EDELL & ASSOCIATES, P.C., a New Jersey Professional Corporation; MARC Z. EDELL v.  LAW OFFICES OF PETER G. ANGELOS, a Maryland Professional Corporation

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 EDELL & ASSOCIATES, P.C., a New
Jersey Professional Corporation;
MARC Z. EDELL,
Plaintiffs-Appellants,
v. No. 00-2069 
LAW OFFICES OF PETER G. ANGELOS,
a Maryland Professional
Corporation,
Defendant-Appellee. 
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Benson E. Legg, District Judge.
(CA-99-3546-L)
Argued: May 9, 2001
Decided: August 24, 2001
Before WIDENER and WILLIAMS, Circuit Judges, and
HAMILTON, Senior Circuit Judge.
Affirmed in part, vacated in part, and remanded for further proceed-
ings by published opinion. Senior Judge Hamilton wrote the opinion,
in which Judge Williams joined. Judge Widener wrote a separate con-
curring and dissenting opinion.
COUNSEL
ARGUED: Martin Stanley Himeless, Jr., ZUCKERMAN,
SPAEDER, GOLDSTEIN, TAYLOR & BETTER, L.L.P., Baltimore,

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Maryland, for Appellants. William J. Brennan, III, SMITH, STRAT-
TON, WISE, HEHER & BRENNAN, Princeton, New Jersey; Harley
Thomas Howell, HOWELL & GATELY, Baltimore, Maryland, for
Appellee. ON BRIEF: Michel F. Baumeister, Dorothea M. Capone,
BAUMEISTER & SAMUELS, P.C., New York, New York, for
Appellants. William F. Gately, HOWELL & GATELY, Baltimore,
Maryland, for Appellee.
OPINION
HAMILTON, Senior Circuit Judge:
This diversity jurisdiction action involves an attorneys’ fee-sharing
dispute between attorney Marc Edell (Edell) and his law firm, Edell
& Associates, P.C., on the one hand, and the Law Offices of Peter G.
Angelos (the Angelos Firm), on the other hand. The Attorney General
of Maryland (the Maryland AG), Edell, his law firm, and the Angelos
Firm jointly represented the State of Maryland (Maryland) in recent
litigation against the tobacco industry to recover money dispersed in
Medicaid payments for cigarette related diseases (the Maryland AG
Action). The tobacco industry settled the Maryland AG Action for an
estimated $4.4 billion.1
The Angelos Firm had minimal experience with litigation against
the tobacco industry prior to its participation in the Maryland AG
Action. For this reason, the Angelos Firm asked Edell and his law
firm to join it in making a litigation proposal to the Maryland AG in
an effort to represent Maryland in the Maryland AG Action.
Edell is widely recognized as a preeminent legal authority on litiga-
1In an affidavit submitted by Edell in the present action, he states that
the tobacco industry settled with Maryland "for an amount estimated by
the Defendant Angelos Firm to be more than $6.6 billion . . . ." (J.A.
778). However, the latest estimate appears to be $4.4 billion. Maryland
v. Maryland Bd. of Contract Appeals, 773 A.2d 504, 507 (Md. 2001)
(estimating Maryland’s recovery from settlement in Maryland AG
Action at $4.4 billion).
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tion against the tobacco industry. Indeed, the litigation proposal the
Angelos Firm ultimately submitted to the Maryland AG touted this
fact and added: "As lead trial counsel for the plaintiff in Cipollone v.
Liggett Group, Edell was the first to bring a successful suit to verdict
against tobacco companies on behalf of a smoker, after five years of
intensive litigation and a four-month trial in federal court in New Jer-
sey." (J.A. 912). The litigation proposal assured the Maryland AG
that if the Angelos Firm was retained, Edell would serve as co-lead
counsel.
The Maryland AG accepted the Angelos Firm’s litigation proposal,
and under a fee-agreement between Maryland and the Angelos Firm,
Maryland agreed to pay the Angelos Firm twenty-five percent of any
amount recovered. Maryland did not enter into a separate fee agree-
ment with Edell and his law firm. The amount of legal fees that Edell
and his law firm would receive for their participation in the Maryland
AG Action was always an issue to be determined solely between
Edell and his law firm and the Angelos Firm.
The dispute in the present case is over the amount the Angelos
Firm agreed to pay Edell and his law firm for their substantial partici-
pation in the Maryland AG Action. Edell and his law firm contend
that in addition to the $798,218 in attorneys’ fees (based upon varying
hourly rates) they have already received from the Angelos Firm in
connection with the Maryland AG Action, the Angelos Firm repeat-
edly promised that they would share fairly in any contingency fee it
received at the conclusion of the case. According to Edell and his law
firm, they never would have continued their substantial participation
in the Maryland AG Action had the Angelos Firm not made these
repeated promises and the Angelos Firm fully understands this.
Because the Angelos Firm denies that it agreed to share any amount
of the estimated $1.1 billion contingency fee that it may potentially
receive in connection with the Maryland AG Action,2 Edell and his
law firm allege in the present action that the Angelos Firm is liable
2We use the word potentially because the Maryland AG refuses to pay
the Angelos Firm the agreed 25% amount of the estimated $4.4 billion
settlement figure on the ground, inter alia, that the fee is excessive. The
Angelos Firm and Maryland are in litigation over the issue. Maryland,
773 A.2d at 507.
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for breach of contract and breach of the covenant of good faith and
fair dealing implied in such contract. The Angelos Firm flatly denies
that it ever agreed that Edell and his law firm would share in any con-
tingency fee that it would possibly receive at the conclusion of the
Maryland AG Action and, therefore, refuses to pay them any further
fees.
Edell and his law firm alternatively allege that if the Angelos Firm
repeatedly promised it would share fairly with them any contingency
fee recovered at the end of the case with the intent never to allow
them to so share, the Angelos Firm is liable for intentional misrepre-
sentation. The Angelos Firm denies the allegation of intentional mis-
representation.
The district court granted summary judgment in favor of the Ange-
los Firm with respect to the three claims Edell and his law firm con-
tinue to press on appeal: (1) common law breach of contract; (2)
common law breach of the covenant of good faith and fair dealing;
and (3) common law intentional misrepresentation.3 The district court
also denied a motion filed by Edell and his law firm for leave to
amend their complaint to allege a claim for negligent misrepresenta-
tion.
Edell and his law firm now appeal the grant of summary judgment
in favor of the Angelos Firm with respect to all three listed claims.
They also appeal the district court’s denial of their motion for leave
to amend their complaint to assert a negligent misrepresentation
claim.
We affirm in part, vacate in part, and remand for further proceed-
ings. Specifically, we: (1) vacate the district court’s grant of summary
judgment in favor of the Angelos Firm with respect to the breach of
contract claim and remand for further proceedings with respect to that
claim; (2) affirm the district court’s grant of summary judgment with
3Other remaining claims were also dismissed, but are either not at
issue in the present appeal or are duplicitous of the three claims we just
listed. For example, Edell and his law firm asserted a claim seeking a
declaratory judgment that is in all material respects duplicitous of his
breach of contract claim.
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respect to the breach of the covenant of good faith and fair dealing
claim; (3) vacate the district court’s grant of summary judgment in
favor of the Angelos Firm with respect to the intentional misrepresen-
tation claim and remand for further proceedings with respect to that
claim; and (4) vacate the district court’s denial of the motion for leave
to amend the complaint and remand with instructions that the district
court grant the motion.
I
Because this case comes to us from the grant of a motion for sum-
mary judgment in favor of the Angelos Firm, we present the facts in
the light most favorable to Edell and his law firm, drawing all reason-
able inferences from the evidence in their favor. Reeves v. Sanderson
Plumbing Products, 530 U.S. 133, 149-150 (U.S. 2000).
In 1995, the Maryland AG solicited proposals from lawyers and
law firms to represent Maryland against the tobacco industry in an
effort to recover money that Maryland dispersed in Medicaid pay-
ments for cigarette related diseases. The Angelos Firm desired to sub-
mit such a proposal, but had minimal experience in prosecuting
claims against the tobacco industry. Thus, in December 1995, the
Angelos Firm approached Edell, a tobacco litigation expert, about the
possibility of Edell and his law firm participating on the litigation
team the Angelos Firm intended to propose to the Maryland AG. The
Angelos Firm was also extremely anxious to obtain access to the data
base of tobacco documents and testimony that Edell had amassed over
more than a decade of pursuing litigation against the tobacco industry.
Relying on the repeated promises made by the Angelos Firm that
Edell and his law firm would share with them any contingency fee
recovered at the conclusion of the Maryland AG Action, Edell, on
behalf of himself and his law firm, accepted its invitation to join the
litigation team, although the terms of the compensation to be paid
them were still undetermined. On December 29, 1995, Peter Angelos
submitted his firm’s litigation proposal to the Maryland AG, promi-
nently naming Edell as co-lead counsel. The litigation proposal
described Edell’s credentials as a tobacco litigation expert in detail.
That the Angelos Firm believed Edell was a heavy hitter in the field
of litigation against the tobacco industry, and used Edell’s reputation
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as such to lure the Maryland AG to accept its litigation proposal, is
evidenced by the fact that the litigation proposal stated that the Ange-
los Firm’s involvement of Edell "underscore[d] [its] commitment to
field the strongest possible team." (J.A. 899).
After submission of the litigation proposal, Peter Angelos, through
H. Russell Smouse (Smouse), a senior attorney employed by the
Angelos Firm and Peter Angelos’ "‘right hand’ and No.2 man," began
negotiating with Edell regarding Edell and his law firm’s compensa-
tion arrangement. (J.A. 747). On January 17, 1996, Edell sent a letter
to Smouse proposing that he and his law firm receive a flat fee each
year, and 20% of any contingency fee recovered in the final disposi-
tion of the Maryland AG Action.
Smouse responded by telephone a few days later. Smouse did not
object to the basic structure of Edell’s proposal; rather he advised
Edell that he felt that the 20% amount suggested by Edell for the con-
tingency fee component was "‘too steep.’" (J.A. 751). Edell offered
a revised proposal by letter dated January 25, 1996, proposing a larger
flat fee, 10% of any contingency fee recovered for the first $100 mil-
lion obtained, and 5% of any fee recovered above $100 million.
Despite these efforts at negotiation, by March 1996, the compensa-
tion issue between Edell, his law firm, and the Angelos Firm had not
been resolved. As a result, Edell and his law firm and the Angelos
Firm agreed, at the suggestion of the Angelos Firm, to an arrangement
by which Edell and his law firm would have only a limited role in the
Maryland AG Action. Therefore, on March 4, 1996, Edell, on behalf
of himself and his law firm, and the Angelos Firm entered into a
signed compensation agreement (the March 1996 Compensation
Agreement). Upon the condition that the Maryland AG accepted the
Angelos Firm’s litigation proposal, the March 1996 Compensation
Agreement provided that Edell would devote fifteen hours per month
to the Maryland AG Action and provide the Angelos Firm with copies
of all documents relevant to the tobacco litigation to which Edell had
access. In exchange, the Angelos Firm would collectively pay Edell
and his law firm $10,000 per month, with payments totaling a guaran-
teed minimum of $500,000. In addition, the Angelos Firm would
advance all expenses incurred during the litigation, subject to reim-
bursement only in the event of a recovery.
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On March 19, 1996, the Maryland AG accepted the Angelos Firm’s
litigation proposal without knowledge of the reduced role that Edell
and his law firm were now slated to perform. Indeed, in a press
release announcing his hiring of outside counsel to represent Mary-
land in the Maryland AG Action, the Maryland AG identified Edell
as one of the "key players on the Maryland tobacco litigation team"
and as "one of the country’s preeminent authorities on tobacco litiga-
tion and the first lawyer to bring a successful suit to verdict against
the tobacco companies on behalf of a smoker (Cipollone v. Liggett)."
(J.A. 753). Following the press release, Peter Angelos and Maryland
executed a representation contract providing the Angelos Firm with
a 25% contingency fee. Notably, the contract prohibited the Angelos
Firm from making any changes in the composition of the litigation
team slated to handle the case, which included Edell, without the prior
written consent of the Maryland AG or his designee.
In April 1996, the Attorney General for the State of New Jersey
(the New Jersey AG) similarly requested proposals from lawyers
nationwide to serve as New Jersey’s special counsel in a planned
Medicaid reimbursement action against major players in the tobacco
industry. The Angelos Firm sought to submit a litigation proposal in
response and once again asked Edell to participate. At the same time,
two different groups of New Jersey attorneys inquired whether Edell
would be interested in joining in their respective litigation proposals
to New Jersey.
Edell informed Smouse of these inquiries. Smouse responded with
"unequivocal assurances of a rewarding ‘partnership’" between Edell
and his law firm and the Angelos Firm in current and future tobacco
litigation. (J.A. 754). Indeed, Smouse urged Edell to "stick with" the
Angelos Firm and to reject any offer to join other bids for appoint-
ment as special counsel in New Jersey’s planned litigation against
major players in the tobacco industry. Id.
Based upon Smouse’s representations and assurances on behalf of
the Angelos Firm, Edell and his law firm joined with the Angelos
Firm in submitting a litigation proposal to the Attorney General of
New Jersey and rejected the invitations by the two groups of New Jer-
sey attorneys to join in their litigation proposals. The New Jersey AG
rejected the proposal submitted by Edell, his law firm, and the Ange-
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los Firm, because under their proposal, the Angelos Firm was only
obligated to advance 50% of the litigation expenses. The New Jersey
AG wanted 100% of the litigation expenses advanced. Ultimately, the
New Jersey AG accepted the proposal of one of the groups of New
Jersey attorneys that Edell and his law firm had informed they would
not join with in making a litigation proposal.
Even after the New Jersey AG had selected the litigation proposal
it did, a representative of the New Jersey AG’s office invited Edell
and his law firm to join the litigation team the New Jersey AG had
selected. Upon learning this fact, Smouse asked Edell to reject the
invitation and work exclusively with the Angelos Firm in the prosecu-
tion of the Maryland AG Action. "In light of [ ]Smouse’s repeated
representations that [they] were ‘partners’ in the tobacco litigation
and his assurances of a ‘one for all team approach,’" Edell politely
rejected the invitation extended by the representative of the New Jer-
sey AG’s Office. (J.A. 756).
On May 1, 1996, the Angelos Firm and the Maryland AG jointly
filed a complaint on behalf of Maryland in Maryland state court
against major players in the tobacco industry, including Philip Morris
Companies, Inc. and R.J. Reynolds Tobacco Company. As requested
by the Angelos Firm, Edell began devoting more than fifteen hours
per month to the Maryland AG Action and submitted a new compen-
sation proposal, dated June 4, 1996, to the Angelos Firm. Edell pro-
posed to devote 80% of his time to the Maryland AG Action in
exchange for $25,000 per month for a minimum of fifty months, plus
8% of the first $250 million in fees obtained and 5% of any fees
obtained in excess of $250 million.
In response to this new compensation proposal, Edell had numer-
ous conversations over the next few months with Smouse in an effort
to finalize a new compensation scheme. During those negotiations,
Edell and his law firm, at the specific request of the Angelos Firm,
continued in good faith to commit more and more time and resources
to the Maryland AG Action.
Among the categories of work performed by Edell and his law firm
in the Maryland AG Action were: (1) periodic preparation of litiga-
tion strategy memos for Smouse outlining the discovery required, the
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organizational efforts required to be undertaken, third-party docu-
ments required to be obtained, the types of experts required to be
retained (as well as identifying specific individuals who could be
retained in many of these categories) and the efforts required to be
undertaken in anticipation of trial; (2) contact and retention of expert
witnesses; (3) review and revision of pleadings and briefs to be filed
with the court as forwarded by the Angelos Firm to Edell and his law
firm for review and comment; (4) consultation with attorneys from
the Angelos Firm on hundreds of factual and procedural issues due to
those attorneys’ inexperience and/or uncertainty as to the manner in
which the issue should be handled; (5) legal research; (6) preparation
of discovery requests; (7) instructing inexperienced attorneys from the
Angelos Firm on deposition preparation and document organization;
(8) development and implementation of a computerized data base of
deposition and trial testimony of industry witnesses; (9) development
and implementation of a computerized data base of thousands of
industry documents, integrating documents produced during the dis-
covery process into the data base shared with the Angelos Firm; (10)
preparation for depositions of critical state and industry witnesses;
(11) review of daily correspondence and other filings; (12) meetings
with attorneys from the Angelos Firm; (13) attendance at depositions
with attorneys from the Angelos Firm; (14) receipt and response to
hundreds of telephone calls from attorneys from the Angelos Firm;
(15) receipt and response to innumerable faxes and e-mails from
attorneys from the Angelos Firm; (16) telephone conferences with
counsel for the tobacco companies; (17) preparation and revision of
experts’ reports; (18) summarizing deposition transcripts; and (19)
identifying for the Angelos Firm industry witnesses whose testimony
should be taken. Additionally, Edell appeared at, and actively partici-
pated in, case management conferences held before the state trial
judge. Also, Edell argued many of the more significant motions and
participated in virtually all of the significant strategy decisions during
the litigation.
In light of Edell’s rapidly increasing litigation responsibilities, he
wrote to Smouse on February 14, 1997, proposing that he be paid an
hourly rate of $325 for every hour he spent on the Maryland AG
Action beyond the fifteen-hours per month as stated in the March
1996 Compensation Agreement. He also suggested an hourly rate of
$75 for his paralegal. The final sentence of the letter stated: "I hope
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you find these terms to be reasonable and acceptable. I look forward
to resolving the global issue with you within the next few weeks."
(J.A. 170) (emphasis added). The global issue is the percentage Edell
and his law firm would share in any contingency fee that the Angelos
Firm may receive at the conclusion of the litigation. From henceforth,
we will refer to this issue as "the Contingency-Fee Issue."
Edell and his law firm continued to dedicate increasing amounts of
time and effort to the Maryland AG Action, and the Angelos Firm
compensated Edell in accordance with Edell’s letter dated February
14, 1997 (the February 1997 Compensation Agreement). At the same
time, Edell and Smouse continued their dialogue with respect to the
Contingency-Fee Issue.
During a telephone conversation on June 4, 1997, Smouse told
Edell that Peter Angelos has always assured him and, therefore, indi-
rectly Edell, that if and when there is a "payday," Edell and his law
firm "will be generously compensated for [their] participation in this
case." (J.A. 760). In response, Edell told Smouse that because he
trusted their relationship and Smouse’s judgment on the matter, he
and his law firm would continue working on the Maryland AG Action
without a formal agreement.
On June 17, 1997, Edell and Smouse discussed the Contingency-
Fee Issue face to face, but did not resolve it. Nonetheless, Smouse
agreed to draft an agreement addressing the issue and memorializing
the revised terms of Edell and his law firm’s compensation to which
the parties had already agreed. By July 29, 1997, Smouse had not
drafted such an agreement. Thus, Edell wrote Smouse a reminder let-
ter. The letter also reported the hours Edell and his paralegal had
spent on the Maryland AG Action for the months March through June
1997 and the related litigation costs incurred. The letter cautioned
Smouse that the stated amount owed "[did not] reflect the contin-
gency fee component which we have also discussed." (J.A. 965).
By letter dated August 4, 1997, Smouse stated that he was not
aware that he had agreed to draft a compensation agreement regarding
Edell and his law firm. Smouse added, however, that he would be
"very happy to discuss all of that with [Edell]" in a face to face meet-
ing. (J.A. 967). Notably, Smouse did not, at this time, object, ques-
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tion, or deny the statement in Edell’s letter that the figure representing
the fees and costs for March through June 1997, did not reflect the
Contingency-Fee Issue, which the parties had also discussed.
Edell and his law firm obliged the continued pressures of the Ange-
los Firm to contribute more hours to the Maryland AG Action.
Indeed, trial in the Maryland AG Action was set for April 1999. As
a consequence of the increased amount of resources Edell and his law
firm were devoting to the Maryland AG Action, they curtailed their
work on other firm matters, and were forced to reject new business.
The Angelos Firm paid Edell and his law firm the hourly rates and
expenses due in accordance with the March 1996 and February 1997
Compensation Agreements. Notably, every monthly invoice sent to
the Angelos Firm by Edell and his law firm, including ones sent by
fax on April 20, 1998 and July 10, 1998, contained a reminder that
the invoice did not reflect the contingency fee component of their
compensation.
In response to the April 20, 1998 invoice, Smouse telephoned Edell
on May 12, 1998 to discuss the reference to the contingency fee com-
ponent of their compensation. This was the first time in over a year
of communications concerning the Contingency-Fee Issue that the
Angelos Firm questioned Edell and his firm’s right to share in any
contingency fee the Angelos Firm recovered at the conclusion of the
case. On May 15, 1998, Edell wrote Smouse as follows:
I am writing as a follow up to our telephone conversation of
May 12, 1998, concerning my [April 1998 invoice].
If I created the misimpression that we had reached an agree-
ment on the specific percentage of my participation in any
legal fees that may be received in the Maryland [AG
Action], that was not my intent. While we did agree that in
consideration of my expanded roll with your firm in the
prosecution of [this case], I would receive a contingent fee
in addition to hourly compensation, we were unable to reach
an understanding on the percentage amount of such contin-
gent component. That being the case, I accepted Peter’s
assurance that when and if a fee was generated he would "do
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the right thing" respecting my participation in those monies.
I continue to take Peter at his word.
(J.A. 974).
During the next two months, neither Smouse nor any other autho-
rized representative of the Angelos Firm objected to, or denied the
accuracy of the statements contained in Edell’s May 15, 1998 letter.
Instead, the Angelos Firm imposed greater and greater responsibilities
upon Edell with respect to the Maryland AG Action.
By July 10, 1998, settlement negotiations between the parties to the
Maryland AG Action became serious. At this same time, Smouse
reassured Edell and his law firm by letter dated July 10, 1998, with
enclosures, that they will be paid at the agreed rate for the time they
had expended and will expend on the Maryland AG Action. In the
same letter, although Smouse denied that he ever agreed that Edell
and his law firm would share in any contingency fee recovered at the
conclusion of the case, Smouse admitted that he had stated to Edell,
on more than one occasion, that he firmly believed "Peter would deal
with [him] fairly . . ." at the conclusion of the case. (J.A. 980).
Smouse also assured Edell that he still believed this to be the case,
and that he sincerely hoped Edell would continue in the case by trust-
ing and having faith that Peter Angelos would deal with Edell and his
law firm fairly at the conclusion of the case.
Shortly thereafter, the settlement negotiations between the Mary-
land AG and the tobacco industry came to an apparent standstill, and
the prospect of an April 1999 trial loomed as a potential reality with
a significant amount of unconducted discovery. Faced with this pros-
pect, the Angelos Firm requested Edell to dedicate four days a week
in Baltimore to furthering the litigation, and to submit yet another
proposal concerning the Contingency-Fee Issue. In this regard, Edell
wrote Smouse on July 26, 1998, outlining the terms under which he
and his law firm would be willing to expand their role even further,
the consequence of which would require that Edell, in essence, walk
away from his New Jersey law practice and move to Maryland for the
remainder of the litigation. In the letter, in addition to receiving flat
fees, Edell requested 10% of any contingency fee that the Angelos
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Firm might receive at the conclusion of the case. Edell hand-delivered
this letter to Smouse.
Upon Smouse’s review of the letter, Smouse once again, acting on
behalf of the Angelos Firm, impliedly reaffirmed that Edell and his
law firm would receive compensation in addition to the hourly bil-
lings agreed to in the March 1996 and February 1997 Compensation
Agreements. Specifically, Smouse reiterated his statement that
"‘when the litigation is resolved Peter will do the right thing.’" (J.A.
770). During the same conversation, Smouse also inquired as to
whether the 10% contingency fee figure suggested by Edell in his
July 26, 1998 letter was negotiable.
On August 3, 1998, Edell submitted an invoice to the Angelos Firm
for July 1998. The invoice specifically stated that the fees requested
in the invoice did not include the "‘Peter will do the right thing at the
end of litigation,’" component of Edell and his firm’s fee. (J.A. 985).
The Angelos Firm paid the July 1998 invoice without comment.
Additionally, Smouse told Edell that Peter Angelos would meet with
him on August 10, 1998, to discuss the Contingency-Fee Issue. When
Edell arrived for the scheduled meeting, Smouse informed him that
Peter Angelos would not be available to meet with him until August
13, 1998.
On August 12, 1998, Edell wrote and sent Smouse the following
clarifying letter:
From our correspondence on this issue, it is clear that we all
agree that in the event of a recovery in this action, I will
receive from the law offices of Peter G. Angelos, in addition
to my hourly compensation, a lump sum payment as further
remuneration. In my correspondence, I have referred to this
additional remuneration as "the contingent component of my
fee" or "Peter’s assurance that when and if a fee was gener-
ated he would ‘do the right thing’ respecting my participa-
tion in those monies." You have chosen to refer to it as
"Peter’s commitment to deal with me fairly at the conclu-
sion of the litigation." The label we choose to apply to this
additional remuneration [is] irrelevant. We can call it a
"bonus," a "kicker," a "premium," a "contingent fee compo-
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nent," or "Peter’s commitment to deal with me fairly at the
conclusion of the litigation." They are all the same and
reflect nothing more than the express agreement [that] we
have all [been] working under for some time now regarding
my receipt of additional remuneration at the successful con-
clusion of the matter.
The events of the past few weeks (e.g., cancellation of
numerous meetings scheduled with Peter to discuss the pro-
posal I submitted to you at his request, your request for me
to withdraw my proposal, and letters sent by you concerning
fee issues, etc.), in conjunction with the current settlement
discussions between the tobacco industry and the various
state Attorney Generals, might be viewed with suspicion by
someone unfamiliar with our personal and professional rela-
tionship. That being the case, I would greatly appreciate
reassurance from you as to Peter’s commitments to me, as
a reaffirmation of the faith and trust I have placed in you
and Peter.
(J.A. 312).
On August 13, 1998, Smouse, acting on behalf of the Angelos
Firm, sent a letter to Edell disavowing any agreement between them
under which Edell and his firm would receive any additional compen-
sation beyond the hourly billing rates set forth in the March 1996 and
February 1997 Compensation Agreements. Smouse further demanded
that Edell confirm, in writing, that no contingent fee agreement
existed between the parties. Edell immediately responded by letter as
follows:
I am sad to say that I am in receipt of your letter of even
date. . . . I will not waste my time reiterating the FACTS.
They are well documented and will substantiate that which
is reflected in my May 15, 1998 and July 26, 1998 letters.
I will only say that, unfortunately, the cynics were once
again proven correct. Shame on me for being so trusting.
(J.A. 312).
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On August 15, 1998, Smouse related to Edell that Peter Angelos
would meet with him on August 17, 1998, on the condition that Edell
withdraw his July 26, 1998 letter detailing his last fee-sharing pro-
posal. Edell complied with the condition the very next day by sending
the following fax to Smouse: "Pursuant to your request at our meeting
on August 15, 1998, and in an effort to facilitate our discussions
scheduled for Monday, August 17, 1998, I hereby withdraw my letter
dated July 26, 1998." (J.A. 318).
Late in the morning on August 17, 1998, Smouse informed Edell
that his August 16, 1998 fax withdrawing his July 26, 1998 letter was
insufficient, and that Peter Angelos would not meet with Edell until
he confirmed, in writing, that Edell and his law firm were not entitled
to a contingency fee for their participation in, and overall contribution
to, the Maryland AG Action. During this telephone conversation,
Smouse stated that it was the Angelos Firm’s position that Edell and
his law firm were not entitled to receive any compensation beyond
hourly fees.
Not surprisingly, Edell refused to write such a confirmation letter.
Nonetheless, Edell and his law firm continued to represent Maryland
in the Maryland AG Action based upon client loyalty and upon a
mutual understanding that the Contingency-Fee Issue would be
resolved at the conclusion of the Maryland AG Action.
As discovery and trial preparations continued, on November 18,
1998, the defendants in the Maryland AG Action settled the case for
an estimated $4.4 billion.4 Pursuant to its fee agreement with Mary-
land, the Angelos Firm stands to recover an estimated $1.1 billion in
attorneys’ fees. In total, Edell and his law firm received $798,218 in
hourly attorneys’ fees for their participation in the Maryland AG
Action.
On February 9, 1999, Edell and his law firm filed this diversity
action in the United States District Court for the District of New Jer-
sey against the Angelos Firm. The case was ultimately transferred to
the United States District Court for the District of Maryland, after
4See Footnote 1 of this opinion, supra, at 2.
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which the district court: (1) denied a motion by the Plaintiffs to
amend their complaint to allege a negligent misrepresentation claim;
and (2) entered final judgment fully in favor of the Angelos Firm
based upon its motion for summary judgment; this timely appeal fol-
lowed.
II
We review the grant of a motion for summary judgment de novo.
Higgins v. E.I. DuPont de Nemours and Co., 863 F.2d 1162, 1167
(4th Cir. 1988). In reviewing the evidence in the record, we should
draw all reasonable inferences in favor of the non-moving party, here,
Edell and his law firm, and we may not make credibility determina-
tions or weigh the evidence. Reeves, 530 U.S. at 149-150. Although
we should review the record as a whole, we must disregard all evi-
dence favorable to the moving party, here, the Angelos Firm, that a
jury would not be required to believe. Id. at 151. "That is, [we] should
give credence to the evidence favoring the non-movant as well as that
evidence supporting the moving party that is uncontradicted and
unimpeached, at least to the extent that the evidence comes from dis-
interested witnesses." Id. (internal quotation marks omitted).
Summary judgment is appropriate when "the pleadings, deposi-
tions, answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a
matter of law." Fed. R. Civ. P. 56(c).
III
Edell and his law firm first contend the district court’s grant of the
Angelos Firm’s motion for summary judgment with respect to their
breach of contract claim should be vacated and remanded for further
proceedings. We agree.
A. The Arguments of Edell and His Law Firm
Succinctly stated, Edell and his law firm seek to enforce a contract
that they allege existed between them and the Angelos Firm, whereby
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the Angelos Firm agreed that Edell and his law firm would share
fairly (in addition to the hourly-rate fees agreed upon) in any contin-
gency fee that it might receive at the conclusion of the Maryland AG
Action. In consideration for such agreement, Edell and his law firm
continued to substantially participate in the Maryland AG Action at
the expense of working on other fee-generating cases. To meet their
burden of proffering sufficient evidence from which a reasonable jury
could find that the Angelos Firm agreed to this fee-sharing arrange-
ment, Edell and his law firm rely upon: (1) the numerous oral and
written representations made by Smouse, Peter Angelos’ right-hand
man, to this general effect; and (2) the Angelos Firm’s long silence
in the face of repeated statements in the invoices that Edell and his
law firm sent to the Angelos Firm reminding it that the invoice did
not reflect the contingency fee component of their compensation
arrangement. Edell and his law firm argue that, at a minimum, this
evidence works to equitably estop the Angelos Firm from denying the
existence of the contingency fee-sharing agreement they now seek to
enforce.
With respect to determining the actual percentage that Edell and his
law firm would receive of any contingency fee the Angelos Firm
recovered (a term Edell and his law firm admit was never expressly
agreed upon), Edell and his law firm rely upon the holding by Mary-
land’s highest court that Rule 1.5(e) of the Maryland Lawyers’ Rules
of Professional Conduct (MLRPC) "does constitute a supervening
statement of public policy to which fee-sharing agreements by law-
yers are subject, and that the enforcement of Rule 1.5(e) is not limited
to disciplinary proceedings." Post v. Bregman, 707 A.2d 806, 818
(Md. 1998). MLRPC 1.5(e) provides:
A division of fee between lawyers who are not in the same
firm may be made only if:
(1) the division is in proportion to the services performed
by each lawyer or, by written agreement with the client,
each lawyer assumes joint responsibility for the representa-
tion;
(2) the client is advised of and does not object to the par-
ticipation of all the lawyers involved; and
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(3) the total fee is reasonable.
(emphasis added). Edell and his law firm argue that because the
Angelos Firm agreed that they would share in any contingency fee the
Angelos Firm received at the conclusion of the Maryland AG Action,
in exchange for their continued substantial participation in the case,
MLRPC 1.5(e) implies, by operation of law, that the sharing must be
in proportion to the services they performed. In other words, once the
Angelos Firm agreed to any sharing of the potential contingency fee,
Maryland law deems them to have agreed to pay Edell and his law
firm the only percentage of that contingency fee to which it could eth-
ically agree. Edell and his law firm fervently maintain that such a
result is consistent with Maryland law’s disfavor with the destruction
of contracts because of uncertainty and its command that contracts
should be construed, if possible, "to carry into effect the reasonable
intention of the parties if that can be ascertained." Born v. Hammond,
146 A.2d 44, 47 (Md. 1958) ("The agreement will be sustained if the
meaning of the parties can be ascertained, either from the express
terms of the instrument or by fair implication. The law does not favor,
but leans against the destruction of contracts because of uncertainty;
therefore, the courts will, if possible, so construe the contract as to
carry into effect the reasonable intention of the parties if that can be
ascertained.").
B. The Responsive Arguments of the Angelos Firm
The Angelos Firm offers numerous arguments in response to Edell
and his law firm’s arguments in support of their breach of contract
claim. First and foremost, the Angelos Firm vigorously argues that,
under the circumstances, no reasonable jury could find that the Ange-
los Firm agreed that Edell and his law firm would share (in addition
to the hourly-rate fees agreed upon) in any contingency fee that it had
the potential to receive at the conclusion of the Maryland AG Action.
The first circumstance it highlights is that Edell did not copy Peter
Angelos, the sole shareholder in the Angelos Firm, on any of his let-
ters and faxes to Smouse prior to Edell’s letter of July 26, 1998.5 Fur-
thermore, the Angelos Firm argues that the implausibility of the
5Notably, the Angelos Firm does not argue that Smouse lacked agency
authority to bind the Angelos Firm contractually in this matter.
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alleged fee-sharing agreement sought to be enforced by Edell and his
law firm is underscored by the gross disparity in financial risks
undertaken by the parties; Edell bargained for and received a guaran-
teed regular stream of income (i.e., the hourly fees), while the Ange-
los Firm fronted 100% of the litigation expenses and took the case on
a completely contingent basis.
Second, the Angelos Firm emphasizes that its fee agreement with
Maryland prevented it from assigning, transferring, conveying, or oth-
erwise disposing of any rights created under that agreement to any
person, firm or partnership, without the prior written consent of the
Maryland AG. According to the Angelos Firm, in the absence of such
written consent, an oral agreement to assign Edell and his law firm
a percentage share of the fees recoverable under its fee agreement
with Maryland would have been ultra vires and unenforceable.
Third, the Angelos Firm argues that Edell and his law firm’s breach
of contract claim must fail because a material term of the contract
sought to be enforced is missing—namely, the percentage to be paid
to Edell and his law firm of any contingency fee that the Angelos
Firm had the potential to receive at the conclusion of the Maryland
AG Action. In support of this argument, the Angelos Firm relies upon
the general rule in Maryland that an enforceable contract does not
exist unless the parties have agreed to all material terms of the con-
tract sought to be enforced. Beck v. Bernstein, 81 A.2d 608, 609 (Md.
1951) ("A contract, to be final, must include all the terms which the
parties intend to introduce and material terms cannot be left for future
settlement. Either party is at liberty to put an end to the negotiations
until actual completion of the bargain."); Peoples Drug Stores, Inc. v.
Fenton Realty Corporation, 62 A.2d 273, 276 (Md. 1948) (same).
One of the chief rationales for this general rule is that courts should
not be in the business of making contracts for parties. Horsey v.
Horsey, 620 A.2d 305, 319 (Md. 1993). The other chief rationale is
that "the terms of a contract must be sufficiently definite for enforce-
ment . . . ." Id.
The fourth argument that the Angelos Firm makes in response to
Edell and his law firm’s breach of contract claim is that their equita-
ble estoppel argument fails on the basis of waiver and on the merits.
Specifically, the Angelos Firm argues Edell and his law firm waived
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their right on appeal to argue the applicability of the doctrine of equi-
table estoppel by not arguing it below. Alternatively, the Angelos
Firm argues that Edell and his law firm’s equitable estoppel argument
fails on the merits for lack of evidence that the Angelos Firm made
a clear and definite promise that they would share in any contingency
fee that the Angelos Firm received at the conclusion of the Maryland
AG Action.
Fifth and finally, the Angelos Firm urges us to reject Edell and his
law firm’s argument regarding MLRPC 1.5(e) on the basis that they
waived their right on appeal to argue its application by not arguing
it below and on the basis that the argument erroneously presupposes
that the Angelos Firm agreed that Edell and his law firm would share
in any contingency fee that the Angelos Firm received.
C. Our Analysis
We conclude that Edell and his law firm have met their summary
judgment burden of proffering sufficient evidence for a reasonable
jury to find that the Angelos Firm agreed to pay them (in addition to
the hourly-rate fees agreed upon) a fair portion of any contingency fee
it might receive at the conclusion of the Maryland AG Action. Con-
sideration for this contractual arrangement is found in Edell and his
law firm’s promised continued substantial participation in the Mary-
land AG Action at the expense of foregoing other fee-generating
cases. In part, they have met this burden by offering evidence that fol-
lowing the execution of the March 1996 and February 1997 Compen-
sation Agreements, the Angelos Firm, through Smouse: (1) informed
Edell, during a telephone conversation on June 4, 1997, that if and
when there is a "payday," Edell and his law firm "will be generously
compensated for [their] participation in this case" (J.A. 760); (2)
Smouse’s admission in a letter to Edell, dated July 10, 1998, that he
had stated on more than one occasion, that he firmly believed "Peter
would deal with [him] fairly . . ." at the conclusion of the case (J.A.
980); (3) Smouse’s assurance in the same letter that he still believed
this to be the case, and that he sincerely hoped Edell would continue
in the case by trusting and having faith that Peter Angelos would deal
with Edell and his law firm fairly at the conclusion of the case; and
(4) on July 26, 1998, Smouse impliedly reaffirmed that Edell and his
law firm would receive compensation in addition to the hourly bil-
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lings agreed to in the March 1996 and February 1997 Compensation
Agreements and queried Edell as to whether the 10% contingency fee
figure suggested by Edell in his July 26, 1998 letter was negotiable.
Porter v. General Boiler Casing Co., 396 A.2d 1090, 1095 (Md.
1979) (reiterating that under Maryland law acceptance of a contract
can be accomplished by acts as well as words with no formal accep-
tance being required).
The fact that Edell did not copy Peter Angelos, the sole shareholder
in the Angelos Firm, on any of his letters and faxes to Smouse prior
to Edell’s letter of July 26, 1998 is merely fodder for the Angelos
Firm’s closing argument before the jury. Edell knew that Smouse was
a senior attorney at the Angelos Firm, Peter Angelos’ right-hand man,
and one of the lead counsels in the Maryland AG Action. Further-
more, Smouse represented to Edell that he was negotiating with Edell
on behalf of Peter Angelos. Under these circumstances, a reasonable
jury could find that Edell’s failure to copy Peter Angelos on most of
his letters and faxes to Smouse was reasonable behavior. Also fodder
for closing argument by the Angelos Firm is the fact that it was obli-
gated to front all the expenses of the Maryland AG Action while Edell
and his law firm had no such obligation. Indeed, this fact is of almost
no consequence because it does not negate the existence of a fee-
sharing agreement.
We also find no merit in the Angelos Firm’s ultra vires argument.
We agree with Edell and his law firm that the Angelos Firm’s ultra
vires argument misapprehends the basic nature of an assignment
when it argues that an agreement to share the potential contingency
fee would have violated the prohibition of assignment in its contract
with the Maryland AG. An assignment is a transfer of one’s rights.
Petals Factory Outlet v. EWH & Assocs., 600 A.2d 1170, 1174 (Md.
Ct. Spec. App. 1992). Edell nor his law firm has ever claimed that the
Angelos Firm assigned them any right under the Angelos Firm’s fee
agreement with the Maryland AG. Rather, Edell and his law firm’s
position has always been that the Angelos Firm had a contractual duty
to pay them a fair portion of any contingency fee it may receive at
the conclusion of the Maryland AG Action aside from any provisions
in the Angelos Firm’s fee agreement with the Maryland AG.
Turning to the balance of Edell and his law firm’s evidentiary bur-
den at summary judgment, we hold they have met the balance of their
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burden by offering evidence that: (1) the Angelos Firm knew the
terms on which Edell and his law firm’s services were being offered
(i.e., hourly fees plus sharing fairly in any contingency fee the Ange-
los Firm received at the conclusion of the Maryland AG Action); (2)
the Angelos Firm received the benefit of those services in silence
until it became quite probable that the Maryland AG Action would
result in a settlement amount significantly greater than initially antici-
pated; and (3) the Angelos Firm did so when it had an opportunity to
express its rejection of the offer. Porter, 396 A.2d at 1095 (holding
that silence operates as an acceptance to an offer where services are
rendered under such circumstances that party benefitted thereby
knows terms on which they are being offered and, he receives the
benefit of those services in silence, having had a reasonable opportu-
nity to express his rejection of offer) (holding under Maryland law
that acceptance of a contract can be accomplished by acts as well as
words; no formal acceptance is required); University Nat’l Bank v.
Wolfe, 369 A.2d 570, 576 (Md. 1977) (parties can "substitute a new
oral contract by conduct and intimation, as well as by express
words"); Cole v. Wilbanks, 171 A.2d 711, 712 (Md. 1961) ("Assent
to an offer to vary, modify or change a contract may be implied and
found from circumstances and the conduct of the parties showing
acquiescence or agreement.").
Allowing a party’s silence to operate as an acceptance to an offer
where services are rendered under such circumstances that the party
who benefitted thereby knows the terms on which they are being
offered and receives the benefit of those services in silence, having
had a reasonable opportunity to express his rejection of the offer, is
a consequence of the doctrine of equitable estoppel. Ganley v. G &
W Ltd. Partnership, 409 A.2d 761, 764 (Md. Ct. Spec. App. 1980).
Allowing the trier of fact to consider the import of the Angelos Firm’s
silence in the face of Edell and his law firm’s repeated statements that
they were continuing to devote significant portions of their time to the
Maryland AG Action based in part on the mutual agreement that they
would share fairly (in addition to the hourly-rate fees agreed upon) in
any contingency fee the Angelos Firm received at the conclusion of
the Maryland AG Action is in complete accord with Maryland law
holding that "the determination of whether the conduct of the parties
subsequent to the execution of a written contract constitutes a modifi-
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cation is ordinarily a question left to the fact-finder." Berringer v.
Steele, 758 A.2d 574, 608 (Md. Ct. Spec. App. 2000).
Moreover, we reject the Angelos Firm’s arguments in opposition
to Edell and his law firm’s invocation of the doctrine of equitable
estoppel. First, the record amply refutes the Angelos Firm’s assertion
that Edell and his law firm failed to argue equitable estoppel. For
example, in "PLAINTIFFS’ MEMORANDUM OF LAW IN OPPO-
SITION TO THE DEFENDANT LAW OFFICES OF PETER G.
ANGELOS’ MOTION FOR SUMMARY JUDGMENT," (J.A. 563),
Edell and his law firm made the following argument:
At no time before the summer of 1998 did the Defendant
Angelos Firm affirmatively deny the existence of an agree-
ment between the parties with respect to Plaintiffs’ entitle-
ment to share in the total attorneys’ fees. Plaintiffs relied in
good faith upon the repeated representations made by the
Defendant of its intention to make such a payment to the
Plaintiffs in addition to the hourly rate agreed to by the par-
ties in the contract of March 4, 1996 and its subsequent
modification on February 14, 1997. As a result, the Defen-
dant should be estopped from denying the existence of a
valid and enforceable agreement between the parties with
respect to the sharing of the total attorneys’ fees generated
by the tobacco litigation.
(J.A. 606) (emphasis added). Second, the Angelos Firm’s argument
that Edell and his law firm cannot invoke the doctrine of equitable
estoppel because they failed to meet the supposed threshold require-
ment of establishing a clear and definite promise is equally unavail-
ing. This is because the Angelos Firm confuses the doctrine of
equitable estoppel from its "distant cousin," the doctrine of promis-
sory estoppel. Pavel Enters., Inc. v. A.S. Johnson Co., 674 A.2d 521,
523 n.1 (Md. 1996). As Edell and his law firm point out, the two theo-
ries have different elements. Indeed, Maryland’s highest court has
described the two theories as "distant cousins." Promissory estoppel
offers a vehicle to enforce a promise for which there is no consider-
ation, but the plaintiff nonetheless relied upon the promise to his det-
riment in circumstances that make it unconscionable not to enforce
the promise. Allen M. Campell Co. v. Virginia Metal Indus., Inc., 708
23 EDELL & ASSOC. v. LAW OFFICES OF PETER G. ANGELOS

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F.2d 930, 931 (4th Cir. 1983). A clear and definite promise on the
part of the defendant is an essential element of a promissory estoppel
claim. Pavel Enters., Inc., 674 A.2d at 532. Such is not the case with
respect to invocation of the doctrine of equitable estoppel, which
relates to misrepresentations of fact, positive acts, and omissions.
Canaras v. Lift Truck Services Inc., 322 A.2d 866, 878 (Md. 1974);
J.F. Johnson Lumber Co. v. Magruder, 147 A.2d 208, 212 (Md.
1958); Ganley, 409 A.2d at 764.
We now turn to address Edell and his law firm’s argument based
upon MLRPC 1.5(e) and Post v. Bregman, 707 A.2d 806 (Md. 1998).
Edell and his law firm concede, as they must, that they never reached
an express agreement with the Angelos Firm regarding the specific
percentage they would receive of any contingency fee the Angelos
Firm might receive at the conclusion of the Maryland AG Action.
Nevertheless, as previously stated, Edell and his law firm argue that
because the Angelos Firm agreed that they would share in any contin-
gency fee that it might receive at the conclusion of the Maryland AG
Action in exchange for their continued substantial participation in the
case, MLRPC 1.5(e) implies, by operation of law, that the sharing
would be in proportion to the services they performed. In other words,
once the Angelos Firm agreed to any sharing of the potential contin-
gency fee, MLRPC 1.5(e) deems them to have agreed to pay Edell
and his law firm the only percentage of that potential contingency fee
to which it could ethically agree.
On the merits, the Angelos Firm opposes this argument on the basis
that it incorrectly presupposes the existence of a fee-sharing agree-
ment in violation of its non-assignment obligation under its fee agree-
ment with Maryland and in violation of the well-settled Maryland
precedent that an enforceable contract does not exist unless the parties
have agreed to all material terms of the contract sought to be
enforced, Beck, 81 A.2d at 609. The Angelos Firm insists that because
it did not and would not agree to any division of the contingency fee
that it might receive at the conclusion of the Maryland AG Action,
considerations associated with MLRPC 1.5(e) never materialized and
must be regarded as purely academic.
Before we address these opposing arguments, a discussion of Post
is warranted. In Post, an attorney brought an action seeking a declara-
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tory judgment that a fee-sharing agreement entered into with a refer-
ring attorney violated MLRPC 1.5(e) because the referring attorney
had done insufficient work on the case to warrant a fee in the amount
specified in the fee-sharing agreement. Post, 707 A.2d at 808. In other
words, the fee due the referring attorney under the fee agreement was
allegedly not in proportion to the legal services he actually rendered
in the case as required by MLRPC 1.5(e).
The referring attorney denied that the fee due him under the fee-
sharing agreement overstated the portion of his actual legal services
in the case, and therefore, denied that MLRPC 1.5(e) would be vio-
lated by enforcement of that agreement. Post, 707 A.2d at 810-811.
Additionally, the referring attorney contended that MLRPC 1.5(e)
was merely an ethical rule only enforceable through the attorney
grievance mechanism. Post, 707 A.2d at 812. The referring attorney
filed a two-count counterclaim for declaratory judgment and for
breach of contract. The case ultimately reached the Court of Appeals
of Maryland based upon the Maryland Court of Special Appeals’
affirmance, Post v. Bregman, 686 A.2d 665 (Md. Ct. Spec. App.
1996), of the circuit court’s grant of summary judgment in favor of
the referring attorney, entry of judgment in his favor on the breach of
contract counterclaim, and dismissal of the opposing declaratory
judgment claim as moot. Post, 707 A.2d at 808.
For reasons irrelevant to the present appeal, the Court of Appeals
of Maryland refused to address the referring attorney’s denial that
MLRPC 1.5(e) would be violated by enforcement of the fee-sharing
agreement. Post, 707 A.2d at 814. Instead, it addressed the extent to
which MLRPC 1.5(e) governs private agreements entered into by
lawyers. Post, 707 A.2d at 817. On this issue, the court held that
MLRPC 1.5(e) "does constitute a supervening statement of public
policy to which fee-sharing agreements by lawyers are subject, and
that the enforcement of Rule 1.5(e) is not limited to disciplinary pro-
ceedings." Post, 707 A.2d at 818. Based upon this holding, the court
held that a fee-sharing agreement that violates MLRPC 1.5(e) may be
unenforceable, provided that the violation is not "merely technical,
incidental, or insubstantial." Post, 707 A.2d at 819. The court con-
cluded:
We view a violation of Rule 1.5(e), whether regarded as an
external defense or as incorporated into the contract itself,
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as being in the nature of an equitable defense, and principles
of equity ought to be applied.
Post, 707 A.2d at 819.6 The court’s rationale for these holdings is that
"it would indeed be at least anomalous to allow a lawyer to invoke
the court’s aid in enforcing an unethical agreement when that very
enforcement, or perhaps even the existence of the agreement sought
to be enforced, would render the lawyer subject to discipline." Id. at
818. Based upon its holdings, the Court of Appeals of Maryland
reversed the judgment of the Maryland Court of Special Appeals and
remanded the case to that court with instructions to remand to the cir-
cuit court for further proceedings in accordance with its opinion. Id.
at 819.
We see no reason why the legal principles announced by the Mary-
6The Post court held that when presented with a defense resting on
MLRPC 1.5(e), a court must look to all of the circumstances. Post, 707
A.2d at 819. In this regard, the court specified the following circum-
stances:
(1) the nature of the alleged violation,
(2) how the violation came about,
(3) the extent to which the parties acted in good faith,
(4) whether the lawyer raising the defense is at least equally
culpable as the lawyer against whom the defense is raised
and whether the defense is being raised simply to escape an
otherwise valid contractual obligation,
(5) whether the violation has some particular public impor-
tance, such that there is a public interest in not enforcing
the agreement,
(6) whether the client, in particular, would be harmed by
enforcing the agreement, and, in that regard, if the agree-
ment is found to be so violative of the rule as to be unen-
forceable, whether all or any part of the disputed amount
should be returned to the client on the ground that, to that
extent, the fee is unreasonable, and
(7) any other relevant considerations.
Id.
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land Court of Appeals in Post should not apply to the present action.
Thus, we hold Edell and his law firm should be permitted to assert
MLRPC 1.5(e) as an equitable defense to the Angelos Firm’s argu-
ment that the contract fails for lack of agreement to a material term,
which defense must be evaluated according to the equitable consider-
ations outlined in Post. Id. at 819. Of course, the nature of those equi-
table considerations would require a jury to resolve factual issues
raised by those considerations before actually considering the merits
of the defense itself in connection with the Angelos Firm’s opposition
to Edell and his law firm’s breach of contract claim.
The major factual distinction between Post and the present action
is that, in Post, the parties had actually agreed to the particular fee-
splitting percentages, while in the present action they have not. Nev-
ertheless, the Court of Appeals of Maryland’s rationale in Post for
allowing the assertion of Rule 1.5(e) as an equitable defense applies
equally in the present action. In this regard, we rely on our holding
that a reasonable jury could find that a contract existed between Edell
and his law firm and the Angelos Firm, whereby the Angelos Firm
agreed that Edell and his law firm would share fairly (in addition to
the hourly-rate fees agreed upon) in any contingency fee that it might
receive at the conclusion of the Maryland AG Action. Based upon this
holding, to prevent Edell and his law firm from asserting MLRPC
1.5(e) as an equitable defense to the Angelos Firm’s refusal to pay
Edell and his law firm a share (in proportion to the legal services they
performed in the case) of any contingency fee that it might ultimately
receive would allow the Angelos Firm to invoke the court’s aid in
avoiding an obligation implied by law, when any basis for splitting
the fee other than proportionally, would be unethical. Indeed, Post
expressly contemplates the assertion of MLRPC 1.5(e) as being incor-
porated into a contract as one way in which a party can use MLRPC
1.5(e) as an equitable defense. Post, 707 A.2d at 819.
We also note that sufficient evidence exists in the record to estab-
lish the other express elements of MLRPC 1.5(e). The subject of the
contract sought to be enforced by Edell and his law firm is the divi-
sion of a fee between lawyers who are not in the same firm and Edell
and his law firm do not have a written agreement with Maryland. Id.
("A division of fee between lawyers who are not in the same firm may
be made only if: (1) the division is in proportion to the services per-
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formed by each lawyer or, by written agreement with the client, each
lawyer assumes joint responsibility for the representation . . . ."). In
compliance with MLRPC 1.5(e)(2), the client, Maryland, was advised
of Edell and his law firm’s participation in the Maryland AG Action
and did not object. Finally, the ongoing litigation between the Ange-
los Firm and Maryland will give rise to a judicial determination of a
reasonable contingency fee in compliance with MLRPC 1.5(e)(3).
Moreover, allowing Edell and his law firm to assert MLRPC 1.5(e)
as an equitable defense is not inconsistent with the general rule in
Maryland that an enforceable contract does not exist unless the parties
have agreed to all material terms of the contract sought to be
enforced. Beck, 81 A.2d at 609. This is because neither of the two
rationales for the rule are implicated by allowing Edell and his law
firm to assert MLRPC 1.5(e) as an equitable defense in the present
action. First, the missing term sought to be supplied is implied by law
rather than the court. Thus, the court in the present action would not
be in the business of making a contract for parties. Second, the fee
sharing in proportion to legal services rendered requirement of
MLRPC 1.5(e) is sufficiently definite for enforcement. Any factual
dispute regarding the actual proportion of the legal services rendered
may be resolved by the trier of fact. We estimate that this type of dis-
pute is often the subject of a breach of contract claim.7
In conclusion, with respect to Edell and his law firm’s breach of
contract claim, we vacate the district court’s grant of summary judg-
ment in favor of the Angelos Firm and remand for further proceedings
consistent with this opinion.
7We also reject the Angelos Firm’s argument regarding the non-
assignment of its rights under its fee agreement with Maryland. As
explained previously, the contract sought to be enforced by Edell and his
law firm does not involve the Angelos Firm’s assignment of any of its
rights under its fee agreement with Maryland.
Additionally, we reject the Angelos Firm’s argument that Edell and his
law firm failed to preserve for appellate review their argument based
upon MLRCP 1.5(e) and Post. The record reveals that Edell and his law
firm sufficiently pressed the substance of the argument below to preserve
it for our review.
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IV
Next, Edell and his law firm contend the district court erred in
granting summary judgment in favor of the Angelos Firm with respect
to their claim alleging breach of the alleged implied covenant of good
faith and fair dealing in the performance of the contract, which con-
tract is the subject of their common law contract claim. We affirm.
Maryland law recognizes an implied covenant of good faith and
fair dealing in contracts. Eastern Shore Mkts., Inc. v. J.D. Assocs.,
Ltd. P’ship, 213 F.3d 175, 182-83 (4th Cir. 2000). However, the cove-
nant is limited to prohibiting one party from acting in such a manner
as to prevent the other party from performing his obligations under
the contract. Id. The covenant does not extend to imply a general duty
of good faith and fair dealing in the performance of obligations under
the contract that do not implicate or impair another party’s perfor-
mance under the contract. See id.
Here, Edell and his law firm do not allege that the Angelos Firm
prevented them from performing their obligations under the alleged
contract at issue. Rather, their claim seeks redress for the Angelos
Firm’s alleged lack of good faith and fair dealing in performing its
obligations under the alleged contract. Accordingly, the claim is not
cognizable under Maryland law. We, therefore, affirm the district
court’s disposition of this claim.
V
Edell and his law firm next contend the district court erred in grant-
ing summary judgment in favor of the Angelos Firm with respect to
their intentional misrepresentation claim. We agree and, therefore,
vacate the district court’s grant of summary judgment with respect to
this claim and remand for further proceedings consistent with this
opinion.
Edell and his law firm’s intentional misrepresentation claim alleges
that the Angelos Firm induced them to perform ever increasing
amounts of legal services in the Maryland AG Action at the cost of
working on other fee-generating cases by intentionally misrepresent-
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ing on numerous occasions that they would share fairly (in addition
to any fees paid them on an hourly basis) in any contingency fee that
the Angelos Firm might receive at the conclusion of the Maryland AG
Action. This claim is an alternative claim to their breach of contract
claim.
In order for a plaintiff to prevail upon an intentional misrepresenta-
tion claim under Maryland common law, the plaintiff must establish
the following facts by clear and convincing evidence:
(1) that the defendant made a false representation to the
plaintiff,
(2) that its falsity was either known to the defendant or
that the representation was made with reckless indifference
as to its truth,
(3) that the misrepresentation was made for the purpose of
defrauding the plaintiff,
(4) that the plaintiff relied on the misrepresentation and
had the right to rely on it, and
(5) that the plaintiff suffered compensable injury resulting
from the misrepresentation.
Nails v. S & R, Inc., 639 A.2d 660, 668 (Md. 1994); Dixon v. Process
Corp., 382 A.2d 893, 900 (Md. Ct. Spec. App. 1978). Of relevance
in the present action, clear and convincing proof of promissory or pre-
dictive statements, made with the present intention not to perform,
satisfy the first and second elements of this test. See Miller v. Fair-
child Indus., 629 A.2d 1293, 1302 (Md. Ct. Spec. App. 1993). The
reliance element is met if the plaintiff establishes by clear and con-
vincing evidence that the misrepresentation "substantially induced
[him] to act." Nails, 639 A.2d at 669. Thus, the plaintiff need not
establish that the misrepresentation was the only motivation for his
actions. Id.
In its appellate brief, the Angelos Firm characterizes the assurances
of sharing fairly (in addition to the hourly-rate fees agreed upon) in
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any contingency fee the Angelos Firm might receive at the conclusion
of the Maryland AG Action as merely predictive statements that
failed to materialize because Peter "Angelos was ‘put off’ by Edell’s
fee-sharing demands, and ultimately changed his mind." (Angelos
Firm’s Br. at 46) (internal citation omitted). Additionally, the Angelos
Firm makes the following arguments in support of the district court’s
grant of summary judgment with respect to this claim: (1) Edell and
his law firm failed to produce evidence demonstrating that Smouse’s
assurances of sharing fairly (in addition to the hourly-rate fees agreed
upon) in any contingency fee the Angelos Firm might receive at the
conclusion of the Maryland AG Action reflected false intentions
when made; (2) all of the assurances relied upon post date Edell and
his law firm’s performance in the Maryland AG Action under the
March 1996 Compensation Agreement, and, therefore, could not have
induced them to undertake any action; (3) any reliance upon these
assurances was unreasonable because Smouse did not have exclusive
control over the future decisions of Peter Angelos; and (4) any reli-
ance upon these assurances was unreasonable in light of the non-
assignment of rights clause in the Angelos Firm’s fee agreement with
Maryland.
Edell and his law firm have proffered sufficient evidence to survive
a motion for summary judgment with respect to their intentional mis-
representation claim. Viewing the evidence in the light most favorable
to Edell and his law firm, as we must at the summary judgment stage,
Reeves, 530 U.S. at 149-150, reveals a masterful plan by the Angelos
Firm to fraudulently benefit from Edell’s undisputed reputation and
experience as a tobacco litigation expert by luring him and his law
firm into falsely believing the Angelos Firm would share fairly (in
addition to the hourly-rate fees agreed upon) any contingency fee it
might receive at the conclusion of the Maryland AG Action if they
continued their substantial participation in the case at the expense of
working on other fee-generating cases. The fact that the false assur-
ances at issue post date the March 1996 Compensation Agreement is
of no moment. This is because the assurances were critical in induc-
ing Edell and his law firm to continue to devote far greater time to
the litigation beyond the amount of time they had agreed to devote in
the March 1996 Compensation Agreement. The Angelos Firm’s argu-
ment that Smouse did not have exclusive control over the future deci-
sions of Peter Angelos is yet more fodder for closing argument. And
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finally, the Angelos Firm’s unreasonable reliance argument based
upon the non-assignment clause in its fee agreement with Maryland
misses the mark. Edell and his law firm have never claimed the Ange-
los Firm agreed to assign them any of it rights under that agreement.
In conclusion, we vacate the district court’s grant of summary
judgment in favor of the Angelos Firm with respect to the intentional
misrepresentation claim and remand that claim for further proceed-
ings consistent with this opinion.
VI
Finally, Edell and his law firm contend the district court abused its
discretion by refusing to grant them leave to amend their complaint
to add a negligent misrepresentation claim. We agree.
Under Federal Rule of Civil Procedure 15(a), leave to amend a
complaint "shall be freely given when justice so requires." Fed. R.
Civ. P. 15(a). Indeed, we have recognized that leave to amend a com-
plaint should be denied only when the amendment would be prejudi-
cial to the opposing party, there has been bad faith on the part of the
moving party, or the amendment would be futile. Edwards v. City of
Goldsboro, 178 F.3d 231, 242 (4th Cir. 1999). We review a district
court’s refusal to grant leave to amend a complaint for abuse of dis-
cretion. Id.
Here, Edell and his law firm filed their motion for leave to amend
their complaint simultaneously with their opposition to the Angelos
Firm’s motion for summary judgment. Although the district court
determined that granting the motion would not prejudice the Angelos
Firm, it nonetheless denied the motion on the basis of futility.
According to the district court, the motion was futile because the
record contained insufficient evidence to establish the false statement
element of a negligent misrepresentation claim under Maryland com-
mon law, Gross v. Sussex, Inc., 630 A.2d 1156, 1162 (Md. 1993).8
8A negligent misrepresentation claim under Maryland common law
has five elements:
(1) the defendant, owing a duty of care to the plaintiff, negli-
gently asserts a false statement;
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On appeal, the Angelos Firm urges us to affirm on the reasoning
of the district court. They also add that futility is present with respect
to one other element of a negligent misrepresentation claim—
justifiable reliance. Id. We have already held in the context of Edell
and his law firm’s intentional misrepresentation claim that sufficient
evidence of these two elements exists in the record to survive the
Angelos Firm’s motion for summary judgment. Accordingly, the
futility rationale relied upon by the district court and the Angelos
Firm does not sustain the district court’s refusal to grant Edell and his
law firm leave to amend their complaint to allege a negligent misrep-
resentation claim. In sum, the district court’s refusal was an abuse of
discretion. Accordingly, we vacate the district court’s denial of Edell
and his law firm’s leave to amend and remand the matter to the dis-
trict court with instructions to grant the motion.
VII
In summary, we: (1) vacate the district court’s grant of summary
judgment in favor of the Angelos Firm with respect to the contract
claim and remand that claim for further proceedings consistent with
this opinion; (2) affirm the district court’s grant of summary judgment
in favor of the Angelos Firm with respect to the breach of the alleged
covenant of good faith and fair dealing; (3) vacate the district court’s
grant of summary judgment in favor of the Angelos Firm with respect
to the intentional misrepresentation claim and remand that claim for
further proceedings consistent with this opinion; and (4) vacate the
(2) the defendant intends that his statement will be acted upon
by the plaintiff;
(3) the defendant has knowledge that the plaintiff will probably
rely on the statement, which, if erroneous, will cause loss or
injury;
(4) the plaintiff, justifiably, takes action in reliance on the
statement; and
(5) the plaintiff suffers damage proximately caused by the
defendant’s negligence.
Gross, 630 A.2d at 1162.
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district court’s denial of Edell and his law firm’s motion for leave to
amend their complaint to assert a negligent misrepresentation claim
and remand with instructions that the district court grant the motion.
AFFIRMED IN PART, VACATED IN PART,
AND REMANDED FOR FURTHER PROCEEDINGS
WIDENER, Circuit Judge, concurring and dissenting:
I.
I concur in parts I through IV of the majority opinion with respect
to Edell’s claims for breach of contract and breach of the implied cov-
enant of good faith. I write separately with respect to parts V and VI
of the majority opinion, however, because I believe that the district
court did not err in granting summary judgment denying Edell’s claim
for intentional misrepresentation and, as well, denying Edell’s motion
to amend his complaint.
II.
I agree with the district court that Edell has failed to offer evidence
sufficient to survive a motion for summary judgment on his claim for
intentional misrepresentation. Generally, "statements which are
merely promissory in nature and expressions as to what will happen
in the future are not actionable as fraud." Miller v. Fairchild Indus.,
Inc., 629 A.2d 1293, 1302 (Md. 1993) (internal quotations omitted).
As the majority recognizes, however, the Maryland courts have ruled
that misleading promissory or predictive statements may be action-
able as intentional misrepresentation if they are "made with a present
intention not to perform." Miller, 629 A.2d at 1302. Thus, to prevail
on his claim for intentional misrepresentation Edell must prove by
clear and convincing evidence that each of the promissory statements
made by the Angelos law firm was made with no intention to per-
form. Gross v. Sussex, Inc., 630 A.2d 1156, 1161 (Md. 1993) ("[T]he
evidence must be such as to constitute proof by clear and convincing
evidence."). We have held that where, as in a fraud claim, the non-
moving party must produce clear and convincing evidence to support
his claim, that higher evidentiary burden is considered as part of "the
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summary judgment calculus." Wells v. Liddy, 186 F.3d 505, 520 (4th
Cir. 1999). While it is true that summary judgment is generally an
inappropriate vehicle for the resolution of questions of intent and
motive, Brown v. Dermer, 744 A.2d 47, 53 (Md. 2000), I believe,
with the district court, that Edell has failed to offer any evidence indi-
cating that the Angelos law firm intended, from the very outset, not
to keep its promises.
The majority concludes that the evidence offered by Edell would
allow a reasonable jury to infer the existence of a "masterful plan" to
deceive Edell from the beginning. I believe that the majority fails to
consider the heightened burden Edell faces on this issue, including the
summary judgment stage. Thus, even viewing the evidence in the
light most favorable to Edell, I agree with the district court’s conclu-
sion that Edell has failed to offer any evidence creating a material
issue of fact as to the intent of the Angelos law firm to deceive him
from the very beginning of their relationship.
III.
I also write separately with respect to part VI of the majority’s
opinion because I believe that the district court did not abuse its dis-
cretion by denying Edell’s motion to amend his complaint to add a
claim for negligent misrepresentation. We review a district court’s
decision to deny a request for leave to amend for an abuse of discre-
tion. See Edwards v. City of Goldsboro, 178 F.3d 231, 242 (4th Cir.
1999). The district court denied the motion on the ground that a claim
for negligent misrepresentation would be futile. See Edwards, 178
F.3d at 242 (noting that delay coupled with a finding of futility may
justify denial of a motion to amend).
I agree with the district court’s conclusion that Edell’s claim for
negligent misrepresentation would be futile, but do so for different
reasons than those cited by the district court. I note that Edell’s claim
for negligent misrepresentation is inconsistent with the theory of his
entire case. All of the statements, written or oral, on which Edell
relies were conscious or deliberate as compared to inadvertent or
careless. They simply do not fit the definition of unintentional wrong-
doing this cause of action requires. See e.g., Walpert v. Katz, 762
A.2d 582, 588 (Md. 2000) (noting that a negligent misrepresentation
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claim must first demonstrate that "the defendant, owing a duty of care
to the plaintiff, negligently asserts a false statement.") (emphasis
added).
Accordingly, I would affirm the district court’s decisions against
the plaintiff with respect to his claim for intentional misrepresentation
and his motion to amend his complaint to add a claim for negligent
misrepresentation. As to those aspects of the case, I respectfully dis-
sent.
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