Opinion ID: 2058658
Heading Depth: 2
Heading Rank: 2

Heading: The Maryland Litigation

Text: In July 1978 the Johnsons and Ocean Holiday withheld payments due on the promissory notes. Jenkins and Esham filed an action in Maryland for payment on the notes, and the Johnsons and Ocean Holiday counterclaimed, alleging fraud, mismanagement, and conversion of partnership property, and seeking a setoff against obligations under the promissory notes. [2] Later the Johnsons and Ocean Holiday amended the counterclaim to add a claim against Ewell. Specifically, the counterclaim contended that Jenkins breached his fiduciary duty to the partnership by profiting, through Skyline, from the sale of the West Ocean City real estate to Herring Landing; that Jenkins, Esham and Ewell made an improper distribution of partnership assets in May 1977; that Ewell engaged in legal malpractice in executing the improper distribution of May 1977; that Jenkins, Esham and Ewell failed to file an amended partnership certificate in connection with the 1976 sale of the general partnership shares to the Johnsons and Ocean Holiday, thereby damag[ing them] in connection with their purchase of partnership shares; that Jenkins and Esham abused their general partnership powers to obtain an exorbitant profit from the 1976 sale of their shares; that the Johnsons and Ocean Holiday were entitled to prejudgment interest on the $100,000 obtained and withheld from the partnership by Jenkins in 1973; and that the Johnsons and Ocean Holiday were entitled to punitive damages against Jenkins, Esham and Ewell. Nearly eight years elapsed between the filing of the Maryland action and trial on the merits, during which time the Johnsons and Ocean Holiday sold their entire interest in Herring Landing to Augmentation, Inc., one of the original limited partners, for $115,000. The Johnsons and Ocean Holiday also assigned to Augmentation any and all claims they might have against Jenkins, Esham, Bounds, and Ewell. In March 1986 the Maryland trial court entered judgments in favor of Jenkins, Esham and Ewell for the amounts due under the promissory notes, and against the Johnsons, Ocean Holiday, and Augmentation on their counterclaims. That decision was affirmed by unpublished opinion in April 1988 by the Court of Special Appeals of Maryland.