Subsection 5-4(a)(1) of Article 13 of the Baltimore City Code prohibits any person from renting or offering to rent a dwelling "without a currently effective license to do so from the Housing Commissioner[.]" Subsection 5-4(a)(2) of that article prohibits any person from charging, accepting, retaining, or seeking to collect rent for a rental dwelling unless the person was properly licensed at the time of both the offer to provide the dwelling and the occupancy. In this appeal, we must determine whether subsection (a)(2) provides tenants a private right of action to collect a refund of rent and other fees already paid to a landlord who was unlicensed during a portion of a rental term, but who otherwise complied fully with the rental agreement for the dwelling. Relying on well-established principles of statutory interpretation, contract law, and equity, we conclude that subsection (a)(2) does not provide such a right with respect to rent and related fees. Accordingly, we will affirm the judgment of the Circuit Court for Baltimore City to the extent that court held that the tenant plaintiffs did not have a right to recover rent already paid to the landlord defendants.
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.
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 Article 13, § 5-4(a)(1) of the Baltimore City Code. The Aletis, unaware of the lack of licensure, paid rental and other fees to Metropolitan, which they then sought to recover through this action. The Aletis also sought (1) certification as a class action to pursue recovery of
The Statutory Scheme: Article 13 of the Baltimore City Code
Article 13 of the Baltimore City Code is "a comprehensive statutory scheme aimed at `establish[ing] minimum standards governing the condition, use, operation, occupancy, and maintenance of dwellings ... in order to make dwellings safe, sanitary, and fit for human habitation.'"
This appeal most directly concerns Subtitle 5 of Article 13, which governs the licensing of rental dwellings. Section 5-4(a), as it applied at the time relevant to this appeal,
Except as provided in subsection (b) of this section,[
Section 5-5 requires owners and managers of a rental dwelling to apply for new and renewal licenses, the prerequisites for which are set forth in § 5-6. Those prerequisites
Subtitle 5 also contains enforcement provisions. Section 5-17 permits the Housing Commissioner to require that an unlicensed rental dwelling be vacated within 24 hours if "vacating the premises is necessary for the public health, safety, and welfare." Under § 5-25, issuance of an environmental citation is an available, non-exclusive remedy to enforce the ordinance. Section 5-26 makes any violation of the subtitle a misdemeanor subject to punishment by "a fine of not more than $1,000 for each offense," with each day a violation continues constituting a separate offense.
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:
On February 24, 2020, the Aletis filed their complaint, in which they alleged that Metropolitan had violated § 5-4 by charging them rent, related service fees, and legal fees while unlicensed. The Aletis alleged
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 § 5-4(a). In Count III, the Aletis sought to recover the same amounts plus a refund of legal fees as restitution damages based on the common law cause of action for money had and received. And in Count IV, the Aletis alleged breach of contract based on ¶ 44 of the Lease, which they contended incorporated § 5-4(a).
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 § 5-4(a) did not create a private cause of action. In dismissing the count for money had and received, the court found that the Aletis had failed to plead with specificity "that they paid more than what they would have paid" but for the violation of § 5-4. And, having found that the Aletis had no claim under § 5-4(a) itself, the court concluded that they also had no contractual claim based on the incorporation of that provision into the Lease. The court then declined to issue a declaratory judgment because, based on the dismissal of "the substantive counts, there remains no issue of justiciable controversy for which a declaratory judgment would be warranted."
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, 230 A.3d 80 (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, 230 A.3d 80 (quoting Lloyd v. Gen. Motors Corp., 397 Md. 108, 121, 916 A.2d 257 (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, 994 A.2d 430 (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, 230 A.3d 80 (quoting Lloyd, 397 Md. at 121, 916 A.2d 257).
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 § 5-4(a)(2) against
Except to the extent that the Aletis contend that § 5-4(a)(2) was incorporated by reference into the Lease, they do not contend that Metropolitan failed to comply with any terms of the Lease, that the apartment they rented was deficient or defective in any way, or that they failed to receive the full benefit of the apartment and other services covered by the Lease.
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, § 5-4(a)(1). The Court of Appeals has previously explored similar claims arising under the licensing schemes of other Maryland jurisdictions. Although the governing ordinances and causes of action at issue in those cases differ from those here—and, most significantly, none of those licensing schemes included a provision similar to § 5-4(a)(2)—those cases nonetheless provide important guidance for our analysis. As a result, before we engage directly with the Aletis' contentions concerning § 5-4(a)(2), we will explore those precedents.
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, 613 A.2d 964 (1992). The tenants acknowledged the property had been in acceptable condition during the rental period. Id. at 145, 613 A.2d 964. However, after learning that the property was not properly licensed, they filed suit to recover the amounts they had paid as damages under the Consumer Protection Act and as restitution because of the unenforceable lease. Id.
After the circuit court ruled in favor of the tenants, the Court of Appeals reversed. Id. at 146, 164, 613 A.2d 964. 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, 613 A.2d 983 (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, 613 A.2d 983. 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, 613 A.2d 983.
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, 19 A.3d 927 (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, 19 A.3d 927 (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, 19 A.3d 927 (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, 19 A.3d 927. When the tenant failed to pay rent after the first month, the landlord initiated summary ejectment proceedings pursuant to § 8-401 of the Real Property Article. Id. at 567, 19 A.3d 927. The tenant, who had discovered that the property was unlicensed, claimed that the landlord was precluded from bringing that action while unlicensed. Id. at 568-69, 19 A.3d 927. The tenant also sought recovery of the rent she had paid as restitution under the Consumer Protection Act. Id. at 570-71, 19 A.3d 927.
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, 19 A.3d 927. 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, 19 A.3d 927. 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, 226 A.3d 15 (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, § 5-4(a)(2) expressly prohibits a landlord from "charg[ing], accept[ing], retain[ing], or seek[ing] to collect any rental payment or other compensation" unless properly licensed. We now turn to that contention.
II. SECTION 5-4(A)(2) PRIVATE RIGHT OF ACTION CLAIM
The Aletis first contend that § 5-4(a)(2) affords them an implied private right of action to recover payments made to Metropolitan while it did not hold an active rental license for 10 Light Street. Metropolitan argues that the circuit court correctly determined that the ordinance does not provide a private right of action. We agree with Metropolitan and the circuit court.
As an initial matter, it is important to clarify our point of focus. Subsection 5-4(a) contains two numbered subparts. Subpart (1) prohibits any person from renting or offering to rent to another any rental dwelling in the absence of "a currently effective license to do so[.]" Subpart (2) then prohibits any such person from charging, accepting, collecting, or retaining rent from another unless the person was licensed at the relevant times. The Aletis seek here to enforce only subpart (2), as they acknowledge that Metropolitan had rectified the lack of licensure of 10 Light Street before they filed their complaint. Our concern is thus whether there is an implied private right of action for a tenant to enforce § 5-4(a)(2) by seeking a refund of rent paid during a period in which the landlord was unlicensed.
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, 92 A.3d 400 (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, 76 A.3d 1186 (2013); see also California v. Sierra Club, 451 U.S. 287, 289-90, 101 S.Ct. 1775, 68 L.Ed.2d 101 (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
Baker, 427 Md. at 709, 50 A.3d 1112 (alteration in Baker) (quoting Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), overruled in part by Touche Ross & Co. v. Redington, 442 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 (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, 230 A.3d 97 (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, 233 A.3d 42 (2020) (quoting Brown v. State, 454 Md. 546, 551, 165 A.3d 398 (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, 233 A.3d 42 (alteration in original) (internal citation and quotation marks omitted) (quoting Johnson v. State, 467 Md. 362, 372, 225 A.3d 44 (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, 233 A.3d 42 (quoting Blackstone v. Sharma, 461 Md. 87, 114, 191 A.3d 1188 (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, 236 A.3d 574 (2020) (quoting In re R.S., 470 Md. 380, 403, 235 A.3d 914 (2020)). Such external sources may include:
Lillian C. Blentlinger, LLC v. Cleanwater Linganore, Inc., 456 Md. 272, 295, 173 A.3d 549 (2017) (quoting Bellard v. State, 452 Md. 467, 482, 157 A.3d 272 (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, 236 A.3d 574 (quoting Lockshin v. Semsker, 412 Md. 257, 276, 987 A.2d 18 (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 § 5-4(a)(2) operates for the specific benefit of tenants—a class of which they are a part—by prohibiting landlords from charging rent to tenants residing in unlicensed properties. That contention, however, misapprehends the role § 5-4(a)(2) plays in the statutory scheme. The apparent purpose of § 5-4(a)(2) is to benefit the City and the public generally, including tenants, by forcing landlords to comply with the licensing requirement in § 5-4(a)(1), not to benefit tenants with rent-free housing in unlicensed properties. The benefits the City Council intended to confer through § 5-4(a) are those accompanying licensure.
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, § 5-4(a)(2) begs the question of why landlords are prohibited from charging tenants rent while unlicensed. That question is answered by viewing § 5-4(a)(2) in the context of the remainder of the statutory scheme.
As described above, the overarching goals of Article 13, as set forth in § 2-1, include clearing and/or remediating deteriorated or deteriorating areas in Baltimore City and preventing the threatened deterioration of other areas. See id. § 2-1(a)(1), (2). Those objectives are intended to prevent numerous social and economic ills identified in the Code. Id. § 2-1(2). Thus, with respect to areas of the City that are "not yet deteriorated or deteriorating," the City Council has a goal of conserving those areas through "the enforcement of applicable regulatory codes relating to buildings, housing, sanitation or safety, [and] the rendering of services to community organizations[.]" Id. § 2-1(b)(1). Those provisions certainly benefit tenants, but the Code makes plain that the City Council's focus was broader. Cf. Erie Ins. Co. v. Chops, 322 Md. 79, 91, 585 A.2d 232 (1991) (in the course of rejecting a claimed private right of action, stating that, "[a]lthough the [plaintiffs] may properly be said to be within the class of persons in whose favor the statute was intended, it seems equally apparent that the principal focus of the uninsured motorist laws is for the general protection of the public").
As part of its "comprehensive and integrated program" to further that intent, id. § 2-1(b)(2), the City Council enacted the
Turning back to § 5-4, we conclude that the City Council's apparent intent was to require that all rental properties in the City be licensed and, in doing so, fulfill all the requirements for licensure, which in turn benefits tenants as well as the City and the public generally. In that scheme, the role of the prohibition in § 5-4(a)(2) against charging, accepting, retaining, or seeking to collect rent during a period of non-licensure is to promote licensure. We see nothing in the statutory scheme broadly or in § 5-4(a)(2) specifically that suggests an intent to specially benefit tenants by providing them with free, unlicensed housing. To the contrary, the apparent legislative intent was for there to be no unlicensed housing, and § 5-4(a)(2) is a coercive mechanism to effectuate that intent.
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 § 5-4(a)(2). See Baker, 427 Md. at 709, 50 A.3d 1112. The Aletis assert that the "plain and unambiguous language" of the provision evinces such an intent, reasoning that because the language prohibits an unlicensed landlord from collecting or retaining rent, § 5-4(a)(2) "clearly impl[ies]" a "tenant-specific remedy" in which a landlord must return improperly collected rent. Metropolitan contends that neither the plain language nor the ordinance's history indicates any express or implied legislative intent to create a private cause of action. We agree with Metropolitan.
The plain language of § 5-4(a)(2) is a broad and sweeping prohibition against landlords not only charging, accepting, or seeking to collect rental payments, but also retaining such payments. It is thus plain that the City Council intended to create a strong financial disincentive for landlords to ignore the licensing requirement. Nonetheless, the question before us is neither whether Metropolitan violated the ordinance in the past nor whether it is currently in violation of the ordinance by retaining payments previously received. The question here is whether the City Council intended to provide tenants with a private cause of action to enforce such violations. To that extent, it is notable that the language employed by the City Council imposes a restriction on landlords; it does not purport to create a right or entitlement for tenants.
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 § 5-4(a)(2), much less identify an intent to provide a private mechanism to enforce it.
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 § 5-4(a)(2) would be "consistent with the underlying purposes of the legislative scheme[.]" Baker, 427 Md. at 709, 50 A.3d 1112 (quoting Cort, 422 U.S. at 78, 95 S.Ct. 2080). Because reasonable arguments can be made on both sides, we view this factor as neutral. On the one hand, taking a narrow view of the City Council's purpose in enacting § 5-4(a)(2), it might be reasonable to view a private right of action as consistent with the underlying purpose of promoting licensure. After all, if the City Council viewed the prospect of being unable to collect or retain rent while unlicensed as a hammer to compel compliance with the licensing requirement, it could reasonably be argued that the prospect of facing tenant claims for reimbursement would be even more effective in compelling compliance.
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 § 2-1 of Article 13 if, for example, claims for repayment of rent were to imperil the continued financial viability of a landlord who was, for a significant period of time, unknowingly out of compliance with the licensing requirement but compliant with all of the prerequisites for licensure.
Ultimately, whether the creation of an implied right of action to enforce § 5-4(a)(2) would be consistent with the legislative purpose is a policy judgment that is not for us to make.
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:
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 § 5-4(a)(2) does not provide a private right or remedy to tenants, no such right or remedy can be incorporated by reference into the Lease through ¶ 44.
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 § 5-4(a)(2) is to force compliance with the obligation
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 § 5-4(a) and are entitled to a refund of payments made while 10 Light Street was unlicensed. According to their complaint, these payments fall into two categories: (1) rent payments and related fees, such as utility fees, trash fees, and late fees; and (2) legal fees that Metropolitan charged them in pursuing court actions for failure to pay rent. Metropolitan counters that a cause of action for money had and received "does not lie on an executed contract" and would unjustly enrich the Aletis.
We hold that the court did not err in dismissing the claim for money had and received for the Aletis' payments for rent or related fees that they paid during the unlicensed period. However, we conclude that the court erred in dismissing the Aletis' claim as to any legal fees Metropolitan may have collected during the unlicensed period in connection with bringing actions for nonpayment of rent. We therefore will vacate that part of the court's judgment and remand for further proceedings.
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, 59 A.3d 509 (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, 843 A.2d 252 (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, 126 A.2d 846 (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, 59 A.3d 509.
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, 59 A.3d 509. 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, 59 A.3d 509.
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, 59 A.3d 509. 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, 59 A.3d 509. 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, 59 A.3d 509. 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 § 5-4(a)(2) was intended to benefit, Metropolitan violated the ordinance, and the parties are not in pari delicto. Metropolitan responds that unlike the plaintiffs in Bourgeois, the Aletis are in pari delicto because the lease was fully executed, and, accordingly, they cannot avail themselves of the cause of action for money had and received.
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, 59 A.3d 509 (quoting Benson, 389 Md. at 652-53, 887 A.2d 525). 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, 613 A.2d 964; see also McDaniel, 419 Md. at 587, 19 A.3d 927. 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, 613 A.2d 983 (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, 59 A.3d 509 (quoting Benson, 389 Md. at 652, 887 A.2d 525).
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. 430 Md. at 17, 59 A.3d 509. 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.
C. The Court Erred in Dismissing the Aletis' Claim for Legal Fees Incurred in Connection with Metropolitan's Failure to Pay Rent Actions.
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 § 8-401 of the Real Property Article (2015 Repl.; 2020 Supp.), if a tenant fails to pay rent "when due and payable," a landlord may initiate a complaint for failure to pay rent and for repossession of the rental property in the District Court. Consistent with the Court of Appeals' holding in McDaniel, however, the landlord must "possess a current license to operate the premises ... if the dwelling is located in a jurisdiction that requires owners to obtain such licenses," 419 Md. at 563, 19 A.3d 927, and the landlord "must affirmatively plead and demonstrate that [the landlord] is licensed at the time of the filing of the complaint," id. at 587, 19 A.3d 927.
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, 59 A.3d 509 (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, 242 A.3d 1158 (2020) (some alterations in original) (quoting Bankers & Shippers Ins. Co. of New York v. Electro Enters., Inc., 287 Md. 641, 653,
Bowen v. City of Annapolis, 402 Md. 587, 608-09, 937 A.2d 242 (2007) (alteration in original and emphasis removed) (quoting Allstate Ins. v. State Farm Mut. Auto. Ins., 363 Md. 106, 117 n.1, 767 A.2d 831 (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, 946 A.2d 15 (2008) (quoting Boyds Civic Ass'n v. Montgomery County Council, 309 Md. 683, 689, 526 A.2d 598 (1987)), aff'd, 407 Md. 461, 966 A.2d 900 (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, 165 A.3d 497 (2017) (quoting Cts. & Jud. Proc. § 3-409(c)); see Allied Inv. Corp. v. Jasen, 354 Md. 547, 556-57, 731 A.2d 957 (1999) ("That a separate claim exists upon which suit could be brought ... ordinarily does not defeat a party's right to seek and obtain a declaratory judgment[.]"). And, notably, our courts "have not ... generally blessed the dismissal of a proper action for declaratory judgment because of a ruling on an alternative claim in the same action." Post v. Bregman, 349 Md. 142, 160, 707 A.2d 806 (1998).
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.
We conclude that:
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).