Citation155 Md. App. 634,845 A.2d 16
Decision Date04 December 2003
Docket NumberNo. 1483,1483
PartiesM. Raul GARCIA v. FOULGER PRATT DEVELOPMENT, INC., et al. F.P. Rockville Limited Partnership v. M. Raul Garcia.
CourtCourt of Special Appeals of Maryland

Read K. McCaffrey, Benjamin D. Wood (Patton Boggs, L.L.P., on brief), Washington, DC, for Appellant.

David Clarke, Jr., Sara Z. Moghadam (Piper Rudnick, L.L.P., on brief), Washington, DC, for Appellee.

Panel: GREENE, SHARER, CHARLES E. MOYLAN, Jr. (Retired, Specially Assigned), JJ. SHARER, Judge.

The parties to this appeal, and consolidated cross-appeal, are M. Raul Garcia, appellant/cross-appellee, and three appellees/cross-appellants comprising several business entities that are engaged in the development and management of commercial real estate properties. The appeals and cross appeals are taken from a judgment and order of the Circuit Court for Montgomery County, Hon. William J. Rowan, presiding.

Garcia (plaintiff below) is one of two limited partners in the F.P. Rockville Limited Partnership ("the Partnership"), holding a 10% equity interest in the Partnership. Appellees (defendants below) are (1) Foulger Investments, Inc. ("Foulger"), the general partner of F.P. Rockville Limited Partnership, ("F.P. Rockville"), holding a 2% equity interest; (2) FP Investments, LLC ("FP Investments"), the other limited partner in the F.P. Rockville Limited Partnership, holding an 88% equity interest; and (3) Foulger-Pratt Development, Inc. ("Foulger-Pratt").

Garcia, a former salaried employee of Foulger-Pratt entered into a partnership agreement, in lieu of salary from the Foulger entities, for his services to identify and process new commercial real estate projects. The partnership agreement contemplated that new "limited partnerships" would be created to oversee development of each individual phase in the overall project site. The new entities would be known as "Operating Partnerships." Garcia identified a project site, and the Partnership formed a limited liability company (with an unrelated business entity) called the Rockville Metro Plaza I, L.L.C., rather than creating an off-shoot limited partnership as anticipated by the partnership agreement.

Garcia brought this action against the Foulger entities alleging, among other things, that the general partner (Foulger Investments, Inc.) of F.P. Rockville Limited Partnership had breached the partnership agreement by failing to assign him a direct 5% interest in the Rockville Metro I Plaza, L.L.C. project, and for wrongfully taking a $934,000 development fee that should have enured to the Partnership. The circuit court agreed with Garcia that the Partnership was entitled to the development fee. The court, however, concluded that Garcia was not entitled to a direct 5% interest in the limited liability company because he failed to prove that the limited liability company constituted an "Operating Partnership" as contemplated by the agreement.

Garcia, therefore, raises the following questions for our review I. Did the circuit court err in concluding that Rockville Metro Plaza I, L.L.C. (the entity formed to own the first building) was not an "Operating Partnership" as that term is defined in Paragraph 3.01 of the Partnership Agreement?

II. If this Court answers the first question in the affirmative, should appellant be assigned a direct interest in Rockville Metro Plaza I, L.L.C.?

III. If this Court rules that the general partner of the Partnership breached the Partnership Agreement by failing to assign appellant a direct interest in Rockville Metro Plaza I, L.L.C. does that ruling—coupled with the trial court's ruling—warrant dissolution of the Partnership and the appointment of a receiver?

We answer "no" to the first question, and because appellant's second and third questions are framed in the alternative, we need not address those issues.

The cross-appeal in this case deals with the award of attorneys fees to Garcia related to recovery of the development fee to the Partnership. The court awarded Garcia $96,000 in attorneys' fees, and at the same time denied Foulger-Pratt's request for attorneys' fees under Maryland Rule 1-341.

In its cross appeal, Foulger-Pratt has raised four questions for our review which we have condensed into two questions for clarity:

I. Whether the trial court abused its discretion, or otherwise erred, when it awarded Garcia his requested attorneys' fees, including fees for unsuccessful claims that the court determined where "reasonably related" to his successful claim?

II. Whether the trial court abused its discretion, or otherwise erred, when it denied Foulger-Pratt's request for attorneys' fees under Maryland Rule 1-341?

We answer "no" to both questions, as discussed more fully within, and shall affirm.


In 1989, Foulger-Pratt Development, Inc., hired Garcia, under a two-year employment agreement, to manage its real estate development and investment activities. Pursuant to the employment agreement, Garcia earned an annual base salary of $85,000, plus bonuses and benefits.

After July 1, 1991, when the employment agreement had ended, Garcia continued to work for the Foulger entities, but no longer received a salary. Between 1991 and 1994, Garcia rendered services to the Foulger entities under a personal services contract. The agreement was not memorialized until April 14, 1994, but was applied retroactively to 1991 and extended his services for one additional year, until April 25, 1995. Garcia's duties and responsibilities under the personal services contract included "the identification and processing of new business opportunities to the point that they can be developed." In lieu of a salary, Garcia was to receive a 10% equity interest as a limited partner in a "limited partnership ... formed between [Garcia] and an assignee of Foulger-Pratt [created] for the purpose of developing, constructing, and owning the project."1 In short, each time Garcia identified and processed a new development "project" a new limited partnership would be created, in which Garcia would have a 10% equity interest as a limited partner. The Foulger entities would retain a 90% equity interest in each limited partnership.

Garcia identified a parcel of real estate for potential commercial development in downtown Rockville, bounded by Middle Lane and Hungerford Drive ("the Rockville Property"). He concluded a contract to purchase the property from the City of Rockville and negotiated the bureaucracy to obtain the necessary permits and support for the development of the site.

As envisioned in the personal service agreement, the F.P. Rockville Limited Partnership ("the Partnership") was created to develop the Rockville Property. Foulger Investments, Inc., served as the general partner of the Partnership, with a 2% equity interest. The two limited partners included FP Investments, LLC, with an 88% equity interest, and Garcia with a 10% equity interest. Pertinent provisions of the Partnership Agreement include the following paragraphs:2

3.01 Business. The business of the Partnership shall be to negotiate contracts to acquire the parcels of real property [at the site in Rockville, otherwise known as "the Project"]; enter into option contracts with respect to the Project; make option payments, deposits and other payments to the owners of the Project; negotiate zoning variances, site plan approvals, proffers, locate tenants, secure financing and equity investors; and take all other actions necessary or advisable to develop or maintain the Project.
The Project has been zoned to permit construction of over one million square feet of commercial office space as well as multi-family residential uses. The General Partner currently plans to develop the Project by constructing three commercial office buildings on the IBEW Site, two commercial office buildings on the Middle Lane Site, and a residential tower on the Middle Lane Site. However, the General Partner may change those plans as it deems appropriate. The General Partner expects to divide the Partnership pursuant to [Internal Revenue Service] Code Section 708(b)(2)(B) and establish separate limited partnerships (the "Operating Partnerships") to own, finance, manage, dispose of, lease and otherwise operate each building constructed as part of the Project. The ownership of the Operating Partnerships may differ from the Interests set forth in Schedule B hereto to take into account the contributions of each of the Partners, admission of additional equity investors, and other factors.

In addition, the Partnership may engage in any other lawful activity for profit permitted under the Act.

* * *
4.03 Additional Funds. If the General Partner determines that the Partnership or any of the Operating Partnerships require funds in addition to the Capital Contributions, the General Partner is authorized to admit additional Partners to the Partnership and the Operating Partnerships, from time to time, upon such terms and conditions as it determines to be appropriate, which shall result in a pro rata dilution of the Interests of the Partners, provided, such additional Partners shall not be Affiliates of the General Partner or Limited Partners, or persons related to the General Partner or Limited Partners unless the General Partner obtains the prior written consent of Raul Garcia, which consent shall not be unreasonably withheld, conditioned or delayed.[ ]
* * *
4.07 Issuance of Additional Interests in Operating Partnerships. Upon formation of each Operating Partnership established to own a commercial office building developed on the IBEW site (pursuant to Paragraph 3.01), the General Partner shall issue interests therein to the Partners, including Raul Garcia, in the amounts set forth in Schedule B, provided, that (i) under the circumstances described in Paragraph 4.08(D), the General Partner may reduce the interest of Raul

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