Aleti v. Metro. Balt., LLC

• Docket Number: 39, September Term, 2021
• Decision Date: 28 July 2022
• Citation: 479 Md. 696,279 A.3d 905
• Parties: Karunaker ALETI, et ux. v. METROPOLITAN BALTIMORE, LLC, and Gables Residential Services, Inc.
• Court: Court of Special Appeals of Maryland

479 Md. 696

279 A.3d 905

Karunaker ALETI, et ux.

v.METROPOLITAN BALTIMORE, LLC, and Gables Residential Services, Inc.

No. 39, September Term, 2021

Court of Appeals of Maryland.

July 28, 2022

Argued by E. David Hoskins (The Law Offices of E. David Hoskins, LLC, Baltimore, MD), on brief, for Petitioners.

Argued by Eric Pelletier (Offit Kurman, P.A., Bethesda, MD), on brief, for Respondents.

Amicus Curiae The Public Justice Center, Civil Justice, Homeless Persons Representation Project, and Maryland Legal Aid: Michael R. Abrams, Esquire, Murnaghan Appellate Advocacy Fellow, Public Justice Center, 201 N. Charles Street, Suite 1200, Baltimore, MD 21201.

Amici Curiae Maryland Multi-Housing Association, Inc. and Apartment and Office Building Association of Metropolitan Washington: Avery Barton Strachan, Esquire, Kerri L. Smith, Esquire, Silverman, Thompson, Slutkin & White, 201 N. Charles Street, Suite 2600, Baltimore, MD 21201.

Argued before:^* Getty, C.J., *McDonald, Watts, Hotten, Booth, Biran, Alan M. Wilner (Senior Judge, Specially Assigned), JJ.

Booth, J.

In this case, we must determine whether the Baltimore City Council's enactment of a local law created a private right of action for Baltimore City tenants to recoup rent payments and related fees they paid in connection with their use and occupancy of rental dwellings during a period when a landlord did not have a valid rental license.

Prior to August 2018, the Baltimore City residential rental housing inspection and licensing laws only applied to multi-dwelling units. Inspections were performed by the City's inspectors. In 2018, Baltimore City adopted Bill 18-0185, which was enacted as Ordinance 18-130. The local law, among other things, amended the provisions of the Baltimore rental license and inspection law to expand its application to include non-owner occupied one- and two-family dwelling units, and required inspections to be performed by licensed third-party inspectors. As part of the amendments, the City Council amended the language contained in Article 13 § 5-4(a)(2)¹ of the Baltimore City Code to prohibit any person from charging, accepting, retaining, or seeking to collect rent for a rental dwelling unless the person was properly licensed at the time of both the offer to provide the dwelling and the occupancy.

The Petitioners, Karunaker and Chandana Aleti, were tenants in a 34-story multi-unit apartment building located at 10 Light Street. They filed a putative class action in the Circuit Court for Baltimore City against the Respondents, Metropolitan Baltimore, LLC, the owner of 10 Light Street, and Gables Rental Services, Inc., the property manager. For ease of reference, we will refer to both entities collectively as "Metropolitan." The Aletis alleged that for a period of approximately ten months while they were tenants of 10 Light Street, Metropolitan did not hold an active rental license for the property, as required by § 5-4(a) of the Baltimore City Code. The Aletis, unaware of the lack of licensure, paid rent, and other fees, such as water and utility charges, to Metropolitan, which they seek to recoup through this action. The Aletis do not assert that the lack of licensure caused them any harm or injury, or that their use and occupancy of the apartment unit was diminished in any way. Instead, they assert that § 5-4(a)(2) establishes a private right of action whereby they may obtain a judicial remedy of restitution or disgorgement of all rent and fees that they paid during the unlicensed period.

The complaint contained four counts. In Count I, the Aletis requested a declaratory judgment that the leases entered into during the unlicensed period are "void and unenforceable" and that Metropolitan may not file court actions for failure to pay rent, or collect legal fees, rent or other compensation during the 302 days when it was unlicensed. In Count II, the Aletis sought money damages in the amount of all rent and other compensation paid to Metropolitan during the 302 days it was unlicensed, in violation of § 5-4(a). In Count III, the Aletis sought to recover the same amount plus a refund of the legal fees they paid as restitution damages based upon the common law cause of action for money had and received. In Count IV, the Aletis alleged a breach of contract based upon their lease, which they contend incorporated by reference the provisions of § 5-4(a).

In response to a motion to dismiss filed by Metropolitan, the circuit court dismissed the case prior to determination of any issues pertaining to class certification. In a reported opinion, the Court of Special Appeals largely agreed with the circuit court. Aleti v. Metropolitan Baltimore, LLC , 251 Md. App. 482, 254 A.3d 533 (2021). The intermediate appellate court held that the Aletis: (1) did not have an implied private right of action under Article 13 § 5-4(a)(2) of the Baltimore City Code; (2) did not state a claim for breach of contract; (3) could not use the common law count of money had and received to recover rent paid during the unlicensed period, except to recover legal fees and other related fees that they paid to Metropolitan in connection with the failure to pay rent cases that Metropolitan filed when it was unlicensed; and (4) that they were entitled to a declaratory judgment.

We granted the Aletis’ petition for writ of certiorari to consider three questions, which we have rephrased as follows:²

1) Does Article 13 § 5-4(a)(2) of the Baltimore City Code create an implied private right of action enabling tenants to obtain the judicial remedy of restitution or disgorgement of rent that was paid to the landlord during a period when the landlord was unlicensed?

2) Is the common law action of money had and received available to a tenant to permit the remedy of restitution or disgorgement of rent paid during the period when the landlord was unlicensed?

3) Did the Aletis’ complaint state a claim for breach of contract where the complaint merely alleges that the landlord did not have a license and accepted rent in violation of § 5-4(a)?

For the reasons set forth more fully herein, we answer no to the above questions and affirm the judgment of the Court of Special Appeals in all respects.

Because all the counts in the Aletis’ complaint are based upon the 2018 amendments to the Baltimore City Code, it is useful to provide some background on the Baltimore City rental license and inspection scheme before we get into the specific allegations that form the basis of the complaint.

IBaltimore City Rental License and Inspection Laws

A. Article 13 of the Baltimore City Code – Intent and Purposes

Article 13 of the Baltimore City Code is "a comprehensive statutory scheme aimed at ‘establish[ing] minimum standards governing the condition, use, operation, occupancy, and maintenance of dwellings ... in order to make dwellings safe, sanitary, and fit for human habitation.’ " Brooks v. Lewin Realty III, Inc. , 378 Md. 70, 81, 835 A.2d 616 (2003) (alteration and omission in original) (quoting Baltimore City Code (2000), Art. 13 § 103(a)(2), abrogated on other grounds by Ruffin Hotel Corp. of Md. v. Gasper , 418 Md. 594, 17 A.3d 676 (2011) ). As the Court of Special Appeals noted, "Section 2-1, which states determinations and declarations of the Baltimore City Council supporting its adoption of Article 13 and establishment of the City's Department of Housing and Community Development, identifies a broad focus on the City and its residents generally." Aleti , 251 Md. App. at 491, 254 A.3d 533. In relevant part, § 2-1 states:

(a) Determinations.

It is hereby found and determined:

(1) that there exist within the City of Baltimore slum, blighted, deteriorated, or deteriorating areas, which constitute a serious and growing menace, injurious and inimical to the public health, safety, morals and general welfare of the residents of the City of Baltimore;

(2) that the existence of such areas and the growth and spread thereof and the deterioration or threatened deterioration of other areas:

(i) contribute substantially and increasingly to the spread of disease and crime, and to losses by fire and accident;

(ii) necessitate excessive and disproportionate expenditures of public funds for the preservation of the public health and safety, for crime prevention, correction, prosecution, and punishment, for the treatment of juvenile delinquency, for the maintenance of adequate police, fire, and accident protection, and for other public services and facilities;

(iii) constitute an economic and social liability;

(iv) substantially impair or arrest the sound growth of the community;

(v) retard the provision of decent, safe, and sanitary housing accommodations;

(vi) aggravate traffic problems ... ;

(vii) depreciate assessable values;

(viii) cause an abnormal exodus of families from the city; and

(ix) are detrimental to the health, the well-being and the dignity of many of the residents of the City of Baltimore;

(3) that such areas cannot be dealt with effectively by the ordinary operations of private enterprise without the aids herein provided;

(4) that the rehabilitation or elimination, in whole or in part, of slum, blighted, deteriorated, and deteriorating areas ... are public uses and purposes requiring the exercise of the governmental powers of the City of Baltimore in the public interest.

(b) Declarations .

(1) It is further found and declared that ... areas not yet deteriorated or deteriorating, or portions thereof, may be conserved so that the conditions and evils hereinbefore enumerated may be prevented from spreading thereto or arising therein; and that all such areas within the boundaries of the City of Baltimore may be benefited through the enforcement of applicable regulatory codes relating to buildings, housing, sanitation or safety, the rendering of services to community organizations or through a combination of other means provided in this ordinance.

(2) It is further found and declared that the elimination, correction, and prevention of the

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