Articles Posted in Contracts

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The award of summary judgment in favor of the general contractor against the subcontractor in this case based on a pay-if-paid clause was improper because the pay-if-paid clause did not apply to the issues in this case. Pay-if-paid clauses make the project owner’s payment of the general contractor a condition precedent of the general contractor’s obligation to pay the subcontractor. Thus, the pay-if-paid clause can relieve the general contractor of liability to the subcontractor even where the subcontractor has fully performed its part of the subcontract. Here, Subcontractor sued General Contractor for breach of contract relating to a construction project. The circuit court granted summary judgment to General Contractor, concluding that, under Virginia law, a pay-if-paid provision in the subcontract applied to the damages sought. The Supreme Court reversed and remanded the case, holding (1) the pay-if-paid clause did not necessarily apply to the costs at issue in this case; and (2) the other provision relied upon by the circuit court did not create a condition precedent for payment of subcontractors. View "Young Electrical Contractors, Inc. v. Dustin Construction, Inc." on Justia Law

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At issue was what findings a court must make in order to require attorney’s fees to be paid to an adverse party who was subjected to proceedings that were brought in bad faith or lacked substantial justification and what the appropriate means are for calculating attorney’s fees when a court determines that a party’s complaint includes claims that have substantial justification and claims that lack substantial justification. Respondents prevailed in having the trial judge dispose of Petitioner’s claims after the close of the evidence. The hearing judge found no substantial justification for each of Petitioner’s claims against Respondents and awarded $300,000 in attorney’s fees to Respondents. The court of special appeals vacated the circuit court’s judgment, concluding that there was substantial justification as to some of Petitioner’s claims. The Court of Appeals affirmed, holding that the hearing judge (1) did not commit clear error in finding no substantial justification for the claims brought by Petitioner; but (2) abused his discretion in assessing $300,000 in attorney’s fees against Petitioner without articulating how he calculated his fees. View "Christian v. Maternal-Fetal Medicine Associates of Maryland, LLC" on Justia Law

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At issue was what findings a court must make in order to require attorney’s fees to be paid to an adverse party who was subjected to proceedings that were brought in bad faith or lacked substantial justification and what the appropriate means are for calculating attorney’s fees when a court determines that a party’s complaint includes claims that have substantial justification and claims that lack substantial justification. Respondents prevailed in having the trial judge dispose of Petitioner’s claims after the close of the evidence. The hearing judge found no substantial justification for each of Petitioner’s claims against Respondents and awarded $300,000 in attorney’s fees to Respondents. The court of special appeals vacated the circuit court’s judgment, concluding that there was substantial justification as to some of Petitioner’s claims. The Court of Appeals affirmed, holding that the hearing judge (1) did not commit clear error in finding no substantial justification for the claims brought by Petitioner; but (2) abused his discretion in assessing $300,000 in attorney’s fees against Petitioner without articulating how he calculated his fees. View "Christian v. Maternal-Fetal Medicine Associates of Maryland, LLC" on Justia Law

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Md. Code Ann., Real Prop. 8-402.1(a)(1)(i) requires that before a landlord may file a breach of lease action, the tenant must breach the lease, the notice requirement must expire, and the tenant must refuse to comply with the notice to vacate. Here, the circuit court determined that Landlord did not need to wait for the fourteen-day notice period to expire before it filed a complaint for breach of lease. The Court of Appeals reversed, holding (1) the circuit court erred in its construction of section 8;402.1(a)(1)(i)(2)(b) when it concluded that Landlord was not required to exhaust the notice requirement prior to filing a complaint for possession; and (2) Landlord’s notice to vacate was not issued in accordance with the terms of the lease with Tenant, and this deficiency could not be cured by the subsequently filed complaint. View "Hunter v. Broadway Overlook" on Justia Law

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The memorandum of understanding (MOU) between Prince George’s County and the City of College Park, a municipality within the County, did not alter the City’s authority to enforce zoning violations within the limits of its municipality and permitted the City to require additional permits under the City building code. Petitioners, a tenant to certain property and the property’s owners, challenged citations issued by the City after Petitioners failed to obtain required City permits. Petitioners sought a declaration that the terms of the MOU restricted the City from requiring City non-residential occupancy or building permits where occupants previously obtained building permits from the County. The circuit court concluded that the MOU restricted the City from requiring additional permits under the City building code where use and occupancy permits had previously been granted by the County. The Court of Special Appeals reversed. The Court of Appeals affirmed, holding that the MOU only controlled power that the County delegated to the City and did not limit the City’s power to enact additional ordinances. View "Precision Small Engines, Inc. v. City College Park" on Justia Law

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When a landlord sues a tenant for breach of contract based on a residential lease and the trial court enters judgment in the landlord’s favor and the judgment includes damages for unpaid rent and other expenses, a post-judgment interest rate of six percent applies pursuant to Md. Code Ann., Cts. & Jud. Proc. (“CJ”) 11-107(b) rather than the post-judgment interest rate of ten percent under CJ 11-107(a). Landlords initiated actions for breach of contract against Tenants. The district court entered judgments in Landlords' favor, but the judgments did not delineate the portions thereof that were comprised of unpaid rent, as opposed to other expenses. Thereafter, Debt Collector engaged in collections activity on Landlords’ behalf. Debt Collector sought to apply the post-judgment interest rate of ten percent under CJ 11-107(a). Tenants filed complaints against Debt Collector, arguing that CJ 11-107(b) applied. The federal district court certified the question of which legal rate of post-judgment interest on the judgment awarded applied. The Supreme Court answered as set forth above. View "Ben-Davies & Moore v. Blibaum & Associates, P.A." on Justia Law

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Petitioners, thirteen operators of charter schools in Baltimore County, filed breach of contract complaints against the Baltimore City Board of School Commissioners directly in the circuit court without first seeking review before the State Board of Education. Petitioners argued that the City Board breached contractual requirements by not providing information as to its commensurate funding calculations and by failing to provide the correct amount of commensurate funding for the 2015-16 school year. The circuit judge stayed proceedings in the circuit court pending the State Board’s administrative review of the parties’ dispute. The court of special appeals dismissed Petitioners' appeal, concluding that the stay order was not an appealable order. The Court of Appeals reversed, holding (1) under the unique circumstances of this case, the stay order was a final and appealable judgment; (2) the circuit court abused its discretion in staying the proceeding in order for the parties to seek administrative review before first allowing for discovery; and (3) the State Board retained primary jurisdiction as to the underlying commensurate funding issues in dispute, and after discovery before the circuit court is concluded, it will be appropriate for the circuit court to enter a more definite order staying proceedings for review of those issues before the State Board. View "Monarch Academy Baltimore Campus, Inc. v. Baltimore City Board of School Commissioners" on Justia Law

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The application of Georgia law concerning a pollution exclusion contained in an insurance policy as excluding coverage for bodily injuries resulting from the ingestion of lead-based paint under the principle of lex loci contractus does not violate Maryland public policy. Appellants were exposed to lead-based paint at a property owned by the Salvation Army. Appellants sued Defendants, alleging lead-based paint related tort claims. Liberty Mutual Insurance Company issued comprehensive general liability insurance policies to the Salvation Army. The policies, which were purchased in Georgia, did not include lead-based paint exclusion provisions but did include pollution exclusion provisions. Appellants sought affirmation that Liberty Mutual was obligated to indemnify the Salvation Army and defend against Appellants’ claims. Liberty Mutual moved to dismiss the complaint, arguing that Maryland courts follow the doctrine of lex loci contracts in choosing the applicable law and that, under Georgia law, the insurance policy did not cover claims for lead-based paint poisoning. The Supreme Court held that application of Georgia law concerning the policy’s pollution exclusion under the principle of lex loci contracts does not violate Maryland public policy. View "Brownlee v. Liberty Mutual Fire Insurance Co." on Justia Law

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When P. Thomas Hoff, the founder of One Call Concepts, Inc. and Hanover Investments, Inc. (Hanover), terminated the employment of Susan Volkman and redeemed her shares of Hanover, Hoff and others brought this declaratory judgment action against Volkman in the circuit court to defend the procedures it followed to redeem her stock. At the time the declaratory judgment action was filed, Volkman had already filed, in a Minnesota state court, a breach of contract action against Hanover concerning the same issue. The circuit court refused to dismiss or stay the action in deference to the pending Minnesota action. The court then issued a declaratory judgment in favor of Hanover. The court of special appeals ruled that there were not unusual and compelling circumstances justifying the circuit court’s issuance of a declaratory judgment to resolve the same question at issue in the pending Minnesota litigation. The Court of Appeals affirmed, holding that this action did not create unusual and compelling circumstances that would justify an exception to the principle that a court should not entertain a declaratory judgment action when there was a pending lawsuit involving the same issues. View "Hanover Investments, Inc. v. Volkman" on Justia Law

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A surety who issued a performance bond on a subcontract was not bound by that contract’s arbitration clause when the surety was jointly and severally liable for the “performance of” the subcontract and the entire subcontract was incorporated into the bond by reference. Petitioner entered into a contract with an electrical subcontractor pursuant to a master subcontract agreement that included a mandatory arbitration clause. Petitioner later entered into a subcontract with the electrical subcontractor to perform work on a project. The subcontract incorporated the entire master subcontract agreement by reference. The subcontractor obtained a performance bond from Respondent stating that Respondent was jointly and severally liable for the performance of the construction contract, which was incorporated into the bond by reference. Petitioner terminated the subcontract after a dispute with the electrical subcontractor and filed a demand for arbitration that included Respondent. Respondent requested a declaratory judgment that it was not bound by the arbitration clause. The circuit court granted partial summary judgment in favor of Respondent. The court of special appeals affirmed, ruling that Respondent could not be compelled to participate in the pending arbitration proceedings between Petitioner and the electrical subcontractor. The Court of Appeals affirmed for the reasons stated above. View "Schneider Electric Buildings Critical Systems, Inc. v. Western Surety Co." on Justia Law