Law firm claims Baltimore's WTC lease illegal from the start

Daily Record, The (Baltimore), May 14, 2007 by Jen DeGregorio

A former tenant of Baltimore's World Trade Center that sued the Maryland Port Administration for "falsely inflating" building costs is now arguing that its lease with the state agency was illegal.

In a court filing last week, law firm Gebhardt & Smith LLP said state law requires MPA to lease space in the World Trade Center primarily to port-related companies. Because Gebhardt & Smith is a commercial law firm, it argues that its lease with MPA for offices in the trade center was illegal. Therefore, MPA cannot force Gebhardt & Smith to pay extra building costs, the filing said.

The argument, which was filed last Monday in Baltimore City Circuit Court, marks a new twist in a year-long court battle between the law firm and MPA.

Gebhardt & Smith first sued MPA last spring, saying the agency falsely upped building costs in order to "mulct tenants of additional rent not due from them." MPA did so, the firm alleged, to push the agenda of former Gov. Robert L. Ehrlich Jr., who in 2005 announced a plan to sell the Inner Harbor office tower. Inflating building costs would make the World Trade Center appear more profitable than it actually was and therefore command a higher price on the private market.

The MPA denied the charges and filed and amended a counterclaim seeking to collect from Gebhardt & Smith about $400,000 in back rent, interest and other fees incurred between fiscal 2002 and 2007. The case is scheduled for trial next spring.

Gebhardt & Smith initially disputed the costs, saying the MPA should not have charged the firm for expenses such as a "ludicrous level" of security at the World Trade Center after its New York namesake was attacked on Sept. 11.

But the firm's latest filing, a motion to dismiss or for summary judgment, offers a new reason why it should not have to pay MPA.

"To the point, the Maryland Port Administration may not, within the limitations of the Maryland Constitution and the Maryland Port Administration's governing statute, operate a commercial office building catering to and occupied predominately by businesses having nothing to do with maritime trade or activities," Lawrence J. Gebhardt, a partner in Gebhardt & Smith, wrote in a memorandum to support the motion.

The state used public funds to develop the World Trade Center, which was completed in 1977, to "serve as a hub for the maritime and port related business and activities of the State of Maryland," the motion said.

But "the World Trade Center has been operated as a commercial office building occupied principally by businesses and law and accounting firms having no apparent connection to maritime trade or the activities of the port."

Because the World Trade Center has failed to advance port- related business, Gebhardt argues, it should be considered a "private" venture. "As a matter of constitutional law, public funds, whether derived from taxation or from borrowing, may not be expended for a private purpose," he wrote.

Gebhardt said his company's lease with MPA was therefore "void from its inception" and should not be upheld by the circuit court, which he asked to dismiss MPA's counterclaim.

Richard Scher, a spokesman for MPA, dismissed claims that the agency's lease with Gebhardt & Smith is illegal.

"MPA believes that Gebhardt & Smith's motion is neither supported by the law or facts and MPA will vigorously oppose the pending motion," Scher said in a statement. "MPA views [the] latest motion as another attempt by G&S to avoid paying amounts it is contractually bound to pay."