Costa Brava Partnership III, L.P. v. Telos Corp., (Cir. Ct. for Baltimore City)

Issued April 19, 2007--Order and Opinion by Judge Albert J. Mattricciani, Jr.

An earlier opinion in this case was issued on November 29, 2006. It is synopsized here. In that earlier opinion, the Court denied the plaintiffs' motion for the appointment of a receiver.

Here, the plaintiffs had asked asked the Court to enjoin defendants and their agents from pursuing or closing any sale of the corporation's assets outside the ordinary course of business until May 31, 2007, when two new Class D directors will be elected to the corporation's board. Defendants countered that plaintiffs' request for a preliminary injunction sought extraordinary relief to which they were not entitled under Maryland corporation law or the facts of this case.

The Court adopted the defendants' position that the request was one for a preliminary injunction. It denied the request because it concluded that the plaintiffs were unable to establish that they had a likelihood of succeeding on the merits of their claim. Specifically, the Court concluded that "at this point [in time]" the plaintiffs are unable to persuade it that the current directors lack the requisite independence to consider a sale of the corporation's assets.

The order, together with supporting opinion, is available in PDF.

Semtek International v. Lockheed Martin (Balt. City Circuit Court, Bus. And Tech. Ct.)

Filed April 12, 2007—Opinion by Judge Albert J. Matricciani

Prior Proceedings:
Semtek sought to amend its complaint shortly before a trial in 2003 in order to add additional allegations and two new causes of action under Massachusetts law. The Court granted Lockheed’s motion to strike the amended complaint, with the modification that permitted Semtek to allege additional facts relating to intentional interference with prospective economic advantage, which was the single count before the Court for trial. At the close of Semtek's case, the Court granted Lockheed’s moved for judgment under Md. Rule 2-519. The Court of Special Appeals affirmed, but remanded to the Circuit Court to consider the two additional Massachusetts causes of action that Semtek had tried to insert in the stricken amended complaint. On remand, Semtek engaged new counsel and filed a second amended complaint, which Lockheed moved to strike or dismiss.

Memorandum Opinion:
The Court denied the motion to strike the second amended complaint but granted with prejudice the motion to dismiss it. The Court found that the factual allegations were expanded significantly in the second amended complaint but the causes of action were the same as those asserted by Semtek in its first amended complaint. Because those were the causes of action the Court of Special Appeals had directed the Court to consider on remand, it would not strike the second amended complaint.

The Court determined, however, that the Court of Special Appeals had already conclusively determined that Lockheed had not interfered with Semtek’s prospective economic advantage and had not engaged in other tortuous conduct that had been alleged. Applying those conclusions as the law of the case, the Court determined that even with the additional allegations of the second amended complaint, Semtek’s claims under the Massachusetts causes of action could not withstand a motion to dismiss or summary judgment. The Court dismissed the amended complaint with prejudice.

The opinion and order are available in PDF.

Final Analysis Communication v. Ballard Spahr Andrews & Ingersoll (Cir. Ct. Balto. City)

Filed January 2, 2007--Opinion by Judge Albert Matricciani, Jr.

In an amended memorandum decision, the Court considered a motion for summary judgment on all of Final Analysis Communication's (FAC's) claims because it allegedly failed to comply with the Court's pre-trial scheduling order in designating expert witnesses and because the undisputed material facts demonstrated that it cannot prove that its damage claims were proximately caused by Ballard Spahr's actions.

FAC asked the Court to excuse its failure to make timely expert witness designations because there was a change in its legal representation in early 2006; because there was an unsuccessful but time consuming effort to bring its parent corporation into the litigation; because Ballard Spahr had previously suggested a six month stay of the case; and because Ballard Spahr allegedly was not prejudiced and did receive notice of proposed experts.

The Court expressed serious doubts about FAC's ability to prove that its damage claims were proximately caused by Ballard Spahr's actions. Further, finding exceptional circumstances, the Court precluded FAC from presenting expert testimony and entered summary judgment for Ballard Spahr on all claims.

The full opinion is available in PDF.

Costa Brava Partnership III, L.P. v. Telos Corp. (Cir. Ct. Balto. City)

Filed November 29, 2006--Opinion by Judge Albert J. Matricciani, Jr.

Motion for the appointment of a receiver. Plaintiffs sought this relief due to the recent resignations of six of the seven independent directors of Telos and the failure of efforts to restructure Telos in order to satisfy the obligations allegedly owed to plaintiffs by virtue of their ownership of certain publicly traded securities.

The Court denied relief holding that the plaintiffs failed to show specific evidence of fraud, oppression or illegal conduct to permit the Court to appoint a receiver. The Court rejected consideration of the alternative equitable remedy suggested by the plaintiffs based upon a change in outside directors or a management dispute over strategic plans.

The full opinion is available in PDF.