Opinion ID: 687889
Heading Depth: 1
Heading Rank: 1

Heading: Fonar's initial letter

Text: 14 We review findings of fact by a trial court sitting without a jury for clear error, with due regard for the opportunity of the trial court to judge the credibility of the witnesses. F.R.Civ.P. 52(a). 15 Tomsco has argued that the magistrate judge committed clear error in finding that the November faxed letter constituted a binding contract between the parties, contending that the language in the letter stating that [t]he purpose of this letter is to structure an agreement .... is evidence that the parties intended the letter to be an agreement to negotiate, non-binding under the law of Maryland, see First National Bank of Maryland v. Burton, Parsons & Co., 57 Md.App. 437, 470 A.2d 822, 828, cert. denied, 300 Md. 88, 475 A.2d 1200 (1984). Tomsco has further argued that the language added by Tomsco to the letter on advice of counsel--This agreement includes a standard service contract as issued by Fonar and to be reviewed and approved by the officers of Tomsco Imaging--indicates that essential terms of the contract had not been decided at the time the letter was signed. Because Maryland courts have held that an agreement is not a binding legal contract when  'an essential element is reserved for the future agreement of both parties,'  First National Bank of Maryland, 470 A.2d at 828 (quoting Samuel Williston, A Treatise on the Law of Contracts Sec. 45 (W.H.E. Jaeger 3d ed.1957)), Tomsco has argued that the added language proves that the letter was not a contract. 16 However, the magistrate judge did not commit clear error in finding that all material terms were agreed upon and that the language of the letter as a whole constituted a binding contract, not simply an agreement to negotiate. The Tomsco doctors already possessed a copy of the standard service contract, the copy previously signed between Bhalla and Fonar, when the doctors signed the letter-fax, and therefore the statement added at the end of the letter did not leave material terms undecided. The language at the beginning of the contract regarding structuring the agreement was introductory; the letter then proceeded to structure an agreement, and the parties engaged in negotiations which resulted in changing the letter to reflect a $7,500 monthly figure rather than the initial offer of $10,250. 17 Moreover, performance by Tomsco under the contract, the monthly payments of $7,500, induced Fonar reasonably to rely on the contract and begin servicing the MRI machine. Fonar did rely on the contract, performing servicing in excess of $100,000 over a period during which Tomsco was paying $7,500 per month ($30,000 in the aggregate). Thus the performance under the contract here was not only some evidence of a binding contract, see Phoenix Mutual Life Insurance v. Shady Grove Place, 734 F.Supp. 1181, 1187 (D. Md.1990), aff'd, 937 F.2d 603 (4th Cir.1991) (citing Teachers Ins. & Annuity Assoc. v. Tribune Co., 670 F.Supp. 491, 499-503 (S.D.N.Y.1987)), but may even have risen to the level of estoppel, see AddressographMultigraph Corp. v. Zink, 273 Md. 277, 329 A.2d 28, 31-32 (1974). 18 Tomsco has also claimed that witnesses for both parties testified that the parties did not intend the letter to be binding. Tomsco has asserted that Fonar's official testified that Fonar wanted to wait until the MRI machine was inspected before committing. Yet this misstates the evidence--Fonar's official stated that Fonar wanted an assurance that Fonar's up-front costs would be covered in whatever condition Fonar found the machine, and accordingly he placed the $25,000 clause in the letter. Tomsco's witness, one of the doctors in the Tomsco group, did testify that the doctors did not want to commit to a service contract until the doctors had a contract with Bhalla for use of the machine. However, the magistrate judge found that testimony not credible in light of the education level of doctors and their concomitant ability to read and understand a document before signing at the notation Agreed and accepted. Additionally, the magistrate judge noted the evidence of commitment in the fact that the doctors actively negotiated the $7,500 monthly payment term of the contract before signing the contract. 19 Thus, we affirm the magistrate judge's finding that Fonar's letter constituted a binding contract.