Aleti v. Metropolitan Baltimore, LLC

Karunaker Aleti, et ux. v. Metropolitan Baltimore, LLC, and Gables Residential Services, Inc., No. 39, September Term, 2021, Opinion by Booth, J. LANDLORD AND TENANT — LOCAL LICENSING ORDINANCE — FAILURE TO LICENSE RENTAL PROPERTY — PRIVATE RIGHT OF ACTION Article 13, § 5-4(a)(2) of the Baltimore City Code, which prohibits a landlord from charging, accepting, retaining, or seeking to collect rent for a rental property unless the property is properly licensed, does not provide tenants with a private right of action to collect a refund of rent and related fees already paid to a landlord who was unlicensed during the rental term but who otherwise complied fully with the lease agreement. Tenants may not recover rental payments and related fees paid to the landlord based solely on the landlord’s lack of a license. LANDLORD AND TENANT — ACTION FOR MONEY HAD AND RECEIVED The common law cause of action for money had and received lies when a defendant has obtained possession of money that, in equity and good conscience, the defendant should not be allowed to retain. The Circuit Court for Baltimore City correctly dismissed the tenants’ claim for money had and received to the extent that the tenants sought to recover rent based solely on the lack of licensure because the landlord had provided all that was bargained for under the lease, and there were no allegations that the property was deficient.

However, the circuit court erred in dismissing the claim for money had and received to the extent that the tenants sought restitution of any legal fees the landlord collected when it was unlicensed, where the tenants alleged that the landlord had brought unlawful actions for nonpayment of rent, made false representations as to its licensure status, and had collected and retained those legal fees. Circuit Court for Baltimore City Case No.: 24-C-20-001105 Argued: February 7, 2022 IN THE COURT OF APPEALS OF MARYLAND No. 39 September Term, 2021 KARUNAKER ALETI, et ux. v. METROPOLITAN BALTIMORE, LLC, AND GABLES RESIDENTIAL SERVICES, INC. *Getty, C.J., *McDonald, Watts, Hotten, Booth, Biran, Wilner, Alan M. (Senior Judge, Specially Assigned), JJ. Opinion by Booth, J. Watts and Wilner, JJ., concur and dissent.

Filed: July 28, 2022 *Getty, C.J., and McDonald, J., now Senior Judges, participated in the hearing and Pursuant to the Maryland Uniform Electronic Legal Materials conference of this case while active members of Act (§§ 10-1601 et seq. of the State Government Article) this this Court; after being recalled pursuant to document is authentic. Maryland Constitution, Art. IV, Section 3A, they 2023-01-17 10:56-05:00 also participated in the decision and adoption of this opinion. Gregory Hilton, Clerk In this case, we must determine whether the Baltimore City Council’s enactment of a local law created a private right of action for Baltimore City tenants to recoup rent payments and related fees they paid in connection with their use and occupancy of rental dwellings during a period when a landlord did not have a valid rental license. Prior to August 2018, the Baltimore City residential rental housing inspection and licensing laws only applied to multi-dwelling units.

Inspections were performed by the City’s inspectors. In 2018, Baltimore City adopted Bill 18-0185, which was enacted as Ordinance 18-130. The local law, among other things, amended the provisions of the Baltimore rental license and inspection law to expand its application to include non-owner occupied one- and two-family dwelling units, and required inspections to be performed by licensed third-party inspectors. As part of the amendments, the City Council amended the language contained in Article 13 § 5-4(a)(2)1 of the Baltimore City Code to prohibit any person from charging, accepting, retaining, or seeking to collect rent for a rental dwelling unless the person was properly licensed at the time of both the offer to provide the dwelling and the occupancy.

The Petitioners, Karunaker and Chandana Aleti, were tenants in a 34-story multi- unit apartment building located at 10 Light Street. They filed a putative class action in the Circuit Court for Baltimore City against the Respondents, Metropolitan Baltimore, LLC, the owner of 10 Light Street, and Gables Rental Services, Inc., the property manager. For 1 All references to the Baltimore City Code are references to Article 13. For simplicity’s sake, we shall sometimes refer to the provisions of Article 13 only by their Section reference. ease of reference, we will refer to both entities collectively as “Metropolitan.” The Aletis alleged that for a period of approximately ten months while they were tenants of 10 Light Street, Metropolitan did not hold an active rental license for the property, as required by § 5-4(a) of the Baltimore City Code.

The Aletis, unaware of the lack of licensure, paid rent, and other fees, such as water and utility charges, to Metropolitan, which they seek to recoup through this action. The Aletis do not assert that the lack of licensure caused them any harm or injury, or that their use and occupancy of the apartment unit was diminished in any way. Instead, they assert that §5-4(a)(2) establishes a private right of action whereby they may obtain a judicial remedy of restitution or disgorgement of all rent and fees that they paid during the unlicensed period. The complaint contained four counts.

In Count I, the Aletis requested a declaratory judgment that the leases entered into during the unlicensed period are “void and unenforceable” and that Metropolitan may not file court actions for failure to pay rent, or collect legal fees, rent or other compensation during the 302 days when it was unlicensed. In Count II, the Aletis sought money damages in the amount of all rent and other compensation paid to Metropolitan during the 302 days it was unlicensed, in violation of § 5-4(a). In Count III, the Aletis sought to recover the same amount plus a refund of the legal fees they paid as restitution damages based upon the common law cause of action for money had and received. In Count IV, the Aletis alleged a breach of contract based upon their lease, which they contend incorporated by reference the provisions of § 5-4(a).

In response to a motion to dismiss filed by Metropolitan, the circuit court dismissed the case prior to determination of any issues pertaining to class certification. In a reported 2 opinion, the Court of Special Appeals largely agreed with the circuit court. Aleti v. Metropolitan Baltimore, LLC, 251 Md. App. 482 (2021). The intermediate appellate court held that the Aletis: (1) did not have an implied private right of action under Article 13 § 5-4(a)(2) of the Baltimore City Code; (2) did not state a claim for breach of contract; (3) could not use the common law count of money had and received to recover rent paid during the unlicensed period, except to recover legal fees and other related fees that they paid to Metropolitan in connection with the failure to pay rent cases that Metropolitan filed when it was unlicensed; and (4) that they were entitled to a declaratory judgment.

We granted the Aletis’ petition for writ of certiorari to consider three questions, which we have rephrased as follows:2 1) Does Article 13 § 5-4(a)(2) of the Baltimore City Code create an implied private right of action enabling tenants to obtain the judicial remedy of restitution or disgorgement of rent that was paid to the landlord during a period when the landlord was unlicensed? 2) Is the common law action of money had and received available to a tenant to permit the remedy of restitution or disgorgement of rent paid during the period when the landlord was unlicensed? 2 The questions presented in the petition for writ of certiorari are: 1) Does Article 13, § 5-4(a)(2) of the Baltimore City Code create an implied private right of action to recover a return of rent that a landlord was prohibited from collecting or retaining? 2) Is the money had and received cause of action available to a tenant to recover a return of rent that a landlord was prohibited from collecting or retaining by operation of § 5-4(a)(2)? 3) Is the breach of contract cause of action available to a tenant when a landlord agrees to abide by § 5-4(a)(2) and not accept, collect, or retain rent if the property is not licensed, but then collects, accepts, and retains rent in violation of § 5-4(a)(2)? 3 3) Did the Aletis’ complaint state a claim for breach of contract where the complaint merely alleges that the landlord did not have a license and accepted rent in violation of § 5-4(a)? For the reasons set forth more fully herein, we answer no to the above questions and affirm the judgment of the Court of Special Appeals in all respects. Because all the counts in the Aletis’ complaint are based upon the 2018 amendments to the Baltimore City Code, it is useful to provide some background on the Baltimore City rental license and inspection scheme before we get into the specific allegations that form the basis of the complaint. I Baltimore City Rental License and Inspection Laws A. Article 13 of the Baltimore City Code – Intent and Purposes Article 13 of the Baltimore City Code is “a comprehensive statutory scheme aimed at ‘establish[ing] minimum standards governing the condition, use, operation, occupancy, and maintenance of dwellings . . . in order to make dwellings safe, sanitary, and fit for human habitation.’” Brooks v. Lewin Realty III, Inc., 378 Md. 70, 81 (2003) (alteration and omission in original) (quoting Baltimore City Code (2000), Art. 13 § 103(a)(2), abrogated on other grounds by Ruffin Hotel Corp. of Md. v. Gasper, 418 Md. 594 (2011)).

As the Court of Special Appeals noted, “Section 2-1, which states determinations and declarations of the Baltimore City Council supporting its adoption of Article 13 and establishment of the City’s Department of Housing and Community Development, identifies a broad focus on the City and its residents generally.” Aleti, 251 Md. App. at 491. In relevant part, § 2- 1 states: 4 (a) Determinations. It is hereby found and determined: (1) that there exist within the City of Baltimore slum, blighted, deteriorated, or deteriorating areas, which constitute a serious and growing menace, injurious and inimical to the public health, safety, morals and general welfare of the residents of the City of Baltimore; (2) that the existence of such areas and the growth and spread thereof and the deterioration or threatened deterioration of other areas: (i) contribute substantially and increasingly to the spread of disease and crime, and to losses by fire and accident; (ii) necessitate excessive and disproportionate expenditures of public funds for the preservation of the public health and safety, for crime prevention, correction, prosecution, and punishment, for the treatment of juvenile delinquency, for the maintenance of adequate police, fire, and accident protection, and for other public services and facilities; (iii) constitute an economic and social liability; (iv) substantially impair or arrest the sound growth of the community; (v) retard the provision of decent, safe, and sanitary housing accommodations; (vi) aggravate traffic problems . . . ; (vii) depreciate assessable values; (viii) cause an abnormal exodus of families from the city; and (ix) are detrimental to the health, the well-being and the dignity of many of the residents of the City of Baltimore; (3) that such areas cannot be dealt with effectively by the ordinary operations of private enterprise without the aids herein provided; 5 (4) that the rehabilitation or elimination, in whole or in part, of slum, blighted, deteriorated, and deteriorating areas . . . are public uses and purposes requiring the exercise of the governmental powers of the City of Baltimore in the public interest. (b) Declarations.

(1) It is further found and declared that . . . areas not yet deteriorated or deteriorating, or portions thereof, may be conserved so that the conditions and evils hereinbefore enumerated may be prevented from spreading thereto or arising therein; and that all such areas within the boundaries of the City of Baltimore may be benefited through the enforcement of applicable regulatory codes relating to buildings, housing, sanitation or safety, the rendering of services to community organizations or through a combination of other means provided in this ordinance. (2) It is further found and declared that the elimination, correction, and prevention of the conditions and evils hereinbefore enumerated must be undertaken through the use of a comprehensive and integrated program; that this program should involve whatever range of municipal powers and resources is required to enable the City of Baltimore to act affirmatively in fulfilling its responsibilities to its citizens; that this program requires a suitable administrative structure to undertake adequately a coordinated and purposeful attack on urban slums and blight and the prevention of new areas of slums and blight; and that a comprehensive program should be undertaken within the boundaries of the City of Baltimore. (3) It is further found and declared that the powers conferred by this ordinance {subtitle} are for public uses and purposes for which public money may be expended and the power of eminent domain exercised and that the necessity in the public interest for the provisions herein enacted is hereby declared and determined. As part of its “comprehensive and integrated program” to further the above stated intent and purposes, the City Council enacted a residential license and inspection scheme, which is currently set forth in Article 13, Subtitle 5.

We turn to those specific provisions next. 6 B. City’s Rental License Law —Prior to the 2018 Amendment The City’s rental license law has been around for many decades. Prior to the adoption of the 2018 amendment, the applicable provisions of Article 13, Subtitle 5 only required those landlords who operated a multiple-family dwelling or rooming house to have a license. As a condition to obtaining a license or a renewal, the dwelling unit was required to be registered and pass an inspection. Before the 2018 amendment, City housing inspectors conducted the inspections necessary to obtain a rental license.

The term of registration was one year, although the City’s Housing Commissioner had the authority to provide for staggered terms for a period of less than one year, or for a period of more than one year but less than two years. Then, as it does now, the City Code contained public enforcement provisions providing for the enforcement of Subtitle 5 through the issuance of an environmental citation as authorized by the City Code, “in addition to any other civil or criminal remedy for enforcement procedure[.]” § 5-20.3 The Code provisions further provide that “[t]he issuance of an environmental citation to enforce this subtitle does not preclude pursuing any other civil or criminal remedy or enforcement action authorized by law.” Id. The Code also states that any person who violates Subtitle 5 is guilty of a misdemeanor, and upon conviction, is liable for a fine of not more than $1,000 for each offense. § 5-24.4 Each day that a violation continues is a separate offense. Id. 3 With the 2018 amendment, the enforcement provisions were moved from § 5-20 to § 5-25. 4 With the 2018 amendment, the penalty provisions were moved from § 5-24 to § 5-26. 7 C. The 2018 Amendment—Bill 18-0185 In 2018, the Baltimore City Council adopted Bill 18-0185, which amended certain sections of Article 13, Subtitles 4 and 5.

The expressly stated purpose of Bill 18-0185 was: FOR the purpose of adding certain non-owner occupied 1- and 2-family dwellings to the licensing, inspection, and related requirements for multi- family dwellings and rooming houses (collectively, “rental dwellings”); modifying the fees, procedures, and prerequisites for the registration of certain non-owner-occupied dwellings, rooming houses, and vacant structures; modifying the procedures and prerequisites for the licensing of rental dwellings; providing for the denial, suspension, or revocation of a rental dwelling license under certain circumstances; providing for judicial and appellate review of administrative decisions relating to the registration or the licensing of these structures[5]; amending the underlying definition of “rooming house” to clarify its applicability to a bed and breakfast facility; defining and redefining certain other terms; imposing certain penalties; correcting, clarifying, and conforming related language; providing certain transition rules for pre-existing licenses; providing for a special effective date; and generally relating to the registration of non-owner-occupied dwellings, rooming houses, and vacant structures and to the licensing of rental dwellings. Consistent with the above-stated purpose, Bill 18-0185 effectuated two significant changes to the City’s rental license laws. First, it expanded the City’s rental license and inspection requirements to all non-owner-occupied dwellings rather than just multi-unit properties. Second, it required property owners to hire third-party licensed home inspectors (instead of City inspectors) to complete the rental inspections prior to receiving a rental 5 Although the initial draft of the Bill and its stated purpose indicated that it would provide for “judicial and appellate review of administrative decisions relating to the registration or licensing” of rental dwellings, these proposed amendments were stricken from the Bill after introduction and prior to adoption at the recommendation of the City’s Office of the Department of Law. 8 license, thereby shifting the administrative burden associated with those inspections from the City to the property owner.6 Section 5-4 was revised as part of the amendments that expanded the rental and inspection requirements to all non-owner-occupied dwelling units.

Prior to the 2018 amendment, § 5-4 stated: “No person may: operate any multiple-family dwelling or rooming house without a license to do so from the Commissioner.” Bill 18-0185 modified the language in § 5-4(a) to read as follows: § 5-4. License Required. (a) In general. Except as provided in subsection (b) of this section,[7] no person may: (1) rent or offer to rent to another all or any part of any rental dwelling without a currently effective license to do so from the Housing Commissioner; or (2) charge, accept, retain, or seek to collect any rental payment or other compensation for providing to another the occupancy of all or any part of any rental dwelling unless the person was licensed under this subtitle at both the time of offering to provide and the time of providing this occupancy. 6 The 2018 amendment also made additional changes, such as implementing a tiered license expiration based upon the property owner’s compliance with the local codes.

However, the salient substantive changes related to the expansion of the license and inspection requirements to all non-owner-occupied dwellings and the privatization of the inspection process. 7 Section 5-4(b) contains an exception to the license requirement for any rental dwelling that is owned and operated by the Housing Authority of Baltimore City. This exception does not apply to this case. Accordingly, we shall not discuss it further. 9 The Aletis contend that Bill 18-0185—and specifically, the above-quoted amendments to § 5-4(a)(2)—created a private right of action that enables Baltimore City tenants to seek a judicial remedy of restitution or disgorgement of rent paid during the period that the tenant occupied an unlicensed dwelling based upon the unit’s lack of licensure alone. Against the backdrop of this statutory scheme, including the 2018 amendments, we turn to the specific allegations in the Aletis’ complaint and the procedural history of this case before it reached our Court.

II Factual Background and Procedural History We adopt the succinct summary of the Aletis’ allegations and procedural history that was provided by the Court of Special Appeals in Aleti, 251 Md. App. at 495–97, which we quote below. A. The Lease On May 31, 2019, the Aletis entered a lease agreement with Metropolitan to rent an apartment on the 16th floor of 10 Light Street for a one-month term beginning on June 1, 2019 and expiring on June 30, 2019, subject to automatic renewals on a monthly basis (the “Lease”). Pursuant to the Lease, the Aletis were obligated to pay monthly rent of $1,435.00, subject to a late fee of $71.75 if not paid by the fifth day of the month due. The Lease also contains a utility and services addendum providing that the Aletis were required to pay certain service charges billed by third parties through Metropolitan for water and sewer service, electric service, and hot water, as well as a flat monthly fee for trash service.

The Lease provides that all sums of money required to be paid under it, “whether or not . . . designated as ‘rent’ or as ‘additional rent,’ will be deemed to be rent and will be collectible as such.” Two other provisions of the Lease are particularly applicable to the Aletis’ claims. First, in a paragraph pertaining to tenant defaults, the Lease provides that, with certain exceptions, the prevailing party will be entitled to 10 recover “attorney’s fees and all other litigation costs.” The Lease does not otherwise reference charges for legal fees. Second, the final numbered paragraph of the Lease, ¶ 44 provides: It is the intent of the parties to comply with the laws of Maryland, including local county and municipal ordinances. . . . In the event no other addendum is attached to this Apartment Lease Contract and the local laws or ordinances provide additional rights or remedies not included herein, this Apartment Lease Contract is amended by reference to such local laws and ordinances to incorporate the terms, rights, or remedies thereof herein.

It is the intent of the parties to have this lease construed to include any such rights or remedies herein, and the provisions of such laws or ordinances shall super[s]ede and control over the language of this Apartment Lease Contract to the extent they are in conflict. . . . B. The Complaint On February 24, 2020, the Aletis filed their complaint, in which they alleged that Metropolitan had violated § 5-4 by charging them rent, related service fees, and legal fees while unlicensed. The Aletis alleged that, although the rental property had previously been registered and licensed, the licensure had lapsed on April 9, 2019 and was not renewed until February 7, 2020, a period of 302 unlicensed days. The Aletis alleged that during that period, Metropolitan had improperly charged them a total of $12,825.00 in rent; $50.00 in application fees; $1,675.00 as a security deposit; $1,639.54 in water, electric, and other utility fees; $90.00 in trash fees; $240.00 in legal fees; $498.75 in late fees; and a $35.00 bank fee.

The Aletis also alleged that during the unlicensed period, Metropolitan had filed complaints in the District Court for nonpayment of rent in which it had “falsely represented . . . that [10 Light Street] was licensed[.]” In addition to themselves, the Aletis sought to represent “a class consisting of all tenants who occupied a rental unit at 10 Light Street at any time from April 10, 2019, through February 6, 2020, and paid rent or any other compensation to [Metropolitan] for the occupancy or Legal Fees[.]” The Aletis alleged that they met the numerosity requirement for a class action because the class would contain “more than 100 members . . . because the Rental Property is advertised as having 419 separate rental units.” The complaint contained four counts. In Count I, the Aletis requested a declaratory judgment that the leases “entered into between April 10, 2019, through February 6, 2020, are void and unenforceable and that 11 [Metropolitan] may not file [court actions for failure to pay rent] or collect Legal Fees, rent and other compensation during the 302 days when the Rental Property was not properly registered and/or licensed.” In Count II, the Aletis sought money damages, in the amount of all rent and other compensation paid to Metropolitan during the 302 days it was unlicensed, for Metropolitan’s violation of § 5-4(a). In Count III, the Aletis sought to recover the same amounts plus a refund of legal fees as restitution damages based on the common law cause of action for money had and received. And in Count IV, the Aletis alleged breach of contract based on ¶ 44 of the Lease, which they contended incorporated § 5-4(a).

C. The Motion to Dismiss Metropolitan moved to dismiss all counts of the complaint on the grounds that the Aletis’ statutory count failed for lack of a private cause of action, their common law count failed because the contract had been fully executed, and their breach of contract count failed because they had received all of the benefits for which they contracted and had not sustained any damages. Metropolitan further contended that the Aletis’ declaratory judgment count should be dismissed as moot if the court dismissed the other counts. The Aletis opposed dismissal. On June 24, 2020, after a hearing, the circuit court granted the motion to dismiss all counts of the complaint.

The court agreed with Metropolitan that § 5-4(a) did not create a private right of action. In dismissing the count for money had and received, the court found that the Aletis had failed to plead with specificity “that they paid more than what they would have paid” but for the violation of § 5-4. And having found that the Aletis had no claim under § 5-4(a) itself, the court concluded that they also had no contractual claim based on the incorporation of that provision into the Lease. The court then declined to issue a declaratory judgment because, based on the dismissal of “the substantive counts, there remains no issue of justiciable controversy for which a declaratory judgment would be warranted.” Following the entry of a written order dismissing the complaint, the Aletis timely appealed.

The Court of Special Appeals largely agreed with the circuit court’s order. Aleti, 251 Md. App. at 482. Specifically, the Court of Special Appeals held that § 5-4(a)(2) of Article 13 of the Baltimore City Code does not provide a private right of action to recover 12 rent and related payments made by a tenant to a landlord who was unlicensed during the rental term, but who otherwise complied with the terms set forth in the lease. Id. at 511.

The intermediate appellate court also held that the Aletis failed to state a claim for breach of contract to recover payments made to the landlord under the Lease, reasoning that given the court’s determination that § 5-4(a)(2) does not provide a private right of action to the tenants, no such right or remedy could be incorporated into the Lease. Id. at 512. The Court of Special Appeals also determined that the Aletis did not identify any material breach of the Lease or any cognizable damages from any such breach. Id. at 513.

The Court of Special Appeals reversed two aspects of the circuit court’s judgment. On the Aletis’ claim for money had and received, the intermediate appellate court held that the circuit court did not err in dismissing the count as it pertained to the Aletis’ payments for rent or related fees that they paid during the unlicensed period. Id. at 514. However, the Court of Special Appeals concluded that the circuit court “erred in dismissing the Aletis’ claim as to any legal fees that Metropolitan may have collected during the unlicensed period in connection with bringing actions for nonpayment of rent.” Id.

Finally, the Court of Special Appeals concluded that the circuit court erred in dismissing Count I of the complaint without entering a declaratory judgment related to the Aletis’ request for a declaration of the rights of the parties pertaining to whether Metropolitan, having obtained its license, could collect unpaid rent from tenants that was attributable to the period in which it was not licensed. Id. at 521. The Court of Special Appeals vacated the judgment entered with respect to Count I and remanded the case for the circuit court to consider that count. Id. at 521–22. 13 For the reasons set forth below, we agree with the Court of Special Appeals and affirm the judgment entered by that court in its entirety.

III Discussion This case involves several questions of law, which we review de novo. Specifically, we must determine whether a local law enacted by the Baltimore City Council establishes an implied private right of action for restitution or disgorgement of rent based upon a landlord’s lack of licensure alone. We must also determine whether the Aletis’ complaint adequately set forth a common law cause of action for money had and received and for breach of contract. These questions of law all arise in connection with the circuit court’s dismissal of the Aletis’ complaint.

Under Maryland Rule 2-322(b)(2), the court may dismiss a complaint if it fails “to state a claim upon which relief can be granted.” A motion to dismiss is properly granted where the factual allegations in a complaint, if proven, would not provide a legally sufficient basis for the cause of action asserted in the complaint. See, e.g., Barclay v. Castruccio, 469 Md. 368, 374 (2020). This Court reviews “a trial court’s grant of a motion to dismiss, without deference, to determine whether it was legally correct.” Id. at 373 . In doing so, “we must assume the truth of all relevant and material facts that are well pleaded and all inferences which can be reasonably drawn from those pleadings.” Id. at 373–74 (quoting Lloyd v. Gen.

Motors Corp., 397 Md. 108, 121 (2007)). A motion to dismiss on this ground may only be granted where the allegations presented do not state a cause of action. Barclay, 469 Md. at 374 . In determining whether a plaintiff has alleged claims 14 upon which relief can be granted, there is a big difference between that which is necessary to prove the elements and that which is necessary to merely allege them.

Lloyd, 397 Md. at 121–22. Indeed, our decision does not “pass on the merits of the claim,” but instead, we merely “determine[] the plaintiff’s right to bring the action.” Id. at 122. Before we address the specific language of the Baltimore City local law, and the Aletis’ assertion that it establishes an implied right of action for restitution or disgorgement of rent, it is useful to examine our case law in which tenants have made claims seeking the identical remedy of restitution of rent. Indeed, the only difference between those cases and the instant case is that in the former cases, the tenants sought to obtain restitution by pleading their cases differently.

As reflected below, we have rejected identical claims by tenants seeking a judicial remedy of restitution or disgorgement of rent without evidence of actual damages under the Maryland Consumer Protection Act (“MCPA”), Md. Code Ann., Commercial Law Article (“CL”) § 13-101 et. seq. (1974, 2013 Repl. Vol., 2021 Supp.), and under common law actions seeking the remedy of restitution. The remedies provided by our judicial decisions and the Maryland General Assembly within the context of the MCPA are particularly instructive here because “the creation of new causes of action in the courts has traditionally been done either by the General Assembly or by this Court under its authority to modify the common law of this State.” McCrory Corp. v. Fowler, 319 Md. 12, 20 (1990), superseded by statute as stated in Wash.

Suburban Sanitary Comm’n v. Phillips, 413 Md. 606 , 627–29 (2010). Indeed, a local government such as Baltimore City, which derives its authority from the Home Rule Amendment, Article XI- A of the Maryland Constitution, may establish a judicial cause of action pursuant to a local 15 law on a matter of purely local concern, only where the General Assembly gives a local government the authority to do so pursuant to the express powers granted to the local government. See, e.g., Edwards Sys. Tech. v. Corbin, 379 Md. 278 (2004).

As discussed below, if we were to accept the Aletis’ argument that the Baltimore City Council created an implied private right of action enabling city tenants to seek a judicial remedy of restitution or disgorgement of rent based upon a lack of license alone, we would be recognizing a private right of action created by a local law that is inconsistent with the remedies provided under the common law or by the General Assembly. Because we have determined that Baltimore City did not intend to create an implied private right of action, we do not decide here whether they have the authority to do so.8 A. Existing Remedies Available to Tenants Where a Landlord is Unlicensed In the rental housing context, our jurisprudence firmly establishes the right of a tenant to bring a private right of action under the MCPA where a landlord violates a local rental license law, and where the tenant can prove that the tenant suffered actual injury or loss in connection with the unlicensed status of the property.9 8 As an alternative ground for affirming the dismissal of Count II, Metropolitan argues that the City Council lacks the constitutional authority to create a private right of action. Metropolitan made a similar argument before the Court of Special Appeals. Like that Court, “because we conclude that the City Council did not create an implied cause of action to enforce § 5-4(a)(2), we do not need to reach the question of whether it could have done so.” Aleti v. Metro.

Baltimore, LLC, 251 Md. App. 482 n.10 (2021). 9 In addition to the remedy provided by the MCPA where a tenant can prove that the lack of licensure caused the tenant to suffer actual injury or loss, the tenant has other statutory remedies to ensure the tenant’s right to safe and habitable living conditions during the term of the tenancy. We recently summarized these remedies in Velicky v. Copycat Building, LLC, 476 Md. 435 , 460–466 (2021). 16 In CitaraManis v. Hallowell, 328 Md. 142 (1992), we considered whether a tenant could maintain a private right of action under the MCPA or under a common law action for restitution, to recover rent paid in connection with the property they had rented that was not licensed as required by the Howard County Code. The tenants did not allege that the lack of licensure caused them any injury or loss, and the condition of the house was acceptable during the tenancy, which lasted one-and-a-half years. Id. at 145 .

However, after learning that the property was not licensed, they filed suit to recover the amounts they had paid as damages under the MCPA and as restitution of voluntary payments made under an illegal lease. Id. After the circuit court ruled in favor of the tenants, we reversed the circuit court’s judgment. We pointed out that under the plain language of the private action provisions of the MCPA, a plaintiff must prove “actual injury or loss sustained.” Id. at 151 (citing CL§ 13-408(a)) (internal quotations omitted).

We discussed the public and private remedies that are available under the MCPA, observing that a consumer who has been subjected to an unfair, abusive, or deceptive trade practice “may elect to utilize either the public or private enforcement proceedings available under the [M]CPA or may utilize both public and private enforcement proceedings, either simultaneously or in the alternative.” Id. at 151. We noted that in a public proceeding under the MCPA, any prohibited practice is a violation regardless of whether the “consumer in fact has been misled, deceived, or damaged as a result of that practice.” Id. at 152 (quoting CL § 13-302) (emphasis added). By contrast, to maintain a private enforcement proceeding, we pointed out that the express terms of the MCPA “only permit[] a consumer to recover for injury or loss sustained by 17 him as the result of a practice prohibited by this title.” Id. (quoting CL § 13-408(a)(1)) (internal quotations omitted) (emphasis added).

Based upon the language in CL § 13-408(a), we concluded that the private action “therefore, requires an aggrieved consumer to establish the nature of the actual injury or loss that he or she has allegedly sustained as a result of the prohibited practice.” Id. We stated that “[t]his statutory construction creates a bright line distinction between the public enforcement remedies available under the [M]CPA, and the private remedy available under [CL] § 13-408(a).” Id. We also observed that “awarding full restitution of the rent paid by the tenants who offered no proof of actual injury or loss would be in the nature of a punitive remedy,” serving to penalize the landlords for their failure to obtain a license and to serve as a general deterrent to similar conduct by other landlords generally. Id. at 153 (emphasis added).

We explained that CL § 13-408(a) “was not intended to punish the landlord or set an example for similar wrongdoers.” Id. Accordingly, we held that the plaintiff tenants could only recover on their private MCPA claim against their landlord for deceptive trade practices arising from renting an unlicensed apartment if they could prove that the unlicensed condition caused them to suffer an “actual injury or loss.” Id. at 164. We similarly rejected the tenant’s claim for restitution of rent based upon a common law theory that they had paid “pursuant to an illegal and unenforceable lease.” Id. at 158. We explained that “even if the lease were unenforceable by the landlords, the tenants have received everything that they bargained for, and a necessary element justifying the remedy of restitution, i.e., unjust enrichment, is lacking.” Id. at 159. 18 In Galola v. Snyder, a companion case to CitaraManis, we held that the circuit court erred in granting summary judgment in favor of a tenant against an unlicensed landlord based upon proof of voluntary payment of rent. 328 Md. 182 , 185–86 (1992).

We rejected the tenant’s argument that the tenant could maintain a private right of action under the MCPA or a common law action for restitution of rent based solely upon the unlicensed status of the leased property. Id. However, unlike the facts in CitaraManis, there was evidence that the tenant was harmed because the property contained defects that would have been uncovered by an inspection. Id. at 184–85.

We therefore remanded the case for a trier of fact to determine whether the tenants suffered actual loss or injury arising from the condition of the unlicensed property. Id. In McDaniel v. Baranowski, 419 Md. 560 , 562–63 (2011), we considered whether an unlicensed landlord could initiate a summary ejectment proceeding for a tenant’s failure to pay rent. A rental license was required under the Anne Arundel County Code for all multi-family dwelling units.

At the time that the tenant rented the apartment, she was unaware that the property was not licensed as the landlord had failed to renew its license for several years. Id. at 564–65. When the tenant failed to pay rent after the first month, the landlord filed a complaint for summary ejectment pursuant to § 8-402 of the Real Property Article of the Maryland Code. Id. at 567.

The tenant, who had discovered that the property was unlicensed, argued that the landlord should be precluded from bringing a summary ejectment proceeding because he was unlicensed. Id. at 568–69. In addition, the tenant filed a counterclaim under the MCPA to recover the rent that she had paid. 19 We agreed with the tenant that the landlord should not be permitted to utilize the summary ejectment process, concluding that “a landlord [should] not be able to seek to dispossess a tenant, summarily, without having a license to operate the leased premises as required by local ordinance.” Id. at 585. However, we upheld the District Court’s denial of the tenant’s counterclaim.

We determined that the “present case is analogous to CitaraManis, because [the tenant] failed to present any evidence that she sustained any actual damages, such as bills for medical treatment, loss of wages, or the cost of securing suitable substitute housing, for example.” Id. at 587–88. Based upon this analysis, we agreed with the District Court that the tenant in McDaniel “failed to prove actual loss or injury, a prerequisite to recovery under the [MCPA].” Id. at 588. To summarize our case law where we have analyzed tenants’ claims for restitution of rent within the context of other types of private causes of action, for over 30 years, we have consistently held that a tenant may only pursue a private action under the MCPA against an unlicensed landlord where the tenant can prove that the unlicensed condition caused them to suffer an “actual injury or loss.” Simply alleging a lack of licensure is not enough. Nor will the Court permit the tenant to maintain a common law action seeking a remedy of restitution to recover unpaid rent under circumstances where the tenant voluntarily paid the rent and received everything that they bargained for, because the necessary element justifying the remedy of restitution—unjust enrichment—is lacking.

The Aletis assert that their claims are different from the claims asserted by the tenants in CitaraManis and McDaniel, because they contend that their judicial remedy 20 arises under a different private right of action—an implied one they assert has been created by the local law enacted by the Baltimore City Council. Metropolitan argues that the local law does not provide a private right of action. For the reasons set forth herein, we agree with Metropolitan. B. Implied Right of Action Count A private right of action allows an individual to bring an action in his or her personal capacity to enforce a legal claim.

State Ctr., LLC v. Lexington Charles Ltd. P’ship, 438 Md. 451, 517 (2014). Of course, § 5-4(a)(2) does not, by its plain language, create an express private right of action for the judicial remedy of restitution or disgorgement of rent for tenants who live in an unlicensed dwelling. Nor do the Aletis claim that subpart (2) creates an express private right of action. Where, as here, a statute or ordinance “does not explicitly provide a cause of action” for claimants who “ha[ve] adequately alleged a violation,” we must assess whether there is an implied right of action.

See Scull v. Groover, Christie & Merritt, P.C., 435 Md. 112, 121 (2013). “A private cause of action in favor of a particular plaintiff or class of plaintiffs does not exist simply because a claim is framed that a statute was violated and a plaintiff or class of plaintiffs was harmed by it.” Baker v. Montgomery County, 427 Md. 691 , 708–09 (2012) (citing Touche Ross & Co. v. Redington, 442 U.S. 560, 568 (1979)). “Rather, the issue is a matter of statutory construction.” Baker, 427 Md. at 709 (citations omitted). In determining whether a state statute contains an implied private right of action, we have adopted the same test applied to federal statutes by the Supreme Court. Scull, 435 21 Md. at 121; Baker, 427 Md. at 709 (quoting Cort v. Ash, 422 U.S. 66, 78 (1975)). That test requires that we consider three relevant factors: (1) Is the plaintiff one of the class for whose special benefit the statute was enacted?

(2) Is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? (3) Is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? Baker, 427 Md. at 709 (quoting Cort, 422 U.S. at 78 ) (cleaned up); see also Scull, 435 Md. at 122 . In Baker, we discussed in detail the application of this test.

Specifically, we noted that “‘[t]he central inquiry remains whether [the legislative body] intended to create, either expressly or by implication, a private cause of action.’” Id. at 710 (quoting Touche Ross, 442 U.S. at 575–76). In discerning legislative intent, we analyze the language of the statute to identify its purpose and intended beneficiaries, review[] the statute’s legislative history, and determine[] whether the statute provides otherwise an express remedy. As a result, in a case in which neither the statute nor the legislative history reveals a legislative intent to create a private right of action for the benefit of the plaintiff, we need not carry the Cort v. Ash inquiry further. Thus, our analysis begins with the language of the statute at hand and whether it confers a beneficial right upon a particular class of persons.

If a statute’s language provides a right to a particular class of persons, there is a strong inference that the legislature intended the statute to carry an implied cause of action. Conversely, that inference becomes attenuated when the statute is framed as a general prohibition or a command to a governmental entity or other group or confers a generalized benefit. Baker, 427 Md. at 710–11 (internal citations and quotations omitted). 22 As previously noted, the genesis of the implied right of action asserted by the Aletis is the City Council’s modification to § 5-4 that was effectuated by the adoption of the 2018 amendment. Notably, § 5-4(a) contains two subparts.

Subpart (1) prohibits any person from renting or offering to rent to another any rental dwelling in the absence of a currently effective license. The Aletis focus solely on subpart (2), which they contend creates an implied right of action entitling Baltimore City tenants to a seek the judicial remedy of disgorgement or restitution of any rent paid during the period that they occupied an unlicensed dwelling, regardless of the condition of the property and without pleading that the unlicensed status caused the tenant any injury or damages. Applying the three-factor test from Cort, for the reasons that follow, we hold that no such implied private right of action was created by the 2018 amendment that revised the language contained in § 5-4(a) of the Baltimore City Code. 1. Section 5-4(a)(2) Was Enacted for the Purpose of Requiring All City Rental Properties to be Licensed—Not to Provide Tenants with a Special Benefit of Free Housing in Unlicensed Properties The first factor that we consider is whether the 2018 amendment was enacted for the special benefit of a class of whom the Aletis are a part.

In other words, we consider whether § 5-4(a)(2) was enacted to provide a “beneficial right” to tenants. Baker, 427 Md. at 710 . “If a statute’s language provides a right to a particular class of persons, there is a strong inference that the legislature intended the statute to carry an implied cause of action. Conversely, that inference becomes attenuated when the statute is framed as a ‘general prohibition or a command’ to a governmental entity or other group or confers a generalized benefit.” Id. at 710–11 (internal citations omitted) (quoting Universities Res. Ass’n v. 23 Coutu, 450 U.S. 754, 772 (1981)).

The question of whether an enactment benefits a special class “is not simply who would benefit from the [enactment], but whether [it was] intended to confer . . . rights upon those beneficiaries.” California v. Sierra Club, 451 U.S. 287, 294 (1981). The law at issue must therefore “unmistakably focus on [a] particular class of beneficiaries whose welfare [the legislature] intended to further,” id., and not be a generalized “prohibitive command.” Baker, 427 Md. at 711 . The Aletis’ assert that, by prohibiting a “person” from charging or collecting rent from “another” for an unlicensed property, the provision necessarily reflects an intent to benefit tenants because they are the “another” from whom rent and other fees may not be collected. We agree with the Court of Special Appeals that the fact that tenants might benefit from the prohibition on the collection of rent does not mean that the City Council desired or intended that outcome.

Section 5-4(a)(2) cannot be read in isolation—without considering subpart (1), as well as the remainder of the statutory scheme and the legislative history of the 2018 amendment. Generally, local housing and inspection codes are enacted pursuant to a local government’s police powers to enact general regulations for the protection and benefit of the health, safety, and welfare of the public. Baltimore City is no exception. See, e.g., Velicky v. Copycat Bldg.

LLC, 476 Md. 435, 477 (2021) (observing that requiring a landlord’s compliance with the Baltimore City “inspection and licensing process to engage in rental activities is a legitimate exercise of governmental police powers to ensure that residential housing complies with public health and safety standards”); Golt v. Phillips, 308 Md. 1, 13 (1986) (stating that “[w]e find that the Baltimore City licensing requirement 24 for multiple family dwellings is a model example of a public health and safety regulation”). Like the Court of Special Appeals, we agree that the City’s residential license laws set forth in Article 13, Subtitle 5, must be read within the overarching goals of Article 13, as set forth in § 2-1, which include the prevention of deterioration of areas within the City, “which constitute a serious and growing menace, injurious and inimical to the public health, safety, morals and general welfare of the residents of the City of Baltimore[.]” As reflected in the broad declarations contained in § 2-1(b), “the enforcement of applicable regulatory codes relating to building, housing, sanitation or safety,” is intended to prevent the spread of the “evils” enumerated in § 2-1(a)(2), including: the “spread of disease and crime”; “losses by fire and accident”; “aggravate[d] traffic problems”; “depreciate[ing] assessed values” of property; “caus[ing] an abnormal exodus of families from the city”; and other conditions that are “detrimental to the health, the well-being and dignity of many of the residents of the City[.]” To be sure, the residential license laws certainly benefit tenants. However, we agree with the Court of Special Appeals that the “Code makes plain that the City Council’s focus was broader.” Aleti, 251 Md. App. at 506; cf. Erie Ins. Co. v. Chops, 322 Md. 79, 91 (1991) (in the course of rejecting a claimed private right of action under § 17-106(b) of the Transportation Article of the Maryland Code, we stated that, “[a]lthough the [plaintiffs] may properly be said to be within the class of persons in whose favor the statute was intended, it seems equally apparent that the principal focus of the uninsured motorist laws is for the general protection of the public”).

When we read the 2018 amendment that adopted the current language contained in § 5-4(a)(2) within the context of the “comprehensive and integrated program,” including 25 the purpose and declaration contained in § 2-1, in addition to the legislative history of the 2018 amendment itself, which we discuss below, we determine that the City Council’s intent was to require that all rental properties in the City be licensed, which in turn, benefits the tenants as well as the City and the public generally. We agree with the Court of Special Appeals, that, when one reads § 5-4(a)(2) within the overall scheme, the prohibition against “charging, accepting, retaining, or seeking to collect rent during a period of non-licensure is to promote licensure.” Aleti, 251 Md. App. at 506. Indeed, we can say it no better than our colleagues on the intermediate appellate court: “We see nothing in the statutory scheme broadly or in § 5-4(a)(2) specifically that suggests an intent to specially benefit tenants by providing them with free, unlicensed housing. To the contrary, the apparent legislative intent was for there to be no unlicensed housing, and § 5-4(a)(2) is a coercive mechanism to effectuate that intent.” Id. at 506–07.

Reading § 5-4(a)(2) along with subpart (1), as well as the legislative history discussed below, it is clear that the intent of the Baltimore City Council was to bring all rental properties—multi-unit dwellings, as well as non- owner-occupied one- and two-family units—within the general welfare licensing scheme, and it was not to confer a special benefit upon Baltimore City tenants in the form of a judicial remedy of restitution or disgorgement of rent. In other words, there is no intent manifested anywhere in § 5-4 to provide tenants with unlicensed housing at no cost, because the ultimate goal of the section was for there to be no unlicensed housing. 26 2. There Is No Indication of Legislative Intent to Create an Implied Private Right of Action to a Judicial Remedy of Restitution or Disgorgement of Rent Turning to the second factor of the Cort test, there is nothing in the legislative history of City Council Bill 18-0185 that reveals an intent to benefit a particular class of persons, specifically, City tenants, in the form a judicial remedy for restitution of rent. As noted above, the expressly stated purpose of Bill 18-0185 reflects the clear intent of the City Council in enacting the amendment to Article 13, Subtitle 5: (1) to expand the City’s regulatory rental licensing scheme to bring all rental properties within its ambit rather than just multi-unit dwellings; and (2) utilize third-party inspectors to reduce the burden on the City’s inspectors generated by the increased number of units that would be required to be inspected under the expanded license program.

In addition to the lack of any indication of legislative intention in the Bill’s express statement of purpose, there is no mention of any intention to create a private right of action in any of the comments generated by any City departments that offered testimony in support of the Bill. Perhaps most notable are the written comments in support of the Bill that were prepared by Michael Braverman, Housing Commissioner, Baltimore City Department of City Housing and Community Development (“HCD”). After reciting the Bill’s express purpose statement verbatim, the Housing Commissioner noted that: If enacted, this bill would improve the overall quality of rental housing in the City by expanding HCD’s current rental inspection program to require all rental properties in the City to be registered, inspected and licensed. The current law requires all non-owner occupied dwelling units to be registered[,] but the inspection and licensing requirements only apply to properties with either two dwelling units and some other additional use or more than two dwelling units. 27 The Housing Commissioner went on to explain that the new requirements “would also add a new inspection and licensing requirement” for one- and two-family dwelling units, which “account for a significant portion of the 43% of all rental units in Baltimore City that rent for less than $750 [per] month.” Explaining that these units substantially contribute to the City’s affordable housing inventory, the Commissioner explained that the requirements “will largely eliminate substandard conditions in the one segment of the affordable housing market where such conditions are prevalent.” The Commissioner commented on two additional amendments to the City’s rental license law that would be effectuated by the Bill’s enactment—specifically, the new requirement that inspections would be performed by third-party licensed home inspectors instead of City inspectors, and the establishment of a three-tiered license renewal system that would have a one-, two- or three-year term for the license.

In his written comments, the Housing Commissioner offered two amendments to the Bill. The first amendment requested that additional language be added to § 5-7(b)(4) requiring that the third-party inspector’s report be “signed by the home inspector, under oath and under the home inspector’s seal,” which the Commissioner stated would “allow for appropriate legal action against the inspector for submitting any false reports.” The second amendment offered was to clarify the language in the definition of “Nuisance Property” in § 5-15(a) to make it clear that the definition included a “public nuisance, neighborhood nuisance and/or an unruly social event.” 28 In its written comments, the Department of Planning recommended approval of the Bill and deferred to the comments provided by HCD “as the most directly-affected agency.” In a letter in support of the Bill from the Baltimore City Police Department, the Chief of Staff, James Gillis commented that “[t]his legislation, among other things, provides valuable tools for making our City safer. Crime is often a result of underlying factors that give rise to criminal conduct. Unsafe, unhealthy, and unchecked housing— whether vacant or occupied—are examples of such underlying factors.” In support of the Bill, the written comments submitted by the City Department of Finance noted that “the main purpose [of Bill 18-0185] is to add certain non-owner-occupied 1- and 2-family dwellings to the licensing, inspection, and related requirements for multi-family dwellings and rooming houses,” and also observed that the “proposed legislation would now require property owners to pay out-of-pocket for a third party housing inspection” by licensed inspectors “registered with the Housing Commissioner” who “must meet the same standards as a City inspection.” Giving the Bill a favorable recommendation, the Department of Finance concluded that the Bill “would increase efficiency within the Department of Housing and allow housing inspectors to focus on quality control and oversight of the City’s rental housing market to improve the standard of living for our residents.” It is also noteworthy that organizations which would ordinarily be most vocal about a Bill creating a private right of action for disgorgement of rent did not raise concerns about this issue in the written testimony provided by such organizations.

The Baltimore 29 Development Corporation (“BDC”) was “asked to comment” on the Bill. The BDC stated that: While BDC generally has concern for regulations that present an undue burden on private enterprise, inhibit the competitiveness of Baltimore City in the regional, national, or global market, or present high regulatory barriers