ADKINS, J.

In this case, we determine the proper measure of lost profit damages in a breach of contract case, a question uncommon for our docket. We also review the rare situation when a trial court has permitted a litigant to discover and introduce into evidence communications between an opposing party and its attorneys, based on an implied waiver of the attorney-client privilege via testimony. Finally, we answer four other issues raised by the parties relating to this urban real estate development that failed to come to fruition.

The owners of two adjoining properties leased them to developer-tenants for the purpose of building an apartment building on each. As construction was beginning, the landlords breached the ground leases by refusing to provide estoppel certificates and contesting the tenants' building permits. The landlords' breach prevented the tenants from obtaining financing, which ended the development project. The tenants sued for lost profits.

In discovery, the landlords admitted to breaching but refused to explain why they had breached, stating simply that they had relied on the advice of counsel. Before trial, the Circuit Court for Montgomery County ruled against the landlords on several motions, holding that (1) the tenants could discover and introduce evidence of the landlords' reasons for breaching, including communications with their former counsel, (2) the landlords could not introduce evidence of the 2008 crash in the real estate market to show that the tenants would not have made profits, and (3) the landlords could not argue or present evidence that the tenants, having planned to create a shell company to operate the apartment buildings, were not the real party in interest. The jury awarded the tenants over $36 million in damages, holding the landlords jointly and severally liable. The trial court also awarded joint and several attorneys' fees.

The landlords appealed, contesting the issues mentioned above, as well as whether joint and several liability was proper. The Court of Special Appeals held that the landlords could not be held jointly and severally liable for damages but otherwise affirmed. Both parties petitioned for certiorari. For the reasons explained below, we shall affirm the judgment of the Court of Special Appeals.

Facts and Legal Proceedings

On June 16, 2004, Respondents/Cross-Petitioners RSC Tower I, LLC and RSC Tower II, LLC ("Tenants") entered into separate ground leases to develop adjoining properties in Rock Spring Park in Montgomery County, Maryland. The owners of the properties, Camalier L.P. and Davis Brothers Montgomery Farm L.P. ("Landlords"), signed the ground leases. The ground leases provided that Tenants — corporate entities formed by Penrose development company for the purpose of developing the two parcels — would build "high rise multifamily apartment project[s]" on each parcel as part of a common plan. Specifically, RSC Tower I, LLC agreed to build "Tower I" on Parcel 20, with construction to start no later than July 15, 2004. RSC Tower II, LLC agreed to build "Tower II" on Parcel 21, with construction to start no later than July 1, 2009.1 Each tower was to contain approximately 350 units.

The plan for the two properties changed later in 2004, when Tenants and Landlords discussed building instead condominium units, a hotel, and a spa resort. The developer for this new project was to be Canyon Ranch, an outside development company. On March 3, 2005, Tenants obtained approval of the site plan amendment for the new project from the Maryland National Capital Park and Planning Commission ("Commission"). Additionally, because Maryland law prohibits developing residential condominiums on leasehold estates,2 on September 13, 2005 Landlords agreed to sell the parcels to Tenants, modifying the ground leases accordingly and entering into sales contracts to convey the land. As a preliminary step to selling the properties, Landlords assigned their interests in the ground leases to Petitioners/Cross-Respondents CR-RSC Tower I, LLC, Second CR-RSC Tower I, LLC, CR-RSC Tower II, LLC, and Second CR-RSC Tower II, LLC, four corporate entities wholly owned by the owners of the properties.3

Yet on August 28, 2006, Tenants reverted to the original plan to build the apartment towers, filing another site plan amendment with the Commission. Tenants returned to the original plan because Canyon Ranch withdrew from the project, citing what it called "the overall slow down in the condominium marketplace" and "some missteps during the development project." A power struggle ensued, with Landlords asserting that they had the "sole authority" to determine whether to return to the apartment plan or to proceed with the condominium plan. Nevertheless, the Commission approved the site plan amendment. Landlords then instituted administrative actions contesting the Commission's approval of the site plan amendments as well as the decision of the Montgomery County Department of Permitting Services ("DPS") to issue a building permit for Tower I.

Tenants moved forward with the apartment project, entering into a Memorandum of Understanding ("MOU") with Northwestern Mutual Life Insurance Company ("NML") under which NML agreed to provide an $85 million construction loan and purchase $30.1 million in equity in the apartment towers. To finalize the financing agreement, in October 2006 Tenants requested that Landlords execute estoppel certificates, as called for by the ground leases. In simple terms, the estoppel certificates would certify that Tenants were in compliance with all terms of the lease. There was some back and forth about the terms of the estoppel certificates, and when Landlords still had not signed them by October 26, 2006, Tenants threatened to sue.

On November 3, 2006, Landlords wrote to Tenants, attaching draft estoppel certificates with several reservations. In those certificates, Landlords asserted that Tenants were in breach of the ground leases. When Tenants showed the certificates to NML, it said the certificates were not sufficient to finalize the financing agreement because Landlords said that Tenants were in breach. Tenants then filed a declaratory action against Landlords in the Circuit Court for Montgomery County.

While the lawsuit was pending, Tenants continued negotiating with NML, ultimately agreeing to a financing arrangement under which Tenants would assign their interest in Tower I to a separate corporate entity, Sorrento, which would be owned by NML and Tenants as "90/10 partners."4 The plans further provided:

These plans were reflected in Tenants' formal application for financing on December 8, 2006. In anticipation of the financing agreement, both NML and Tenants prepared pro formas projecting the towers' expected profits.

On April 4, 2007, the Circuit Court entered summary judgment in Tenants' favor, finding that Landlords had breached the ground leases by failing to provide the requested estoppel certificates and pursuing administrative actions against the site plan amendments and building permits. The Circuit Court ordered Landlords to execute the requested estoppel certificates within three days and dismiss the administrative actions.

Landlords appealed, and the Court of Special Appeals stayed the order to dismiss the administrative actions. Landlords signed the estoppel certificates but attached cover letters expressly reserving "all claims asserted in the pending litigation" and "all claims regarding the existence of any default, event, or condition that was not addressed by the Court in its Order, the final adjudication of which may [cause] any of the certifications contained in the Estoppel Certificates to be inaccurate." Of course, these reservations caused NML to reject the estoppel certificates, and the financing deal remained stalled. The Court of Special Appeals ultimately affirmed the order to dismiss the administrative actions, which Landlords did on September 8, 2008. This appellate decision, though, is not what we review today. We review issues arising in a second suit brought by Tenants against Landlords.

In September 2008, when the Court of Special Appeals' decision came down, the previous financing arrangement with NML was no longer available, and the building permits had expired. Thus, instead of attempting to move forward with the project,5 Tenants filed their second lawsuit on March 3, 2009, seeking damages from Landlords in the amount of $30 million.6 An amended complaint filed on October 29, 2009, increased the demand to $50 million and alleged that Landlords had acted in bad faith and committed a "succession of breaches" following the initial refusal to sign the estoppel certificates.

In discovery, Tenants questioned Landlords about their reasons for refusing to sign the estoppel certificates and instituting the administrative actions. Landlords' responses almost uniformly pointed to conversations with counsel as the reason for their actions. Accordingly, Tenants filed a motion to compel discovery from Landlords' former counsel, Hogan & Hartson, which Landlords opposed. The trial court ruled in Tenants' favor, ordering discovery from Hogan & Hartson regarding Landlords' reasons for breaching. In discovery, Tenants obtained an email from Davis Camalier, one of Landlords, in which he instructed the lawyers: "Just make sure you stop the bastards Whichever way you choose to go. We need some leverage[.]" Some might say this was the "smoking gun."

On the first day of trial, the trial court ruled on several pre-trial motions. It reserved ruling on Landlords' motion to exclude evidence of "motivations that led to the breach of the Ground Leases, and ... communications with former counsel Hogan & Hartson," opting to wait "and see how that played out[,] ... if it was going to be used as a defense ... [, and not] mention it in opening statement." Significantly, the court granted Tenants' motion to exclude evidence or argument relating to "post-breach market conditions for the purpose of seeking to prove that [Tenants] have no damages or lesser damages than claimed." This had the effect of preventing Landlords from presenting evidence or pursuing cross-examination regarding the post-breach decline in the real estate market.7

The trial occurred between March 1 and March 11, 2010. On the first day of trial, Tenants filed a second amended complaint that alleged a breach of the covenant of good faith and fair dealing; raised the demand for damages; and added, as an alternative to the lost profits claim, $23 million in reliance damages. The second amended complaint also alleged that each Tenant was a third-party beneficiary of the other's ground lease, making Landlords jointly and severally liable for all damages.

Tenants presented the expert testimony of Wiley Wright, who used the pro formas prepared by NML and Tenants in advance of their financing agreement to estimate the amount of profits that the towers would have made. Expert William Foote also calculated the money spent by Tenants in reliance on the contracts. The "bastards" email was introduced into evidence as well.

The verdict was large. The jury awarded damages of $36,350,239 against Landlords, jointly and severally, and did not specify whether the damages were lost profits or reliance damages. The trial court also awarded joint and several attorneys' fees in the amount of $3,654,633 against Landlords.

The dispute then took its second trip to Annapolis, with Landlords' appeal. The Court of Special Appeals issued a published opinion reversing the joint and several nature of the damages award but otherwise affirming. See CR-RSC Tower I, LLC v. RSC Tower I, LLC, 202 Md.App. 307, 32 A.3d 456 (2011).

Questions Presented

Landlords petitioned for certiorari, asking:

Tenants filed a cross-petition for certiorari, asking:

We granted certiorari on February 8, 2012, CR-RSC Tower v. RSC Tower, 424 Md. 628, 37 A.3d 317 (2012) as to all questions, and shall affirm the judgment of the Court of Special Appeals.

Discussion

Post-Breach Market Evidence

Landlords sought to show that Tenants would have made no profits, regardless of whether there was a breach. They offered expert testimony about the real estate market crisis in 2008-2010, when, as phrased by counsel, "the world has changed"8 and, "the cataclysmic events of 2008 in the economy"9 took place. In granting Tenants' Motion in Limine, the trial court ruled that Landlords could not present evidence of "post-breach market conditions," such as the unusually severe drop in the real estate market in 2008, and the market's static nature in 2010 at the time of trial. The Order stated that designated defense experts were not permitted to opine that "Key Assumptions" made by Tenants' expert Wright, who testified about pro forma projections made in 2006, were "unreasonable under current market conditions." The Court of Special Appeals affirmed, citing the "general principle" that contract damages are measured at the time of breach. CR-RSC, 202 Md.App. at 344, 32 A.3d at 478. The court held that this rule applied to both collateral and direct lost profits. Id.10

Landlords argue that this ruling was in error, because evidence of the post-breach market is a necessary part of any lost profits claim. Without such evidence, they say, a plaintiff cannot meet the requirement that lost profits be proved with "reasonable certainty."11 They assert that their proffered evidence of post-breach market conditions would have showed that the towers never would have made a profit. Thus, Landlords contend not only that the trial court erred by excluding such evidence, but also that Tenants' lost profits claim fails as a matter of law for lack of post-breach evidence.12 Tenants respond generally that evidence of post-breach market conditions not contemplated by the parties is irrelevant and inadmissible to prove lost profits, and that reasonable projections made during the contract are sufficient to sustain the verdict.

The decision whether to allow or preclude the admission of evidence is generally committed to the sound discretion of the trial court. Ruffin Hotel Corp. of Md., Inc. v. Gasper, 418 Md. 594, 619-20, 17 A.3d 676, 690-91 (2011). We will only find an abuse of such discretion "where no reasonable person would share the view taken by the trial judge." Consol. Waste Indus. v. Standard Equip. Co., 421 Md. 210, 219, 26 A.3d 352 (2011) (quoting Brown v. Daniel Realty Co., 409 Md. 565, 601, 976 A.2d 300, 321 (2009) (quotation marks omitted)). We review for clear error "the trial judge's factual finding that an item of evidence does or does not have `probative value,'" but we review de novo "the trial judge's conclusion of law that the evidence at issue is or is not `of consequence to the determination of the action.'" Gasper, 418 Md. at 620, 17 A.3d at 691 (citation omitted). Thus, we examine the law of contracts and how to prove damages from a breach in order to determine whether the trial court erred in excluding Landlords' proffered evidence about the post-crash real estate market.

We observe at the outset that the parties' phrasing of the lost profits issue is imprecise. Both parties offered evidence of "post-breach market conditions," in the sense that each sought to introduce evidence relating to 2009 and 2010. The difference is that Tenants' market evidence as to 2009 and 2010 consisted of projections made during the pre-breach life of the contract, by them and NML while negotiating the financing agreement, and Landlords' market evidence consisted of analyses made for trial based only on conditions current at trial. Landlords argue that post-breach market evidence is necessary to prove lost profits. Yet the 2010 market evidence they proffered, as the attorneys agreed, reflected a "cataclysmic change" from what was contemplated in 2006. This distinction, as we shall explain, is key to determining whether Landlords' market evidence was relevant to, or necessary for, proving Tenants' lost profits claim.

General v. Consequential Damages

As we said in David Sloane, Inc. v. Stanley G. House & Assocs., Inc., a party injured by a breach of contract

311 Md. 36, 42, 532 A.2d 694, 697 (citing Restatement (Second) of Contracts § 347 (1981)).

Damages are calculated differently depending on which category the claim is in — whether it is for the "value of the other party's performance" or a "consequential loss" following from the breach. As we recently said in Burson v. Simard, when the claim is based on value, it is a "general damages" claim, calculated as "the difference between the contract price and the fair market value at the time of breach." 424 Md. 318, 327-28, 35 A.3d 1154, 1159 (2012) (citation and quotation marks omitted). However, when the claim is for "consequential loss," it is a "special" or "consequential" damages claim, calculated as losses that "may reasonably be supposed to have been in the contemplation of both parties at the time of making of the contract." Id. at 327, 35 A.3d at 1159 (citation and quotation marks omitted).

There is some uncertainty over which category applies to lost profits claims. As Professor Dobbs explains, this is because the word "profit" can refer either to business profits or the increase in value of an item. See 3 Dan B. Dobbs, Law of Remedies § 12.4(3) (2d ed.1993). In the former instance, when lost profits are claimed for lost income from business operations that would have been made but for the breach, the claim is for "consequential" or "special" damages. Id.; see also E. River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858, 874, 106 S.Ct. 2295, 2303-04, 90 L.Ed.2d 865 (1986) (lost profits claim for income that could have been earned but for a breach of warranty by a manufacturer who installed defective turbines on plaintiffs' ships was for consequential damages).

In the latter instance when the lost profits claim is based on the value of the item promised, the claim is for "general damages," as the damages are "the difference between the contract price and the fair market value at the time of breach." Burson, 424 Md. at 327-28, 35 A.3d at 1159 (citation and quotation marks omitted); see also Dobbs, supra, § 12.2(3) (lost profits are general damages when they are for "the market value of the very thing promised"); 11 Corbin on Contracts § 56.19 (Rev. ed.2005) (lost profits based on the resale of a promised car can be proved by looking to "the excess of this market price over the contract price").

In such cases, as with all general damages claims, the market value of the item is determined at the time of breach. The cases cited by Tenants support this rule. See, e.g., Charles County Broad. Co., Inc. v. Meares, 270 Md. 321, 332, 311 A.2d 27, 34 (1973) ("[I]n breach of a contract to sell, damages are based on value at the time the transfer was to be made...."); Kasten Constr. Co. v. Jolles, 262 Md. 527, 531, 278 A.2d 48, 51 (1971) ("In general, the measure of damages when a vendee breaches a contract to purchase real estate is the difference between the contract price and the fair market value at the time of breach."); Dobbs, supra, § 12.2(3) ("General damages ... [i]n a contract for the sale and purchase of property or goods... is the difference between contract price and market price on the date when performance was due.").

Landlords challenge Tenants' "time of breach" theory, pointing out that many of the cases cited by Tenants did not involve lost profits at all. See, e.g., Beard v. S/E Joint Venture, 321 Md. 126, 147-48, 581 A.2d 1275, 1285-86 (1990); Charles County Broad. Co., 270 Md. at 332-33, 311 A.2d at 34; Kasten Constr. Co., 262 Md. at 531, 278 A.2d at 51; Marshall v. Haney, 9 Gill 251, 260 (Md.1851); Cannell v. M'Clean, 6 H. & J. 297, 301-02 (Md.1825). Thus, Landlords argue, these cases do not support Tenants' position that the "time of breach" rule applies to consequential lost profits.13

Tenants would have us apply this "time of breach" rule across the board, to every kind of damages claim. Yet as Corbin explains, there cannot be one rule for every kind of breach, because different kinds of damages require different kinds of calculations. See Corbin, supra, § 55.11 ("There are many rules of damages for particular kinds of contracts, such as contracts for the sale of goods, construction contracts, employment contracts, etc." (footnotes omitted)); see also Great Atlantic & Pacific Tea Co. v. Atchison, T. & S. F. R. Co., 333 F.2d 705, 708 (7th Cir.1964) ("Since the market value rule is merely a method, it is not applied in cases where it is demonstrated that another rule will better compute actual damages.").14 Thus, we cannot take for granted that the "time of breach" rule applies here.

Applying The Time of Breach Rule

Some of the cases cited by Tenants make this distinction very clear, explaining that the "time of breach" rule applies only to lost profits as general damages. See, e.g., Anchor Sav. Bank, FSB v. United States, 597 F.3d 1356, 1369 (Fed.Cir.2010) ("[T]he rule favoring the measurement of damages as of the time of the breach `does not apply ... to anticipated profits or to other expectancy damages that, absent the breach, would have accrued on an ongoing basis over the course of the contract.'" (citation omitted)); Sharma v. Skaarup Ship Mgmt. Corp., 916 F.2d 820, 825-26 (2d Cir.1990) ("It is ... fundamental that, where the breach involves the deprivation of an item with a determinable market value, the market value at the time of the breach is the measure of damages.... However, [when the things promised] did not have a market value and were not replaceable[, l]ost profits were therefore the best measure of the loss." (citations omitted)); see also Lehrman v. Gulf Oil Corp., 500 F.2d 659, 668 (5th Cir.1974).

The distinction between general damages and consequential damages is present in the secondary literature as well. See Dobbs, supra, § 12.4(4) (explaining that the time of breach rule applies to general damages but not special or consequential damages); Corbin, supra, § 60.12 ("[G]eneral damages are the full contract price minus the market value of the land at date of breach and also minus any payment received. Costs of making a resale may be allowed as consequential or incidental damages. If foreseeable, other consequential damages are available." (citing Kasten, 262 Md. at 530-31, 278 A.2d at 51)); id. § 60.11 (measuring damages "by the value of land at the time it should have been paid," whereas "consequential damages" are separate and extra). We think it clear, therefore, that the "time of breach" rule cannot be blithely applied to lost profits cases involving a business's anticipated income. The nature of the evidence offered to prove lost profits must be examined carefully.

Here, the evidence of damages reveals that although Tenants' expert, Mr. Wright spoke about "lost profits," he also sought to establish how to value the ground lease that Landlords' refused to perform. See Dobbs, § 12.4(3) at 76. ("Lost profits are normally consequential damages. But in some instances lost profits may resemble general damages because they furnish evidence about the value of the defendant's performance."). Indeed, Mr. Wright testified about market value of the ground lease, and lost profits in one unified approach. He explained,

Using pro forma projections made in 2006 by Tenants and their lender and applying the capitalization formula, he estimated income from rentals for both towers, and subtracted total costs to build the towers, as well as ground rents payable to Landlords. He then discounted that figure to present value by using a 6-percent capitalization rate for Tower I and a 6.5-percent capitalization rate for Tower II to arrive at a total lost revenue for each tower. With Wright's damages testimony, lost profits for a 10-year period might be seen as congruent with the value (to Tenants) of the ground lease that Landlords breached.

Dobbs explains in § 12.4(3) general damages with this example:

Id. Dobbs uses the following example of consequential damages as a contrast with general damages:

Id.

In one sense the damages proof in this case as more like the first example above. Yet, arguably these damages are unlike breach of sale of land or business in that example because Tenants were required to take necessary steps to develop the property in order to realize the profits Mr. Wright estimated. This was a complex undertaking requiring Tenants' expertise as developers. For this reason, it is difficult to say that the testimony reflected that the ground lease itself was equal in value to the 10-year income stream. We conclude, therefore, that the damages proved by Tenants should not be strictly categorized either as general or consequential. Accordingly, rather than stop our analysis with the conclusion that these are general damages, measurable only at breach, we will address further arguments made by Landlords, which are premised on their theory that these are consequential damages, measurable at a later day.

Post-Breach Evidence

Landlords continue to vigorously argue that the trial court erred in refusing admission of their expert's testimony about the condition of the real estate market in 2010. They cite cases purportedly demonstrating that Maryland courts have always looked to post-breach market evidence to determine whether a lost profits claim has been proved with "reasonable certainty." Yet a close examination of those cases shows that they do not stand for Landlords' asserted rule. For example, in Lanahan v. Heaver, we commented that the plaintiff's unbuilt houses seemed not to be in demand given that "thirteen of those actually built remain unsold[.]" 79 Md. 413, 422-23, 29 A. 1036, 1038-39 (1894). Yet this was not why we held that the plaintiff's lost profits claim failed for lack of certainty. As we explained, the lost profits claim failed because there was simply "no evidence in the record of what the market value of such houses would have been." Id. at 420, 29 A. at 1038.15 Here, of course, we have the opposite problem: the parties proffered competing measures of the relevant market, and we must decide which is the proper measure.

Landlords' other cases are similarly unhelpful. For example, in Macke Co. v. Pizza of Gaithersburg, Inc., we remanded to the trial court to calculate lost profits, speculating that if the plaintiff had found a substitute for the defendant's promised machines, then "a more appropriate measure of damages might be that grounded on the [plaintiff's] actual experience for the period [contemplated by the contract], rather than one based on extrapolating profits from the results experienced [previously]." 259 Md. 479, 492, 270 A.2d 645, 652 (1970). Landlords assert that this language directs courts to look to post-breach market evidence to determine the amount of profits a plaintiff would have made. Yet as Tenants point out, Macke did not involve "market evidence" at all, but instead referred to the plaintiff's "actual experience" with substitute performance during the period when the profits would have been made. Id.16 We agree with Tenants that the best reading of Macke is simply that a plaintiff's actual experience with substitute performance is relevant to determining lost profits. Of course, Tenants could not seek substitute performance here, as no one other than Landlords could produce the estoppel certificates respecting the ground leases.17

Moreover, in M & R Contractors & Builders, Inc. v. Michael, we were not even calculating the amount of lost profits when we mentioned substitute performance. Rather, we were discussing whether the plaintiff builder's substitute performance would count as mitigation against his lost profits. We held that it would not unless the plaintiff's contract with the defendant "was such as to require [his] entire time and attention so that their breach made it possible for the builder to undertake another project[.]" 215 Md. 340, 356, 138 A.2d 350, 359 (1958). This was the context in which we said, "the actual gain made under the substituted contract must be considered in measuring the damages to which the builder is entitled." Id. We were not even discussing the measure of lost profits, let alone "post-breach market conditions." Finally, Republic Ins. Co. v. Prince George's County, the last case cited by Landlords, did not involve lost profits, and its statement about measuring damages "as of the date of the breach" referred to "fluctuations in value," not market conditions. 92 Md.App. 528, 533, 608 A.2d 1301, 1304 (1992) (citation omitted).

Thus, none of Landlords' Maryland cases directly support admitting post-breach market evidence to prove lost profits.18 Indeed, we know of no Maryland cases in which such evidence was admitted for that purpose,19 and out-of-state cases provide no general rule either.20 Thus, we find no support for Landlords' claim that any and all post-breach evidence is admissible as a necessary part of any consequential lost profits claim. In our view, the question of time is not key. Rather, as we shall explain, the core question for consequential damages is whether they were in the contemplation of the parties when they contracted.

The Contemplation of the Parties

As Professor Corbin explains, consequential lost profits "may be regarded as too remote or too speculative ... [but] will not be so regarded if the defendant had reason to foresee them." Corbin, supra, § 56.19 (footnotes omitted). Professor Dobbs agrees that foreseeability is the key, because, under Hadley v. Baxendale, 9 Ex. 341, 156 Eng. Rep. 145, 151 (1854), the "contemplation of the parties" at the "time of contracting governs" consequential damages. As he says:

Dobbs, supra, § 12.4(7) (citing Hadley, 156 Eng. Rep. at 151 (consequential damages are "such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract")).

Likewise, Professor Sutherland explains that consequential damages are determined by looking to what the parties can be said to have planned and assumed when they contracted. As he says, consequential damages are "such as ordinarily arise according to the intrinsic nature of the contract and the surrounding facts and circumstances made known to the parties at the making of it." J.G. Sutherland, A Treatise on the Law of Damages § 51 (John R. Berryman, ed., 4th ed.1916) (emphasis added). These passages instruct us that consequential lost profits are calculated with reference to what the parties can reasonably be said to have anticipated when they entered into the contract. Thus, circumstances that cannot be said to have been "known to the parties" when they contracted — such as a post-breach boom or bust in the market — should not affect the measure of consequential damages that would "ordinarily arise" according to the "intrinsic nature of the contract."21

To be sure, the Hadley foreseeability rule originated as a limit on damages and has been most often applied that way. But courts have also applied the rule positively, using it to justify damages because they were foreseeable or would ordinarily occur under the circumstances. See Dobbs, § 12.4(1) ("[T]here is no reason to deny consequential damages if the limiting rules are met."); Anchor Sav. Bank, 597 F.3d at 1369-70 (evidence of future lost profits that could have been derived from the lost income-producing asset admissible); Midland Hotel Corp. v. Reuben H. Donnelley Corp., 118 Ill.2d 306, 113 Ill.Dec. 252, 515 N.E.2d 61, 67-68 (1987); Welch v. U.S. Bancorp Realty & Mortgage Trust, 286 Or. 673, 596 P.2d 947, 963 (1979); AM/PM Franchise Ass'n v. Atlantic Richfield Co., 526 Pa. 110, 584 A.2d 915, 921 (1990) (treating "reason to know" test as equivalent to "foreseeable.").22

The dispositive questions, therefore, are (1) whether, at the time they entered into contract, it was foreseeable to the parties that a breach of contract might result in the termination of the real estate development project for which the land was being leased and, if so, (2) whether the trial court abused its discretion in ruling that post-breach market data was irrelevant in determining the expected value of performance as of the time of breach. Thus, evidence of post-breach booms and busts is not relevant — and thus not admissible — when it cannot be said that the parties foresaw it.

Of course, many contracts are made with the possibility of a future market downturn in mind — for example, contracts for delivery or sale of goods.23 Indeed, such contracts are often made with the purpose of allocating the risk of future market swings between the parties.24 But when both parties' success depends on a relatively stable market, it cannot be said that a subsequent, unforeseen market crash was within the parties' contemplation, at least not without any evidence to suggest that it was.25

Such is the case here, as both Landlords and Tenants were relying on the success of the towers. Indeed, the ground leases provided for Landlords' rental income to more than double following construction of the towers, from $64,734.58 prior to construction26 to $130,260.83 following full construction,27 with further increases thereafter based on the "fair rental value" of the premises. Thus, Landlords' income from the leases was dependent on Tenants' success in constructing and running the towers.28 Testimony about the income projections produced by Tenants revealed that, by use of capitalization rates,29 Tenant and NML took into account the normally expected risk of vacancy in the apartments.30 With no suggestion that the market swing described by Landlords as "cataclysmic" was contemplated,31 we cannot say that the trial court erred in excluding all evidence of it. We bear in mind, in reaching this conclusion, that a trial court's rulings on the admission of evidence are discretionary, so long as the correct rule of law is applied. See Gasper, 418 Md. at 619-20, 17 A.3d at 690-91.

Our conclusion is reinforced when we consider that market projections of Tenants and NML made in furtherance of the contract were not contradicted by Landlords. Rather, they declined to produce any projections of future profits based on conditions during the contract. Landlords must have made their own market projections in anticipation of the ground leases, given that their expected revenue was just as dependent upon the rental market as that of Tenants. But, despite clear and repeated rulings by the trial court against use of post-breach market evidence for 2009 or 2010, Landlords declined to offer any evidence of market projections made during the 2006-2007 time period. Indeed, at oral argument, when asked by Judge Battaglia why they failed to introduce such evidence, in the face of the trial court's rulings, Landlords simply reiterated their belief that 2009-2010 evidence should have been admitted.32 Landlords' view of the market as of the time of contracting would certainly have been relevant, but as they clarified in their opposition to Tenants' motion to exclude post-breach evidence, their proffered experts were prepared to testify only as to "what the market actually is/was at the time the Project would have been available for rent" to show that Tenants' "earlier projections... have now — given the downturn of the real estate market — proven to be unrealistic." They reiterated at the hearing on the motion that their experts were going to testify as to "how the market performed after time, over time ... [w]hen the towers would have been delivered."

Thus, Landlords failed to contradict Tenants' view of the parties' expectations for profit at the time of contracting. They did not offer evidence of their own market projections, and did not point to any market indicators33 that may have made the crash objectively foreseeable. Without anything to contradict the projections put forth by Tenants, the trial court was acting reasonably when it concluded that the crash was not within the parties' contemplation.34 See Prod. Credit, 989 F.2d at 418 (market decline unforeseen where "the parties never addressed the possibility"); W.A. Lighter, 24 F.2d at 537-38 (parties' contemplation at the time of contracting showed that there was no liability for the decline in the market); Reliance Acceptance Corp., 34 P.2d at 765-66 (using the terms of the contract to deduce that the parties did not contemplate the decline in the market value of the security at issue).35

We are not persuaded by Landlords' thesis that post-breach market evidence is always required to prove lost profits with reasonable certainty. See Corbin, supra, § 56.20 (consequential lost profits can be proved simply with the "past history" of the business operation); Dunn, supra, § 1.20-22 (explaining that the foreseeability of lost profits can be inferred from the contract, negotiations in contracting, or later communications between the parties). Some of our consequential lost profits cases, while not explicitly addressing which market projections were relevant, appear to adhere to the principle that the parties' contemplation controls. For example, in Automatic Retailers of Am., Inc. v. Evans Cigarette Serv. Co., we affirmed a lost profits award, refusing to consider post-breach circumstances that "might have changed" the amount, instead holding that the plaintiff's "long history" in the business was sufficient evidence of the profits that it would have made "for its services during the applicable period." 269 Md. 101, 109-10, 304 A.2d 581, 586 (1973); see also Sumwalt Ice & Coal Co. v. Knickerbocker Ice Co., 114 Md. 403, 417, 80 A. 48, 51 (1911) (holding that "declarations ... made more than six months or a year after the commission of the wrong complained of, were too remote and were properly excluded"); U.S. Tel. Co. v. Gildersleve, 29 Md. 232, 250 (1868) ("[I]f the special circumstances under which the contract was actually made, were communicated by the plaintiff to the defendant, and thus known to both parties, the damages resulting from the breach of such a contract which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of a contract under these special circumstances so known and communicated." (emphasis added)).

Landlords contend that looking only to the parties' expectations at the time of contracting creates a windfall for Tenants by "award[ing] damages based upon a fictional market, which was far sunnier than the real market into which each Tenant would have delivered its product." Tenants respond that the appearance of a windfall in this case is "illusory," as a drastic change in the market post-breach will cause one party more harm than the other "no matter which standard is chosen." We agree with Tenants on this point. The only reason Tenants benefitted from the exclusion of post-breach market evidence is that the market declined post-breach. But whether post-breach market evidence would increase or decrease an award, we think it irrelevant to the measure of consequential damages — that were clearly within the contemplation of the parties when the contracted — measured at the time of breach.36

The Second Circuit explained why measuring damages at the time of breach, rather than the time of trial, is preferable:

Sharma v. Skaarup Ship Mgmt. Corp., 916 F.2d 820, 826 (2d Cir.1990).

Landlords further complain that excluding post-breach evidence encourages "strategic litigation," as potential plaintiffs would be able to sit back during the three-year statute of limitations37 to see if the market rises or falls. If it rises, they say, plaintiffs should simply ignore the breach and strike a more profitable deal elsewhere; if it falls, plaintiffs should sue, getting the "windfall" of having their damages measured according to pre-breach projections. Landlords argue that such was Tenants' course of action here, waiting until the real estate market crashed to file for damages.

We disagree that Tenants' behavior in this case evidenced any kind of gamesmanship. They attempted for more than a year to secure Landlords' performance under the ground leases, even obtaining an injunction for such performance. That was no strategic "wait-and-see" tactic, but was an attempt to move forward with the project. Similarly, suing for damages once the breach had made the project impossible was not gamesmanship. Landlords cannot seriously contend that Tenants should have continued to employ lawyers in an attempt to secure estoppel certificates and move forward with a project that had lost its funding and permits. After Landlords' prolonged breach, which happened to extend into a severe market downturn, Tenants' only reasonable course of action was to sue for damages.38

Sorrento as Intermediary

We next address Landlords' argument that Tenants' plans to create a separate corporate entity to operate the towers undermined the causation element of the damages claim. The Court of Special Appeals rejected this argument:

CR-RSC, 202 Md.App. at 334, 32 A.3d at 472.

Landlords challenge this ruling, urging that we reverse the damages judgment "for lack of proximate causation and for failure to name the real plaintiff in interest." This is because, they say, "most of the ... lost profit damages ... would have belonged to Sorrento, which would have in turn paid most of those profits to NML[.]" Thus, Landlords claim that the jury improperly awarded Tenants damages that would have gone to another entity.

Tenants rely on the Court of Special Appeals' analysis and also point out that Landlords "blocked Sorrento from participating by refusing to consent to an assignment of the grounds leases" and therefore "can hardly raise a party-in-interest defense when they are the ones responsible for the missing party's absence."

Maryland Rule 2-201 provides: "Every action shall be prosecuted in the name of the real party in interest[.]"39 As Judge Harrell explained in Mid-Atlantic Power Supply Ass'n v. Public Service Comm'n, "the trend has been to define a real party in interest as: `A person entitled under the substantive law to enforce the right sued upon and who generally, but not necessarily, benefits from the action's final outcome.'" 361 Md. 196, 221, 760 A.2d 1087, 1100 (2000) (Harrell, J., dissenting) (quoting Black's Law Dictionary 1143 (7th ed.1999)).40 Thus, given that Tenants were named in the ground leases, the breach of which caused them to lose profits under a collateral agreement made pursuant to the ground leases, it is clear that they were the party entitled to enforce the breach and seek compensation for the damages thus incurred. Landlords provide no competing analysis.

We now turn to Landlords' proximate cause arguments. We detailed the proximate cause standard in Pittway Corp. v. Collins:

409 Md. 218, 243-46, 973 A.2d 771, 786-88 (2009).

Applying the above framework to this case,41 it is clear that there was sufficient evidence to show that Landlords' breach was the "cause-in-fact" of Tenants' losses. Testimony from NML's Director of Field Production Nicolas Jahnke confirmed that NML was planning to close the financing deal by the end of 2006, but Landlords' refusal to provide unconditioned estoppel certificates and their administrative actions challenging the site plan amendments scuttled the deal. This causal chain from Landlords' breach to Tenants' damages is not seriously challenged by Landlords. Nor do Landlords provide any analysis as to why their actions were not a "legally cognizable cause" of Tenants' injuries, except to maintain that Tenants are not the real parties in interest. We answered that question above.

Nevertheless, Landlords seek "a new trial to determine the amount of profits which Tenants would have themselves lost as a proximate result of Landlords' breaches." (Emphasis added.)42 This is because, Landlords say, Tenants planned to operate Tower I through Sorrento, which NML and Tenants were to own "as 90/10 partners," with cash flow being split 90% to NML at first, and then 60% to NML following a 10% cumulative preferred return. Thus, Landlords argue that it "would be a perversion of Maryland law for Tenants to recover tens of millions of dollars that never would have belonged to them even in the hypothetical economy of their pro formas." Tenants respond that the Sorrento financing plan was only one of the options available for Tower I, and that a different plan could have been used.

Judge James Eyler writing for the Court of Special Appeals considered this issue:

CR-RSC, 202 Md.App. at 334, 32 A.3d at 472. We adopt the opinion of the Court of Special Appeals on this issue.

Attorney-Client Privilege

The issue of whether Landlords waived the attorney-client privilege here presents an application of the waiver doctrine that we have not previously addressed-whether a defendant may waive the privilege through testimony. The Circuit Court held that Landlords had waived the privilege, and the Court of Special Appeals agreed. Landlords raise this novel issue — and diverse others — about the privilege in their efforts to win a new trial.

Landlords contest "one, and only one, attorney-client communication[:] the `stop the bastards' email of April 9, 2007."43 Landlords attack admission of this communication into evidence on two fronts. First, they assert that there was no waiver of the privilege with regard to the email because they did not formally raise an "advice of counsel defense," but "simply denied Tenants' allegations of bad faith."44 Landlords would have us limit waiver by a defendant to instances when an "advice of counsel defense" was raised by the pleadings. Second, Landlords aver that their testimony, in which they used the advice of counsel to explain their actions, "described only the circumstances of the attorney-client communications, not the content." They argue that the deposition was

Tenants respond that "Landlords' contention that they did not `formally' assert advice of counsel in a pleading sidesteps the key point," which is that the waiver resulted from Landlords' attempt to rely on advice of counsel "to avoid candidly explaining why Landlords breached." In Tenants' view, "if the defendant voluntarily chooses to establish his blamelessness by pointing to advice of counsel, the privilege is waived as to that advice."

A. Waiver of Attorney-Client Privilege, Generally

The basics of this salient evidentiary privilege guide us. Attorney-client privilege is "the oldest of the privileges for confidential communications known to the common law." Newman v. State, 384 Md. 285, 300-02, 863 A.2d 321, 330 (2004) (quoting Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 682, 66 L.Ed.2d 584, 591 (1981)). Judge Battaglia, writing for the Court in Newman v. State, explained the purpose of the privilege as "an accommodation of the competing public interests of the need to promote candor in communications between attorneys and their clients and the general testimonial compulsion to divulge relevant evidence in the pursuit of truth and justice." Id. Although this privilege is "essential to an effective attorney-client relationship" and "prevents the disclosure of a confidential communication," it "is not absolute." Id. at 302, 863 A.2d at 330-31.

One way in which the privilege is "not absolute" is that "[w]aiver may be effected by the client's testifying to a significant part of the privileged confidential information." Greenberg v. State, 421 Md. 396, 404, 26 A.3d 955, 960 (2011) (quoting 6 Lynn McLain, Maryland Evidence State & Federal § 503:15 (2d ed.2001)). As we explained in Harrison v. State:

276 Md. 122, 136, 345 A.2d 830, 839 (1975).

Although there are exceptions to this waiver doctrine,46 one established application of it is when a witness attempts to use the attorney-client privilege as both a "sword" and a "shield." As the United States Court of Appeals for the Eighth Circuit has opined:

United States v. Workman, 138 F.3d 1261, 1263-64 (8th Cir.1998).

We recognized a similar waiver doctrine in Parler & Wobber v. Miles & Stockbridge, P.C., a case involving a professional corporation that was sued for legal malpractice. 359 Md. 671, 756 A.2d 526 (2000). The defendant responded by filing a third party claim against the lawyers then representing the plaintiffs, claiming contribution or indemnification based on the latter's negligence. Id. at 677-78, 756 A.2d at 529. In applying the doctrine against the defendant-corporation, we said: "a privileged party cannot fairly be permitted to disclose as much as he pleases and then to withhold the remainder to the detriment of the defendant." Id. at 693, 756 A.2d at 538 (quoting Greater Newburyport Clamshell Alliance v. Public Serv. Co. of N.H., 838 F.2d 13, 20 (1st Cir.1988))(internal quotation marks omitted).

B. Waiver of Attorney-Client Privilege by Defendants

Landlords argue that "[t]his Court has never actually held a defendant to have waived the attorney-client privilege under the facts of any case." (Emphasis added). Other than the Parler defendant, who filed a third-party claim, this is true, although not outcome determinative, because we have never addressed facts like these. They further aver that "[t]his Court has never found a party to have placed attorney-client communications `at issue' where the party's own pleadings did not affirmatively inject the issue into the case[,]" citing Ehrlich v. Grove, 396 Md. 550, 574 n. 14, 914 A.2d 783, 798 n. 14 (2007).47 Landlords propose this much stricter standard for waiver, when applied against a defendant. Yet, Landlords advance no policy reason why defendants should be immune from waiver principles, and our quest is to determine whether there are sound reasons to exclude defendants from the usual application of the waiver doctrine.

Our study of the issue starts close to home, as our own Court of Special Appeals has recognized that an implied waiver could be applied against defendants based on testimony, in three cases.48 In one of these cases, that court said:

ST Sys. Corp. v. Md. Nat'l Bank, 112 Md.App. 20, 35, 684 A.2d 32, 39-40 (1996). Neither in ST Systems or the other two Court of Special Appeals cases, though, has waiver of the privilege by the defendant actually been found. The United States Bankruptcy Court for the District of Maryland, however, applied ST Systems, ruling that defendants, as well as plaintiffs, can be held to have waived the privilege if they brought up conversations with counsel for their own benefit. In re Nazarian, 18 B.R. 143, 147 (Bankr.D.Md. 1982) ("Maryland law establishes that when a client, through his testimony, puts at issue a specific communication with his attorney, the attorney's testimony becomes admissible because the client has waived his privilege. When [the defendant] chose to raise advice of counsel as a defense in this case, he waived the attorney-client privilege." (citation omitted)).

Searching outside Maryland, we find widespread application of the waiver doctrine to both plaintiffs and defendants. As a treatise on the privilege has explained, a client may waive the privilege by "affirmatively, albeit impliedly, relying on [counsel's] advice to support its denial of the plaintiffs' claims." 2 Paul R. Rice, Attorney-Client Privilege in the United States § 9:46 (2012). The treatise explained further:

Id. (quoting Van Straaten v. Shell Oil Products Co. LLC, No. 09C1188, 2010 U.S. Dist. LEXIS 98604, at *14 (N.D. Ill. June 8, 2010), rev'd on other grounds, 678 F.3d 486 (7th Cir.2012)).

Professor Wigmore, whose definition of the privilege we adopted in Harrison, 276 Md. at 135-37, 345 A.2d at 838-39, agrees:

8 John H. Wigmore, Evidence in Trials at Common Law § 2327 (John T. McNaughton ed.1961); see also Edward J. Imwinkelried, The New Wigmore A Treatise on Evidence: Evidentiary Privileges § 6.12.4.b(2) (Richard D. Friedman ed., 2d ed. 2010) ("In principle, it should make no difference whether the litigant made the allegation as a plaintiff or defendant."); 12-5 Bender's Forms of Discovery Treatise § 5.02 (2012) ("If the advice of counsel becomes an issue in litigation, fairness may require full disclosure of the attorney's opinion....").

Federal cases amply support applying this waiver doctrine against defendants. See, e.g., United States v. Woodall, 438 F.2d 1317, 1325 (5th Cir.1970) ("By offering his own testimony as to a part of the conversation relative to plea results, [the defendant] waived the right to claim the privilege as to the whole thereof."); Sedillos v. Bd. of Educ. of Sch. Dist. No. 1, 313 F.Supp.2d 1091, 1094 (D.Colo.2004) (defendant "cannot on the one hand claim as a defense that he relied on the advice of his counsel ... while at the same time invoking the attorney-client privilege to prevent the plaintiffs from exploring fully the substance and circumstances of that advice") (citation omitted)); Handgards, Inc. v. Johnson & Johnson, 413 F.Supp. 926, 929 (N.D.Cal.1976) (applying the "sword and shield" doctrine against the defendants, observing that "[t]he deliberate injection of the advice of counsel into a case waives the attorney-client privilege as to communications and documents relating to the advice"); Daniels v. Hadley Mem'l Hosp., 68 F.R.D. 583, 589 n. 8 (D.D.C.1975) (applying the doctrine against the defendant, observing: "The client's offer of his own or the attorney's testimony as to part of any communication to the attorney is a waiver as to the whole of the communication...." (citation and quotation marks omitted)); In re Penn Cent. Commercial Paper Litig., 61 F.R.D. 453, 464 (S.D.N.Y.1973) (holding that the defendant's parent company had waived the privilege by allowing his attorney to testify about the relevant communication).

Cases from other states support this interpretation as well. See, e.g., Elia v. Pifer, 194 Ariz. 74, 977 P.2d 796, 804 (Ct. App.1998) ("[A] defendant [will] not be allowed to use privilege as a shield to block inquiry into an issue that he ha[s] raised."); Hoechst Celanese Corp. v. Nat'l Union Fire Ins. Co., 623 A.2d 1118, 1125 (Del.Super.Ct.1992) (sword and shield doctrine "applies when the party holding the privilege waives the privilege, traditionally in one of two basic ways: (1) the party injects the communications themselves into the litigation, or (2) the party injects an issue into the litigation, the truthful resolution of which requires an examination of the confidential communications." (emphasis added)); Savino v. Luciano, 92 So.2d 817, 819 (Fla.1957) ("The anomaly of [the defendant's] position is immediately apparent: for the purpose of barring the discovery procedure, the audit and report is confidential and privileged; for the purpose of proving his case, it is not.... We hold, therefore, that the defendant in the instant case has either expressly or impliedly waived the right to insist upon the privileged nature, if any, of the audit and report."); Carpenter v. Mass. Inst. of Tech., 19 Mass. L. Rep. 339 (Mass.Super.Ct.2005) (applying the "sword and shield" doctrine against the defendant university, holding that it had waived the attorney-client privilege); Wardleigh v. Second Judicial Dist. Court, 111 Nev. 345, 891 P.2d 1180, 1186 (1995) ("[W]aiver occurs when the holder of the privilege pleads a claim or defense in such a way that eventually he or she will be forced to draw upon the privileged communication at trial in order to prevail, and such a waiver does not violate the policies underlying the privilege." (emphasis added)); Arnold v. City of Chattanooga, 19 S.W.3d 779, 787 (Tenn.Ct.App.1999) (quoting Wardleigh, 111 Nev. 345, 891 P.2d 1180).49

Landlords disagree with these authorities, urging us to be guided by a footnote in our own decision in Ehrlich v. Grove, where we addressed a waiver of privilege issue, but not by testimony. In that suit by a former state employee against Governor Ehrlich, the employee alleged waiver of the privilege based on the Governor's supposed earlier production of documents similar to those refused. This footnote provides, in pertinent part:

396 Md. at 574-75 n. 14, 914 A.2d at 798-99 n. 14. Landlords rely on this Ehrlich footnote to support their argument that, as defendants whose pleadings did not place their good faith intent at issue, they were not subject to an implied waiver of the privilege. We are not persuaded.

To be sure, the Court in Ehrlich articulated a narrow view of implied waiver doctrine in explaining why the Governor did not waive the attorney-client privilege when he (allegedly) produced documents similar to the ones for which he later claimed the privilege. Yet, the Court was careful to qualify its comment about the Parler & Wobber doctrine, saying only that it did not apply to the Governor's production of documents, and that "to the extent previously applied in this State, [the doctrine] relates to civil plaintiffs in professional malpractice cases." Id. (emphasis added). The Court did not purport to set a steadfast rule that under different circumstances a defendant could not be said to have waived the privilege through testimony. Using a restrained approach, the Ehrlich Court went as far as it needed to, in distinguishing Parler & Wobber, to reach the conclusion that the Governor's earlier production of documents was not a waiver of the privilege.

Ehrlich's assertion of the privilege belatedly, in connection with document production, is strikingly different from offering up "attorney advice" as the only reason that prevented Landlords from providing the estoppel certificates, but refusing to disclose what the advice was. This is not a case of waiver by prior document production. Here, in stark contrast, the asserted basis of waiver is the affirmative testimony of several officers and employees of Landlords, both in depositions and at trial, in which they brought up conversations with their attorneys to answer questions about their reasons and motivations for certain actions. Landlords employed this strategy in an effort to prove that they acted in good faith in refusing to sign the estoppel certificates. And they did so with remarkable consistency, beginning with the deposition of Floyd Davis Camalier on December 3, 2009, when the idea to hide behind the advice of counsel appears to have been hatched:

In subsequent depositions, Landlords used the same strategy of claiming that their business decisions were based on the advice of counsel, and therefore that they could not say anything more about their motivations. For example, Floyd E. Davis, III, repeatedly refused to answer questions about his personal reasons for opposing Tenants' site plan approvals, pointing simply to counsel's advice:

Similarly, Charles A. Camalier, III, when asked about his reasons for refusing to sign the estoppel certificates and for failing to back the project before the county, offered only his conversations with Hogan & Hartson:

Finally, John G. Davis employed the same strategy, bringing up conversations with Hogan & Hartson in answers to questions about his personal motivations for opposing Tenants' site plans and refusing to sign the estoppel certificates:

The trial court considered this deposition testimony key to its decision to grant Tenants' motion to compel discovery from Hogan & Hartson. The court reasoned that Landlords could not use their consultations with counsel unfairly to assert good faith while at the same time avoiding any investigation into the asserted basis of that good faith:

Even so, the trial court did not rule that any evidence discovered from Hogan & Hartson would necessarily be admissible. Instead, the trial court decided to "wait[] and see ... [i]f [reliance on counsel] was going to be used as a defense" before allowing any of the Hogan & Hartson evidence into trial. He also specifically instructed Tenants not "to mention it in opening statement."

Yet at trial, Landlords brought up their privileged discussions once again, using the same coy strategy. The Court of Special Appeals described several such exchanges:

CR-RSC, 202 Md.App. at 366-67, 32 A.3d at 491. The record also contains several other examples of affirmative use of the privilege as a dodge against candid answers, such as when Davis mentioned that Landlords consulted with counsel before deciding to try to force Tenants to follow the original condominium plan:

Davis was no more forthcoming when asked about the "business reason for" opposing the building permit for the apartment project: "Business reason? I think it was the legal reason. We [just] wanted to make sure that, you know, that we as landowners sign the proper documents." Given a second chance, he stone-walled again: when asked for "any business reason[,] if you wanted apartments to be built on the land[,] why you would challenge the fact that there is a building permit authorized by Montgomery County to build the apartment building," Davis answered, "I don't know." Never missing an opportunity, Davis continued to hide behind the privilege in response to other questions:

This conduct is a far cry from the mere disclosure of documents similar to privileged ones by the Governor in Ehrlich.50 When defendants behave in this manner, bringing up conversations with attorneys to deflect questions about business justification, personal motivation, or intent, we enter a different realm of considerations than that posed in Ehrlich.

We see no principled distinction that would call for applying the doctrine of waiver of the privilege to a plaintiff, but not a defendant. It may be that there are more situations in which the waiver doctrine will be applied against a plaintiff, but the doctrine is based on fairness, and fairness cannot be one-sided. For a witness to disclose that he was acting "on the advice of" his attorney, and say no more, constitutes disclosure of "as much as he pleases." Wigmore, supra, § 2327; Parler & Wobber, 359 Md. at 693, 756 A.2d at 538. If this occurs, the trial court may find that the privilege has been abused, and that a waiver has occurred. The waiver doctrine is also grounded in the "truth-finding process" of trial. See Permian Corp. v. United States, 665 F.2d 1214, 1221 (D.C.Cir.1981) ("Because the attorney-client privilege inhibits the truth-finding process, it has been narrowly construed... and courts have been vigilant to prevent litigants from converting the privilege into a tool for selective disclosure. The client cannot be permitted to ... invoke the privilege as to communications whose confidentiality he has already compromised for his own benefit."); see also State v. Walker, 345 Md. 293, 328, 691 A.2d 1341, 1358 (1997) (referencing the "truth-seeking mission" of trial.)

The Nature of Statements Resulting in the Waiver of Attorney-Client Privilege

Landlords further assert that authorities allowing waiver by a defendant should not have been applied to them because their testimony "described only the circumstances of the attorney-client communication, not the content[.]" According to Landlords, their testimony was simply a denial of Tenants' allegations of bad faith. Thus, they contend that if the above precedents were applied to them, their only options while testifying would have been to concede bad faith or waive the privilege.

We agree with Landlords that a "client's simple denial of an allegation by the opposing side that an act was committed with a particular intent does not inject advice of counsel into the case, even though that advice may have been the reason why the intent was not present." Rice, supra, § 9:46. The waiver doctrine certainly leaves room for a defendant to deny bad faith without waiving the attorney-client privilege. Yet what defendants cannot do is defend a charge of bad faith by referencing specific communications with attorneys that purportedly provided a good-faith basis for certain actions, and then refuse to allow any further investigation into those communications. This is because allowing a defendant to "make the naked assertion that they consulted with their attorneys ... leav[es] the fact finder with the impression that they had [shown good faith] even in [a] situation where they had not." Id. (quoting Van Straaten, 2010 U.S. Dist. LEXIS 98604, at *14). Such tactics would allow the defendant to use the attorney-client communication to his benefit and then refuse to answer more questions about it. This would be an abuse of the privilege — using it both as a sword and a shield.

The quoted testimony amply shows that Landlords attempted to use the attorney-client privilege as a sword and shield. They did not simply deny bad faith and refuse to answer questions about attorney-client communications. Indeed, Tenants' counsel repeatedly clarified that they were not seeking information about attorney-client communications, but instead wanted to know what was in the minds of the individual Landlords when they took certain actions.51 As in Workman, each Landlord "claim[ed] in his defense that he relied on [counsel's] advice without permitting [Tenants] to explore the substance of that advice." See 138 F.3d at 1264. This is not allowed because it is not fair and undermines the "truth-seeking mission" of a trial.

Of course, the information sought from the defendant must be relevant, or likely to lead to the discovery of relevant information, to an issue at trial. Thus, we examine the question of why Landlords' business reason, or other motivation or reasons for acting, was relevant to this suit.52 This issue is debated by the parties, with Landlords asserting that their intent in pursuing the administrative actions and refusing to give the estoppel certificates was not relevant. After a close review of the record, we conclude that the business reasons or Landlords' other intent or motivation, were relevant both because of the allegations of the complaint, as amended, and because of the defenses raised by Landlords.

With respect to the allegations in the complaint, every contract contains an implied covenant of good faith and fair dealing.53 Tenants, in their amended complaint, alleged a breach of the implied covenant, in addition to other breaches of the contract, placing Landlords' intent and motivations in issue. Landlords' motivations became even more relevant when they offered two defenses on the damages issue: arguing first that Tenants could not prove that the damages they claimed were proximately caused by Landlords' breach, and second, that Tenants failed to mitigate their damages, as contract law requires. These theories overlap and both contained a theme that Landlords were acting in good faith. For example, in opening statement, Landlords' counsel said:

So, from the start of trial, Landlords' counsel portrayed his clients as reasonable businesspersons who had a business reason that they thought was justifiable, to refuse the estoppel certificates. This portrait was offered in the context of attempting to minimize the breach, with counsel saying to the jury: "How did these estoppel certificates, these ungiven estoppel certificates, cause them $50 million, $60 million, what they're going to ask you for, in damages because they went unsigned for about ... seven months[.]"54 Yet when Tenants asked Landlords what was the basis of their "business decision not to" provide the certificates, the witnesses refused to say, invoking the attorney-client privilege. Since in their argument as to why a certain damage award was too high, Landlords relied on their belief that "they were right" in refusing to issue the certificates, Tenants certainly had a right to inquire as to the basis of that thinking.

As to mitigation, Landlords' counsel threw out this notion:

The 60-day notice counsel referred to was a disagreement between the parties as to whether Tenants had failed to comply with the Lease by failing to give Landlords 60 days notice of the site plan amendment for the anticipated project, which Tenants filed with the Commission. During testimony, Landlords' counsel pursued this point by asking Tenants:

What this sequence of questions portrays is Landlords' theory that, although legally Landlords were not entitled to 60 days notice, Tenants had a duty to mitigate, and mitigation required that, rather than file a lawsuit to force Landlords to give the estoppel certificate, they just give in to Landlord's demand for 60 days to review the site plan, and re-file the plan with the zoning authority after that review. One could reasonably interpret Landlords' theory to be that Tenants' giving in to the 60-day review (and re-filing) would have avoided the $60 million damage claim because financing would not have been lost and the project could have been built. This theory pre-supposes, of course, that Landlords were not planning other steps to thwart the project, whether by further breach or other method. Tenants' counter to this theory is that Landlords did not want Tenants to complete the development project because they thought they could do better leasing the land to someone else. With these two countervailing theories, Landlords' business reason for refusing the estoppel certificates takes a front and center position as a highly relevant issue in the damages trial. Thus, the trial court acted within its discretion in deciding that Landlords' good faith business reason for refusing the certificates was a legitimate and relevant area for inquiry by Tenants. There was no error.

Joint and Several Liability

Damages

The jury found that each Tenant was "entitled to enforce the [other's] ground lease, either as a third-party beneficiary... or a third-party entitled to the benefit of a covenant running with the land[.]" The Court of Special Appeals overturned this portion of the verdict, holding that there was insufficient evidence of intent to support either theory of joint and several liability. CR-RSC, 202 Md.App. at 355-58, 32 A.3d at 484-86. The court also held that only restrictive covenants, as opposed to affirmative covenants such as the agreement to provide estoppel certificates, could be enforced by third parties under a uniform plan of development. Id.

Tenants contend that the evidence was sufficient to support joint and several liability under either theory. Landlords respond that the ground leases reflect the parties' intention that each Tenant be "a single-purpose entity formed for the sole purpose of developing its respective parcel." We shall examine the two theories of joint and several liability separately.

Our task is to review whether the evidence was sufficient to allow a rational fact-finder to impose joint and several liability. See Taylor v. Giant of Maryland, LLC, 423 Md. 628, 635, 33 A.3d 445, 449 (2011) (sufficiency of the evidence for a jury verdict is reviewed for whether "a rational fact finder could have found" as the jury did); see also Univ. of Md. Med. Sys. Corp. v. Gholston, 203 Md.App. 321, 329, 37 A.3d 1074, 1078 (2012) ("In a civil case, the evidence is legally sufficient to support a finding in support of the prevailing party if, on the facts adduced at trial viewed most favorably to that party, any reasonable fact finder could find the existence of the elements of the cause of action by a preponderance of the evidence.") (citing Hoffman v. Stamper, 385 Md. 1, 16, 867 A.2d 276, 285 (2005)).

Third-Party Beneficiary Status

Tenants assert there is ample evidence within the "four corners of the ground leases" to support joint and several liability under the third-party beneficiary theory. Most important, they say, is language in Section 9.3(c) referencing "easements, privileges and obligations" between the two parcels, including "the shared infrastructure of common access, a clubhouse, garage, parking, and recreational areas."55 Tenants also reference attachments to the ground leases, such as the "site plan for both towers;" "specifications for Towers I and II; plans and specifications for [a] clubhouse shared by both towers; the overall project site plan; and the `overall underground garage.'" They assert that Section 14.1 makes all of these provisions covenants,56 and that they became covenants running with the land when Tenants filed "Memoranda of ground lease" with Montgomery County. Thus, Tenants contend that, because the "very purpose" of a covenant running with the land is to "circumvent privity constraints," the four corners of the ground leases show an intent to confer third-party beneficiary status on each Tenant under our decision in 120 W. Fayette St., LLLP v. Mayor of Balt., 426 Md. 14, 35-36, 43 A.3d 355, 368 (2012), and other cases.

Tenants additionally assert that the "surrounding circumstances" are relevant to the parties' intent to create third-party beneficiaries under Shillman v. Hobstetter, 249 Md. 678, 689, 241 A.2d 570, 576 (1968), and other authorities. They contend that several "surrounding circumstances" show the parties' intent to confer third-party beneficiary status on each Tenant, including:

Thus, Tenants' assert that, because "the promisee's intent ... controls,"59 Tenants' plan to create "intertwined," mutually-dependent towers — under which "[n]either ground lease would have been executed had the other not been executed simultaneously" — "amply supported the jury's conclusion that each RSC tenant was a third party beneficiary of the other's ground lease."

Landlords cite mostly the same cases as Tenants, arguing that those cases support the Court of Special Appeals' holding. Under those cases, they say, the evidence presented at trial "negates [the] inference" that the parties intended to make each Tenant a beneficiary of the other's ground lease.

In the primary case cited by both parties, 120 West Fayette Street, we summarized the law regarding third-party beneficiaries:

426 Md. at 35-36, 43 A.3d at 368.

In Lovell Land, Inc. v. State Highway Admin., we explained the third-party beneficiary standard in more detail. We said the "decisive[] distinction" was between "intended and incidental beneficiaries," with the "crucial fact" being whether the pertinent provisions in the contract were "inserted ... to benefit" the third party. 408 Md. 242, 261, 265, 969 A.2d 284, 296, 298 (2009). Another "factor to consider," we said, is whether the third party is named in the contract or its "antecedent agreements." Id. at 265, 969 A.2d at 297-98. We also reaffirmed our agreement with Section 302 of the Restatement (Second) of Contracts, which provides:

Id. at 262 n. 6, 969 A.2d at 296 n. 6. Other cases have further detailed this standard. See, e.g., Noble v. Bruce, 349 Md. 730, 753, 709 A.2d 1264, 1276 (1998) (holding that the third party was not an intended beneficiary because the promisor "did not communicate or meet with" the third party); Marlboro Shirt Co. v. Am. Dist. Tel. Co., 196 Md. 565, 570, 77 A.2d 776, 778 (1951) ("In order to recover ... [the third party] must show that [the promisor] owed [him] a duty under the contract.").

In applying this standard, we look to "the intention of the parties to recognize a person or class as a primary party in interest as expressed in the language of the instrument and consideration of the surrounding circumstances as reflecting upon the parties' intention[.]" Ferguson v. Cramer, 349 Md. 760, 767, 709 A.2d 1279, 1283 (1998) (citation and quotation marks omitted).61

To begin with, only two of the cases cited by Tenants from this Court actually found evidence of intent to create a third-party beneficiary, and they both involved facts markedly different from this case. In Shillman v. Hobstetter, a residential developer and a lender agreed that the lender would issue conditional commitments for certain planned homes if the developer would refund certain purchasers' deposits. 249 Md. at 682-83, 241 A.2d at 572-73. The only thing the developer promised to do under the agreement (return the deposits) was clearly intended to benefit the purchasers, so logically we found that the purchasers were intended third-party beneficiaries. Id. at 690, 241 A.2d at 576-77. Similarly, in Prescott v. Coppage, the trial court appointed a receiver for a savings and loan company as well as a special counsel to assist him. Because the purpose of the court order was to benefit the creditors, we found them to be third-party beneficiaries entitled to recover against the special counsel. 266 Md. 562, 574, 296 A.2d 150, 156 (1972). In both cases, the contracts were created specifically to benefit the third parties in question. In other words, it is fair to say that the purchasers in Shillman and the creditors in Prescott were the "primary part[ies] in interest"62 under those contracts, because the provisions that named them were obviously "inserted ... to benefit" them.63

The same cannot be said of the ground leases in this case, which were clearly entered into first and foremost for the benefit of the parties that signed them. In each ground lease, the purported third-party beneficiary is mentioned only briefly and in passing — to wit, in sections involving easements running between the two parcels, plans for the development of common areas, and overall site plans that mention both towers. The peripheral nature of these provisions — which simply describe the joint nature of the two projects — is substantially different from the central provisions in Shillman and Prescott, which demonstrated how the third parties in those cases were "owed ... a duty under the contract[s]."64 This, we said, was the "crucial fact" in support of finding a third-party beneficiary,65 and it is not present here.66

None of Tenants' secondary arguments overcome this "crucial fact." Although covenants running with the land are generally designed to "circumvent privity restraints," the covenant to provide estoppel certificates was not. Nothing about Landlords' breach of that covenant or their breach by pursuing administrative actions had anything to do with the joint nature of the development project. Nor do the "surrounding circumstances" change the "crucial fact" that the breached covenants were not "inserted ... to benefit" the third party. See Lovell, 408 Md. at 261, 265, 969 A.2d at 296, 298. Most of the "surrounding circumstances" alluded to by Tenants simply reveal the joint-nature of the towers project. As we have said, this is not evidence of intent to benefit a third party.

The only novel circumstance is what Tenants' call "the third party's reliance interest" under the ground leases — that each tower would not have been built without the other — which they assert is relevant under the Restatement (Second) of Contracts § 302. Yet simply reviewing the explanation and illustrations of this Restatement section reveals why it is inapplicable here. In each of the section's examples, the contracts were entered into with the express purpose of benefitting a third party, as the parties explained and agreed upon how the third party would be benefitted. See Restatement (Second) of Contracts § 302 (1981). Here, in contrast, the parties simply understood that the two towers were to "intertwine" as part of a common plan.67 Tenants cite no other authority to support their reliance theory. We are left, therefore, with no evidence that the parties intended to make each Tenant a third-party beneficiary of the other's ground lease.

Covenants Running with the Land

Alternatively, Tenants argue that the Court of Special Appeals erred in holding that there was insufficient evidence to support joint and several liability under the doctrine of uniform plans of development. They also contend that the court incorrectly limited joint and several liability to restrictive covenants, but assert that, in any case, the restrictive covenants present here supported joint and several liability. Landlords respond that the language of the ground leases does not create third-party liability under a uniform plan of development.

To begin with, we know of no authorities, and Tenants provide none, connecting covenants under a uniform plan of development with joint and several liability for damages. As Professor Powell explains, the question of a uniform plan of development arises when a party with an interest in a piece of property in a community asserts that there is an implied covenant that, although not mentioned in any of the community's deeds, restricts what each property owner can do with his or her land. See 9 Richard R. Powell, Powell on Real Property § 60.03[1] (Michael A. Wolf ed., 2012). In such cases, the implied restriction must be "plain and unmistakable, or necessary" when examining the nature and purpose of the development as a whole. Id. (footnote omitted). Such "implied covenants" are "most commonly found in cases involving subdivisions where title to all lots originated in a common grantor." Id. § 60.03[2].

Our cases reflect this description of the "common plan" doctrine. We detailed the history and purpose of the doctrine in Roper v. Camuso:

376 Md. 240, 260-62, 829 A.2d 589, 602 (2003).

As the above examples show, covenants that can be implied by a uniform plan of development must relate to the uniform plan and "affect the land." McKenrick, 174 Md. at 128, 197 A. at 584-85. Such covenants are typically restrictions on how the lots can be used and developed, so as not to alter the nature of the development as a whole. See, e.g., Roper, 376 Md. at 259, 829 A.2d at 601 (covenants dealing with the height of fences); Schovee v. Mikolasko, 356 Md. 93, 97, 737 A.2d 578, 580 (1999) (restriction providing that "no lot could be devoted to a use other than a residential use and that no lot may contain more than one detached residential structure at any time"); Turner v. Brocato, 206 Md. 336, 343-44, 111 A.2d 855, 859 (1955) (covenants "relating to front yard measurements, walls, open spaces, and approval of plans by an architect... [and] the maintenance or operation of a number of specified noxious or offensive trades or businesses on the land").

We know of no authority for the proposition that a person with an interest in land subject to the restrictions of a uniform plan can enforce other, unrelated covenants against persons not in privity. The breaches of covenants here — failure to provide estoppel certificates and wrongful administrative actions — have no relation to the common plan. The doctrine simply does not fit the facts. Such evidence cannot create joint and several liability for the breach of unrelated covenants, and we affirm the Court of Special Appeals' decision to reverse the Circuit Court on this issue.

Attorneys' Fees

Although the Court of Special Appeals invalidated the jury's joint and several damages award, it did not address the trial court's award of joint and several attorneys' fees, observing that the award of attorneys' fees "lies within the sound discretion of the trial judge" and that Landlords had "offer[ed] virtually no argument in support of" overturning that award. CR-RSC, 202 Md.App. at 374, 32 A.3d at 495.

Landlords argue that the Court of Special Appeals erred in not extending its ruling on joint and several liability to the attorneys' fees. The only basis for joint and several attorneys' fees, they say, is third-party beneficiary status, which the court held was not present here. Landlords also assert that it would be "absurd" to ignore Tenants' "carefully crafted separate existences simply because they chose not to act like separate entities in their joint prosecution of this case."

Tenants respond that Landlords incorrectly conflate joint and several liability for attorneys' fees with joint and several liability for damages, which depends on separate analytical factors. They cite cases in which courts have apportioned attorneys' fees among defendants based upon (1) the commonality of issues in the litigation, Turner v. D.C. Bd. of Elections & Ethics, 354 F.3d 890, 898 (D.C.Cir.2004); (2) each defendant's degree of liability and culpability, Grendel's Den, Inc. v. Larkin, 749 F.2d 945, 959-60 (1st Cir.1984); and (3) the amount of time spent defending against each defendant, id. Thus, Tenants assert that the Circuit Court acted within its discretion in awarding joint and several attorneys' fees.68

When a contract provides for attorneys' fees in the event of litigation,69 Maryland Lawyers' Rule of Professional Conduct 1.5 is "the foundation for analysis of what constitutes a reasonable fee." Monmouth Meadows Homeowners Ass'n v. Hamilton, 416 Md. 325, 336-37, 7 A.3d 1, 8 (2010). Additionally, the trial court has discretion to consider "any other factor reasonably related to a fair award of attorneys' fees[,]" and the trial court need not "explicitly comment on or make findings with respect to each factor" nor "hold an evidentiary hearing to determine a proper fee award[.]"70 Id. at 337-38 & nn. 11-12, 1 A.3d at 8 & nn. 11-12.

In this case, the trial court explained on the record why the attorneys' fee estimate of the plaintiffs' expert was reasonable under Rule 1.5. The trial court did not mention the joint and several nature of the award, however, which was summarily stated in the written order. Yet the court did provide a clue as to its reasoning on the joint and several nature of the award. By referring to the parties as "the defendant" and "the plaintiff," the trial court implied that it viewed the parties as single entities for the purposes of attorneys' fees.

Such reasoning is supported by precedent. Although we have not defined precisely when attorneys' fees should be awarded jointly and severally, we have upheld joint and several awards when defendants acted in concert to harm the plaintiffs. See, e.g., Hoffman, 385 Md. at 6, 48-49, 867 A.2d at 279, 304-05 (various defendants conspired to defraud and misrepresent aspects of a residential purchase). Federal courts have employed the same reasoning. As the United States Court of Appeals for the D.C. Circuit opined:

Turner, 354 F.3d at 898; see also Action on Smoking & Health v. Civil Aeronautics Bd., 724 F.2d 211, 216 (D.C.Cir.1984).

Indeed, the United States Court of Appeals for the Eighth Circuit has held that "[j]oint and several liability for costs is the general rule unless equity otherwise dictates." Concord Boat Corp. v. Brunswick Corp., 309 F.3d 494, 497 (8th Cir.2002); see also Lewis v. Whelan, 99 F.3d 542, 545 (2d Cir.1996) (joint and several attorneys' fees appropriate where "the breaches by the parties were mutually dependent and agreed upon"); Walker v. U.S. Dept. of Hous. & Urban Dev., 99 F.3d 761, 773 (5th Cir.1996) (joint and several attorneys' fees appropriate where "there was a single indivisible injury, and each party played a substantial role in the litigation. The parties had a joint legal defense and shared experts."); Bennett v. Local Union No. 66, 958 F.2d 1429, 1440-41 (7th Cir.1992) (where the parties participate in each other's breaches, "it is no longer `unjust' to hold either party accountable for the entire period of injury"); Allen v. Allied Plant Maint. Co. of Tenn., 881 F.2d 291, 298 (6th Cir.1989) (joint and several attorneys' fees appropriate where the employer and the Union "colluded" in the breach).

Landlords cite no authority to contradict these precedents, and we find them instructive here. As in Hoffman, Landlords conspired in deciding to breach the ground leases and oppose the development of the towers. 385 Md. at 6, 48-49, 867 A.2d at 279, 304-05. As in Turner, Tenants claims "centered on a set of common issues against two or more jointly responsible defendants." 354 F.3d at 898 (citation and quotation marks omitted). As in Walker, Landlords "had a joint legal defense and shared experts." 99 F.3d at 773. As in Bennett and Allen, the parties acted in concert in the breach. 958 F.2d at 1440-41, 881 F.2d at 298. For all of these reasons, we conclude that the joint and several award of attorneys' fees was not an abuse of the trial court's discretion. The Court of Special Appeals' reversal of the joint and several damages award in no way affected the validity of the joint and several attorneys' fees.

JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED. COSTS TO BE PAID 5/6 BY LANDLORDS AND 1/6 BY TENANTS.

HARRELL and BATTAGLIA, JJ., dissent.

BATTAGLIA, J., dissenting, in which HARRELL, J., joins.

I respectfully dissent. Although we have been asked to determine, in this economic climate, how lost profit damages in the context of a speculative real estate venture are to be measured, what the Majority has done is affirm an award of damages as lost profits that is really punitive in nature, rather than acknowledge that any standard for awarding damages lacks certainty and eviscerates foreseeability. I believe, in this framework, that the Landlords1 should have been afforded their day in court.

In this case, the trial court erred in barring the Landlords from introducing evidence of the depressed residential real estate market as it existed at the time Tenants' claimed lost profits were expected to materialize. As Landlords described at trial, "the world had changed" due to a downturn of the real estate and credit markets caused by the "economic Armageddon in [20]08." The Majority's holding that such drastic economic factors cannot inform an assessment of damages when the nature and extent of such damages were not foreseen by the contracting parties provides a windfall to the non-breaching party by excluding evidence that such profits would not have arisen had the contract been performed. This places the breaching party in the position of a guarantor of the non-breaching party's ultimately unrealistic expectations.

To put the case in context:

Developer Tenants were prevented from building, renting, and selling apartment buildings on Landlords' tracts in Montgomery County. In June of 2004, the parties entered into ground leases under which Tenants would build two high-rise apartment buildings, Tower I, anticipated to be completed in 2008 or 2009, and Tower II, with completion contemplated in 2012. Tenants projected, for their own purposes and as justification for obtaining financing, multimillion dollar profits from the planned development, based on projections made in 2006 of continuing growth in the residential real estate market. In 2007, Landlords breached their contracts, and in 2008, the U.S. housing market crashed. Subsequently, Tenants sued for lost profits. Before the case was tried, however, the judge barred Landlords from introducing any "evidence of, or ... arguments based upon, post-breach market conditions for the purpose of refuting [Tenants'] claimed damages," thus precluding introduction of evidence of the real estate market downturn that occurred after the breach but before development of the Towers was to be completed.

The Landlords proffered that they would have offered expert testimony taking into account "the economic downturn and the resulting impact on the real estate market." Landlords' designated damages expert, R. Larry Johnson, according to his proffer, would have opined "that no profits would have been earned by [Tenants], even if there had been no breach, because the Tower I building would have been delivered into a rental market (in 2008 or 2009) which does not support the projections upon which [Tenants' expert's] conclusions are based." Landlords would have introduced expert testimony to rebut Tenants' damage claims, contending that Tenants' projections "are too high, and even slight decreases in market rental rate eliminates the profit in the damages claim." Furthermore, Landlords proffered expert testimony regarding the unrealistic nature of Tenants' projections when viewed in light of "the current market," the "[s]tagnant rental rates in [the real estate] market over the last several years," and evidence of "what the market is/was at the time the Project would have been available for rent."

At trial, Tenants' expert had estimated lost profits based on Tenants' profit projections made in October 2006 for the purposes of obtaining financing for the project.2 The jury awarded damages in the amount of $36,350,239.00.

In this case, Landlords as well as Tenants had to rely on experts in economics and real estate. To that extent, the parties were evenly matched in their proffered expert testimony, until the trial court barred Landlords' proffered testimony on damages. Obviously neither method for defining lost profits, an inquiry that focuses on foreseeability at time of contracting as the Majority espouses, or market-based calculations from the anticipated time of completion sought by Landlords, can be other than speculative because the buildings in issue were never built. The trial court thus erred in allowing the use of Tenants' assumptions to prove the amount of damages but foreclosing Landlords from rebutting such projections with evidence of the real estate market as it existed at the time the development would have come to fruition.

Clearly, courts prefer a rule that allows admission of evidence of actual performance when such evidence is available. The Majority acknowledges as much when it contends that the cases cited by Landlords all consider the admissibility of evidence of post-breach substitute performance and notes that "none of Landlords' Maryland cases directly support admitting post-breach market evidence to prove lost profits." Op. at 416, 56 A.3d at 187. In Macke Company v. Pizza of Gaithersburg, Inc., we noted that plaintiff's substitute performance after the breach but before trial might be "a more appropriate measure of damages" because it is "grounded on ... actual experience." 259 Md. 479, 492, 270 A.2d 645, 652 (1970). We have further stated that "the actual gain made under the substituted contract must be considered in measuring the damages to which the builder is entitled." M & R Contractors & Builders, Inc. v. Michael, 215 Md. 340, 356, 138 A.2d 350, 359 (1958). Thus, it is clear that when evidence of actual performance is available, any rule setting the benchmark for damages determinations either at the time of contracting or at the time of the breach must yield to more relevant evidence of "plaintiff's `actual experience' with substitute performance." Op. at 414, 56 A.3d at 186, quoting Macke, 259 Md. at 493, 270 A.2d at 652.

This principle is supported by Justice Benjamin N. Cardozo's explanation in Sinclair Refining Company v. Jenkins Petroleum Process Company, that post-breach evidence of actual performance must be admitted to avoid providing a financial windfall based on inaccurate prediction:

289 U.S. 689, 697-98, 53 S.Ct. 736, 739, 77 L.Ed. 1449, 1456 (1933) (internal citations omitted). Justice Cardozo further determined that "[t]o correct uncertain prophecies in [measuring the damages for a breach of contract] is not to charge the offender with elements of value non-existent at the time of his offense. It is to bring out and expose to light the elements of value that were there from the beginning." Id. at 698, 53 S.Ct. at 739, 77 L.Ed. at 1456 (allowing evidence of the actual profits gained from defendant's post-breach use of the plaintiff's device for purposes of proving damages).3

The question then becomes, how should lost profits be computed when actual performance is not available as a benchmark. Faced with such a situation, post-contract market evidence has been admitted to prove lost profits. Hoang v. Hewitt Avenue Associates, LLC involved the breach of a sales contract for two adjacent parcels of raw land on which town homes were to be built. 177 Md.App. 562, 936 A.2d 915 (2007). In the case, a developer "sought to recover collateral lost profits, i.e., the profits it anticipated it would have realized upon the sale of the 14 town houses it planned to construct on the property, and would have constructed but for [the sellers'] breach by failure to convey." Id. at 607, 936 A.2d at 941-42. The sales contract, executed in May 2004, was to close within 60 days. When, in July 2004, the sellers failed to close on the sale, the developer filed suit. Following entry of default against the sellers, the court held an evidentiary hearing on the issue of damages in April 2005. At that hearing, the trial court admitted expert testimony regarding estimated profits on the town homes that were never built. Specifically, the trial court admitted testimony about:

Id. at 611, 936 A.2d at 945. The testimony of the expert real estate appraiser, James Donnelly, was based upon his appraisals of the land dependant upon comparable sales and market conditions at the time of the 2005 hearing. Additionally, Mr. Donnelly had opined that the profit projections were conservative based on the residential real estate market as it existed at the time of the 2005 hearing. The trial court referenced those "conservative" estimates in finding that "the amount of profits in this case can be determined with reasonable certainty." Id. at 574, 936 A.2d at 922. The Court of Special Appeals affirmed the trial court's award of lost profits, concluding that the evidence the of post-contracting real estate market admitted at the hearing was "legally sufficient to prove that [the developer] sustained collateral lost profits due to the breach of contract to convey the property." Id. at 610-11, 936 A.2d at 944 (2007). Clearly, when actual performance is absent, evidence of post-contract conditions is admissible and is not rejected as too speculative, unforeseeable and lacking reasonable certainty.

In fact, in the present case, the evidence adduced by Tenants was more speculative than that put forth by the developers in Hoang, based as it was on "market conditions as of October, the October 2006 time frame, to determine whether or not the assumptions that were utilized in [Tenants' projections] prepared at that time were reasonable assumptions." Tenants relied on projections of a real estate market three to five years in the future, which turned out, as we know, to be unreliable. As such, it was no more certain than Landlords' proffered testimony as to the state of the real estate market when the Towers would have been built and reached the market.

The Majority contends, however, that post-breach market evidence is not "a necessary part of any consequential lost profits claim." Op. at 417, 56 A.3d at 188. Practical application of the Majority's rule would require that the Landlords here were guarantors of future profits and could not introduce similarly speculative evidence of potential gains and losses to mitigate lost profit damages. The Restatement (Second) of Contracts expressly disclaims such a scenario when it states, "[t]he expectation interest is not based on the injured party's hopes when [it] made the contract but on the actual value that the contract would have had to [it] had it been performed."4 Restatement (Second) of Contracts Section 344, comment b, at 104 (1981). The Restatement provides an example that is analogous to the situation in this case:

Restatement (Second) of Contracts, Section 344, illustration 5 at 105. Although relied upon by this Court in 1987, this Restatement provision governing lost profits are not addressed by the Majority. David Sloane, Inc. v. Stanley G. House & Associates, 311 Md. 36, 42, 532 A.2d 694, 697 (1987).

In determining lost profits when no evidence of actual performance is available, admission of evidence to assist the jury in determining damages that are as close as possible to the actual value of performance is a necessity.5 By allowing Tenants to exclude evidence of post-breach market conditions, the Majority effectively puts the Landlords in the position of "A" in the Restatement example, thereby awarding Tenants damages based upon projections that the Landlords were not permitted to rebut.6

By embracing the jury verdict that was not informed by the Landlords' expert testimony, the Majority reinforces an award that is punitive in nature. It is clear from the evidence presented at trial that the apparently willful and acrimonious breach on the part of the Landlords colored the jury's damage award. The trial court admitted an email from Landlords to their former counsel requesting that counsel "stop the bastards," and in denying Landlords' pre-trial motion in limine to exclude this communication, the trial court reasoned,

The Majority references the "bastards" e-mail, suggesting it may have been the "smoking gun" in the case, op. at 402-03, 56 A.3d at 179, highlighting the spectre that the damages awarded are really punitive in nature because, what would it be a "smoking gun" of, other than willfulness? Certainly we should not be sanctioning punitives in the guise of "lost profits." The Landlords should have had their day in court; I respectfully dissent.

Judge HARRELL has authorized me to state that he joins this dissenting opinion.