Lord & Taylor, LLC v. White Flint, L.P.

Filing 476

REPORT AND RECOMMENDATIONS re 450 MOTION for Attorney Fees. Signed by Magistrate Judge Charles B. Day on 12/15/2017. (jf3s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

LORD & TAYLOR, et al.,

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Plaintiffs,
v.
WHITE FLINT, L.P. n/k/a
WHITE FLINT MALL, LLLP,
Defendant.

Civil Action No. RWT-13-1912

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REPORT AND RECOMMENDATION

This Report and Recommendation addresses Plaintiffs’ Motion Requesting the Award of
Attorney’s Fees (“Plaintiffs’ Motion”)(ECF No. 450), as well as the opposition and reply thereto.
Pursuant to 28 U.S.C. § 636, and Local Rule 301, the Honorable Roger W. Titus referred this
matter to me for the making of a Report and Recommendation concerning the award of
attorney’s fees. For the reasons stated herein, I recommend the Court DENY the Motion as
enumerated herein.
I.

Factual and Procedural Background
The present dispute arises from the redevelopment of the White Flint Mall located in

Bethesda, Maryland. Plaintiffs were tenants, whereas Defendant was the lessor of the property.
The relationship between the parties is governed by a Reciprocal Easement Agreement
(“REA”)(ECF No. 450-1) which Plaintiffs allege was violated. After a multi-week jury trial,
Plaintiffs obtained a jury verdict of $31 million. Specifically, the jurors determined that
Defendant violated Plaintiffs’ “rights under the REA in one or more ways described in the

Court’s instructions.” Plaintiffs now seek $2,725,363.00 in attorney’s fees for nearly nine
thousand hours of legal work flowing from the litigation. It is the purpose of this report to
recommend to the Court the appropriateness of the award of legal fees to Plaintiffs.
II.

Discussion
A.

Maryland Follows the “American Rule” in Awarding Attorney’s Fees

This case was filed pursuant to the diversity jurisdiction of the court. As such, Maryland
law is applicable. Under Maryland law, “the prevailing party in a lawsuit may not recover
attorney’s fees as an element of damages or costs unless (1) the parties to a contract had an
agreement to that effect, (2) there is a statute that allows the imposition of such fees, (3) the
wrongful conduct of a defendant forces a plaintiff into litigation with a third party, or (4) a
plaintiff is forced to defend against a malicious prosecution.” Thomas v. Gladstone, 386 Md.
693, 699, 874 A.2d 434, 437 (2005). Plaintiffs seek attorney’s fees here on the basis of
contracts, specifically the REA and its relevant counterpart in Paragraph 31 of the Sub-Lease
Agreement (the “Sub-Lease”)(ECF No. 450-8).
B.

The Indemnification Clauses of Sections 1.13 and 5.4 of the REA

The REA contains at least two indemnification provisions under which Plaintiffs contend
they are entitled to attorney’s fees. Section 1.13 states
“Each party shall at all times: (A) take any and all safety measures
reasonably required to protect the other parties hereto and their
employees, agents, contractors, and invitees from injury or damage
caused by or resulting from the performance of its construction,
(B) indemnify and hold harmless the other parties hereto from or in
respect to the death of or any accidents, injury, loss or damage . . .
whatsoever caused by any person or to property as shall occur in
the process of, during the course of or by virtue of its construction
and (C) indemnify and hold the others harmless from and against
mechanic’s, materialman’s and laborers’ liens, and all costs,
expenses and liabilities in connection with or arising from its said
construction.
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Section 1.13 (emphasis added). Under this Section, the parties intended to mutually indemnify
each other during the construction phase of the mall. By its terms, it is not applicable to a more
general award of fees. Section 5.4 of the REA is similarly concerned about insurance. It states
Except for claims paid pursuant to joint general public liability
insurance referred to in Section 5.5, [Defendant] will indemnify
and save [Plaintiffs] harmless from and against any and all claims,
actions, damages, liability and expense in connection with the loss
of life, personal injury or damage to property, or any of them, in,
on or about the Shopping Center Site or the Access Easement
occasioned wholly or in part by any act or omission of
[Defendant], its tenants, agents, contractors or employees,
including but not limited to any and all claims, actions, damages,
liability and expense arising out of [Defendant’s] maintenance of
the Common Areas, common facilities and improvements and
common utility facilities on the Shopping Center Site and Access
Easement as in Section 4.1 provided[.]
Section 5.4 of the REA. The plain reading of the REA suggests that Section 5.4 is limited to
issues of insurance. There is no indication that attorney’s fees are to be paid due to any other
breach of the REA.
In light of the broad language of indemnification used in both sections, Plaintiffs argue
that case law supports the reimbursement of attorney’s fees to the prevailing party in a lawsuit
such as the present one. Plaintiffs contend that their position is supported by Atlantic
Contracting & Material Co., Inc. v. Ulico Cas. Co., 380 Md. 285, 844 A.2d. 460 (2004). Atlantic
Contracting deals with a surety and indemnification agreement in a first party lawsuit which did
not use the term “attorney’s fees.” The Maryland Court of Appeals allowed Ulico to pursue its
claim for attorney’s fees based upon the strong language of the indemnity agreement itself. The
indemnity agreement defines “Loss” to mean:
Any and all damages, costs, charges, and expenses of any kind,
sustained or incurred by [Ulico] in connection with or as a result
of: (1) the furnishing of any Bonds; and (2) the enforcement of this

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Agreement. Loss shall also include any funds disbursed by
[Ulico], or arranged for or guaranteed by [Ulico] for the use and/or
benefit of any indemnitor.
Id. at 469. The Court determined that Atlantic Contracting was required “to pay Ulico the sums
it incurred to enforce the agreement, which included its attorney’s fees.” Id. at 478. Conversely
here, the language in the indemnification clauses of the REA are not sufficiently similar to
support Plaintiffs’ arguments. In neither Section 1.13 nor 5.4 did the parties include the right to
the recovery of attorney’s fees for the initiation of lawsuits seeking to enforce the provisions of
the REA. The principle set forth in Atlantic Contracting was reaffirmed four years later in the
case of Nova Research Inc. v. Penske Truck Leasing Co., L.P., 405 Md. 435, 952 A.2d 275
(2008). The Court in Nova Research adopted the approach followed in the majority of states and
requires that
[T]he contract provide expressly for recovery in first party
enforcement actions. The contract in the case before us does not
explicitly cover expenses in the enforcement of the contract;
therefore, we shall not imply the recovery of attorney’s fees
accrued in a first party action establishing the right to indemnity.
Id. at 289. In looking to the Nova Research decision, our federal court in Maryland has stated
that
[I]ndemnification provisions normally only extend to losses
incurred in defending against actions by third parties not first party
litigation between the contracting parties. ‘Where the contract
provides no express provision for recovering attorney’s fees in a
first party action establishing the right to indemnity, . . . we decline
to extend this exception to the American Rule which generally
does not allow for the prevailing party to recover attorney’s fees.’
Hearn Insulation and Improvement Co., Inc. v. Bonilla, Civ. A. No. 09-cv-00990-AW, 211 WL
220091 at *1 (D. Md. Jan. 21, 2011) (quoting Nova Research, 952 A.2d at 285). In summary,
the indemnification provisions here provide “no express provision” to recover fees in this first
party action.
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C.

Compliance with Laws Issued by Governmental Authorities under Section
6.4 of the REA

Under the REA, Defendant agrees to indemnify Plaintiffs from all claims, damages, costs
and expenses, “including reasonable counsel fees,” by reason of its failure to comply with
Section 6.4. In pertinent part, it states Defendant agrees
. . . [T]o comply or cause compliance with any and all laws,
orders, notices, regulations, rules and requirements in respect to
any buildings or improvements, including the Enclosed Mall in the
Partnership Tract and in respect to the Common Areas, common
facilities and improvements and common utility facilities wherever
situated, issued by any municipal, county, state, federal or other
governmental authority . . . .
Section 6.4 of the REA. In essence, Defendant agreed to comply with all laws and requirements
“issued by any . . . governmental authority” as it relates to the buildings and improvements of
which Plaintiffs were expecting to receive the beneficial use. If Defendant failed to comply,
Plaintiffs would be indemnified from all claims, damages, costs, expenses and reasonable
counsel fees. Plaintiffs now attempt to expand upon the agreed to language and suggest that the
parties agreed that Defendant would indemnify Plaintiffs if Defendant failed to comply with the
“any laws” or legal principles that ever existed.
The jury determined that Defendant violated Plaintiffs’ rights under the REA. The jury
did not determine that a law, order, notice, regulation, rule or requirement was “issued” and
disobeyed. It is the view of the Court that provisions such as this are aimed at activities such as
the passage of building codes that require changes to the property. If the landowner fails to
timely comply, the tenant would then have a cause of action and would be entitled to the award
of attorney’s fees. Section 6.4 is not written or intended to be applicable to virtually any
violation of the law whether it be a public or a private nature. There is no indication that
Defendant failed to comply with any laws “issued” by a governmental authority.
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Plaintiffs also conflate the violation of their private rights and transgressions of common
law principles to make the argument that any violation of the contract or of a common law
principle is tantamount to a noncompliance with the “all laws” provision of the REA triggering
the application of the award of counsel fees under Section 6.4. For example, Plaintiffs state
“White Flint agreed only to construct the Site with Exhibit B to the REA and was not permitted
to alter it in order to build the Sketch Plan without the consent of Lord & Taylor.” Pls.’ Mot. at
9-10. Distilled to its essence, Plaintiffs’ argument is that if Defendant proceeded with
construction without Plaintiffs’ consent, said activity would make Defendant’s conduct unlawful.
While this would be a clear breach of contract, it is equally clear that such a scenario has nothing
to do with the “issuance” of “laws, orders, notices, regulations, rules or requirements” by a
governmental authority. The same construct is reflected in Plaintiffs’ argument regarding
Defendant’s covenant to “operate a first class Mall in the Mall building during the term of Lord
& Taylor’s lease.” Plaintiffs’ attempt to blend the tenants of common law with the contractual
remedies of Section 6.4 in an effort to recover legal fees. Such an attempt should not be
endorsed.
At its core, Plaintiffs’ view is that if Defendant violates the law, “any law,” said violation
would entitle Plaintiffs to the award of attorney’s fees. From Plaintiffs’ vantage point “any law”
includes not only building regulations that may become effective over the years, but also all
aspects of the common law, tort law, property law, and the law of contracts. In the event that a
simple breach of contract is found to exist for any reason, said breach would be a failure to
comply with this “any law” provision. Such a conclusion contorts the express language of the
REA. In the event these sophisticated business entities were intending such a result, they could

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have simply stated that should there be litigation between the parties for any reason, the
prevailing party would be entitled to an award of attorney’s fees. Such did not occur here.
D.

Default and Performance Section 10.1 of the REA and Paragraph 31 of the
Sub-Lease Agreement

In the event of default by Defendant, under either the REA or the Sub-lease, Plaintiffs
may elect to perform those duties that are the responsibility of Defendant and recover attorney’s
fees. In pertinent part, the REA states,
If any party shall not keep and perform any of the terms,
covenants, conditions or agreements . . . , or in the case of a default
which cannot with due diligence be cured within a period of thirty
(30) days . . . (the non-defaulting party) shall have the right to elect
to perform such term, convenant, condition, or agreement . . . . In
the event a party shall elect to perform any defaulting party’s
obligations hereunder as authorized in the preceding sentence, and
the latter fails to make reimbursement to the electing party
promptly on demand for the cost (including reasonable expenses
incurred in so doing, which expenses shall include counsel fees) of
so doing, the electing party may reimburse itself therefor with
interest . . . .
Section 10.1 of the REA. The language of the Sub-Lease Agreement is quite similar.
If either Landlord or Tenant shall default in the performance of any
of its covenants, obligations or agreements contained in this SubLease . . . , then the non-defaulting party . . . may . . . perform the
same for the account . . . at the expense of the defaulting party, and
the amount of any payment made or other reasonable expenses,
including attorneys’ fees incurred by the non-defaulting party for
during such default . . . shall be payable by the defaulting party to
the non-defaulting party on demand.
Paragraph 31 of the Sub-Lease Agreement. Plaintiffs’ argument suggests that the “performance”
requirement was satisfied by their pursuit of the present litigation resulting in a favorable verdict.
I am of the view that this argument strains the plain reading of the contract. The language of
entitlement to fees is not tied to a mere breach of contract, but to the actual performance of “the
defaulting party’s obligations.” Plaintiffs have made no suggestion that they actually performed
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“any of the terms, covenants, conditions or agreements” in the REA. The jury verdict was silent
as to this factual issue.
Clearly, certain “terms, covenants, conditions or agreements” (such as snow removal
obligations) are capable of being “performed” by Plaintiffs in the event of a failure of Defendant
to do so. Others are not capable of being “performed.” Such a distinction does not result in the
right to attorney’s fees for any breach or default under the contract in the absence of an express
provision. Here the parties expressly linked such a right to “performance” of the defaulting
party’s obligations. It is not for the Court to re-write the contract. Preserving or protecting a
“term,” “covenant,” “condition,” or “agreement” by way of litigation is far different from
performance and/or carrying out the duties of another. Again, the parties could have agreed that
attorney’s fees would be available to the prevailing party should litigation be required in order to
enforce any of the “terms, covenants, conditions or agreements.” This did not occur. Plaintiffs’
argument that the only way to protect its rights was by way of litigation was rejected in Hearn
Insulation. See Hearn Insulation at *1. Plaintiffs there were armed with a far more robust
contractual provision. Additionally, Berkley Trace, LLC v. Food Lion, Civ. A. No. RDB-1103207, 2013 WL 5718867 (D. Md. Oct. 18, 2013), stands for the proposition that attorney’s fees
are appropriate for the breach of a lease agreement when expressly authorized.
Unavailing is Plaintiffs’ reliance on Glesner v. Baer, No. 0857, Sept. Term, 2014, 2015
WL 7162010 (Md. Ct. Spec. App. Nov. 13, 2015). Glesner involved the breach of the covenant
of special warranty of an easement. The grantor of the deed refused to defend the title against a
challenge resulting in the grantee incurring legal expenses to do so. By definition, under Md.
Code Ann. Real Prop. §2-106 (West 2010) the grantor is required to provide the legal defense to
any challenged use of the easement. Such is not the case between the present parties. Section

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10.1 is not a special warrant provision. There is no adverse claim from a third party. In fact
none of Plaintiffs’ arguments suggesting that the Court can infer the ability to collect attorney’s
fees due to a violation of a restrictive covenant or easement, without more, is supported by case
law. 1 Simply put, Plaintiffs’ argument is lacking support.
E.

Plaintiffs’ Alternative Reliance on Fed. R. Civ. P. 37 for Defendant’s
Responses to Requests for Admission

During the discovery phase of this case, Plaintiffs propounded requests for admission
pursuant to Fed. R. Civ. P. 36. Certain requests for admissions were clear, unambiguous and
deserving of a better response. For example, Request No. 23 is lifted verbatim from the REA,
and Defendant’s objection is without basis. Similarly, Defendant’s response to Request No. 28
is disingenuous in its attempt to avoid admitting the obvious. Other requests for admission are
problematic. For example, Request No. 22 states “admit or deny that you conveyed easements to
Lord & Taylor over certain portions of the Partnership Tract.” Here, Plaintiffs seek fees for
Defendant’s failure to admit the existence of easements. Plaintiffs additionally argue that as a
result of Defendant’s failure to admit, they were then required to prove that Defendant’s
“redevelopment efforts had already damaged and would continue to damage those easements.”
This “proof point” is not accurate. Even if admitted, Plaintiffs would have been required to
demonstrate the claimed damage. Moreover, Request No. 22 speaks in very general terms.
There is no specificity as to which easement is at issue, how many easements are at issue, or to
what locations on the property the easements may be at issue. The easements are not otherwise
identified by reference to the REA, or maps, or other descriptions of the property. Even if
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Plaintiffs misapply Redner’s Markets v. Joppatown GP, L.P., Civ. A. No. RDB-11-1864,
2015 WL 1242342 (D. Md. Mar. 17, 2015). The fees awarded in Redner’s Markets were in
response to the Court’s sanction for a violation of the Court’s permanent injunction. No such
situation is involved here.
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Defendant admitted to this request, Plaintiff’s burden would have been the same at trial, that is,
the burden of demonstrating with specificity the easement allegedly violated. Additionally,
Defendant argues about the use of the term “easement.” This was a disputed description of the
language of the REA. At the end of the day, the jury verdict was silent even as to the existence
of an easement, let alone the existence of more than one.
Assuming arguendo that Defendant wrongfully responded to selected requests for
admission, Plaintiffs’ have failed to specify the actual fees incurred for said misconduct.
Plaintiffs have not pointed to an occasion where a particular witness had to be interviewed or
prepared to testify. Plaintiffs have not identified any unnecessary research conducted, nor
motion filed with the Court that is directly traceable to Defendant’s refusal to make an
admission. For this reason alone, I recommend no award of attorney’s fees for Defendant’s
alleged failures to admit.
IV.

Conclusion
It is my recommendation that no attorney’s fees be awarded under the REA or the Sub-

Lease Agreement. In the event that the Court determines otherwise, the affidavit of Plaintiffs’
fee expert John D. Wilburn is exhaustive, informative and speaks directly to the reasonableness
of the rates charged, the time spent by each timekeeper, and the necessity of the work performed.
(ECF 453-2). Furthermore, there is no challenge to the rates applied, to the time spent by each
time keeper, to the work performed or to whether such work was necessary. Here, Defendant
only challenges “the results obtained.” Accordingly all other aspects of the time keeper entries
are conceded by silence. See Astornet Technologies v. BAE Systems, Inc., 201 F. Supp. 3d 721,
730 (D. Md. 2016).

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This case is a classic instance in which the application of Appendix B of our Local Rules
provides only marginal guidance. Without doubt this matter was of significant complexity and
required the full time and attention of counsel experienced in the area of commercial real estate
litigation. I also agree with Plaintiffs’ assessment that the victory here was substantial and
significant. Nonetheless, my recommendation is against the award of attorney’s fees.

December 15, 2017

/s/
Charles B. Day
United States Magistrate Judge

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