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Legal spat over Weinberg Foundation-backed building continues

The building at 1200 W. Baltimore St. was once owned by a local nonprofit that, with a grant from The Harry and Jeanette Weinberg Foundation, was supposed to be space for adult literacy programs. Instead, the foundation alleges the nonprofit sold it without the foundation’s consent and then leased the space for a for-profit business incubator. (Maximilian Franz/The Daily Record)

The building at 1200 W. Baltimore St. was once owned by a local nonprofit that, with a grant from The Harry and Jeanette Weinberg Foundation, was supposed to be space for adult literacy programs. Instead, the foundation alleges the nonprofit sold it without the foundation’s consent and then leased the space for a for-profit business incubator. (Maximilian Franz/The Daily Record)

A dispute over the sale of a west Baltimore building that was developed in part by The Harry and Jeannette Weinberg Foundation continues to move forward in federal court.

The case stems from an agreement the foundation entered with a local nonprofit, Communities Organized to Improve Life Inc., in the 1990s to develop a property located at 1200 W. Baltimore St into a space for adult literacy programs. The foundation granted COIL $675,000 for the project, or about 30 percent of the renovation costs.

As part of the agreement, COIL had permission to display a sign on the building with the foundation’s name. The agreement also stated that if COIL dissolved or sold the property with the foundation’s consent, COIL had to give the property and remaining funds to a nonprofit entity with a similar mission, or put the money in a trust, according to court documents.

But COIL sold the property to St. Marks Avenue LLC, a New York-based company, for $1 million in 2013 without the foundation’s consent, according to the complaint. COIL then leased the property from St. Marks, and its director, Stacy Smith, opened a for-profit business incubator called the Urban Business Center, according to the complaint.

The foundation, which found out about the sale through public records, sent a letter to COIL in late 2014 to sever their relationship and request that the sign on the building bearing the foundation’s name be taken down. The foundation filed suit in U.S. District Court in Maryland against COIL, Smith, and St. Marks alleging false endorsement, breach of contract, civil conspiracy, among other counts.

The lawsuit also seeks to stop COIL from using any displays that uses the foundation’s logo, names or symbols.

“Defendants are aware of the benefits obtained by associating with the goodwill of the Foundation, and as a result, are deliberately trading on the Foundation’s name to deceive, mislead and confuse consumers as to the Foundation’s affiliation,” the complaint states.

The foundation’s name has since been removed the building.

The foundation also seeks $675,000 in damages, the amount it gave COIL for the adult literacy center.

The litigation recently took a detour when Smith, who had a lawyer at the time, filed pro se a counterclaim against the foundation and St. Marks. Her lawyer subsequently withdrew from the case, and Smith filed a motion to dismiss the lawsuit.

U.S. District Judge George L. Russell III last week denied Smith’s motion to dismiss and granted the foundation and St. Marks’ motion to dismiss the counterclaim. (Smith subsequently filed a motion to stay the proceedings that is pending.)

Russell has yet to rule on summary judgement motions filed by the foundation and St. Marks.

“My client wants to have the property free and clear of the claims of Weinberg and wants to have a determination of what the various rights and obligations are between St. Marks and COIL,” said Jonathan Azrael, a lawyer for St. Marks and its sole member, William Spivey. Azrael is senior partner at Towson-based Azrael, Franz, Schwab, & Lipowitz LLC.

COIL does not have a lawyer who has entered an appearance. Smith has been filing motions on behalf of COIL and herself since February, according to court documents.

The parties “remain hopeful for an out-of-court resolution to this matter,” according to a joint status report filed in March.

The foundation is represented by Anthony P. Ashton and William F. Kiniry III of DLA Piper US LLP in Baltimore.

The case is The Harry and Jeanette Weinberg Foundation Inc. v. St. Marks Avenue, LLC et al., 1:15-cv-03525-GLR


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