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Media Alerts - Marks v. Dann -- Fourth Circuit
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April 4, 2015
  Marks v. Dann -- Fourth Circuit
Headline: Pleading Based on Economic Injury Failed to Plausibly Plead Malice or Scope of Employment Exceptions under MTCA

Area of Law: Maryland Torts Claims Act

Issue Presented: Whether the actions of a state official who entered into a sweetheart deal with a Maryland-based manufacturer fell within the "malice" or "scope-of-employment" exceptions to the Maryland Tort Claims Act ("MTCA").

Brief Summary: Jeremy Marks, a co-founder of Maryland- based manufacturer Maxtena, was sued by Maxtena on allegations that he founded a competing venture during his employment. Marks agreed to mediation with Maxtena's board of directors and during the discovery process he became aware that Maxtena's board sold interest in Maxtena to Maryland Venture Fund ("MVF"). Marks brought suit alleging that Maxtena entered into the deal with MVF (which he described as a "sweetheart deal") to dilute Marks' stake in the company. In particular, Marks alleged that the board breached its fiduciary duties to the company when it accepted a low valuation for the company's stock. In addition to naming the Maxtena board of directors, Marks alleged that Thomas Dann colluded with the board, breaching his fiduciary duties. Thomas Dann was the Managing Director of MVF and MVF's representation on the Maxtena board. Dann, acting as a representative for MVF, entered into the alleged sweetheart deal with Maxtena.

The District Court held that Dann was entitled to immunity from personal liability under the Maryland Torts Claims Act, and dismissed Marks' claim against Dann. On appeal, the United States Court of Appeals for the Fourth Circuit affirmed the dismissal of the tort claim against Dann. The Fourth Circuit found that Marks failed to plausibly allege that Dann acted with malice or acted outside the scope of his official duties when making the deal. The court noted that proving a state official acted maliciously is a high bar in a commercial context, because there must be more than the suffering of economic injury as a result of a state official's actions for the court to infer malice. In addition, the court found that Marks was unable to show Dann was acting in his own self-interest instead of in the interests of MVF. The Fourth Circuit found that Marks was unable to plausibly plead either of the two exceptions to personal immunity under the MTCA, and affirmed the dismissal of the claim against him.

To read the full opinion, please click here.

Panel: Judges Keenan, Floyd, and Harris.

Argument Date: 12/09/2014

Date of Issued Opinion: 01/21/2015

Docket Number: Case No. 13-2491

Decided: Affirmed by unpublished opinion.

Case Alert Author: Michele Hayes, Univ. of Maryland Carey School of Law

Counsel: ARGUED: John Da Grosa Smith, SMITH HORVATH LLC, Atlanta,
Georgia, for Appellant. Julia Doyle Bernhardt, OFFICE OF THE
ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland, for Appellee.
ON BRIEF: Matthew A. Horvath, SMITH HORVATH LLC, Atlanta,

Author of Opinion: Judge Harris

Case Alert Circuit Supervisor: Professor Renée Hutchins

    Posted By: Renee Hutchins @ 04/04/2015 02:41 PM     4th Circuit  

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