Darnestown Valley-WHM Ltd. Partnership v. McDonald's Corp.

650 A.2d 1365, 102 Md. App. 577
CourtCourt of Special Appeals of Maryland
DecidedDecember 29, 1994
DocketNo. 214
StatusPublished
Cited by6 cases

This text of 650 A.2d 1365 (Darnestown Valley-WHM Ltd. Partnership v. McDonald's Corp.) is published on Counsel Stack Legal Research, covering Court of Special Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Darnestown Valley-WHM Ltd. Partnership v. McDonald's Corp., 650 A.2d 1365, 102 Md. App. 577 (Md. Ct. App. 1994).

Opinion

BLOOM, Judge.

Appellant, Darnestown Valley-WHM Limited Partnership (Darnestown), which manages the Quince Orchard Shopping Center located in Gaithersburg, Maryland, leased premises in the shopping center to appellee, McDonald’s Corporation (McDonald’s). In September 1992, appellant initiated a summary ejectment action in the District Court for Montgomery County, seeking to evict appellee for an alleged breach of its lease. Appellee demanded a jury trial, and the case was transferred to the Circuit Court for Montgomery County. On 12 May 1993, the court (Harrington, J.) denied appellee’s Motion for Summary Judgment or in the Alternative Motion to Dismiss. Subsequently, appellant’s Motion for Summary Judgment and appellee’s Motion to Dismiss were presented to a different judge, who denied appellant’s motion and granted appellee’s motion. In its appeal from that Order, appellant presents the following issues for our consideration:

I. Whether a landlord has sufficient legal title, possession and authority to institute and maintain a summary ejectment action against a tenant for breach of lease, where the fully performing Deed of Trust, to which the tenant is not a party, requires the mortgagee’s approval to terminate a lease and such approval was not obtained at the time suit was filed, but was obtained and filed prior to trial.
II. Whether a landlord is entitled to summary judgment for breach of lease where it is undisputed that the tenant knowingly and wilfully breached its lease by expanding its use of the leased property without the consent of the landlord, in violation of a zoning ordinance and then knowingly and wilfully failed to cure said violation upon notice of default from landlord within the contractual cure period even after the Tenant was found to be in violation of the zoning ordinance by the Montgomery County Board of Appeals.

Appellee filed a cross-appeal presenting the following additional issue for our consideration:

[581]*581Did the Circuit Court err in its May 12, 1993 Order denying McDonald’s Motion to Dismiss where:
(i) Darnestown’s cause of action was premature and not ripe for adjudication?
(ii) Darnestown, as the purported landlord, had not established a prima facie case for breach of lease under Section 8-402.1?
(in) Darnestown was precluded from terminating the Lease under the doctrines of waiver and/or estoppel?

FACTS

In February 1976, McDonald’s entered into an agreement with Quince Orchard Associates, Inc., to lease premises located in the Quince Orchard Shopping Center for the operation of a restaurant. In March 1984, appellant purchased the shopping center property from Quince Orchard Associates, Inc., and thus became appellee’s landlord. In September 1986, appellant executed a Deed of Trust conveying the shopping center property to Richard Lawson and Wendy Sharp as trustees for Perpetual Savings Bank, F.S.B. (collectively referred to as “Perpetual”) as security for a $7,800,000 debt owed by appellant to Perpetual. Contained within the Deed of Trust was a provision (Paragraph 37) assigning all of the shopping center leases to Perpetual, with a covenant by appellant that it would not terminate any of the leases without the prior written consent of Perpetual. Appellant was permitted to continue to operate the shopping center and, pursuant to the provisions of the assignment of the leases, it also continued to collect the rents, being designated as a trustee for Perpetual for that purpose. Perpetual became insolvent, and the Resolution Trust Corporation (RTC) succeeded Perpetual as holder of the deed of trust note secured by the deed of trust with assignment of leases.

In 1985, appellant and appellee began negotiating a modification of the lease that would allow appellee to expand its use of the leased premises. Appellee asserts that it merely wanted to install an outdoor children’s playground on the property [582]*582that it was leasing and that it only needed a fence permit from the Montgomery County Department of Environmental Protection to comply with the county’s zoning requirements. Appellant asserts that appellee planned to install additional patron seating, which would increase the number of parking spaces required to be available to restaurant patrons and thus would require a special exception to county zoning regulations. Although the parties never reached an agreement, appellee was granted a fence permit by the Department of Environmental Protection and proceeded with its construction plans.

When appellant discovered that appellee had constructed improvements on the property, it sent appellee a letter requesting proof that the improvements complied with county zoning regulations. After a hearing before the Montgomery County Board of Appeals, which appellant contends established that appellee violated zoning regulations, appellant notified appellee on 7 August 1992 that, because the improvements to the leased premises made by appellee violated county zoning regulations, appellee was in violation of Paragraph 12 of its lease agreement.

Under the lease agreement, appellee had thirty days in which to cure the alleged breach. When appellee failed to cure in that time, appellant undertook to terminate the lease; on 30 September 1992, it initiated a summary ejectment action in the district court, pursuant to Maryland Code (1974, 1988. Repl.Vol.), § 8-402.1 of the Real Property Article, to repossess the premises. At the time that action was filed, appellant had not obtained RTC’s written consent to terminate appellee’s lease. Upon appellee’s demand for a jury trial, the case was transferred to the circuit court and scheduled for trial on 25 May 1993.

On 12 May 1993, the court denied appellee’s Motion for Summary Judgment or in the Alternative Motion to Dismiss. On the day of trial, the presiding judge heard oral arguments on appellee’s Motion to Dismiss and appellant’s Motion for Summary Judgment. The court then dismissed the jury and directed appellant either to join RTC as a required party or to [583]*583obtain its written consent to terminate appellee’s lease. Although appellant obtained RTC’s written consent to terminate appellee’s lease on 25 June 1993, appellee once again filed its Motion to Dismiss, and appellant supplemented its Motion for Summary Judgment, which was still under advisement. On 4 January 1994, the court denied appellant’s Motion for Summary Judgment and granted appellee’s Motion to Dismiss.

I.

Appellant contends that the circuit court erred in granting appellee’s Motion to Dismiss because appellant was “vested with sufficient title, authority, and possession to maintain a possessory action against McDonald’s for breach of lease.” According to appellant, the Deed of Trust should be interpreted as a mortgage, since it was granted to Perpetual only as security for the debt owed to it by appellant. Appellant argues that, if it is treated as mortgagor, the language of Paragraph 37 of the Deed of Trust acts as a redemise of the property to appellant, thus making appellant the beneficial owner of the mortgaged property as to all persons except the mortgagee. Consequently, appellant contends, it could maintain an ejectment action against appellee.

Under Maryland Code (1974, 1988 Repl.Vol.), § 8-402.1 of the Real Property Article,

if the tenant breaches the lease ...

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Cite This Page — Counsel Stack

Bluebook (online)
650 A.2d 1365, 102 Md. App. 577, Counsel Stack Legal Research, https://law.counselstack.com/opinion/darnestown-valley-whm-ltd-partnership-v-mcdonalds-corp-mdctspecapp-1994.