MIE Maryland v. LaSalle National ( 2000 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
MIE MARYLAND EXECUTIVE PARK
GENERAL PARTNERSHIP; LASALLE
LIMITED PARTNERSHIP; EDWARD A.
ST. JOHN,
Plaintiffs-Appellants,
v.
LASALLE NATIONAL BANK,
No. 99-2066
individually and as Trustee on
behalf of the Holders of MLIC
Commercial Mortgage Pass-Through
Certificates, Series 1996-1; LENNAR
PARTNERS, INCORPORATED; MIDLAND
LOAN SERVICES, INCORPORATED; JOHN
ENGEL; LEE C. CARTER,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Frederic N. Smalkin, District Judge.
(CA-99-1786-S)
Argued: April 5, 2000
Decided: May 22, 2000
Before WILKINSON, Chief Judge, and WILKINS and
WILLIAMS, Circuit Judges.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: William Fitts Ryan, Jr., WHITEFORD, TAYLOR &
PRESTON, L.L.P., Baltimore, Maryland, for Appellants. Deborah
Brand Baum, SHAW PITTMAN, Washington, D.C., for Appellees.
ON BRIEF: Michael A. Stodghill, WHITEFORD, TAYLOR &
PRESTON, L.L.P., Baltimore, Maryland, for Appellants. Elizabeth S.
Becker, SHAW PITTMAN, Washington, D.C., for Appellees.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
This case involves a dispute over whether the prepayment premium
contained in a Promissory Note survived a subsequent Loan Modifi-
cation Agreement. Plaintiffs argue that they are no longer bound by
the premium. The district court disagreed and dismissed their suit.
The district court also awarded defendants attorneys' fees. Finding no
error in the proceedings below, we now affirm.
I.
In 1989, plaintiff Edward St. John provided financing for his office
complex in Baltimore County, Maryland, by means of a $12.5 million
non-recourse Promissory Note. The Note mandates that if St. John
prepays the principal prior to 90 days before the Note maturity date
of May 1, 2004, he must pay a substantial premium. A Deed of Trust
further secured the loan by giving the defendants a lien on the prop-
erty. The other plaintiffs in this case are LaSalle LP, the guarantor of
the Note, and MIE Maryland Executive Park, the general partner of
LaSalle LP. Defendants are LaSalle National Bank, the noteholder,
Lennar Partners and Midland Loan Services, the loan's servicers, and
John Engel and Lee Carter, the trustees.
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For the next eight years, plaintiffs met their payment obligations
under the original loan documents. In 1997, however, the project
encountered financial difficulties. Negotiations ensued between St.
John and Lennar, on behalf of LaSalle National Bank. The negotia-
tions culminated with the execution of a Loan Modification Agree-
ment, effective October 1, 1997. In the spring of 1999, St. John
sought to refinance the property. His efforts were thwarted when
defendants refused to release the lien. The sticking point was plain-
tiffs' contention that they no longer had to pay the prepayment pre-
mium. By April 1999, the premium consisted of more than $3 million.
On May 11, 1999, after the refinancing fell through, plaintiffs filed
suit in the Circuit Court for Baltimore County, Maryland. They
argued that the Note's prepayment premium did not survive the Loan
Modification Agreement. In addition to their contract claims, plain-
tiffs brought promissory estoppel and breach of fiduciary duty claims.
Defendants removed the case to the United States District Court for
the District of Maryland and filed a Fed. R. Civ. P. 12(b)(6) motion
to dismiss. On July 16, 1999, the district court granted this motion.
On July 28, plaintiffs timely filed a Notice of Appeal. Two days later,
defendants filed a motion with the district court seeking attorneys'
fees pursuant to the Deed of Trust. The district court granted defen-
dants' motion and awarded them $30,747.79 in fees. Plaintiffs appeal
both the dismissal of their claims and the fee award.
II.
Plaintiffs argue that the district court erred by finding that the
Note's prepayment premium survived the Loan Modification Agree-
ment.
We disagree. The Loan Modification Agreement itself states that
the terms of the original loan documents remain in full effect. Thus,
unless a provision in the Loan Modification Agreement expressly
modifies or alters the Note's prepayment premium, the premium
remains in full force. And there is no reference to, much less a modi-
fication of, the prepayment premium in any provision of the Loan
Modification Agreement.
The prepayment premium is not a peripheral provision of the Note
which carries limited monetary consequence. Rather, as of April
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1999, the premium stood at over $3 million -- a quarter of the Note's
original amount. If plaintiffs, who were represented by legal counsel,
had wished to replace, alter, or affect in any manner the prepayment
premium, it would have been very easy for them to do so. They could
have bargained with defendants to insert explicit language excising
the premium. They chose not to do so. To now accept plaintiffs' argu-
ment would grant them a $3 million windfall.
Plaintiffs, however, point to two provisions in the Loan Modifica-
tion Agreement that they argue infuse ambiguity into this issue. They
first reference the agreement's overview section:"On or before matu-
rity of the Note, the Borrower and Guarantor intend to sell or refi-
nance the Property in order to repay all of the Indebtedness, including
any deferred interest." Plaintiffs argue that this provision evinces an
intent to allow prepayment without penalty. Even assuming that this
provision contains such a general intent, it cannot trump the specific
language of the Note's prepayment premium. As the district court
properly noted, "a general statement of intent cannot render meaning-
less a specific, clear and unambiguous provision."
Plaintiffs next focus on article II.C.4(b) of the Loan Modification
Agreement. This provision, however, merely gives St. John the ability
to amortize principal on a limited basis. We cannot conclude that this
provision, without even mentioning the Note's prepayment premium,
serves as a general repeal of this premium.
Finally, in an effort to show that the parties intended to rescind the
prepayment premium, plaintiffs seek to introduce evidence of conver-
sations among the parties that occurred during the negotiations of the
Loan Modification Agreement. But because we find the agreement
clear and unambiguous on its face with respect to the continued exis-
tence of the prepayment premium, Maryland's parol evidence rule
bars us from considering such extrinsic evidence. See, e.g., Trotter v.
Lewis, 45 A.2d 329, 332 (Md. 1946). Moreover, the Loan Modifica-
tion Agreement contains an integration clause, which even further
"strengthens . . . the presumption of integration upon which the parol
evidence rule proceeds." Rinaudo v. Bloom, 120 A.2d 184, 189 (Md.
1956).
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Because the Loan Modification Agreement clearly does not affect
the Note's prepayment premium, we conclude that the district court
properly dismissed this suit.*
III.
Plaintiffs also make a series of challenges to the district court's
award of $30,747.79 in attorneys' fees pursuant to the Deed of Trust.
The Deed of Trust provides defendants "all costs and expenses . . .
incurred by reason of any action, suit, proceeding, hearing, motion or
application before any Court or administrative body in and to which
the [defendants] may be or become a party by reason of this Deed of
Trust . . . wherein proof of claim is by law required to be filed or in
which it becomes necessary to defend or uphold the terms of this
Deed of Trust . . . ."
Plaintiffs first argue that the district court lacked jurisdiction over
defendants' motion for fees. But because the defendants' motion
raised "issues collateral to the main cause of action," the district court
retained jurisdiction to consider the motion regardless of the fact that
the case on the merits had already been appealed. White v. New
Hampshire Dep't of Employment Sec., 455 U.S. 445, 451 (1982);
accord Langham-Hill Petroleum Inc. v. Southern Fuels Co., 813 F.2d
1327, 1330-31 (4th Cir. 1987).
Plaintiffs next contend that the instant litigation does not arise "by
reason of this Deed of Trust . . . wherein proof of claim is by law
required to be filed or in which it becomes necessary to defend or
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*Plaintiffs' other claims are also meritless. With respect to their prom-
issory estoppel claim, we conclude that any reliance upon alleged oral
statements made by the defendants was unreasonable as a matter of law.
Plaintiffs were sophisticated in the ways of business, had legal represen-
tation, and most importantly the alleged statements were inconsistent
with clear contractual language. See Howard Oaks, Inc. v. Maryland Nat.
Bank, 810 F. Supp. 674, 677 (D. Md. 1993); see also Foremost Guar.
Corp. v. Meritor Sav. Bank, 910 F.2d 118, 126 (4th Cir. 1990). And
because the trustees' interpretation of the contract was the only reason-
able construction possible, they cannot be held to have breached a fidu-
ciary duty.
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uphold the terms of this Deed of Trust." The Loan Modification
Agreement, however, ratifies the terms of both the Note and the Deed
of Trust. And in the Deed of Trust, plaintiffs agreed "[t]o pay all sums
required to be paid pursuant to the Note . . . at the times and in the
manner provided in said Note." Thus, a violation of the Note's pre-
payment premium also constitutes a violation of the Deed of Trust.
As a result, plaintiffs' argument fails.
Plaintiffs next contend that more than $11,000 should be subtracted
from the fee award because such fees were incurred prior to the initia-
tion of this lawsuit. We, however, find no such limitation in the Deed
of Trust. Rather, the attorneys' fees provision provides that fees are
recoverable if "incurred by reason of any action, suit, proceeding,
hearing, motion or application before any Court . . . to which the
[defendants] may be or become a party . . . and all money paid or
expended . . . in that regard." This language is broad enough to
encompass the $11,000 spent on such attorney activities as claim
assessment and communication with opposing counsel a mere few
months before plaintiffs formally filed suit.
Plaintiffs' next argument that the legal work performed by defen-
dants Engel and Carter cannot be included in the fee award also falls
short. Plaintiffs have provided neither legal authority nor any con-
vincing rationale for why the time billed for work done by these two
attorneys cannot be included in the fee award.
Plaintiffs finally contend that the documentation provided by the
defendants to support their motion was insufficient. See Johnson v.
Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). We
disagree. The submitted affidavit and records include such informa-
tion as the number of hours each attorney worked and the specific
tasks involved in defending against this suit. We cannot conclude that
the district court erred by finding such documentation adequate.
IV.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
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