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Cushman & Wakefield of Maryland, Inc. v. Drv Greentec, LLC

Court of Appeals of Maryland

March 4, 2019

CUSHMAN & WAKEFIELD OF MARYLAND, INC., ET AL.
v.
DRV GREENTEC, LLC

          Argued: January 7, 2019

          Circuit Court for Montgomery County Case No. 419686V

          Barbera, C.J. Greene McDonald Watts Hotten Getty Wilner, Alan M. (Senior Judge, Specially Assigned)

          OPINION

          Wilner, J.

         Petitioners, Cushman & Wakefield of Maryland, Inc. (Cushman) and Sloan Street Advisors, Inc. (Sloan) sued DRV Greentec, LLC (DRV) in the Circuit Court for Montgomery County to collect real estate brokerage commissions allegedly due after the tenant of the property exercised its option to renew a lease that Cushman and Sloan had procured for a prior owner. Finding no liability on the part of DRV, the court granted summary judgment in its favor, and, in an unreported Opinion, the Court of Special Appeals affirmed that judgment. We granted certiorari to determine whether the two lower courts were correct. We shall conclude that those courts were correct and affirm the Court of Special Appeals' judgment.

         BACKGROUND

         The property in question is located at 7700 Hubble Drive in Greenbelt, Maryland. It consists of two buildings, with an adjoining lobby, comprising 120, 000 square feet. The property was purchased by MGP Greentec IV, LLC (MGP) in 2005 and mortgaged initially to Bear Stearns but, through assignments ultimately to Bank of America (BOA).[1] As part of the security for the loan, MGP assigned to the lender all current and future leases. The assignment clause in § 3.7 of the Deed of Trust provided that "[s]uch assignment to Lender shall not be construed to bind Lender to the performance of any of the covenants, conditions, or provisions contained in any such Lease or otherwise impose any obligation upon Lender."

         Supplementing that clause in the Deed of Trust was a separate Assignment of Leases and Rents, § 4.1 of which confirmed that the Assignment "shall not be construed to bind Lender to the performance of any of the covenants, conditions or provisions contained in any Lease or Lease Guaranty or otherwise impose any obligation upon Lender."

         In 2009, the then-current tenant vacated the property, and MGP began searching for a replacement. To that end, it entered into a contract with Cushman, a commercial leasing agent, to find a new tenant. The agreement obligated "Owner," identified in the Agreement as MGP, to pay a commission equal to three percent of the aggregate gross rental for the initial lease term and, if that term was renewed or extended, an additional commission equal to three percent of the aggregate gross rental for the renewal term.

         Contemporaneously, the National Aeronautics and Space Administration (NASA) was looking for office space for its Joint Polar Satellite System and employed Sloan to assist it in that endeavor. NASA and Sloan decided to use a government contractor, TRAX International Corporation (TRAX), to act as the entity to lease and manage the space. Cushman and Sloan collaborated in their efforts, which led to a Deed of Lease for the Hubble Drive property being signed on July 15, 2010. MGP was the landlord and TRAX was the tenant. The lease term was to commence when the leasehold improvements were complete, which was anticipated to be October 1, 2010, and to run for "approximately" 66 months. Subject to certain conditions, § 32 of the Lease gave TRAX an option to renew for one additional five-year term.

         Section 1.17 recognized Cushman as the Landlord's broker and Sloan as the Tenant's broker. Section 17 made the Landlord exclusively liable for brokers' commissions, with respect to both the initial lease and any renewal of it. In relevant part, it provided:

"Landlord agrees to compensate the Real Estate Brokers referenced in Section 1.17 above in accordance with a separate agreement, and agrees to indemnify Tenant against any claims, damages, costs, expenses, attorneys' fees or liability for compensation or changes which may be incurred by Tenant as a result of any claim of non-payment made by Real Estate Brokers. In no event shall Tenant have any liability for Real Estate Broker commissions. In addition, in the event Tenant exercises its Option to Renew pursuant to Section 32 below, Landlord shall pay Tenant's Broker a fee of $617, 928.50, and Landlord's Broker a fee of $463, 446.37."

         Section 19 gave the Landlord the right to transfer any portion of its interest in the project and to assign the Lease to the transferee. The section continued that, following such a transfer, "Tenant shall look solely to Landlord's transferee for the performance of Landlord's obligations" and that, "[s]ubject to the rights of any lender holding a mortgage or deed of trust encumbering all or part of the Project, Tenant shall look solely to Landlord's equity interest in the Project . . . for the collection of any judgment requiring payment of money by Landlord arising out of [ ] Landlord's failure to perform its obligations under this Lease . . ." Section 31.8 provided that the Lease was binding on the parties and their successors and permitted assigns. Section 23 of the Lease, however, stated that the Lease "shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the Project."

         Not long after the TRAX lease took effect, MGP defaulted on its mortgage, and, in January 2011, the property was sold at a foreclosure sale. BOA, the successor lender, was the successful bidder, took title to the property subject to the Lease, and employed Transwestern and C-III Realty Services, to market the property. An Offering Memorandum prepared by Transwestern noted that the tenant, ...


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