Relating to Real Estate
Making Illegal Campaign Contributions to the County Councilman Cannot be Considered in Challenge of PUD Approval
The Court of Appeals in Kenwood Gardens Condominiums, Inc. v. Whalen Properties, LLC, 449 Md. 313 (2016), held that illegal campaign contributions from the landowner to a Baltimore County councilmember who was instrumental in obtaining a planned unit development (“PUD”) approval on certain property was not a sufficient basis to invalidate the PUD approval. The Court’s decision was based on its view that introduction and passage of a resolution is a legislative action, which is subject to limited judicial review, and that the appearance of impropriety was not sufficient to negate the presumption of validity of the legislative act.
In so doing, the Court of Appeals affirmed the unreported decision of the Court of Special Appeals entitled Kenwood Gardens v. Whalen Properties, LLC, which we wrote about in the November 2015 issue of Relating to Real Estate.
In Baltimore County in order for a property to be designated as a PUD, the owner must submit an application to the county councilmember for that district. Substantive review of the application may begin only after the County Council passes a resolution. Then various county agencies review the request, leading up to a public hearing before an administrative law judge (“ALJ”). A party may appeal the decision of an ALJ to the Board of Appeals. Subsequent appeals may be taken to the circuit court and then to the Court of Special Appeals.
In the subject case, Whalen Properties LLC filed a PUD application on August 9, 2011, and a community meeting occurred on September 1, 2011. On September 19, 2011 Councilman Thomas Quirk submitted to the County Council a resolution (the “Bill”), which was unanimously approved on June 6, 2012. The Bill exempted property in certain areas, including the Whalen property, from some general compatibility requirements of the Baltimore County Code. A neighbor, Kenwood Gardens Condominiums, Inc., protested that this was an improper “special law.”
As related by the Court of Special Appeals in its unpublished decision, prior to and during the time that the Bill was before the County Council, the principal of Whalen Properties, Stephen W. Whalen, Jr., was in communication with Councilman Quirk about the councilman’s forthcoming campaign for reelection and about the project. In order to provide money to Councilman Quirk in excess of the amount that Mr. Whalen was allowed by law to donate to the campaign, Mr. Whalen gave $8,500 to several of his employees, who deposited it in their bank accounts. Mr. Whalen then withdrew the funds and delivered the money to Councilman Quirk on August 31, 2011.
An ALJ conducted five days of hearings from August 23 to December 3, 2012 to determine whether the proposed PUD complied with Baltimore County zoning and development requirements. Shortly before the hearings began, the Baltimore Sun reported that the State prosecutor issued subpoenas to eight Baltimore County agencies for records concerning the Whalen property. Kenwood requested a postponement of the hearing, which was denied. After the hearing concluded, but before a decision was announced, Mr. Whalen was charged with violating campaign finance laws. On January 3, 2013, Mr. Whalen pleaded guilty to five counts of violations of campaign laws. The Circuit Court for Baltimore County sentenced him to one year of probation and imposed a fine of $53,000. Six days later, the ALJ approved the PUD.
The ALJ found that Whalen Properties had presented sufficient evidence to meet the requirements for approval of the PUD. The ALJ concluded that he did not have authority to invalidate the County Council resolution or the bill that Kenwood claimed was a “special law.” Further, the ALJ noted that there was no evidence that Councilman Quirk knew that the contributions were illegal when they were made. The ALJ rejected Kenwood’s claim that the appearance of impropriety was reviewable or invalidated the process.
On June 7, 2013, the Board of Appeals (the “Board”) affirmed the decision of the ALJ and granted the application for the PUD. The Board concluded that introduction and passage of the bill were legislative acts that the Board did not have the power to review. The Circuit Court for Baltimore County reviewed the Board’s decision and found that the introduction of the bill and the County Council’s passage of it were quasi-judicial actions that could be reviewed for “the appearance of impropriety.” Nevertheless, the circuit court affirmed the Board’s decision.
On appeal, the Court of Special Appeals affirmed the order of the circuit court and held that the ALJ did not exceed his statutory authority in issuing his opinion and that the ALJ’s decision was supported by substantial evidence.
On a petition from Kenwood, the Court of Appeals granted a writ of certiorari and then affirmed the decision of the Court of Special Appeals.
The Court of Appeals noted that the process by which a PUD action is approved includes both action by the County Council, which is legislative, and review by the ALJ, which is quasi-judicial. Legislative acts, whether by legislative bodies or quasi-legislatively by administrative agencies, are normally subject to extremely limited scrutiny. In contrast, when an agency acts in a fact-finding capacity, which is quasi-judicial, courts review the agency’s conclusions to determine whether those decisions were reached in an illegal, arbitrary, capricious, oppressive, or fraudulent manner.
Both the Court of Appeals and the Court of Special Appeals concluded that the County Council’s actions with respect to the resolution involved “only the most bare, minimal fact-finding process,” so the process was, therefore, legislative. Essentially, the actions of the County Council were only the beginning of the process. After the County Council finished its work, County agencies reviewed the PUD proposal, and there was an intensive and lengthy hearing about the matter where objectors could (and did) present testimony and evidence, cross-examine witnesses, and make rebuttal arguments.
Because the Court of Appeals found that the County Council’s process was legislative, the Court stated, “As long as Councilman Quirk acted within legal boundaries of the law, his actions were beyond the scope of any extended judicial review.” The Court refused to consider the alleged appearance of impropriety relating to the actions of Mr. Whalen and Councilman Quirk. The Court held that there was substantial evidence to support the agency’s final decision to approve the PUD, and it found that the decision was not contrary to law. Therefore, it affirmed the decision of the Court of Special Appeals and approved of the decisions of the ALJ and the Board of Appeals.
For questions, please contact Ed Levin (410) 576-1900.