Konover Property Trust, Inc. v. WHE Associates, Inc.

• Decision Date: 01 February 2002
• Docket Number: No. 2851,2851
• Parties: KONOVER PROPERTY TRUST, INC. v. WHE ASSOCIATES, INC.
• Court: Court of Special Appeals of Maryland

790 A.2d 720

142 Md. App. 476

KONOVER PROPERTY TRUST, INC. v. WHE ASSOCIATES, INC.

No. 2851, Sept. Term, 2000.

Court of Special Appeals of Maryland.

February 1, 2002.

Rebecca Lambreth (Kelly C. Wilcove, Alston & Bird, LLP, Atlanta, GA, James E. Gray, Michael B. Mac Williams and Venable, Baetjer and Howard, LLP, Baltimore, on the brief), for appellant.

Neil J. Dilloff (Tracey Gann Turner, Michael C. Hanlon and Piper, Marbury, Rudnick & Wolfe LLP, on the brief), Baltimore, for appellee.

Argued before KRAUSER, ROBERT E. CAHILL, SR. (Specially Assigned), and RAYMOND G. THIEME, JR. (Ret'd, Specially Assigned), JJ.

RAYMOND G. THIEME, JR., Judge, Ret'd, Specially Assigned.

Appellee WHE Associates, Inc. (WHE) filed suit against appellant Konover Property Trust, Inc. (Konover), claiming that it was entitled to a finder's fee of an amount between $2,000,000.00 and $4,000,000.00 for introducing Konover to Lazard Freres Real Estate Investors, LLC (Lazard), an investment firm, that ultimately invested $200,000,000.00 in Konover. At trial, the theories of recovery asserted by WHE were based in equity, as there never existed a written contract between the parties. The jury returned a verdict for damages in favor of WHE, and the Circuit Court for Baltimore City subsequently entered judgment for WHE in the amount of $2,756,550.00 against Konover. Konover appeals from that decision and presents the following questions for our review:

1. Did the trial court err in entering summary judgment in favor of WHE, notwithstanding an erroneous entry of partial summary judgment in favor of WHE prior to trial, leaving only the issue of damages to be tried?

2. Did the trial court err in applying the substantive law of Maryland, because WHE's claims are governed by the substantive law of New York, and, if not, by the substantive law of North Carolina?

3. Did the trial court err in entering judgment in favor of WHE instead of Konover, because WHE's claim for a finder's fee is barred as a matter of law based on New York's applicable statute of frauds and broker licensing provisions?

4. Did the trial court err in entering judgment on WHE's Count V (detrimental reliance/promissory estoppel) because it lacked any evidentiary support?

5. Did the trial court err in instructing the jury on the Maryland law of detrimental reliance/promissory estoppel, and did so in a way that wrongly equated that claim with WHE's dismissed implied contract claim?

6. Did the trial court err in entering judgment on WHE's claim for pre-judgment interest because WHE waived such claim by failing to plead it as a component of its claimed damages in its complaint or otherwise?

7. Did the trial court err in denying Konover's motion for judgment notwithstanding the verdict and motion for new trial, which raised the above enumerations of error?

We reverse the granting of summary judgment on detrimental reliance/promissory estoppel. The remaining judgments are affirmed.

Facts and Proceedings

Konover, a real estate investment trust engaged in the development, acquisition, leasing, management, and marketing of shopping centers, was attempting to raise equity capital.¹ A business relationship of some type existed between William H. Elliott, the President of WHE, and C. Cammack Morton, the Chief Executive Officer and President of Konover. Konover apparently was having difficulty raising the equity capital it sought, and therefore Elliott and Morton spoke about this issue on several occasions.

They met in North Carolina in September of 1997, at which time Lazard was pointed out as a potential source for capital. Elliott informed Morton that he knew principals at Lazard. He asked Morton for permission to contact Lazard on behalf of Konover. Morton expressly authorized Elliott to explore whether Lazard would be interested in investing in Konover. At trial, Morton testified that he understood Elliott's role as that of a "finder and introducer. To be finder, in fact.... Someone who introduces two people, who then take on the obligation of putting a deal together."

Elliott subsequently arranged for a three-way telephone conference between himself, Morton, and a Lazard representative, at which time the introduction was made. This introduction eventually led to an agreement between Konover and Lazard in which Lazard agreed to invest $200,000,000.00 in Konover. Although Elliott expected to be compensated for acting as the finder, Konover never compensated Elliott for such. On several occasions Elliott requested that the fee agreement for his services as the finder be put in writing. Konover repeatedly insisted that this was unnecessary, and consistently reassured Elliott that he would be compensated. WHE eventually filed suit for recovery of a fee for Elliott's services as the finder.

WHE initially filed suit in the United District Court for the Central District of California, but that court dismissed the case, finding that Konover was not subject to personal jurisdiction in California. WHE subsequently filed its suit in the Circuit Court for Baltimore City, alleging breach of contract, breach of implied contract, unjust enrichment, quantum meruit, and detrimental reliance/promissory estoppel. Contemporaneously with the filing of its Complaint, WHE moved for partial summary judgment on the issue of liability. The circuit court granted WHE's motion regarding its claims for unjust enrichment, quantum meruit, and detrimental reliance/promissory estoppel. Thereafter, Konover moved for summary judgment, arguing that WHE's claims were barred by the statute of frauds of New York, and by real estate and securities licensing statutes of New York, North Carolina, and Maryland. The circuit court denied Konover's motion, and the case proceeded to jury trial.

Before opening statements, WHE voluntarily dismissed its claims regarding breach of contract and breach of implied contract, so the only issue remaining at trial was damages on WHE's equitable claims, as the issue of liability on those claims had already been decided pursuant to the prior partial summary judgment. During trial Konover urged the trial court to revisit the earlier summary judgment ruling concerning choice of substantive law. The trial court denied any reprise, and the jury was instructed on Maryland law relating to WHE's equitable claims.

At the conclusion of trial, the jury awarded WHE damages in the following amounts: $1,275,000.00, plus $206,550.00 in prejudgment interest, on the unjust enrichment claim; $1,275,000.00, plus $206,550.00 in prejudgment interest, on the quantum meruit claim; and $2,550,000.00, plus $206,550.00 in prejudgment interest, on the detrimental reliance/promissory estoppel claim. The trial court entered judgment on the verdict in the total amount of $2,756,550.00. Konover moved for judgment notwithstanding the verdict and a new trial. Following oral arguments the trial court denied these motions. This appeal followed.

Discussion

Konover appeals from the following judgments: entry of partial summary judgment in favor of WHE on the issue of liability; the denial of Konover's motion for summary judgment; the amounts of the jury verdicts; and the trial court's denial of its post-trial motions. Konover's various grounds for appeal are in large part interwoven, essentially having as their schwerpunkt the issue of choice of law.

We turn first to Konover's contention that the trial court erred in granting partial summary judgment on the issue of liability under WHE's claims for equitable relief.² We find that the trial court ruled correctly on the claims based on unjust enrichment and quantum meruit, but reverse its decision on the detrimental reliance/promissory estoppel claim.

Standard for Summary Judgment

The trial court, in accordance with Maryland Rule 2-501(e), shall grant a motion for summary judgment if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law. In reviewing the grant of a summary judgment motion, we are concerned with whether a dispute of material fact exists.

Jones v. Mid-Atlantic Funding Co., 362 Md. 661, 675, 766 A.2d 617 (2001) (citations and internal quotation marks omitted).

The standard for appellate review of a trial court's grant of summary judgment is whether the trial judge was legally correct in his or her rulings. In granting a motion for summary judgment, the trial judge may not resolve factual disputes, but instead is limited to ruling on matters of law.

Okwa v. Harper, 360 Md. 161, 178, 757 A.2d 118 (2000).

Detrimental Reliance/Promissory Estoppel

Konover contends that the trial court erred by granting summary judgment in favor of WHE on its detrimental reliance/promissory estoppel claim.³ We agree. Moreover, we shall direct the circuit court instead to grant summary judgment on this issue in favor of Konover. In Pavel Enterprises, Inc. v. A.S. Johnson Co., Inc., 342 Md. 143, 166, 674 A.2d 521 (1996), the Court of Appeals brightened the long shadows cast by this confusion and recognized that courts were using dissimilar paradigms in determining the applicability of this theory of recovery. It clearly set forth the law in Maryland pertaining to this cause of action, stating:

To resolve these confusions we now clarify that Maryland courts are to apply the test of the Restatement (Second) of Contracts 90(1) (1979), which we have recast as a four-part test:

1. a clear and definite promise;

2. where the promisor has a reasonable expectation that the offer will induce action or forbearance on the part of the promisee;

3. which does induce actual and reasonable action or forbearance by the promisee; and

4. causes a detriment which can only be avoided by the enforcement of the promise.

We find that the allegations by WHE did not sufficiently establish a clear and definite promise so as to permit recovery under this theory....