Relating to Real Estate

We learned the following from the decision of the Maryland Court of Special Appeals about Bubba Gump Shrimp Co. Restaurants, Inc.’s litigation against its landlord at Harborplace:

1. Ashkenazy has done a deplorable job of maintaining Harborplace. But you already knew that if you have been to Harborplace since 2012 or if you have read about the receivership that has been put into place.
    
2. Bubba Gump’s claim for lost profits as a result of customers staying away because of the condition of Harborplace was considered too speculative. Bubba Gump could not prove the extent of such damages with reasonable certainty; therefore, its demand for such damages was denied by the Circuit Court for Baltimore City.
    
3. The circuit court thought that Bubba Gump was entitled to substantial damages as a result of the landlord’s default under the lease, and it awarded Bubba Gump $1,096,270.51 as an “equitable rent reduction.” The circuit court considered this amount to be an alternative to the claim for lost profits. It was equal to the portion of the amount (20.45%) that Bubba Gump paid to its landlord that was attributable to the joint use and operating expense for the common areas of Harborplace. The circuit court decided to make this award on the basis of unjust enrichment, which the Court of Special Appeals categorized as a quasi-contract claim. Unfortunately for Bubba Gump, the Court of Special Appeals noted that a quasi-contractual claim cannot arise when there is a contract, except in four limited circumstances, and there has never been a reported Maryland case that has upheld a judgment based on those exceptions. The Court of Special Appeals, therefore, reversed the circuit court’s decision on this point.
    
4. Without an award for lost profits or for unjust enrichment, Bubba Gump was left with a judgment for $32,300 for out-of-pocket security costs and $5,000 in attorneys’ fees as specifically allowed by the lease. These amounts hardly compensate Bubba Gump for its losses.
    
5. Why couldn’t the claim for $1,096,270.51 have been expressed as a contractual claim for damages? Bubba Gump spent that amount under its lease for services that it did not receive — a clean and hospitable environment — and therefore it should get back the money it paid for that.

The case is AAC HP Realty, LLC v. Bubba Gump Shrimp Co. Restaurants, Inc., No. 1076, Sept. Term 2018 (Md. Ct. Spec. App. Oct. 31, 2019).

Ed Levin
(410) 576-1900 • elevin@gfrlaw.copm