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Airport Square Holdings, LLC v. GCCFC 2007-GG9 Colomary Facilities, LLC

United States District Court, D. Maryland

February 16, 2017

AIRPORT SQUARE HOLDINGS, LLC
v.
GCCFC 2007-GG9 COLOMARY FACILITIES, LLC

          MEMORANDUM

          J. Frederick Motz, United States District Judge

         Plaintiff Airport Square Holdings, LLC ("Airport Square") brings this lawsuit against defendant GCCFC 2007-GG9 Colomary Facilities, LLC ("Colomary") seeking declaratory relief, damages, restitution, and the return of an escrow deposit paid to Colomary in connection with a contract for the sale of land. Airport Square asserts that its contract to purchase two parcels of real property from Colomary is void, that Colomary breached the contract between the parties, and that Colomary has been unjustly enriched as a result of the aborted land transaction. Colomary countersues for breach of contract, seeking declaratory relief and the release of Airport Square's cash deposit from the escrow account. Now pending is Colomary's motion for summary judgment, (ECF No. 27), and Airport Square's cross motion to grant their Rule 56(d) application and to compel discovery, (ECF No. 31). The motions are fully briefed and no oral argument is necessary. See Local R. 105.6. For the reasons set forth below, Colomary's motion for summary judgement is granted, and Airport Square's Rule 56(d) application and its motion to compel discovery are denied as moot.[1]

         BACKGROUND

         This dispute arises out of contract for the sale of two parcels of land known respectively as Airport Square 10 and Airport Square 20 ("the Properties") in Linthicum, Maryland. (ECF No. 2 ¶ 11). On or about March 3, 2016, Airport Square entered into an Agreement for Sale and Purchase of Property ("the Contract") and agreed to purchase the Properties from Colomary for $14, 910, 000. (Id. ¶ 27). Pursuant to the terms of the Contract, Airport Square delivered a nonrefundable $1, 000, 000 deposit to an escrow agent, LNR Partners, LLC, on March 4, 2016. (Id. ¶ 30). The parties set a closing date of March 29, 2016 at 2:00 pm on which Airport Square was scheduled to deliver the balance of the Properties' purchase price. (Id. ¶ 31). At the time the Contract was executed, both properties were subject to long-standing lease agreements with the United States Army Corps of Engineers. (See Id. ¶ 9).

         According to Airport Square, prior to the closing date on the Contract, it became aware that Colomary had previously entered into a contract to sell the Properties to another buyer, Airport Square Owner, LLC[2] (the "First Purchaser"), in February 2016. (Id. ¶ 12, 32). Colomary and the First Purchaser had set a closing date for their contract on March 1, 2016 at 2:00pm, and the First Purchaser delivered a $500, 000 deposit to the escrow agent. (Id. ¶ 15). Airport Square contends that the First Purchaser and Colomary agreed to extend their original closing date by two weeks and amended their original contract to reflect the change. (Id. ¶¶ 16-17). Apparently in consideration for the extension of the closing date, the First Purchaser wired two additional deposits to the escrow agent in the amounts of $260, 000 and $1, 250, 000 on February 29, 2016 and March 1, 2016, respectively. (Id. ¶ 19). Despite their allegedly amended agreement, Colomary declared the First Purchaser in default and terminated the sales contract on March 1, 2016. (Id. ¶¶ 20-22). The First Purchaser subsequently filed a complaint against Colomary in the Circuit Court for Anne Arundel County seeking specific enforcement of the parties' sales contract. (Id. ¶ 25, 32, Ex. A).[3]

         Additionally, shortly before the closing date, Airport Square received notice that the Properties' tenants, the United States Army Corps of Engineers, planned to terminate its lease. (Id. ¶ 33). According to Airport Square, the lease termination had a significant adverse impact on the value of the Contract. (Id.). On March 28, 2016, approximately twenty-four hours before the closing date, Airport Square requested Colomary supply all information related to the termination of the tenant's lease agreement. (Id. ¶ 34). When Airport Square failed to deliver the balance of the purchase price for the Properties on March 29, 2016, Colomary declared the plaintiff in default of the Contract. (Id. ¶ 35).

         In July of 2016, Airport Square filed a complaint in the Circuit Court for Anne Arundel County, and Colomary filed a notice of removal on August 16, 2016. (ECF No. 1 ¶ 1). Airport Square filed a complaint in this court on August 16, 2016. The complaint asserts five grounds for declaratory relief, asking the court to hold that the Contract between Airport Square and Colomary is void due to impossibility/impracticability (Count I), frustration of purpose (Count II), fraudulent inducement (Count III), and mutual mistake (Count IV), and that the Contract's liquidated damages clause is in actuality an unenforceable penalty (Count V). Additionally, Airport Square asserts a breach of contract claim (Count VI) and an unjust enrichment claim (Count VII). Defendant Colomary filed an answer and two counterclaims on August 17, 2016, seeking a declaration that Colomary is entitled to possession of the escrow deposit (Count 1), and asserting breach of contract (Count II). (ECF No. 7). On November 9, 2016, Colomary filed a motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. (ECF No. 27). Plaintiff filed a cross motion under Rule 56(d) and 57 of the Federal Rules of Civil procedure, asking the court to deny or defer Colomary's motion for summary judgment to allow Airport Square time to take discovery and to compel Colomary to respond to discovery demands. (ECF No. 31).

         STANDARD

         Rule 56(a) of the Federal Rules of Civil Procedure provides the "court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). A genuine issue of material fact exists where "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Id. When reviewing a motion for summary judgment, the court must take all facts and inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007).

         While the party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine dispute of material fact, see Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986), the party opposing summary judgment must "do more than simply show that there is some metaphysical doubt as to the material facts, " Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); see also In re Apex Express Corp., 190 F.3d 624, 633 (4th Cir. 1999). The non-movant '"may not rest upon the mere allegations or denials of [his] pleadings, ' but rather must 'set forth specific facts showing that there is a genuine issue for trial.'" Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (alteration in original) (quoting Fed.R.Civ.P. 56(e)); see also Adickes v. S. H. Kress & Co., 398 U.S. 144, 160 (1970). A court should enter summary judgment when a party fails to make a showing sufficient to establish elements essential to a party's case, and on which the party will bear the burden of proof at trial. Celotex Corp., 477 U.S. at 322.

         ANALYSIS

         Airport Square seeks declaratory judgment from the court that the Contract between Airport Square and Colomary is void (Count 1-IV) and that the liquidated damages clause in the sales agreement is an unenforceable penalty (Count V). Additionally, Airport Square asserts two affirmative claims for breach of contract (Count VI) and unjust enrichment (Count VII) against defendant Colomary.

         Airport Square's claims regarding the voidability of the Contract rest on two primary factual contentions: (1) Colomary was aware of the fact that the United States Army Corps of Engineers intended to terminate its long-term lease and actively concealed this information from the plaintiff; and (2) Colomary wrongfully terminated a valid sales contract with the First Purchaser and did not disclose to Airport Square that Colomary could not deliver valid title. Based on these allegations, Airport Square claims the parties' agreement is voidable under a number of theories: (1) impossibility/impracticability; (2) frustration of purpose; (3) fraudulent inducement; and (4) mutual mistake.[4] Plaintiff also asks the court to declare the liquidated damages provision in the parties' sales agreement unenforceable because it constitutes a penalty.

         In addition to seeking declaratory judgment, Airport Square also claims that defendant Colomary breached the Contract between the parties when it purported to terminate the agreement following Airport Square's failure to deliver the balance of the purchase price on March 29, 2016. Lastly, Airport Square asserts that Colomary has been unjustly enriched by wrongfully terminating the Contract and depriving plaintiff of the $1, 000, 000 escrow deposit. In response, Colomary argues that Airport Square has breached their valid sales agreement and seeks declaratory judgment that defendant is entitled to retain the escrow deposit as liquidated damages for plaintiffs unjustified breach.

         I will first address Airport Square's requests for declaratory judgment on the issue of voidability.[5] I will then address the parties' arguments regarding liquidated damages and their competing breach of contract claims. Finally, 1 will analyze the Airport Square's unjust enrichment claim.

         I. Validity of the Contract

         a. Impossibility/impracticability

         According to Airport Square, the fact that Colomary allegedly remained bound by a prior sales contract with the Properties' First Purchaser rendered the Contract impossible and impracticable to perform. Because Colomary was contractually obligated to sell the properties to the First Purchaser, plaintiff contends, Colomary was unable to convey valid title to Airport Square. Colomary insists that any former sales agreement with the First Purchaser had been properly terminated prior to the ...


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