254 A.3d 533
Md. Ct. Spec. App.2021Background
- Tenants Karunaker and Chandana Aleti rented an apartment at 10 Light Street; Metropolitan Baltimore, LLC (owner) and Gables Residential Services (manager) are defendants.
- Metropolitan’s rental license lapsed April 9, 2019 and was not renewed until February 7, 2020 (302 days); tenants unknowingly paid rent, utility/service charges, late fees, legal fees, and other payments during that period.
- Complaint (four counts): (1) declaratory judgment that Metropolitan cannot collect rent/fees/legal fees for the unlicensed period; (2) statutory damages under Baltimore City Code Art. 13 §5-4(a)(2) to recover amounts charged while unlicensed; (3) money had and received (restitution), including legal fees collected for court actions; (4) breach of contract based on lease ¶44 (incorporating local law).
- Trial court dismissed all counts for failure to state a claim; plaintiffs appealed to the Court of Special Appeals.
- Court of Special Appeals: affirmed dismissal of statutory claim and breach claim; affirmed dismissal of money-had-and-received claim as to rent/related fees; reversed dismissal insofar as plaintiffs sought restitution of legal fees charged for unlawful failure-to-pay actions; vacated denial of declaratory relief and remanded for a written declaration and further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §5-4(a)(2) of Baltimore City Code creates an implied private right to recover rent/fees paid while landlord unlicensed | §5-4(a)(2) plainly prohibits charging/retaining rent when unlicensed and thus implies a tenant-specific private remedy to recover payments | Ordinance creates public/coercive enforcement mechanisms (inspection, citations, criminal penalties, administrative license actions) and shows no legislative intent to create a private cause of action | No implied private right of action to recover rent/fees under §5-4(a)(2) (affirmed) |
| Whether lease ¶44 (incorporating local laws) gives rise to breach-of-contract recovery for rent/fees paid while landlord unlicensed | Lease incorporates local-law rights; so plaintiffs can sue for recovery under §5-4(a)(2) via contract | Because §5-4(a)(2) affords no private remedy, nothing material was breached and plaintiffs received the bargained-for benefit | Breach claim dismissed: no incorporated private remedy and no material breach/damages alleged (affirmed) |
| Whether money-had-and-received supports restitution of rent and related fees paid under an executed lease | Restitution is an equitable remedy and applies generally; plaintiffs are entitled to recover payments made in violation of the ordinance | Money-had-and-received generally does not apply to fully executed contracts where the tenant received the bargained-for benefit (in pari delicto) | Dismissal affirmed as to rent and related fees—no unjust enrichment when tenant received full benefit (affirmed) |
| Whether money-had-and-received permits recovery of legal fees charged/collected for filing unlawful failure-to-pay actions while landlord unlicensed | Legal fees were collected in connection with court actions the landlord had no right to bring and were obtained by false representations; restitution is warranted | Defendant improperly brought and charged for unlawful litigation; but denies liability | Dismissal reversed in part: plaintiffs may pursue restitution for legal fees charged/retained in connection with unlawful failure-to-pay actions (remanded) |
| Whether the court must enter a declaratory judgment after dismissing substantive counts | Plaintiffs sought declaration that landlord may not file/collect for obligations arising during unlicensed period; declaratory relief remains justiciable | Trial court treated substantive dismissals as mooting declaratory claim | Court erred: even if substantive counts resolved, the court must issue a written declaratory judgment and the underlying dispute over ongoing collection attempts was not resolved—vacated and remanded for declaration |
Key Cases Cited
- CitaraManis v. Hallowell, 328 Md. 142 (1992) (tenants who received the bargained-for benefit cannot recover rent paid to an unlicensed landlord absent actual damages)
- Galola v. Snyder, 328 Md. 182 (1992) (restitution may be available where lack of licensure masked defects that caused actual damages)
- McDaniel v. Baranowski, 419 Md. 560 (2011) (unlicensed landlords cannot initiate summary ejectment; tenants cannot recover rent paid in absence of actual damages)
- Bourgeois v. Live Nation Ent., Inc., 430 Md. 14 (2013) (money-had-and-received remains a Maryland remedy; restitution may lie for fees collected in violation of ordinance under certain circumstances)
- Bowen v. City of Annapolis, 402 Md. 587 (2007) (requirements for issuing a declaratory judgment and the necessity of a written declaration)
- Pettiford v. Next Generation Tr. Serv., 467 Md. 624 (2020) (McDaniel’s rule applies to Baltimore City licensing scheme for summary ejectment)