Towson v. Conte
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Circuit Co urt for Baltim ore Cou nty Case No. 03-C-00-000667 IN THE COURT OF APPEALS OF MARYLAND No. 55 September Term, 2003 TOWSON UNIVERSITY v. MICHAEL CONTE Bell, C.J. Raker Wilner Cathell Harrell Battaglia Eldridge, Jo hn C. (retired , specially assigned), JJ. Opinio n by Rak er, J. Bell, C.J. and Eldridge, J., dis sent. Filed: November 17, 2004 In this case, we must decide whether or to what extent a jury may examine or review the factual bases of an employer s decision to terminate an employee in the absence of an express directive fro m the em ployment co ntract. That question has been answere d in this jurisdiction with regard to two different types of employees, the employee at-will and the employee subject to a satisfaction emplo yment contra ct. We dete rmine the a nswer w ith regard to a third type of employee, the employee who may be fired only for just cause. I. The controversy surrounds an employment agreement between Michael Conte, the employee, and Tow son Un iversity (the University), the e mployer. In 19 96, the Un iversity hired Dr. Conte to become the director o f the Reg ional Eco nomic Studies Institute at Towson University (RE SI). T he U nive rsity and Dr. Conte executed an employment contract that enumerated Dr. Conte s duties as the new director of RESI, as well as his compensation, period of employment, and the causes for which he could be terminated. In 1998, several events came to the attention of the University and led to the decision to terminate Dr. Conte. Most of these events centered around RESI s relationship with the State Department of Human R esources (DHR), RESI s primary revenue source. As the owner of RE SI s co mpute r databa se and s oftwa re, unde r federa l regulat ions, D HR was entitled to compensation for any income generated by RES I s use of DH R equipmen t. Dr. Conte was responsible for developing an acceptable methodology for compensating DHR. In June 1998, DHR complained to Dr. Conte about RESI s accounting of that compensation, which was, according to DHR, inconsistent and incomprehensible. Troubled by RES I s accounting procedures, DH R hired a p rivate accou nting firm to review the m and tried to resolve its issues with R ESI throu gh Dr. C onte. Non e of these a ttempts was succ essful, and the relationship b etween D HR an d Dr. Co nte deteriorated until the University Provost John Haeger was informed of the dispute and intervened . Although the Unive rsity eventually was able to save the c ontract and settle the dispu ted costs w ith DHR , it became e xtremely dissatisfied with the manner in which D r. Conte ha d handled the issues an d blamed him for the accelerated reduction in D HR s contract by $2,30 0,000.00 the follow ing fiscal year. Having lost confide nce in Dr. Conte, the University initiated an internal investigation into RESI s a ctivities and ac counting p rocedures . In Augu st of 1998 , the Univ ersity President Hoke Smith directed the Uni vers ity s auditor to ex amine R ESI s reco rds and to determine wheth er RE SI had proper ly accoun ted for i ts expe nditure s and co sts. A preliminary report of the audit in November revealed that personnel costs were documented imprope rly, in violation of University and federal regulations. In addition, the audit showed that the timekeeping procedures used by RESI attributed to D HR pe rsonnel co sts which were unrelated to DHR s contract. In November of 1998, President Smith convened a meeting to discuss RESI s status. The meeting included RESI s associate director, an assistant director, and a former assistant director who had raised concerns about Dr. Conte s management of RESI. Shortly after the meeting, President Smith asked the University s counsel to investigate whether the -2- University had just cause to terminate D r. Conte. During the investigation, various other problems with RESI came to the University s attention, including irregularities in the services provided to other clients and Dr. Conte s alleged attempt to convert RESI into a private entity. After the meeting, Dr. Conte was informe d of the U niversity s intent to terminate him and its request for him to resign. Because Dr. Conte refused to resign, Provost Haeger sent him a detailed letter explaining the causes f or his termina tion. Alleging incompetence and wilful neglect of duty two of the just causes for termination enumerated in Dr. Conte s employment contract the University cited Dr. Con te s handling of the DH R contrac t, which resu lted in an approximate $2,300,000 revenue loss for the fiscal year 1999; RESI s estimated operating losses of $930,000 for the period between J uly and Decemb er 1998; RES I s failure to abide by federal, state, and University regulations in its record-keeping practices; the dissatisfaction of other clients with RESI s work product; the dissatisfaction of several RESI employees who complained about Dr. Conte s management style; as well as various other reasons for the termination. D r. Conte dis puted these allegations an d said that the y did not cons titute incompetence or wilful n eglect of duty as required by the contract. After a brief hearing before the University President with his counsel, Dr. Conte was formally termin ated from his position as director on January 26, 1999. Dr. Conte filed a co mplaint in the Circuit Co urt for Baltim ore Cou nty against the Uni vers ity, alleging , inter alia, that the University had wrongfully discharged him and -3- breached his employment contract. He sought damages for his alleged wrongful termination as director of R ESI, the U niversity s refusa l to pay him additional compensation as defined by his employm ent agreem ent, 1 and the U niversity s failure to appoint him to the faculty after his termination as director as required by the agreement. The University responded to the complaint with several defenses, including the defense that the University had just cause under the contract to terminate Dr. Conte. In September 2001, trial commenced before a jury in the Circuit Court for B altimore Cou nty. At the close of the evidence and testimony of several witnesses, the trial judge instructed the ju ry that the University has the burden to prove by a preponderance of the evidence that one or more of the [causes in Dr. Con te s] contract existed for the plaintiff s termination (emphasis added ). The trial judge refused the U niversity s request to instruct the jury that, in the event they find just cause to b e required u nder the co ntract, the U niversity was nevertheless permitted to terminate Dr. Conte for common law cause or cause that goes to the e ssence of the c ontract. The jury returned with a verdict in Dr. C onte s favor, finding that the University did not prove by a preponderance of the evidence that just cause existed under the contract to fire Dr. Conte, and awarding him $926,822.00 in damages. The University noted a timely appeal to the C ourt of Special Appeals, arguing that the trial court had erred when it instructed the jury that the U niversity was re quired to show just 1 While discovery was proceeding, the Circuit Court dismissed, on limitation grounds, Dr. Conte s claim for additional compensation for fiscal years 1997 and 1998. -4- cause for the termination and when it refused to instruct the jury on common law cause. The Court of Specia l Appeals , in an unreported opinion, agreed with the Circuit Court and affirmed the judgm ent. The University filed a petition for writ of certiorari in this Court to consider two questions.2 376 Md. 543, 831 A.2d 3 (2003). Slightly rephrased, the principal question raised in the petition is whether or to what extent a jury may examine or review the factual bases of an em ployer s decisio n to terminate an employee. The second question is whether Dr. Conte s employment contract was exclusive in its enumeration of the just causes for which Dr. Con te could be terminated, thereby prohibiting termination based upon any other cause, such as common law cause.3 II. From petitioner s perspective, a jury s role in disputes involving just cause employees is not to determine whether just cause in fact existed, but to determine whether the employer acted in go od faith, and not a rbitrarily o r cap ricio usly, when it decided the re was just cause to fire the employee. Put another way, provided the University genuinely believed that Dr. Conte was incompetent or wilfully neglectful of his duties as director, whether Dr. Conte was 2 We denied Dr. Con te s cross-petition for certiorari. 376 Md. 543, 831 A.2d 3 (2003 ). 3 Petitioner argues that the burden of proving just cause or the absenc e thereof lies with Dr. Conte, and that the trial court erred w hen it assign ed the burd en to the Unive rsity. While this issue was raised and argu ed before the trial and inte rmediate appellate courts, the issue is not contained in the petition for certiora ri, and w e will no t consid er it. See Ma ryland Sta te Police v. Zeigler, 330 Md. 540, 562-63, 625 A.2d 914, 925 (1993) -5- actually incompetent or wilfully n eglectf ul is irrele vant to th e jury s inq uiry. Accord ing to petitioner, then, the jury s inquiry must center on the employer s motive and state of mind, not on the actions of the employee and whether they constitute just cause for termination. Underlying petitioner s position is the strong judicial policy against interfering with the business judgment of priv ate bus iness en tities. See Sadler v. Dimensions, 378 Md. 509, 526-27, 836 A.2d 65 5, 665 (2003). To th at end, petitioner relies heavil y on a Court of Special Appe als case , Elliott v. Board of Trustees, 104 Md.App. 93, 655 A .2d 46 (1995). Writing for the panel, Judge Cathell, now on this Court, noted that courts and juries should refrain from becoming involved in an employer s personnel decisions, lest they become super personnel officers, second-guessing an employer about its own business needs. The Elliott court gleaned from Maryland precedent that absent evidence of bad faith on the part of an employer, courts shou ld be reluctant to overturn an e mployer s decision to discharge an employee when the employer has complied with its own procedures for resolving matters such as this. Id. at 108-109, 655 A.2d at 53. Petitioner argues that this rule is app licable to the University s decision to terminate Dr. Conte. Supplementing the argument, petitioner also asserts that Dr. Conte s employment contract expressly reserved to the University, not to a trial court or jury, the right to determine whether just cause existed , i.e., the fact-finding prerogative. Petitioner reasons that because Paragraph 6.2 of the employment contract establishes a procedure for appeal from the employer s decision to te rminate, that p rocedure n ecessarily implies that the University had -6- the sole author ity to determine whether just cause existed. Relatedly, petitioner argues that absent any express provision assigning the fact-finding prerogative to a third-party or jury, the trial court should not have permitted the jury to determine de novo whether just cause had been proved by a preponderance of the evidence. Petitioner urges this Court to confirm, as have a number of decisions from other states, that an emplo yer reserves the right to termin ate an employee for cause unless the employment agreeme nt expressly co ntracts awa y its factfinding prerog ative. In short, petitioner proposes a legal presumption that, in the interpretation of emplo yment contracts, an employer retains all fact-finding prerogatives, absent an express provision stating otherwise. In response to petitioner s arguments, responde nt asserts that p etitioner essen tially wants to transform an express, just cause employment contract into an at-will employment contract. The cases relied upon by petitioner are almost all in the context of implied employment contracts, as in contracts implied from employee handbooks, or satisfaction contracts, in which the employer expressly reserves the right to terminate if it deems the employee s performan ce unsatisfa ctory. None o f the cases d eal with an express co ntract sans a satisfaction clause, like the one agreed to by both parties to this litigation. Furthermore, responde nt states that pe titioner s reading of the con tract distorts its plain meaning , which ind icates the inten tion by both the University an d Dr. Co nte to permit termination only for just cause. Pa ragraph 6 .2 of the co ntract mere ly promises a perfun ctory hearing before the President, ba sically a rubber- stamp of the decision to terminate after it -7- unquestio nably had been dete rmin ed al read y. Respondent argues that under Maryland law, one party is not permitted to retain the ultimate fact-finding prerogative with respect to a breaching event, unless the contrac t expressly grants the fact-finding prerogative to one of the parties. Respondent cites Foster-Porter Ent prises v. De Mare, 198 Md. 20, 81 A.2d 325 (1951), for the proposition that the party asserting a breach of contract must prove the breach actually occurred, n ot that it was re asonable to believe it occurred. Respondent would have us adopt a rule permitting the jury to second-guess the University s factual determination that it had cause to fire Dr. Conte. Notably, neither party po ints to Ma ryland case law that deals squarely with the jury s role in deciding wrongful termination cases. Both parties rely mainly on cases from other jurisdictions that have considered this issue and balanced the judicial policy of noninterference with business judgment with that of enforcing contracts meant to ensure job secu rity. In this issue of first impressio n, we sha ll consider external authorities, but also our own case precedent, which provides a pathway for our decision. III. A. Our analysis begins, as it should, with the language of the employment contract at issue. The interpretation of a co ntract, including the determination o f whether a contract is ambiguous, is a question of law, subject to de novo review . Sy-lene v. Starwood, 376 Md. -8- 157, 163, 829 A.2d 540, 544 (200 3); Calomiris v. Woods, 353 Md. 425, 434-35, 727 A.2d 358, 362-63 (1999). Maryland courts follow the law of objective interpretation of contracts, Atlantic v. Ulico 380 Md. 28 5, 301, 844 A.2d 46 0, 469 (20 04); Sy-lene, 376 Md. at 166, 829 A.2d at 546, giving effect to the clear terms of the contract regardless of what the parties to the contract may have believed those terms to mean: [A court is to] determine from the language of the agreement itself what a reasonable person in the position of the parties would have meant at the time it was effectuated. In addition, when the language of the contract is plain and unambiguous there is no room for construction, and a court must presume that the parties meant what they expressed. In these circumstances, the true test of w hat is meant is not what the parties to the contract intended it to mean, bu t what a reasonable person in the position of the parties would have thought it mea nt. Con sequ ently, the clear and unambiguous language of an agreement will not give away to what the parties thought that the agreem ent me ant or in tended it to mea n. Calomiris, 353 Md. at 436, 727 A.2d at 363 (quoting Genera l Motors A cceptanc e v. Danie ls, 303 Md. 25 4, 261, 492 A.2d 1306, 1310 (19 85)). Paragraph 6 of the employment contract between Dr. Conte and the University governs termination of employment and provides, in pertinent part, as follows: 6. Termination: 6.1 The University may terminate this appointment for cause which shall include: (a) the intentional violation of University of Maryland System Regulations or University regulations (b) wilful n eglect of d uty (c) insubordination (d) incompetence -9- (e) misconduct (f) criminal conduct (g) long-term physical or mental condition which renders Dr. Conte unable to perform the duties essential to the Director s position 6.2 In the event the Un iversity terminates this Appoin tment, for the above reasons, it shall notify the Director, in writing, of the cause for which term ination is sought and the right of the Director to request a hearin g by the Un iversity President or the Presid ent s designee. The hearing must be requested within 30 days of the D irector s receipt of the written termination notice. In the event no such hearing is requested, the termination shall become immediately effective. Two legal conse quences relevant to o ur discussio n can be d rawn fro m the lang uage of th e contract. First, Paragraph 6.1 of the contract makes clear th at Dr. Con te was no t an at-will employee. The Un iversity could not fire Dr. Conte on a whim, nor could it avail itself of the various legal protections afforded employers who terminate at-will employees. Although employment in Maryland is presump tively at-will, see Porter field v. Mascari, 374 Md. 402, 421-22, 823 A.2 d 590, 60 1-02 (200 3); see also S. Mazarof f & T . Horn , Maryland Employment Law, § 3.01 (2d. ed. 2004), a contract, whether express or implied, may overcome that presum ption and c reate an em ployment rela tionship whereby the employee may be term inated o nly for jus t cause. See 19 Williston on C ontracts § 54:41 (4 th ed. 2001). While the language of the contract itself may express a just cause requirement, a contractual delineation of the length of the employment period will also create a just cause employment relationship because by specifying the length or term of employment, the employer usually -10- is considered to have surrendered its ability to te rminate the em ployee at i ts discre tion. See Shapiro v. Massengill, 105 Md .App. 743 , 661 A.2d 202 (199 5); Chai Management v. Leibow itz, 50 Md .App. 504 , 439 A.2d 34 (1982 ); cf. Gill v. Computer Equip. Corp., 266 Md. 170, 179, 292 A.2d 54, 58 (1972) (refusing to find a just c ause emp loyment relation ship in a contract that did not delineate specific term of employm ent); McCarter v. Chamber of Commerce, 126 M d. 131, 9 4 A. 54 1 (191 5) (sam e). Dr. Conte s contract contains a provision that permits termination only for cause and a provision that sets the time period of his employment, 4 both of which independently establish he was not an at-will employee. The trial court found that he w as not an at-w ill-employee an d neither pa rty has appeale d this finding. Second, the language of the contract is ambiguous as to whether the fact-finding prerogative lies with the University. On the one hand, we note the glaring absence of express language directing the fact-finding prerogative to the Univers ity. Paragraph 6.2 provides a procedural safeguard for Dr. Conte a hearing be fore the Pr esident of th e Univer sity before termination may take effect. But it does not say the President s d ecision is fina l, nor does it intimate that the traditional judicial remedy was foreclosed to Dr. Conte if he disagreed with the President s decision. T he contrac t is silent as to adequate investigation, fact-finding, or arbitration in the even t of dispute, a nd it provides no semblance o f procedural or eviden tiary 4 Section 2 of Dr. Conte s employment contract provides a set employment period from April 1, 1996 to June 30, 1999. -11- safeguards that would imply that adjudicatory discretion is reserv ed to the Unive rsity. Cf. Murphy v. Duquesne University , 777 A.2d 418, 433 -34 (Pa. 20 01) (noting that it would be unreasonab le to believe that an employment contract intended that a carefully elaborated procedure for termination of a tenured professor could be completely circumvented by the filing of a civil actio n). Rather, all that is promis ed is a hearin g, a meeting , essentially, with the President before termination takes effect, and that is all that Dr. Conte received. I t is difficult to read into Paragraph 6.2 an intention by the parties to exclude the traditional remedy in court for contractual disputes. On the other ha nd, it is just as difficu lt, if not more d ifficult, to understand Paragraph 6.2 as having a rational bas is for existence unless it was meant to reserve, at some level, the fact-finding prerogative for the University. If the parties intended to permit the relitigation of every fact related to Dr. Conte s term ination, why was it necessary to grant Dr. Conte the right to a hearing in the first place? One resp onse is that D r. Conte s h earing prov ides an avenue whereby a factual dispute or mistake might be resolved by the parties before resorting to the expensive measure of litigation. B ut that respon se is not persu asive with r egard to Paragraph 6.2, which grants Dr. C onte the rig ht to a hearing. Resolving disputes privately does not require giving the employee the right to a hearing as a condition for effective termination. That avenue always exists, even in the absence of a provision like Paragraph 6.2. In other w ords, a hearin g would accomplish nothing that would not be accomplished in court before the jury. Paragraph 6.2 would be rendered superfluous, and courts do not -12- interpret contracts in a manner that would render provisions superfluous or as having no effect. See Walker v. Human Resources, 379 Md. 407, 421 , 842 A.2d 53 , 61 (2004) (stating that [w]e also attempt to construe contracts as a whole, to interpret their separate provisions harmoniously, so that, if possible, all of them m ay be given effect ). Fort unately, we need not address which interpretation is more persuasive because we find that, under either interpretation of the contract, the University retains the fact-finding prerogative. If petitioner s reading of the contract prevails, and the contract expressly reserves the right to the University, then the University retains the fact-finding prerogative, and it was error f or the low er courts to p ermit the jury to be the fact-fin der in this case. Nevertheless, because the contract is ambiguous, we will assume, without deciding, that respondent s reading is correct, and that the contractual language does not speak either way on the issue of fact-finding prerogative. In that case, we mu st decide, in the employme nt law sph ere, who s hould presum ptively retain the fact-finding prerogative. We have already addressed this issue with regard to two different types of employees, the employee at-will and the employee subject to a satisfaction employme nt contract. W e now a ddress this issu e with regard to a third type of employee, who, like Dr. Conte, may be fired only for just cause. B. In order to glean guidance on this issue, we start with an analysis of the presumptive fact-finder in the types of employment relationships for which this question has already been -13- answered. In the at-will employment context, we have held that a jury may not review any aspect of the employer s decision to terminate and that the e mployer ma y, absent a contravening public policy, terminate an em ployer for any rea son, even a reason that is arbitrary, capricious, o r fundam entally unfair. See Porte rfield, 374 Md. at 422, 823 A.2d at 602; Suburban Hospital v. Dwiggins, 324 Md. 294, 310, 596 A.2d 1069, 1077 (1991) (declining the invitation to impose a general requirement of good faith and fair de aling in at-will employme nt situations ); Adler v. American Standard Corp., 291 Md. 31, 35, 432 A.2d 46 4, 467 (19 81). For ou r purposes , the significan t point is that courts and juries may not review eith er the employer s (1) motivation or (2) factual bases for termination in the context of an at-will employment relationship. A jury s review, however, is ratcheted up one step when the emplo yment is pursuant to a satisfaction emplo yment co ntract. See, e.g., H & R Block, Inc. v. Garland, 278 Md. 91, 100, 359 A.2d 130, 134 (1976) and cases cited therein. A satisfaction employment contract typically conditions employment on the employer s satisfaction. As we intimated when we first explained satisfaction employment contracts in Ferris v. Polansky, 191 Md. 79, 59 A.2d 74 9 (1948): In a contract where the employer agrees to employ another as long as the services are satisfactory, the employer has the right to terminate the contract and discharge the employee, whenever he, the employer, acting in good faith is actually dissatisfied with the employee's work. This applies, even though the parties to the employment contract have stipulated that the contract shall be operative during a definite term, if it provides that the services are to be performed to the satisfaction of the emp loyer. -14- It is not necess ary that ther e exist grou nds deem ed adequ ate by the trier of facts for th e employ er's dissatisfactio n. He is the judge as to whether the services are satisfacto ry. Howev er, this dissatisfaction, to justify the discharge of the employee, must be real and not pretended, capricious, mercenary, or the result of a dishonest design. If the employer feigns dissatisfaction and dismisses the employee, the discharge is wrongful. The employer in exercising the right of dismissal because of dissatisf action m ust do s o hone stly and in g ood fa ith. Id. at 85-86, 59 A.2d at 752 ( emph asis add ed). Polansky teaches that when an emplo yee is subject to a satisfaction contract, the jury may not review the employer s factual bases for termination, but the jury is permitted to review the employer s motive for term inati on spec ifica lly, the employer s subjective motivation. Subjective motivation means whether the employer was genuinely or honestly dissatisfied with the employee s services or mere ly feignin g dissati sfactio n. Id. In contrast to at-will employment in which a jury may review neither the motivation nor the factual bases of the employer s decision, a satisfaction emplo yment contract permits a jury to review (1) the employer s motivation, limited to his subjective motivation,5 but not (2) the factual bases for termination, the prerogative of wh ich rem ains w ith the em ployer. Id.; H & R Block, 278 Md. at 100, 359 A.2d at 134; Volos, Ltd. v. Sotera, 264 Md. 155, 170, 286 A.2d 101, 109 (1972) (noting that the usual rule is that subjective, not objective, standard of review applies to sufficiency of 5 We do not intim ate that the subjective stan dard app lies to satisfaction contracts outside the em ploymen t sphere . See First National v. Warren-Ehret, 247 Md. 652, 658-659, 233 A.2d 811, 814 (1967) (noting that there are different types of satisfaction contracts, dealing with different subject matters, and that the courts h ave not ap plied the sam e rule to all of them). -15- performance issue s in satisfaction employment co ntracts). Fina lly, there are em ployment co ntracts that gra nt a greater level of protection from termination than both the at-will and satisfaction employment contracts, by which we mean the just cause employment co ntract. To what extent m ay a jury review an employer s decision to terminate when the employer has promised not to terminate except for just cause? At-will employmen t contracts permit review of neither the employer s motivation nor the factual bases for te rmination. S atisfaction em ployment co ntracts permit revie w only of the employer s motivation, limited to his or her subjective motivation, but not the factual bases for termination. Just cause employment contracts, such as in the case sub judice, logically permit the jury to review w ith greater scru tiny the employer s decision to terminate than do satisfaction contracts. Does a just cause employment contract require, as respondent posits, a jury s review of the factual bases in addition to the employer s motivation? Or, as petitioner argues, is a just cause contract similar to a satisfaction contract, permitting review of the employer s good faith, but nothing more? While we disagree that just cause employment contracts should be treated like satisfaction contracts, we will not take the extraordinary step precluded by our case law in all the employment contracts we have so far encountered of permitting the jury to scrutinize the factual bases for the decision to terminate. Therefore, we hold that the jury may not review whether the factual bases for termination actually occurred or w hether they were proved by a preponderance of the evidence submitted for its review. Ins tead, the pro per role -16- of the jury is to review the objective motiva tion, i.e., whether the employer acted in objective good faith and in accordance with a reasonable employer under similar circumstances when he decided th ere was ju st cause to terminate the employee. The jury s inquiry should center on whether an employer s termination was based upon any arbitrary, capricious, or illegal reason, or on facts not reasonably believed to be true by the employer. But the fact-finding prerogative remains with the employer, absent some express intention otherwise. This view, which is in accord w ith the majorit y of our sister states that have encountered this precise issue, broker s an app ropriate balanc e betw een the two vie ws ad vocate d by the p arties. See, e.g., Life Care Centers of America v. Dexter, 65 P.3d 385 (W yo. 2003); Almad a v. Allstate Ins. Co.,153 F.Supp.2d 1 108 (D. Ariz. 200 0); Thompson v. Associate d Potato Growers, 610 N.W.2d 53 (N.D . 2000); Cotran v. Rollins Hudig Hall Intern., Inc., 948 P.2d 412 (Ca l. 1998); Southwest Gas v. Vargas, 901 P.2d 693 (Ne v. 1995); Braun v. Alaska Com. Fishing & Agr. Bank, 816 P.2d 140 (Ala ska 1991 ); Baldwin v. Sisters of Providence in Washington, 769 P.2d 298 (Wash. 1 989); Kestenbaum v. Pennzoil Co., 766 P.2d 280 (N .M. 1988); Simpson v. Western Graphics Corp., 643 P.2d 1276 (Or. 1982); cf. Gaudio v. Griffin Health Services Corp., 733 A.2d 197, 20 8 n.13 (Conn. 19 99); Wilde v. Houlton Regional Hosp., 537 A.2d 1137, 1138 (Me. 1988) (refusing to infer term into contract limiting e mployer's fundam enta l righ t to re duce his wor k force, a bsen t som e exp ress prov ision to the con trary, due to essential business prero gatives and marke t forces). In a minority of jurisdictions, the role of the jury is to determine whether the alleged -17- misconduct actually occurred. The leading case for this position is Toussaint v. Blue Cross & Blue Shield of Mich., 292 N.W.2d 880 (Mich. 1980), in which the Michigan Supreme Court held that the trie r of fact, not the employer, determines whether there was cause sufficient to warrant the employee s termination. That court reasoned that an em ployer s promise to discharge only for just cause would be rendered meaningless and illusory if the employer was th e final a rbiter of the disc harge. Id. at 895. Therefore, an employer s good faith belief that there was just cause to terminate could not by itself supply cause. In other words, under the Toussaint holding, the factual bas es of the jus t cause asse rted by the employer must be proven by a preponderance of the evidence to the trier of f act. See, e.g ., Raymond v. International Business Machines, Corp., 954 F.Supp. 744, 751-52 (D . Vt. 1997); cf. Schuessler v. Benchmark Marketing and Consulting, Inc., 500 N.W.2d 529, 538 (Neb. 1993) ( If the employer produces sufficient evidence, the employee may rebut, and if in controversy, the issue go es to the trier of fact; howev er, the ultimate burden of proving wrongful termination remains w ith the employee ); Sanders v. Parker Drilling Co., 911 F.2d 191 (9th Cir. 199 0) (applying Alaska law, cast into doubt sub silentio by Braun, 816 P.2d 140); Alegria v. Idaho First Nat. Bank, 723 P.2d 858, 87 5 (Idaho,1986). Following closely on the heels of Toussaint, however, a case by the Oregon Supreme Court implicitly rejected the Toussaint holdin g. Simpson v. Western G raphic s Corp ., 643 P.2d 1276, a case involving the disputed nature of threatening remarks made to a co-worker, held that when an emplo yer contracts to d ischarge on ly for just cause, it d oes not, absent -18- indication of some other intent, contract away its inherent right to be the ultimate fact-finder in determining whether just cause existed. Therefore, to justify its decision to terminate, the employer need not prove to the jury that the misconduct or just cause actually occurred by a preponderance of the evidence. 643 P.2d at 1278. As stated by that court: In the absence of any evidence of express or implied agreement whereby the employer contracted away its fact-finding prerogative to some other arbiter, we shall not infer it. Id. at 1279. In other words, that cou rt, in the absence of a contrary contra ctual provisio n, presum ptively designated the fact-finding prerogative to the emp loyer. We agree with the Oregon Supreme Court that absent some express indication otherwise, an employer does not contract aw ay his core fun ction as ultim ate fact-find er with regard to an employer s workplace perf ormance. We will not interpret Dr. Conte s employment contract as granting a third-party, the jury, the authority to review the factual bases of the University s decision to terminate him especially in light of our previous holdings, with re gard to satisfac tion and at-will e mploym ent relatio nships , that have consistently attributed the fact-finding prerogative to the employer. As Judge Cathell, then on the Court of Special Appeals, aptly warned, [t]o hold otherwise would be to put the courts in the po sition of makin g . . . personnel decisions, acting as a super personne l officer, or of second-guessing a company s decisions. Elliott, 104 Md.App at 110, 655 A.2d at 54 (citation and quo tations omitte d). Echoing Judge Cathell s admonition, another supreme court that en countered this precise issu e has said: -19- [Allowing a jury to trump the factual findings of an employer with regard to just cause] would create the equivalent of a preeminent fact-findin g board unconnected to the challenged employer, that would have the ultimate right to determine anew whether the emplo yer s decision to terminate an em ployee . . . . This ex officio fact-finding board, unattuned to the practical aspects of employee suitability over which it would exercise consum mate power, and unexposed to the entrepreneurial risks that form a significan t basis of ev ery state s econo my, would be empowered to impose substantial monetary consequences on employers whose employee termination decisions are found wantin g. Vargas, 901 P.2d at 699. We are in agreement with these concerns. This premise that the employer, not the jury, retains the fact-finding prerogative does not render illusory the promise not to terminate except for just cause. In Cotran v. Rollins Hudig Hall, the California Supreme Court also agreed with the Simpson holding that the jury s role did not encompass that of fac t-finder in a w rongful term ination case , and it disagreed with the Toussaint court that this w ould re nder th e prom ise mea ningles s. Instead, the jury s role was to assess the objective reasonableness of the employer s factual determination that just cause existed. 948 P.2d at 4 19. To flesh out the meaning of objective reasonableness in the employment context, the court explained that just cause required (1) that the employer act in objective good faith (meaning , as we hav e already stated, g ood faith from the perspec tive of a reas onable employer, not of the in dividu al emp loyer), id. at 420, and (2) that the employer base its decision on a reasoned conclusion supported by substantial evidence. Id. (citing Baldwin, 769 P.2d at 304). Such an approach, said the court, achieved -20- a middle ground between the Toussaint rule and a toothless just cause doctrine. The Cotran court supported its decision with policy considerations it found persuasive in the personnel context: As several courts h ave po inted ou t, a standard permitting juries to reexamine the factual basis for the decision to terminate for miscond uct typica lly gathered under the exigencies of the workaday world and without benefit of the slow-moving machinery of a conte sted trial dampen s an emp loyer's willing ness to a ct . . . . Equally significant is th e jury's relative remoteness from the everyday reality of the w orkpla ce. The decision to terminate an employee for misconduct is one that not uncommonly implicates organizational judgmen t and may turn on intractable factual uncertainties, even where the grounds for dismissal are fact specific. If an employer is required to have in hand a signed confession or an eyewitness account of the alleged misconduct before it can act, the workplace will be transformed into an adjudicatory arena and effective decisionmaking will be thwarted. Although these features do n ot justify a rule permitting employees to be dismissed arbitrarily, they do mean that asking a civil jury to reexamine in all its factual detail the triggering cause of the decision to dismiss including the retrospective accuracy of the employer's comprehension of that event months or even years later, in a context distant from the imperatives of the workplace, is at odds with an axiom underlying the jurisprudence of wrongful termination. That axiom . . . is the need for a sensible latitude for managerial decisionmaking and its coro llary, an optimum balance point between the employer's interest in organizational efficiency and the em ployee's in terest in c ontinu ing em ploymen t. Id. at 420-42 1 (citation om itted). The m ajority of high c ourts that have considered the issue are in ag reeme nt with Califo rnia, see supra, and so are we. As outlined above and in addition to the logical progression of our precedent, the -21- practical considerations of running a business overwhelmingly favor a legal presumption that an employer retain the fact-finding prerogative underlying the decision to terminate employment. Indeed, this case is a good example as to why a jury should not be permitted to review the factual bas es for termin ation in the emplo yment conte xt. Because of the strict evidentiary rules of a judicial proceeding, the University was barre d from ad mitting into evidence hearsay statements relied upon by the University in its termination decision. Nevertheless, employers often rely on hearsay, on past similar conduct, on their personal knowledge of people s credibility, and on othe r factor s that the judicial p rocess ig nores, indicating that [w]hat works best in a judicial proceeding may not be appropriate in the employment context. Waters v. C hurchill, 511 U.S. 661, 676, 114 S.Ct. 1878, 1888, 128 L.Ed.2d 686 (1994). Similarly, the University alone was in the best position to determine whether there were facts sufficient to constitute incompetence and wilful neglect of duties, the two just causes outlined by the contract as the basis for Dr. Conte s termination. Whether an employee was incompetent or in wilful neglect of duties is a question that not only requires the special knowledge of the employer, but it is also so overbroad and vague in its terminology that a jury s attempt to figure out what those terms mean especially in the conte xt of a high ly competitive a nd comp lex research institute involving, among o ther things, va rious private c lients and pu blic interests, interlo cking federal and state reg ulations, and the comp lex accou nting protoc ol of a large public univ ersity is an en deav or do ome d to f ailur e or g ross uncertai nty. -22- Respondent refers us to tw o Court o f Specia l Appe als case s, Tricat v. Harper, 131 Md.App. 89, 748 A.2d 48 (2000), and Foster-Porter Ent prises v. De Mare as support for the opposite position that the employer was required to prove actual cause by a preponderance of the evidence. We do not find these cases relevant to the issue of the jury s role as fact-finder. Tricat did not address the issue of a jury s role or actual cause, but instead dealt with the proper placement of the burden of proof, an issue not presented in this case, see supra n.3. Respondent fares no better with the Foster-Porter case, which does not deal with the em ployee-emp loyer relationship (although it h as occasion ally been cited in that context for a dif ferent p ropositi on, see infra Part IV). Instead, it involved a standard breach of contract dispute betw een a distributor and ma nufacturer. Fina lly, we are un persuade d by respond ent s argum ent that many of the cases that have held, as we do , that the presu mption of fact-finder lies with the emplo yer apply only to the implied contrac t case. Cf. Cotran, 948 P.2d at 414 n.1 (noting that [w]rongful termination claims founded on an explicit promise that termination will not occur except for just or good cause may call for a different standard, depending on the precise terms of the contract provision (second e mphasis a dded)); Khajavi v. Feather River An esthesia Medical Group, 100 Cal.Rptr.2d 627 (Cal. Ct. App. 2000) (holding that unlike wrongful discharge based on an implied con tract, employment for a specified term may not be terminated prior to the term s expiration based upon employer s honest but mistaken belief of misconduct), rehearing and review denied. First, resp onden t s prem ise is inco rrect. See, e.g., Thompson, -23- 610 N.W.2d at 57-59 (adopting the Cotran holding in the context of an express just cause contract); Manning v. Alaska R.R. Corp., 853 P.2d 1120, 1125 n.2 (Alaska 1993) (applying the same definition of just cause to collective bargaining agreement that expressly stated the employer may take disciplinary action against an e mployee fo r just cause because th is is the appropriate standard for just cause discha rges ). Second, an d perhap s mo re im portantly, the reasonin g of the ca ses that adh ere to the ob jective goo d faith standard in the context of implied contracts ap ply with equal force in the context of express contracts. Respondent offers no reason why the two should be distinguished. Perhaps respondent and other jurisdictions do not provide rationales for treating differently implied contracts from express contracts because the two do not differ in substance or effect, but only in the manner in which they are f ormed . Regarding that difference in contract formation, the comment to the Restatement of Con tracts explains, Contracts are often spoken of as express or implied. The distinction involv es, how ever, no difference in legal effect, but lies merely in the mode of manifesting assent. Restatement (Seco nd) of Contracts § 4 cmt. a (1981) (emp hasis added). In sum, we agree with the majority of jurisdictions that have considered this issue and hold that a jury s role in a wrongful discharge ca se does no t include that o f ultimate fa ctfinder. Instead, in the just cause employment context, a jury s role is to determine the objective reasonableness of the employer s decision to discharge, which means that the employer act in objective good faith and base its decision on a reasoned conclusion and facts reasonably believed to be true by the em ployer. -24- IV. Although Part III of this opinion resolves the dispute and will require a new trial, we will give guidance on the second question presented, as it will undoubtedly arise again in the litigation. This issue is w hether D r. Conte s em ployment co ntract was e xclusive in its enumeration of the just causes f or which Dr. Con te could be terminated, thereby prohibiting termination based up on any other c ause, such as comm on law ca use. We h old that it was not exclusive. This interpre tation of D r. Conte s em ployment contract is required by its clear terms, which are unambiguous with regard to this issue and which are reproduc ed, in pertinent part, as follows: 6. Termination: 6.1 The University may terminate this appointment for cause which shall include: (a) the intentional violation of University of Maryland System Reg ulations or U niversity regulations (b) wilful n eglect of d uty (c) insubordination (d) incompetence (e) misconduct (f) criminal conduct (g) long-term physical or mental condition which renders Dr. Conte unable to perform the duties essential to the Director s position *** 6.3 The appointment shall terminate for the following reasons: (a) The Director s acceptance of other employme nt; the Director s resignation, or the Director s re tirement. -25- (b) Pursuant to Maryland law, if funds are not appropriated or otherw ise made a vailable to support continuation of this position on or after July 1, 1997, and the Direc tor choose s not to operate RESI on a self-supporting basis. (c) The Director s death. 7. Faculty Appointment: In the event the Director is terminated for reasons other than those provided in paragraph 6.1(a) through (g) and 6.3(a), or if this App ointment is n ot renewed, the Director shall be appointed Profe ssor of econo mics, w ith tenur e, subject to the University of Maryland System Appointm ent, Rank and T enure Policies and Procedures and University Policies and Procedures on the appointment of tenured faculty, as amende d from tim e to time. Because we find these prov isions clearly and unambig uously manifest an intent by the parties not to limit the just causes for which Dr. Conte could be terminated, we will enforce those terms. Dr. Conte s contract does not limit the causes for his terminatio n to those enumerated by 6.1(a) (g) because the language in Paragraph 6.1 of the contract is clear and unambiguous. Th e Un iversity may terminate this e mploymen t for cause w hich shall include [the enum erated s even c auses]. This langu age does not expres sly or impliedly make those causes exclus ive. The word include ordinarily means comprising by illustration and not by way of limitation. Group Health Ass'n v. Blumenthal, 295 Md. 104, 111, 453 A.2d 1198, 1203 (1983 ), cited with appr oval in State v. Wiegmann, 350 Md. 585, 593, 714 A.2d 841, 845 (1998). There is nothing in the language of the contract such as shall include only that would re fute this ordinary understanding of the term and make the seven listed -26- causes exclus ive. See also Thompson, 610 N.W.2d at 57 (addressing the identical issue, and finding that the list of causes w as not exclusive). This interpretation is further supported by the word may in Paragraph 6.1. Connoting a permissive, discretionary action, the wo rd may indicates that the Univers ity, at its discretion, could terminate Dr. Conte for the seven enumerated causes, but it did not require the University to do so. Cf. Board of Physician v. Mullan, 381 Md. 157, 848 A.2d 642 (2004); Spencer v. Board of Pharmacy, 380 M d. 515, 846 A.2d 34 1 (2004); Planning Comm. v. Silkor Corp., 246 Md. 516, 229 A.2d 135 (1967) (interpreting the word may to signal the ordinary meaning of permission unless the context or the purp ose of the s tatute shows that it is meant to be imperative). Paragrap h 6.1 man ifests an intention to describe the types of causes for whic h Dr. Co nte could b e terminated , but there is no language signaling the parties intended to limit those causes to the ones mentioned. Second, and perhaps even m ore com pellingly, the textu al conte xt of Pa ragrap h 6.1 plainly indicates that the enumerated causes of that paragraph were not exclusive. Paragraph 7 states that, [i]n the event the Director is terminated for reasons other than those provided in paragraphs 6.1 (a) through (g) and 6.3 (a), Dr. Con te will be appointed a professor at the Uni vers ity. At the very lea st, Paragrap h 7 anticipa tes that some causes w ere not listed in Paragraph 6.1. Respondent argues that the causes other than those provided for in Paragraph 6.1 (a) through (g) and 6.3 (a) refer to 6.3(b) alone and do not imply that other just causes might -27- exist. We find this explanation unpersuasive and objectively unreasonable. If the parties had truly intended such a thing, a much more logical, simple, and intuitive way of articulating their intent would have been to use language such as for the reason stated in 6.3(b) of this contrac t. Indeed, the plain language of the contract refutes respondent s interpretation, for it uses the plu ral, reasons, in dicating that th e singular rea son stated in 6.3(b) is not th e only reason for termination contemp lated by the contract. To adopt resp ondent s understanding of the contract would belie common sense. Therefore, the claim that the contract intended the causes of Paragraph 6.1 to be exclusive is unpersuasive. The implication for petitioner is that the University may base its cause f or term ination o n reaso ns othe r than th ose listed in the co ntract. See Regal Savings Bank v. Sachs, 352 Md. 356, 364, 722 A.2d 377, 381 (1999) (holding that, in the context of employment contracts, unless a provision for termination is in terms exclusive, it is a cumulative remedy and does not bar the ordinary remedy of termination for a breach which is material, or w hich goes to the root of the ma tter or essence of the contract (quoting Foster-Porter, 198 Md. at 36, 81 A.2d at 333) (citations and internal quotations omitted)). This understanding of the contract does not transform Dr. Conte into an emplo yee atwill. As we have already stated, the contract establishes, and it is concede d, that Dr. C onte could be terminated only for just cause. Thus, as long as the University bases its termination on just cause, it can do so regardless of whether that specific just cause is included in the contract. However, petitioner concedes that termination based on a cause subject to -28- Paragraph 7 will result in Dr. Conte being appointed to a tenured professorship. In this case, the University could base its termination on common law cause which permits an employer to terminate an employee for a material breach of the contract, one that goes to the essence of the contract itself e ven thoug h that cause is not mentio ned in the contrac t. See id. But it could not terminate D r. Conte at its discretion or for any other reason that w ould not sa tisfy the just cause requireme nt. In his dissent, Judge Eldridge raises two jurisdictional or quasi-jurisdictional issues that Dr. Co nte s only available ju dicial remedy was to seek judicial review of the administrative decision by the President of Towson, and that his breach of contract action was filed beyond the one year allowed by Maryland Code, § 12-202 of the State Government Article. On the state of the record before us, neither of those issues appears apposite. Towson University is part of the University System of Marylan d. See Maryland Code, § 12-101 of the Education Article. Section 12-104(j)(2) of the Education Article makes clear that, except with respect to grievance appeals under Title 13, subtitle 2 of the Education Article, of which this action is not one, the contested case provisions of the Administrative Procedure Act do not apply to the University, and there is, accordingly, no statutory provision for any administr ative hearing to which Dr. Conte would be entitled or any APA-type of judicial r eview of adm inistrativ e proce edings provid ed for in his con tract. Although, under ou r case law, the courts have inherent authority, by mandamus or injunction, to review administrative decisions alleged to be arbitrary, capricious, or unlawful -29- in som e wa y (see, e.g., Crimina l Inj. Comp . Bd. v. Gou ld, 273 Md. 486, 331 A.2d 55 (1975) and cases cited therein), we have never held that such an ac tion is, in all case s, the sole remedy available or that resort to that avenue of judicial review is a jurisdictional requirement. Dr. Conte was not seeking a Gould-type of judicial review of any administrative decision by the President o f Tow son but w as, instead, see king damages for common law breach of contract. Every breach of contract action against the State involves, to some ex tent, an allegation that a State agen cy or official ac ted improp erly and unlaw fully in failing to comply with the contract, but this Court has never suggested that, in the absence of an applicab le statutory administrative procedure, the plaintiff s only remedy is to seek judicial review of the adm inistrative decision not to comply with the c ontract through an action f or man damu s or injun ction. With respect to Conte s alleged failu re to comp ly with the one-year limitations period provided in § 12-202 for bringing a breach of contract action again st the State, it wo uld appear that his action wa s, in fact, timely. His contract and employment were formally and effectively terminated on Janua ry 26, 1999, and his action was filed on January 24, 2000. Whether Dr. Conte could have sued for injunctive relief prior to January 26, 1999, to preclude Towson U niversity from terminating his contract or fo r an anticipatory breach of contract an issue that is not before us his cause of action for the actual breach did not and could n ot arise u ntil the co ntract w as, in fac t, termina ted. -30- Citing and relying upon Delaw are Sta te Colle ge v. Ric ks, 449 U.S. 250, 101 S.Ct. 498, 66 L.Ed.2d 431 (1980) and Chardon v. Fernandez, 454 U.S. 6, 102 S.Ct. 28, 70 L.Ed.2d 6 (1981) (per curiam), the dissent maintains that the statute of limitations begins when notice of termination is issued by the employer and not when the termination is effective. Dissenting op. at 7. Ricks claimed that the College discriminated against him on the basis of national origin in violation of Title VII an d 42 U.S .C. § 1981 . The Sup reme Co urt held that the only alleged discrimination occurred at the time the tenure decision was made and communicated to Ricks, and hence, the filing limitations period commenced at that time. 449 U.S. at 258, 101 S.Ct. at 504 . In Chardon, plaintiff Fernandez filed a complaint alleging that his termination from the Puerto Rico Department of Education violated 42 U. S. C. § 1983. Applying the holding in Ricks that the proper focus is the time of the alleged discriminatory act, the Supre me Cou rt held that the time f or filing beg an to run whe n plaintiff rec eived his letter of termination because there was no allegation of any discriminatory act after that date. 454 U.S. at 8, 102 S.Ct. at 29. Ricks and Chardon are inapposite to the case at bar. There is no alle gation o f discrim ination o r depriv ation of civil righ ts. JUDGMENT OF THE COURT O F SPECIAL APPEALS REVERSED. CASE REMANDED TO THAT COURT WITH DIRECTIONS TO REVERSE THE JUDGMENT OF THE CIRCU IT C O U RT F O R B AL T I M O RE COUNTY AND TO REMAND TH E CASE TO THAT COU RT F OR A NEW TRIA L. COSTS IN THIS COURT AND IN THE COURT OF SPECIAL APPEALS TO BE PAID BY RESPONDENT. -31- IN THE COURT OF APPEALS OF MARYLAND No. 55 September Term, 2003 TOWSON UNIVERSITY v. MICHAEL CONTE Bell, C.J. Raker Wilner Cathell Harrell Battaglia Eldridge, John C. (retired, specially assigned), JJ. Dissen ting Op inion b y Bell, C. J . Filed: November 17, 2004 Bell, C.J., dissenting: In this case, Towson University, the petitioner, and Michael Conte , the respond ent, entered into an em ployment co ntract, pursua nt to which the petitioner s right to terminate the respondent s employment was conditioned on there being just cause for doing so.1 Section 6.2 of the contract2 also provid ed for the n otification of the respon dent, in writing, of the cause f or which termination is sought and that the responde nt could req uest a hearing by the President or the President s designee within thirty days of receipt of the notice of termination. The result of the failure to request a hearing, the contract warned, would be that 1 Paragraph 6 of the Employment Contract addressed the termination of the contrac t. Section 6.1 provides The University m ay terminate this appointment for cause which shall include: (a) the intentional violation of University of Maryland System Regulations or University regulations (b) wilfu l neglect of d uty (c) insubordination (d) incompetence (e) misconduct (f) criminal conduct (g) long-term physical or mental condition which ren ders Dr. Conte unable to perform the duties essential to the Director s position . 2 Section 6.2 of the contract provides: In the event the University terminates this Appointment, for the above reasons, it shall notify the Director in writing, of the cause for which termination is sought and the right of the Director to request a hearing by the University Preside nt or the Preside nt s des ignee. The hearing must be requested within 30 days of the Director s receipt of the written termination notice. In the event no such h earing is requ ested, the term ination shall become immed iately effe ctive. the termination shall become immediately effective. The majority accurately characterizes this contractual arrangement as a just cause contract, one pursuant to which the employee may be fired only for cause, see Towson University v. Micha el Conte, ____ Md. ____, ____, ____ A.2d _____, ____ (2004) [slip. op. at 1] , as oppo sed to one in which the employee serves at the will of the employer or subject to the employer s satisfaction. The majority also recognizes, again correctly, that there are substantial differences between these c ontracts - in an at will contrac t, the employee is subject to termin ation f or any rea son, ev en a rea son tha t is arbitra ry, capricio us, or fundam entally unfair, id. at ____, ____ A.2d at ____, [slip op. at 14]; in a satisfaction contract, the e mployee is subject to term ination w henever ... the employer, actin g in good faith is actually dissatisfied with the employee s work, id. at ____, ____ A.2d at ____, [slip op. at 14], quoting Ferris v. Polansky, 191 Md. 79, 85, 59 A. 2d 749, 752 (1948); in a just cause contract, the e mployee is su bject to termination only for g ood ca use. Id. at ____, ____ A.2d at __ __, [slip op. a t 16]. The latte r provides th e employee w ith greater protecti on fro m disch arge tha n the oth er two. Id. [slip op. at 16]. Despite its conclusion that [j]ust cau se employm ent contrac ts ... logically permit the jury to review with greater scrutiny the employer s decision to terminate than do satisfaction contrac ts, id. [slip op. at 16], and, therefore, should not be treated like satisfaction contracts, id. [slip op. at 16 ], the majority proc eeds nev ertheless to do just that, treat them like satisfac tion con tracts. -2- In defining the fact-finder s limited role in the review of satisfaction contracts, the majority relies on Ferris v. Polansky, from which it quotes the rule, as follows: In a contract where the employer agrees to employ another as long as the services are satisfactory, the employer has the right to terminate the contract and discharge the employee, whenever he, the emp loyer, acting in good faith is actually dissatisfied with the employee's work. This applies, even though the parties to the emplo yment contra ct have stipu lated that the c ontract shall be operative during a definite term, if it provides that the services are to be performed to the sa tisfactio n of the emplo yer. It is not necessary that there exist grounds deemed adequate by the trier of fact s for the e mployer's dissatisfaction. He is the judge as to whether the services are sa tisfa ctory. Howeve r, this dissatisfaction, to justify the discharge of the employee, must be real and not pretended, capricious, mercenary, or the result of a dishonest design. If the employer feigns dissatisfaction and dismisses the employee, the discharge is wrongful. The employer in exercising the right of dismissal becau se of d issatisfa ction m ust do s o hone stly and in g ood fa ith. Towson, ___ at ____, ____ A .2d at ____ , [slip op. at 14-15], quoting 191 Md. at 85-86, 59 A.2d at 752 (emphas is added). W ith respect to th e fact-finde r s role in the review of just cause contracts, it holds: ... the jury may not review whether the factual bases for termina tion actually occurred or whether they were proved by a preponderance of the evidence submitted for its review. Instead, the proper role of the jury is to review the objective motiva tion, i.e., whether the employer acted in objective good faith and in accordance with a reasonable employer under similar circumstances when he decided there w as just cause to terminate the em ployee. The jury s inquiry should center on whether an employer s termination was based upon any arbitrary, capricious, or illegal reason, or based on facts not rea sonably believed to be true by the employer. B ut the fact-fin ding prero gative will remain with th e emp loyer, abse nt som e expre ss intent ion oth erwise . [3] 3 This latter statement is curious. By limiting the employer s right to discharge its employee, except for just cause, I would have thought that the contract provision to that effect was an expre ss intent ion oth erwise . -3- Id. at ____ , ____ A .2d at __ __, [slip op. at 16 -17]. Underlying this decision, as urged by the petitioner, is the strong judicial policy against interfer ing wit h the bu siness ju dgme nt of pr ivate bu siness e ntities, [4] for which proposition the majority cites Sadler v. Dimensions Healthcare Corp ., 378 Md. 509, 526, 836 A.2d 655, 665 (2003) and Elliott v. Bd. Of Trustees o f Mon tgomery Co unty Comm unity College, 104 M d. App . 93, 108 -09, 65 5 A. 2d 46, 53 ( 1995) . Towson, ___ at ____, ____ A.2d at ____, [slip op. at 6]. Also critical to the majority decision is the fact that the contract language fails to address definitively, one way or the other, the question of who, as between the jury and the employer, will perform the fact-finding function, id. at ___, ___ A. 2d at ___ [slip op. at 11], thus, requiring it, the majority, to determ ine which presump tively should do so. Id. at ___, ___ A. 2d at ___ [slip op. at 13]. Refusing to interpret the contract at issue as granting a third party the authority to review the factual basis for the employer s termination decision, the majority concludes that the fact-finding prerogative rests with the emplo yer. Id. at ____ , ____ A .2d at __ __, [slip op. at 19 ]. It reasons, agreeing 4 The petitioner is, to be sure, a public university and not, as Judge E ldridge, in dissent, points out, ___ Md. ___, ___, ___ A. 2d ___, ___ (2004 ) [slip op. at 1], (Eldridge, J. dissenting), a private business entity. Public universities, however, can be, and indeed must be, held to their contracts, even their employment contracts. Adoption of the position espoused by the Eldridge dissent with re spect to the rev iew to w hich the resp ondent is entitled, althou gh with a d ifferent app ellate focus, w ould leave the responde nt no better, if not worse, off than he would be under the majority formulation - in either case, the decision as to his employment fate is left to the party to the contract who agreed that the respondent could be dismissed only for cause, without, expressly or otherwise, reserving to itself the right to determine whether, and when, cause existed. -4- with the Oregon Supreme Court, that absent some express indication otherwise,[5] an employer does not contract away his core fu nction as ultim ate fact-find er with rega rd to an employee s workplace performance. Id. at ____, ____ A.2d ____, [slip op. at 19]. It concludes, [t]o hold otherwise would be to put the courts in the position of ma king ... personnel decisions, acting as a super personnel officer, or of second-guessing a company s decisio ns. Id. at ____ , ____ A .2d ___ _, [slip op. at 19], quoting Elliott, 104 Md. App. at 110, 655 A. 2d at 54 (citation and qu otations omitted ). Moreo ver, the ma jority points out, its result is consistent with the result reached by the majorit y of the courts that have addressed the issue . See Braun v. Alaska Commercial Fishing and Agriculture Bank, 816 P. 2d 140 (A laska 199 1); Cotran v. R ollins Hud ig Hall, 948 P. 2d 412 (C al. 1998); Southwest Gas Corp. v. Vargas, 901 P.2d 693 (Nev. 1995); Thompson v. Assoc. Potato G rowers, 610 N. W.2d 53 (N.D. 20 00); Kestenbaum v. Pennzoil Co., 766 P.2d 280 (N. M. 198 8); Simpson v. Western Graphics Corp., 643 P. 2d 127 6 (Ore. 19 82); Baldwin v. Sisters of Providence, 769 P. 2d 298 (W ash. 1989); Life Care, Inc. v. Dexter, 65 P. 3d 3 85 (Wy. 200 3); Almada v. Allstate Ins. Co., Inc.,153 F. Supp.2d 110 8 (D. Ariz . 2000); cf. Gaudio v. Griffin H ealth Services Corp., 733 A.2d 197 , 208 n.13 (Conn . 1999). 5 It is well to repeat that this contract does expressly provide that the respo ndent cou ld be discharged only for cause and, thus, I submit, does contain an express indication otherwise that the employer is contracting away his fact-finding function as to the quality of the employees workplace performance. The rule that the majority espouses wou ld be more palatable were the parties contract to co ntain expre ss languag e reserving to the Univ ersity the righ t to deter mine w hether th ere wa s just ca use fo r discha rge. -5- At the outset, I can see little, if any, distinction b etween th e test the majo rity enunciates for the review of just cause contracts and that applicable to satisfaction contracts. Although characterized as focusing on the review of the objective motivation of the employer, in the case of a just cause contract, within the majority s contemplation and as it explains, what is really to be determined is the objective good faith with which the employer acted and the consistency of those actions with those of a reasonable employer under similar c ircums tances. Id. at ____, ____ A.2d at ____, [slip op. at 17]. That determination is made by assessing whether the challenged termination was based upon any arbitrary, capricious, or illegal reason, or based on facts not reasonably believed to be true by the employer, id. ____ A.2d at ____ , [slip op . at 17], i.e. whether the emplo yer acted in good f aith. Notwithstanding its being characterized as being a subjective one, Towson, ___ Md. at ___, ___ A. 2d at ___ [slip op. at 15], this is the precise test that also applies in the case of a satisfaction contract. As the majority describes it, the employer s subjective motivation involves determinin g whe ther the em ployer was g enuinely or honestly dissatisfied with the employee s services or merely feigning dissatisfaction. Id. at ____, ____ A. 2d at ____, [slip op. at 15 ]. Thus, the te st in a satisfactio n contract is whether, when the employee was terminated, the employer was acting in good f aith. Elliott, 104 Md App. at 108, 655 A.2d at -6- 53 (1995). 6 Whether probative of the objective motivation of the employer or its subjective motivation, the decisive factor is the same; in the case of either kind of contract, it is the good faith with w hich the em ployer acted tha t counts and that defines the test. I am not at all convinced that the business judgment rule, treated, and relied upon, in Sadler and Elliot supports, lest more requires, the result the majority reaches in this case. To be sure, that rule c ounsels ag ainst, and, indee d, prohibits the courts from inapprop riately interfering with the business judgment of a private business, thus limiting the court s role in review ing the a ctions o f that bu siness. See Sadler, 378 Md. at 531, 836 A. 2d at 668. But Sadler is clear: the business judgment rule has never prec luded full litiga tion of com plaints sounding in tort or contract against the corporation. A corporation, as a private entity, may be held liable for tortious conduct and breaches of contracts, perpetrated by its officers, directors, and agents, against third parties. ... Nothing in the jurisprudence of this State wo uld hold otherw ise. Id. at 532, 836 A. 2d at 668-69, citing Maryland C ode (197 5, 1999 R epl. Vol., 2002 Supp.) § 2-103 of the Corporations and Associations Article. The petitioner entered the employment contract at issue in this case voluntarily. In return for the respondent s services, it agre ed to limit its power to discharge the respondent, thus, however 6 It seems clear to me that an employee s proof of the non-existence of the purported factual basis for his or her termination is quintessentially and a fortiori proof of bad faith and, therefore, the lack of good faith. More over, it is difficu lt to conceive of a better w ay to attack an employer s objective motivation than by demonstrating that the grounds on which it acted did n ot exist. By parity of reason ing, there is no better way for the jury to assess a party s subjective motivation. -7- viewed, objectively or subjectively, intending to provide the respondent with greater job security. The business judgment rule does not, and should not, be construed to shield the petitioner, even partia lly, from its breach or to chang e, in the least, the b argain that the parties made. Rather than the cases on which the majority relies, the majority view, I am persuaded, on both accounts, by the reasoning of Toussaint v. Blue Cross & Blue Shield of Michigan, 292 N. W. 2d 88 0 (Mich. 1980 ), and its pr ogeny. See Raymond v. IBM , Corp., 954 F. Supp. 744, 751-52 (D . Vt. 1997); Schuessler v. Benchmark Marketing and Consulting, Inc., 500 N.W.2d 529, 538 (Neb. 1993) ( If the employer produces sufficient evidence, the employee may rebut, and if in controversy, the issue goes to the trier of fact; ho wever, the ultimate burden of proving wrongful termination remains with the em ployee ); Alegria v. Idaho First Nat. Bank, 723 P.2d 858, 875 (Idaho,19 86); Sanders v . Parker D rilling Co., 911 F.2d 191 (9th Cir. 1990). In Toussaint, the Mich igan Sup reme Co urt held that, like the determinations of whether there is an express agreement to discharge the employee only for cause and the compliance of that termination with the procedures governing it, the question whether termination of employment was in breach of the contract ... was also one for the jury. 292 N. W. 2d at 895. T he court w as aware of, and too k accoun t of, the facts that the role of the jury may differ in each case,7 id. at 896, and may present some significant issues, if not 7 The court in Toussaint v. Blue Cross & Blue Shield of Michigan, 292 N. W.2d 880 (Mich. 1980) observed: (contin ued...) -8- difficulties, id., including the danger, when the issue is the sufficiency of the cause for termination, that the jury will substitute its jud gmen t for tha t of the e mployer . Id. Nevertheless, after considering the good faith/reasonableness test and the option of instructing the jury consistent therewith and notwithstan ding its recognition that [w]hile the promise to terminate for cause includes the right to have the employer s decision reviewed, it does not include a right to be discharged only with the concurrence of the communal judgment of the jury, id., the court rejected both the test and th e instruc tion alter native. Noting that [s]uch an instruction would transform a good-cause contract into a satisfaction contract, id., it explained: Where the employer has secured a promise not to be discharged except for cause, he has contracted for more than the employer s promise to act in good faith or no t to be unreasonable. A n ins truction which permits the jury to review only for re asonab leness in adequ ately enfo rces tha t promis e. Id. 7 (...continued) Where the emplo yer claims that th e employee was discharged for specific misconduct intoxication, dishonesty, insubordination and the employee claims that h e did not commit the misconduct alleged, the question is one of fact for the jury: did the employee do what the employer said he did? ... Where the employer alleges that the employee was discharged for one reason excessive tardiness and the employee presents evidence that he was really discharged for another reason because he was making too much money in commiss ions the qu estion also is one of fact for the jury. ... The ju ry is always permitted to determine the employer s true reason for discharging the emplo yee. Id. at 896 (footnotes om itted). -9- Moreo ver, rejecting th e notion tha t there is an identity betwee n satisfaction contracts and just cau se c ontracts, the c ourt conclud ed, [a] p romise to term inate emp loyment for cause only would be illusory if the employer were permitted to be the sole judge and final arbiter of the discharge. There must be some review of the employer s decision if the cause contract is to be distinguished from the satisfaction contract. Id. at 895. To the expressed fear that enforcing cause only discharges will lead to employee incompetence and inef ficie ncy, id. at 896, the court responded, no employer is obliged to enter into such a contract. Id. at 896- 97. The cases on w hich the m ajority relies, and therefore the basis on which the majority has decided this case, proceed on a premise that is antithetical to the ordina ry rules of contract construction,8 that a contract that is clear and unam biguous w ith respect to th e rights and obligations of the parties may be construed so as to relieve one party of the obligations it undertoo k and to red efine the righ ts the other co ntracted to re ceive. The majority also adopts a legal presumption tha t the employer retain[s] the fact-finding prerogative underlying the dec ision to te rminate emplo yment. 9 Towson, ___ Md. at ____, ____ A.2d 8 It is well settled that contracts are construed in accordance with, and governed by, the canons of statutory constru ction. See Walker v. Department of Human Resources, 379 Md. 407, 421, 84 2 A2d . 53, 61 ( 2003) . One of them, and a most important one, is that the parties intention is to be glean ed from th e words o f the contract, and when they are unambigious, no con struction or interp retation is neces sary or pe rmitted. Id. 9 A legal presumption is necessary given the majority s assumption, as the petitioner argued, that the contract language is ambiguo us and do es not spea k one w ay or the other to (contin ued...) -10- at ____, [ slip op. at 22]. This is required, the majority submits, due to the practical considerations of runnin g a busine ss, emplo yers often rely on h earsay, on past similar conduct, on their personal knowledge of people s credibility, and on factors that the judicial process igno res, indicatin g tha t [w ]hat wor ks be st in a judicial p roce edin g ma y not be appropriate in the emp loyment con text, and, in a ny event, the pe titioner in this case alone was in the best position to determin e whethe r there wer e facts suff icient to cons titute incompetence and wilful neglect of d uties. Id. at ____, ____ A.2d at ____, [slip op. at 22], quoting Waters v. C hurchhill, 511 U. S. 661, 676, 114 S. Ct. 1878, 1888, 128 L. Ed. 2d 686, 700 (1994). This rule is given context and meaning by reference to the business judgment rule and the majority s interpre tation of that ru le as a non-in terference r ule for all purposes. Surely, the majority does not advoc ate that one p arty to the contrac t should be its 9 (...continued) the issue of the fact-finding prerog ative. Towson, ___ at ___ _, ____ A .2d at ____ [slip op. at 11] Although the majority did not resolve the conflicting arguments of the parties as to the real meaning and effect of Paragraph 6.2, it does suggest the possibility that the paragraph, because a hearing would accomplish nothing that would not be accomplished in court before a jury, would be superfluous except as a means of reserving to the employer the fact-finding prerogative. Id. at ___, ___ A. 2d at ___ [slip op. at 12]. I can think of a reason for Paragraph 6.2 that has absolutely nothing to do with the fact-finding prerogative. It is a timing provision; the date of the hearing or of the decision following the hearing, or the date of expiration of the time for requesting a hearing, triggers when the termination takes effect. Indeed, tha t is precisely what the Paragraph provides, howev er inartfully the m ajority may think it is. This also answers Judge Eldridge s point with respect to the governmental immunity issue, which is dependent on the timeliness of the contract action filed by the responde nt. In this case, the President s letter denying the resp ondent relie f specifically states the date of the respondent s termination and that date is less than one year prior to the filing of the respondent s contract action. -11- sole and fin al arbiter in the a bsence o f such an agreeme nt. The well settled rule of contract construction is, of course , to the co ntrary. It is that, where the words of the contract are clear and unambiguous, no interpretation is required or permitted, see Wells v. Chevy Chase Bank, FSB , 363 Md. 232, 250-251, 768 A.2d 620, 630 (2001); effect is to be g iven to th e contra ct as wr itten. See Walker v. Department of Human Resources, 379 Md. 407, 421, 842 A2d. 53, 61 (2003). Even when the contract terms are ambiguous, we s eek t he in tenti on of the parties, w hich may be supplied by parol evidence or from other extr aneou s sourc es. Beale v. American Nat l Ins. Reciprocal, 379 Md 643, 658, 843 A .2d 78, 87 (2004). I am simply unaware that, in contract cases, even those involving a business entity, the parties intention can be determined by means of a legal presum ption. In any event, there is nothing in the contract that suggests, much less establishes, that the parties intended that the fact-finding as to the termination decision be made solely by the employer. Certainly, in the absence of an express provision to that effect, such an interpretation is inconsisten t with the em ployee s intent, as evidence d by his having succes sfully neg otiated f or a jus t cause only term ination. Extracting such a promise is inconsistent with an intent on the part o f the emp loyee to give h is or her employer the degree of control, or even close to that deg ree of control, that the employer retains w hen it enters into an at will or a satisfaction c ontract. A just cause contract is, as the majority admits, significantly different from, and provides an employee with significantly greater protection -12- than, those o ther tw o kinds of con tract. Towson, ___ Md. at ___, ___ A. 2d at ___ [slip op. at 16]. Rather than simply paying lip service to the distinction, the petitioner s promise should be refle cted in th e interpr etation g iven the contrac tual relati onship . And the use of a legal presumption is no t the appropriate way to resolve an amb iguity; as I have p ointed o ut, and th is Cou rt has rep eatedly he ld, see Sy-Lene of Washington Inc., v. Starwood Urban Retail II, 376 Md. 157, 167-68, 829 A.2d. 540, 547 (2003); Langston v. Langston, 366 Md. 490, 506 -507, 784 A.2d 10 86, 1095 (2001); Wells 363 Md. at 25 0-51, amb iguity triggers a sea rch for the p arties intention, in the pursuit of which a court m ust con sider, inter alia, parol or extrinsic evidence, the literal or usual meaning of the words used, the meaning of the words in light of the statute as a whole and within the con text of th e objec tives an d purp oses of the ena ctmen t. See Marriott Employees Fed. Credit Union, supra, 346 M d. 437, 445, 697 A.2d 455, 459 (1997) (citing Romm v. Flax, 340 Md. 690, 693, 668 A.2d 1 (1995)); Sy-Lene, 376 Md. at 167-68, 829 A.2d at 547; Langston, 366 Md. at 506, 784 A. 2 d at 1095. E ven if an ambiguity may be resolved by use of a legal presumption, the question still remains, why should the presumption favor the employer and not the employee? Indeed, log ically, because th e employer is n ot required to enter into just cause contracts and may, as it often do es, retain con siderable au thority to discharge its employees, the ambiguity should be co nstrued against the emp loyer, at least in the absence of evidenc e, by parol or oth erwise, that b oth parties inte nded the e mployer to have the fact-finding responsibility and that the court or jury defer to the employer s exercise -13- of that responsibility. The failure of the employer to negotiate a provision that clearly so provides is, I believe, proof positive that the parties did not intend what the majority imposes as a def ault. The only basis on w hich the m ajority can justify the leg al presum ption it applies to hold in favor of the petitioner is by reference to the business judgment rule. But, as I have demonstrated, while the b usiness judg ment rule m ay preclude a court from substituting its judgment for that of the business whose judgment is at the core of a case, it was never intended to prevent the business from entering into contrac ts with such terms as the business desires nor to impact, one way or the other, the bargain that the business an d the other p arty or parties to the contract made. Stated differently, the business judgment rule does not, and should not, change the terms of a contract negotiated at arms length. That this is so is made clear by the fact that no business is required to contract away its ability to terminate its emplo yees; it nee d not ag ree to a just cau se con tract. To be sure, the m ajority s concern that permitting the jury to be the final arbiter of whether the termination was justified may put the employer in a difficult position is legitimate. It may very well, and that might well be the situation in this case. It should be borne in mind, however, as the concurring and dissenting Justice in Cotran pointed out, that the diff icult y of th e em ploye r s position is matc hed or ex ceed ed by the plight of a f alsely accused and wro ngfully termin ated emp loyee who is denied all legal redress. 948 P. 2d at 428 (Kennard,J, concurring and dissen ting). It is, in short, w ell and goo d to be concerned -14- about what is fair to the employer, but what is fair to the employee also should, and must, be considered as well, and as seriously. The rule the majority adopts, being very deferential to the business entity, places the employee in at least as difficult a position as permitting a jury to review the employer s termination decision would place the employer. The difference between the two positions is that one gives effect to the contract terms, the bargain the parties made, while the other does not. Because both parties agreed to the contract terms, as written, the contract should be enforced, as written. The majority s evide nt and exp ressed con cern that the everyday reality of the workplace is respected a nd that the e fficient con duct of bu siness is protected is reminiscent of the concern expressed by the dissenting judge in Sanders v. Parker Drilling Company, 911 F. 2d 191 , supra. In that case, the issue was the propriety of the jury s review of the employer s decision to terminate some of its employees for smoking marijuana on the employer s oil rigs, in violatio n of co mpan y policy. Id. at 192. Consistent with the majority s holding in this case, the employer argued that the jury s responsibility in reviewing the decision should be limited to determining whether the decision was based on a good faith belief that [the employees] smoked marijuana on the oil rigs, not whether the allegation was actually true. Id. at 193. The court rejected that argument, holding that the question was w hether th e emp loyees ac tually smo ked m arijuana . One judge to ok the c ontrary vi ew. Id. at 204-218 (Kozinski, J., dissenting). He expressed concern that the more expansive role of the jury would have an adverse impact on -15- the employer s obligation to provide a safe working environment and did not give sufficient deference to the employer s policies against the use of drugs in th e workp lace, opining , in part: Working on an oil rig is dangerous business. It requires total concentration, precise timing, a fair degree of coordination and a significant amount of speed. Rig accidents can have disastrous consequences, ranging from severed limbs and multiple deaths to massive despoliation of the environment. It goes with out saying that d rug abuse has no pla ce on oil rigs and that a company operating oil rigs has the right--indeed, the obligation --to take decisive ac tion when it obtains reliable inform ation that som e of its emplo yees may b e abusi ng dru gs wh ile on du ty. This is the unhappy tale of a company that did just that. Company officials reasonably believed that three employees had used drugs on the job, not once but re peatedly. Tw o eyewitness es fingered the drug-using employees; the company pursued the matter promptly, but not p recip itously, obtaining confirmation from yet a third eyewitness before discharging the violators. The personnel action was taken in a balanced, detached, professional manner, free from any hint of ranc or or pers onal anim osity. Had the com pany acted less dec isive ly, it would have betrayed its respo nsibility to other employees and the environment we all share. Ye t when all is said and done, the fingered employees walk off with a cool third of a million dollars, while the company is left to pick up the tab, pay its lawyers and scratch its head wondering what it could hav e done dif ferently. It is a ques tion we all might ponder a s we con template the bitter lesson of this cocke yed morality tale. Id. at 204-20 5. Respo nding, the c ourt pointed out: The dissent sympathizes with Park er's obligation to provide a safe working environm ent for its em ployees. It cites strong policy argum ents against the use of drugs as authority to alter Alaska's law. Judge Kozinski does not believe that the jury should have the prerogative to second-guess Parker's determination that plaintiffs smoked marijuana on the oil rigs. Although we share Judge Kozinski's concern for safety in the work place, we -16- respectfully do not believe that concern provides us a manda te to water down centuries of respect for the place of juries in our civil justic e system. At this level of our system of jurisprudence--the appellate level--the issue we confront as judges is not whethe r the use of certain drugs and narcotics is a serious threat to our nation , which it is, or whether the use of marijuana is dangerous to workers on oil rigs, which it is, but whe ther the verd ict of the jury is supported by the evidence presented. The war on drugs can be waged without turning our back on the rightful function of juries in resolving factual dispute s. Id. at 195. This response is just as appropriate and applicable to the case sub judice. Respect for, and deference to, the business judgment rule may be, and should be, given in an appropriate case, when the employer s business judgment is at issue. It should not be used, and it was not intended, to emascu late, in cases of express co ntracts between businesses and individuals employees, the rightful functions of juries in resolving factual disputes or to render the end of the playing field allocated to the employees in such case s a steep and ever increasing incline. Certainl y, evidence as to the business judgments made and the rationale for them may well be ad miss ible a nd th e jury wou ld ha ve to be in struc ted a ppro priately in light of the evidence. This is not the same, however, as abdicating to the business itself, the final word as to the efficacy of that judgment and its determinative effect in the case in which those business judgments we re applied. Just as important, holding the parties to the bargain they struck does not, in a ny way, underm ine the busin ess judgment rule. In deed, it really enhances it; it is after all, the exercis e of busin ess judgm ent to enter into a contract w ith specific and enumerated terms. Having exercised its business judgment to negotiate a -17- contract acceptable to it, in which it in corporated contract term s favorab le to it, the business should not be allowed then to decide, in the guise of business judgment, whether and, if so, how, those te rms acc eptable , but not unifor mly favo rable, to i t, but favorab le to the emplo yee, are to b e interpr eted an d applie d. I dissent. -18- IN THE COURT OF A PPEALS OF MARYLAND No. 55 September Term, 2003 _________________________________________ TOWSON UNIVERSITY v. MICHAEL CONTE __________________________________________ Bell, C .J . Raker Wilner Cathell Harrell Battaglia Eldridge, John C. (retired, specially assigned), JJ. __________________________________________ Dissenting Opinion by Eldridge, J. _________________________________________ Filed: November 17, 2004 Eldridge, J., dissenting: The majority opinion, Chief Judge Bell s dissenting opinion, the courts below, and the parties, all treat this case as an appropriate common law breach of contract action which was timely filed. The majority takes the position that this breach of contract action is controlled by the so-called busine ss judg ment ru le, i.e., the strong judicial policy against interfering with the business judgment of private business entities. (Slip opinion at 6, emphasis ad ded). This action, however, does not involve the business judgment of a private entity. The defendant Towso n Unive rsity is a state govern ment entity. Co nte s employment contract was a public contract with an agency of the State of Maryland. The difference between private employment contracts and public employment contracts, terminable only for cause, has substantial ramifications. First, if it were appropriate to treat this lawsuit as a common law breach of contract action, I believe that the lawsuit would be untimely under the one-year limitations period for breach of contract actions against state government agencies set forth in Maryland Code (1984, 1999 Repl. Vol.), § 12-202 of the State Government Article. T herefore, th e suit wou ld be barred by governm enta l imm unity. Second, I believe that it would be more appropriate to treat this action as a Maryland common law action for judicial rev iew of a s tate govern ment adju dicatory administrative proceeding, and to remand the matter to the agency for proper findings of fact and conclu sions o f law. Fina lly, regardless of whether Conte is en titled to an adm inistrative hear ing with findings of fact and conclusions of law, or to a judicial breach of contract action, the business judgmen t rule applied by the majority has no applica tion to a governmental employment relationship te rminable only for c ause. Under d ue proces s principles ap plicable to the state government, an employee in Conte s position is entitled to present his defenses and obtain a de novo determination either in an administrativ e hearing w hich com plies with Maryland la w or in co urt. I. If the majority, Chief Judge Bell, the co urts below , and the pa rties were co rrect in treating this case as a common law breach of contract action, it was not filed within one year of the date on which the claim arose, as required by Maryland Code (1984, 1999 Repl. Vol.), § 12-202 of the State Government Article. Therefore, the suit was barred by governmental imm unity. Although a private breach of contract action is subject to a three-year statute of limitations which may be wa ived by a failure to raise the issue, a breach of contract action against a state agency must be filed within one year. Furthermore, as recently reaffirmed by this Court in State v. Sha rafeldin, 382 Md. 129, 140, 854 A.2d 1208, 1214 (2004), the oneyear period for bringing a b reach of c ontract action against a state government agency is not a mere statute o f lim itatio ns, w aiva ble a t will by State agencies or their respective attorneys . The Court in Sharafeld in, 382 Md. at 148, 854 A.2d at 1219, concluded that the -2- enactment of §§ 12-201 and 12-202 of the State Government Article was intended as a conditional waiver of the State s sovereign immunity in contract actions, which was to be accomplished by precluding the State and its agencies from raising that defense if the action was founded on a written contract executed by an authorized official or employee and the action was brought within the one-year period. If the action was not brough t within that p eriod, how ever, it was barred. The sovereign immunity that the State enjoyed remained in effect; it cou ld not be w aived by sub ordinate ag encies or the ir attorneys, and thus the agencies were required by law to raise the defense. We hold, therefore, that §12-202 is not a mere statute of limitations but sets forth a condition to the action itself. The waiver of the State s imm unity van ishes at th e end o f the on e-year pe riod . . . . Because neither Towson University nor its attorneys may waive the issue of governmental or sovereign immunity by failing to raise it, this Court must consider whether the doctrine of sovereign immunity is applicable in this case even though it was not previously raised by the parties. Board v. John K. Ruff, Inc., 278 Md. 580 , 583, 366 A.2d 3 60, 362 (1976). 1 After Conte refused to resign, Towson University, on November 20, 1998, notified Conte by letter that it had cause to terminate his employment and that the University will proceed to termin ate your U niversity e mploym ent for c ause. The November 20, 1998, letter went on to state that Conte was being reliev[ed] of your responsibilities as RESI Director 1 The parties in the courts below did raise the issue of the timeliness of Conte s claims for compen sation in fiscal years 1997 and 1998, and the Court of Special Appeals held that those claims we re barred b y § 12-202 o f the State G overnm ent Article. Conte s crosspetition for a writ of certiorari challenging that holding was denied by the Court. It appears that no issue has previously been raised concerning the timeliness of Conte s en tire action. -3- and was bein g placed on admin istrative leave, w ith full pay and b enefits un til the termination became effective. Then, on December 10, 1998, a ten-page letter signed by the Provost of Towson University was hand-delivered to Conte, informing Conte that the University terminated h is employme nt; the Dec ember 10 th letter set forth the reasons suppo rting your termina tion. Conte requ ested a hearin g before the P resid ent o f To wso n Un iversity, as provided for in the employment contract, and President Hoke L. Smith held the hearing on January 18, 1999. On January 21, 1999, President Smith notified Conte that he was terminated for the reasons set forth in the December 10, 1998, letter and that the termination was effective the close of business January 26, 1999. President Smith s January 21st decision consisted of one short paragraph and contained no findings of fact or conclusions of law based upon eviden ce introd uced o r argum ents ma de at the hearing . The statutory time limit for filing a breach of contract action begins to run from the initial breach of the c ontract. Jones v. H yatt, 356 Md. 639, 648-649, 741 A.2d 1099, 1104 (1999), and cases there cited. The complaint in the case at bar was filed in the Circuit Court on Monday, January 24, 2000. If January 21, 1999, the date on which Conte was last notified of his termination, was the date on which his cause of action arose, the action was barred by the one year period set forth in § 12-202 of the State Government Article. The one-year period from January 21, 1999, expired eithe r on T hurs day, January 20, 2000, or at the latest, Friday, January 21, 2000. -4- Obv ious ly, if his breach of contract cause of action accrued earlier, on November 20, 1998, when Conte was first notified of the proposed termination and was suspended, or December 10, 1998, when he was again notified of his termination and given detailed reasons, the one-year period prescribed by § 12-202 had long expired. Conte s breach of contract suit was tim ely only if the one-year p eriod und er § 12-20 2 did not b egin to run u ntil his termination was effective and he was removed from the payroll on January 26, 1999. The majority opinion baldly asserts, without citing any case-law or other authorities, and without any reasoning, that Conte s cause of action for the actual breach of his employment contract arose when the contract was effectively terminated on Janu ary 26, 1999. (Slip opinion at 30). This assertion is erroneous and contrary to authority in this Court and elsewhere. If there were a breach of the employment contract between Conte and Towson Uni vers ity, it is likely that the breach occurred on November 20, 1998, or December 10, 1998, when th e Univer sity informed Conte that the contract was terminated and suspended Conte. A change in an employee s status, such as a suspension, has been held to constitute a breach of the employment contract even though th e employee s pay is not terminated or changed. See 9 Corbin On Co ntracts § 958, a t 752 (In terim E dition 2 002). Furthermore, the fact that a plaintiff may have defenses to the defendant s action does not necessarily prevent the runnin g of lim itations. Cf. Himelfarb v. American Express Company, 301 Md. 698, 705, 484 A.2d 1013, 1016 (1984) ( From the standpoint of the Maryland common law of -5- contracts, . . . [the] claimed defense is . . . ineffective to prevent accrual of [the plaintiff s] cause of ac tion . . . . Th e lim itatio ns clock begins to tick w hile t he [c ontractin g party] is deciding wheth er an as serted d efense is merito rious ). C onseq uently, the one year period under § 12-202 probably started to run on November 20, 1998, or December 10, 1998, despite Conte s assertion of defenses at the January 18, 1999, hearing. At any rate, the breach of contract had certainly occurred, and Conte s cause of action had clearly arisen, by January 21, 1999, when Conte for the third and final time was notified that the contract was terminated. This Court has held that repudiation of an employment contract, even before the time for performance, in our judgment, constituted a breach which gave an immediate right of action and entitled the plaintiff to recover damages, Dugan v. Anderson, 36 Md. 567, 585 (1872). The ma jority opinion implies that, for purposes of injunctive relief, Conte s cause of action may have accrued when Conte was notified of the termination, but that for purposes of an actual breach of contract action, for money damages, Conte s cause of action accrued on the effective date of the termination, which was January 26, 1999. (Majority slip opinion at 30). This position is directly contrary to Dugan v. Anderson, supra, 36 Md. 567. The Dugan case was a breach of contract action at law, for money damages, in a court which had jurisdiction only in actions at law (the Supe rior Court of Baltimore City).2 2 Furthermore, because an action for an injunction is equitable, in such an action (contin ued...) -6- In common law breach of employment contract actions, as well as statutory actions based upon wrongful breaches of employment contracts or wrongful terminations of employme nt, the general rule is that the running of limitations begins when notice of termination is issued by the employer and not when the termination becomes effective. For example, in the leading case of Chardon v. Fernandez, 454 U.S . 6, 102 S.C t. 28, 70 L.Ed.2d 6 (1981), employees were notified prior to June 18, 1977, that their employment would terminate at effective dates between June 30 and August 8, 1977. One of these employees on June 19, 1978, brought an action for unlawful employment termination pursuant to a statute which, like Maryland s § 12-202, had a one-year period of limitations. The United States Court of Appea ls for the First Circuit, like the majority today, held that the limitations period did not begin running until the employment termination became effective and the emp loyment a ctua lly end ed, a nd th at, theref ore, t he ac tion was time ly. The Supreme Court of the United States, however, reversed, holding that the limitation s period be gan to run when the employee was notified of the termination. The Court explained that [t]he fact that they [respondent and other employees] were afforded reasonable notice cannot extend the period w ithin which suit must be filed. Chardon v. Fernandez, supra, 454 U.S. at 8, 102 S.Ct. at 2 9, 70 L .Ed.2d at 9. 2 (...continued) against a private em ployer, the statute o f limitations wou ld not ordina rily be directly applica ble, and the time liness iss ue wo uld be g overne d by princ iples of laches. -7- Another leading Supreme Court case is Delaware State College v. Ricks, 449 U.S. 250, 101 S.Ct. 498, 66 L.Ed.2d 431 (1980), which was an action by a college professor based upon the alleged unlawful termination of his employment. The Supreme Court held that the statute of limitations b egan to run from the tim e the college professor was notif ied that he would be denied tenure and would be terminated, and not from the later date when the termination was effective. Numerous cases, both federal and state, ha ve relied upon the Su preme Cou rt s Chardon and Ricks opinions, as persuasive authority, to hold that the statute of limitations, in an employee s action based upon termination of employment, begins to run from the time the employee received notice of the termination and not from a later date when the termination became effective or the emplo yment ac tually ceas ed. See, e.g., Co oper v. St. Cloud State Univ ersity, 226 F.3d 964, 965, 967 (8th Cir. 2000) (Relying upon Delaware State College v. Ricks, supra, the United States Court of Appeals stated: [W]e hold that the statute of limitations began to run when the college announced its official tenure decision, rather than at the time of te rmination ); Holme s v. Texas A &M Un iversity, 145 F.3d 681, 684-685 (5th Cir. 199 8) (Texas statute of limitations ran fro m the notic e to the univ ersity professor that he would b e terminated rather than f rom the later date whe n the unive rsity reaffirmed its decision, with the United States Court of Appeals stating: Although Ricks concerned the statute of limitations for filing a complaint with the EEOC rather than the Texas limitations period at issue here, we still consider the Ricks opinion p ersuasive o n this -8- point ); Thurman v. Sears, Roebuck & Co., 952 F .2d 128 , 133-1 34 (5th Cir.), cert denied, 506 U.S. 845, 133 S.Ct. 136, 121 L.Ed.2d 89 (1992 ) (Employee s action un der a state statu te for allegedly improper termination ); Miller v. International Telephone and Telegraph Corp., 755 F.2d 2 0, 23 (2 d Cir.), cert. den ied, 474 U.S. 851, 106 S.Ct. 148, 88 L.2d 122 (1985) (citing Chardon v. Fernandez, supra, and Delaware State College v. Ricks, supra, the court stated that the statute of limitations starts running on the date when the employee receives a definite notice of the termination, not upon his discharg e ); Daniels v. Fesco Division of Cities Service Co., 733 F.2d 622, 62 3 (9th Cir. 1984) ( [A ]n employer s liability for wrongful discharge commences upon notice of the employee s termination even though the employee continues to serve the employer after receipt of such notice, citing Delaw are State College v. Ricks, although the cause of action before the Ninth C ircuit was u nder Calif ornia law); Eastin v. Entergy Corp., 865 So.2d 49, 54 (Supreme Court of Louisiana 2004 ) ( [W]e adopt the Ricks/Chardon rule . . . . Consequently, in the instant case, the prescriptive period of one year began to run for each of the . . . Plaintiffs on the dates each of them were notified of their respectiv e termination s ); Martin v. Special Resource Management, Inc., 246 M ont. 181, 185, 803 P.2d 1086, 1088-1089 (1990) (In an employee s breach of contract action, after discussing the Chardon and Ricks cases, the Montana Supreme Court agreed that the employee s cause of action accru ed upon notice of h er termination , as [a]ll the e lements needed for a claim of breach . . . were present then and [i]t is from the decision to terminate itself which M artin seeks redre ss ) (emph asis in origina l); Delgad o Rodrig uez v. Naz ario De -9- Ferrer, 121 P. R. Dec. 347, 357 (Supreme C ourt of Puerto Rico 1988) (The em ployee s cause of action accrued on March 19, 1981, when he was notified of his removal. * * * The action was time-barred and should have been dismissed, relying upon Chardon v. Fernandez); Webster v . Tennesse e Board of Regen ts, 902 S.W.2d 412, 4 14 (Tenn. App. 1995) (A state university s Director of Finance and Accounting received notice on September 3, 1991, that he would be terminated from his employment, effective 30 September 1991, the day on which his contract f or services e nded. Plain tiff continue d to work until 30 September 1991. After discussing Delaw are State College v. Ricks, the court held that limitations began to run on September 3, 1991, and that the action, filed on September 28, 1992 , was barre d by the one-yea r statute of lim itations); Yoone ssi v. State University of New York, 862 F. Supp. 1005, 1 014 (W . D. N. Y . 1994) , appeal denied, 56 F.3d 10 (2d Cir . 1995) , cert. denied, 516 U.S. 1075, 116 S.Ct. 779, 133 L.Ed.2d 730 (1996) ( [T]he date the dec ision to termin ate was m ade [is w hen] the lim itations period begins to run . . ., or on the date the employee was notified of the decision, citing Chardon and Ricks); Montalban v. Puerto Rico Marine Management, Inc., 774 F.Supp. 76, 77 (D. P. R 1991) (Applies the principle of Chardon and Delgado Rodriguez v. Nazario de Ferrer, supra, that all causes of actions for employment termination accrue when the employee has notice or knowledge o f the termination, and not fro m the later effective date). 3 3 In Oker v. Ameritech Corp., 729 N.E.2d 1177 (Ohio 2000), the Supreme Court of Ohio, in an action under an Ohio statute relating to age discrimination, declined to apply the (contin ued...) -10- Many other cases , although n ot specifically relying on Chardon or Ricks, have taken the same p osition. See, e.g ., Eisenberg v. Insurance Co. of North America, 815 F.2d 1285, 1292 (9th Cir. 1987) (Hold ing, in a diversity case governed by Ca lifornia law, that [a]n employer s liability for wrongful discharge co mmences up on notice of the em ployee s termination even though the employee continues to serve the employer after receipt of such notice ); Johnston v. Farmers Alliance Mutual Insurance Company, 218 Kan. 543, 548, 545 P.2d 312, 317 (1976) (A n employee was notif ied of his termination on March 3, 1972, although he was paid through May 31, 1972, and the S upreme Co urt of Kansas, in holding that the action was time-barred, reasoned that plaintiff sustained substantial injury upon receipt of official notice of termination on March 3, 1972, and his cause of action accrued on that date ); Nicholson v. St. John the Baptist Parish School Board, 707 So.2d 94, 95 (La. 3 (...continued) principle of Delaware State College v. Ricks. In holding that the period of lim itations did not begin to run until the last day of em ployment, the Ohio Supreme Court did not disagree with the Ricks opinion. Instead, the court distinguished Ricks because of a provision in the Ohio statute expressly providing for liberal construction and because of other language in the Ohio statute. The Supreme Court of Oregon, however, has disagreed with the rule set forth in Ricks, holding that, in a tort action based on wrongful discharge, limitations runs from the end of the employment relationship because the tortious discharge occurred on the last day of employme nt. Stupek v. Wyle Laboratories, 327 Or. 433, 439 , 963 P.2d 678, 68 2 (1998). The position taken by the Oregon court is a distinct minority view. Moreover, the Stupek case is distinguishable from the case at bar, as it involved a tort action for abusive discharge. In an action for breach of an employment contract, M aryland law c learly appears to be in accord with the Ricks and Chardon opinio ns. See Dugan v. Anderson, 36 Md. 567, 585 (1872). -11- App.) writ not considered, 716 So.2d 879 (La. 1998) ( The prescriptive period begins to run when the plaintiff has actual or constructive notice of the alleged wrongful termination ) (italics in original); Morga n v. Mus selwhite, 101 N. C. App. 390, 393, 399 S.E.2d 151, 153, review denied , 329N.C. 498, 407 S.E.2d 536 (1991) ( By no later than the spring of 1987, plaintiff . . . knew [that] defendant no longer planned to employ him. It was at this time that his cau se of ac tion aro se ). Moreover, even in situa tions whe re, after notice of termina tion, an emp loyee is entitled to invoke contractual or other grievance procedu res or adm inistrative proc edures to challenge the termination, the statute of limita tions for an independ ent breach of contrac t, tort, or statutory action based upon the termination, begins to run from the time of notice and not from the decision under the grievance or admin istrative p rocedu res. See Holmes v. Texas A&M University, supra, 145 F.3d at 685 ( Holmes deserves no equitable tolling for the pendency of his univ ersity grievance procedu res ); Walch v. University of Montana, 260 Mont. 496, 498, 502, 861 P.2d 179, 180, 182 (1993) (After notice of termination, the plaintiff filed a grievanc e contesting his discharge, but the Supreme Court of Montana held that limitations began running from the notice, stating that a cause of action for wrongful termination from employme nt, whether it is based on breach of the covenant . . . or a common law wro ngful disch arge claim , accrued upon notice of [the employee s] termination ); Zachary v. State of Oklahoma ex rel. The Department of Corrections, 34 P.3d 1171, 1172-1173 (Okl. Civ. App. 2001) (Limitations began to run when the employee -12- received his notice of termination and not when his administrative remedies were ex hausted); Yoonessi v. State University of New York, supra, 862 F. Supp. at 1014 ( [T]he filing and pendency of his grievances with the union did not toll the . . . period for filing ); Montalban v. Puerto Rico Marine Managem ent, Inc., supra, 774 F . Supp . at 78. If the present c ase is to be treated as a brea ch of con tract actio n, it w as un time ly. Under these circum stances, the ju dgments below sh ould be vacated and the case should be remanded to the Circuit Court with directions to dismiss the action on the ground of governmental immu nity. This Co urt has no o ccasion to reach the questions dealt with in the majority s opinio n and C hief Ju dge B ell s disse nting o pinion . II. Towson University s status as an agency in the Executive Branch of the State Govern ment, and Co nte s status as a governm ent emplo yee who co uld only be term inated for cause, coupled with the express contractual provision for a hearing before the head of the agen cy, i.e., the Presiden t of Tow son Un iversity, necessarily presents the issue of whether a common law breach of contract action in the Circuit Court is an appropriate proceeding for resolving this dispute. An employee in the Executive Branch of the State Government, who can only be disciplined or terminated for cause, is, as a matter of constitutio nal due pro cess, entitled to a hearing at which the employee is given the opportunity to refute the charges against him -13- or presen t defen ses. Board o f Regents v . Roth, 408 U.S. 564, 573, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972); Codd v. Velger, 429 U.S. 624, 97 S.Ct. 882, 51 L.Ed.2d 9 2 (1977); Maryland Classified Employees Association v. State of Maryland, 364 Md. 1, 22, 694 A.2d 937, 947 (1997); De Bleecker v . Montgo mery C ounty, 292 Md. 498, 51 3 n.4, 43 8 A.2d 1348, 1 356 n.4 (1982). Such a hearing is normally an adjudicatory administrative hearing in the Executive Branch of government, subject to a statutory or common law judicial review action in a Maryland Circuit C ourt. See Brukiewa v. Police Comm r, 257 Md. 36, 42, 263 A.2d 210, 213 (1970). The majority opinion seems to suggest that a common law breach of contract action is a remedy available to an employee for purposes of defending against the charges brought by the state agency. (Slip opinion at 30). Although perhaps due proc ess requirem ents could be satisfied by a de novo breach of contract action in a court at which the terminated employee would have an opport unit y to refute the charges or offer defenses, such a proceeding involving a government employee w ould be hig hly unusual. M oreover, in Maryland Classified Employees Association v. State of Maryland, supra, 346 Md. at 22, 694 A.2d at 947, Judge Wilner for this Court took the position that the hearing must ordinarily be pre-termination, saying: [W]hen the attributes atte ndant to public em ployment un der State law are such as to g ive the em ployee a legitim ate claim of entitlement to the position, as under a tenure plan or where dismissal may only be for cause, a property interest in that employment is created, and the right -14- to procedu ral due process ordinarily requires the opportunity of a pretermina tion hea ring. 4 Furthermore, the majority opinion in the present case, by treating Towso n Unive rsity as a private entit y, applies a rule precluding the court in the breach of contract action from reviewing the factual basis of the termination, even under a substantial evidence standard. If a circuit court breach of contract action could provide the due process hearing for a governmental employee, the type of court action outlined by the majority opinion clearly does not provide due process. It does not give the employee any right to refute the charges or present defenses in a circuit court. The Due Process Clause of the Fourteen th Amendment and Article 24 o f the Ma ryland Decla ration of Rights are not app licable to priva te employment relation ships. Towso n Unive rsity, however , is restrained by both constitutional provisions. Considerations of due process, plus the express provisions of the employment 4 The majority intimates that my position is that an administrative/judicial review proceeding is a jurisdictiona l requireme nt. (Slip opinion at 30). That is not my position. Exhaustion of a require d administra tive/judicial review remedy is ordinarily not a jurisdictiona l matter or a jurisdicti onal req uireme nt und er Ma ryland law . Board of Education for Dorchester Co. v. Hubbard, 305 Md. 774, 787, 506 A.2d 625, 631 (1986) (Failure to invoke and exhaust a primary administrative/judicial review remedy does not ordinarily result in a trial court s being deprived of fundamental jurisdiction, per Eldridge, J., for the C ourt). See als o, e.g., State Retirement v. Thompson, 368 Md. 53, 66, 792 A.2d 277, 284-285 (2002); Montgomery Cou nty v. Ward, 331 Md. 521, 526 n.6, 629 A.2d 619, 621 n.6 (1993). In the case at bar, the Circuit Cou rt clearly had subject matter jurisdiction over Conte s breach of contract action. The issues concern how that jurisdiction should have been e xercise d. -15- contract, certainly appear to require an administrative hearing before the head of an agency within the Ex ecutive Branc h of M aryland G overnm ent, i.e., the President of Towson Uni vers ity. In fact, the majority s deference to the governmental fact- finder confirms that the majority, although unw itting ly, is actually treating the proceedings cu lminating in Conte s termination as governmental administrative adjudicatory proceedings. In its insistence th at this case shou ld properly be treated as a common law breach of contract action, the majority relies on Marylan d Cod e (1978 , 2004 R epl. Vo l.), § 12-104(j)(2) of the Education Article, which provides as follows: (2) Except with respect to grievance appeals under Title 13, Subtitle 2 of this article, T itle 10, Subtitles 1 and 2 of th e State Government Article ( Administrative Pro cedure Act ) are not applica ble to the Unive rsity. Title 13, Subtitle 2, of the Article deals with classified employees of the University System of Maryland. C onseque ntly, termination p roceeding s with regard to classified employees of Towson University are subject to the Administrative Procedure Act, and termination proceedings concerning non-classified employees, including Conte, are exempt from the Adm inistrativ e Proce dure A ct. The fact that the termination proceed ings here are exem pt from the Administrative Procedure Act furnishes no reason to conclude that a common law breach of contract action is appropriate. Num erous types of adjudicatory administrative proceedings are exempt from -16- the Administrative Procedure Act, but such exemption does not change the inheren t nature of such proceedings or convert them into common law breach of contrac t actions . See, e.g., Code (1984, 1999 Repl. Vol.), §§ 10-102(b) and 10-203 of the State Government Article, containing lists of administrative agencies or proceedings exempt from the Administrative Procedu re Act. An exemption from the Administrative Procedure Act or other administrative law statute simply means that the administrative proceeding is governed by Maryland common law administrativ e law princ iples and tha t judicial review in a circuit court takes the form of mandamus, certiorari, declaratory judgment, or equitable proceedings. It also means that the 30-day period of lim itations set forth in Maryland R ule 7-203 is inapplic able. See Rule 7201(a). The standards, however, are essentially the same regardless of whether the administrative/judicial review proceedings are pursuant to statute or are governed by Maryland comm on law admin istrative la w prin ciples. See, e.g., Board of License Comm. v. Corridor, 361 Md. 403, 411-412, 761 A.2d 91 6, 920 (20 00); Bucktail v. County Council of Talbot County, 352 M d. 530, 542 -552, 723 A.2d 44 0, 446-45 0 (1999); State v. Board of Education, 346 Md. 633, 642-644, 697 A.2d 1334, 1338-13 39 (1997 ); Goodrich v. Nolan, 343 Md. 130, 146, 680 A.2 d 1040, 1 048 (199 6); Medica l Waste v. M aryland W aste, 327 Md. 596, 610-611 , 612 A.2d 241, 248 (1992); Silverma n v. Mar yland D eposit, 317 Md. 306, 324326, 563 A.2d 402, 411-412 (1989); Crimina l Inj. Comp . Bd. v. Gou ld, 273 Md. 486, 501507, 331 A.2d 55, 65-68 (1975), and cases there cited. -17- In fact , the G ener al Assem bly s express exemption of all University System of Maryland proceedin gs from th e Adm inistrative Procedure Act, except those involving classified employees, could hardly be a de termination that no such p roceedings are by nature adjudicatory administrative proceedings and that all disputes should be resolved by common law contract or tort actions in the courts. Obviously, numerous types of adjud icatory administrative proceedin gs take plac e in the Un iversity System. See, e.g., Frankel v. Board of Regents , 361 M d. 298, 308 , 761 A.2d 324, 329 (2000). A n exemp tion from the Administrative Procedure Act clearly does not reflect a legislative intention that governmental employment termination disputes should be treated as breach of contract actions. The General Assemb ly exempts administrative proceedings from the Administrative Procedure Act. It does not, to the best of my knowledge, enact statutes exempting common law breac h of contra ct actions fro m the Ad ministrative P rocedure A ct. It would seem that the Towson University proceedings leading up to Conte s termination should be regarded as adjudicatory administrativ e proceed ings subjec t to normal judicial review for substantial evidence und erlying factual findings, arbitrariness, legal error, etc.5 Under our cases, primary jurisdiction should be accorded to such administrative/judicial 5 In fact, using a breach of contract action instead of a substantial evidence judicial review action, to review an adjudicatory administrative proceeding and decision by the Executive Branch of the State Governmen t, may well present serious Maryland constitutional problems under the p rinciples set forth in Department of Natural Resources v. Linchester Sand and Gravel Corporation, 274 Md. 211, 222-229, 334 A.2d 514, 522-526 (1975), and its pr ogeny. -18- review proceedings, and exhaustion of the adm inistrative/judicia l review rem edy is required. See, e.g., Fosler v. Panoramic Design, LTD., 376 Md. 118, 133-138, 829 A.2d 271, 280-283 (2003); Dorsey v. Bethel A.M.E. Church, 375 Md. 59, 76, 825 A.2d 388, 397-398 (2003); Furnitureland v. Comptroller, 364 Md. 126, 133, 771 A.2d 10 61, 1065 (2001); Josephson v. Annap olis, 353 Md. 667, 674-678 , 728 A.2d 690, 693 -695 (199 8); Holiday v. Anne Arundel, 349 M d. 190, 201 , 707 A.2d 829, 834 -835 (199 8); Zappone v. Liberty Life Insurance, 349 Md. 45, 60 -66, 706 A.2d 1 060, 1067-107 0 (1998). Like governmental immunity, public policy considerations mandate that issues of primary jurisdiction, exhaustion of administrative remedies, and the propriety of bringing an action other than a judicial review action, are issues which this Court will address sua sponte. Furnitureland v. Comptroller, supra, 364 Md. at 132, 771 A.2d at 1065. See, e.g ., Montgomery County v. Broadcast Equities, 360 Md. 438, 451 n.7, 758 A.2d 995, 10 02 n.7 (2000); Maryland R eclamatio n v. Harfo rd Coun ty, 342 Md. 476, 490 n.10, 677 A.2d 567, 574 n.10 (199 6); Montgomery County v. Ward, 331 Md. 521, 526 n.6, 629 A.2d 6 19, 621 n.6 (1993); Moats v. City of Hagerstown, 324 Md. 519 , 525-526, 597 A .2d 972, 975 (199 1); Board of Education for Dorchester Co. v. Hubbard, 305 Md. 774, 787, 506 A.2d 625, 631 (1986 ). If, as I believe, the appropriate circuit court action in this case was not a breach of contract suit but was a common law action for substantial evidence judicial review under the principles set forth in Bucktail v. Talbot County, supra, 352 Md. at 549-552, 723 A.2d -19- at 448-450, and similar cases, this Court could in its discretion take any one of three different approaches. Since Conte failed to bring a judicial review action, and improperly sued for breach of contract, the Court could simply vacate the judgments below and direct that the breach of con tract suit b e dismis sed. See Ho liday v. Ann e Arund el, supra, 349 Md. at 202204, 214, 707 A.2d at 835-836, 841 (A fter a final administrative decision, the aggriev ed party pursued a declaratory judgment action instead of a judicial review ac tion, and this Court vacated the judgments below and directed the Circuit Court to dismiss the action). Or, the Court could vacate the judgments below, direct that Conte be allowed to amend his complaint to assert the proper type of action, and, if he so am ends, direct the Circuit Court to perform a traditional judicial review function. Lastly, because the function of a trial court and an appellate court are the same in an action for judicial review of an adjudicatory administrative decision, this Court could treat Conte s complaint as an action for judicial review and proceed to review the final administrative decision by the P resid ent o f To wso n Un iversity. See Holiday v. Anne Arundel, supra, 349 Md. at 204-214 , 707 A.2d at 836-84 1 (This C ourt, as an alternative ground o f decision, treated the imprope r declaratory judgment action as a judicial review action, reviewed the administrative decision, and took the position that the administrative decision shou ld be upheld). In the inter ests of ju stice, I would prefer this third alterna tive. Furtherm ore, I wou ld direct that the administrative decision be vacated and that the case be remanded for findings of fact and conclusions of law. The short one-paragraph opinion of President Smith after the -20- January 18, 199 9, hearin g, conta ins no f inding s of fac t or con clusion s of law . It fails to deal with any evidence or arguments that may have been adv anced at the January 18th administrative hearing. Thus, in Bucktail v. Talbot County, supra, 352 Md. at 552-553, 723 A.2d at 450-451, a non-statutory judicial review action, the Court in an opinion by Judge Rodowsky summarized the applicable Maryland administrative law as follows: Lo gica lly, the next step in our analysis would be to determine if the facts found by the Council are supported by substantial evidence. The difficulty here, however, is that the Council's findings are insufficient to permit judicial review. The court's task on review is not to substitute its judgment for the expertise of those persons who constitute the administrative agency[.] A reviewing Court may not uph old the agency order unless it is sustainable on the agency's findings and for the reasons stated by the agency. A court's role is limited to determin ing if there is substantial evidence in the record as a whole to support the agency's findings and conclusio ns, and to dete rmine if the administrativ e decision is premis ed upo n an err oneou s concl usion o f law. United Parcel Serv., Inc. v. People's C ounsel for B altimore C ounty, 336 Md. 569, 576-77, 650 A.2d 226, 230 (1 994) (c itations o mitted). Accord Harford County v. Earl E. Preston, Jr., Inc., 322 Md. 493, 505, 588 A.2d 772, 778 (1991) ( [A] fundamental right of a party to a proceeding before an administrative agency [is] to be apprised of the facts relied upon by the agency in reaching its decision and to permit meaningful judicial review of those findings. In a judicial review of administrative action the court m ay only uphold the agenc y order if it is sustained by the agency's findings and for the reasons stated by the agency. ); United Steelworkers of America AFL-CIO, Local 2610 v. Bethlehem Steel Corp., 298 M d. 665, 6 79, 472 A.2d 6 2, 69 (1 984) (s ame). -21- In accordance with the above standard of judicial review, in order for the reviewing court to determine whether the Council's action was fairly deb atable, f inding s of fac t are req uired. Findings of fact must be meaningful and cannot simply repeat statutory criteria, broad conclusory statements, or boilerplate resolutions. See also, e.g., Turner v. Hammond, 270 Md. 41, 56, 310 A.2d 543, 551 (1973) (The agency made no findings of fact worthy of the name ); Rodrigu ez v. Prince George s County , 79 Md. App. 5 37, 550 , 558 A .2d 742 , 748, cert. denied, 317 M d. 641, 566 A.2d 101 (1989) (Where Judge Wilner for the court stated: It is not permissible for . . . any administrative body, simply to parro t general statu tory requireme nts or rest on broad conclusory statements. * * * We have quoted in full the determinations . . . that the [agency] adopted as its findings and conclusions. They do not suffice they do not even begin to suffice a s specific written findings of basic f acts and conclusions ). Nevertheless, regardless of the nature of the Towson University termination proceedings or the appro priate type of court action, there is one thing about this case which is clear. The business jud gment ru le applied by the majority has no application to a governmental employme nt relationship which ca n only be term inated for c ause. Con te is entitled to and should receive either a proper administrative proceeding which complies with Maryland law or a de novo breach of contract trial at which his defenses to the charges should be conside red and ruled upo n. The majority gives him ne ither. -22-
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