Week 23 (2020)
Week of June 1, 2020 through June 5, 2020
United States v. Rogers (Harris 6/2/2020): The Fourth Circuit held that discretionary conditions to a defendant’s supervised release must be stated orally during the defendant’s sentencing hearing rather than, after the fact, in a written standing order. The court’s decision vacated the district court’s sentence (Whitney) and the case was remanded. Full Opinion
Parkway 1046, LLC v. U.S. Home Corp., No. 18-1556
- Majority Opinion: Wynn
- Submitted: June 1, 2020
- Decided: June 3, 2020
The Fourth Circuit held that Parkway 1046 (appellee-plaintiff), a third-party beneficiary to a development agreement, brought a timely suit against U.S. Home Corporation (appellant-defendant) because Parkway’s contract claim accrued in April 2017 when U.S. Home refused to reimburse Parkway. Further, the court held that Parkway’s award of prejudgment interest dates back to April 2017. And finally, the court held that Parkway could not receive attorney’s fees following U.S Home’s breach because it was not a “party” under the terms of the agreement. The Fourth Circuit affirmed the district court’s judgment (Morgan) that Parkway’s contract claim satisfied Maryland’s statute of limitations; the court vacated the district court’s award of prejudgment interest; and the court reversed the district court’s award of attorney’s fees to Parkway.
In 2005, U.S. Home contracted to purchase 1,250 acres of land in Maryland. Along with this purchase agreement, U.S. Home had a development agreement to develop the land. Parkway was not a party to either the purchase or the development agreement. It was, however, a third-party beneficiary. Under the agreement, “U.S. Home agreed to pay Parkway [about] $2.25 million ‘at the time of Settlement under the [Purchase] Agreement’ as reimbursement for Parkway’s acquisition of certain nearby properties ‘for right of way purposes.’” 2020 WL 2892224, at *1 (4th Cir. June 3, 2020). The agreement “defined ‘Settlement’ as ‘[t]he consummation of the purchase and sale’ of the land.” Id. Years of litigation caused the settlement date to be pushed back—repeatedly. Eventually, the sale occurred in April 2017. With the sale complete, Parkway sought reimbursement. But U.S. Home refused to pay. Thus, Parkway sued U.S. Home—in June 2017—for breach of contract.
The district court (E.D. Va.) ruled that Parkway’s contract claim was timely. Further, the court awarded prejudgment interest dating back to May 2008. And finally, the court awarded Parkway attorney’s fees. U.S. Home appealed those judgments.
First, the Fourth Circuit held that Parkway’s claim was timely under Maryland’s three-year statute of limitations. U.S. Home argued that Parkway’s claim accrued in either 2008 or 2009, making Parkway’s suit untimely. But the Fourth Circuit disagreed. The court began by noting that a claim accrues when the plaintiff has knowledge (actual or constructive) of a contractual obligation, breach, and damages. The dispute turned on when the breach occurred.
The court concluded that the claim did not accrue until Parkway knew of U.S. Home’s breach. Reading the agreement, the court interpreted finalizing the land sale as a condition precedent for U.S. Home to reimburse Parkway: if the land sale did not occur, then U.S Home did not have to pay Parkway; if the land sale occurred, U.S. Home had to pay Parkway. From that premise, the court reasoned (1) the land sale occurred in April 2017; (2) because the land sale occurred in April 2017, the land sale triggered U.S. Home’s obligation to Parkway; (3) when U.S. Home refused to pay Parkway, Parkway had knowledge of U.S. Home’s breach. Consequently, the court concluded that Parkway’s claim accrued in 2017, and its suit two months later was timely.
Second, the Fourth Circuit held that the award of prejudgment interest began to accrue in April 2017, not May 2008. Maryland law provides that mandatory prejudgment interest accrues when “the obligation to pay and the amount due [are] both certain.” First Virginia Bank v. Settles, 588 A.2d 803, 807 (Md. 1991). Because the obligation to pay and the amount due were uncertain until April 2017, the court concluded, that is when the prejudgment interest began accruing. Therefore, the Fourth Circuit vacated the district court’s award of prejudgment interest dating back to May 2008.
Third, the Fourth Circuit held that U.S. Home did not owe Parkway attorney’s fees because Parkway was not a “party” within the meaning of the contract’s terms. The development agreement read that if “‘litigation arises between the parties regarding this Contract, the . . . prevailing party shall be entitled to recover its reasonable attorney fees.’” 2020 WL 2892224,at *9. The court construed the plain meaning of “party,” using Black’s Law Dictionary, as “signatory.” From that interpretation of party, the court pointed out that Parkway was not a signatory of the contract. Further, the court said that references to a party or parties in the agreement could not be construed to include Parkway. As such, the court concluded that the signatories did not intend Parkway to be a party as that term is used in the agreement. Therefore, the Fourth Circuit reversed the district court’s award of attorney’s fees to Parkway.
In sum, the Fourth Circuit affirmed the district court’s judgment that Parkway’s suit satisfied Maryland’s three-year statute of limitations; it vacated the judgment on prejudgment interest; and it reversed the district court’s award of attorney’s fees.