Rrc Ne. v. Baa Md. Inc

• Decision Date: 10 May 2010
• Docket Number: No. 70 Sept.Term,2009.,70 Sept.Term
• Citation: 413 Md. 638,994 A.2d 430
• Parties: RRC NORTHEAST, LLCv.BAA MARYLAND, INC.
• Court: Maryland Court of Appeals

413 Md. 638

994 A.2d 430

RRC NORTHEAST, LLCv.BAA MARYLAND, INC.

No. 70 Sept.Term, 2009.

Court of Appeals of Maryland.

May 10, 2010.

COPYRIGHT MATERIAL OMITTED

Catherine M. Manofsky (Kevin F. Arthur and Joseph S. Johnston of Kramon & Graham, P.A., Baltimore, MD), on brief for Petitioner.

Cathy A. Hinger (Womble Carlyle Sandridge & Rice, PLLC, Washington, DC: David B. Hamilton and James P. Scholtes of Womble Carlyle Sandridge & Rice, PLLC, Baltimore, MD), on brief for Respondent.

ARGUED BEFORE BELL, C.J., HARRELL, BATTAGLIA, GREENE, MURPHY, ADKINS and BARBERA, JJ.

HARRELL, Judge.

The Maryland Aviation Administration (“MAA”) owns and operates Baltimore-Washington International/Thurgood Marshall Airport (“BWI” or “the Airport”). MAA leases BWI's retail business concession spaces in its passenger terminals to Respondent, BAA Maryland, Inc. (“BAA”), which, in turn, sublets individual spaces to a variety of individual retail vendors and food service providers. In 2004 and 2005, Petitioner, RRC Northeast, LLC (“RRC”), signed sublease agreements with BAA to operate at BWI several stores specializing in the sale of Maryland/D.C.-themed gifts and souvenirs. According to RRC, the sublease agreements, by incorporating certain other pre-subleasing documents, restricted to four the number of other vendors' competing stores selling similar merchandise to RRC's stores that BAA could sublet at BWI. During 2004, BAA began subletting several retail spaces at BWI to Hudson Group (“Hudson”), which sold Maryland/D.C.-themed gifts and souvenirs in competition with RRC. Eventually, the number of Hudson stores at BWI competing directly with RRC significantly exceeded four. Due to the increased competition, RRC ceased operating at BWI in 2007.

RRC filed a five-count complaint (the “Original Complaint”) against BAA and MAA in the Circuit Court for Anne Arundel County, alleging, among other things, that BAA's subleases to Hudson, and the resultant increased competition, caused economic damage to RRC and the ultimate demise of its operations at BWI. After the Circuit Court granted BAA's and MAA's motions to dismiss RRC's complaint, with leave to amend, RRC filed an Amended Complaint (the “Amended Complaint”) against BAA only. The Amended Complaint asserted three counts: (1) breach of contract and implied covenant to refrain from destructive competition; (2) breach of contract; and, (3) tortious interference with economic relations. The Circuit Court granted BAA's motion to dismiss RRC's Amended Complaint, but this time with prejudice. In response, RRC filed a motion to alter or amend the judgment and for reconsideration, which included a request for leave to file a second amended complaint. The Circuit Court denied RRC's motion. On direct appeal, the Court of Special Appeals affirmed the Circuit Court's dismissal of RRC's Amended Complaint, holding that (1) RRC's Amended Complaint failed to state any claims upon which relief could be granted, and (2) the Circuit Court did not err by denying RRC leave to amend further the Amended Complaint. For reasons we shall explain, we affirm the judgment of the intermediate appellate court.

STANDARD OF REVIEW

Considering a motion to dismiss a complaint for failure to state a claim upon which relief may be granted, a court must assume the truth of, and view in a light most favorable to the non-moving party, all well-pleaded facts and allegations contained in the complaint, as well as all inferences that may reasonably be drawn from them, and order dismissal only if the allegations and permissible inferences, if true, would not afford relief to the plaintiff i.e., the allegations do not state a cause of action for which relief may be granted. Lloyd v. Gen. Motors Corp., 397 Md. 108, 121-22, 916 A.2d 257, 264-65 (2007); Sprenger v. Pub. Serv. Comm'n, 400 Md. 1, 21, 926 A.2d 238, 249-50 (2007); Pendleton v. State, 398 Md. 447, 458-60, 921 A.2d 196, 203-04 (2007); Converge Servs. Group, LLC v. Curran, 383 Md. 462, 475, 860 A.2d 871, 878-79 (2004); Fioretti v. Maryland State Bd. of Dental Exam'rs, 351 Md. 66, 71-72, 716 A.2d 258, 261 (1998). Consideration of the universe of “facts” pertinent to the court's analysis of the motion are limited generally to the four corners of the complaint and its incorporated supporting exhibits, if any. Curran, 383 Md. at 475, 860 A.2d at 879. The well-pleaded facts setting forth the cause of action must be pleaded with sufficient specificity; bald assertions and conclusory statements by the pleader will not suffice. Adamson v. Corr. Med. Servs., Inc., 359 Md. 238, 246, 753 A.2d 501, 505 (2000); Bobo v. State, 346 Md. 706, 708-09, 697 A.2d 1371, 1372 (1997). Upon appellate review, the trial court's decision to grant such a motion is analyzed to determine whether the court was legally correct. Sprenger, 400 Md. at 21, 926 A.2d at 250; Benson v. State, 389 Md. 615, 626, 887 A.2d 525, 531 (2005); Fioretti, 351 Md. at 71, 716 A.2d at 261.

FACTS ¹

Founded in 1987, RRC provides specialty retail shops designed to sell regionally-themed souvenirs and gift items to travelers. Pursuant to a contract with MAA, RRC opened its first souvenir and gift retail store, called “Celebrate Maryland,” at BWI in 1995. Over the next decade, RRC opened six additional retail stores at BWI, including stores that sold items for children and regional merchandise relating to Maryland and the Washington, D.C. region.

In 2003, MAA changed its model for concessions development and operation at BWI. Under the new model, MAA would no longer contract directly with individual retail and concessions tenants. Instead, MAA would lease all concession spaces at BWI to a single operator, which, in turn, would sublease individual retail spaces to individual tenants.

As part of its new concessions model, in June 2003, MAA issued a Request for Proposals (the “RFP”) to obtain a contractor to lease, develop and manage the food, service, and merchandise concessions at BWI. The RFP set forth a proposed concessions plan that included RRC's souvenir and gift store locations, as well as space for, among other things, four additional, competing souvenir and gift stores designated under the category of “News/Gifts.” RRC was operating stores at BWI when MAA issued the RFP, and RRC was represented at the pre-bid meeting for the RFP.

BAA submitted a development proposal, entitled the “Lessee's Proposal,” in response to the RFP, and MAA selected BAA as the new concessions operator at BWI. In March 2004, MAA and BAA executed a Master Lease (the “Master Lease”) and concessions contract. The Master Lease specifically incorporated the terms of the RFP and proposed concessions plan, as well as BAA's “Lessee's Proposal” prepared in response to the RFP.

After BAA entered into the Master Lease with MAA, BAA and RRC began negotiations regarding sublease agreements for RRC's existing and future locations at BWI. According to RRC, during these negotiations, RRC relied on the terms of the RFP, including the proposed concessions plan, which contemplated only four additional stores that would compete with RRC in the market for souvenir and gift sales. In addition, RRC alleged that the representation that RRC's competition would be limited to four additional souvenir and gift stores was a material condition upon which all subsequent agreements between RRC and BAA were based.

In April 2004, BAA and RRC entered into a temporary sublease (the “temporary sublease”), which permitted RRC to continue operating a total of seven existing stores at BWI. The temporary sublease incorporated by reference the terms of the Master Lease between MAA and BAA, which, in turn, incorporated the RFP and the proposed concessions plan. In addition, the temporary sublease provided that RRC's rent would be based on a percentage of its gross revenues from sales at BWI, and limited RRC to using its locations only for “retail concession of gift items focused on the Baltimore region and for no other purpose.” The temporary sublease lasted through 2007 and was repeatedly extended by the parties.

BAA and RRC entered into a new and separate sublease agreement in August 2005 (the “2005 sublease”) regarding RRC's anticipated new stores at BWI. The 2005 sublease provided RRC with eight future locations at which to operate concession facilities. In addition, the 2005 sublease required RRC to pay BAA a minimum rent and a percentage rent of specific dollar amounts of gross receipts and dictated the specific operations of RRC's stores at BWI, all of which related generally to the sale of souvenirs and gifts. The 2005 sublease contained an express “Good Faith and Fair Dealing” clause, which required BAA and RRC “to perform their obligations under [the] Sublease, and to exercise their rights and remedies under [the] Sublease, in good faith, and consistent with customary standards of commercial reasonableness and fair dealing.” ²

In 2004, BAA began subleasing numerous locations at BWI to Hudson, for the operation of news and gift locations in the same terminals at BWI as stores operated by RRC. By 2007, BAA had permitted Hudson to establish 18 locations at BWI, where it sold gifts and souvenirs in direct competition with RRC. As noted by RRC in its Amended Complaint, that number greatly exceeded the four “News/Gifts” locations contemplated by the RFP's proposed concessions plan. According to RRC, after Hudson opened its competing stores, RRC saw an immediate and severe decline in its sales.

In response to the additional competition from Hudson, RRC requested changes in the terms of its subleases with BAA so that it could remain competitive and improve its sales revenue. According to RRC's Amended Complaint, BAA refused to make any changes or to take any action to halt Hudson's sales of regionally-themed souvenirs and gifts. In November 2006, RRC complained to BAA about the number of Hudson stores that were selling regionally-themed gifts and souvenirs and about RRC's loss of...