Legal Opinions - U.S. District Court, Maryland: October 27, 2008

Daily Record, The (Baltimore), Oct 27, 2008

Here, PFI and WFI argument that the case was moot on both of those grounds, but failed to establish those claims.

Contracts

Breach of contract

BOTTOM LINE: Summary judgment denied on breach of contract claim filed by property management company against apartment complex because a factual dispute remained as to the circumstances surrounding contractual language.

CASE: Ambling Management Co. v. University View Partners, LLC, et al., No. WDQ-07-2071 (decided Oct. 8, 2008) (Judge Quarles).

FACTS: University View Partners, LLC (UVP) owned University View Apartments (University View), an apartment building in College Park housing University of Maryland students. UVP's partners were Clark University View LLC, Otis Warren Jr., Stephen Garchik, and Stephen McBride. Ambling Management Company was a property management company specializing in student housing.

In April 2004, UVP and Ambling entered into an agreement under which Ambling would manage University View and be its leasing agent until July 31, 2009. Warren was designated the Owner's Representative under the Agreement.

The Agreement provided that Ambling was to operate and maintain University View in a "first class manner," that it was to employ capable staff to maintain and lease University View, and that if Ambling failed to comply with the Agreement and the default continued for fifteen days after UVP gave Ambling notice, UVP could terminate. Moreover, the Agreement provided UVP with a right of termination without notice of Ambling misappropriated funds, committed gross negligence, willful misconduct, fraud, malfeasance, or breached a fiduciary duty, and did not make restitution within five days and bar the responsible employee from University View.

University View's first year of operation was the 2005-2006 school year. Although utilities were included in the rent, UVP intended to include in leases a provision requiring a tenant to pay an extra fee if he used more utilities than allotted under the lease. That "utility cap" provision allowed UVP to recoup money spent when a tenant overused utilities. Through a drafting mistake, the 2005-2006 leases listed utility caps that were "per-tenant." However, the dollar caps listed were actually calculated per- apartment. As a result, individual tenants never exceeded the utility caps. UVP, therefore, did not recoup any extra money it spent on utilities.

When preparing the leases for the 2006-2007 school year, UVP sent Ambling a new utility cap provision that included a table in which dollar amounts were to be inserted. UVP claimed to have sent Ambling the provision only for review, but Ambling added the provision to the new leases and retained the cap provision from the 2005-2006 leases in the leases signed by the tenants. As a result, the new leases were confusing and potentially contradictory. Also, the table inserted into the leases did not include the cap amounts.

After discovering the problem, UVP asked Ambling to fix it. In August 2006, an addendum was prepared to the lease that provided substitute utility cap language. The 305 tenants who moved in after the addendum was included signed it, but UVP could not enforce the addendum on the 751 tenants who had previously moved in. Consequently, UVP did not enforce the new addendum. UVP also complained that Ambling did not hire and retain competent staff, including a full-time property manager.