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Opinions: Maryland Court of Special Appeals

Contract Law

Employment agreement

BOTTOM LINE: Physician’s action against defendant health care provider, seeking allegedly unpaid wages, alleging claims under Wage Payment and Collection Law, quantum meruit, and unjust enrichment, was properly dismissed by the circuit court because physician failed to allege sufficient facts establishing that defendant was his employer.

CASE: Mohiuddin v. Doctors Billing & Management Solutions, Inc., et al., No. 1286, Sept. Term, 2009 (filed Nov. 1, 2010) (Judges Zarnoch, Graeff & Moylan (retired, specially assigned)). RecordFax No. 10-1101-02, 18 pages.

FACTS: In May 2006, Dr. Rashid Mohiuddin entered into an employment contract with Doctors Billing, a medical services provider located in Glen Burnie, Maryland, whereby he agreed to provide services as a physician to patients of Doctors Billings in exchange for a salary and benefits. The employment contract was operative from July 1, 2006 to June 30, 2007. The contract contained an exclusivity clause requiring Mohiuddin to devote his “entire time and attention to [Doctors Billings’] business,” and specifically forbade Mohiuddin from “engag[ing] in any other business activity as a physician.”

During his year-long employment with Doctors Billing, Mohiuddin would, to be sure, occasionally be assigned to see patients of PHC, a separate corporation that provides patients with physicians for home visits. The complaint did not state what payment or reimbursement provisions may have existed between Doctors Billing and PHC. PHC provided Mohiuddin with a vehicle for the purpose of treating its patients, and occasionally paid Mohiuddin by checks listing him as an employee of PHC.

For a 10-week period in the beginning of 2007, Mohiuddin was not fully compensated for the work he performed. In an effort to recover his unpaid wages and restitution, Mohiuddin filed the instant suit in the circuit court. His second amended complaint asserted three counts against PHC: (1) violation of Maryland’s Wage Payment and Collection Law; (2) quantum meruit; and (3) unjust enrichment. PHC responded by moving to dismiss the complaint for failure to state a claim.

A hearing was held on the motion on February 12, 2008. With respect to the Wage Payment and Collection Law claim, the parties focused their argument on the issue of whether Mohiuddin was an employee of PHC. The parties also disputed the legal significance of the written contract between Mohiuddin and Doctors Billing with regard to the quantum meruit and unjust enrichment counts.

The court granted PHC’s motion, concluding that there was insufficient demonstration of a connection to PHC.

Mohiuddin appealed to the Court of Special Appeals, which affirmed.

LAW: Title 3, subtitle 5 of the Maryland Code (2008), Labor & Employment Article (LE), otherwise known as the Maryland Wage Payment and Collection Law, provides an employee the right to bring a civil suit against an employer to recover unpaid wages. See LE §3-507.1(a). An “employer” is defined as “any person who employs an individual in the State or a successor of the person,” §3-501(b), and “employ” means “to engage an individual to work,” including “allowing an individual to work” and “instructing an individual to be present at a work site.” §3-101(c). “The decisive test in determining the existence of an employer-employee relationship is the right of the employer to control and direct the employee in the performance of the work and in the manner in which the work is to be done.” Automobile Trade Assoc. v. Harold Folk Enterprises, Inc., 301 Md. 642, 660 (1984).

According to Mohiuddin, there was an inference that PHC was his employer, that is, that PHC had the right to control and direct Mohiuddin “in the performance of the work and in the manner in which the work is to be done.” Mohiuddin relied on the facts that he was assigned to see patients through PHC, PHC provided him with a vehicle, and he often received paychecks drawn on PHC’s bank account that listed him as their employee.

These facts, even if proven, were not enough to raise an inference that Mohiuddin was either engaged to work by PHC, or that PHC exercised any degree of control over him. The first allegation gave no indication as to whether Doctors Billing, PHC, or someone else assigned Mohiuddin to see PHC’s patients. The second allegation similarly shed no light on the question of control, but merely explained who owned the vehicle used by Mohiuddin while attending to PHC’s patients. The last allegation was the only fact asserted that, if proven with other facts, could have supported an inference that Mohiuddin was employed by PHC. Standing alone, however, it was not sufficient to raise such an inference and save Mohiuddin’s Maryland Wage Payment and Collection Law claim.

Two forms of quantum meruit claims exist: quantum meruit based on an implied-in-fact contract, and quantum meruit based on a quasi-contract. See Alternatives Unlimited, Inc. v. New Baltimore City Bd. of School Comm’rs, 155 Md.App. 415, 482-87 (2004). Mohiuddin did not state which theory of recovery he relied on in this case. Since a quasi-contractual quantum meruit claim is identical to a charge of unjust enrichment, however, it was assumed that Mohiuddin’s complaint was not redundant and that his quantum meruit claim sounded in implied-in-fact contract law. Id. at 488-89.

An implied-in-fact contract is a “true contract” and “means that the parties had a contract that can be seen in their conduct rather than in an explicit set of words.” Implied-in-fact contracts are “dependent on mutual agreement or consent, and on the intention of the parties; and a meeting of the minds is required.” Mogavero v. Silverstein, 142 Md.App. 259, 275 (2002).

Mohiuddin failed to allege sufficient facts for his quantum meruit claim to survive PHC’s motion to dismiss. Mohiuddin clearly pled that he performed work for PHC for which he expected compensation, and that PHC accepted Mohiuddin’s services with the knowledge that he expected compensation. Fatal to Mohiuddin’s claim, however, was the absence of any allegation that either he or PHC had agreed that PHC was obligated to pay him. Without this critical allegation, to wit, that both parties intended that PHC (rather than Doctors Billing) was required to pay Mohiuddin for his services, Mohiuddin failed to plead the existence of a mutual agreement between the parties. Because Mohiuddin did not allege a meeting of the minds between himself and PHC, his quantum meruit claim was legally deficient.

“Quasi-contracts have often been called implied contracts or contracts implied in law; but, unlike true contracts, quasi-contracts are not based on the apparent intention of the parties to undertake the performances in question, nor are they promises. They are obligations created by law for reasons of justice.” Restatement (Second) of Contracts, § 4 (1981). Three elements must be established to prevail on a claim of unjust enrichment: 1. A benefit conferred upon the defendant by the plaintiff; 2. An appreciation or knowledge by the defendant of the benefit; and 3. The acceptance or retention by the defendant of the benefit under such circumstances as to make it inequitable for the defendant to retain the benefit without the payment of its value. Alternatives Unlimited, Inc., 155 Md.App. 415, 496 (2004).

With respect to this count, Mohiuddin alleged that he benefited PHC by serving its patients, and PHC knowingly accepted these benefits without paying him. These allegations clearly satisfied the first and second element of an unjust enrichment claim. It was with respect to the third element, however, that Mohiuddin encountered an insurmountable obstacle.

In order to survive a motion to dismiss, a complaint must plead “the facts comprising the cause of action … with sufficient specificity. Bald assertions and conclusory statements by the pleader will not suffice.” Adamson v. Corr. Med. Servs., Inc., 359 Md. 238, 245 (2000).

Here, Mohiuddin’s allegations fell well short of this minimum pleading standard. The complaint failed to assert that PHC was enriched as a result of circumstances, such as fraud or misrepresentation, that might make it inequitable for the company to retain the value of Mohiuddin’s services without paying for them. The complaint left the court guessing why the canons of justice and equity required PHC to pay Mohiuddin any compensation. As such, Mohiuddin’s unjust enrichment claim was properly dismissed.

Accordingly, the judgment of the circuit court was affirmed.

COMMENTARY: The case against PHC was “dismissed without prejudice.” Seven months later, Mohiuddin filed another amended complaint, claiming, inter alia, that PHC breached an implied contract. The court dismissed the complaint as untimely because it was filed beyond the 30-day filing period prescribed by Rule 2-322(c). Mohiuddin argued that the deadline was not applicable in this case because the court order did not “expressly grant leave to amend.”

When a trial judge grants to a defendant a motion to dismiss the claim pursuant to Rule 2-322, particularly if the motion to dismiss is based on subsection (b)(2), which is the “failure to state a claim upon which relief can be granted,” there are two sets of alternate sequelae that may be dealt with in the order of dismissal. Those sets of sequelae are absolutely distinct and do not blur into each other. There is first the question of whether the pleading, following its dismissal, can be amended and thereby revitalized. Even when that is no longer a possibility, there is still the further question of whether a new claim can be filed against the defendant based on essentially the same factual base as the former claim without running afoul of the prohibition of res judicata.

“Where leave to amend is expressly granted in an order, the case remains pending in the trial court, whether or not an amended complaint is filed, until another order is entered disposing of the case. On the other hand, an order dismissing or granting a motion to dismiss a plaintiff’s entire complaint, without granting leave to amend, and where there are no counter-claims, cross-claims or third-party claims, puts the plaintiff out of court and terminates the particular action in the trial court. This is true regardless of whether the dismissal was with prejudice or was without prejudice.” Moore v. Pomory, 329 Md. 428, 432 (1993).

The order of dismissal in this case did not expressly grant to the Mohiuddin any leave to amend. However, in dismissing his attempt to do so, the trial court was correct. The continuing pendency of a case against a co-defendant, still awaiting a determination as to damages following the judgment by default as to liability, rendered Pomory inapplicable. Even in the event that they might not be dispositive and that the possibility of amending a still pending case availed, such amendment would still have been subject to the time restraints of Rule 2-322(c).