27 TU families lawyer up to break leases at Capstone residences

By: Caitlyn Freeman, Assistant Editor and Anna Hovet, Contributing Writer
Photo by Macy Dowla/ The Towerlight

Multiple Towson University families have taken legal action against the Maryland Economic Department Corporation (MEDCO) citing a breach of leasing contracts after the corporation refused to provide refunds and release residents from their leases. 

Paca and Tubman houses as well as Millennium Hall are owned by MEDCO. MEDCO leases the land these residences are on from TU, and employs Capstone Properties Inc. to manage day-to-day operations. 

Students who began their semester in an on-campus dorm run by the University’s Housing and Residence Life (HRL) saw a full refund following the shift to distance-learning. Capstone, however, announced on Facebook that MEDCO owned residences will remain open, and students are still expected to oblige by the terms of their leases.

The Executive Director of MEDCO, Robert Brennan, disclosed that MEDCO ground leases their properties, financed by bond investors. MEDCO follows a budget as required by the investors, and which is signed off on by the universities they are affiliated with, themselves, and Capstone.

In order to fulfill their financial responsibilities, MEDCO is continuing to operate their buildings. 

This decision was met with criticism from some residents and guarantors of the properties, a portion of whom were unable to move in due to the pandemic. 

Leonard Lucchi, who works as an Esquire for O’Malley, Miles, Nylen & Gilmore, P.A., is representing 27 families (at the time of publication) from Towson.

On Sept. 9, Lucchi sent a demand letter to MEDCO.

“We put their names on a list of students, and the parents who are guarantors, and sent a letter to the landlords and the University saying ‘we do not believe that this lease is valid,’ because they cannot keep tenants healthy in the way they’re set up,” Lucchi said.

Lucchi claims that the tenants don’t have a responsibility to pay rent under the lease currently in place, and for those who have paid, they should be getting a refund. He stated that students should not be expected to uphold their leases if Towson University President Kim Schatzel deemed the campus unsafe for students to reside in. 

According to Lucchi, there has been no update to the ventilation systems within the buildings, which he says is a  CDC recommendation.  He speculates that the buildings are not “habitable” and don’t accommodate the requirements set by the Center for Disease Control and Prevention.

“The students state that MEDCO is unable to provide safe housing at the premises during the COVID-19 outbreak,” reads the demand letter. “Students are unable to properly social distance due to shared facilities like kitchens and common areas. Additionally, it does not appear that MEDCO has made any effort to de-densify the premises, properly test and monitor ventilation systems which service the premises, or provide appropriate living arrangements for any Student who tests positive for COVID-19.” 

He added that if MEDCO decides to move forth with legal action against the tenants, he will represent them and defend them vigorously in court.

Lucchi received a response letter from MEDCO’s legal council, John Anthony Wolf, a shareholder at Baker, Donaldson, Bearman, Caldwell & Berkowitz, PC. Wolf disagreed with Lucchi’s statements regarding the inability for residents to safely occupy the building, and says that MEDCO is following the standards set by Housing and Residence Life, TU, and CDC guidelines. 

“While you may be disappointed with this position, MEDCO will continue the operation of the Paca and Tubman houses and Millennium Hall in accordance with its obligations and expects all licensees to perform their obligations, including the payment of license fees,” the response letter reads. “Based on your letter, MEDCO will not be terminating the Students’ license agreement or issuing any refunds at this time.” 

According to Brennan, there have also been discussions with other schools within the University System of Maryland, where those schools are paying out MEDCO leases currently held by their students in order for them to be released from their contracts. However, Towson has not been a part of these discussions. 

“If Towson University came and said, we’ll make a payment to keep these whole, we could figure out how to release students, but no one’s offered to make a payment at this point,” Brennan said. 

Freshman Ethan Payne, who moved into Paca House on Aug. 24, two days before the announcement of Towson’s modality shift, is a student affected by the leasing contract. 

Payne’s father, Brain Payne, created a facebook page titled “Towson Students held hostage (FINANCIALLY) by MEDCO and Capstone Management.” B. Payne explained that he created the group in order to have a centralized location where residents and guarantors frustrated with MEDCO could come together. 

Brennan stated that he was unaware of the creation of the group, and he doesn’t agree with the name of it; that it makes it sound like the students are being held hostage. 

“I understand what it means to be a hostage,” Brennan said. “We don’t have anybody held hostage. I mean, we’re holding people to their leases, which is a contractual obligation. And there’s an obligation to make a payment, and our obligation is to collect and try to enforce those payments on those leases.”

B. Payne says that they have not yet paid their first installment to MEDCO since Schatzel had announced TU’s modality shift before the first payment deadline. He explained that he and his son petitioned Capstone to cancel the lease, however they were denied.

“We do have an active lease but we have not paid,” B. Payne said. “So when the time came, all the parents had to make a decision and the majority of us did not pay.”

According to the leasing agreement for Millennium Hall, Capstone will accept petitions under exceptional circumstances such as medical conditions, winter graduations, and internships located 50 miles away from the University.

B. Payne called for MEDCO, Towson, and the state of Maryland to take accountability and begin presenting options to the families that are in MEDCO housing. 

Sophomore Jared Rogers, who is currently leased with MEDCO to live in Paca, decided he wanted to forgo moving on-campus due to all of his classes being moved online.

“I tried to email them so I could talk to them, so I could explain the situation of why I’m trying to cancel the lease,” Rogers said. “Every time it was just one of those automated responses.”

Brennan stated that students have the choice to move in or to not move into their housing, and that there are a number of students who’ve moved in and are continuing online learning from their apartments. 

“My hope is that there’s a resolution that we can all live with, we can all take part in a resolution,” Payne said.  “And everybody comes together to present some options to us, to the families that are in MEDCO housing, that’s fair and reasonable based on what the President of Towson said about health concerns on campus.” 

– The Towerlight reached out to Capstone Properties Inc. for comment, but they did not respond in time for publication of this article.
– The Towerlight reached out to Towson University for comment, but they did not respond in time for publication of this article.