Chaplick v. Mao et al
Filing
114
MEMORANDUM OPINION. Signed by Judge Theodore D. Chuang on 12/5/2016. (aos, Deputy Clerk)
UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND
TREVOR CHAPLICK,
Trustee for Canal Vista Trust,
Plaintiff,
v.
Civil Action No. TDC-13-2070
JENG FEN MAO and
CHIA YEE CHEW MAO,
Defendants.
MEMORANDUM
OPINION
On July 17, 2013, Trevor Chaplick ("Chaplick"), as Trustee for Canal Vista Trust ("the
Trust"), filed this breach of contract action against Jeng Fen Mao and Chiayee Chew Mao ("the
Maos") following the aborted sale of a Maryland residence that overlooks the Potomac River.
After the Court granted summary judgment in favor of Chaplick on liability, the Court held a
bench trial on damages on November 2 and 21, 2016.
Pursuant to Federal Rule of Civil
Procedure 52(a), the Court now provides its findings of fact and conclusions of law. For the
reasons stated below, the Court awards damages to Chaplick in the amount of$8,231.69.
BACKGROUND!
The residential property at the heart of this action is located at 13728 Canal Vista Court
in Potomac, Maryland ("the Property").
In November 2012, Chaplick, on behalf of Canal Vista
Trust, listed the Property for sale with an asking price of $1,399,999.
On January 22, 2013, the
Additional factual background is set forth in the Court's Memorandum Opinion of February
26, 2016, ECF No. 82, in which the Court granted summary judgment in favor of Chaplick on
liability.
II
Maos offered to purchase the home for $1,280,000.
The contract of sale ("the Contract") set a
settlement date of March 21, 2013. In its February 26, 2016 Memorandum Opinion, the Court
held that the Maos breached the Contraet when they were not able to close on the Property on
that date. Chaplick then remarketed the Property. On or about April 15,2013, he entered into a
new contract of sale with Abraham Taylor and Silvia Taylor ("the Taylors") for a purchase price
of$I,304,500.
Chaplick and the Taylors closed on the sale on June 17,2013.
Even before the Maos breached the Contract, Chaplick had begun to plan litigation
against them.
On March 19, 2013, having learned that the Maos might not proceed to closing,
Chaplick wrote to his realtor that he thought that he was "being played," proposed a 30-day
extension if the Maos agreed to pay half of the broker's commission and give up a $20,000 credit
originally payable at closing, and threatened that if they did not agree to the proposed terms "we
will terminate the contract and pursue litigation aggressively against buyers." Tr. Ex. 102, at 2.
Chaplick further instructed the realtor:
If these terms are not agreed to promptly, we will engage the most experienced
trial counsel we can find in Maryland and direct such counsel to initiate litigation
against buyers immediately on March 22nd. Please also remind buyers that there
is a prevailing party clause in the contract which entitles the party which prevails
in any lawsuit to the award of all attorneys fees caused to be incurred by the other
party's breach.
Id
On March 20, 2013, as negotiations on an extension continued, Chaplick informed his
realtors that "I am next going to search for experienced trial counsel in MD to ensure he or she is
teed up and ready to go for a lawsuit on Friday morning if this will be necessary."
Tr. Ex. 103,
at 2. That same day, he reported that he had retained his current trial counsel, "an extremely
experienced trial attorney with expertise in real estate litigation" and that his attorney "will be
ready on Friday morning to file and serve a complaint on the Maos, Re/Max, and Mortgage
2
Capital Partners, if necessary."
Tr. Ex. 104, at 1. He asked his realtors to inform the Maos that
"I am a person who does what he says he will do." fd
From March 21, 2013 to June 17,2013, Chaplick incurred various costs that he alleges
were caused by the breach of contract.
The Court's factual findings regarding these costs and
their nexus to the breach of contract are set forth below.
DAMAGES FINDINGS
I.
Introduction
On October 19,2016, Chaplick submitted a Trial Brief with attached exhibits in advance
of the November 2 trial, including Exhibit 2, a table of requested damages totaling $103,952.58.
The requested damages consist of four broad categories: (1) operating costs for the Property for
the period from March 21, 2013 to June 17, 2013 ("the Breach Period"); (2) costs of the sale to
the Taylors ("the Taylor Sale"); (3) attorney's fees predating the date of breach; and (4) trustee
fees.
Chaplick's submission was riddled with misleading information, errors, and unjustified
requests. Among the misleading information and facially invalid requests were:
1.
In claiming "Trustee Fees," Chaplick referred to his selected hourly rate as the
"Statutory hourly rate for trustee's fees under Maryland guidelines." When
challenged, Chaplick acknowledged that there is no statutory hourly rate, or
any applicable Maryland guidelines, for trustee fees.
2.
Chaplick claimed as damages monthly payments made on a "Second
Mortgage." When challenged, Chaplick conceded that no second mortgage on
the Property existed. The loan referenced as a "Second Mortgage" was in fact
a personal loan taken out by Chaplick, not the Trust, for approximately
$280,000 and was not secured by the Property (hereinafter "the Second
Loan").
3.
In claiming monthly interest payments on the actual mortgage on the Property,
Chaplick included in his damages request an extra monthly mortgage payment
beyond those covering the Breach Period. Likewise, he sought an extra
monthly payment on the Second Loan beyond those covering the Breach
3
Period. On the eve of the trial, Chaplick withdrew his request for these extra
payments.
4.
Chaplick requested full payment for a fee relating to Canal Vista LLC ("the
LLC"), an entity with no ownership interest in the Property, for tax year 2012,
a period that completely or mostly predates the date of breach.
5.
Chaplick submitted a receipt for gutter work performed on February 20, 2013,
almost one month before the date of the breach. After facing questioning at
trial on this issue, Chaplick withdrew his request for this payment prior to
closing argument.
6.
Chaplick submitted electricity bills covering time periods predating the date of
breach. During the trial, Chaplick conceded that certain of these requested
payments were not recoverable.
7.
Chaplick submitted water bills covering time periods predating the date of
breach. During the trial, Chaplick conceded that certain of these requested
payments were not recoverable.
8.
Chaplick submitted an inflated request for property insurance payments that
he conceded during his testimony overstated the payments relevant to the
Breach Period. Prior to closing argument, he submitted a revised, lower
request.
9.
Chaplick submitted a check in the amount of $40 made payable to
Montgomery County, Maryland, but he acknowledged during his testimony
that he had no knowledge of the reason he made the payment or how it was
connected to the Property.
10.
Chaplick submitted two copies of the same invoice for landscaping services
performed on April 24, 2013 and requested reimbursement for both. At
closing argument, Chaplick withdrew the second request.
Most of these misleading characterizations and facially invalid requests were withdrawn
before or during the trial, after the Court or defense counsel had questioned them. Nevertheless,
the fact that Chaplick requested so many items that the Court easily identified as invalid on the
face of the relevant documents casts serious doubt on the reliability and accuracy of Chaplick's
request for damages. At trial, Chaplick acknowledged that his approach consisted of seeking
reimbursement for every payment he made during the Breach Period regardless of the date the
4
servIces were rendered or whether the expenses related to the Breach Period.
The Court
concludes that these unjustified and misleading requests derived in part from Chaplick's overly
aggressive approach to this dispute generally, as reflected by his threats about and plans for
litigation even before the original closing date on the sale. Accordingly, in rendering findings on
damages, the Court takes a rigorous approach to analyzing the evidence, relying more heavily on
the existence of explicit documentary evidence than on Chaplick's testimony alone.
II.
Legal Standards
"Damages for breach of a contract ordinarily are that sum which would place the plaintiff
in as good a position as that in which the plaintiff would have been, had the contract been
performed."
Beard v. S/E Joint Venture, 581 A.2d 1275, 1278 (Md. 1990). The non-breaching
party is entitled to damages for losses caused by the breach, that were reasonably foreseeable as
a probable result of the breach, and that can be proven with reasonable certainty.
See M&R
Contractors & Builders, Inc. v. Michael, 138 A.2d 350, 353 (Md. 1958); Hoang v. Hewitt Ave.
Assocs., LLC, 936 A.2d 915, 934 (Md. Ct. Spec. App. 2007) (citing Impala Platinum, Ltd v.
Impala Sales, Inc" 389 A.2d 887, 907 (Md. 1978); Stuart Kitchens, Inc. v. Stevens, 234 A.2d
749, 752 (Md. 1967)). Damages are proximately caused where the losses "actually resulted from
the breach." Hoang, 936 A.2d at 934. Damages are reasonably foreseeable if they are generally
"of the sort that are presumed to have been in the contemplation of the parties when the contract
was made," or if "evidence of the particular circumstances" establishes that they "may fairly and
reasonably be supposed to have been in the contemplation of both parties at the time they made
the contract, as the probable result of the breach of it." Id (citing Winslow Elevator & Mach.
Co. v. Hoffman, 69 A. 394 (Md. 1908)). The Maryland Court of Appeals has emphasized that
reasonable foreseeability is to be assessed as of the time of contract formation, not as of the time
5
of breach. CR-RSC Tower 1, LLC v. RSC Tower 1, LLC, 56 A.3d 170, 184, 188 (Md. 2012). The
reasonable certainty requirement, which relates to the likelihood that the damages were incurred
as a result of the breach and their probable amount, bars "[l]osses that are speculative,
hypothetical, remote, or contingent either in eventuality or amount."
Hoang, 936 A.2d at 935
(citing Stuart Kitchens, Inc. v. Stevens, 234 A.2d 749, 751-52 (Md. 1967)).
Finally, the non-breaching party has a duty to mitigate damages.
Specifically, that party
has a duty "to make all reasonable efforts to minimize the loss he sustains as a result of the
breach" and can recover only those damages that could not be prevented with "reasonable effort
and expense without risk of additional substantial loss or injury."
Sergeant Co. v. Pickett, 401
A.2d 651, 660 (Md. 1979).
III.
Claim of No Damages
As a threshold issue, the Court addresses the Maos' claim that no damages have been
established because, while the plaintiff in this case is Chaplick in his official capacity as Trustee,
all expenses claimed as damages were paid by Chaplick personally rather than by the Trust. The
Maos note that the checking and credit card accounts from which expenses were paid were
Chaplick's personal accounts, so there was no evidence that the Trust had paid any of the costs
now claimed as damages.
The Maos' argument does not prevail.
"costs incurred by the Trust."
The Complaint seeks damages in the form of
Compl. 12-13. To the extent that bills were paid to provide a
specific benefit to the Property, which was owned by the Trust, they can be construed as costs
incurred by the Trust. The fact that Chaplick paid such costs out of his personal accounts does
not necessarily indicate that the Trust did not pay such expenses.
The Canal Vista Trust
Agreement ("the Trust Agreement") indicates that the Trust is a family trust, apparently for
6
estate-planning
purposes, for which Chaplick is the settlor, trustee, and beneficiary all at the
same time. None of the formalities of a separate legal entity were observed.
To the extent that
the Trust had funds, they were commingled with those of Chaplick in his personal accounts. The
Court therefore concludes that to the extent that Chaplick paid expenses that provided a specific
benefit to the Trust or to the Property, as opposed to Chaplick himself, it is reasonable to infer
that those expenses were Trust expenses paid for with Trust funds.
The Court therefore addresses Chaplick's specific claims of damages.
IV.
Operating Costs
The first category of damages identified by Chaplick is the operating costs of holding and
maintaining the Property during the Breach Period.
Chaplick seeks as dam.ages:
(l) interest
payments made on the mortgage on the Property; (2) interest payments made on a line of credit
allegedly tied to, but not secured by, the Property; (3) property tax payments; (4) property
insurance payments; (5) utility costs; (6) lawn maintenance expenses; (7) costs associated with
the LLC; and (8) other miscellaneous costs.
A.
Mortgage Interest Payments
The Trust had a mortgage on the Property with Citibank.
Chaplick made interest-only
payments on the mortgage in the amount of $2,460.94 on April 5, 2013, covering March 2013;
on May 8, 2013, covering April 2013; and on June 5, 2013, covering May 2013. The prorated
amount of interest paid for the period from March 21 to March 31,2013 is $793.85 (10 out of 31
days).
This amount and the two $2,460.94 payments covering April and May 2013 constitute
damages because the Trust would not have had to make these payments had the Maos not
breached
the Contract,
and such additional
mortgage
foreseeable.
7
interest payments
were reasonably
As for the period from June 1 to June 17, 2013, Chaplick seeks $2,075.48, which is the
difference between the payoff amount on the mortgage that Chaplick paid at the closing on June
17, 2013 and the remaining principal on the loan at that time. Chaplick, however, provided no
evidence to establish that the difference between those amounts consisted of only unpaid interest
relating to the period from June 1 to June 17. The payoff figure could well have included
additional charges that would have been included had the loan been paid off upon a sale to the
Maos.
Accordingly, the Court calculates the paid interest for June 1 to June 17 as $1,394.53,
consisting of a prorated amount based on the $2,460.94 standard monthly payment.
The Court
thus finds that Chaplick is entitled to recover damages for the interest payments made on the
mortgage in the amount of $7,110.26.
B.
Interest Payments on Second Loan
Chaplick also claims as damages monthly payments he made during the Breach Period on
the Second Loan, a line of credit with Citibank. Although Chaplick originally claimed that this
loan was a "Second Mortgage," he conceded that there was no mortgage associated with the
loan, and it was never secured by the Property. The loan was taken out by Chaplick personally,
not the Trust, and the bank did not require any collateral. According to Chaplick, he opened the
line of credit in order to obtain funds to complete the purchase of the Property.
Chaplick used
funds from his and his wife's personal j oint checking account to make a $517.81 interest
payment on the Second Loan on March 31, 2013, covering March 2013, and a $535.07 interest
payment on May 1, 2013, covering April 2013.
On June 8, 2013, he paid off the remaining
balance of $281 ,424.51 with the proceeds from the sale of the Property to the Taylors. Chaplick
claims as damages $2,124.92 in payments relating to the Second Loan.
8
The Court does not award damages relating to the Second Loan.
First, the interest
payments on this loan were not an operating cost of the Trust relating to the Property. This was a
line of credit in the name of Chaplick in his personal capacity, not the Trust. It was not secured
by the Property.
Thus, the Trust had no obligation to make payments on the loan, Chaplick's
payments on the loan from his personal funds conferred no benefit on the Trust or the Property,
and any failure to make interest payments would have had no adverse impact on the Property.
Even if the Maos failure to purchase the Property caused Chaplick to have to make additional
payments, that was a harm to Chaplick personally, not to the Trust.
Second, under the facts here, these alleged damages were not reasonably foreseeable to
the Maos at the time of contracting.
It is foreseeable to a potential buyer that the seller would
have a mortgage on the Property, and perhaps a second mortgage secured by the Property, and
that the need to make additional mortgage interest payments could result from a breach of
contract.
Such mortgages could be readily discovered through a title search.
Here, however,
there is no evidence that the Maos knew or should have known about the existence of Chaplick's
personal line of credit. There was no way, through a title search or otherwise, for the Maos to
learn about it or any connection it may have to the Property. The Maos could no more foresee
being charged with these interest payments as damages as with responsibility for credit card
payments, car loan payments, or any other unsecured obligations that a seller might plan to pay
off with the proceeds of a sale.
The Court therefore finds that the interest payments on the
Second Loan were not damages incurred by the Trust and were not reasonably foreseeable by the
Maos.
c.
Property Taxes
For the tax year from July 1, 2012 to June 30, 2013, Montgomery County assessed
$15,262.97 in taxes on the Property.
Although the Maos argue that there was no specific
9
evidence establishing who paid these taxes, the Court infers, from Chaplick's testimony and the
fact that the full amount was paid, that the Trust paid these taxes. The prorated amount covering
the 88-day Breach Period is $3,679.84, an amount which constitutes damages because the Trust
would not have had to pay it had the Maos completed the sale on March 21,2013, and the need
for such payment was reasonably foreseeable.
The Court finds that Chaplick is entitled to
recover damages for the property tax payments in the amount of $3,679.84.
D.
Property Insurance
The annual property insurance premium for the Property for the relevant time period was
$2,650. Chaplick paid the premiums covering the Breach Period. Although Chaplick originally
claimed an inflated amount of $1,574 in property insurance premiums, the parties now agree that
the appropriate figure is $638.90, consisting of the prorated amount of the annual premium
covering the Breach Period.
Because the need for payment of such additional premiums was
caused by the breach of contract and was reasonably foreseeable, Chaplick is entitled to recover
$638.90 in damages for property insurance premium payments.
E.
Utility Expenses
Chaplick presented documentation for four payments made for electricity bills and two
payments made for water and sewer bills. The electricity bills span the period between February
22, 2013 and June 18, 2013.
Chaplick now concedes that he is not entitled to payment for
electrical services for the period from February 22 to March 21,2013, which predates the Breach
Period. The prorated amount for the period from March 21 to March 25, 2013 is $34.03. The
remaining bills are for $119.58 (March 25 to April 22), $88.38 (April 22 to May 21), and $71.97
(May 21 to June 18). The total electricity charges for the Breach Period are therefore $313.96.
On May 27, 2013, Chaplick paid a $28.41 bill for water and sewer services relating to the
period from December 18,2012 to April 3, 2013. The prorated amount for the portion of that
10
bill covering the Breach Period (March 21 to April 3) is $3.48. On June 8, 2013, Chaplick paid a
$54.98 bill for water and sewer services. Because Chaplick paid the full amount due as of April
3, 3013, and because an invoice shows a previous balance of $54.98 as of May 28, 2013, the
Court infers that the $54.98 water charge relates to the time period from April 3, 2013 to May
28,2013.
Accordingly, the total water and sewer bill payments relating to the Breach Period are
$58.46.
Utility charges and fees incurred during the Breach Period were proximately caused by
the Maos' breach and reasonably foreseeable.
Accordingly, the Court finds that Chaplick is
entitled to $372.42 in utility payments covering the Breach Period.
F.
Lawn Maintenance Expenses
Chaplick also seeks as damages the value of payments for lawn maintenance services and
materials obtained during the Breach Period.
Chaplick made payments to Nelson Franco, a
handyman who periodically engaged in landscaping and yard maintenance work on the Property,
on March 23,2013; April 22, 2013; April 28, 2013; May 4,2013; May 10,2013; May 19,2013;
May 27, 2013; June 2, 2013; June 9, 2013; and June 13, 2013.
These payments total $950.
According to Chaplick, Franco was paid for clearing the Property of debris and leaves.
Chaplick also made payments to TruGreen, a lawn care service, for insecticide and lawn
treatments, as shown by invoices with service dates of April 16, 2013, April 24, 2013, and May
10, 2013 and a credit card statement showing a payment to TruGreen on June 17, 2013. These
payments total $299.99.
In addition, Chaplick testified that he purchased sprinklers and a hose
from a hardware store and provided a receipt totaling $100.05.
Although the Maos acknowledge that Franco's services were necessary operating costs,
they dispute that the TruGreen services were needed. They also argue that the sprinklers were
11
---------------------------------------,
not foreseeable because they were purchased on April 21, 2013, after the Taylors' contract for
sale had been drafted.
The TruGreen invoices reflect that the services consisted of spraying insecticides to
protect foliage from pests and disease.
Chaplick testified that the sprinklers were necessary to
allow for watering to keep the lawn from dying.
The Court concludes that these expenses
relating to upkeep of the Property's lawn and yard during the Breach Period were reasonably
foreseeable operating costs caused by the breach. The Court finds that Chaplick has established
$1,350.04 in damages for lawn maintenance costs.
The Court does not, however, find that Chaplick has provided sufficient evidence to
establish that a $531.82 Home Depot credit card charge dated April 14, 2013, reflected on a
credit card statement, constituted damages caused by the Maos' breach.
Chaplick asserted that
because the charge arose from a Home Depot in Gaithersburg, Maryland, it had to relate to the
Property because he only went to that location for Property-related
Chaplick's testimony on what he purchased was unconvincing.
materials.
However,
He claimed that he purchased
mulch and plants for a Property landscaping project for which he had engaged a contractor, see
irifra part V.A, in order to reduce the cost of the work. But all of the written estimates for that
project that were introduced as evidence, which were significantly less expensive than the
proposal ultimately selected, reflected that the costs of mulch and plants would be included.
Furthermore, at his deposition, Chaplick gave an entirely different account, claiming that the
Home Depot purchase was for cleaning supplies and sprinklers.
events contradicted
With Chaplick's version of
by his deposition testimony and undermined by documentary
evidence
relating to the landscaping project, the Court cannot credit it and therefore concludes that there is
12
insufficient evidence to establish that thi~ charge was proximately caused by the breach or has
been proven with reasonable certainty.
G.
LLC Expenses
Chaplick seeks to recover $250 for a payment made on March 31, 2013 to the Dela~are
Secretary of State which he described as the annual fee for Canal Vista LLC, an entity he
established relating to the Property.
was for tax year 2012.
The invoice relating to his payment states that the charge
He also seeks $280 for a May 27, 2013 payment to Incorporating
Services, Ltd. to cover an annual fee for an agent for service of process for the LLC.
Chaplick asserts that these payments, which were made during the Breach Period, would
not have been necessary had the Maos purchased the Property. The Court, however, concludes
that these payments do not constitute damages arising from the breach of contract.
First, the
payment to the Secretary of State was for tax year 2012, some or all of which predates the
Breach Period. Second, Chaplick testified that he has not yet liquidated the LLC despite closing
on the sale to the Taylors in 2013. Based on this admission, the Court finds that Chaplick would
not have terminated the LLC immediately after a sale to the Maos, and so the payment of related
fees was not proximately caused by the breach.
Finally, because these payments relate to an
LLC that has no ownership interest in the Property, they were not necessary to the Trust's
ownership of the Property, and the LLC's existence was never disclosed to the Maos, the Court
concludes that these payments were not reasonably foreseeable consequences
Accordingly, the Court does not award damages relating to the LLC fees.
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of a breach.
H.
Miscellaneous Expenses
Chaplick seeks as damages various other expenses related to the maintenance
of the
Property during the Breach Period, including the costs of pest control, security services, painting,
house cleaning, gutter work, gasoline, and locksmith services.
Chaplic~ has provided a pest control service agreement signed April 19, 2013 and
invoices for pest control treatment for services in April and May 2013 totaling $265. Chaplick
has also presented an invoice dated April 1, 2013 and a cancelled check showing a payment of
$76.32 for alarm system monitoring services for a three-month period. Chaplick testified that this
invoice covered the period following April 1. The Court finds that the total payments of $341.32
for pest control and security monitoring constituted operating expenses during the Breach Period
and were reasonably foreseeable damages caused by the Maos' breach.
Chaplick testified that he incurred $687 in expenses for touch-up painting, carpentry, and
other repairs on the Property and provided a cancelled check in that amount payable to
University Painters on April 5, 2013. He also testified that he paid $641.25 for cleaning service
on the Property on April 15,2013 and provided a credit card statement showing a charge in that
amount to Maid Brigade in Maryland.
The Court finds that these expenses of $1,328.25 were
either operating expenses or costs associated with preparing the Property for sale and thus were
reasonably foreseeable damages resulting from the Maos' breach.
Having withdrawn a request for damages relating to gutter repair arising from an invoice
listing a service date of February 20, 2013, Chaplick still seeks to recover damages for a $110
charge for "gutter cleaning renewal" dated May 23, 2013.
Although Chaplick's testimony in
support of the February charge was entirely unconvincing, the invoice listing gutter cleaning
services on May 23, 2013 provides sufficient evidence for the Court to conclude that gutter
14
cleaning services occurred on that date and that the expense was a reasonably foreseeable
operating cost resulting from the Maos' breach.
The Court therefore finds that Chaplick is
entitled to recover the $110 expense for gutter cleaning services.
Chaplick further requests damages for gas expenses incurred traveling to and from the
Property.
Chaplick provided a credit card bill showing a purchase at a Maryland gas station of
$48.53 dated April 17,2013 and a Maryland gas station receipt for $58.99 dated June 10,2013.
He testified that as a Virginia resident, he incurred gasoline expenses while traveling to or from
the Property to attend to it. Although some gasoline costs may have been proximately caused by
the Maos' breach and reasonably foreseeable, the amount requested has not been established
with reasonable certainty because Chaplick has not provided any estimate of, or evidence to
establish, the portion of the two tanks of gas purchased that was consumed while driving for
Property business. He cannot credibly claim that the entirety was used for that purpose. Lacking
evidence to establish reasonable certainty as to amount, the Court finds that Chaplick is not
entitled to recover for these gasoline charges.
The Court also finds that Chaplick is not entitled to recover for a $265.65 payment made
on April 29, 2013 to repair a lock that was damaged by a realtor.
Chaplick testified that the
damage was caused when a realtor showing the Property accidentally broke the lock. The Court
concludes that because of the intervening act of the realtor's action, the Maos' breach of contract
was not the proximate cause of the repair costs and denies this request.
V.
Costs of the Taylor Sale
The second category of identified damages is the cost of the sale to the Taylors, which
can be further divided into three categories:
a capital expenditure on landscaping, repairs and
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improvements
related to the Taylors' inspection, and attorney's fees paid for reviewing and
assisting with the contract of sale between Chaplick and the Taylors.
A.
Landscaping Project
Chaplick claims as damages $9,255 paid to Colonial Landscape & Design ("Colonial")
on April 17, 2013, as reflected by a cancelled check, for a landscaping proj ect on the Property
that he testified was undertaken to prepare the Property for sale. Chaplick testified that, after he
fielded a number of bids, he chose Colonial because it allowed for the most work to be done at
the lowest price.
Although no written proposal or invoice from Colonial was offered as
evidence, Chaplick provided four written estimates by other contractors in the amounts of $5,203
(Distinct Landscapes - first proposal), $7,239 (Distinct Landscapes - second proposal), $5,820
(Pro Landscaping) and $4,907.20 (Garden Gate Landscaping).
The project ultimately selected
substantially exceeded Chaplick's budget, as referenced in an email, of approximately $5,000.
Although Chaplick claims that this project was necessary in order to have the Property
resold, there are substantial questions as to whether that is true.
Chaplick has argued that it
would be difficult to sell the Property during spring or summer because the growth of leaves on
trees would block the view of the Potomac River, but the landscaping project, which consisted
primarily of spreading mulch and adding shrubs to the front of the house, had nothing to do with
the view. No evidence was offered to establish that the Taylors would not have purchased the
Property in the absence of such landscaping.
Indeed, there is no clear evidence on whether the
work took place before the Taylors first viewed the Property. The Taylors' contract for sale was
drafted on April 15, 2013, two days before Chaplick paid Colonial.
Nevertheless, Chaplick persuasively argues that the coming of spring necessitated some
landscaping in order to attract buyers, and the higher sales price offered by the Taylors provides
16
evidence to indicate that improvements were needed to achieve the eventual sales price.
The
Court therefore
and
concludes
that some landscaping
work was reasonably
foreseeable
proximately caused by the breach.
The Court concludes, however, that the $9,255 expended on landscaping far exceeded
what was necessary or reasonably foreseeable.
Chaplick himself set a budget of $5,000 for this
proj ect. Of the estimates available, Chaplick selected what was by far most the expensive option
without providing any documentary support for such a selection. In doing so, Chaplick violated
his duty to mitigate damages and also incurred excess costs that were not reasonably foreseeable
to the Maos at the time of contracting. Because Chaplick initiated steps toward litigation against
the Maos as early as March 19, the Court finds that the selection of the most expensive option at
a price significantly higher than his initial budget was motivated in part by the assumption that
the costs could be charged to the Maos.
Accordingly, the Court finds that the necessary and
reasonably foreseeable amount of damages was $5,203 (Distinct Landscapes - first proposal),
consisting of the lowest estimate that included both mulch and shrubs in the proposal.
B.
Home Repairs and Improvements
Chaplick also seeks as damages expenses relating to repairs and improvements to address
items identified in the Taylors' home inspection and other requests by the Taylors that had to be
met to consummate the sale. These items included $4,188 on replacement windows, $1,810 on
radon and mold remediation
work, $1,480 on floor replacement,
plumbing,
and mold
remediation work, and $469.66 for washing machine repairs.
Chaplick provided an invoice and credit card bill showing payment for the replacement
windows on June 10, 2013.
An email from Chaplick's realtor indicated that the Taylors had
asked for certain replacement windows, to which Chap lick replied by complaining about the
17
Taylors'
requests
ansmg
from the home inspection.
The radon and mold remediation
expenditures are supported by invoices and consisted of payments dated June 1,2013 and June 6,
2013 of $1,210 and $600, respectively.
An invoice from University Painters dated June 5, 2013
substantiates the floor replacement, plumbing, and mold remediation work and indicates that the
work related to a home inspection.
Chap lick also provided invoices reflecting washing machine
repairs in late May 2013 in the amounts of$50, $329.71, and $89.95.
The Maos argue that Chaplick failed to offer the Taylors' home inspection report as
evidence and imply that it would refute Chaplick's claims that these expenditures were related to
the inspection.
They acknowledge,
however, that the inspection report was produced
in
discovery, so either side could have offered it into evidence. The Maos also claim that the mold
work related to issues already remediated after the Maos' home inspection and therefore should
have been addressed by requiring the same contractor to redo the work at no charge.
Maos do not offer evidence to substantiate that claim.
But the
Thus, based on the documentation
provided, which supports the conclusion that Chaplick paid for these improvements in order to
satisfy the Taylors, the Court finds that these expenditures were proximately caused by the
Maos' breach and were reasonably foreseeable.
Chaplick is entitled to recover $7,947.66 in
damages for the costs of these repairs and improvements.
C.
Attorney's Fees on the Taylor Sale
Chaplick seeks to recover $7,722 in damages for legal fees incurred for negotiating the
contract of sale with the Taylors.
Chaplick retained David Kochanski of Shulman, Rogers,
Gandal, Pordy, & Ecker, P.A., who billed for 15.6 hours of work at a rate of $495 per hour.
Chap lick has provided an invoice detailing the work performed, the time expended, and the
applicable hourly rate.
18
The Maos argue that it is not necessary to retain an attorney for a real estate transaction
involving a single-family residence where the agreement was a standard form contract.
While
that may be true, the Court concludes that retaining an attorney for a real estate transaction is
reasonably foreseeable under the circumstances.
so the attorney's
Chap lick did retain counsel for the Taylor Sale,
fees were proximately caused by the Maos' breach.
However, the Court
concludes that Chaplick is not entitled to the full amount requested. First, Chap lick had a duty to
mitigate damages and was thus obligated to incur no more legal fees than necessary to complete
the transaction.
The Court concludes that for this type of transaction, with this type of contract,
it was not necessary to retain an attorney at $495 per hour. Significantly, this Court's guidelines
for hourly rates, used for calculating reasonable attorney's
fees in federal court litigation,
including trial work, have a maximum hourly rate of $475 for the most experienced attorneys.
D. Md. Local R. App. B ~ 3. Second, for the same reason, the Court concludes that the Maos
could not have reasonably foreseen such a high charge for representation in this type of sale.
Accordingly, the Court reduces the damage award relating to legal services for the Taylor Sale to
$3,900, calculated by applying to the stated hours a rate of $250 per hour. This figure represents
the approximate
hourly rate under this Court's guidelines for an attorney with ten years of
experience, id, which would be more than sufficient to advise a seller of a single-family home
using a standard form contract.
VI.
Pre-Breach Attorney's Fees
Chap lick also seeks $4,109 in attorney's fees incurred prior to the breach of contract on
March 21, 2013.
At trial, Chaplick testified that these attorney's fees were incurred because
when breach was imminent, his realtors informed him that they would not re-list the Property for
sale unless they had a letter from an attorney providing a legal opinion that the Maos had
breached the Contract.
In an email dated March 21, 2013, Chaplick advised his realtor, "You
19
simply need a letter from a credible law firm indicating that the buyers are in material breach"
and that his attorney would provide such a letter. Tr. Ex. 110, at 1. However, in an email sent
on March 19, 2013, Chaplick stated that "we will engage the most experienced trial counsel we
can find in Maryland and direct such counsel to initiate litigation against buyers immediately on
March 22nd." Tr. Ex. 102, at 2. The next day, on March 20, Chaplick sent another email stating
that "I am next going to search for experienced trial counsel in MD to ensure he or she is teed up
and ready to go for a lawsuit on Friday morning if this will be necessary."
Tr. Ex. 103, at 2.
That same day, he reported that he had retained his current trial counsel, "an extremely
experienced trial attorney with expertise in real estate litigation" and that his attorney "will be
ready on Friday morning to file and serve a complaint on the Maos, Re/Max, and Mortgage
Capital Partners, if necessary."
Tr. Ex. 104, at 1.
"Maryland follows the American rule which 'stands as a barrier to the recovery, as
consequential damages, of foreseeable counsel fees incurred in enforcing remedies for' breach of
contract."
Bausch & Lomb Inc. v. Utica Mut. Ins. Co., 735 A.2d 1081, 1094 (Md. 1999)
(quoting Collier v. MD-Individual Practice Ass'n, 607 A.2d 537,543 (Md. 1992)). Under this
rule, "in the absence of a statute, rule or contract expressly allowing the recovery of attorney's
fees, a prevailing party in a lawsuit may not ordinarily recover attorney's fees." Id. Thus, for
Chaplick to recover the requested attorney's fees, he must establish that the fees were incurred
not to enforce remedies, but as a form of damages caused by the breach of contract.
If the fees, in fact, were incurred only in order to procure an attorney's letter to allow the
realtors to re-list the Property, they arguably could be construed as a necessary cost of the Taylor
Sale that could constitute damages arising from the breach of contract. Chaplick, however, has
failed to provide sufficient proof to establish that the attorney's fees constituted such damages.
20
First, Chaplick has not provided any billing records or other documentary support for the amount
or purpose of the attorney's fees.2 The Court therefore cannot be satisfied that all, or even part,
of the attorney's fees were incurred for this purpose. In particular, the Court cannot make such a
finding because
Chaplick's
testimony
is contradicted
in part by the emails immediately
preceding the breach of contract which explicitly state that he retained an attorney in whol~ or in
part to draft a complaint to initiate litigation against the Maos. Accordingly, the Court does not
credit Chaplick's claim that the requested attorney's fees were solely or even primarily for the
purpose of drafting a letter for his realtors opining that the Maos' had breached the Contract.
Because Chaplick has neither proven that these attorney's
fees qualified as damages, nor
established the amount with reasonable certainty, the Court does not grant the request.
VII.
Trustee Fees
Chaplick also seeks $50,680 in trustee fees, consisting of 126.7 hours of work that he
performed at a rate of $400 per hour.
Under Chaplick's theory, he is entitled to recover as
damages the value of the time he expended post-breach in the capacity of Trustee in order to
maintain the Property and arrange for its sale to the Taylors. Chaplick selected a proposed rate
of $400 per hour because that figure is half of his $800 per hour billable rate as a corporate
attorney in private practice in Washington, D.C.
A.
Facts
Prior to the sale to the Taylors, the Property was owned by Canal Vista Trust. The Trust
was established on April 16, 2008, with Chaplick and his wife, Vivian Chaplick, as the settlors,
for the specific purpose of owning the Property. The beneficiaries of the Trust are Chaplick, his
wife, and their children.
The sole property in the Trust was the Property.
Chaplick also
Chaplick offered an exhibit on this issue, but the Court granted the Maos' Motion in Limine to
exclude the exhibit on the grounds that it was never produced in discovery.
2
21
established the LLC in order to facilitate the establishment of a bank account from which he
could pay bills for the Trust.
The Trust Agreement describes the fiduciary powers of the Trustee, which include the
powers to retain, lease, repair, improve, and sell estate property, as well as the powers to "pay
taxes and to pay for repairs and other expenses incurred in the management, collection, care,
administration and protection of the estate" and to borrow money in the name of the Trust. Trust
Agreement Ex. 13, at 7-16.
The Trust Agreement provides that "Any individual serving as
Trustee shall be entitled to reasonable compensation for fiduciary services."
Id. at 7.
The
agreement further provides that:
The fiduciary shall be entitled from any assets held by or controlled by the trust
estate to be paid reasonable compensation for services rendered as fiduciary and
shall be compensated or reimbursed for costs, expenses, liabilities imposed upon
the estate or the fiduciary in his or her capacity as such; and, similarly, the
fiduciary shall be compensated for reasonable services rendered in any other nonfiduciary capacity involving services performed on behalf of or for the trust.
Id. at 13.
The initial Trustee
was David Kochanski,
an attorney.
resignation, Chaplick and his wife became co-Trustees.
Following
Kochanski's
When Vivian Chaplick resigned as
Trustee in March 2012, Chaplick became the sole Trustee.
During the time period of the
proposed sale to the Maos and the actual sale to the Taylors, Chaplick paid expenses relating to
the Property out of his personal checking account, not a Trust or LLC bank account. In his email
and other correspondence
relating to the Property, Chaplick did not identify himself as the
Trustee or state that the correspondence was sent in his capacity as Trustee. There is no evidence
that, prior to the breach, Chaplick ever informed the Maos that he was acting as a trustee who
would be compensated for his services or that he provided a copy of the Trust Agreement to the
Maos.
22
In his role as Trustee, Chaplick has never entered into any agreement with the Trust that
would set the terms of his compensation, such as a contract that would provide for an hourly rate.
During his tenure as Trustee, Chaplick never billed the Trust for his services and never sought or
obtained compensation from the Trust.
Even during the negotiations with the Maos for the
possible purchase of the Property, Chaplick never tracked his time or billed the Trust for his
services. According to Chaplick, he never did so because it would have involved writing a check
to himself from his own bank account, which would be unnecessary.
As for expenses incurred
during the Breach Period, Chaplick has never submitted a bill to the Trust or received
compensation from the Trust for his services. Even as of the date of his testimony, Chaplick had
no plan to bill the Trust for his expenses.
The Court therefore concludes that until this litigation, Chaplick had no intention of
seeking reimbursement
from the Trust for his expenses.
The first time he sought to track his
time as Trustee was as part of this litigation, when he sought to track his hours for the purpose of
manufacturing additional damages in this case. The Court infers that such fees were included in
part to reach the $75,000 threshold for diversity jurisdiction as required to bring this action in
federal court.
B.
Analysis
The Maos argue that Chaplick cannot recover trustee fees because he cannot be
reimbursed for such fees where he is also the beneficiary of the trust, and because such fees do
not satisfy the requirements
for damages under Maryland law.
First, the Maos argue that
allowing Chaplick to recover trustee fees is analogous to awarding attorney's fees to an attorney
proceeding pro se. Under Maryland law, an attorney proceeding pro se is not entitled to collect
attorney's fees either pursuant to a contractual provision allowing for such fees or under the
23
Maryland Rules. See Weiner v. Swales, 141 A.2d 749, 750 (Md. 1958); Frison v. Mathis, 981
A.2d 57,60-63 (Md. Ct. Spec. App. 2009). These rulings are based primarily on the language of
Maryland
Rule 1-341, which permits recovery of attorney's
fees "incurred,"
comparable
language in particular contractual provisions at issue, and the conclusion that a self-represented
attorney does not actually "incur" any legal fees. Frison, 981 A.2d at 62.
Because this textual analysis does not apply here, the case law relating to attorney's fees
does not control in this case.
Nevertheless,
the analogy has some persuasive force.
An
individual who is both attorney and client does not actually incur legal fees because there is no
need to do so, since any charges would be paid by and to the same person.
Likewise, where
Chaplick is settlor, trustee, and beneficiary, he has acknowledged that charging for trustee fees
does not make any sense because it would consist of writing a check to himself. The selection of
the trust structure to own a home, especially where none of its formalities are observed, should
not entitle a homeowner to be paid for time relating to the sale of the property which other
homeowners would expend in the ordinary course without any expectation of compensation.
Moreover, the Maryland Court of Special Appeals has identified a public policy reason for
preventing pro se attorneys from recovering attorney's fees, specifically that "one should not
become one's own client and charge for professional services and that attorneys representing
themselves
might be tempted to protract litigation for their own financial betterment"
if
permitted to recover fees. Id. at 63 (quoting Connor v. Cal-Az Properties, Inc., 668 P .2d 896,
899 (Ariz. Ct. App. 1983)).
Here, where Chaplick acted on his own behalf as trustee and
beneficiary, he had a similar incentive to incur charges that would directly benefit himself.
The Court need not decide whether, as a rule, a trustee who is also settlor and beneficiary
can claim trustee fees as damages, because Chaplick has not established as a factual matter that
24
his proposed trustee fees satisfy the requirements for damages.
First, even though the Trust
Agreement allows for a trustee to receive compensation, Chaplick has not established that the
Trust has suffered any damages in the form of trustee fees actually incurred.
Chaplick has not
billed the Trust for his time, and there is no evidence that the Trust has paid the itemized trustee
fees to Chaplick or has any current debt to Chaplick for the trustee fees sought. The fact that
Chaplick never billed the Trust throughout its history for any work relating to the Property,
including during the period leading up to the Maos' breach of contract, reinforces the conclusion
that the Trust does not owe Chaplick any trustee fees. Thus, Chaplick has failed to show any
damages to the Trust in the form of trustee fees incurred.
Second, even if the Trust had incurred a loss or debt arising from trustee fees, such
damages were not reasonably foreseeable to the Maos at the time they entered into the Contract.
Although the available documentation presumably indicated that the Property was owned by a
trust, the Trust Agreement indicates that the Trust was effectively a family trust established for
estate planning purposes, and the Trust did not operate any differently than if Chaplick had
owned the Property directly. No Trust bank account was used, and none of the correspondence
or payments by Chap lick ever identified him as acting in the role of a trustee such that the Maos
could reasonably expect that they might have to compensate him for the time he spent relating to
the Property. Moreover, the Contract includes no provision discussing trustee fees as a potential
obligation in the event of a breach of contract, there is no evidence that the Trust Agreement was
provided to the Maos, and there was no other evidence that the Maos were ever made aware that
Chaplick was acting in the role of a trustee, property manager, or other similar role such that he
would be entitled to compensation for professional services, and certainly not at $400 per hour.
Indeed, prior to filing this lawsuit, Chap lick himself had never taken any steps toward charging
25
the Trust for his services. It was only after he had concluded in his own mind that the Maos had
acted in bad faith, then threatened and initiated litigation, that he first sought to calculate his
hours expended and conjure up an hourly rate to apply. Under these circumstances, the Court
concludes that damages in the form of trustee fees claimed by Chaplick were not reasonably
foreseeable to the Maos.
Finally, Chaplick has not established damages with any reasonable certainty, particularly
as to the amount, because he has provided no acceptable method of calculation. Although
Chaplick initially claimed that his proposed $400 hourly rate derived from a Maryland statute or
formal guidelines, he quickly abandoned that false claim. There was never any written or
unwritten agreement between the Trust and Chaplick on a particular hourly rate, because
Chaplick never planned to charge the Trust for his time. Rather, once Chaplick decided to
manufacture trustee fees as an item of damages for purposes of this litigation, in part to meet the
threshold for federal jurisdiction, he unilaterally adopted the $400 per hour rate because it is 50
percent of his billing rate as an attorney. The Trustee work, however, is not legal in nature; in
fact, much of the work for which compensation is sought is similar to the work of a property
manager. Indeed, Chaplick retained separate counsel to represent the Trust on the legal ~ssues
arising from the breach. Accordingly, the Court finds no principled basis to apply the selfserving $400 hourly rate. In the absence of any actual hourly rate agreed to in advance by both
the Trust and Chaplick, the Court cannot calculate the amount of trustee fees with any reasonable
certainty. For these reasons, the Court concludes that Chaplick has not met his burden to
establish the requested trustee fees as damages.
26
VIII.
Final Damages Calculation
Based on the findings above, the Court calculates that Chaplick sustained $31,981.69 in
damages arising from the Maos' breach of contract. However, Chaplick received some benefit
from the breach because the Taylors paid a higher purchase price, $1,304,500, than the Maos had
agreed to pay, $1,280,000, for a gain to Chaplick of $24,500. Because the higher purchase price
resulted in a broker's fee that was $750 higher, the net gain to Chaplick was $23,750.
The
damages amount must be reduced by the amount of this net gain.
Thus, the Court awards to Chaplick damages in the amount of$8,231.69.
CONCLUSION
For the foregoing reasons, the Court awards damages to Chap lick in the amount of
$8,231.69. A separate Order shall issue.
Date: December 5, 2016
THEODORE D. CH
United States District
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