MJ Harbor Hotel, LLC v. McCormick & Schmick Restaurant Corp.
D. Maryland2/18/2009
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MEMORANDUM OPINION WILLIAM D. QUARLES, JR., District Judge. MJ Harbor Hotel, LLC (âHarbor Hotelâ) sued McCormick & Schmick Restaurant Corp. and McCormick & Schmick Acquisition Corp. (âDefendantsâ) for breach of a lease agreement and for a declaratory judgment. Pending are: (1) Harbor Hotelâs motion for partial summary judgment, (2) the Defendantsâ cross-motion for summary judgment, and (3) Harbor Hotelâs motion to strike the Defendantsâ expert report and testimony. For the following reasons, the motions will be denied. I. Background On July 16, 1997, McCormick & Schmick ECP III, a predecessor of McCormick & Schmick Restaurant Corp., contracted with The Inn at Pier 5 Limited Partnership, a predecessor of Harbor Hotel, to lease space in the Pier 5 complex (âPier 5â) located at 711 Eastern Avenue, Baltimore Maryland. Am. Compl. ¶¶ 7, 14. The *615 space was to be used for â[t]he operation of an upscale, sit-down, full service white tablecloth seafood restaurant, together with accompanying bar/alcoholic beverage service.... â PL Mot. Summ. J. Ex. 1 § 1.23. Sometime before 2001, Harbor Hotel became the landlord under the 1997 lease. Id. at ¶20. On August 17, 2001, McCormick & Schmick Restaurant Corp. became the tenant under the lease. Id. at ¶ 22. McCormick & Schmick Acquisition Corp. is now the guarantor of the tenantâs obligations under the lease. Id. Section 10.5 of the 1997 lease restricts the tenant from directly or indirectly operating a restaurant âof a similar kindâ within a 10 mile radius of the leased property. PL Mot. Summ. J. Ex. 1 § 10.5. Section 10.5 states that âany restaurant operating under the name of âMcCormick and Schmickâ and/or whose menu consists of 50% or more seafood entree items shall be deemed âanother restaurant of a similar kindâ...â Id. Section 39.1.2 of the 1997 lease defines a Default as any failure by the tenant to perform a âcovenant, agreement, obligation, or condition ... other than the payment of Rent or Additional Rentâ after the landlord has provided notice of the default and the tenant has failed to cure within 30 days. Id. at § 39.1.2. Under § 10.5 of the lease, rent includes a percentage of the income of a similar restaurant operated by McCormick & Schmick. Id. at § 10.5. In March 2003, McCormick & Schmick Restaurant Corp. contracted with Harbor Place Associates Limited Partnership, an affiliate of the Rouse Companies, to lease space in the Pratt Street Pavilion of Har-borplace. Harborplace Lease. That space was to be used for âthe operation of a full service, medium to better quality M & S Grill restaurant serving lunch and dinner and offering menu items substantially similar to those offered in the majority of M & S Grill restaurants.â PL Mot. Summ. J. Ex. 4 § l.l.F. In October, 2003, McCormick & Schmick Restaurant Corp. opened an M & S Grill restaurant in Harborplace. Def. Mot. Summ. J. at 5. The Harborplace M & S Grill is located within 10 miles of the Pier 5 McCormick & Schmick. On July 31, 2007, Harbor Hotel sued the Defendants in the Circuit Court for Baltimore City. Notice of Removal ¶ 1. On September 5, 2007, the Defendants removed the case. On January 3, 2008, the Plaintiff filed its Amended Complaint seeking a declaration that Harbor Hotel is owed damages recoverable under § 10.5 of the lease. On July 3, 2008, Harbor Hotel moved to strike the Defendantsâ expert report and testimony. Paper No. 33. On October 17, 2008, Harbor Hotel moved for partial summary judgment. Paper No. 50. On November 6, 2008, the Defendants filed a cross-motion for summary judgment. Paper No. 54. The motions were heard on February 11, 2009. 1 *616 II. Analysis A. Harbor Hotelâs Motion for Partial Summary Judgment 1. Standard of Review Under Rule 56(c), summary judgment is appropriate when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 , 106 S.Ct. 2548 , 91 L.Ed.2d 265 (1986). A dispute about a material fact is genuine âif the evidence is such that a reasonable jury could return a verdict for the nonmoving party.â Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 , 106 S.Ct. 2505 , 91 L.Ed.2d 202 (1986). The Court must view the facts and reasonable inferences drawn therefrom âin the light most favorable to the party opposing the motion.â Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 , 106 S.Ct. 1348 , 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 , 82 S.Ct. 993 , 8 L.Ed.2d 176 (1962) (per curiam)). The opposing party, however, must produce evidence upon which a reasonable factfinder could rely. Celotex, 477 U.S. at 324 , 106 S.Ct. 2548 . A mere âscintillaâ of evidence is insufficient to preclude summary judgment. Anderson, 477 U.S. at 252 , 106 S.Ct. 2505 . 2. Is the M & S Grill âOperating under the name âMcCormick & Schmickâ â? Harbor Hotel contends that M & S Grill is operating under the name âMcCormick & Schmick,â in violation of § 10.5 of the 1997 lease, because: (1) âM & Sâ is an âobviousâ reference to âMcCormick & Schmick;â (2) the Defendants list M & S Grill as a restaurant operated under the name âMcCormick & Schmickâ on the company website; and (3) M & S Grill is listed as operating under the name âMcCormick & Schmickâ in McCormick & Schmick Seafood Restaurants, Inc.âs SEC filings. PI. Mot. Summ. J. at 4,15. The Defendants counter that: (1) âM & Sâ is not literally âMcCormick & Schmick;â (2) only a restaurant named âMcCormick & Schmickâ violates § 10.5; and (3) M & S Grillâs trade name is not âMcCormick & Schmick.â Def. Mot. Summ. J. at 17. If- a contract is unambiguous, âthe court must give effect to its plain meaning and not contemplate what the parties may have subjectively intended ...â Nova Research, Inc. v. Penske Truck Leasing Co., 405 Md. 435, 448 , 952 A.2d 275, 283 (2008). A contract term is ambiguous if, âwhen read by a reasonably prudent person, it is susceptible of more than one meaning.â Nova Research, Inc. v. Penske Truck Leasing Co., 405 Md. 435, 448 , 952 A.2d 275, 283 (2008). If a term is ambiguous, its interpretation is a question for the factfinder. Prison Health Services, Inc. v. Baltimore County, 172 Md. App. 1, 8 , 912 A.2d 56, 61 (Md.Ct.Spec.App.2006). Section 10.5 states that âany restaurant operating under the name of âMcCormick and Schmickâ... shall be deemed âanother restaurant of a similar kind.â â Section 10.5âs use of quotation marks strongly suggests that only a restaurant identifying itself as âMcCormick & Schmickâ is deemed a restaurant of a similar kind. 2 *617 Additionally,- when âMcCormick & Schmickâ is in § 1.6 of the lease, it identifies the tenantâs trade name. 3 This suggests that under § 10.5, only a restaurant with the name âMcCormick & Schmickâ is âa restaurant of a similar kind.â As Harbor Hotel notes, however, the term âoperating underâ does not unequivocally refer to a restaurantâs trade name. Pl. Repl. at 8. Because the term âis ambiguous,â whether âM & S Grillâ operates under the name âMcCormick & Schmickâ is a question for the factfinder. 3. Does the M & S Grill âMenu Consists] of 50 [Percent] or More Seafood Entreesâ? Section 10.5 of the lease states that âany restaurant ... whose menu consists of fifty percent ... or more seafood entre[e] items shall be deemed âanother restaurant of a similar kind.â â Pl. Mot. Summ. J. Ex. 1. Harbor Hotel contends that the M & S Grill menu consists of at least 50 percent seafood entrees. Pl. Mot. Summ. J. at 5, 17. a. What is a Menu? âMenuâ is not defined in the lease. The parties disagree about the meaning of the term âmenu.â Harbor Hotel contends that the menu attached to the M & S Grill lease (âthe old menuâ) contains âfifty percent or moreâ âmenuâ seafood entree items Pl. Mot. Summ. J. at 5, Ex. 4. D00495. ' Harbor Hotel also contends that (1) each individual menu presented to customers, or (2) the aggregate menu created by its expert, is a âmenuâ under § 10.5. Hrâg Tr. at 8-11; Pl. Mot. Summ. J. at 13-14,17. The Defendants assert that the âmenuâ described in § 10.5 is not the old menu, but instead refers to the individual menus for each day of a restaurantâs operation. Def. Mot. Summ. J. at 25-29. Thus, Defendantsâ proposed menu is the combined M & S Grill lunch and dinner menus for each day of service. See Def. Mot. Summ. J. at 25; Def. Mot. Summ. J. Ex. 12; Hrâg Tr. at 23-24. The old menu was used at the Washington, D.C. M & S Grill before March 11, 2003, the date on which the Harborplace lease was signed. Id. at Ex. 4, D00409, D00495-497. Although the parties agree that the old menu contains more than 50 percent seafood entrees, Pl. Mot. Summ. J. at 5; Def. Mot. Summ. J. at 23, the Defendants contend â and Harbor Hotel does not dispute â that the old menu was never given to customers of the M & S Grill in Harborplace. Although the old menu may be some evidence of the type of menu meant by § 10.5 of the 1997 lease, it does not â standing alone â entitle the Plaintiff to relief. The old menu is not dispositive of whether M & S Grill is a âsimilar kindâ of restaurant under § 10.5. As Harbor Hotel recognizes, however, the 1997 lease does not specify which menus âmust be examined for seafood entree items.â Pl. Repl. at 11. Accordingly, whether M & S Grillâs âmenuâ violates the 1997 lease is a question of fact. Prison Health Services, Inc., 172 Md.App. at 8 , 912 A.2d at 61 (Md.Ct.Spec.App.2006). b. What is a Seafood Entree? The parties also disagree about when an entree is a âseafood entree.â Harbor Ho *618 tel, like the Defendantsâ expert, contends that an entree with seafood and non-seafood elements is half of a seafood entree under § 10.5. PI. Mot. Summ. J. at 12; Ex. 5. The Defendants agree that their expert stated that an entree with seafood and non-seafood elements is counted as a half seafood entree, but contend that such an entree is a âcomboâ entree that is not to be counted as a seafood entree under § 10.5. Def. Mot. Summ. J. at 28; Ex. 13. To further complicate matters, many of the M & S Grill entrees include the option of adding a crab cake. PI. Mot. Summ. J. Ex. 12, D00008. Harbor Hotel contends that if a menu has 10 non-seafood entrees with the option of adding a crab cake, each of those entrees is one half of a seafood entree. PI. Mot. Summ. J. at 12; Ex. 4. Using the same example, the Defendants contend that adding a crab cake creates 20 entrees, 10 of which are each one half of a seafood entree, and 10 of which are non-seafood entrees. Def. Mot. Summ. J. at 29; PI. Mot. Summ. J. Ex. 4. The term âseafood entreeâ may be reasonably construed either way. Nova Research, Inc., 405 Md. at 448 , 952 A.2d at 283 . Accordingly, the construction of this ambiguous term is a matter for the fact-finder. Prison Health Services, Inc., 172 Md.App. at 8 , 912 A.2d at 61 . 4. Is the M & S Grill, generally, a restaurant of a Similar Kind? Harbor Hotel contends that, in addition to being âdeemed a restaurant of a similar kind,â under § 10.5, M & S Grill is a ârestaurant of a similar kindâ as the term is generally used in the 1997 lease. 4 PI. Mot. Summ. J. at 16. The Defendants appear to agree that ârestaurants of a similar kindâ are restaurants that share similar marketing positions, prices, wine selections, service, and decor. Def. Mot. Summ. J. at 18-25, 29-34; PI. Mot. Summ. J. at 5-11. The partiesâ motions papers did not discuss the interplay between the permitted use clauses in the 1997 5 and the M & S Grill leases 6 and the interpretation of âsimilar kindâ in § 10.5. At the motions hearing, Harbor Hotel stated that § 1.23 does not define âsimilar kind,â and âsimilar kindâ is broader than the permitted use clause. Hrâg Tr. at 7-8. The Defendants stated that the permitted use in § 1.23 of the 1997 lease defines âsimilar kind,â and only restaurants described in § 1.23 violate § 10.5. Hrâg Tr. at 32. Section 1.23 of the 1997 lease permits the tenant to operate an âupscale, sit-down, full service white tablecloth seafood restaurant ...â Id. at Ex. 1 § 1.23. Section I.I.F. of the M & S Grill lease permits the tenant to operate a âfull service, medium to better quality M & S Grill restaurant ...â Id. at Ex. 4 § l.l.F. The permitted use of the Harborplace lease may encompass the permitted use of the 1997 lease agreement because a âbetter quality M & S Grill restaurantâ may be an âupscale, sit-down, full service white tablecloth seafood restaurant.â Whether § 10.5 prohibits the *619 operation of the M & S Grill is a question of fact. 7 Because there is a genuine dispute of material fact whether McCormick & Schmick and M & S Grill are â generallyâ restaurants of a similar kind, Harbor Hotelâs motion for summary judgment must be denied. Celotex, 477 U.S. at 322 , 106 S.Ct. 2548 . B. Defendantsâ Motion for Summary Judgment The Defendants seek summary judgment on the grounds that (1) Harbor Hotel waived or limited its right to relief by failing to object to M & S Grillâs Harbor-place presence for four years, (2) M & S Grill is not âdeemed a restaurant of a similar kind,â and (3) M & S Grill is not generally a restaurant of a similar kind. 1. May the M & S Grill be âDeemed a Restaurant of a Similar Kindâ? The Defendants seek partial summary judgment on whether M & S Grill is deemed a restaurant of a similar kind under § 10.5. As discussed above, there may be issues of material fact whether M & S Grill is in violation of âoperating underâ the name âMcCormick & Schmickâ or has a menu with 50 percent or more seafood entrees. Accordingly, summary judgment on the âoperating underâ and âseafood entreeâ provision must be denied. Celotex, 477 U.S. at 322 , 106 S.Ct. 2548 . *620 2. Restaurant of a Similar Kind The Defendants move for summary judgment, contending that the restaurants are not similar because: (1) M & S Grill does not include âThe Fresh Listâ on its menu, unlike McCormick & Schmick; (2) the check prices at the restaurants are substantially different; and (3) McCormick & Schmick is required by the lease to use white tablecloths, which M & S Grill does not use. Def. Mot. Summ. J. at 36. As Harbor Hotel notes, these facts are countered by its evidence â discussed above â that the two restaurants are similar. PI. Repl. at 14. That evidence precludes summary judgment for the Defendants. 3. Notice and Waiver The Defendants contend that â if M & S Grill is a restaurant of a similar kindâ Harbor Hotel is barred from any recovery before February 1, 2008 â 30 days after it gave the Defendants written notice of default because: (1) § 39.1 of the lease required Harbor Hotel to provide the Defendants written notice of default and 30 days to cure; and (2) Harbor Hotel waived its rights under § 10.5 because it had constructive notice for more than four years that M & S Grill was open before giving notice of Default under § 39.1. a. Notice Under Section 39.1 Section 39.1 of the lease agreement states, If any one of the following events (sometimes called âDefaultâ) shall happen, the same shall constitute a Default under this Lease: ... If any of Tenantâs covenants, agreements, obligations or conditions set forth in this Lease other than the payment of Rent or Additional Rent are not performed or complied with by Tenant or Tenantâs guarantor within thirty (30) days after written notice from Landlord to Tenant of same unless Tenant shall commence the curing of such default within said thirty (30) day period and shall thereafter diligently and continuously prosecute the curing of same until completion, but in no event shall such cure period exceed sixty (60) days PI. Mot. Summ. J. Ex. 1 §§ 39.1, 39.1.2. The Defendants contend that § 39.1 requires Harbor Hotel to give written notice and an opportunity to cure before finding a Default. Def. Mot. Summ. J. at 7-9. Harbor Hotel argues that § 39.1âs notice requirement is excused by the Defendantsâ breach of § 10.5, and that § 39.1 does not apply to § 10.5 because § 10.5 is a rent-payment provision. PI. Repl. at 2-4; Hrâg Tr. at 56. On May 9, 2007, Harbor Hotel first told the Defendants that they were in breach of § 10.5. Def. Mot. Summ. J. Ex. 4. In a letter of that date, counsel for Harbor Hotel, Dennis Solomon, told the Defendants that they were in breach of § 10.5. Id. Solomonâs letter concluded, â[t]his is a courtesy letter, rather than a formal notice of default under the Lease.â Id. On May 23, 2007, the Defendants wrote Solomon, noting that Solomon âalleg[ed] a violation and breach by Tenant of its lease covenants under Section 10.5 of the Lease,â but denying that M & S Grill is a restaurant of a similar kind. Id. Ex. 5. On July 31, 2007, Harbor Hotel filed its complaint in the Circuit Court for Baltimore City, alleging a breach of § 10.5. Paper No. 1, Compl. On January 2, 2008, Solomon wrote the Defendants, that, â[njotwithstanding the Landlordâs position that sufficient notice of default was providedâ in the May 9, 2007 letter, the Defendants had breached § 10.5 of the lease, and their failure to comply with the lease agreementâs remedies for breach of § 10.5 âis a default under the terms of the Lease.â The letter concluded, â[tjhis is a *621 notice of default given by the Landlord to the Tenant ...â Id. Ex. 6. Despite Solomonâs January 2, 2008 assertion that the May 2, 2007 letter constituted notice under § 10.5, Harbor Hotel appears to concede that it did not give the Defendants written notice of the default until January 2, 2008, as it does not mention Solomonâs argument in its Reply brief. PL Repl. at 2-4. Instead, Harbor Hotel argues that the Defendantsâ failure to obtain its written approval before opening M & S Grill â a restaurant of a similar kindâ was a breach of § 10.5 and waived the Plaintiffs obligations under the lease agreement. 8 PI. Repl. at 3-4. The Defendants reply that § 10.5 requires notice only when the tenant actually operates a restaurant of a similar kind. Harbor Hotel also argues that § 39.1 does not apply to § 10.5 because § 10.5 is a rent-payment provision. Hrâg Tr. at 50-52. Section § 39.1.2 â which requires notice of default and opportunity to cureâ applies to âany of Tenantâs covenants, agreements, obligations or conditions ... other than the payment of Rent or Additional Rent ...â 9 Harbor Hotel contends that § 10.5âs requirement that the revenue from similar restaurants be included in the âAnnual Percentage Rentâ means § 10.5 is a rent provision. Hrâg Tr. at 49-52. The defendants respond that: (1) § 10.5 is a non-payment provision; (2) the reference to rent is remedial only; and (3) § 39.1.2 applies to § 10.5. Hrâg Tr. at 56. Harbor Hotel and the Defendants present reasonable interpretations of the interplay between § 39.1 and § 10.5. Because § 10.5 references rent, it may be interpreted as a rent payment provision not subject to § 39.1.2. But § 10.5 may also refer to a remedy within § 39.1.2. The relationship between § 39.1 and § 10.5 is an issue for the factfinder. Prison Health Services, Inc., 172 Md.App. at 8 , 912 A.2d at 61 . b. Waiver The Defendants contend that Harbor Hotel knew of the M & S Grill when it opened in October 2003, and its long delay in notifying the defendants of the breach of § 10.5 waived its rights under the lease. Def. Mot. Summ. J. at 5; Ex. 3 at 12, 50-51. A party to a contract waives its rights under that contract if it (1) intentionally continues performance under the contract after (2) learning of a breach. Pumphrey v. Pelton, 250 Md. 662, 667-668 , 245 A.2d 301, 304 (1968). Waiver is âthe intentional relinquishment of a known right.â Taylor v. Mandel, 402 Md. 109, 135 , 935 A.2d 671, 686 (2007) (citing In re Blessen H., 392 Md. 684, 698 , 898 A.2d 980, 988 (2006)). 10 *622 The Defendants argue that Harbor Hotel has known about the M & S Grill since 2003 when Kenneth Conklin' â the senior vice president of marketing for the corporate owner of Harbor Hotel â attended its grand opening, and has known since that date that M & S Grill and McCormick & Schmick are affiliated. Def. Mot. Summ. J. at 11, Ex. 3 at 49. Conklin has also eaten at M & S Grill several times since then. Id. The Defendants contend that Harbor Hotelâs officers failed to object to the Har-borplace M & S Grill because they had not read the lease agreement. Id.; Ex. 2. at 74-76. Noting that Maryland law assumes corporations have knowledge of facts within their possession, Gould, 224 Md. at 300, 167 A.2d at 912, they argue that Harbor Hotelâs failure to give notice of default until January 1, 2008, demonstrates that Harbor Hotel intended to allow the breach. The Defendants rely on Pumphrey v. Pelton, in which Pelton â a Dairy Queen franchisor â was found to have waived his right to terminate a contract with Pum-phrey â a franchisee â based on Humphreyâs breach of a contract provision barring him from selling non-Dairy Queen products at his restaurant. The court held that Pelton waived his rights under the contract because he âagreed by his conduct to a modification of the contract.â 250 Md. 662, 671 , 245 A.2d 301, 306 (1968). As Harbor Hotel explains however, Pelton knew that Pumphrey was breaching the contract and publicly and privately agreed to allow the sale of nonDairy Queen products. PI. Repl. at 5, Pumphrey, 250 Md. at 663-7 , 245 A.2d at 302-4 . Unlike Pumphrey , Harbor Hotel has not admitted intentionally allowing the defendants to operate a ârestaurant of a similar kindâ and has not publicly acquiesced to the breach. Harbor Hotel notes that (1) Conklin is not an officer of Harbor Hotel charged with knowledge of the lease agreement; thus, it had no knowledge of the alleged breach in October 2003, PI. Repl. at 6; Def. Mot. Summ. J. Ex. 3; (2) it mistakenly thought M & S Grill was a steak house until just before its initial letter to the Defendants on May 2, 2007, PI. Repl. at 5; Def. Mot. Summ. J. Ex. 3 at 77; and (3) there is no evidence that Harbor Hotel intended to allow the Defendants to breach § 10.5. Id. at 5. Although the Defendants correctly note that intent may be inferred from the circumstances, Gould. 224 Md. at 294, 167 A.2d at 909, finding such an inference is a matter for the fact-finder because (1) knowledge of the breach and (2) intent to allow the breach are disputed. C. Motion to Strike Harbor Hotel has moved to strike the written report produced by Douglas Breg-man, Esquire, the Defendantsâ expert real estate attorney. Alternatively, Harbor Hotel seeks to exclude Bregmanâs written report and testimony. Harbor Hotel argues that Bregmanâs report and testimony are inadmissable under Federal Rule of Evidence 702 because they contain legal opinions that will not aid the trier of fact in resolving any factual issue. The Defen *623 dants contend that Bregmanâs report and testimony are based on specialized knowledge of commercial leasing and will assist the Court in understanding the context, purpose, and operation of the provisions at issue. Def. Resp. at 1. 1. Motion to Strike Under Federal Rule of Civil Procedure 12(f), a âcourt may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.â Fed.R.Civ.P. 12(f). A pleading is a complaint, an answer to a complaint, an answer to a counterclaim, an answer to a cross claim, an answer to a third-party complaint, or a court-ordered reply to an answer. Fed.R.Civ.P. 7(a). Because Bregmanâs report and testimony are not pleadings, they are not subject to this rule. Thomas v. Bet Sound-Stage Restaurant/BrettCo, Inc., 61 F.Supp.2d 448, 458 (D.Md.1999); Modaressi v. Vedadi, 441 F.Supp.2d 51 (D.D.C.2006). 2. Motion to Exclude Federal Rule of Evidence 702 âprovides that if âscientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue,â a qualified expert may testify thereto.â Safeway, Inc. v. Sugarloaf Partnership, LLC, 423 F.Supp.2d 531, 538 (D.Md.2006) (citing Fed.R.Evid. 702). Bregmanâs report and testimony may be admitted if they âconcern (1) scientific, technical, or other specialized knowledge that (2) will aid the ... trier of fact to understand or resolve a fact at issue.â Westberry v. Gislaved Gummi AB, 178 F.3d 257, 260 (4th Cir.1999). âEvidence supplied by experts as to legal conclusions is not admissible ...â Safeway, 423 F.Supp.2d at 538 (citing Nutrition 21 v. United States, 930 F.2d 867 , 871 n. 2 (Fed.Cir.1991)). In his report, Bregman explains that his knowledge of commercial leasing is the result of experience (1) authoring a textbook on Maryland landlord/tenant law, practice, and procedure; (2) authoring articles on landlord/tenant law; (3) advising landlords and tenants during commercial lease negotiations and drafting; (4) advising parties on commercial lease litigation; and (5) managing commercial property. PI. Mot. Ex. 1 at 1. Bregman then (1) explains that certain provisions in the lease agreement are common in commercial leases; (2) comments on the general value of those lease provisions; (3) interprets the landlordâs duties under the lease agreement; and (4) states that he believes that Harbor Hotel forfeited any claim under § 10.5 of the Lease Agreement because he failed to give prompt notice of the alleged default. PI. Mot. Ex. 1 at 2-4. As the Defendants recognize, Bregmanâs expertise âis intertwined with legal issues and ... the ultimate issue to be decided is the interpretation of a contract according to legal principles.â Def. Resp. at 4. Because the Court will be the factfinder in this case however, the traditional wariness toward attorney experts is not required. Bregmanâs report and testimony will be admitted to the extent they illuminate whether the terms used in the 1997 and Harborplace lease are terms of art with uniformally â or widely understood â understood meanings. The Court will remember that it bears the ultimate responsibility for interpreting the leases. III. Conclusion For the reasons stated above, Harbor Hotelâs motion for partial summary judgment, the Defendantsâ motion for summary judgment, and Harbor Hotelâs motion to strike will be denied. 1 . After the motions hearing, the Defendants filed a motion for leave to file a post-hearing memorandum. Although the motion will be granted, no reply is necessary. In this memorandum, the Defendants repeat their argument that § 10.5 of the 1997 lease is a non-monetary provision. The Defendants also contend â for the first time â that a requirement for filing any suit under § 39.2.4 is a finding of Default under § 39.1. Section 39 of the lease defines defaults and remedies. Section 39.1.2 states notice and opportunity to cure provisions for all defaults "other than payment of Rent or Additional Rent.â Harbor Hotel reasonably argues that the notice requirement of 39.1.2 does not apply to the rent obligation generated by sales from a âsimilarâ restaurant that are to "be included in the computation of the Annual Percentage Rentâ defined in § 10.5 and collectible under § 10.4. As the Amended Complaint seeks, inter alia, a declaration of the amount of Additional Rent recoverable under § 10.5 of the lease, the Defendants' failure to *616 provide notice under § 39.1.2 will not â in and of itself â relieve the Defendants of the obligation' â if any is determined â to pay the Additional Rent. 2 . Although âpunctuation cannot control or alter the effect of language that is plain in its meaning,â Laurel Race Course, Inc. v. Regal Const. Co., Inc., 274 Md. 142, 153 , 333 A.2d *617 319, 327 (1975), punctuation may illuminate the plain meaning of a provision. See, e.g., Harleysville Mut. Ins. Co. v. Zelinski, 393 Md. 83 , 86 n. 1, 899 A.2d 835 , 836 n. 1 (2006); Owens-Illinois, Inc. v. Cook, 386 Md. 468, 497 , 872 A.2d 969, 986 (2005). 3 . The term McCormick & Schmick is used elsewhere in the lease, but is not enclosed in quotation marks. Def. Repl. at 9; see, e.g., Pl. Mot. Summ. J. Ex. 1 §§ 1.3, 1.-4. 4 .Section 10.5 states that "neither Tenant nor any of its affiliated parent or subsidiary companies ... shall operate ... another restaurant of a similar kind within a 10 mile radius of the Premises ...â Pi. Mot. Summ. J. Ex. 1. Section 10.5 goes on to state two situations in which a restaurant is "deemed a restaurant of a similar kind.â Because § 10.5 does not state that a restaurant is only of a similar kind if it meets the deeming criteria, the clause may be interpreted to allow a finding that a restaurant that meets neither deeming criterion is of "similar kind.â Id. 5 . Pi. Mot. Summ. J. Ex. 1 § 1.23. 6 . PL Mot. Summ. J. Ex. 4 § l.l.F. 10 7 . Harbor Hotel argues that (1) M & S Grill contracted with the Rouse Company as a seafood restaurant; (2) the Harborplace lease identifies M & S Grill as âM & S Seafood Grill,â PL Mot. Summ. J. Ex. 4 at D00410; and (3) Douglas Schmick, M & S Grillâs President, testified that the Rouse Company wanted a seafood restaurant for Harborplace. PL Mot. Summ. J. at 16. The Defendants argue, however, that (1) Harbor Hotel mischaracterized the Harbor-place Lease and Schmickâs deposition; (2) throughout the remainder of the lease, the restaurant is only referred to as âM & S Grill,â PL Mot. Summ. J. Ex. 4; (3) the lone reference to âM & S Seafood Grillâ cited by Harbor Hotel was a typographical error, Def. Mot. Summ. J. at 21-22; and (4) Schmick testified that the Defendants opened M & S Grill in Harborplace only after assuring themselves â out of concern for § 10.5 â that M & S Grill was not a seafood restaurant, Def. Mot. Summ. J. Ex. 1 at 114-15. Thus, the Defendants contend that M & S Grill was not intended to be a seafood restaurant. The parties also disagree about how McCormick & Schmick and M & S Grill are to be categorized. Harbor Hotel cites (1) the conclusion of its expert, Arlene Speigel, that both restaurants are âcasual ... based on 'industry designation,â â PL Mot. Summ. J. Ex. 8 at AS 0012, (2) portions of McCormick & Schmick's "Investor Relationsâ website and SEC forms that reference casual diners, Id.., Ex. 11, and (3) "Chain Leader'sâ â a trade publicationâ reference to McCormick & Schmick and M & S Grill as casual restaurants' â to argue that the restaurants share similar marketing positions. PL Mot. Summ. J. at 5-7, Ex. 9. The Defendants oppose Harbor Hotelâs characterization of their website and the Chain Leader article. Def. Mot. Summ. J. at 30, 33. They fault Ms. Speigelâs method of evaluating the two restaurants and rely on their expertâs conclusions about the classification of the two restaurants. Id. at 31-34. Michael Birchenall, the Defendantsâ expert, states that M & S Grill is classified as "moderateâ under Zagat classifications and McCormick & Schmick is "expensive.â Def. Mot. Summ. J. Ex. 14 at 10. Finally, the parties disagree about supposed similarities between McCormick & Schmick and M & S Grillâs wine list, prices, service, and decor. Harbor Hotel relies on Ms. Speig-el and the Chain Leader article to conclude that the two restaurants share similar wine lists, menu prices, levels of service, and interi- or decor. PL Mot. Summ. J. at 5-12; Ex. 8, 9. The Defendants rely on differences in decor that Ms. Speigel failed to highlight in her conclusion, Def. Mot. Summ. at 34, and differences in check price between the two restaurants, Def. Mot. Summ. J. at 32, Ex. 14, for their argument that McCormick & Schmick and M & S Grill are not restaurants of a similar kind. 8 . Harbor Hotel appears to argue that anytime the tenant thinks it may be operating a restaurant of a similar kind, it must notify the landlord under § 10.5. 9 . Section 39.1.1 of the Harborplace lease requires a notice of default and opportunity to cure for the failure to pay "Annual Base Rent or Additional Rent.â PI. Mot. Summ. J. Ex. 4 § 39.1.1. Section 10.5 refers to "Annual Percentage Rent,â which appears to differ from either Annual Base Rent or Additional Rent. Id. at§ 10.5; see Id. at§§ 10.2, 10.3. 10 ."[T]here can be no waiver unless the person against whom the waiver is claimed had full knowledge of his rights, and of facts which will enable him to ... enforce ... such rights.â Id. (citing Armour Fertilizer Works v. Brown, 185 Md. 273, 278-79 , 44 A.2d 753, 755 (1945)). If a company âought to have known ... facts, or with proper attention to its own business, would have been apprised of them, it has no right to set up its ignorance as an excuse.â Gould v. Transamerican Associates, 224 Md. 285, 300 , 167 A.2d 905, 912 (1961) (citing Monahan v. Mutual Life Ins. Co., 103 Md. 145, 159 , 63 A. 211, 213 (1906)). *622 Waiver may result from "an express agreement [to allow the breaching conduct to continue] or be inferred from circumstances.â Gould v. Transamerican Associates, 224 Md. 285, 294 , 167 A.2d 905, 909 (1961). "The intention to waive must be clearly established and will not be inferred from equivocal acts or language." The Redemptorists v. Coulthard Services, Inc., 145 Md.App. 116, 136-37 , 801 A.2d 1104, 1116 (Md.Ct.Spec.App.2002). "The question of whether waiver has occurred is a question of fact.â City of Bowie v. MIE Properties, Inc., 398 Md. 657, 699 , 922 A.2d 509, 534 (2007).
Case Information
- Court
- D. Maryland
- Decision Date
- February 18, 2009
- Status
- Precedential