RRC Northeast, LLC v. BAA Maryland, Inc.

HARRELL, Judge. The Maryland Aviation Administration (“MAA”) owns and operates Baltimore-Washington International/Thurgood Marshall Airport (“BWI” or “the Airport”). MAA leases BWI’s retail business concession spaces in its passenger terminals to Respondent, BAA Maryland, Inc. (“BAA”), which, in turn, sublets individual spaces to a variety of individual retail vendors and food service providers. In 2004 and 2005, Petitioner, RRC Northeast, LLC (“RRC”), signed sublease agreements with BAA to operate at BWI several stores specializing in the sale of Maryland/D.C.-themed gifts and souvenirs.

According to RRC, the sublease agreements, by incorporating certain other pre-subleasing documents, restricted to four the number of other vendors’ competing stores selling similar merchandise to RRC’s stores that BAA could sublet at BWI. During 2004, BAA began subletting several retail spaces at BWI to Hudson Group (“Hudson”), which sold Maryland/D.C.-themed gifts and souvenirs in competition with RRC. Eventually, the number of Hudson stores at BWI competing directly with RRC significantly exceeded four. Due to the increased competition, RRC ceased operating at BWI in 2007.

RRC filed a five-count complaint (the “Original Complaint”) against BAA and MAA in the Circuit Court for Anne Arundel County, alleging, among other things, that BAA’s subleases to Hudson, and the resultant increased competition, caused economic damage to RRC and the ultimate demise of its operations at BWI. After the Circuit Court granted BAA’s and MAA’s motions to dismiss RRC’s complaint, with leave to amend, RRC filed an Amended Complaint (the “Amended ⁶⁴³ Complaint”) against BAA only. The Amended Complaint asserted three counts: (1) breach of contract and implied covenant to refrain from destructive competition; (2) breach of contract; and, (3) tortious interference with economic relations. The Circuit Court granted BAA’s motion to dismiss RRC’s Amended Complaint, but this time with prejudice.

In response, RRC filed a motion to alter or amend the judgment and for reconsideration, which included a request for leave to file a second amended complaint. The Circuit Court denied RRC’s motion. On direct appeal, the Court of Special Appeals affirmed the Circuit Court’s dismissal of RRC’s Amended Complaint, holding that (1) RRC’s Amended Complaint failed to state any claims upon which relief could be granted, and (2) the Circuit Court did not err by denying RRC leave to amend further the Amended Complaint. For reasons we shall explain, we affirm the judgment of the intermediate appellate court.

STANDARD OF REVIEW Considering a motion to dismiss a complaint for failure to state a claim upon which relief may be granted, a court must assume the truth of, and view in a light most favorable to the non-moving party, all well-pleaded facts and allegations contained in the complaint, as well as all inferences that may reasonably be drawn from them, and order dismissal only if the allegations and permissible inferences, if true, would not afford relief to the plaintiff, ie., the allegations do not state a cause of action for which relief may be granted. Lloyd v. Gen. Motors Corp., 397 Md. 108, 121-22 , 916 A.2d 257, 264-65 (2007); Sprenger v. Pub. Serv.

Comm’n, 400 Md. 1, 21 , 926 A.2d 238, 249-50 (2007); Pendleton v. State, 398 Md. 447, 458-60 , 921 A.2d 196, 203-04 (2007); Converge Servs. Group, LLC v. Curran, 383 Md. 462, 475 , 860 A.2d 871, 878-79 (2004); Fioretti v. Maryland State Bd. of Dental Exam’rs, 351 Md. 66, 71-72 , 716 A.2d 258, 261 (1998). Consideration of the universe of “facts” pertinent to the court’s analysis of the motion are limited generally to the four corners of the complaint and its incorporated supporting exhibits, if any. Cur- ⁶⁴⁴ ran, 383 Md. at 475 , 860 A.2d at 879 .

The well-pleaded facts setting forth the cause of action must be pleaded with sufficient specificity; bald assertions and conclusory statements by the pleader will not suffice. Adamson v. Corr. Med. Servs., Inc., 359 Md. 238, 246 , 753 A.2d 501, 505 (2000); Bobo v. State, 346 Md. 706, 708-09 , 697 A.2d 1371, 1372 (1997).

Upon appellate review, the trial court’s decision to grant such a motion is analyzed to determine whether the court was legally correct. Sprenger, 400 Md. at 21 , 926 A.2d at 250 ; Benson v. State, 389 Md. 615, 626 , 887 A.2d 525, 531 (2005); Fioretti, 351 Md. at 71 , 716 A.2d at 261 . FACTS 1 Founded in 1987, RRC provides specialty retail shops designed to sell regionally-themed souvenirs and gift items to travelers. Pursuant to a contract with MAA, RRC opened its first souvenir and gift retail store, called “Celebrate Maryland,” at BWI in 1995.

Over the next decade, RRC opened six additional retail stores at BWI, including stores that sold items for children and regional merchandise relating to Maryland and the Washington, D.C. region. In 2003, MAA changed its model for concessions development and operation at BWI. Under the new model, MAA would no longer contract directly with individual retail and concessions tenants. Instead, MAA would lease all concession spaces at BWI to a single operator, which, in turn, would sublease individual retail spaces to individual tenants.

As part of its new concessions model, in June 2003, MAA issued a Request for Proposals (the “RFP”) to obtain a contractor to lease, develop and manage the food, service, and merchandise concessions at BWI. The RFP set forth a proposed concessions plan that included RRC’s souvenir and gift store locations, as well as space for, among other things, four additional, competing souvenir and gift stores designated un ⁶⁴⁵ der the category of “News/Gifts.” RRC was operating stores at BWI when MAA issued the RFP, and RRC was represented at the pre-bid meeting for the RFP. BAA submitted a development proposal, entitled the “Lessee’s Proposal,” in response to the RFP, and MAA selected BAA as the new concessions operator at BWI. In March 2004, MAA and BAA executed a Master Lease (the “Master Lease”) and concessions contract.

The Master Lease specifically incorporated the terms of the RFP and proposed concessions plan, as well as BAA’s “Lessee’s Proposal” prepared in response to the RFP. After BAA entered into the Master Lease with MAA, BAA and RRC began negotiations regarding sublease agreements for RRC’s existing and future locations at BWI. According to RRC, during these negotiations, RRC relied on the terms of the RFP, including the proposed concessions plan, which contemplated only four additional stores that would compete with RRC in the market for souvenir and gift sales. In addition, RRC alleged that the representation that RRC’s competition would be limited to four additional souvenir and gift stores was a material condition upon which all subsequent agreements between RRC and BAA were based.

In April 2004, BAA and RRC entered into a temporary sublease (the “temporary sublease”), which permitted RRC to continue operating a total of seven existing stores at BWI. The temporary sublease incorporated by reference the terms of the Master Lease between MAA and BAA, which, in turn, incorporated the RFP and the proposed concessions plan. In addition, the temporary sublease provided that RRC’s rent would be based on a percentage of its gross revenues from sales at BWI, and limited RRC to using its locations only for “retail concession of gift items focused on the Baltimore region and for no other purpose.” The temporary sublease lasted through 2007 and was repeatedly extended by the parties. BAA and RRC entered into a new and separate sublease agreement in August 2005 (the “2005 sublease”) regarding RRC’s anticipated new stores at BWI.

The 2005 sublease ⁶⁴⁶ provided RRC with eight future locations at which to operate concession facilities. In addition, the 2005 sublease required RRC to pay BAA a minimum rent and a percentage rent of specific dollar amounts of gross receipts and dictated the specific operations of RRC’s stores at BWI, all of which related generally to the sale of souvenirs and gifts. The 2005 sublease contained an express “Good Faith and Fair Dealing” clause, which required BAA and RRC “to perform their obligations under [the] Sublease, and to exercise their rights and remedies under [the] Sublease, in good faith, and consistent with customary standards of commercial reasonableness and fair dealing.” 2 In 2004, BAA began subleasing numerous locations at BWI to Hudson, for the operation of news and gift locations in the same terminals at BWI as stores operated by RRC. By 2007, BAA had permitted Hudson to establish 18 locations at BWI, where it sold gifts and souvenirs in direct competition with RRC.

As noted by RRC in its Amended Complaint, that number greatly exceeded the four “News/Gifts” locations contemplated by the RFP’s proposed concessions plan. According to RRC, after Hudson opened its competing stores, RRC saw an immediate and severe decline in its sales. In response to the additional competition from Hudson, RRC requested changes in the terms of its subleases with BAA so that it could remain competitive and improve its sales revenue. According to RRC’s Amended Complaint, BAA refused to make any changes or to take any action to halt Hudson’s sales of régionally-themed souvenirs and gifts.

In November 2006, RRC complained to BAA about the number of Hudson stores that were selling regionally-themed gifts and ⁶⁴⁷ souvenirs and about RRC’s loss of sales. RRC alleged that representatives of BAA responded to RRC’s concerns by stating that RRC was “afraid” of competition. Also in November 2006, in an effort to respond to the competition from Hudson, RRC proposed the sale of a portion of its business to a large national airport concessionaire, HMS Host, Inc. (“Host”). Pursuant to the 2005 sublease, BAA’s consent was required before the proposed sale could be consummated.

According to RRC’s Amended Complaint, BAA “willfully and intentionally and unreasonably” refused to consent to the sale. As noted supra, RRC eventually closed all of its stores at BWI in 2007. On 27 March 2007, RRC filed suit in the Circuit Court for Anne Arundel County, alleging that BAA breached its sublease contracts with RRC and tortiously interfered with RRC’s contractual relations. Count I of the Original Complaint alleged that BAA breached the 2005 sublease’s and temporary sublease’s express and implied covenants of good faith and fair dealing by allowing Hudson and Hudson-related stores at BWI to sell regionally-themed souvenirs and gifts and other competing merchandise at BWI to an extent exceeding the specifications of the RFP’s proposed concession plan, actions which RRC characterized as destructive competition.

Count II alleged that BAA breached the temporary sublease 3 by authorizing a number of “News/Gifts” retail locations that far exceeded the four additional locations contemplated by the RFP’s proposed concessions plan. 4 Count III alleged that BAA tortiously interfered with RRC’s contractual relations ■with Host by refusing unreasonably to consent to the pro ⁶⁴⁸ posed sale of a portion of RRC’s operations to Host. 5 RRC did not attach the RFP, Master Lease, or sublease agreements to its Original Complaint because, according to RRC, its counsel did not believe the voluminous agreements 6 were either useful or necessary at the initial pleading stage of the litigation. 7 On 18 May 2007, BAA moved to dismiss the entirety of RRC’s Original Complaint, contending that RRC failed to state any viable claims. As to Counts I and II, BAA argued that RRC failed to identify actual contract terms that BAA breached. Moreover, as to Count II specifically, BAA argued that RRC was alleging breach of the Master Lease, an agreement to which RRC was not a party. RRC opposed BAA’s motion to dismiss.

Following a hearing on 24 September 2007, the Circuit Court granted BAA’s motion, but gave RRC leave to amend the Original Complaint within 80 days, stating: All right, obviously the contractual relationship between the parties is complex and, perhaps, the more complex it is, the more one needs to allege to make clear the complaint. But, ultimately, although there is going to be a whole lot of ⁶⁴⁹ dispute about what these things mean I find it with respect to the first two counts. The breach of contract counts, that there is a viable cause of action there but that there needs to be a more explicit recitation of what particular contractual terms are allegedly being breached. I think that that may include information that preceded the entry of the contract, if it is possible, ambiguity in the contract, and there may be a lot of the material for the RFP and the master lease that ultimately finds its way into the allegations.

But, I am really left with a bit of a blank on which particular paragraph of the sublease or what portion of the contractual relationship has been breached. As I think I suggested by some of my questions to [RRC’s counsel], I think there has to be more than [“]my client based upon a series of experiences with the landlord, made certain assumptions as a result of which she assumed certain things were going to happen or certain things were not going to happen. [”] So, I am going to grant the motion to dismiss counts one and two with leave to amend. I will discuss with you momentarily how much time might be appropriate to do that. With respect to count three, which is the tortious interference count, there has to be some existing contractual relationship in order for someone to tortiously interfere in it.

I really do not see that even as I try to read the complaint in the light most favorable to the pleader. The most we have is a proposal and I am not sure that is sufficient to constitute a tortious interference. Assuming all the other elements, of course, assuming that there was an interference at all with a contractual relationship. Whether or not there is a potential cause of action for interference with a prospective contractual relationship or economic advantage.

I leave that to [RRC’s counsel] and his client. ⁶⁵⁰ But, with respect to count three, I am going to grant the motion to dismiss and again, I will permit an amendment if there is something simply that has not been pled that might possibly be pled. So, I am not going to dismiss it at this point with prejudice, but I will permit an amendment. 8 Despite dismissing RRC’s Original Complaint, with leave to amend, the judge who did so instructed the parties to “go forward with discovery” and stated that “it would be naive for anybody to assume that this case is going to be terminated with prejudice on all counts.” In addition, the court added that “there is going to be something left for a trier [of] fact to deal with at some point,” and that it “encourage[d][BAA], unless [BAA] really see[s] something extraordinarily fatal[,] to devote [its] energies to something other than a motion to dismiss” any amended complaint. On 24 October 2007, RRC filed an Amended Complaint, which essentially reasserted the facts as alleged in the Original Complaint and restated Counts I and II against BAA, in nearly identical form. 9 Count III of the Amended Complaint asserted a claim of tortious interference with economic (rather than contractual) relations, but otherwise essentially restated Count III of the Original Complaint. As noted by the Court of Special Appeals, the most significant changes from the Original Complaint were the new factual allegation by RRC that the 2004 temporary sublease incorporated the RFP by virtue of incorporating the Master Lease between BAA and MAA, and the addition to Count I of the specific contractual language of the 2005 sublease’s “Good Faith and Fair Dealing” ⁶⁵¹ clause.

Again, RRC did not attach the RFP, Master Lease, or sublease agreements to the Amended Complaint. 10 In response, on 21 November 2007, BAA moved to dismiss RRC’s Amended Complaint, with prejudice and without leave to amend, on essentially the same grounds as it had moved to dismiss RRC’s Original Complaint. Specifically, BAA contended that RRC’s Amended Complaint failed to state claims upon which relief could be granted, and that Counts I and II, in particular, were unchanged essentially from the Original Complaint and should be dismissed for RRC’s failure to identify the contract terms allegedly violated by BAA. On 28 January 2008, a different judge of the Circuit Court than the one who dismissed the Original Complaint issued a written opinion and order dismissing, with prejudice, RRC’s Amended Complaint. The discussion section of the court’s opinion provided a thorough explanation of its reasons for dismissal: Initially, this court notes, because Plaintiff again has failed to incorporate or even quote at length[ ]any provisions either of the sublease, the master lease or the RFP, that this court is unable to consider, interpret and apply the specific terms of the alleged lease.

Instead, the Plaintiff has quoted only the good faith and fair dealing paragraph and has alleged in a conclusory manner than “on information and belief’ the June, 2003 RFP provided for exclusivity as to retail sales of particular goods at particular locations within the airport as it then existed.” At oral argument, Plaintiffs counsel argued that no more specifics were needed because Maryland law should impute a contractual duty against unfair competition when a lease contains a percentage of sales term. This court does not agree with Plaintiffs arguments as to the contract terms for three reasons: First, Plaintiffs have not even alleged their current sublease incorporated the ⁶⁵² terms of the master lease and the June, 2003 RFP. Second, even if this incorporation explicitly was alleged, this court cannot consider, apply and interpret the contract terms without having the exact words of the documents. The presence or absence of key phrases such as “exclusivity,” “including but not limited to,” or other qualifications might be dispositive of the issue.

The court cannot speculate in such a matter as to what actual contract terms might include. The burden of proof is on the Plaintiff to present them. Third, cases which Plaintiff has cited as the basis for the court implying exclusivity from either the percentage sales term or the “good faith dealing” terms of the contract do not support its position. In Eastern Shore v. J.D. Associates, 213 F.3d 175 at 185 (2000), the court held that “under Maryland [law], the intention of the parties as expressed in a lease providing for rent [to be] calculated as part of sales, combined with circumstances surrounding the lease’s formation, may give rise to [an] implied covenant to refrain from competition that is destructive to the mutual benefit of the contracting parties.” But, in that case, the court noted that it must be able to consider the terms “as expressed in the lease____” Plaintiff has prevented the court from considering these terms.

Similarly, in the other cases cited by Plaintiff, the terms of the lease were required for the court’s consideration. See Food Fair Stores, Inc. v. Blumberg, 234 Md. 521, at 536 , 200 A.2d 166 (1964). Also see Automatic Laundry Service, Inc. v. Demas, 216 Md. 544 , 141 A.2d 497 (1958) in which [the] court was willing to imply [an] obligation against competition because the contract was produced and shown to include a requirement for a specific number of laundry machines “to render adequate services to the premises— that is, to all of the tenants of the trailer park.” To the contrary, in the present case there is no allegation that Plaintiffs lease required it to provide services sufficient to satisfy the needs of every customer of the BWI airport (or ⁶⁵³ any particular quantity or proportion of them) and, thus, no allegation sufficient to suggest it was an exclusive contract. For all these reasons, the court will grant the Motion to Dismiss the contract counts.

As to count 3, the Motion to Dismiss and Plaintiffs Opposition have triangulated on one particular element of the four (4) components of [ jintensional [sic] interference with economic relations—whether the Defendant “acted improperly or wrongfully” using improper means. See Macklin v. Robert Logan Associates, 334 Md. 287, at 301 , 639 A.2d 112 (1994). In Macklin , the Court of Appeals stated “conduct that is quite subtle, nevertheless, can be improper or wrongful. It is clear that, to be improper or wrongful, conduct need not be as overt as ... threatening to breach an existing contract [or] threatening to notify unions that an employer was a non-union shop.... ” In the amended complaint, Plaintiff does not specify how the “refusal to authorize [Plaintiffs] sale of a portion of its business” was improper.

The suggestion that a BAA employee made comments to a[n] RRC employee that “RRC was afraid of competition [and this comment was] intended to intimidate RRC and its management” is insufficient. For all these reasons, the court will grant the Motion to Dismiss in its entirety. (Footnote omitted). On 1 February 2008, RRC filed a motion to alter or amend the judgment of dismissal and for reconsideration, seeking to have the Circuit Court clarify that its dismissal of the Amended Complaint was without prejudice and with leave to amend further.

In the motion, RRC alleged, for the first time, that the 2005 sublease incorporated the Master Lease and, therefore, the RFP and proposed concessions plan. In addition, RRC attached to the motion several documents, including copies of the Master Lease, the RFP, and both sublease agreements. On 5 March 2008, the Circuit Court denied summarily RRC’s motion, and RRC noted timely an appeal to the Court of Special Appeals. ⁶⁵⁴ In an unreported opinion, the intermediate appellate court affirmed the Circuit Court’s dismissal, with prejudice, of RRC’s Amended Complaint. In its opinion, the Court of Special Appeals held that the Circuit Court did not err in dismissing Count I, RRC’s claim for breach of the implied covenant against destructive competition, because, at the time it signed the sublease agreements, “RRC had reason to expect greater competition in the sale of souvenirs and gifts than that contemplated by the RFP.” In addition, the appellate court found that the Circuit Court did not err in dismissing Count II, the express breach of contract claim, because RRC failed to allege the existence of a contractual obligation on the part of BAA to limit the number of competing stores to the four contemplated by the RFP’s proposed concessions plan.

Finally, the court held that the Circuit Court did not abuse its discretion in denying RRC leave to amend further its Amended Complaint. On 11 May 2009, RRC filed a petition for writ of certiorari, which we granted, 409 Md. 47 , 972 A.2d 861 (2009), to consider the following questions, as presented by RRC: I. Did the Court of Special Appeals err in concluding that a plaintiffs claim for breach of the implied covenant to refrain from destructive competition must be dismissed where the parties’ contract did not prohibit all competition, but rather provided specific limits to competition, which one of the parties exceeded? Did the Court of Special Appeals err in dismissing a breach of contract claim where the plaintiff made allegations regarding the defendant’s obligation and breach thereof, but failed to either attach copies of or quote expressly from the contractual documents?

II

Did the Court of Special Appeals err in concluding that the trial court should not have granted leave to amend because the plaintiff had already amended the complaint on one occasion without success? For reasons we shall explain, we affirm the judgment of the Court of Special Appeals. ⁶⁵⁵ ANALYSIS It is well-established in Maryland that a complaint alleging a breach of contract “must of necessity allege with certainty and definiteness facts showing a contractual obligation owed by the defendant to the plaintiff and a breach of that obligation by defendant.” Continental Masonry Co., Inc. v. Verdel Constr. Co., Inc., 279 Md. 476, 480 , 369 A.2d 566, 569 (1977) (emphasis in original). In addition, we have observed that “ ‘the necessary allegations of fact sufficient to state a cause of action ... in a simple factual situation vary from those in more complex factual situations and a form of declaration useful in the former situation may not be sufficient as a guide in preparing a declaration in the more complex case.’ ” Id.

(quoting Read Drug v. Colwill Constr., 250 Md. 406, 413 , 243 A.2d 548, 553 (1968)). Finally, in considering the sufficiency of a complaint alleging breach of contract, “any ambiguity or uncertainty in the allegations is to be construed against the pleader.” Id.; Carder v. Steiner, 225 Md. 271, 276 , 170 A.2d 220, 222 (1961). Like the Court of Special Appeals, for clarity’s sake, we shall address Counts I and II in their logical (and chronological) order, rather than their numerical order as they appear in the Amended Complaint. As such, we consider first Count II of RRC’s Amended Complaint, followed by Count I. i.

Count II—Breach of Contract RRC contends that the Court of Special Appeals erred in affirming the Circuit Court’s dismissal of Count II of RRC’s Amended Complaint, the charge premised upon BAA’s alleged breach of the temporary sublease, for failure to state a claim upon which relief may be granted. Specifically, the Court of Special Appeals held that, “[e]ven when read in a light most favorable to RRC, the complaint does not allege that BAA ever promised RRC—either orally or in any lease document— that, as the developer charged with improving BWI’s concourse facilities, it would restrict the number of potentially competing gift stores to four.” In addition, the intermediate appellate court noted that neither the alleged incorporation of ⁶⁵⁶ the RFP’s proposed concessions plan into the Master Lease or the temporary sublease, or the alleged fact that RRC “based its negotiations and proposal to BAA in reliance on the RFP concessions plan,” could “transform MAA’s preliminary proposals for development into an enforceable promise by BAA to RRC to restrict competition.” We agree with the judgment of the Court of Special Appeals in this regard, and find that the Circuit Court did not err in dismissing Count II of RRC’s Amended Complaint for failure to state a claim upon which relief may be granted. Count II of RRC’s Amended Complaint asserts that BAA breached the terms of the temporary sublease when it allowed Hudson to operate more than the four competing “News/Gifts” stores contemplated by the RFP and proposed concessions plan. Specifically, Count II, entitled “Breach of Contract,” of RRC’s Amended Complaint states: 43.

Plaintiff adopts and incorporates the foregoing allegations of fact contained in paragraphs 1 through 42 as if stated herein. 44. Defendant BAA entered into an agreement with MAA in which in Article I, the “Lessee’s Proposal” and the RFP issued by MAA were incorporated in and part of its contract. In its RFP, the MAA identified four locations for possible news/gifts sale locations at BWI. According to the terms of the master lease, the RFP and the subleases between BAA and RRC were incorporated into the master lease.

According to the terms of paragraph 33 of the temporary sublease, the terms of the master lease are incorporated by reference. BAA was bound to a configuration of concession sales locations for news/gifts of four locations. RRC reasonably relied on the RFP and the representations concerning news/gift locations contained in the RFP when it entered into the temporary sublease and 2005 sublease agreement with BAA. 45. BAA breached this agreement by allowing Hudson and Hudson-related entities to operate more than the 4 competing stores contemplated by the RFP. ⁶⁵⁷ 46.

As a result of the material breach of the temporary sublease agreement by the Defendant BAA, the Plaintiff was unable to perform all of its obligations under the sublease agreement and suffered damages. As noted by the Court of Special Appeals, critical to the viability of Count II are the following factual assertions contained in the Amended Complaint: 13. The RFP issued by MAA included a proposed concession plan. In addition to existing RRC’s stores, the concession plan, as revised in September 2004, included new spaces for the following concepts: Gourmet Coffee/Newstands-2 locations; Newstands-2 locations; News/Gifts-4 locations; News/Sundries-8 locations; Books/News/Coffee-2 locations.

On information and belief, BAA responded to the RFP from MAA. 14. On or about March 10, 2004, and based in part on BAA’s response to the RFP, MAA entered into a master lease and concession contract with BAA authorizing BAA to be its agent and to serve as developer of certain areas of BWI and to provide food, retail and service facilities to serve the needs of BWI patrons and employees. On information and belief, the master lease and concession contract between MAA and BAA incorporated the June 2003 RFP and proposed concession plan. 16. RRC entered negotiations with BAA.

RRC based its negotiations and proposal to BAA in reliance on the RFP concession plan, which contemplated only four competing gift stores. 22. Pursuant to paragraph 33 of the temporary sublease, the terms of the Master Lease between MAA and BAA are incorporated by reference into the temporary sublease and both BAA and RRC are bound by all sublease obligations in the Master Lease. ⁶⁵⁸ RRC notes correctly that, in order to state a claim for breach of contract, a plaintiff need only allege the existence of a contractual obligation owed by the defendant to the plaintiff, and a material breach of that obligation by the defendant. Taylor v. NationsBank, N.A., 365 Md. 166, 175 , 776 A.2d 645, 651 (2001) (“To prevail in an action for breach of contract, a plaintiff must prove that the defendant owed the plaintiff a contractual obligation and that the defendant breached that obligation.”). The allegations contained in Count II of RRC’s Amended Complaint, however, fail to satisfy this threshold.

Although Count II states in conclusory fashion that “BAA was bound to a configuration of concession sales locations for news/gifts of four locations,” nowhere in the Amended Complaint does RRC allege an explicit or implicit promise by BAA to be so bound. Rather, the Amended Complaint alleges merely that the RFP, which contained a “proposed” concessions plan that “contemplated” four additional “possible” locations for future “News/Gifts” stores, was incorporated into the temporary sublease, that RRC based its negotiations in reliance upon the RFP’s proposed concessions plan, and that, by allowing Hudson to open more than four new “News/Gifts” stores, BAA violated the RFP’s proposed concessions plan. RRC makes no allegation, beyond the conclusory statement noted supra, that BAA ever obligated itself in any manner to a defined limit of four additional “News/Gifts” locations. In fact, that the 2005 sublease permitted RRC to open eight additional “News/Gifts” stores demonstrates clearly that the RFP did not serve to bind BAA to permit only four additional “News/Gifts” stores.

In addition, RRC’s Amended Complaint states that the Master Lease incorporated BAA’s “Lessee’s Proposal,” i.e., BAA’s response to MAA’s RFP and proposed concessions plan, suggesting further that BAA never bound itself to the proposed concessions plan contained in the RFP. As such, in Count II of the Amended Complaint, RRC failed to meet its duty under Continental Masonry to plead with certainty and definiteness a contract term, allegedly breached by BAA, that limited to four the number of additional “News/ Gifts” locations that BAA could permit. Continental Mason ⁶⁵⁹ ry, 279 Md. at 481 , 369 A.2d at 569 (noting that “skeletal factual allegations accompanied by nothing more than mere conclusions and general averments of a breach of a contractual duty do not suffice to establish [the plaintiffs] somewhat unique and sophisticated claim”). Thus, the Court of Special Appeals did not err when it affirmed the Circuit Court’s dismissal of Count II for failure to state a claim upon which relief may be granted. ii.

Breach of Implied Covenant Against Destructive Competition RRC contends that the Court of Special Appeals erred in affirming the Circuit Court’s dismissal of Count I of RRC’s Amended Complaint for failure to state a claim upon which relief may be granted. RRC submits that two cases, namely, Automatic Laundry Service, Inc. v. Demas, 216 Md. 544 , 141 A.2d 497 (1958), and Eastern Shore Markets, Inc. v. J.D. Associates Limited Partnership, 213 F.3d 175 (4th Cir.2000) (applying Maryland law), when read together, establish that: (1) the duty of good faith and fair dealing, which binds every party to a contract and which was stated explicitly in the 2005 sublease, implies a covenant against destructive competition where (a) a tenant is bound by a percentage lease and (b) the parties contract to limit competition with that tenant (in the contract or another document) by creating exclusivity or a particularly limited level of competition; and, (2) when a plaintiff alleges an implied covenant imposing a duty to refrain from destructive competition and a subsequent breach of that duty, a court may not dismiss the complaint. Thus, RRC posits that, because it alleged a breach by BAA of its duty to refrain from destructive competition (citing the RFP’s proposed concessions plan contemplating four additional “News/ Gifts” locations and the number of Hudson stores permitted by BAA well in excess of four), the Circuit Court should not have dismissed Count I of the Amended Complaint. Upon examination of Automatic Laundry and Eastern Shore Markets, the Court of Special Appeals held that “an implied covenant against destructive competition cannot be inferred from a shopping center lease where the tenant has ⁶⁶⁰ reason to expect expanding competition at the time of execution of the lease.” In the intermediate appellate court’s opinion, because the Amended Complaint’s allegations “reveal[] that, at the time RRC executed the 2005 sublease, [RRC] had reason to expect unlimited competition in the sale of regionally themed gifts and souvenirs” beyond the level of competition contemplated by the RFP and proposed concessions plan, the Circuit Court dismissed correctly Count I of RRC’s Amended Complaint.

In addition, the court opined that “RRC’s allegations that the 2005 sublease contained a covenant of good faith, provided for RRC to pay a percentage of gross receipts as rent, and restricted some of RRC’s new stores to selling only regionally themed gifts and souvenirs” provided an insufficient basis for the court to infer from the provisions of the 2005 sublease or temporary sublease an implied covenant against destructive competition in the business of selling regionally-themed gifts and souvenirs. We agree with the Court of Special Appeals’s determination. 11 Count I of RRC’s Amended Complaint charges BAA with breaching its implied obligations under the 2005 sublease and temporary sublease 12 to refrain from engaging in destructive competition by allowing Hudson to sell regionally-themed gifts and souvenirs in more locations than the four stores contemplated by the RFP’s proposed concessions plan. 13 Specifically, ⁶⁶¹ Count I, entitled “Breach of Contract and Implied Breach of Contract,” of RRC’s Amended Complaint alleges the following: 39. Plaintiff adopts and incorporates the foregoing allegations of fact in paragraphs 1 through 38 as if stated herein. 40. Defendant BAA has an express obligation under Article 12.17 of the 2005 sublease agreement as well as an implied covenant of good faith and fair dealing under the sublease agreement and temporary sublease to perform its obligations in good faith.

Article 12.17 of the Sublease states: “BAAM [BAA] and Subtenant agree to perform their obligations under this Sublease and to exercise their rights and remedies under this Sublease, in good faith and consistent with customary standards of commercial reasonableness and fair dealing.” By authorizing additional vendors to sell souvenirs and gifts based on themes of Baltimore, Washington and the State of Maryland at BWI more than those delineated in the concession plan of the RFP, BAA acted in bad faith and breached the sublease agreement and its implied covenant of good faith. 41. Defendant BAA breached its express obligation of good faith under the