Rocky Gorge Dev., LLC v. Gab Enters., Inc.
| Decision Date | 30 November 2018 |
| Docket Number | No. 1501,No. 676,676,1501 |
| Parties | ROCKY GORGE DEVELOPMENT, LLC F/K/A ROCKY GORGE HOMES, LLC, et al. v. GAB ENTERPRISES, INC. ROCKY GORGE DEVELOPMENT, LLC, et al. v. GAB ENTERPRISES, INC. |
| Court | Court of Special Appeals of Maryland |
Circuit Court for Frederick County
Case No.: 10-C-12-002939
Friedman, Beachley, Salmon, James P. (Senior Judge, Specially Assigned), JJ.
Opinion by Salmon, J.
* This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.
The litigation that resulted in this consolidated appeal commenced on September 28, 2012 when GAB Enterprises, Inc. ("GAB") filed a nine count complaint in the Circuit Court for Frederick County against four defendants: Rocky Gorge Development, LLC (F/K/A Rocky Gorge Homes LLC, et al.) ("Rocky Gorge"), Christopher Dorment ("Dorment"), Dorment's wife, Rosemary P. Dorment ("Mrs. Dorment"), and Waverley View Investors, LLC ("Waverley"). Dorment was, at all times here relevant, president and chief executive officer of Rocky Gorge. Waverley is a company formed and controlled by Dorment. The nine counts, and the defendants named in each count, were:
The circuit court granted defendants' motion to dismiss and a motion for summary judgment as to all counts. The reason for the dismissal and the grant of summary judgment was based on a previous finding by a judge in a related bankruptcy case. The circuit court ruled that the bankruptcy decision barred plaintiff's claims under the collateral estoppeldoctrine. GAB appealed the circuit court's decision and we reversed the dismissal as well as the grant of summary judgment and remanded the case to the circuit court for further proceedings. See GAB Enterprises v. Rocky Gorge Dev., 221 Md. App. 171 (2015). The Court of Appeals denied the defendants' petition for a writ of certiorari on May 27, 2015.
On September 27, 2016, GAB filed an amended complaint that added Count X and requested a declaratory judgment against Rocky Gorge, Dorment, and Waverley. Count X alleged:
• [I]n the circumstances of this case, an actual controversy exists between GAB, on the one hand, and Rocky Gorge, Mr. Dorment, and Waverley, on the other, regarding the respective rights and interests of GAB, Rocky Gorge, Mr. Dorment, and Waverley concerning the Property. Specifically, as described above, GAB maintains that, because of Rocky Gorge's, Mr. Dorment's, and Waverley's wrongful and tortious conduct, GAB is entitled to (1) twenty percent of the current value of the Property, including, but not limited to, any settlement proceeds from, or judgment that is obtained against, any party, including, but not limited to, the Department of the Army, in connection with any environmental contamination issues, and (2) any and all profits received in connection with the parcel of the Property developed with pad sites for 240 multi-family apartment homes. In contrast, Rocky Gorge, Mr. Dorment, and Waverley contend that GAB has no rights or interests in the Property or any profits or proceeds received therefrom.
Reduced to its essence, Count X asked the court to declare what damages GAB was entitled to recover, due to the "wrongful and tortious conduct" alleged in Counts I - VII and IX.
On October 14, 2016, the defendants, for the first time, filed an answer to the complaint. GAB filed a motion to strike the answer on the grounds that the answer to the complaint was filed over thirteen months late. That motion was denied.
Count X was bifurcated and all remaining counts that had not been voluntarily dismissed, were tried before a Frederick County jury from October 24 through November 2, 2016. The jury returned a verdict in favor of GAB and against Dorment and Rocky Gorge on Count III (negligent misrepresentation) but awarded no damages as to that count. In regard to Count VI (tortious interference with contractual and economic relations), the jury found against Dorment but in favor of the other defendants and awarded GAB $1,400,000 in damages against Dorment. As to Count VII (breach of contract), the jury found in favor of GAB and against Rocky Gorge and awarded GAB $1,440,000. The jury returned a verdict in favor of Rocky Gorge and Dorment in regard to the counts alleging intentional misrepresentation and constructive fraud; additionally, the jury found in favor of Dorment and Mrs. Dorment, on the counts alleging fraudulent transfer of assets. The jury found in favor of all defendants in regard to the count alleging civil conspiracy and found, in answer to a question on the verdict sheet, that Dorment did not act with "actual malice," which, according to the court's instructions, meant "evil motive, intent to injure, or ill will."
Judgments, in accordance with the jury verdicts, were entered on November 3, 2016. Rocky Gorge and Dorment filed a motion for judgment notwithstanding the verdict or, in the alternative, for a new trial or for remittitur. GAB filed an opposition to each of the post-trial motions. Following a hearing on the motions, the circuit court entered judgment in favor of Dorment and Rocky Gorge on the negligent misrepresentation claim because the jury had found no damages as to that count and, as a consequence, there could be noliability. Otherwise, the court denied Rocky Gorge's and Dorment's post-trial motions. This left, for trial, the declaratory judgment count.
In regard to Count X, GAB filed a motion to reopen discovery on June 9, 2017. The circuit court denied that motion on June 27, 2017.
After a hearing on the declaratory judgment count, the circuit court entered judgment against GAB as to Count X. GAB filed a timely motion to alter or amend the declaratory judgment, which the circuit court denied on September 2, 2017. This appeal by Rocky Gorge and Dorment and cross-appeal by GAB followed. The questions presented, as phrased by Rocky Gorge and Dorment, are:
Gary A. Berman ("Berman") is the president and sole owner of GAB. In 2003, Berman and Dorment wanted to develop a tract of land that was approximately 93 acres, as well as two smaller parcels, all located on Shookstown Road in Frederick City, Maryland ("the Property"). To accomplish their goal, Dorment, the chairman and CEO of Rocky Gorge, and Berman, the president of GAB, formed a company named RGHGAB at Frederick, LLC ("RGHGAB").
Although RGHGAB is technically a limited liability company, at trial, both Dorment and Berman referred to RGHGAB as "our partnership" or "the partnership." RGHGAB was formed so that it could purchase a promissory note that secured a loan on the Property, then foreclose on the loan so that RGHGAB would own the Property.
On November 10, 2003, GAB and Rocky Gorge signed a document titled "RGHGAB at Frederick, LLC Operating Agreement" ("the Operating Agreement"). The Operating Agreement was thirty-two pages in length with numerous exhibits attached. It provided that Rocky Gorge would be an 80% member and GAB would be a 20% memberof RGHGAB. Expenses, profits and losses were to be allocated in accordance with each party's ownership interest.2 Under the Operating Agreement, RGHGAB would develop the property. All parties agreed to use "good faith and best efforts in all dealings."
The...
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