Harford County v. Town of Bel Air

• Citation: 348 Md. 363,704 A.2d 421
• Decision Date: 01 September 1995
• Docket Number: No. 114,114
• Parties: HARFORD COUNTY, Maryland v. TOWN OF BEL AIR. ,
• Court: Court of Appeals of Maryland

Page 363

348 Md. 363

704 A.2d 421

HARFORD COUNTY, Maryland v. TOWN OF BEL AIR.

No. 114, Sept. Term, 1995.

Court of Appeals of Maryland.

Jan. 14, 1998.

Jefferson L. Blomquist (Ernest A. Crofoot, Harford County Department of Law, on brief), Bel Air, for Petitioner.

Charles B. Keenan, Jr. (Kimberley Kahoe Muenter, Stark and Keenan, P.A., on brief), Bel Air, for Respondent.

Argued before MURPHY, ^* C.J., and ELDRIDGE, RODOWSKY, CHASANOW, KARWACKI*, BELL and RAKER, JJ.

ELDRIDGE, Judge.

We issued a writ of certiorari in this case primarily to address Harford County's argument that, under the doctrine of governmental immunity, "the County could abrogate its obligations under a contract entered into in performance of a governmental function if dictated by the public good." (Harford County's brief at 17). We shall reject this argument, along with several other contentions advanced by Harford County in an effort to justify the County's breach of a contract with the Town of Bel Air.

I.

In 1954, Harford County and the Town of Bel Air entered into an agreement whereby the Town leased approximately 27 acres of land from the County for 25 years, at $1 per year. The Town used a portion of the 27 acres as a sanitary landfill (presently known as "Tollgate Landfill"), and the County reserved the right to use the remainder of the acreage. ¹

On February 24, 1969, the County and the Town executed a new contract which replaced the 1954 contract. In exchange for the Town's agreement to terminate the 1954 contract, the County agreed:

"1. To provide, for a term of ninety-nine (99) years, adequate facilities or transfer stations, for the disposal of all refuse originating in the Town of Bel Air, including garbage, household trash, minor home appliances, stumps, brush and leaves [and] demolition rubble at no 'on-site expense' to the [Town]; ...

"2. To provide for a term of ninety-nine (99) years adequate facilities for disposal of major home appliances and other like bulky non-burnable articles at no 'on-site expense' to [the Town]."

The Town also agreed to the following provisions:

"1. It shall not be the responsibility of the [County] to provide equipment to haul or transport such refuse originating in the Town of Bel Air to such refuse disposal facilities or transfer station.

"2. The [Town] will not use the said facilities or transfer station for any other purposes than those listed above without obtaining prior approval from the [County] in writing."

In 1981 Harford County enacted Bill No. 81-24, which imposed a $10 per ton fee on solid waste haulers for "any solid waste, collected in Harford County for deposit in any solid waste facility or landfill operated by or under contract for Harford County located within Harford County." In light of Bill No. 81-24, the County attempted to charge the Town $10 per ton of refuse that the Town deposited into county facilities or landfills. In response, the Town filed an action for a declaratory judgment in the Circuit Court for Harford County, asserting that the 1969 agreement exempted it from the fee.

On March 17, 1982, the circuit court rendered a declaratory judgment which concluded that "the Lease Agreement dated February 24, 1969, is a valid agreement" and "[t]hat the Town of Bel Air is exempt from the charges imposed by Bill 81-24...." The court based its conclusion on the following four determinations: (1) "solid waste disposal operations are ... a proprietary function" and, therefore, Harford County had no governmental immunity from suit; (2) the County and the Town were authorized to execute the 1969 agreement; (3) the phrase "on-site expense" in the 1969 agreement, exempting the Town from such expenses, encompassed the $10 per ton fee; and (4) "the County is not able ... to cancel the contract ... on the basis of unreasonableness."

The County appealed the trial court's decision to the Court of Special Appeals. Prior to briefing and argument in that court, both the County and the Town petitioned this Court for a writ of certiorari, which we denied. Thereafter, the County filed a motion in the Court of Special Appeals to dismiss its appeal, and the intermediate appellate court dismissed the appeal.

In 1988, the General Assembly enacted the Maryland Recycling Act, which imposed a mandatory requirement on the County to recycle 20% of its solid waste by January 1, 1994. The Recycling Act also required that the County adopt a plan to accomplish this objective. See Ch. 536 of the Acts of 1988; Maryland Code (1982, 1996 Repl.Vol.), § 9-505(a)(18) of the Environment Article.

In 1992, in accordance with the Maryland Recycling Act, the County administrators submitted a recycling plan to the County Council for its approval. Accompanying this plan was Bill No. 92-10, which imposed a $35 per ton "tipping fee" ² on solid waste haulers depositing waste at either the County municipal sanitary landfill or at the Harford Resource Recovery Facility (HRRF). ³ The County adopted the plan and enacted Bill No. 92-10 in February 1992. Shortly thereafter, the County again attempted to charge the Town for the municipal waste and recyclables that the Town deposited either at the county municipal sanitary landfill or at the HRRF. ⁴

The Town brought another declaratory judgment action against the County in the Circuit Court for Harford County, seeking a declaration that the fee was an illegal tax and that imposition of the fee violated the 1969 agreement. ⁵ The County filed a counterclaim for accrued fees, and both parties filed motions for partial summary judgment on the issue of the fee's legality. After some procedural skirmishes, the circuit court in substance denied the motions for partial summary judgment and set the case for trial in May 1995.

At the conclusion of the trial, the circuit court issued a declaratory judgment, declaring that the 1969 agreement was valid and that the Town was exempt from the fee imposed by Bill No. 92-10. The court reasoned that it was bound by the 1982 declaratory judgment under principles of res judicata, stating:

"[O]n the res judicata issue that does bind us in certain findings that Judge Fader made back in 1982. He did find that this was a valid contract supported by adequate consideration; ...

"He also found that the solid waste issue was a proprietary as opposed to a governmental function. And as I read the Eslinger case, that is something that I am bound by, even if I would have come to a different decision had I approached it as a fresh issue.

"And in all probability, quite frankly, I think under the facts presented in this case I think that's more likely than not the answer. Although I am not making a finding in that regard, I think more likely than not under today's law it probably would be determined to be a governmental issue. But we are bound by Judge Fader's decision on that issue, as I previously mentioned.

"We are also bound by his decision as to what an on-site expense is, insofar as the '82 tipping fee is concerned. Of course as to the present fee he didn't make a finding because it wasn't in effect. But I do find that the two statutes establishing the respective fees are similar except that the present tipping fee exempts recycling. So I really think they are so similar almost to be distinction without a difference."

The court rejected the County's argument that it was entitled to rescind the agreement on the ground that the contract was unenforceable under the doctrines of frustration of purpose and legal impossibility. The court also rejected the County's argument that the agreement was ultra vires and against public policy. The County's claim for accrued fees was denied.

The County filed a notice of appeal. Prior to briefing and argument in the Court of Special Appeals, the Town filed in this Court a petition for a writ of certiorari which we granted.

The County's primary argument before this Court is that it is entitled to governmental immunity under this Court's decisions in American Structures v. City of Balto., 278 Md. 356, 364 A.2d 55 (1976); Lake Roland Elevated Railway Co. v. Mayor & c. of Balto., 77 Md. 352, 26 A. 510 (1893); and Rittenhouse v. Baltimore, 25 Md. 336 (1866). The County specifically argues that, pursuant to those cases, it is entitled to "abrogate its obligations under a contract entered into in performance of a governmental function if dictated by the public good." (County's brief at 17). According to the County, the collection and disposal of municipal waste "constitutes a governmental, not a proprietary, function." (Id. at 24). While recognizing that in 1976 the General Assembly abolished any entitlement to governmental immunity in contract actions which might otherwise be possessed by a charter county, ⁶ Harford County maintains that, under the above cited cases, the County is entitled to immunity with regard to contracts entered into prior to 1976. The County further argues that, as the 1982 case involved a "totally different transaction" from the present one, in that the two "fees were enacted at different times and for entirely different motives," principles of res judicata do not bar the relitigation of its governmental immunity.

The County further argues that, even if it is not entitled to governmental immunity with regard to the Town's declaratory judgment action, the 1969 Agreement, under general principles of contract law, (1) lacked consideration, (2) is unenforceable due to inadequacy of consideration, (3) is unreasonable, (4) is a nullity under the doctrines of frustration of purpose and impossibility of performance, (5) contravenes the statutory public policies mandating recycling and solid waste management.

According to the Town, however, the circuit court correctly relied on the 1982 declaratory judgment that the County was not immune from this action. The Town contends that the activity involved is "proprietary" rather than "governmental." The Town further argues that the...