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Wartzman v. Hightower Productions, Ltd.

Court of Special Appeals of Maryland
456 A.2d 82 (1983)

Wartzman v. Hightower Productions, Ltd.


Several men wanted to employ an entertainer to break the Guinness Book of World Records for sitting atop a flagpole. These men approached the law firm of Wartzman, Rombro, Rudd and Omansky, P.A. (the law firm) (defendant), and hired attorney Wartzman to set up a corporation for the venture. The men informed Wartzman that they would need to sell stock in order to raise the funds necessary to finance the venture. Wartzman filed the articles of incorporation, creating Hightower Productions, Ltd. (Hightower) (plaintiff). The articles of incorporation authorized the corporation to issue one million shares of stock at 10 cents per share, for a total of $100,000. The men began developing the project, including setting up a corporate account, opening an office, hiring their entertainer, constructing the premises within which the entertainer would sit on top of the flagpole, and scheduling press events for the stunt. Hightower raised $43,000 by selling stock. However, Hightower became low on funds. Just two weeks before the stunt, Wartzman informed Hightower that it could not sell anymore stock because the corporation was “structured wrong.” Specifically, Wartzman failed to prepare an offering memorandum and also failed to have Hightower make required disclosures to prospective investors. Wartzman informed Hightower that it would need to hire a securities attorney, which would cost between $10,000 and $15,000. Wartzman offered to set up the meeting with a securities specialist. Hightower asked Wartzman to have the firm cover the cost because Hightower could not do so, but the request was refused. Hightower hired substitute counsel. Hightower learned that, because it was not in compliance with securities laws, the initial $43,000 investment would need to be placed in escrow, Hightower would need to hire a securities specialist, and that there would be an additional six to eight weeks of work before Hightower could sell additional stock or take their stunt across state lines. Hightower filed suit against Wartzman. A jury awarded Hightower damages reflecting its expenditures for relying upon the contract between itself and the law firm. The law firm appealed to the Court of Special Appeals of Maryland. Hightower filed a cross appeal, seeking prejudgment interest.

Rule of Law


Holding and Reasoning (Getty, J.)

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