4900 Park Heights Ave. LLC v. Cromwell Retail 1, LLC

Decision Date30 April 2020
Docket NumberNo. 3136, Sept. Term, 2018,3136, Sept. Term, 2018
Citation227 A.3d 757,246 Md.App. 1
Parties 4900 PARK HEIGHTS AVENUE LLC v. CROMWELL RETAIL 1, LLC
CourtCourt of Special Appeals of Maryland

Argued by: Thomas M. Wood, IV (Nicole M. Barnard, Neuberger, Quinn, Gielen, Rubin & Gibber, PA, on the brief), Baltimore, MD, for Appellant.

Argued by: Meagan C. Borgerson (Jonathan P. Kagan, Kagan, Stern, Marinello & Beard, LLC, Harry C. Blumenthal, Liff, Walsh & Simmons, LLC, on brief), Annapolis, MD, for Appellee.

Panel: Fader, C.J., Friedman, Gould, JJ.

Fader, C.J. 4900 Park Heights Avenue LLC ("4900 Park Heights"), the appellant, owns and operates The Sofa Store, which is located in a Glen Burnie business park developed by the appellee, Cromwell Retail 1, LLC ("Cromwell"). 4900 Park Heights initiated this litigation to resolve whether it had the right to erect on its premises, without Cromwell's approval, a 30-foot-tall, freestanding pylon sign to advertise its business. On the eve of trial, counsel informed the Circuit Court for Anne Arundel County that the parties had reached a settlement and would not go forward with the trial. The next morning, counsel for both parties appeared in court, confirmed that they had reached an agreement, and placed terms on the record. The central issue in this appeal is whether the terms placed on the record were binding on the parties. The circuit court determined that they were and, therefore, granted Cromwell's motion to enforce the settlement agreement. We agree and, as to that issue, will affirm the judgment. However, because the enforcement order impermissibly modified part of the settlement agreement, we also will vacate the judgment in part and remand for further proceedings consistent with this opinion.

BACKGROUND
Lot Ownership and the Declaration of Covenants and Restrictions

In January 2014, Cromwell transferred ownership of Lot 7R in Cromwell Business Park to 4900 Park Heights, subject to the terms of a 2014 Declaration of Covenants and Restrictions (the "2014 Declaration"). The 2014 Declaration contained a series of "perpetual and irrevocable" covenants that "run with the land within the Property." Central here are paragraphs 4 and 5 of the 2014 Declaration:

4. Initial Improvements to Property . [Cromwell] shall have the right, in its sole and absolute discretion, to approve or disapprove all aspects of the initial improvements constructed upon the Property and all material modifications to such improvements thereafter (collectively, the "Initial Improvements" ).
[Cromwell]’s right of approval includes, but is not limited to, all architectural design elements, exterior materials, colors and elevations, signage, and landscaping, and all future material revisions thereto.
5. Future Improvements . [Cromwell] shall have the right, in its reasonable discretion, to approve or disapprove all aspects of the improvements made to the Property after completion of the Initial Improvements (the "Future Improvements" ). [Cromwell]’s right of approval includes, but is not limited to, all architectural design elements, exterior materials, colors and elevations, signage, and landscaping, and all future material revisions thereto. The standard of [Cromwell]’s approval shall be reasonable so long as the Future Improvements are consistent with the Initial Improvements. Notwithstanding the foregoing, in the event that any Future Improvements are materially different from the Initial Improvements, then the standard for [Cromwell]’s right to approve or disapprove the Future Improvements shall be in its sole and absolute discretion.

The Declaration also required that, "[b]efore commencement of construction of any improvements," the owner of the lot "shall submit plans and specifications" to Cromwell for approval.

The Underlying Controversy

In March 2015, 4900 Park Heights applied to the Anne Arundel County Department of Inspections and Permits for a permit to construct a freestanding, 30-foot tall, LED pylon sign on Lot 7R to advertise The Sofa Store. The County issued a permit in July 2015. In September 2016, without first seeking approval from Cromwell, 4900 Park Heights began construction.

Cromwell promptly sent 4900 Park Heights a cease and desist letter. Cromwell asserted that 4900 Park Heights was violating the 2014 Declaration by constructing the sign without Cromwell's advance approval. The letter stated that if 4900 Park Heights did not cease all work on the sign, Cromwell reserved "the right to seek injunctive relief and recoupments of any costs or expenses incurred in enforcing the Declaration of Covenants and Restrictions."

4900 Park Heights beat Cromwell to the punch. In October 2016, 4900 Park Heights filed a complaint in the Circuit Court for Anne Arundel County, asking the court to declare that Cromwell had unreasonably withheld its approval of the sign and, therefore, that construction of the sign could proceed.1 In February 2017, with the litigation still pending, 4900 Park Heights finished construction of the sign. The following month, Cromwell filed a counterclaim in which it sought, among other things, declaratory and injunctive relief against 4900 Park Heights.

The March 28, 2018 Hearing

The parties’ opposing claims were scheduled to proceed to trial on March 28, 2018. The evening before that, however, counsel for the parties reached what they both believed to be a settlement. That night, Cromwell's counsel sent an e-mail to the court, copied to counsel for 4900 Park Heights, which stated in pertinent part: "Counsel will appear Wednesday to place on the record their agreement which settles this case as well as another case pending before the Court."2

The following day, counsel for both parties—Thomas M. Wood, IV, for 4900 Park Heights, and Jonathan P. Kagan, for Cromwell—appeared before the circuit court. After a preliminary discussion, the court noted that it was "happy that the parties have reached an agreement" and asked, "[W]hich side would like to memorialize the terms of the agreement?" The following discussion ensued:

MR. WOOD[ ]: I think we have sort of roughly done it. I think [Cromwell's counsel] is just going to come up here and put it on the record. This is going to be followed by a settlement agreement.
THE COURT: Great. Okay.
MR. KAGAN: Yes. So, I can just generally put the terms, if I may, on the record.
...
Your Honor, just again to memorialize the general terms which will be reduced to a settlement agreement, first, that the parties agree that [4900 Park Heights]’s freestanding pylon sign, that is, the Sofa Store sign, shall remain in its present location, except that the top of the sign shall be lowered 12 feet, ... provided that if [Cromwell], in its sole absolute discretion, determines that [Cromwell]’s pylon sign is not impeded, that it may only be lowered 11 feet.
So, there will be some discretion between 11 feet and 12 feet, depending on whether there is any obstruction.
THE COURT: Okay.
MR. KAGAN: [4900 Park Heights] and [Cromwell] shall each pay their own legal fees. [4900 Park Heights] shall pay court costs.
The parties agree to modify the [2014 Declaration] ... so that all initial and future improvements, as defined therein, must be approved by Cromwell Retail 1, LLC, which shall be in the sole and absolute discretion of Cromwell Retail 1, LLC.
THE COURT: Now, is that only amended vis-à-vis 4900 [Park Heights]? Or are there other present owners that would be incorporated within that?
MR. KAGAN: So, it just applies to the particular lot that the Sofa Store is on.
THE COURT: Okay.
MR. KAGAN: And the declarant in that declaration is Cromwell Retail 1, LLC, but it applies specifically to the lot of the Sofa Store, or the Plaintiff in this case. ... The parties in this case will dismiss all claims and counterclaims without prejudice ... until the sign has been relocated.
I believe the parties agreed that [4900 Park Heights] would try to accomplish that within 45 days of today and that, again, upon completion of that, that the parties would agree that both lawsuits, that is this current lawsuit, as well as the petition for judicial review, would then be dismissed with prejudice.
THE COURT: Okay.
MR. WOOD[ ]: And assuming also that we can agree on the language of the covenants and we can agree on the mutual release.
MR. KAGAN: Right.
THE COURT: So, you are asking the Court to hold not everything in abeyance? Just dismiss it without prejudice and then file a line in 45 days, assuming everything -- is that right?
MR. KAGAN: Right. Essentially, following the completion of the lowering of the sign, as well as the other terms of the settlement agreement; that once all the terms of the settlement agreement have been met, that the parties will then agree to file lines of dismissal with prejudice for both matters.
THE COURT: I see.
MR. KAGAN: Also, lastly, that the parties will agree to a mutual general release as well.
THE COURT: Okay. Any modifications, additions, deletions, Mr. Wood?
MR. WOOD[ ]: No, Your Honor.
THE COURT: All right. Well, that sounds very reasonable. Mr. Kagan, are you putting together the settlement agreement?
MR. KAGAN: Yes.
THE COURT: Okay.

The court expressed a preference that the parties "resolve any wordsmithing issues" with the agreement, and sign the final draft, before forwarding it to the court. Before dismissing the parties, the court reiterated that it was "pleased you reached a settlement."

Cromwell's Motion to Enforce

On May 4, 2018, counsel for Cromwell wrote to the court to request that the court grant the parties "an additional 10 days, until May 14, 2018, to finalize and execute the settlement documents and file a Stipulation of Dismissal with the Court." The letter, which was copied to counsel for 4900 Park Heights, stated that "[w]hile the material terms of the settlement were agreed to on the record, the parties are still in the process of working out the terms of the Settlement Agreement and Release, and Restated Declaration of Covenants and Restrictions that will need to be filed...

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