by Bernie Madoff. 197 Md. App. 586, 

592–93 (2011). The complaint alleged multiple counts including the breach of fiduciary 

duties for which the plaintiffs sought monetary damages. Id. at 600. Although the court 

concluded that “managing members of LLCs owe common law fiduciary duties to the LLC 

and to the other members,” id. at 616, the court cited Kann as precluding claims for 

monetary damages for breach of those duties: 
35

Kann and its progeny do not obliterate the possibility of a 

separate cause of action for breach of fiduciary duty in an 

action seeking equitable relief. In a claim for monetary 

damages at law, however, an alleged breach of fiduciary duty 

may give rise to a cause of action, but it does not, standing 

alone, constitute a cause of action. 

Id. at 631. Thus, although the same factual allegations supporting a claim for breach of 

fiduciary duty could support other causes of action for money damages, the intermediate 

appellate court held that “they do not constitute a stand alone nonduplicative cause of 

action.” Id. at 631–32. 

In Latty v. St. Joseph’s Society of Sacred Heart, Inc., the court considered claims

brought by children of a church organist/Josephite priest against a religious society, 

alleging, among other things, breach of fiduciary duty, and seeking money damages. 198 

Md. App. 254, 260 (2011). The Court of Special Appeals affirmed the circuit court’s 

dismissal of the plaintiff’s complaint in its entirety. Id. at 278. With respect to the breach 

of fiduciary duty count, the court explained that “[b]ecause the society had no fiduciary 

duty to appellants, there can be no cause of action for its breach.” Id. at 271. The court 

offered an alternative ground for affirming the circuit court’s rejection of a breach of 

fiduciary duty claim seeking money damages, stating that although “an action seeking 

equitable relief . . . may give rise to ‘a separate cause of action for breach of fiduciary duty,’ 

. . . a claim for monetary damages at law . . . does not constitute a separate cause of action.”

Id. (quoting Wasserman, 197 Md. App. at 631). Thus, the court held, “[w]hen monetary 

damages are sought, a claim or cause of action for breach of a fiduciary duty may be 

available, but only if the breach gives rise to another cause of action.” Latty, 198 Md. App. 
36

at 271 (citing Kann, 344 Md. at 713). Given that the appellants sought monetary damages 

and did not successfully plead another cause of action, the Court of Special Appeals 

affirmed the circuit court’s dismissal of the claim. Id. 

In Catler v. Arent Fox, LLP, the Court of Special Appeals followed its decision in 

Wasserman and held that the plaintiffs could not pursue a claim against their former 

attorneys for breach of fiduciary duty as an independent cause of action, but that “the 

remedy for such a breach may be connected to another cause of action,” such as legal 

malpractice. 212 Md. App. 685, 717 (2013). The court concluded that Maryland law does 

not recognize a direct cause of action for breach of fiduciary duty, but it does “allow for 

recovery from the breach of fiduciary duty, but the breach must be coupled with a proper 

cause of action.” Id. at 717 n.38 (citing Int’l Bhd. of Teamsters, 369 Md. at 727 n.1). 

Therefore, although the appellant could not succeed on a breach of fiduciary duty count, 

the breach could be connected to another cause of action. Id. at 717. The court proceeded 

to review the alleged breach of fiduciary duty in conjunction with the legal malpractice 

claim. Id.

4. Federal Courts’ Discussion of Kann

Given the inconsistencies in Maryland’s jurisprudence on this issue, federal judges 

also have been understandably inconsistent in their efforts to reconcile “a split of authority 

. . . as to whether the Court of Appeals rejected breach of fiduciary duty as an independent 

tort.” Froelich v. Erickson, 96 F. Supp. 2d 507, 526 n.22 (D. Md. 2000). For example, in 

Kerby v. Mortgage Funding Corp., as part of a 13-count complaint, the federal court

considered a breach of fiduciary duty tort in the context of a class action arising out of an 
37

alleged fraudulent mortgage refinancing scheme. 992 F. Supp. 787, 790 (D. Md. 1998).

The court dismissed the claim because Maryland does not recognize a “‘universal or 

omnibus tort for the redress of breach of fiduciary duty,’ at least in a situation where other 

remedies exist[.]” Id. at 803 (quoting Kann, 344 Md. at 713). Another judge of that court 

concluded that “Maryland law is clear that there is no free-standing, independent tort for 

breach of fiduciary duty.” Stewart v. Balt. Teachers Union, 243 F. Supp. 2d 377, 379 (D. 

Md. 2003) (citing Kann, 344 Md. at 713); see also Swedish Civil Aviation Admin. v. Project 

Mgmt. Enters., Inc., 190 F. Supp. 2d 785, 801 (D. Md. 2002) (concluding that “there is no 

independent tort for breach of fiduciary duty in Maryland, especially in light of the multiple 

alternative remedies” available to the plaintiff).

In re LandAmerica Financial Group, Inc., a bankruptcy trustee alleged a breach of 

fiduciary duty claim against a real estate underwriter and its Maryland subsidiary. 470 

B.R. 759, 777 (Bankr. E.D. Va. 2012). Applying Maryland law to the subsidiary, the court 

disagreed with the subsidiary defendant’s arguments that Kann precludes a tort claim for 

the breach of fiduciary duty. Id. at 794. Instead, the court summarized its understanding

of the holding in Kann: “[W]hile no general ‘omnibus tort for the breach of fiduciary duty’

may exist, Kann contemplates tailored claims for a breach of fiduciary duty that are tied to 

discrete harms capable of being rectified by an appropriate remedy.” Id. at 795 (cleaned 

up). The court explained that the claim was permissible because the fiduciary duty was 

well-established; the trustee asserted conduct constituting the breach; the breach resulted 

in actual, quantifiable economic losses; and the monetary damages sought can remedy the 

loss. Id.
38

In BEP, Inc. v. Atkinson, in considering a complaint filed by a corporation against a 

high-level management employee alleging breach of fiduciary duty, the court concluded 

that the plaintiff corporation “has, pursuant to Kann, properly asserted under Maryland law 

a claim of breach of fiduciary duty.” 174 F. Supp. 2d 400, 405–06 (D. Md. 2001).

In Adobe Systems Inc. v. Gardiner, a federal court held that, although a plaintiff 

software company could not proceed with a broad claim for breach of fiduciary duty, it 

would proceed with claims alleging more specific breach of the fiduciary duties of loyalty 

and confidentiality. 300 F. Supp. 3d 718, 727 (D. Md. 2018). After reviewing what it 

found to be inconsistent treatment of the issue by Maryland’s appellate courts, the federal 

district court concluded that, although Kann precludes recognition of an “omnibus” tort 

applicable to all fiduciaries, it read Kann as holding that such a claim may “be asserted if 

it involved an identified fiduciary relationship and an identified breach.” Id. at 726. The 

court permitted the specific claims to proceed, finding that they were based on “specific 

breaches of specific fiduciary duties that have allegedly resulted in economic losses not 

otherwise redressable through separate causes of action.” Id. at 726–27 (citing Kann, 344 

Md. at 713). 

5. Other Discussion of Inconsistent Approaches to Breach of Fiduciary 

Duty Claims

Discussion on the issue of whether Maryland recognizes an independent cause of 

action for breach of fiduciary duty, and the inconsistent interpretations of Kann, is not 

limited to judicial opinions. In Pleading Causes of Action in Maryland, the authors pose, 

but do not purport to answer, the question of whether Maryland recognizes an independent 
39

cause of action for breach of fiduciary duty. Paul Mark Sandler & James K. Archibald, 

Pleading Causes of Action in Maryland, at 576–79 (6th Ed. 2018) (“Sandler”). Sandler 

comments on the tension between footnote 1 in International Brotherhood of Teamsters, 

369 Md. at 727 n.1, and footnote 16 in Shenker, 411 Md. at 351 n. 16. After discussing the 

Court’s analysis in Kann, Sandler observes that “Kann may be said to hold merely that not 

every claim for breach of fiduciary duty is a viable action at law for which a jury trial may 

be prayed.” Sandler, at 578. In attempting to reconcile our jurisprudence, Sandler 

postulates that the footnotes in question may be dicta. 

Court of Specials Appeals’ Certification to this Court

As the Court of Special Appeals observed in its Certification, the various courts’ 

interpretations of Kann appear to be grounded in differing interpretations of the passage 

that immediately follows the Court’s holding that “there is no universal or omnibus tort for 

the redress of breach of fiduciary duty by any and all fiduciaries[,]” which describes the 

analysis that litigants and the court should undertake on a case-by-case basis when 

considering a breach of fiduciary duty claim. Kann, 344 Md. at 713. In its Certification, 

the Court of Special Appeals describes three general interpretations of the passage. 

1. Interpretation Number One

According to the Court of Special Appeals, the first interpretation is that a breach 

of fiduciary duty is actionable only if it gives rise to liability under a separate, independent 

cause of action, such as breach of contract or negligence. The Court of Special Appeals 

notes that cases adopting this interpretation have relied upon the footnote in International 
40

Brotherhood of Teamsters, 369 Md. at 727 n.1. See also Vinogradova, 162 Md. App. at 

510 (describing footnote 1 as this Court’s “clarification of its Kann holding”).

2. Interpretation Number Two 

The Court of Special Appeals explains that under a second interpretation, a breach 

of fiduciary duty is actionable as an independent cause of action, but only if that is the most 

appropriate path after considering all other potential options. Under this interpretation, the 

Kann Court’s instruction to counsel should be construed as identifying the factors that must 

be considered in determining whether there is another, more appropriate cause of action to 

the type of relationship and the breach identified. Stated differently, “whether the 

particular allegations of a breach of fiduciary duty are appropriately governed by a different 

cause of action is based on how such allegations have been treated historically.” The Court 

of Special Appeals explains that “[d]epending on the result of that historical analysis[,] (1) 

a stand-alone cause of action for breach of fiduciary duty may be available[,] and (2) the 

relief available pursuant to such a cause of action may or may not be limited (i.e., as 

between equitable or monetary relief).” The Court of Special Appeals points out that the 

cases adopting this interpretation include Miller, 362 Md. 361; Garcia, 155 Md. App. 634; 

Lasater, 194 Md. App. 431; In re LandAmerica Financial Group, Inc., 470 B.R. 759; and 

Adobe Systems, Inc., 300 F. Supp. 3d 718. 

3. Interpretation Number Three

The third interpretation, which the Court of Special Appeals describes in its 

Certification as a “tweak on the second, recognizes the possibility of a stand-alone cause 

of action for breach of fiduciary duty where there is no more appropriate cause of action 
41

applicable to the conduct at issue, but only for equitable relief.” The Court of Special 

Appeals observes that this interpretation appears to be “grounded in the Court’s discussion 

in Kann of the historical limitation of remedies available for a breach of the duties owed 

by a trustee to a trust beneficiary, which is the specific context in which Kann arose.” The 

Court of Special Appeals notes that cases adopting this interpretation include their cases—

Wasserman, 197 Md. App. 586; Latty, 198 Md. App. 254; and Moshyedi, 132 Md. App.

184. 

We consider each of the three interpretations of Kann below. 

The Ripple Effect – How Two Small Footnotes Caused Big Confusion

Our sentence in Kann—“we hold that there is no universal or omnibus tort for the 

redress of breach of fiduciary duty by any and all fiduciaries”—has been over-simplified 

into an oft-repeated blanket assertion that “Maryland does not recognize a separate tort for 

breach of fiduciary duty.” To be sure, this Court contributed to the over-simplification in 

International Brotherhood of Teamsters where, in an attempt at brevity, we “pointed out” 

that in Kann, “although the breach of fiduciary duty may give rise to one or more causes 

of action, in tort or in contract, Maryland does not recognize a separate tort action for 

breach of fiduciary duty.” 369 Md. at 727 n.1. We compounded the confusion in Shenker, 

when we stated in a footnote that “we assume, without deciding that . . . breach of fiduciary 

duties is a cognizable tort in Maryland.” 411 Md. at 351 n.16. Reading these footnotes in 

isolation, one could either conclude that we do not recognize a separate tort for breach of 

fiduciary duty, or that it is an open-ended question. 
42

Based upon our review of those cases, as well as our jurisprudence in which we 

specifically recognized a cause of action for breach of fiduciary duty, we conclude that 

these footnotes are dicta. “Admittedly, it is not always easy to distinguish between dicta

and a holding. The distinction between a holding and dicta, while difficult to define, is 

also difficult to apply.” State v. Baby, 404 Md. 220, 276 (2008) (Raker, J., concurring and 

dissenting) (citations omitted). There is “no real consensus on the correct definition” of 

dicta. Ryan S. Killian, Dicta and the Rule of Law, 2013 Pepp. L. Rev. 1, 7–8 (2013). 

Black’s Dictionary defines “obiter dictum” (which is commonly shortened to “dictum”) as 

“[a] judicial comment made while delivering a judicial opinion, but one that is unnecessary 

to the decision in the case and therefore not precedential (although it may be considered 

persuasive).” Obiter dictum, Black’s Law Dictionary 569 (11th ed. 2019). The Supreme 

Court has described a prior proposition of the Court as being “unquestionably dictum 

because it was not essential to our disposition of any of the issues contested” in the case. 

Cent. Green Co. v. United States, 531 U.S. 425, 431 (2001). This Court has previously 

explained that “[w]hen a question of law is raised properly by the issues in a case and the 

Court supplies a deliberate expression of its opinion upon that question, such opinion is not 

to be regarded as obiter dictum, although the final judgment in the case may be rooted in 

another point also raised by the record.” Schmidt v. Prince George’s Hosp., 366 Md. 535, 

551 (2001) (citations omitted). A matter is not dictum if “the question was directly 

involved in the issues of law . . . and the mind of the Court was directly drawn to, and 

distinctly expressed upon the subject.” Id. at 552 (citations omitted).
43

Applying these definitions and principles to the footnote in question in International 

Brotherhood of Teamsters, 369 Md. at 727 n.1, and Shenker, 411 Md. at 351 n.16, leads to 

the conclusion that the language in both footnotes is clearly dicta. In International 

Brotherhood of Teamsters, the issue of whether Maryland recognized an independent cause 

of action for breach of fiduciary duty was not directly involved in the issues of law raised 

on appeal, nor did the Court supply a “deliberate expression of opinion” on the issue. We

did not discuss or analyze the breach of fiduciary duty count, and our entire analysis 

concerned whether the circuit court erred in granting summary judgment on whether the 

insured was contributorily negligent in failing to read the insurance policy. Int’l Bhd. of 

Teamsters, 369 Md. at 737–41. In context, we view the footnote as the Court’s attempt to 

briefly describe why it was not considering the breach of fiduciary count any further. In 

doing so, the Court oversimplified our holding in Kann.

With respect to the footnote in Shenker, as discussed above, we considered two 

separate fiduciary claims in that case. 411 Md. at 327, 347. On the shareholder’s breach 

of fiduciary duty claim against the directors, the Court undertook a Kann-type analysis and 

held that the shareholders were entitled to “pursue direct claims against directors for breach 

of fiduciary duties of candor and maximization of shareholder value.” Id. at 336–42. 

(emphasis added). We repeated our holding in this opinion several times in several places. 

See id. at 351, 354. Footnote 16, which appears to leave open-ended the question of 

whether “breach of fiduciary duty is a cognizable tort in Maryland[,]” was placed in the 

section of the opinion discussing the shareholders’ civil conspiracy claim against the 

investors, where we found no fiduciary relationship. Id. at 351 n.16. We can certainly 
44

understand how this footnote, in isolation, could create confusion. But given our holding, 

in which we restated three times in the body of the opinion, that the shareholders could

pursue a direct cause of action for breach of fiduciary duty against the directors for damages 

under the facts of the case, the language in the footnote is not controlling. 

Rejection of Interpretation Numbers 1 and 3

We reject the first interpretation of Kann suggested in the Certification that “a 

breach of fiduciary duty is actionable only if it gives rise to liability under a separate, 

independent cause of action, such as breach of contract or negligence.” (emphasis in 

original). This interpretation arises out of our footnote in International Brotherhood of 

Teamsters, which, as noted above, we consider dicta. The footnote has been relied upon 

and carried through various opinions in the intermediate appellate court and federal courts

attempting to apply our common law concerning fiduciary duties, causing a ripple effect. 

“The most banal use of dicta may also be the most pernicious. In some cases, dicta is cited 

as law with no apparent realization by the judge that the adversarial process has played no 

significant role in producing a rule based on reason and adequately considered precedent.” 

Killian, supra, at 15–16. Such an interpretation is directly at odds with our case law where 

we have specifically upheld separate claims for breach of fiduciary duty in specific 

situations. See Shenker, 411 Md. at 351; Clancy, 405 Md. at 565–72; Della Ratta, 382 Md. 

at 557; Miller, 362 Md. at 387–88. 

Taking the interpretations out of order, we also reject the third interpretation of 

Kann, which recognizes the possibility of a cause of action for breach of fiduciary duty 

where there is no more appropriate cause of action applicable to the conduct at issue, but 
45

only for equitable relief. This is the interpretation initially adopted by the Court of Special 

Appeals in Wasserman, 197 Md. App. at 631–32, and then restated in Latty, 198 Md. App. 

at 271, and Moshyedi, 132 Md. App. at 196. This interpretation is inconsistent with our 

cases cited above and interprets Kann too narrowly. When examining the language in 

Kann, it is necessary to keep in mind the context and facts. Kann involved the attempt by 

a beneficiary of a trust to maintain a common law claim for breach of fiduciary duty, with 

a right to a jury trial and noneconomic and punitive damages, against the trustee. 344 Md. 

at 696–97. The Court analyzed the beneficiary’s asserted claim within the traditional and 

historic context of claims by beneficiaries against trustees, and explained that by statute, 

trusts are subject to the “general superintending power” of a “court having equity 

jurisdiction.” Id. at 713 (cleaned up and citations omitted). We rejected the beneficiary’s 

argument for “wholesale changes in Maryland law” and refused to “preside over the death 

of equity” by adopting her contentions. Id. at 713–14. Given the nature of the type of 

fiduciary relationship at issue in that case, and our analysis of the remedies traditionally 

available in equity as defined by statute, the beneficiary’s remedies were limited to 

whatever rights she had in equity. 

To interpret Kann in a manner to suggest that, in any case alleging a breach of 

fiduciary duty, regardless of the type of fiduciary relationship, an independent cause of 

action can only be pursued where the plaintiff is seeking equitable relief, is too constrictive 

and does not take into account various other types of fiduciary relationships and the relief 

traditionally associated with claims based on those specific relationships. 
46

Breach of Fiduciary Duty Claim as an Independent Cause of Action in Maryland

We hold that under Kann, and our jurisprudence that followed, a breach of fiduciary 

duty may be actionable as an independent cause of action. The type of relief that is 

available will be determined by the historical remedies provided by statute, common law, 

or by contract. We explain.

Prior to his appointment to the bench, Judge Kevin Arthur perhaps best summarized 

the confusion arising from Kann in an article published in the Federal Bar Association 

Newsletter, explaining that in his view, 

the conflict and confusion have come about because courts and 

litigants are asking the wrong question. It is incorrect, and 

potentially misleading, to ask whether Maryland recognizes 

“a” cause of action for breach of fiduciary duty. This is 

because Maryland does not have a single, discrete cause of 

action for all breaches of fiduciary duties; instead, it has several 

(perhaps even many) different causes of action, with different 

essential characteristics, depending upon the nature of the 

fiduciary relationship in question and the remedies that 

historically have been available to address a breach of that 

fiduciary relationship. 

Kevin F. Arthur, Breach of Fiduciary Duty: a Cause of Action in Maryland?, Federal Bar 

Association Maryland Chapter Newsletter (March 2013). We agree with this apt 

description of Kann. 

As is borne out by our survey of the case law, fiduciary relationships can be created 

by common law, by statute, or by contract, and can have different characteristics. “Wellknown examples of habitual or categorical fiduciary relationships include those between 

trustees and beneficiaries, agents and principals, directors and corporations, lawyers and 

clients, and guardians and wards, as well as the relationship among partners.” Deborah A. 
47

DeMott, Relationships of Trust and Confidence in the Workplace, 100 Cornell L. Rev. 

1255, 1261 (2015). For this reason, there is no “one-size fits all” breach of fiduciary tort 

that encompasses all types of relationships. In other words, “there is no universal or 

omnibus tort for the redress of breach of fiduciary duty by any and all fiduciaries.” Kann,

344 Md. at 713. 

As Judge Rodowsky correctly observed in Kann, although “a breach of fiduciary 

duty is a civil wrong, [] the remedy is not the same for any breach by every type of 

fiduciary.” Id. at 710. Or put another way, not every claim for breach of fiduciary duty is 

a viable action at law for which a jury trial may be prayed. “For some breaches the remedy 

may be at law, for others it may be exclusively in equity, and for still others there may be 

concurrent remedies.” Id. A breach of fiduciary duty may be actionable as an independent 

cause of action, but not every breach of fiduciary claim will entitle the plaintiff to damages 

at law, and the right to a trial by jury. 

To establish a breach of fiduciary duty as an independent cause of action, a plaintiff 

must show: “(i) the existence of a fiduciary relationship; (ii) breach of the duty owed by 

the fiduciary to the beneficiary; and (iii) harm to the beneficiary.” Froelich, 96 F. Supp. 

2d at 526 (citing Lyon v. Campbell, 120 Md. App. 412, 439 (1998)) (applying Maryland 

law, under the assumption that Maryland recognizes an independent cause of action). The 

remedy for a breach is dependent upon the type of fiduciary relationship, and the remedies 

provided by law, whether by statute, common law, or contract. Under our Kann analysis, 

a court should consider the nature of the fiduciary relationship and possible remedies 

afforded for a breach, on a case-by-case basis. If a plaintiff describes a fiduciary 
48

relationship, identifies a breach, and requests a remedy historically recognized by statute, 

contract, or common law applicable to the specific type of fiduciary relationship and the

specific breach is alleged, a court should permit the count to proceed. The cause of action 

may be pleaded without limitation as to whether there is another viable cause of action to 

address the same conduct. This is consistent with our pleadings practice as established by 

the Maryland Rules. See Maryland Rule 2-303(c).11 Of course, this does not mean that 

every breach will sound in tort, with an attendant right to a jury trial and monetary damages. 

The remedy will be dependent upon the specific law applicable to the specific fiduciary 

relationship at issue.

For example, in Kann, although we rejected the beneficiary’s attempt to pursue 

remedies at law, with a right to a jury trial and potential punitive damages where proven, 

we made clear that the beneficiary nonetheless had equitable remedies. 344 Md. at 711–

12. In other contexts, the Court has analyzed the fiduciary relationship and included that 

damages were available under the traditional common law remedies associated with a 

breach. See Shenker, 411 Md. at 345; Miller, 362 Md. at 381. As we noted in more detail 

above, in some cases, the intermediate appellate court and the federal courts have 

 

11 Maryland Rule 2-303(c) provides that:

A party may set forth two or more statements of a claim or 

defense alternatively or hypothetically. When two or more 

statements are made in the alternative and one of them if made 

independently would be sufficient, the pleading is not made 

insufficient by the insufficiency of one or more of the 

alternative statements. A party may also state as many separate 

claims or defenses as the party has, regardless of consistency 

and whether based on legal or equitable grounds.
49

successfully applied our Kann analysis in the same manner. See, e.g., Adobe Sys. Inc., 300 

F. Supp. 3d at 727; BEP, Inc., 174 F. Supp. 2d at 405–06; In re LandAmerica Fin. Grp., 

Inc., 470 B.R. at 794; Lasater, 194 Md. App. at 454. 

Our Recognition of a Cause of Action for Breach of Fiduciary Duty is Consistent 

with the Third Restatement

In Kann, we looked at the Restatement (Second) of Torts § 874 (1979), including 

the comments, and concluded that § 874 “recognizes the universal proposition that a breach 

of a fiduciary duty is a civil wrong, but the remedy is not the same for any breach by every 

type of fiduciary.” Kann, 344 Md. at 710. 

In May 2018, the American Law Institute (“ALI”) approved the Restatement of the 

Law Third, Torts: Liability for Economic Harm.

12

 In § 16 of the Third Restatement, titled 

“Breach of Fiduciary Duty,” the ALI states that “[a]n actor who breaches a fiduciary duty 

is subject to liability to the person to whom the duty was owed.” Restatement (Third) of 

Torts: Liab. For Econ. Harm § 16 (Am. Law Inst. 2020) (“Third Restatement”).13 Like the 

language in the Second Restatement, the Third Restatement’s articulation of “Breach of 

Fiduciary Duty,” consists of one short sentence. The brevity and simplicity of the sentence 

belies the complexity of the topic.

 

12 The American Law Institute (“ALI”) approved Restatement of the Law Third, 

Torts: Liability for Economic Harm, on May 21, 2018. Pauline Toboulidis, Restatement 

of the Law Third, Torts: Liability for Economic Harm Approved, The ALI Adviser (May 

21, 2018), https://perma.cc/QJT2-87LV.

13 Section 16 of the Third Restatement of Torts: Liability for Economic Harm is a 

successor to the Restatement (Second) Torts § 874 (1979). Restatement (Third) of Torts: 

Liab. for Econ. Harm § 16 note a (Am. Law Inst. 2020).
50

As the comments explain, “[a] fiduciary duty is, in general, a duty to act for the 

benefit of another on matters within the scope of the parties’ relationship.” Third 

Restatement, § 16 cmt. a. Despite this general duty, the comments to the Third Restatement 

recognize that there are different types of fiduciary relationships with different types of 

characteristics: 

Some fiduciary relationships arise as a matter of law, such as

the relation between attorney and client, between principal and 

agent, or between a trustee and the beneficiary of a trust. They 

may also arise from the terms of a contract or from less formal 

dealings that create the elements of such a relationship.

Id. Accordingly, although a fiduciary relationship will have “general responsibilities that 

are common to all settings[,]” such as a duty of loyalty, and an obligation to avoid selfdealing and conflicts of interest, a fiduciary will also have “specific obligations that vary 

from one circumstance to the next . . . .” Id. “The details of these [fiduciary] principles 

depend . . . on the precise relationship between the parties and on the surrounding law.” 

Id. For example, “[t]he particular obligations of a trustee . . . are defined by the law of 

trusts. The obligations of an agent are matters for the law of agency. The obligations of 

fiduciaries in many settings are further specified by statute.” Id. 

Comment b to § 16 explains that there may be different remedies for a breach of 

fiduciary duty arising from the type of fiduciary relationship in question: “The fiduciary 

duty may be defined by a body of law that also provides particular and specialized remedies 

when the duty is breached. This Section is not intended to displace those rules and 

remedies where they exist.” Third Restatement, § 16 cmt. b (emphasis added). The Third 
51

Restatement’s articulation of Breach of Fiduciary Duty is consistent with our analysis in 

Kann. 

The Minority Members’ Breach of Fiduciary Count in this Case

Having answered the certified questions, we turn to whether the trial court correctly 

applied Maryland law, and correctly entered judgment in favor of Mr. Cherneski on the 

breach of fiduciary duty count. The Minority Members allege that the circuit court erred

by concluding that under Kann, no independent cause of action exists for breach of 

fiduciary duty. Second, the Minority Members argue that even if the circuit court 

considered the breach of fiduciary duty count as a separate cause of action, the circuit court 

erred by finding that “there is insufficient evidence to show that there has been a breach of 

fiduciary duty,” and by failing to award separate, preventative equitable relief for breaches 

of fiduciary duties, which they contend do not overlap with other causes of action. We 

examine the Minority Members’ contentions below. 

1. The Trial Court’s Resolution of the Breach of Fiduciary Duty Claim was Based 

Upon a Factual Determination that there was No Breach, Not an Erroneous 

Legal Conclusion that No Independent Cause of Action Exists

We analyze the circuit court’s discussion of Kann, and its consideration of the 

Minority Members’ breach of fiduciary duty count, within the context of the other counts 

pleaded, the relief sought, and the presentation of the case. In the nine-count complaint, 

the Minority Members alleged several counts which they conceded were overlapping. 

Specifically, the Minority Members argued that the breach of fiduciary duty count 

overlapped with their breach of contract claims and their claims for dissolution and 

appointment of a receiver. At trial, the Minority Members conceded that they had no 
52

claims for money damages, and they were only seeking injunctive relief related to their 

claims.

After conducting a six-day trial with over 100 exhibits, defense counsel moved for 

judgment at the conclusion of the Minority Members’ case-in-chief. As the court ruled 

from the bench, in a format akin to an appellate argument, the trial judge permitted counsel 

to summarize the facts and the law that supported their position on each count. The court 

interjected questions to counsel as they presented their arguments and summarized the 

evidence. The court heard arguments of counsel on two separate days and requested 

written memoranda on the Minority Members’ request for dissolution and receivership 

prior to ruling on those counts. 

Ultimately, the court granted Mr. Cherneski’s and the Company’s motion for 

judgment on five of the nine claims, “find[ing] very little compelling evidence to support 

[the Minority Members’] case in the light most favorable to [the Minority Members] as it 

relates to dissolution or receivership, the breach of contract . . ., invasion of privacy, 

publicity, and false light.” Upon the conclusion of all the evidence, the circuit court granted 

equitable relief on three of the Minority Members’ breach of contract claims. The court 

found that “there is insufficient evidence to show there has been a breach of fiduciary duty” 

and granted judgment in favor of Mr. Cherneski on that claim. 

During these arguments, counsel for the Minority Members argued that the holding

in Kann “doesn’t mean that there is [no] possible claim for breach of fiduciary duty. You 

just have to decide what kind of remedy you are looking for . . . and what version of fiduciary 

duty you’re talking about.” (emphasis added). When the court asked counsel whether the 
53

breach of fiduciary duty count was an independent tort, Plaintiff’s counsel stated that 

although she believed that it was, “Honestly, it’s – it’s going to all blend together in this 

case.” (emphasis added). When asked again by the Court whether the fiduciary duty count 

“just blends into . . . counts eight and nine[,]” counsel for the Minority Members again stated 

that although counsel believed that the breach of fiduciary duty count was a separate count 

under Wasserman, “I think it does blend in because I think the facts are all the same that 

support all these claims in that sense.” (emphasis added). The trial judge concluded that he 

was going to “reserve on that” count until after he reread Kann and Wasserman. 

In their written memoranda summarizing the facts and law applicable to the 

dissolution, receiver, and breach of fiduciary duty counts, the Minority Members once 

again stated that “[t]he breach of fiduciary duty claim is supported by the same facts 

underlying the claims for dissolution and appointment of a receiver.” The Minority 

Members then asserted that “[t]his factual overlap does not give Mr. Cherneski a free pass 

to avoid liability on the breach of fiduciary duty claim. He is a fiduciary who has breached 

his duty of care to [the Minority Members] and the LLC and should be held accountable.” 

The Minority Members argued that “[t]he Court has the authority to find Mr. Cherneski 

liable for breaches of these fiduciary duties and to award fitting and equitable relief, such 

as specific performance of the Operating Agreement, injunctive relief, dissolution or 

appointment of a receiver.” 

When the trial next resumed, the court proceeded to discuss the counts for breach 

of fiduciary duty, dissolution, and the assignment of a receiver. The court stated that it had 

reread Kann and articulated that “there seem[s] to be within that case a clear recognition 
54

that there is no stand-alone tort for breach of fiduciary duty. But if a person breaches their 

duty there is a tort.” The court explained that “Kann is very clear in terms of its proposition 

that the court considers the matters in equity, not the jury.” The court stated that it would 

“skip count seven for now” and proceed to the petition for judicial dissolution and the 

appointment of a receiver. 

After summarizing the applicable law, the court entered judgment in favor of Mr. 

Cherneski and the Company on the dissolution and receiver counts. The court explained 

that it “is convinced that the record demonstrates that [Mr.] Cherneski and Trusox engage 

and continue in a lawful business which involves the development, the production, and the 

sale of performance athletic socks and other apparel.” The court discussed the testimony 

of various witnesses, crediting the testimony of Mr. Cherneski describing the Company’s 

recent production numbers, and the products that are being sold and shipped. The court 

rejected the testimony of Mr. Fisher that the company was insolvent, finding it not credible. 

The court concluded that “[t]here is so much that is speculative in this case that it is hard 

for the [c]ourt, considering it in the light most favorable to the non-moving party, to allow 

this case to continue.” 

In the context of Mr. Cherneski’s and the Company’s motion for judgment, the court 

did not address the breach of fiduciary duty claim. However, the court commented that 

“while I’m not addressing it at this point in time, I believe that for all intents and purposes 

count seven [for breach of fiduciary duty] would be effectively perhaps of no weight.”

(emphasis added). 
55

Given the overlapping nature of the claims in this case, the court’s approach to the 

breach of fiduciary duty count was logical and reasonable. By first addressing the 

overlapping claims for breach of contract, dissolution, and receiver, the circuit court peeled 

back and addressed each separate layer of the onion until the only remaining claim was the 

breach of fiduciary duty. The court methodically articulated its ruling on each count, 

disposing of all other counts, and did not consider the breach of fiduciary count until the 

conclusion of the entire case.

After the defense rested, once again, the court heard additional arguments by 

counsel prior to fashioning its equitable relief on the Minority Members’ successful breach 

of contract claims, and prior to rendering its decision on the breach of fiduciary duty count, 

the only outstanding count. Clearly disappointed with the court’s entry of judgment in 

favor of Mr. Cherneski and the Company on the majority of the claims, counsel for the 

Minority Members then stated that “I would like to point out to the [c]ourt . . . [that] there 

were many, many other items that the [c]ourt did not consider in its opinion that it rendered 

from the bench.” The court responded that, “[w]ell, I considered them. But I didn’t find 

them compelling.” (emphasis added). 

The court proceeded to rule on the equitable relief sought under the breach of contract 

claims upon which the Minority Members’ prevailed, ordering Mr. Cherneski: (1) to make 

available Trusox’s books and records within ten days of any reasonable request by the 

Minority Members and to provide them with tax documentation within 75 days of the end of 

each tax year; and (2) to transfer any patents in his personal name over to Trusox. The court 

further ordered that, pursuant to the terms of the Operating Agreement preventing family 
56

members from working at the Company, Mr. Cherneski’s brother could not receive any 

benefit in the form of compensation or stock for any work that he may perform. 

As the last matter addressed by the court on the Minority Members’ counts, having 

disposed of all the other counts, the court denied the count for breach of fiduciary duty 

“find[ing] [that] there is insufficient evidence to show that there has been a breach of 

fiduciary duty.” Significantly, the trial court did not state that it was entering judgment in 

Mr. Cherneski’s favor because it thought that no cause of action existed, or because the 

relief sought was duplicative or unavailable. 

We determine that the court considered the Minority Members’ breach of fiduciary 

duty count on its merits and entered judgment in favor of Mr. Cherneski after making a 

factual determination that there had been no breach of the fiduciary duty. Based upon the 

record, including the Minority Members’ presentation of overlapping claims and 

overlapping remedies, it is clear that the court considered all of the testimony and evidence, 

and fashioned specific equitable relief based upon the breach of contract claims. To the 

extent that the Minority Members argued that they were entitled to additional, 

nonduplicative equitable relief based upon a breach of fiduciary duty, it is also clear that 

the court considered those arguments and declined to enter further equitable relief based 

upon its assessment of the evidence: 

There is testimony that late payments to employees have been 

addressed. There is testimony that current employees are being 

paid. There is no evidence that there is any type of law suit for 

any misappropriation of athletes’ images, et cetera. There is 

nothing to indicate there is any demand or threats that any 

player’s image or logo has led to this litigation. It’s all 

speculative that this could happen.
57

(emphasis added). The court was “not required to set out in detail each and every step of 

[its] thought process.” Thomas v. City of Annapolis, 113 Md. App. 440, 450 (1997) (citing 

Kirsner v. Edelmann, 65 Md. App. 185 (1985)). Nor is the trial court required to “elaborate 

on the reason” for its decision. Attorney Grievance Comm’n v. Jeter, 365 Md. 279, 288 

(2001). Rather, this Court “presume[s] that trial judges know the law and correctly apply 

it.” Id. We are not persuaded by the Minority Members’ argument that the court did not 

consider its count for breach of fiduciary duty. The circuit court plainly stated its reason 

for denying the claim—it made a factual determination that there was “insufficient 

evidence” of a breach. The Minority Members have failed to persuade us that the circuit 

court didn’t mean what it said. 

2. The Circuit Court’s Factual Determination that Mr. Cherneski Did Not Breach 

his Fiduciary Duty, and the Court’s Decision Not to Award Additional Equitable 

Relief on that Claim, were Not Clearly Erroneous 

The Minority Members contend that, assuming the circuit court considered its 

breach of fiduciary duty claim, the circuit court erred in its factual finding that “there was 

insufficient evidence to show that there has been a breach of fiduciary duty[,]” and erred 

by failing to award additional injunctive relief for the breaches that were not duplicative of 

its request for equitable relief arising from its other claims. 

In response, Mr. Cherneski and the Company point out that there was ample 

evidence in the record to support the circuit court’s factual determination that there was 

“insufficient evidence to show that there has been a breach of fiduciary duty” on any 

remaining allegations associated with a separate claim. Mr. Cherneski contends that the 
58

circuit court did not err in refusing to exercise its discretion to award additional equitable 

relief arising from an alleged breach of fiduciary duty. 

As noted above, when an action has been tried without a jury, we review the case 

on both the law and the evidence and will not set aside the judgment of the trial court unless 

it is clearly erroneous. Md. Rule 8-131(c). “The appellate court must consider evidence 

produced at the trial in a light most favorable to the prevailing party and if substantial 

evidence was presented to support the trial court’s determination, it is not clearly erroneous 

and cannot be disturbed.” Gen. Motors Corp. v. Schmitz, 362 Md. 229, 233–34 (2001) 

(citations omitted). “If there is any competent material evidence to support the factual 

findings of the trial court, those findings cannot be held to be clearly erroneous.” YIVO 

Inst. for Jewish Research v. Zaleski, 386 Md. 654, 663 (2005). Additionally, “an appellate 

court may affirm a trial court’s decision on any ground adequately shown by the record 

even though the ground was not relied upon by the trial court or the parties.” Id. (citations 

omitted). “We review the exercise of the trial court’s discretion to grant or deny a request 

for injunctive relief under an ‘abuse of discretion’ standard.” El Bey v. Moorish Sci. Temple 

of Am., Inc., 362 Md. 339, 354 (2001) (citations omitted). Furthermore, “[i]njunctive relief 

will normally not be granted unless the petitioner demonstrates that it will sustain 

substantial and irreparable injury as a result of the alleged wrongful conduct.” Id. at 355 

(citations omitted). 

Based upon our review of the record, there was ample evidence to support the circuit 

court judge’s factual finding that there was “insufficient evidence to show that there was a 

breach of fiduciary duty.” We also conclude that the circuit court did not abuse its 
59

discretion in failing to award the additional equitable relief sought by the Minority 

Members related to their separate claim for breach of fiduciary duty. We examine each of 

the Minority Members’ factual assertions of wrongful conduct, and the facts upon which 

Mr. Cherneski relies, which support the trial court’s factual finding, and its decision not to 

enter additional equitable relief, below.

a. Violation of Maryland Wage and Hour Laws 

The Minority Members contend that Trusox violated Maryland wage and hour laws 

by paying its employees late.

14 The Minority Members contend that there was 

“uncontested evidence presented at trial that Trusox, at the direction of [Mr.] Cherneski 

and with his full knowledge, violated Maryland wage and hour law.” 

On this contention, despite the fact that the Company had paid its employees late in 

the past, which the circuit court determined was the result of cash flow issues, the court 

determined, based upon the testimony at trial, “that the late payments to employees have 

been addressed . . . [and] that current employees are being paid.” Those findings are 

supported by the testimony of Trusox’s operations manager that all wage amounts were 

current as of the beginning of trial. Trusox’s former employee witnesses testified that they 

were paid all wages that they earned. 

We consider the trial court’s factual findings within the context of the remedy 

sought by the Minority Members. Maryland law is clear that an injunction is a 

 

14 Pursuant to Maryland Code Labor and Employment Article (“LE”), § 3-502(a)(1), 

an employer is required to set up regular pay periods and “pay each employee at least once 

every 2 weeks or twice in each month.” 
60

“preventative and protective remedy, aimed at future acts, and it is not intended to redress 

past wrongs.” El Bey, 362 Md. at 353 (emphasis in original) (quoting Carroll Cty. Ethics 

Comm’n v. Lennon, 119 Md. App. 49, 58 (1998)). To the extent that the Minority Members 

sought injunctive relief for past wrongs, such as untimely payments to employees, which 

the trial court determined was no longer an issue, entering an injunction based upon past 

conduct would not have been appropriate. 

b. Mr. Cherneski’s Private Placement Offering to Investors

The Minority Members assert that Mr. Cherneski’s private placement offering 

violated the Section 5 of the Federal Securities Act of 1933 (the “Securities Act”), which 

makes it unlawful for any person to sell or offer to buy a security unless a registration 

statement is in effect for that security. 15 U.S.C. § 77e (2018). Section 4(2) of the 

Securities Act exempts from the Section 5 registration requirement “transactions by an 

issuer not involving any public offering.” 15 U.S.C. § 77d (2018). To help establish a 

clear path to obtaining an exemption under Section 4(2), the Securities and Exchange 

Commission (“SEC”) has issued regulations commonly referred to as Regulation D. 17 

C.F.R. § 230.500 et seq. (2013). 

One exemption afforded in Regulation D is SEC Rule 506(b). Id. at § 230.506. 

The Minority Members contend that in undertaking the private placement offering, 

Trusox was relying upon the exemption afforded by Rule 506(b). The Minority Members 

assert that the evidence presented at trial supports a finding that Trusox “has fallen 

outside the ‘safe harbor’ of Rule 506(b) and is selling unregistered securities in violation 

of the [] Act.” To support this assertion, the Minority Members point to the Trusox 
61

Membership Interest Purchase Agreement (“MIPA”), the document presented to 

prospective purchasers of membership interests in the Company. The Minority Members 

contend that because Mr. Cherneski testified that he did not ask potential purchasers to 

initial and return the portion of the MIPA, Section 3.2, where the document requests that 

the purchaser acknowledge that he or she is an “accredited investor” by initialing the 

specific category into which they fall, “the Company is unable to determine whether the 

investors are accredited.” The Minority Members also point to the testimony of an 

investor, who admittedly was not an accredited investor. Accordingly, the Minority 

Members asserted that they “proved [Mr.] Cherneski was selling unregistered securities, 

thereby exposing the Company to investor suits and government enforcement actions, 

jeopardizing [the Minority Members’] interests, and taking advantage of unwary 

investors.” Accordingly, they assert that the “circuit court erred in not enjoining this 

conduct.” 

In response to the Minority Members’ contentions, Mr. Cherneski points to 

conflicting evidence in the record to support the propriety of Trusox’s private placement 

offering. In a section that stands independent of any exemption for offerings to accredited 

investors, Mr. Cherneski notes that Regulation D exempts an offering where “there are no 

more than 35 purchasers of securities from the issuer.” Id. at § 230.506(b)(2)(i). Mr. 

Cherneski points out that the circuit court had evidence before it that Trusox fell under 

such exemption because it had only 18 investors. 

Concerning “accredited investors” the federal regulations require that the “issuer” 

of the securities—in this case Trusox— “take reasonable steps to verify that purchasers of 
62

securities . . . are accredited investors.” Id. at § 230.506(c)(2)(ii). Mr. Cherneski testified 

that Trusox received signature pages of the MIPA by its investors, wherein “each investor 

agree[d] to be bound by all terms and provisions of [the] Agreement,” including the 

representations and warranties concerning their status as an accredited investor. 

Mr. Cherneski further testified that he retained securities counsel to advise him 

concerning the private placement offering and that he requested, received, and at all times 

followed his securities counsel’s advice. 

c. Minority Members’ Contention that Mr. Cherneski Misled Potential 

Investors 

The Minority Members also allege that Mr. Cherneski “blatantly misled potential 

investors in violation of . . . the Maryland Securities Act[, CA § 11-302].” To support this 

assertion, the Minority Members point to the fact that Trusox “failed to update the MIPA 

to inform potential investors of [the Minority Members’] lawsuit.”

Once again, Mr. Cherneski points out that there is evidence in the record to refute 

the Minority Members’ allegations. Although this lawsuit may not have been specifically 

referenced in the MIPA, Mr. Cherneski testified at trial that “I told everybody about the 

pending lawsuit.” Mr. Cherneski also testified that, in consultation with counsel, he 

transmitted to prospective investors a packet of information that included a copy of the 

Minority Members’ lawsuit. 

The Minority Members assert that Mr. Cherneski “sent misleading financial 

forecasts to potential investors” with inaccurate income projections that are not consistent 
63

with the pairs of socks actually manufactured. They also point to projections associated 

with the sale of cleats, “although no cleats had actually been sold.” 

In response to these assertions, Mr. Cherneski refers us to a disclosure document 

that he attached as an exhibit to the MIPA, explaining that forecasts “are based on

assumptions and estimates and are completely dependent on future events and 

transactions” and are also “inherently subject to varying degrees of uncertainty.” The 

exhibit further stated that “[a]ccordingly, no assurance is or can be given that any or all 

of the forecasts set forth in the Business Plan will or can be realized.” Trusox 

accompanied this disclosure with a four-page statement of “risk factors” in investing in 

the Company, including the inherently speculative nature of the business. Mr. Cherneski 

also testified that he gave any prospective investor who asked “all the financial records 

that we had up to [sic] date that we had[,]” and that he never refused any request for 

financial information. 

The Minority Members also allege that Mr. Cherneski sent emails to potential 

investors “saying that he turned down a $40 million offer from Nike. There was no such 

offer.” The Minority Members acknowledge that “[t]here was at most a request to 

negotiate a non-binding letter of intent from Nike, and even that never occurred.” The 

Minority Members assert that they sought an injunction because they “wanted to stop 

[Mr.] Cherneski from making material false statements, like these, to potential investors 

that could get the Company sued or attract enforcement actions.” Mr. Cherneski counters 

this assertion, claiming that the “record supports that there was no misrepresentation of 
64

an offer by Nike.” He points to the trial testimony, which establishes that the offer was 

verbal. 

d. Minority Members’ Contention that Mr. Cherneski Violated Trademark 

Laws and Right of Publicity Laws

Finally, the Minority Members contend that Mr. Cherneski “violated the Lanham 

Act[15]and sports figures’ rights of publicity[]” by “using images of professional athletes 

and trademarks to market Trusox to consumers and to encourage investments in Trusox.” 

In response to this allegation, Mr. Cherneski points out that the circuit court found 

that the Minority Members’ allegations of misappropriation of athletes’ images was 

“speculative.” Mr. Cherneski confirmed in his testimony that Trusox paid for a license 

with Getty Images to use the photographs of professionals and further asserts that the trial 

record is devoid of any evidence that this is improper. The record also establishes that Mr. 

Cherneski relied upon advice of legal counsel as to how and under what conditions athletes’ 

images could be used. There is no evidence of athletes raising any question about the use 

of their images.

e. Sufficiency of the Evidence Generally and Discretion to Decline to 

Award Additional Equitable Relief

We hold that there is ample evidence in the record to support the trial court’s factual 

determination that there was “insufficient evidence to show there has been a breach of 

fiduciary duty.” Accordingly, the court’s decision to enter judgment in favor of Mr. 

 

15 The Lanham Act (also known as the Trademark Act of 1946) is the federal statute 

that governs trademarks, service marks, and unfair competition. See 15 U.S.C. ch. 22 

(2018). The Minority Members alleged that Mr. Cherneski’s marketing efforts violated 15 

U.S.C. § 1114 (2018) and 15 U.S.C. § 1125(a) (2018). 
65

Cherneski was not clearly erroneous. As noted above, the circuit court specifically 

commented on some of the allegations of “wrongful conduct” that form the basis for the 

Minority Members’ request for injunctive relief arising from an alleged breach of duty and 

rejected them as either no longer being an issue (commenting that late payments “have 

been addressed”) or as being speculative (observing that there were no lawsuits arising 

from misappropriation of athletes’ images, and stating, “It’s all speculative that this could 

happen”). The circuit court did not abuse its discretion in failing to award equitable relief 

in the form of a preventative injunction on the Minority Members’ breach of fiduciary duty 

claim. 

Appropriateness of the Attorneys’ Fees Award

Next, we turn to the circuit court’s award of attorneys’ fees under the fee-shifting 

provision of the Operating Agreement. The attorneys’ fees dispute between the parties 

centers on the interpretation of Section 14.13 of the Operating Agreement, which provides 

as follows:

Governing Law: Jurisdiction, Enforcement. All questions 

concerning the construction, validity and interpretation of this 

Agreement and the performance of the obligations imposed 

by this Agreement shall be governed by the laws of the State 

of Maryland. Any action, suit or proceeding arising out of, 

connected with, or pertaining to this Agreement shall be 

submitted exclusively to the state or federal courts sitting in 

Maryland, and venue for any such action, suit or proceeding 

shall be in the state or federal courts sitting in Maryland. All 

parties to the Agreement (including any Member who 

becomes a party to this Agreement after the Effective Date) 

hereby consent to the jurisdiction of such courts and 

irrevocably waive any objection as to personal jurisdiction, 

venue or inconvenient forum. In the event any legal action is 

brought by a party arising hereunder or between the parties, 
66

the court shall award to the substantially prevailing party all 

costs and expenses, including reasonable attorneys’ fees, 

incurred in such action including costs incurred prior to 

commencement of any such legal action and all costs and 

expenses, including reasonable attorneys’ fees incurred in any 

appeal from any action to enforce any of said terms, covenant 

and conditions. 

The parties offered competing interpretations of the fee-shifting provision set forth 

in Section 14.13. Focusing on the phrase “arising hereunder” in that sentence, the Minority 

Members contend that the fee-shifting does not apply to all disputes between the parties, 

but only to those claims that are based expressly on the Operating Agreement itself. Based 

upon that interpretation, the Minority Members contend that they, and not Mr. Cherneski 

and Trusox, were the prevailing parties because only the breach of contract counts (Counts 

I, II, IV)—the counts on which they prevailed—were based expressly on the Operating 

Agreement. 

Mr. Cherneski contends that one must read the clause in its entirety, and that the 

Minority Members’ construction ignores the additional language that follows the 

disjunctive “or”—“arising hereunder or between the parties.” Under this interpretation,

Mr. Cherneski asserts that all of the claims arise out of the same action between the parties, 

regardless of whether they are based expressly on the Operating Agreement, and are 

covered by the fee-shifting provision. Moreover, Mr. Cherneski also contends that even if 

one accepts the Minority Members’ narrow interpretation of the language, Mr. Cherneski 

and the Company are still the “prevailing parties” because the Minority Members’ request 

for dissolution or the appointment of a receiver both “arise” under the Operating 

Agreement and were the more significant claims in the case. 
67

After hearing argument and considering additional briefing, and after conducting a 

hearing on the appropriateness and reasonableness of the attorneys’ fees over the course of 

a three-day evidentiary hearing, the court issued a memorandum opinion, in which it

rejected the narrow interpretation offered by the Minority Members, stating that the 

contractual provision “means just what it says” and applied to all claims brought 

“hereunder or between the parties.” The court also determined that Mr. Cherneski and 

Trusox were the substantially prevailing parties because the claims on which they prevailed 

“were of greater significance and more important than the claims” upon which the Minority 

Members prevailed. Based on its consideration of all of the allegations, the court found 

that “all of the [Minority Members’] claims relate to a dispute between the parties that falls 

within the confines of the fee-shifting provision of the Operating Agreement . . . .” 

The court also rejected the Minority Members’ argument to apportion the attorneys’

fees based on the counts upon which each party prevailed, noting that the Minority 

Members “combined all counts to the action in this case, whether the claims arose in equity 

or contract, forcing the Defendants to defend all claims in this action.” The court discussed 

each factor enumerated under Maryland Rule 2-703(f)(3), as required by Rule 2-705, and 

determined the fees to be fair and reasonable.

Based upon this analysis, the circuit court entered judgment against the Minority 

Members in favor of Mr. Cherneski in the amount of $453,806.49, representing his 

attorneys’ fees, and entered judgment against the Minority Members in favor of Trusox in 

the amount of $189,269.15, for its attorneys’ fees.
68

1. The Circuit Court Correctly Interpreted the Contractual Language of the 

Fee-Shifting Provision of the Operating Agreement 

The attorneys’ fees provision in this case arises out of a contract between the parties. 

We review the circuit court’s interpretation of the contract de novo, while the determination 

of reasonableness is a factual determination that will not be overturned unless clearly 

erroneous. See Credible Behavioral Health, Inc. v. Johnson, 466 Md. 380, 392 (2019) 

(citations and quotations omitted) (“[T]he interpretation of a contract . . . is a question of 

law subject to de novo review.”); Myers v. Kayhoe, 391 Md. 188, 207 (2006) (citations 

omitted) (“The trial court’s determination of the reasonableness of attorney’s fees is a 

factual determination within the sound discretion of the court, and will not be overturned 

unless clearly erroneous.”). 

Contractual fee-shifting provisions providing for awards of reasonable attorneys’ 

fees and costs to the prevailing party are generally valid and enforceable. See Myers, 391 

Md. at 207. We interpret contracts under the objective theory of contract interpretation, 

which provides that “unless a contract’s language is ambiguous, we give effect to that 

language as written without concern for the subjective intent of the parties at the time of 

formation.” Ocean Petroleum, Co. v. Yanek, 416 Md. 74, 86 (2010) (citing Cochran v. 

Norkunas, 398 Md. 1, 16 (2007)). “In interpreting a contract provision, we look to the 

entire language of the agreement, not merely a portion thereof.” Nova Research, Inc. v. 

Penske Truck Leasing Co., 405 Md. 435, 448 (2008) (citing Jones v. Hubbard, 356 Md. 

513, 534–35 (1999)). We consider the language of the contract in its “customary, ordinary, 

and accepted meaning[.]” Fister v. Allstate Life Ins. Co., 366 Md. 201, 210 (2001)
69

(citations omitted); see also Nova Research, 405 Md. at 448. The language is ambiguous 

if, “when viewed from [a] reasonable person perspective, that language is susceptible to 

more than one meaning.” Ocean Petroleum, 416 Md. at 87 (citing United Servs. Auto. 

Ass’n v. Riley, 393 Md. 55, 80 (2006)). 

The parties make the same contractual analysis arguments on appeal that they made 

to the circuit court. Focusing on the language “arising hereunder[,]” the Minority Members 

argue that the fee-shifting provision must be read narrowly to apply only to claims brought 

to enforce the terms, covenants, and conditions of the Operating Agreement. They claim 

that “[of] the six counts on which [Mr.] Cherneski prevailed, none ‘arise under’ the 

Operating Agreement.” Accordingly, they argue that because they prevailed on the breach 

of contract claims, which they contend “arise under” the Operating Agreement, they are 

the substantially prevailing party. They assert that the phrase “or between the parties” must 

be interpreted within the context of the Operating Agreement, taking into consideration the 

surrounding language of the paragraph. The Minority Members argue that, if the feeshifting clause applies to any claim “between the parties,” then the “arising hereunder” 

language becomes meaningless. The Minority Members contend that the only reasonable 

way to interpret the fee-shifting provision is to limit it to claims that “arise under” the 

Operating Agreement. The Minority Members further assert that there is a “recognized 

distinction” under Maryland law between claims “arising out of” and claims “arising 

hereunder.” Citing to Weichert Co. of Maryland, Inc. v. Faust, 191 Md. App. 1, 10 (2010), 

aff’d, 419 Md. 306 (2011), the Minority Members argue that the Maryland appellate courts 
70

have distinguished contractual language “arising out of” from “arising hereunder[,]” and 

have determined that the latter phrase is narrower than the former.16

Mr. Cherneski and Trusox argue that the Minority Members’ plain language 

analysis does not take into account the language that follows “arising hereunder[,]” namely, 

the separate phrase “or between the parties.” Mr. Cherneski and Trusox contend that the 

Minority Members’ narrow interpretation of the language “arising hereunder” renders the 

language “or between the parties” nugatory. We agree with Mr. Cherneski’s interpretation, 

and the plain language analysis undertaken by the circuit court. 

As we previously noted, a limited liability company is a creature of contract. Under 

the LLC Act, the General Assembly described the intent of the Act as giving “the maximum 

effect to the principles of freedom of contract and to the enforceability of operating 

agreements.” CA § 4A-102(a). The Act therefore permits members of an LLC to “enter 

into an operating agreement to regulate or establish any aspect of the affairs of the limited 

liability company or the relations of its members.” CA § 4A-402(a). 

The LLC Act permits a Maryland court to enter a decree of involuntary dissolution 

of an LLC only if “it is not reasonably practicable to carry on the business in conformity 

with the articles of organization or the operating agreement.” CA § 4A-903. The statutory 

 

16 We disagree with the Minority Members’ contention that Weichert Co. of 

Maryland, Inc. v. Faust, 191 Md. App. 1, 10 (2010), aff’d, 419 Md. 306 (2011) supports 

their interpretation. In Weichert, the Court of Special Appeals discussed the word 

“hereunder” in the context of a fee-shifting provision that only applied to one paragraph of 

the contract addressing breach of a duty of loyalty claims and did not apply to any other 

claims arising under the contract. Id. at 8. Here, the attorneys’ fees paragraph applies to 

any legal action arising under the Operating Agreement. 
71

standard makes it clear that dissolution of an LLC is “initially a contract-based analysis.” 

In re 1545 Ocean Ave., LLC, 72 A.D.3d 121, 128 (N.Y. App. Div. 2010). 

The record demonstrates that the Minority Members relied upon the Operating 

Agreement to allege not only their breach of contract claims, but also their dissolution 

claim. The Minority Members were cognizant that the LLC statute requires a contractbased analysis. They asserted that “Trusox is unable to perform its purpose as defined in 

the Operating Agreement[]”; and therefore, they met the legal standard for judicial 

dissolution. The record also reflects that the Minority Members expressly relied upon the 

Operating Agreement when making their claims for breach of fiduciary duty. The Minority 

Members argued to the trial court that Mr. Cherneski breached “his duty to act with care, 

competence, and reasonable diligence, and his duty to act in accordance with the Operating 

Agreement—a contract that he entered into in his role as an agent of Trusox.” (emphasis 

added). 

According to Black’s Law Dictionary, “hereunder” means “[i]n accordance with 

this document.” Hereunder, Black’s Law Dictionary 745 (11th Ed. 2019). A review of the 

Complaint and the arguments of counsel reflect that a majority of the claims asserted by 

the Minority Members are firmly rooted in the Operating Agreement. In other words, the 

unsuccessful claims for dissolution and breach of fiduciary duty “arise under” the 

contractual umbrella of the Operating Agreement. 

Our plain language analysis does not stop, however, with the phrase “arising 

hereunder.” The language in the parties’ contract is broader than that. The fee-shifting 

provision states, in pertinent part, that “[i]n the event any legal action is brought by a party 
72

arising hereunder or between the parties, the court shall award the substantially prevailing 

party all costs and expenses, including reasonable attorneys’ fees, incurred in such action

. . . .” The fee-shifting provision uses the disjunctive word “or” to apply its terms 

separately, independently, and alternatively, to (i) any action “arising hereunder” or (ii) 

any action “between the parties.” Maryland courts generally interpret “or” in the

disjunctive sense when they construe statutes. SVF Riva Annapolis, LLC v. Gilroy, 459 

Md. 632, 642 (2018). “Or” is a conjunction “[u]sed to indicate an alternative, usually only 

before the last term of a series . . . .” Id. at 642 (quoting The American Heritage Dictionary

of the English Language 1236 (4th ed. 2006)). “Each item in a string of terms, separated 

by the disjunctive ‘or,’ is given independent meaning.” Bainbridge St. Elmo Bethesda

Apartments, LLC v. White Flint Express Realty Grp. Ltd. P’ship, LLLP, 454 Md. 475, 491 

(2017). Under the plain language of the Operating Agreement, the fee-shifting provision 

applies to both categories—claims “arising hereunder” or claims “between the parties.” 

The Minority Members’ narrow interpretation of “arising hereunder” would render the 

word “or” meaningless.17

 

17 The Minority Members argue that Tomran, Inc. v. Passano, 391 Md. 1, 16 (2006) 

applies, and to interpret “arising hereunder” and “between the parties” separately, will 

render the language “arising hereunder” nugatory. We find the analysis in Tomran to be 

inapposite because that case involved a forum selection clause that had an entirely different 

application than the fee-shifting provision here. Id. at 16. The forum selection clause in 

Tomran applied to a “Deposit Agreement and Receipts and all rights hereunder and 

thereunder.” Id. at 13. We determined that “‘hereunder and thereunder’ limit[ed] the scope 

of the choice of law clause to those rights specifically stated in the Deposit Agreement and 

the Receipts.” Id. at 17. By contrast, here, the language includes two clauses separated by 

the disjunctive “or.” 
73

The Minority Members alleged nine counts consisting of three counts of breach of 

contract, invasion of privacy (false light), invasion of privacy (right of publicity), 

dissolution, appointment of receiver, and breach of fiduciary duty. All nine either “arise 

under” the Operating Agreement “or between the parties . . . in such action”.

18

 Under the 

plain language of the fee-shifting provision of the Operating Agreement, the Court 

correctly determined that Trusox and Mr. Cherneski were the “substantially prevailing 

parties,” having entered judgment in their favor on six of the nine counts. We will not 

rewrite the terms of the contract because the Minority Members are dissatisfied with the 

language.19 

2. The Circuit Court Did Not Err in Determining that Trusox and Mr. Cherneski 

were the Substantially Prevailing Parties, Thereby Entitling Them to Their 

Attorneys’ Fees

The Minority Members disagree with the circuit court’s conclusion that Mr. 

Cherneski and Trusox were the “substantially prevailing parties.” The circuit court’s 

conclusion was not clearly erroneous. It is clear from the record that the Minority 

 

18 The invasion of privacy counts (false light and right of publicity) concerned Mr. 

Cherneski’s marketing efforts. As such, they also arose out of his duties as the CEO, 

President, and majority member. The circuit court dismissed these claims at the end of the 

Minority Members’ case, finding “very little compelling evidence” to support those claims. 

19 We also disagree with the Minority Members that an interpretation that gives 

independent meaning to the clause: legal action arising . . . “between the parties” could be 

construed as applying to any legal action between the parties, including legal action 

unrelated to the operations of Trusox. Based on its inclusion and placement in the 

Operating Agreement, “or between the parties” remains limited to claims flowing from or 

originating from Trusox and the parties’ relationship as members of Trusox. Lawsuits 

entirely unrelated to Trusox and its operations do not invoke the fee-shifting provision 

simply on the basis of the parties involved. 
74

Members’ primary objective was to obtain dissolution or a receivership. The court rejected 

this extraordinary relief, commenting that “the parties have contracted and bargained – for 

lack of a better word – Mr. Cherneski is in charge,” and because “[t]here is so much that is 

speculative in this case that it is hard for the Court, considering it in the light most favorable 

to [the Minority Members], to allow the case to continue.” 

Based upon the record, including the nature of the counts and the remedies sought, 

the circuit court did not err in finding that “the claims [the Minority Members] prevailed 

upon were minor and insignificant in comparison to the claims [Mr. Cherneski and the 

Company] prevailed upon,” or in finding that Mr. Cherneski and the Company were 

therefore the “prevailing party.”

3. The Circuit Court Did Not Err in Failing to Apportion the Attorneys’ Fees 

Nor did the circuit court abuse its discretion by awarding Mr. Cherneski and Trusox 

the entirety of their attorneys’ fees. The circuit court noted that the Minority Members 

“combined all counts in the action in this case, whether the claims arose in equity or

contract, forcing [Mr. Cherneski and the Company] to defend all claims in this action.” 

The circuit court’s approach to the attorneys’ fees in this case is consistent with the 

“common core of facts” doctrine, which the Supreme Court established in Hensley v. 

Eckerhart:

It may well be that cases involving such unrelated claims are 

unlikely to arise with great frequency . . . . In other cases the 

plaintiff’s claims for relief will involve a common core of facts 

or will be based on related legal theories. Much of counsel’s 

time will be devoted generally to the litigation as a whole, 

making it difficult to divide the hours expended on a claim-byclaim basis. Such a lawsuit cannot be viewed as a series of 
75

discrete claims. Instead, the district court should focus on the 

significance of the overall relief obtained by the plaintiff in 

relation to the hours reasonably expended on the litigation. 

461 U.S. 424, 435 (1983).

Although we have not specifically used the term “common core of facts,” the Court 

of Special Appeals determined that the doctrine comports with Maryland law, and adopted 

this approach in Weichert, 191 Md. App. at 15–19.20 In Weichert, the Court of Special 

Appeals agreed with the appellee that the doctrine was consistent with ideas generally 

espoused by this Court in Diamond Point Plaza L.P. v. Wells Fargo Bank, N.A., 400 Md. 

718, 761 (2007). Weichert, 191 Md. App. at 16. As the intermediate appellate court 

explained in Weichert, the circuit court may encounter “philosophical problems” when 

apportioning fees where an agreement shifts costs to a prevailing party on some claims but 

may not apply to other claims. Id. at 16–17. The Court of Special Appeals explained that 

a problem may arise “at a fundamental level because certain costs are necessary to litigate 

each claim successfully and yet do not change as the number of claims increases.” Id. at 

17. The court explained how the “common core of facts” doctrine can be applied to address 

attorneys’ fees arising in such circumstances: 

In the hypothetical case of a single question relevant to 

multiple claims, it is clear that a party prevailing on one but not 

all claims should receive some compensation, and it is within 

reason to assign the question’s cost to the single claim that 

merits a fee award. While this may appear to be a windfall to 

the fee recipient, it is only so in hindsight. If the claim had 

been brought alone, the prevailing litigant would have incurred 

 

20 In Weichert Co. of Maryland, Inc. v. Faust, we affirmed in its entirety the 

judgment of the Court of Special Appeals, with no discussion of the “common core of 

facts” doctrine. 419 Md. 306 (2011).
76

its necessary costs and the court could do nothing but award 

the expense as a whole. We can see no reason why the 

prevailing litigant should necessarily be denied this amount 

merely because the expense was related to other claims.

 

We have therefore established that a court could reasonably 

assign to a single fee-shifting claim any cost that would have 

been necessary to litigate the claim as if it had been brought 

alone. However, the “common core of facts” doctrine is 

somewhat broader than that. If the court finds that two claims 

are factually related, the doctrine not only awards the costs 

common to all claims, but also awards costs that arise solely 

by virtue of the non-fee-shifting claim. 

Id. at 18 (emphasis in original). 

We agree with the Court of Special Appeals that the “common core of facts”

doctrine comports with Maryland law and may be a reasonable method for apportioning 

attorneys’ fees in certain cases. We agree with Trusox and Mr. Cherneski that this was an 

appropriate methodology for determining attorneys’ fees in this case and that the circuit 

court did not err in applying a methodology that is consistent with that doctrine. Where, 

as here, a plaintiff presents multiple claims “involv[ing] a common core of facts or . . . 

based on related legal theories[, m]uch of counsel’s time will be devoted generally to the 

litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim 

basis. Such a lawsuit cannot be viewed as a series of discrete claims.” Hensley, 461 U.S. 

at 435. 

As noted in detail above, many of the nine counts alleged in the Complaint contained 

“overlapping” facts and relief. The Minority Members conceded as much, describing the 

overlapping nature of the breach of fiduciary duty claims with the breach of contract, 

dissolution, and receiver claims. Given the Minority Members’ approach to this case, and 
77

the entirety of the record before it, the circuit court did not err in exercising its discretion 

to award Mr. Cherneski and Trusox the entirety of their attorneys’ fees because the 

Minority Members “combined all counts to the action in this case, whether the claims arose 

in equity or contract, forcing [Mr. Cherneski and Trusox] to defend all claims in the action.” 

We reject the Minority Members’ argument that the circuit court erred in not 

applying proportionality to reduce the fee award based upon the result obtained. To be 

sure, the circuit court’s use of a proportionality theory may be appropriate in certain 

circumstances. See Ochse v. Henry, 216 Md. App. 439, 460–69 (2014), cert. denied, 439 

Md. 331 (2014) (upholding the circuit court’s use of a proportionality theory to take into 

account the results obtained by each side of the litigation). However, it does not follow 

that use of a proportionality theory is required of the circuit court when performing its 

discretionary analysis in every instance. Id. at 460 (explaining that the application of a 

proportionate award, or the application of the “common core of facts” doctrine is “in the 

court’s discretion”). “Certain circumstances could make another method more reasonable, 

but we leave that to the discretion of the trial court.” Weichert, 191 Md. App. at 19–20. 

III. 

Conclusion

For the reasons above, we hold that managing members of an LLC owe common 

law fiduciary duties to the LLC and to the other members based upon the fiduciary relations 

governing principles of agency. 

We answer the certified questions as follows. We hold that under Kann and our 

jurisprudence that followed, a breach of fiduciary duty may be actionable as an independent
78

cause of action. To establish a breach of fiduciary duty, a plaintiff must demonstrate: (1) 

the existence of a fiduciary relationship; (2) breach of the duty owed by the fiduciary to the 

beneficiary; and (3) harm to the beneficiary. The remedy for the breach is dependent upon 

the type of fiduciary relationship, and the historical remedies provided by law for the 

specific type of fiduciary relationship and specific breach in question, and may arise under 

a statute, common law, or contract. To clarify the Court’s analysis described in Kann, the 

court should consider the nature of the fiduciary relationship and possible remedies 

afforded for a breach, on a case-by-case basis. If the plaintiff describes a fiduciary 

relationship, identifies a breach, and requests a remedy historically recognized by statute, 

contract, or common law applicable to the specific type of fiduciary relationship and the 

specific breach alleged, the court should permit the count to proceed. The cause of action 

may be pleaded without limitation as to whether there is another viable cause of action to 

address the same conduct. This does not mean that every breach will sound in tort, with

an attendant right to a jury trial and monetary damages. The remedy will be dependent 

upon the specific law applicable to the specific fiduciary relationship at issue.

We hold that in this case, the circuit court did not err in entering judgment in favor

of Mr. Cherneski on the breach of fiduciary duty count. The court made a factual 

determination that there was insufficient evidence of a breach of fiduciary duty. The 

court’s factual determination was not clearly erroneous. Nor did the court abuse its 

discretion in refusing to award equitable relief on the Minority Members’ assertions of 

unlawful conduct associated with their breach of fiduciary duty claim. 
79

We hold that the circuit court correctly interpreted the fee-shifting provision of the 

parties’ Operating Agreement and did not err in determining that Mr. Cherneski and the 

Company were the “substantially prevailing parties” and in awarding the defendants’ their 

attorneys’ fees. 

The circuit court did not err in awarding Mr. Cherneski and Trusox the entirety of 

their fees. The circuit court’s approach to awarding attorneys’ fees in this case is consistent 

with the “common core of facts” doctrine, which was a reasonable method for apportioning 

attorneys’ fees in this case. 

CERTIFIED QUESTIONS ANSWERED. 

JUDGMENT OF THE CIRCUIT COURT 

FOR ANNE ARUNDEL COUNTY 

AFFIRMED. APPELLANTS TO PAY 

COSTS. 
The correction notice(s) for this opinion(s) can be found here: 

https://mdcourts.gov/sites/default/files/import/appellate/correctionnotices/coa/3a19mcn.pdf