Blessing v. Sandy Spring Bank, 1442

CourtCourt of Special Appeals of Maryland
Docket NumberNo. 1442,1442
Decision Date19 February 2021

Circuit Court for Montgomery County

Case No. 453759V


Fader, C.J., Nazarian, Adkins, Sally D. (Senior Judge, Specially Assigned), JJ.

Opinion by Fader, C.J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

Charles Blessing, Jr., the appellant, filed suit in the Circuit Court for Montgomery County against Sandy Spring Bank ("the Bank") and 227 East Diamond LLC ("227"), the appellees. In his two-count complaint, Mr. Blessing: (1) alleged that the Bank had fraudulently conveyed fixtures, equipment, and other personal property to 227; and (2) sought a declaratory judgment that, among other things, he was "the owner of 100% of [that] property[.]" The court dismissed the fraudulent conveyance count for failure to state a claim on which relief could be granted, and awarded summary judgment on the declaratory judgment count to the Bank and 227. We will affirm the dismissal of the fraudulent conveyance claim, vacate the award of judgment on the declaratory judgment count, and remand for further proceedings consistent with this opinion.

General Background

Growlers of Gaithersburg, LLC ("Growlers") is the former operator of a bar and restaurant located at 227 East Diamond Avenue in Gaithersburg, Maryland ("the Premises"). In May 2006, Growlers purchased the business from Gaithersburg Brewing Company. In connection with the transaction, Gaithersburg Brewing Company conveyed to Growlers:

All of the tangible assets owned by or used in the operation of the Business, including furniture, fixtures and equipment, goodwill and trade name, inventory, supplies, books and records, customer and vendor lists, and all other property, tangible or intangible, used in the Business known as "Summit Station Restaurant and Brewery[.]"

Growlers did not receive "an interest in land or any interest in real property." At the time, the Premises were owned by KB Summit Land, LLC ("KB Summit Land").

Between May 2006 and June 2009, the Bank made a series of loans to KB Restaurants, LLC ("KB Restaurants"), the then-majority member of Growlers. Those loans were secured by agreements executed by KB Restaurants and Growlers, as well as an "Indemnity Deed of Trust and Security Agreement" executed by KB Summit Land, which gave the Bank a security interest in the Premises. The aggregate sum of the loans ultimately amounted to nearly $2.4 million.

The 2011 Transactions

On January 13, 2011, the owners of 100% of the membership interests in Growlers assigned those interests to Jr. Rams, LLC ("Jr. Rams").1 As part of the transaction, title to certain "personal property and fixtures" was transferred to Jr. Rams "free and clear of any liens[.]" The property subject to the transfer was listed on a Bill of Sale attached to the assignment agreement. The list included a variety of furniture, dishes, glassware, utensils, office equipment, clothing, tools, cleaning supplies, and the business's "complete inventory of food and alcohol[.]" (Capitalization removed). We will refer to this property, which did not include any brewing equipment, cooking equipment, or other appliances, as the "Jr. Rams Personal Property."

Also on January 13, 2011, KB Summit Land and Growlers executed a new lease of the Premises. The agreement was signed on behalf of: (1) KB Summit Land, as landlord, by Victor M. Kazanjian, as its manager; (2) Growlers, as tenant, also by Mr. Kazanjian, also as its manager; (3) Jr. Rams, as the contract purchaser of the Growlers membership interests, by Mr. Blessing, as its managing director; and (4) the Bank. Among its terms, the lease provided: "[Growlers] expressly acknowledges they are using certain fixtures of the [Premises], including but not limited to the brewing equipment, cooking equipment and entertainment equipment, and that [Growlers] is solely responsible for the repair and replacement of such equipment as needed." A non-exhaustive list of the fixtures Growlers "[was] using," attached as Exhibit D to the lease, included various appliances (refrigerators, grills, ovens, freezers, sinks, fermenters, tanks, brewing equipment, etc.), televisions, heaters, and a video surveillance system. We will refer to this property, which appears to be the focus of Mr. Blessing's claims in this litigation, as the "Brewing, Cooking, and Entertainment Equipment." Based on a comparison of the lists, there does not appear to be any overlap between the Brewing, Cooking, and Entertainment Equipment and the Jr. Rams Personal Property.2

The Secured Transaction

Before August 2013, three parties owned membership interests in Jr. Rams. Andrea Martinez-Conte (Mr. Blessing's wife) and Jonathan Silverman each owned a 46.875%membership interest, while Gerald Chaney owned the remaining 6.25%. In August 2013, Jr. Rams agreed to redeem Mr. Silverman's membership interest in exchange for $258,585.00. The terms of the redemption agreement provided that Jr. Rams would make a $50,000 down payment and tender subsequent monthly payments of $6,404.93. Mr. Blessing and Ms. Martinez-Conte personally guaranteed payment of the note evidencing the debt.

In a simultaneous transaction, Jr. Rams and Mr. Silverman executed a Security Agreement, pursuant to which Jr. Rams "agreed to secure the Note payments by granting to [Mr. Silverman] a security interest in the assets and properties of both JR. RAMS, LLC and its wholly owned subsidiary, Growlers[]." Although the Security Agreement identified both Jr. Rams and Growlers as debtors and obligors, the agreement did not contain a signature line for Growlers and it was executed only by Ms. Martinez-Conte, in her capacity as managing member of Jr. Rams, and Mr. Silverman. Mr. Silverman then filed a UCC Financing Statement with the Maryland State Department of Assessments and Taxation. In that Financing Statement, recorded on August 27, 2013, Mr. Silverman named both Jr. Rams and Growlers as his collateralized debtors and described the property ostensibly securing their debt as follows:

All of each Debtor's personal property and fixtures, tangible and intangible, real, personal, and mixed, whether now in existence or whether acquired or created at any time hereafter, wherever located, including but not limited to all present and hereafter existing or acquired accounts, contract rights, general intangibles (including goodwill), deposit accounts, investment property, letters of credit, letter of credit rights, equipment, furniture, goods, inventory, fixtures, leaseholdimprovements, commercial tort claims, money, instruments, documents, chattel paper, securities, deposits, credits, claims and demands, and all cash and noncash proceeds, products, additions, replacements, and substitutions of, to or for any of the foregoing.
Jr. Rams Defaults

Jr. Rams defaulted on its payment obligations to Mr. Silverman in 2014. According to Mr. Blessing, Mr. Silverman then verbally asserted ownership over all of the property that was subject to the Security Agreement. Mr. Blessing further asserts that, on behalf of Growlers, he verbally assented to Mr. Silverman's claim of ownership in consideration of Mr. Silverman's agreement to forbear any enforcement activity. The parties did not document that arrangement in writing, Mr. Silverman never took possession of any property, and Mr. Silverman did not credit the value of any assets against the outstanding balance owed under the redemption agreement.

The Receivership, Sale of the Premises, Default, and Eviction

In 2014, the Bank filed a complaint in which it alleged that KB Restaurants had defaulted on obligations that were secured by the Premises and sought the appointment of a receiver to sell the Premises. In a consent order approved by the parties to that proceeding—which did not include either Jr. Rams or Growlers—the court appointed a receiver, whom it authorized to sell the Premises.

In December 2014, the court approved the receiver's sale of the Premises to 227. In that transaction, the receiver transferred to 227 "all of the rights, title, interest, benefits and privileges of [KB Summit Land], as landlord, under the Lease [with Growlers], includingwithout limitation all rents, issues and profits arising therefrom[.]" 227 thus became Growlers' landlord.

Growlers subsequently defaulted on the payment of rent to 227, which then sought and obtained a judgment of possession and evicted Growlers from the Premises in June 2017. Mr. Blessing asserts that when 227 did so, it took control over personal property and fixtures of the Growlers business that actually belonged either to Mr. Silverman or to Growlers.

The Assignment

Messrs. Blessing and Silverman assert that in August 2018, shortly before this litigation was filed, Mr. Silverman conveyed his interest in all Growlers' assets to Mr. Blessing in exchange for nominal consideration in a verbal transaction that was never reduced to writing. During his deposition in this case, Mr. Silverman described the consideration he received as follows:

I think it was going to be like a dollar or $10 dollars. It wasn't going to be like a big sale. I don't remember any money going back and forth. It might have been done over beers or at a bar or something like that. There wasn't any like written check or anything.
. . .
I don't remember [an exchange]. There definitely wasn't a check. I don't remember cash. And again, it might have been over beers, like picking up the tab.

On August 28, 2018, Mr. Blessing filed a UCC Financing Statement Amendment naming himself as the assignee of Mr. Silverman's security interest in the assets of Jr. Rams and Growlers.

Procedural History

Mr. Blessing, who represented himself in the circuit court proceedings and...

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