Optimum Constr. v. Remax Realty Ctr., Inc.

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OPTIMUM CONSTRUCTION, INC., ET AL. v. REMAX REALTY CENTRE, INC., ET AL.

No. 0390-2020

Court of Special Appeals of Maryland

February 2, 2022

Circuit Court for Montgomery County Case No. 465986-V

Fader C.J., Berger, Zic, JJ.

OPINION ^[*]

Zic J.

This case arises from two commercial subleases. Appellants Optimum Construction, Inc. ("Optimum") and Amr Elrahimy, rented an office space and an event hall located within a retail building. Appellants' relationship with their landlord deteriorated and they subsequently filed suit against appellees Remax Realty Centre, Inc. ("Remax"), Buffington Enterprises II, LLC ("Buffington LLC"), Joseph Buffington, and Elizabeth Buffington, asserting breach of the leases in addition to other claims. Remax filed a counterclaim against appellants, alleging breach of contract. After a bench trial, the Circuit Court for Montgomery County determined that appellants failed to establish their claims and entered judgment in favor of appellees. Appellants subsequently appealed.

QUESTIONS PRESENTED

Appellants present the following three questions, ^[1] which we have slightly rephrased:

1. Did the court err in denying appellants' motion to dismiss Remax's counterclaim for lack of subject matter jurisdiction pursuant to § 4-401(4) of the Courts and Judicial Proceedings Article?

2. Did the court err in finding that appellees did not breach the subleases when they changed the locks without providing notice?

3. Did the court err in finding that appellees did not interfere with appellants' quiet enjoyment of the Clarksburg Room by denying appellants the right to serve food supplied by outside vendors?

For the following reasons, we hold that the circuit court did not err and affirm the court's judgment.

BACKGROUND

Buffington LLC is a Maryland limited liability company that is owned exclusively by Mr. and Mrs. Buffington. Buffington LLC owns rental property within a retail building located in Clarksburg, Maryland. Mr. and Mrs. Buffington also exclusively own another entity, Remax, which is based in Maryland. On July 15, 2012, Buffington LLC and Remax entered into a "Master lease" agreement where Buffington LLC leased part of the rental property to Remax.

Mr. and Mrs. Buffington retained office space within the property to use as a place of business for Remax. Additionally, Bennigan's, a restaurant franchise that serves Irish pub fare, rented space on the property. Bennigan's was owned and operated by Buffington Enterprises III, LLC, ^[2] another entity owned exclusively by Mr. and Mrs. Buffington.

On November 21, 2016, Remax and Mr. Elrahimy entered into a five-year sublease agreement for office space, about 1, 000 square feet, located within the building ("Office Lease"). Mr. Elrahimy used the space as his principal office for his company, Optimum, of which he is the sole owner and president. Mrs. Buffington executed the sublease on behalf of Remax. The Office Lease began on December 1, 2016 at a fixed rent of $107, 661.27, plus $32, 346.60 in additional rent for common area maintenance, utilities, insurance, and property tax.^[3]

During the summer of 2018, Mr. Elrahimy approached Mrs. Buffington about the possibility of leasing the Clarksburg Room, an event hall of about 3, 100 square feet that was located within the building. The parties met several times to discuss the opportunity and Mr. Elrahimy informed Mrs. Buffington that he could market and promote the Clarksburg Room as an event space. Mr. Elrahimy testified that it "could . . . bring in a lot of business to [Mrs. Buffington] . . . because Bennigan's is downstairs" and it is "so much easier for [him] to cater through Bennigan's." According to Mr. Elrahimy, he wanted Bennigan's to be the "preferred" caterer for events at the Clarksburg Room and "to give Bennigan's all of the alcohol packages" because he does not deal with alcohol directly due to his religious beliefs.

Mrs. Buffington, however, testified that the parties agreed that Bennigan's would be the "exclusive" caterer of food and alcohol for every event at the Clarksburg Room. She explained that due to this arrangement, she agreed to lease the Clarksburg Room at a discounted "warehouse rent" rate, which was significantly lower than the price per square foot rental rate for the Office Lease. This understanding, according to Mrs. Buffington, was a "win-win" because Mr. and Mrs. Buffington would profit from use of Bennigan's as the exclusive caterer. She further testified that she "never would've rented to [Mr. Elrahimy] if [she] knew that he was going to have outside caterers because it just wouldn't work in that space. It's a conflict of interest." The circuit court found Mrs. Buffington's testimony to be credible.

On August 29, 2018, Remax and Optimum entered into a five-year sublease agreement for the Clarksburg Room ("Clarksburg Room Lease"). Mr. Elrahimy guaranteed the Clarksburg Room Lease for and executed the sublease agreement on behalf of Optimum. Mr. Buffington executed the sublease on behalf of Remax. The Clarksburg Room Lease began on October 1, 2018 at a fixed rent of $150, 312.58, plus $98, 571.00 in additional rent.^[4] Importantly, there is no provision in the Clarksburg Room Lease regarding Bennigan's or catering requirements.

After executing the Clarksburg Room Lease, Mr. Elrahimy began transforming the Clarksburg Room into an event hall business. The relationship between Mr. Elrahimy and the Buffingtons, however, began to deteriorate due to a variety of troubles, such as maintenance issues, disputes over the parties' duties under the subleases, and disagreements concerning whether Bennigan's was the exclusive caterer for the Clarksburg Room.

In October 2018, Mrs. Buffington discovered that Mr. Elrahimy intended to use other caterers besides Bennigan's for events at the Clarksburg Room and Bennigan's would not be the exclusive alcohol supplier. On November 1, 2018, there was a contentious meeting, which was attended by Mr. Elrahimy and his wife, the Buffingtons, Jennifer Rowan, Bennigan's manager, and Bobby Smith, Optimum's office manager. At the meeting, Mrs. Buffington explained that Bennigan's was to be the exclusive caterer for all food and alcohol at the events and no other caterer could be used because, under Montgomery County regulations, only one alcohol license was permitted per address, which was held by Bennigan's. Mr. Elrahimy denied making such an agreement and stated he would use other caterers in addition to Bennigan's. Mrs. Buffington then offered to rescind the Clarksburg Room Lease, but Mr. Elrahimy rejected the offer and said he would continue his tenancy under the sublease. The parties left the meeting with no agreement on whether Bennigan's would cater events.

Mr. Elrahimy then changed the Clarksburg Room to an alcohol-free banquet hall and hosted between eight and fourteen events over the next several months, such as a family baby shower and a "Donuts for Dads" breakfast for a neighboring elementary school. None of the events hosted at the Clarksburg Room were catered by Bennigan's.

On April 23, 2019, appellants filed a Petition to Establish and Enforce Mechanic's Lien and Complaint for Damages in the Circuit Court for Montgomery County, which was subsequently amended. Appellants then stopped paying rent for both the Office Lease and the Clarksburg Room Lease. On May 23, 2019, Mrs. Buffington emailed Mr. Elrahimy, stating: "Hello Omar, We have not yet received your May rent payments for either your office or the Clarksburg Room. A late fee has been added to both[.] Please remit payments now." Appellants did not pay May or June rent. On or about June 11, 2019, Mrs. Buffington changed the locks to the office and Clarksburg Room and retook possession of the premises.

Remax individually filed a counterclaim on June 20, 2019, alleging that Mr. Elrahimy breached the Office Lease and that both Mr. Elrahimy and Optimum breached the Clarksburg Room Lease. Remax sought to recover unpaid rent from May and June 2019 for both subleases.

Appellants filed a second amended complaint on June 28, 2019, alleging breach of lease and unjust enrichment. Appellants also withdrew their petition to establish a mechanic's lien. Remax filed a counterclaim on July 22, 2019, alleging the same breach of contract claims but seeking unpaid rent from May, June, and July 2019. On December 9, 2019, appellants moved to dismiss Remax's counterclaim for lack of subject matter jurisdiction. Appellees then filed an opposition to the motion to dismiss on December 10, 2019. On December 19, 2019, the court denied the motion to dismiss.

On December 9, 2019, appellants filed a third amended complaint alleging breach of lease, unjust enrichment, trespass, intentional misrepresentation, tortious interference with prospective advantage, and tortious interference with economic relations. In response, Remax filed a counterclaim, again alleging the same breach of contract claims in addition to seeking unpaid rent from May to December 2019.

After a three-day bench trial, the court entered an order and accompanying memorandum opinion on May 14, 2020. The court concluded that appellants failed to establish their claims against appellees and were not entitled to any recovery. Regarding Remax's counterclaim, the court found that Mr. Elrahimy breached the Office Lease and that Mr. Elrahimy and Optimum breached the Clarksburg Room Lease by failing to pay rent. Mr. Elrahimy was ordered to pay $19, 614.35 and Optimum was ordered to pay $4, 200.00. The order was entered as a final judgment.

Appellants then noted this appeal. Remax filed a cross-appeal, which was later withdrawn. We shall include additional facts as necessary in our discussion of the issues.

STANDARD OF...