Date: 03-01-2002

Case Style: The Fischer Organization, Inc. v. Landry's Seafood Restaurants

Case Number: No. 181, Sept. Term, 2001

Judge: Davis

Court: Court of Special Appeals of Maryland

Plaintiff's Attorney: Tamir Damari and Stanley H. Goldschmidt, Washington, D.C.

Defendant's Attorney: William F. Ryan, Jr. and Steven F. Tiller of Whiteford, Taylor & Preston, L.L.P., Baltimore, Maryland

Description: Appellant, The Fischer Organization, Inc., filed suit against appellee, Landry’s Seafood Restaurants, Inc., in the Circuit Court for Prince George’s County. The four-count complaint, alleging breach of contract, quantum meruit, promissory estoppel, and fraud in the inducement, was filed on August 12, 1999. Appellee filed its answer on October 22, 1999. From January 10-11, 2001, a bench trial was conducted (Thomas Smith, J.) and, on February 14, 2001, the parties submitted post-trial memoranda summarizing the arguments and evidence adduced at trial. The trial court rendered a judgment in favor of appellee on March 15, 2001. Appellant filed this timely appeal on March 22, 2001, wherein it presented three questions, which we rephrase for clarity as follows:

I. Did the trial court commit reversible error by rendering a judgment in favor of appellee on appellant’s claim for breach of contract?

II. Did the trial court commit reversible error by rendering a judgment in favor of appellee on appellant’s claim for unjust enrichment?

III. Did the trial court commit an abuse of discretion when it deemed portions of a deposition transcript of appellee’s designated representative inadmissible?

We answer the above questions in the negative and, therefore, affirm the judgment of the trial court.

FACTUAL BACKGROUND

This appeal stems from a brokerage dispute. Appellant is a real estate brokerage firm whose President is Benson J. Fischer, a duly licensed real estate broker in the State of Maryland. Appellee is a Texas corporation that owns and operates a number of restaurants throughout the country. In 1996, appellee acquired Bayport Restaurants, Inc. (Bayport), in accordance with the terms of a merger. At the time, one of Bayport’s wholly-owned subsidiaries, Take-Away/King Shopping Center, Inc. (Take-Away), leased commercial premises located at King Shopping Center, in Prince George’s County, from King Associates Limited Partnership (King Associates).

At or about the time of the merger, Take-Away ceased paying rent to King Associates, with approximately fifteen years remaining under the terms of the lease. Consequently, King Associates declared appellee, the parent company of Take-Away, in default under the lease for failure to pay rent and abandonment of its business operations. Appellee’s right to possession of the premises was terminated shortly thereafter.

On November 18, 1996, King Associates filed a lawsuit against Take-Away and appellee for breach of Take-Away’s lease. Because fifteen years remained on the lease, appellee faced potential liability in the amount of $700,000, reflecting total base rent and “build-out” rent remaining due over the balance of the lease term. In addition to the approximately $700,000 owed on the remaining lease term, appellee faced liability arising out of obligations to pay common area maintenance costs and real estate taxes.

Meanwhile, Fischer learned of Take-Away’s abandoned properties in Prince George’s County,1 while driving through the area on a routine survey of possible vacancies. Appellant approached appellee and offered its services to locate replacement tenants for the vacancies, in order to help mitigate appellee’s liability as guarantor under the lease. On October 8, 1996, appellant sent appellee a proposed commission agreement, whereby appellee would pay appellant a four percent brokerage commission “of the aggregate value of the entire lease term, including any fixed increases, renewals[,] or expansions of the [l]ease,” for “procuring a client that leases or purchases the property . . . on terms acceptable to [appellee].” (Commission Agreement.) Appellee accepted the proposed agreement in mid-November, limiting its duration to six months and adding the following paragraph, to which appellant agreed:

It is expressly agreed and understood that this Letter Agreement is contingent upon [appellee] retaining and being able to transfer its rights in and to the Lease, Leased Premises[,] and personal property located thereon. In the event that [appellee] is unable to transfer its rights to the real and personal property which is the subject of this agreement at closing, this [a]greement shall be null and void and all parties shall be relieved of liability hereunder.

At the same time, Fischer was engaged in negotiations with Morton Bender, general partner in King Associates, whereby King Associates would pay appellant a brokerage commission equal to four percent of the aggregate value of any lease transaction consummated between King Associates and a suitable replacement tenant. According to appellant, all parties were made aware of both brokerage agreements; however, both Bender and appellee’s representative, Matt Dillick, denied at trial that either was aware of appellant’s other commission agreement. Indeed, Bender testified that, had he known of appellee’s agreement with appellant, he would not have entered into an agreement with appellant.

Appellant then located Rejnaj of King Shopping Center, a franchisee of the Popeye’s fast food chicken chain, as a possible replacement tenant for the shopping center. On December 2, 1996, appellant prepared a Letter of Intent between appellee and Rejnaj, setting forth the terms of the proposed tenancy, including an additional guarantee of $50,000 from Popeyes Limited Partnership II (PLP II). According to appellee, the letter provided, among other things, for monthly rent “in amounts less than those owed by [appellee] to [King Associates] in its lease, an extremely limited guarantee from an unknown entity, and no “key” money for the leasehold improvements, restaurant equipment[,] and other personal property left in the space of which Rejnaj would take control.” In addition, appellee claims, it would have had to guarantee Rejnaj’s obligations. For all of these reasons, appellee found the proposal unacceptable and, as a result, rejected it in a letter to appellant dated December 16, 1996. That letter stated, in relevant part:

In response to your letter dated December 16, 1996, please re-read your proposal. You have not brought us a thirty year lease but rather a one year lease with [twenty-nine] option years. There are no guarantees and you have not removed us from the lease.

We are interested in pursuing this arrangement but will not pay $78,000 in commission for this type of deal.

Appellant responded in a letter, also dated December 16, 1996, stating, in relevant part:

The [brokerage] provision clearly states that a four percent commission shall be due and payable for the total aggregate value of the entire Lease Term. A guarantee, or lack of guarantee, has absolutely nothing to do with the aggregate value of the Lease, [and] therefore should not be calculated to increase or decrease the commission value.

During this time, litigation between King Associates and appellee continued. On March 15, 1997, King Associates filed a Motion for Summary Judgment and, on April 8, 1997, appellee filed an opposition thereto, noting that it had “retained [appellant] to attempt to relet the premises.” In its motion, appellee argued that it should benefit from any mitigation of damages “[i]f . . . it is discovered that [King Associates] would benefit from future lease payments from the Popeye’s franchisee in excess of those which it could have expected from [appellee] but for [appellee’s] offer of surrender of the premises.”

Appellant made no effort to remove the objectionable provisions in the Rejnaj Lease, nor did it engage in further negotiations in an attempt to incorporate terms that would be acceptable to appellee; rather, it approached King Associates to negotiate the Rejnaj Lease based on the original Letter of Intent. On May 1, 1997, King Associates and Rejnaj entered into a lease agreement that was, according to appellant, “substantially based upon the terms of the Letter of Intent prepared by appellant” – the same terms to which appellee had objected. King Associates paid appellant a commission on January 26, 1999 and later sought reimbursement from appellee as part of its litigation seeking damages arising out of Take-Away’s abandonment of the premises. On January 27, 1999, appellant transmitted its first invoice to appellee, reminding appellee that it owed appellant a brokerage commission of $44,940. Appellee never paid appellant, thus the basis of the breach of contract claim filed in the trial court.

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Click the case caption above for the full text of the Court's opinion.

Outcome: Affirmed

Plaintiff's Experts: Unavailable

Defendant's Experts: Unavailable

Comments: None