Karunaker Aleti, et ux. v. Metropolitan Baltimore, LLC, et al.
No. 459
In the Court of Special Appeals of Maryland
July 6, 2021
Opinion by Fader, C.J.
September Term, 2020
Karunaker Aleti, et ux. v. Metropolitan Baltimore, LLC, et al., No. 459, September Term, 2020. Opinion by Fader, C.J.
LANDLORD AND TENANT — LOCAL LICENSING ORDINANCE — FAILURE TO LICENSE RENTAL PROPERTY — PRIVATE RIGHT OF ACTION
LANDLORD AND TENANT — ACTION FOR MONEY HAD AND RECEIVED
The common law cause of action for money had and received lies when a defendant has obtained possession of money that, in equity and good conscience, the defendant should not be allowed to retain. The circuit court correctly dismissed the tenants’ claim for money had and received to the extent that the tenants sought to recover rent based solely on the lack of licensure because the landlord had provided all that was bargained for under the lease and there were no allegations that the property was deficient.
However, the court erred in dismissing the claim for money had and received to the extent that the tenants sought restitution of any legal fees the landlord collected when it was unlicensed, where the tenants alleged that the landlord had brought unlawful actions for nonpayment of rent, made false representations as to its licensure status, and had collected and retained those legal fees.
DECLARATORY JUDGMENT — REQUIREMENT TO ISSUE DECLARATION OF RIGHTS AND OBLIGATIONS
A ruling on the substantive counts of a lawsuit in which a plaintiff also seeks a declaratory judgment does not render the declaratory judgment claim moot or non-justiciable.
Circuit Court for Baltimore City
Case No. 24C20001105
REPORTED
IN THE COURT OF SPECIAL APPEALS OF MARYLAND
No. 459
September Term, 2020
______________________________________
KARUNAKER ALETI, ET UX.
v.
METROPOLITAN BALTIMORE, LLC, ET AL.
______________________________________
Fader, C.J.,
Shaw Geter,
Zarnoch, Robert A.
(Senior Judge, Specially Assigned),
JJ.
______________________________________
Opinion by Fader, C.J.
______________________________________
Filed: July 6, 2021
We will, however, reverse two aspects of the circuit court‘s judgment: (1) its entry of judgment in favor of the landlords on the common law count of money had and received, to the extent that the tenants seek to recover legal fees attributable to the landlords’ attempts, while unlicensed, to use the courts to collect rental fees; and (2) its dismissal of the tenants’ request for a declaratory judgment. We will remand for further proceedings consistent with this opinion.1
BACKGROUND
Karunaker and Chandana Aleti (the “Aletis“), the appellants, brought this action in the Circuit Court for Baltimore City against the appellees, Metropolitan Baltimore, LLC, the owner of 10 Light Street, an apartment building located in Baltimore City, and Gables Residential Services, Inc., the property manager for 10 Light Street. For ease of reference, we will refer to both entities collectively as “Metropolitan.” The Aletis alleged that for a period of approximately ten months while they were tenants of 10 Light Street, Metropolitan did not hold an active rental license for the property as required by
The Statutory Scheme: Article 13 of the Baltimore City Code
(a) Determinations.
It is hereby found and determined:
- that there exist within the City of Baltimore slum, blighted, deteriorated, or deteriorating areas, which constitute a serious and growing menace, injurious and inimical to the public health, safety, morals and general welfare of the residents of the City of Baltimore;
- that the existence of such areas and the growth and spread thereof and the deterioration or threatened deterioration of other areas:
- contribute substantially and increasingly to the spread of disease and crime, and to losses by fire and accident;
- necessitate excessive and disproportionate expenditures of public funds for the preservation of the public health and safety, for crime prevention, correction, prosecution, and punishment, for the treatment of juvenile delinquency, for the maintenance of adequate police, fire, and accident protection, and for other public services and facilities;
- constitute an economic and social liability;
- substantially impair or arrest the sound growth of the community;
- retard the provision of decent, safe, and sanitary housing accommodations;
- aggravate traffic problems . . .;
- depreciate assessable values;
- cause an abnormal exodus of families from the city; and
- are detrimental to the health, the well-being and the dignity of many of the residents of the City of Baltimore;
- that such areas cannot be dealt with effectively by the ordinary operations of private enterprise without the aids herein provided;
- that the rehabilitation or elimination, in whole or in part, of slum, blighted, deteriorated, and deteriorating areas . . . are public uses and purposes
requiring the exercise of the governmental powers of the City of Baltimore in the public interest. (b) Declarations.
- It is further found and declared that . . . areas not yet deteriorated or deteriorating, or portions thereof, may be conserved so that the conditions and evils hereinbefore enumerated may be prevented from spreading thereto or arising therein; and that all such areas within the boundaries of the City of Baltimore may be benefitted through the enforcement of applicable regulatory codes relating to buildings, housing, sanitation or safety, the rendering of services to community organizations or through a combination of other means provided in this ordinance.
- It is further found and declared that the elimination, correction, and prevention of the conditions and evils hereinbefore enumerated must be undertaken through the use of a comprehensive and integrated program; that this program should involve whatever range of municipal powers and resources is required to enable the City of Baltimore to act affirmatively in fulfilling its responsibilities to its citizens; that this program requires a suitable administrative structure to undertake adequately a coordinated and purposeful attack on urban slums and blight and the prevention of new areas of slums and blight; and that a comprehensive program should be undertaken within the boundaries of the City of Baltimore.
- It is further found and declared that the powers conferred by this ordinance {subtitle} are for public uses and purposes for which public money may be expended and the power of eminent domain exercised and that the necessity in the public interest for the provisions herein enacted is hereby declared and determined.
This appeal most directly concerns
§ 5-4. License required.
(a) In general.
Except as provided in
subsection (b) of this section ,4 no person may:
- rent or offer to rent to another all or any part of any rental dwelling without a currently effective license to do so from the Housing Commissioner; or
- charge, accept, retain, or seek to collect any rental payment or other compensation for providing to another the occupancy of all or any part of any rental dwelling unless the person was licensed under this subtitle at both the time of offering to provide and the time of providing this occupancy.
The Lease
On May 31, 2019, the Aletis entered a lease agreement with Metropolitan to rent an apartment on the 16th floor of 10 Light Street for a one-month term beginning on June 1, 2019 and expiring on June 30, 2019, subject to automatic renewals on a monthly basis (the “Lease“). Pursuant to the Lease, the Aletis were obligated to pay monthly rent of $1,435.00, subject to a late fee of $71.75 if not paid by the fifth day of the month due. The Lease also contains a utility and services addendum providing that the Aletis were required
to pay certain service charges billed by third parties through Metropolitan for water and sewer service, electric service, and hot water, as well as a flat monthly fee for trash service. The Lease provides that all sums of money required to be paid under it, “whether or not . . . designated as ‘rent’ or as ‘additional rent,’ will be deemed to be rent and will be collectible as such.”
Two other provisions of the Lease are particularly applicable to the Aletis’ claims. First, in a paragraph pertaining to tenant defaults, the Lease provides that, with certain exceptions, the prevailing party will be entitled to recover “attorney‘s fees and all other litigation costs.” The Lease does not otherwise reference charges for legal fees. Second, the final numbered paragraph of the Lease, ¶ 44, provides:
It is the intent of the parties to comply with the laws of Maryland, including local county and municipal ordinances. . . . In the event no other addendum is attached to this Apartment Lease Contract and the local laws or ordinances provide additional rights or remedies not included herein, this Apartment Lease Contract is amended by reference to such local laws and ordinances to incorporate the terms, rights, or remedies thereof herein. It is the intent of the parties to have this lease construed to include any such rights or remedies herein, and the provisions of such laws or ordinances shall supercede [sic] and control over the language of this Apartment Lease Contract to the extent they are in conflict. . . .
The Complaint
On February 24, 2020, the Aletis filed their complaint, in which they alleged that Metropolitan had violated
period, Metropolitan had improperly charged them a total of $12,825.00 in rent; $50.00 in application fees; $1,675.00 as a security deposit; $1,639.54 in water, electric, and other utility fees; $90.00 in trash fees; $240.00 in legal fees; $498.75 in late fees; and a $35.00 bank fee. The Aletis also alleged that during the unlicensed period, Metropolitan had filed complaints in the District Court for nonpayment of rent in which it had “falsely represented . . . that [10 Light Street] was licensed[.]”
In addition to themselves, the Aletis sought to represent “a class consisting of all tenants who occupied a rental unit at 10 Light Street at any time from April 10, 2019, through February 6, 2020, and paid rent or any other compensation to [Metropolitan] for the occupancy or Legal Fees[.]” The Aletis alleged that they met the numerosity requirement for a class action because the class would contain “more than 100 members . . . because the Rental Property is advertised as having 419 separate rental units.”
The complaint contained four counts. In Count I, the Aletis requested a declaratory judgment that the leases “entered into between April 10, 2019, through February 6, 2020, are void and unenforceable and that [Metropolitan] may not file [court actions for failure to pay rent] or collect Legal Fees, rent and other compensation during the 302 days when the Rental Property was not properly registered and/or licensed.” In Count II, the Aletis sought money damages, in the amount of all rent and other compensation paid to Metropolitan during the 302 days it was unlicensed, for Metropolitan‘s violation of
received. And in Count IV, the Aletis alleged breach of contract based on ¶ 44 of the Lease, which they contended incorporated
The Motion to Dismiss
Metropolitan moved to dismiss all counts of the complaint on the grounds that the Aletis’ statutory count failed for lack of a private cause of action, their common law count failed because the contract had been fully executed, and their breach of contract count failed because they had received all of the benefits for which they contracted and had not sustained any damages. Metropolitan further contended that the Aletis’ declaratory judgment count should be dismissed as moot if the court dismissed the other counts. The Aletis opposed dismissal.
On June 24, 2020, after a hearing, the circuit court granted the motion to dismiss all counts of the complaint. The court agreed with Metropolitan that
Following the entry of a written order dismissing the complaint, the Aletis timely appealed.
“We review a trial court‘s grant of a motion to dismiss, without deference, to determine whether it was legally correct.” Barclay v. Castruccio, 469 Md. 368, 373 (2020). “In considering the legal sufficiency of a complaint . . ., we must assume the truth of all relevant and material facts that are well pleaded and all inferences which can be reasonably drawn from those pleadings,” in the light most favorable to the non-movant. Id. at 373-74 (quoting Lloyd v. Gen. Motors Corp., 397 Md. 108, 121 (2007)). “The well-pleaded facts setting forth the cause of action must be pleaded with sufficient specificity; bald assertions and conclusory statements by the pleader will not suffice.” RRC Northeast, LLC v. BAA Maryland, Inc., 413 Md. 638, 644 (2010). “The granting of a motion to dismiss is proper only if ‘the allegations and permissible inferences, if true, would not afford relief to the plaintiff, i.e., the allegations do not state a cause of action.‘” Barclay, 469 Md. at 374 (quoting Lloyd, 397 Md. at 121).
I. LEGAL BACKGROUND
The Aletis’ claim for a return of all rent and other fees paid to Metropolitan attributable to the 302-day period during which 10 Light Street was unlicensed is based on the prohibition in
charg[ing], accept[ing], retain[ing], or seek[ing] to collect any rental payment or other compensation for providing to another the occupancy of all or any part of any rental dwelling unless the person was licensed under this
subtitle at both the time of offering to provide and the time of providing this occupancy.
Except to the extent that the Aletis contend that
This appeal concerns one aspect of the effect on the landlord-tenant relationship of Metropolitan‘s failure to comply with a local ordinance requiring licensure of rental properties—here,
In CitaraManis v. Hallowell, the Court of Appeals considered whether tenants who learned that their rented property was unlicensed in violation of a Howard County ordinance could recover one-and-a-half years of rent they had voluntarily paid during the term of the lease. 328 Md. 142, 144-45 (1992). The tenants acknowledged the property had been in acceptable condition during the rental period. Id. at 145. However, after learning that the property was not properly licensed, they filed suit to recover the amounts
they had paid as damages under the
After the circuit court ruled in favor of the tenants, the Court of Appeals reversed. Id. at 146, 164. The Court first held that the tenants could not
In Galola v. Snyder, a companion case to CitaraManis, the Court held that the circuit court had erred in granting summary judgment in favor of a tenant against an unlicensed landlord based only on proof of voluntary payment of rent. 328 Md. 182, 185-86 (1992). In that case, however, there was evidence that the tenant was harmed because the property contained defects that would have been uncovered by an inspection. Id. at 184-85. The Court therefore remanded the case for further proceedings to determine the amount of actual damages the tenant had incurred as a result of defects that would have been discovered upon an inspection required for licensure. Id. at 186.
Almost two decades later, in McDaniel v. Baranowski, the Court held that an unlicensed owner of multi-unit rental housing may not initiate a summary ejectment proceeding for a tenant‘s failure to pay rent. 419 Md. 560, 562-63 (2011). There, the Anne Arundel County Code prohibited persons from “operat[ing] a multiple[-unit] dwelling . . . without a license issued by the [County] Department [of Inspections and Permits.]” Id. at 564 (omission and some alterations in original) (quoting Anne Arundel County Code (2005; 2009 Supp.), § 11-10-102). The specified purpose of the license requirement was “to insure the safety and habitability of the premises, namely that the dwelling is ‘clean, sanitary, fit for human occupancy, and in compliance with this title and other applicable State and County law.‘” McDaniel, 419 Md. at 564-65 (footnote omitted) (quoting Anne Arundel County Code § 15-4-103). Unknown to the tenant at the time she rented the apartment, the landlord had failed to renew the license for the property for several years. McDaniel, 419 Md. at 564-65. When the tenant failed to pay rent after the first month, the landlord initiated summary ejectment proceedings pursuant to
The Court first held that, in light of the summary nature of the ejectment proceedings, “a landlord in those jurisdictions requiring licensure[] must affirmatively plead and demonstrate that [the landlord] is licensed at the time of the filing of the
complaint . . . in order to initiate the summary ejectment process.” Id. at 587. The Court concluded that “a landlord [should] not be able to seek to dispossess a tenant, summarily, without having a license to operate the leased premises as required by local ordinance.” Id. at 585. Turning to the tenant‘s damages claim, the Court, relying on its decision in CitaraManis, held that the tenant could not recover rent previously
Recently, the Court of Appeals stated that it was “clear” that its holding in McDaniel would apply to Baltimore City‘s current scheme for licensing rental properties. Pettiford v. Next Generation Tr. Serv., 467 Md. 624, 642 (2020). Thus, “to avail itself of the summary ejectment process now, a Baltimore City landlord must affirmatively plead and demonstrate in a complaint that the landlord possesses a license to operate the premises.” Id.
The Aletis argue that the rule of CitaraManis and McDaniel does not apply here because, unlike the licensing schemes at issue in those cases,
II. SECTION 5-4(A)(2) PRIVATE RIGHT OF ACTION CLAIM
The Aletis first contend that
As an initial matter, it is important to clarify our point of focus.
A private right of action allows an individual to bring an action in his or her personal capacity to enforce a legal claim. State Ctr., LLC v. Lexington Charles Ltd. P‘ship, 438 Md. 451, 517 (2014). Where, as here, a statute or ordinance “does not explicitly provide a cause of action” for claimants who “ha[ve] adequately alleged a violation,” we must assess whether there is an implied right of action. See Scull v. Groover, Christie & Merritt, P.C., 435 Md. 112, 121 (2013); see also California v. Sierra Club, 451 U.S. 287, 289-90 (1981)
(stating that where a statute “does not explicitly create a private enforcement mechanism” under which a plaintiff can bring a claim, a court must determine whether “a private right of action can be implied” for a plaintiff to bring “a claimed violation of [the statute]“). In determining whether an implied right of action exists, our “central inquiry” is whether the legislative body intended to
First, is the plaintiff “one of the class for whose especial benefit the statute was enacted [.]” Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff?
Baker, 427 Md. at 709 (alteration in Baker) (quoting Cort v. Ash, 422 U.S. 66, 78 (1975), overruled in part by Touche Ross & Co. v. Redington, 442 U.S. 560 (1979)).
As with any exercise of statutory interpretation, our “goal . . . is to discern and carry out the intent of the [legislative body].” Aleman v. State, 469 Md. 397, 421 (2020). We “first look[] to the normal, plain meaning of the language of the statute, reading the statute as a whole to ensure that no word, clause, sentence or phrase is rendered surplusage, superfluous, meaningless or nugatory.” Berry v. Queen, 469 Md. 674, 687 (2020) (quoting Brown v. State, 454 Md. 546, 551 (2017)). In doing so, “[o]ur inquiry is not confined to the specific statutory provision at issue on appeal. Instead, ‘[t]he plain language must be viewed within the context of the statutory scheme to which it belongs, considering the purpose, aim or policy of the Legislature in enacting the statute.‘” Berry, 469 Md. at 687
(alteration in original) (internal citation and quotation marks omitted) (quoting Johnson v. State, 467 Md. 362, 372 (2020)). That context may include the statute‘s “relationship to earlier and subsequent legislation, and other material that fairly bears on the fundamental issue of legislative purpose or goal, which becomes the context within which we read the particular language before us in a given case.” Berry, 469 Md. at 687 (quoting Blackstone v. Sharma, 461 Md. 87, 114 (2018)).
“Where the statutory language is subject to more than one reasonable interpretation, or its meaning is not clear when considered in conjunction with other statutory provisions, we may glean the legislative intent from external sources.” Johnson v. Md. Dep‘t of Health, 470 Md. 648, 674 (2020) (quoting In re R.S., 470 Md. 380, 403 (2020)). Such external sources may include:
the legislative history, including the derivation of the statute, comments and explanations regarding it by authoritative sources during the legislative process, and amendments proposed or added to it; the general purpose behind the statute; and the relative rationality and legal effect of various competing constructions.
Lillian C. Blentlinger, LLC v. Cleanwater Linganore, Inc., 456 Md. 272, 295 (2017) (quoting Bellard v. State, 452 Md. 467, 482 (2017)). “[W]e must give the statute in question a reasonable interpretation, ‘not one that is absurd, illogical, or incompatible with common sense.‘” Johnson, 470 Md. at 675 (quoting Lockshin v. Semsker, 412 Md. 257, 276 (2010)).
A. Section 5-4(a)(2) Was Enacted for the Purpose of Enforcing Compliance with the Licensure Requirement of § 5-4(a)(1).
The first Baker factor is whether the ordinance was enacted for the special benefit of a class of whom the
The Aletis contend that
unlicensed properties. The benefits the City Council intended to confer through
The Aletis argue that by prohibiting a “person” from charging or collecting rent from “another” for an unlicensed property, the provision necessarily reflects an intent to benefit tenants because they are the “another” from whom rent and other fees may not be collected. But the fact that tenants might benefit from the prohibition on the collection of rent does not mean that the City Council desired or intended that outcome. Viewed in isolation,
As described above, the overarching goals of Article 13, as set forth in
As part of its “comprehensive and integrated program” to further that intent,
Turning back to
B. Indicia of Legislative Intent Suggest an Intent to Enforce § 5-4(a)(2) Through Executive Action, Not a Private Right of Action.
The second factor we consider is whether there are any indications of legislative intent to either create or deny a private remedy under
The plain language of
Moreover, Subtitle 5 establishes several enforcement mechanisms, all of which require
We also find no support for an implied private right of action in the legislative history. Section 5-4(a)(2) was added to Subtitle 5 as part of a set of amendments adopted in 2018. The statement of purpose the City Council adopted at the time does not expressly reference the addition of
C. Implying a Private Right of Action Would Not Necessarily Be Consistent with the Legislative Purpose of § 5-4(a)(2).
The third factor we consider is whether a private right of action to enforce
On the other hand, it is also possible that the City Council might conclude that the existence of such a private right of action might undermine the overarching goals reflected in
Ultimately, whether the creation of an implied right of action to enforce
III. BREACH OF CONTRACT
The Aletis contend that the circuit court erred in dismissing Count IV of the complaint, in which they alleged that Metropolitan breached the Lease by charging them rent while it was unlicensed. Their claim is premised on ¶ 44 of the Lease, which provides:
It is the intent of the parties to comply with the laws of Maryland, including local county and municipal ordinances. . . . In the event no other addendum is attached to this Apartment Lease Contract and the local laws or ordinances provide additional rights or remedies not included herein, this Apartment Lease Contract is amended by reference to such local laws and ordinances to incorporate the terms, rights, or remedies thereof herein. It is the intent of the parties to have this lease construed to include any such rights or remedies herein, and the provisions of such laws or ordinances shall supercede [sic] and control over the language of this Apartment Lease Contract to the extent they are in conflict. . . .
For two reasons, we conclude that the circuit court correctly dismissed Count IV. First, ¶ 44 purports to incorporate “by reference . . . the terms, rights, or remedies” of applicable local laws and ordinances. As we have already concluded that
Second, the Aletis have not identified any material breach of the Lease or any cognizable damages from any such breach. The Aletis’ complaint alleges that they incurred damages “because they paid [Metropolitan] rent and other compensation in exchange for occupancy of the Rental Property and Legal Fees during the 302 days when the Rental was not properly registered and licensed as required by the Baltimore City Code.” But, as already discussed, the intent of
Accordingly, we will affirm the circuit court‘s dismissal of Count IV.
IV. MONEY HAD AND RECEIVED
The Aletis next contend that the court erred in dismissing their claim for money had and received, a cause of action that they assert “applies to any fact pattern[.]” (Emphasis removed). The Aletis posit that “whether or not the lease has been fully performed,” they were “deprived the protections” of
A. Actions for Money Had and Received Generally
An action for money had and received is one of the “‘common counts’ . . . that developed under English common law as a branch of the common law writ of assumpsit[.]” Bourgeois v. Live Nation Ent., Inc., 430 Md. 14, 45 (2013). The common counts were “developed as standard and handy descriptions of a number of set fact patterns for quasi-contractual restitution in General Assumpsit.” Alternatives Unlimited, Inc. v. New Baltimore City Bd. of Sch. Comm‘rs, 155 Md. App. 415, 476 (2004). The counts are thus “particular kinds of quasi-contract” that “refer to fact patterns which may call for restitution to prevent
Although money had and received is an action at law, our courts have long held that it is governed by equitable considerations. See, e.g., State to Use of Emp. Sec. Bd. v. Rucker, 211 Md. 153, 157-58 (1956) (“[T]he gist of [the money had and received] action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money.“) (citation omitted); Callahan v. Linthicum, 43 Md. 97, 105 (1875) (“[M]oney had and received, is an equitable action . . . and the plaintiff, in support of it, can resort to all equitable circumstances incident to his case.“). Because of its origins in quasi-contract, a claim for money had and received generally “allow[s] the recovery of money paid under a contract still executory in nature,” and is “generally not to recover money paid under a fully executed contract.” Bourgeois, 430 Md. at 49.
The Court of Appeals discussed the common law action for money had and received at length in Bourgeois. There, ticket purchasers sued several ticket agencies in the United States District Court for the District of Maryland and alleged that the agencies were in violation of a Baltimore City ordinance by collecting excessive service charges for tickets for events in the City. Id. at 17-18. Among the counts the plaintiffs pled was a count for money had and received, pursuant to which the plaintiffs sought restitution of the amounts collected by the ticket agencies over and above what was permitted by the ordinance. Id. at 18-19. In answering certified questions from the federal court, the Court first confirmed that Maryland continues to recognize an action for money had and received. Id. at 46. The Court then concluded that such an action could lie to recover money for the service charges that were barred by the City ordinance. The Court observed that Maryland courts have found the action to be available to recover money paid under mistake of fact, mistake of mixed law and fact, or as “money obtained by fraud or false pretenses, paid upon an unexecuted illegal contract, or, in certain circumstances, paid under an executed illegal contract.” Id. at 48. The “branch of the action” most applicable to the plaintiffs’ claim was recovery of amounts “paid pursuant to an illegal, and thus allegedly void, agreement.” Id. The Court observed that recovery in such a case was ordinarily limited “to recover money paid under an executory illegal contract—one not yet fully consummated—but generally not to recover money paid under a fully executed contract.” Id. at 49. The basis for the distinction is that the courts will treat an illegal executory contract as a nullity and order restitution independent of the contract. Id. “When the contract is fully executed, however,
B. The Court Did Not Err in Dismissing the Aletis’ Claim for Money Had and Received as to Payments for Rent and Related Fees.
Relying on Bourgeois, the Aletis contend that they have properly pled a claim for money had and received because they are members of the class
With respect to the Aletis’ claim for restitution of rent and related fees they paid pursuant to the Lease, the circuit court correctly determined that the complaint does not state a claim on which relief can be made. An action lies for money had and received “whenever the defendant has obtained possession of money which, in equity and good conscience, [the defendant] ought not to be allowed to retain.” Bourgeois, 430 Md. at 46 (quoting Benson, 389 Md. at 652-53). In CitaraManis, the Court of Appeals determined that a tenant could not recover rent paid to an unlicensed landlord, absent evidence of actual damages, because “the tenants have received everything that they bargained for, and a necessary element justifying the remedy of restitution, i.e., unjust enrichment, is lacking.” 328 Md. at 158-59; see also McDaniel, 419 Md. at 587. In other words, where a landlord has provided all that was bargained for, there is no injustice in permitting the landlord to keep rent and other fees paid under the lease based solely on the landlord‘s lack of licensure. See Galola, 328 Md. at 186 (stating that “voluntary payment of rent under an unenforceable lease does not entitle a tenant to restitution of that rent unless the tenant . . . was provided less than [the tenant] had bargained for in the lease“). “[E]quity and good conscience” do not require restitution of those amounts. Bourgeois, 430 Md. at 46 (quoting Benson, 389 Md. at 652).
Bourgeois, on which the Aletis primarily rely, is inapposite. There, the ordinance at issue made it unlawful for ticket agencies to charge certain fees over and above the face value of the tickets being sold. Id. at 17. The very purpose of the ordinance was thus to protect purchasers of such tickets—including the plaintiffs in that action—from having to pay those charges. Id. Here, by contrast, the problem was Metropolitan‘s lack of licensure, not the rent or associated fees it charged. For the reasons expressed by the Court of Appeals in CitaraManis, McDaniel, and Galola, there is no injustice in denying restitution of otherwise lawful rent and related fees based solely on Metropolitan‘s lack of licensure.
We reach a different conclusion with respect to the Aletis’ claim for restitution of legal fees charged by Metropolitan for bringing actions for nonpayment of rent during the period in which it was unlicensed. Under
It is undisputed that Metropolitan was required to possess a rental license to operate 10 Light Street. The Aletis have alleged that: (1) Metropolitan was unlicensed for a period of 302 days; (2) during that period, notwithstanding its lack of licensure, Metropolitan filed actions against the Aletis for failure to pay rent in violation of local and State law; (3) Metropolitan charged the Aletis legal fees for bringing actions it had no right to bring and which were based on false representations concerning its licensure status; and (4) Metropolitan collected and continues to retain those legal fees. If true, those allegations could form the basis of an action for money had and received. See Bourgeois, 430 Md. at 48 (stating that Maryland cases have recognized grounds for an action for money had and received including mistake of fact or law and money obtained by fraud or false pretenses). We therefore hold that the circuit court erred in dismissing Count III to the extent that the Aletis seek restitution of amounts Metropolitan charged them in legal fees for bringing actions against them for failure to pay rent during a period in which it was unlicensed.
V. DECLARATORY JUDGMENT
We now turn to Count I, in which the Aletis requested that the court issue a declaratory judgment concerning the rights and obligations of the parties. The court declined to do so, stating in its oral ruling that “having dismissed the substantive counts, there remains no issue of justiciable controversy for which a declaratory judgment would be warranted.” For two independent reasons, we hold that the circuit court erred in entering judgment on Count I without declaring the rights and obligations of the parties. First, even if the court were correct that its rulings on Counts II through IV settled the entire dispute between the parties, it still was required to enter a declaratory judgment. Second, the court‘s rulings on Counts II through IV did not settle the dispute the Aletis identified in Count I. We will therefore vacate the judgment entered on Count I and remand to the circuit court for entry of a proper declaration.
A. The Court Was Required to Enter a Declaratory Judgment.
“[A] declaratory judgment does not seek to ‘enforce a claim against [a] defendant,’ but rather seeks a ‘judicial declaration as to the existence and nature of a relationship between [the plaintiff] and the defendant.‘” Daughtry v. Nadel, 248 Md. App. 594, 630 n.26 (2020) (some alterations in original) (quoting Bankers & Shippers Ins. Co. of New York v. Electro Enters., Inc., 287 Md. 641, 653 (1980) (in turn quoting Restatement (Second) of Judgments § 76, Comment c.)). The Court of Appeals has explained the requirements for the entry of a declaratory judgment:
[W]hen a declaratory judgment action is brought and the controversy is appropriate for resolution by declaratory judgment, the court must enter a declaratory judgment and that judgment, defining the rights and obligations of the parties or the status of the thing in controversy, must be in writing. It is not permissible for the court to issue an oral declaration. . . . When entering a declaratory judgment, the court must, in a separate document, state in writing its declaration of the rights of the parties, along with any other order that is intended to be part of the judgment. Although the judgment may recite that it is based on the reasons set forth in an accompanying memorandum, the terms of the declaratory judgment itself must be set forth separately. Incorporating by reference an earlier oral ruling is not sufficient, as no one would be able to discern the actual declaration of rights from the document posing as the judgment. This is not just a matter of complying with a hyper-technical rule. The requirement that the court enter its declaration in writing is for the purpose of giving the parties and the public fair notice of what the court has determined.
Bowen v. City of Annapolis, 402 Md. 587, 608-09 (2007) (alteration in original and emphasis removed) (quoting Allstate Ins. v. State Farm Mut. Auto. Ins., 363 Md. 106, 117 n.1 (2001)).
“[T]he existence of a justiciable controversy is an absolute prerequisite to the maintenance of a declaratory judgment action.” Floyd v. Mayor & City Council of Baltimore, 179 Md. App. 394, 429 n.22 (2008) (quoting Boyds Civic Ass‘n v. Montgomery County Council, 309 Md. 683, 689 (1987)), aff‘d, 407 Md. 461 (2009). A justiciable controversy “is one in which ‘there are interested parties asserting adverse claims upon a state of facts which must have accrued wherein a legal decision is sought or demanded.‘” Id. (emphasis removed). However, our courts have repeatedly held that “a party may seek a declaratory judgment ‘notwithstanding a concurrent common-law, equitable, or extraordinary legal remedy[.]‘” Hanover Invs. v. Volkman, 455 Md. 1, 16 (2017) (quoting
In sum, a ruling on substantive counts brought as part of a lawsuit in which a plaintiff also seeks a declaratory judgment does not render the declaratory judgment claim moot or non-justiciable. For that reason, even if the court were correct that its rulings on Counts II through IV effectively resolved the dispute identified by the Aletis in Count I, the court still was required to enter a judgment declaring the rights and obligations of the parties.
B. The Rulings on Counts II through IV Did Not Resolve the Dispute Identified in Count I.
More importantly, the court‘s resolution of Counts II through IV did not resolve the dispute identified in Count I. As we have discussed, in Counts II
The circuit court‘s resolution of Counts II through IV, all of which related to recovery of amounts the tenants had already paid, therefore did not resolve the dispute the Aletis identified in Count I, which related to collection of amounts the tenants had not paid. For that reason as well, we will vacate the judgment entered with respect to Count I and remand for further proceedings.
CONCLUSION
We conclude that:
Section 5-4(a)(2) of Article 13 of the Baltimore City Code does not provide a private right of action to recover rent and related payments that a tenant made during a period in which a landlord was unlicensed. As a result, the court properly dismissed Count II of the complaint.- The Aletis did not state a claim for breach of contract to recover payments that they made to Metropolitan under the Lease. As a result, the court properly dismissed Count IV of the complaint.
- To the extent they sought restitution of rent and related fees paid under the Lease during the period in which Metropolitan was unlicensed, the Aletis did not state a claim for money had and received. To that extent, we will affirm in part the court‘s dismissal of Count III of the complaint.
- However, the circuit court erred in dismissing the claim for money had and received to the extent that the Aletis sought restitution of legal fees they had paid related to actions Metropolitan had no legal right to bring. To that extent, we will reverse in part the court‘s dismissal of Count III of the complaint.
- The circuit court erred in dismissing Count I of the complaint without entering a declaratory judgment declaring the rights and obligations of the parties.
JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY AFFIRMED IN PART AND REVERSED IN PART. CASE REMANDED FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION. COSTS TO BE PAID 75% BY APPELLANTS AND 25% BY APPELLEES.
Notes
Baltimore City Ordinance 18-130 (Aug 1, 2018), available at https://dhcd.baltimorecity.gov/sites/default/files/Full_text_of_Council_Bill_18-0185.pdf (last accessed June 4, 2021).FOR the purpose of adding certain non-owner-occupied 1- and 2-family dwellings to the licensing, inspection, and related requirements for multi-family dwellings and rooming houses (collectively, “rental dwellings“); modifying the fees, procedures, and prerequisites for the registration of certain non-owner-occupied dwellings, rooming houses, and vacant structures; modifying the procedures and prerequisites for the licensing of rental dwellings; providing for the denial, suspension, or revocation of a rental dwelling license under certain circumstances; providing for judicial and appellate review of administrative decisions relating to the registration or the licensing of these structures; amending the underlying definition of “rooming house” to clarify its applicability to a bed and breakfast facility; defining and redefining certain other terms; imposing certain penalties; correcting, clarifying, and conforming related language; providing certain transition rules for pre-existing licenses; providing for a special effective date; and generally relating to the registration of non-owner-occupied dwellings, rooming houses, and vacant structures and to the licensing of rental dwellings.