Marwani v. Catering by Uptown

MURPHY, J. The case at bar presents us with the question of whether Ofir and Monique Marwani, Appellants, are entitled to the return of a “non-refundable” deposit they paid to Catering By Uptown, Appellee. After the District Court of Maryland, sitting in Prince George’s County, answered “no” to that question, and the Circuit Court for Prince George’s County affirmed the judgment of the District Court, 1 Appellants filed a petition for writ of certiorari in which they presented this Court with the following question: May a food service facility enforce a contract with consumers even though it is not licensed as required by Section 21-305(a) of Title 21 of the Health-General Article (“H-G”), Annotated Code of Maryland, and the contract does not contain the requisite disclosures under H-G § 21-312.1(b)? This Court granted the petition. 406 Md. 112 , 956 A.2d 201 (2008). For the reasons that follow, we shall affirm the judgment of the Circuit Court.

Background Appellants’ Amended Complaint, 2 in pertinent part, alleges: 10. [Appellee] is not properly licensed under Section 21-305 of the Health-General Article, and the regulations promulgated under Title 21, to operate a food establishment and food service facility. [Appellee] further violated Section 21-312.1(b) by failing to identify a food facility license number on its contract and various ³¹⁵ advertising materials. Nor could [Appellee] have displayed a food facility license number as required by law, as [Appellee] does not possess one. 25. [Appellee] omitted to tell [Appellants] that it was not properly licensed to provide the food, drinks, and services [Appellee] agreed to provide. 26. [Appellee’s] failure to disclose that it was not properly licensed constituted a failure to disclose a material fact which it had a duty to disclose. 27. If [Appellee] had disclosed to [Appellants] that it was not properly licensed, [Appellants] never would have even considered [Appellee] for providing the catering services for their wedding, and never would have provided [Appellee] with an $8,000 deposit. 28. [Appellee] intended to deceive [Appellants], and knew that [Appellants] would never have deposited $8,000 with [Appellee] or agreed to have [Appellee] cater their wedding. 29. [Appellants] acted in justifiable reliance upon the concealment. 30. [Appellants] suffered damages as a result of the concealment. 32. Advertising and promising to provide catering services without the proper licenses was an unfair or deceptive trade practice under § 13-301, subsections 1 through 3, of the Commercial Law Article, Annotated Code of Maryland (hereinafter, “Maryland Consumer Protection Act” or “CPA”) 33.

The licensing regulations for caterers are public health and safety regulations, and therefore [Appellee] is not entitled to retain the deposit provided by [Appellants]. 34. [Appellants] are entitled to restitutionary and consequential damages on account of [Appellee’s] violations of the CPA. ³¹⁶ The parties presented final arguments on May 14, 2007, and on June 12, 2007, the District Court filed an “OPINION ” that included the following findings and conclusions: For the reasons stated below[,] the Court finds that [Appellee] was unlicensed and failed to place a food service facility license number on its contract. Therefore, [Appellee] violated the CPA. However, because [Appellants] have failed to show actual “injury or loss” as a result of the violations as required by § 13-408 of the CPA [Appellants] cannot recover their $8,000 deposit. Read as a whole, § 21-305 states that a person must be licensed to operate a place or any operation where food or drink is prepared for sale or service to the public and that each place or operation that a person owns or operates must have its own separate license.

In the case sub judice, [Appellee’s] food service license allows Clark’s Celebration on The Bay—a place—to prepare food for sale or service to the public. [Appellee] Catering by Uptown, who contracted with [Appellants], is a catering operation. Based upon the facts in this case and upon a plain reading of the statute, the Court finds that [Appellee], Catering by Uptown must have its own separate license. Because [Appellee], Catering by Uptown is holding itself out to the public as a catering organization, it must be licensed. Failure to be licensed and failure to place a food service facility license number on its contract as required by H-G § 21-312.1(b) violates § 13-301(1)(2) and (3) of the CPA.

See, CitaraManis v. Hallowell, 328 Md. 142 , 613 A.2d 964 (1992), Golt v. Phillips, 308 Md. 1 , 517 A.2d 328 (1986). Nevertheless, under the facts of this case, [Appellants] have failed to show actual injury or loss as a result of [Appellee’s] violation of the statute to trigger recovery of their deposit under § 13-408 of the CPA. See, Citaramanis v. Hallowell, 328 Md. 142 , 613 A.2d 964 (1992). Therefore, [Appellants] cannot recover. ³¹⁷ [Appellants’] second theory of recovery is based upon the argument that they are entitled to obtain restitution of the deposit they paid because the deposit was paid pursuant to [an] illegal and unenforceable contract.

For the reasons stated below [Appellants’] argument must fail. In DeReggi Construction Company, et al. v. Mate et at., 130 Md.App. 648 , 747 A.2d 743 (2000), the Court citing Harry Barenter [Berenter ], Inc. v. Berman, 258 Md. 290 , 265 A.2d 759 (1970) states: “Maryland law is clear that if a licensing statute is regulatory in nature, for the protection of the public, rather than merely to raise revenue, an unlicensed person will not be given assistance of the courts in enforcing contracts that fall within the regulatory scheme.” Id. at 654, 747 A.2d 743 . The Court, after discussing the “broad” language in Bar-enter [Berenter ] and noting that its language “could potentially require a contract to be held unenforceable for any violation of a regulatory statute absent express direction from the legislature ‘that such contracts would be legal and enforceable,’” stated that the Court of Appeals “has not followed this strict application of Barenter [Berenter ].” Id. at 656 , 747 A.2d 743 . Citing Citaramanis [CitaraManis ], 328 Md. 142 [ 613 A.2d 964 ] (1992), the Court stated that the “unenforceability of a contract because of illegality is a function of the strength of the public policy involved together with the degree of the violation of that policy under the facts of the case.” (Emphasis added) DeReggi Construction Company, 130 Md.App. at 657 , 747 A.2d 743 .

In this case [Appellee] argues that Clark’s Celebration at The Bay where [Appellants’] wedding was to be held was licensed. The license was displayed at the location as required by the statute. These facts are not disputed. As a result of the location being licensed [Appellee], which is a family owned business which has been providing catering services in the Washington metropolitan area for decades, had the ability to provide the contracted for services to [Appellants] had [Appellants] appeared on September 25. ³¹⁸ Based upon the facts of this case the Court finds the degree of [Appellee’s] violation de minimus. [Appellee] substantially complied with the requirements of the licensing statute because the location where [Appellants’] wedding was being held was a licensed food service facility.

Therefore, the public would be afforded the same protection that strict compliance to the statute would offer. See, DeReggi at 658, 659 & 660 [ 747 A.2d 743 ]. Accordingly, the contract is not illegal and unenforceable, and [Appellants] may not recover its deposit. Moreover, [Appellee] may maintain its counterclaim against [Appellants] for breach of contract.

See DeReggi Construction Company, et al. v. Christian P. Mate, et al., 130 Md.App. 648 , 747 A.2d 743 (2000). [Appellee] allege[s] that [Appellants] breached the contract by failing to appear on the appointed event date. Therefore pursuant to the contract they are entitled to retain the non-refundable deposit of $8,000. [Appellee] further alleges in its counter claim that [Appellants’] breach caused damages in the amount of $3,000[.] Accordingly, for the reasons stated above, the Court rules against the [Appellants] and in favor of [Appellee] on Count 1 (Breach of Contract). The Court however denies [Appellee’s] counterclaim as [Appellee’s] $3,000 claim for damages ... comprised a portion of the $8,000 non-refundable deposit. (Emphasis in original; footnotes omitted).

Discussion The following standard of review is applicable in the case at bar: The Court of Appeals -will set aside the judgment of a court based on the factual findings of that court only when those findings are clearly erroneous. Maryland Rule 8-131(c)____The legal analysis of the District Court and of the Circuit Court, however, enjoy no deferential standard of ³¹⁹ appellate review. Helinski v. Harford Memorial Hosp., Inc., 376 Md. 606, 614-15 , 831 A.2d 40, 45 (2003). We review de novo their interpretations of the relevant statutes.

Friendly Fin. Corp. v. Orbit Chrysler Plymouth Dodge Truck, Inc., 378 Md. 337, 342-43 , 835 A.2d 1197, 1200 (2003). Before applying this standard of review, it may be helpful to identify issues that are not presented in the case at bar. We are not presented with the argument that Appellants are entitled to a return of their deposit on the ground that (1) after they “cancelled” the contract, Appellee actually “booked” an equally profitable event at the facility, 3 or (2) they notified Appellee of their decision to cancel the planned event at a point in time that provided Appellee with a reasonable opportunity to book an equally profitable event, but Appellee did not make a reasonable effort to do so.

Our review is limited to the issues of whether