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Law Digest — 4th Circuit, Court of Appeals, Court of Special Appeals — July 14, 2022

U.S. Court of Appeals for the 4th Circuit

 Contract; damages: Where a tenant argued the landlord received an improper windfall because it was awarded both late fees and interest for a breach, that argument was rejected. The parties’ lease allowed the landlord to recover both late fees and interest in the event of a breach. Cantwell-Cleary Co. Inc. v. Cleary Packaging LLC, No. 21-1981 (filed June 7, 2022).

Maryland Court of Appeals

Administrative; transportation impact fee credits: Where the Anne Arundel County Code states that the county “shall” award transportation impact fee credits when a developer satisfies certain criteria, a developer was entitled to those credits when it satisfied the criteria. The county’s contrary interpretation was rejected because it inserted language into the code that does not exist. Anne Arundel County v. 808 Bestgate Realty LLC, No. 38, Sept. Term, 2021 (filed July 7, 2022).

Criminal; waiver: Where a defendant filed a pretrial motion to suppress evidence obtained through a warrantless search, that preserved the issue for appeal. As a result, when his counsel answered “no objection” when the evidence was introduced at trial, that did not waive the objection. Huggins v. State, No. 59, Sept. Term, 2021 (filed July 7, 2022). 

Maryland Court of Special Appeals

Criminal; expungement: Where an individual who filed a petition to expunge convictions and related court and police records argued that the “good cause” proviso in Crim. Proc. § 10-105 applied to expungement petitions filed pursuant to Crim. Proc. § 10-110, that argument was rejected because it was contrary to the plain text of the statute, the legislative history, the relevant case law and a consideration of the interpretative consequences. In re Expungement Petition of Vincent S., Nos. 607 and 608, Sept. Term, 2021 (filed July 5, 2022).

U.S. Court of Appeals for the 4th Circuit

Contract

Damages

BOTTOM LINE: Where a tenant argued the landlord received an improper windfall because it was awarded both late fees and interest for a breach, that argument was rejected. The parties’ lease allowed the landlord to recover both late fees and interest in the event of a breach.

CASE: Cantwell-Cleary Co. Inc. v. Cleary Packaging LLC, No. 21-1981 (filed June 7, 2022) (Judges NIEMEYER, Gregory, Harris).

FACTS: This protracted litigation concerning a 12-year commercial lease comes to this court on the merits for the third time. The court first held that NCO Financial Systems Inc. failed to satisfy the conditions for exercising the lease’s early termination option and that its vacation of the leased premises left it potentially liable for the payment of rent for the full term.

In the second appeal, the court held that Montgomery Park LLC’s obligation to mitigate damages was not a condition precedent to an award of damages and that it also did not require Montgomery Park to “develop a unique, preferred plan for leasing the NCO space . . . at the expense of its other vacant spaces” in the building. The court concluded that it was required only “to reasonably market NCO’s space on an equal footing with the other spaces that it was seeking to rent” in the building. Accordingly, it directed the district court to determine whether Montgomery Park’s “generalized marketing efforts” of the entire building, including NCO’s vacant space, were commercially reasonable.

In this appeal the court is presented with the question of whether the district court, on remand, clearly erred in finding that Montgomery Park’s efforts to mitigate damages were commercially reasonable. NCO also raises the question of whether the damages award can include both late fees and interest.

LAW: NCO primarily contends that the conclusions that the district court reached in finding Montgomery Park’s re-leasing efforts commercially reasonable were inconsistent with its earlier conclusions, reached before this court’s last decision, when it found the efforts were not commercially reasonable.

While most of the mitigation facts were developed in the prior proceeding, where the district court found Montgomery Park’s marketing efforts to lack commercial reasonableness, the court reconsidered those facts on remand, along with others it found in a subsequent hearing, to conclude that Montgomery Park had in fact engaged in commercially reasonable efforts.

The difference in conclusions, it explained, was attributable to the different standard directed by this court. The court does not find that the district court’s findings were clearly erroneous.

NCO also focuses on particular strategies that Montgomery Park did not pursue to argue that the district court’s failure to consider them or be influenced by their omission rendered its findings clearly erroneous. While NCO’s arguments are designed to effect body punches against the district court’s findings, NCO has, in the end, failed to demonstrate that any of the district court’s findings were clearly erroneous.

Finally, NCO contends that the district court erred in awarding Montgomery Park both late fees (over $300,000) and interest (over $3.8 million), because doing so left “Montgomery Park in a far better position than it would have been in had NCO not breached the Lease and, thus, would be a windfall prohibited under Maryland law.”

The court finds no error. While NCO relies exclusively on the general principle that “[i]n an action for breach of contract, courts attempt to put the injured party in as good a position as it would have occupied had the contract been fully performed by the breaching party, ” that same case also provides that damages may include that which “may reasonably be supposed to have been in contemplation of both parties at the time they made the contract, as the probable result of the breach of it.” And, in this case, the parties did expressly agree to the payment of both late fees and default interest, thus signaling that they contemplated that both would be payable upon default.

Affirmed.

Maryland Court of Appeals

Administrative

Transportation impact fee credits

BOTTOM LINE: Where the Anne Arundel County Code states that the county “shall” award transportation impact fee credits when a developer satisfies certain criteria, a developer was entitled to those credits when it satisfied the criteria. The county’s contrary interpretation was rejected because it inserted language into the code that does not exist.

CASE: Anne Arundel County v. 808 Bestgate Realty LLC, No. 38, Sept. Term, 2021 (filed July 7, 2022) (Judges Getty, McDonald, Watts, Hotten, BOOTH, Biran, Battaglia).

FACTS: Under the Anne Arundel County Code, § 17-11-207(c), when transportation improvements are constructed in connection with a development project that provide “transportation capacity over and above the adequate road facilities requirements” required by § 17-5-401, then “[t]ransportation impact fee credits shall be allowed[.]”

In this appeal, there is no dispute that 808 Bestgate Realty LLC proposed to construct improvements to Bestgate Road, which were approved by the County’s Engineer Administrator, and that the improvements provided transportation capacity that was “over and above” the requirements of the County’s adequate public facilities, or APF,  standards that are applicable to roads. The County Board of Appeals of Anne Arundel County nevertheless determined that Bestgate was not entitled to transportation impact fee credits.

The circuit court reversed the board’s decision. The Court of Special Appeals then affirmed the circuit court in part, and reversed it in part. The intermediate appellate court determined that, under the plain language of § 17-11-207(c), the board erred in its interpretation. However, the Court of Special Appeals remanded the case to the board for further findings on an issue that it raised on its own: whether the improvements to Bestgate Road were “site-related transportation improvements” under the code, which would render them ineligible for transportation impact fee credits.

LAW: Under the plain language of the Code, “[t]ransportation impact fee credits shall be allowed for transportation improvements providing transportation capacity over and above the adequate road facilities requirements[.]” This court has repeatedly held that the word “shall” is mandatory.

The board’s interpretation of § 17-11-207(c)—in which a development must first fail to satisfy the APF road requirements thereby triggering the need for a mitigation plan in order to be eligible for transportation impact fee credits—would require that the court insert language into the code that does not exist. Nothing in the plain language of § 17-11-207(c) conditions the developer’s entitlement to transportation impact fee credits on the necessity of a mitigation plan under § 17-5-401(a)(3).

The court is unpersuaded by the County’s argument that the plain language interpretation of § 17-11-207(c) will lead to an absurd or illogical result. First, the County has adopted the same interpretation in connection with other development proposals in which the credits have been granted without the need for mitigation.

Second, if the County determined that the developer’s proposed improvements would not add to the transportation capacity or enhance public safety of county roads, it could simply deny the approval of the same. Here, the County’s Engineer Administrator approved the improvements.

Third, the County has the authority to amend its code to reach the interpretation that it seeks here—to limit the availability of the transportation impact fee credits to those instances where a developer must first undertake improvements as part of an approved mitigation plan, and the improvements exceed those required by the mitigation plan. However, until such time as the County chooses to amend the code, the court will interpret it consistent with its plain language.

The Court of Special Appeals pointed out that under subsection (c), the credits would not be permitted if the Bestgate Road improvements were considered to be “site-related” improvements. In the briefs and oral arguments before this court, the parties agreed that improvements to Bestgate Road are not “site related” as that term is defined under the code. Given that the County does not dispute the interpretation of its own code provisions on this issue, a remand to the board to resolve the same is not “necessary or desirable . . . to avoid the expense and delay of another appeal.”

Judgment of the Court of Special Appeals affirmed in part, reversed in part.

Criminal

Waiver

BOTTOM LINE: Where a defendant filed a pretrial motion to suppress evidence obtained through a warrantless search, that preserved the issue for appeal. As a result, when his counsel answered “no objection” when the evidence was introduced at trial, that did not waive the objection.

CASE: Huggins v. State, No. 59, Sept. Term, 2021 (filed July 7, 2022) (Judges Fader, Watts Hotten, Booth, Biran, GOULD, Eaves).

FACTS: Luis Felepe Huggins was indicted on charges of possessing a regulated firearm after having been convicted of a crime of violence and other related crimes. Mr. Huggins moved to suppress the gun and the loaded magazine that police recovered inside a closed overnight bag while conducting a warrantless search of his hotel room. After an evidentiary hearing, the Honorable Timothy J. McCrone denied the motion to suppress.

The state filed a superseding indictment under a new case number to add additional charges. Mr. Huggins renewed his motion to suppress in the new case. This time, the motion to suppress was heard by the Honorable Richard S. Bernhardt. At the hearing on the motion, defense counsel explained that the motion had been argued and denied in the case filed under the original indictment and that Mr. Huggins renewed the motion under the new case number only to ensure that the denial of the motion to suppress was preserved for appeal.

Judge Bernhardt suggested that defense counsel scan the transcript from the prior motions hearing and have it incorporated into the record. Defense counsel agreed to do so but emphasized that Mr. Huggins was preserving his objections from the original motion. The state agreed. The transcript and all exhibits from the motion filed in the first case were admitted and then incorporated into the record. No additional argument was heard.

During Mr. Huggins’s subsequent trial, the police officer testified about his search of the overnight bag, and the items found therein were admitted into evidence. As each was offered into evidence, defense counsel stated: “No objection.” Mr. Huggins was convicted of multiple charges.

Mr. Huggins appealed, arguing in part that the circuit court erred in denying his motion to suppress. The Court of Special Appeals, on its own, concluded that Mr. Huggins had waived his right to appeal the denial of his suppression motion.

LAW: Maryland Rule 4-252 governs motions practice in criminal matters. A defendant claiming an unlawful search and seizure must file a pretrial motion in conformity with this rule. In contrast, objections to the admission of evidence and any other rulings at trial are governed by a different rule, Rule 4-323.

The potential inconsistency in the application of these two rules to the present case is readily apparent. Mr. Huggins complied with Rule 4-252 by filing a timely pretrial motion to suppress evidence recovered from the search and seizure. Under the plain language of that Rule, therefore, nothing more was required of him to preserve the issue for appeal—Rule 4-252 had completed its work, and the evidentiary baton was passed to Rule 4-323. Yet, under Rule 4-323, the failure to object to the admission of that same evidence would—based on its plain text—seemingly result in a waiver of any objections. The task, therefore, is to harmonize these rules if possible.

The simple answer is that the relevant subsections of these two rules address different and mutually exclusive grounds for objecting: Rule 4-252(a) applies to motions that must be filed and resolved pretrial, including claims of unlawful search and seizure, and Rule 4-323(a) applies to any other grounds for objecting to the admission of such evidence.

This explains why the state is correct that defense counsel could have remained silent when the evidence was offered at trial without waiving the right to appeal the search and seizure issue. Where the state goes astray, however, is in its contention that Mr. Huggins’ counsel’s unprompted response of “no objection” produced a waiver of the search and seizure issue.

Mr. Huggins’ pretrial motion to suppress was denied. That issue was taken off the table and preserved well before trial, and the ruling remained binding at trial. So, when considered in the appropriate context, defense counsel’s response of “no objection” referred only to the objections then in play—those contemplated by Rule 4-323. Under these circumstances, the court sees no cogent basis on which to conclude that defense counsel’s response of “no objection” was intended by defense counsel or would have been reasonably understood by the court as a voluntary relinquishment of the fully preserved right to judicial review of the search and seizure issue.

The court does not foreclose the possibility that, having fully preserved the issue under Rule 4-252, words or actions taken by defense counsel could potentially result in a waiver of the previously preserved search and seizure issue. But this is not such a case.

Judgment of the Court of Special Appeals vacated.

Maryland Court of Special Appeals

Criminal

Expungement

BOTTOM LINE: Where an individual who filed a petition to expunge convictions and related court and police records argued that the “good cause” proviso in Crim. Proc. § 10-105 applied to expungement petitions filed pursuant to Crim. Proc. § 10-110, that argument was rejected because it was contrary to the plain text of the statute, the legislative history, the relevant case law and a consideration of the interpretative consequences.

CASE: In re Expungement Petition of Vincent S., Nos. 607 and 608, Sept. Term, 2021 (filed July 5, 2022) (Judges KEHOE, Leahy, Moylan).

FACTS:  Crim. Proc. § 10-105(c)(9) authorizes courts to grant petitions for expungement “at any time on a showing of good cause.” Mr. S. filed two petitions for expungement of convictions and related court and police records in the circuit court pursuant to Crim. Proc. § 10-110. After a hearing, the circuit court denied both requests.

The issue in this appeal is whether the exercise of this authority is limited to the relatively narrow class of records that can be expunged pursuant to § 10-105 or whether it extends to the much broader universe of records that can be expunged pursuant to Crim. Proc. § 10-110.

LAW: Mr. S. first asserts that he has satisfied the statutory criteria for expungement of the 2001 burglary convictions and the 2002 felony theft conviction. This is clearly not correct.

Section 10-110(c)(3) provides that a petition for expungement of a felony conviction “may not be filed earlier than 15 years after the person satisfies the sentence or sentences imposed for all convictions for which expungement is requested, including parole, probation, or mandatory supervision[.]” As the state points out in its briefs, Mr. S. finished paying the restitution ordered by the court for the burglary conviction in 2018. Fifteen years has not expired since 2018.

And, as to both the burglary and the theft convictions, Mr. S. was subsequently convicted of violating Bus. Reg. § 8-601(a). Because this conviction is not eligible for expungement, his theft and burglary convictions are also “not eligible for expungement.”

Mr. S.’s second argument is based on Crim. Proc. § 10-105(c)(9), which gives courts the authority “to grant a petition for expungement at any time on a showing of good cause.” He asks this court to vacate the circuit court’s order and to “remand with instructions to conduct a hearing concerning the issue of good cause.” This contention is based on the assumption that subsection (c)(9) grants courts plenary authority to grant petitions for expungement even if the petitioner is unable to satisfy the relevant statutory criteria. The court does not agree with Mr. S.’s interpretation of the statute.

When it is read in context, § 10-105(c)(9) grants courts discretionary authority to relieve a petitioner of the time requirements for filing an expungement petition only as to those circumstances described in the preceding subsections of Crim. Proc. § 10-105(c). Section 10-105(c)(9) does not apply to Mr. S.’s expungement petitions because they were filed pursuant to Crim. Proc. § 10-110. That statute does not contain a provision that grants courts the discretion to grant expungements at any time upon a showing of good cause. The relevant legislative history confirms this interpretation.

Finally, accepting Mr. S.’s proposed construction of Crim. Proc. § 10-105(c)(9) would make meaningless surplusage of the time limitations set out in § 10-110(c)(1)-(3). Mr. S.’s proffered interpretation of § 10-105(c)(9) would also render meaningless § 10-110(d), which provides “if the person [seeking expungement] is convicted of a new crime during the applicable time period set forth in subsection (c) of this section, the original conviction or convictions are not eligible for expungement unless the new conviction becomes eligible for expungement.”

The plain text of the statute, the legislative history, the relevant case law and a consideration of the interpretative consequences all point to the conclusion that the General Assembly did not intend the “good cause” proviso in Crim. Proc. § 10-105 to apply to expungement petitions filed pursuant to Crim. Proc. § 10-110.

Judgments of the Circuit Court for Baltimore County affirmed.