Meleski v. Pinero Intern. Restaurant, Inc.

• Decision Date: 20 January 1981
• Docket Number: No. 137,137
• Parties: , 14 A.L.R.4th 1315 Arthur W. MELESKI et al v. PINERO INTERNATIONAL RESTAURANT, INC.
• Court: Court of Special Appeals of Maryland

Page 526

47 Md.App. 526

424 A.2d 784, 14 A.L.R.4th 1315

Arthur W. MELESKI et al v. PINERO INTERNATIONAL RESTAURANT, INC.

No. 137.

Court of Special Appeals of Maryland.

Jan. 20, 1981.

Jervis S. Finney, Baltimore, with whom were Ober, Grimes & Shriver, Baltimore, on the brief, for appellant, Chas. H. Steffey, Inc.

Jerome F. Connell, Sr., Glen Burnie, with whom were Connell & Clinton, Glen Burnie, on the brief, for appellants, Arthur W. and Elizabeth J. Meleski.

Michael Demyan, Glen Burnie, on the brief, for appellant, John S. Collins.

Martin J. Snider, Annapolis, with whom were Manis, Wilkinson & Snider, Chartered, Annapolis, on the brief, for appellee.

Argued before MELVIN, WILNER and COUCH, JJ.

MELVIN, Judge.

This case involves questions of partnership law, more particularly the liability of a partnership and its individual members to a non-partner for compensatory damages and punitive damages resulting from an alleged fraud practiced upon the non-partner by the partners in connection with a contract for the sale of a liquor license. To understand the precise issues presented it is necessary to set out in considerable detail the procedural history of the case below, tried before a jury in the Circuit Court for Anne Arundel County on special issues pursuant to Maryland Rule 560.

On June 21, 1974, a partnership known as Fort George Associates and Elizabeth J. Meleski, "parties of the first part, vendors" entered into a written "Agreement of Sale" with "International Restaurant, Incorporated, Maryland Corporation, second part, Vendee." The agreement contained the following recitals:

"Whereas the Vendors are the owners and possessors of a certain Class B liquor license issued by the Board of License Commission of Anne Arundel County for the premises known as 1630-32 Annapolis Road, unto Elizabeth J. Meleski trading as Butch's Beef and Beer, and

Whereas, the Vendee is the tenant of the adjacent property known as 1634 Annapolis Road, Odenton, Maryland and does intend to re-open the restaurant and tavern business on the said premises and

Whereas, the Vendees (sic) do desire to transfer their interest in the said Class B Liquor License and the said Vendees do desire to acquire and purchase the Vendors said interest, these premises are made."

The agreement then provided that the vendors "do hereby bargain and sell and transfer and assign all their right, title and interest in and to the Class B Seven Day Liquor License owned by them unto the said Vendee at and for the purchase price of Twelve Thousand Five Hundred Dollars ($12,500)...." (Emphasis added.) The purchase price was to be paid in monthly installments over a three year period and if the vendee failed to make any monthly payment within ten days of its due date "the whole balance" became "due and collectable at once." The agreement also provided that the vendors would "assist in any and whatever the Vendees in the matter of the transfer of the said License to them including whatever assistance it may render at the hearing before the Zoning Hearing Officer for Special Exception and before the Board of License Commissioners for the transfer of the said license." (Emphasis added). ¹

The agreement was signed on behalf of the partnership by one of the partners, John S. Collins. Collins was the managing partner and the attorney for the partnership. The agreement was also signed by Elizabeth Meleski individually, apparently in her capacity as the individual to whom a Class B liquor license had been issued in connection with the operation of the restaurant known as Butch's Beef and Beer. There was testimony, however, that the partnership, Fort George Associates, was "in fact" the owner of the liquor license. It seems that sometime in 1971 or 1972 Mrs. Meleski and her husband, Arthur Meleski, had bought into the partnership consisting of John S. Collins and Chas. H. Steffey, Inc. The partnership owned the property on which Mr. and Mrs. Meleski operated Butch's Beef and Beer restaurant, but at the time of the agreement, the restaurant had been closed since April 30, 1973, and, according to Mr. Meleski, the building was demolished two or three months after the restaurant was closed "due to the fact that we (the partnership) were going to build motels in the back." The motel was under construction in April 1974. Apparently, the original building plans for the motel did not include a restaurant and there was testimony that the partnership considered it advantageous to have an operating restaurant with a liquor license next door as a convenience to the motel's guests.

The agreement was signed on behalf of the vendee, International Restaurant, Incorporated, by its president, Antonio Pinero. Mr. Pinero is a native of Cuba. He came to the United States in 1957 and became a U.S. Citizen in 1966. Prior to coming to Anne Arundel County he and his wife had operated, successively, small restaurants in Pennsylvania, Delaware and Washington, D. C. He said that in 1973 when "we lost our lease" to the premises where his Washington, D. C. restaurant was located, he and his wife sought another restaurant location. They were unsuccessful in their search until, in April 1974, they came to Anne Arundel County in answer to a newspaper advertisement that the English Company had a restaurant for rent. The restaurant was immediately adjacent to the property owned by the Fort George Associates partnership where Butch's Beef and Beer restaurant had been operated.

Before signing a lease with the English Company, Mr. Pinero, in early April, 1974, contacted Mr. Collins whose name had been mentioned to him as one who had a liquor license for sale. Collins told him of his (Collins') association with Fort George Associates and that the partnership had a license they would transfer to him. According to Pinero, after the $12,500 price was verbally agreed upon, he asked Collins why he couldn't "just get a new one" rather than pay $12,500 for the transfer. Pinero said Collins replied that there was a "moratorium" on the issuance of new licenses and that "you have to buy an existing license." Pinero testified that he regarded Collins as his lawyer in connection with all the "paperwork" necessary to the obtention of the transfer of the license, including the formation of International Restaurant Corporation to receive it, the preparation of the June 21, 1974 agreement of sale, and representation before the Anne Arundel County Zoning Hearing Officer and the County Liquor Board. He testified that although he had owned a beer license in connection with his restaurant in Washington, D. C., he "didn't have any knowledge" of the liquor laws or "the different classes of licenses that existed in Anne Arundel County."

On September 7, 1977, the partnership (then consisting of Mr. and Mrs. Meleski and Chas. H. Steffey, Inc. Mr. Collins having retired as a partner in 1976) and Mrs. Meleski filed suit against International Restaurant Corporation. ² The declaration alleged the existence of the June 21, 1974 written agreement of sale and that International had "wrongfully breached the contract by failing to pay" a balance claimed to be due on the purchase price of the liquor license they had sold to International. International had a perfect defense to this suit: the Class B liquor license that the plaintiffs purportedly owned and for which they sought payment from International did not exist on June 21, 1974. Although a valid Class B license had at one time been owned by the plaintiffs-vendors, it had been allowed to expire on April 30, 1974, after Butch's Beef and Beer restaurant had ceased to operate. Thus, when these admitted facts became known to the court, at a pre-trial hearing, International's motion for Summary Judgment was granted as to the plaintiffs' claim for payment.

In the meantime, International had filed in the proceedings a counterclaim against the original plaintiffs for fraud and deceit. It alleged that the counter defendants were partners in Fort George Associates and claimed a judgment against them "jointly and severally" for compensatory and punitive damages. International also filed in the proceeding what it called a "Third-Party Claim" against Mr. Collins seeking the same damages for the same fraud alleged in the counterclaim, i. e., that the partnership acting through one of the partners (Collins) falsely and fraudulently represented to International that the partnership owned a valid liquor license "with the intent to deceive and defraud Third-Party Plaintiff to pay valuable consideration for a non-existent commodity." A separate count of the "Third-Party Claim" also sought damages against Mr. Collins for an alleged breach of duty owed to International as its attorney.

The case went to trial by jury on International's counterclaim and "Third-Party Claim" and the general issue pleas filed thereto. At the close of the evidence, various issues were submitted to the jury pursuant to Md.Rule 560 with instruction from the court. Based on the jury's answers to the issues submitted, the docket entries show that the following judgments were entered on October 2, 1979:

"Judgment Absolute extended for the Counter-Plaintiff, Pinero International Restaurant, Inc., against the Counter-Defendant, Arthur W. Meleski, in the amount of $4,068.00 compensatory damages and $11,250.00 punitive damages ($15,318.00); for the Counter-Plaintiff, Pinero International Restaurant, Inc., against the Counter-Defendant, Elizabeth J. Meleski in the amount of $4,068.00 compensatory damages and $11,250.00 punitive damages; in favor of Counter-Plaintiff, Pinero International Restaurant, Inc., against the Counter-Defendant, Charles H. Steffey, Inc., in the amount of $4,068.00 compensatory damages and $22,500.00 punitive damages, and in favor of the Third-Party Plaintiff, Pinero International Restaurant, Inc., against the Third-Party Defendant, John S. Collins, in the amount of $4,068.00 compensatory...