Ambling Management Co. v. University View Partners

581 F.Supp.2d 706

AMBLING MANAGEMENT COMPANY, Plaintiff, v. UNIVERSITY VIEW PARTNERS, LLC, et al., Defendants.

Civil No. WDQ-07-2071.

United States District Court, D. Maryland, Northern Division.

October 8, 2008.

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Linda S. Woolf, Joseph Benjamin Wolf, Thomas J.S. Waxter, III, Goodell Devries Leech and Dann LLP, Baltimore, MD, for Plaintiff.

Thomas M. Wood, IV, Neuberger Quinn Gielen Rubin and Gibber PA, Nathaniel Edmond Jones, Jr., James Howard Fields, Jones and Associates PC, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

WILLIAM D. QUARLES, JR., District Judge.

Ambling Management Company ("Ambling") sued University View Partners, LLC ("UVP"), Otis Warren Management Company, Inc. ("OWMC"), and Otis Warren, Jr. ("Warren") (collectively the "Defendants") for breach of contract and tortious interference with contract. UVP counterclaimed for breach of contract, negligence, intentional misrepresentation, and unjust enrichment. Pending are (1) UVP's motion for summary judgment on Ambling's breach of contract claim (Count I) and Counts I through VI of its counterclaim; (2) Warren and OWMC's motion for summary judgment on Ambling's tortious interference with contract claim (Counts II and III); (3) Warren and OWMC's motion for leave to file excess pages; (4) Ambling's cross-motion for summary judgment on its breach of contract claim and UVP's counterclaims; and (5) Ambling's motion for leave to file a surreply. For the following reasons, UVP's motion for summary judgment will be denied, Warren and OWMC's motion for summary judgment will be granted, Warren and OWMC's motion for leave to file excess pages will be granted, Ambling's motion for summary judgment will be granted in part and denied in part, and Ambling's motion for leave to file a surreply will be denied.

I. Background

UVP owns University View Apartments ("University View"), an apartment building in College Park, Maryland that houses University of Maryland students. UVP's partners are Clark University View LLC (50 percent ownership), Warren (25 percent),¹ Stephen Garchik (17 percent), and Stephen McBride (7.5 percent). Ambling is a property management company that specializes, in student housing.

On April 13, 2004, UVP and Ambling entered into an agreement (the "Agreement") under which Ambling would manage University View and be its leasing agent until July 31, 2009. Warren was designated the Owner's Representative under the Agreement. James E. "Hugh" Hodge, Ambling's Senior Vice President of Student Housing, oversaw Ambling's operations under the Agreement, and delegated oversight to Julianne Sullivan and Deena Downey, Ambling's Regional Property Managers.

The Agreement provided that Ambling was to operate and maintain University View in a "first class manner."² Agreement at §§ 2.2, 3.1(a). The Agreement also required Ambling to employ capable staff to maintain and lease University View. Id. at § 3.2(a). If Ambling failed to comply with the Agreement and the default continued for fifteen days after UVP gave Ambling notice, UVP could terminate the Agreement. Id. at §§ 7.2(e),(g). UVP could terminate without notice if Ambling misappropriated funds, committed gross negligence, willful misconduct, fraud, malfeasance, or breached a fiduciary duty, and did not make restitution within five days and bar the responsible employee from University View. Id. at § 7.2(c).

University View's first year of operation was the 2005-2006 school year. Although utilities were included in the rent, UVP intended to include in leases a provision requiring a tenant to pay an extra fee if he used more utilities than allotted under the lease. This "utility cap" provision allowed UVP to recoup money spent when a tenant overused utilities. Through a drafting mistake,³ the 2005-2006 leases listed utility caps that were "per-tenant." However, the dollar caps listed were calculated per-apartment. As a result, individual tenants never exceeded the utility caps.⁴ UVP did not recoup any extra money it spent on utilities.

When preparing the leases for the 2006-2007 school year, UVP sent Ambling a new utility cap provision that included a table in which dollar amounts were to be inserted. UVP asserts that it sent Ambling the provision only for review. Ambling added the provision to the new leases and retained the cap provision from the 2005-2006 leases in the leases signed by the tenants.⁵ As a result, the new leases were confusing and potentially contradictory. Also, the table inserted into the leases did not include the cap amounts.

After discovering the problem, UVP asked Ambling to fix it. In August 2006, Downey prepared an addendum to the lease that provided substitute utility cap language. The 305 tenants who moved in after the addendum was included signed it. However, UVP could not enforce the addendum on the 751 tenants who had previously moved in; UVP did not enforce the new addendum.

UVP also complained that Ambling did not hire and retain competent staff, including a full-time property manager. UVP alleges that Ambling's staff required constant supervision. UVP believes that Ambling's use of temporary employees led to constant turnover and an inefficient workplace. According to UVP, this led to unresponsiveness to tenants' concerns, and a deteriorating relationship with the University of Maryland and local law enforcement. In February 2005, Warren sent William Barkwell, Ambling's President, a letter stating his discontent with the appearance of the leasing office and the staffs ability to lead and handle applications.

On July 25, 2005, UVP notified Ambling that it had defaulted on various sections of the Agreement.⁶ On July 29, 2005, Ambling and UVP met to discuss Ambling's alleged deficiencies. UVP continued to be dissatisfied with Ambling's performance and in August 2006, Warren sent Barkwell a letter notifying him that UVP had decided that Warren would manage University View.⁷ On September 11, 2006, Barkwell sent a letter to Warren stating that Ambling had not defaulted, and it expected to continue its performance under the Agreement. On September 13, 2006, UVP notified Ambling that it had defaulted and UVP was terminating the Agreement, effective October 15, 2006.

On August 3, 2007, Ambling sued UVP for breach of contract and OWMC and Warren for tortious interference with contract. On August 29, 2007, UVP counterclaimed, alleging breach of contract,⁸ negligence, intentional misrepresentation, and unjust enrichment. On December 19, 2007, Ambling increased its ad damnum.

On August 8, 2008, UVP moved for summary judgment on Ambling's breach of contract claims and Counts I through VI of its counterclaim.⁹ On the same day, Warren and OWMC moved for summary judgment on Ambling's tortious interference with contract claims. Warren and OWMC subsequently moved for leave to file excess pages.¹⁰ On August 31, 2008, Ambling moved for summary judgment on its breach of contract claim and UVP's counterclaims. On September 3, 2008, Ambling moved for leave to file a surreply to the Defendants' motion for summary judgment.

II. Analysis

A. Ambling's Claims

1. Standard of Review

Under Rule 56(c), summary judgment is appropriate when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The Court must view the facts and reasonable inferences drawn therefrom "in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) (per curiam)). The opposing party, however, must produce evidence upon which a reasonable factfinder could rely. Celotex, 477 U.S. at 324, 106 S.Ct. 2548. A mere "scintilla" of evidence is insufficient to preclude summary judgment. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

2. Breach of Contract

UVP argues that its termination did not breach the Agreement because Ambling defaulted by committing gross negligence and malfeasance, and failing to manage and maintain University View in a first class manner. Ambling counters that (1) UVP breached by not providing proper notice under the Agreement, (2) its actions did not constitute gross negligence or malfeasance, and (3) UVP cannot claim gross negligence or malfeasance because its termination notice did not mention those acts. UVP replies that (1) Ambling had actual notice, (2) Ambling, being in breach of the Agreement, cannot recover for UVP's breach, (3) the July 2005 letter was sufficient notice, and (4) the provision relating to gross negligence does not require notice.

In Maryland, the interpretation of a contract is a question of law, and courts interpret contracts objectively. Nova Research, Inc. v. Penske Truck Leasing Co., 405 Md. 435, 448, 952 A.2d 275, 283 (2008). The Court seeks to ascertain the parties' intent. Phoenix Servs. Ltd. P'ship v. Johns Hopkins Hosp., 167 Md.App. 327, 391, 892 A.2d 1185, 1223 (Md.Spec.App.2006). If a contract is unambiguous, the Court gives effect to the terms' plain meaning, not what the parties subjectively intended. Nova Research, Inc., 405 Md. at 448, 952 A.2d at 283. "A contract is ambiguous if, when read by a reasonably prudent person, it is susceptible of more than one meaning." Id. "A contract is not ambiguous merely because the parties do not agree as to its meaning." Floyd v. Mayor of Baltimore, 179 Md.App. 394, 451, 946 A.2d 15, 48 (Md. Spec.App.2008).

To determine whether contract language is susceptible to more than one meaning, the Court...