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IN THE COURT OF APPEALS OF MARYLAND

No. 87 September Term, 2006 _________________________________________

MICHAEL HANNA, JR., et al.

v.

ARE ACQUISITIONS, LLC ________________________________________ Raker * Cathell Harrell Battaglia Greene Eldridge, John C. (Retired, Specially Assigned) Wilner, Alan M. (Retired, Specially Assigned), JJ. _________________________________________ Opinion by Eldridge, J. _________________________________________

Filed: August 22, 2007 *Cathell, J., now retired, participated in the hearing and conference of this case while an active member of this Court; after being recalled pursuant to the Constitution, Article IV, Section 3A, he also participated in the decision and adoption of this opinion.

The issue in this case is whether the officers and directors of a tenant corporation committed a trespass by leaving the tenant's materials on the leased premises and not removing the materials at the time of, or subsequent to, the termination of the lease. The individual petitioners are officers and directors of Intracel Corporation. Two corporate entities affiliated with Intracel are also petitioners.1 The petitioners argue that the Court of Special Appeals erred when it held that a cause of action for trespass may lie against them. The respondent is ARE Acquisitions, LLC, the owner of the leased premises. ARE argues that the officers and directors of Intracel, by "leaving chattels on the premises after [their] right to be on the premises has expired," committed a trespass. We shall hold that no cause of action for trespass lies against the petitioners. The petitioners' actions do not amount to a trespass under Maryland law. I. ARE's predecessor, as landlord, and Intracel, as tenant, were parties to a ten year lease entered into on January 15, 1997, of a building in Rockville, Maryland. In June 1997, ARE purchased the property and thus became the landlord under the lease. Intracel, as tenant, was a biopharmaceutical company engaged in the business of developing vaccines and other products for the treatment of various diseases. Intracel used the property for its office and laboratory. The equipment and materials utilized

Hereafter, for convenience, the phrase "officers and directors" will sometimes be used to include both the individual petitioners and the two corporate petitioners.

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by Intracel were typical in the biopharmaceutical industry and included biological agents, radioactive material, various chemicals including acids, lacquer thinner, oxygen, argon, cagewashing detergent and sodium hydroxide. In addition, Intracel used incinerators, irradiators, syringes, and other equipment. In 1998, Intracel was suffering financial difficulties. By September 2000, Intracel stopped paying rent in a timely manner and defaulted under the lease. ARE agreed to give Intracel additional time to cure its default under the lease and to refrain from evicting Intracel during the additional time period. Intracel, however, failed to cure its default and by early 2001 owed ARE a rental arrearage in excess of $400,000. On April 4, 2001, ARE notified Intracel that the lease was terminated effective April 19, 2001, and that Intracel was required to vacate the premises by that date. Intracel requested and was granted additional time to complete its move and ultimately vacated the premises by April 30, 2001. ARE contended that Intracel's officers and directors committed a trespass because, when they vacated the property, Intracel's officers and directors "left the Premises in disarray, abandoning large quantities of unwanted hazardous waste and contaminated materials, including but not limited to biological agents, radioactive materials and dangerous chemicals at the Premises." ARE alleged that, because it "did not know what all the materials were, and because some were obviously chemically hazardous, biohazardous, or radioactive, the condition of the building posed a risk to ARE's employees, other tenants, any new tenant, and the general public." In July 2001, ARE hired a contractor to clean up the materials left behind by Intracel. Intracel filed

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a bankruptcy petition in the United States Bankruptcy Court for the District of Maryland on September 12, 2001, and ARE was one of the largest unsecured creditors in the bankruptcy action. In September 2002, ARE instituted this action in the Circuit Court for Montgomery County, seeking both compensatory and punitive damages. The operative pleading is ARE's second amended complaint, filed on March 18, 2004. In that complaint, ARE named seven of Intracel's officers and directors as defendants.2 Intracel itself was not a defendant. ARE also included as defendants Intracel

Acquisition Holding Company, LLC (IAHC) and Dublind Partners, Inc. According to the second amended complaint, IAHC was a company set up and controlled by the individual defendants "to acquire Intracel, control its operations, and protect IAHC's investment in Intracel." ARE alleged that Dublind Partners, Inc. was "set up and controlled by Defendants Lindsay and Dubroff, [and] controlled IAHC and Intracel's operations." The second amended complaint included several alleged causes of action, including, inter alia, trespass, tortious interference with contract, "aiding and abetting trespass," waste, negligence, and "aiding and abetting waste." The only asserted cause of action which remains in the case is trespass. In its second amended complaint, ARE claimed that the defendants "directed, were aware of, and participated in the conduct of Intracel which caused waste and contaminated materials to be deposited, abandoned

The individual defendants were Michael G. Hanna, Jr., Peter R. Nardin, Richard P. Cox, Jonathan C. Swindle, Charles Dubroff, Charles J. Lindsay, and David Fox.

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and strewn about the Premises, which . . . constituted an unauthorized entry to the Premises." In addition, ARE asserted in the trespass count that "Defendants Dublind, IAHC, Nardin, Durbroff, Lindsay, Fox, Hanna and Swindle controlled the cash flow of Intracel and refused to authorize the payment of the funds necessary to remove the hazardous waste and materials and restore the Premises to its proper condition." The Circuit Court for Montgomery County granted the defendants' motion to dismiss all the counts in the second amended complaint except those relating to trespass and waste, and to dismiss the request for punitive damages. Thereafter, ARE filed a motion for summary judgment on the trespass count, and the Circuit Court denied the motion. The defendants then filed a motion for summary judgment on the remaining counts, submitting transcripts of depositions, interrogatories and answers to the interrogatories. After reviewing the material and holding a hearing on the motion, the Circuit Court granted summary judgment in favor of the defendants on the remaining counts which related to trespass and waste. ARE appealed to the Court of Special Appeals, arguing that the Circuit Court erred in dismissing the negligence count and the request for punitive damages. ARE also contended that the grant of summary judgment in favor of the defendants on the trespass and waste counts was erroneous. In an unreported opinion, the Court of Special Appeals affirmed the Circuit Court's rulings on all counts except the trespass count. In holding that the Circuit Court erred in granting summary judgment as to trespass, the intermediate appellate court chiefly relied on the Restatement (Second) of Torts. The pertinent sections of the

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Restatement provide as follows (emphasis added):

"

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