Court Opinion

ID: 9893014
Source: CourtListenerOpinion
Date Created: 2023-10-25 19:07:15.487425+00
Date Added: 2024-06-11T08:52:51.241224
License: Public Domain

Baltimore Cotton Duck, LLC v. Ins. Comm’r of the State of Md., et al., No. 951,
September Term, 2022. Opinion by Nazarian, J.

INSURANCE – FINANCIAL IMPAIRMENT – SUPERVISORS, LIQUIDATORS,
CONSERVATORS, REHABILITATORS OR RECEIVERS – POWERS AND
DUTIES

Once an Insurance Commissioner is appointed receiver, the Commissioner may, either
directly or through an agent, disavow or amend existing contracts for impaired insurers in
order to protect insureds, creditors, and the general public. There is an important state
interest in protecting health insurance policyholders, creditors, and the general public, and
the procedures and powers the Insurance Code affords the Commissioner do not violate
the U.S. or Maryland Constitutions.
Circuit Court for Baltimore City
Case No. 24-C-17-003939
                                                                                  REPORTED

                                                                        IN THE APPELLATE COURT

                                                                               OF MARYLAND

                                                                                    No. 951

                                                                          September Term, 2022
                                                                ______________________________________

                                                                    BALTIMORE COTTON DUCK, LLC

                                                                                        v.

                                                                  INSURANCE COMMISSIONER OF THE
                                                                     STATE OF MARYLAND, ET AL.
                                                                ______________________________________

                                                                       Nazarian,
                                                                       Leahy,
                                                                       Raker, Irma S.
                                                                         (Senior Judge, Specially Assigned),

                                                                                  JJ.
                                                                ______________________________________

                                                                         Opinion by Nazarian, J.
                                                                ______________________________________

                                                                       Filed: October 25, 2023

                                                                *Arthur, Kevin F., and Albright, Anne K., JJ.,
                                                                did not participate in the Court’s decision to
                                                                designate this opinion for publication pursuant to
                                                                Md. Rule 8-605.1.
Pursuant to the Maryland Uniform Electronic Legal Materials
Act (§§ 10-1601 et seq. of the State Government Article) this
document is authentic.
                2023-10-25 14:36-04:00

Gregory Hilton, Clerk
       This appeal arises out of delinquency proceedings in the Circuit Court for Baltimore

City brought by the Maryland Insurance Administration (“MIA”) against Evergreen

Health, Inc. (“Evergreen”), a licensed health maintenance organization (“HMO”). The

dispute involves a commercial lease for office space between Evergreen, as tenant, and

Baltimore Cotton Duck, LLC (“BCD”), as landlord and creditor. The State of Maryland,

acting as a Receiver through an agent, Risk & Regulatory Consulting, LLC (“RRC”), and

standing in the shoes of Evergreen, agreed with BCD to amend the lease as part of the plan

to liquidate Evergreen, which was insolvent.

       RRC sought to recover the security deposit Evergreen had paid and collect other

money BCD owed Evergreen under that lease amendment. BCD disputed the amounts

owed, arguing that it entered into the lease amendment under economic duress, that the

notice of the delinquency proceeding and claims process violated its right to due process,

and that RRC was granted authority by the circuit court to disavow the original lease

improperly. The circuit court disagreed and ordered BCD to repay the Evergreen’s security

deposit and to pay $8,000 for furniture Evergreen left on the premises. BCD appeals and,

among other things, claims that the entire enforcement scheme, including the Department’s

authority to disavow the lease, is unconstitutional. We affirm.

                                I.      BACKGROUND

       Anyone who engages in or transacts health insurance business in Maryland is

subject to provisions of the Insurance Article and the Health-General Article of the

Maryland Code. Evergreen was licensed as an HMO incorporated under the laws of

Maryland on September 6, 2011, and was subject to the regulation of the MIA, see Md.
Code (1995, 2017 Repl. Vol.), § 2-101 of the Insurance Article (“IN”); Md. Code (1982,

2019 Repl. Vol.), § 19-702(b) of the Health-General Article (“HG”), and Title 9 of the

Insurance Article, which regulates insurance entities operating in a “financially hazardous”

condition. See Md. Code (1996, 2017 Repl. Vol.), IN §§ 9-101 et seq. The Insurance

Commissioner operates the MIA and enforces the Insurance Article. IN § 2-103(b)(1).

       A.     The Original Lease And First Amendment.

       In February 2013, Evergreen entered a ten-year commercial lease for office space

owned by BCD located on Falls Road in Baltimore. Evergreen agreed to occupy the

waterfront “Mill Building” of the premises and to pay monthly rent that would increase

annually. Section 1.03 of the lease gave Evergreen a limited right to terminate the lease

subject to an early termination fee. Section 2.07 provided that Evergreen would pay a

$16,770.20 security deposit “for the Tenant’s payment of Rent and performance of all of

its other obligations under the provisions of this lease.” BCD was liable to pay all costs for

space improvements “for the purpose of initially preparing the Premises for occupancy by

[Evergreen] . . . .” And section 16.01 provided that “[a]ny notice, demand or other

communication to be provided hereunder to a party hereto shall be . . . addressed to Terra

Nova Ventures, LLC, 1817 Thames Street, Baltimore, Maryland 21231, if directed to

[BCD].” Rent—according to the lease—was to be paid to the same address, but no one

disputes that rent in fact was paid to a North Charles Street address belonging to BCD’s

property manager.

       A short time later, in July 2013, the lease was amended (the “First Amendment”) to

expand the rental space so that Evergreen would occupy both the Mill Building and the

                                              2
“Warehouse Building” behind it. This expansion nearly doubled Evergreen’s monthly rent

to approximately $40,000 per month, and Evergreen paid an additional security deposit to

BCD (the total security deposit was $37,294.10). Again, as part of the agreement, BCD

built out the space that Evergreen occupied at BCD’s own cost.

       B.     Evergreen’s Receivership.

       It wasn’t long before Evergreen experienced financial difficulties that triggered

oversight by the MIA and the Insurance Commissioner. Section 19-706.1(c) of the Health-

General Article authorizes the Commissioner to apply to the Circuit Court for Baltimore

City for an order directing the Commissioner to rehabilitate or liquidate an HMO “[w]hen

in the Commissioner’s opinion the continued operation of the [HMO] would be hazardous

either to its members or to the people of this State.” 1

       On July 31, 2017, the Commissioner applied to the circuit court for an order

appointing RRC as receiver for Evergreen. 2 The court granted the request the same day in

an Order of Rehabilitation by Consent (the “Rehabilitation Order”) between Evergreen and

the Commissioner. Notices were sent to creditors under the terms of the order, including

to BCD, which received a copy of the order the day after it was issued.

       It became clear pretty quickly that there was no hope of rehabilitating Evergreen,

and RRC sought the circuit court’s authorization to liquidate it. On September 1, 2017, the

   1
    This statutory scheme is based on the Uniform Insurer’s Liquidation Act and is the
   exclusive method of liquidating an insurer. See PrimeHealth Corp. v. Ins. Comm’r, 133
   Md. App. 375, 400 (2000); IN § 9-204.
   2
     RRC is a consulting company that administers the rehabilitation and liquidation of
   insurance companies across the country.

                                               3
court entered an Order Authorizing Liquidation of Evergreen Health, Inc., and Order

Directing Certain Health Maintenance Organizations to Offer Evergreen Members an Open

Enrollment Period (the “Liquidation Order”). The court found that liquidation was “in the

best interest of the receivership estate, members, creditors and parties of interest.”

       Under the Rehabilitation Order, the court granted RRC “the power to affirm or

disavow, continue or cause to be rewritten, any contract to which EVERGREEN is a party,

provided however that [RRC] shall not be deemed to have affirmed any contract without

[RRC] having done so in writing.” The Liquidation Order stated similarly that RRC “shall

continue to have” that same power.

       C.        The Second Amendment To The Lease.

       RRC reached out to BCD in September 2017 to amend the lease in light of

Evergreen’s liquidation proceedings. The parties dispute the nature of the negotiations

(more on that below), but on September 28, 2017, BCD and Evergreen entered into a

second lease amendment (the “Second Amendment”). The Second Amendment

acknowledged that “Evergreen a) has fallen into financially hazardous condition, b) the

Commissioner applied for and was granted a court order to liquidate Evergreen, [and] c) the

Commissioner appointed [RRC] as Receiver to liquidate Evergreen . . . .” And by

agreement, the lease was amended, “among other things, to provide for [Evergreen] to

occupy reduced space and pay reduced rent during the period Evergreen is winding down

its business.”

       Under the Second Amendment, beginning October 1, 2017, Evergreen vacated the

Mill Building and retained only a portion of the Warehouse space. In exchange, Evergreen

                                              4
agreed to pay $10,000 per month for three months and then $5,000 per month through

December 2018. In addition, certain sections of the original lease were deleted, including

the early termination clause in section 1.03, and RRC was added to the notices section of

the lease. BCD had “the right to relocate [Evergreen] within the Property if there is space

available, so long as [t]he relocated space is reasonably suited to [Evergreen’s] needs at the

time of relocation” and BCD had the right to show the Property to secure a new tenant.

Importantly, the Second Amendment provided that the security deposit “shall be returned

to [Evergreen] at the conclusion of the lease term” ending December 2018. David F.

Tufaro, as managing member of BCD, signed the amendment on its behalf.

       D.     BCD’s Claim Against The Receivership.

       The circuit court also entered an order establishing a bar date of July 31, 2018 for

creditors to submit claims against Evergreen. The court required RRC to mail proof of

claim forms on or before April 2, 2018 “to each person or entity on the Potential Claimants

List . . . .” The court also required that “[i]n addition to the mailing, notice of the Bar Date

and a blank Proof of Claim Form will be posted on Evergreen’s website maintained by

[RRC] and [RRC] will provide notice by publication in The Baltimore Sun.”

       RRC sent the Proof of Claim to BCD using the same address used for the payment

of rent (albeit not the address contained in the original lease), 6301 North Charles Street,

Ste. 2, Baltimore, Maryland 21212, the address of BCD’s property manager, Thornhill

Properties, Inc. RRC also published a notice in The Baltimore Sun on April 22, 2018.

       Over a year-and-a-half later, in a letter dated December 9, 2019, Mr. Tufaro, on

behalf of BCD, wrote to the circuit court asking that RRC pay Evergreen’s back rent with

                                               5
interest, a total of over $1,700,000. BCD alleged that it was denied due process in the

appointment of RRC as receiver because it didn’t have notice or the right to object and

because RRC ultimately was given the power to “affirm or disavow” contracts in the

Rehabilitation Order. Relatedly, BCD asserted that “MIA, an agency of the Maryland State

Government, was a party to this Order and the contents thereof. As such, this was an action

of the government violating our due process rights . . . which supersede Maryland statutory

law.” BCD asked the court to void the Second Amendment because it “was executed under

a classic legal case of economic duress that beg[a]n[] with the Court Order that [the court]

signed granting the Receiver unlimited authority to disavow any contract that Evergreen

had executed.” BCD asked the court to declare the Second Amendment “null and void”

and to order RRC to pay BCD back rent with interest. Its demand letter to RRC for payment

was attached.

       The court, treating the letter as a filing by “a potential claimant who might not have

understood the process in place,” forwarded it to counsel for RRC. In response, on February

5, 2020, RRC filed a motion “for an Order (A) requiring [BCD] to pay over to [RRC] for

a security deposit and purchased furniture, and (B) disallowing claims alleged by BCD

against the estate.” RRC asserted that BCD held the $37,284.10 security deposit due to it

under the Second Amendment and that it was owed an additional $8,000 for furniture left

on the premises. RRC requested “$38,324.10 (calculated as the Security Deposit, plus the

Furniture Sales Price, less the Alleged Repair Costs).”

       BCD opposed the motion and filed a separate claim for unpaid rent and termination

fees under the original lease and First Amendment, along with “[o]ther [a]ssociated

                                             6
[c]osts.” BCD argued again that the Second Amendment “was entered into by BCD under

economic duress, and therefore is null and void. Accordingly,” BCD argued, “Evergreen

owes BCD in excess of $1.7 million under the terms of the Lease for unpaid rent and lease

termination fees.” BCD conceded that it owed RRC $8,000 for furniture, but argued that

that amount “needs to be offset against funds owed to BCD by Evergreen.” BCD insisted

that it had no notice of the delinquency proceedings or the claim bar date, and that the

Second Amendment should not be enforced because it was the result of “economic duress.”

       E.     The Evidentiary Hearing.

       On September 23, 2020, the parties appeared (remotely) for an evidentiary hearing.

Two witnesses, Patrick Tracy and Eric Scott, testified on behalf of RRC. Mr. Tufaro,

managing member of and counsel for BCD, testified on behalf of BCD. 3 Eleven exhibits

were admitted.

       Mr. Tracy testified first, as a partner and founder of RRC. He explained that once

Evergreen went into liquidation, it no longer needed the space it rented from BCD. This

left “two options, negotiate with [BCD] for reduced space and reduced rent or . . . move

out.” RRC hoped to “work with Mr. Tufaro” to stay in the space, but RRC had “a fiduciary

responsibility to all stakeholders, including policyholders” to save money when it “did not

need all that space.”

   3
    Mr. Tufaro was permitted to testify in narrative form over RRC’s objection that the
   Maryland Rules of Professional Conduct prohibit an attorney from serving as both an
   advocate and witness. See Md. Rule 19-303.7.

                                            7
       Mr. Tracy testified that he contacted Mr. Tufaro by telephone in September 2017 to

negotiate for reduced space and rent:

              I’m sure [Mr. Tufaro] knew about the Receivership and—
              because it was in the press, but I did let him know that we had
              to modify the lease in order to stay and that was our preference.
              We had no intention to leave if we could work with him
              because it was in everybody’s best interest, including, I think,
              Baltimore Cotton Duck and Mr. Tufaro as to basically say we
              could stay and still pay rent but it’s got to be reduced.

              And also, that he should probably start right away to look at
              leasing the facility because we weren’t going to need it
              anyway. So it was in his best interest actually to actively
              engage in trying to find new tenants for the building.

Mr. Tracy informed Mr. Tufaro that RRC had “the right to cancel the lease and . . . move”

and suggested that Mr. Tufaro “check[] the law . . . to make sure what [he] was telling him

was accurate,” but that’s how Mr. Tracy understood the receivership law. One other option

was for Evergreen to move to the MIA offices and leave BCD’s premises altogether.

       According to Mr. Tracy, he and Mr. Tufaro spoke six to eight times over the course

of about a week, and “by the time we got to the third or fourth phone call” Mr. Tufaro, who

was “understandably upset about the whole process,” ultimately was willing to amend the

lease. The two met in person at Evergreen’s office, where they agreed to “migrate”

Evergreen’s people from the Mill Building to the Warehouse.

       Mr. Tracy testified further that he received the initial draft of the Second

Amendment from Mr. Tufaro himself, and that he believed Mr. Tufaro “drew [it] up based

on our discussions . . . .” Once the Second Amendment was agreed and signed, Evergreen

vacated the Mill Building by October 1st and “allowed Mr. Tufaro to show that to other . . .

                                             8
potential tenants.” Mr. Tracy stated that he and Mr. Tufaro agreed to leave Evergreen’s

furniture in place so new tenants could view the premises fully furnished, which Mr. Tracy

viewed as beneficial to BCD. Mr. Tufaro was in fact able to re-lease the Mill Building

“pretty quickly” to a new tenant. 4

       Mr. Tracy insisted that he never “threaten[ed] Mr. Tufaro with physical harm” nor

did he “perceive that Mr. Tufaro was unable to exercise his free will or judgment” in

negotiating the Second Amendment. In Mr. Tracy’s view, Mr. Tufaro had the ability to

“choose not to amend the lease.”

       Eric Scott, Director of RRC’s Troubled Company Group, testified next about the

negotiation of the Second Amendment and RRC’s furniture claim. Mr. Scott

communicated both with Mr. Tufaro and BCD’s property manager about the lease

amendment beginning on September 27, 2017. He specified that “Mr. Tufaro drafted the

initial draft” of the Second Amendment, which eliminated the early termination fee. Mr.

Scott then “provided a redline copy of the second amendment to the lease to Mr. Tufaro by

email” and, “after some discussion,” Mr. Tufaro accepted the amendments, which included

BCD returning Evergreen’s security deposit. Mr. Scott described Mr. Tufaro as a “skilled

negotiator.” Mr. Scott added that Evergreen complied with the terms of the Second

Amendment and moved out at the end of 2018 to an office park where it shares space with

another insurer in receivership and pays only $1,800 a month in rent. Mr. Scott stated that

   4
    That lease was signed October 27, 2017, to begin January 1, 2018, and provided that
   “[r]ent shall be paid to [BCD] c/o Thornhill Properties, Inc., 6301 N. Charles Street,
   Suite 2, Baltimore, Maryland 21212,” the same address where Evergreen sent rent
   payments.

                                            9
the language in the Rehabilitation and Liquidation Orders giving RRC “the power to affirm

or disavow” contracts is “standard Receivership order language” used in “[v]irtually[]

every insurance company Receivership across the land.”

       Finally, Mr. Tufaro testified on behalf of BCD. He clarified that although he is a

licensed attorney in Maryland, he has not practiced law since 1978, and was involved in

this case as the managing member of BCD, not as an attorney. He stated that he’d been

involved in real estate development in Baltimore since that time and has owned the

premises involved since 2009. He noted that it was a difficult site to build out and improve

and Evergreen occupied the “premier space” in the building. When Evergreen and BCD

entered the lease, BCD was required to build out the space, “[a]nd it’s a lot of money you

expend and that’s part of the reason you sign, at least, like a ten-year lease so that you can

spread those costs and get a return on that over the course of the lease.” He described

Evergreen’s “phas[ing] into the expanded space,” which increased the rent and also

required BCD to build out the space.

       Mr. Tufaro explained that before the Rehabilitation Order, counsel for Evergreen

contacted him in March 2017 (with ongoing discussions through June 2017) to inquire

about what the early termination fee under the lease might be. Mr. Tufaro indicated that

Evergreen’s counsel “kept [him] apprised of what was happening” with Evergreen’s

financial trouble, including a “potential acquisition” to keep the company afloat.

Notwithstanding efforts for an acquisition, Mr. Tufaro was informed that “Evergreen was

likely to be placed in rehabilitation.”

                                             10
      Mr. Tufaro was “appalled” to learn that the receiver, RRC, had the power to disavow

contracts, a power that seemed “over the top” to him. When Mr. Tracy first contacted him,

he was “shocked” at the proposal offered and admitted that he “was sometimes . . . noisily

upset” during negotiations. He described the nature of the negotiations for the Second

Amendment as lopsided:

             I proposed a higher rent. I don’t remember exactly but I’m sure
             it was double or more [than] that. And [Mr. Tracy] did not
             budge.

             And I realized at that time that I had zero leverage. I did consult
             with a couple lawyers and they said, David, my experience
             with Receivership-type activity is that you will get nowhere.
             They—there’s—there’s no fight that you’re going to win on
             that issue. So I, basically, said look, I—and I do vividly recall
             Pat Trac[y] suggesting that MIA had some space to offer,
             which to me, I viewed as a threat. If you don’t take my deal,
             then we’re just going to—we’re just going to move over to
             MIA’s space.

             . . . I’m stuck in this situation where I could not negotiate.
             They—Pat [Tracy] and Eric [Scott] might have called it a
             negotiation. It was not a negotiation. I had no other reasonable
             alternative. There was no consideration given to me for, in my
             view, of that reduction of rent.

He explained that the Baltimore office market was “in disarray” with “very little leasing”

and so he “was under economic duress” to accept and sign the Second Amendment

“because the alternative was zero dollars.” He admitted that he “wasn’t physically

threatened” and that he “made a business decision” to accept the Second Amendment so

that he “could get something as opposed to nothing.”

      Mr. Tufaro also testified that he never “receive[d] an official notice of what was

going on by the Receiver, including having to provide a claim by a certain date.” He

                                             11
explained that his property manager, Thornhill Properties, doesn’t always forward mail to

BCD that comes to its North Charles Street address. However, on cross-examination he

admitted that he received an email on August 1, 2017, which included a copy of the

Rehabilitation Order. Finally, Mr. Tufaro conceded that he was able to re-lease the space

Evergreen occupied in the Mill Building beginning January 1, 2018, albeit at a lower rent.

       F.     The Court’s Memorandum Order.

       On July 16, 2022, the trial court entered a detailed Memorandum Order in which it

walked through each of BCD’s contentions. First, the court, finding that BCD “may be

considered a creditor,” held that BCD’s due process claim was without merit because BCD

was “entitled to notice after the appointment of a Receiver.” (Emphasis added.) Second,

the court enforced the Second Amendment by determining that “there [wa]s no evidence

produced of any threat that would constitute economic duress to either the entity [BCD] or

to its Managing Partner, David Tufaro.” As such, “there [wa]s no evidence of economic

duress sufficient to invalidate the Second Amend[ment], which was ultimately drafted by

Mr. Tufaro himself.” Third, the court held that BCD received sufficient notice of the claims

procedure, finding that there was “undisputed testimony” that “Terra Nova, a Management

Company, receives the lease payments from tenants . . . , including Evergreen” and “the

Notice of Claims was mailed by [RRC] to [BCD] at the same address where the monthly

lease payments were remitted.” The court added that Mr. Tufaro was aware of the

proceedings and “he never indicated that he did not have actual notice of the claims

procedure and the claims deadline.” Finally, the court held that it was undisputed that BCD

agreed to pay $8,000 for the furnishings.

                                            12
         In summary, the circuit court held the insurance receivership statute as applied was

constitutional. The court also found that BCD was not “entitled to notice prior to the

appointment of a receiver by the court” and that BCD received actual notice of the claim

procedure once RRC was appointed. The court ordered BCD’s letter stricken as a “late

claim” not comporting with the claim procedure. Finally, the court ordered BCD to pay the

receivership estate both the security deposit and the $8,000 for the furniture left in the rental

space.

         BCD’s timely appeal followed.

                                   II.      DISCUSSION

         In seeking to overturn the circuit court’s enforcement of the Second Amendment,

BCD’s appeal presents the following issues, which we have condensed and reworded: 5

   5
       BCD stated the Questions Presented in its brief as follows:
                1.     Did the Court err in concluding that Receiver complied
                with the law governing providing Proof of Claim and Bar
                Date?
                2.     Did the Court err in concluding that the 2nd
                Amendment between Receiver and BCD was a valid and
                enforceable agreement despite (a) the absence of basic tenets
                of contract law – consideration and free will – and (b) violation
                of Due Process under the Maryland Declaration of Rights and
                U.S. Constitution?
                3.    Did the authority granted by the Court’s Orders exceed
                the authority allowed by Maryland law, and violate Due
                Process under the Maryland and U.S. Constitutions?
                4.      Did the Court err in not making a finding that the State
                engaged in a taking of property without just compensation for
                failing to direct Receiver to pay BCD the Termination Fee and

                                                                                 Continued . . .

                                               13
          to allow BCD to retain the security deposit?
          5.    Did the Court display the requisite impartiality and
          open-mindedness in conducting the hearing and rendering its
          Decision?
The Commission stated the Questions Presented as follows:
          1.     Did the circuit court act within its discretion when it
          granted the Receiver the authority to disavow, or cause to be
          rewritten, contracts to which the impaired insurer was a party?

          2.    Did the circuit court properly determine that Baltimore
          Cotton Duck was not entitled to prior notice of the filing of the
          Complaint and Petition for Immediate Order of Receivership
          by Consent?

          3.     Did the application by the court of Title 9, Subtitle 2 of
          the Insurance Article and Md. Code Ann., Health-Gen.
          § 19-706 (LexisNexis 2019) comport with the due process and
          takings clauses?
RRC stated the Questions Presented as follows:
          1.     Did the Circuit Court correctly conclude that BCD
          received notice of the proof of claim bar date in compliance
          with Maryland Law?
          2.   Did the Circuit Court correctly conclude that the Second
          Amendment was a valid, enforceable agreement?
          3.     Was the power to disavow contracts granted to the
          Receiver in the Circuit Court’s orders within the scope
          permitted by Maryland Law?
          4.     Was the Circuit Court correct when it did not find that
          the State engaged in a taking of property without just
          compensation by failing to direct the Receiver to pay BCD a
          termination fee and failing to allow BCD to retain the security
          deposit?
          5.      Did the Circuit Court display the requisite impartiality
          and open-mindedness in conducting the hearing and in making
          its decision?

                                         14
first, whether the circuit court erred in concluding that BCD received proper notice of the

claims process; second, whether the circuit court erred in enforcing the Second

Amendment; and third, whether the circuit court was biased in its treatment of BCD’s

claim. In the course of challenging the validity of the Second Amendment, BCD claims

that the entire enforcement scheme, including the Department’s authority to disavow the

lease, is unconstitutional. Spoiler alert: it isn’t.

       “When an action has been tried without a jury, an appellate court will review the

case on both the law and the evidence.” Md. Rule 8-131(c). We will not set aside the circuit

court’s factual findings “unless clearly erroneous.” Id.; see also Plank v. Cherneski, 469

Md. 548, 568 (2020) (“A trial court’s findings are not clearly erroneous if ‘any competent

material evidence exists in support of the trial court’s factual findings[.]’”) (quoting Webb

v. Nowak, 433 Md. 666, 678 (2013)). Questions of law decided by the circuit court aren’t

given deference and are reviewed de novo. Plank, 469 Md. at 569 (citing MAS Assocs. v.

Korotki, 465 Md. 457, 475 (2019)).

       A. The Circuit Court Concluded Correctly That RRC Complied With
          The Statutory And Constitutional Notice Requirements In The
          Claims Process.

       BCD’s first contention is that RRC failed to comply with law governing notice of

the claims process because RRC sent notice to the address where it sent rent rather than to

the address listed in the notices provision in the lease. BCD argues this was a “debilitating

error committed in reckless disregard of BCD’s civil rights.” The MIA responds that “due

process requirements were met here as interested parties were made aware of the existence

of the receivership and were afforded an opportunity to present objections.” BCD admitted

                                                15
that it received a copy of the Receivership Order via email the day after it was entered, but

asserts that notice of the claims bar date was “never sent to BCD, and was never received.”

And, in fact, Mr. Scott admitted that the proof of claim was sent to a different address (the

address where Evergreen sent rent payments) rather than the address provided in the notice

provision in the lease. The circuit court found that the notice was sufficient.

       The Insurance Code provides that within fifteen days of appointment, a receiver is

required to provide notice of the delinquency proceeding to policyholders and notice of the

possibility “that the insurance of the policyholder may be canceled.” IN § 9-214. The

Rehabilitation Order, which BCD admits receiving, included language informing BCD that

creditor claims would need to be filed in the delinquency proceedings:

              20.    All persons asserting claims against [Evergreen] shall
              be enjoined from the date of this Order until further Order of
              this Court . . . from commencing, maintaining or prosecuting
              any actions or obtaining any preferences, judgments,
              attachments, liens, or the making of any levy against
              [Evergreen] . . . , except that nothing in this Order shall prevent
              any person from filing a claim in this proceeding.

              21.    This Court shall retain jurisdiction over this matter and
              this Order shall be subject to further Order of this Court.

BCD was on notice of a future claims procedure by virtue of the Rehabilitation Order.

       Once liquidation is authorized, the Commissioner must “notify all creditors that may

have claims against the insurer to present their claims.” IN § 9-212(c)(1)(iv). And in fact,

the Code states “notwithstanding any previous notice given to creditors” after the

Liquidation Order issued, the Commissioner was required to send additional notice about

the claims process. IN § 9-226(a)(2) (“the Commissioner shall notify each person that may

                                              16
have a claim against the insurer that the claim is forever barred unless the person files the

claim with the Commissioner at a place and within the time specified in the notice”

(emphasis added)). The Insurance Code doesn’t dictate expressly how creditors must be

notified. Instead, the Code states only that “[t]he notice shall be given in the manner and

for the reasonable period of time that the court orders.” IN § 9-226(a)(4).

       BCD knew at least about the Liquidation Order itself. The Second Amendment, as

Mr. Tufaro drafted it, acknowledged Evergreen’s liquidation—it stated that “the

Commissioner applied for and was granted a court order to liquidate Evergreen, [and] . . .

the Commissioner appointed [RRC] as Receiver to liquidate Evergreen . . . .” Moreover,

the Rehabilitation Order Mr. Tufaro admits to receiving referenced a claims process. RRC

also points out that “[t]he address that BCD claims [RRC] should have used (the one in the

lease) was not the address of BCD.” Although it turns out the address is the same address

as BCD’s, the address as it appeared in the lease was for Terra Nova Ventures, “whose

relationship to BCD is not clear from the lease,” nor is it clear from the record. There was

no evidence that RRC knew any other address for BCD, and—since the notice was to be

sent “in the manner . . . that the court order[ed],” IN § 9-226(a)(4), rather than provided

under the lease 6—RRC acted reasonably when it sent the notice to the same address where

it sent rent payments.

   6
     Section 16.01 of the original lease provided that “[a]ny notice, demand or other
   communication to be provided hereunder to a party hereto shall be . . . addressed to
   Terra Nova Ventures, LLC, 1817 Thames Street, Baltimore, Maryland 21231, if
   directed to [BCD].” (Emphasis added.)

                                             17
       In order to comport with due process, notice must be given in a manner that is

“reasonably calculated, under all of the circumstances, to apprise interested parties of the

pendency of the action and afford them an opportunity to present their objections.” Mullane

v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950). The record reveals that Mr.

Tufaro, and therefore BCD, had actual notice of the delinquency proceedings and the

claims process in general. Mr. Tufaro testified that he was aware of the delinquency case

from the media and through his ongoing contact with Evergreen’s general counsel. He

admitted that he received notice of the Rehabilitation Order the day after it was entered and

that he knew of the Liquidation Order, which he then referenced when he drafted the

Second Amendment. It was reasonable under these circumstances for RRC to send the

claims notice to the address where it sent rent payments. The circuit court concluded

correctly that BCD received appropriate notice under the statute.

       In any event, and although the court ultimately struck BCD’s claim as untimely, the

court still afforded BCD the opportunity to present its objections and considered BCD’s

claim and legal defenses substantively in a full evidentiary hearing. And more importantly,

BCD had no meritorious claim if the Second Amendment was valid and enforceable,

which—as we discuss next—it was.

       B.     The Circuit Court Didn’t Err When It Enforced The Second
              Amendment.

       BCD seeks next to attack the validity of the Second Amendment in three ways: first,

by arguing that the Second Amendment lacked consideration; second, by contending that

the circuit court lacked authority to grant RRC the right to disavow Evergreen’s contracts,

                                             18
which “coerced” BCD to agree to the Second Amendment, and third, by asserting that the

Second Amendment is the unenforceable result of economic duress. We disagree with all

three contentions.

              1. The Second Amendment is supported by sufficient consideration.

       “[C]ontracts ordinarily require consideration to be enforceable.” Harford County v.

Town of Bel Air, 348 Md. 363, 381 (1998). Consideration can be supported by either “‘a

benefit to the promisor or a detriment to the promisee’ . . . .” Id. at 382 (quoting Vogelhut

v. Kandel, 308 Md. 183, 191 (1986)). BCD asserts that “[t]here [wa]s no testimony

supporting any benefit that BCD received compared to what it had prior to the [Seco]nd

Amendment being forced upon it.” RRC argues that it gave adequate consideration by

agreeing to stay at the Falls Road location at all:

              BCD was given the right to relocate Evergreen to different
              space, other than the space which it had leased, so that BCD
              could rent the more desirable space to another tenant. [RRC]
              also left furniture in place to assist BCD in showing the space.
              [RRC] agreed to pay, and did pay, approximately $90,000 in
              rent. [RRC]’s accommodations benefited BCD, as BCD
              successfully re-leased a portion of the space that had been
              occupied by Evergreen . . . .

       We agree with the circuit court and RRC that the Second Amendment is supported

by sufficient consideration. The alternative was for BCD to collect no rent at all; instead,

RRC promised to stay on the premises and continue paying rent. BCD agreed to this

modification, admitting that “the alternative was zero dollars” and that it was “a business

decision” to accept the Second Amendment to “get something as opposed to nothing.” “A

promise becomes consideration for another promise only when it constitutes a binding

                                              19
obligation,” Cheek v. United Healthcare of Mid-Atl., 378 Md. 139, 148 (2003), and here,

RRC took on the new binding obligation to continue renting from BCD in lieu of leaving

altogether.

              2. There was no violation of BCD’s constitutional rights when the
                 circuit court granted RRC the right to disavow Evergreen’s
                 contracts.

       This brings us to BCD’s next contention, that the alternative that BCD might collect

no rent at all by virtue of RRC’s right to disavow Evergreen’s contracts was

unconstitutional. BCD contends that “such broad authority . . . violated Due Process and

Just Compensation.” BCD adds that there is “no language” in the Maryland Insurance Code

“that specifically allows the State, through a receiver, to disavow a contract.” Finally, BCD

asserts that the ex parte nature of the delinquency proceedings violated due process and the

circuit court erred in holding that BCD didn’t have the right to notice prior to RRC’s

appointment as receiver. We disagree.

       First, this case does not involve a taking or deprivation of BCD’s property. A taking

claim lies only when the government takes private property for public use. Hardesty v.

State Rds. Comm’n of State Hwy. Admin., 276 Md. 25, 33 (1975) (“The Constitutional

prohibition against the taking of private property means taking the property from the

owner, and actually applying it to the use of the public.” (cleaned up)). A due process claim

for deprivation of property can lie only when the government actor directly caused the loss.

See O’Bannon v. Town Ct. Nursing Ctr., 447 U.S. 773, 787 (1980) (“[A]n indirect and

incidental result of the Government’s enforcement action . . . does not amount to a

deprivation of any interest in life, liberty or property.”). The government did nothing of the

                                             20
sort here—it merely stepped in to manage Evergreen, with authority of and oversight by

the court, to limit harmful consequences to policyholders and the public. BCD’s losses

flowed from Evergreen’s insolvency, not any government act.

       Second, the Insurance Code grants receivers the right to disavow or amend existing

contracts for impaired insurers and this authority is constitutional. Under the Maryland

Insurance Code, rehabilitators have the express power to revoke or cancel contracts. See

IN § 9-212(a)(1)(ii)(1)–(2) (a rehabilitation order shall direct the commissioner “to take

possession of the property of the insurer and conduct the business of the insurer under the

general supervision of the court; and to take action as the court directs to remove the causes

and conditions that have made rehabilitation necessary”); IN § 9-212(a)(2)(ii) (the issuance

of an order of rehabilitation “is not grounds for retroactive revocation or retroactive

cancellation of a contract of the insurer, unless the rehabilitator revokes or cancels the

contract”); IN § 9-212 (c)(1) (“An order to liquidate the business of a domestic insurer shall

direct the Commissioner promptly . . . (i) to take possession of the property of the insurer;

(ii) to liquidate the business of the insurer; (iii) to deal with the property and business of

the insurer in the name of the Commissioner or in the name of the insurer, as the court

directs[.]”). These provisions of the Insurance Code grant the Commissioner broad powers

to cancel contracts when doing so serves the interest of protecting insurance policyholders

and the general public.

       Third, the court’s power to enter the Receivership Order (what BCD

(mis)characterizes as an “ex parte order”) and authorize the Commissioner’s power to

disavow contracts is constitutional under the U.S. Constitution and Maryland Declaration

                                             21
of Rights. “Maryland’s statutory scheme is based, in substantial part, on the Uniform

Insurer’s Liquidation Act.” PrimeHealth Corp., 133 Md. App. at 400; see IN § 9-202. “The

Uniform Insurers Liquidation Act was enacted in order to avoid the confusion inherent in

the forced liquidation of a multistate insurance corporation, especially with regard to assets

in foreign jurisdictions.” Jay M. Zitter, Validity, construction, and application of Uniform

Insurers Liquidation Act, 44 A.L.R.5th 683 (1996). Its application avoids potential

conflicts between states by “providing consolidated, orderly, and equitable liquidations and

securing equal treatment of creditors wherever situated.” Id.

       The U.S. Supreme Court upheld the constitutionality of insurance delinquency

proceedings almost a century ago in Neblett v. Carpenter, 305 U.S. 297 (1938). There, an

insurer entered a rehabilitation plan that substituted existing policies with new company

policies “for only a percentage of the face value of their old policies.” Id. at 303. The

alternative was for policyholders to opt out and pursue their claims for breach of their

policy contracts against the liquidator of the old company, id., but the liquidation funds

would be insufficient for payment of their claims. Id. at 304. Policyholders claimed “that

the method of liquidation adopted by the Commissioner and approved by the court, even if

authorized by the [California] Insurance Code, denie[d] them due process and impair[ed]

the obligation of their policy contracts.” Id. at 303. The Supreme Court held that the

policyholders “failed to show that the plan takes their property without due process.” Id. at

305.

       Although Maryland has never had occasion to review the constitutionality of

legislation authorizing a receiver of an insurance company to disavow or amend existing

                                             22
contracts for impaired insurers in order to protect insureds, creditors, and the general

public, other jurisdictions have examined the question. The Supreme Court in Neblett

upheld the Commissioner’s total substitution of insurance policies in a rehabilitation plan,

which is just one example of disavowing or amending an existing contract in the insurance

context. 305 U.S. at 304. The Supreme Court of Pennsylvania “recogni[zed] the validity of

the goals sought and the scheme offered by . . . rehabilitation” in its approval of “the broad

powers afforded to the [Insurance] Commissioner granted in order to effectuate equitably

the intent of the Rehabilitation statutes, i.e., to minimize the harm to all affected parties,”

including the “impairment of contractual rights.” Foster v. Mut. Fire, Marine & Inland

Ins., 531 Pa. 598, 614 (1992); see also Kentucky Cent. Life Ins. v. Stephens, 897 S.W.2d

583, 587 (1995); In re Scottish Re (U.S.), Inc., 274 A.3d 1019, 1035 (Del. Ch. 2022). We

agree that there is an important state interest in protecting health insurance policyholders,

creditors, and the general public, and that the procedures and powers the Insurance Code

affords the Commissioner do not violate the U.S. or Maryland Constitutions.

              3.     The Second Amendment was not executed under economic
                     duress.

       Next, BCD contends the Second Amendment is unenforceable because it was

entered into under economic duress. BCD points to California common law for the

proposition that “‘economic duress’ can apply when one party has done a wrongful act

which is sufficiently coercive to cause a reasonably prudent person, faced with no

reasonable alternative, to agree to an unfavorable contract.” But as outlined above, there

was no “wrongful act” to coerce BCD into agreeing to the Second Amendment. And even

                                              23
if there were, the standard in Maryland for economic duress is stricter.

       A party claiming economic duress must prove: “(1) [a] wrongful act or threat” by

the other party to the transaction, and (2) that “the complaining party was overwhelmed by

fear and precluded from using free will or judgment.” Meredith v. Talbot County, 80 Md.

App. 174, 183 (1989) (cleaned up) (emphasis added). Mr. Tufaro conceded at the

evidentiary hearing that he was not threatened physically and, if anything, that he was the

party “noisily upset” during negotiations. He also testified that he “made a business

decision” when agreeing to the Second Amendment, that he had an opportunity to consult

with other lawyers once he had notice of the delinquency proceedings (the day after the

Rehabilitation Order was entered), and that he accepted the Second Amendment so that he

“could get something as opposed to nothing.” “Mere stress of business” is not duress when

RRC “was not responsible for such circumstances.” Shillman v. Hobstetter, 249 Md. 678,

693 (1968). The trial court did not err in enforcing the Second Amendment.

       C.     The Circuit Court Didn’t Show Improper Bias In Handling
              BCD’s Claim.

       Finally, BCD argues that the circuit court “did not display the requisite impartiality

and open-mindedness in conducting the hearing and in its Decision.” BCD accuses the

circuit court of “hostility” toward Mr. Tufaro for serving as BCD’s only witness and its

attorney in the proceedings, and the court’s “repeated demonstrated favoritism” toward

RRC’s and MIA’s counsel. There is no merit to these contentions.

       At the outset, BCD’s bias arguments aren’t preserved. Preserving review of “the

conduct and actions of a trial judge during the course of a proceeding in which it is alleged

                                             24
that such conduct is detrimental to a party’s case” requires that “the party raises the issue

during the trial,” such that the record reflects the following four requirements:

              (1) facts are set forth in reasonable detail sufficient to show the
              purported bias of the trial judge; (2) the facts in support of the
              claim must be made in the presence of opposing counsel and
              the judge who is the subject of the charges; (3) counsel must
              not be ambivalent in setting forth his or her position regarding
              the charges; and (4) the relief sought must be stated with
              particularity and clarity.

Braxton v. Faber, 91 Md. App. 391, 408–09 (1992). Indeed, “it is incumbent upon counsel

to state with clarity the specific objection to the conduct of the proceedings and make

known the relief sought.” Id. at 407. And BCD did nothing of the sort here.

       Even assuming the issue was preserved, though, the actions of which BCD

complains don’t reveal any bias or prejudice. When reviewing a trial judge’s alleged bias,

and “‘assuming the sufficiency of the record, our inquiry is limited to what impact, if any,

the trial judge’s alleged conduct had on the appellant’s ability to obtain a fair trial. We are

not here otherwise concerned with adjudication of judicial misconduct.’” Reed v. Balt. Life

Ins., 127 Md. App. 536, 550 (1999) (quoting Braxton, 91 Md. App. at 405 n.6). Mr. Tufaro

made clear repeatedly that he hadn’t practiced law in decades and, in our view, the court

attempted to accommodate Mr. Tufaro’s lack of legal experience and control the

proceedings to comport with the rules of evidence and professionalism. “[T]here is a strong

presumption in Maryland, and elsewhere, that judges are impartial participants in the legal

process . . . .” Jefferson-El v. State, 330 Md. 99, 107 (1993) (citations omitted). After

careful review of the record, that strong presumption is not rebutted.

                                              25
       Unfortunately, Evergreen’s business model was not sustainable and the Insurance

Commissioner had the challenging task of navigating its liquidation, a process that

invariably left many interested parties unhappy. But the Insurance Code provides the

framework that protects policyholders first, and BCD’s contractual rights had to “yield to

legislation in the interest of the general welfare.” Caminetti v. Pac. Mut. Life Ins. Co. of

Cal., 139 P.2d 908, 917 (Cal. 1943). We affirm the circuit court’s findings that BCD

received proper notice of the claims process and the court’s decision to enforce the Second

Amendment and applicable provisions of the Insurance Code, and we hold that BCD failed

to demonstrate that the court was biased in its treatment of BCD’s claim in the delinquency

proceedings.

                                          JUDGMENT OF THE CIRCUIT COURT
                                          FOR BALTIMORE CITY AFFIRMED.
                                          APPELLANT TO PAY COSTS.

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