Antigua Condominium Ass'n v. Melba Investors Atlantic, Inc.

• Decision Date: 01 September 1985
• Docket Number: No. 364,364
• Citation: 65 Md.App. 726,501 A.2d 1359
• Parties: ANTIGUA CONDOMINIUM ASSOCIATION, et al., v. MELBA INVESTORS ATLANTIC, INC., et al. ,
• Court: Court of Special Appeals of Maryland

Page 726

65 Md.App. 726

501 A.2d 1359

ANTIGUA CONDOMINIUM ASSOCIATION, et al., v. MELBA INVESTORS ATLANTIC, INC., et al.

No. 364, Sept. Term, 1985.

Court of Special Appeals of Maryland.

Jan. 9, 1986.

Barry L. Steelman and Kevin Thornton (Sidney Kaplan and Kaplan, Kaplan & Steelman, on brief), Baltimore, for appellants.

Judith D. O'Neill and Steven M. Caplan (Weinberg & Green, Jonathan Claiborne and Whiteford, Taylor, Preston, Trimble & Johnston, on brief), Baltimore, for appellees.

Argued before WILNER, BISHOP and BLOOM, JJ.

BLOOM, Judge.

This appeal reaches us after four years of unsuccessful attempts to get past the pleading stage, the defendants below having successfully interposed demurrers to the plaintiffs' declaration and various amendments thereto. A demurrer to the Second Amended Declaration was sustained without leave to amend as to one defendant because the court concluded that no cause of action had been or could be stated as to it. The remaining defendant's demurrer to the "Revised Second Amended Declaration" (translation: fourth attempt) was sustained without leave to amend because the court concluded that all claims were barred by the statutes of limitations. We find that some claims for breach of contract were not barred by limitations, and we will reverse the judgments as to them, while affirming the judgments on all other claims.

BACKGROUND

There are eighty-four appellants in this case--Antigua Condominium Association, which is a council of condominium unit owners (the Council) and the owners of forty-five individual condominium units. There are two appellees--Melba Investors Atlantic, Incorporated (Melba), and Bankers Trust Company, Incorporated (Bankers Trust).

The Antigua Condominium is one of many condominium complexes recently built in Ocean City. Construction on the condominium was started sometime in 1973 by the 85th Street Development Corporation (85th Street). Bankers Trust, a New York banking corporation, extended construction financing to 85th Street in 1973. By 1976, 85th Street was in default on the mortgage and lawsuits were pending. To avoid foreclosure, 85th Street conveyed Antigua Condominium to Bankers Trust in consideration of which Bankers Trust cancelled 85th Street's mortgage debt, which had a balance of about $5,500,000 at the time of this transfer. The condominium constituted all of the assets of 85th Street.

Bankers Trust, because of banking restrictions and regulations, could not hold title to or develop Antigua Condominium, so it caused 85th Street to convey the property directly to appellee Melba, a wholly owned subsidiary of Bankers Trust, previously created to engage in the business of developing real estate. Melba paid no consideration for the property but channelled to Bankers Trust all the funds it received through the sale of condominium units.

After acquiring the property, Melba continued construction of the condominium, completing it in 1977 when the first units were offered for sale. The first two units were conveyed by Melba by deeds dated September 17, 1977, one to Mr. and Mrs. Sanford Daily and the other to Mr. and Mrs. John Dolan. Both couples are among the appellants in this case. Sales by Melba continued through June 1, 1979, when it conveyed a unit to Mr. and Mrs. Dewey Jordan, who are also appellants. Each contract of sale by Melba is alleged to contain the following provision:

[The unit is sold "as is"] except as follows: Seller will make any necessary repairs, adjustments, or replacements to the condominium unit and item of personal property specified herein or the common elements of the condominium required as the result of faulty construction, faulty materials, faulty manufacture, or faulty installation, provided that notice of the defect shall be given Seller within a period of one (1) year accounting from the date of settlement under this Contract.

According to appellants, problems developed throughout the condominium, both in individual units and in the common elements. Some of the more obvious problems were: water leakage due to faulty exterior waterproofing and poor door and window seals; inadequate insulation; and malfunctioning heating and air conditioning units. Many more major and minor defects were asserted. The pleadings alleged that the Council gave notice to Melba and to Bankers Trust of the defects "within the first year of occupancy," i.e., within a year of September 17, 1977. The pleadings also alleged that the individual unit owners gave notice "within the time prescribed" by the contract.

Melba apparently undertook repairs soon after the first sale and continued repairs, both new and old, until May of 1980. The Council and the individual unit owners were unhappy with the repair work and were not assured by Melba's attitude about continuing to make repairs. The Council finally sent Melba a letter in April of 1980 listing all defects, complaining about the work that was being done, and demanding additional work. Melba responded with a letter dated May 6, 1980, in which it stated that it had responded in every way to all of its responsibilities and that it had already extended itself far beyond its legal obligations.

Appellants finally brought suit against Melba and Bankers Trust in the Circuit Court for Baltimore City in September of 1981. Since the problems in the case reside in the pleadings, it is necessary to trace the various documents that were filed. On September 24, 1981, appellants--both the Council and the individual unit owners--filed a Bill of Complaint for both equitable relief and damages at law. Defendants raised preliminary objections, which were overruled, and the Circuit Court for Baltimore City merged the counts at law from the bill of complaint with a law case known as Antigua Condominium Association v. Melba Investors Atlantic, Inc. Likewise, the equitable claims raised in Antigua Condo. Ass'n v. Melba Inv. Atlantic, Inc. were merged into the equity case which was known as Balin, et al. v. Melba Inv. Atlantic, Inc. These cases were later consolidated as Antigua Condo. Ass'n v. Melba Inv. Atlantic, Inc.

Appellants filed an Amended Declaration on February 16, 1983. This declaration, as the two revised versions that followed it, contained ninety-four counts. The first count contained most of the factual allegations and prayed for damages on behalf of the Council for breach of contract. The second count sought damages for the Council for breach of express and implied warranties. In the third count, the unit owners as a group sued for damages for breach of contract. The unit owners sued for breach of express and implied warranties in the fourth count. In counts five through ninety-four, the owners of individual units sued for breach of contract in one count and breach of express and implied warranties in the next count, alleging various defects for each unit. Melba and Bankers Trust each filed demurrers, supplemented by memoranda, on September 1, 1983, demurring to all ninety-four counts of the declaration. The demurrers were sustained as to almost all counts, and appellants were given thirty days to amend. A Second Amended Declaration was filed on February 14, 1984, and appellees again demurred. Bankers Trust demurred on the grounds that there was no contractual relationship between it and appellants, that it had made no warranties, and that none of the facts alleged supported a cause of action against it; its demurrer was sustained without leave to amend.

Appellants then filed a "Revised Second Amended Declaration" on December 3, 1984. We note that the new Maryland Rules went into effect on July 1, 1984, which is of some significance to appellants' arguments. Melba filed a motion ne recipiatur and another demurrer to all ninety-four counts. This last demurrer was sustained without leave to amend, and this appeal was then taken.

The focus of the final demurrer and the order sustaining it was on the statute of limitations. The court below ruled that the statute of limitations had run on all of appellants' claims prior to the filing of the original bill of complaint and that this defect was apparent on the face of the pleadings. The court also found that Melba's letter of May 6, 1980, did not amount to an express unconditional promise which, under Potterton v. Ryland Group, Inc., 289 Md. 371, 424 A.2d 761 (1981), would toll the statute of limitations.

There are eleven issues raised in appellants' brief and six more addressed in their reply brief. For simplicity, we have reorganized the arguments and discuss the following issues:

I. Was suit properly brought against Bankers Trust Company?

II. May a demurrer (now a motion to dismiss) be used to raise the defense of the statute of limitations?

III. Are appellants' claims barred by the statute of limitations?

A. Claims of the council of unit owners

B. Claims of the individual unit owners

C. Does the "discovery rule" apply to toll the statutes of limitations?

D. Did Melba's letter of May 6, 1980, constitute a Potterton promise?

E. Were the statutes of limitations tolled under the principles of the "repair doctrine" or equitable estoppel?

F. Were the warranty and limitations periods extended by Melba's failure to file Articles of Transfer upon receiving the deed from 85th Street?

I. THE CLAIM AGAINST BANKERS TRUST

We first address appellants' claim against Bankers Trust. Bankers Trust is a New York corporation having its principal place of business in New York City; it is engaged in business in Maryland. This was alleged by appellants in each of their four declarations. Appellants further alleged that Bankers Trust is the true party in interest, that it had absolute control over Melba and that Melba is essentially the alter ego of Bankers Trust.

Appellants urge, both in their briefs and at oral argument, that the corporate veil of Melba should be pierced in order to reach Bankers Trust. In support of this argument they point out that...