120 W. FAYETTE v. Baltimore

• Decision Date: 13 April 2010
• Citation: 413 Md. 309,992 A.2d 459
• Parties: 120 WEST FAYETTE STREET, LLLP v. MAYOR & CITY COUNCIL OF BALTIMORE CITY, Baltimore Development Corp. and Lexington Square Partnership, LLC.
• Court: Maryland Court of Appeals

992 A.2d 459

413 Md. 309

120 WEST FAYETTE STREET, LLLP v. MAYOR & CITY COUNCIL OF BALTIMORE CITY, Baltimore Development Corp. and Lexington Square Partnership, LLC.

No. 96 September Term, 2009.

Court of Appeals of Maryland.

April 13, 2010.

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M. Albert Figinski (Paul D. Raschke and Joyce R. Lombardi of Law Offices of Peter G. Angelos, P.C., Baltimore, MD), on brief for Appellant.

David E. Ralph (George A. Nilson and Steven J. Potter of Baltimore City Dept. of Law, Baltimore, MD), on brief; Brian L. Moffet (Catherine A. Bledsoe of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC; Charles S. Hirsch and Mark Pollak of Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, MD), on brief for Appellees.

ARGUED BEFORE BELL, C.J., HARRELL, BATTAGLIA, GREENE, MURPHY, ADKINS and BARBERA, JJ.

BARBERA, Judge.

In this appeal, we consider for the second time the controversy between 120 West Fayette Street, LLLP ("120 West Fayette") and the Mayor and City Council for Baltimore City et al. ("the City"), in which 120 West Fayette alleges that the City illegally entered into a Land Disposition Agreement ("LDA") to sell to Lexington Square Partners, LLC property in Baltimore's westside known as the "Superblock." When we first considered this case in 120 West Fayette Street, LLLP v. Baltimore, 407 Md. 253, 964 A.2d 662 (2009), we held that 120 West Fayette had standing to challenge the LDA and that the Circuit Court for Baltimore City had erred in treating the City's motion to dismiss as a motion for summary judgment. Id. at 258, 964 A.2d at 664-65. This case's current incarnation arises in response to the Circuit Court's grant of summary judgment in the City's favor on 120 West Fayette's original complaint and that court's grant of the City's motion to dismiss Count Two of 120 West Fayette's amended complaint. For the foregoing reasons, we shall affirm the judgment of the Circuit Court.

I.

"In 1999, the Baltimore City Council enacted an urban renewal plan¹ for the westside of downtown Baltimore. The renewal plan, known as the `Market Center Urban Renewal Plan,' "the Renewal Plan" has been advertised as Baltimore's largest urban renewal plan since the plan to revitalize the city's Inner Harbor." Id. at 258-59, 964 A.2d at 665. At issue in this case is an area within the westside redevelopment area known as the "Superblock." "The `Superblock' encompasses five blocks and is bound by Fayette Street, Howard Street, Lexington Street, Clay Street, and Park Avenue."² Id. at 259, 964 A.2d at 665.

"To implement the Renewal Plan, the Baltimore Board of Estimates ("BOE") delegated `ministerial and administrative' functions to a nonprofit corporation known as the Baltimore Development Corporation, Inc. ("BDC")." Id. at 258-59, 964 A.2d at 665. The BDC is a not-for-profit corporation created, among other reasons, "to develop and implement long-range development strategies for commercial, industrial, office, residential, and other development in the City of Baltimore." Baltimore Dev. Corp. v. Carmel Realty Assocs., 395 Md. 299, 309, 910 A.2d 406, 411 (2006) (quoting Amended Articles of Incorporation of the City of Baltimore Development Corporation, ART. FOURTH, October 4, 1991). The BDC is governed by a board of directors comprising "not less than seven (7), nor more than fifteen (15) directors," including the Commissioner of the City's Department of Housing and Community Development and the Director of the City's Department of Finance. Id. at 325 n. 17, 910 A.2d at 421-22 n. 17 (quoting SECTION 1 of the BDC's bylaws as amended on November 4, 1997). Those directors not named in the bylaws, including the chairman of the board, are nominated by the Mayor of the City and elected by the corporation's members. Id., 910 A.2d at 421 n. 17. The Mayor also has the authority to remove directors and fill vacancies on the board until the expiration of the absent director's term. Id., 910 A.2d at 422 n. 17.

In Carmel Realty, we recognized that the Mayor, by virtue of the above-mentioned authority, effectively controls the BDC's board of directors. Id. at 326, 910 A.2d at 422. In this case, the BDC's relevant responsibility was to orchestrate the development and revitalization of the City-owned properties subject to the Renewal Plan, including the "Superblock." To that end, "the City asserts that it instructed the BDC to `work with developers and interested groups regarding the development of the westside, prepare and issue requests for development proposals, arrange and attend meetings between developers and business owners, and coordinate financial assistance.'" 120 West Fayette St., 407 Md. at 259, 964 A.2d at 665.

On October 27, 2003, the BDC issued a Request for Proposals ("RFP") soliciting proposals from experienced real estate developers to develop the "Superblock." The RFP provided that the BDC, on behalf of the City, was "seeking developers who were willing and able to develop the "Superblock" ... in accordance with revitalization objectives and goals as stated in the RFP, as well as the rules and regulations for standards and controls established by the Mayor and City Council ... and implemented by the BDC." In addition to other rules and regulations, the City's efforts to redevelop the "Superblock" are subject to a Memorandum of Agreement ("MOA") between the Mayor and City Council of Baltimore City, and the Maryland Historical Trust ("MHT"). Among other things, the MOA provides that in all City-issued RFPs "the City will use reasonable efforts" to preserve certain City-owned or acquired historic properties within the relevant development area.

Accordingly, the RFP provided, in part, that the proposed "development should conform to the Memorandum of Agreement (MOA) executed between the City and the Maryland Historical Trust ... and The West Side Strategic Plan." The RFP also provided that the selected developers would receive an Exclusive Negotiating Privilege ("ENP"), which guaranteed them the exclusive privilege of negotiating a Land Disposition Agreement ("LDA") with the City.³ During the ENP's term, the privileged developers would be granted an opportunity to enter the property and conduct any activities necessary to satisfy the City's requirements within the ENP. After the expiration of the term, the City could extend the time period if negotiations were "proceeding satisfactorily."

In response to the RFP, the BDC received proposals from four competitive development teams and responded to each of those development teams with written questions. Additionally, each development team presented its proposal to BDC staff and members of the WestSide Renaissance and the MHT.⁴ Among the prospective development teams was Next Generation Chera, LLC ("Next Generation"), with which the Mayor, members of the BDC, and members of the WestSide Renaissance met prior to awarding an ENP, on June 24, 2005, to Lexington Square Partners, LLC ("Lexington Square"), an affiliate of Next Generation.⁵ The ENP lists the signatories as the Mayor and City Council of Baltimore, on whose behalf the president of the BDC signed; Lexington Square, represented by its managing member's signature; and the City's Chief Solicitor, who signed on his own behalf.

The ENP provided for a one-year negotiations period with an option to extend for six months, required Lexington Square to "comply in all material respects" with the MOA, and specified that the ultimate disposition of the property would be governed by the terms of an LDA subject to the approval of the BOE. The ENP did not guarantee that the BOE would approve an LDA with Lexington Square. After the one-year term expired, Lexington Square exercised the six-month extension. After that term expired, in a letter dated December 14, 2006, the BDC recommended to the BOE that the City enter into an LDA with Lexington Square. At a public meeting on January 10, 2007, the BOE approved and authorized the execution of the LDA with Lexington Square. In November 2007, the BOE approved an amendment of the LDA to reflect changes in the property being transferred.

Under the LDA, Lexington Square will receive upon closing a fee simple interest in all property conveyed pursuant to the agreement. Closing on the property is contingent on several conditions, including the City's acquisition of any unowned property to be conveyed under the agreement, the "resolution of any legal and administrative challenges," the MHT's approval of the project plan, and sufficient evidence that Lexington Square has financing for the project. In the event that the closing does not occur by December 31, 2010, the LDA provides that as long as the developer has not defaulted on the agreement, it will terminate automatically without liability or obligation to either party. Similarly, if the parties are unable to agree on a final project plan, the developer may terminate the agreement.⁶ In the event that Lexington Square defaults on the terms of the LDA, it provides that the City will have a right of re-entry. The LDA also provides that Lexington Square will be reimbursed for its costs plus ten percent interest upon the City's default.

The Lawsuit

On February 27, 2007, 120 West Fayette filed, as a taxpayer and landowner, a declaratory judgment action against the City to challenge the validity of the Lexington Square LDA. 120 West Fayette argued that "the City, and its agent, the BDC, unlawfully violated and manipulated the RFP process, in violation of the City's Charter and laws, to award the LDA to a favored developer." 120 West Fayette St., 407 Md. at 260, 964 A.2d at 665. Accordingly, 120 West Fayette sought a declaratory judgment finding that the LDA awarded to Lexington Square was illegal and ultra vires. On April 30, 2007, the City filed a motion to dismiss the complaint, and on January 18, 2008, the Circuit Court issued a memorandum opinion...