Copinol Restaurant, Inc. v. 26 N. Mkt. LLC

• Court: Maryland Supreme Court
• Writing for the Court: Booth, J.
• Citation: 491 Md. 246,339 A.3d 873
• Docket Number: 43
• Decision Date: 11 July 2025
• Parties: COPINOL RESTAURANT, INC. v. 26 NORTH MARKET LLC

491 Md. 246

339 A.3d 873

COPINOL RESTAURANT, INC.

v.26 NORTH MARKET LLC

No. 43, Sept. Term, 2025

Supreme Court of Maryland.

July 11, 2025

Circuit Court for Frederick County, Case No.: C-10-CV-24-000038, Kathleen D. English, Judge.

Argued by Brian M. Maul (The Law Office of Brian M. Maul, LLC, Frederick, MD), on brief, for Petitioner.

Argued by Paul D. Rose, Jr. (Matthew K. Graham of McNees Wallace & Nurick LLC, Frederick, MD), on brief, for Respondent.

Argued before: Fader, C.J., Watts, Booth, Biran, Gould, Eaves, Killough, JJ.

Booth, J.

The Maryland General Assembly has created a judicial process, known as a “tenant holding over action,” which allows a landlord to obtain a judgment for restitution of possession of real property from the District Court of Maryland, upon the “expiration of a lease,” after providing statutory notice to a tenant who remains in possession. Md. Code Ann., (2023 Repl. Vol.) Real Prop. (“RP”) § 8-402. We issued a writ of certiorari in this case to determine: (1) whether the tenant holding over action applies when a tenant is in possession of property pursuant to a lease for a term of years that has not expired; and if not, (2) whether a landlord may contractually modify the phrase “expiration of a lease,” as that term is used in RP § 8-402, to avail itself of the tenant holding over statute in order to recover possession of property where the parties are subject to a lease that has not expired, and the landlord elects to terminate the lease for the tenant’s nonpayment of rent.

As we discuss more fully herein, 26 North Market LLC, Respondent (“North Market” or “Landlord”), and Copinol Restaurant, Inc., Petitioner (“Copinol” or “Tenant”), are parties to a commercial lease for a term that expires on March 31, 2032, unless terminated sooner pursuant to the terms of the lease. After Copinol failed to pay rent by the due date in the lease, North Market terminated the lease and provided written notice to vacate. Copinol failed to vacate the premises, and North Market filed a tenant holding over action in the District Court of Maryland sitting in Frederick County. Copinol asserted that North Market could not bring a tenant holding over action because the statute has no application when the tenant is in possession of property pursuant to a lease that has not expired. North Market disagreed and argued that under the terms of the commercial lease, it was entitled to bring such an action upon the tenant’s breach of a lease for nonpayment, and the landlord’s election to terminate the lease. The District Court agreed with North Market and granted it a judgment of possession of the property. Copinol appealed. The Circuit Court for Frederick County initially ruled in Copinol’s favor; however, after North Market filed a motion to alter or amend judgment, the circuit court affirmed the District Court’s judgment awarding possession to North Market.

Copinol filed a petition for writ of certiorari, which this Court granted. We held oral argument on May 6, 2025. On May 23, 2025, we issued a per curiam order reversing the order issued by the circuit court and remanding the case to the circuit court for entry of judgment in favor of Copinol.

In our order, we held that: (1) the lease had not expired; (2) the tenant holding over statute establishes a statutory mechanism that enables a landlord to regain possession of property by virtue of the landlord’s reversionary interest, which is available after “the expiration of a lease”; and (3) that the parties do not have the authority to contractually modify the statutory meaning of the phrase “expiration of a lease” in RP § 8-402, thereby enabling a landlord to avail itself of remedies available under the tenant holding over statute in a manner inconsistent with its plain language. We now explain the basis for that order.

I Factual Background

A. Commercial Lease

North Market and Copinol entered into a commercial lease agreement dated December 31, 2003, in which Copinol agreed to rent the premises, located at 26 North Market Street, Frederick, Maryland, from North Market. Thereafter, the parties executed an “Amended and Restated Lease Agreement” dated March 27, 2014, for a term of ten years. On May 1, 2022, the parties executed a “First Amendment to Amended and Restated Lease Agreement,” which increased the rent and extended the term for an additional 10 years, with an expiration date of March 31, 2032, “unless the Lease is sooner terminated in accordance with the terms and provisions of the Lease.” We shall collectively refer to these agreements as the “Lease.”

Copinol operated the Cacique Restaurant at the premises. We touch upon some of the notable provisions of the Lease that are relevant to the instant dispute. The Lease established an annual minimum rent, which was payable in monthly installments, defined in the Lease as “Minimum Rent.” In addition to the minimum monthly rent, Copinol was responsible for all taxes and insurance, which the Lease included as “Additional Rent.” Each monthly installment of the Minimum Rent and the Additional Rent were due on the first day of the month. Section 4.2 of the Lease provides that if the payment of the Minimum Rent and Additional Rent “shall be in arrears, in whole or in part, for five (5) or more days, then such failure shall be an Event of Default hereunder and Landlord may elect to pursue such remedies as are set forth herein.” Although the Lease requires Landlord to provide notice and an opportunity to cure for non-monetary defaults, no notice is required where Tenant’s breach arises from the failure to pay rent.¹ Section 9.2 addresses the Landlord’s remedies in the event of a default for failure to pay rent, stating in pertinent part:

If the Rent shall be in arrears in whole or in part for five (5) or more days … the covenant to pay Rent herein shall be considered breached by Tenant. If Tenant shall be in breach of any of the covenants set forth in this Lease, Landlord may at its option, after having given notice set forth below, and if Tenant after such notice shall fail to remedy such breach as set forth below, reenter the Leased Premises without the need for resort to judicial proceedings, and declare this Lease and the tenancy hereunder terminated, and Landlord shall be entitled to the benefit of all provisions of the law respecting the speedy recovery of lands and tenements held over by tenants or proceedings in forceable entry and detainer.

Finally, Section 14.7 of the Lease governs circumstances in which Tenant holds over at the end of the lease term and gives Landlord the right to bring summary proceedings to recover possession of the premises and damages in the amount of two times the amount of the Minimum Rent payable at the end of the term, as well as the Additional Rent during the period of the holdover.²

B. Copinol’s Failure to Make Timely Rent Payments

Copinol made renovations to the premises in 2023. On April 25, 2023, Copinol’s representative, Jose Perez, sent North Market’s President, Paul DiFrancesco, an email advising that, because of the costs of the renovations, Copinol would not be able to pay rent for the month of May. On May 11, 2023, North Market mailed Copinol a letter captioned “Notice of Lease Termination and Notice to Quit,” in which North Market stated that it was terminating the Lease based upon Copinol’s late payment of rent for May pursuant to Section 9.1 of the Lease and that it was giving Copinol until June 30, 2023, to vacate the premises. North Market sent a second letter on July 24 extending the period in which Copinol was to vacate until September 30. North Market explained in its July 24 letter that it was providing a revised notice because of a change in the tenant holding over statute, which changed the notice provision from 30 days’ to 60 days’ written notice “before the expiration of the tenancy.”³ As we discuss below, although Copinol did not make its May or June rent payments by the respective due dates, Copinol paid the rent in full for both months, as well as the accrued late fees, by June 16. Copinol did not vacate the premises, which led to the underlying litigation.

II Procedural History

A. Tenant Holding Over Action

On October 5, 2023, North Market filed a tenant holding over complaint pursuant to RP § 8-402 in the District Court sitting in Frederick County. Based upon the language of the preprinted form complaint,⁴ the complaint alleged that Copinol “occupied the premises as a periodic tenant or unlawfully holds the premises after the expiration of the lease.” The complaint stated that the monthly rent was $11,503.75 per month, and that North Market served written notice on Copinol on July 25 directing Copinol to vacate the premises and to deliver possession of the premises to North Market on September 30. North Market sought restitution of the possession of the premises and damages in the amount of $57,518.75, plus attorney’s fees in an amount to be determined. The Frederick County Sheriff’s Office served Copinol on October 17 by posting a copy of the complaint and summons at the premises.

The parties appeared for trial on November 13, 2023. Before the court heard the case, Copinol’s counsel made a preliminary motion asserting that North Market’s tenant holding over complaint was improper because the Lease did not expire until 2032.⁵ In response, counsel for North Market asserted that, under the terms of the Lease, the lease provisions permitted Landlord to terminate the Lease without notice upon Tenant’s breach for failure to pay rent, which had the effect of changing the Lease’s expiration date. North Market asserted that, upon Copinol’s breach, it terminated the Lease—and that the Lease therefore “expired” because it no longer existed. Copinol’s counsel disagreed and asserted that, although North Market could seek repossession based upon a breach of lease, it could not unilaterally change the Lease expiration date to utilize the statutory remedy provided...