Diamond Point Plaza Ltd. Partnership v. Wells Fargo Bank, N.A., 400 Md. 718

Summary

The Maryland Court of Appeals considered consolidated appeals arising from a mortgage default involving a shopping center, lease restrictions, diverted rents, and alleged misrepresentations concerning a major tenant's planned departure. The court affirmed the judgments against the Diamond Point and Konover defendants, vacated part of the judgment involving the Wal-Mart defendants concerning a lease radius restriction, and remanded for reconsideration of attorneys' fees. The opinion was issued after reconsideration and replaced an earlier opinion filed July 26, 2007.

Holdings

1. The Konover defendants were personally liable under the non-recourse loan's carve-out because Diamond Point knowingly and fraudulently represented that it had no knowledge of any tenant's intention to vacate, despite knowing of Sam's Club's planned departure.
2. The evidence was sufficient to establish that Diamond Point's fraudulent certifications proximately caused Wells Fargo's losses.
3. The transfer of $633,000 after the loan default constituted a misapplication or conversion of rents and independently triggered personal liability under the mortgage's recourse carve-out.
4. The radius restriction was unambiguous and prohibited Sam's Club from operating a similar store within seven miles only while a similar store was then being conducted at the leased Diamond Point premises. Because the Diamond Point store closed before the Golden Ring store opened, the Golden Ring store did not violate the restriction.
5. A precise line-by-line allocation of attorneys' fees is not an absolute prerequisite to recovery when such allocation is impracticable, although the claimant must still prove entitlement and the reasonable amount of fees by a preponderance of the evidence.

Questions Presented

1. Whether the Konover defendants were personally liable under the non-recourse loan's carve-out for fraud or intentional misrepresentation in failing to disclose Sam's Club's planned departure.
2. Whether the false borrower certifications proximately caused Wells Fargo's losses.
3. Whether the transfer of $633,000 in rents after default violated the mortgage and assignment of rents and triggered personal liability.
4. Whether the Sam's Club lease radius restriction was ambiguous and prohibited the Golden Ring Mall store when the Diamond Point store and Golden Ring store were not simultaneously operating.
5. Whether Wells Fargo was entitled to reconsideration of its claim for attorneys' fees without a line-by-line allocation of fees among claims and defendants.

Disposition

remanded