Norino Properties v. Balsamo

Norino Properties, LLC, et al. v. Joseph J. Balsamo, No. 1343, September Term, 2020, Opinion by Graeff, J. MARYLAND CONSTITUTIONAL LAW — IN BANC REVIEW — SCOPE OF REVIEW Pursuant to Article IV, § 22 of the Maryland Constitution, in banc review by a circuit court panel is permitted “[w]here any trial is conducted by less than three Circuit Judges.” The plain language of Article IV, § 22 provides that in banc review is available only after a trial. A “trial” for purposes of Article IV, § 22 is “‘that step in an action by which issues or questions of fact are decided.’” Berg v. Berg, 228 Md. App. 266, 281 (2016) (quoting Miller v. Tobin, 18 F. 609, 616 (C.C.D. Or. 1883), overruled on other grounds by Alley v. Nott, 111 U.S. 472 (1884)). The term “trial” in the context of in banc review should be read broadly to include an action that determines issues (of law or fact) or questions of fact, as long as the action results in a final judgment. The ruling of the circuit court granting a motion to dismiss with prejudice, thereby resolving the action between the parties, was a “trial” pursuant to Article IV, § 22.

Accordingly, the in banc panel had jurisdiction to review the decision of the circuit court dismissing Mr. Balsamo’s complaint. The in banc panel properly found that the circuit court abused its discretion in denying Mr. Balsamo leave to amend the complaint. Circuit Court for Baltimore County Case No. C-03-CV-19-002722 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 1343 September Term, 2020 ______________________________________ NORINO PROPERTIES, LLC, ET AL. v. JOSEPH J. BALSAMO ______________________________________ Graeff, Reed, Ripken, JJ. ______________________________________ Opinion by Graeff, J. ______________________________________ Filed: December 15, 2021 Pursuant to Maryland Uniform Electronic Legal Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. 2022-06-15 15:06-04:00 Suzanne C. Johnson, Clerk This appeal involves an ongoing business dispute between appellants, John Zorzit and Norino Properties, LLC (“Norino Properties”),1 and appellee, Joseph Balsamo. Mr. Zorzit and Mr. Balsamo are co-owners of Balsamo and Norino Properties, LLC (“BNP”), a real estate investment company created in 1998.

In 2012, Mr. Balsamo filed suit in the Circuit Court for Baltimore County seeking, among other things, to dissolve BNP. The court did not dissolve BNP, but it granted some relief to Mr. Balsamo. Mr. Balsamo appealed, and we affirmed the circuit court’s judgment. See Balsamo v. Zorzit, No. 761, Sept. Term, 2017 (filed July 9, 2018), cert. denied, 461 Md. 487 (2018) (“Balsamo I”).

In 2019, Mr. Balsamo, individually and derivatively on behalf of BNP, filed in the Circuit Court for Baltimore County a Complaint, and a First Amended Complaint, against appellants seeking, among other things, a judicial dissolution of BNP. Appellants filed a Joint Motion to Dismiss, arguing that the claims were barred by the doctrine of res judicata, and the Amended Complaint failed to state a claim upon which relief could be granted. The court granted the motion to dismiss. It subsequently denied Mr. Balsamo’s Motion to Alter or Amend Judgment and his accompanying request for leave to amend the complaint.

Mr. Balsamo requested in banc review, and the circuit administrative judge designated three judges to review the court’s decision as a panel in banc. The in banc panel reversed the court’s denial of the request for leave to amend and granted Mr. Balsamo 30 days to file another complaint. 1 Mr. Zorzit is the majority owner of Norino Properties, LLC. On appeal, appellants present the following questions for this Court’s review, which we have rephrased slightly, as follows: 1. Did the in banc panel lack jurisdiction to consider the appeal pursuant to Article IV, § 22 of the Maryland Constitution because the circuit court’s dismissal of the Amended Complaint for failure to state a claim was not a “trial”? 2.

Did the in banc panel err in concluding that it was an abuse of discretion for the circuit court to refuse to grant Mr. Balsamo leave to amend his complaint? For the reasons set forth below, we shall affirm the judgment of the in banc panel. FACTUAL AND PROCEDURAL BACKGROUND2 I. Events Prior to the Litigation Subject to Appeal BNP, a limited liability company, was formed on November 18, 1998. Mr. Balsamo and Mr. Zorzit each have a 50% membership interest in BNP.

Although they did not have a “comprehensive written operating agreement” for BNP, they established BNP “for the purpose of buying, selling, leasing, improving and otherwise investing in real estate to create and preserve assets to fund each member’s retirement.” Mr. Zorzit is BNP’s managing member. Norino Properties is a limited liability company that was formed on September 15, 1997. Mr. Zorzit is the majority owner and “manager or managing member” of Norino 2 Because the present case was resolved on a motion to dismiss, the facts are taken from the Amended Complaint and undisputed documents attached to the Complaint. See Sprenger v. Pub.

Serv. Comm’n of Md., 400 Md. 1, 21 (2007). 2 Properties. James Parks, a certified public accountant, is Norino Properties’ minority member. Mr. Balsamo does not have a membership interest in Norino Properties.

On November 18, 1998, Norino Properties and BNP entered into an Agreement for Management Services (“Management Agreement”), which provided that Norino Properties would “provide construction, maintenance and supporting services to BNP in exchange for largely unspecified compensation paid by BNP to Norino Properties.” The Management Agreement “does not include any specific rates for compensation and is of indefinite duration.” On November 1, 2010, Mr. Balsamo and Mr. Zorzit affirmed the Management Agreement through an Affirmation.3 In 2012, Mr. Balsamo, individually and derivatively on behalf of BNP, filed suit against appellants, asserting multiple claims, including negligence and breach of fiduciary duties, breach of contract, unjust enrichment, and indemnification. Mr. Balsamo alleged that Mr. Zorzit wasted his and BNP’s assets, stating that Mr. Zorzit “caused BNP to loan him or companies he controlled over $900,000 to purchase property in Canada,” which Mr. Zorzit subsequently mismanaged, “without a promissory note in place to evidence the loan or any writing memorializing his obligations to BNP.” Mr. Balsamo alleged that Mr. Zorzit harmed BNP “by using its funds to satisfy a tax lien imposed upon Nick’s Amusement, another company of which Mr. Zorzit is the sole owner.” 3 Copies of the Management Agreement and the Affirmation are attached to the Amended Complaint, collectively, as Exhibit 2, and incorporated into the complaint by reference. 3 Mr. Balsamo also alleged that, although BNP owned commercial real property in Baltimore County (the “Baltimore County Property”), Mr. Zorzit “wrongfully held that property in the name of Norino Properties.” Chick-fil-A leased the Baltimore County Property, which was valued at $3.5 million. Mr. Balsamo further alleged that Mr. Zorzit assisted Mr. Parks in, among other things, falsely claiming a membership interest in BNP. Mr. Balsamo sought damages, a judicial dissolution and winding up of BNP, and a declaratory judgment “that the Baltimore County Property was owned by and for the benefit of BNP; that Mr. Parks had no interest in BNP; and that BNP’s agreements with Mr. Zorzit’s companies,” including the Management Agreement with Norino Properties, “were not binding or enforceable upon BNP.” In June 2014, a fifteen-day bench trial ensued.

On March 4, 2015, the court issued an Order, with Findings of Fact and Conclusions of Law.4 The court did not dissolve BNP, noting that the parties had agreed in the beginning that Mr. Zorzit was the sole authorized representative to conduct business for BNP. Although there had been disputes between the parties in recent years, the court found that it was “reasonably practicable to carry on the business in conformity with the articles of organization.”5 The court did, however, grant 4 A copy of the court’s Findings of Fact and Conclusions of Law from Balsamo I is attached to the Amended Complaint as Exhibit 3, and incorporated into the Complaint by reference. 5 Md. Code Ann., Corps. & Ass’ns Article § 4A-903 (2014 Repl. Vol.), provides that, on application of a member, a circuit court “may decree the dissolution of the limited liability company whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or the operating agreement.” 4 some relief to Mr. Balsamo, including ordering an independent accounting of BNP member capital accounts.

II

Amended Complaint at Issue in the Present Case In August 2019, Mr. Balsamo filed a new Complaint, and in September 2019, he filed an Amended Complaint, against Norino Properties and Mr. Zorzit. In Count One, Mr. Balsamo, in his individual capacity, requested dissolution of BNP because it was “not reasonably practicable to carry on the business in conformity with the articles of organization or the operating agreement.” In Counts Two and Three, he alleged breach of contract and constructive fraud. In Counts Four through Seven, Mr. Balsamo alleged, “for the use and benefit of BNP,” negligence and breach of fiduciary duties, unjust enrichment, constructive fraud, and corporate waste. In Count Eight, for the use and benefit of BNP, he sought a declaratory judgment that the Management Agreement was terminable at any time.

The Amended Complaint alleged that, since October, 2017, Mr. Zorzit had operated BNP “for the primary benefit of himself” and “his other companies,” including Norino Properties. It alleged that Mr. Zorzit had “breached his fiduciary duties and other obligations, and since October 1, 2017, had engaged in, and caused BNP to engage in, a course of fraudulent, deceptive, oppressive, illegal and inequitable conduct,” including: (1) illegitimate loans; (2) obfuscation of business records; (3) self-dealing; and (4) fraudulent or otherwise unlawful acts. 5 Regarding illegitimate loans, Mr. Balsamo alleged that Mr. Zorzit “frequently caused BNP to make loans unrelated to BNP’s business purpose,” without Mr. Balsamo’s consent, and thereby treated BNP as his personal lender. Four loans, in particular, had “provided BNP no legitimate business advantage and apparently were instead intended to benefit Mr. Zorzit and his other businesses.” First, the Amended Complaint alleged that BNP, through Mr. Zorzit, made an “undocumented, unsecured, interest-free loan” to an administrative law judge (“ALJ”) for “tens of thousands of dollars” to “curry favor” with the ALJ. The loan served no business purposes of BNP, and ultimately, it caused a loss to BNP because the ALJ did not repay the loan after it was discharged in bankruptcy.

Second, BNP, through Mr. Zorzit, made a loan of $61,567.77 to an unspecified borrower, who secured the loan with a mortgage on real property located in Catonsville, Maryland. The loan documents and mortgage were in BNP’s name. After the borrower refinanced the secured loan and repaid the principal amount, plus interest, in the total amount of $77,309.29, “Mr. Zorzit contended that the loan repayment actually belonged to Norino Properties, and he transferred the repayment funds, including accrued interest, from BNP to Norino Properties.” Third, BNP, through Mr. Zorzit, made a loan to Amer. Inc. (“Amer”), which “operates a bar on real estate owned by one of Mr. Zorzit’s other companies.” After Mr. Zorzit disbursed the loan funds from BNP, Amer “used the funds to pay Mr. Zorzit’s other businesses.” Amer has not repaid the loan from BNP, and “Mr. Zorzit has not collected any late fees on BNP’s behalf.” 6 Fourth, BNP, through Mr. Zorzit, made a “substantial loan” to a Canadian corporation that Mr. Zorzit owned pursuant to a Non-Negotiable Promissory Note that provided “for no interest or periodic payments but only a single balloon payment upon maturity in 2024.” Mr. Zorzit’s corporation used the loan proceeds to purchase real property in Ontario, Canada in its name, but BNP paid the property taxes.

Consequently, rather than BNP’s “loan balance being paid down over time, it currently continues to increase as Mr. Zorzit causes BNP to make additional disbursements for taxes and other expenses.” Regarding obfuscation of business records, the Amended Complaint alleged that, since October 1, 2017, Mr. Zorzit had precluded Mr. Balsamo “from having any meaningful access to the books, records, and finances of BNP.” Despite Mr. Balsamo’s “repeated demands” after October 2017, Mr. Zorzit refused Mr. Balsamo access to BNP’s bank records. In July 2019, Mr. Balsamo requested that Mr. Zorzit produce documents in electronic format related to BNP’s properties. Mr. Zorzit responded that Mr. Balsamo could continue to obtain hardcopies of the documents from him. Mr. Zorzit also refused Mr. Balsamo access to documents concerning Chick-fil-A’s lease of the Baltimore County Property.

In accordance with the ground lease between Chick-fil-A and BNP, Chick-fil-A sublet parts of the Baltimore County Property to third- parties. Mr. Balsamo had “requested to review the documents related to those subleases, but Mr. Zorzit has refused.” The Amended Complaint alleged that Norino Properties was receiving the rent paid by Chick-fil-A, despite the ruling in Balsamo I that BNP was the 7 owner. Because Mr. Balsamo did not have access to the subleases, he could not determine whether the monies owed to BNP were being paid. Mr. Zorzit also refused Mr. Balsamo access to documents regarding BNP’s legal expenses and attorneys’ fees.

BNP, through Mr. Zorzit, paid over $2.1 million in expenses and fees in connection with Balsamo I that BNP should not have paid because Mr. Balsamo, not Mr. Zorzit, was granted indemnification in Balsamo I. Regarding self-dealing, the Amended Complaint alleged that “Mr. Zorzit frequently operates BNP for the sole benefit of his other companies,” including Norino Properties. Since 2017, Mr. Parks had performed accounting services for Mr. Zorzit and his companies, but only BNP paid Mr. Parks’ compensation. Additionally, BNP, through Mr. Zorzit, contracted with Mr. Zorzit’s companies whenever possible. Mr. Zorzit’s Maryland- based companies provided construction and maintenance services to BNP’s non-Maryland properties, even though “it likely would be cheaper and more efficient to employ local companies for such work.” For example, BNP, through Mr. Zorzit, used one of Mr. Zorzit’s companies, Norino Construction, for construction services at one of BNP’s properties in North Port, Florida, “even though Norino Construction is based in Maryland, not Florida.” The Amended Complaint alleged that BNP, through Mr. Zorzit, also obtained property management services from Mr. Zorzit’s other business “at above market rates.” Although BNP paid Mr. Zorzit, his companies, and Mr. Parks, collectively, $364,000 per year for management and bookkeeping services, Mr. Balsamo received a solicited bid from WPM Management Co. (“WPM”), a professional property management company, to 8 provide the same management and bookkeeping services for $95,000 per year.

WPM also would provide monthly documentation related to BNP’s properties. Mr. Zorzit also failed to inform Chick-fil-A that, in accordance with the circuit court’s judgment in Balsamo I, the lease for the Baltimore County Property was assigned from Norino Properties to BNP. Chick-fil-A was unaware of the assignment until Mr. Balsamo contacted the restaurant in July 2019. As of September 30, 2019, Chick-fil-A had tendered all rent payments due under the ground lease to Norino Properties.

Mr. Zorzit had not instructed Chick-fil-A to make future rent payments to BNP. Such omissions placed BNP at “unnecessary risk” and “personally enriched” Mr. Zorzit. Regarding fraudulent or otherwise unlawful acts, Mr. Zorzit opened bank accounts in the name of BNP with Wells Fargo, SunTrust, M&T Bank, and Bank of America “by fraudulently holding himself out as the sole owner of BNP.” He did so to freeze Mr. Balsamo out of BNP and to preclude Mr. Balsamo from accessing BNP’s business records. Mr. Balsamo “made demand of Mr. Zorzit on most, if not all, of the offending conduct but nothing has happened as a result.” Thus, Mr. Balsamo alleged that further demand was futile.

Mr. Balsamo sought, among other things, damages and dissolution of BNP.

III

Joint Motion to Dismiss and Opposition On October 11, 2019, appellants filed a Joint Motion to Dismiss the Amended Complaint with prejudice. They argued, among other things, that Mr. Balsamo’s claims 9 against Mr. Zorzit were barred by res judicata, and all counts of the Amended Complaint failed to state claims for relief. With respect to res judicata, appellants argued that the Amended Complaint involved the same claims that were at issue in Balsamo I, the same parties were involved, and the claims were the subject of a final judgment rendered on the merits. Accordingly, appellants argued that Mr. Balsamo was barred from relitigating his claims.

Regarding the legal sufficiency of the Amended Complaint, appellants argued that, in Count One, Mr. Balsamo failed to state a claim for a judicial dissolution of BNP, asserting that BNP continued to operate in accordance with its Articles of Organization, and therefore, the statutory remedy of judicial dissolution was unavailable to Mr. Balsamo as a matter of law. With respect to Count Two, appellants argued that Mr. Balsamo failed to state a claim for breach of contract because, under the November 1998 agreement, Mr. Zorzit had broad authority to act as BNP’s managing member, and Mr. Balsamo was unable to identify any provision of the agreement or the Articles of Organization that Mr. Zorzit allegedly breached. They argued that Counts Three and Six failed to state claims for constructive fraud because the allegations contained in those counts lacked the requisite degree of factual particularity. Appellants further argued that Mr. Balsamo was barred as a matter of law from pursuing relief for unjust enrichment, as alleged in Count Five, because such a claim was inapplicable where there was a contract, and Mr. Balsamo failed to allege how, and to what extent, Mr. Zorzit was unjustly enriched.

With respect to Count Seven, which alleged corporate waste by Mr. Zorzit based on BNP’s advancement of attorneys’ fees to defend the litigation against him, appellants 10 argued that the count failed to state a claim because, by maintaining the present action, Mr. Balsamo was the source of the alleged waste at issue. Finally, appellants argued that Mr. Balsamo was not entitled to the declaratory relief sought in Count Eight because a justiciable controversy between BNP and Norino Properties did not exist. Accordingly, appellants asserted that the court should dismiss the Amended Complaint with prejudice. On November 5, 2019, Mr. Balsamo filed an Opposition, arguing that the claims were not barred by res judicata.

He asserted that the Amended Complaint was “based on new groups of facts” that occurred after October 2017, and this case did not “sufficiently overlap” with the operative facts of Balsamo I. Mr. Balsamo also argued that the Amended Complaint sufficiently alleged claims for relief. With respect to Count One, he argued that it sufficiently alleged a judicial- dissolution claim because it was not reasonably practicable for BNP to operate as intended as a result of Mr. Zorzit’s “pervasive fraudulent and oppressive conduct.” He argued that Count Two sufficiently alleged a breach-of-contract claim because, “through his diversion of assets, self-dealing, obfuscation of records, fraudulent identity of himself as the sole owner, and myriad other examples of oppressive and illegal conduct that acts to the detriment of BNP, Mr. Zorzit breached his obligations as stated under the Articles of Organization.” Mr. Balsamo also argued that he sufficiently alleged claims for constructive fraud in Counts Three and Six. Initially, he argued that the heightened pleading standard for fraud claims under federal law “exceed[s] that which is required under the Maryland 11 Rules.” In any event, he asserted that he sufficiently alleged claims for constructive fraud because the Amended Complaint was “replete with allegations of concealment and deceit.” With respect to the claim for unjust enrichment in Count Five, Mr. Balsamo asserted that this claim was legally sufficient because he had “alleged that Mr. Zorzit, outside the scope of authority granted to him as an employee of Norino Properties and under the Management Agreement, has repeatedly conferred benefits upon himself to the detriment of BNP.” With respect to his claim for corporate waste, Mr. Balsamo argued that there was no document providing Mr. Zorzit with authority to advance the payment of legal fees and costs, through BNP, to finance appellants’ defense in the present case. Finally, Mr. Balsamo argued that he sufficiently alleged a declaratory judgment claim, asserting that one of the primary issues in the case, whether the Management Agreement was terminable for lack of a durational limit, was “precisely the type of question to be answered by a declaratory judgment claim.” IV.

Motion Hearing On January 9, 2020, the circuit court held a hearing on the Joint Motion to Dismiss.6 At the hearing, appellants reiterated their argument that the Amended Complaint “should be dismissed because all of the claims were or could have been” litigated in Balsamo I, and 6 The circuit court also intended to hear argument on Mr. Balsamo’s motion for a preliminary injunction. After argument on the Joint Motion to Dismiss, however, the parties entered into a consent order that obviated the need to argue the injunction motion. Under the consent order, appellants agreed that they would provide Mr. Balsamo with ten days’ written notice of an intention to sell any of BNP’s properties. The court continued the hearing on the injunction motion to a future date. 12 therefore, they were barred by res judicata.

They disputed that the claims in the Amended Complaint were based on conduct that occurred after October 2017. Mr. Balsamo initially argued that a claim that suit is barred by res judicata “is really not a motion to dismiss, it is a motion for summary judgment.” In any event, he conceded that two of the three elements of res judicata were satisfied, i.e., the parties were the same and there had been a final judgment rendered on the merits in Balsamo I. Mr. Balsamo argued, however, that the claims were not the same because the alleged conduct that formed the basis of the claims in the Amended Complaint occurred from 2017 to 2019, after the judgment in Balsamo I.7 Mr. Balsamo further argued that the Amended Complaint stated legally sufficient claims for relief, reiterating arguments he made in the Opposition to the Joint Motion to Dismiss. Regarding the legal sufficiency of the constructive fraud claims, the following colloquy occurred between the court and Mr. Balsamo’s counsel: [COUNSEL FOR MR. BALSAMO]: [W]e have obtained documents from the bank, Your Honor, that we think demonstrate -- so we haven’t had a chance -- here is this in a nutshell, Your Honor.

I could have filed another amended complaint on December 21st but I didn’t think I needed to do so because I think that this complaint suffices. 7 Res judicata bars “the same parties from litigating a second lawsuit on the same claim, or any other claim arising from the same transaction or series of transactions and that could have been—but was not—raised in the first suit.” Anne Arundel Cnty. Bd. of Educ. v. Norville, 390 Md. 93, 106 (2005) (quoting Lizzi v. Washington Metro. Area Transit Auth., 384 Md. 199, 206 (2004)). The elements of res judicata are: (1) that the same parties, or those in privity, are involved in each suit; (2) the claims are identical; and (3) there was a final judgment in the first action.

Colandrea v. Wilde Lake Cmty. Ass’n, Inc., 361 Md. 371, 392 (2000). 13 We have gotten documents that if we get to the preliminary injunction hearing, would be some of the first things we cross Mr. Zorzit on that I think show fraud. I’m not going to give away the house right now. THE COURT: You didn’t sue for fraud. [COUNSEL FOR MR.

BALSAMO]: I agree, Your Honor. The point I’m making, Your Honor, is that I don't think I need to -- I think that we can dismiss the constructive fraud and I can now plead an actual fraud claim based on the documents I received. THE COURT: So you want to dismiss Counts 3 and 6? [COUNSEL FOR MR. BALSAMO]: I don’t want to dismiss anything.

What I’m suggesting, if you have a concern about dismissing anything – THE COURT: I don’t want to stand in your way? [COUNSEL FOR MR. BALSAMO]: Give me the opportunity to plead the fraud that I have now found in the documents that we received. That is what I’m asking for. THE COURT: Well, are you conceding that you haven’t alleged sufficient facts for constructive fraud? [COUNSEL FOR MR.

BALSAMO]: I’m not. THE COURT: Okay. I guess we will be seeing another amended complaint. [COUNSEL FOR MR. BALSAMO]: Happy to do whatever the Court would like.

THE COURT: No. I’m not telling you to do that, believe me. [COUNSEL FOR MR. BALSAMO]: Fair enough, Your Honor. The point, Your Honor, I guess, is this: If you are not going to see another amended complaint, you might see a whole new complaint. THE COURT: All right.

Okay. Go ahead. In rebuttal, counsel for appellants addressed the failure to state a claim for constructive fraud. Counsel stated that he could not stop Mr. Balsamo from filing a new 14 complaint based on new facts, but he reiterated his position that the Amended Complaint “fails to state claims upon which relief can be granted and ought to be dismissed,” and he stated that “there shouldn’t be an ability to amend this complaint because they already had two chances.” V. Memorandum Opinion and Order On January 29, 2020, the circuit court filed a Memorandum Opinion and Order granting the Joint Motion to Dismiss the Amended Complaint with prejudice.

The court dismissed Count One (judicial dissolution) as barred by res judicata, noting that the claim for dissolution of BNP in the present case was identical to the dissolution claim in Balsamo I. The court stated that the claim in both suits was that it was not reasonably practicable to operate under the current conditions, and although the Amended Complaint alleged acts of bad faith by Mr. Zorzit, it failed to allege, other than a conclusory allegation, that BNP was operating in a different manner than it was in Balsamo I. The court next discussed the general categories of misconduct alleged in Counts Two (breach of contract), Four (breach of fiduciary duties), Five (unjust enrichment), and Seven (corporate waste). It dismissed those counts based on res judicata or for failure to state a claim upon which relief could be granted. With respect to the allegations relating to obfuscation of business records, the court found that they did not support any of the counts because they failed to state a claim for relief. Based on the findings of fact made in Balsamo I, Mr. Balsamo was a passive member of BNP, and as such, his right to inspect BNP’s records was defined in Md. Code 15 Ann., Corps. and Ass’ns Article § 4A-406(e) (2014 Repl.

Vol.), but the Amended Complaint did not allege that Mr. Balsamo made a demand pursuant to the statute or that any such demands were denied. The court also concluded that the allegations pertaining to self-dealing were barred by res judicata because the claims had already been litigated, or could have been litigated, in Balsamo I. With respect to the claims of fraud, the court found that the claims did not allege false statements or plead the claims with particularity. Accordingly, it concluded that the fraud claims in Counts Two, Four, Five, and Seven, as well as Counts Three and Six, should be dismissed for failure to state a claim upon which relief could be granted. Finally, the court dismissed Count Eight, seeking declaratory judgment.

Although the court recognized that Mr. Balsamo “understandably wants to extricate himself from the Management Agreement,” he previously had sought this relief, and this was “nothing but a second attempt to accomplish the identical goal.” Therefore, this count was barred by res judicata. Accordingly, the court granted the motion to dismiss the Amended Complaint.

VI

Motion to Alter or Amend On February 10, 2020, Mr. Balsamo filed a Motion to Alter or Amend, arguing that the court erred in granting the motion to dismiss “on the basis of evidence offered outside of the pleadings without giving [Mr. Balsamo] the opportunity to rebut it.” He asserted that, if the court based its decision on the ground that res judicata barred the litigation, it effectively treated the motion as one for summary judgment, and the court should re-open 16 the case to allow him the opportunity to introduce evidence on that issue. If the court treated the motion as one to dismiss, it should analyze whether he properly stated a claim upon which relief could be granted. Mr. Balsamo further argued that his counsel had requested leave to amend the Complaint at the motion hearing, and the court erred in not addressing that request in its Memorandum Opinion and Order. Mr. Balsamo submitted an affidavit of Abigail E. Ticse, an attorney and colleague of Mr. Balsamo’s counsel.

In the affidavit, Ms. Ticse stated that, had Mr. Balsamo’s counsel “proceeded with the preliminary injunction hearing” on January 9, 2020, counsel expected to present documentary and testimonial evidence of the following: a. In support of its allegation at paragraph 35 of the Amended Complaint, that [BNP] is paying, and has been paying, the taxes on the Lauzon Road property in Canada through the present, causing the loan balance to increase, rather than decrease as one would expect over time, because Mr. Zorzit causes BNP to make additional disbursements for taxes and other expenses. By proceeding in such a manner, Mr. Zorzit has frustrated the reasonable expectation of Mr. Balsamo that, if in fact BNP has the authority to make such loans in the first place, that any such loans would be serviced in a manner maximizing benefit to BNP, not to an entity owned by Mr. Zorzit that was the recipient of the loan in the first place. b. That Mr. Zorzit failed to notify Chick-fil-A of the change in ownership, unnecessarily causing Chick-fil-A to continue to remit payments to an entity owned by Mr. Zorzit, Norino Properties, that did not have a segregated account for receipt of such payments, in violation of the appropriate standard of care, and that Norino Properties has at times, including after October 2017, failed to transfer the payment to BNP. c.

That in 2018 and 2019, Mr. Zorzit used a company that he owns in Maryland, Norino Construction, to perform work at a property owned by BNP in Florida, the North Port shopping center, and that in connection therewith, Mr. Zorzit falsely stated that the property was owned by another of his companies, Norino Properties, and failed to undertake any analysis to determine whether BNP should engage in this self-dealing transaction and whether that was fair to Mr. Balsamo. 17 d. That Mr. Zorzit has allowed the [Amer] loan to go through a 40-month period in which no payments were required, with such period of time stretching past October 2017, with no good reason to support such loan forgiveness. e. That Mr. Zorzit has not enforced BNP’s lease with Eye Candy Lounge after October 2017, allowing that entity to forego rent payments for no good reason. f. That since October 2017, Mr. Zorzit has taken tenants of his other companies to court