McDonald & Eudy Printers LLC v LTS Home Improvements

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MCDONALD AND EUDY PRINTERS LLC v. LTS HOME IMPROVEMENTS, ET AL.

No. 244-2021

Court of Special Appeals of Maryland

May 18, 2022

UNREPORTED

Circuit Court for Prince George's County Case No CAL2013614.

Reed Ripken, Sharer, J. Frederick (Senior Judge, Specially Assigned), JJ.

OPINION^[*]

Ripken, J. McDonald & Eudy Printers LLC ("McDonald") filed suit in the Circuit Court for Prince George's County against LTS Home Improvements ("LTS"), a sole proprietorship, and its owner, Lou Sequenzia ("Sequenzia"), for breach of contract relating to roof repair services. The court entered a default judgment in favor of McDonald. The court held a hearing on damages. At the conclusion of the hearing, the court ruled that McDonald failed to prove its damages and awarded it zero dollars. McDonald timely appealed.

For the reasons explained below, we shall affirm.

PROCEDURAL AND FACTUAL BACKGROUND

In July 2020, McDonald filed a complaint against LTS and Sequenzia for breach of contract. The complaint alleged as follows: In June 2017, McDonald contracted LTS to repair the roof of McDonald's production plant in Temple Hills, Maryland. Repairs took eight months to complete, and McDonald paid LTS in full. Eventually, McDonald's roof began leaking. LTS attempted to address the issue, but the roof continued to leak. A different contractor informed McDonald that LTS's deficient repair work had caused the leak. The complaint sought $118, 814 in damages from LTS and Sequenzia.

No answer was filed by LTS or Sequenzia. On February 12, 2021, the circuit court entered an order of default against LTS and Sequenzia. On March 23, 2021, the court held a remote hearing to determine McDonald's damages. McDonald's vice president testified on its behalf as follows: McDonald accepted written proposals from LTS for the repair work, which involved sealing the roof with spray foam. The parties reached an oral agreement concerning the work, under which McDonald paid $141, 689. After LTS completed the work, McDonald requested that LTS return to address leaks that were becoming progressively worse. Sequenzia brought a specialist to review the work, and Sequenzia assured McDonald that the leaks were unrelated to the application of the spray foam. McDonald had another contractor, with a company called American Homes Specialists, inspect LTS's work. The McDonald vice president stated that American Homes Specialists was "one of three" companies that came to inspect the damage to the roof. The American Homes Specialists contractor determined that LTS had not properly completed the repairs. He estimated it would cost $178, 000 to properly preform the repair and to remediate damage caused by LTS's deficient performance. McDonald also sought costs for its legal expenses: the vice president testified that McDonald's counsel spent $2, 099.29 for work performed by counsel and $259 for service on Sequenzia and LTS.

Sequenzia appeared at the hearing on damages pro se. The court permitted Sequenzia to cross-examine McDonald's vice president, who explained that McDonald's damages resulted from LTS's failure to apply spray foam in the proper thickness and from its application in such a way that screws were popping through the foam. The vice president stated that besides American Home Specialists, a spray foam company called SPF Roofing had found LTS's work deficient. On cross-examination, Sequenzia asked to see either photographs or a report of the damages. McDonald did not have photographs. Sequenzia also elicited testimony from McDonald's vice president that another McDonald executive had recently sold his home to the owner of American Home Specialists.

In his own direct testimony, Sequenzia stated that American Home Specialists was a commercial roofer rather than a specialist in spray foam.

In an oral ruling, the court found as follows:

And, number one, these damages that are being testified to"I have Mr. McDonald talking about a particular company that provided some estimate. I have another testimony contradicting that the estimates that were provided do not even do that kind of work.

There are no photographs for the Court to even observe as to what, if any, damages actually occurred.

And so while the Court would find that with respect to"there has not been a motion to vacate the default judgment, there has not been a request to vacate the default judgment, it was just merely argument.

But as to damages, the Court cannot find that the Plaintiff met by a preponderance of the evidence the amount of damages. And so, therefore, damages awarded will be zero.

The court denied McDonald's request to be heard on the damages ruling. McDonald timely appealed to this Court.

DISCUSSION

On appeal, McDonald argues first that the circuit court improperly considered liability, where the issue before the court was the amount of McDonald's damages. Second McDonald argues that the court erred by awarding zero dollars in damages.

The standard of review for an appeal from a bench trial is set out in Maryland Rule 8-131(c):

When an action has been tried without a jury, the appellate court will review the case on both the law and the evidence. It will not set aside the judgment of the trial court on the evidence unless clearly erroneous, and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses.

"[W]e assume the truth of all the evidence relied upon by the trial court, and of all favorable inferences fairly deducible from that evidence." Cherry v. Mayor and City Council of Baltimore City, 475 Md. 565, 594 (2021) (quoting Leavy v. Am. Fed. Sav. Bank, 136 Md.App. 181, 200 (2000)).

A circuit court's ruling that a party failed to meet their burden of persuasion on a factual issue is not clearly erroneous so long as the record reveals "a state of honest doubt" about that issue. Bricker v. Warch, 152 Md.App. 119, 137 (2003) (quoting Starke v. Starke, 134 Md.App. 663, 680"81 (2000)); see also Omayaka v. Omayaka, 417 Md. 643, 658"59 (2011) ("Although it is not uncommon for a fact-finding judge to be clearly erroneous when he [or she] is affirmatively persuaded of something, it is . . . almost impossible for a judge to be clearly erroneous when he [or she] is simply not persuaded of something." (emphasis in original)). The court reviews questions of law de novo. Anderson v. Great Bay Solar I, LLC, 243 Md.App. 557, 582 (2019).

"[T]he entry of a judgment by default in a claim for unliquidated damages merely establishes the non-defaulting party's right to recover." Greer v. Inman, 79 Md.App. 350, 356 (1989). "The general rule, therefore, is that, although the defaulting party may not introduce evidence to defeat his opponents' right to recover at the hearing to establish damages, he is entitled to present evidence in mitigation of damages and cross examine witnesses." Id. at 356"57 (internal quotation marks omitted).

Compensatory damages must be proven with "reasonable certainty, and may not be based on speculation or conjecture." Asibem Assocs. v....