It appears the dust has finally settled on the legal dispute that pitted Bainbridge Development Corp. against Lenny Greenberg’s Bethesda-based real estate company Greenhill Cos.
The Maryland Court of Appeals ruled Tuesday that Bainbridge must pay $3.93 million in legal fees and expenses related to Greenhill’s lawsuit over structural damages at the Greenhill property resulting from construction of the adjacent Bainbridge Bethesda apartment building. The court found the developer was required to pay the legal fees because a contract agreed to by Bainbridge and Greenhill before construction began said that Bainbridge would cover those fees if a legal dispute arose about damages to Greenhill’s adjoining properties.
“We were delighted with the outcome after six years of litigating the facts and they were found absolutely wrong on their quest for victory on appeal after appeal,” Greenberg said Wednesday.
Attorneys for Bainbridge did not immediately return a request for comment Wednesday.
Bainbridge agreed in 2014 to pay $3.2 million in damages to Greenhill after a court ruled that the company failed to properly shore up the ground underneath Greenhill’s 4905 Fairmont Ave. property while constructing the 200-unit apartment building between Fairmont and St. Elmo avenues in 2011 and 2012—a requirement stipulated in the contract. The construction caused cracks in the walls at the low-rise building that was home to the Fresh Grill restaurant and Dansez! Dansez! Dance studio.
The court’s opinion notes that, “By February 2012, the owner of the children’s dance studio on [Greenhill’s] property reported seeing numerous cracks in the walls, that she feared a roof collapse on her students and that many parents would not bring their children to class until she received assurances by Montgomery County that the building was safe.”
Shortly after, the building was closed because of the damage. Greenhill also received another $2.65 million payout from Bainbridge for damages caused by construction to another of its properties, the former Red Tomato building at 4910 St. Elmo Avenue.
In addition to damages, Greenhill had sought more than $3.5 million in legal fees, which Bainbridge contested. After a Montgomery County Circuit Court judge and then the Maryland Court of Special Appeals both ruled in favor of Greenhill, Bainbridge appealed the case to the Court of Appeals—the state’s highest court.
Bainbridge’s attorneys had argued that Greenhill could not be awarded the cost of attorney’s fees because it had already received damages.
However, the judges pointed to the contract between Greenhill and Bainbridge that specifically stated Greenhill would receive attorney’s fees and related expenses if Bainbridge breached the contract and damaged Greenhill’s properties.
“Bainbridge and [Greenhill] designed the agreement to ensure that Bainbridge, and not [Greenhill], carried all of the risk from the construction work; otherwise, [Greenhill] had no incentive to support Bainbridge’s plans,” wrote Judge Irma Raker in the court’s opinion.
The court upheld the earlier rulings and ordered Bainbridge to pay the fees.
Greenhill’s low-rise building at the property remains unoccupied, although there are green “leased signs” hanging in the window.
Meanwhile the Bainbridge apartment building opened in the fall of 2014. At a grand opening celebration, Jeffrey Kane, president and CEO of National Real Estate Advisors, a firm that helped finance the project, said it was completed, “despite the fact that our neighbor Lenny Greenberg likes to file lawsuits.”
Greenhill’s offices are at 4901 Fairmont Ave., two doors down from Bainbridge Bethesda.