Relating to Real Estate

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Relating to Real Estate - May 2017

In this issue: Addition Built in Setback Must be Razed, Neighbors Cannot Wait Three Years and Then Claim a Setback Violation, Judicial Tolling Extends Statute of Limitations, For Challengers of Development, Sixth Time is the Charm

In this issue:

Addition Built in Setback Must be Razed

The Circuit Court for Baltimore County ordered that Friends of Lubavitch, Inc. must remove a 6,600 square foot addition to a house it owns in Towson by March 1, 2018, because the improvements are located in a setback area proscribed in a 1950 deed.  Zoll v. Friends of Lubavitch, Inc., No. 03-C-16-008420 (Cir. Ct. for Baltimore Cnty., April 13, 2017).

Friends of Lubavitch, Inc. purchased 14 Aigburth Road on September 29, 2008 when it was a 2,000 square foot ranch house to establish a Chabad, where Rabbi Mendel Menachem Rivkin would reside with his family and serve students of Towson University and Goucher College.  The title report and title insurance policy issued at that time showed the existence of a deed from 1950 in the chain of title that provided that any dwelling erected at 14 Aigburth must "... have a setback equal to one-half of the total setbacks of the two houses erected on the lots adjoining to the East and West thereof, measured to the centre of said houses, exclusive of porches."  The representatives of Friends of Lubavitch claimed to have not been aware of this restriction until July 2016.

Friends of Lubavitch obtained a building permit in May, 2016, purportedly to allow for the construction of additional living space for Rabbi Rivkin and his family.  Excavation for the improvements began in June 2016.  Robin Taylor Zoll, who lives next door, engaged a lawyer who did a title search and uncovered the 1950 setback restriction, and Ms. Zoll told Rabbi Rivkin of this in July 2016. 

On August 12, 2016, Ms. Zoll and the Aigburth Manor Association of Towson filed suit seeking an injunction to stop the construction.  The plaintiffs' request for a preliminary injunction was denied, and during the course of the litigation, Friends of Lubavitch continued the construction of the addition.  Based on the setbacks of the houses on either side of 14 Aigburth Road and the provisions of the 1950 deed, virtually the entirety of the addition as completed is located within the setback area.

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Neighbors Cannot Wait Three Years and Then Claim a Setback Violation

Davis Wood obtained a building permit from the Town of St. Michaels in 2002 and began building an addition to his house.  In 2004, when the addition was almost finished, one of his neighbors told the Town's Zoning Inspector that the improvements encroached into the rear setback area.  Rather than challenging Mr. Wood's addition, the Zoning Inspector issued a temporary occupancy permit in 2006 and a final occupancy permit in 2010.  Some of Mr. Wood's neighbors appealed the decision of the Zoning Inspector, but the St. Mary's Board of Zoning Appeals affirmed it in 2013.  The Board of Zoning Appeals thought that it would be unduly harsh to impose a "draconian penalty" on Mr. Wood, who had not intentionally violated the setback, and an excess amount of time had passed.  James Valliant and other neighbors appealed to the Circuit Court for Talbot County, which reversed, finding that the statute of limitations contained in Courts and Judicial Proceedings Article ("CJP") §5-114(b)(1) was inapplicable and holding that the Zoning Inspector did not have the authority to disregard the setback violation.  On appeal, the Court of Special Appeals reversed the decision of the circuit court.  Wood v. Valliant, --- A.3d ---,  1852 SEPT TERM 2014, 2017 WL 769782 (Md. Ct. Spec. App. Feb. 28, 2017).

The Court of Special Appeals stated that CJP §5-114(b)(1) sets a time limit for challenging a failure of a structure to comply with a setback restriction.  Because the challengers in this case waited more than three years to file their petition for judicial review, the circuit court should have dismissed their action and let the ruling of the Board of Zoning Appeals stand.

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Judicial Tolling Extends Statute of Limitations

Back River, LLC v. Jablon, 1758 SEPT.TERM 2015, 2016 WL 7077675 (Md. Ct. Spec. App. Dec. 2, 2016), describes how Back River, Sprint, and others (collectively, "Back River") have been trying to obtain permission to construct and operate a wireless communications tower in Baltimore County since 2001.  A tower was constructed under a validly issued building permit based on a variance issued by the Baltimore County Zoning Commissioner, but that variance was overturned on appeal.  On the way to this case, Baltimore County requested that the Circuit Court for Baltimore County issue an injunction ordering Back River to tear down the tower itself or to allow the County to tear it down.  Back River argued that the County's action was barred by the three-year statute of limitations set forth in Courts and Judicial Proceedings Article ("CJ") §5-114, but the circuit court rejected that argument.  On appeal, the Court of Special Appeals affirmed.

The Court of Special Appeals found that from its face, the statute of limitations of CJ §5-114 would apply.  However, the doctrine of judicial tolling allows a court to suspend a statute of limitations in a particular case for what it considers important policy reasons, even when the statute does not contain a provision allowing for an extension of the limitations period.  The court noted that two conditions must be met for the doctrine of judicial estoppel to be applicable:  "(1) there is persuasive authority or persuasive policy considerations supporting the recognition of the tolling exception, and (2) recognizing the tolling exception is consistent with the generally recognized purposes for the enactment of statutes of limitations."  The court determined that judicial tolling was applicable in light of the prolonged litigation between the parties, extending for more than 15 years.  Additionally, the court found that applying judicial tolling in this case would not be inconsistent with the purposes of statutes of limitation.

The court stated that "[j]udicial tolling is a narrow and disfavored doctrine, rarely invoked and even more rarely affirmed."  Moreover, judicial tolling may not indefinitely postpone the limitations period; instead the doctrine postponed the limitations period while the litigation continued in a diligent manner.

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

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For Challengers of Development, Sixth Time is the Charm

This reported decision was the sixth case before the Court of Special Appeals that challenged the proposed residential development of certain property near Lake Linganore in Frederick County.  All of the previous cases dismissed the claims of the challengers to the development.  In this iteration of the dispute, which was decided on February 3, 2017, the Court of Special Appeals ruled that the applicable Development Rights and Responsibilities Agreement ("DRRA") did not provide value to Frederick County and hence was void.  Cleanwater Linganore, Inc. v. Frederick County, 231 Md. App. 620 (2017).

In the February 2017 issue of Relating to Real Estate, we discussed the December 28, 2016 decision in which the Court of Special Appeals endorsed the DRRA between the developer and Frederick County that froze certain local laws, rules, regulations, and policies as they were when the DRRA was signed.  The court found in December and again in the instant case that this was permitted pursuant to §7-304 of the Land Use Article of the Maryland Code because DRRAs are a solution to the vesting problem.  The general rule in Maryland is that rights in property do not vest until there is visible commencement of lawful construction, so developers are typically at risk of changes in the legal setting after they begin their planning and before they break ground for construction of improvements.

The challengers in the instant case raised an issue that had not been previously considered – that the DRRA was void for lack of consideration because it lacked "enhanced pubic benefits" to Frederick County.  The court agreed with the challengers on this point, viewing DRRAs as bargained-for agreements between developers and local governments, and as such contracts they must contain provisions that are beneficial to each of the parties.  Therefore, in the court's view, DRRAs must contain benefits to the County or obligations of the developer that exceed those that would exist if there were no DRRA.

The developer argued that it was offering to convey a portion of the subject property to the County for use as a middle school.  However, the court found that a typical developer would be required to grant property for one or more schools under the County's adequate public facilities ordinance, so this did not reflect enhanced obligations of the developer.  Further, the developer only offered the school site to the County; the offer may not have been accepted for such purpose.

Because the developer could not point out any enhanced public benefit, the Court of Special Appeals reversed the decision of the Circuit Court for Frederick County and ordered that the DRRA be vacated.

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

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If You Do Not Have Standing, Riding a Horse Near the Property Will Not Help

In Valleys Planning Council, Inc. v. Boys' School of St. Paul's Parish, Inc. (unreported Court of Special Appeals, January 3, 2017), the Court of Special Appeals held that the Valleys Planning Council, Inc. and two neighbors, Douglas Carroll and Justin Batoff (collectively, the "Challengers"), did not have standing to challenge the decision of the Baltimore County Board of Appeals upholding the zoning commissioner's approval of plans for the construction of a maintenance building by St. Paul's School ("St. Paul's") because the Challengers did not live close enough.

The St. Paul's campus is located on 125 acres northwest of Falls Road and Greenspring Valley Road in Baltimore County.  It is in an RC2 zone, which permits private schools only by special exception.  The property was subject to a special exception case in 1989, which was modified in 1993 and 2004.

In 2013, in order to construct an 8,000 square foot maintenance building on so-called "Tract A," a 7.753 acre parcel which had been donated to the school in 2003, St. Paul's requested an amendment to the special exception and site plan.  The building was designed to look like a barn and was virtually hidden from the road because of the surrounding trees.  The Board granted the amendment to the special exception and the site plan on July 16, 2014, and on August 14, 2014, the Challengers appealed to the Circuit Court for Baltimore County.  The circuit court held that St. Paul's had waived its argument that the protestants did not have standing.  However, the circuit court held for the school on the merits.

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Historic Preservation Proceedings are Civil, Not Criminal

Spaw, LLC v. City of Annapolis, --- A.3d ---- (2017), 2017 WL 1131012 (March 27, 2017), discussed how since 1963 Maryland state law has permitted local governments to regulate the preservation of historically significant sites and structures within their jurisdictions.  See the Historic Area Zoning Act, Land Use Article, §8-101 et seq.  Historic area zoning does not displace traditional zoning.  Instead, it creates overlay zones and further regulations for property owners within affected areas, in addition to the ordinary zoning laws.  An application to the appropriate commission must be filed before "constructing, reconstructing, altering, moving, or demolishing a site or structure located within a locally designated district if any exterior changes are involved that would affect the historic, archaeological, or architectural significance of the site or structure" and any of the changes are "visible or intended to be visible from a public way."

On December 13, 2012, the Annapolis Historic Preservation Commission (the "Commission") issued two historic preservation municipal infraction citations to Spaw, LLC, the owner of apartments at 2 Maryland Avenue in Annapolis, alleging that Spaw replaced historic wood windows with vinyl windows without a Certificate of Approval from the Commission.  The District Court of Maryland found in favor of the City of Annapolis (the "City"), and Spaw appealed the decision to the Circuit Court of Maryland for Anne Arundel County.  In answers to interrogatories, Spaw admitted to replacing nine or ten historic wood windows with vinyl windows without prior approval by the Commission, as required by law.  Based on this admission, the circuit court granted summary judgment to the City.  The Court of Appeals granted cert. and affirmed.

Spaw argued that historic preservation proceedings are criminal in nature, rather than civil, which would affect certain substantive rights as well as discovery issues.  However, the Court of Appeals held that based on State law and the Annapolis City Code, historical preservation municipal infraction proceedings are civil matters and are governed by the civil rules of procedure.  The Court further ruled that the citation that wooden windows had been replaced with vinyl ones at a particular address and the date that the violation was observed was sufficient without stating the number of affected windows or the date that the replacements occurred.

The Court held that neither of the two statutes of limitations that Spaw cited applied.  The City withdrew the possibility of a fine before the case was tried at the circuit court, leaving abatement of the infraction as the only remedy.  Therefore, (i) because abatement is not a penalty, the one-year statute of limitations does not apply; (ii) because the action of the City was in connection with the exercise of a governmental function, the three-year statute of limitations does not apply; and (iii) because the City did not tarry in issuing the citations after the violations were observed, the doctrine of laches did not apply.

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

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Commissioners May Change Their Minds

In Boomer v. Waterman Family Limited Partnership, ––– A.3d ––––, 1783, SEPT.TERM, 2015, 2017 WL 823712 (Md. Ct. Spec. App. Mar. 2, 2017), and Modell v. Waterman Family Ltd. Partnership, –– A.3d ––, 2104, SEPT.TERM, 2015, 2017 WL 822671 (Md. Ct. Spec. App. Mar. 2, 2017), the Court of Special Appeals held that the Queen Anne's County Commissioners had the authority to rescind a resolution that allowed for the rezoning of property that had been annexed into the Town of Queenstown (the "Town").

Waterman Family Limited Partnership owned 140 acres in Queen Anne's County that was zoned for agricultural and low density uses.  The Town Commissioners of Queenstown annexed the property into the Town, and then the Town Commissioners enacted a rezoning ordinance to allow higher density development of the property.  However, rezoning within five years of annexation was dependent on obtaining a waiver from the County Commissioners pursuant to Local Government Article §4-416.

The County Commissioners passed Resolution 14-31 on November 25, 2014, which granted such a waiver.  However, soon thereafter new commissioners were elected, and the new board rescinded the first resolution with Resolution 14-33 on December 9, 2014. 

Litigation followed, and the Circuit Court for Queen Anne's County held that the County Commissioners had no authority to rescind Resolution 14-31.  On appeal, the Court of Special Appeals reversed. 

The court found that the resolutions were public local laws because they applied to only Queen Anne's County, a single subdivision of the State of Maryland.  Also, the court noted that Queen Anne's County is a code county.  Under Article XI-F, §6 of the Maryland Constitution, a code county may enact, amend, or repeal a public local law of that county. 

Furthermore, the court stated that Queen Anne's County had the inherent power to rescind Resolution 14-31, with the sole limitation being that vested rights may not be affected.  In the subject case, no vested rights were involved. 

Therefore, the Court of Special Appeals held that Resolution 14-33 validly rescinded Resolution 14-31.
 
For questions, please contact Ed Levin (410) 576-1900.

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Neighborhood Sufficiently Defined Special Exception

In Attar v. DMS Tollgate, LLC, 451 Md. 272 (2017), the Court of Appeals affirmed the grant of a special exception for the construction of a Wawa gas station and convenience store, holding that the description of the neighborhood of the property was sufficiently defined.

Landowners William and Mary Gruff and DMS Tollgate, LLC applied for a special exception to build a gas station and convenience store to be operated by Wawa on an 8.51 acre parcel on Reisterstown Road in Reisterstown.  The Office of Administrative Hearings granted the petition with conditions.  On appeal, the Baltimore County Board of Appeals approved the special exception with the same conditions.  The Circuit Court for Baltimore County affirmed that decision, as did the Court of Special Appeals.  The Court of Appeals granted cert., and then it also affirmed. 

The Court noted that an applicant for a special exception has met the necessary burden if the applicant shows that the proposed use will be "without real detriment to the neighborhood."  In this context "neighborhood" means "surrounding properties" and is a flexible concept.  In this case the Court held that "the description of the neighborhood impacted by the special exception must be precise enough to enable a party or appellate court to comprehend the area that the Board considered."  The Court determined that the applicants had provided sufficient evidence to show this.

The Court distinguished the manner in which a neighborhood must be delineated in a rezoning case because there is a strong presumption in favor of the original zoning.  In contrast, the Court stated that "a special exception is presumed to be in the interest of the general welfare, and therefore a special exception enjoys a presumption of validity."

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

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Mineral Rights - Use Them or Lose Them

The Court of Special Appeals held in Ellis v. McKenzie, 1723, SEPT.TERM, 2015, 2017 WL 562475 (Md. Ct. Spec. App. Feb. 10, 2017), that the Dormant Minerals Interest Act (DMIA) is constitutional and has the effect of terminating dormant mineral interests and merging them into the estates of the owners of the surface.

Sarah Wright owned 430 acres in Garrett County, and from 1884 until 1898, she conveyed the surface interests of the property while retaining the mineral rights.  On the property there had never been any active operations to excavate minerals, no recordation of the interests had occurred since Ms. Wright's conveyances, and no taxes had been paid.

The current landowners of the surface interests of the 430 acres brought an action on January 10, 2013 in the Circuit Court for Garrett County to terminate the mineral rights under the DMIA.  They identified 76 heirs or descendants of Ms. Wright and served them.  In so doing, they made what the court characterized as "some minor errors," which they corrected by amending the complaint.

The DMIA provides that if a mineral interest is unused for a period of 20 or more years before the commencement of an action to terminate it, the mineral interest may be terminated.  The DMIA further provides that the filing of a notice of intention to preserve the mineral interest before the filing of a termination action has the same effect as use of the mineral right.

The heirs of Ms. Wright contended that the DMIA was unconstitutional, but the argument failed for the reasons set forth in Harvey v. Sines, 228 Md. App. 283 (2016), which we wrote about in the September 2016 issue of Relating to Real Estate.  These reasons include that the DMIA does not retrospectively abrogate property rights, and it does not violate an owner's "fair notice, reasonable reliance, [or] settled expectations."

Certain of the Wright heirs stated that they filed notices of intent to preserve their rights after the subject case was filed but before the filing of the fourth amended complaint, which corrected errors in the original pleading.  The Court of Special Appeals rejected this argument and held that under the circumstances none of the holders of mineral rights preserved their interests.  The court, therefore, affirmed the judgment of the circuit court.

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

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Speaking of Real Estate

Presentations

Larry Coppel, Chair of Gordon Feinblatt's Bankruptcy Practice, and Ed Levin, Chair of the Real Property Practice, were panelists on "The Proposed Maryland Commercial Receivership Act: Providing Certainty and Uniformity to Receivership Practice in Maryland," at the Commercial Real Estate Discussion Group Lunch of the MSBA's Real Property Section, February 14, 2017.

Larry Coppel testified in Annapolis before the Senate Finance Committee on March 1, 2017 on Senate Bill 895, and Ed Levin testified before the House Economic Matters Committee on March 8, 2017 on House Bill 1180.  These two bills were entitled the Maryland Commercial Receivership Act.

Ed Levin was a panelist on "Legal Opinions in Real Estate Transactions: What You Need To Know," an American Law Institute (ALI) webinar on March 21, 2017.

Deals

For several years, Gordon Feinblatt has represented the Downtown Columbia Arts and Culture Commission, Inc. (DCACC).  DCACC was formed by Howard County to enhance visual, performing, and literary arts in downtown Columbia and ultimately take ownership of and revitalize Merriweather Post Pavilion, one of the premier concert sites in the United States.  After lengthy negotiations with a subsidiary of the Howard Hughes Corporation, and with the close assistance of the Howard County government, including County Executives Ken Ulman and Allan Kittelman, DCACC took title to Merriweather in late 2016.  More recently, Gordon Feinblatt represented DCACC in structuring a lease with It's My Amphitheater, Inc. (IMA), the operator of many events at Merriweather.  The lease deal was reported in the Baltimore Business Journal and in Billboard Magazine on March 23, 2017.  In addition, Gordon Feinblatt represented DCACC in connection with a bond financed loan transaction with the Maryland Industrial Development Financing Authority and Howard Bank to IMA for improvements to Merriweather Post Pavilion.  Searle Mitnick led the team that worked on this matter.

Ed Levin represented the Maryland Mortgage Bankers Association, Inc. (the "MMBA") in the merger of Maryland Association of Mortgage Professionals, Inc. with and into the MMBA, which was effective on December 31, 2016.  The surviving entity is known as the Maryland Mortgage Bankers and Brokers Association, Inc. (the "MMBBA").  Ed has served as legal counsel to the MMBA since 1995, and he remains counsel to the MMBBA.

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Date

05.11.17

Type

Publications

Authors

Levin, Edward J.

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