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Chaplick v. Mao

United States District Court, D. Maryland

December 5, 2016

TREVOR CHAPLICK, Trustee for Canal Vista Trust, Plaintiff,


          THEODORE D. CHUANG United States District Judge.

         On July 17, 2013, Trevor Chaplick ("Chaplick"), as Trustee for Canal Vista Trust ("the Trust"), filed this breach of contract action against Jeng Fen Mao and Chiayee Chew Mao ("the Maos") following the aborted sale of a Maryland residence that overlooks the Potomac River. After the Court granted summary judgment in favor of Chaplick on liability, the Court held a bench trial on damages on November 2 and 21, 2016. Pursuant to Federal Rule of Civil Procedure 52(a), the Court now provides its findings of fact and conclusions of law. For the reasons stated below, the Court awards damages to Chaplick in the amount of$8, 211.69.

         BACKGROUND [1]

         The residential property at the heart of this action is located at 13728 Canal Vista Court in Potomac, Maryland ("the Property"). In November 2012, Chaplick, on behalf of Canal Vista Trust, listed the Property for sale with an asking price of $1, 399, 999. On January 22, 2013, the Maos offered to purchase the home for $1, 280, 000. The contract of sale ("the Contract") set a settlement date of March 21, 2013. In its February 26, 2016 Memorandum Opinion, the Court held that the Maos breached the Contract when they were not able to close on the Property on that date. Chaplick then remarketed the Property. On or about April 15, 2013, he entered into a new contract of sale with Abraham Taylor and Silvia Taylor ("the Taylors") for a purchase price of$1, 304, 500. Chaplick and the Taylors closed on the sale on June 17, 2013.

         Even before the Maos breached the Contract, Chaplick had begun to plan litigation against them. On March 19, 2013, having learned that the Maos might not proceed to closing, Chaplick wrote to his realto vr that he thought that he was "being played, " proposed a 30-day extension if the Maos agreed to pay half of the broker's commission and give up a $20, 000 credit originally payable at closing, and threatened that if they did not agree to the proposed terms "we will terminate the contract and pursue litigation aggressively against buyers." Tr. Ex. 102, at 2. Chaplick further instructed the realtor:

If these terms are not agreed to promptly, we will engage the most experienced trial counsel we can find in Maryland and direct such counsel to initiate litigation against buyers immediately on March 22nd. Please also remind buyers that there is a prevailing party clause in the contract which entitles the party which prevails in any lawsuit to the award of all attorneys fees caused to be incurred by the other party's breach.

Id. On March 20, 2013, as negotiations on an extension continued, Chaplick informed his realtors that "I am next going to search for experienced trial counsel in MD to ensure he or she is teed up and ready to go for a lawsuit on Friday morning if this will be necessary." Tr. Ex. 103, at 2. That same day, he reported that he had retained his current trial counsel, "an extremely experienced trial attorney with expertise in real estate litigation" and that his attorney "will be ready on Friday morning to file and serve a complaint on the Maos, Re/Max, and Mortgage Capital Partners, if necessary." Tr. Ex. 104, at 1. He asked his realtors to inform the Maos that "I am a person who does what he says he will do." Id.

         From March 21, 2013 to June 17, 2013, Chaplick incurred various costs that he alleges were caused by the breach of contract. The Court's factual findings regarding these costs and their nexus to the breach of contract are set forth below.


         I. Introduction

         On October 19, 2016, Chaplick submitted a Trial Brief with attached exhibits in advance of the November 2 trial, including Exhibit 2, a table of requested damages totaling $103, 952.58. The requested damages consist of four broad categories: (1) operating costs for the Property for the period from March 21, 2013 to June 17, 2013 ("the Breach Period"); (2) costs of the sale to the Taylors ("the Taylor Sale"); (3) attorney's fees predating the date of breach; and (4) trustee fees.

         Chaplick's submission was riddled with misleading information, errors, and unjustified requests. Among the misleading information and facially invalid requests were:

1. In claiming "Trustee Fees, " Chaplick referred to his selected hourly rate as the "Statutory hourly rate for trustee's fees under Maryland guidelines." When challenged, Chaplick acknowledged that there is no statutory hourly rate, or any applicable Maryland guidelines, for trustee fees.
2. Chaplick claimed as damages monthly payments made on a "Second Mortgage." When challenged, Chaplick conceded that no second mortgage on the Property existed. The loan referenced as a "Second Mortgage" was in fact a personal loan taken out by Chaplick, not the Trust, for approximately $280, 000 and was not secured by the Property (hereinafter "the Second Loan").
3. In claiming monthly interest payments on the actual mortgage on the Property, Chaplick included in his damages request an extra monthly mortgage payment beyond those covering the Breach Period. Likewise, he sought an extra monthly payment on the Second Loan beyond those covering the Breach Period. On the eve of the trial, Chaplick withdrew his request for these extra payments.
4. Chaplick requested full payment for a fee relating to Canal Vista LLC ("the LLC"), an entity with no ownership interest in the Property, for tax year 2012, a period that completely or mostly predates the date of breach.
5. Chaplick submitted a receipt for gutter work performed on February 20, 2013, almost one month before the date of the breach. After facing questioning at trial on this issue, Chaplick withdrew his request for this payment prior to closing argument.
6. Chaplick submitted electricity bills covering time periods predating the date of breach. During the trial, Chaplick conceded that certain of these requested payments were not recoverable.
7. Chaplick submitted water bills covering time periods predating the date of breach. During the trial, Chaplick conceded that certain of these requested payments were not recoverable.
8. Chaplick submitted an inflated request for property insurance payments that he conceded during his testimony overstated the payments relevant to the Breach Period. Prior to closing argument, he submitted a revised, lower request.
9. Chaplick submitted a check in the amount of $40 made payable to Montgomery County, Maryland, but he acknowledged during his testimony that he had no knowledge of the reason he made the payment or how it was connected to the Property.
10. Chaplick submitted two copies of the same invoice for landscaping services performed on April 24, 2013 and requested reimbursement for both. At closing argument, Chaplick withdrew the second request.

         Most of these misleading characterizations and facially invalid requests were withdrawn before or during the trial, after the Court or defense counsel had questioned them. Nevertheless, the fact that Chaplick requested so many items that the Court easily identified as invalid on the face of the relevant documents casts serious doubt on the reliability and accuracy of Chaplick's request for damages. At trial, Chaplick acknowledged that his approach consisted of seeking reimbursement for every payment he made during the Breach Period regardless of the date the services were rendered or whether the expenses related to the Breach Period. The Court concludes that these unjustified and misleading requests derived in part from Chaplick's overly aggressive approach to this dispute generally, as reflected by his threats about and plans for litigation even before the original closing date on the sale. Accordingly, in rendering findings on damages, the Court takes a rigorous approach to analyzing the evidence, relying more heavily on the existence of explicit documentary evidence than on Chaplick's testimony alone.

         II. Legal Standards

         "Damages for breach of a contract ordinarily are that sum which would place the plaintiff in as good a position as that in which the plaintiff would have been, had the contract been performed." Beard v. S/E Joint Venture, 581 A.2d 1275, 1278 (Md. 1990). The non-breaching party is entitled to damages for losses caused by the breach, that were reasonably foreseeable as a probable result of the breach, and that can be proven with reasonable certainty. See M&R Contractors & Builders, Inc. v. Michael, 138 A.2d 350, 353 (Md. 1958); Hoang v. Hewitt Ave. Assocs., LLC, 936 A.2d 915, 934 (Md. Ct. Spec. App. 2007) (citing Impala Platinum, Ltd. v. Impala Sales, Inc., 389 A.2d 887, 907 (Md. 1978); Stuart Kitchens, Inc. v. Stevens, 234 A.2d 749, 752 (Md. 1967)). Damages are proximately caused where the losses "actually resulted from the breach." Hoang, 936 A.2d at 934. Damages are reasonably foreseeable if they are generally "of the sort that are presumed to have been in the contemplation of the parties when the contract was made, " or if "evidence of the particular circumstance"" establishes that they "may fairly and reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it." Id. (citing Winslow Elevator & Mack Co. v. Hoffman, 69 A. 394 (Md. 1908)). The Maryland Court of Appeals has emphasized that reasonable foreseeability is to be assessed as of the time of contract formation, not as of the time of breach. CR-RSC Tower 1, LLC v. RSC Tower 1, LLC, 56 A.3d 170, 184, 188 (Md. 2012). The reasonable certainty requirement, which relates to the likelihood that the damages were incurred as a result of the breach and their probable amount, bars "[l]osses that are speculative, hypotheticat, remote, or contingent either in eventuality or amount." Hoang, 936 A.2d at 935 (citing Stuart Kitchens, Inc. v. Stevens, 234 A.2d 749, 751-52 (Md. 1967)).

         Finally, the non-breaching party has a duty to mitigate damages. Specifically, that party has a duty "to make all reasonable efforts to minimize the loss he sustains as a result of the breach" and can recover only those damages that could not be prevented with "reasonable effort and expense without risk of additional substantial loss or injury." Sergeant Co. v. Pickett, 401 A.2d 651, 660 (Md. 1979).

         III. Claim of No Damages

         As a threshold issue, the Court addresses the Maos' claim that no damages have been established because, while the plaintiff in this case is Chaplick in his official capacity as Trustee, all expenses claimed as damages were paid by Chaplick personally rather than by the Trust. The Maos note that the checking and credit card accounts from which expenses were paid were Chaplick's personal accounts, so there was no evidence that the Trust had paid any of the costs now claimed as damages.

         The Maos' argument does not prevail. The Complaint seeks damages in the form of "costs incurred by the Trust." Compl. 12-13. To the extent that bills were paid to provide a specific benefit to the Property, which was owned by the Trust, they can be construed as costs incurred by the Trust. The fact that Chaplick paid such costs out of his personal accounts does not necessarily indicate that the Trust did not pay such expenses. The Canal Vista Trust Agreement ("the Trust Agreement") indicates that the Trust is a family trust, apparently for estate-planning purposes, for which Chaplick is the settlor, trustee, and beneficiary all at the same time. None of the formalities of a separate legal entity were observed. To the extent that the Trust had funds, they were commingled with those of Chaplick in his personal accounts. The Court therefore concludes that to the extent that Chaplick paid expenses that provided a specific benefit to the Trust or to the Property, as opposed to Chaplick himself, it is reasonable to infer that those expenses were Trust expenses paid for with Trust funds.

         The Court therefore addresses Chaplick's specific ...

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