La Belle Epoque, LLC v. Old Europe Antique Manor, LLC

GREENE, J. In this case we must determine whether the Circuit Court for Montgomery County properly entered summary judgment in favor of Petitioners, Double H Family, LLC, and its principal Judith Goozh (collectively, “Double H Family”) and La Belle Epoque, LLC, and its owners Mark Hoover and Marie Christine Hoover (collectively, “La Belle Epoque”). On the record before us, we shall hold that the Circuit Court erred in granting summary judgment on the basis that there was no genuine dispute of material fact as to whether Respondent, Old Europe Manor, LLC (“Old Europe”) was a tenant of Double H Family. Further, we shall hold that the Circuit Court erred in concluding, as a matter of law, that Old Europe’s status on Double H Family’s property was that of either a licensee or a trespasser. In February 2003, the Washington, D.C. metropolitan area was hit by a winter storm of unusually heavy rain and ¹⁹⁹ snowfall.

Following the storm, Old Europe sustained considerable water damage to its merchandise and the space it occupied, allegedly, when runoff water trapped by accumulated trash and debris infiltrated the premises at 4124-F Howard Avenue in Kensington, Maryland. On May 2, 2005, Old Europe and owner, Isabelle Sanchez-Tintenier, 1 filed a civil action seeking damages from Double H Family and La Belle Epoque. Old Europe sued Double H Family for negligence, breach of contract, and breach of the covenant of good faith and fair dealing. In the negligence count against La Belle Epoque, Old Europe maintained that La Belle Epoque negligently created the pile of debris and trash outside the shared building which subsequently led to the infiltration of runoff water into Old Europe’s space.

Upon motions by La Belle Epoque and Double H Family, the Circuit Court for Montgomery County granted summary judgment on all counts against Old Europe. Old Europe filed a timely appeal to the Court of Special Appeals and that court subsequently vacated the Circuit Court’s judgment. The intermediate appellate court agreed with the trial court that Old Europe could not assert rights against Double H Family under a lease that was orally transferred to Old Europe because the oral assignment did not satisfy the Statute of Frauds. 2 The Court of Special Appeals concluded, however, “that there [we]re material disputes as to whether Old Europe became Double H Family’s periodic tenant by operation of law and as to whether Double H Family and La Belle Epoque negligently caused damage to its neighbor.” We granted both Double H Family’s and La Belle Epoque’s petitions for writ of certiorari. 3 ²⁰⁰ BACKGROUND The relevant facts taken in a light most favorable to Old Europe are as follows. Double H Family is the owner of a commercial two-story building on Howard Avenue in Kensington, Maryland.

The building has two leased spaces: 4088-A Howard Avenue (the upstairs space) and 4124-F Howard Avenue (the downstairs space). The building sits against the side of a hill so that the downstairs space opens onto Howard Avenue and the upstairs space can only be accessed by “an [elevated] alley at the base of the building that runs parallel to Howard Avenue.” On July 23, 2001, Double H Family executed a five-year lease (“the Lease”) with Francois Desbois for the premises known as 4124-F Howard Avenue for the operation of his antique business, Vieille France Antiques. Both Desbois and Sanchez-Tintenier, who was the vice president and secretary of Vieille France Antiques at that time, were present at the signing of the Lease. Sanchez-Tintenier played a large role in negotiating the Lease because Desbois does not speak English.

At some time either prior to or after the execution of the Lease with Desbois, Double H Family leased 4088-A Howard Avenue to La Belle Epoque for its antique storage business. ²⁰¹ The Lease between Double H Family and Desbois commenced on September 1, 2001, for a five year term ending on August 31, 2006. In relevant part to this appeal, the Lease reads: 2.5 Repairs and Improvements. Landlord shall deliver the Premises with all electrical, mechanical and plumbing systems and equipment in good working condition. And will replace the sink and toilet.

Landlord shall be responsible for maintenance and repair of the roof, exterior walls, foundation, downspouts, gutters and structural elements of the building of which the Premises are a part, unless such repair or maintenance is necessitated by any act or neglect of Tenant or anyone acting by, through or under Tenant. Except as provided in the preceding paragraph, Tenant shall promptly repair, at Tenant’s expense, any damage to the Premises and to any equipment, systems, and facilities therein, and will make all repairs and replacements thereto, whether such repairs and replacements be necessitated by ordinary wear and tear or other event of any kind, except a Casualty as provided in Section 3.2 hereof. Without limiting the generality of the foregoing, Tenant’s maintenance, repair and replacement responsibilities shall include the interior of the Premises, all doors, windows and loading docks, if any, and all electrical, mechanical, plumbing, heating, ventilating, air conditioning, security, fire prevention, and sprinkler systems and equipment, if any, presently or hereafter installed in the Premises. Tenant has had the opportunity to inspect the Premises and is leasing the Premises “AS IS”, without any representation, warranty, or covenant by the Landlord or Agent respecting the suitability of the Premises for Tenant’s use thereof of the condition of the Premises or any element thereof.

Tenant shall pay all expenses of operating and maintaining the Premises, including, but not limited to, expenses for ²⁰² refusal removal, janitorial services, carpet cleaning, and painting---- 2.7 Notices. All notices hereunder shall be made in writing and shall be hand delivered or mailed by Registered or Certified U.S. Mail, Return Receipt Requested, First Class, postage prepaid, to the parties hereto at their respective addresses set forth below, or at such other address of which either party shall notify the other in accordance with the provisions hereof. Any notice required to be given hereunder on or before a specified date shall be deemed to have been duly and timely given if hand delivered before 5:00 P.M. on such date, or when given by mail as aforesaid, if postmarked before Midnight on such date. Notices given by mail shall be addressed: IF TO LANDLORD: Double H Family LLC c/o David Dant Michael Management, Inc. 4390 Parliament Place, Suite A Lanham, Maryland 20706 IF TO TENANT: Desbois Francis 4124-F Howard Avenue Kensington, Maryland 20875 3.1 Assignment and Subletting.

Tenant will not assign this Lease, in whole or in part, or sublet all or any part of the Premises, without first obtaining the Landlord’s written consent. This prohibition includes any subletting or assignment which would otherwise occur by operation of law, merger, consolidation, reorganization, transfer, or other change of Tenant’s corporate or proprietary structure, or an assignment or subletting to or by a receiver or trustee in any bankruptcy, insolvency, or other proceedings. Consent by Landlord to any assignment or subletting shall not ²⁰³ constitute a waiver of the requirement for Landlord’s consent to any subsequent assignment or subletting. The acceptance by Landlord of the payment of rent following any assignment of subletting shall not be deemed to be a consent by Landlord to such assignment or subletting.

Sanchez-Tintenier was principally responsible for the operation of Desbois’s business. She was the sole employee of the store from the outset of Desbois’s tenancy. She managed the store, corresponded with Double H Family’s leasing agent on matters affecting the business, and prepared checks drawn on Desbois’s Riggs banking account for Desbois’s signature (Sanehez-Tintenier never signed checks on behalf of Desbois). Sanchez-Tintenier was single-handedly responsible for the store’s operation because Desbois did not live in the United States.

Instead, he lived in France and visited the United States every two or three months for 10 to 14 days at a time. Sanchez-Tintenier was not, however, responsible for the store’s inventory and pricing; that task was left solely to Desbois. About a year into Desbois’s five-year Lease with Double H Family, Desbois removed his merchandise from the premises and discontinued his U.S. business. Sanchez-Tintenier took over the premises in July or August 2002, paying Desbois approximately $10,000 to do so.

Sanchez-Tintenier recalled that she paid Desbois “$7,500 for the rent and then $2,500 in a security deposit.” Desbois sold Sanchez-Tintenier the business name — Vieille France Antiques — for $1.00. SanchezTintenier, however, initially called her business “Vieille France and German Antiques,” but soon after September 11, 2001, she changed the name to “Old Europe Antique Manor.” Despite the name change, Sanchez-Tintenier did not replace the sign bearing the name “Vieille France Antiques” until September 2003, after the flood in February. Sanchez-Tintenier believed “that both Michael Management 4 and Double H Family knew that [she] was the tenant of ²⁰⁴ 4124-F Howard Avenue.” Sanchez-Tintenier contends that she told David Dant of Michael Management “that I am going to take care of the store and to take over the store and that [Desbois] don’t (sic) want anymore.” She further contends that Dant told her “[t]hat it was no problem” and “that was fine to take it over.” Sanchez-Tintenier understood that she would be subject to the Lease that was signed by Desbois. According to Sanchez-Tintenier, she informed Dant of the transfer and was never told by Michael Management that she needed to contact Double H Family directly.

After taking over the space from Desbois in August 2002, Sanchez-Tintenier made monthly rental payments to Michael Management for the next 17 months. She usually wrote the checks on her Riggs bank account, in the name of “Old Europe Antique Manor LLC[;]” although, between five and seven times she paid the rent by certified check or money order. 5 Although Michael Management accepted rental payments from Sanchez-Tintenier, it continued to address the rental bills to Desbois. Storm Damage In its complaint, Old Europe contends that in the weeks prior to the February 2003 storm, La Belle Epoque “negligently and recklessly created a huge pile of debris outside” the building that Old Europe and La Belle Epoque occupied. On behalf of Old Europe, Sanchez-Tintenier also contends that she issued complaints, about the accumulated debris, to Michael Management, Double H Family’s leasing agent; however, Double H Family and La Belle Epoque “failed to cause ²⁰⁵ the debris to be removed” prior to the flood.

It is alleged that when Kensington was hit with “substantial snowfall and rain,” melted snow and surface water accumulated among the debris, entered the building through the second floor and then “poured into the antiques store.” According to Old Europe, “[t]he area of the property that caused the damage was in the exterior part of the property, where tenant La Belle Epoque had placed garbage and debris” outside its upstairs unit. Sanchez-Tintenier described the water infiltration as a “flood,” where the “water was going around the walls like Niagara Falls, and the ceiling too.” Water accumulated up to about 20 to 25 centimeters in the store. According to Sanchez-Tintenier, she suffered more than $300,000.00 in damages to her inventory and was “forced ... to close” as a result of the flood. In addition, Sanchez-Tintenier contends that she suffered cardiac problems relating to the stress of dealing with the aftermath of the flood.

Post-Storm Dealings According to Sanchez-Tintenier, after the storm damage in February 2003, Double H Family’s agent “came on several occasions to inspect the damage from the flood, and met with [Old Europe’s] former attorney, Bill Scanlin, on several occasions.” In April 2003, the agent notified Sanchez-Tintenier that she “could reenter the premises.” In May 2003, the agent entered the premises to take photos of a ceiling that had collapsed. In June, July, and September of 2003, as well as January and February of 2004, the agent inspected the premises and, according to Sanchez-Tintenier, “[o]n each of the occasions he promised that he would take [care] of the damage and make needed repairs.” In addition, Sanchez-Tintenier “met Lou Kressin of Double H Family” at least twice after the flood. In May 2003, Kressin came to the premises and told Sanchez-Tintenier “that he was [her] landlord and that he was there to meet an insurance agent to file a claim [regarding] the flood.” Sanchez-Tintenier met Kressin again in March 2004 when the Montgomery County Environmental Protection Agency in ²⁰⁶ spected the premises after a report of mold infestation. On April 1, 2003, Sanchez-Tintenier and Desbois presented to Double H Family a signed amendment to the original Lease transferring the Lease from Desbois to Sanchez-Tintenier.

Double H Family, however, would not consent to the assignment at that time. 6 Legal Proceedings On May 2, 2005, Old Europe filed, in the Circuit Court for Montgomery County, a complaint against Double H Family and La Belle Epoque. Old Europe alleged that Double H Family was liable for negligence, breach of contract, and breach of the covenant of good faith and fair dealing. The complaint also alleged that La Belle Epoque was guilty of negligence. Double H Family moved for summary judgment, arguing that Old Europe was not a tenant under the terms of the written Lease, because the Lease was executed between Desbois and Double H Family and did not allow for assignments without the written consent of Double H Family.

In addition, Double H Family argued that Old Europe had not alleged or offered evidence to establish that Double H Family had breached its duty to refrain from willful injury or entrapment. La Belle Epoque moved to dismiss the complaint, or, in the alternative, moved for summary judgment, arguing that Old Europe did not allege or offer evidence showing that La Belle Epoque breached its duty under Maryland law; that is, to refrain from willful injury or entrapment of a trespasser. On May 16, 2006, the Circuit Court granted summary judgment in favor of Double H Family and La Belle Epoque on all counts. 7 The court explained: I really don’t see that there’s any facts to support that Ms. Tintenier is a tenant---- She always operated as an agent for the actual tenant, Mr. [Desbois]____I think there ²⁰⁷ is a valid statute of frauds issue. I certainly think that if she’s not the tenant, which the [cjourt finds that she wasn’t, she would either be a trespasser or a bare licensee.

And certainly, it’s true then the duty would be not anything other than just willful injury. And there is nothing like that alleged here. On May 26, 2006, Sanchez-Tintenier filed a notice of appeal to the Court of Special Appeals. On August 30, 2007, the intermediate appellate court issued an unreported opinion vacating the judgment of the Circuit Court.

The Court of Special Appeals held that the Circuit Court correctly concluded that “Old Europe cannot assert the rights of an assignee under the Lease against Double H Family.” Ultimately the court held that the Circuit Court “erred in concluding as a matter of law that there was no tenancy relationship.” The intermediate appellate court explained: An occupant who is present with the landlord’s knowledge and pays rent may have a common law tenancy giving rise to a suit that is not barred by the statute of frauds. On this record, Old Europe could establish a month-to-month tenancy under common law, because rent payments were made one month in advance, after Tintenier notified Dant that she was taking over for Desbois, and Dant agreed to that arrangement on behalf of Double H Family. Contrary to Double H Family’s contention, there is ample evidence from which a reasonable person might conclude that Double H Family was aware of Old Europe’s tenancy, accepted it, and therefore “granted possession” of the premises to Old Europe. Furthermore, the court held that the Circuit Court erred in concluding that Double H Family could not be liable under established negligence principles governing liability to occupiers of land.

The intermediate appellate court explained: As owner of the property, Double H Family occupied and controlled the common area where La Belle Epoque allegedly placed water-collecting and -diverting junk. According ²⁰⁸ to Kressin, he and his agents were aware before the flood that the common area adjacent to La Belle Epoque’s premises “resembled a junk yard,” and he instructed Dant to have it cleaned up. In the aftermath of the storm, water that was allegedly collected and redirected as a result of the debris infiltrated both La Belle Epoque’s and Old Europe’s premises. In these circumstances, a reasonable person could conclude that Double H Family breached its duty of care to Old Europe.

The Court of Special Appeals further held that the Circuit Court erred in granting summary judgment in favor of La Belle Epoque. The intermediate appellate court stated: “[T]here is evidence from which a fact finder might conclude that La Belle Epoque’s activities on or around its premises (i.e., storing junk) proximately caused the flood that damaged Old Europe’s property.” DISCUSSION Standard of Review In Anderson v. The Gables, 404 Md. 560 , 948 A.2d 11 (2008), we summarized the standards applicable to our review of the grant of a motion for summary judgment: In considering a trial court’s grant of a motion for summary judgment, this Court reviews the record in the light most favorable to the non-moving party. Bednar v. Provident Bank of Maryland, Inc., 402 Md. 532, 542 , 937 A.2d 210, 215 (2007); Rhoads v. Sommer, 401 Md. 131, 148 , 931 A.2d 508, 518 (2007) (“We review the record in the light most favorable to the non-moving party and construe any reasonable inferences that may be drawn from the facts against the moving party”); Harford County v. Saks Fifth Ave. Distribution Co., 399 Md. 73, 82 , 923 A.2d 1, 6 (2007) (In reviewing a trial court’s decision on a motion for summary judgment, “we seek to determine whether any material facts are in dispute and, if they are, we resolve them in favor of the non-moving party”); Serio v. Baltimore County, 384 Md. 373, 388-89 , 863 A.2d 952, 961 (2004); Lovelace ²⁰⁹ v. Anderson, 366 Md. 690, 695 , 785 A.2d 726, 728 (2001) (In reviewing a grant of the defendants’ motions for summary judgment, “we must review the facts, and all inferences therefrom, in the light most favorable to the plaintiffs”).

If no material facts are placed in genuine dispute, this Court must determine whether the Circuit Court correctly entered summary judgment as a matter of law. See Maryland Rule 2—501(f); Bednar, 402 Md. at 532 , 937 A.2d at 216 ; Saks, 399 Md. at 82 , 923 A.2d at 6 ; Prop. and Cas. Ins. Guar.

Corp. v. Yanni, 397 Md. 474, 480 , 919 A.2d 1, 5 (2007); Standard Fire Ins. Co. v. Berrett, 395 Md. 439, 451 , 910 A.2d 1072, 1079 (2006); Ross v. State Bd. of Elections, 387 Md. 649, 659 , 876 A.2d 692, 698 (2005). Anderson, 404 Md. at 571 , 948 A.2d at 18 . In addition, “when reviewing the grant of a motion for summary judgment, ordinarily, [our review] is limited to the grounds relied upon by the [trial] court.” Deering Woods v. Spoon, 377 Md. 250, 263 , 833 A.2d 17, 24 (2003).

Essentially, in reviewing a trial court’s grant of summary judgment, we examine “the same information from the record and determine the same issues of law as the trial court.” Miller v. Bay City, 393 Md. 620, 632 , 903 A.2d 938, 945 (2006). We only look to the evidence submitted in opposition and support of the motion for summary judgment in reviewing the trial court’s decision to grant the motion. Miller, 393 Md. 620 , 903 A.2d 938 ; Livesay v. Baltimore, 384 Md. 1, 10 , 862 A.2d 33, 38 (2004). Breach of Contract and the Covenant of Good Faith and Fair-Dealing Old Europe contends that Double H Family breached the original Lease between Double H Family and Desbois (purportedly transferred to Old Europe) and violated the covenant of good faith and fair-dealing by failing to provide a rental space fit for ordinary use.

Old Europe posits that it is a valid assignee of the Lease and that Double H Family waived its ability to contest the assignment to Old Europe when it accepted Old Europe’s rent with knowledge of Old Europe’s presence on the premises. To establish that Double H Family ²¹⁰ knew of and consented to a landlord-tenant relationship, Old Europe points to the change in the signage on the building, 8 its payment of seventeen consecutive months of rent, 9 and the timely response by Double H Family’s agent in making repairs to the shop during the alleged assignment period. Old Europe also contends that the Court of Special Appeals was correct in its conclusion that it was a commercial tenant at common law. Further, Old Europe argues that it was a periodic tenant of Double H Family based upon its entry onto the premises and subsequent payment of rent.

In that regard, Old Europe relies primarily on Annapolis Fire v. Rich, 239 Md. 573 , 212 A.2d 249 (1965). Double H Family contends, however, that the Court of Special Appeals’s holding erroneously creates a “commercial tenancy” at common law. Specifically, it argues that “the payment of rent by a non-tenant is insufficient to create a new ‘commercial tenancy 1 in favor of the entity making the payment.” Double H Family posits that Old Europe was never a tenant because Double H Family, as landlord, never granted Old Europe the right of possession. In this regard, Double H Family argues that the attempted assignment of the leasehold from Desbois to Old Europe was invalid because Desbois provided no written notice of the