Hamzavi v. Bowen, 896

• Decision Date: 27 May 1999
• Docket Number: No. 896,896
• Citation: 126 Md. App. 492,730 A.2d 274
• Parties: Siamak A. HAMZAVI v. Marc BOWEN, et ux.
• Court: Court of Special Appeals of Maryland

730 A.2d 274

126 Md. App. 492

Siamak A. HAMZAVI v. Marc BOWEN, et ux.

No. 896, Sept. Term, 1998.

Court of Special Appeals of Maryland.

May 27, 1999.

Raymond D. Burke (David Freishtat and Freishtat & Sandler, on brief), Baltimore, for appellant.

Courtland K. Townsend, Jr., Ocean City (Michael O. Connaughton and Blumenthal, Delavan & Williams, P.A., Annapolis, on brief for receiver), for appellees.

Argued before DAVIS, EYLER and SONNER, JJ.

SONNER, Judge.

This case arises out of a lawsuit filed by the owners of a condominium unit in the Carousel Hotel located in Ocean City, Maryland. The dispute has a tortured history that began in June of 1995, when Dr. Siamak Hamzavi, a cardiac surgeon from Scranton, Pennsylvania, through his wholly owned limited partnership, Four Star Enterprises, bought the Carousel Hotel and many of the condominium units located within the hotel complex. The condominium owners manage the condominium units through the Council of Unit Owners of Carousel Center Condominium, Inc. ("the council"). After purchasing the hotel on September 12, 1996, Dr. Hamzavi used his voting power from ownership of multiple condominium units located in the Carousel Hotel to dismiss the council's preexisting board of directors and substitute one completely controlled by him. Although the named appellant in this appeal is Dr. Hamzavi, the disputes have centered around the activities of not only Dr. Hamzavi, but also the board of directors, which has indisputably been working on his behalf. There have been other related suits involving the Carousel Hotel and the condominium owners that have complicated and affected the management and financial health of the hotel, but relating them is not necessary to the resolution of the issues before this Court.

It is also unnecessary to recite here all the history of the many financial problems that the Carousel Hotel is experiencing that has led to a lapsing of insurance coverage and the imminent threat by the town of Ocean City to close the Carousel Hotel. Suffice it to say that the accumulating financial problems led to the filing of a complaint against the council in the Circuit Court for Worcester County and eventually to this appeal. The allegations of the condominium owners were, in effect, that Dr. Hamzavi, through his control of the council, was operating the Carousel Hotel in violation of the Maryland Condominium Act and in a manner that endangered their investments, was attempting to enforce payment of illegal assessments, had adopted a budget that was not in the interests of the condominium owners, and was conspiring to devalue the price of the condominium units so that he could purchase them below market value. The condominium unit owners were facing a council totally controlled by Dr. Hamzavi, one that filed suit against them to collect dues, and at the same time refused to collect dues or assessments from Dr. Hamzavi.

After several hearings on motions filed in the case, the court below entered a consent order appointing a trustee to protect the interests of the 160 individual condominium owners. For several months, the trustee, a local CPA, attempted to manage the financial affairs of the condominium, but he was repeatedly frustrated by a complete lack of cooperation from Dr. Hamzavi and his agents. The dispute between the unit owners of the condominiums and Dr. Hamzavi reached a critical point when Dr. Hamzavi, without notifying the trustee or anyone else, filed for bankruptcy under Chapter 11 of United States Bankruptcy Code. The bankruptcy court dismissed the case and stated that "[t]he purpose of this filing is not to adjust or reorganize the financial relationships between the debtor and its creditors. Rather, the purpose of this filing is to collect condominium assessments as determined by the debtor, with the debtor in control." The court found further that Dr. Hamzavi was seeking to promote the interests of the hotel in conflict with the interests of the condominium unit owners, and that the best means of bringing order out of the chaos created by Dr. Hamzavi was to "abstain in favor of" the circuit court. Subsequently, the circuit court held a hearing and came to the conclusion that the instrumentality of a trustee was not working, and decided, instead, to appoint a receiver who would assume complete authority over the incorporated council of unit owners of the Carousel Hotel, and who would manage its affairs and operations. It is from that order that this appeal was taken. The issues, as framed by appellant, are:

I. Did the trial court possess the authority to create a receivership?

II. Was the court's appointment of a receiver supported by sufficient evidence?

III. Did the trial court have the authority to strike the appearance of appellant's counsel?

For the reasons discussed below, we find in favor of appellee on all issues.

We first address appellant's contention that the trial court lacked the authority to appoint a receiver. Specifically, appellant argues that Maryland courts do not possess the inherent power to create receiverships; rather, the establishment of a receivership must be made pursuant to a statutory provision, which expressly authorizes the appointment of a receiver.

Generally, a court of law without equity jurisdiction or statutory authority has no power...