Maryland Port Administration seeking $100K more in Baltimore's World

Daily Record, The (Baltimore), May 1, 2007 by Jen Degregorio

The Maryland Port Administration has upped the ante by a third in litigation that has dragged on for more than a year with a former tenant of Baltimore's World Trade Center.

In an amended complaint filed last week, the MPA said it wants more than $400,000 in back rent and interest from Gebhardt & Smith LLP, a law firm that until last year operated out of offices in the Inner Harbor office tower managed by the state agency.

That is about $100,000 more than the MPA previously sought to collect from the firm. The agency adjusted its claim after recalculating the World Trade Center's expenses for fiscal 2006 and adding expenses for fiscal 2007 that were not included in a prior lawsuit.

Lawrence J. Gebhardt, a senior partner with the law firm, on Monday called the amended complaint "more of the same nonsense."

The firm sued the MPA last April, after the agency threatened to send a collection agency after Gebhardt & Smith for failing to pay its share of increased operating expenses at the World Trade Center.

In the suit, Gebhardt accused the state of falsely inflating building costs to "mulct tenants of additional rent not due from them." Gebhardt alleged that the MPA "massaged" expense numbers in order to make the World Trade Center appear more profitable than it actually was. The agency did so, Gebhardt claimed, in order to advance the agenda of former Gov. Robert L. Ehrlich Jr., who in 2005 announced a plan to sell the building on the private market.

The suit led to a drawn-out court battle between the law firm and the MPA, which, after a series of motions and arguments, denied Gebhardt's allegations and filed a counterclaim that is scheduled for trial next spring.

The Daily Record first reported the dispute between the law firm and the agency in an article early last month.

"We will respond on the merits of the [amended] complaint and expect to not be paying them anything," Gebhardt said. "Gebhardt & Smith does not owe anywhere near the amount of money they are contending, if anything at all."

Officials with the MPA declined to comment for this article.

According to Gebhardt, the trouble began after Sept. 11, 2001. After terrorist attacks at the World Trade Center in New York, the MPA upped security to a "ludicrous level" at the building's Baltimore namesake, he said.

SWAT teams with attack dogs and automatic weapons took position in the building's lobby, which was "festooned- with razor wire." In court filings, Gebhardt described the measures as a manifestation of the MPA's "egotistical, delusional paranoia."

Two years after the MPA instituted the expanded security measures, Gebhardt & Smith received a bill saying the firm owed the agency nearly $23,000 for operating expenses during fiscal 2002 and an estimated $33,500 for fiscal 2004. Much of the expense increase came from security, which jumped to $392,000 in fiscal 2002, up from about $280,000 in 2001, according to audits obtained by The Daily Record.

Gebhardt & Smith's lease allowed MPA to charge it at the end of the year for extra building expenses. But Gebhardt said such charges had been negligible for the nearly 30 years his company had been headquartered at the World Trade Center. The highest charge for such expenses prior to 2003 had been $5,000, he said.

Gebhardt refused to pay and challenged the MPA, requesting audits and other documents to justify expense hikes. Meanwhile, the state continued to charge his firm for costs that ultimately totaled $328,186.88 between fiscal years 2002 and 2007. The MPA added 12 percent interest to that amount, bringing the total amount owed to more than $400,000.

In the amended complaint, the MPA also asked for an additional 17 percent of the total amount owed to cover collection and administration costs.

Gebhardt said he would file an answer to the MPA's lawsuit in the weeks ahead. He intends to defend his firm by arguing that it does not owe money to the agency because the MPA falsely inflated building costs and charged the firm for excessive security measures.