Merriweather Post Bus. Tr. v. It's My Amphitheater, Inc.

MERRIWEATHER POST BUSINESS TRUST v. IT'S MY AMPHITHEATER, INC.

No. 2594

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2018

August 6, 2020

Circuit Court for Howard County

Case No. 13-C-16-109978

UNREPORTED

Fader, C.J., Beachley, Wilner, Alan M. (Senior Judge, Specially Assigned), JJ.

Opinion by Fader, C.J.

* This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

Merriweather Post Business Trust ("Trust"), the appellant/cross-appellee, and It's My Amphitheater, Inc. ("IMA"), the appellee/cross-appellant, each seeks review of a judgment rendered by the Circuit Court for Howard County. The judgment resolved various claims relating to renovation work performed—and, importantly, not performed—at Merriweather Post Pavilion (the "Pavilion"); the effect of that work on IMA's business during the 2016 concert season; and the associated implications for the parties' respective obligations under the Operating Agreement that governed their relationship. The circuit court ultimately ruled in IMA's favor regarding both counts of its complaint and in Trust's favor regarding two of the four counts of its counterclaim. The court ordered Trust to pay $1,160,496.87 to IMA and IMA to pay $309,000 to Trust. Both parties then sought awards of attorneys' fees and costs¹ pursuant to a "prevailing party" fee-shifting provision in the Operating Agreement. The court concluded that IMA was the sole prevailing party; granted its claim for attorneys' fees of $641,859.55; and denied Trust's claim.

Trust contends that it was entitled to judgment as a matter of law on IMA's primary claim against it and also challenges the circuit court's award of attorneys' fees. IMA defends those aspects of the court's judgment and challenges the court's judgment in favor of Trust on one count of its counterclaim. We will affirm.

BACKGROUND

The Operating Agreement

During the relevant time period, Trust owned, and IMA produced music concerts at, the Pavilion, a concert venue in Columbia, Maryland. As part of a "revitalization and redevelopment plan for Downtown Columbia," Trust had agreed to renovate the Pavilion and, upon completing those renovations, to transfer ownership of the Pavilion to the Downtown Columbia Arts and Culture Commission (the "Commission").² See Howard County, Downtown Columbia Plan: A General Plan Amendment iv, 78 (2010), available at https://www.howardcountymd.gov/LinkClick.aspx?fileticket=EGk3eRK-xIA%3d&portalid=0 (accessed July 28, 2020).

In May 2014, Trust and IMA entered a ten-year Operating Agreement for the Pavilion. The parties' primary claims center on alleged breaches of provisions of that Operating Agreement. The following provisions are particularly relevant:

• Section 2(a) defines IMA's "Permitted Use" of the Pavilion, which is its operation of the property from April 1 through October 31 of each year "only for the purpose of producing musical events and any other non-musical events . . . (collectively 'IMA Events') and for food and beverage services and general merchandising in connection therewith." Section 2(a) further requires IMA to "use all commercially reasonable efforts to (i) provide at least thirty (30) IMA Events . . . per Season at the [Pavilion]," including "at least ten (10) having a paid admission of 10,000 or more people."

• Section 3(a) provides: "In consideration for the right to manage and operate the [Pavilion]," IMA agrees to make specified annual payments to Trust. The only component of those annual payments at issue here is the "Base AnnualPayment," which was set at $1 million for 2015 and scheduled to increase by $100,000 each year until it reached $1.5 million. For 2016, the year at issue, the Base Annual Payment was $1.1 million.

• Section 4 makes IMA "responsible, at its sole cost and expense, for managing and operating the [Pavilion] during the Season, including the food and beverage service consistent with the Permitted Use, as a first class major concert amphitheater."

• Section 6—after reciting that Trust had agreed to undertake renovations to the Pavilion and, upon completion, to transfer ownership of the Pavilion to the Commission—sets forth IMA's "acknowledg[ment] that [Trust] and [the Commission] may enter into a joint development agreement . . . with respect to the [Pavilion]" and provides that "IMA is or will become familiar with all the terms and conditions of" any such agreement and "agrees to consult with, cooperate with and take direction from [Trust] and [the Commission] to the extent that [Trust] determines any of the foregoing is necessary to cause the parties to the Joint Development Agreement to comply with the terms and conditions thereof."

• Section 12 addresses more directly the contemplated renovations:

? Section 12(a) provides: "IMA acknowledges and agrees that [Trust] intends to cause certain improvements to be made to the [Pavilion] . . . (the 'Required Renovations')." The "principal construction and renovation activities" were to be scheduled and performed in the offseason (i.e., not between April 1 and October 31), and Trust was required to "use commercially reasonabl[e] efforts to cause such principal construction and renovation activities to avoid interfering with IMA Events." However, "[s]hould construction or renovation materially interfere with the Permitted Use, the applicable Base Payment Amount shall be equitably adjusted to reflect such material interference."

? Section 12(b) sets the commencement of the fifth season of operation under the Agreement as the deadline for completion of the renovations. IMA has the right to terminate the Agreement if the renovations "are not substantially completed on or before" that date.

• Section 15 addresses the consequences of default events:

? Section 15(a) provides that if Trust "is in material default of its performance obligations under this Agreement, . . . IMA's sole and exclusive remedy shall be the right, following notice to [Trust] and afailure by [Trust] to cure such default within ninety (90) days after such notice, to terminate this Agreement." The sole exception identified in § 15(a) is that if Trust's breach "relates solely to precluding IMA from access to the [Pavilion] as required hereunder, IMA shall be entitled to avail itself of all available remedies at law, in equity or otherwise under the Operating Agreement."

? Section 15(b) provides that if IMA fails to make any payments owed under the Agreement, Trust has the right to charge interest on all past due amounts and "avail itself of any and all remedies at law, in equity or elsewhere under this Agreement, including, without limitation, the termination of this Agreement." If "IMA fails to perform any other obligation" under the Agreement (and absent a timely cure of such a default), Trust has "the right to avail itself of any and all remedies at law, in equity or elsewhere under this Agreement, including, without limitation, the termination of this Agreement." Finally, if "IMA fails, refuses or neglects to perform any act or fulfill any obligation required of IMA pursuant to this Agreement," and fails to cure such default after written notice, Trust is entitled to "perform or fulfill the same without prior notice to, but at the sole cost and expense of, IMA, together with a management fee of ten percent (10%)."

• Section 26 provides in relevant part: "Attorneys' Fees. If either [Trust] or IMA institutes any action or proceeding against the other relating to the provisions of this Agreement or any default hereunder, the non-prevailing party in such action or proceeding shall reimburse the prevailing party for the reasonable expenses of attorneys' fees and all costs and disbursements incurred therein by the prevailing party, including, without limitation, any such fees, costs or disbursements incurred on any appeal from such action or proceeding."

Renovations and the First Amendment to the Operating Agreement

In June 2014, a month following the effective date of the Operating Agreement, Trust and the Commission entered into a Joint Development Agreement that called for an acceleration of both the contemplated renovations to the Pavilion and the transfer of ownership from Trust to the Commission. Nonetheless, Phase I of the renovations, which was initially slated to begin at the end of the 2014 season, was delayed until March 2015.The Phase I renovations, which included "a couple of new concession stands, a box office, and new restrooms," were undertaken throughout the 2015 season.

Phase II of the renovations encompassed both a new stage house and new backstage facilities. The backstage facilities included cooking, cleaning, dressing, and production areas. At some point, it was decided both that the Phase II renovations should be enhanced from what was originally planned and that the timetable for those renovations should be accelerated. Thus, in October 2015, Trust proposed splitting Phase II into two sub-phases. Phase IIa, which consisted of constructing a new stage house with "a number of enhanced features incorporated into the design," would now require "complete demolition" of the existing stage house and construction of a new structure "approximately 40' higher than the existing Stage House." Phase IIb would include renovation of the backstage facilities.

Effective November 2015, IMA and Trust entered into a First Amendment to the Operating Agreement. The only substantive amendment was the addition of § 3(c)(ii), which provided, in pertinent part:

(ii) [Trust] shall undertake certain improvements on behalf of and for the benefit of IMA pursuant to, and as described in [specified contract documents between Trust and a construction company]. . . .

[Trust]'s agreement to undertake the Improvements and [Trust]'s obligation to continue to perform the Improvements is predicated on

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