Hanna v. ARE ACQUISITIONS, LLC

ELDRIDGE, J. The issue in this case is whether the officers and directors of a tenant corporation committed a trespass by leaving the tenant’s materials on the leased premises and not removing the materials at the time of, or subsequent to, the termination of the lease. The individual petitioners are officers and directors of Intracel Corporation. Two corporate entities affiliated with Intracel are also petitioners. 1 The petitioners argue that the Court of Special Appeals erred when it held that a cause of action for trespass may lie against them. The respondent is ARE Acquisitions, LLC, the owner of the leased premises.

ARE argues that the officers and directors of Intracel, by “leaving chattels on the premises after [their] right to be on the premises has expired,” committed a trespass. We shall hold that no cause of action for trespass lies against the petitioners. The petitioners’ actions do not amount to a trespass under Maryland law. I. ARE’s predecessor, as landlord, and Intracel, as tenant, were parties to a ten year lease entered into on January 15, 1997, of a building in Rockville, Maryland.

In June 1997, ⁶⁵² ARE purchased the property and thus became the landlord under the lease. Intracel, as tenant, was a biopharmaceutical company engaged in the business of developing vaccines and other products for the treatment of various diseases. Intracel used the property for its office and laboratory. The equipment and materials utilized by Intracel were typical in the biopharmaceutical industry and included biological agents, radioactive material, various chemicals including acids, lacquer thinner, oxygen, argon, cagewashing detergent and sodium hydroxide.

In addition, Intracel used incinerators, irradiators, syringes, and other equipment. In 1998, Intracel was suffering financial difficulties. By September 2000, Intracel stopped paying rent in a timely manner and defaulted under the lease. ARE agreed to give Intracel additional time to cure its default under the lease and to refrain from evicting Intracel during the additional time period.

Intracel, however, failed to cure its default and by early 2001 owed ARE a rental arrearage in excess of $400,000. On April 4, 2001, ARE notified Intracel that the lease was terminated effective April 19, 2001, and that Intracel was required to vacate the premises by that date. Intracel requested and was granted additional time to complete its move and ultimately vacated the premises by April 30, 2001. ARE contended that Intracel’s officers and directors committed a trespass because, when they vacated the property, Intracel’s officers and directors “left the Premises in disarray, abandoning large quantities of unwanted hazardous waste and contaminated materials, including but not limited to biological agents, radioactive materials and dangerous chemicals at the Premises.” ARE alleged that, because it “did not know what all the materials were, and because some were obviously chemically hazardous, biohazardous, or radioactive, the condition of the building posed a risk to ARE’s employees, other tenants, any new tenant, and the general public.” In July 2001, ARE hired a contractor to clean up the materials left behind by Intracel.

Intracel filed a bankruptcy petition in the United States Bankruptcy Court for the District of Maryland ⁶⁵³ on September 12, 2001, and ARE was one of the largest unsecured creditors in the bankruptcy action. In September 2002, ARE instituted this action in the Circuit Court for Montgomery County, seeking both compensatory and punitive damages. The operative pleading is ARE’s second amended complaint, filed on March 18, 2004. In that complaint, ARE named seven of Intracel’s officers and directors as defendants. 2 Intracel itself was not a defendant.

ARE also included as defendants Intracel Acquisition Holding Company, LLC (IAHC) and Dublind Partners, Inc. According to the second amended complaint, IAHC was a company set up and controlled by the individual defendants “to acquire Intracel, control its operations, and protect IAHC’s investment in Intracel.” ARE alleged that Dublind Partners, Inc. was “set up and controlled by Defendants Lindsay and Dubroff, [and] controlled IAHC and Intracel’s operations.” The second amended complaint included several alleged causes of action, including, inter alia, trespass, tortious interference with contract, “aiding and abetting trespass,” waste, negligence, and “aiding and abetting waste.” The only asserted cause of action which remains in the case is trespass. In its second amended complaint, ARE claimed that the defendants “directed, were aware of, and participated in the conduct of Intracel which caused waste and contaminated materials to be deposited, abandoned and strewn about the Premises, which ... constituted an unauthorized entry to the Premises.” In addition, ARE asserted in the trespass count that “Defendants Dublind, IAHC, Nardin, Durbroff, Lindsay, Fox, Hanna and Swindle controlled the cash flow of Intracel and refused to authorize the payment of the funds necessary to remove the hazardous waste and materials and restore the Premises to its proper condition.” The Circuit Court for Montgomery County granted the defendants’ motion to dismiss all the counts in the second ⁶⁵⁴ amended complaint except those relating to trespass and waste, and to dismiss the request for punitive damages. Thereafter, ARE filed a motion for summary judgment on the trespass count, and the Circuit Court denied the motion. The defendants then filed a motion for summary judgment on the remaining counts, submitting transcripts of depositions, interrogatories and answers to the interrogatories.

After reviewing the material and holding a hearing on the motion, the Circuit Court granted summary judgment in favor of the defendants on the remaining counts which related to trespass and waste. ARE appealed to the Court of Special Appeals, arguing that the Circuit Court erred in dismissing the negligence count and the request for punitive damages. ARE also contended that the grant of summary judgment in favor of the defendants on the trespass and waste counts was erroneous. In an unreported opinion, the Court of Special Appeals affirmed the Circuit Court’s rulings on all counts except the trespass count.

In holding that the Circuit Court erred in granting summary judgment as to trespass, the intermediate appellate court chiefly relied on the Restatement (Second) of Torts. The pertinent sections of the Restatement provide as follows (emphasis added): “ § 158. Liability for Intentional Intrusions on Land One is subject to liability to another for trespass, irrespective of whether he thereby causes harm to any legally protected interest of the other, if he intentionally (a) enters the land in the possession of the other, or causes a thing or a third person to do so, or (b) remains on the land, or (c) fails to remove from the land a thing which he is under a duty to remove. “ § 161. Failure to Remove Thing Tortiously Placed on Land ⁶⁵⁵ (1) A trespass may be committed by the continued presence on the land of a structure, chattel, or other thing which the actor has tortiously placed there, whether or not the actor has the ability to remove it.

(2) A trespass may be committed by the continued presence on the land of a structure, chattel, or other thing which the actor’s predecessor in legal interest therein has tortiously placed there, if the actor, having acquired his legal interest in the thing with knowledge of such tortious conduct or having thereafter learned of it, fails to remove the thing.” The Court of Special Appeals concluded that § 158(c) was the section which covers the present case. In reaching this conclusion, the intermediate appellate court distinguished this Court’s decision in Rosenblatt v. Exxon, 335 Md. 58 , 642 A.2d 180 (1994). Rosenblatt involved circumstances somewhat similar to those in the present ease. In Rosenblatt , a tenant of commercial property, upon termination of the lease, vacated the property but allegedly left behind “toxic chemicals” which “contaminated” the property.

This Court in Rosenblatt emphasized that “we have never recognized a trespass where the thing which intrudes actually entered the land during the ‘trespasser’s’ possession and the plaintiff took possession of the land subsequent to the ‘intrusion.’ ” Rosenblatt, 335 Md. at 78 , 642 A.2d at 189 . The Rosenblatt opinion next discussed the Restatement and held that § 161 did not apply in that case because it “explicitly provides that a trespass involves the tortious placing of something on the land and implicitly provides that the affected land is the land of another 335 Md. at 78 , 642 A.2d at 190 . The Court then quoted language from § 158 of the Restatement to “further support[ ] this interpretation.” Ibid. Specifically, this Court quoted the language stating that “ ‘[o]ne is subject to liability to another for trespass ... if he intentionally ...

(c) fails to remove from the land a thing which he is under a duty to remove.’ ” 335 Md. at 78-79 , 642 A.2d at 190 . The Rosenblatt opinion then held that a tenant “owed ... no duty to remove the contamination.” 335 Md. at 79 , 642 A.2d at 190 . ⁶⁵⁶ In distinguishing Rosenblatt , the Court of Special Appeals in the case at bar acknowledged that this Court’s statement, that “we have never recognized a trespass where the thing which intrudes actually entered the land during the ‘trespasser’s’ possession and the plaintiff took possession of the land subsequent to the intrusion,” appeared to support the grant of summary judgment. According to the Court of Special Appeals, however, those words should be read only to “explain[ ] why Section 161 of the Restatement (Second) of Torts was inapplicable” in Rosenblatt . The intermediate appellate court in the present case, turning to § 158 of the Restatement, went on to hold that the “no duty” language in Rosenblatt should be limited to the situation where the plaintiff was a successor lessee as in Rosenblatt , but that in the present case “no ‘successor lessee’ is involved.” Consequently, the Court of Special Appeals could “see no reason why Section 158(c) would not be applicable to Intraeel.” The appellate court reversed the judgment “as to the trespass count” and affirmed with respect to all other counts.

The defendants filed in this Court a petition for a writ of certiorari, challenging the Court of Special Appeals’ reversal on the trespass count. ARE filed a conditional cross-petition for a writ of certiorari, contending that the Court of Special Appeals erred in affirming the dismissal of the negligence count and the dismissal of the claim for punitive damages. ARE also raised a procedural issue in the event that the case was remanded to the Circuit Court for further proceedings. This Court granted the defendants’ petition and denied ARE’s conditional cross-petition.

Hanna v. ARE, 396 Md. 9 , 912 A.2d 646 (2006). Consequently, as previously indicated, the only issue remaining in the case is whether there exists a cause of action for trespass under the circumstances here.

II

The petitioners’ argument is that Rosenblatt v. Exxon, supra, 335 Md. 58 , 642 A.2d 180 , is dispositive and mandates a reversal of the Court of Special Appeals’ decision on the trespass count. According to the petitioners, Rosenblatt held ⁶⁵⁷ that “a possessor of land under a lease (Intracel) cannot be ... [held liable for] trespass by a subsequent possessor (ARE) for having left materials behind; the ‘intrusion’ occurred during the lawful possession of the property by the tenant.” (Petitioners’ brief in this Court at 12). The respondent, agreeing with the Court of Special Appeals, argues that “Rosenblatt does not apply because it deals with a tenant’s liability to a subsequent tenant, not its landlord.” (Respondent’s brief in this Court at 11). The respondent also contends that Rosenblatt is distinguishable because it involved materials left in the property’s “subsurface” and “subsurface contamination,” whereas the present case involved “hazardous materials inside ARE’s building.” (Id. at 13-14).

We agree with the petitioners that Rosenblatt v.