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Pleading Guilty to Violating Campaign Finance Laws is Not Sufficient to Set Aside Approval of a PUD in Baltimore County

In Kenwood Gardens v. Whalen Properties, LLC, the Court of Special Appeals, in an unreported decision by Judge Kevin Arthur dated September 16, 2015, affirmed the denial of a challenge to the granting of a Planned Unit Development (“PUD”) designation on property even though the principal of the landowner pled guilty to violating campaign finance laws because of contributions to the councilperson who introduced the PUD bill.

The Court of Special Appeals reached its decision because it held that granting the PUD was a legislative act and therefore not subject to judicial review for “the appearance of impropriety.”

In order to obtain a PUD designation, the developer must submit a request to the councilperson who represents that district, and then a community meeting is held. After that meeting, the local councilperson introduces a resolution in the Baltimore County Council supporting the PUD, and the County Council must approve the resolution. Then County agencies process the PUD application, which includes obtaining community input, and an administrative law judge (“ALJ”) conducts a hearing.

In the subject case, Whalen Properties LLC filed an application on August 9, 2011, and a community meeting occurred on September 1, 2011. On September 19, 2011 Councilman Thomas Quirk submitted a resolution to the Baltimore County Council, and it was unanimously approved as County Council Bill 38-12 on June 6, 2012. The bill exempted property in certain areas, including the Whalen property, from certain general compatibility requirements of the Baltimore County Code.

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 he was allowed by law to donate to the campaign, Mr. Whalen gave $8,500 to his employees, who deposited it in their bank accounts, and then Mr. Whalen withdrew the funds and delivered them to Councilman Quirk on August 31, 2011.

An ALJ conducted five days of hearings on the PUD application from August 23 to December 3, 2012. 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 Gardens Condominiums, Inc., a party protesting the PUD, requested a postponement of the hearing, but the ALJ denied that request. 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.

After a lengthy analysis of the testimony and of the applicable law, 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 strike down the County Council resolution or the bill that relaxed certain applicable requirements. Further, the ALJ noted that there was no evidence that Councilman Quirk knew that the contributions were illegal when they were made.

On June 7, 2013, the Board of Appeals 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 decision of the Board of Appeals 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 agreed with the Board of Appeals that the resolution was a legislative act and not a quasi-judicial one. Therefore, the Board did not have the authority to inquire into any “appearance of impropriety.” The Court of Special Appeals determined that the resolution process did not have a sufficient level of fact-finding to qualify it as a quasi-judicial act under Maryland law. This was crucial because 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 do review their conclusions to determine whether their decisions were reached in an illegal, arbitrary, capricious, oppressive, or fraudulent manner.

In the subject case, 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 Special Appeals found that the County Council’s process was legislative, Councilman Quirk’s motivations were beyond the scope of judicial review. Therefore, the rulings of the ALJ were affirmed.

For questions, please contact Ed Levin (410) 576-1900.

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Date

11.04.15

Type

Publications

Authors

Levin, Edward J.

Teams

Real Estate