Your broken contract may limit your recovery.

Reported court cases capture a moment. We can look back at reported decisions for detailed and accurate portrayal of historical events, and conditions. The recent reported decision in AAC HP Realty v. Bubba Gump Shrimp Co. Restaurants, Inc. gives a glimpse through the windows of Baltimore City's once-cherished Harbor Place, to see the consequences of decades long neglect by its owners and operators.

The case arose from complaints that Harbor Place tenant Bubba Gump Shrimp Co. Restaurant brought against its landlord that:

"Shortly after it began its operations at Harborplace in 2012, Bubba Gump observed that the landlord was not maintaining the property in good order and repair. At trial, the restaurant presented ample evidence of poor conditions in the common areas, including water leaks, hanging wires, dirty bathrooms, broken concrete, chipping and peeling paint, escalators that did not work, planters containing trash and debris, rusted metal stairs, and rodent infestation."

This photo of Bubba Gump Shrimp Co. is courtesy of TripAdvisor

These conditions lead Bubba Gump to sue the landlord for breach of contract, alleging that its lease required the landlord to maintain common areas. Bubba Gump alleged that rat infestation and dirty common areas evidenced a breach of the contractual promises. Bubba Gump estimated that over 20% of its greater than $1 MM yearly rent was attributable to the common area maintenance that was not being performed by the landlord.

As is typical in cases for breach of contract, Bubba Gump's lawyers added additional alternative claims for  unjust enrichment and other claims for equitable relief. It was the appellate court's discussion of this group of equitable claims which gives us a snapshot of Maryland's current law on commercial disputes.

The case reminds lawyers that equitable remedies, like unjust enrichment, are not available where the parties have a contract in place for the same  subject in dispute, and that contract fully covers the dispute. There are exceptions where a fraud has been committed at the inception of the contract (and not its performance), or the existing contract does not fully cover the subject matter of the dispute. This appellate court saves all Maryland lawyers time in the library by reminding that "[n]o reported decision applying Maryland law has ever upheld a judgment based on any of these exceptions."

For this reason, the trial court's decision granting Bubba Gump an equitable discount on rent owed under the leasing contract was reversed. Bubba Gump was entitled to recover contract damages, but the appellate court instructed that the contract also operated to limit the categories and amounts of damages a commercial tenant may collect.

In the end, broken glass, dirty restrooms and rat infestation at Harbor Place netted Bubba Gump recovery of its out-of-pocket expenses and some attorney fees, but no lost profits or return of rent.

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It's a rebirth, a renaissance!

"Rest when you're weary. Refresh and renew yourself, your body, your mind, your spirit. Then get back to work."-- Ralph Marston

The day-to-day of law practice is non-stop. A law office has hundreds of "bosses," including clients, judges, and  court administrators. All are entitled to our best level of service. The rejuvenation of our office space reflects our desire to continue to better serve all of you.

After nine years in our space, walls were scuffed, carpets worn, and colors dulled. It was time to freshen up our space and slightly reconfigure a few rooms for increased efficiency and access.

The work is going smoothly because we have an existing back-bone of cloud services- our staff and attorneys can access all essential data remotely. Clients who need immediate access to their files can also utilize their client portal accounts.

We practice in the State and federal courts of Maryland and the District of Columbia. All of our federal court cases are immediately accessible through the court's on-line attorney access, and our clients have immediate access to the public on-line dockets. Similarly, both Maryland and D.C. courts have on-line facilities for filing, serving and review open cases.

Client and attorney meetings are being scheduled at the nearby Johns Hopkins Club and in shared conference space within our building. We remain fully accessible to all our clients and witnesses during the renovation!

The renovations should be done by early October. We look forward to your next visit, and appreciate your patience!

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A duty of candor applies in tax sale cases foreclosing rights of redemption.

Our real estate litigation practice touches some of the saddest moments of client life, such as where a family home is lost to tax sale. When real estate taxes and other municipal charges are unpaid, the municipality will auction the property to the highest bidder.  The winning bidder must pay the tax due to the municipality. The winning bidder is then given the privilege to later file a new lawsuit to permanently take the real property from the defaulted taxpayer/owner.

The lawsuit to take ownership of the property asks a judge to extinguish the title owner's "right of redemption."  This is a right to refund to the successful auction bidder the taxes paid to the municipality, plus various fees, interest and expense allowed by statute. The defaulted taxpayer/owner can make this payment, or "redemption," right up to the moment a judge's gavel falls in the lawsuit.

If that redemption is made, all is well and the taxpayer/owner is fully restored to her property.

Where the redemption is not made, usually because of the very hardships that prevented payment of the original tax bill, the court will issue a final order "extinguishing rights of redemption," and granting fee simple title to the successful bidder. This is where today's story begins.

Much of the tax sale and foreclosure process runs on the good faith and professionalism of the lawyers prosecuting the cases--- Our judges rely on truthful representations about service, the status of non-payment, and the material facts of each case. Our rules of professional conduct call this a "duty of candor."  It often requires a lawyer to disclose facts, circumstances and  controlling law that might impair or even defeat the relief she seeks from the court.

The duty of candor greases the gears that run our courts. If counsel is not deemed truthful, she will not obtain desired results. Worse, if counsel is not candid and wrongly obtains a result, then the integrity of our court system is damaged. Further to that point, in a society built on a foundation of property rights, any perversion of the court system by which ownership is involuntarily stripped from one person and awarded to another damages our Nation.

Where a lawyer and her client seeks to foreclose rights of redemption, the order issued by the court contains several requirements, all of which must be met before the lawyer's client may evict the current occupants of the foreclosed property:

1. Pay the full bid purchase price to the municipality (this is the amount bid above the amount of the delinquent tax);
2. Receive a deed from the municipality naming the new title owner;
3. Request and receive writ of possession (a court instruction to the Sheriff directing that the new owner be put in actual possession of the real property;
4. Execution of the writ by the Sheriff (after notice of a date certain, the occupants and their possessions are put out).

The redemption statute in Maryland is written so that the auction bidder has 90 days to pay the full bid price and receive a deed. If this is not done to completion, interested parties may move for a court order vacating the order foreclosing rights of redemption. This may or may not occur, as most folks subject to tax sale foreclosure are caught up in the basic need to secure safe and clean housing.

It is at this point of the proceedings that an attorney's duty of candor is most required for the just operation of our court. The statutes do not expressly say that payment must be made to the municipality before a writ of possession is requested. However, it is logical and just to anyone with a real property background that payment must be made before title can be received, and that title must be received before one has rights to actually possess property, and that one must have legal possession before relying on judicial process to evict the former owner and occupants.

This is not always the case, though, in our local court systems. Some high-volume tax sale foreclosure businessmen and their entities seek writs of possession (item #3 on the list, above) before making full payment in exchange for a deed showing their ownership. This creates the injustice of dispossessing the prior owner while depriving them of the money representing equity in the property. In short, they have lost the property, and they are simultaneously deprived of the money paid for the property.

A recent case handled by this Firm illustrates the issue, and how the court handles such lack of candor when it is revealed.

Our client, an elderly individual with dementia, lost his home to tax sale. His legal guardian could not redeem the property, and so the court issued the order extinguishing rights of redemption and directing the four items, listed above, for the transfer of ownership to the successful auction bidder.

The successful bidder, through its lawyer, made immediate request for a writ of possession, before making full payment and before receiving a title deed. The request filed with the court and upon which the judge relied did not candidly disclose that payment had not yet been made. The court issued the writ, and the Sheriff arrived to put the elderly individual out of the house, with the assistance of his care-giver and guardian.

It was only after this Firm filed a request to set aside the order for the lawyers lack of candor that the successful bidder made payment. But this payment was two months after the elderly individual was put out, and after the successful bidder spent over 50,000 renovating the property in preparation for a flip.

The judge hearing the motion found that the successful bidder had, indeed, jumped the gun to request a writ of possession before having paid for the property. This fell under a rule applicable to all lawyers and litigants, in all cases, barring claims made "without substantial justification." In this instance, like many others that go unnoticed, the successful bidder sought to use the equity in the property as a no-interest loan from the former owner to prepare the property for sale. Without court intervention, the property would have been flipped and those proceeds of sale used to fund payment to the municipality of the bid price.  The municipality would have been asked to issue the deed directly to the new third-party owner, or two deeds would have been executed simultaneously.

And throughout that process, our elderly client would have been deprived of both a home and his money. The judge was as appalled as you likely are while reading this story.  It was for the lack of candor that damages were awarded to our elderly client that included emergency hotel costs and our attorney's fees.

The duty of candor applies to all cases, in all courts. A lack of candor by your opponent, if proven, may well permit you to vacate a prior judgment or to obtain money damages, even where  all appears lost.

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Civil Litigation is a Roller Coaster!

The February 22, 2019 Manafort District of Columbia sentencing memo

Here is the Government's February 22, 2019 sentencing memo for the case in the District of Columbia.

And here are the attachments.

Don't rely on television, please read for yourself.

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