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Landlord’s damages top $4.5M

Jury finds interference with loan; judge may increase award

The former owner of a Rockville office building has been awarded more than $4.5 million in compensatory damages from a former tenant that twice forced it into foreclosure because of unpaid rent.

The jury also found that Tower Oaks Boulevard LLC is entitled to punitive damages, which Judge Ronald B. Rubin will determine, along with attorneys’ fees, during a March 25 hearing in Montgomery County Circuit Court.

Tower Oaks’ wins started before the trial itself. On Jan. 17, after a motions hearing, Tower Oaks obtained a summary judgment ruling for almost $600,000 in unpaid rent from Ronald Cohen Investments Inc. and Ronald Cohen Management Co.

But the lawsuit also claimed that the damages went beyond missed rent, and that the Cohen companies intended to cause Tower Oaks to default on its loan. On Monday, after a trial, the jury agreed. It awarded Tower Oaks $3.9 million in damages for tortious interference with its lender and breach of contract.

“I think [the jury] loudly and clearly told the Cohen companies this is not the way we do business in Montgomery County,” said Christopher C. Fogleman, a lawyer for Tower Oaks, adding it is unusual for a jury there to award punitive damages.

Jeffery W. Bernstein, the Cohen companies’ lawyer, did not return a phone call seeking comment. Bernstein is with Goozman, Bernstein & Markuski in Laurel.

Tower Oaks, a holding company of the late John D. Buckingham Sr., purchased the office building at 2701 Tower Oaks Blvd. in 2001. The Cohen companies signed a 10-year lease in 2002 for the second floor of the building.

The Cohen companies were one of two tenants in the Tower Oaks building, and the landlord needed the rent to pay the mortgage, according to Fogleman, of Gleason, Flynn, Emig & Fogleman Chtd. in Rockville.

In early 2009, the Cohen companies began to demand rent concessions from Tower Oaks and did not pay their monthly rent, according to an amended complaint. When Tower Oaks refused to make the concessions, Ronald Cohen notified Tower Oaks his companies were preparing to leave the office building and that Tower Oaks’ position was “an economic decision that they will have to face with their lender,” according to the complaint.

Tower Oaks took legal action and the Cohen companies, in September 2009, paid nearly $460,000 in unpaid rent and attorneys’ fees, according to the lawsuit. But the companies continued to “falsely claim problems, deficiencies and damages to the property as justification for their failures to pay rent due under the lease,” the lawsuit states.

The Cohen companies stopped paying rent again in February 2011, forcing Tower Oaks to file for Chapter 11 bankruptcy, according to the lawsuit. Since then, Tower Oaks staved off one foreclosure auction and is appealing a second in the Court of Special Appeals. The building was sold back to the lender for $6 million last February, according to the lawsuit.

Fogleman, Tower Oaks’ lawyer, said the Cohen companies “had a purposeful plan to cause my clients to default” on the loan.

“Cohen wanted to buy back the building after foreclosure,” Fogleman said.

The Cohen companies are owned by Ronald J. Cohen, president of The Cohen Cos. Inc., a trade name owned by Cohen Management. Cohen Cos. owns more than two dozen office, retail and residential buildings in suburban Washington, D.C.

As Tower Oaks was fighting foreclosure, it again took legal action against the Cohen companies for unpaid rent. A judge in Maryland District Court for Montgomery County in November 2011 awarded Tower Oaks $600,000 in unpaid rent and gave Tower Oaks possession of the office space.

During the four-day trial this month, Ronald Cohen testified he did not owe Tower Oaks any rent, according to Fogleman — a fact he said “bothered” the jury of six women.

“The attitude was consistent from 2009 until today: they weren’t going to pay,” Fogleman said.

Jurors deliberated for five-and-a-half hours over two days before coming back with their verdict, which included $2.3 million for the tortious interference count and $950,000 for unpaid rent from December 2011 through November 2012.

Fogleman said his clients were satisfied with the outcome.

“This is a battle they’ve been fighting since 2009 and they were happy to get some closure on the issue,” he said.

TOWER OAKS BOULEVARD LLC, ET AL. V. CWCAPITAL LLC, ET AL

Court:

Montgomery County Circuit Court

Case No.:

368256V

Judge:

Ronald B. Rubin

Outcome:

Plaintiffs’ verdict for $3,930,268.96 in compensatory damages; $599,508.57 from summary judgment motion; punitive damages and attorneys’ fees to be awarded March 25

Dates:

Incident: February 2009 through November 2012

Suit filed: Sept. 10, 2012

Verdict: Jan. 27, 2014

Plaintiffs’ Attorney:

Christopher C. Fogleman and William J. Chen III of Gleason, Flynn, Emig & Fogleman Chtd. in Rockville

Defendant’s Attorney:

Jeffery W. Bernstein of Goozman, Bernstein & Markuski in Laurel.

Counts:

Tortious interference with contractual relations and breach of contract.