PETROLEUM TRADERS CORPORATION, An Indiana Corporation v. Baltimore County, Maryland

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-2097
PETROLEUM TRADERS CORPORATION, An Indiana Corporation,
Plaintiff - Appellee,
v.
BALTIMORE COUNTY, MARYLAND,
Defendant – Appellant,
and
JOHN E. BEVERUNGEN, Individually and in his Official
Capacity; FRED HOMAN, Individually and in his Official
Capacity; DEBORAH MEEHAN, Individually and in her Official
Capacity; JOYCE A. STROUPE, Individually and in her Official
Capacity; DAVID W. WOLFE, Individually and in his Official
Capacity; HARFORD COUNTY, MARYLAND; CARROLL COUNTY,
MARYLAND; COMMUNITY COLLEGE OF BALTIMORE COUNTY; ANNE
ARUNDEL COUNTY, MARYLAND,
Defendants.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Benson Everett Legg, Chief District
Judge. (1:06-cv-00444-BEL)
Argued: October 28, 2010 Decided: January 12, 2011
Before TRAXLER, Chief Judge, WILKINSON, Circuit Judge, and Bobby
R. BALDOCK, Senior Circuit Judge of the United States Court of
Appeals for the Tenth Circuit, sitting by designation.

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Affirmed by unpublished per curiam opinion.
ARGUED: John Edward Beverungen, Paul M. Mayhew, BALTIMORE COUNTY
OFFICE OF LAW, Towson, Maryland, for Appellant. Michael Scott
Elvin, CHICO & NUNES, PC, Chicago, Illinois, for Appellee. ON
BRIEF: Adam M. Rosenblatt, Assistant County Attorney, BALTIMORE
COUNTY OFFICE OF LAW, Towson, Maryland, for Appellant. Joshua
A. Glikin, BOWIE & JENSEN, LLC, Towson, Maryland; Andrew M.
Spangler, Jr., Sandy L. Morris, CHICO & NUNES, PC, Chicago,
Illinois, for Appellee.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
Petroleum Traders Corporation (“PTC”) prevailed below in a
breach of contract action it brought against Baltimore County.
The district court estopped Baltimore County from denying the
existence of the contract, and we now affirm the judgment.
I.
Baltimore County is a member of the Baltimore Regional
Cooperative Purchasing Committee (“BRCPC”), a group formed by
the counties of the Baltimore metropolitan area for the purpose
of jointly purchasing various commodities, including fuel.*
* The court grants PTC’s motion to file a supplemental
appendix in this action.
In
February 2004, the BRCPC issued an “Invitation to Bid” on the
provision of gasoline and diesel fuel to its constituent
counties for a time period running from April 1, 2004 through
June 30, 2007. The Invitation set out the terms of the fuel
purchasing agreement the BRCPC would enter into with the
successful bidder. It explained that the contract would require
the participating counties to purchase all of their fuel from
the winning bidder. Additionally, the Invitation to Bid gave
the counties the option to lock-in a fixed price for fuel over a
set period of time instead of purchasing it at the prevailing

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market price. Under the lock-in option, the winning bidder was
to purchase futures contracts to ensure an adequate supply at a
fixed price.
PTC submitted a bid on March 11, 2004. And on March 15,
2004, David Wolfe, a staff buyer for Baltimore County, informed
PTC that it had won the bid and been awarded the contract.
Approximately a month later, on April 11, 2004, Baltimore County
issued a “Term Contract Award” to PTC signed by Deborah Herbold,
a deputy purchasing agent for Baltimore County. It stated,
“This is notice that the contract . . . has been awarded to you
. . . .” Baltimore County purchased fuel under this agreement
for approximately a year and half. On behalf of the BRCPC, it
elected to lock-in prices for three periods: May 17, 2004
through September 30, 2004; October 1, 2004 through January 31,
2005; and March 7, 2005 through June 30, 2005. During each of
these periods, the market price for fuel rose above the locked-
in price, yielding considerable savings for Baltimore County.
In September 2005, oil prices began to rise in the wake of
Hurricanes Katrina and Rita. Baltimore County feared they would
continue to rise and, accordingly, locked-in fuel prices for two
additional periods, September 5, 2005 to December 5, 2005 and
December 6, 2005 to April 2, 2006. But oil prices soon began to
fall. And by November 2005, the price for fuel on the open
market had fallen below the locked-in price. This development

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displeased the BRCPC member counties, and they demanded that PTC
renegotiate the locked-in price. PTC, having already purchased
the futures contracts, refused to do so.
Despite this friction, Baltimore County continued to follow
its usual practice of locking-in fixed prices in advance, opting
for a stable cost structure over the unpredictable swings of the
market. In December 2005, on behalf of the BRCPC, it requested
that PTC lock-in prices for an additional period, from April 3,
2006 through December 31, 2006. Before purchasing futures
contracts, PTC first asked for estimates of the fuel
requirements of the counties during this period and sought
assurances that the BRCPC counties would honor the contract.
Baltimore County construed this delay as a breach of their
contract. Baltimore County then formally terminated the
contract on December 7, 2005. PTC informed Baltimore County of
the losses it would incur if the contract were terminated, but
Baltimore County was unmoved. As a result, PTC was forced to
liquidate its futures contracts for a considerable loss.
PTC brought suit against Baltimore County and the other
BRCPC counties for breaching the fuel purchase contract.
Whereas prior to suit Baltimore County had cited PTC’s breach as
the sole justification for its termination, Baltimore County
added a new argument during litigation, contending that there
was never a valid contract in the first place. The Baltimore

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County Charter and Code required that the County Executive or
his designee sign commodities contracts and that the County
Attorney approve contracts for legal form and sufficiency.
Baltimore County argued that the contract was not valid because
these two contractual formalities had not been observed.
Baltimore County sought summary judgment on this basis, but
the district court denied its motion on September 11, 2008.
Although the court found the Charter and Code sections governing
contracting to be confusing and ambiguous, it agreed with
Baltimore County that the Charter and Code required the County
Executive or his designee to sign the contract and the County
Attorney to approve it for legal sufficiency. But the court
went on to hold that Baltimore County could be estopped from
denying the existence of the contract if PTC proved the elements
of equitable estoppel at trial, which in this case primarily
meant showing that it reasonably relied on Baltimore County’s
interpretation of its ambiguous Charter and Code provisions.
The case proceeded to trial. During the charging
conference, the court noted that Baltimore County was arguing
there was no contract while simultaneously arguing that there
was a valid contract that PTC breached. Baltimore County
recognized that a jury might not be receptive to these
conflicting arguments and agreed that the court should decide
whether there was a de facto contract because of equitable

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estoppel. The court decided that there was. Accordingly, the
court instructed the jury that it was to assume that there was
an enforceable contract between Baltimore County and PTC.
Thus, the only substantive question for the jury was
whether Baltimore County justifiably terminated the contract
because of PTC’s material breach. The jury found in favor of
PTC and awarded it $590,397 in damages. Baltimore County now
appeals, arguing that the application of equitable estoppel was
improper.
II.
Baltimore County contends that the district court erred in
estopping it from denying the existence of a contract. First,
Baltimore County argues that Maryland law prohibits the
application of equitable estoppel against a governmental entity
to cure a defective contract. Second, it claims that PTC failed
to prove the elements of equitable estoppel as a matter of law.
We will consider these contentions in turn.
A.
Baltimore County argues that under Maryland law equitable
estoppel can never be applied against a governmental entity to
cure a defective contract. It grounds this rule in a trio of
Maryland cases. See ARA Health Servs., Inc. v. Dep’t of Pub.
Safety & Corr. Servs., 685 A.2d 435 (Md. 1996); Inlet Assocs. v.

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Assateague House Condominium Ass’n, 545 A.2d 1296 (Md. 1988);
Alternatives Unlimited, Inc. v. New Baltimore City Bd. Of School
Comm’rs, 843 A.2d 252 (Md. Ct. Spec. App. 2004).
Baltimore County contends that these cases establish that
equitable estoppel is applied against governmental entities only
in the rarest of circumstances. See ARA Health Servs., 685 A.2d
at 440; Inlet Assocs., 545 A.2d at 1308; Alternatives Unlimited,
Inc., 843 A.2d at 258. The County argues that representations
of a government official can estop the governmental entity from
contesting the validity of a contract only when the official has
actual authority to enter into the contract; apparent authority
alone is not sufficient for an equitable estoppel claim against
a governmental entity. See ARA Health Servs., 685 A.2d at 440.
Therefore, Baltimore County reasons, equitable estoppel is not
available to PTC because Herbold, the only signatory to the Term
Contract Award, had no actual authority to enter into a contract
without the signature of the County Executive or his designee
and the approval of the County Attorney as to legal form and
sufficiency.
B.
Baltimore County is correct that equitable estoppel is
applied narrowly against governmental entities and that a
government official’s representations outside the scope of his
authority are insufficient to estop the governmental entity.

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But these two propositions of law do not end the matter.
Maryland law is not as clear as Baltimore County would have us
believe, and another line of Maryland cases carve out a limited
place for equitable estoppel in the context of government
contracting.
For over a hundred years, Maryland law has allowed
equitable estoppel to be asserted against governmental entities
when “both parties to the transaction have acted and proceeded
as if all preliminary formalities and regulations had been
complied with, and rights have attached.” Rose v. Baltimore, 51
Md. 256, 271-72 (1879). And Maryland’s highest court has since
reaffirmed this rule, tracing the contours of equitable
estoppel’s role in government contracting: “[T]he doctrine of
[equitable estoppel] is applied to municipal . . . corporations
. . . at least where the acts of its officers are within the
scope of their authority and justice and right require that the
public be estopped.” Berwyn Heights v. Rogers, 179 A.2d 712,
716 (Md. 1962).
Other cases have fleshed out the exact parameters of the
rule. Permanent Financial Corp. v. Montgomery County, 518 A.2d
123 (Md. 1986), makes clear that equitable estoppel is
appropriate when a government official, acting within the scope
of his authority, offers a reasonable interpretation of an
ambiguous law. Id. at 129. The case involved a developer who

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began construction pursuant to a permit issued by the county.
Id. at 124. But the county later changed its longstanding
interpretation of an ambiguous zoning ordinance. Id. at 129.
Under the new interpretation, the developer had violated the
ordinance. Id. at 124. The Maryland Court of Appeals estopped
the county from changing its interpretation of the ordinance
because the developer had reasonably relied on its
interpretation of the ambiguous provision. Id. at 129-30.
Heartwood 88, Inc. v. Montgomery County, 846 A.2d 1096 (Md.
Ct. Spec. App. 2004), was similarly decided. The case concerned
an advertisement for a tax sale promising that in the event a
sale was invalidated, the county would refund any payments along
with eight percent interest. Id. at 1101. After providing one
such refund, the county modified its interpretation of the law
and claimed that it did not have legal authority to pay the
eight percent interest. Id. at 1102. The Maryland Court of
Special Appeals found estoppel to be appropriate because the
representations in the advertisement were made within the scope
of the official’s authority and embodied the county’s reasonable
interpretation of an ambiguous law. Id. at 1119-20.
Additional cases set forth two further factors. The first
is whether the governmental entity behaves as if there were a
contract. The second is that the analysis should not become
bogged down in determining whether mere contracting formalities

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were observed. For example, in Hagerstown v. Hagerstown Railway
Co. of Washington County, 91 A. 170 (Md. 1914), the Maryland
Court of Appeals estopped a city from denying the existence of a
contract. The case involved a city that had contracted with a
power company for electricity. Id. at 171-72. But after many
years of proceeding under this agreement, the city decided to
build its own power plant and sought to void the contract,
claiming that certain contractual formalities had not been
observed. Id. at 172. The Maryland Court of Appeals found two
aspects of the case to be dispositive: the city had the power to
enter into the contract, regardless of whether all the
formalities were observed, and the city had behaved as if there
were a contract in place for all the years prior to the
litigation. Id. at 174-75.
Similarly, in Baltimore v. Crown Cork & Seal Co., 122 F.2d
385 (4th Cir. 1941), this court estopped a city from denying its
division of riparian rights among itself and several landowners.
Seeking to void the arrangement, the city argued that it had not
followed the proper legal procedures when it instituted the
division plan. Id. at 388. Specifically, the city had never
adopted the plan by a formal ordinance. Id. But the court
refused to be distracted by the absence of formalities: “[T]he
City cannot avoid [estoppel] by the plea that it did not

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exercise the powers conferred upon it in the proper fashion.”
Id. at 390.
To sum up, Maryland law allows a governmental entity to be
equitably estopped when: (1) a government official acting within
the scope of his authority (2) makes a reasonable interpretation
of an ambiguous law; and (3) the governmental entity has
proceeded in accordance with the representation.
III.
Baltimore County contends that PTC cannot meet the first
and second elements of the test derived above. Specifically it
claims that Herbold, the deputy purchasing agent, did not have
actual authority to enter into the contract on behalf of the
county and that the Baltimore County Charter and Code provisions
are unambiguous.
A.
Baltimore County may be correct that Herbold alone did not
have authority to contract on behalf of the county, but that is
not the relevant issue. The dispositive question, rather, is
whether Baltimore County officials acted within the scope of
their authority when they entered into the contract with PTC.
And Baltimore County’s narrow focus on Herbold neglects this
broader picture.

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The Baltimore County Charter and Code vest considerable
authority with the County Purchasing Agent, Fred Homan. Section
902 of the Baltimore County Charter authorizes the County
Purchasing Agent to “[make] all purchases and [contract] for all
public work and services, and for all supplies, material and
equipment [for the county],” a power “which he may delegate” to
any of his deputies, including both Herbold and Wolfe. Section
904 grants the County Purchasing Agent further power regarding
soliciting bids and awarding contracts. And § 10-2-310 of the
Baltimore County Code empowers the County Purchasing Agent to
make purchases under cooperative purchase agreements, such as
those used by the BRCPC.
As these provisions indicate, Homan had the authority to
enter into contracts on behalf of the county. In the agreement
with PTC, he delegated this authority to Wolfe and Herbold.
This delegation was proper. It in no way undermines the
critical fact that when Wolfe and Herbold awarded PTC the
contract, their actions were backed by the full authority of
Homan, who was expressly authorized by the Baltimore County
Charter and Code to contract on behalf of the county in a
cooperative purchasing situation such as this.
Beyond Homan, Wolfe, and Herbold, still more county
officials assured PTC that the contract was valid. County
Administrative Officer Anthony Marchione, who was the County

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Executive’s designee, consented to the contracting protocols in
place before and during PTC’s contract. Assistant County
Attorney Joyce Stroupe was more direct, sending a letter to PTC
invoking the provisions of the Invitation to Bid as if it were a
valid contract.
It is true that Marchione and Stroupe did not observe the
requisite contractual formalities, but Hagerstown Railway makes
plain that a singular focus on formalities is not always
conclusive in equitable estoppel cases. 91 A. at 174-75. What
is important is that Marchione, Stroupe, and Homan collectively
had the authority to enter into contracts on behalf of Baltimore
County, and all of them affirmed the validity of the PTC
contract.
Furthermore, this is not a case where an individual or even
a small group of people were the only ones making allegedly
erroneous representations. The entire Baltimore County
government operated for years under its reasonable
interpretation of the Baltimore County Charter and Code, namely
that the County Purchasing Agent could enter into commodities
contracts without obtaining the signatures of the County
Executive and County Attorney. Indeed, Baltimore County had
even drafted its official contracting procedures manual based on
this interpretation. And it had entered into over 5,000
contracts using the very same protocols that were used in the

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PTC contract. In all that time, no Baltimore County official
even hinted that the County’s contracting protocols were faulty.
Rather, every indication was that Baltimore County followed
consistent and proper contracting procedures.
It is hardly dispositive, therefore, whether Herbold,
acting alone with only her own authority, could enter into
contracts on behalf of the county. All of the relevant
Baltimore County officials gave their blessing to the PTC
contract, and the county as a whole demonstrated its view that
the contract was valid based on its longstanding contracting
procedures.
B.
As for the second element, Baltimore County argues that the
Baltimore County Code and Charter contracting provisions are
unambiguous. According to Baltimore County, the relevant
provisions plainly require that the County Executive or his
designee sign the contract and the County Attorney approve it
for legal form and sufficiency. But the Baltimore County
Charter and Code are not the model of clarity Baltimore County
suggests.
As discussed above, Baltimore County Charter §§ 902 and 904
and Baltimore County Code § 10-2-310 give the County Purchasing
Agent broad powers to negotiate and enter into commodities
contracts on behalf of the county, especially in cooperative

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purchase agreement settings like the PTC contract. Other
provisions, namely Baltimore County Code § 10-2-306, together
with Baltimore County Charter §§ 402 and 508, require that all
contracts be signed by the County Executive or his designee and
that the County Attorney approve all contracts for legal form
and sufficiency.
Although the district court ultimately determined that the
formalities embodied in Baltimore County Charter §§ 402 and 508
must be observed for a commodities contract to be valid, it
first noted that the Baltimore County Charter and Code were
ambiguous on this issue. We agree. As we have noted, Baltimore
County Charter §§ 902 and 904 and Baltimore County Code § 10-2-
310 vest considerable contracting authority with the County
Purchasing Agent, especially in the area of cooperative
commodities contracts. Based on Baltimore County’s longstanding
practice, the County Purchasing Agent was allowed to enter into
commodities contracts without observing the formalities required
by §§ 402 and 508. And though this interpretation exempting
commodities contracts from these formalities may ultimately have
been erroneous, the district court was right to note that the
interpretation was not an unreasonable one.
C.
The final element of the estoppel test presents a powerful
rationale for affirmance. Baltimore County behaved as though

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there were a contract throughout the course of the agreement.
Indeed, the County does not even dispute this conclusion.
Perhaps this is because Baltimore County was more than willing
to treat its agreement as a valid contract when it was
advantageous for it to do so.
During the course of the agreement, Baltimore County
locked-in prices with PTC five times, placed numerous purchase
orders for fuel from PTC, and received over $11,000,000 worth of
fuel from PTC. All of this took place in the manner
contemplated by the Invitation to Bid, and Baltimore County
reaped the savings of purchasing fuel for less than the market
price for the first three lock-in periods. Moreover, Baltimore
County repeatedly invoked the terms of the agreement in its
dealings with PTC. Wolfe and Stroupe both wrote letters to PTC
in which they highlighted particular provisions of the
agreement. And Baltimore County even went so far as to threaten
PTC that it would be in breach if it failed to perform in
accordance with the terms of the contract.
Even when the market price for fuel fell below the locked-
in price and Baltimore County was losing money as a result of
the agreement, it tried to get out of the arrangement not by
denying the existence of a contract but by declaring PTC to be
in material breach. It was not until the instant litigation
that Baltimore County changed its interpretation of its Charter

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and Code in a way that sought to invalidate the PTC contract.
And even then, Baltimore County was selective with its new
interpretation, seeking to invalidate only the PTC contract
while simultaneously performing under thousands of other
contracts that also lacked the formalities at issue here. In
sum, Baltimore County is continuing to act as if the contracting
procedures used for the PTC agreement are adequate to produce
valid contracts while asserting the invalidity of its contract
with PTC.
IV.
The fact that equitable estoppel is available does not end
the analysis. PTC must prove its elements to prevail, and
Baltimore County argues that it failed to do so. The elements
of equitable estoppel under Maryland law are: (1) voluntary
conduct or representation; (2) reasonable reliance; and (3)
detriment as a result of the reliance. Heartwood 88, 846 A.2d
at 1116. Baltimore County claims that PTC has not satisfied the
reasonable reliance element because it failed to perform due
diligence before relying on the representations of Baltimore
County officials and entering into the agreement. But the facts
do not support Baltimore County’s contention.
PTC reasonably relied on the representations of Baltimore
County officials conveying their belief that its contracting

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procedures were lawful. The first such representation came in
the Invitation to Bid, which set out the terms of the contract
and indicated that submitting a bid constituted acceptance of
those terms. Wolfe’s letter informing PTC that it won the
contract is another representation. And the Term Contract Award
is yet another. These documents made clear that there was a
contract between Baltimore County and PTC.
Baltimore County’s course of conduct during the term of the
contract encouraged this reliance. Every Baltimore County
purchase order issued to PTC reaffirmed PTC’s belief that it had
a contractual relationship with Baltimore County. Each time
Baltimore County requested prices to be locked-in for a period,
PTC reasonably relied on Baltimore’s County’s representation
that it would purchase the fuel for the locked-in price.
Baltimore County’s repeated invocations of the contractual terms
in correspondence with PTC further reinforced the conclusion
that there was a contract. PTC’s reliance was reasonable given
the numerous and consistent representations of Baltimore County
officials.
Furthermore, if PTC had hired legal counsel to investigate
the proper contracting procedures, as Baltimore County insists
it should have, the result would have been the same. As long as
the market favored Baltimore County, its officials would have
assured PTC that a valid contract was in place. Indeed, no

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Baltimore County official questioned this fact until it sought
to extricate itself from the PTC contract when the market
turned. The district court and jury correctly surmised that the
entire matter turned on Baltimore County’s refusal to honor its
agreement, and nothing on appeal has drawn that conclusion into
question.
V.
For the foregoing reasons, the judgment of the district
court is
AFFIRMED.

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