Macklin v. Robert Logan Associates

• Decision Date: 01 September 1992
• Docket Number: No. 116,116
• Citation: 639 A.2d 112,334 Md. 287
• Parties: Clifford MACKLIN et al. v. ROBERT LOGAN ASSOCIATES. ,
• Court: Maryland Court of Appeals

Page 287

334 Md. 287

639 A.2d 112

Clifford MACKLIN et al. v. ROBERT LOGAN ASSOCIATES.

No. 116, September Term, 1992.

Court of Appeals of Maryland.

March 25, 1994.

Reconsideration Denied and Opinion Corrected May 6, 1994.

Kenneth L. Crosson, on brief, Fairfax, VA, for appellant.

Henry F. Leonnig, on brief, Upper Marlboro, for appellee.

Argued before ELDRIDGE, RODOWSKY, McAULIFFE, ^* CHASANOW, KARWACKI, ROBERT M. BELL and CHARLES E. ORTH, Jr., Judge of the Court of Appeals (Retired, Specially Assigned), JJ.

ROBERT M. BELL, Judge.

Robert Logan Associates, the appellee, filed suit in the Circuit Court for Prince George's County against Clifford and Sandra Macklin, ¹ the appellants, alleging unlawful appropriation of its trade name, "Golden Cue," and tortious interference with its lease. After a jury trial, verdicts were entered in favor of the appellee as follows: for unlawful appropriation of trade name, compensatory damages of $300 and punitive damages of $50,000 and for tortious interference with the appellee's lease, $100,000 compensatory damages and $75,000 punitive damages. Their motion for new trial, to revise judgment and for judgment notwithstanding the verdict having been denied, appellants noted a timely appeal to the Court of Special Appeals. Before that court considered the matter, we granted certiorari, 329 Md. 22, 616 A.2d 1286, on our own motion, to address two issues: (1) whether the appellants tortiously interfered with the appellee's lease ² by negotiating with the appellee's landlord for the lease of premises occupied by the appellee prior to termination of appellee's lease and, (2) whether the trial court erred in sustaining the jury's punitive damages awards.

I.

The appellee owned and operated a billiard room business, in leased premises, located in the Bladensburg Shopping Center in Bladensburg, Maryland, but serving a wide area, including northern Virginia, Clinton, Waldorf, Silver Spring, College Park, Beltsville, Greenbelt, and Laurel. The business was operated under the trade name, "Golden Cue." The business had been in operation for some time prior to the events precipitating this case and, during that time, received favorable media publicity as a family billiard center.

The appellee's lease was renegotiated in February, 1985. Its new lease, which was for a term of five years, contemplated the possibility that the shopping center would be sold. The lease provided that either party could terminate the lease by giving 90 days notice, but only after three years of the lease term had passed. It also provided that if the lease were terminated by the landlord, the landlord must, in addition, pay the appellee $5,000. ³ The rental payments due under the lease ranged from a low of $1,200 per month at its inception to a high of $1,500 a month at the end of the term.

The shopping center was sold to GLM, the landlord, in July, 1986. Following unsuccessful attempts to renegotiate the terms of the appellee's lease, GLM exercised its option to terminate the lease by letter dated May 16, 1989, giving the appellee 90 days to vacate the premises. Upon receipt of the cancellation notice, the appellee immediately contacted GLM for the purpose of renegotiating the lease. GLM refused to do so and advised the appellee, albeit without identifying to whom, that the premises had been leased to a new tenant.

GLM subsequently leased a portion of the premises formerly leased by the appellee to the appellants for a term of five years, commencing thirty days after May 26, 1989, when GLM delivered the lease to Clifford Macklin. Although covering the same use, i.e., "billiard lounge and retail billiard supply sales as presently operated," ⁴ appellants' lease was more favorable to GLM than the appellee's had been. Rather than a maximum monthly rental of $1,500, the appellants agreed to pay fixed annual minimum rents ranging from $2,404.79 in the first year to $3,253.54 in the fifth year, with an increase each year. In addition, the appellants agreed to pay as additional rent, $12,500, "due upon commencement of the lease, to cover cost related to the conversion of the existing space of 5157 square feet of two stores in order to conform to tenants' needs." Among the conversion costs was the $5,000 payment due the appellee upon the landlord's cancellation of the lease. The appellants executed the lease on May 26, 1989; however, negotiation of the terms of the lease occurred prior to that date. ⁵

Before they executed the lease, the appellants investigated the feasibility of obtaining a use and occupancy permit. Because the use and occupancy permit applicable to the appellee's premises had been issued in the name of "The Golden Cue" as a result of a grandfathered special exception, they learned that it would have required extensive and complex legal proceedings to obtain one in any other name. Consequently, the appellants effected a transfer of the use and occupancy permit by using the name, "Golden Cue." Subsequently, having discovered that the appellee had neither formally registered "The Golden Cue" as a trade name nor formed a corporation under that name, the appellants incorporated as Golden Cue, Inc. So armed, the appellants sought to obtain the exclusive use of the telephone number listed for The Golden Cue. ⁶ Also in the fall of 1989, the appellants wrote to the appellee informing it that the appellants had formed a corporation under that name and complaining of the appellee's use of "its" trade name.

Prior to the termination of the appellee's lease, Clifford Macklin, who, at one time, sold cues to the appellee for resale, was permitted by Logan Sharp, the appellee's operator, to store equipment in premises the appellee leased on a month-to-month basis for storage. Logan Sharp testified that Clifford Macklin had expressed an interest in purchasing the appellee's business in 1989. The matter was dropped when Clifford Macklin was informed that the purchase price would be between $150,000 and $175,000. The appellee also presented testimony that Clifford Macklin had stated on several occasions that "he was going to take the business from Logan ... [because] Logan was fooling around with him in business dealings."

Having to vacate the premises, the appellee advertised its billiard tables for sale. The appellants responded to the advertisement and offered to purchase not only the billiard tables, but all of the appellee's billiard equipment for $20,000. Believing that price to be too low, the appellee declined the offer.

II.

The tort of intentional interference with contract is well established in Maryland. Travelers Indemnity v. Merling, 326 Md. 329, 605 A.2d 83 (1992); K & K Management v. Lee, 316 Md. 137, 557 A.2d 965 (1989); Sharrow v. State Farm Mutual, 306 Md. 754, 511 A.2d 492 (1986); Vane v. Nocella, 303 Md. 362, 494 A.2d 181 (1985); Natural Design, Inc. v. Rouse Company, 302 Md. 47, 485 A.2d 663 (1984); Rite Aid Corp. v. Lake Shore, Inc., 298 Md. 611, 471 A.2d 735 (1984); Wilmington Trust Company v. Clark, 289 Md. 313, 424 A.2d 744 (1981); Cunningham v. A.S. Abell Co., 264 Md. 649, 288 A.2d 157, cert. denied, 409 U.S. 865, 93 S.Ct. 160, 34 L.Ed.2d 114 (1972); Stannard v. McCool, 198 Md. 609, 84 A.2d 862 (1951); Miller v. Preston, 174 Md. 302, 199 A. 471 (1938); Green v. Samuelson, 168 Md. 421, 178 A. 109 (1935); Pocketbook Workers v. Orlove, 158 Md. 496, 148 A. 826 (1930); Goldman v. Harford Road Building Association, 150 Md. 677, 133 A. 843 (1926); McCarter v. Chamber of Commerce, 126 Md. 131, 94 A. 541 (1915); Cumberland Glass Manufacturing Company v. DeWitt, 120 Md. 381, 87 A. 927 (1913), aff'd, 237 U.S. 447, 35 S.Ct. 636, 59 L.Ed. 1042 (1915); Sumwalt Ice and Coal Company v. Knickerbocker Ice Company, 114 Md. 403, 80 A. 48 (1911); Willner v. Silverman, 109 Md. 341, 71 A. 962 (1909); Knickerbocker Ice Company v. Gardiner Dairy Company, 107 Md. 556, 69 A. 405 (1908); Klingel's Pharmacy v. Sharp & Dohme, 104 Md. 218, 64 A. 1029 (1906); Gore v. Condon, 87 Md. 368, 39 A. 1042 (1898); Lucke v. Clothing Cutters' & Trimmers' Assembly, 77 Md. 396, 26 A. 505 (1893). The tort, which has two general manifestations, Natural Design, Inc., 302 Md. at 69, 485 A.2d at 674, is committed when a third party's intentional interference with another in his or her business or occupation induces a breach of an existing contract or, absent an existing contract, maliciously or wrongfully infringes upon an economic relationship. Sharrow, 306 Md. at 763, 511 A.2d at 497; Natural Design, Inc., 302 Md. at 69, 485 A.2d at 674. See Restatement (Second) of Torts § 766. ⁷

While the two manifestations of the tort share an underlying rationale, i.e., "under certain circumstances, a party is liable if he interferes with and damages another in his business or occupation," they differ in their tolerance of interference. As we said in Natural Design, Inc.: "[W]here a contract between two parties exists, the circumstances in which a third party has a right to interfere with the performance of that contract are more narrowly restricted. A broader right to interfere with economic relations exists where no contract or a contract terminable at will is involved." Id. at 69-70, 485 A.2d at 674.

Count two of the amended complaint alleges that the appellants,

well knowing of the Plaintiff's lease, ... did approach The GLM Companies, the manager for the Landlord, and maliciously and with the intent to injure the Plaintiff did induce the said Landlord to breach and/or cancel the lease with the Plaintiff notwithstanding that said lease had until February 29, 1990 to run and could be renewed fully intending to appropriate the Plaintiff's trade name, business and goodwill thereby causing the Plaintiff the loss of his business and profits earned and to be earned.

Although it recognizes that the effect of cancellation of the lease would be to cause the appellee prospective loss, the primary focus of this allegation is on the...