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Suit claims PenMar charged too much rent

March 19, 2005|by TARA REILLY

tarar@herald-mail.com

CASCADE -A past tenant of the former Fort Ritchie U.S. Army base alleges in an amended federal lawsuit that the PenMar Development Corp. overcharged it $1.9 million in rent, which was part of a "fraudulent scheme" to discriminate against and bankrupt the tenant.

The amended suit, filed earlier this month by Role Models America Inc., seeks $167.8 million in compensatory and punitive damages. That's less than the $304.5 million it sought in the original suit, which was filed in January 2004.

Role Models operated the College Corps program, a military-style school for high school dropouts, at the former base in Cascade from March 2000 until it was evicted by PenMar in July 2002. PenMar claimed Role Models owed it rent and utility charges.

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PenMar was created by the state in 1997 to redevelop the former base, which the Army shut down in 1998.

The amended suit was filed in U.S. District Court for the District of Columbia against PenMar, former PenMar Executive Director James LaFleur, R. Les Browlee, secretary of the Army, and Elaine Chao, secretary of the U.S. Department of Labor.

In addition to compensatory and punitive damages, Role Models also wants, for no charge, ownership of 587 of the base's 638 acres, according to the suit.

Role Models, which leased property at the base for $1.3 million a year, alleges in the suit that PenMar charged the school rent for buildings it could not use because they needed repairs.

The suit alleges that, according to the lease between PenMar and Role Models, PenMar was to make $521,000 in repairs to several buildings that the school planned to use. Those repairs were never made, the suit alleges.

Role Models was to lease 253,000 square feet of property at the base, but it only was able to use 110,000 square feet as a result of the repairs not being made, the suit alleges.

The suit also alleges that PenMar charged Role Models utility expenses for buildings the school did not use. It also alleges that several buildings on the base did not have meters in 2001 and 2002, making it impossible to accurately determine the utility usage for each building.

The suit alleges that the school, which focused on minority students and was led by Robert Alexander, who is black, did not receive as favorable a lease agreement as International Masonry Institute, a PenMar tenant with white owners.

"All defendants have either systematically denied (Role Models) an opportunity to operate the College Corps Program, charged (Role Models) exorbitant rent for space that it didn't and could not use, treated them differently in terms of contracting practices and from enjoying the benefit of their contract, employed discriminatory and fraudulent practices to cause a termination of their lease agreement ..." the suit alleges.

Role Models and PenMar have a lengthy list of disputes and legal battles that began shortly after the school announced its plans in 2000.

Another suit filed by Role Models resulted in a February 2003 federal court-issued injunction barring the transfer of the property from PenMar to the Army.

In that suit, Role Models claimed it wasn't notified that land was available to the school for free under federal regulations. The Court of Appeals ruled the method by which the land was advertised was faulty and that PenMar would have to readvertise the land.

PenMar is waiting for the injunction to be lifted, so the state agency can sell the base to Corporate Office Properties Trust (COPT) Inc. of Columbia, Md.

COPT plans to turn the base into a residential and business center.

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