Abington Center Associates Ltd. Partnership v. Baltimore County, 1202

Decision Date01 September 1996
Docket NumberNo. 1202,1202
PartiesABINGTON CENTER ASSOCIATES LIMITED PARTNERSHIP v. BALTIMORE COUNTY, Maryland ,
CourtCourt of Special Appeals of Maryland

Gary P. Aiken (Friedman and Friedman, on the brief), Towson, for Appellant.

Matthew Weir, Asst. County Atty. (Virginia W. Barnhart, County Atty. and William O. Jensen, Jr., Asst. County Atty., on the brief), Towson, for Appellee.

Argued before MOYLAN, WENNER and HOLLANDER, JJ.

HOLLANDER, Judge.

In this case, we must determine whether a taxpayer who has not paid a disputed Baltimore County transfer tax must pursue an administrative remedy before challenging in circuit court the transfer tax and imposition of a lien on its property. Abington Center Associates Limited Partnership ("Abington"), appellant, instituted a declaratory judgment action in the Circuit Court for Baltimore County, claiming that Baltimore County (the "County"), appellee, improperly assessed a transfer tax in the amount of $83,840.00, and then unconstitutionally imposed a lien on Abington's property when it refused to pay the tax. The circuit court concluded that appellant failed to exhaust its administrative remedies and dismissed the suit.

Appellant noted a timely appeal and presents a pentad of questions for our consideration, which we have rephrased slightly.

I. Does the Maryland Tax Court have jurisdiction over challenges to the Baltimore County transfer tax? If so, has such jurisdiction been implemented?

II. Does the Circuit Court for Baltimore County have jurisdiction over this dispute under the Uniform Declaratory Judgments Act, without exhaustion of administrative remedies, because the constitutionality of the statute under which Appellee acted was challenged?

III. Does the Circuit Court for Baltimore County have jurisdiction over this dispute under the Uniform Declaratory Judgments Act, without exhaustion of remedies, because there was no adequate administrative remedy available to Appellant?

IV. Does Baltimore County Code § 33-137 violate Appellant's right to due process of law pursuant to the provisions of Article 24 of the Maryland Declaration of Rights, and the Fifth and Fourteenth Amendments to the United States Constitution?

V. Did Appellee erroneously assess and/or calculate the local transfer tax?

For the reasons that follow, we conclude that appellant did not have an available administrative remedy, and therefore was entitled to litigate its claim in circuit court. Accordingly, we shall vacate the circuit court's order granting appellee's motion to dismiss, and remand for further proceedings.

Factual Summary

Abington is a limited partnership organized pursuant to the laws of Connecticut. Appellee is a body politic, organized and existing under the laws of the State of Maryland.

The case arises from a series of conveyances with respect to a parcel of land situated in Baltimore County, containing approximately 6.5 acres (the "Land"). Hechinger Company ("Hechinger") acquired fee simple title to the unimproved Land in 1981. The Land has since been improved by a shopping center (the "Improvements"). After Hechinger reserved to itself an estate for years to June 1, 2005 with respect to the Land, and fee simple title to the Improvements, it conveyed the fee simple remainder interest in the Land to Penmar Holdings Company, Inc. ("Penmar"), by Deed dated December 1, 1982, for the sum of $30,000.00. Through an unrecorded deed dated December 1, 1982, Hechinger conveyed to Mary Penn Properties, Inc. ("Mary Penn") its estate for years in the Land and its fee simple interest in the Improvements. Also on that date, through an unrecorded agreement, Hechinger agreed to hold title to the estate for years in the Land and the fee simple title to the Improvements, as agent and nominee for Mary Penn. In an unrecorded lease agreement, Mary Penn then leased the property back to Hechinger on the same date.

Appellant acquired title to the estate for years in the Land and fee simple title to the Improvements by a deed from Hechinger dated April 1, 1983. Abington paid a transfer tax to the County in connection with that transaction. Years later, on April 14, 1993, Mary Penn, without consideration, executed a Confirmatory Deed to confirm the prior conveyance by Hechinger to appellant of the reserved interest in the Land and Improvements. When the Confirmatory Deed was recorded, appellee determined that no local transfer tax was due, and stamped the Confirmatory Deed in the manner then provided by Baltimore County Code § 33-140 (1988 & Supp. 2). 1

As a result of the above described transactions, appellant became the owner of an estate for years in the Land and the Improvements in fee simple. Penmar was the record owner of the fee simple remainder interest in the Land. Thereafter, by Deed dated November 10, 1993 (the "Remainder Deed"), Penmar sought to convey its remainder interest in the Land to appellant. Appellee, however, refused to accept the Remainder Deed for recordation, because of an unrelated transfer tax dispute that is not the subject of this proceeding. That matter, however, led to another review of the Confirmatory Deed, as a result of which the County determined that it erroneously concluded that no local transfer tax was due upon the earlier recording of the Confirmatory Deed.

Appellee completed a "Revenue Division" form, dated November 30, 1993, which stated that papers submitted to appellee (presumably to record the Remainder Deed) were being returned for deficiencies. The deficiencies noted were:

TAXABLE CONVEYANCE, NOT EXEMPT. AMOUNT DUE $86,640.00 (SEE ATTACHED LIST OF EXEMPTIONS. Your check is short $83,840.00.

* * * * * *

OTHER 175,000.00 & 5,240,000.00 = 5,415,000.00 Total Consideration

* Mortgages are consideration (per 33-130 Balto Co. Code) See also Council Bill 128-92.

PLEASE MAKE WHATEVER CORRECTIONS ARE CHECKED ABOVE AND RETURN ... WITH YOUR DEED.

On February 14, 1994, appellee sent appellant a letter concerning its position with respect to the transfer tax in issue. The letter stated in pertinent part:

You have presented for recordation a Deed (Deed) dated November 10, 1993 between Penmar, Grantor, and Abington, Grantee, containing 6.4940 acres of land for the consideration of $175,000.00.

The Deed reflects the purchase by Abington, the owner of the present possessory estate, of a reversionary interest in the subject project.

The Deed contains the following language:

"AND SPECIFICALLY EXCLUDING FROM THE GRANT HEREUNDER (i) an estate for years to and including June 1, 2005, in and to the Land, including the exclusive right to the possession and use of the Land, (ii) fee simple title to any buildings, building fixtures and improvements ("Improvements") now or hereafter erected or located on the Land.

"It is the intent of the Grantor by virtue of this Deed to convey to the Grantee a remainder interest in the Land and to exclude from the conveyance hereunder fee simple title to the Improvements."

* * * * * *

The Deed contains language that publicized or gave constructive notice of an unrecorded lease which saves and excepts an estate for years and fee simple title to improvements thereon relating to a transfer of property on which no transfer tax was paid.

The recording of the Deed was denied and the County questioned the consideration of $175,000.00. We stated that a transfer tax should be paid on the $175,000.00, plus the $5,240,000.00 mortgage, or $5,415,000.00, that transfer tax being $86,640.00. We advised you that consideration includes the amount of any outstanding principal balance of any mortgage or deed of trust assumed by the purchaser/grantee. Tax Property Article 12-103(a), 13-203(a) and Sec. 33-130 of the Baltimore County Code.

* * * * * *

In addition, the Confirmatory Deed from Mary Penn to Abington, confirming "prior unrecorded instruments" was subject to a transfer tax based on Tax Property Article Sec. 13-205(c)(2) and Baltimore County Code, Section 33-133:

When any attornment agreement, memorandum of lease, assignment of lease, or other document publicizing or giving constructive notice of the existence of a lease which has not been recorded is presented for recording, the original lease must be presented and taxes paid thereon, if due, before the document may be recorded. Tax Property Articles 12-105(e)(2) and 13-205(c)(2).

If you want to record the Deed and the Agreement, a transfer tax on the leasehold and reversionary interest in 6.9490 acres and improvements thereon, based on the amount of the indebtedness of $5,240,000.00, plus $175,000.00 in the amount of $5,415,000.00 must be paid.

Should you not wish to record these two (2) instruments, I am further advising the Office of Finance to subject the property transferred by the Confirmatory Deed conveying an estate for years and fee simple title to improvements thereon, and recorded among the Land Records of Baltimore County, to a lien, based on the outstanding mortgage assumed by Abington in the amount of $5,240,,000.00, [sic] pursuant to Section 33-137 of the Baltimore County Code .. [sic]

(Emphasis added).

On June 9, 1994, the County Office of Finance assessed a transfer tax in the amount of $83,840, 2 and imposed a lien for unpaid taxes on the Land and Improvements. See Baltimore County Code § 33-127; § 33-137 (1988 & Supp. 6). Baltimore County Code, § 33-137 provides:

Any property transferred, by operation of law or otherwise, evidenced by written instrument recorded among the land records of the county and subject to transfer tax under this article shall be subject to a lien for the amount of said unpaid taxes which shall be assessed against such property and collected in the same manner as ordinary real property taxes.

(Emphasis added). If property taxes are not timely paid, the County Code requires that the County "shall proceed" to sell the property. Baltimore County Code, § 33-71 (1988).

Appellant filed a...

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