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ELECTRICAL EQUIP. CO. v. 1. SEC. NATL. BANK

January 15, 1976

ELECTRICAL EQUIPMENT COMPANY ARLINGTON WOODWORKING & LUMBER COMPANY, INC. BALTIMORE CONCRETE BLOCK CORPORATION. CUMMINS-WAGNER COMPANY, INC. DONN PRODUCTS, INC. ITT GRINNELL CORPORATION. ARTISTICA, INC. IGM TILE DIVISION. INSULATION CONTRACTORS, INC. JACRON SALES COMPANY, INC. JOHNSON SERVICE COMPANY MARYLAND STEEL ERECTORS, INC. MURICK SUPPLY COMPANY, INC. OWEN STEEL COMPANY OF NORTH CAROLINA, INC. FH SPARKS COMPANY OF MARYLAND, INC. TIDEWATER EQUIPMENT COMPANY. U.S. LOCAL NO. 5 PENSION FUND. U.S. LOCAL NO. 5 VACATION FUND. U.S. LOCAL NO. 5 PRENTICESHIP
v.
SECURITY NATIONAL BANK, ROYAL NATIONAL BANK OF NEW YORK, NATIONAL REALTY & CONSTRUCTION COMPANY, INC., NATIONAL CENTER CORPORATION, ATLANTIC MECHANICAL CONTRACTORS, INC., ALEXANDER TITLE AGENCY, INC., COLUMBIA PLAZA CORPORATION, JOHN MCSHAIN, INC., JOHN P. COONEY, JOHN W. UNDERWOOD, LOUIS J. POMPONIO, JR., MARY LOU POMPONIO, PETER POMPONIO, CAROLYN POMPONIO, PAUL POMPONIO, JUDITH B. POMPONIO, GENERAL DYNAMICS CORPORATION, MARYLAND LUMBER COMPANY, MAURICE ELECTRICAL SUPPLY COMPANY INC. ELECTRICAL EQUIPMENT COMPANY v. SECURITY NATIONAL BANK, ROYAL NATIONAL BANK of NEW YORK, NATIONAL REALTY & CONSTRUCTION COMPANY, INC., NATIONAL CENTER CORPORATION, ATLANTIC MECHANICAL CONTRACTORS, INC., ALEXANDER TITLE AGENCY, INC., COLUMBIA PLAZA CORPORATION., JOHN MCSHAIN, INC., JOHN P. COONEY, JOHN W. UNDERWOOD, LOUIS J. POMPONIO, JR., MARY LOU POMPONIO, PETER POMPONIO, CAROLYN POMPONIO, PAUL POMPONIO, JUDITH B. POMPONIO, ARLINGTON WOODWORKING & LUMBER COMPANY, INC., BALTIMORE CONCRETE BLOCK CORPORATION, CUMMINS-WAGNER COMPANY, INC., DONN PRODUCTS, INC., GENERAL DYNAMICS CORPORATION, ITT GRINNELL CORPORATION, ARTISTICA, INC. IGM Tile Division, INSULATION CONTRACTORS, INC., JACRON SALES COMPANY, INC., JOHNSON SERVICE COMPANY, MARYLAND LUMBER COMPANY, MARYLAND STEEL ERECTORS, INC., MAURICE ELECTRICAL SUPPLY COMPANY INC., MURICK SUPPLY COMPANY, INC., OWEN STEEL COMPANY OF NORTH CAROLINA, INC., FH SPARKS COMPANY OF MARYLAND, INC., TIDEWATER EQUIPMENT COMPANY, U.S. LOCAL NO. 5 PENSION FUND. U.S. LOCAL NO. 5 VACATION FUND. U.S. LOCAL NO. 5 PRENTICESHIP



The opinion of the court was delivered by: PRATT

 PRATT, District Judge

 On September 22, 1975, this Court granted the motions for summary judgment of plaintiff (No. 1) Electrical Equipment Company and plaintiff (No. 6) ITT-Grinnell Corporation against defendants (Nos. 7 and 8) Columbia Plaza Corporation and John McShain, Inc., and entered judgment thereon. On January 14, 1976, the Court granted similar motions for summary judgment against said defendants filed jointly on behalf of the remaining plaintiffs, i.e.,

 
(No. 3) Baltimore Concrete Block Corporation
 
(No. 4) Cummins-Wagner Corporation
 
(No. 8) Insulation Contractors, Inc.
 
(No. 9) Jacron Sales Company
 
(No. 10) Johnson Service Company
 
(No. 15) Tidewater Equipment Co., Inc.
 
(No. 16) Local No. 5 Pension, Vacation and Apprenticeship Funds

 and granted a similar motion on behalf of plaintiff (No. 14) F. H. Sparks Company of Maryland against defendant (No. 7) Columbia Plaza Corporation alone. The grounds of said motions are that defendant John McShain, Inc., through the corporate shell of Columbia Plaza Corporation, entered into a joint venture with the Pomponio organization through the corporate shell of National Center Corporation for the construction of the Columbia Plaza Office Building as a result of which John McShain, Inc. is liable on contracts of the National Realty & Construction Co., Inc., a Pomponio company, and of Atlantic Mechanical Contractors, Inc., another Pomponio company, reasonably necessary in the construction of the Columbia Plaza Office Building. As an alternative ground, plaintiffs assert that they may recover against defendant John McShain, Inc., the owner of the non-FHA portion of the project, for the reason that plaintiffs are third party beneficiaries of a covenant remaining with the land, requiring any subsequent grantee to pay materialmen for materials supplied to the project.

 In granting summary judgment to plaintiffs, we hold that under the peculiar factual context of this case there was a joint venture between the Pomponio organization, including National Realty & Construction Co., Inc., National Center Corporation, and Atlantic Mechanical Contractors, Inc., on the one hand, and defendants John McShain, Inc., and Columbia Plaza Corporation, a McShain company, on the other hand, sufficient to render defendant John McShain, Inc. and Columbia Plaza Corporation liable on contracts entered into by National Realty & Construction Co., Inc. and any other Pomponio organization with the various plaintiff materialmen. The purpose of this Memorandum is to spell out the basis for this holding.

 The Facts

 It is not necessary to set forth all of the facts accruing over more than a decade, and only the more essential events are set forth herein. In 1960, defendant Columbia Plaza Corporation (Columbia Plaza) was formed and in 1964 said defendant entered into a lease with option to purchase with the Redevelopment Land Agency (RLA) which provided that Columbia Plaza would erect an apartment on what is described as the FHA portion of the demised premises and a hotel on the non-FHA portion. The hotel requirement was later amended to provide for the construction of an office building instead. At this time, defendant John McShain, Inc. owned 27% of the stock of Columbia Plaza. John McShain, Inc. was a Delaware corporation whose only stockholders were John McShain and his wife.

 John McShain, Inc. began construction of the apartment complex. Prior to its completion, Columbia Plaza exercised its option to purchase and in 1966 RLA conveyed the property in fee simple, subject to certain conditions, to Columbia Plaza. After completion, Columbia Plaza sold the apartment complex for approximately $28 million. After this sale, John McShain, Inc. or John ...


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