Court Opinion

ID: 9756368
Source: CourtListenerOpinion
Date Created: 2023-08-28 21:25:57.046279+00
Date Added: 2024-06-11T07:28:20.649493
License: Public Domain

HARRELL, Judge,
dissenting.
I respectfully dissent. I do so because, in my view, the arbitration agreement between Appellant, Ronnie E. Cheek (“Cheek”), and Appellee, United Health Care of the Mid-*162Atlantic, Inc., (“United”), was supported by consideration. Even assuming, arguendo, that the arbitration agreement was not supported by consideration independent from that of the employment contract of which it was a part, the consideration supporting the employment contract supported the arbitration agreement as well. Reasonably construed, the parties’ mutual obligations with regard to arbitration were not illusory. Therefore, I would affirm the Circuit Court for Baltimore City’s judgment compelling arbitration of the employment dispute between the parties.
I.
“The interpretation of a written contract is ordinarily a question of law for the court and, therefore, is subject to de novo review by an appellate court.” DIRECTV v. Mattingly, 376 Md. 302, 312, 829 A.2d 626, 632 (2003). “Maryland follows the law of objective contract interpretation.” Sy-Lene of Washington, Inc. v. Starwood Urban Retail II, LLC, 376 Md. 157, 166, 829 A.2d 540, 546 (2003). “Under the objective test of contract interpretation, ‘the written language embodying the terms of an agreement will govern the rights and liabilities of the parties, irrespective of the intent of the parties at the time they entered into the contract.’ ” Id. (quoting Long v. State, 371 Md. 72, 84, 807 A.2d 1, 8 (2002)) (quoting, in turn, Slice v. Carozza Prop., Inc., 215 Md. 357, 368, 137 A.2d 687, 693 (1958)). “A contract’s unambiguous language will not give way to what the parties thought the contract meant or intended it to mean at the time of execution; rather, ‘if a written contract is susceptible of a clear, unambiguous and definite understanding ... its construction is for the court to determine.’” Sy-Lene, 376 Md. at 167, 829 A.2d at 546 (citing Langston v. Langston, 366 Md. 490, 507, 784 A.2d 1086, 1095 (2001)). “When the clear language of a contract is unambiguous, the court will give effect to its plain, ordinary, and usual meaning, taking into account the context in which it is used.” Langston, 366 Md. at 506, 784 A.2d at 1095. “A contract is ambiguous if it is subject to more than one interpretation when read by a reasonably prudent person.” Id. “If the *163contract is ambiguous, the court must consider any extrinsic evidence which sheds light on the intentions of the parties at the time of the execution of the contract.” Sy-Lene, 376 Md. at 167-68, 829 A.2d at 547 (quoting County Commissioners v. St. Charles, 366 Md. 426, 445, 784 A.2d 545, 556 (2001)) (quoting, in turn, Heat & Power v. Air Products, 320 Md. 584, 596-97, 578 A.2d 1202, 1208 (1990)).
The 17 November 2000 letter from United to Cheek framed an offer of employment. That offer included conditions, such as the requirement that Cheek agree to be bound by United’s “Employment Arbitration Policy”. On 28 November 2000, Cheek authored an acceptance letter to United informing it that he was “delighted to accept United Healthcare’s generous offer” and that “[a]ll of the terms of your employment letter are amenable to me.” (Maj. op. at 142). The mutual obligations of the agreement to arbitrate and the consideration for the contract of employment render the agreement to arbitrate enforceable in the present case.
Cheek’s unsworn and unsubstantiated assertion that he did not receive, until after commencing employment with United, the summary of United’s Arbitration Policy referred to as an attachment in the 17 November 2000 offer letter, is unconvincing. His attorney’s artfully framed statement, made in passing in the Response and Opposition to United’s motion in the Circuit Court, that “no detail” of the policy was provided, is also unavailing. (Maj. op. at 141, n. 2). United’s human resources representative (and the author of United’s 17 November offer letter to Cheek), in an affidavit in support of United’s motion to compel arbitration filed in the Circuit Court, appended a “true and correct copy of the offer letter that was provided to Mr. Cheek” and stated further that United’s company policy was also to distribute a summary of the arbitration policy upon commencement of employment. Cheek conceded that he received a copy of the four-page summary of United’s Arbitration Policy at the commencement of his employment. (Maj. op. at 143).
*164Even were one to assume Cheek did not receive a summary of United’s Arbitration Policy with the 17 November offer letter, his unqualified acceptance of the offer, including the arbitration condition, was not obtained by duress, Cheek’s suggestion to the contrary notwithstanding. This Court has held that the “test [for] duress is essentially composed of two elements: ‘(1) a wrongful act or threat by the opposite party to the transaction ..., and (2) a state of mind in which the complaining party was overwhelmed by fear and precluded from using free will or judgment.’ ” Food Fair Stores, Inc. v. Joy, 283 Md. 205, 217, 389 A.2d 874, 881 (1978) (quoting Plechner v. Widener College, Inc., 418 F.Supp. 1282, 1294 (E.D.Pa.1976)). See also Central Bank v. Copeland, 18 Md. 305 (1862). If one hopes to benefit from the law of duress, then that person cannot place himself or herself into the situation which is the impetus for the deprivation of that person’s free will. “The mere stress of business does not constitute duress when the person against whom it is asserted is not responsible for the circumstances.” Shillman v. Hob-stetter, 249 Md. 678, 693, 241 A.2d 570, 578 (1968).
Cheek implies that he was forced into employment with United, and thus bound by its “undetailed” arbitration policy, because he involuntarily was placed in a position where he had no alternative but to accept the terms of the contract after resigning from a position with his former employer. On the contrary, Cheek freely and voluntarily placed himself into a position whereby he had no other immediate employment opportunities, except with United. Cheek submitted his resignation to his former employer before he notified United of his acceptance of its employment offer. United is “not responsible for the circumstances” surrounding Cheek’s decision to resign from his former employer before accepting United’s offer and without apprising himself of any material information now claimed to be lacking or missing in United’s offer. If Cheek did not have sufficient information regarding the announced condition of arbitration in the employment offered by United, he should not have resigned from his former employment and accepted United’s offer before making further inqui*165ry. The terms of employment with United did not change between the offer date and Cheek’s acceptance. Because United did not commit any wrongful act to coerce Cheek’s unconditional acceptance of its employment offer as presented, Cheek’s decision to resign “prematurely” from his former employer should have no bearing on the outcome of this case. Shillman, 249 Md. at 693, 241 A.2d at 578.
II.
This Court dealt with the severability of an arbitration agreement from the contract of which it is a part in Holmes v. Coverall North America, Inc., 336 Md. 534, 649 A.2d 365 (1994). The Holmes Court adopted the view “that an arbitration clause is a severable contract which is enforceable independently from the contract as a whole.” Id. at 545, 649 A.2d at 370. The Court went on to state “that the mutual promises to arbitrate constitute a separate agreement contained in the contract.” Id. at 547, 649 A.2d at 371. See also Allstate v. Stinebaugh, 374 Md. 631, 644, 824 A.2d 87, 95 (2003).
The U.S. Court of Appeals for the Fourth Circuit held to the same effect in Johnson v. Circuit City Stores, Inc., 148 F.3d 373 (4th Cir.1998). That case involved an arbitration agreement that applied to all job applicants at a retail store in Maryland. The Fourth Circuit concluded that the parties’ mutual agreement to arbitrate constituted sufficient independent consideration to support the agreement to arbitrate, standing on its own. In so doing, the Johnson court cited to O’Neil v. Hilton Head Hosp., 115 F.3d 272 (4th Cir.1997), for the proposition that “an arbitration agreement was supported by adequate consideration where both parties agreed to be bound by the arbitration process.” Johnson, 148 F.3d at 378. O’Neil, interpreting South Carolina law, involved the resort to arbitration in an employee discharge suit. The O’Neil court stated:
O’Neil first argues the contract to arbitrate was not supported by adequate consideration because the agreement *166was not binding on the hospital. O’Neil’s argument fails because its premise is mistaken.
Here the agreement to be bound by arbitration was a mutual one. The contract to arbitrate was proffered by the employer. Such a proffer clearly implies that both the employer and the employee would be bound by the arbitration process. If an employer asks an employee to submit to binding arbitration, it cannot then turn around and slip out of the arbitration process itself.
O’Neil, 115 F.3d at 274. The O’Neil court reiterated that “a mutual promise- to arbitrate constitutes sufficient consideration for this arbitration agreement.” O’Neil, 115 F.3d at 275 (citing Rickborn v. Liberty Life Ins. Co., 321 S.C. 291, 468 S.E.2d 292, 300 (1996)).
III.
Although it has been held that arbitration agreements may stand apart from the contracts of which they may be a part, if supported by independent consideration, they nonetheless also may be supported by the consideration that supports the contract as a whole. “Whether a number of promises constitute one contract (and are non-separable) or more than one is to be determined by inquiring “whether the parties assented to all the promises as a single whole, so that there would have been no bargain whatever, if any promise or set of promises were struck out.’ ” Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 424, 87 S.Ct. 1801, 1816, 18 L.Ed.2d 1270 (1967) (quoting U.S. v. Bethlehem Steel Corp., 315 U.S. 289, 298, 62 S.Ct. 581, 587, 86 L.Ed. 855 (1942)). “Contracts ordinarily require consideration to be enforceable.” Harford County v. Town of Bel Air, 348 Md. 363, 382, 704 A.2d 421, 430 (1998). “A benefit to the promisor or a detriment to the promisee is sufficient valuable consideration to support a contract.” Vogelhut v. Kandel, 308 Md. 183, 191, 517 A.2d 1092 (1986) (quoting Shimp v. Shimp, 287 Md. 372, 385, 412 A.2d 1228, 1234 (1980)). See also Prince George’s County v. Brown, 348 Md. 708, 715, 705 A.2d 1158, 1161 (1998). “The Courts of Law, in the absence of fraud, will not inquire into *167the adequacy of the value extracted for the promise so long as it has some value.” Blumenthal v. Heron, 261 Md. 234, 242, 274 A.2d 636, 640 (1971).
In the present case, there is no indication that either Cheek or United intended severability of the arbitration agreement from the employment contract as a whole. The parties do not dispute that the employment contract as a whole is valid, enforceable, and supported by consideration.1,2 As such, the arbitration provision within the contract is supported by the consideration for the contract and is enforceable.
The majority opinion in the present case commendably devotes attention to a review of cases from those of our sister jurisdictions that have addressed the consideration issue. See Maj. op. at 155-61. It then, however, places Maryland in the company of the decidedly minority view (“we join at least two other state courts” See Maj. op. at 155) that consideration from the overarching contract should not be looked to as consideration to support an arbitration agreement within the contract. The justification for this position, in the minds of the majority, is that to do so would require the court to *168address the sufficiency of the consideration of the entire contract, a question, if raised, normally reserved for the arbiter. Maj. op. at 161. I fail to see this as a real problem. Courts are not required to inquire into the adequacy of consideration where there is at least some indicia of its presence. See Blumenthal, 261 Md. at 242, 274 A.2d at 640. Further, the majority of our sister jurisdictions have decided that consideration from the overall contract may be used to support an arbitration clause, recognizing that doing so will result in sending more cases to the arbiter.
I disagree further with the majority’s rejection of the persuasive authority from the majority of courts that have addressed this issue. Maj. op. at 158-61. In Avid Engineering v. Orlando Marketplace, Ltd., 809 So.2d 1 (Fla.App.2002), the written contract in question was “to provide engineering services for an expansion of retail space.” The court there held that “because there was sufficient consideration to support the entire contract, the [embedded] arbitration provision was not void for lack of mutuality of obligation.” Avid, 809 So.2d at 4. The Court of Appeals of New York also has held that “if there is consideration for the entire agreement that is sufficient; the consideration supports the arbitration option, as it does every other obligation in the agreement.” Sablosky v. Gordon Co., Inc., 73 N.Y.2d 133, 538 N.Y.S.2d 513, 516, 535 N.E.2d 643, 646 (1989) (involving the arbitration of commissions claimed to be due to real estate salespeople).
Federal courts, usually in the context of analyzing state laws, have analyzed and decided the issue in much the same way. The Third Circuit recently dealt with the issue of consideration for an arbitration agreement embedded in a contract in the case of Blair v. Scott Specialty Gases, 283 F.3d 595 (2002). In Blair, an employee brought a sexual harassment suit against her former employer. The court, ordering arbitration pursuant to a provision in the employment agreement, stated that “when both parties have agreed to be bound by arbitration, adequate consideration exists and the arbitration agreement should be enforced.” Blair, 283 F.3d at 603. The Blair court went on to state that “a contract need not *169have mutuality of obligation as long as the contract is supported by consideration.” Blair, 283 F.3d at 604 (referencing “decisions that have found that continued employment may serve as consideration”, such as Hightower v. GMRI, Inc., 272 F.3d 239, 243 (4th Cir.2001); Venuto v. Ins. Co. of N. Am., No. 98-96, 1998 WL 414723, at *5, 1998 U.S. Dist. Lexis 11050, at *14-*15 (E.D.Pa. July 22, 1998) (holding that an at-will employee’s continued employment provides adequate consideration for an arbitration provision)). In the context of an alleged breach of an employment contract, the Sixth Circuit found that “Prima Paint [supra] does not require separate consideration for an arbitration provision contained within a valid contract.” Wilson Electrical Contractors, Inc. v. Min-notte Contracting Corp., 878 F.2d 167, 169 (6th Cir.1989). In a case in which a franchisee sued the franchisor for fraud, the Eighth Circuit, interpreting Oklahoma law, stated that it believed that “mutuality of obligation is not required for arbitration clauses so long as the contract as a whole is supported by consideration.” Barker v. Golf U.S.A., 154 F.3d 788, 792 (8th Cir.1998). The Barker court relied on the Restatement (Second) of Contracts § 79 (1979), for the proposition that “if the requirement of consideration is met, there is no additional requirement of ... ‘mutuality of obligation’.” (Internal citation omitted in original.) Id. The Second Circuit addressed the issue of consideration for an overall contract “pouring over” to an arbitration clause in Doctor’s Associates v. Distajo, 66 F.3d 438 (2d Cir.1995). In that case, the court, citing Sablosky, supra, stated that “the Connecticut courts would conclude that ‘where the agreement to arbitrate is integrated into a larger unitary contract, the consideration for the contract as a whole covers the arbitration clause as well’.” Distajo, 66 F.3d at 453. The Distajo court observed that “most courts facing this issue have arrived at the same conclusion [that the consideration supporting the overall contract can also support an arbitration provision, standing alone].” Distajo, 66 F.3d at 452 (citing to Wilson, supra; Becker Autoradio U.S.A. v. Becker Autoradiowerk GmbH, 585 F.2d 39, 47 (3rd Cir.1978); W.L. Jorden & Co. v. Blythe *170Indus., 702 F.Supp. 282, 284 (N.D.Ga.1988); Willis Flooring, Inc. v. Howard S. Lease Constr. Co. & Assocs., 656 P.2d 1184, 1185 (Alaska 1983); LaBonte Precision, Inc. v. LPI Indus. Corp., 507 So.2d 1202, 1203 (Fla.Dist.Ct.App.1987); Kalman Floor Co. v. Jos. L. Muscarelle, Inc., 196 N.J.Super. 16, 481 A.2d 553 (1984), aff'd for reasons stated below, 98 N.J. 266, 486 A.2d 334 (1985)).
Two cases particularly representing the national majority view, to which the majority opinion here devotes substantial attention in an effort to explain them away (Maj. op. at 158-61), are, in many ways, the most apposite to the present case. Both cases involve the Appellee here, United, or a related entity, as a party and interpret and apply its apparently uniform arbitration policy. More specifically, both cases involve the clause within United’s arbitration policy whereby it “reserves the right to alter, amend, modify, or revoke the Policy at its sole and absolute discretion with or without notice.” See Maj. op. at 142-43.
Kelly v. UHC Management Company, Inc., 967 F.Supp. 1240 (N.D.Ala.1997), involved an employment discrimination claim for which United sought implementation of its then-new arbitration policy. After reviewing the same contract language as is at issue in the present case, the Kelly court stated that the only showing necessary for enforcement is that the arbitration “agreements are supported by consideration, not ‘mutuality of obligation’.” Kelly, 967 F.Supp. at 1260. In McNaughton v. United Healthcare Services, 728 So.2d 592 (Ala.1998), an employee sued United for fraud and intentional interference with business relations relating to an interdepartmental transfer. United sought arbitration. The McNaughton court, applying Alabama law, stated that “United’s providing at-will employment to [appellant] constituted sufficient consideration in exchange for [appellant’s] agreement to arbitrate [his] employment disputes under United’s arbitration policy.” McNaughton, 728 So.2d at 595. The court reiterated that it had “consistently held that an employer’s providing continued at-will employment is sufficient consideration to *171make an employee’s promise to his employer binding.” 728 So.2d at 596.
The reasoning of the majority in the present case notwithstanding, I am persuaded that Maryland would be better advised to follow the national majority view permitting consideration for the contract to suffice as consideration for the embedded arbitration agreement.
IY.
A.
We generally should strive, whenever possible, to find arbitration agreements between private parties enforceable.3 “The courts "will prefer a construction which will make the contract effective rather than one which will make it illusory or unenforceable.” Kelley Constr. Co. v. Washington Suburban Sanitary Comm’n, 247 Md. 241, 247, 230 A.2d 672, 676 (1967). United’s Arbitration Policy, as explicated in the four page summary given Cheek, contains a provision under which the employer has “the right to alter, amend, modify, or revoke the Policy at its sole and absolute discretion at any time with or without notice.” (Maj. op. at 142-43). This Court repeatedly has held generally that the reservation of the power to alter, amend, or terminate an agreement does not invalidate the agreement. “The conclusion should be drawn that an *172unlimited option to cancel does not invalidate a contract where it can be shown that it does not wholly defeat consideration.” Stamatiades v. Merit Music Service, 210 Md. 597, 613, 124 A.2d 829, 837 (1956), citing Tyler v. Capitol Indemnity Ins. Co., 206 Md. 129, 110 A.2d 528, 529 (1955). “It is only where the option reserved to the promisor is unlimited that his promise becomes illusory and incapable of forming part of a legal obligation.” Id. at 614, 124 A.2d at 838. See Yarnick v. King, 259 Md. 241, 249, 269 A.2d 607, 611 (1970) (stating that “a power to terminate in case performance is not satisfactory may be expressly reserved without invalidating the contract”); Prince George’s County v. Brown, 348 Md. 708, 715, 705 A.2d 1158, 1161 (1998) (stating that “a conditional promise may be consideration, and when a man acts in consideration of a conditional promise, if he gets the promise he gets all that he is entitled to by his act, and if, as events turn out, the condition is not satisfied, and the promise calls for no performance, there is no failure of consideration.”).
United’s reserved power to alter or terminate the arbitration agreement, however, was not without limit. That power should be read reasonably as exercisable only with regard to subsequent arbitrable conduct or acts, but not as to those acts which occurred prior to any asserted alteration or termination. Thus read, the Arbitration Policy was not illusory as United was bound to the original provisions of the arbitration agreement for all arbitrable incidents occurring prior to any purported change or revocation it might make with regard to the Policy.
B.
The majority here focuses on an asserted lack of mutuality of obligation as a means to declare illusory United’s promise to arbitrate. Such focus is short-sighted. We addressed the general problems associated with illusory contracts, versus those with a failure of consideration, in Acme Markets, Inc. v. Dawson Enters., Inc., 253 Md. 76, 251 A.2d 839 (1969). In Acme, we stated that “when a contract is entered into, a power of termination may be expressly reserved to either *173party or to both of them.” Acme, 253 Md. at 86, 251 A.2d at 845. We went on to state that “the reservation of such a power to terminate does not invalidate the contract or render the consideration for a promise insufficient, so long as the party reserving the power to terminate is irrevocably bound for any appreciable period of time or has materially changed any of his legal relations or otherwise rendered some performance capable of operating as a consideration.” Id. at 87, 251 A.2d at 846 (quoting 6 A. Corbin, Contracts § 1266 (1962)). We continued that “a contract is not made invalid for lack of mutuality by the fact that one of the parties and not the other is given the option of terminating the contract on some condition.” Id. (quoting 1A A. Corbin, Contracts § 265 (1963)). “Although an option to terminate may be unilateral and appear to lack mutuality, it has been held that if the provisions are quite clear as to one party’s option a court cannot be expected to relieve the other party of the consequences thereof because the bargain as to him was improvident, rash, foolish or oppressive”. Id. at 88-89, 251 A.2d at 847. When melded with the objective theory of contract interpretation, the result is identical to that discussed by this Court over fifty years ago, “where the right to terminate a contract is reserved in the instrument itself, in the absence of fraud, undue influence, or mistake, such reservation is valid and will be enforced, if not contrary to equity and good conscience.” Id. at 88, 251 A.2d at 847 (quoting Kahn v. Janowski, 191 Md. 279, 285-86, 60 A.2d 519, 521 (1948)).
As noted earlier, the arbitration agreement between United and Cheek is not illusory because the terms of the agreement, as construed here, may not be revoked or modified by United as to a particular arbitrable dispute after it has arisen. Stated otherwise, United is bound to the terms of the arbitration agreement as it exists at the time an arbitrable incident arises. It could not revoke or change the terms regarding prior acts triggering the then-prevailing arbitration provisions because “no party has a right to rescind or modify a contract merely because he finds, in the light of changed conditions, that he has made a bad deal.” Harford County, 348 Md. at 384, 704 *174A.2d at 431. I note, however, that there is not the slightest hint in this record that United proposed any such change in, or revocation of, the Arbitration Policy incorporated in its contract with Cheek.
y.
United gave Cheek an opportunity to review and/or inform himself about the Arbitration Policy before he accepted the employment offer. Cheek freely entered into the employment contract without further inquiry into any “details” of that Policy. Cheek agreed to the arbitration agreement almost seven months before the subject arbitrable dispute arose. During that time, United made no attempt to alter, amend, modify, or revoke its Arbitration Policy. United was as bound to the Arbitration Agreement as was Cheek for the dispute giving rise to the present litigation. As such, United’s promise was not illusory, and there was neither lack or failure of consideration or lack of mutuality of obligation. The contract contained a valid arbitration agreement, which was supported by consideration. As a result, it is my view that the parties, as ordered by the Circuit Court, should submit this dispute to arbitration.

. No reasonable argument could be mounted on these facts of a failure of consideration in the employment contract. United promised to pay Cheek an initial annualized base salary of $75,000, an initial annual minimum sales incentive totaling $90,000, and a sign-on bonus of $25,000, together with other benefits and “perks”. In his acceptance of the offer, Cheek described it as "generous” and its terms “amenable” to him. Thus, the majority opinion’s concern that a court would have to evaluate the sufficiency of consideration for the overall contract, in resolving the issue of enforcement of the arbitration agreement, is not a factor in this case. See Maj. op. at 153-54.

. As a supplemental note, Cheek, as he sought to do here, should not be permitted to both sue for enforcement of the employment contract as a whole, while concurrently trying to enjoin enforcement of the arbitration clause contained therein. "No party suing on a contract should be able to enforce certain contract provisions while simultaneously attempting to avoid the terms of an arbitration provision contained therein.” U.S. v. Bankers Ins. Co., 245 F.3d 315, 323 (4th Cir., 2001) (citing to Int’l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411, 418 (4th Cir., 2000), holding that it would “both disregard equity and contravene [the FAA]” to allow a plaintiff "to claim the benefit of the contract and simultaneously avoid its burdens.”)

. Section 3-206(a) of the Courts and Judicial Proceedings Article of the Maryland Code (2002 Repl. Vol., 2003 Supp.), dealing with the validity of arbitration agreements, states that written arbitration agreements are "valid and enforceable, and [are] irrevocable, except upon grounds that exist at law or in equity for the revocation of a contract.” Md.Code Ann., Cts. & Jud. Proc. § 3-206(a) (2002). Section 3-206(b), however, provides that § 3-206(a) “does not apply to an arbitration agreement between employers and employees ... unless it is expressly provided in the agreement that this subtitle shall apply.” In Wilson v. McGrow, Pridgeon & Co., 298 Md. 66, 467 A.2d 1025 (1983), we stated that "the reference in § 3-206(b) to 'employers and employees’ should be read as not including the arbitration agreement between employer and a single employee” and that the Court’s "reading necessarily excludes from § 3-206(b) an agreement between an employer and a single employee to arbitrate future disputes.” Wilson, 298 Md. at 78, 467 A.2d at 1031.