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Office tenants seek to set aside $8M verdict

The former tenant of a Rockville office building has asked a judge to throw out more than $8 million in compensatory and punitive damages it was ordered to pay its former landlord for allegedly forcing the landlord into foreclosure — twice — because of unpaid rent.

Ronald Cohen Investments Inc. and Ronald Cohen Management Co. claim the landlord, Tower Oaks Boulevard LLC, would have filed for bankruptcy in February 2011 in any event.

“The mounting debt and financial problems of Plaintiff Tower Oaks increased in magnitude throughout 2010 culminating in the filing of bankruptcy, during which time Defendant RCI had been paying its rent in full for 16 months,” states the motion, filed Tuesday in Montgomery County Circuit Court. “Clearly, forces totally independent of any acts by either defendant caused financial problems.”

Christopher Fogleman, a lawyer for Tower Oaks, said Wednesday the arguments raised by the Cohen companies were previously raised and rejected at trial.

“The jury returned a verdict supported by facts and the law,” said Fogleman, of Gleason, Flynn, Emig & Fogleman Chtd. in Rockville.

The Cohen companies also argue there was no evidence to show they tortiously interfered with Tower Oaks and its lender.

A jury in January awarded Tower Oaks $2.3 million for that cause of action. The Cohen companies say that if the award stands, it could “forever change the landscape of contracts in Maryland.”

“No prospective tenant would ever enter into a lease out of fear that [a] breach could lead to exposure to pay not only damages under the lease but also non-foreseeable damages resulting from the incidental consequences of that breach,” Steven M. Weisbaum, a Rockville solo practitioner representing the Cohen companies, wrote in the motion.

But Fogleman said Ronald Cohen himself wrote a letter in 2009 to Tower Oaks, noting the landlord could not pay the lender if Cohen’s companies did not pay their rent.

“[Cohen] is squeezing them,” Fogleman said. “This is so much more than a breach of lease case.”

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.

Tower Oaks has said it needed the Cohen companies’ rent to pay the mortgage. But the Cohen companies’ motion claims the other tenant in the building, Sun Control Systems Inc., which is owned by the Buckingham family, owed $1.3 million in back rent at the time Tower Oaks filed for bankruptcy.

Fogleman said the Cohen companies could have brought Sun Control into the litigation and that Judge Ronald B. Rubin instructed the jurors on concurrent causation, meaning there might be multiple causes to an incident but it does not absolve a party from its actions.

Punitives, attachments challenged

The Cohen companies also claim they did nothing to justify the award of $3 million in punitive damages awarded to Tower Oaks last month by Rubin.

“It is against reason that Defendants would try to force Plaintiffs to lose their building because it would place Defendants in jeopardy of being evicted by the lender or subsequent owner,” the motion states.

Rubin also granted Tower Oaks’ motions for writs of attachment on four Cohen-owned properties located on or near Rockville Pike. But Eric Siegel, principal and legal counsel for Cohen Siegel Investors LLC, said Wednesday the defendant Cohen companies have no ownership stake in any of the properties. The properties are owned by Cohen family members, and the property owners Wednesday filed third-party motions to remove the writs, Siegel said.

Fogelman said it is true “as a matter of record” that the defendant Cohen companies don’t own the properties but that the funding sources are the same for all Cohen entities.

The case is Tower Oaks Boulevard LLC, et al. v. CWCapital Asset Management LLC, et al., 368256V.