Wells Fargo Bank, N.A. v. Diamond Point Plaza Ltd. Partnership

971 A.2d 360

185 Md. App. 489

WELLS FARGO BANK, N.A., Trustee v. DIAMOND POINT PLAZA LIMITED PARTNERSHIP, et al.

No. 666, September Term, 2008.

Court of Special Appeals of Maryland.

May 8, 2009.

K. Donald Proctor (Margaret M. McKee, Proctor & McKee of Towson and Jeff Joyce of Houston, TX, on the brief), for appellant.

William J. Murphy (John J. Connolly, Murphy & Shaffer LLC on the brief), of Baltimore, for appellee.

Panel: WOODWARD, MATRICCIANI and JAMES A. KENNEY, III (Retired, specially assigned), JJ.

MATRICCIANI, J.

The litigation giving rise to this appeal has its genesis in November 2002, when Diamond Point Plaza Limited Partnership, owner of a shopping center in Baltimore County, defaulted on a mortgage loan that was secured by the shopping center property. Appellant Wells Fargo Bank, N.A. ("Wells Fargo"), as trustee for the assignees of the mortgage, brought an action in the Circuit Court for Baltimore County against two sets of defendants: the Konover Defendants, appellees in the appeal now before us, and the Wal-Mart Defendants.¹ Wells Fargo alleged breach of contract, fraud and misrepresentation, and conversion of funds against the Konover Defendants, and breach of lease agreement provisions against the Wal-Mart Defendants.

Following a bench trial and various earlier rulings, including a partial summary judgment in favor of the Wal-Mart Defendants concluding that they did not violate a radius restriction in the lease, the circuit court ruled in favor of Wells Fargo. The court entered judgment against the Konover Defendants in the amount of approximately $22.8 million, roughly $3.5 million of which, plus interest, was identified as a "prepayment premium," and against the Wal-Mart Defendants in the amount of approximately $1.3 million. Despite evidence of contractual provisions providing for attorney's fees, the court ruled that Wells Fargo had not satisfied its burden of proof because it had failed to itemize and apportion its fees among the various defendants and claims.

Wells Fargo appealed the court's ruling on attorney's fees, and both sets of defendants appealed the court's rulings on the merits. On appeal before this Court, we affirmed in part and vacated in part the circuit court's judgments on the merits. Wells Fargo Bank Minnesota, N.A. v. Diamond Point Plaza L.P., 171 Md.App. 70, 908 A.2d 684 (2006). We also vacated the circuit court's judgments regarding attorney's fees and remanded the case for further hearings on that issue.

The Court of Appeals granted cross-petitions for writs of certiorari, Wal-Mart v. Wells Fargo, 396 Md. 524, 914 A.2d 768 (2007), and affirmed this Court's judgment with respect to the Konover Defendants on both the merits and the issue of attorney's fees. Diamond Point Plaza L.P. v. Wells Fargo Bank, N.A., 400 Md. 718, 929 A.2d 932 (2007).

On remand in the Circuit Court for Baltimore County, the Konover Defendants filed a pre-hearing memorandum opposing Wells Fargo's request for attorney's fees. In that memorandum, the Konover Defendants argued that any award of attorney's fees would be unreasonable because the circuit court had erroneously overcompensated Wells Fargo in its original judgment by including the $3.5 million prepayment premium, which the Konover Defendants argued was never due under the loan documents.² The court agreed with the Konover Defendants, stating that, although Wells Fargo met its burden in proving that it was entitled to $1,443,208.81 in attorney's fees, that award was unreasonable given the court's previous error. Consequently, the circuit court denied Wells Fargo any attorney's fees.³

Wells Fargo appealed that judgment, and presents one issue for our review:

Whether the circuit court erroneously refused to award Wells Fargo attorney's fees in the amount of $1,443,208.81 from the Konover Defendants on the ground that the court's earlier final $23,674,331.06 judgment against those Defendants improperly included a prepayment premium of $3,546,437.05.

For the reasons we explain, we reverse the circuit court's judgment.

FACTS AND PROCEEDINGS

The Diamond Point Plaza shopping center, owned by Diamond Point Plaza Limited Partnership, was developed in 1988 and consists of three buildings containing space for commercial tenants. Two of its largest tenants were Sam's P.W., Inc. ("Sam's"), which operated a Sam's Club wholesale store, and Ames Department Stores ("Ames"). Ames filed for bankruptcy in August 2001, and closed its store at Diamond Point Plaza in October 2002. Sam's closed its store at Diamond Point Plaza in July 2002. Sam's continued to pay monthly rent but Ames did not, rejecting its lease in bankruptcy court.

As a result of Ames' failure to pay rent to Diamond Point Plaza Limited Partnership, Diamond Point Plaza Limited Partnership failed to make its November 2002 loan payment to Wells Fargo. In March 2003, Wells Fargo filed its initial complaint, which it later amended three times.

Following a six-day trial that began on April 4, 2005, the court requested that the parties submit Proposed Findings of Facts and Conclusions of Law. The court reviewed the parties' submissions, and in August 2005, the court issued its Findings of Fact and Conclusions of Law.⁴ In those Findings of Fact and Conclusions of Law, the court found, inter alia, both that "[t]he prepayment premium is due regardless of whether the Borrower voluntarily chooses to repay the Loan or the Borrower defaults on the Loan," and, "[u]nder the Mortgage and other applicable Loan Documents, Diamond Point [Plaza Limited Partnership] agreed to reimburse Wells Fargo its reasonable and necessary attorney's fees incurred in enforcing the Loan Documents."

The court also adopted Wells Fargo's itemized calculation of damages, which totaled $22,862,399.66, and which included a line item entitled "Prepayment premium" in the amount of $3,546,437.05. In its Final Amended Judgment, entered on December 5, 2005, the court stated:

Judgment in favor of Plaintiff, Wells Fargo bank, N.A., as trustee, is hereby entered against Defendants, Diamond Point Plaza Limited Partnership, Oriole Commercial Associates Limited Partnership and Diamond Point Management Corporation for breach of ¶ 55(A) and (B) of the Mortgage for intentional misrepresentation and gross negligence and against Defendant, Konover Management Corporation, now known as Peerless Corp., for breach of the Guaranty of Recourse Obligations, under Counts 1, 2, 3, and 4 of the Third Amended Complaint, in the amount of $22,862,399.66 ... together with prejudgment interest thereon at the rate of $5,799.51 per day from April 5, 2005, [or] $811,931.40, [which totals $23,674,331.06,] and postjudgment interest from the date of entry of Final Judgment until finally paid. This judgment is entered jointly and severally against each of these Defendants.

The court also reiterated its conclusion that, "for the reasons stated on the record on August 24, 2005," Wells Fargo "has not met its burden of proof for its claims to recover its reasonable and necessary attorney's fees incurred in connection with pursuing its claims for judgment against Defendants, Diamond Point Plaza Limited Partnership, Konover Management Corporation now known as Peerless Corp., Oriole Commercial Associates Limited Partnership, and Diamond Point Management Corporation pursuant to [the Note] and related loan documents." On August 24, 2005, the court explained that it did not find Wells Fargo's request for attorney's fees reasonable because it had not adequately itemized and apportioned its fees among the various defendants and claims. On that point, the court stated: "I don't believe it is possible that fees are reasonable and necessary without undertaking a line-by-line analysis of each legal bill. Most reluctantly, I don't believe that is possible."

On appeal before this Court, we affirmed in part and vacated in part the circuit court's judgments on the merits. Wells Fargo, 171 Md.App. at 137, 908 A.2d 684. Notable to the appeal now before us we affirmed the circuit court's calculation of damages against the Konover Defendants. Id. at 125, 134-37, 908 A.2d 684. On the issue of attorney's fees, we acknowledged the complexity of the case, but nevertheless stated that, instead of completely denying Wells Fargo attorney's fees, the circuit court "should have compelled Wells Fargo to resubmit the bills for which it sought payment with a clearer indication of exactly what those charges represented." Id. at 110, 908 A.2d 684. Consequently, we vacated the circuit court's judgment regarding attorney's fees and remanded the case for further hearings on that issue. Id. at 110-11, 908 A.2d 684.

The Court of Appeals affirmed the circuit court's judgments with respect to the Konover Defendants, but like this Court, concluded that "the case must be remanded for reconsideration of attorney's, fees." Diamond Point, 400 Md. at 727, 929 A.2d 932. Specifically, the Court stated that the circuit court incorrectly regarded "the requirement of a line-by-line analysis [not] as a mere preference, but as [a] legal requirement that was not met." Id. at 760, 929 A.2d 932. Characterizing that view as "too rigid," the Court stated that, although "the best evidence ordinarily would be a clear delineation in the attorneys' billings of the time spent and expenses incurred with respect to the particular claims upon which the fee request is based[, b]ecause such a precise delineation may not always be practicable, however, we do not regard it as a sine qua non of the right to recover, for to conclude otherwise would, in many cases, deny all recovery where some recovery is clearly warranted." Id. at 760-61, 929 A.2d 932. The Court's mandate read, in pertinent part:

JUDGMENT OF COURT OF SPECIAL APPEALS VACATED; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO REMAND TO CIRCUIT COURT FOR BALTIMORE COUNTY FOR FURTHER PROCEEDINGS WITH RESPECT TO WELLS FARGO'S CLAIM FOR ATTORNEY'S FEES IN...