Coin Automatic Laundry Equipment Company v. Hampton Plaza, LLLP

Filing 20

MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 2/16/2017. (dass, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
COIN AUTOMATIC LAUNDRY EQUIPMENT
COMPANY,
:
Plaintiff,

:

v.

:

HAMPTON PLAZA, LLLP,

:

Defendant.

:

Civil Action No. GLR-16-0695

MEMORANDUM OPINION
THIS MATTER is before the Court on Hampton Plaza, LLLP’s
(“Hampton Plaza”) Motion to Dismiss or, in the Alternative, for
Summary

Judgment

(ECF

No.

8).

The

Motion

disposition, and no hearing is necessary.
(D.Md. 2016).

is

ripe

for

See Local Rule 105.6

For the reasons outlined below, the Court will

grant in part and deny in part the Motion.
BACKGROUND1

I.
Plaintiff
(“CALECO”)

Coin

entered

Automatic
into

a

Laundry

commercial

Equipment

lease

Company

agreement

with

Hampton Plaza (“CALECO Lease”) on April 13, 2009 to lease space
to allow

CALECO to install and service

Hampton Plaza.

(Compl. ¶ 7, ECF No. 1).

on May 13, 2009 for a six-year term.
1-1).
1

laundry equipment

at

The CALECO Lease began

(Compl. Ex. A ¶ 1, ECF No.

The CALECO Lease automatically renews with the same terms

Unless otherwise noted, the Court describes facts taken
from the Complaint and accepts them as true.
See Erickson v.
Pardus, 551 U.S. 89, 94 (2007) (citations omitted).

and conditions unless a party terminates the lease with ninety
days written notice.
monthly

rent

of

(Id. ¶ 7).

sixty-percent

The CALECO Lease required a

of

CALECO’s

revenue

collected

during the month and required the laundry equipment to remain
CALECO

property.

(Id.

¶¶

2, 4).

The

CALECO

Lease

also

contained a right of first refusal (“ROFR”) provision: [CALECO]
“shall have a right of refusal to continue to lease space to
provide laundry services on the same terms as any bona fide bid
received

by

renewed.”

[Hampton

Plaza],

if

this

[CALECO]

Lease

is

not

(Id. ¶ 8).

On April 15, 2015, Hampton Plaza provided CALECO written
notice of its termination of the CALECO Lease.

(Compl. Ex. B,

ECF No. 1-2).

Two days later, CALECO advised Hampton Plaza, in

writing,

it

that

intended

to

exercise

(Compl. Ex. C, ECF No. 1-3).

the

ROFR

provision.

CALECO requested that Hampton

Plaza provide copies of any bona fide bids for laundry services
or

commercial

received.

laundry

(Id.).

equipment

purchases

Hampton

Plaza

CALECO alleges Hampton Plaza never provided

any bids, contracts, or other documents in April, May, or June
2015.

(See Compl. ¶ 14).

Instead, on July 16, 2016 Hampton

Plaza allegedly executed a new lease (“C&G Lease”) with Caldwell
&

Gregory

services.

(“C&G”),

CALECO’s

competitor,

to

provide

laundry

(Pl.’s Opp. Def.’s Mot. Dismiss Alt. Summ. J. [“Pl.’s

2

Opp.”] Ex. A, ECF No. 13-1).2
leased

“all

current

and

In the C&G Lease, Hampton Plaza

future

laundry

areas

within

the

premises” to C&G for the purpose of installing and maintaining
washers and dryers.

(Id.).

C&G allegedly signed the C&G Lease

a day later, on July 17, 2015.
On

July

Hampton Plaza,

21,

2015,

advised

(Id.).

Rachel

Smith,

building

manager

with

CALECO that she never received a

new

proposal for laundry services from CALECO, Hampton Plaza “signed
a

contract

with

another

vendor,”

continue on a month-to-month basis.
5).

and

the

CALECO

Lease

will

(Compl. Ex. E, ECF No. 1-

On July 22, 2015, CALECO again informed Hampton Plaza that

it intended on exercising its rights under the ROFR provision.
(Compl. Ex. F, ECF No. 1-6).
any

bids,

contracts,

or

Hampton Plaza failed to provide

other

documents

to

CALECO

in

July,

August, or September 2015, despite continuing requests.

(See

Compl. ¶ 14).

On October 2, 2015, Hampton Plaza, in writing,

terminated

CALECO

the

Lease.

(Compl.

2

Ex.

I,

ECF

No.

1-9).

At this stage in the litigation, the Court may consider
documents referred to and relied upon in the Complaint, “even if
the documents are not attached as exhibits.” Coulibaly v. J.P.
Morgan Chase Bank, N.A., No. DKC 10-3517, 2011 WL 3476994, at *6
(D.Md. Aug. 8, 2011) (quoting Fare Deals Ltd. v. World Choice
Travel.com, Inc., 180 F.Supp.2d 678, 683 (D.Md. 2001) (internal
quotation marks omitted).
Here, the Complaint alleges that
“Hampton [Plaza] signed a new contract with C&G without
providing CALECO with the bona fide bid from that vendor.”
(Compl. ¶ 30).
Accordingly, because the Complaint refers to,
and relies on, the C&G Lease, the Court will consider it at this
stage.
3

Hampton Plaza’s letter advised CALECO that Hampton Plaza decided
to purchase its own laundry equipment and as a result, “there
are no lease terms to match” under the ROFR provision.
On

October

22,

2015,

executed an “Addendum”

Hampton

Plaza

and

Sales

Order

(collectively,

allegedly

to the C&G Lease that terminated the

original C&G Lease (“Termination Addendum”).
ECF No. 13-1).

C&G

(Id.).

(Pl.’s Opp. Ex B,

That same day, Hampton Plaza and C&G executed a
Form
the

and
“C&G

Service
Purchase

and

Collection

Agreement”).

Contract

(Def.’s

Mot.

Dismiss Alt. Summ. J. (hereinafter “Def.’s Mot. Dismiss”) Ex. 3,
ECF

No.

8-5).3

Under

the

Sales

Order

Form,

Hampton

Plaza

purchased washers, dryers, and other laundry equipment from C&G.
(Id.).

Under the Service and Collection Contract, Hampton Plaza

agreed to pay C&G a monthly fee to service and maintain the
laundry equipment Hampton Plaza purchased.

(Id.).

On November

11, 2015, Hampton Plaza disconnected CALECO’s laundry equipment
and removed it from Hampton Plaza’s property.

(Compl. ¶ 28).

On March 8, 2016, CALECO sued Hampton Plaza, raising one
claim for breach of contract.

(Compl. ¶¶ 32–36).

Specifically,

CALECO alleges Hampton Plaza violated the ROFR provision when it

3

The Complaint alleges that “Hampton [Plaza] attempted to
re-characterize the new agreement as an arrangement that would
not run afoul of the existing [CALECO] Lease.”
(Compl. ¶ 30).
Because the Complaint refers to, and relies on, the C&G Purchase
Agreement, the Court will consider it at this stage. See note 2
supra.
4

signed the C&G Lease because Hampton Plaza never provided CALECO
with C&G’s bona fide bid.

(See Compl. ¶ 30).

CALECO further

alleges Hampton Plaza violated the CALECO Lease when it signed
the C&G Purchase Agreement because the agreement was “meant to
circumvent
CALECO

CALECO’s

asserts

[ROFR

Hampton

provision].”

Plaza

withheld

(Compl.

bona

fide

¶ 34(c)).

offers

from

CALECO and executed the C&G Purchase Agreement in bad faith.
(Compl.

¶ 34(g)).

Finally,

CALECO

alleges

Hampton

Plaza

disconnected and removed CALECO’s laundry equipment in violation
of the CALECO Lease.

(Compl. ¶ 34(e)).

On May 9, 2016, Hampton

Plaza filed a Motion to Dismiss, or in the Alternative, for
Summary Judgment.

(ECF No. 8).

CALECO filed a Response on June

10, 2016, (ECF No. 13), and Hampton Plaza filed a Reply on July
8, 2016 (ECF No. 16).
II.
A.

DISCUSSION

Standards of Review
1.

Conversion to Summary Judgment

As a threshold matter, the Court must determine how to
construe

the

Motion.

Hampton

Plaza

styles

its

Motion

as

a

motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)
or, in the alternative, for summary judgment under Rule 56.

A

motion styled in this manner implicates the Court’s discretion
under

Rule

12(d).

See

Kensington

Vol.

Fire

Dept.,

Inc.

v.

Montgomery Cty., 788 F.Supp.2d 431, 436–37 (D.Md. 2011), aff’d
5

sub nom., Kensington Volunteer Fire Dep’t, Inc. v. Montgomery
Cty., 684 F.3d 462 (4th Cir. 2012).

This Rule provides that

when “matters outside the pleadings are presented to and not
excluded

by

treated

as

court,

one

Fed.R.Civ.P.
determine

the

for

12(d).

whether

the

[Rule

summary
The

or

not

judgment

Court
to

12(b)(6)]

“has

accept

motion

under

‘complete
the

must

Rule

be

56.”

discretion

submission

of

to
any

material beyond the pleadings that is offered in conjunction
with a Rule 12(b)(6) motion and rely on it, thereby converting
the motion, or to reject it or simply not consider it.’”

Wells-

Bey v. Kopp, No. ELH-12-2319, 2013 WL 1700927, at *5 (D.Md. Apr.
16,

2013)

(quoting

5C

Wright

&

Miller,

Federal

Practice

&

Procedure § 1366, at 159 (3d ed. 2004, 2012 Supp.)).
The United States Court of Appeals for the Fourth Circuit
has articulated two requirements for proper conversion of a Rule
12(b)(6) motion to a Rule 56 motion: notice and a reasonable
opportunity for discovery.

See Greater Balt. Ctr. for Pregnancy

Concerns, Inc. v. Mayor of Balt., 721 F.3d 264, 281 (4th Cir.
2013).

When the movant expressly captions its motion “in the

alternative” as one for summary judgment and submits matters
outside the pleadings for the court’s consideration, the parties
are deemed to be on notice that conversion under Rule 12(d) may
occur.

See

Moret

2005).

Here,

v.

Hampton

Harvey,
Plaza

381

F.Supp.2d

captions
6

its

458,

Motion

464
as

(D.Md.
one

for

summary

judgment

affidavit

and

“in

other

the

alternative,”

materials

court’s consideration.

outside

the

and

submitted

pleadings

an

for

the

(Def.’s Mot. Dismiss Exs. 1, 2, 4–6, ECF

Nos. 8-2, 8-3, 8-5 through 8-8).

Thus, the Court concludes that

Hampton met the notice requirement.
Ordinarily,

summary

judgment

is

inappropriate

when

“the

parties have not had an opportunity for reasonable discovery.”
E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d
435, 448 (4th Cir. 2011).

To sufficiently establish that more

discovery

is

non-movant

affidavit

or

needed,

the

declaration

under

must

Rule

typically

56(d)

file

explaining

an
the

“specified reasons” why “it cannot present facts essential to
justify its opposition.”

Importantly, “Rule 56(d) affidavits

may not demand discovery for discovery’s sake; a Rule 56(d)
request is properly denied ‘where the additional evidence sought
. . . would not have by itself created a genuine issue of
material fact sufficient to defeat summary judgment.’”

Gardner

v. United States, No. JKB-15-2874, 2016 WL 2594826, at *4 (D.Md.
May 4, 2016) (quoting Strag v. Bd. of Trs., 55 F.3d 943, 954
(4th Cir. 1995)).
Here,

Hampton

Plaza

submitted

an

affidavit

from

Smith

describing events related to the CALECO Lease, C&G Lease, and
C&G Purchase Agreement.
3).

(Def.’s Mot. Dismiss Ex. 1, ECF No. 8-

Smith states all of her actions and decisions were made in
7

good faith.

(Id. ¶ 10).

In response, CALECO submitted a Rule

56(d) affidavit from Mark A. Schiavo, Esq., an attorney for
CALECO.

(Pl.’s Opp. Ex. B, ECF No. 13-2).

In his affidavit,

Schiavo explains that CALECO seeks discovery regarding Smith’s
“reasons, motives, and intentions behind her actions” related to
the ROFR provision, the C&G Lease, and the Termination Addendum.
(Id. ¶¶ 3, 5).

Because the discovery CALECO seeks relates to

whether Hampton Plaza withheld bona fide bids in violation of
the ROFR provision,4 the Court concludes the discovery CALECO
seeks could lead to the creation of “a genuine issue of material
fact sufficient to defeat summary judgment.’”

Gardner, 2016 WL

2594826, at *4 (quoting Strag, 55 F.3d at 954).

Accordingly,

the Court will construe Hampton Plaza’s Motion as a motion to
dismiss under Rule 12(b)(6).
2.

Rule 12(b)(6)

The

purpose

of

a

Rule

complaint,”

sufficiency

of

a

surrounding

the

facts,

12(b)(6)

the

applicability of defenses.”

motion

not

to

merits

of

“is

to

“resolve
a

claim,

test

the

contests
or

the

Edwards v. City of Goldsboro, 178

4

As the Court will explain below, however, whether Hampton
Plaza entered into the C&G Purchase Agreement in bad faith is
not relevant because the ROFR provision relates to matching a
monthly rental agreement, not a circumstance where Hampton
purchases the laundry equipment and takes control of the laundry
services, as is the case with the C&G Purchase Agreement.
Accordingly, the Court is only referring to bona fide bids
related to the alleged C&G Lease, not the C&G Purchase
Agreement.
8

F.3d 231, 243–44 (4th Cir. 1999) (quoting Republican Party v.
Martin, 980 F.2d 943, 952 (4th Cir. 1992)).

A complaint fails

to state a claim if it does not contain “a short and plain
statement of the claim showing that the pleader is entitled to
relief,” Rule 8(a)(2), or does not “state a claim to relief that
is plausible on its face,” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).
pleads

A claim is facially plausible “when the plaintiff

factual

reasonable

content

inference

that

misconduct alleged.”
“Threadbare

that

allows

the

the

defendant

court
is

to

draw

the

for

the

liable

Id. (citing Twombly, 550 U.S. at 556).

recitals

of

the

elements

of

a

cause

of

action,

supported by mere conclusory statements, do not suffice.”

Id.

(citing Twombly, 550 U.S. at 555).

Though the plaintiff is not

required

prove

to

forecast

evidence

to

the

elements

of

the

claim, the complaint must allege sufficient facts to establish
each element.

Goss v. Bank of Am., N.A., 917 F.Supp.2d 445, 449

(D.Md. 2013) (quoting Walters v. McMahen, 684 F.3d 435, 439 (4th
Cir.

2012)),

aff’d

sub

nom.,

Goss

v.

Bank

of

Am.,

NA,

546

F.App’x 165 (4th Cir. 2013).
In considering a Rule 12(b)(6) motion, a court must examine
the complaint as a whole, consider the factual allegations in
the complaint as true, and construe the factual allegations in
the light most favorable to the plaintiff.
9

Albright v. Oliver,

510 U.S. 266, 268 (1994); Lambeth v. Bd. of Comm’rs of Davidson
Cty.,

407

F.3d

266,

268

(4th

Cir.

Rhodes, 416 U.S. 232, 236 (1974)).

2005)

(citing

Scheuer

v.

But, the court need not

accept unsupported or conclusory factual allegations devoid of
any reference to actual events, United Black Firefighters v.
Hirst, 604 F.2d 844, 847 (4th Cir. 1979), or legal conclusions
couched as factual allegations, Iqbal, 556 U.S. at 678.
B.

Analysis
1.

The Scope of the ROFR Provision
i.

The C&G Purchase Agreement

Hampton

Plaza

first

argues

that

the

ROFR

provision

is

inapplicable to the C&G Purchase Agreement because under the
Agreement,

Hampton

Plaza

purchases

the

operates the laundry services themselves.

laundry

equipment

and

CALECO’s allegations

appear to concede that the terms of the ROFR provision do not
apply to the C&G Purchase Agreement.

CALECO only alleges that

the C&G Purchase Agreement was Hampton Plaza’s attempt to “not
run afoul” of the ROFR provision.

(Compl. ¶ 30; see also Pl.’s

Opp. at 8 (arguing that the C&G Purchase Agreement was “meant to
operate
ROFR”)).

as

a

lease

but

serve

to

circumvent

or

defeat

the

Instead, CALECO’s allegations focus on Hampton Plaza’s

intent to design the C&G Purchase Agreement so that it fell
outside the ROFR

provision, thus violating its duty of good

faith and fair dealing.

(Compl. ¶ 34(g)).
10

The Court agrees

that the ROFR

provision

is inapplicable

to the

C&G Purchase

Agreement.
Contracts in Maryland contain an implied duty of good faith
and fair dealing. See, e.g., Clancy v. King, 954 A.2d 1092,
1106–07 (Md. 2008).

As CALECO indicates, this duty extends to

property owners and ROFR holders in land-sale contracts.

David

A. Bramble, Inc. v. Thomas, 914 A.2d 136, 148–49 (Md. 2007); see
Straley v. Osborne, 278 A.2d 64, 70 (Md. 1971) (holding that
including the premises of a junkyard that is subject to a ROFR
provision with the surrounding land to avoid application of the
ROFR would violate the duty of good faith).

The duty of good

faith and fair dealing, however, does not require parties to
take “affirmative actions” that they are “clearly not required
to take” under the contract.

E. Shore Mkts., Inc. v. J.D.

Assocs. Ltd. P'ship, 213 F.3d 175, 182 (4th Cir. 2000) (quoting
Parker

v.

Columbia

Bank,

604

A.2d

521,

1992)) (internal quotation marks omitted).
not

“interpose

new

obligations

about

531

(Md.Ct.Spec.App.

Hence, the duty does

which

the

contract

is

silent, even if inclusion of the obligation is thought to be
logical and wise.”

Id. at 184.

Rather, the only obligations

required are ones “inherent in expressed promises.”
Here,

in

the

C&G

Purchase

Agreement,

Id.

Hampton

Plaza

purchased laundry equipment from C&G and employed C&G to service
and maintain the equipment.

(Def.’s Mot. Dismiss Ex. 3).
11

The

ROFR provision,

however,

only gives CALECO a right of first

refusal “to continue to lease space to provide laundry services
on the same terms as any bona fide bid received” by Hampton
Plaza.

(Compl. ¶ 11 (emphasis added)).

The duty of good faith,

therefore, does not “interpose” a “new obligation” on Hampton
Plaza

to

provide

CALECO

an

opportunity

to

match

bids

and

agreements other than leases -- even if they relate to providing
the same laundry services

-- because the ROFR

provision

silent” about bids and agreements other than leases.

“is

See E.

Shore Mkts., 213 F.3d at 184.
Nor is such an obligation “inherent” in the CALECO Lease.
See

id.

In

the

CALECO

Lease,

CALECO

paid

Hampton

Plaza

a

monthly rent of sixty-percent of its monthly revenues, and the
laundry equipment remained CALECO’s property.
¶¶ 2, 4).

(Compl. Ex. A

But in the C&G Purchase Agreement, Hampton Plaza is

purchasing laundry equipment and employing C&G to service and
maintain the equipment.
Hampton
continue

Plaza’s
to

(Def.’s Mot. Dismiss Ex. 3).

continuing

lease

space”

obligation
does

not

to

allow

inherently

Thus,

CALECO

“to

encompass

an

obligation to give CALECO an opportunity to sell and service
laundry

equipment.

agreements

that

(Compl.

provide

¶ 11).

laundry

services

Including
may

be,

non-lease
at

best,

“logical and wise” due to the presence of the ROFR provision,
but is not an obligation under the duty of good faith and fair
12

dealing.
Court

See E. Shore Mkts., 213 F.3d at 184.

will

dismiss

CALECO’s

Accordingly, the

breach-of-contract

claim

to

the

extent CALECO seeks damages for Hampton Plaza’s execution of the
C&G Purchase Agreement.
ii.

The C&G Lease

Hampton Plaza next argues that CALECO’s claim should be
dismissed to the extent it seeks damages as a result of the
first C&G Lease because Hampton Plaza “mere[ly] contemplate[d]”
the C&G Lease and it went “unconsummated.”
at 13).

CALECO argues

it sufficiently

(Def.’s Mot. Dismiss
alleged that

Hampton

Plaza and C&G consummated the C&G Lease in violation of the ROFR
provision.

The Court agrees with CALECO.

Hampton Plaza relies on Smith’s affidavit to demonstrate
that Hampton Plaza and C&G never entered into a valid, binding
lease, and therefore never triggered the ROFR provision.
Def.’s

Mot.

construing
however,

Dismiss

Hampton

the

documents

Court

referred

Ex.

1,

Plaza’s

¶ 5).

Motion

may

only

to

and

Because
as

consider
relied

Coulibaly, 2011 WL 3476994, at *6.

a
the

upon

the

Motion

Court

to

Complaint
in

the

(See
is

Dismiss,
and

any

Complaint.

The Court must consider the

factual allegations in the Complaint as true, and construe the
factual

allegations

plaintiff.

in

the

light

most

favorable

to

the

Albright, 510 U.S. at 268; Lambeth, 407 F.3d at 268

(citing Scheuer, 416 U.S. at 236).
13

Smith’s affidavit aside, CALECO alleges that on April 17,
2015, it sent a letter to Hampton Plaza informing Hampton Plaza
that it intended to exercise the ROFR provision and requested
copies of any bona fide bids for laundry services.
C).

(Compl. Ex.

CALECO further alleges that Hampton Plaza never provided

any bids, contracts, or other documents in response.
¶ 14).

CALECO asserts that instead, Hampton Plaza signed the

C&G Lease.
Hampton

(Compl.

(See Compl. ¶ 30).

Plaza

leased

“all

According to the C&G Lease,

current

and

future

laundry

areas

within the premises” to C&G for the purpose of installing and
maintaining washers and dryers.

(Pl.’s Opp. Ex. A).

The dates

next to the C&G Lease’s signatures reveal that Hampton Plaza
signed the lease on July 16, 2015 and C&G signed it on July 17,
2015.

(Id.).

Thus, CALECO has sufficiently pled that Hampton

Plaza and C&G executed the C&G Lease.
2.

Validity of the ROFR Provision

Hampton Plaza further argues that the ROFR provision itself
is invalid because it constitutes an unreasonable restraint on
alienation of property and it violates Maryland’s Rule against
Perpetuities.
provision.

CALECO argues neither rule invalidates the ROFR

The Court agrees with CALECO.

14

i.

Rule
Against
Unreasonable
Alienation of Property

Restraints

on

The rule against unreasonable restraints on alienation of
property “prevents grantors from unreasonably depriving grantees
of the power to alienate their estates.”

Ferrero Const. Co. v.

Dennis Rourke Corp., 536 A.2d 1137, 1142–43 (Md. 1988).
Plaza

relies

on

Ferrero

Construction

Co.

to

Hampton

support

its

assertion that the ROFR provision is invalid under the rule.
Specifically,
Appeals’

holding

alienation.”
not

Hampton

hold

Plaza

that

“rights

Id. at 1144.

that

rights

relies

of

on

of

of

first

refusal

Maryland

first

refusal

Court

of

restrain

The Court of Appeals, however, did
first

refusal

restraint on alienation of property.
rights

the

were

a

were

an

unreasonable

The court only held that

restraint

on

alienation

of

property in rejecting the minority view that the Rule against
Perpetuities does not apply to rights of first refusal.
at

1143

(“Even

if

the

minority

view

were

correct

See id.
that

an

interest should not be subject to the Rule Against Perpetuities
unless that interest constitutes a restraint on alienation, we
would

disagree

that

rights

of

first

refusal

should

not

be

subject to the Rule.”).
Hampton Plaza cites no other Maryland authority, and the
Court’s own exhaustive research reveals none, that applies the
rule against unreasonable restraints on alienation of property

15

to a right of first refusal.

Maryland courts instead apply the

Rule against Perpetuities.

See, e.g., Dorado Ltd. P’ship v.

Broadneck Dev. Corp., 562 A.2d 757, 759 (Md. 1989) (“In our
view,

the

contract

for

the

sale

of

the

remaining

112

lots

violates the Rule Against Perpetuities. Consequently, we do not
reach the issues of whether the contract is an unreasonable
restraint

on

alienation

or

is

fatally

vague.”);

Corp. v. Marie, 860 A.2d 886, 890 (Md. 2004).5

The

Arundel

Thus, the Court

declines to apply the rule against unreasonable restraints on
alienation of property to the ROFR provision and will only apply
the Rule against Perpetuities.
ii.
Under

The Rule against Perpetuities

the

common

law

Rule

against

Perpetuities,

“[n]o

interest is good unless it must vest, if at all, not later than
twenty-one years after some life in being at the creation of the
interest.”

Selig v. State Highway Admin., 861 A.2d 710, 717

(Md.

(quoting

2004)

John

Chipman

Gray,

The

Rule

Against

Perpetuities, § 201 (4th ed. 1942)) (internal quotation marks
5

The Supreme Court of Vermont has observed that “[c]ourts
have divided over” whether preemptive rights, such as rights of
first refusal, “should be tested under the rule against
perpetuities
rather
than
the
common-law
rule
against
unreasonable restraints, and disagree over the extent to which
the two rules overlap.” SKI, Ltd. v. Mountainside Props., Inc.,
114 A.3d 1169, 1178 n.8 (Vt. 2015). The court there cited the
Maryland Court of Appeals’ decision in Ferrero Construction Co.
as an example of a court applying the Rule against Perpetuities
over the rule against unreasonable restraints on alienation.
Id.
16

omitted).

The

Maryland

exceptions to the Rule.
Trusts

§ 11-102

(West

legislature,

however,

has

codified

See generally Md. Code Ann., Est. &
2017).

One

exception

is

nondonative

property interests created after October 1, 2007 that vest, or
are exercised, within seven years of the interest’s creation.
Id.

§ 11-102.1(d)(1–2).

The

statute

defines

a

nondonative

property interest as a property interest, such as a right of
first refusal, given for consideration.

Id. § 11-102.1(a).

A

right of first refusal vests when the property owner decides to
sell his or her property interest.

See Bramble, 914 A.2d at 146

(holding that a preemptive right “vests only when the property
owner decides to sell” (quoting Ayres v. Townsend, 598 A.2d 470,
474 (Md. 1991))).
Here, the ROFR provision is valid because it is exempted
from the Rule against Perpetuities under Section 11-102.
ROFR

provision

Hampton

Plaza

is

a

passed

nondonative
the

property

interest

to

interest
CALECO

consideration provided in the CALECO Lease.

The

because
for

the

(Compl. Ex. A).

The CALECO Lease contained the ROFR provision after 2007 because
CALECO and Hampton Plaza executed it in 2009.

(Compl. ¶ 7).

The ROFR provision vested within seven years because Hampton
Plaza and C&G executed the C&G Lease on July 17, 2015, a little

17

over six years later.

(Pl.’s Opp. Ex. A).6

The Court concludes,

therefore, that CALECO sufficiently pled a valid ROFR provision
under Maryland law.
In sum, CALECO sufficiently pleads that the ROFR is valid
and that Hampton Plaza executed the C&G Lease in violation of
the ROFR.

Accordingly,

the Court will deny

Hampton Plaza’s

Motion to the extent it seeks to dismiss CALECO’s claims related
to the C&G Lease.
III. CONCLUSION
For the foregoing reasons, the Court will GRANT in part and
DENY in part Hampton Plaza’s Motion (ECF No. 8).

The Court will

GRANT the Motion to the extent CALECO seeks damages for Hampton
Plaza’s execution of the C&G Purchase Agreement.

The Court will

DENY the Motion to the extent CALECO seeks damages for Hampton
Plaza’s execution of the C&G Lease.

A separate Order follows.

Entered this 16th day of February, 2017
/s/
________________________
George L. Russell, III
United States District Judge

6

Hampton Plaza argues that it never executed the C&G Lease
with C&G.
Because Hampton Plaza solely relies on Smith’s
affidavit to support this contention, for the reasons the Court
described in Section II.B.1.ii supra, at the 12(b)(6) stage the
Court only considers the C&G Lease and construes the dates
contained therein in the light most favorable to CALECO.
Albright, 510 U.S. at 268; Lambeth, 407 F.3d at 268 (citing
Scheuer, 416 U.S. at 236).
Thus, at this time the Court
construes the C&G Lease as executed on July 17, 2015.
18