County Commissioners of Charles County v. ST. CHARLES ASSOCIATES LTD.

• Decision Date: 08 November 2001
• Docket Number: No. 7,7
• Citation: 366 Md. 426,784 A.2d 545
• Parties: COUNTY COMMISSIONERS OF CHARLES COUNTY et al., v. ST. CHARLES ASSOCIATES LIMITED PARTNERSHIP et al.
• Court: Maryland Court of Appeals

784 A.2d 545

366 Md. 426

COUNTY COMMISSIONERS OF CHARLES COUNTY et al., v. ST. CHARLES ASSOCIATES LIMITED PARTNERSHIP et al.

No. 7, Sept, Term, 2001.

Court of Appeals of Maryland.

November 8, 2001.

Kurt J. Fischer (Marta D. Harting of Piper, Marbury, Rudnick & Wolfe, LLP, Baltimore, Roger Lee Fink, County Attorney, LaPlata), all on brief, for petitioners

James A. Dunbar (Mark D. Maneche of Venable, Baetjer and Howard, LLP, on brief), Baltimore, for respondents.

Argued before BELL, C.J., ELDRIDGE, RAKER, WILNER, CATHELL, HARRELL and ROBERT L. KARWACKI (Retired, specially assigned), JJ. CATHELL, Judge.

This case concerns a 1989 Settlement Agreement created by and between the County Commissioners of Charles County and St. Charles Associates, LP and the Interstate General Company, resolving various issues of contention between these two parties, as the developer proceeded its build-out of a large planned unit development district established in 1970 and located in Charles County. This 1989 Settlement Agreement arose out of proposals to strengthen the planning process and improve the orderly growth of Charles County, and to ensure adequate infrastructure and facilities linked to the substantial development of property in this planned unit development district—all with the aim of ultimately serving the health, safety, and welfare of Charles County residents.

In litigation spanning the past decade, the two parties have disputed the obligations set forth under this Settlement Agreement.¹ More recently, on February 18, 1999, the Circuit Court for Charles County issued an order, which led to this appeal now before our court, in which the Circuit Court found that under the disputed 1989 Settlement Agreement the County was required to issue sewer and water connection permits to St. Charles Community, LLC and Dorchester Greens LP for the fee of $2,040 per permit on certain specified properties.² Additionally, the Circuit Court ordered that Charles County may not impose a fee in excess of $2,040 per water and sewer connection³ for all residential lots or properties located in St. Charles Communities planned unit development ("PUD") until such time as the County obtains a rate report approved by the Circuit Court, which substantiates an increased charge.⁴

On December 5, 2000 the Court of Special Appeals in an unreported opinion, County Commissioners of Charles County v. St. Charles Associates Limited Partnership ("St. Charles III"), affirmed the Circuit Court's February 18, 1999 order. We granted the County's petition for writ of certiorari to review that decision. Petitioners present three questions to this Court:

1. Does ... language in a development agreement between a local government and a developer stating that the agreement "runs with the land" conclusively establish that the agreement binds all purchasers of individual lots in the development where the agreement also provides that it may be assigned, in whole or in part, only if certain procedures are satisfied?

2. Is an assignment of contractual rights that do not run with the land effective where the subject matter of the assignment is not described sufficiently in the document purporting to effect the assignment to make the subject matter capable of being readily identified?

3. Where a contract provides that an assignment must be made "as a part of" a transfer of real property, is an assignment effective where it is made 11 months after the transfer of the property and not pursuant to an instrument relating to the transfer of the property?

We answer yes to question one because the agreement at issue in this case is unambiguous in its terms and meets the elements of a covenant running with the land. Under the circumstances of this case, we also answer in the affirmative to questions two and three. The deeds conveyed the real property, and, by their terms, implicitly conveyed the rights and privileges of the agreement. Also, the assignment of contractual rights set forth in the agreement were effectively assigned via the deeds of conveyance. The eleven-month lapse in time did not hinder the effective assignment of contractual rights, and this subsequent assignment document merely was a redundant formalization of the assignment that had already taken place through the actual conveyances by deed.

I. Statement of Facts⁵

In 1970, the Interstate General Company, predecessor in interest of St. Charles Associates, LP (collectively "St. Charles" or "SCA"), and the United States Department of Housing and Urban Development ("HUD") entered into a project agreement, which established a development plan for the planned and orderly development of St. Charles Communities ("SCC") as a new community under the New Communities Act of 1968, 42 U.S.C. section 3901 et. seq. After the project agreement was executed, the Board of County Commissioners of Charles County enacted new zoning ordinances amending its zoning ordinances in a July 12, 1972 order known as the "Docket 90 Order," creating a planned unit development ("PUD") zone of SCC.⁶ The 7,030 acres comprising SCC is located within the Mattawoman Creek drainage basin, which encompasses roughly eighty square miles in northern Charles County and southern Prince George's County. SCC covers approximately twelve square miles and ultimately may be built out to 24,730 units. To date, SCA and many other builders have constructed homes on lots within the PUD. Due to a substantial increase in commercial and residential development in both Charles County and Prince George's County, and because the increased development rendered the Mattawoman Creek drainage basin and its soils unable to process the effluent from the area's individual sewage disposal systems, Charles County decided to construct a modern wastewater treatment plant. The wastewater treatment plant initially had the capacity to process 5.0 million gallon per day ("MGD"), and cost $33.3 million to construct.⁷ The construction of the plant was completed in the early to mid 1970s.

In the 1980s, it became necessary to expand the capacity of the Mattawoman treatment plant from 5.0 MGD to 15.0 MGD. The county financed this expansion by adopting Resolution 88-81, which significantly increased the water and sewer connection charges to be paid by users of the Mattawoman plant. This Resolution adopted on October 18, 1988, increased sewer connection charges for the purpose of paying the debt service due to the costs of plant expansion. It is these increased charges brought forth by the adoption of Resolution 88-81, which spurred the issue and resultant case sub judice.

In 1989, a dispute arose between the County and SCA as to certain water and sewer capacity entitlements and connection charges. Specifically, on May 10, 1989, SCA filed a Complaint, petitioning the Circuit Court for Charles County for an accounting pursuant to the equity jurisdiction of the court, and for declaratory relief pursuant to the Maryland Code section 3-401 et seq., of the Courts and Judicial Proceedings Article. In its complaint, SCA asserted that SCA should not be subject to the increased water and sewer connection charges imposed under the Resolution, because the County was already contractually bound, under a prior settlement agreement, to provide water and sewer treatment capacity for the 24,730 residential units planned to be built in the SCC.⁸ SCA contended that the Mattawoman treatment plant and its initial 5.0 MGD capacity was constructed for the benefit of the PUD, a significant portion of the basin. Thus, the PUD had immediate entitlement to this initial capacity. SCA alleged that the PUD's federal status as a new community benefitted the County, because it led to the County's receipt of millions of dollars in federal grants and state matching funds designated specifically for the construction and maintenance of SCC's community infrastructure.

The County disputed SCA's claim of entitlement to the capacity and maintained that the key reason for the federal and state grants that financed the 5.0 MGD capacity was the health and safety concerns generated by the then failing septic systems in particular areas of the County.

On November 29, 1989, SCA and the County settled the original litigation with a settlement agreement (the "1989 Agreement").⁹ This 1989 Agreement addressed the disputed connection charges and a number of other issues related to municipal services affecting the SCC. On March 6, 1990, the 1989 Agreement was incorporated into a Consent Decree by the trial court, and thus became a judgment of the court. Relevant portions of the "1989 Agreement" provide as follows:

"AGREEMENT

1. GENERAL PROVISIONS

1.1 Intent of the Parties: The property subject to this Agreement is all of that Real Property located in Charles County, Maryland, described in Exhibit "A," and any other property acquired by SCA, its successors and assigns that is, pursuant to the proper exercise of County discretion, subsequently rezoned PUD and made subject to Docket 90 and all property previously developed by SCA and/or its predecessor, located in Charles County, Maryland. It is intended and determined that the provisions of this Agreement shall constitute covenants which shall run with said Real Property and the benefits and burdens hereof shall bind and inure to the benefit of the parties hereto and their respective assigns and successors in interest. The Recitals are specifically incorporated in and made a part of this Agreement. It is the further intent of the parties hereto, to provide certainty to SCA and the County regarding the number of residential units to receive water and sewer allocations each year, to ensure that SCA continues to provide balanced growth by developing and selling commercial and industrial property, to ensure that such commercial and industrial development is afforded adequate and timely water and sewer allocations in accordance with paragraph 4.1.4 hereof, and to ensure the

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