Hoang v. Hewitt Avenue

Decision Date07 December 2007
Docket NumberNo. 1048 September Term, 2005.,1048 September Term, 2005.
Citation177 Md. App. 562,936 A.2d 915
PartiesMinh-Vu HOANG v. HEWITT AVENUE ASSOCIATES, LLC.
CourtCourt of Special Appeals of Maryland

Rachel T. McGuckian, Rockville, for appellant.

Gerald F. Chapman, Bethesda, for appellee.

Panel: MURPHY, C.J., DEBORAH S. EYLER, LAWRENCE F. RODOWSKY (Ret'd, Specially Assigned), JJ.

EYLER, DEBORAH S., Judge.

The genesis of this appeal is a failed real estate transaction in the Silver Spring area of Montgomery County. Hewitt Avenue Associates, LLC ("HAA"), the appellee, entered into a contract to purchase two contiguous parcels of raw land from Minh-Vu Hoang, the appellant, and others. The multiple listing for the property advertised it as suitable for building 15 town houses. HAA purchased the property to develop into a town house community. When Hoang and the other sellers failed to close on the sale, HAA sued them, in the Circuit Court for Montgomery County, for specific performance and breach of contract. In the ad damnum clause of its breach of contract count HAA sought damages "in excess of $100,000."

Orders of default were entered against the served defendants when they did not file timely answers or responsive pleadings. The appellant moved, unsuccessfully, to vacate the default order against her. The court then held an evidentiary hearing on relief. The appellant attended, with counsel. (The other defendants did not appear.) At the hearing, HAA elected to pursue damages instead of specific performance. It proceeded to present evidence of the profits it would have realized from developing the town house community, but for the defendants' breach. The court ruled in HAA's favor and awarded it $1,889,755.98 in damages.

From the judgment entered against her in that amount, the appellant noted this appeal, presenting the following questions, which we have reordered and restated:

I. Did the trial court err in awarding damages in excess of $100,000?

II. Did the trial court err in awarding damages for collateral lost profits?

III. Did the trial court err in entering monetary judgments individually against the partners in a partnership of which the appellant is a member?

IV. Did the trial court err by not reducing the judgment to present value?

V. Did the trial court err by entering judgment against the appellant for attorney's fees and expert witness fees when she did not sign the contract of sale?

For the following reasons, we answer "Yes" to Question I and "No" to Questions II and III. On that basis, we shall modify the amount of the judgment against the appellant to conform to the sum stated in the ad damnum clause of HAA's complaint, which, for the reasons we shall explain, is $100,000, and shall vacate the judgment awarding damages in excess of that sum. Given our disposition of Question I, it is not necessary to address Question IV. Finally, Question V is not preserved for review.

FACTS AND PROCEEDINGS

On May 7, 2004, "Thinh Q. Vu et al" and Fred A. Ezra entered into a "Regional Sales Contract" ("Sales Contract") by which Ezra or his assigns agreed to purchase two contiguous parcels of raw land for $760,000: 3401 Hewitt Avenue ("Parcel One") and 3405 Hewitt Avenue ("Parcel Two"). Settlement was to take place in 60 days, on July 6, 2004. Ezra later formed HAA and assigned his rights under the Sales Contract to it. (In this opinion, we shall refer to HAA, Ezra, and his business, The Ezra Company, interchangeably.)

The parcels were listed for sale by defendant Thanh Hoang, the appellant's husband, who is a real estate agent. As noted above, the multiple list offer stated that the land was suitable for building 15 town houses.

Ezra is the Chairman and CEO of The Ezra Company, a real estate construction and development business. After the Sales Contract was signed, Ezra obtained a title search that revealed that Parcel One is owned by Thinh Q. Vu, the appellant's brother, and Hong Ngoc Nguyen, Thinh Q. Vu's wife, as tenants by the entireties, and Parcel Two is owned by Alta Vista General Partnership ("AVGP"). The general partners in AVGP are the appellant, Thanh Hoang, Hao Vu, Van Vu, and Ruby J. Jacobs.

On June 28, 2004, Ezra's lawyer wrote to Craig Parker, counsel for the sellers, attaching a copy of the title commitment Ezra had received and advising of the results of the title search:

As you can see, all of the titled owners have not executed the sales contract. Also you will note from this title report, we must have a copy of the partnership papers for [AVGP].

I have prepared a Ratification of Regional Sales Contract to address the above and request that your clients promptly execute and return the document to me with the requisite exhibit.

The title commitment also reports that the unpaid taxes for [Parcel Two] has resulted in a tax sale and the subsequent filing of a Foreclosure of the Rights of Redemption which must be dismissed in order to convey title.

The title issues were not resolved before the July 6 settlement date. That day, Ezra's lawyer informed Parker, in writing, that HAA had tendered to a title company the funds necessary for settlement and was prepared to go forward with closing. The letter warned, "Please be advised that if your clients fail to settle today pursuant to the contract, they shall be in default of the agreement and we shall pursue all remedies available to us." Nevertheless, settlement did not happen on July 6.

Between July 6 and July 15, HAA's lawyer wrote several letters to Parker, including one demanding that settlement go forward at 1:00 p.m. on July 16. When the sellers did not appear for settlement that day, HAA filed suit.

The complaint named eight defendants: the appellant, Thanh Hoang, Thinh Q. Vu, Hong Ngoc Nguyen, AVGP, Hao Vu, Van Vu, and Ruby J. Jacobs. The appellant was sued individually and as a partner in AVGP. Hong Ngoc Nguyen, who lives in China, was not served. Affidavits of service were filed for the other seven defendants, including the appellant.

As explained, orders of default were entered against the seven served defendants, and the appellant moved to vacate the order against her. She argued that she had not been served; that "the Defendants" "acknowledged that they agreed to sell [Parcel One and Parcel Two]"; that she had received a $10,000 deposit from Ezra; that the defendants were ready to convey the parcels to HAA; that the defendants had never been asked to attend a settlement; and that she had delivered a deed to HAA that same day.1

HAA opposed the motion to vacate, asserting that the appellant properly had been served and knew about the lawsuit; that she had not explained her failure to plead; and that the deeds she had delivered with her motion to vacate were defective and could not effect conveyances of the parcels. In a supplemental opposition, HAA recounted the appellant's extensive history as a civil litigant in real property cases in Montgomery County.2

The court held a hearing on the appellant's motion to vacate and denied it. One month later, the court held an evidentiary hearing on relief. The appellant appeared with Parker as her counsel. During the hearing, HAA's lawyer informed the court that his client had elected not to pursue specific performance, and instead to pursue damages. It is undisputed that the election first was made and communicated to the appellant at that time.

HAA called three witnesses: Mark Ezra, a managing member of HAA and senior vice president of The Ezra Companies (and Fred A. Ezra's son); Paul Goodsite, an expert in the residential building business; and James Donnelly, an expert appraiser in the residential development and construction field. The appellant did not call any witnesses but testified on her own behalf.

Mark Ezra explained that The Ezra Company, which is located in Bethesda, is "a 50-person Maryland based real estate company that does development, construction, and sales of real estate." The company has been in operation for about 25 years; for 15 years, he has been its senior vice president. The company decided to buy the parcels in question because they were listed as being suitable for building a town house development. It was the company's typical practice to form a separate legal entity for each construction project; hence the formation of HAA. Thanh Hoang, the realtor, knew that Ezra/HAA was purchasing the parcels in order to build town houses, just as the parcels had been marketed for sale. HAA had drawn up plans to construct 14 town houses on the parcels. (The zoning for the land allowed town houses to be built.)

The town house project the company had in mind was a "very straightforward project for [them]." In the five years preceding the Sales Contract, the company had developed about 4 million square feet of real estate. Its planned project for the two parcels was to be about 30,000 square feet. The company had adequate resources to develop the property, build the town houses, and resell them. It had worked with experts to calculate the income the project would generate and the cost of the project. The project was slated to commence in July or August of 2004, and to take three years to complete.

The 14 town houses would be expected to sell for $440,000 each, which is a conservative number in Montgomery County. Given the projected revenue from sales of the town houses and the projected expenses for building the town house community, Mark Ezra anticipated that the project would generate a profit of "just under $1.9 million," by a conservative estimate. He acknowledged that he decided to seek money damages in this case instead of specific performance because there were "issues" with the title to the parcels.

Mark Ezra also testified that HAA had incurred $16,760.98 in legal fees in this case and $2,000 apiece for expert witness fees for the two experts.

Paul Goodsite works with Chase Homes, Inc., in residential real estate development. He testified as an expert in that field. HAA had...

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