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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 221 September Term 2005 _______________________________

ELBA M. HILDEBRANT V.

EDUCATIONAL TESTING SERVICE, ET AL.

_______________________________ Davis, Salmon, Adkins, JJ. _______________________________ Opinion by Salmon, J. Filed: September 28, 2006

Educational

Testing

Service,

Inc.

("ETS"),

a

non-profit

corporation, develops, administers, and grades standardized tests. On September 11, 2004, one of ETS's standardized tests was

administered to Elba H. Hildebrant ("Hildebrant") at Montgomery College in Rockville, Maryland. The test taken by Hildebrant was

a Praxis Series School Leaders Licensure Assessment Test ("the Praxis test"). The Praxis test is a standardized licensing

examination required to be taken by teachers in Montgomery County (and elsewhere) who hope to become school principals. Hildebrant, a principal-intern at a Montgomery County

elementary school, was among the candidates taking the test at Montgomery College. ETS. After the test was concluded, Ms. Baker submitted a Dana Baker administered the test on behalf of

"Supervisor's Irregularity Report" to ETS.

The report said that

Hildebrant, in Session I of the test, engaged in "misconduct" because she "refused to stop writing when time was called. Warning given. Material Taken." In regard to Session II, Ms. Baker

reported that Hildebrant engaged in "misconduct" when she "had to be instructed twice to stop work and close the test book. insisted on completing her thought.)" On September 30, 2004, ETS sent Hildebrant a letter telling (She

her that it had been reported that she continued to work on a section of the test after time was called and that she failed to follow a direction to stop writing.

Hildebrant responded to ETS's letter with a missive dated October 9, 2004, in which she said that she was "willing to accept that the staff may think they were doing what they were instructed to do to maintain the secure, standard conditions" of the test center, but that she had "conformed completely to those standards, and that the report to the contrary was an error in judgment on the part of the proctor." Shortly thereafter, ETS canceled

Hildebrant's test scores, based on its belief that Hildebrant engaged in the misconduct alleged in Ms. Baker's report.

Subsequently, ETS returned to Hildebrant the fee she had paid to take the exam. no one. Hildebrant filed a complaint and then an amended complaint in the Circuit Court for Montgomery County against Ms. Baker and ETS. The second count of the amended complaint was against ETS only and alleged that ETS breached its contract with plaintiff by failing to "fairly and accurately report her leadership assessment scores" to the Montgomery County Board of Education. ETS filed a motion for summary judgment as to the breach of contract count. Hildebrant filed an opposition to that motion. ETS reported Hildebrant's (alleged) misconduct to

After a hearing, the motions judge granted summary judgment in favor of ETS. The court then dismissed all remaining counts1

against both Ms. Baker and ETS.

ETS had filed a motion to dismiss the other two counts in the complaint, which was granted. Hildebrant does not contend in this appeal that the court erred in dismissing the other counts.

1

2

Hildebrant filed a motion to alter or amend judgment, arguing that summary judgment should not have been granted as to the breach of contract count because issues of material fact existed regarding whether ETS acted in good faith in determining that Hildebrant was guilty of misconduct. on April 12, 2005. one question, viz.: Did the trial court err in entering summary judgment for ETS on appellant's breach of contract claim despite the presence of outstanding issues of material fact regarding whether ETS acted in good faith in determining that appellant engaged in misconduct? After ETS responded, the motion was denied

Hildebrant filed this timely appeal and raises

I.

STANDARD OF REVIEW

Summary judgment may be granted on the ground that "there is no genuine dispute as to any material fact and that the party is entitled to judgment as a matter of law." Md. Rule 2-501(a). In

ruling on a summary judgment motion, the court must view all facts and all inferences that may be drawn legitimately from those facts, in the light most favorable to the party opposing the motion. Summary judgment should not be granted if the party opposing the motion can demonstrate that there is a genuine dispute as to material facts. Ritter v. Ritter, 114 Md. App. 99, 104 (1997). A

fact is "material" if the outcome of the case depends on how the fact-finder resolves the disputed fact. Id. Thus, when reviewing

the circuit court's grant of a motion for judgment, we determine whether a material fact is in dispute and whether the motions judge 3

was legally correct in granting the motion. Group, LLC v. Curran, 383 Md. 462, 476 (2004).

Converge Services

II.

DEPOSITION EXCERPTS, AFFIDAVITS, AND EXHIBITS PRESENTED TO THE MOTIONS JUDGE A. Dana Baker's Deposition Testimony She testified

Dana Baker was deposed on December 21, 2004.

that she had worked for ETS for approximately eight years and that she administered roughly ten to fifteen tests per year for that organization. She further testified that she was "an associate

supervisor of a testing site" and that she "generally [has] no knowledge of what ETS does after the testing session is over." In regard to the test administered on September 11, 2004, the deponent said that Hildebrant continued to write after time had been called during the test, that a Supervisor's Irregularity Report was filled out by her because of that infraction, and that she informed Hildebrant that such a report would be made. B. Dana Baker's Affidavit Ms. Baker's affidavit read, in material part, as follows: 1. I am currently a Professor in and Department Chair of the Department of Counseling at Montgomery College, Rockville campus. I was chosen as one of twelve faculty members at the college to receive a Faculty Outstanding Service Award for 2003-2004. 2. I received a B.A. in psychology from The College of Wooster in 1981. 3. I received a M.A. in counseling and guidance from Trinity College in Washington, DC[,] in 1992. 4

4. I am currently pursuing a Ph.D. American University in Washington, DC.

at

5. I have administered tests for Educational Testing Service ("ETS") and other testing companies for approximately ten years. 6. On behalf of ETS, I administered the September 11, 2004[,] The Praxis Series: Professional Assessments for Beginning Teachers, The School Leaders Licensure Assessment test ("Praxis test") at Montgomery College. Assisting me in my duties, which included monitoring the testing room, was a room proctor, Ms. Jocelyn Lowry. 7. One of the candidates who took the September 11, 2004[,] Praxis test that I administered at Montgomery College was Elba Hildebrant. I had never previously met Ms. Hildebrant, nor did I know anything about her before the test. 8. On September 11, 2004, I filled out a "Supervisor's Irregularity Report" regarding Ms. Hildebrant. I provided this report to the test site supervisor, who sent the report on to ETS. C. All candidates The Registration Bulletin who take the Praxis test are sent a

"Registration Bulletin" that spells out the rules governing the taking of the test. On the date Hildebrant took the test, she

signed a certificate that read:
CERTIFICATION STATEMENT: (Please write the following statement below. DO NOT PRINT.) *I hereby agree to the conditions set forth in the Registration Bulletin and certify that I am the person whose name and address appear on this answer sheet."

/s/ I hereby agree to the conditions set [sic] in the Registration Bulletin an[d] certify that I am the person whose name and address appear on this answer sheet. SIGNATURE: /s/ E. Hildebrant DATE: /s/ 9/11/04
Month Day Year

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The Registration Bulletin advises test takers in advance about the consequences of breaking the test-taking rules. The Bulletin

also alerts the test taker to the fact that ETS has the right to cancel a test taker's score if "misconduct" occurs. Misconduct is

defined as directly observable violation of the rules during test administration but also defines "misconduct" to include "working on any test, or test section, when not authorized to do so, or working after time has been called." Included in the Registration Bulletin are the following paragraphs: ETS reserves the right to take all action -- including, but not limited to, barring you from future testing and/or canceling your scores -- for failure to comply with test administration regulations or the test administrator/supervisor's directions. If your scores are canceled, they will not be reported, and your fees will not be refunded. * * * Misconduct When ETS or test center personnel find that there is misconduct in connection with a test, the test taker may be dismissed from the test center, or ETS may decline to score the test, or cancel the test score. Misconduct includes, but is not limited to, noncompliance with the "Test Center Procedures and Regulations," pages 10-12 of this Bulletin. D. Hildebrant's Affidavit

Hildebrant's opposition affidavit read, in relevant part: 1. I am a principal intern at an elementary school in Montgomery County School System in Maryland ("MCPS"). One of the requirements to become a principal in MCPS is to take and pass the Praxis II, School Leaders Licensure Assessment test ("Assessment Test"), which is administered by ETS. 6

2.

I registered by telephone with ETS to take the Assessment Test scheduled for September 11, 2004, for which I paid a fee of $465. . . . I have read the Supervisor's Report of Irregularities, attached to the defendants' Motion to Dismiss or, Alternatively, for Summary Judgment as Exhibit 5. Each statement on the report concerning my conduct during the administration of the Assessment Test is false in every respect and has no basis in fact whatsoever. These statements are so contrary to any reasonable understanding or interpretation of anything that could have been observed that I have readily concluded that they were made with the knowledge that they were false and with the intent to harm me personally.

3.

III.

THE MOTIONS JUDGE'S OPINION

The motions judge granted summary judgment in favor of ETS because (1) the contract between the parties (i.e., the

Registration Bulletin) explicitly gave ETS the right to cancel the test scores whenever, in ETS's judgment, a test taker engages in misconduct; (2) ETS, pursuant to that right, exercised its judgment when it decided to cancel Hildebrant's score; (3) therefore, ETS did not breach its contract with the plaintiff when it exercised its judgment and canceled Hildebrant's scores.

IV.

ANALYSIS

In this appeal, Hildebrant does not take issue with the fact that ETS had the contractual right to cancel her scores if, in ETS's judgment, she had engaged in the conduct of which Ms. Baker 7

accused her.

Hildebrant argues, however, that ETS's exercise of

its judgment in deciding whether to cancel the test scores must be exercised in good faith. According to Hildebrant, an issue of

material fact existed as to whether ETS canceled the test scores in good faith. Her reasoning is as follows: (1) Hildebrant said in

her affidavit that everything Ms. Baker said in the "Irregularity Report" concerning Hildebrant's failure to stop writing after time was called was false; (2) if what Ms. Baker said was false, then she knew it was false when she wrote the report; (3) Ms. Baker was, at all times here pertinent, ETS's agent; (4) ETS is bound by the knowledge of its agents; (5) because Ms. Baker knew the allegations of misconduct were bogus, then so did ETS; and (6) therefore, taking the evidence in the light most favorable to the movant, when ETS exercised its discretion to cancel the test scores, it did so in bad faith. As Hildebrant correctly points out, in every contract there exists an implied covenant of good faith and fair dealing. See,

e.g., Food Fair Stores, Inc. v. Blumberg, 234 Md. 521, 534 (1964) ("[I]n every contract there exists an implied covenant that each of the parties thereto will act in good faith and deal fairly with the others."); First Union Nat'l Bank v. Steel Software Sys., 154 Md. App. 97, 139 (2003) ("Good faith is a standard that has honesty and fairness at its core and that is imposed on every party to a contract."). In this appeal, ETS does not contest the fact that it was required to act in good faith when dealing with Hildebrant. 8 ETS

contends,

however,

that

under

applicable

Maryland

law,

the

knowledge of Ms. Baker cannot be imputed to it.

ETS gives two

reasons in support of that contention, which will be discussed infra.2 In Unsatisfied Claim and Judgment Claim Fund Board v. Fortney, 264 Md. 246, 255 (1972), the Court of Appeals said: "`The ordinary

law of principal and agent' is that knowledge of the agent is knowledge of the principal." 458, 463 (1960)). (quoting Boring v. Jungers, 222 Md. One

There are exceptions to that rule, however.

of the exceptions to the rule is the "adverse interest" exception. See Hecht v. Resolution Trust Co., 333 Md. 324, 346 (1994)

(knowledge of agent whose interests are adverse to principal cannot be imputed to principal); Shah v. Health Plus, Inc., 116 Md. App. 327, 342 (1997) (same). The RESTATEMENT (SECOND ) this exception.
OF

AGENCY

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