After a 2 week trial in March 2010, a jury found that the Camalier and Davis families who had ground leased to Penrose approximately five acres in Bethesda breached the ground leases and completely undermined the financing necessary to complete the project. The jury awarded Penrose nearly $40 million in damages and attorneys’ fees. That judgment was appealed to Maryland’s Court of Special Appeals, which affirmed the damages and attorneys fee awards in October 2011. Thereafter, Maryland’s Court of Appeals granted a writ of certiorari to review the case. Oral argument took place in June 2012, and on November 27, 2012, the Court of Appeals affirmed the awards. The court also addressed an issue of first impression concerning when a party waives the protections of the attorney-client privilege by claiming to have relied on counsel’s advice. In this case, the defendants had declined to explain the business reasons for their breaching actions and instead pointed to their lawyers as the driving force.
Schwalb told Law360 that the court’s ruling was correct good for business in the state, saying, “When business folks are making decisions that can affect people's contractual rights, you can only take into consideration what you know at that time.” Schwalb added that the ruling “is good for the certainty of the law, and business transactions thrive on certainty.” Commenting on the families' attorney-client privilege claim, Schwalb said the court’s ruling followed the "pretty well-established rule that the privilege cannot be used as a sword and a shield at the same time.”
Along with Schwalb, Penrose was represented by partners Mitch Mirviss and Samantha Williams.