79 A.3d 950
Md. Ct. Spec. App.2013Background
- Falls Garden used and maintained 39 of 65 disputed parking spaces from 1985–2008, believing it owned them; The Falls actually owned the land and asserted rights in 2009.
- Falls Garden sued in December 2010 for declaratory relief (adverse possession or easement); The Falls counterclaimed for trespass.
- During settlement talks, counsel executed a signed Letter of Intent (LOI) on August 17, 2011, specifying material terms: a 99‑year lease of 24 specific parking spaces at $20/space/month, responsibilities for maintenance, taxes, insurance, indemnity, and contingency on a 2/3 vote by The Falls’ membership.
- The Falls obtained the required membership approval, drafted a lease consistent with the LOI, and submitted it to Falls Garden; Falls Garden later refused to execute the lease and raised multiple objections to lease provisions.
- The Falls moved to enforce the LOI as a binding settlement/executory accord; the circuit court (Judge Norman) found the LOI enforceable and ordered The Falls to prepare the settlement agreement and the lease for Falls Garden to execute; Falls Garden appealed.
Issues
| Issue | Plaintiff's Argument (Falls Garden) | Defendant's Argument (The Falls) | Held |
|---|---|---|---|
| Whether the August 17 LOI was an enforceable settlement agreement | LOI was only a non‑binding framework; parties intended to be bound only upon execution of the lease/settlement agreement | LOI contained all essential terms and reflected mutual assent; subsequent documents were ancillary | LOI was an enforceable agreement (Corbin category 3) and an executory accord |
| Whether the court should have held an evidentiary hearing before enforcement | A plenary hearing was required because existence/intent to be bound was contested; proffered witnesses could testify | No hearing needed because LOI was a signed, unambiguous written document; no evidentiary hearing was requested | No plenary hearing required; written LOI sufficient and uncontested in authenticity |
| Effect of LOI on underlying claims | Falls Garden contends underlying claims remained available until formal lease/execution | The Falls contends LOI suspended claims pending performance (executory accord) | LOI functioned as an executory accord suspending Falls Garden’s claim; The Falls’ performance entitled it to seek specific performance |
| Whether additional lease terms (e.g., insurance, waivers, fee‑shifting) defeat enforceability | Objections to additional lease terms show no meeting of minds until final lease | Additional non‑essential details do not negate agreement on core terms | Additional terms were non‑essential; core deal was definite and enforceable |
Key Cases Cited
- Erie Ins. Exchange v. Estate of Reeside, 200 Md. App. 453 (settlement agreements treated as contracts; interpretation reviewed de novo)
- Cochran v. Norkunas, 398 Md. 1 (letters of intent classified; enforceable when definite on necessary terms)
- Myers v. Kayhoe, 391 Md. 188 (objective theory of contract interpretation)
- Clark v. Elza, 286 Md. 208 (executory accord suspends underlying claim until performance)
- Peoples Drug Stores, Inc. v. Fenton Realty Corp., 191 Md. 489 (when parties intend reduction to writing merely as evidence, prior agreement may be binding)
- David v. Warwell, 86 Md. App. 306 (oral settlement agreements—plenary evidence may be required when existence is contested)
- Horsey v. Horsey, 329 Md. 392 (labeling a document a "letter of intent" does not automatically make it nonbinding)