Court Opinion

ID: 992920
Source: CourtListenerOpinion
Date Created: 2013-07-03 23:59:56.796706+00
Date Added: 2024-06-11T15:11:33.059336
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

OMNI JET TRADING, INCORPORATED,
Plaintiff-Appellee,

v.

DAVID J. HEERENSPERGER,
Defendant-Appellant,                            No. 96-1365

and

EAGLE HARDWARE AND GARDEN,
INCORPORATED,
Defendant.

OMNI JET TRADING, INCORPORATED,
Plaintiff-Appellant,

v.

DAVID J. HEERENSPERGER,
Defendant-Appellee,                             No. 96-1426

and

EAGLE HARDWARE AND GARDEN,
INCORPORATED,
Defendant.

Appeals from the United States District Court
for the District of Maryland, at Baltimore.
William M. Nickerson, District Judge.
(CA-93-2957-WMN)

Argued: July 8, 1997

Decided: September 5, 1997
Before NIEMEYER, MICHAEL, and MOTZ, Circuit Judges.

_________________________________________________________________

Reversed and remanded by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Henry Mark Stichel, PIPER & MARBURY, L.L.P., Bal-
timore, Maryland, for Appellant. Alvin Friedman, Washington, D.C.,
for Appellee. ON BRIEF: Michael F. Brockmeyer, PIPER & MAR-
BURY, L.L.P., Baltimore, Maryland, for Appellant. Lawrence S.
Bauman, Washington, D.C., for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit.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

_________________________________________________________________

OPINION

PER CURIAM:

These consolidated cases arise from the relationship between a pro-
spective purchaser of an aircraft and an aircraft broker. The jury
awarded damages to both parties; both appeal. Finding the damage
awards unsupported by the evidence, we reverse.

I.

David J. Heerensperger is the chief executive officer for Eagle
Hardware and Garden, Inc., a retail chain. In the summer of 1993,
Heerensperger became interested in purchasing an airplane that he
could then lease to Eagle for corporate use. In July, Heerensperger
asked Dennis McCormick, a pilot, to serve as his representative in
searching for a plane. McCormick, in turn, contacted Omni Jet Trad-

                    2
ing Center, Inc., an aircraft sales company based in Easton, Maryland,
for assistance. Omni had in the past often acted as a broker for other
parties in purchasing and selling aircraft. McCormick spoke with
Michael Sala, an Omni aircraft salesperson, about Heerensperger's
request.

At trial, McCormick and Sala agreed that McCormick informed
Sala that Heerensperger did not want to pay any fee over and above
the purchase price of the airplane for Omni's services, but they dif-
fered as to the remainder of their conversation. According to Sala, he
told McCormick that they could either establish an agency agreement,
where Heerensperger would pay a fee directly to Omni, or a "back-to-
back" sales relationship, where Omni would purchase the plane from
the seller and then sell it to Heerensperger at a higher price, keeping
the difference as its profit. Since McCormick made clear that Heeren-
sperger did not want to pay any fee above the purchase price of the
plane, Sala testified that they agreed to establish the back-to-back
arrangement. McCormick denied any such arrangement, contending
that he told Sala Omni's profit should come "from the seller" of the
plane.

Notwithstanding the apparent lack of understanding between the
two, Sala, after the discussion, dedicated significant time to searching
for a plane that would meet Heerensperger's criteria. He traveled with
McCormick around the country to look at planes and provided techni-
cal information to McCormick for Heerensperger's use. In the search,
McCormick found one plane, a Hawker 700 model owned by ITT
Automotive that fit Heerensperger's requirements. Whether McCor-
mick first learned of the plane from Sala was contested at trial;
regardless, after traveling to Pennsylvania with Sala to inspect it,
McCormick sought Heerensperger's approval to make an offer.

On September 3, 1993, Heerensperger told Omni to offer $2.45
million on Heerensperger's behalf for the Hawker 700. Omni, how-
ever, offered ITT only $2.25 million -- $200,000 less than Heeren-
sperger's offer. ITT -- through its sales agent, Gene Church --
counter-offered, telling Sala that ITT would accept $2.55 million if
certain conditions were met. Sala informed McCormick that Heeren-
sperger needed to offer $2.65 million for the plane and Heerensperger
agreed to raise his offer to $2.65 million. But Omni did not offer

                    3
$2.65 million; instead, it bid $2.5 million for the plane -- $150,000
less than Heerensperger had authorized and $50,000 less than Church
had said ITT would accept. That offer was rejected. Sala -- appar-
ently receiving incorrect information from Church-- then informed
McCormick the Hawker 700 plane had been sold.

Subsequently, McCormick learned that the plane had not been sold.
After contacting Church directly, McCormick also discovered that
Omni had never bid $2.65 million on Heerensperger's behalf. McCor-
mick, with Heerensperger's authorization, rebid on the plane at $2.65
million. Because other potential buyers had expressed interest in the
plane in the interim, ITT raised the price to $2.7 million. Heerensper-
ger paid that amount, and paid no fee to Omni for the sale.

On October 14, 1993, Omni brought this diversity action against
Heerensperger, asserting that Heerensperger breached a contract
under which Omni was to provide aircraft search and marketing ser-
vices to Heerensperger, in exchange for a reasonable fee for those ser-
vices. Alternatively, Omni alleged that Heerensperger had been
unjustly enriched by Omni, and should compensate Omni in quantum
meruit. Omni sought a judgment in the amount of"not less than
$135,000 plus interest." Heerensperger counterclaimed, asserting that
Omni had agreed to be his agent in searching for a plane and had
breached a fiduciary duty to him as his agent. In addition, Heeren-
sperger alleged that Omni had defrauded him, and had committed
constructive fraud and negligent misrepresentations in the course of
their dealings. Heerensperger sought compensatory damages in the
amount of $150,000 and punitive damages in the amount of $300,000.

After a six-day trial, the jury awarded Omni $185,500 in compen-
satory damages on its quantum meruit claim and awarded Heeren-
sperger $50,000 in damages on his negligent misrepresentation claim.
On a special verdict form the jury found: (1) Heerensperger did not
breach any contract with Omni; and (2) Omni did not breach any fidu-
ciary duty owed to Heerensperger or defraud Heerensperger. After the
jury verdict, each party renewed motions that had earlier been made
and denied requesting judgment as a matter of law; the motions were
again denied.

Both parties now appeal the court's denial of their motions, each
asserts entitlement to judgment, as a matter of law, or the right to a

                     4
new trial. We review de novo the district court's failure to grant judg-
ment as a matter of law. Teague v. Baker, 35 F.3d 978, 985 (4th Cir.
1994). We review for abuse of discretion a denial of a motion for a
new trial. Poynter ex rel. Poynter v. Ratcliff , 874 F.2d 219, 223 (4th
Cir. 1989).

II.

Heerensperger's contention on appeal is that there is no evidence
to support the jury's award to Omni of quantum meruit damages in
the amount of $185,500.

Quantum meruit is an equitable remedy; it seeks, through restitu-
tion, to "put the plaintiff in a position as good as that occupied by him
before the contract was made . . . ." W.F. Magann Corp. v. Diamond
Mfg. Co., 775 F.2d 1202, 1208 (4th Cir. 1985) (quoting 5 Corbin on
Contracts § 1112, at 598 (1964)). Such an award is appropriate when
one party has been unjustly enriched by the actions of another. To
sustain a claim based on unjust enrichment, a party must prove the
following elements:

          1. A benefit conferred upon the defendant by the plaintiff;

          2. An appreciation or knowledge by the defendant of the
          benefit; and

          3. The acceptance for retention by the defendant of the
          benefit under such circumstances as to make it unequitable
          for the defendant to retain the benefit without the payment
          of its value.

Everhart v. Miles, 422 A.2d 28, 31 (Md. Ct. Spec. App. 1980)
(emphasis added); Mass Transit Admin. v. Granite Constr. Co., 471
A.2d 1121, 1125 (Md. Ct. Spec. App. 1984).

Thus, under Maryland law, a party may collect under quantum
meruit only if he had a reasonable expectation of being paid. See
Cleaves v. Sharp & Dohme, Inc., 171 A.2d 374, 377 (Md. 1934) (A
plaintiff "may recover on a quantum meruit or implied contract if his

                     5
efforts have been contributed under circumstances from which expec-
tation of paying may be inferred."). The mere fact that "a person ben-
efits another is not of itself sufficient to require the other to make
restitution." Bennett Heating & Air Conditioning, Inc. v. NationsBank
of Maryland, 654 A.2d 949 (Md. Ct. Spec. App. 1995), rev'd in part
on other grounds, 647 A.2d 534 (Md. 1996). A seller of goods, for
instance, cannot obtain reimbursement on efforts made trying to make
a sale, even if those efforts benefitted another. Cleaves, 171 A.2d at
378. Moreover, in "the ordinary arrangement with commission agents
and brokers," "the agent is to earn compensation only by procuring
the result." Id. at 377.

When these principles are applied in this case, it is clear that there
is no evidence that Heerensperger was unjustly enriched by Omni.
The jury specifically rejected Omni's contention that Heerensperger
had entered into a contract to purchase a plane only from Omni.
Indeed, the jury rejected all claims as to the existence of a contract
or agency agreement between the parties. Neither party appeals those
findings; thus, we accept them as established facts.

Without a contract or agency relationship with Heerensperger,
Omni could not have had a reasonable expectation of compensation
from him. Rather, Omni worked on the assumption that it would be
paid only if Heerensperger purchased a plane through it; Omni
expected no payment if Heerensperger purchased a plane from
another party or if he did not purchase any plane. Indeed, Sala,
Omni's sales representative, admitted as much at trial:

          Q. Mr. McCormick never told you that he would reim-
          burse you or Omni for the work that had been per-
          formed if they didn't buy an aircraft from you, right?

          A. That is correct.

Heerensperger did not "buy an aircraft from Omni," thus Omni, by its
own admission, had no basis for expecting compensation for its ser-
vices. Accordingly, the quantum meruit award fails as a matter of law.

III.

On cross-appeal, Omni contends that the district court erred as a
matter of law in permitting Heerensperger to recover on its claim of

                    6
negligent misrepresentation. We note at the outset that, contrary to
Heerensperger's contentions, this issue has been preserved for appel-
late review. Omni objected to the use of a special verdict form that
allowed the jury to award Heerensperger damages for its negligent
misrepresentation claim, even if the jury found no agency relation-
ship. Such an objection sufficiently preserves the issue for appeal.
See, e.g., Cleveland ex rel. Cleveland v. Piper Aircraft Corp., 890
F.2d 1540, 1556 (10th Cir. 1989) (Defendant's "objection to the form
of the special verdict employed by the district court preserved for our
review any errors therein which were the bases for Defendant's objec-
tion, even though such asserted errors were not made the bases of a
motion for a new trial or for judgment notwithstanding the verdict.");
see also A.G. Sys., Inc. v. United Decorative Plastics Corp., 55 F.3d
970, 973-74 (4th Cir. 1995) (Objections to special verdicts are neces-
sary to preserve matter for appeal.).

Turning then to the negligent misrepresentation claim -- in order
to prove such a claim under Maryland law, a plaintiff must demon-
strate that:

          (1) the defendant, owing a duty of care to the plaintiff, negli-
          gently asserts a false statement;

          (2) the defendant intends that his statement will be acted
          upon by the plaintiff;

          (3) the defendant has knowledge that the plaintiff will prob-
          ably rely on the statement, which, if erroneous, will cause
          loss or injury;

          (4) the plaintiff, justifiably, takes action in reliance on the
          statement; and

          (5) the plaintiff suffers damage proximately caused by the
          defendant's negligence.

Brock Bridge Ltd. Partnership v. Dev. Facilitators, Inc., 689 A.2d
622, 630 (Md. Ct. Spec. App. 1997) (quoting Martens Chevrolet, Inc.
v. Seney, 439 A.2d 534 (Md. 1982)) (emphasis added); accord Village

                     7
of Cross Keys, Inc. v. United States Gypsum Co., 556 A.2d 1126 (Md.
1989).

The extent of duty owed a plaintiff depends on the nature of the
relationship enjoyed with the defendant. See Brock Bridge, 689 A.2d
at 630. Traditionally, courts permit recovery for negligent misrepre-
sentation "in the context of a patient's or client's dealings with a pro-
fessional in whom one places a great degree of personal trust and
confidence -- such as a physician, an attorney, an architect or a pub-
lic accountant." Martin Marietta Corp. v. International Telecomms.
Satellite Org., 991 F.2d 94, 98 (4th Cir. 1992) (quoting district court
opinion, 763 F. Supp. 1327, 1332-33 (D. Md. 1991)) (discussing
Maryland law); see, e.g., Brock Bridge , 689 A.2d at 633 (finding that
engineering contractor could be held liable for misrepresenting cost
of construction project); Village of Cross Keys , 556 A.2d 1126, 1134
(suggesting that negligent misrepresentation claim can lie against a
curtain wall manufacturer for misrepresentations in publication if mis-
representations were reasonably relied upon by architects and engi-
neers).

In evaluating whether a plaintiff owed a defendant a duty of care,
Maryland courts also consider the "nature of the harm likely to result
from a failure to exercise due care." Champion Billiards Cafe, Inc. v.
Hall, 685 A.2d 901, 905 (Md. Ct. Spec. App. 1996), cert. denied, 690
A.2d 523 (1997). "Where the failure to exercise due care creates a
risk of economic loss only, courts have generally required an intimate
nexus between the parties as a condition to the imposition of tort lia-
bility." Id. (emphasis added).

Contractual privity or its equivalent satisfies this"intimate nexus"
requirement. Id. Maryland courts have also occasionally found this
"intimate nexus" between parties who do not enjoy contractual privity
but enjoy some other special relationship. For instance, in L&P Con-
verters, Inc. v. Alling & Cory Co., 642 A.2d 264 (Md. Ct. Spec. App.
1994), the Court of Special Appeals found sufficient"intimate nexus"
between a broker of paper goods and a paper converter. Immediately
prior to entering into a contract to purchase the paper, the broker spe-
cifically asked the converter if its paper met the specifications for a
job the broker was bidding on; after the converter twice expressly
assured the broker that it did, the broker purchased from the converter

                     8
a large quantity of paper that proved unsuitable. See also Weisman v.
Connors, 540 A.2d 783 (Md. 1988) (finding intimate nexus between
an employer and a prospective job candidate in pre-contractual nego-
tiations).

Omni contends that no evidence supported a finding that it owed
a duty of care to Heerensperger. We agree. Neither"the relationship
that exist[ed] between the parties" nor"the nature of the harm likely
to result" justifies the imposition of such a duty here. Champion Bil-
liards Cafe, 685 A.2d at 905.

The relationship between Heerensperger and Omni involved no
intimate nexus. The jury specifically rejected the parties' contract and
agency claims, clearly indicating that it found no contractual or
agency relationship to exist between them that could justify a height-
ened duty of care. Moreover, unlike the situation in L&P Converters,
642 A.2d 264, Omni's misrepresentations did not take place during
extensive pre-contractual negotiations, in which one party can reason-
ably expect the other to be truthful. Furthermore, unlike those cases
where a plaintiff without access to reasonable knowledge relied on
representations from an expert in the field on a matter in which the
client was ignorant, see, e.g., Brock Bridge, 689 A.2d at 633, Omni's
misrepresentations upon which Heerensperger assertedly relied
required no unique expertise. Heerensperger was perfectly capable of
directly asking ITT what price was acceptable, what had been bid,
and whether its plane was still available; for such purposes, Heeren-
sperger did not need to rely on the professional expertise of Omni.

Nor are we persuaded by Heerensperger's invocation of Giant
Food, Inc. v. Ice King, Inc., 536 A.2d 1182 (Md. Ct. Spec. App.
1988). There, a supplier of ice and a potential buyer held discussions
over the course of seven months about establishing a long-term rela-
tionship. In reliance on Giant's representations, Ice King invested in
an ice making plant; when Giant subsequently informed Ice King it
had no need for its ice, Ice King brought suit. The court found that
"[t]hough, initially, the relationship was arguably tenuous, it ripened
into a full-fledged business dealing as communications continued."
Id. at 1185. The court concluded that that business relationship gave
rise to a duty of care on the part of Giant not to misrepresent its needs
in such a fashion that Ice King would invest significant sums to pre-

                     9
pare for future orders that Giant knew or should have known would
not materialize. The case at hand, however, involves no such relation-
ship, and no such harm. Heerensperger and Omni were not buyer and
seller discussing a long-term relationship. Rather, Omni served as a
one-time potential broker to Heerensperger; its relationship to
Heerensperger was not even exclusive. Unlike Ice King, Heerensper-
ger made no major new investments based on the asserted misrepre-
sentations.

In sum, just as Heerensperger assumed no duty to pay Omni if he
did not purchase a plane through Omni's services, Omni assumed no
duty to guard against negligent misrepresentations. To hold otherwise
would do serious harm to the concept of intimate nexus. Accordingly,
Heerensperger's negligent misrepresentation claim must fail as a mat-
ter of law.

IV.

For the reasons set forth above, the judgments of the district court
are reversed and the cases are remanded to the district court for entry
of judgment in No. 96-1365 on Omni's quantum meruit claim in favor
of Heerensperger, and in No. 96-1426 on Heerensperger's negligent
misrepresentation claim in favor of Omni.

REVERSED AND REMANDED

                    10