CSA affirms $14.4M judgment for Choice Hotels

A Montgomery County judge was under no obligation to grant a stay of proceedings to allow a litigant to change lawyers for a fourth time, the Court of Special Appeals held.

Last week’s decision affirmed a $14.4 million judgment against PLC Partners LLC and Sam Klein in favor of Silver Spring-based Choice Hotels International Inc.

According to the appellate court’s opinion, Choice Hotels sued PLC and Klein in 2009 after PLC defaulted on six short-term loans designed to assist it in developing hotels under Choice’s Cambria Suites brand. Klein had personally guaranteed all six notes.

Klein and PLC, in turn, sued Choice Hotels and the cases were consolidated in February 2009.

“In the seven months that followed, appellants replaced their counsel twice with each new set of counsel filing amended complaints,” Judge Alexander Wright Jr. wrote for the three-judge panel on Tuesday.

In January 2010, PLC’s case survived Choice’s motion to dismiss; however, the circuit court warned PLC and Klein they would have to cooperate closely with their lawyers on discovery matters, retain and prepare expert witnesses, and promptly hire a specialized vendor to deal with electronic discovery issues. The parties agreed to have discovery completed by May 28, 2010, for a trial to begin that August.

That April, however, PLC’s third set of lawyers moved to withdraw as counsel, “alleging in part that a ‘dysfunctional attorney-client relationship’ had arisen,” and that their erstwhile clients were not complying with the judge’s January directives.

The motion to withdraw was granted on April 19, 2010. About two weeks later, Klein sought a 21-day stay of all proceedings, saying he had been unable to retain new counsel in Maryland. Choice opposed the request.

At a status hearing on May 7, 2010 — three weeks before the discovery deadline — Klein reduced the requested delay to 10 days, saying he had been in a federal trial in New York and unable to find new counsel in Maryland. The court denied the request, recommending he consult with his lawyers in the New York case and have them retain local counsel.

Instead, Klein filed for a protective order in state court in New York, which precluded scheduled depositions from taking place. He did not appear for his own deposition, as ordered.

Choice sought sanctions, and the circuit court struck PLC and Klein’s second amended complaint as well as their affirmative defenses. Choice then filed for summary judgment, which the circuit court granted. It also made a motion for contractual attorneys’ fees and was given leave to submit evidence of the amount.

PLC and Klein filed an appeal before attorneys’ fees were determined, and the Court of Special Appeals remanded the case to the circuit court. On remand, Choice withdrew its motion for attorneys’ fees. The circuit court then vacated the prior award, updated the amount of pre-judgment interest due and entered judgment.

PLC and Klein appealed, challenging the denial of the stay of proceedings and the circuit court’s revision of the judgment on remand. The Court of Special Appeals affirmed the ruling on both counts.

The unreported opinion in PLC Partners LLC et al. v. Choice Hotels International Inc., No. 1579 of the September 2010 term, is available as RecordFax #12-0306-02, 15 pages.

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