Court Opinion

ID: 998413
Source: CourtListenerOpinion
Date Created: 2013-07-04 17:10:46.694135+00
Date Added: 2024-06-11T15:36:03.167844
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

INTEGRATED CONSULTING SERVICES,
INCORPORATED,
Plaintiff-Appellant,

v.
                                                                    No. 98-1277
LDDS COMMUNICATIONS,
INCORPORATED GA, a Georgia
Corporation,
Defendant-Appellee.

Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Alexander Williams, Jr., District Judge.
(CA-95-1707-AW)

Argued: January 29, 1999

Decided: April 15, 1999

Before WILKINSON, Chief Judge, and LUTTIG and
TRAXLER, Circuit Judges.

_________________________________________________________________

Affirmed by unpublished opinion. Judge Traxler wrote the opinion,
in which Chief Judge Wilkinson and Judge Luttig joined.

_________________________________________________________________

COUNSEL

ARGUED: Sheldon Neal Jacobs, SNYDER, WEINER, WELT-
CHEK, VOGELSTEIN & BROWN, Baltimore, Maryland, for Appel-
lant. David Graham Leitch, HOGAN & HARTSON, L.L.P.,
Washington, D.C., for Appellee. ON BRIEF: Stephen L. Snyder,
Arnold M. Weiner, SNYDER, WEINER, WELTCHEK, VOGEL-
STEIN & BROWN, Baltimore, Maryland, for Appellant.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit.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

_________________________________________________________________

OPINION

TRAXLER, Circuit Judge:

This case concerns the relationship between three companies that
are involved to varying degrees in the provision of long-distance tele-
phone service. LDDS Communications, Inc. ("LDDS"), one of the
largest long-distance carriers in the United States, markets its service
to potential customers through an in-house sales force and also
through independent contractors. The independent contractors, which
produce only a small percentage of business for LDDS, solicit cus-
tomers for LDDS' long-distance service and pay their own expenses.
In return, LDDS pays these independent contractors a percentage of
revenues acquired from customers they enroll.

In 1992, Net-Tel Management Group ("Net-Tel") signed a repre-
sentation agreement ("LDDS/Net-Tel Agreement") to operate as an
independent contractor with LDDS. Thereafter, Net-Tel signed a sep-
arate agreement with Integrated Consulting Services, Inc.
("Integrated") under which Integrated agreed to solicit long-distance
customers through advertisements on cable television. When the ven-
ture between Net-Tel and Integrated failed, Integrated decided to
forego an action against Net-Tel and instead brought the present
action against LDDS.1

Integrated now appeals from the district court's order granting
_________________________________________________________________
1 Integrated's decision not to sue Net-Tel was undoubtedly due to Net-
Tel's shaky financial status.

                    2
summary judgment in favor of LDDS on Integrated's claims for
breach of contract and breach of the implied covenant of good faith
and fair dealing. For the reasons set forth below, we affirm.

I.

To assess the claims Integrated makes against LDDS, the court
reviews the contracts by which the parties expressed their obligations,
as well as the surrounding circumstances. At the outset, we note that
LDDS conferred very limited authority upon companies that solicited
business for it so as to avoid the creation of agency relationships. In
its contract with Net-Tel, for example, LDDS included language
which clearly established that Net-Tel would operate as an indepen-
dent contractor:

          You [Net-Tel] understand that you are an independent
          contractor and not an employee of [LDDS] under this
          Agreement. We are interested only in the orders for our ser-
          vices that you obtain. You will have total control of the man-
          agement of your business subject to the limitations
          contained in this Agreement. We will not require you to do
          anything that would jeopardize your status as an indepen-
          dent contractor under this Agreement. You may not, how-
          ever, enter into any agreement on behalf of [LDDS] or
          otherwise obligate [LDDS] without [LDDS's] prior written
          approval.

J.A. 396 (emphasis added). Additionally, LDDS held no management
control over Net-Tel, which was explicitly prohibited from using
LDDS' trade name or service marks without written approval from
LDDS.

Thus, the scope of Net-Tel's authority was prescribed in 1993 by
the LDDS/Net-Tel Agreement when Integrated -- a small business
concern managed by Erwin Aguayo ("Aguayo") and Robert Post
("Post")-- expressed interest in signing an agreement with Net-Tel.
Aguayo approached Michael Clifford ("Clifford"), Net-Tel's Presi-
dent, with an "innovative" idea of marketing LDDS' long-distance
service via cable television. Although Clifford told Aguayo that he

                    3
had express authority to act on LDDS' behalf, Integrated never veri-
fied this with LDDS.

On October 23, 1993, after a period of negotiations, Integrated
signed an agreement with Net-Tel entitled "Master Independent Dis-
tributor" Agreement, a standard agreement that Net-Tel used with all
of its distributors. J.A. 403. The agreement set forth Integrated's role
as an independent contractor for Net-Tel and explained that Net-Tel's
only obligation was to remit to Integrated a percentage of revenue for
all sales generated by Integrated. LDDS was not mentioned in the
agreement.

The Master Independent Distributor Agreement was replaced on
October 28, 1993 by the Master Corporate Distributor Agreement
("MCD Agreement"), which was drafted by Integrated. Under this
Agreement, Integrated agreed to develop and implement a plan to
market LDDS' long-distance service to cable television subscribers.
In return, Net-Tel promised to pay Integrated commissions for long-
distance sales generated by Integrated out of commissions Net-Tel
received from LDDS.

The MCD Agreement was signed only by representatives of Net-
Tel and Integrated, but incorrectly represented that"Net-Tel [wa]s the
agent of [LDDS]," J.A. 404, and that "[LDDS ha[d] authorized Net-
Tel to enter into independent distributor agreements with third parties,
for the marketing and sales of [LDDS'] telephone services." Id. Nei-
ther Net-Tel nor Integrated notified LDDS of the MCD Agreement's
existence.

After executing the MCD Agreement, Aguayo and Post prepared
a separate agreement, the Cable Affiliate Agreement, which was
merely a written proposal summarizing Integrated's suggested strat-
egy of marketing through cable television. The Cable Affiliate Agree-
ment contained no language, either explicit or implicit, purporting to
create a contractual relationship between Integrated and LDDS. But,
Aguayo planned to "review [the Cable Affiliate Agreement] with the
executives of LDDS to get their blessing." J.A. 91.

Aguayo presented the Cable Affiliate Agreement to LDDS on
November 16, 1993 -- nearly one month after Integrated and Net-Tel

                    4
executed the MCD Agreement -- when Aguayo met with LDDS offi-
cials for the first time. This meeting was planned by Net-Tel's Clif-
ford, who attended along with Net-Tel's Roger Depew ("Depew") and
Mark Brownski ("Brownski"), Integrated's Aguayo, and LDDS'
Vice-President H. Tresvant Moore ("Moore"), and Manager of Mar-
keting Programs George Hampton ("Hampton"). The greater portion
of the meeting consisted of Aguayo's verbal effort to solicit LDDS'
participation in Integrated's proposed marketing scheme reflected by
the Cable Affiliate Agreement. The MCD Agreement, however, was
not mentioned and LDDS remained unaware that it existed at the
time.

After considering Integrated's proposal, Hampton informed
Aguayo that LDDS had attempted such a program in the past and it
had failed. Hampton then wished Aguayo the best of luck in the event
that he pursued the program "exclusively" with Net-Tel, but declined
to obligate LDDS in any way.

Following the November 16, 1993 meeting, Integrated proceeded
to develop a marketing plan and claims to have spent thousands of
dollars in furtherance of the MCD Agreement. Integrated sent a copy
of the plan to Net-Tel, but not to LDDS. Although Net-Tel later for-
warded this plan to LDDS, the plan contained no specific reference
to the MCD Agreement and, for all practical purposes, was adminis-
tered exclusively between Integrated and Net-Tel. Integrated main-
tained minimal and sporadic discourse with Margaret Harrington,
Hampton's assistant at LDDS, but these conversations likewise
included no specific reference to the MCD Agreement or to any con-
tractual relationship allegedly existing between Integrated and LDDS.

In March 1994, Integrated's relationship with Net-Tel soured over
production costs for television advertisements. Integrated alleged that
Net-Tel refused to provide "[m]arketing assistance in the form of pre-
recorded television advertising spots," J.A. 405, as required under the
MCD Agreement. Integrated also asserted that Net-Tel breached the
MCD Agreement in other ways. In a last ditch effort to salvage its
relationship with Net-Tel, Integrated attempted to renegotiate the
terms of the MCD Agreement. This attempt, however, was unsuccess-
ful.

                    5
In April of 1994, Integrated sought to establish a relationship
directly with LDDS by placing telephone calls to Moore and Hamp-
ton. This marked the first direct contact Integrated had with either
Hampton or Moore since the November 16, 1993 meeting. Integrated
forwarded a copy of the MCD Agreement to LDDS on April 7, 1994,
which was the first time LDDS was made aware of its existence. On
the same day, Hampton advised Clifford that Net-Tel was not autho-
rized to use LDDS' name in the MCD Agreement, or any other agree-
ment, without LDDS' written permission.

Integrated's efforts to reach an agreement with LDDS intensified
when Aguayo sent a letter to Hampton requesting to deal "directly
with [LDDS] as opposed to [the] existing agreement with Net-Tel."
J.A. 422. No such agreement was ever reached, however, and Net-Tel
was ultimately prompted to terminate the MCD Agreement on April
15, 1994. On the following day, Hampton advised Aguayo in writing
that "[t]here [was] no existing Representation Agreement . . . between
LDDS and [Integrated]." J.A. 426.

At all times between the MCD Agreement's negotiation and termi-
nation, Integrated had the express right to review the underlying
LDDS/Net-Tel Agreement.2 The LDDS/Net-Tel Agreement expressly
forbade Net-Tel from reaching any agreement purporting to bind
LDDS. Indeed, Integrated concedes that had it reviewed the
LDDS/Net-Tel Agreement, it would not have entered into the MCD
Agreement with Net-Tel. Nevertheless, Integrated neglected such
review.

Claiming to have lost substantial sums of money in its venture with
Net-Tel, Integrated initiated this lawsuit against LDDS for breach of
the MCD Agreement and for breach of the implied covenant of good
faith and fair dealing. Integrated asserted that LDDS could be held
responsible for the obligations of Net-Tel based upon principles of
agency, ratification, apparent agency, and estoppel.
_________________________________________________________________

2 The MCD Agreement provided at Paragraph 6 that, "Net-Tel agrees
that [Integrated] may examine copies of its contracts with LDDS." J.A.
220.

                    6
II.

This case presents the issue of whether LDDS may be held liable
to Integrated for breach of contract or breach of the implied covenant
of good faith and fair dealing resulting from its own conduct or that
of Net-Tel. We conclude, upon de novo review, that LDDS is not lia-
ble as a matter of law.

A.

We first address Integrated's allegation that Net-Tel was LDDS'
agent and thus, Integrated effectively contracted with LDDS when it
contracted with Net-Tel. Agency is "the fiduciary relation which
results from the manifestation of consent by one person to another
that the other shall act on his behalf and subject to his control, and
consent by the other so to act." Restatement (Second) of Agency
§ 1(1) (1958). The existence of an agency relationship in fact --
actual authority -- may be established "by written agreement or by
inference." Patten v. Bd. of Liquor , 667 A.2d 940, 947 (Md. Ct. Spec.
App. 1995). By either mechanism, however, Integrated bears the bur-
den of coming forward with reliable evidence supporting Net-Tel's
authority to bind LDDS to third party agreements, such as the MCD
Agreement. See Homa v. Friendly Mobile Manor, 612 A.2d 322, 333
(Md. Ct. Spec. App. 1992). We conclude that Integrated cannot meet
this burden.

1.

Primarily, there is no written agreement granting Net-Tel actual
authority to act on LDDS' behalf as an agent. To the contrary, the
LDDS/Net-Tel Agreement expressly withheld such authority, provid-
ing that "[Net-Tel] may not . . . enter into any agreement on behalf
of [LDDS] or otherwise obligate [LDDS] without [LDDS'] prior writ-
ten approval." J.A. 396.

Moreover, the LDDS/Net-Tel Agreement expressly provides that
Net-Tel is an independent contractor. Although an independent con-
tractor can be an agent, a written contract on the subject is conclusive
absent other evidence of agency or course of dealing. See State

                    7
Comm. on Human Relations v. Suburban Hospital, Inc., 686 A.2d
706, 717 n.6 (Md. Ct. Spec. App. 1996); Cerniglia v. Pretty, 674 F.
Supp. 1167, 1171 (D. Md. 1987). Thus, Integrated cannot establish
Net-Tel's agency by written agreement.

2.

Integrated's attempt to establish Net-Tel's agency by inference also
fails. To establish an agency relationship by inference, it must be
shown that (1) the agent was subject to the principal's right of control;
(2) the agent had a duty to act primarily for the benefit of the princi-
pal; and (3) the agent held the power to alter legal relations of the
principal. Schear v. Hotel Management Corp., 487 A.2d 1240, 1248
(Md. Ct. Spec. App. 1985). The relationship between Net-Tel and
LDDS does not involve circumstances suggesting that an agency rela-
tionship had been established by inference.

At the outset, we note Integrated's obvious inability to satisfy the
third element as Net-Tel held no power "to alter the legal relations of
[LDDS]." Id. Agency is a product of agreement, and "[r]eciprocal
duties between the parties together with a power of the agent to bind
the principal are normally created at the time of the agreement."
Restatement (Second) of Agency § 1, 10 (1958) (emphasis added).
But the LDDS/Net-Tel Agreement forbade Net-Tel from legally bind-
ing LDDS. This fact is fatal to Net-Tel's claim of agency by implica-
tion. See id.

In addition, LDDS did not retain sufficient "control" over Net-Tel
so as to create an agency by inference. For example, under the
LDDS/Net-Tel Agreement, LDDS did not prescribe the manner or
means by which Net-Tel generated business. Net-Tel was authorized
to engage its own agents, but LDDS played no role in selecting these
agents, did not negotiate agreements with them, and transacted no
direct business with them. Further, under the Agreement, Net-Tel
lacked the authority to compel LDDS to accept customers recruited
by Net-Tel.

Traditional indicia of control lacking, nothing suggests that the
relationship between Net-Tel and LDDS was, in fact, any different
than that described by the Agreement. That relationship was one

                     8
whereby Net-Tel served LDDS as an independent contractor, without
binding authority commonly associated with agency. Patten, 667
A.2d at 947 ("An agency relationship is not simply an employ-
er/employee or contractor/subcontractor relationship. . . . [N]ot every
fiduciary relationship automatically equates to an agency relation-
ship.").

This is not to say, of course, that no benefit enured to LDDS when
Net-Tel procured customers for LDDS. Indeed, Net-Tel's compensa-
tion from LDDS was linked to its performance of subsidiary duties in
procuring long-distance customers. "But the fact that one of the par-
ties has subsidiary duties to act for the interests of another, as where
a [seller] of [services for a service provider] agrees that he will
advance the interests of the [service provider] in certain respects, does
not create an agency relation[ship] with respect to the sale[s]."
Schear, 487 A.2d at 1249 (internal quotation marks and citation omit-
ted). Indeed, "[i]t is the element of continuous subjection to the will
of the principal which distinguishes the . . . agency agreement from
other [more liberal] agreements," id . at 1248-49 (internal quotation
marks and citation omitted), such as the LDDS/Net-Tel Agreement.

In support of its argument that an agency relationship existed
between Net-Tel and LDDS, Integrated relies on statements of a Net-
Tel representative that Net-Tel was LDDS' "number one agent," J.A.
75, as well as contractual language in the MCD Agreement declaring
that "Net-Tel [wa]s an agent of [LDDS]" and that LDDS "ha[d]
authorized Net-Tel to enter into independent distributor agreements
with third parties, for the marketing and sales of[LDDS'] telephone
service." J.A. 404. Net-Tel's statements alone, however, cannot estab-
lish the existence of an agency relationship. "From the well-
established tenet that an agent cannot create his own authority to rep-
resent a principal, it follows that an agent's statements that he has
such authority cannot, without more, entitle a third party to rely on
his agency." Auvil v. Grafton Homes, Inc., 92 F.3d 226, 230 (4th Cir.
1996). See also Restatement (Second) of Agency §§ 7-8 (1957).
Instead, "[t]he authority of an agent must come from the principal,"
Homa, 612 A.2d at 333, and, to be actionable, must underlie the pre-
cise activity of which the injured party complains, see id.

In the present matter, LDDS granted no authority conferring
agency status upon Net-Tel. Instead, LDDS expressly withheld such

                     9
status as beyond the scope of Net-Tel's authority under the LDDS/Net
Tel Agreement, and Integrated has come forward with no evidence
which would support its claim that Net-Tel was an agent. To be clear,
Net-Tel's own proclamations of agency status do not support the exis-
tence of an agency relationship. Whether a particular relationship is
an agency depends on the relations of the parties as they in fact exist,
without regard to what they call their relationship. A mere proclama-
tion of agency is not enough. Thus, we find Integrated's agency by
inference claim to be deficient as a matter of law.

B.

Integrated next contends that LDDS ratified the MCD Agreement
thereby subjecting itself to liability. "Ratification is the affirmance by
a [principal] of a prior act which did not bind him but which was done
or professedly done on his account, whereby the act, as to some or all
persons, is given effect as if originally authorized by [the principal]."
Restatement (Second) of Agency § 82 (1958). The theory is not
dependent on authority underlying the agent's actions, but, con-
versely, has effect where the "[i]ntention to ratify may be inferred by
words, conduct or silence on the part of the principal that reasonably
indicates its desire to affirm the unauthorized act." Progressive Casu-
alty Ins. v. Ehrhardt, 518 A.2d 151, 156 (Md. Ct. Spec. App. 1986)
(emphasis added). In other words, even "[w]hen the [alleged] agent
has no authority to do an act, the principal may later ratify the act,
giving it the same effect as if it had been originally authorized."
Citizens Bank of Maryland v. Maryland Indus. Finishing Co., 659
A.2d 313, 320 n.9 (Md. 1995).

Integrated argues that LDDS, by words, conduct, and/or silence,
bestowed its approval upon the disputed MCD Agreement and, conse-
quently, ratified it. We are not persuaded by Integrated's arguments
in this regard. Indeed, LDDS could not have ratified the MCD Agree-
ment for two reasons: (1) Net-Tel did not execute the MCD Agree-
ment on LDDS' behalf; and (2) LDDS was unaware of the MCD
Agreement's existence at all relevant times when ratification could
have occurred.

1.

Principally, Integrated's failure to prove that the MCD Agreement
was executed on LDDS' behalf is crucial because"ratification . . .

                     10
presupposes that the act complained of was . . . on behalf of the prin-
cipal." Hammond v. DuBois, 101 A. 612, 623 (Md. 1917). The record
is replete with evidence revealing that the MCD Agreement was not
executed on LDDS' behalf. Net-Tel's Clifford testified that he
believed the MCD Agreement to be between Net-Tel and Integrated,
rather than between LDDS and Integrated. Thus, even Net-Tel did not
execute the MCD Agreement with the intent to bind LDDS. Other
evidence also suggests the absence of any such intent when the
Agreement was executed. It is undisputed that LDDS did not partici-
pate in the MCD Agreement's negotiation, that Integrated had no
interaction with LDDS whatsoever prior to or during the MCD Agree-
ment's execution, and that the MCD Agreement was explicitly
between Net-Tel and Integrated only. There is simply no evidence
that LDDS ratified the MCD Agreement, which was consummated
solely by the acts of Integrated and Net-Tel in their respective indi-
vidual capacities and for their own benefit.

2.

Integrated's ratification argument also fails because LDDS had no
knowledge of the Agreement's existence and no intent to ratify it. In
order to ratify the MCD Agreement, LDDS must have had "an inten-
tion to ratify, and knowledge of all material facts," Ehrhardt, 518
A.2d at 156 (internal citations omitted), one of obvious import being
the Agreement's existence. Plainly stated, LDDS' knowledge of the
MCD Agreement's existence, at the relevant times alleged as ratifying
moments, was a condition precedent to its ratification. See Lee v.
Pfeifer, 916 F. Supp. 501, 508-09 (D. Md. 1996). However, Integrated
has come forward with no competent evidence that LDDS' knowl-
edge of the MCD Agreement's existence ever coalesced with an
intent to ratify it.

Integrated first alleges that LDDS ratified the MCD Agreement
during the November 16, 1993 meeting. This meeting, which took
place nearly one month after the execution of the MCD Agreement,
marked the first time that Integrated officials met with LDDS officials
and, according to Integrated, the first time that it informed Hampton
and Moore of the Agreement's existence. Integrated further alleges
that Hampton and Moore accepted the MCD Agreement as their own
and encouraged Integrated to perform accordingly. The evidence,

                    11
however, contradicts Integrated's allegations. More specifically, the
testimony of Integrated's Aguayo suggests that the subject of the
November 16, 1993 meeting was the Cable Affiliate Agreement,
which bore little to no relation to the MCD Agreement. Aguayo testi-
fied at his deposition as follows:

          A: We asked Mr. Moore if he had seen the-- we had
         an affiliate agreement, but by this time we had drawn up and
         we had been given a copy, reviewed it. He said that was fine
         . . . . I asked them if they had a copy of our agreement and
         I believe -- I'm not sure which, whether it was Mr. Hamp-
         ton. I don't believe. One of them did and I can't remember
         which one.

         ...

          Q: One of them said they had a copy of the agreement
         between [Integrated] and Net-Tel?

          A: I asked if they had seen a copy of that and I believe
         one of them -- I think it was Mr. Moore that said because
         he was the one that reviewed the cable affiliate thing, and
         he said it was fine. I don't believe Mr. Hampton said, and
         Mr. Clifford then said, "I'll make sure they get their copy."

         Q: Did that suggest to you that they did not have a copy
         of the [Integrated]/Net-Tel agreement?

          A: I would say that you suspect that they didn't have a
         copy from what he said, but I also suspected that they had
         reviewed it. At least Mr. Moore.

J.A. 106, 226 (emphasis added).

The only reasonable inference to be drawn from Aguayo's testi-
mony is that LDDS, by the time of the November 16, 1993 meeting,
had reviewed the Cable Affiliate Agreement, but had not even been
made aware of the MCD Agreement's existence. At most, Aguayo
suspected that LDDS had reviewed the MCD Agreement. Aguayo's

                    12
suspicion, however, is insufficient to create a genuine issue of fact
precluding summary judgment. See Wilson v. Southwestern Bell Tele-
phone Co., 55 F.3d 399, 405 (8th Cir. 1995) ("Mere suspicion about
what may have been in the back of [another's] mind[ ] is not enough
to withstand summary judgment . . . . "). Nor may Integrated create
a genuine issue by alleging the mere existence of some theoretical
argument or "metaphysical doubt" about the facts. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather,
under the language of Fed. R. Civ. P. 56(e), Integrated must offer
"specific facts showing that there is a genuine issue for trial."
Aguayo's testimony, which is the only evidence offered by Integrated
on this issue, is insufficient to support the allegation that LDDS rati-
fied the MCD Agreement during the November 16, 1993 meeting.

Integrated's next claim is that LDDS ratified the MCD agreement
by words, conduct, and/or silence, after the November 16, 1993 meet-
ing. In this regard, Integrated submits a series of three or four phone
calls placed to Margaret Harrington, Hampton's administrative assis-
tant, and several additional calls it placed directly to Hampton and
Moore -- all of which were initiated by Integrated. Substantively,
these conversations were devoid of any acknowledgment of a contrac-
tual relationship between LDDS and Integrated. Indeed, on one occa-
sion Aguayo expressed disappointment with the absence of such a
relationship, stating that "it appears that it would be better if our
agreement [was] directly with [LDDS] as opposed to our existing
agreement with Net-Tel." J.A. 422.

Accordingly, we find no evidence that LDDS ever ratified the
MCD Agreement. LDDS had no knowledge of the MCD Agreement's
existence during the time that Integrated alleges it was ratified. When
first notified of the Agreement's actual existence, moreover, Hampton
did not in any way indicate his assent. Instead, he made it crystal clear
that LDDS was in no way a party to the Agreement.

3.

This brings us to the fundamental and overarching deficiency in
Integrated's claims -- that LDDS never assented to a direct contrac-
tual relationship with Integrated or to the MCD Agreement between
Net-Tel and Integrated. This court cannot enforce a contract unless it

                     13
can determine the dimensions of that contract. It is not enough that
one of the parties believes it has made a contract-- the parties must
have collectively expressed their intentions in a manner that is capa-
ble of understanding. See Meyers v. Josselyn, 129 A.2d 158, 161 (Md.
1957) ("[w]hen an alleged agreement is so vague and indefinite that
the [c]ourt finds it impossible to determine substantially the full inten-
tion of the parties, it must be held unenforceable, because the [c]ourt
cannot make an agreement for the parties."). Indeed, we cannot lose
sight of the fact that a contract is a deliberate agreement of the parties,
frequently marked by certain formalities, establishing their own
framework of rules to govern their relations.

To find LDDS liable under the MCD Agreement would be to foist
the peculiar and special circumstances of that Agreement on LDDS,
which never agreed to its terms. At most, LDDS engaged in prelimi-
nary negotiations with Integrated regarding the Cable Affiliate Agree-
ment, which LDDS declined to enter into and which LDDS advised
Integrated to pursue exclusively with Net-Tel, if at all. Preliminary
negotiations, without more, do not form binding contracts.3

Here, no contract, written or oral, was ever formed between LDDS
and Integrated. Integrated alleges the existence of a contract with
LDDS without providing any evidence that LDDS assented to such.
While Integrated itself may have intended to create a contract
between Integrated and LDDS, Integrated's subjective assent alone
cannot substitute for the mutual assent which constitutes a "meeting
of the minds" -- an essential element in the formation of every con-
tract. Klein v. Weiss, 395 A.2d 126, 141 (Md. 1978).

At most, LDDS considered a business proposition brought to it by
_________________________________________________________________
3 In fact, the United States Supreme Court has articulated the "highly
realistic approach . . . that a contract is ordinarily . . . an intermediate step
serving to tie up prior business negotiations with future consequences
which themselves are the real object of the business transaction." Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 479 (1985). It should be noted
that the above language from Rudzewicz is most commonly cited in cases
involving an analysis of corporate minimum contacts. The distinction
drawn between preliminary negotiations and the actual contract, how-
ever, is relevant here. See id.

                     14
Integrated, which LDDS, in the end, decided not to pursue. Ulti-
mately, freedom not to contract should be protected as vigorously as
freedom to contract. Accordingly, we find Integrated's claims that
LDDS ratified or otherwise assented to the terms of the MCD Agree-
ment to be deficient as a matter of law.

C.

Finally, we consider Integrated's claims that LDDS should be held
accountable under the equitable theories of apparent authority and
agency by estoppel. Under the doctrine of apparent authority, a princi-
pal will be bound by the acts of a person purporting to act for him
where "the words or conduct of the principal cause a third party to
believe that the principal consents to or has authorized the conduct of
the agent." Johns Hopkins Univ. v. Ritter, 689 A.2d 91, 100 (Md. Ct.
Spec. App. 1996) (emphasis in original). A similar showing is
required to establish agency by estoppel. "Like apparent authority, an
agency by estoppel can arise only where the principal, through words
or conduct, represents that the agent has authority to act and the third
person reasonably relies on those representations." Ritter, 689 A.2d
at 100 (emphasis in original). Here, LDDS has made no representa-
tions that Net-Tel was an agent with authority to bind LDDS as prin-
cipal.

1.

Integrated's first allegation is that Net-Tel possessed apparent
authority to bind LDDS. We disagree. "Apparent authority results
from a principal's manifestation of an agent's authority to a third
party, regardless of the actual understanding between the principal
and the agent." Auvil, 92 F.3d at 230; see also Homa, 612 A.2d at
333. The principal's manifestations must occur early enough in a
transaction that they may fairly be said to have"cause[d] the third
party to believe that the principal consents to or has authorized the
conduct of the agent." Ritter, 689 A.2d at 100; see also Ehrhardt, 518
A.2d at 156. This mandate requires Integrated to establish that LDDS
made some manifestation, prior to the actual execution of the MCD
Agreement, that Net-Tel was authorized to enter such on LDDS'
behalf. See Ehrhardt, 518 A.2d at 156.

                    15
When the MCD Agreement was executed, LDDS had no knowl-
edge that Net-Tel and Integrated were contemplating any agreement,
much less one as expansive as the MCD Agreement. Indeed, LDDS
had never been in contact with Integrated. Obviously then, LDDS
could have done nothing to inspire Integrated's belief that Net-Tel
was LDDS' agent. Like an actual agency relationship,"[t]he apparent
power of an agent is to be determined by the acts of the principal, and
not by the acts of the agent[.]" Homa, 612 A.2d at 335 (internal quo-
tation marks and citation omitted). The record does not support Inte-
grated's contention that LDDS acted so as to confer upon Net-Tel
apparent authority to act as LDDS' agent.

2.

Estoppel, however, is not limited to the principal's conduct at the
time of contracting, but may also encompass conduct occurring after
the execution of the contract. In this respect, the doctrine of estoppel
is similar to that of ratification, although the two are technically dis-
tinct. In a claim of estoppel, the principal's intent to adopt the agent's
conduct is largely without import -- "the crucial factor is reasonable
reliance by a third party on the principal's conduct." Ehrhardt, 518
A.2d at 156. We conclude that Integrated's claim for estoppel must
fail, specifically because Integrated cannot simply assert that it relied
upon LDDS' alleged adoption of the contract. There must be some
evidence that its reliance was reasonable. See Ritter, 689 A.2d at 100.

Based upon a single meeting and a few ambiguous conversations
with LDDS, and without a written contract with LDDS, Integrated
alleges it spent over $100,000.00 in attempting to perform under the
MCD Agreement. The unreasonableness of Integrated's acts in this
regard is manifest, as was the blind faith that Integrated placed in Net-
Tel as LDDS' purported agent:

          The mere fact that one is dealing with an agent, whether the
          agency be general or special, should be a danger signal, and,
          like a railroad crossing, suggests the duty to stop, look, and
          listen, and he who would bind the principal is bound to
          ascertain, not only the fact of agency, but the nature and
          extent of the authority[.]

                     16
Standard Acc. Ins. Co. v. Simpson, 64 F.2d 583, 589 (4th Cir. 1933)
(quotations omitted).

Integrated neglected to review the LDDS/Net-Tel Agreement,
which stipulated that Net-Tel lacked the authority to enter into bind-
ing agreements on behalf of LDDS. Moreover, Integrated concedes
that had it so reviewed the LDDS/Net-Tel Agreement, it would not
have entered into the MCD Agreement with Net-Tel. Under these cir-
cumstances, we decline to protect Integrated from the consequences
of its failure to take the reasonable precautions required during the
negotiation of a prospective business transaction.

III.

For the reasons set forth above, we conclude that Integrated's
claims for breach of contract and breach of implied covenant of good
faith and fair dealing fail as a matter of law. Accordingly, we affirm
the district court's order granting summary judgment in favor of
LDDS.

AFFIRMED

                    17