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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 232 September Term, 2003

SCOTT B. GOLDSTEIN, ESQ. et al.

v.

STEPHEN L. MILES, ESQ.

Adkins, Krauser, Bloom, Theodore G., (Retired, specially assigned) JJ. Opinion by Krauser, J. Dissenting opinion by Adkins, J.

Filed: October 8, 2004

In this case, tort and contract law converge to produce a tort claim for fraud and negligent misrepresentation coupled with a demand for contract damages, a conceptual composite recognized by Maryland law.1 to obtain To assure that this hybrid is not used as a device damages where no enforceable promise or

contract

agreement exists or as a means to circumvent standard contract defenses, we join other jurisdictions today in holding that

benefit-of-the-bargain damages are obtainable for such tortious conduct but only where there is in fact an enforceable bargain. The failure of appellants to allege, much less to produce,

sufficient evidence of that, is fatal to their claim, leading us to conclude, for this and other reasons, that the circuit court did not err in granting summary judgment in favor of appellee. The tort claim of which we speak was brought by former employees of the Law Offices of Stephen L. Miles,2 appellants Scott B. Goldstein, Esquire, and James K. MacAlister, Esquire. Relying

upon the representations of appellee, Steven L. Miles, that he would sell his law firm to them when he retired, both men claim that they turned down other employment opportunities to stay with Miles's firm. When Miles chose instead to sell his practice to the

1 See, e.g. , Hinkle v. Rockville Motor Co. , 262 Md. 502 (1971); see also Downs v. Reighard , 265 Md. 344 (1972); Hall v. Lovell Regency Homes Ltd. P'ship , 121 Md. App. 1 (1998); Ward Dev. Co. v. Ingrao , 63 Md. App. 645 (1985); Aeropesca Ltd. v. Butler Aviation Int'l, Inc. , 44 Md. App. 610 (1980). 2 Although the parties refer to Miles's firm as the Law Offices of Stephen L. Miles, the Maryland State Department of Assessments and Taxation lists the practice as Stephen L. Miles, P.A.

law firm of Saiontz & Kirk, P.A.,3 Goldstein and MacAlister filed suit in the Circuit Court for Baltimore County, accusing him of fraud and negligent misrepresentation and requesting lost profits and benefit-of-the-bargain damages. Claiming promises, that there was no evidence of any actionable or actual The

reasonable

reliance,

fraudulent

intent,

damages, Miles moved for summary judgment as to both counts.

circuit court granted that motion, ruling that appellants had failed to produce sufficient evidence that they had ever struck a "bargain" with Miles to purchase his practice. Requesting reconsideration of that decision, Goldstein and MacAlister submitted, among other things, the affidavit of Bruce D. Block, an attorney who, at one point, had considered purchasing the firm with Goldstein. The effect of that submission, however, was

to convince the court that appellants had little cause to have brought the fraud and negligent misrepresentation claims in the first place: the affidavit flatly contradicted representations made by appellants at the summary judgment hearing concerning a

statement Miles purportedly made to Block. At that hearing, Goldstein and MacAlister represented to the court that Miles had told Block that he never intended to sell his practice to Goldstein and MacAlister. That statement conflicted

with the Block affidavit that Goldstein and Miles subsequently
The two law firms actually merged, but we shall refer to it as a sale because the parties do.
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produced at the reconsideration hearing.

The affidavit stated

that what Miles actually said to Block was that "he would not sell his law firm to Scott Goldstein, alone, due to the fact that [he] did not perceive that Mr. Goldstein had the financial backing or wherewithall [sic] to permit him to purchase the law firm." After

reaffirming its earlier decision that Miles was entitled to summary judgment on the benefit-of-the-bargain issue, the court then

declared that it was granting "Summary Judgment . . . in favor of [Miles] on all counts and all issues." From appeal. that decision, Goldstein and MacAlister noted this

Despite the circuit court's pronouncement that it was

granting summary judgment as to "all counts and all issues," Goldstein and MacAlister mischaracterize the court's ruling in their brief by stating, "the trial court properly determined that there were sufficient issues of fact on the issues of liability to submit this case to a jury." Consistent with this misdescription

of the circuit court's holding, they present only one question for our review, and that question appears to focus principally, as does their argument, on whether there to was sufficient a evidence of

benefit-of-the-bargain motion.

damages

survive

summary

judgment

They frame that question as follows: Did the trial court, by granting Appellee's Motion For Summary Judgment and subsequently denying Appellants' Motion for Reconsideration, abuse its discretion under Rules 2-501, 2-534, and 2-535 and improperly interpret the facts and law regarding the -3-

proper assessment of damages arising from . . . properly presented and supported counts in fraud and negligent misrepresentation, when it determined that Appellants' theories of damages, including "benefit of the bargain[,"] were not properly presentable to the trier of fact? In the course of presenting their argument, however,

appellants do touch upon whether Miles made actionable promises and whether they reasonably relied upon them by reciting the facts as they believed the evidence presented them. They did not, however,

submit a reply brief though these issues were fully developed and presented in Miles's brief. FACTS The parties present a farrago of facts. Their frequent

inability to assign dates to the very statements or actions upon which the principal claims rest, or even, at times, to establish a comprehensible sequence of events, has required us to engage in a painstaking review of the record. appellants have lumped together Complicating matters further, material and, according to

appellants, false representations that Miles purportedly made, at different times, to different combinations of potential purchasers, to presumably create the impression that all of the alleged

misrepresentations are relevant to their claim.

Only some are.

In reviewing the facts below, one must keep in mind that, during the roughly fifteen year period they cover, there were at least four different sets of potential buyers: (1) Goldstein and

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MacAlister;

(2)

Goldstein

and

Tom

Bernier;

(3)

Goldstein,

MacAlister, and Bernier; and (4) Goldstein and Bruce D. Block. But, for the purposes of this appeal, the only relevant purchasing unit is Goldstein and MacAlister. this suit and now this They are the ones who brought Consequently, the only

appeal.

representations that are material to the claims of fraud and negligent misrepresentation now before us are those that are relevant to the attempt of Goldstein and MacAlister to buy the firm together. With this in mind, we now turn to the facts of this case

as presented in the pleadings, the depositions, and the affidavits submitted both in support of and in opposition to appellee's motion for summary judgment. Miles's law firm, the Law Offices of Stephen L. Miles,

concentrated in personal injury law.

Miles marketed his firm by In

appearing in television commercials, and the firm prospered. 1985, Goldstein joined Miles's firm as an associate.

When he

interviewed for that position, Miles told him, "If it worked out to be a marriage between [them], [his] future would be very bright." As time passed, Miles began to spend, according to Goldstein, "less and less time in the practice," while Goldstein's "level of responsibility and [his] commitment to the practice in the form of hours and obligations . . . drastically increas[ed]." Goldstein

maintained that he was largely responsible for managing the firm, and generally worked sixty or seventy hours per week. Consistent

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with his growing responsibilities, Goldstein's salary increased during his employment with Miles, reaching a high of $198,000 in 1994 or 1995.4 Goldstein stated that, in 1997, Miles promised to pay him a salary of at least $200,000 that year, but did not. paid him a salary of $166,000. On several occasions, Miles discussed with Goldstein Instead, Miles

agreements that the two might enter regarding the practice, in the event that Miles died while Goldstein was still with the firm. In

1985 or 1986, Miles expressed the wish to enter into a "contingent death agreement," providing that, upon his death, Goldstein and another associate would have the opportunity to purchase the law firm from his estate. Although a written agreement was drafted, it was never signed because, according to Goldstein, "Miles was [not] satisfied with the final draft." In 1989 "Miles proposed the

drafting and the execution of what he referred to as a nonequity partnership agreement," Goldstein stated. agreement was also never executed. Miles stated, according to Goldstein, that the firm "would be sold to [him] as an acknowledgment of [his] longevity and [his] commitment to the practice[,] for less than what was otherwise perceived to be the market value." Miles promised, he asserted, Although drafted, that

that Miles would sell the practice to him "on the terms that he
Goldstein testified that he was unsure whether he earned that amount in 1994 or 1995.
4

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knew that [Goldstein] could afford and make." Describing the understanding he purportedly had with Miles, Goldstein stated: Mr. Miles . . . regularly told me that we would hire an appraiser who would come in and would appraise the belongings of the practice . . . the furniture or whatever there was, that we would agree on a payout for that, that . . . we would agree on a percentage of the fees to be paid to him, that we would have to agree to affix a number for the good will, that he would take back the financing on the . . . practice because he knew . . . that I wouldn't be able to . . . go out and borrow the kind of money necessary, so that he would hold the financing on it because what he was primarily interested in achieving from the sale of the practice was a stream of income . . . . But Goldstein acknowledged that the deal was also always contingent on Goldstein purchasing the firm with a partner

acceptable to Miles.

Even when he insisted that Miles "had

essentially already guaranteed to [him] by 1993 that the practice would be [his]," he added, "along with co-participants." Because

Miles anticipated that any deal he might strike with Goldstein and MacAlister would require that the purchase price be paid over time, the continued profitability of the firm was of vital importance to him. He therefore stressed that he would only sell to Goldstein if another lawyer, acceptable to him, purchased the practice with Goldstein. To that end, Miles directed Goldstein "to go out to

identify a potential [partner] or to identify a person to come in." The plan, according to Goldstein, was that "that person would come -7-

in and they would work as an associate."

He explained that, "if it

proved to be a marriage, as [Miles] call[ed] it, then that person would have an opportunity to have a nonequity type of profit sharing position. And then ultimately [Miles] would sell th[e]

practice . . . to [Goldstein] and that individual." Over the course of Goldstein's employment with Miles, "a series of individuals . . . were brought in with that intention." But these individuals were ultimately either rejected by Miles as potential partners for Goldstein or they left Miles's firm to pursue other employment opportunities. Goldstein acknowledged that, as of 1993, the specific terms of the sale had not been agreed upon: [T]here were not a lot of stone cold specifics that had been agreed upon. It was more a format, an outline within which the acquisition of the firm was to occur. There were certain things that were hard and fast. . . . That he absolutely would take back the financing, that he recognized that I would have to pay him off over a period of time, that he wanted to have someone else involved in the practice in addition to myself. . . . . It was agreed that he would be paid his money over an installment period of time so that he would have an income generated. It was agreed that he would make himself available to assist in the marketing of the law firm by performing on commercials. Those are things that were essential elements of the deal. clearly

During his employment with Miles, Goldstein believed he did -8-

everything Miles asked of him in connection with the practice: I did everything that this man asked me to do and exceeded that over a period of 15 years. I couldn't have been more committed. And despite my efforts, my undying efforts, and despite the fact that I sat down and made a significant effort to negotiate with Mr. Miles in good faith, Mr. Miles refused to sell me the firm and Mr. Miles specifically misled me as far as his negotiations with other parties. MacAlister testified at his deposition that he began working for Miles as an associate on January 8, 1990. Although satisfied both Miles and

with MacAlister's performance as a trial lawyer,

Goldstein were deeply concerned about his "organizational skills." Those concerns were apparently justified, as MacAlister admitted that his disorganized working habits were his "Achilles' heel." In 1996, MacAlister accepted an offer of employment with the Baltimore firm of "Gordon, Feinblatt."5 When MacAlister told Miles about the offer, Miles purportedly became upset, insisting that MacAlister meet him at his house to talk, while purportedly

exclaiming: "I can't believe you're leaving me. . . . [W]e can't operate without you or, . . . this is horrible or this is really bad news for us. I know I can talk you into staying."

MacAlister met with Miles at his home, but upon arriving he cautioned: "I just want to emphasize to you I'm here out of I never tell anybody I won't listen to you, but

respect for you.

We assume that MacAlister's testamonial references to "Gordon, Feinblatt," were shorthand for the firm known as "Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC."

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I am committed to leaving.

I'm leaving.

I've given my word, and

that's the end of the story." ensued, MacAlister stated:

Describing the conversation that

I said okay. I'm not happy with the way you treat me and I'm not happy with the way you treat the staff. And he said what have I ever done to upset you. And then he said I know, it's because I yell at you all the time. I said, Steve, you don't just yell at me all the time. It's abusive yelling. You threaten to fire me all the time. I now own two houses. I have a lot of mortgage payments, and I can't afford an income interruption. Miles promised not to threaten to fire or yell at MacAlister in the future and to meet the financial terms of the Gordon, Feinblatt offer. When MacAlister told Miles that those promises

were not enough to induce him to stay, Miles offered to sell his firm, upon his retirement, to MacAlister, if he purchased it with Goldstein and Tom Bernier, another firm associate. the following exchange: [Miles said] what if I offer the business to you. I said what does that mean. And he said when I turn 60, you, Scott and Tom [Bernier] will buy me out. . . . [T]his would have to be subject to [Goldstein's] approval, and you guys wouldn't have to put up any money. We would have the business appraised when I turn 60 or about that time. You guys would have to guarantee me an income of like [$]175 to 200,000 a year until -10That prompted

you paid it off out of firm proceeds. And that way you don't have to come up with any money. You guys pay me off, I continue to make ads for you the whole time while you guys are running the firm, and, of course, I'd keep some voice on how things were going so you guys wouldn't drive it into the ground, make sure my investment is safe. Miles told MacAlister that the purchase price of the firm would be based on an appraisal but that it was "all subject to [Goldstein's] approval." MacAlister replied that he would think

about it overnight, but that Gordon, Feinblatt would have to let him "off the hook" before he could accept Miles's proposal. When MacAlister informed Goldstein of Miles's proposal,

Goldstein responded that he already "had a 50/50 deal with Tom Bernier,"6 to purchase the firm. But, he added: "I really want

you to stay." Goldstein and MacAlister then agreed that MacAlister would have a greater role in the management of the firm. increased MacAlister's salary while allegedly And Miles him:

assuring

"[W]e'll put everything in writing. totally committed. When

Don't worry.

You know, I'm

And, you know, I'll never yell at you again." told Tom Glancy, a partner at Gordon,

MacAlister

Feinblatt, about Miles's offer, Glancy purportedly advised him that, if he accepted Gordon, Feinblatt's offer, after two or three years he would be "eligible for partnership." MacAlister claims he replied: "I have an opportunity to own this business. I don't

Bernier was employed by Miles at the time MacAlister, Goldstein, and Miles had these discussions. He subsequently left the firm in 1997 or 1998.

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come from money.

I don't come from a family that has the resources I've got a chance in owning half an a bit a money," to which Glancy

to buy into a partnership. operation that makes quite

responded that the decision was MacAlister's.

Deciding to stay

with Miles, MacAlister told Goldstein that "the deal was on." That deal, according to MacAlister, was that he, Goldstein, and Bernier, would purchase interest in Miles's firm. firm, and each would that own a one-third could

that

But,

before

arrangement

materialize, Bernier left the firm. In oral and written communications, Miles frequently expressed his expectation that Goldstein and MacAlister would eventually purchase his firm. Summarizing the contents of emails sent by "They would say things, for example,

Miles, MacAlister stated:

`when you and Scott buy me out' or `when you and Scott take over the practice' or `when you and Scott some day, you know, when I turn 60, you and Scott come in here and take this place over.'" But, as Goldstein himself testified, it was understood by the parties that Miles would not sell his firm to them unless

MacAlister made substantial progress in becoming "more organized in his day to day activities as an attorney in the practice" and more "accessible during normal work hours." MacAlister claims, however, that in 1997 Miles told him: want you to know whatever deal we have is on. yourself around. I'm very impressed with you. "I

You really turned You're trying a lot

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of cases.

You're getting great results."

In the summer of 1998,

Miles, according to MacAlister, said that the "deal [was] a hundred percent on." In September 1998, Miles attended the bat mitzvah of one of Goldstein's daughters. At that event, he had a conversation with

Bruce D. Block, an attorney, in which he raised the subject of Block and Goldstein purchasing his firm. The colloquy lasted "a

couple minutes," but never amounted to more than, in Block's words: "[M]aybe he was interested in selling and maybe I was interested in buying." It was, at that time, that Miles told Block that "he

would not sell his law firm to Scott Goldstein, alone, due to the fact that [he] did not perceive that Mr. Goldstein had the

financial backing or wherewithall [sic] to permit him to purchase the law firm." Goldstein and Block later discussed with one

another, and then with Miles, the possibility of purchasing Miles's firm. Describing the conversations that he and Block had with

Miles, Goldstein stated: We tried to reach various different agreements. And as a result of various different things that transpired during the course of those negotiations, things changed. At times, the purchase price was discussed at one level. At times, it was discussed in another fashion. . . . There were different prices depending upon what Mr. Miles was willing to do and how it was going to work. Two months after Miles first spoke with Block, Miles sent Goldstein an e-mail stating: "I want you and [Block] and me to know

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by no later than February 1st what we are doing because if you decide to possible." leave, I want to start running an ad as soon as

Goldstein replied by e-mail: "I will inform [Block] of

your deadline of February 1st and he will try to put an offer together. If we don't succeed, in light of your email, I imagine

that I will not otherwise have an opportunity to buy you out." Despite the February 1, 1999, deadline, Goldstein and Block did not submit an offer by that date. In April 1999, Miles stated that he would accept a purchase price of $1.75 million to be paid over time at a five percent interest rate. He proposed that the entire purchase price would be paid to him as salary, making it tax deductible to what would be a new firm consisting of Goldstein and Block. accepted, and negotiations continued. In May 1999, Goldstein and Block first mentioned a possible purchase price of $1.3 million and a downpayment of $100,000. Although Miles eventually said "okay" to both, he did not believe that Goldstein and Block had made "a firm offer," because "they kept changing" the terms of their offer and never committed it to writing. According to Goldstein, they "had been inching closer and closer to the deal," but he acknowledged that, as of May 1999, no "agreement had been reached." Miles characterized the discussions That proposal was not

with regard to a purchase price, down payment, and interest rate,

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as "an ongoing thing." In the meantime, Goldstein had apparently left MacAlister in the dark as to his plans to buy the firm with Block. Sensing that

something was amiss, MacAlister asked Goldstein what was going on. Goldstein declined to discuss the matter with him and suggested he speak with Miles. When he did, Miles told him:

I'm not going to lie to you. I'm looking to sell the firm. And I said we have a deal. And he said the deal was contingent on you being able to buy me out. You and [Goldstein] can't buy me out. The business isn't doing well. So, I'm looking to sell it to somebody else. At some point, during the 1999 negotiations with Goldstein and Block, Miles disclosed that he was also negotiating with someone else. That disclosure prompted Goldstein and Block to present

Miles with a written proposal to purchase his firm for $1.3 million. MacAlister testified that he "wasn't involved" in the

Goldstein and Block offer and that he "only found out afterwards once their offer had been rejected." In a handwritten note attached to that proposal, Goldstein wrote: "[P]lease give this proposal genuine consideration. I want this opportunity. I hope that in weighing it against the other In response,

alternative, you always consider my loyalty . . . ."

Miles told Goldstein that he would consider the offer over the weekend. According to Goldstein, Miles said "he wouldn't reach a

decision before Monday and that he would let me know."

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The other party, with whom Miles was negotiating, was the law firm of Saiontz & Kirk. At a meeting on May 15, 1999,7 Miles

agreed to accept Saiontz and Kirk's offer of $1.75 million for his firm. Although Miles informed Goldstein and Block that he was

negotiating with someone else, he did not advise them that he had accepted an offer from Saiontz & Kirk. In fact, Goldstein only

learned of that deal the weekend that Miles was supposed to be considering his and Block's offer. Goldstein stated:

[O]n that Friday, he left the office and told me he wouldn't reach a decision before Monday and that he would let me know. I would be the first person to know ultimately what his decision was. And Saturday morning, I picked up the newspaper and found that he had consummated a deal with [the law firm of] Saiontz & Kirk prior to that time. Goldstein and MacAlister produced expert testimony that they could have earned $9,510,068 from the firm had Miles sold it to them. They also claimed they were entitled to the difference

between the value of the firm, which they allege was $2 million,8 and the $1.3 million that Miles allegedly agreed to accept from them as the purchase price. MOTION TO DISMISS Miles filed a motion to dismiss with this Court, which was

7 Miles could not recall the precise date of this meeting, but he testified at his deposition that it occurred in May, and he used May 15th as an estimate as to when the meeting occurred. 8

Miles argues that the evidence offered regarding the value of the practice was inadmissible. Given our resolution of this appeal, it is unnecessary for us to reach this issue.

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denied without prejudice.

Miles then renewed the motion in his

brief to this Court, arguing that Goldstein and MacAlister's appeal should be dismissed because they (a) failed to order necessary transcripts timely, (b) failed to have the transcripts included in the Record transmitted to this Court, (c) misled the Court by claiming contrary to the transcript - that they were unaware that a private court stenographer was used for the February 10 hearing, (d) never consulted [him] concerning the preparation of the Record Extract, and (e) unilaterally filed a 1200-page Record Extract that does not comply with the Rules and that contains obviously extraneous material. In sum, Miles requests that this Court dismiss Goldstein and MacAlister's appeal because the record extract did not comply with Maryland Rule 8-501, the rule governing the filing of record extracts. But Rule 8-501 states that, "[o]rdinarily, an appeal

will not be dismissed for failure to file a record extract in compliance with this Rule." Md. Rule 8-501(m).

The February 10, 2003 transcript, which Miles alleges was omitted from the record extract, was in fact included in the record extract. Other possible gaps in the record extract were cured by

Miles's appendix to his brief, which included additional documents that he believed were improperly omitted. And while we agree with

Miles that the record extract was voluminous and was not presented in the format required by Rule 8-501, it does not warrant dismissal of the appeal. Miles's motion to dismiss is therefore denied. MOTION TO STRIKE -17-

Goldstein and MacAlister moved to strike Miles's appendix, claiming that the documents in the appendix were not properly before the circuit court. They further claimed, in a seperate

motion to strike certain portions of Miles's brief, that Miles's brief addresses issues that are not before this Court, notably, whether they presented sufficient evidence of fraud or negligent misrepresentation. The documents contained in Miles's appendix were either

pleadings filed in the circuit court, this Court, or the Court of Appeals, or they were exhibits to those pleadings. Furthermore,

because the circuit court ultimately granted summary judgment in favor of Miles "on all counts and all issues," the issue of whether the circuit court correctly ruled that Goldstein's and MacAlister's claims for fraud and negligent misrepresentation did not survive Miles's motion for summary judgment is before this Court. We

therefore deny Goldstein and MacAlister's motion to strike Miles's appendix and their motion to strike and/or dismiss certain portions of Miles's brief. DISCUSSION Goldstein and MacAlister contend that the circuit court erred in granting Miles's motion for summary judgment on the ground that no bargain ever existed between the parties and that they were therefore not entitled to lost profits or benefit of the bargain damages. But that was not the only ground relied upon by the

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circuit court in granting summary judgment. noted in the introduction to this

Ultimately, as we the court, on

opinion,

appellants' motion for reconsideration, granted summary judgment in favor of Miles "on all counts and all issues." We shall

nonetheless begin our analysis by first considering the benefit-ofthe-bargain issue as that was the principal issue upon which the circuit court relied in granting summary judgment in favor of Miles. Because this issue, and ultimately the case itself, were disposed of on a motion for summary judgment, our task is to "determine if there is a genuine dispute of material fact and, if not, whether the moving party is entitled to judgment as a matter of law." Crews v. Hollenbach, 126 Md. App. 609, 624 (1999), aff'd, We begin by resolving all inferences that may See

358 Md. 627 (2000).

be drawn from the facts presented against the moving party.

Gross v. Sussex Inc., 332 Md. 247, 256 (1993). If, after doing so, there is still not enough evidence from which a jury could

reasonably find for the plaintiff, we affirm the circuit court's grant of summary judgment for the defendant. See Beatty v. In this

Trailmaster Prods., Inc., 330 Md. 726, 738-39 (1993).

instance, we agree with the circuit court that appellants failed to produce evidence from which a jury could reasonably find that the parties had entered into a bargain, the sine qua non of a claim for benefit-of-the-bargain damages in tort or contract, and shall

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therefore affirm the lower court's decision. Benefit-of-the-bargain Damages In determining "the proper measure of damages in fraud and deceit cases," Maryland applies the "flexibility theory." v. Rockville Motor Co., 262 Md. 502, 511 (1971). Hinkle

Under that

theory, a victim of fraudulent or negligent misrepresentation may elect to recover either "out-of-pocket" expenses or benefit-of-thebargain damages. The former will permit the plaintiff to recover

his or her actual losses; the latter "put[s] the defrauded party in the same financial position as if the fraudulent representations had in fact been true," Midwest Home Distrib., Inc. v. Domco Indus. Ltd., 585 N.W.2d 735, 739 (Iowa 1998), by awarding as damages "`the difference between the actual value of the property at the time of making the contract and the value that it would have possessed if the representations had been true.'" Hall v. Lovell Regency Homes

Ltd. P'ship, 121 Md. App. 1, 12 (1998) (quoting Beardmore v. T.D. Burgess Co., 245 Md. 387, 390 (1967)). But, as will become

evident, the benefit-of-the-bargain rule is not so elastic that every victim of a false representation is entitled to receive the benefit of what he or she was promised. The flexibility theory is composed of four "conclusions" reached by the Supreme Court of Oregon in Selman v. Shirley, 85 P.2d 384 (Or. 1938) and later cited with approval by the Court of Appeals in Hinkle. They are: -20-

"(1) If the defrauded party is content with the recovery of only the amount that he actually lost, his damages will be measured under that rule; (2) if the fraudulent representation also amounted to a warranty,9 recovery may be had for loss of the bargain because a fraud accompanied by a broken promise should cost the wrongdoer as much as the latter alone; (3) where the circumstances disclosed by the proof are so vague as to cast virtually no light upon the value of the property had it conformed to the representations, the court will award damages equal only to the loss sustained; and (4) where . . . the damages under the benefitof-the-bargain rule are proved with sufficient certainty, that rule will be employed."

9 It is not altogether clear what the Selman court meant by "warranty." As the inestimable Karl Llewellyn observed at about the time Selman was decided, "To say `warranty' is to say nothing definite as to legal effect . . . ." K. Llewellyn, Cases and Materials on the Law of Sales 210 (1930), quoted in John Edward Murray, Jr., Murray on Contracts 543, n. 19 (3d ed. 1990). "[T]he sane course," he advised, "is to discard the word from one's thinking." Id. He, nonetheless, "agreed to retain the term `warranty' in the UCC," Murray, supra , at 543, n. 19, but we are cautioned by Professor John Edward Murray, Jr. that "its retention was simply one of innumerable compromises he [Llewellyn] made to ascertain the enactment of the new Code throughout the Country." Id. More recently, Professor Samuel Williston, expressed similar sentiments: "`Warranty' is a word which illustrates as well as any other the fault of the common law in the ambiguous use of terms. The word naturally means promise, but in different kinds of contracts is used with varying meanings." 1 Samuel Williston, A Treatise on the Law of Contracts

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