WPC? 'em_a&KW .X47[>;2;Ei[$cyCPR:Ҹ^J""y 5$zsluwLj$4&MWߋixژ$F1k=$ j/8Sʳ5n9W&v`5{UJ.fEE`]l$l&s@8dݐs/WlHuu[v)$xKafa,D@>fYc?aBx7'J{~8eH&IžaE&غ/׊_ JU> J 0 0 0 0 0( 0; 0N 0a 0t 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0! 0" 0# 0<$ 0<$ 0 %& 00' 1e'"J(UuJl( B( 0C()"+"+S,"W/"y/"/z/"72ZY2"4"4"4"5;5"77": 0:; 0 ;#[<U N> %j>Mp>(t>N> 1u> 72?^ E?wQ?4U?i? mk?\  `&Times New Roman' GRAY AND ASSOCIATES, LLC, Training0Training .   2[+[ 0_level1   , 8.` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level2   X 8.` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level3    8.4` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level4    8.` ` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level5    8. ` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level6    8. ` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level7   4 8. ` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level8   ` 8.` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level9    8.<` hp x (#823  ..   8.` hp x (#8  2[[ 0_levsl1   , 8.` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl2   X 8.` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl3    8.4` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl4    8.` ` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl5    8. ` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl6    8. ` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl7   4 8. ` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl8   ` 8.` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl9    8.<` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levnl1   , 8.` hp x (#823     8.` hp x (#8  2[[ 0_levnl2   X 8.` hp x (#823     8.` hp x (#8  2[[ 0_levnl3    8.4` hp x (#823     8.` hp x (#8  2[[ 0_levnl4    8.` ` hp x (#823     8.` hp x (#8  2[[ 0_levnl5    8. ` hp x (#823     8.` hp x (#8  2[[ 0_levnl6    8. ` hp x (#823     8.` hp x (#8  2[[ 0_levnl7   4 8. ` hp x (#823     8.` hp x (#8  2[[ 0_levnl8   ` 8.` hp x (#823     8.` hp x (#8  2[[ 0_levnl9    8.<` hp x (#823     8.` hp x (#8  <:Default Para<:Footnote Ref2\+P 0Level 1    X 8.` hp x (#823  ..  8.` hp x (#8    ")..      >07X>X07>07  _  XxXX07  07XXxX(2$ <!..      >07X>X07>07    35;AGMSY_11.11111111111111     ѳkIA`2WP TypographicSymbols d($      <!..      >07X>X07>07  B.` hp x (#XB  X  XxXX07  1  <  Hereinafterplaintiff,plaintiffcorporationandSunterrawillbeusedinterchangeably.  TheCourtrecognizes,however,thatthenamedplaintiffistheLitigationTrusteeaslistedinthe  captionofthecase.D|07XXxX           I <!..      >07X>X07>07  B.` hp x (#XB  X  XxXX07  2  <  PursuanttoMd.CodeAnn.,[Cts.&Jud.Proc.],%XXXXxX'XxXXX%X12303(3)(ix),anorderofthis  Courtgrantingapetitiontostayarbitrationpursuantto%XXXXxX'XxXXX%X3208isoneoftheenumerated  interlocutoryordersfromwhichapartymaynoteanimmediateappeal.H07XXxX                p <!..      >07X>X07>07  B.` hp x (#XB  X  XxXX07  3  <  Thelimitationofliabilityprovisionintheagreementisseparateanddistinctfromthe  arbitrationclauseand,therefore,notdirectlyrelevanttotheissuenowbeforetheCourt.^07XXxX      P <!..      >07X>X07>07  B.` hp x (#XB  X  XxXX07  4  <  Hebackedawayfromthistestimonyattrial,claimingthathecouldnotthenhave  knownenoughtothinkthesubsequentrolloutschedulewasabsurd.^07XXxX                      <!..      >07X>X07>07  B.` hp x (#XB  X  XxXX07  5  <  Atdeposition,NoyesdeniedthattherewasfraudcommittedinconnectionwithE&Y%XXXXxX=XxXXX%Xs  1998agreement.HearingTranscript,p.123.(Hearing05/21/03).`07XXxX       <!..      >07X>X07>07  B.` hp x (#XB  X  XxXX07  6  <  TheagreementprovidedforreperformanceofserviceswhichbreachedE&Y%XXXXxX=XxXXX%Xs  warrantyofprofessionalcareandcompetence,upon90dayswrittennotice.`07XXxX     (2$ <!..      >07X>X07>07  xXX07  0  #|x(r$..      >07X>X07>07HP LaserJet 5M,,,,0(9 Z6Times New Roman Regular>X3#37=CIQYag1.a.i.(1)(a)(i)1)a)Ci)Uy/ h.yweb0U <!..      >07X>X07>07  _       !807dd8 hB.` hp x (#XBXxXX07GRAYANDASSOCIATES,LLC, h   *  INTHE    hE.` hp x (#X(#ETrusteeundertheLitigationTrustestablished    hE.` hp x (#X(#EpursuanttotheReorganizationPlanof  *  CIRCUITCOURT |   hE.` hp x (#X(#E_Sunterra_ԀCorporationandtheRelated b   hE.` hp x (#X(#EDebtors,etal, `     h   *  FOR H   hE.` hp x (#X(#E  hE.` hp x (#X(#EPlaintiffs    h   *  BALTIMORECITY  d   hE.` hp x (#X(#E  hE.` hp x (#X(#Ev.   `     h   *  Part20  0   hE.` hp x (#X(#E  hE.` hp x (#X(#EERNST&YOUNG_LLP_   h   *  CaseNo.:24C02002963     `  hE.` hp x (#X(#E h     [2003_MDBT_Ԁ2]    X` Defendant    h   * x   X****************************************************************************** ^  3p x (#X(#3Q MEMORANDUMANDOPINION  D  H.` hp x (#X(#H #  (03C" "  XE.` hp x (#X(#E  E.` hp x (#X(#E  2  1  .3      StatementoftheCase  ݌ ` Ќ X' X(#X(#'   OnJanuary30,2003thisCourtenteredanOrdergrantingatemporarystayof , arbitrationuntilitdeterminedwhetheravalidandenforceablearbitrationagreementhadbeen  madebythepartiesinMay,1998.TheCourtthenpermittedthepartieslimiteddiscoveryand t conductedanevidentiaryhearingforthethreedaysofMay2123,2003.TheCourthashadthe @ opportunitytoconsiderthetestimonyofferedduringtheevidentiaryhearing,the91exhibits  \ admittedintoevidenceatthehearingandthe23depositionssubmittedbythepartiesinsupport ( oftheirrespectivepositions.Bothpartieshavefiledtrialbriefsaswell,andtheCourtheard  argumentfromcounselforbothpartiesforseveralhoursonMay20,2003,theeveofthe p!  hearing.TheCourtispreparedtoruleonthecrossmotionsforastaypendingarbitrationandfor <#" astayofarbitration. %X $   l*%* _$" "  XE.` hp x (#X(#E  E.` hp x (#X(#E 2  2  .3      TheStandardsofProof ݌  Ќ X' X(#X(#'   & l<`  Plaintiff%XXXXxX=XxXXX%Xs  ( '  1     &<  amendedcomplaintallegesatparagraph61that%XXXXxXAXxXXX%X[O]noraboutMay | 20,1998,throughgrossabuseofitsfiduciarydutiesandegregiousfraudanddeceit,Ernst& L Young(%XXXXxXAXxXXX%XE&Y%XXXXxX@XxXXX%X)wrongfullyinducedSunterratoenterintoanarbitrationagreementforwhich  h therewasnoconsideration.%XXXXxX@XxXXX%XԀInitsJanuary30,2003MemorandumandOpinion,theCourtfound  8 thattheseallegationsweresufficienttopresentathresholdissueforjudicialdeterminationand    thatissueiswhetherthepartiesenteredintoavalidagreementtoarbitrateSunterra%XXXXxX=XxXXX%Xsclaimson   May21,1998. T  Insituationswherecourtshavebeencalledupontoaddressthisthresholdissueof  p avalidarbitrationagreement,theproponentsofthearbitrationagreementbeartheburdenof < establishingtheexistenceofavalidarbitrationagreementbyapreponderanceoftheevidence.  Messersmithv.BarclayTownhouseAssociates,313Md.652,664(1988).Inthepresentcase,  however,plaintiffhasadvancedtwotheories,thefirstofwhichwouldhavetheCourtdetermine P thatthearbitrationprovisionsintheMay21,1998agreementareunenforceableandthesecond l ofwhichwouldrequiretheCourttorescindthearbitrationprovisionsashavingbeenobtained 8 byconstructivefraud.  )ThefirsttheoryisthatthedefendantE&Ymadematerialmisrepresentationsto !  plaintiffand/orconcealedmaterialfactsandtherebyinducedplaintifftoenterintothearbitration L#" provisionsbyfraud.InordertoestablishfraudordeceitunderMarylandlawtheplaintiffmust %h $ show,byclearandconvincingevidence:(1)thatthedefendantmadeafalserepresentationtothe &4"&  $) $ )$ )  plaintiff,(2)thatitsfalsitywaseitherknowntothedefendantorthattherepresentationwas  madewithrecklessindifferenceastoitstruth,(3)thatthemisrepresentationwasmadeforthe | purposeofdefraudingtheplaintiff,(4)thattheplaintiffreliedonthemisrepresentationandhad H therighttorelyonit,and(5)thattheplaintiffsufferedcompensableinjuryresultingfromthe  d misrepresentation.EnvironmentalTrustv.Gaynor,370Md.89,97(2002)andcasescited  0 therein(emphasisadded).    Plaintiff%XXXXxX=XxXXX%XssecondtheoryispremiseduponitsallegationthatE&Y%XXXXxX=XxXXX%Xsengagement x  partner,GibbsVandercook,wasactingasSunterra%XXXXxX=XxXXX%XsChiefInformationOfficerinMayof1998 H  whenthecontractcontainingthearbitrationprovisionwaspresentedtoCharlesFreyforhis h signature.Plaintiffassertsthat,asCIO,Vandercookhadafiduciarydutythatrequired 4 disclosureofallmaterialfactsinordertoavoidabreachoftrust.Consequently,Marylandlaw  requiresplaintifftoestablishtheexistenceofaconfidentialrelationshipbetweenVandercook | andSunterraCorporationandtherebytoraiseapresumptionofconstructivefraudwhichmustbe H rebuttedbyE&Y%XXXXxX=XxXXX%Xsshowingthatthearbitrationprovisionsofthecontractwerefreely,fairlyand d voluntarilyenteredintobySunterra.FrederickRd.Ltd.Pshp.v.Brown&Sturm,360Md.76, 4 100(2000);Desserv.Woods,266Md.696,70809(1972).Implicitintheseauthoritiesisthe  conceptthattheplaintiff%XXXXxX=XxXXX%Xsinitialburdenofestablishingthefiduciaryrelationshipandthe |!  defendant%XXXXxX=XxXXX%Xsconsequentburdenofdisprovingthefraudaremetbythenormalcivil L#" preponderancestandard. %l $ 07XXxX" "  XE.` hp x (#X(#E  E.` hp x (#X(#EXxXX07 p(2  3  .3      ThePendingMotions p()݌ &8"& Ќ X' X(#X(#'   07XXxX" "  XE.` hp x (#X(#E  E.` hp x (#X(#EXxXX07 *2  4  .3       ($( * *,݌ *%* * * *  ь X' X(#X(#'   E.` hp x (#X(#EPlaintiffhasmovedforastayofarbitrationanddefendanthasmovedforastayof  thislitigationtopermitthearbitrationprovisionsoftheparties%XXXXxX=XxXXX%XԀagreementtoproceed.Both | motionsaregroundedupontheMarylandArbitrationAct,codifiedatMd.CodeAnn.,[Cts.& L Jud.Proc.],%XXXXxX'XxXXX%X3201,et.seq.%XXXXxX'XxXXX%X3207(c)provides,%XXXXxXAXxXXX%X[I]fthecourtdeterminesthattheagreement  h exists,itshallorderarbitration.%XXXXxX@XxXXX%XԀ%XXXXxX'XxXXX%X3208(c)provides,%XXXXxXAXxXXX%X[I]fthecourtdeterminesthatexistenceof  8 thearbitrationagreementisinsubstantialandbonafidedispute,itshalltrythisissuepromptly    andorderastayifitfindsforthepetitioner.%XXXXxX@  + '  2     3had  XxXXh%X   Finally,asnotedintheCourt%XXXXxX=XxXXX%XsMemorandumandOpinionofJanuary30,2003, T  %XXXXxX'XxXXX%X3206oftheActstatesthat%XXXXxXAXxXXX%XAwrittenagreementtosubmitanyexistingcontroversyto $t arbitrationoraprovisioninawrittencontracttosubmittoarbitrationanycontroversyarising D betweenthepartiesinthefutureisvalidandenforceable,andisirrevocable,exceptupon  groundsthatexistatlaworinequityfortherevocationofthecontract.%XXXXxX@XxXXX%XԀTheCourtshallnow  examinewhethergroundsexistatlaworinequityforrevocationofthearbitrationagreement \ enteredintobetweenthepartiesonMay21,1998. (x 07XXxX" "  XE.` hp x (#X(#E  E.` hp x (#X(#EXxXX07 82  5  .3      DiscussionoftheEvidence 89݌ D Ќ X' X(#X(#'   07XXxX" "  XE.` hp x (#X(#E  E.` hp x (#X(#EXxXX07 :2  6  .3        , :3<݌̌ X' X(#X(#'   E.` hp x (#X(#EIngrantingthetemporarystayofarbitrationonJanuary30,2003,theCourtrelied X#" inpartonthedecisionoftheCourtofAppealsofMarylandinHolmesv.CoverallN.Am.,Inc., $%t $ 336Md.534,544(1994),wheretheCourtofAppealssaid:%XXXXxXAXxXXX%XThecourtmustdeterminethatthere &@"& , , ,  arenoinfirmitiesintheformationofthearbitrationagreementitself;thatis,thatthereisa  mutualexchangeofpromisestoarbitrate.%XXXXxX@XxXXX%XԀ(Emphasisadded).Thecontractbetweentheparties | here,executedonMay21,1998isinevidenceasplaintiff%XXXXxX=XxXXX%Xsexhibit90.Itcontainsan L engagementletterdatedMay20,1998addressedtoMr.ChuckFreyandsignedbyhimthe  l followingday.TheTermsandConditionsoftheagreementandtheDisputeResolution  8 ProcedurescontainedinAnnex1areincorporatedbyreferenceintotheletterofunderstanding.    Onitsface,thisconstitutesavalidandenforceableagreement,whichcontainsalimitationon   E&Y%XXXXxX=XxXXX%Xspotentialliabilityandanexpressprovisionrequiringmediation/arbitration(subjecttothe L  proceduressetforthinAnnex1).TheCourtmust,therefore,determinewhetherthereisabasis l inlaworequitytosetasidethemediation/arbitrationprovisioninthisagreement,whichforthe 8 purposesofthislimiteddetermination,isotherwisedeemedtobeavalidagreement.  Attheconclusionofthethreefulldaysofhearingonthisissue,theCourthad  beenpresentedwithliterallyhundredsofexhibits(notallenteredintoevidence)andcountless L depositiondesignations,tosupporttheparties%XXXXxX=XxXXX%XԀrespectivepositions.Asapracticalmatter,the h Court%XXXXxX=XxXXX%Xscalendarwillnotpermitittotakethetimetoincludeallofthearguablyrelevant 8 evidenceinitsdiscussionhere.Thebestthatcanbedoneissimplyadistillationofthesalient  evidenceofferedonthetwotheoriespresentedbyplaintiffinanefforttoavoidarbitration. !  -TheuncontestedevidencedemonstratesthatSunterraCorporationannouncedto P#" theWallStreetinvestmentcommunityinSeptember,1997itsintentiontoimplement%XXXXxXAXxXXX%XClub %l $ Sunterra%XXXXxX@XxXXX%XԀorapointsbasedtimesharesystembytheendof1998.InDecemberofthatyear, &<"& SunterraenteredintoanagreementwithRCCtopurchasethesourcecodetoabetaversionof ( $( thePremiersoftwareforapproximately$3.5million.Attheinstigationofthecompany%XXXXxX=XxXXX%Xschief *%* - - -  operatingofficer(COO),JamesNoyes,E&Ywashiredtoassistthecompanyinimplementing  itsClubSunterrainitiativebytestinganddevelopingthePremiersoftwareforuseinsupportof | thenewtimesharesystem.ThisengagementwasknownastheSWORDProjectandbeganin H January,1998.Althoughtheremainingfactsmaybemoreorlesscontestedbytheparties,itis  d cleartotheCourtthattheClubSunterrainitiative,includingtheSWORDProject,created  0 substantialtimepressures,oncetheannouncementwasmadethattheprogramwouldbe    implementedbyyearend1998.Sointensewerethesetimepressuresthatthecompany%XXXXxX=XxXXX%Xsnew x  chiefinformationofficer(CIO),ChuckLisinski,felloutoffavoralmostimmediatelywhenhe H  projectedthatitwouldtakethreeyearsand$40milliontocompletetheSWORDProject.He d wasrelievedofhisresponsibilitiesbytheendofFebruary,1998. 0 PlaintiffcontendsthatE&Yusedthetimepressuretoitsownadvantage.  Essentially,SunterraassertsthattheevidenceestablishesthatGibbsVandercookseizedcontrol x oftheSWORDProject,quicklyaddingmoreandmoreE&Ypersonneltotheteamand D concealingfromtheexecutivemanagementofthecompanytheimportantdetailsconcerningthe ` SWORDtechnology.Viewingtheevidencefromplaintiff%XXXXxX=XxXXX%Xsperspective,Vandercookwasinthe , uniquepositiontodothisbecausethegrowthoftheSWORDProjectteamoccasionedits  removaltoaseparatesiteatLakeEleanor,FloridaandthedepartureofChuckLisinskiin x!  February,1998placedVandercookinthepositionofActingCIOofthecompanywithauthority D#" overtheentireInformationTechnologyDivisionofSunterra.Althoughhereportedonaregular %` $ basistoSunterra%XXXXxX=XxXXX%Xsseniorexecutives(Noyes,Frey,Giannoni,DePatieandShoobridge),no &,"&  recordofthesepresentationsisavailableandplaintiffcontendsthatthesewerehighlevel,non (#( technicalpresentationsaimedatdemonstratingthattheSWORDProjectwas%XXXXxXAXxXXX%Xontimeand  withinbudget.%XXXXxX@XxXXX%X   .SunterrainsiststhattheevidenceestablishesthatVandercookknewthatthe P PremiersoftwarewasinnoconditiontosupporttheoperationsatCypressPointe,thedesignated  l betasite,ortomeetarolloutscheduletootherresortsintimeforsubstantialimplementationof  8 the%XXXXxXAXxXXX%XClubSunterra%XXXXxX@XxXXX%XԀprogrambeforetheendof1998.SunterracontendsthatVandercookandhis    teammadenoefforttoadvisetheircompanycounterpartsortheseniorexecutivesofthe   companyabouttheirconcernsthatthePremiersoftwarelackedimportantmodulesandcontained P  innumerablebugsandthatthemilestonesestablishedforthebetasiteandthesubsequentrollout l wereunreasonableandunachievable. 8 Itisinthiscontext,withsuperiorknowledgeofthetechnologicaldeficienciesin  thePremiersoftwareandtheSWORDProjectteam%XXXXxX=XxXXX%Xsinabilitytomeettheplanned  implementationschedule,thatSunterracontendsVandercookpresentedChuckFreywiththe P May20,1998engagementletter,containingthemediation/arbitrationprovisioninquestionhere. l TheconclusionthatplaintiffwouldhavetheCourtreachisthatVandercookandE&Y 8 fraudulentlymisrepresentedorwithheldmaterialinformationfromSunterrainanefforttoobtain  awrittenagreement,containinglimitationsofliability  / '  3     ]X  andanarbitrationclause,priortothe !  implementationatCypressPointe,whichtheyknewwouldrevealthetechnicaldeficienciesin L#"  thePremiersoftwareandE&Y%XXXXxX=XxXXX%XsfailureontheSWORDProject. %h $ . . .  0Theprincipalevidenceofferedinsupportofplaintiff%XXXXxX=XxXXX%Xsfraudtheoryincludesa   QualityAdvisorProgramreportenteredintoevidenceasdefendant%XXXXxX=XxXXX%Xsexhibit59A.Thisreport  wasaccompaniedbyanemailfromtheE&YQualityAdvisor,JohnFarrell,toGibbs P VandercookdatedApril9,1998(defendant%XXXXxX=XxXXX%Xsexhibit59).Farrellincludedinhisreport,which  l wasnotafterwardssharedwithSunterra%XXXXxX=XxXXX%Xsexecutives,thatthe%XXXXxXAXxXXX%XProjectteamin(sic)concerned  < aboutmanagingclient%XXXXxX=XxXXX%Xsexpectationsintermsoftimingandsolution.Theschedulehasnoslack   andnoroomfortheinevitableproblems.%XXXXxX@XxXXX%XԀWhenconfrontedwiththisstatementathispretrial   deposition,GibbsVandercooktestifiedthatinAprilof1998hethoughtthattheimmediate \  initiativeofthefirstrollout,thebetasite,hadabsolutelynoroomforslackforinevitable (x problemsandthatthemorelongtermschedulewasabsurd.  1 '  4     Ce   Hefurthertestifiedthathedidnot D recallsharingthisspecificinformationwiththeexecutivesatSunterraatthattime.TheQA  reportalsoindicatesthat%XXXXxXAXxXXX%XGibbshaspositionedhimselfakeyadvisortotheCOOandisbasically  functioningastheCIO.%XXXXxX@XxXXX%XԀIturgesthat%XXXXxXAXxXXX%Xthenegotiationofthepaymentterms(especiallytheissue \ surroundingthe%XXXXxX>XxXXX%Xinkind%XXXXxX=XxXXX%XԀpayment)forthenextphaseofwork($2.9million)mustcompleteit ,| quickly.Havingthisbehinduswillpositionusforadditionalwork.%XXXXxX@XxXXX%XԀPlaintiffalsointroduced L exhibit44,anorganizationalchartofSignatureResorts,Inc.(nowSunterraCorporation)forits  InformationServicesandTechnologyDivision,datedMay2,1998.Thedocumentclearly !  indicatesthatGibbsVandercook(E&Y)holdsthepositionofChiefInformationOfficer. d#" 2Inadditiontothisevidence,plaintiffpresentedtestimonyfromColinDrummond, 0% $ whowasrecruitedtothefulltimepositionofCIObyGibbsVandercookinJune,1998. &L"&  0 2  0 20 2  Drummondtestifiedthat,uponhisarrivalatSunterra,henotedthatthecompanyemployees  servingontheSWORDProjectteamwereintimidatedandconsideredbyGibbsVandercookto | beinferiortotheE&Ypersonnel.Hefurthertestifiedthatitwasverydifficulttoobtain H informationfromVandercook,whosepositionremainedunchallengedduetohispersonal  d relationshipwithJimNoyes,theCOO.Drummondcontendedthatthedeliverablesfromthe  0 E&YcontrolledSWORDProjectteamwerepoorbutthatitwastoohighariskatthatparticular    timetoattempttoterminateE&Yfromtheproject.OnlyafterNoyes%XXXXxX=XxXXX%XԀexecutivepositionwas x  alteredandSteveMillerbecameCEOwasheabletoobtainpermissiontodeemphasizeE&Y%XXXXxX=XxXXX%Xs H  involvementintheproject.DrummondfurthertestifiedthatthestatusreportsprovidedbyE&Y h fortheSWORDProjectteamfailedtoindicatethelevelofincompletenessorthebugsthat 4 remainedinthesoftwaresystem,aslaterrevealedbyaSeptember30,1998E&Ydocument.  3Whileotherwitnesseswerecalledtosupportplaintiff%XXXXxX=XxXXX%Xsfraudtheory,theprimary | focusoftheevidencewasuponthetestimonyofChuckFrey,theseniorexecutivewhowasa L signatorytotheMay21,1998engagementletter,containingthemediation/arbitrationclause. h FreydescribedacompanywhichgrewexponentiallyandquicklyfollowingtheIPOinAugustof 4 1996.HedescribedthecomputersystemsavailabletoSunterraatitsvariousresortsas%XXXXxXAXxXXX%Xamixed  bag.%XXXXxX@XxXXX%XԀWhenthecompany%XXXXxX=XxXXX%XsBoarddecidedtogoforwardtoapointsbasedsystemandtocreate !  %XXXXxXAXxXXX%XClubSunterra,%XXXXxX@XxXXX%XԀhesaidthatJimNoyesassumedtheresponsibilitytopulltogetherateamto P#" implementtheprogram.Hedescribedthisas%XXXXxXAXxXXX%Xamajorundertaking.%XXXXxX@XxXXX%XԀFreydescribedtheMaster  %p $ AffiliationAgreementnegotiatedwithRCIandthecontractwithRCCtopurchasethePremier &@"& softwarepackage.HetestifiedthatPremierwasnewandwaspurchasedonan%XXXXxXAXxXXX%Xasis%XXXXxX@XxXXX%XԀbasis ( $( becauseithadnotbeenbetatestedanddidnotcontainaclubmodule.Sunterrawasinterestedin *%* 3  3 3  evaluatingthenewsoftwarebecauseitwason%XXXXxXAXxXXX%Xsuchatighttimeframe.%XXXXxX@XxXXX%XԀHesaid,%XXXXxXAXxXXX%XButnobody  atthetimehadanideaexactlywhatitwas.%XXXXxX@XxXXX%XԀAccordingtoFrey,itfelltoVandercookandE&Y  toevaluatethePremiersoftwareandprepareitforimplementation.HedescribedtheSteering P CommitteemeetingsofSunterraseniorexecutivesashighlevelmeetingsduringwhichJim  l Noyesplacedamajorfocusonobtainingupdatesandmaking%XXXXxXAXxXXX%Xsurethathisseniormanagement  8 team%XXXXxX@XxXXX%XԀwassupportingGibbsinanythingthatheneeded.Theinferencetobedrawnfromhis    testimonyisthattheE&YpersonneldominatedtheSWORDProjectteamandthat,althoughhe   hadreservationsaboutthefeesandratesbeingchargedbyVandercookandE&Y,hewas T  compelledtosigntheengagementletteronMay21,1998attheinstructionofhissuperior,Jim  p Noyes.Critically,FreytestifiedthatVandercookneveradvisedhim,priortoMay21,1998,that < theschedulehadnoslackandnoroomforinevitableproblemsandthattherolloutschedule  beyondthebetasitewasabsurd.Hesaidthathewouldnothavesignedthecontractifhehad  beenawareofthosefactsbuttheydidnotcometolightuntilthebetasitetestatCypressPointe P attheendofJune,1998. l 4IntheCourt%XXXXxX=XxXXX%Xsjudgment,plaintiff%XXXXxX=XxXXX%Xsevidenceisinsufficienttomeettheclearand 8 convincingstandardofproofforfraud.Inthefinalanalysis,thematerialfactswhichplaintiff  contendswereeithermisrepresentedorconcealedherearetheincompletenessofthePremier !  softwareinMay,1998,itsunreadinessforbetasitetestingatCypressPointeinJune,1998and P#" itsinabilitytosupportarolloutatotherscheduledresortsthroughouttheremainderofcalendar %l $ year1998.WhilethesefactsmaymeetthetestformaterialityestablishedunderMarylandlaw, &8"& see,e.g.,Grossv.Sussex,332Md.247,258(1993),theCourtdoesnotbelievethattheevidence ($( issufficienttoestablishthattheyweremisrepresentedtoorconcealedfromtheplaintiff.What *%* 4  4 4  theevidencedoesshowisthatthe%XXXXxXAXxXXX%XClubSunterra%XXXXxX@XxXXX%XԀandSWORDProjectweredeadlinedriven  fromthetimethatthecompanymadeitsWallStreetannouncementinSeptember,1997for  implementationbytheendofcalendaryear1998.AccordingtothetestimonyofChuckFrey, L thecompanydidnothavethepersonneltoevaluateandimplementthePremiersoftware.E&Y  h andGibbsVandercookwerebroughtonboardtoundertakethatengagementasapartofa  4 SWORDProjectteamwhichincludedSunterrapersonnelinsignificantnumbersandat   significantpositionsthroughoutthedurationoftheproject.Monthlystatusreportswere |  providedbySandyWorthingofE&YfortheSWORDProjectteamandpresentedbyGibbs H  VandercooktoSunterra%XXXXxX=XxXXX%XsseniorexecutivemanagementteamatSteeringCommitteemeetings. d Itwastheleadersoftheplaintiffcorporation,JimNoyes,ChuckFreyandGigiGiannoni,who 4 orchestratedthedismissaloftheCIO,ChuckLisinski,andreplacedhimwithGibbsVandercook.  ByFrey%XXXXxX=XxXXX%Xsownadmission,thePremiersoftwarewasanunknownquantity.IfSunterra%XXXXxX=XxXXX%Xssenior | executivemanagementteamelectedtodelegatethetechnologicalaspectsofitscriticalnew L SWORDProjecttoGibbsVandercookandhisE&Ycolleagues,whilemaintaininga%XXXXxXAXxXXX%Xbig h picture%XXXXxX@XxXXX%XԀfocusthemselves,thatevidenceisinsufficienttoestablishfraudonthepartofthe 8 defendant.Thisisparticularlytrue,whentheevidenceoffraudintheinducementofthe  arbitrationprovisionisexaminedclosely. !  5Thereissimplynoevidencethattheplaintiff%XXXXxX=XxXXX%Xsfraudtheoryisrelatedspecifically P#" tothemediation/arbitrationclauseintheMay21,1998agreement,asdistinguishedfromthe  %p $ othertermsandconditionsincorporatedinthatsocalled%XXXXxXAXxXXX%Xletterofunderstanding.%XXXXxX@XxXXX%XԀAdraftofthe &<"& agreement,containingthesamearbitrationclausewasprovidedtoChuckFreyinMarch,1998 ( $( (defendant%XXXXxX=XxXXX%Xsexhibit18).HishesitationaboutformalizingtheagreementwithE&Yrelatedto *%* 5  5 5  whathethoughtwereexcessiverates,feesandexpenses.Somedelayinformalizingthe  agreementmaybeattributedtoSunterra%XXXXxX=XxXXX%XsinitiativetohaveE&Yaccepttimesharearrangements | aspartialcompensationforitsservices.WhenChuckFreywasasked,however,whetherhewas L awareofthealternativedisputeresolutionprovisionsintheMay,1998agreement,headmitted  h thathewasandthathehadreaditandthattheprovisionsseemedtobeofnoconsequencetohim  4 atthattime.EvenassumingthatmaterialfactsweremisrepresentedorconcealedfromFreyand   SunterrabyVandercook,theevidencedoesnotsupportaparticularizedpurposetoobtain |  Sunterra%XXXXxX=XxXXX%Xsagreementtosubmitfutureclaimstoarbitration. H  Infact,theevidencedemonstratedthatSunterra,duringtherelevant1998time h period,hadinhousecounselbythenameofScottPodvin,whoseofficewaslocatednearthatof 4 ChuckFreyattheMetroWestofficesite.AlthoughFreytestifiedthathedidn%XXXXxX=XxXXX%Xtrecalldiscussing  thecontractwithScottPodvin,headmittedhehadregularaccesstohimbetweenMarch30and  May21,1998.Heexplained,however,thatthiswasJimNoyes%XXXXxX=  6 '  5        XxXXh%Xcontracttonegotiate.The L evidencefurthershowedthatFreyandNoyesmayhavehadsomediscussionsaboutthe l economictermsoftheE&Ycontractbutthereisnosuggestionthateitherofthemwasconfused 8 orsurprisedbythearbitrationclause.  Thiswasneitherthefirstnorthelastagreement,executedbySunterra !  CorporationwithE&Y,containinganalternativedisputeresolutionprovision.ChuckFrey L#" testifiedthatthecompanyhadenteredintoa1996contractwithE&Ywithasimilarclauseand %h $ theevidenceindicatesthatSunterraenteredintoa1999agreementwithVandercookandthe &4"& E&Yengagementteamandthatagreementcontainedanidenticalmediation/arbitration  agreementtotheoneatissuehere. | 7Thereisnoevidencethattheplaintiffpaidparticularattentiontothe H mediation/arbitrationprovisionintheMay,1998agreementortoanyothertermorconditionof  d theagreementpriortotheinitiationofthislawsuitinMayof2002.Sunterraneversoughtto  0 terminateitsagreementwithE&Y,aspermittedunderthetermsofthecontract.Itnevermade    anydemanduponE&Yto%XXXXxXAXxXXX%Xcure%XXXXxX@XxXXX%XԀdeficiencies  8 '  6        inthePremiersoftware,aspermittedunderthe x  termsofthecontract.Itraisednoobjectiontotheidenticalmediation/arbitrationprovisioninthe H  1999agreementwithE&Y.EvenifSunterrabelievedthatitwouldbe%XXXXxXAXxXXX%Xsuicide%XXXXxX@XxXXX%XԀtoterminate d abruptlyitsrelationshipwithE&Ybeforeitwasinapositiontoassumeresponsibilityforthe 4 SWORDProject,theevidencefailstosupportthatanydiscussionwaseverundertakentorelieve  thecompanyofthearbitrationprovisionsagaincontainedinthe1999agreementwithE&Y.As | defendantrepeatedlyasserted,plaintiffneversoughttorescindorrevokeanyofthetermsofthe H 1998agreementpriortofilingsuitinthiscase.Tothecontrary,E&Ywasfullypaidforits d servicesandretainedbySunterraforcontinuedworkontheSWORDProjectunderthe1999 0 agreement.TheCourtdoesnothavetofind,underMarylandlaw,thatthesefactsestablish  waiverorratificationbecauseitispatentlyobviousthattheevidencecannotestablishthatthe x!  arbitrationprovisionsinthe1998agreementwerefraudulentlyprocured.Infact,whatthe D#" evidenceshowedisthatthepartieshaveadisputeaboutthevalueoftheservicesperformedby %` $ E&Yunderthe1998agreementandthistheyareentitledtoaddressinarbitration.Duringthree &,"& 7 7 7  fulldaysofevidentiaryhearing,however,therewasalmostnodiscussionastohowthe  arbitrationprovisioninthe1998agreementwasobtained,otherthanthatitisapartofacontract | withwhichSunterraisnolongersatisfied.Thereisnodirectevidencethatthepartiesevereven H gaveindependentthoughttothearbitrationprovision,asopposedtoanyoftheothertermsor  d conditionsofthe1998agreement.  0 9Astoplaintiff%XXXXxX=XxXXX%Xssecondtheoryconcerningconstructivefraudandrecisionofthe    1998contract,theCourtfindsthattheplaintiffwasabletoestablishthatGibbsVandercook, |  E&Y%XXXXxX=XxXXX%XsengagementpartnerontheSWORDProject,didassumethepositionofactingCIOat H  SunterrafromsometimeinFebruary,1998untilColinDrummondcameonboardinJune,1998. h Inthatcapacity,hemayhavehadconflictingloyaltiesbut,underMarylandlaw,theCourt 4 believesthatheassumedaconfidentialrelationshipwithplaintiffcorporation.Thedifficulty  withplaintiff%XXXXxX=XxXXX%Xssecondtheory,however,isthatthesameevidenceaddressedabovewhichfailsto | provebyclearandconvincingevidencethatthearbitrationprovisionwasfraudulentlyobtained L servestomeetdefendant%XXXXxX=XxXXX%Xsburdenofproofthattheagreementtoarbitratewasreached h voluntarilyandknowinglybySunterra.Thereissimplynoreasonableinferenceorconclusionto 8 bedrawntothecontrary.  Thepartiesweresophisticatedbusinessentitiescontractingonequalfootingwith !  respecttotheirrightsandresponsibilities.ThefactthatSunterraurgedE&Ytoparticipateinthe L#" ClubSunterrapointsprogramonbehalfofitsemployees(negotiationswhichapparentlydelayed %h $ executionofthewrittenagreement)evidencesarmslengthbargainingbetweenapublic &4"& companyandoneoftheworld%XXXXxX=XxXXX%Xslargestpublicaccountingfirms.Undersuchcircumstancesthe ($( courtshavebeenreluctanttoimposeanydisclosurerequirementsnotcontainedintheagreement *%* 9 9 9  itself.SeeMartinMariettaCorp.v.InternationalTelecommunicationsSatelliteOrg.,991F.2d  94,98(4thCir.1992).  | TheconfidentialrelationshipcreatedbyVandercook%XXXXxX=XxXXX%XsserviceasSunterra%XXXXxX=XxXXX%Xsacting  CIOisnotthetypeofsituationwhichgenerallygivesrisetotortdutiesofduecarewithout  evidencetoestablishthatplaintiffcorporationwas%XXXXxXAXxXXX%Xapeculiarlyvulnerableparty.%XXXXxX@XxXXX%XԀId.,991F.2d L at98.Mostimportantly,thereisnorecordbasistoconnectanyarguableviolationofE&Y%XXXXxX=XxXXX%Xs  l fiduciarydutiestoaparticularizedefforttoobtainanarbitrationagreementfromplaintiff.Thus,  < Sunterra%XXXXxX=XxXXX%Xssecondtheorythatthearbitrationagreementshouldberescindedduetoconstructive    fraudfailsaswell.   TheCourt%XXXXxX=XxXXX%Xsdeterminationthatplaintiffhasfailedtoestablishthatthe T  mediation/arbitrationprovisionintheMay,1998agreementwasobtainedbyfraudisnot $t intendedtodisposeofanyotherclaimsplaintiffmayhaveagainstdefendant,ifthedispute @ reachesarbitration.OnJanuary30,2003thisCourtdeterminedthatplaintiff%XXXXxX=XxXXX%Xsallegations,as   containedintheamendedcomplaint,raisedasubstantialandbonafidedisputeaboutthevalidity  ofthearbitrationprovisioninthe1998agreement,compellingtheCourt%XXXXxX=XxXXX%Xsthreshold X determinationofarbitrability.QuotingJudgeCalabresiinGartenv.Kurth,265F.3d136(2d (x Cir.2001),theCourtnotedthatitwouldbeplaintiff%XXXXxX=XxXXX%Xsburdentoestablishasubstantial D relationshipbetweentheallegedfraudandthearbitrationclauseinparticular,somethingmore  thanamereclaimthatthearbitrationclausewasanelementoftheschemetodefraudbut, !  particularizedfactsspecifictothearbitrationclauseindicatinghowitwasusedtoeffectthe \#" schemetodefraud.Theevidenceelicitedduringthethreedayevidentiaryhearingfailedto (%x $ establishbyapreponderanceoftheevidenceorclearandconvincingevidencetheparticularized &D"& factsspecifictothearbitrationclausewhichwouldsatisfythisCourtthatthatprovisionwas ($( fraudulentlyobtained.TheCourtiscompelledtofind,therefore,thatthemediation/arbitration *%* provisionintheMay21,1998agreementisvalidandenforceable.Accordingly,plaintiff%XXXXxX=XxXXX%Xs  remainingcontentionsmust   Ӏberesolvedthroughthosemediation/arbitrationprocedures. L  h򀀀   ALBERTJ.MATRICCIANI,JR.   Judge |  June11,2003 b   h  hE.` hp x (#X(#Ecc:  ArnoldM.Weiner,Esquire h      p  .~   d  J  0        x  ^  D  *z  `  F  ,         t!   Z"!  @#"  &$v#   %\ $  %B!%  &("&  '#'  (#(  )$)  p*%*  V+&+ ЇGRAYANDASSOCIATES,LLC, h   *  INTHE    hE.` hp x (#X(#ETrusteeundertheLitigationTrustestablished    hE.` hp x (#X(#EpursuanttotheReorganizationPlanof  *  CIRCUITCOURT |   hE.` hp x (#X(#ESunterraCorporationandtheRelated b   hE.` hp x (#X(#EDebtors,etal, `     h   *  FOR H   hE.` hp x (#X(#E  hE.` hp x (#X(#EPlaintiffs    h   *  BALTIMORECITY  d   hE.` hp x (#X(#E  hE.` hp x (#X(#Ev.   `     h   *  Part20  0   hE.` hp x (#X(#E  hE.` hp x (#X(#EERNST&YOUNGLLP   h   *  CaseNo.:24C02002963     `  hE.` hp x (#X(#E    X` Defendant    h   * x   X****************************************************************************** ^    Ӏ ORDER  D     ForthereasonsmorespecificallysetforthintheCourt%XXXXxX=XxXXX%XsMemorandumand ` Opinionofthisdate,itisthis11thdayofJune,2003,bytheCircuitCourtforBaltimoreCity, 0 Part20,   ORDERED asfollows: x 07XXxX" "  XE.` hp x (#X(#E  XxXX07 2  7  .3      Defendant%XXXXxX=XxXXX%Xsmotiontodismisstheamendedcomplaintor,inthealternative,tostay D pendingarbitrationis GRANTED ,andthepartiesareorderedtoproceedto d mediation/arbitrationinaccordancewiththeprovisionsoftheirMay21,1998agreement. ݌ 0 Ќ X$ X(#X(#$   07XXxX" "  XE.` hp x (#X(#E  XxXX07 $2  8  .3      Plaintiff%XXXXxX=XxXXX%Xsmotionforstayofarbitrationis DENIED . $݌  Ќ X$ X(#X(#$   07XXxXXxXX07 h򀀀 %d $ ALBERTJ.MATRICCIANI,JR. %J!% Judge &0"&  h  Xcc:  ArnoldM.Weiner,Esquire h    (#(   XE.` hp x (#X(#EIrvinB.Nathan,Esquire )$)   E.p` hp x (#X(#EPaulF.Strain,Esquire h      p KendallMillard,Esquire x*%*   XE.` hp x (#pX(#EIrvinB.Nathan,Esquire ^+&+   XE.p` hp x (#X(#EPaulF.Strain,Esquire h      p KendallMillard,Esquire     |  b  07XXxX E.` hp x (#pX(#E