Court Opinion

ID: 989795
Source: CourtListenerOpinion
Date Created: 2013-07-03 23:12:06.003261+00
Date Added: 2024-06-11T15:38:19.524472
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JAMES H. FERGUSON, M.D.;
HEATHER R. STARK, M.D.,
Plaintiffs-Appellants,

v.                                                                   No. 95-2322

UPPER CHESAPEAKE MEDICAL
SERVICES, INCORPORATED,
Defendant-Appellee.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
John R. Hargrove, Senior District Judge.
(CA-94-2792-HAR)

Argued: April 1, 1996

Decided: July 11, 1996

Before ERVIN, NIEMEYER, and WILLIAMS, Circuit Judges.

_________________________________________________________________

Affirmed by unpublished opinion. Judge Ervin wrote the opinion, in
which Judge Niemeyer and Judge Williams joined.

_________________________________________________________________

COUNSEL

ARGUED: Stephen Donald Langhoff, LANGHOFF & WACKER,
Baltimore, Maryland, for Appellants. Richard Jeffrey Magid,
WHITEFORD, TAYLOR & PRESTON, L.L.P., Baltimore, Mary-
land, for Appellee. ON BRIEF: Carmina Perez, WHITEFORD,
TAYLOR & PRESTON, L.L.P., Baltimore, Maryland, for Appellee.

_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

ERVIN, Circuit Judge:

I

Dr. James Ferguson and Dr. Heather Stark ("the doctors"), both
Canadian citizens, entered employment agreements with Upper Ches-
apeake Medical Services, Inc. The parties agreed, and the district
court found, that the contracts included conditions precedent requiring
the doctors to obtain Maryland medical licenses, obtain authorizations
to work in the United States, and report for work. The contracts did
not specify a time limit for satisfaction of the conditions. Fifteen
months after the contracts were signed, only one of the conditions
precedent had been fulfilled--Dr. Stark had obtained a Maryland
license. Upper Chesapeake decided then that it no longer needed the
doctors' services, and it terminated the agreements.

The doctors sued in the District of Maryland for breach of contract,
and the district court granted summary judgment in favor of Upper
Chesapeake. It held that a party has no duty of performance under a
contract as long as there are conditions precedent that remain unful-
filled, so Upper Chesapeake was free to terminate the agreements.
The doctors' appeal consists of two primary arguments. They assert
first that Upper Chesapeake was barred from terminating the contracts
by estoppel or waiver. Second, although they acknowledge that Upper
Chesapeake had no duty to perform as long as conditions precedent
remained unsatisfied, the doctors contend that Upper Chesapeake was
not entitled to terminate the agreements until it had allowed the doc-
tors a reasonable time to fulfill those conditions. Whether a reason-
able time has passed, they conclude, is a question of fact for a jury.

We agree with the doctors' analysis of the law governing condi-
tions precedent. Nevertheless, the undisputed evidence before us can-
not support an inference that Upper Chesapeake failed to allow the

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doctors a reasonable time to satisfy the conditions precedent. Waiver
and estoppel were not argued in the district court, so we do not
address their merits. Accordingly, we hold that Upper Chesapeake did
not breach the agreements, and we affirm the district court's grant of
summary judgment.

II

Maryland law controls this case, over which the district court had
diversity jurisdiction. We review the district court's summary judg-
ment de novo, and affirm only if the evidence, viewed in the light
most favorable to the doctors, fails to create a genuine issue of mate-
rial fact. Sempione v. Provident Bank, 75 F.3d 951, 954 (4th Cir.
1996) (citing Fed. R. Civ. P. 56(c)).

III

The parties do not dispute the basic facts, so we excerpt from the
district court's opinion:

          Upper Chesapeake, a managed care organization, pro-
          vides a wide range of medical services to various groups and
          individuals. To supply medical services to its HMO[health
          maintenance organization] members, Upper Chesapeake
          enters into various contractual arrangements with area doc-
          tors. In the spring of 1992, Upper Chesapeake determined
          that it could offer more efficient and less costly surgical spe-
          cialties to its HMO members by hiring an orthopedic sur-
          geon. On July 30, 1992, Plaintiff Ferguson, a Canadian
          orthopedic surgeon who practiced in Ontario, Canada, and
          his wife, Plaintiff Stark, a primary care physician also prac-
          ticing in Ontario, Canada, entered into separate employment
          contracts with Upper Chesapeake. Both contracts provided
          inter alia:

          1. Term The term of this Agreement shall com-
          mence no later than January 1, 1993, or as
          soon as Physician obtains Maryland license
          and shall continue for a period of twelve (12)
          months.

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          See Defendant's Motion for Summary Judgment, Exh. 1 and
          Exh. 2.

          On November 17, 1993, over a year after the parties
          entered into their respective contracts but before either Fer-
          guson or Stark had reported for work, Upper Chesapeake
          terminated their contracts. As of this date, it is undisputed
          that only Stark had obtained her Maryland medical license
          and neither party had received immigration approval to
          work in the United States.

The doctors acknowledge that, during the fifteen-month period
between the execution and termination of the contracts, Upper Chesa-
peake cooperated with their efforts to obtain licenses and immigration
approval.

IV

A

The district court defined condition precedent:

          A condition precedent is a fact or event that the parties
          intend must exist before there is a right to performance on
          a contract. Pradhan v. Maisel, 338 A.2d 905, 26 Md. App.
671 (1975) (holding no contractual duty arises where there
          is an unfulfilled condition precedent to a contract). If the
          condition does not occur, and is not excused, the promised
          performance need not be rendered. Laurel Race Course Inc.
          v. Regal Constr. Co., 274 Md. 142, 154, 333 A.2d 319, 327
          (1975) ("It is fundamental that where a contractual duty is
          subject to a condition precedent, whether express or implied,
          there is no duty of performance and there can be no breach
          by nonperformance until the condition precedent is either
          performed or excused.").

That definition is correct as far as it goes, but the conclusion the dis-
trict court drew from it--that Upper Chesapeake was entitled to ter-
minate the contracts because the conditions precedent had not been
fulfilled--is a non sequitur.

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The absence of a duty to perform under a contract is not equivalent
to a freedom to terminate it. Performance is not due until conditions
precedent have been satisfied, but a future obligation to perform once
they are fulfilled exists upon the agreement's inception. Accordingly,
the obligor must allow its counterpart an opportunity to satisfy the
conditions. If the agreement does not specify the duration of that
opportunity, the law implies a reasonable time. E.g., E. Allan Farns-
worth, Contracts § 8.3, at 569-70 (2d. ed. 1990).1 Upper Chesapeake
_________________________________________________________________
1 We have located no Maryland case addressing this issue directly, but
other jurisdictions provide ample support. See City of Stockton v. Stock-
ton Plaza Corp., 68 Cal. Rptr. 266, 270 (1968); Lieberman Properties,
Inc. v. Braunstein, 522 N.Y.S.2d 874, 877 (N.Y. App. Div. 1987) ("In
light of . . . the lack of a specific time period for performance of the con-
dition precedent, it follows that in the event the plaintiff is not able to
secure approval for the proposed subdivision within a reasonable time,
the defendants retain the absolute right to cancel the contract."); Carroll
v. Wied, 572 S.W.2d 93, 97 (Tex. Civ. App. 1978) ("We disagree with
the argument that there can be no breach of contract before the condition
precedent is fulfilled. The provision . . . implied . . . that the appellees
would pursue their application for a loan diligently and would be allowed
a reasonable time within which to secure it."); see also Christopherson
v. Blount, 582 A.2d 460, 462 (Conn. 1990) ("In the absence of a speci-
fied time limit to comply with a condition precedent, the law implies a
reasonable time."); HECI Exploration Co. v. Clajon Gas Co., 843
S.W.2d 622, 634 (Tex. Ct. App. 1992) ("If a contract does not specify
a time within which a party must fulfill a condition precedent, as was the
case here, the law will imply that performance must occur within a rea-
sonable time."); Pearcy v. Environmental Conservancy, 814 S.W.2d 243,
246 (Tex. Ct. App. 1991) ("[W]here a contract does not specify a time
during which a condition precedent must occur, the condition precedent
must occur within a reasonable time.").

The district court confused the instant agreements--bilateral contracts
with conditions precedent to performance--with offers for unilateral
contracts. Calamari and Perillo addressed the distinction:

          In [the case of] an offer to a unilateral contract B's performance
          is a condition precedent to A's duty of payment. It is also, under
          the classical view, a condition precedent to the formation of the
          contract--that is to say, performance of the act is the acceptance
          of the offer. It should be stressed again, however, that the term
          "condition" is ordinarily reserved to describe acts or events

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was not free, therefore, to terminate the agreements at any time before
the doctors fulfilled the conditions precedent. It was entitled to do so
only if it had allowed them a reasonable opportunity.

Ordinarily the factfinder should determine whether the period
allowed for fulfillment of conditions precedent was a "reasonable
time." E.g., Christopherson v. Blount, 582 A.2d 460, 463 (Conn. 1990).2
However, when the facts are undisputed and they support only one
inference regarding the reasonableness of the time, the court may
decide the question as a matter of law. See, e.g., Lynx, Inc. v. Ord-
nance Prods., Inc., 327 A.2d 502, 512 (Md. 1974).3 In this case, the
undisputed evidence shows that the parties entered into the contracts
on July 30, 1992. The term of employment under each contract was
to begin on January 1, 1993, or as soon as the doctor obtained a Mary-
land license, and was to last for one year. Upper Chesapeake cooper-
_________________________________________________________________

          which must occur before a duty of performance under an existing
          contract becomes absolute.

John D. Calamari & Joseph M. Perillo, The Law of Contracts § 11-3 (2d
ed. 1977) (emphasis added).
2 See also, e.g., Hamlin v. Steward, 622 N.E.2d 535, 540 (Ind. Ct. App.
1993); Johnson v. Zingarelli, 448 N.E.2d 1282, 1282 (Mass. App. Ct.
1983); Kesinger v. Burtrum, 295 S.W.2d 605, 609 (Mo. App. 1956);
HECI Exploration Co., 843 S.W.2d at 634; cf. Lynx, Inc. v. Ordnance
Prods., Inc., 327 A.2d 502, 512 (Md. 1974) ("Where notice of rejection
or of breach has been given by the buyer, the sufficiency of the notice
and whether it was given within a reasonable time are ordinarily ques-
tions of fact based upon all the surrounding circumstances."); Town of
Glenarden v. Lewis, 273 A.2d 140, 144 (Md. 1971) ("What is a reason-
able time is a question of fact, and depends upon all the circumstances
of the case."); Smith v. Butler, 311 A.2d 813, 815 (Md. Ct. Spec. App.
1973) ("Ordinarily the question of what is a`reasonable time' in which
a buyer is to give notice to the seller of breach of warranty is a question
of fact for the determination of the jury based upon the surrounding cir-
cumstances.").
3 See also, e.g., Smith, 311 A.2d at 816; cf. Pearcy, 814 S.W.2d at 246
("Where the material facts are undisputed, the question of what is a rea-
sonable time is a matter of law."); Carroll , 572 S.W.2d at 97 ("[W]here
the facts are undisputed, as here, the issue of what is a reasonable time
for performance is a question of law for the court.").

                    6
ated with the doctors' efforts to obtain licenses and immigration
approval during the five months between the formation of the agree-
ments and the intended beginning date of January 1, 1993, and it con-
tinued to cooperate for more than ten more months. Not until
November 17, 1993, more than fifteen months after it entered the con-
tracts and barely more than six weeks before the doctors' periods of
employment were expected to end under the agreements' terms, did
Upper Chesapeake decide that it had waited long enough. We agree.
These circumstances support only one reasonable inference--that
Upper Chesapeake allowed the doctors a reasonable time to satisfy
the conditions precedent.

B

The doctors note correctly that the general rule of conditions prece-
dent is subject to exceptions for fraud, bad faith, waiver, and estoppel.
Laurel Race Course Inc. v. Regal Constr. Co., 333 A.2d 319, 325
(1975). They argue that Upper Chesapeake waived the contracts'
"time conditions" by exhibiting willingness

          to extend the time of performance beyond January 1, 1993
          and "Early Spring" 1993. And since the Defendant never
          advised the Plaintiffs of a date by which the conditions had
          to be fulfilled, it waived its right to insist on performance
          without first advising the Plaintiffs of a completion date.

Brief of Appellants at 18. The doctors also contend that equitable
estoppel should bar Upper Chesapeake from terminating the con-
tracts, because "Upper Chesapeake's actions and silence induced the
Plaintiffs to continue their quest to obtain the immigration clearances
and for Dr. Ferguson to obtain his Maryland medical license."

Upper Chesapeake counters that the doctors are precluded from
arguing waiver or estoppel on appeal, because they failed to raise
those issues before the district court. The doctors respond only that
their arguments are based on Laurel Race Course , which the parties
and the district court agreed "contain[ed] the applicable law." But the
portions of the Joint Appendix to which the doctors refer reveal that
the parties and the court cited Laurel Race Course only for the gen-
eral rule of conditions precedent, without mentioning the exceptions

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to the rule. Thus the issues of waiver and estoppel are not preserved
for review, and we do not address their merits. Cf. Beaudett v. City
of Hampton, 775 F.2d 1274, 1278 (4th Cir. 1985) (holding that,
"[e]ven in the case of pro se litigants," "fleeting references" are insuf-
ficient to preserve issues for appeal), cert. denied, 475 U.S. 1088
(1986); Tyler v. Runyon, 70 F.3d 458, 465 (7th Cir. 1995) ("[M]ere
citation of the rule [of civil procedure] fails to preserve the merits of
this issue for appeal.").

V

The doctors failed to satisfy the conditions precedent within a rea-
sonable time, so Upper Chesapeake was free to terminate the con-
tracts. Accordingly, we affirm the district court's summary judgment.

AFFIRMED

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