New Maryland Case on Attorney's Fee Awards - Fixed Percentage Fees in Promissory Notes & Post-Judgment Attorney Fee Awards

The Maryland Court of Special Appeals recently addressed an issue that affects lawyers and other contract and promissory note drafters. In Suntrust Bank v. Goldman, the Court ruled that actual reasonable attorneys' fees incurred are the proper measure of an attorney fee award even where the promissory note calls for a fixed percentage fee based on the amount of the obligation due.

In the case, Sunstrust's Credit Line agreement provided that Suntrust was entitled to an award of attorneys' fees equal to 15% of the principal due "or reasonable attorneys' fees allowed by law." Suntrust asked for an award of $60,206.00 (15% of the balance due) and the Circut Court for Baltimore County awarded actual attorneys' fees of only $3,094.00.

The Court of Special Appeals agreed with the Circuit Court. The Court's opinion is here. Specifically, the Court held: "Thus, Maryland law limits the amount of contractual attorneys fees to actual fees incurred, regardless of whether the contract provides for a greater amount. The contract may provide that the amount of fees is determined by a percentage or some other method, but to comply with the indemnification requirement, the amount of fees paid pursuant to the agreement between the claimant and its attorneys must equal or exceed the amount provided for in the contract."

The Court also dealt with the issue of attorneys' fee awards for post-judgment collection efforts, and seemingly recommended that if a creditor wanted to be able to pursue reimbursement for post-judgment colection efforts, it could include clear language in its agreements providing that the parties intend that the attorneys' fee provision shall not merge into a judgment on the agreement.

New Business & Technology Opinion - Montgomery County Circuit Court

The Circuit Court for Montgomery County, Maryland, Judge Ronald Rubin, recently issued an opinion in the Hospitality Partners, LLC v. Brewmasters Hotel, LLC case.

The case is summarized and linked to by Edward Sharkey of the Maryland State Bar Association's Business Law Section at http://bit.ly/r5Jx0h.

In the case, the Defendant argued (on a motion for new trial) that a $2.8 million judgment was inappropriate where there was a contractual clause allowing the Defendant to terminate a contract without cause and calling for a termination payment far below the $2.8 million awarded.

The court held that the Defendant did not argue applicability of that clause at trial, and could not do so now on a motion for new trial. In essence, the Defendant was stuck with its decision to try and terminate the contract "for cause."

Maryland Court of Special Appeals: Perpetual Waiver of Statute of Limitations Unenforceable

In 2009, I helped my partner David Lease try the case of Ahmad v. Eastpines Terrace Apts. in the Circuit Court for Montgomery County. In that case, the plaintiff sued a company owned by his elderly father alleging that he was entitled to payment for services allegedly rendered to the company, and for amounts allegedly advanced on behalf of the company.

Defendant denied owing anything to Mr. Ahmad, and argued that even if any amounts ever had been due Plaintiff for his claims, those claims were barred by Maryland's three year statute of limitations. Plaintiff argued that a document he drafted and had his elderly father sign waived the statute of limitations. [The document had been drafted in English, and Plaintiff's father could not read English]

At trial, the Circuit Court held that the document did not perpetually waive the statute of limitations, and that in any event, a perpetual waiver would be against public policy and unenforceable. Judgment was entered in favor of our client on all of Plaintiff's claims. Plaintiff appealed to the Court of Special Appeals.

The Court of Special Appeals affirmed the Circuit Court. The appellate Court held that the document in question did not specifically say that it waived limitations perpetually, and that even if it did, perpetual waivers of limitations would be unenforceable under Maryland law.

A copy of the opinion is here.