PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 15-1988

NCO FINANCIAL SYSTEMS, INC., now known as EGS Financial 

Care, Inc.,

Plaintiff - Appellee,

v.

MONTGOMERY PARK, LLC,

Defendant - Appellant.

No. 15-2071

NCO FINANCIAL SYSTEMS, INC., now known as EGS Financial 

Care, Inc.,

Plaintiff - Appellant,

v.

MONTGOMERY PARK, LLC,

Defendant - Appellee.

Appeals from the United States District Court for the District 

of Maryland, at Baltimore. George L. Russell, III, District 

Judge. (1:11-cv-01020-GLR)

Argued: September 21, 2016 Decided: November 29, 2016 
2

Before GREGORY, Chief Judge, and NIEMEYER and HARRIS, Circuit 

Judges.

Affirmed in part, reversed in part, and remanded by published 

opinion. Judge Niemeyer wrote the opinion, in which Chief Judge 

Gregory and Judge Harris joined.

ARGUED: Howard G. Goldberg, GOLDBERG & BANKS, P.C., Baltimore, 

Maryland, for Appellant/Cross-Appellee. Andrew David Levy, 

BROWN GOLDSTEIN & LEVY, LLP, Baltimore, Maryland, for 

Appellee/Cross-Appellant. ON BRIEF: John E. McCann, Jr., Ranak 

K. Jasani, MILES & STOCKBRIDGE P.C., Baltimore, Maryland, for 

Appellant/Cross-Appellee. Joshua R. Treem, Kevin D. Docherty, 

BROWN GOLDSTEIN & LEVY, LLP, Baltimore, Maryland, for 

Appellee/Cross-Appellant.
3

NIEMEYER, Circuit Judge:

This appeal involves disputes between parties to a 12-year 

commercial lease of office space in Baltimore, Maryland. NCO 

Financial Systems, Inc., the lessee, contends that it properly 

exercised a right of early termination of the lease and that, 

during the course of the lease, it was overcharged for rent 

based on erroneous calculations of the space’s square footage. 

Montgomery Park, LLC, the lessor, contends that NCO failed to 

satisfy the lease’s specific conditions for early termination 

and that NCO now owes rent for the remainder of the lease term. 

The district court concluded that NCO effectively exercised 

its right to terminate the lease early. It also concluded that 

NCO was not overcharged or, in any event, that its overcharge 

claim was barred by Maryland’s three-year statute of 

limitations. 

On appeal, we reverse the district court’s ruling that NCO 

effectively exercised the right of early termination, and we 

affirm its ruling rejecting NCO’s overcharge claims. 

Accordingly, we remand for further proceedings on Montgomery 

Park’s claim that NCO breached the lease agreement in failing to

pay rent.
4

I

Beginning on March 15, 2003, Montgomery Park leased 

“approximately 106,267” square feet of office space to NCO in a 

building located on Washington Park Boulevard in Baltimore, 

Maryland. The base rent for the first year was $15 per square 

foot, or $1,594,005 per year, which thereafter would increase as 

determined by a formula tied to inflation. The rent also 

included NCO’s proportionate share of real estate taxes and 

operating expenses for the common areas of the building.

The initial term of the lease was 12 years, subject to 

renewal for an additional 8 years. The lease, however, gave NCO 

a limited right to terminate the lease after 8 years, provided 

that NCO gave timely notice and made timely payment of a 

termination fee. More specifically, the lease provided:

§ 1.05 Limited Right of Early Termination. 

Tenant shall have a one-time, conditional right to

terminate this Lease (the “Termination Right”), 

effective on that date which is eight years after the

Commencement Date (the “Termination Effective Date”), 

upon Tenant's strict compliance with all of the

following requirements: (a) Tenant shall deliver to 

Landlord (not later than ten (10) months prior to the

Termination Effective Date (such notice deadline, the 

“Termination Notice Deadline”)) a written notice (the 

“Termination Notice”) stating that Tenant elects to 

exercise this Termination Right; and (b) Tenant shall 

pay to Landlord (50% simultaneously with delivery of 

the Termination Notice and the remaining 50% balance 

at least three (3) months prior to the Termination 

Effective Date), a termination fee (the “Termination 

Fee”) equal to ten (10) times the monthly installment 

(which will be in effect as of the Termination 

Effective Date) of Rent (including, without 
5

limitation, all Additional Rent on account of Taxes or 

Operating Expenses). If (and only if) Tenant both 

timely delivers the Termination Notice and timely pays 

the Termination Fee as required above, then the Lease 

will be terminated effective on the Termination 

Effective Date. Tenant shall not have the right to 

terminate this Lease if it fails either timely to 

deliver the Termination Notice or timely to pay the 

Termination Fee. 

By letter dated May 12, 2010, NCO gave Montgomery Park 

notice that it was exercising its right of early termination, 

effective March 15, 2011. At the same time, it remitted 

$779,964.15, representing 50% of the termination fee, which

§ 1.05 of the lease specified was equal to 10 months’ rent.

On December 15, 2010, NCO remitted the second payment of 

the termination fee, but the amount it remitted was only 

$697,100.55, which was $79,067.70 less than the first payment 

that it had made the previous May. NCO explained the 

discrepancy, stating that it had reduced the termination fee by 

the amount of a janitorial services credit described elsewhere 

in the lease. Under that provision, if NCO elected to hire its 

own janitorial service in lieu of using Montgomery Park’s 

service for NCO’s own leased premises -- as distinct from such 

services that Montgomery Park provided for the common areas --

Montgomery Park would provide NCO with an annual allowance of up 

to $1.00 per square foot per year.

Montgomery Park responded to the discrepancy, stating that 

because NCO had failed to remit the second half of the 
6

termination fee on December 15, 2010, it had not satisfied the 

specified condition for early termination and therefore had not

terminated the lease. Montgomery Park stated that it would, 

upon NCO’s acknowledgment of this fact, return to NCO the 

payments that NCO had made in May and December.

NCO disagreed with Montgomery Park’s position, asserting 

that it had “timely and completely fulfilled all of the 

requirements set forth in Section 1.05 of the Lease,” and it 

considered the lease properly terminated. Accordingly, it 

vacated the premises on May 31, 2011, and did not pay rent 

thereafter. Montgomery Park advised NCO that it considered NCO

to be in default of the lease for the failure to pay rent. 

In 2010, after NCO had first provided notice of early 

termination, the parties discussed the alternative possibility 

of reducing the size of rented space, and, in furtherance of 

those discussions, Montgomery Park provided NCO with computergenerated drawings of the building containing the leased space. 

Receipt of those drawings prompted NCO to question the amount of 

rent that it had been paying under the lease. It disputed the 

calculation of “usable square feet,” which, when multiplied by a 

factor of 1.12, determined “rentable square feet,” the basis for 

computing the rent. NCO contended that it should have paid rent 

for only 100,800 rentable square feet instead of “approximately 

106,267” rentable square feet, a difference of 5,467 square 
7

feet. To make its claim, NCO relied on standards published by

the Building Owners and Managers Association (“BOMA”), which 

would exclude from “usable square feet” restrooms within NCO’s 

leased space, areas holding mechanical equipment serving NCO’s 

space, a 13-square-foot room holding fire protection equipment, 

and an elevator lobby used by NCO within its leased space. NCO 

also disputed the inclusion in its leased space of a 562-squarefoot area called the “Bridge.”

NCO commenced this diversity action against Montgomery Park 

in February 2011, alleging breach of contract, unjust 

enrichment, and fraud based on the allegation that NCO had been 

overcharged for rent. NCO also sought a judgment declaring that 

the lease had been effectively terminated under the early 

termination right contained in § 1.05. Montgomery Park filed a 

counterclaim, seeking a judgment declaring that the lease was 

still in effect and demanding contract damages for NCO’s failure 

to pay rent after May 31, 2011. 

After the completion of discovery, NCO and Montgomery Park 

filed cross-motions for partial summary judgment. NCO sought a 

partial summary judgment on its claims that the premises did not 

include the Bridge; that NCO had properly terminated the lease; 

and that “usable square footage” should be determined according 

to the standards published by BOMA. Montgomery Park sought a 

partial summary judgment dismissing NCO’s overcharge claims on 
8

the ground that they were barred under Maryland’s three-year 

statute of limitations.

The district court granted NCO’s motion in part, agreeing

that the leased premises did not include the Bridge and that NCO 

had effectively exercised the early termination right. It 

denied NCO’s motion on its overcharge claim, deferring that 

issue to trial of disputed facts. It also deferred to trial 

Montgomery Park’s motion claiming that NCO’s overcharge claim 

was barred by the applicable statute of limitations. 

In granting a partial summary judgment to NCO on the early 

termination issue, the court concluded, as a matter of law, that 

the janitorial allowance claimed by NCO was not a credit 

properly applied against the early termination fee because it 

was not a component of rent that defined the fee. Therefore, 

NCO’s deduction of the allowance from the termination fee was 

improper. Nonetheless, the court found that NCO had properly 

exercised its early termination option. Even though the court 

recognized that the words of the early termination provision 

“clearly and unambiguously provide[d]” that exercising the 

option required “strict compliance with specified conditions 

precedent,” it determined that the payment amount required was 

not a condition but instead a “non-material covenant” that did 

not need to be strictly satisfied. The court reasoned that, 

while parts of the lease made full payment of the termination 
9

fee a condition, other phrases were less clear. At bottom it 

held that it would be unreasonable to require NCO to correctly 

calculate the termination fee in order to exercise its early 

termination right.

Following a bench trial on the overcharge claim, the court 

held that “usable square feet” included the square footage of 

internal restrooms, the area holding mechanical equipment, the 

room holding fire protection, and the elevator lobby. The court 

reasoned that the word “usable” was not ambiguous in the context 

of the lease, and it accordingly applied the normal meaning of 

that term, finding that NCO had exclusively possessed and used 

the areas that BOMA would, if applied, have deemed unusable. 

Additionally, the court found that NCO had had inquiry notice of 

its overcharge claim for more than three years before it 

commenced this action, such that its claim was barred by 

Maryland’s three-year statute of limitations. The court thus 

dismissed NCO’s overcharge claim by judgment dated August 19,

2015.

Montgomery Park filed this appeal, contending that the 

district court erred in concluding that NCO had effectively 

terminated the lease under the early termination provision, and 

NCO filed a cross-appeal, challenging the district court’s 

denial of its overcharge claim. 
10

II

With respect to Montgomery Park’s appeal, both parties 

accept the district court’s conclusion that the lease’s early 

termination provision required NCO to provide timely notice and 

to pay in two equal payments a termination fee equal to 10

months’ rent. Both parties also accept the district court’s 

conclusion that, although NCO gave timely notice and made its 

first payment in the correct amount, NCO failed to make the 

second of these equal payments in the correct amount because it 

improperly deducted $79,067.70 for a janitorial services credit. 

Montgomery Park, however, challenges the court’s conclusion that 

NCO had nonetheless exercised its right of early termination on 

the reasoning that, under the lease, payment in the correct

amount was a covenant with which strict compliance was not 

required. Montgomery Park contends that payment in full was an 

express condition of the option’s exercise and NCO’s attempt to 

terminate early was therefore ineffective. It argues that the 

district court’s contrary interpretation, based on its 

conclusion that the correct amount of the termination fee was 

not part of the condition for early termination but merely a 

non-material covenant, ignored the plain language of the early 

termination provision and violated key principles of contract 

construction under Maryland law. 
11

NCO contends that the district court “correctly analyzed 

the language of the lease to conclude that matching precisely

Montgomery Park’s calculation of the termination fee was not a 

condition precedent to NCO’s exercise of its option.” Relying 

on Beckenheimer’s Inc. v. Alameda Associates Limited 

Partnership, 611 A.2d 105 (Md. 1992), it asserts that the 

inadequate payment of the termination fee was a breach of a 

covenant, not the failure to satisfy a condition, and that the 

district court therefore properly applied principles of equity 

to conclude that NCO effectively terminated the lease early 

under § 1.05, even though it did not pay the full early 

termination fee.

Under Maryland law, which applies in this diversity case, 

when the terms of an option impose conditions on its exercise, 

those conditions must be exactly matched for exercise to be 

effective. See Elderkin v. Carroll, 941 A.2d 1127, 1133 (Md. 

2008). In determining whether an option has been exercised, the 

Elderkin court articulated a three-part test to be applied. Id.

at 1135. First, a court must evaluate whether the exercise

exactly matched the terms specified by the offer. Second, if 

the match is not exact, the court must consider whether any 

variance is covered by a number of highly specific exceptions, 

none of which applies to the present case. Finally, the court 

must determine whether any breach was of a covenant or of a 
12

condition. Id. The determination of whether requirements for 

exercising an option are conditions or covenants is a question 

“of construction dependent on the intent of the parties to be 

gathered from the words they have employed.” Chesapeake Bank of 

Md. v. Monro Muffler/Brake, Inc., 891 A.2d 384, 391 (Md. Ct. 

Spec. App. 2006) (quoting Chirichella v. Erwin, 310 A.2d 555 

(Md. 1973)). The Chesapeake Bank court noted that conditions 

are indicated by words and phrases such as “if,” “provided 

that,” and “when.” Id.

Applying these principles to the lease before us, the 

language could hardly be more clear that § 1.05 reveals an 

intent to impose two conditions on the exercise of the right of 

early termination: (1) that the lessee give 10 months’ notice 

prior to the specified early termination date; and (2) that the 

lessee make payment -- in two equal installments -- of a 

“termination fee” defined to equal 10 months’ rent. As § 1.05 

states, the right to early termination can be exercised only 

“upon strict compliance” with the two requirements. And the 

lease then uses language indicative of a condition when 

describing how early termination can be effected. The lease 

states that termination will be effective “[i]f (and only if) 

Tenant both timely delivers the Termination Notice and timely 

pays the Termination Fee as required above.” (Emphasis added). 

And thereafter, it makes unmistakably clear that the lease is 
13

imposing conditions by stating the obverse -- that early 

termination is not exercised “if [Tenant] fails either timely to 

deliver the Termination Notice or timely to pay the Termination 

Fee.” (Emphasis added). Applying Maryland law, which provides

that the use of the word “if” is indicative of a condition, we 

therefore conclude that § 1.05 of the lease imposes conditions,

as it uses “if” three different times when referring to the two 

requirements and, on one of those occasions, uses “if” with 

“only if” to emphasize the conditional nature of the 

requirements.

In short, we conclude that the lease unambiguously imposes 

two conditions on NCO’s exercise of its right of early 

termination -- timely notice and timely payment of the 

termination fee. Because NCO undisputedly failed to make full 

payment of the termination fee, it did not satisfy those 

conditions and therefore did not successfully exercise the right 

of early termination.

The district court expressed a concern that reading the 

requirement of full payment as a condition to early termination 

would be potentially unreasonable as it would require NCO to 

properly calculate the termination fee. Following this vein, 

NCO argues that it satisfied the requirement of payment even 

though it did so in the wrong amount, because paying the proper 

amount was not part of the condition. It asserts that because 
14

the calculation of the termination fee could be difficult, any

inadequate payment, regardless of its cause, must therefore be

excused as the failure to satisfy a covenant, not treated as the 

failure to satisfy the condition. The flaw in this argument is 

its underlying assumption that the calculation of the amount of 

the termination fee was somehow at issue. But it never was. 

When NCO paid the first 50% installment, it remitted 

$779,964.15, and Montgomery Park never expressed any reservation

or disagreement with the accuracy of that amount. Similarly, 

the second installment differed only because NCO made the 

decision, as it explained, to set off against that amount the 

janitorial services credit, as if it were rendering an account, 

not paying a specifically defined fee. It thus reduced the 

second installment to $697,100.55, contrary to the condition

that required payment of the defined fee in equal parts. 

Because NCO’s underpayment derived not from any miscalculation 

but from NCO’s deliberate decision to offset an unrelated

payment, any concerns about the posited difficulty of

calculation are irrelevant.

In sum, the clear and unambiguous language of the lease 

agreement made payment in full of the termination fee a 

condition, and NCO failed to satisfy it.
15

III

Because NCO failed effectively to exercise its right of 

early termination, the lease continued in force after March 15, 

2011, and Montgomery Park is thus entitled to pursue its 

counterclaim against NCO for breach of the lease agreement for

failing to pay rent. In response to this conclusion, NCO argues 

that Montgomery Park’s claim for rent should be barred by the 

equitable doctrine of election of remedies because, after the 

district court found that NCO had properly exercised its early 

termination option, Montgomery Park pursued the unpaid balance 

of the termination fee, rather than refusing that remedy in the 

hope that a favorable holding on appeal would enable it to 

pursue the unpaid rent.

The doctrine of election of remedies, however, has no 

application here because Montgomery Park did not have multiple 

remedies available from which to choose when it pursued the 

balance of the termination fee. To interpret the doctrine as 

NCO urges would force claimants to forego the only remedy made 

available to them by the court in hopes of obtaining a favorable 

result on appeal. This harsh interpretation is inconsistent 

with Maryland law. 

Maryland law recognizes that “[t]he doctrine of election of 

remedies is quite technical and should not be lightly employed 

by a court.” Surratts Assocs. v. Prince George’s Cnty, 408 A.2d 
16

1323, 1330 (Md. 1979). Moreover, the doctrine is available only 

“where there are two or more coexistent remedies available to 

the litigant at the time of election which are repugnant and 

inconsistent.” Shoreham Developers, Inc. v. Randolph Hills, 

Inc., 305 A.2d 465, 472 (Md. 1973) (emphasis added) (quoting 25 

Am. Jur. 2d, Election of Remedies §§ 10-12 (1966)). 

In this case, when Montgomery Park pursued the balance of 

the termination fee, the district court had already found that 

NCO had validly exercised its right to terminate the lease 

early. At that point, Montgomery Park had no remedy other than 

claiming the balance of the termination fee that NCO had failed 

to remit. Because Montgomery Park did not have two or more 

coexistent remedies from which to make an election, the doctrine 

has no applicability.

IV

In its counterclaim, NCO contends that Montgomery Park

misrepresented or misstated in the lease the usable-squarefootage portion of the total space for which NCO paid rent. The 

lease used 94,881 as the number of “usable square feet” and then 

applied to that number a factor of 1.12 to calculate the 

“rentable square feet” of 106,267 square feet. The rentable 

square footage was then used to determine the rent. NCO argues

that 94,881 overstated the usable square footage of the premises
17

because it included internal restrooms, areas holding mechanical 

equipment serving NCO space, a room holding fire protection 

equipment, and the elevator lobby used by NCO within its 

offices. NCO argues that those areas should not have been 

included in the total number of usable square feet, as they were

not “usable” under standards published by the Building Owners 

and Managers Association or BOMA. When those areas are excluded 

from “usable square feet,” NCO contends, the “rentable square 

footage” becomes 100,800, instead of the leases’ provision of 

“approximately 106,267,” a difference of 5,467 square feet. In 

furtherance of this argument, NCO introduced at trial parol

evidence from several witnesses who testified that they 

understood the lease to be measuring “usable square feet” under 

the standards published by BOMA.

Even though the district court heard the parol evidence at 

trial, it did not apply the BOMA standards to define “usable” 

because it found that the term “usable,” “in the context of the 

agreement, [was] unambiguous,” and therefore it could not use

parol evidence to overcome the unambiguous contract terms. See

Sy-Lene of Wash., Inc. v. Starwood Urban Retail II, LLC, 829 

A.2d 540, 544 (Md. 2003). In addition, the court noted that the 

lease’s integration clause suggested that the parties were not 

relying on a technical meaning not defined in the lease. The 

court concluded, “using its own common sense and everyday 
18

experience as a finder of fact[,] . . . that the term ‘usable’ 

means to use, occupy, or possess.” And when it applied that 

meaning to the facts, it found that NCO “certainly possessed and 

occupied and used exclusively the bathroom areas, the mezzanine 

area, and as well the valve room.” In addition, it noted that 

NCO’s use and possession of the bathrooms was further evidenced 

by NCO’s taking over the janitorial services for the bathroom

areas of which it had exclusive use.

We conclude that the district court did not err in its 

construction of the lease and that its finding that the disputed 

areas were used and possessed exclusively by NCO was not clearly 

erroneous. When these disputed areas are included in the usable 

square feet, as the court concluded, the lease did not 

misrepresent or misstate that the premises constituted

“approximately 106,267” rentable square feet.*

NCO argues that this conclusion is erroneous because it

ignores the parol evidence NCO offered to show that BOMA should 

be consulted to supply the meaning of “usable” in the lease. 

 * NCO also argues that the inclusion of some 562 square feet 

for the area called the Bridge was improper. The district court 

agreed, ruling that the Bridge’s square footage should not have 

been included in the definition of the leased premises. But the 

court also ruled that in the context of a 106,000-square-foot 

premises, the Bridge area was not material, especially in light 

of the lease’s use of “approximately 106,267” square feet, as 

well as the testimony of NCO’s witnesses that 562 square feet 

was not material. We agree with the district court’s ruling.
19

This argument, however, misunderstands the court’s position on 

that evidence. The district court, in fact, received the parol

evidence as to the BOMA standards during trial but concluded not

to use it in light of the court’s conclusion that the term 

“usable” was unambiguous. This was not error. See Sy-Lene, 829 

A.2d at 544.

At bottom, we conclude that the district court did not err 

in concluding that NCO was properly charged for “approximately 

106,267” square feet. In reaching this conclusion, we do not 

address NCO’s claim that the district court erred in applying

Maryland’s three-year statute of limitations as an alternative 

basis for denying NCO’s overcharge claim.

* * *

For the reasons given, we reverse the district court’s 

ruling that NCO satisfied the lease’s conditions for early 

termination; we affirm its ruling rejecting NCO’s overcharge 

claims; and we remand for further proceedings on Montgomery 

Park’s claim that NCO breached the lease agreement by failing to 

pay rent after May 31, 2011.

AFFIRMED IN PART,

REVERSED IN PART,

AND REMANDED