Eui Kim v. Council of Unit Owners for Collington Center III Condominium

KENNEY, J. Appellee, the Council of Unit Owners for Collington Center III (“the Council”), as landlord of a commercial condominium complex located in Prince George’s County, instituted repossession proceedings in the District Court for Prince George’s County against Angela Trading Company, Inc. (“Angela Trading”), tenant of Condominium Unit 104 (“the Unit”). A default judgment of possession of the Unit was entered for the Council. While Angela Trading’s motion for a new trial was pending in the District Court, appellants, Eui Kim and Sook Ja Kim (“the Kims”), as the purchasers of the Unit from Angela Trading, sought a declaratory judgment in the Circuit Court for Prince George’s County that they owned the Unit. The circuit court granted summary judgment in favor of the Council.

The Kims present four questions for our review, which we have consolidated and reworded as follows: I. Are the Kims barred from pursuing their claim to the Unit by the doctrine of res judicata? ⁶¹⁰ II. Did the circuit court err in granting summary judgment in favor of the Council?

III

Did the Council have standing to challenge the validity of the deed purporting to give an interest in the condominium unit to the Kims? For the following reasons, we shall dismiss this appeal as moot. FACTUAL AND PROCEDURAL HISTORY I. Facts On October 15, 1985, Prince George’s County, as landlord, entered into a 61-year lease agreement (“the Prime Lease”) with Foreign Trade Zone Three Associates Limited Partnership (“FTZT Associates”), as tenant, for approximately 11.8 acres of land in the subdivision known as Prince George’s International Commerce Center (“the Property”). That same day, pursuant to a sublease agreement (“the Sublease”), FTZT Associates leased all of its rights and interests in the Property to Harkins Associates, Inc. (“Harkins Associates”) for a term to “expire, unless sooner terminated, upon the expiration of the term of the Prime Lease[.]” Section 14 of the Sublease permitted Harkins Associates to develop the Property into commercial condominiums for sale to third parties, “subject to the terms of [the Prime Lease].” The Memorandum of the Prime Lease and the Sublease, signed by representatives for Prince George’s County, FTZT Associates, and Harkins Associates, Inc., was recorded among the land records on November 5,1985.

Harkins Associates established a condominium regime of twenty-six commercial units known as Collington Center III Condominium on August 3,1987. Also on August 3, the Prime Lease and the Sublease were amended to extend the respective term of each to sixty-six years. The First Amendment to the Memorandum of the Prime Lease and the Sublease reflecting the new term was recorded. On November 25, 1987, by a Deed and Assignment of Subleasehold Interest (“the Unit 104 Assignment Deed”), Har ⁶¹¹ kins Associates assigned its interest in the Unit 1 to Angela Trading for “the term of years set forth in [the Prime Lease].” The Unit 104 Assignment Deed expressly stated that it was subject to the Prime Lease and the Sublease, and that the Unit “is a portion of the property” of which Prince George’s County was the fee simple owner.

It was recorded on November 27, 1987. On July 6, 1989, Prince George’s County assigned its interest in the Prime Lease to Collington Center Associates Limited Partnership (“Collington Center Associates”), and, by a deed recorded on July 10, 1989, it granted its fee simple ownership of the Property to Collington Center Associates. Collington Center Associates conveyed its fee simple ownership of the Property to the Council on May 28, 1996. By a separate agreement, Collington Center’s interest in the Prime Lease and FTZT Associates’ interest in the Sublease were assigned to the Council.

Relevant to this case, Section 12.13 of the Prime Lease and Section 3 of the Sublease amendment provided that interests under those leases would not merge unless a written instrument effecting such a merger was executed. The Council became sublessor under the Sublease. On August 31, 2005, Angela Trading executed a deed (“the Deed”) purporting to grant to the Kims, “in FEE SIMPLE, [its] sub-leasehold estate, title and interests in and to the land and all of their interests in and to the improments [sic] [,]” for “consideration of the sum of Ten and No/100 (10.00) Dollars[.]” The Deed was recorded on October 5,2005.

II

Legal Proceedings A. District Court Proceedings On April 14, 2006, the Council filed a complaint for breach of lease against Angela Trading in the District Court for Prince George’s County, asserting that Angela Trading was in sub ⁶¹² stantial violation of the Sublease for “[unauthorized lease to subtenant, excessive noise and disturbance^] and creating a nuisance.” 2 The complaint stated that, on October 13, 2005 and January 25, 2006, the Council notified Angela Trading that it was in violation of the Sublease and that the Council desired to repossess the premises. Angela Trading did not appear at the June 13, 2006 hearing, and a default judgment of possession of the Unit was entered in favor of the Council. Angela Trading did not appeal the default judgment within the required ten day period. In a letter dated June 23, 2006, the Council’s attorney notified counsel for Angela Trading that it had filed a petition for a warrant to remove Angela Trading from the Unit.

Angela Trading filed a motion for a new trial on June 26, 2006, in which it claimed that it was the tenant of the Unit and that it had not been served with the Counsel’s complaint for breach of lease. Attached to it’s motion, Angela Trading provided an “affidavit of non-service” signed by Eui Kim, “as principal for Angela Trading[.]” In the affidavit, Eui Kim asserted: 3. I was never served with any complaint in the above captioned case. 4. I am not in breach of the lease with [the Council] and if I was previously in breach of lease with [the Council], any such breach has been cured at this time.

(Emphasis added.) On August 24, 2006, Angela Trading filed an amended motion for a new trial. In its supporting memorandum, filed ⁶¹³ seven days later, it explained that, “previous to the filing of [the breach of lease action], [it had] conveyed its ownership interest in [the Unit] to [the Kims.]” In the memorandum, Angela Trading argued: Neither Angela Trading [], nor [the Kims] had any knowledge of the pending action for breach of lease, nor did either Angela Trading [] or [the Kims] know about the entry of judgment by default until June 26, 2006[,] when the attorney for Angela Trading [ ] and [the Kims] received a letter from [the Council’s] attorney, just after the appeal period had run, advising [their] counsel that a judgment had been entered by default in favor of [the Council.] That judgment names only Angela Trading [ ] as a defendant^] and does not name [the Kims], the actual tenants pursuant to the [D]eed and assignee of the subleasehold interest. In its conclusion, it asserted that “[the Kims], the true lessor, [have] a valid and credible defense to the alleged breaches of lease filed against Angela Trading [,]” and that “[the Council] has put [the Kims’] property interest in jeopardy and has caused [the Kims] to incur substantial legal fees[.]” The initial hearing on the original motion for a new trial, conducted on August 30, 2006, 3 was limited to whether Angela Trading had been actually served and had notice of the June 13, 2006 hearing. Another hearing on whether the proper defendant was named, the issue raised in the amended motion for a new trial, was held on December 11, 2006.

At the August 30, 2006 hearing, Bonnie Windsor, supervisor of the landlord clerks and civil clerks in the Prince George’s County Sheriffs Office, testified that she mailed the complaint and summons to the Unit on April 26, 2006. Kristina Coleman, a Prince George’s County deputy sheriff, testified that she served the complaint by affixing it to the front door of the Unit on April 28, 2005. Frank Carlyle, president of In The ⁶¹⁴ Beginning School of Arts, testified that the school subleased the Unit from Angela Trading. He stated that any mail that he received at the Unit that was addressed to Angela Trading was “store[d] [ ] in the inbox for [Eui] Kim [,]” who typically retrieved the mail once a week.

Eui Kim testified that he had been Angela Trading’s president for thirty-five years, and that he was the owner of the Unit. He stated that he had visited the Unit in late April of 2006, but he did not see the complaint posted on the door and he did not receive the District Court’s mailed notice of the June 13, 2006 hearing. At the conclusion of the hearing, the District Court stated that it did not believe Eui Kim’s testimony and found that the complaint was properly served. Angela Trading’s amended motion for a new trial, in which it argued that the Kims were the proper party to the breach of lease proceedings, was heard on December 11, 2006.

At that hearing, it was asserted that the Kims were the owners of the Unit, and, because they were not named as defendants in the complaint, they could not have received notice of the June 13, 2006 hearing. The Council argued that Angela Trading had acquired only a leasehold interest in the Unit and, therefore, it could not transfer fee simple title. According to the Council, the Deed was invalid because it did not comply with the Prime Lease’s restriction on assignability, did not mention the Prime Lease, and purported to convey a fee simple interest, which Angela Trading did not possess. Because the Kims did not acquire an interest in the Unit, the Council asserted, Angela Trading was the proper defendant in the breach of lease proceeding.

At the conclusion of the hearing, the District Court denied the motion for a new trial. It determined that Angela Trading had a leasehold interest in the Unit, and that the Deed to the Kims was invalid. Therefore, Angela Trading was the proper party. Angela Trading noted an appeal on the record, which was subsequently dismissed. 4 ⁶¹⁵ B. Circuit Court Proceedings The Kims filed a Verified Complaint to Quiet Title and Declaratory Judgment on August 29, 2006.

In their Complaint, they asked the court to declare that the Deed conveyed ownership of the Unit to them. The Kims simultaneously filed a motion seeking summary judgment. In its cross-motion for summary judgment, the Council asserted that the Deed failed to transfer any interest in the property to the Kims. Attached to its cross-motion, the Council included a Statement of Undisputed Material Facts that traced the chain of title of the Property and the Unit.

The Kims did not file a contravening affidavit. Following the April 4, 2007 hearing, the circuit court issued a written opinion granting summary judgment in favor of the Council. After the denial of their motion to reconsider, the Kims filed this appeal. DISCUSSION I. Effect of District Court Proceeding A. Res Judicata Included in the Council’s brief is a motion to dismiss the Kims’ appeal as moot, arguing that “[t]he sole issue raised in [the Kims’] declaratory judgment action and in this appeal was already asserted and finally decided in the District Court landlord-tenant proceedings.” Res judicata bars a lawsuit involving claims that have been litigated or should have been litigated in a prior proceeding between the same parties, or their privies.

United ⁶¹⁶ Book Press, Inc. v. Maryland Composition Co., Inc., 141 Md.App. 460, 476 , 786 A.2d 1 (2001). A determination that res judicata applies may render a case moot. Maryland Rule 8-602(a)(10) permits this Court, on motion or on its own initiative, to dismiss an appeal because the case has become moot. A case is moot “ ‘if, at the time it is before the court, there is no longer an existing controversy between the parties so that there is no longer any effective remedy which the court can provide.’ ” Baltimore Sun Co. v. State, 340 Md. 437, 454 , 667 A.2d 166 (1995) (quoting Attorney General v. A.A. School Bus, 286 Md. 324 , 327, 407 A.2d 749 (1979)).

See Arundel Corp. v. Board of Zoning Appeals of Howard County, 255 Md. 78, 79 , 257 A.2d 142 (1969) (Dismissing the appeal of a denial of an injunction as moot based on res judicata.); Roebuck v. Steuart, 76 Md.App. 298 , 307 fn. 2, 544 A.2d 808 (1988) (“Steuart correctly observes in his brief that this issue would become moot by a holding in his favor that this judgment is barred because [ ] of the doctrine of res judicata[.]”). In Simpkins v. Ford Motor Credit Company, 389 Md. 426 , 441 fn. 23, 886 A.2d 126 (2005), the Court of Appeals summarized the doctrine of res judicata in Maryland: Maryland law requires the following elements for the application of res judicata: “1) that the parties in the present litigation are the same or in privity with the parties to the earlier dispute; 2) that the claim presented in the current action is identical to the one determined in the prior adjudication; and 3) that there was a final judgment on the merits.” Accordingly, a judgment between the same parties and their privies acts as a final prohibition to any other proceeding upon the same cause of action and is final, “not only as to all matters decided in the original suit, but also as to matters that could have been litigated in the original suit.” Res judicata is applied notwithstanding the type of court which rendered the earlier final judgment, provided that the earlier final judgment was rendered by a court of “competent jurisdiction.” The judgment of a court, acting ⁶¹⁷ within the limits of its jurisdiction, that has not been reversed must be accepted as conclusive by all other courts. (Citations omitted.) Whether the parties are the same or in privity with a party in the prior proceeding is a question of law. Boyd v. Bowen, 145 Md.App. 635, 658 , 806 A.2d 314 (2002) (citing Douglas v. First Security Federal Savings Bank, Inc., 101 Md.App. 170, 180 , 643 A.2d 920 (1994)).

Because the Kims were not named parties in the District Court case, the question is whether they are in privity with Angela Trading, the named party in that proceeding. In Douglas, 101 Md.App. at 183 , 643 A.2d 920 , we examined privity in the context of res judicata: Generally, the parties to a suit are those persons who are entered as parties of record. But for the purpose of the application of the rule of res judicata, the term “parties” includes all persons who have a direct interest in the subject matter of the suit, and have a right to control the proceedings, make defense, examine witnesses, and appeal if an appeal lies. So, where persons, although not formal parties of record, have a direct interest in the suit, and in the advancement of their interest take open and substantial control of its prosecution, or they are so far represented by another that their interests receive actual and efficient protection, any judgment rendered therein is conclusive upon them to the same extent as if they had been formal parties.

(Emphasis in original.) As Angela Trading asserted during the December 11, 2006 hearing, 5 the Kims clearly had a direct interest in the District Court proceedings. Counsel for Angela Trading, who also served as counsel for the Kims, 6 repeatedly contended that the ⁶¹⁸ Kims had a fee simple interest in the Unit. Eui Kim, when he testified at the August 30, 2006 hearing, stated that he was the owner of the Unit. Eui Kim actively participated in the District Court proceedings.

In his affidavit of “non-service” to accompany Angela Trading’s motion for a new trial, he stated that he was not served with the complaint and that he was not in breach of the lease with the Council. At the August 30, 2006 hearing on the service of process, he testified that he had not been served with the complaint. Angela Trading, acting through Eui Kim, represented, and attempted to protect, the Kims’ asserted interest in the Unit throughout the District Court proceedings. Attached to its first motion for a new trial, it included Eui Kim’s affidavit described above.

The amended motion for a new trial explained that Angela Trading had conveyed its interest in the Unit to the Kims, and that “[n]either Angela Trading [ ], nor [the Kims] had any knowledge of the pending action for breach of lease, nor did either Angela Trading [] or [the Kims] know about the entry of judgment by default until June 26, 2006[,] when the attorney representing Angela Trading [ ] and [the Kims] received a letter from [the Council’s] attorney[.]” (Emphasis added.) Moreover, the conclusion of the motion focused solely on the Kims’ interests: Upon information and belief, [the Kims], the true lessors], [have] a valid and credible defense to the alleged breaches of lease filed against Angela Trading Company. By failing to thoroughly investigate its claim and filing suit prematurely against the wrong party, [the Council] has put [the Kims’] property interest in jeopardy and has caused [the Kims] to incur substantial legal fees as a result of this improper action. This Court should strike its judgment and dismiss this action filed against the wrong party. Counsel clearly represented the Kims’ interest in the Unit during the hearings.

At the August 30, 2006 hearing, when the District Court rejected its argument that it did not receive notice of the breach of lease proceeding, Angela Trading ⁶¹⁹ asserted that it had conveyed its fee simple interest in the Unit to the Kims, and, therefore, it was not the correct party defendant and the default judgment